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[Service Date April 21, 2010]
BEFORE THE WASHINGTON STATE
UTILITIES AND TRANSPORTATION COMMISSION
SANDY JUDD AND TARA
AT&T COMMUNICATIONS OF THE
PACIFIC NORTHWEST, INC., AND
INITIAL ORDER DENYING IN
PART AT&T‟S AMENDED MOTION
FOR SUMMARY DETERMINATION
AND GRANTING T-NETIX‟S
MOTION AND AMENDED MOTION
FOR SUMMARY DETERMINATION
SYNOPSIS. This is an Administrative Law Judge’s Initial Order that is not effective
unless approved by the Commission or allowed to become effective pursuant to the
notice at the end of this Order. This Order denies in part the Amended Motion for
Summary Determination filed by AT&T Communications of the Pacific Northwest,
Inc. , by finding that AT&T, and not T-Netix, was the operator service provider for
Washington State Reformatory (a/k/a Monroe Correctional Complex), Airway
Heights, McNeil Island Penitentiary, and Clallum Bay, from June 4, 1997 to
December 31, 2000. AT&T’s Amended Motion which requests that the Commission
find AT&T did not violate any of the Commission’s OSP rate disclosure regulations is
held in abeyance pending further Commission proceedings. This Order grants the
Motion and Amended Motion for Summary Determination filed by T-Netix, Inc.
NATURE OF PROCEEDING. Docket UT-042022 involves a formal complaint
filed with the Washington Utilities and Transportation Commission (Commission) by
Sandy Judd and Tara Herivel (Complainants)1 against AT&T Communications of
Zuraya Wright filed suit, in conjunction with Ms. Judd and Ms. Herivel, against Respondents in
the Superior Court of Washington for King County (Superior Court or Court). See, Exhibit A-2.
the Pacific Northwest, Inc. (AT&T), and T-Netix, Inc. (T-Netix, collectively with
AT&T, Respondents).2 Complainants request that the Commission resolve certain
issues under the doctrine of primary jurisdiction and pursuant to the referral by the
APPEARANCES. Chris R. Youtz, Sirianni Youtz Meier & Spoonemore, Seattle,
Washington, represents Complainants. Letty Friesen, AT&T Law Department,
Austin, Texas, and Charles H. R. Peters, Schiff Hardin, LLP, Chicago, Illinois,
represent AT&T. Arthur A. Butler, Ater Wynne LLP, Seattle, Washington, and
Stephanie A. Joyce, Arent Fox LLP, Washington, D.C., represent T-Netix.
PROCEDURAL HISTORY. This matter has an extensive history, dating back to
when the complaint was first filed in 2000 in the Superior Court. Complainants
alleged in their complaint that they received collect calls from inmates in Washington
State correctional facilities served by Respondents, that Respondents provided
operator services to the correctional facilities and that Respondents were operator
service providers (OSPs) 3 who violated the rate disclosure statute4 by failing to assure
As Ms. Wright‟s claim is restricted to interstate inmate telephone calls, and our jurisdiction
extends only to intrastate telephone calls, we will not address Ms. Wright‟s claim in this order.
Complainants originally named five telecommunications companies in their suit in Superior
Court. In addition to Respondents, Complainants also filed suit against Verizon Northwest, Inc.,
f/k/a GTE Northwest, Inc. (Verizon), Qwest Corporation, f/k/a U.S. West Communications, Inc.
(Qwest), and CenturyTel Telephone Utilities, Inc., f/k/a CenturyTel Telephone Utilities, Inc. and
Northwest Telecommunications, Inc., d/b/a PTI Communications, Inc. (CenturyTel). Verizon,
Qwest, and CenturyTel were subsequently dismissed from the action. Exhibit A-46. The
Washington Court of Appeals affirmed the trial court‟s ruling, as did the Supreme Court of
Washington. Judd, et al., v. American Telephone and Telegraph Company, et al., 116 Wash.App.
761, 766, 66 P.3d 1102 (2003) and Judd v. Am. Tel. & Tel. Co., 152 Wash.2d 195, 198, 95 P.3d
While WAC 480-120-021 (1989) and (1991) classify entities that provide connections from call
aggregators to local and interexchange carriers (IXC) as alternate operator services companies,
WAC 480-120-021 (1999) changed the term for these entities to OSP. As the Superior Court
refers to them as OSPs, we will do likewise in this Order.
RCW 80.36.520 provides that:
[t]he utilities and transportation commission shall by rule require, at a minimum,
that any telecommunications company, operating as or contracting with an
alternative operator services company, assure appropriate disclosure to
rate disclosures for the collect calls Complainants received. Following the Superior
Court‟s dismissal of three defendants from the suit and the subsequent affirmations of
the Court‟s verdict, the Superior Court referred two questions to the Commission
under the doctrine of primary jurisdiction:5
1) Whether Respondents were OSPs under the contracts at issue herein, and
2) If so, if the regulations have been violated. 6
On November 17, 2004, Complainants filed a formal complaint with the Commission
under the court‟s referral. In that filing, Complainants expanded their arguments
further, claiming that Respondents had violated the Commission‟s rule requiring that
OSPs provide rate quote information to consumers.7 In violating the Commission‟s
rule, Complainants allege that Respondents also violated the Washington Consumer
Protection Act (WCPA).8 On December 15, 2004, AT&T filed an answer to the
formal complaint and a Motion for Summary Determination (AT&T‟s Motion),
requesting that the Commission find that AT&T was not an OSP during the period in
question and that AT&T had not violated the Commission‟s regulations applicable to
OSPs. On December 16, 2004, T-Netix filed its answer to the formal complaint. Due
consumers of the provision and the rate, charge or fee of services provided by an
alternative operator services company.
Primary jurisdiction is a doctrine which requires that issues within an agency‟s special expertise
be decided by the appropriate agency. Tenore, v. AT&T Wireless Services, 136 Wash.2d 322,
345, 962 P.2d 104, 115 (1998).
Judd v. Am. Tel. & Tel. Co., 136 Wash.App. 1022, not reported in P.3d, (2006).
See, WAC 480-120-141 (1991) and (1999).
