Statement of Facts

Amicus curiae Mackinac Center for Public Policy is only interested in the first of the four questions presented by this Court, and the facts relevant to that question are fairly straightforward.

William Rovas and Sandra Rovas ("the customers") had a phone line that experienced problems during the period of April 3-13, 2001. A service technician for SBC[1] went to their home on April 4, 2001. The technician performed a test outside the customers' home and determined there to be a dial tone at that time. The technician therefore concluded the problem must have been inside the customers' home, an area that SBC had no duty to maintain. Because of this determination, the customers were charged $71 for a service visit. It was later discovered that the service technician was wrong and that the problem was with an outside line.

According to the testimony of SBC employees before the Michigan Public Service Commission (MPSC), the customers' problem, intermittent service, is difficult to diagnose. The problem is often caused by a break in a phone line's protective casing, which then allows the line to be affected by the elements. Thus, the presence of a dial tone at the point where the phone line enters a home does not mean that there is not a problem with the outside line.

The full course of the repair process eventually led the customers to file a complaint with the MPSC. One charge was that by billing the customers the $71 service fee SBC violated MCL 484.2502(1)(a), which at the time stated:

(1) A provider of a telecommunication service shall not do any of the following:

    (a) Make a statement or representation, including the omission of material information, regarding the rates, terms, or conditions of providing a telecommunication service that is false, misleading, or deceptive.[2]

The Administrative Law Judge recommended that a misdiagnosis does not constitute a false, misleading, or deceptive statement. The MPSC rejected this recommendation:

[W]hat occurred in this case was more than a simple misdiagnosis. Rather, at least with regard to the April 4, 2001 service tag, the dispute arose from an assertion of fact that was false at the time that it was made, and that [SBC] used as a basis for improperly imposing a $71 charge on the complainants. The Commission therefore concludes that it should reject the ALJ's recommendation and, instead, find that the company violated Section 502(1)(a).

    It should also be noted that [SBC]'s general policy regarding the imposition of its $71 service charge is at odds with its duty to inspect and repair, without cost to the customer, all facilities outside the customer's structure. Specifically, the company's propensity for assuming that the problem is with the inside wiring whenever a service technician finds a dial tone at the interface, and for assessing the $71 charge without first verifying that the problem actually arises from within the customer's premises, can lead to repeated violations of the [Michigan Telecommunications Act]. Thus, the Commission directs [SBC] to refrain from assessing its service charge against a customer unless and until it specifically identifies the phone line's problem, enters the customers premises, and confirms that the problem is located within the inside wiring.

In re Complaint of Rovas, MPSC Case No. U-13079 (February 25, 2002) at 15. For the violation of MCL § 484.2502(1)(a), the Commission fined SBC $15,000.

On June 17, 2004, the Court of Appeals affirmed the ruling "[a]fter reviewing the decision of the PSC under a deferential standard of review." Ameritech Michigan v Public Service Commission, unpublished opinion per curiam of the Court of Appeals, decided June 17, 2004 (Docket No. 244742) at 1. The Court of Appeals discussed what it believed to be the standard of review:

    Our review of PSC orders is narrow in scope. The party attacking an order of the PSC bears the burden of proving by clear and satisfactory evidence that the order is unlawful or unreasonable. MCL 462.26(8). A decision of the PSC is unlawful when it involves an erroneous interpretation or application of the law and it is unreasonable when it is unsupported by the evidence. To the extent that the decision is based on findings of fact, the challenger must show that those findings are not supported by competent, material, and substantial evidence on the whole record. This Court gives due deference to the administrative expertise of the PSC, and will not substitute its judgment for that of the PSC.

    While this Court must give due deference to the administrative expertise of the PSC, the Court may not abandon or delegate its responsibility to interpret statutory language and legislative intent.

Id. at 1 (some citations omitted).

The Court of Appeals noted that the dictionary definition of "false" supported two interpretations for MCL 484.2502(1) (a): (1) that the "provision is not intended to proscribe a statement that is simply not true or correct, but is only intended to proscribe those statements tending to deceive or mislead"; and (2) "that the statute does not require an intention to deceive on the part of the telecommunications service provider." Id. at 2.

