Indoor Billboard v. Integra Telecom

170 P.3d 10

162 Wn.2d 59

INDOOR BILLBOARD/WASHINGTON, INC., a Washington corporation, individually, and on behalf of a class of persons and/or entities similarly situated, Appellant, v. INTEGRA TELECOM OF WASHINGTON, INC., a Washington corporation, Respondent.

No. 79977-6.

Supreme Court of Washington, En Banc.

Argued May 29, 2007.

Decided October 18, 2007.

John David Stahl, Mundt MacGregor LLP, Seattle, WA, for Appellant/Cross-Respondent.

Sarah J. Crooks, Attorney at Law, Lawrence Reichman, Portland, OR, for Respondent/Cross-Appellant.

Bryan Patrick Harnetiaux, Attorney at Law, Spokane, WA, for Amicus Curiae on behalf of Washington State Trial Lawyers Association Foundation.

Shannon E. Smith, Office of the Attorney General, Seattle, WA, for Amicus Curiae on behalf of Attorney General of Washington.

FAIRHURST, J.

¶ 1 Indoor Billboard/Washington, Inc. (Indoor Billboard) appeals a trial court order granting summary judgment to Integra Telecom of Washington, Inc.¹ (Integra). Indoor Billboard asserted a claim for relief in King County Superior Court under Washington's Consumer Protection Act (CPA), chapter 19.86 RCW, alleging that Integra engaged in an unfair or deceptive act or practice by assessing its Washington local exchange customers a surcharge known as a presubscribed interexchange carrier charge or PICC. Indoor Billboard further claims it established causation under the CPA merely by a showing that it paid the PICC.

¶ 2 Integra argues the trial court properly granted summary judgment in its favor. It denies that it engaged in an unfair and deceptive act or practice by assessing a PICC surcharge to its local exchange customers and argues Indoor Billboard must establish that it relied on Integra's actions to show causation. It further asserts that the voluntary payment doctrine bars Indoor Billboard's claim for damages because Indoor Billboard knowingly paid the charges. In a cross petition, Integra argues that even if the trial court erred in granting summary judgment in its favor on the CPA issues, the trial court should have dismissed the case on the grounds that the Washington Utilities and Transportation Commission (WUTC) had exclusive jurisdiction over Indoor Billboard's claim.

¶ 3 We reverse the trial court's grant of summary judgment in favor of Integra and affirm the trial court's denial of Integra's motion to dismiss for lack of subject matter jurisdiction. We hold that Indoor Billboard established as a matter of law that Integra engaged in an unfair or deceptive act or practice. We hold that genuine issues of material fact exist regarding a causal link between Integra's unfair or deceptive acts or practices and Indoor Billboard's injuries. We also conclude the voluntary payment doctrine does not apply as a matter of law. We remand the matter for trial.

I. FACTUAL HISTORY

¶ 4 Under Federal Communications Commission (FCC) regulations, certain local exchange carriers (LECs), known as incumbent local exchange carriers (ILECs),² may impose a PICC on interexchange (long distance) carriers. FCC PICC rule, 47 C.F.R. § 69.153(a); Clerk's Papers (CP) at 378. The purpose of the PICC is to allow ILECs to recover some of their costs of providing the "local loop."³ CP at 378. The FCC permits interexchange carriers to pass-through to their end-users the PICC that they pay to the ILECs. Id. The FCC also sets the maximum monthly PICC an ILEC may charge but does not dictate the amount an ILEC charges as long as it is under the maximum. CP at 379.

¶ 5 Integra is not an ILEC. Integra is a competitive telecommunications company (CTC)⁴ under former RCW 80.36.320 (2003)⁵ and, therefore, not subject to the provisions of 47 C.F.R. § 69.153. Nevertheless, in the fall of 2001, after conducting a survey to determine what rates other local competitors charged to their local service customers, Integra began to impose a surcharge of $4.21 entitled a PICC to all of its customers, regardless of whether they had presubscribed to an interexchange carrier. Integra properly included the PICC surcharge on its price list, as required by WAC 480-80-204.⁶

¶ 6 In March 2005, an Integra sales representative, Erin McCune, met with the vice president of Indoor Billboard, James Shulevitz, to discuss Integra's telephone services. McCune sent Shulevitz a copy of Integra's price list, which included the PICC surcharge. Shortly after their meeting, Shulevitz sent McCune an e-mail informing her that there would be "no need to charge [him] PICC charges" because he was not interested in Integra's interexchange services. CP at 163. McCune responded that the PICC could not be waived "regardless of whether [Indoor Billboard] use[d] Integra as [its interexchange] carrier." CP at 164.