RCW 80.36.530 provides that:
In addition to the penalties provided in this title, a violation of RCW 80.36.510,
80.36.520, or 80.36.524 constitutes an unfair or deceptive act in trade or commerce
in violation of chapter 19.86 RCW, the consumer protection act. Acts in violation of
RCW 80.36.510, 80.36.520, or 80.36.524 are not reasonable in relation to the
development and preservation of business, and constitute matters vitally affecting the
public interest for the purpose of applying the consumer protection act, chapter 19.86
RCW. It shall be presumed that damages to the consumer are equal to the cost of the
service provided plus two hundred dollars. Additional damages must be proved.
to intervening motions relating to discovery and standing, AT&T‟s Motion was never
On July 28, 2005, T-Netix filed a Motion for Summary Determination (T-Netix‟s
Motion.) In its Motion, much like that of AT&T, T-Netix alleges that it was not an
OSP for certain inmate collect calls and that the exemptions of Verizon, Qwest, and
CenturyTel should preclude liability for T-Netix.9
Concurrently, T-Netix filed a Motion for Summary Judgment (Summary Judgment
Motion) with the Superior Court, alleging that the Complainants had suffered no
injury and therefore lacked standing to bring the action.10 On September 6, 2005, the
Superior Court granted T-Netix‟s Summary Judgment Motion and revoked its referral
to the Commission.11 The Superior Court later clarified that the ruling also applied to
AT&T.12 As a result, neither AT&T‟s nor T-Netix‟s Motions before the Commission
On September 7, 2005, T-Netix filed a Motion to Dismiss with the Commission based
on the Court‟s revocation of the referral. On October 28, 2005, the Commission
issued Order 07, granting T-Netix‟s Motion to Dismiss the complaint against both TNetix and AT&T and found that, “a primary jurisdiction referral does not invoke an
agency‟s independent jurisdiction, but is derivative of that of the court in which the
matter is pending.”13
Exhibit T-1HC, at 1.
Judd v. Am. Tel. & Tel. Co., King County Superior Court, No. 00-2-17565-5 SEA, T-Netix’s
Motion for Summary Judgment, July 26, 2005.
Judd v. Am. Tel. & Tel. Co., King County Superior Court, No. 00-2-17565-5 SEA, Order
Granting Defendant T-Netix’ Motion for Summary Judgment, September 6, 2006.
Judd, 136 Wash.App. 1022, not reported in P.3d, (2006).
Judd v. Am. Tel. & Tel. Co., Docket UT-042022, Order 07, Order Granting T-Netix‟s Motion to
Dismiss and Dismissing Complainants‟ Action, ¶ 19, quoting International Ass’n of Heat and
Frost Insulators and Asbestos Workers v. United Contractors Ass’n, Inc., 483 F.2d 384, 401 (3rd
On December 18, 2006, the Washington Court of Appeals reversed the lower court‟s
decision on T-Netix‟s Summary Judgment Motion and remanded the case back to the
Superior Court.14 On December 4, 2007, the Supreme Court of Washington denied TNetix‟s request for review.15 On March 21, 2008, the Superior Court issued an order
reinstating the referral to the Commission for the determination of the issues:
1) Whether AT&T or T-Netix were OSPs, and
2) Whether they violated the Commission‟s disclosure regulations.
On August 21, 2008, the Commission convened a prehearing conference before
Administrative Law Judge Marguerite E. Russell (ALJ).16 On October 2, 2008, the
Commission entered Order 09 establishing a briefing schedule for AT&T‟s and TNetix‟s motions.
The parties requested amendments to the discovery and briefing schedules on several
occasions subsequent to the Commission‟s entrance of Order 09.17
AT&T filed an Amended Motion for Summary Determination (AT&T‟s Amended
Motion) on August 24, 2009.18 On August 27, 2009, T-Netix filed its Amended
Motion for Summary Determination (T-Netix‟s Amended Motion).
Judd, 136 Wash.App. 1022, not reported in P.3d, (2006).
Judd v. Am. Tel. & Tel. Co., 162 Wash.2d 1002, 175 P.3d 1092 (2007).
During scheduling discussions at the prehearing conference, it became clear that the parties did
not agree on the status of the procedural schedule as it existed when the Superior Court rescinded
its referral. Following briefing by the parties, the Commission entered Order 09 finding that both
AT&T‟s and T-Netix‟s Motions were still pending before the Commission and that the
procedural schedule should accommodate decision on the motions.
There were no less than ten requests to modify the procedural schedule from October 2008 to
AT&T neglected to request leave to amend its original pleading. Following a telephonic
conference on August 25, 2009, between the parties and the ALJ, AT&T and T-Netix both filed
motions for leave to amend their original motions for summary determinations, stating that the
original motions were more than 4 years. In Order 21, entered on August 28, 2009, the
Commission granted AT&T‟s and T-Netix‟s request for leave to file amended motions for
On September 10, 2009, Complainants filed a Memorandum in Opposition to
T-Netix‟s and AT&T‟s Amended Motions (Complainants‟ Opposition); T-Netix filed
its Opposition to AT&T‟s Amended Motion (T-Netix‟s Opposition); and AT&T filed
its Response to T-Netix‟s Amended Motion (AT&T‟s Response).
On September 24, 2009, AT&T filed its Reply in Support of its Amended Motion
(AT&T‟s Reply) and T-Netix filed its Reply in Support of its Amended Motion
The Commission, on October 8, 2009, issued Bench Request No. 1 to T-Netix stating
that T-Netix had provided duplicative exhibits, Exhibits 5 and 10, in its original
Motion. Bench Request No. 1 requested that T-Netix file a list of its intended
exhibits to clarify which exhibits should have been attached to the Motion. T-Netix
filed a Response to Bench Request No. 1 on October 12, 2009, acknowledging that
the wrong document had been provided to the Commission as Exhibit 5 and rectifying
that error by including the appropriate document for Exhibit 5 and a list of exhibits
T-Netix intended to file with its Motion.
On January 4, 2010, the ALJ issued Bench Request No. 2 to AT&T, noting that the
company had alleged that it was certified as a local exchange carrier (LEC) by the
Commission, but provided conflicting dates for the certification. Bench Request No.
2 asked that AT&T, inter alia, clarify the date of its certification and provide a copy
of the Commission-issued certificate. On January 15, 2010, AT&T responded to
Bench Request No. 2 stating that it was certificated as a LEC on January 24, 1997, in
Docket UT-960248. AT&T included a copy of its LEC certification, asserting that it
had not surrendered its LEC certificate, nor had the Commission revoked it.
The Commission issued Bench Request No. 3 to AT&T, explaining that AT&T had
advanced the theory of collateral estoppel in response to Complainants arguments
regarding RCW 80.36.520. Bench Request No. 3 requested that AT&T provide a
copy of its Motion to Dismiss filed with the Superior Court and which was the subject
of the Court‟s October 10, 2000, order. AT&T filed its response to Bench Request
No. 3 on February 5, 2010, with a copy of its Motion to Dismiss. AT&T also
included a copy of Verizon‟s Motion to Dismiss, arguing that Verizon had made the
On March 4, 2010, the Commission issued Bench Request No. 4 to T-Netix asking
the company to indicate whether its P-III Premise call platform19 had the ability, from
June 1996 to December 2000, to provide consumers with instructions on how to
receive rate quotes and provide consumers with rate quotes. T-Netix responded to
Bench Request No. 4 and stated that the platform did have the capacity to accomplish
The Commission issued Bench Request Nos. 5 and 6 on March 19, 2010. Bench
Request No. 5 noted that AT&T had alleged that T-Netix had contracted with the
LECs for T-Netix to connect calls from the correctional facilities to local and longdistance service providers and to provide operator services at the correctional
facilities. The Bench Request sought the contract(s) between T-Netix and the LECs
on which AT&T based the allegation. AT&T responded by stating that T-Netix had
not produced any contracts between the LECs and T-Netix for the relevant time
period, but that T-Netix employees and agents had indicated during discovery that
T-Netix had a business relationship with the LECs.