The Court of Appeals indicated that the record did not support a finding that the SBC technician had the intent to mislead; rather, the record only supported a finding that the technician made a mistake. Id. at 2. If the standard of review was de novo, the Court of Appeals would have held that MCL 484.2502(1)(a) required the intent to deceive or mislead and that no violation was supported by the record:

If we were members of the PSC we would have concluded that Ameritech did not violate MCL 484.2502(1)(a) when it indicated to the customers in this case that the problem with their phone originated inside the house, and therefore they would be billed $71.00 for the service call, a determination that was subsequently proven to be incorrect. However, because we must not substitute our judgment for that of the PSC, and must review a decision of the PSC under a deferential standard of review, we find no error.

    We are charged with giving great deference to the PSC's construction of a statute which the Legislature has required the PSC to enforce, and therefore the mere establishment of an alternative interpretation of a statute to that given by the PSC will not satisfy the appellant's burden of proving the PSC's interpretation was unlawful or unreasonable.

Id. at 2. The Court of Appeals then cited another standard of review, which included new considerations: whether the interpretation involves a new statute and whether the interpretation is longstanding. Both of these instances would lead to less deference:

    As a general rule, we will defer to the construction placed on a statute by the governmental agency charged with interpreting it, unless the agency interpretation is clearly erroneous. An agency's initial interpretation of new legislation is not entitled to the same measure of deference as is a longstanding interpretation. However, merely establishing that another interpretation of a statute is plausible does not satisfy a party's burden of proving by clear and convincing evidence that the PSC's interpretation is unlawful or unreasonable.

Id. at 2 (citing In re Canales Complaint, 247 Mich App 487, 496 (2001)).

Because of the standard of review, the Court of Appeals could not conclude that SBC's "alternative and plausible construction of the statute means that the PSC's interpretation was unlawful or unreasonable." Id. at 2. The Court of Appeals concluded; "Since it is undisputed that the statements made by Ameritech to the customers were wrong, and one definition of ‘false' is ‘wrong,' the PSC's interpretation of the statute was quite literal and certainly not unlawful or unreasonable." Id. at 2.

While the Court of Appeals upheld the MPSC's interpretation of MCL 484.2502(1)(a), it remanded the case to the PSC for clarification on when it would be proper for SBC to bill the $71 service-fee charge, and specifically on whether SBC had to go inside the premises before billing for a service fee. Id. at 2-3.

On April 8, 2005, this Court denied leave to appeal at that time. Justice Markman dissented and would have explored the standard-of-review question. Because this Court denied leave to appeal, the matter was remanded to the MPSC.

On August 1, 2005, the MPSC clarified that SBC need not enter the premises on each service visit, but indicated that SBC could not charge customers for service visits (here the $71 fee) related to SBC's obligation to maintain outside lines.

On June 12, 2007, the Court of Appeals considered the MPSC order as it related to charges for inside wiring, an area that is unregulated. The Court of Appeals ordered MPSC to clarify that MPSC could not regulate any costs related to a correct determination that "a problem with the telephone service is due to a customer's nonregulated inside wiring." In re Complaint of Rovas, 276 Mich App 55, 66 (2007).

SBC and the MPSC both appealed, and the Michigan Supreme Court granted leave stating:

    On order of the Court, the applications for leave to appeal the June 17, 2004 and June 12, 2007 judgments of the Court of Appeals are considered, and they are GRANTED. The parties shall include among the issues to be briefed: (1) what legal framework appellate courts should apply to determine the degree of deference due an administrative agency in its interpretation of a statute within its purview; (2) whether the Court of Appeals erred in deferring to the Michigan Public Service Commission's interpretation of MCL 484.2502(1)(a); (3) whether the Commission abused its discretion in applying this statutory provision to a carrier's diagnostic mistakes; and (4) whether the Court of Appeals erred in holding that the Commission lacks the jurisdiction to prohibit the imposition of a fee for a carrier's inspection of its own services when that inspection eliminates the carrier as the cause of a service disruption. The parties shall detail the relationship between state regulatory authority and federal authority regarding de-regulation in addressing the last question.

Amicus curiae filed the instant brief to address issue 1.

[1] The current real party in interest is Michigan Bell Telephone Company. When this matter began, it was known as Ameritech Michigan. It became SBC Ameritech Michigan and then SBC Michigan. It is now known as AT&T Michigan. For ease of reference, amicus curiae will refer to this entity as SBC, the name this Court used in captioning the case. The only exception will be if some other name appears in a citation, in which case that name will be used.

[2] 2005 Public Act 235 added the following language to the end of MCL 484.2502(1)(a): "As used in this subdivision, ‘material information' includes, but is not limited to, all applicable fees, taxes, and charges that will be billed to the end-user, regardless of whether the fees, taxes, or charges are authorized by state or federal law."