¶ 7 A few days later, Shulevitz contacted Frank Westby, a representative of Indoor Billboard's interexchange carrier, Eschelon. Shulevitz informed Westby that Integra had offered to provide Indoor Billboard with local service in Washington and asked Westby whether the PICC charge was federally mandated. Westby replied that it was "not regulated by the government" and that the price was "determined by the Long distance carrier/Phone company." CP at 171.

¶ 8 Shulevitz wrote back to McCune to tell her about his discussions with Westby and asked her why Eschelon's PICC was 44 percent lower than Integra's. McCune responded,

[d]ifferent CLECs have different PICC . . . charges . . . and these can vary by market. Our PICC . . . [is] different in the Oregon market than in Washington, due to different market conditions. I am unable to change them, so I would recommend looking at the whole picture (line rate plus all surcharges) to make an accurate comparison.

CP at 174 (emphasis added).

¶ 9 The next month, Shulevitz signed an agreement with Integra for five line local exchange and digital subscriber line services. Integra sent Indoor Billboard its first invoice in June 2005, which included a PICC surcharge listed under "Taxes and Surcharges." CP at 55-56. Before paying the invoice, Shulevitz conducted some independent research into Integra's PICC surcharge. First, he sent an e-mail to a friend who worked in the telecommunications industry, Mark Berkovitch. Berkovitch suggested that Integra's PICC was a "double dip" and gave Shulevitz a link to the FCC website. CP at 178-79. Shulevitz checked the FCC website and called the FCC. The FCC informed Shulevitz that it did not regulate Integra and could not help him. The FCC suggested that Shulevitz contact the WUTC. Shulevitz called the WUTC and the representative he spoke with told him it was "news to [her]" that Integra came under the WUTC's purview. CP at 137. She told him that if he was billed for the surcharge again he should call her back. Finally, Shulevitz spoke with a representative at Integra's customer service department. Shulevitz said the representative left him with the impression that Integra's PICC was "associated with," "approved by," "sanctioned by," and "okay with" the FCC and Integra had "every right to charge it." CP at 146. Shulevitz further claimed that, despite Integra's reassurances, he continued to be concerned about the PICC surcharge but he did not make a written complaint.

¶ 10 Despite his ongoing concerns, Shulevitz authorized payment of the June invoice because he "[didn't] like to start things off on a sour note." CP at 148. He also authorized payment of the July invoice, which included another PICC charge, but he did not call the WUTC back as the representative had advised.

¶ 11 However, the August invoice did not include a PICC charge. It contained a message that stated, "[d]ue to recent FCC rulings, changes to government prescribed fees are reflected in this invoice. The . . . PICC will no longer be assessed. Instead, the Interconnection Fee (ICF) will now recover network costs prescribed and regulated by the FCC and state public utility commissions." CP at 63. Customers were directed to Integra's website for more information.

II. PROCEDURAL HISTORY

¶ 12 In its complaint, Indoor Billboard first alleged that Integra had published a price list indicating it would assess a PICC of $4.21 per line per month to all customers regardless of whether they had presubscribed to an interexchange carrier. CP at 45, ¶ 11. It alleged that in the telecommunications industry, a PICC is a charge assessed only by ILECs on multiline business customer's interexchange carriers to recover costs of providing the ILECs' local loop. CP at 45, ¶ 13. It alleged that an ILEC may assess a PICC only against a multiline business customer's interexchange carrier, which may pass the PICC on to its customer, or the ILEC may assess its multiline business customer directly, but only if the customer has not presubscribed to an interexchange carrier. CP at 46, ¶ 13. It alleged that because Integra is not an ILEC and does not own and operate its own local loop, the PICC Integra assessed and collected was not a PICC as the term is defined in the telecommunications industry. CP at 46, ¶ 14. Indoor Billboard further alleged that Integra's price list "wrongfully institute[d] a purported PICC surcharge" and "wrongfully assessed upon and collected from its customers a surcharge misrepresented to be a PICC." CP at 46, ¶ 15.

¶ 13 Indoor Billboard claimed (1) Integra was engaged in a trade or commerce as defined in RCW 19.86.110, (2) Integra's practice of assessing and collecting its PICC was an unfair and deceptive act or practice under RCW 19.86.020, (3) Integra's unfair or deceptive act or practice impacted the public interest, (4) Indoor Billboard and the members of the class had suffered injury in their business or property, and (5) Integra's unfair or deceptive act or practice was the proximate cause of the injuries to Indoor Billboard and the members of the class. CP at 51, ¶¶ 34, 38. Finally, Indoor Billboard claimed it was entitled to actual damages, treble damages, injunctive relief, and attorney fees and costs under...