Bench Request No. 6 indicated that Amendment No. 3 to the DOC contract required
T-Netix to remit a twenty-seven percent (27 percent) monthly commission to the
DOC for local calls. The Bench Request asked that T-Netix explain what services or
activities, if any, T-Netix was providing upon which the monthly commission was
based. T-Netix filed its response explaining that it leased facilities to provide local
calls on behalf of AT&T. According to T-Netix, AT&T agreed to reimburse T-Netix
for the commission T-Netix paid on local calls placed after March 3, 1998, from the
five DOC facilities T-Netix served.
In its Motion, T-Netix treated the name of its platform as highly confidential, yet T-Netix
disclosed the name of the computer platform system in its Amended Motion. On January 19,
2010, the Commission issued a Notice of Commission Challenge to Assertion of Highly
Confidential Designation and Notice of Intent to Make Information Public (Challenge Notice).
The Challenge Notice indicated that, since T-Netix had already disseminated the moniker in
filings that are public records, the company had waived its right to designate the information as
highly confidential. The Challenge Notice also stated that the Commission would treat the name
of T-Netix‟s computer platform as public information as of January 29, 2010.
On April 8, 2010, the Commission issued Notice of Final Exhibit List (Notice). The
Notice stated that the attached exhibit list was complete and that each exhibit had
been admitted on the date it was filed with the Commission. The Notice also
requested that the parties file any objection or corrections to the exhibit list by Noon
on April 12, 2010. None of the parties filed objections or corrections to the final
On April 8, 2010, AT&T filed with the Commission its Motion for Leave to File a
Response Regarding Bench Request No. 6 (Motion for Leave) and its Response.20 In
its Motion for Leave, AT&T claims that T-Netix‟s Response to Bench Request No. 6
is “vague, ambiguous, and, particularly with respect to references it makes to AT&T,
misleading.”21 On April 9, 2010, T-Netix filed its Opposition and Response to
AT&T‟s Motion for Leave (T-Netix‟s Opposition and Response). T-Netix asserts
that AT&T has failed to cite to any authority which would allow it to respond to a
bench request directed only to T-Netix.22 T-Netix also alleges that AT&T‟s Response
is misleading, factually incorrect, and that it should be stricken.23
On April 12, 2010, the Commission issued Order 22 denying AT&T‟s Motion for
Leave. The Commission found that AT&T‟s Motion for Leave was lacking in any
real substance and fails to indicate how its supplementation of the record would assist
the trier of fact.
The Superior Court referred two questions to the Commission: 1) whether AT&T or
T-Netix were OSPs and 2) whether each violated the Commission‟s rate disclosure
regulations. Complainants‟ lawsuit, filed in Superior Court, alleges that they received
operator-assisted collect calls from four Washington state correctional facilities and
AT&T‟s pleading was actually captioned “AT&T‟s Unopposed Motion for Leave to File its
Amended Motion for Summary Determination.” The pleading did, however, contain the
appropriate title elsewhere in the text. As T-Netix has indicated, AT&T‟s Motion for Leave was
AT&T‟s Motion for Leave, ¶ 2.
T-Netix‟s Opposition and Response, ¶ 5.
Id., ¶ 6.
were not given the option of hearing rate quotes before accepting the collect calls in
violation of the Commission‟s rate disclosure rules.24 Complainants have alleged that
the Respondents were each responsible, under the Commission‟s regulations,25 for
disclosing the collect calling rates, and that, by failing to comply with the
Commission‟s regulations, the Respondents have violated the WCPA.26 The
Complainants claim that they received the calls in question from June 1996 through
December 31, 2000. The Commission limited the scope of discovery in this matter
In ruling on the Respondents‟ motions, we consider our rule governing summary
determination. WAC 480-07-380(2) provides:
A party may move for summary determination of one or more issues if
the pleadings filed in the proceeding, together with any properly
admissible evidentiary support (e.g., affidavits, fact stipulations,
matters of which official notice may be taken), show that there is no
genuine issue as to any material fact and that the moving party is
entitled to judgment as a matter of law. In considering a motion made
under this subsection, the [C]ommission will consider the standards
applicable to a motion made under CR 56 of the Washington [S]uperior
[C]ourt‟s [C]ivil [R]ules.
As a result, our decision really is two-fold. First, we must review the pleadings and
supporting evidence to ascertain whether there is a dispute as to any question of fact
material to our determination of the issues that cannot be resolved without resorting to
further process, i.e., an evidentiary hearing, to develop additional evidence. Second,
if we can make all findings of fact necessary to a decision on the basis of the
The four correctional facilities are: the Washington State Reformatory (a/k/a Monroe
Correctional Complex), Airway Heights, McNeil Island Penitentiary, and Clallum Bay.
See, WAC 480-120-141.
See, RCW 19.86.010, et seq., and RCW 80.36.530.
See, Order 14 (January 9, 2009).
pleadings and supporting evidence, we consider that evidence in the light most
favorable to the nonmoving party28 and determine whether the moving party is
entitled to judgment as a matter of law.29 We will grant motions for summary
determination only where reasonable minds “could reach but one conclusion from all
The nonmoving party may not rely upon speculation or argumentative assertions in
meeting their burden.31 As the Court of Appeals has stated, “[e]xpert testimony must
be based on the facts of the case and not on speculation or conjecture.”32 CR 56(e)
provides that declarations containing conclusory statements that are unsupported by
facts are insufficient for purposes of summary determination.33
The first issue referred to us under the doctrine of primary jurisdiction is whether
AT&T or T-Netix was an OSP. From 1991 to 1999, WAC 480-120-021defined an
any corporation, company, partnership, or person other than a local
exchange company providing a connection to intrastate or interstate
long-distance or to local services from locations of call aggregators.
The term „operator services‟ in this rule means any intrastate
telecommunications service provided to a call aggregator location that
includes as a component any automatic or live assistance to a consumer
to arrange for billing or completion, or both, of an intrastate telephone
call through a method other than: (1) automatic completion with billing
Activate, Inc., v. State, Dept. of Revenue, 150 Wash.App. 807, 812, 209 P.3d 524 (2009) (citing
Vallandigham v. Clover Park Sch. Dist. No. 400, 154 Wash.2d 16, 26, 109 P.3d 805 (2005).
Activate, 150 Wash.App. at 812, (citing Vallandigham, 154 Wash.2d at 26).
Marshall v. Bally’s Pacwest, Inc., 94 Wash.App. 372, 377, 972 P.2d 475 (1999) (citing Vacova
Co. v. Farrell, 62 Wash.App. 386, 395, 814 P.2d 255 (1991).
