Preview:

IN THE SUPREME COURT OF IOWA
No. 143 / 06-0541 Filed February 15, 2008 OFFICE OF CONSUMER ADVOCATE, Appellant, vs. IOWA UTILITIES BOARD, Appellant. ------------------------------------------------------MCI WORLDCOM, INC., Appellee, vs. IOWA UTILITIES BOARD, Appellant. Appeal from the Iowa District Court for Polk County, Douglas F. Staskal, Judge.

The Office of Consumer Advocate and the Iowa Utilities Board appeal an adverse judicial review decision. AFFIRMED.

John R. Perkins, Consumer Advocate, and Craig F. Graziano, Des Moines, for appellant Office of Consumer Advocate. David Lynch, General Counsel, and Mary F. Whitman, Assistant General Counsel, Des Moines, for appellant Iowa Utilities Board.

Krista K. Tanner and Bret A. Dublinske of Dickinson, Mackaman, Tyler & Hagen, P.C., Des Moines, for appellee.

2 WIGGINS, Justice. The Iowa Utilities Board (Board) interpreted Iowa Code section 476.103 (2003) and Iowa Administrative Code rule 199--22.23 (1999) to require the verification of a change in telecommunications service and a verification of the terms and conditions the customer consented to when agreeing to the change. On judicial review, the district court reversed the decision of the Board finding these provisions only required the carrier to obtain the customer's verification of a change in service, not a verification of the terms and conditions of the change in service. Because we agree with the district court's interpretation of section 476.103 and rule 199--22.23, and because we find the Board's interpretation of rule 199--22.23 irrational, illogical, or wholly

unjustifiable under Iowa Code section 17A.19(10)(l), we affirm the decision of the district court. I. Background Facts and Proceedings. On November 16, 2002, a telemarketer contacted Dr. Syam Kilaru on behalf of MCI Worldcom. According to Kilaru, the telemarketer told him if he changed his telephone service to MCI he would receive an international long distance rate of 37 cents per minute for calls to India on any day of the week, at any time. The telemarketer also informed

Kilaru he would receive one hour of free calling to India per month for the first three months of MCI's service and 200 minutes of domestic long distance minutes for a monthly fee of $12.95. Kilaru agreed to switch his telephone service to MCI. The

telemarketer transferred Kilaru's call to a third-party verification company hired by MCI. Kilaru verified that he agreed to transfer his

phone service to MCI. The verification call was recorded but the original call describing the rates was not.

3 Five or six business days later, MCI sent Kilaru a welcome packet explaining his rates. Kilaru did not review it. The welcome packet stated the rate for calls to India was 49 cents per minute on weekdays and 42 cents per minute on weekends. The welcome packet made no mention of the free calls to India. Kilaru first discovered he was being charged more than what the telemarketer represented when he received his first bill. On January 8, 2003, Kilaru filed an informal complaint with the Board alleging MCI did not honor the rate it offered him to switch long distance carriers. Kilaru alleged he switched long distance carriers from AT&T Communications of the Midwest to MCI in response to MCI's offer. Pursuant to its rules, the Board forwarded Kilaru's complaint to MCI on January 10. MCI responded, stating its records indicated Kilaru was to be billed 49 cents per minute for weekday calls to India and 42 cents per minute on the weekends, and the sign-up bonus was a free month of domestic long distance calling, not free international long distance. MCI's

response pointed Kilaru to the welcome packet, which indicated the 42 and 49 cent per minute rates. In its response MCI agreed to credit Kilaru $219.27 for the first month of calls to India that were not billed in accordance with the 37 cent per minute rate. billed at the higher rates. On March 10 the Board issued a proposed resolution and concluded MCI complied with the Board's and the federal communication commission's rules by using a third-party verification company. Future calls would be

Therefore, the Board found MCI obtained the required authorization to switch Kilaru's service and billed him the correct rate. The Board

informed Kilaru that he could request a formal proceeding if he did not agree with the proposed resolution.

4 On March 24 the Office of Consumer Advocate (OCA) filed a petition with the Board contesting the March 10 proposed resolution. The OCA requested the Board impose civil penalties against MCI for committing an unlawful slam in violation of Iowa Code section 476.103. On July 14, 2004, a hearing was held before an administrative law judge (ALJ), at which Kilaru and a representative from MCI testified. The ALJ found Kilaru's testimony credible and found MCI violated section 476.103 and rule 199--22.23. As a remedy, the ALJ reasoned because there was no meeting of the minds, there was no valid contract, and MCI should zero out Kilaru's account. However, the ALJ found because there was no evidence MCI intended to mislead Kilaru, a penalty would have no deterrent effect and would therefore be inappropriate. Both the OCA and MCI appealed the ALJ's decision to the Board. The Board affirmed the ALJ. The OCA petitioned for judicial review,

challenging the Board's determination that civil penalties should not be awarded. MCI filed a cross-appeal/motion to intervene. The district

court treated MCI's motion as a petition for judicial review. The district court reversed the Board's decision and dismissed the OCA's petition. decision. II. Issue. We must decide whether the verification provisions contained in the statute and rules only require the verification of a change in carriers or whether the statute and rules also require verification of the terms and conditions of service. The Board and the OCA appeal the district court's

5 III. Discussion. Rules promulgated by an agency represent the agency's

interpretation of the Iowa Code provisions the legislature gave it to administer. Iowa Ag Const. Co. v. Iowa State Bd. of Tax Review, 723

N.W.2d 167, 173 (Iowa 2006); see also Iowa Code

Download OFFICE OF CONSUMER ADVOCATE vs. IOWA UTILITIES BOARD vs. IOWA UTILITIES BOARD.pd

Iowa Law