LCI INTL TELECOM CORP V MPSC
Annotate this Case
Download PDF
STATE OF MICHIGAN
COURT OF APPEALS
In re MARTINEZ COMPLAINT.
__________________________________________
FOR PUBLICATION
April 30, 2002
9:25 a.m.
LCI INTERNATIONAL TELECOM
CORPORATION, d/b/a QWEST
COMMUNICATIONS SERVICES,
Appellant,
v
MICHIGAN PUBLIC SERVICE COMMISSION
and ENRIQUE MARTINEZ,
Appellees.
No. 225396
MPSC
MPSC No. 00-012114
Updated Copy
August 2, 2002
Before: Fitzgerald, P.J., and Hoekstra and Markey, JJ.
PER CURIAM.
On September 10, 1999, Enrique Martinez filed a complaint with the Michigan Public
Service Commission (MPSC), alleging that LCI International Telecom Corporation, doing
business as Qwest Communications Services (Qwest), had switched his long-distance (toll)
telephone service without his authorization, a practice commonly referred to as "slamming." In
an opinion and order issued January 19, 2000, the MPSC found that Qwest had violated § 505 of
the Michigan Telecommunications Act (MTA), MCL 484.2505,1 by switching Mr. Martinez'
service without authorization. The MPSC ordered Qwest to pay a fine of $40,000 for a secondoffense violation of the MTA and the MPSC's antislamming procedures, pay restitution of
$1,022.36 to Mr. Martinez for his time and expenses, pay the costs and reasonable attorney fees
incurred by the MPSC staff and Mr. Martinez, and cease and desist from future violations of the
1
The MTA is repealed effective December 31, 2005. MCL 484.2604, amended by 2000 PA 295,
immediate effect, July 17, 2000. Before this amendment, the act had been set to be repealed on
January 1, 2001.
-1-
MTA and the antislamming procedures. Qwest appeals by right. We affirm in part and reverse
in part the MPSC's order and reduce the fine imposed for violating § 505.
A party challenging an MPSC order bears the burden of proving by clear and satisfactory
evidence that the order is unlawful or unreasonable.
MCL 462.26(8); In re MCI
Telecommunications Complaint, 460 Mich 396, 426-427; 596 NW2d 164 (1999). To prove that
an order is unlawful, the appellant must show "'that the commission failed to follow some
mandatory provision of the statute or was guilty of an abuse of discretion in the exercise of its
judgment.'" Id. at 427, quoting Giaras v Public Service Comm, 301 Mich 262, 269; 3 NW2d 268
(1942). Further, "[t]he hurdle of unreasonableness is equally high. Within the confines of its
jurisdiction, there is a broad range or 'zone' of reasonableness within which the [MPSC] may
operate." In re MCI, supra at 427. Where the MPSC engages in fact finding, the findings must
be supported by competent, material, and substantial evidence on the whole record. Attorney
General v Public Service Comm, 206 Mich App 290, 294-296; 520 NW2d 636 (1994).
Qwest first argues that the MPSC's imposition of a $40,000 second-offense fine was
unlawful and excessive. We agree. Slamming is prohibited under subsection 505(1) of the
MTA, MCL 484.2505(1), which provides: "An end user of a telecommunications provider shall
not be switched to another provider without the authorization of the end user." Remedies and
penalties for violation of § 505 are set forth in § 506, which at the relevant time provided in
pertinent part:
(2) If the commission finds that a person has violated section 505 or an
order issued under section 505, the commission shall order remedies and penalties
to protect and make whole end users and other persons who have suffered
damages as a result of the violation, including, but not limited to, 1 or more of the
following:
(a) Order the person to pay a fine for the first offense of not less than
$10,000.00 or more than $20,000.00. For a second and any subsequent offense,
the commission shall order the person to pay a fine of not less that $25,000.00 or
more than $40,000.00. If the commission finds that the second or any of the
subsequent offenses were knowingly made in violation of section 505, the
commission shall order the person to pay a fine of not more than $50,000.00.
Each switch made in violation of section 505 shall be a separate offense under this
subdivision. [MCL 484.2506(2)(a).]
On December 16, 1999, in another case involving Qwest, the MPSC found that Qwest
violated the antislamming provisions of the MTA in a contested case proceeding arising from a
complaint filed by Dagoberto and Mary Canales and ordered Qwest to pay a fine of $21,000,
reimburse the Canaleses for their expenses, cease and desist future violations, and pay the costs
of the Canaleses and the MPSC staff, including reasonable attorney fees, on the basis that
Qwest's defenses were devoid of legal merit and therefore frivolous (MPSC Case No. U-12031).
On appeal, this Court affirmed the MPSC's findings of statutory violations and the fines and
reimbursements imposed for those violations, but reversed the imposition of costs and attorney
-2-
fees, finding that Qwest's arguments were not frivolous. In re Canales Complaint, 247 Mich
App 487; 637 NW2d 236 (2001).