Davies v. Holy Family Hospital, 144 Wash.App. 483, 493, 183 P.3d 283 (2008) (citing Seybold
v. Neu, 105 Wash.App. 666, 677, 19 P.3d 1068 (2001).
CR 56(e) and Davies, 144 Wash.App. at 496 (citing Guile v. Ballard Cmty. Hosp., 70
Wash.App. 18, 25, 851 P.2d 689 (1993).
to the telephone from which the call originated, or (2) completion
through an access code use by the consumer with billing to an account
previously established by the consumer with the carrier.34
In 1999, we modified WAC 480-120-021 by, inter alia, removing the exemption of
LECs from the definition of an OSP.
The second question on referral from the Superior Court is, if either T-Netix or
AT&T was an OSP, whether either violated our rate disclosure regulations. This
issue implicates WAC 480-120-141. In 1991, WAC 480-120-141(5)(a)(iv)(A)-(C)
mandated that an OSP:
Identify the [OSP] providing the service audibly and distinctly at the
beginning of every call, and again before the call is connected,
including an announcement to the called party on calls placed
collect…The [OSP] shall immediately, upon request, and at no charge
to the consumer, disclose to the consumer: (A) a quote of the rates or
charges for the call, including any surcharge; (B) the method by which
the rates or charges will be collected; and (C) the methods by which
complaints about the rates, charges, or collection practices will be
In 1999, we revised WAC 480-120-141 so that OSPs were required to verbally advise
consumers how to receive a rate quote. Specifically, the modified regulation provided
Before an operator-assisted call from an aggregator location may be
connected by a presubscribed OSP, the OSP must verbally advise the
consumer how to receive a rate quote, such as by pressing a specific
key or keys, but no more than two keys, or by staying on the line.35
WAC 480-120-021 (1991).
WAC 480-120-141(2)(b) (1999).
The facts material to our determination of the legal questions before us are those that
tell us what whose responsibility it was to provide the operator services at the
correctional facilities and how they went about providing such services. Based on the
affidavits, deposition transcripts, and other documents attached as exhibits to the
parties‟ various pleadings, we find the following facts well established in this matter.
These facts are summarized below.
In 1992, AT&T entered into a contract (DOC contract) with the State of Washington
Department of Corrections (DOC) to provide telecommunication services and
equipment to various inmate correctional institutions and work release facilities.36
The DOC contract authorized AT&T to subcontract with three LECs, Verizon, Qwest,
and CenturyTel, for the provision of public telephone sets and equipment, lines,
Dictaphone recording/monitoring equipment,37 and local and intraLATA telephone
service and operator service.38 AT&T would only provide “0+” interLATA and
international operator assisted long distance service on its own.39
In their subcontracts, the LECs agreed to provide public pay telephones and
equipment and deliver interLATA traffic originating from the public pay telephones
While the DOC contract addresses public telephones made available to inmates for collect calls
as well as other public telephones located on the facility premises for use exclusively by staff and
visitors, Complainants‟ suit and thus the Commission‟s examination are limited to the former.
Both AT&T and T-Netix have detailed the special challenges involved in providing inmate
telecommunications services. See, Exhibit A-12, ¶ 6 and Exhibit A-19HC, ¶¶ 6-10. Inmate
telecommunications systems generally need to be equipped with call control features such as call
monitoring and recording equipment. See, Exhibit A-19HC, ¶ 7. They formerly employed live
operators but now use automated operators, thereby avoiding the possibility of threats and
manipulation by inmates to which live operators were subjected. Id. Furthermore, inmates are
only allowed to call pre-approved telephone numbers in order to prevent harassment of witnesses
and intimidation of the law enforcement community. Id., ¶ 9. As such, inmate
telecommunications systems need to be able to screen the telephone numbers inmates attempt to
See, Exhibit A-8.
to AT&T‟s Point of Presence (POP) over switched access facilities.40 The LECs also
contracted to complete all “0+” local and intraLATA telephone calls, provide various
live or mechanical operator announcements, and provide call timing and call blocking
Amendment No. 2 to the DOC contract, executed in 1995, required AT&T to
“arrange for the installation of certain call control features for intraLATA,
interLATA, and international calls” which AT&T was to carry.42 The Amendment
mandated that AT&T would “install and operate such call control features through its
subcontractor Tele-Matic Corporation.43 Further in 1995, the Commission recognized
the acquisition of Tele-Matic Corporation by T-Netix.44 T-Netix was retained to
provide a computerized platform at the correctional facilities that would feature call
control provisions as well as various support functions for the platform.45
In 1997, T-Netix sold its P-III Premise platform to AT&T.46 In Washington state, the
P-III Premise platform was used for all local and intraLATA calls, which are the only
Exhibit A-9 (for Verizon), ¶ 3(a) and (b); Exhibit A-10 (for Qwest), ¶ 3(a) and (b); and Exhibit
A-11 (for CenturyTel), ¶ 4(a) and (b). CenturyTel was responsible for delivering both
interLATA and intraLATA traffic.
Exhibit A-9, ¶ 3(c), (g), and (h); Exhibit A-10, ¶ 3(c), (g), and (h); and Exhibit A-11, ¶ 4(c),
(g), and (h). CenturyTel was only responsible for completion of “0+” local calls, not “0+”
Exhibit A-8, Amendment No. 2, ¶ 1.
Exhibit C-13, at 1.
Exhibit T-25, ¶ 13; Exhibit A-1HC, ¶¶ 12, 13; and Exhibit C-1C, ¶¶ 18, 19.
Exhibit T-1HC, ¶ 9. See Exhibit T-2C. The issue of who owns the platform is at the crux of
any determination of which Respondent acted as the OSP. Yet, the parties have designated the
June 4, 1997, contract, where T-Netix sells title of the platform to AT&T, as confidential, and
they have redacted the entire document. This has served to complicate the Commission‟s
discussion of the contract immeasurably. The few references to the content of the contract used
by the Commission are taken directly from the parties‟ pleadings and not the contract itself.
However, these references have been verified using the contract.
types of calls Complainants have documented in this case.47 T-Netix was responsible
for installing the platform, adjusting the call restriction settings, formatting the
records of the inmate calls, and providing on-site administrative support.48
A typical call from the correctional facilities interacting with T-Netix‟s P-III platform
would have progressed as follows:
1. The inmate lifts the handset and dials the desired “0+” destination number
and, if required, a personal identification number.49
2. The platform screens the number against a list of prohibited numbers.50
3. For a valid call, the platform prompts the caller to record his name.51
4. The platform will seize a dedicated outbound trunk and, after receiving [a]
dial tone, will outpulse52 the destination number as a 1+ call.53
5. The LEC end office switch will then route the call to either an
interexchange carrier (IXC) switch or to a LEC‟s switch, depending on the
jurisdictional nature of the call and which carrier is the designated
telecommunications provider for the type of call being made.54
6. If the called party answers the telephone, the platform will announce that
they have a call from an inmate and then play the inmate‟s recording.55
Id. Exhibit A-19HC, ¶ 12a-e.
Exhibit A-19HC, ¶ 18(a) and (b) and Exhibit A-20HC, ¶ 14.
Exhibit A-20HC, ¶ 14 and Exhibit A-19HC, ¶ 18(c).
Exhibit A-20HC, ¶ 14 and Exhibit A-19HC, ¶ 18(d). T-Netix explains that, if the call is
prohibited, the platform will play a rejection message and return simulated dial tone to allow for
another attempt. Id.
Outpulsing is the process of transmitting address information over a trunk from one switching
center to another. BLACK‟S LAW DICTIONARY 583, (19th ed. 2003).
Exhibit A-20HC, ¶ 14 and Exhibit A-19HC, ¶18(e).
Exhibit A-20HC, ¶ 14 and Exhibit A-19HC, ¶ 18(f).
Exhibit A-20HC, ¶ 14 and Exhibit A-19HC, ¶ 18(g).
7. The platform then gives the recipient the option of accepting the call or
rejecting the call.56
8. While this interaction is proceeding, the platform does not make a
connection for the audio path between the inmate and the called party.57
9. If the recipient accepts the call, the platform will complete the audio
path and the call proceeds, as would a normal call.58
10. The platform performs multiple fraud detection tests throughout the
duration of the call.59
11. When the call has ended, the platform will record the call details, including
the date, time, originating phone number, terminating phone number,
length of call and distance of call. Call detail records for each call are
periodically downloaded from the platform to a centralized T-Netix data
center where it is formatted and sent to the LEC or IXC that owns the
T-Netix provided support for the platform including: installation and removal of the
call control platforms, performance of diagnostic checks and housekeeping functions
of the systems; implementation of revisions to the call restrictions; formatting call
records for the service providers for billing purposes; and provision of on-site
personnel to administer the equipment.61
In 1997, AT&T and the DOC agreed to amend their original contract (Amendment
No. 3) to delete CenturyTel as a subcontractor and include T-Netix as a station
provider.62 Amendment No. 3 also terminated CenturyTel‟s subcontract in its
Id. and Exhibit A-19HC, ¶ 18(h).
Exhibit A-19HC, ¶ 18(i).
Exhibit A-20HC, ¶ 14 and Exhibit A-19HC, ¶ 18(j) and (k).
Exhibit T-25, ¶ 13.
Exhibit A-8, Amendment No. 3.
While the Superior Court referred two questions to the Commission, the Motions
themselves only address the first question, i.e., whether AT&T or T-Netix was the
OSP. The second referral question, whether either AT&T or T-Netix violated the
Commission‟s OSP rate disclosure regulations, is not addressed in this order. The
parties did not raise this issue in their pleadings and did not present the Commission
with facts upon which it could make a determination regarding this issue. Following
the review period for this initial order, a prehearing conference will be scheduled to
determine how best to address this next phase of the referral.
A. DID AT&T OR T-NETIX PROVIDE THE CONNECTION BETWEEN THE
CALL AGGREGATOR LOCATIONS AND LOCAL OR LONG-DISTANCE
SERVICE PROVIDERS AND THUS SERVE AS THE OSP?
1. AT&T’s Arguments
AT&T asserts that it was not the OSP, as defined by the Commission‟s rule, for any
of the calls in question since it did not provide the connection between the call
aggregators, i.e., the prisons, and the intrastate long distance or local service
providers. As a result, AT&T contends that it should not be held liable for any failure
to disclose rates.64
AT&T notes that the DOC contract did not anticipate that AT&T would provide the
connection of inmate telephone calls from the call aggregator to its point of presence
(POP).65 According to AT&T, the LEC contracts required the LECs to make operator
announcements “ … for all personal calls made from Inmate Public Telephones that
the call is coming from a prison inmate and that it will be recorded and may be
Exhibit A-1HC., ¶ 5.
Id., ¶ 10.
monitored and/or intercepted.”66 AT&T asserts that the LECs hired T-Netix to
“connect calls from the prisons at issue to local or long-distance service providers and
provide the operator services for such calls.”67 AT&T claims that T-Netix provided
these services to the LECs through its P-III Premise platform.68 However, AT&T
admits that the assertion that the LECs hired T-Netix to provide operator services is
based solely on the statement of T-Netix employees and agents who testified during
discovery to a business relationship between T-Netix and the LECs.69
AT&T asserts that T-Netix was the OSP, through the software platform that provided
the operator services.70 In fact, AT&T argues that Complainants have already
admitted that T-Netix was the OSP that provided operator services for the calls in
question.71 AT&T relies on the statement of T-Netix‟s employee, J.R. Roth, who
stated that “[a]s the OSP we verbally advise the consumer how to receive a rate
quote.”72 Further, T-Netix petitioned the FCC for a waiver of its obligation to
announce actual rates to consumers because T-Netix alleged that it did not have the
technical capabilities to do so.73 AT&T claims that, in its petition, T-Netix admitted
that it served access lines and was the “sole service provider in … these facilities.”74
Exhibit A-9, ¶ 3(g), Exhibit A-10, ¶ 3(g), and Exhibit A-11, ¶ 4(g).
Exhibit A-1HC, ¶ 15. AT&T‟s Response to Bench Request No. 5.
AT&T‟s Response to Bench Request No. 5, ¶ 2. AT&T states that it does not possess any
contracts in which T-Netix agreed to provide operator services on behalf of the LECs. Id.
According to AT&T, the LECs acknowledged that they were required under contract to connect
the calls at the facilities and provide operator services when they sought waivers of the
Commission‟s rate disclosure regulation. Exhibit A-1HC, ¶ 26. By requesting waivers, AT&T
argues that the LECs were recognizing that they or their agent, T-Netix, were the OSP at the
Exhibit A-1HC, ¶ 23.
Exhibit A-45HC, ¶ 4. AT&T states that T-Netix‟s Opposition is largely duplicative of TNetix‟s own Amended Motion which AT&T claims it responded to at length in AT&T‟s
Opposition. As a result, AT&T asserts that it has incorporated by reference its Opposition and
will only address any newly raised arguments found in T-Netix‟s Opposition. Id. n.1.
Exhibit A-22HC, ¶ 40, citing Exhibit A-40.
Exhibit A-22HC, ¶ 42, citing Exhibit A-42, ¶¶ 1, 5-8.