Approximately one month after the MPSC entered its order in the In re Canales matter, it
issued the order in the present matter. The MPSC found the present offense to be Qwest's second
offense, subjecting it to an enhanced penalty under subsection 506(2)(a). Qwest now asserts, and
we agree, that the imposition of an enhanced fine for a second offense was improper where the
alleged prior offense of slamming in In re Canales, supra, occurred after the offense in the
present case.2
This conclusion is supported by this Court's decision in In re Canales, supra. In that
case, which was the first one involving Qwest, this Court affirmed the MPSC's decision to fine
Qwest the maximum allowable of $20,000 because it '"is appropriate to increase the incentive to
eliminate slamming' and that lesser fines would be 'insufficient incentives if providers conclude
that they can simply reimburse the out-of-pocket costs for those who complain and keep the toll
revenues from those who do not complain.'" Id. at 494. This rationale clearly is one comprised
of common sense and comports with a normal reading of the statutory language. A second
offense means just that: one that occurs subsequent in time, or chronological order. Here, the
offense at hand occurred before that in the case of In re Canales.
Subsection 506(2)(a) reflects the same analysis by providing for an increased penalty for
"a second and any subsequent offense . . . ." Neither common sense nor a fair reading of the
statute would allow for our considering this offense, though adjudicated after that in In re
Canales, to be a "second" or "subsequent offense." Hence, the rationale underlying both the
statute and the decision in the first case involving Qwest supports our conclusion. If the purpose
for increasing the fine was to deter further violations of the statute, that cannot occur if a
"subsequent" offense is in reality one that occurred before another. The fact that the MPSC
addressed the second offense before the first one is not sufficient argument to stand the plain
wording of this statutory provision on its head by saying that a subsequent offense is really not
because it was adjudicated earlier in time. For these reasons, we conclude that the MPSC's
imposition of a $40,000 second-offense fine was both a failure to follow a mandatory provision
of the statute, specifically subsection 506(2)(a), and an abuse of discretion. Accordingly, we
order that the MPSC's imposition of the maximum allowable $40,000 fine for a second offense
be reduced to $20,000, which is the maximum allowable fine for a first offense.
Next, Qwest argues that the MPSC clearly erred in finding Qwest's defenses to be
frivolous under § 209 of the MTA, MCL 484.2209, warranting an award of costs, including
reasonable attorney fees, to Mr. Martinez and the MPSC staff under subsection 506(4)3 of the
MTA. We agree and reverse.
2
The present slamming offense occurred in October or November 1998, while the slamming
offense in In re Canales, supra, occurred in March 1999.
3
MCL 484.2506(4) provides:
(continued…)
-3-
In In re Canales, supra at 505-506, this Court reversed the MPSC's finding that Qwest's
defenses were frivolous, explaining as follows:
Although Qwest failed to prevail on these issues [i.e., lack of standing of
Mrs. Canales and exemption from fines under subsection 506(3)], its positions
were not devoid of arguable legal merit. The standing issue presents a question of
statutory interpretation of a relatively new enactment not yet interpreted by the
courts. While the [MPSC] determined that Qwest's position requires that the first
clause of the statute be ignored, the argument that if the Legislature intended that
same clause to be read so broadly as to include anyone, it was unnecessary to
further enumerate specific entities who may file a complaint is a plausible legal
argument and is not frivolous. Qwest was not obliged to accept the [MPSC's]
decision in the earlier case as a binding statement of the law and was within its
rights to seek a judicial determination of the standing issue.
Similarly, the examples of "unintentional and bona fide" errors set forth in
subsection 506(3) are clearly intended to be nonexclusive. Because it was not
shown that Qwest knew that the [letter of authorization] was forged and because
Qwest had instructed against the practice, the argument that subsection 506(3)
applied was not devoid of arguable legal merit and was not frivolous.
Consistent with In re Canales, supra, we conclude that the MPSC's finding that Qwest's
defenses in the present case were frivolous is clearly erroneous. At the time these defenses were
asserted below, no binding precedent precluded them. Accordingly, the award of costs, including
attorney fees, as a sanction under subsection 506(4) is reversed.
We affirm in part and reverse in part the MPSC's order in accordance with this opinion.
The fine imposed under subsection 506(2)(a) of the MTA is reduced to $20,000. We retain no
further jurisdiction.
/s/ E. Thomas Fitzgerald
/s/ Joel P. Hoekstra
/s/ Jane E. Markey
(…continued)
If the commission finds that a party's complaint or defense filed under this
section is frivolous, the commission shall award to the prevailing party costs,
including reasonable attorney fees, against the nonprevailing party and their
attorney.
-4-
Some case metadata and case summaries were written with the help of AI, which can produce inaccuracies. You should read the full case before relying on it for legal research purposes.
This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.