AT&T argues that T-Netix‟s distinction between the Commission‟s definition of
„operator services‟ and what T-Netix labels as „operator functionality‟ is a non
sequitur.75 AT&T contends that T-Netix is attempting to divert attention from the
Commission‟s regulatory definition of operator services and instead define operator
services as the provision of switching, routing, access, and transport services.76
AT&T argues that the Commission‟s definition of an OSP does not include the
provision of switching, routing, access, or transport services, and T-Netix has not
explained how these are related to the definition.77
AT&T asserts that it is critical to establishing the identity of the OSP to determine
who provided the operator services, especially since the Commission‟s definition of
an OSP included the term “operator services” and defined it.78 AT&T maintains that
in doing so, the Commission recognized that an OSP is a provider of operator
services.79 AT&T argues that T-Netix‟s witness, Alan Schott, testified that the
services T-Netix provided had historically been performed by a live operator.80
T-Netix‟s P-III Premise platform replaced live operators by performing the services
In addition to performing the operator services, AT&T maintains that T-Netix also
provided the connections of the calls to the local or long-distance service providers.
According to AT&T, the Commission‟s definition of an OSP does not look at every
Id. citing Exhibit A-42, ¶ 8.
Exhibit A-22HC, n.3.
Id. ¶ 14.
Exhibit A-22HC, ¶ 13.
Exhibit A-22HC, ¶ 12, citing to Exhibit A-19HC, ¶¶ 5 and 8.
connection made during the path of a telephone call.82 The only relevant connection,
AT&T surmises, is the initial connection that allowed the call to move from the call
aggregator to either the local or long-distance service provider.83 AT&T cites to
Complainants‟ witness, Kenneth Wilson, who detailed the path an inmate-initiated
collect call would take.84 Mr. Wilson specifically stated that “[f]or a valid call, the
platform will seize an outbound trunk, and after receiving dial tone will outpulse the
destination number as a 1+ call.”85
AT&T asserts that T-Netix‟s witness, Robert Rae, testified that the company‟s
platform acted as a gatekeeper which allowed calls to go through only if certain
criteria were fulfilled.86 Mr. Wilson stated that “[i]f the [called party] accepts the call,
the [T-Netix] platform will complete the audio path and the call proceeds as would a
normal call.”87 Defining the term “connection” as “how a call routes through the
network, the various pieces of equipment and trunks or lines or links in a call,”88 Mr.
Wilson associated connection with completion of the call “… [with] the connection
[being] made when the call is complete from end to end.”89
T-Netix acknowledged, according to AT&T, that it connected all of the calls from the
correctional facilities to the local or long-distance carriers through the P-III
platform.90 In fact, AT&T cites to the testimony of Scott Passe, T-Netix‟s witness,
who stated that the P-III platform was “the interface between the inmate and the …
Exhibit A-22HC, ¶ 17.
Exhibit A-1HC, ¶ 23 (citing to Exhibit A-20HC, ¶ 14.).
Exhibit A-20HC, ¶ 14.
Exhibit A-22HC, ¶ 8, citing to Exhibit A-24HC, 224:10-24.
Exhibit A-20HC, ¶ 14.
Exhibit C-9, at 42:10-12.
Id. at 42:15-19.
Exhibit A-22HC, ¶ 8.
[public telephone switched network].”91 Further, AT&T points to T-Netix‟s data
request response that “T-Netix equipment made a connection to the access line
provider‟s facilities at the network interface device.”92
AT&T disagrees with T-Netix‟s contention that the OSP must be a common carrier,
stating that T-Netix‟s argument is based on the federal definition of an OSP, not the
Commission‟s.93 According to AT&T, T-Netix mistakenly assumes that, since the
Commission stated in an order that it was “adopt[ing] the FCC‟s verbal disclosure
requirement on an intra-state basis” that the Commission was also adopting the FCC‟s
OSP definition.94 AT&T argues that, had the Commission wanted to limit OSPs to
common carriers, it would have.95
The Commission‟s order indicating that it adopted the federal verbal rate disclosure
requirement does not have any impact upon the definition of an OSP.96 AT&T asserts
that the Commission‟s adoption of a verbal rate disclosure based on the FCC‟s
requirement had no bearing on whom the Commission intended to perform that
requirement.97 AT&T cites to a Washington Supreme Court case in support of this
assertion which mandated that “a provision of [a] federal statute cannot be grafted
onto [a] state statute where the Legislature saw fit not to include such provision.”98
AT&T vigorously disagrees with Complainants‟ attempts to hold AT&T responsible
for T-Netix‟s failure to provide rate disclosures to consumers. Complainants contend
Id. citing to Exhibit A-23, at 97:8-24.
Id. ¶ 10, quoting Exhibit A-26.
Exhibit A-22HC, ¶ 22.
Id. ¶ 24.
Id. ¶ 23.
Id. ¶ 24.
Id. quoting Nucleonics Alliance v. Wash. Public Power Supply System, 101 Wash.2d 24, 34,
677 P.2d 108, 113 (1984).
that RCW 80.36.520 imposes liability for failure to disclose rates upon any entity that
merely contracts with the OSP. Complainants have cited to RCW 80.36.520 which
The [Commission] shall by rule require, at a minimum, that any
telecommunications company, operating as or contracting with an [OSP]
assure appropriate disclosure to consumers of the provision and the rate,
charge or fee of services provided by an [OSP].99
Complainants also reference RCW 80.36.530 which states, inter alia, that any
“violation of RCW 80.36.520 constitutes an unfair or deceptive act in trade or
commerce in violation of … the consumer protection act.”
AT&T contends that the statute only directs the Commission to establish regulations
imposing that liability.100 Further, as AT&T notes, Complainants have made this
argument before and failed when the Superior Court held that “the [Washington]
legislature intended to create a cause of action … only for violations of the
regulations promulgated by the [WUTC] and did not create a cause of action for
actions beyond or outside the regulations.”101 AT&T points out that, in the 1991
revision of WAC 480-120-021, the Commission explicitly removed the reference
requiring the OSP to be in contractual privity with call aggregators.102 Thus, AT&T
argues that the Superior Court referred limited questions to the Commission and one
of those was not whether AT&T is liable simply based on the fact that it contracted
with an OSP.103
Exhibit A-45HC, ¶ 11.
Exhibit A-45HC, ¶ 12.
Exhibit A-22HC, ¶ 28.
Exhibit A-45HC, ¶ 13.
As a result, AT&T argues that Complainants are collaterally estopped from raising
the argument again.104 The four elements of the doctrine of collateral estoppel,
AT&T explains, are:
(1) Identical issues,
(2) A final judgment on the merits,
(3) The party against whom the plea is asserted must have been a party to or in
privity with a party to the prior adjudication, and
(4) Application of the doctrine must not work an injustice on the party against
whom the doctrine is to be applied.105
AT&T contends that Complainants argument is identical to the previously litigated
issue.106 The Superior Court‟s decision to reject Complainants‟ argument is now
final.107 AT&T argues that Complainants were the plaintiffs in the Superior Court
case, and that preventing Complainants from re-litigating their argument will not
work an injustice since Complainants were given a “full and fair hearing on the
In addition, AT&T contends that a T-Netix witness, Nancy Lee, stated that T-Netix‟s
acquisition of Gateway Technologies, Inc. (Gateway) in 1999 was the acquisition of a
T-Netix competitor.109 According to AT&T, Gateway was certified as an OSP in the
state of Washington, and Gateway acknowledged providing operator services in
Id. ¶ 15.
Id. citing to Malland v. State, Dept. of Retirement Systems, 103 Wash. 2d 484, 489, 694 P.2d
16 (1985) (en banc) and Shoemaker v. City of Bremerton, 109 Wash. 2d 504, 507, 745 P.2d 858
(1987) (en banc).
Id. ¶ 16.
Id. AT&T posits that allowing Complainants to relitigate this argument when the Superior
Court has already rejected it would violate the Fourteenth Amendment of the United States
Constitution. Id, ¶ 17. The Fourteenth Amendment, AT&T argues, prevents entities from being
punished for that which they had no knowledge was prohibited. Id. This, according to AT&T,
violates the company‟s due process.
Exhibit A-22HC., ¶ 41 and Exhibit A-41, ¶ 3.
Washington.110 From these statements, combined with T-Netix‟s receipt of
Gateway‟s OSP certificate, AT&T argues that T-Netix acted as an OSP at the
Finally, AT&T notes that from 1998 to 2003, WAC 480-120-141(5)(a) required that
the OSP provide necessary call detail information to the billing company for billing
purposes.112 AT&T suggests that this regulation would have been unnecessary if the
call provider was the OSP as well.113
2. Netix’s Arguments
T-Netix requests that the Commission find that it was not an OSP for any of the
correctional facilities involved and was not bound by the Commission‟s rate
disclosure regulation. In its original Motion, T-Netix claimed that the LECs acted as
the OSP, and that it only acted as an equipment provider, supplying “customized
computer-based telephone control cards.”114 As proof of the LECs‟ responsibilities,
T-Netix points to the fact that all three LECs, Verizon, Qwest, and CenturyTel,
obtained exemptions and waivers from the Commission‟s rate disclosure
requirements.115 T-Netix indicates that it has been providing “a proprietary platform
that could be programmed to perform [the operator services] automatically” to inmate
OSPs since the late 1980s.116 According to T-Netix, it sold this platform to AT&T,
and the company only operated the platform at the prisons on behalf of AT&T.117
Exhibit A-22HC, ¶ 46.
Exhibit T-1HC, ¶¶ 2, 4. In its Reply, T-Netix clarifies that the LECs were the OSP for local
calls which they switched onto their own facilities and AT&T was the OSP for long-distance calls
since it switched the calls at its POP to its own facilities. Exhibit T-29, ¶ 12.
Exhibit T-1HC, ¶ 3.
Id. ¶ 8.
Exhibit T-13, ¶ 3.
T-Netix disagrees with Mr. Wilson‟s definition of an OSP as based on two criteria:
1) which entity performed the operator services functions and 2) which entity
established an end-to-end connection.118 With regard to the operator services prong,
T-Netix argues that this examination is inappropriate because the regulation “applies
to operator service providers, not operator functionality providers,”119 and the
determination of which entity provided operator services does not assist the
Commission in establishing which entity actually provided the connection discussed
in the regulation.120
T-Netix has raised the issue of the admissibility of Mr. Wilson‟s testimony and argues
that his testimony is irrelevant and immaterial. T-Netix has not specifically
formulated its request that the Commission exclude his testimony in a motion to
strike.121 T-Netix posits that, if the Commission finds that Mr. Wilson‟s opinions are
admissible, then the Commission should refuse to grant AT&T‟s Amended Motion
since Mr. Rae‟s testimony directly contradicts Mr. Wilson‟s and raises a genuine
issue of material fact.122
With regard to the Commission‟s definition of an OSP, T-Netix argues that a
connection to long distance services is established, as corroborated by AT&T‟s
witness, Mark Pollman, “when the LEC delivered the call to AT&T, via intrastate
switched access services ordered by AT&T from the LEC as a carrier, at AT&T‟s
POP.”123 Therefore, T-Netix posits that the Commission‟s query should really be
Exhibit T-25., ¶ 18. T-Netix claims that this would mean that there is no OSP for incomplete
or busy telephone calls. Id.
Id. ¶ 18.
Exhibit T-25 , ¶¶ 32-38.
Id. ¶ 38.
Id. ¶ 19, citing to Exhibit T-16, Tr. 57:1-22, 60:11-61:7.
whether the LEC, connecting to AT&T‟s switched access services, or AT&T,
connecting to its own long-distance network, provided the necessary connection.124
To further bolster its contention that it was never an OSP for the calls in question,
T-Netix points to language in Amendment No. 3 to the original DOC contract which
states that the company would act as a station provider.125 Since a “station” has been
defined by the Commission as “a telephone instrument installed for the use of a
subscriber to provide toll and exchange service,” 126 T-Netix concludes that its
contractual obligation was simply to provide inmate phones.127 This argument,
according to T-Netix, comports with the language of the contract the company
entered into with AT&T in 1997.128 The contract is silent on the question of which
entity had the obligation to fulfill the rate disclosure requirement.129 The 2001
amendment130 to the 1997 AT&T/T-Netix contract specifically mentions for the first
time “that T-Netix was obligated to assist AT&T with rate disclosures.”131
T-Netix denies having any direct relationship to the DOC, the calling parties, or the
call recipients, and states that it maintained a 1:1 ratio between station lines and
trunks to the LEC such that the company was acting only as a gatekeeper for approval
of the calls.132
Exhibit T-1HC, ¶ 15.
Exhibit T-1HC, ¶ 16.
Id. ¶ 17.
Id. ¶ 18.
Id. Exhibit T-6C.
Id. ¶¶ 19-20. T-Netix points out that it was only obligated to provide assistance to AT&T with
the rate disclosures for interstate telephone calls. Id.
Exhibit T-25, ¶¶ 14 and 15.
T-Netix concedes that the Commission‟s OSP regulation does not specifically define
the term “connection” in the regulation.133 Yet, T-Netix notes that AT&T provided
the switching, routing, access, and transport services for intrastate interLATA inmate
collect calls.134 Robert Rae, T-Netix‟s witness, maintains that collect calls from the
correctional facilities in question were connected to local and long-distance services
by the LEC or AT&T, respectively.135
T-Netix contends that the Commission‟s definition of an OSP was never intended to
implicate an entity that provides an end-to-end connection.136 T-Netix admits that the
platform was connected to inmate telephones over a separate plain old telephone
serve (POTS) line to the central office serving the LEC.137 However, T-Netix argues
that the connection that an OSP provides has to occur prior to the call being answered
since unanswered calls and “busy” phone calls have not technically been completed
but they have been connected to an intrastate or interstate long-distance or local
service provider.138 The regulation, insists T-Netix, could have conditioned the OSP
designation on call completion, but it did not.139
T-Netix proposes that, since the Commission‟s rate disclosure regulation is based on
the FCC‟s own verbal rate disclosure requirement, the correctional facilities in
question cannot be call aggregators.140 The company argues that the FCC ruled in
1991 that its regulations did not classify correctional facilities as call aggregators, and
Exhibit T-25, ¶ 17.
Id. citing to Exhibit T-17, ¶ 8 in which Mr. Rae references Alan Schott‟s Supplement
Affidavit, Exhibit A-19HC, which Mr. Rae adopted.
Exhibit T-29, ¶ 6.
Id. ¶ 12.
Id. ¶ 7.
Id. ¶ 9.
Exhibit T-13, ¶ 27.
the agency later adopted a separate rule to correct this deficiency.141 The
Commission, T-Netix notes, did not adopt a separate regulation bringing these
institutions under the Commission‟s definition, as the FCC had.142 T-Netix asserts,
therefore, that calls placed by inmates at correctional facilities are not covered by the
Commission‟s OSP regulations and did not require verbal rate disclosures.143 T-Netix
argues that Complainants‟ assertion that the FCC did not forestall the state
commissions from adopting greater regulations for OSPs is irrelevant. 144 In addition,
T-Netix posits that the Commission has already stated that the definition of the OSP is
intended to closely reflect the federal definition and even provided a point by point
comparison of the two regulations.145
T-Netix argues that, contrary to AT&T‟s assertion, the Commission‟s regulation did
not provide that the „connection‟ in the OSP definition referred both to connecting
long-distance service and connecting to the public switched telephone network
T-Netix stresses that the objective of the Commission‟s OSP regulation has been to
shield the consumer from excessive charges by carriers for calls from aggregator‟s
payphones.147 According to T-Netix, the rationale was that carriers providing long
distance services from aggregator locations would institute high fees because of their
preferred contractual status.148 As a result, T-Netix posits, the Commission adopted
regulations requiring that the OSP insure that the call aggregator posted a notice
stating that: the public phone rates may be higher than normal, which OSP was
Exhibit T-29, ¶ 44.
Exhibit T-13, n.9.
Exhibit T-29, ¶ 13.
Exhibit T-25, ¶ 21.
responsible for the call, and disclosing that, inter alia, the caller may access other
carriers from the public phones.149 The regulations also required that the OSP brand
itself as such at the beginning of the telephone call and provide a rate quote for the
call upon request.150
T-Netix asserts that the regulations themselves require that an OSP must be a
common carrier.151 The Commission‟s regulation implementing the verbal rate quote
in 1999 was based on the FCC‟s rate disclosure requirement, and the FCC specifically
defined an OSP as a common carrier.152 T-Netix also argues that the OSP serving end
user customers is the entity that the Commission required to provide verbal rate
quotes.153 T-Netix cites to the Commission‟s adoption order, Order R- 452, which
provides that OSPs are to resolve service problems directly with the interexchange
carrier or other party responsible for resolving blockage problems.154
To bolster its argument that OSPs must be common carriers, T-Netix points out that
both the 1991 and 1999 versions of WAC 480-120-021 refer to “operator services” as
any intrastate telecommunications service.155 The 1991 and 1999 versions of WAC
480-120-141 mandate that “telecommunications companies” providing operator
Id. ¶ 22, referencing Exhibit A-5.
Id, ¶ 20.
Id. ¶ 23. T-Netix quotes the federal statute as defining a “provider of operator services” to be
“any common carrier that provides operator services or any other person determined by the
Commission to be providing operator services.” Id., citing to 47 U.S.C. § 226(a)(9).
Exhibit T-25, ¶ 24.
Id. ¶ 25, citing to Exhibit A-6.
Exhibit T-29, ¶ 15. WAC 480-120-021 specifically defines “operator services” as “any
intrastate telecommunications service provided to a call aggregator location that includes as a
component any automatic or live assistance to a consumer to arrange for billing or completion, or
both, or an intrastate telephone call through a method other than (1) automatic completion with
billing to the telephone from which the call originated, or (2) completion through an access code
use by the consumer with billing to an account previously established by the consumer with the
services must comply with this and all other Commission telecommunications
regulations.156 T-Netix maintains that the regulations purposely designated OSPs as
telecommunications companies, and thus, common carriers.157 According to T-Netix,
it did not provide any transmission, switching, or access services, and therefore, did
not act as a common carrier.158 The company argues that AT&T and the LECs served
as OSPs under the Commission‟s regulations.159
T-Netix contends that, while it did agree to be a station provider at correctional
facilities that CenturyTel had contracted to serve, none of those facilities originated
any of the calls at issue in this matter.160 T-Netix asserts that the only CenturyTel
facility at issue in this matter is the Clallam Bay Corrections Center, and
Complainants only allege that they received intraLATA calls from this facility.161
T-Netix points out that neither AT&T nor Complainants have asserted that T-Netix
provided intraLATA calling services at the Clallam Bay facility.162
T-Netix notes that the OSP definition also contains an explanation of the term
“operator services.”163 The term “operator services” was defined in WAC 480-120021 as:
any intrastate telecommunications service provided to a call aggregator
location that includes as a component any automatic or live assistance
to a consumer to arrange for billing or completion, or both, of an
intrastate telephone call through a method other than (1) automatic
completion with billing to the telephone from which the call originated,
Id. ¶¶ 17-19.
Id. ¶ 28.
Id. ¶ 29.
Exhibit T-1HC, ¶ 21.
or (2) completion through an access code use by the consumer with
billing to an account previously established by the consumer with the
T-Netix maintains that it did not arrange for billing or completion of an intrastate
telephone call.165 AT&T and the other LECs each billed for calls that they
individually carried.166 T-Netix posits that its only role in the billing process was to
provide call detail records to the billing entity.167 For that matter, T-Netix claims that
call completion was performed through the routing of calls.168 According to T-Netix,
all signaling functions required to complete the call were enabled by the LEC
In a letter to AT&T from T-Netix, the company explains that it would “provision the
local traffic on AT&T‟s behalf.”170 That being said, T-Netix opines that this
obligation “required obtaining the local phone line from the phone to the LEC
switch and billing end users for local calls.”171 Since neither of the Complainants
received a call from any of the correctional facilities affected by the March 1998 letter
to AT&T, T-Netix argues that it could not have been acting as an OSP for the calls
received by the Complainants.172
Id. ¶ 25.
Id. ¶ 26.
Id. ¶¶ 29 and 31.
Id. ¶ 31.
Exhibit T-1HC, ¶ 22 and Exhibit A-12.
. Id. (Emphasis in original).
T-Netix argues that AT&T‟s participation in interLATA collect calls reflects the
company‟s understanding of itself as the OSP.173 The interLATA collect calls in
question were assessed AT&T service rates, were branded as AT&T telephone
calls,174 and were billed on behalf of AT&T by T-Netix.175 T-Netix asserts that it
would be absurd to have the telephone calls branded as AT&T‟s but find that T-Netix
was the ultimate OSP since the Commission‟s regulations were designed to clarify for
the consumer which party was actually providing the services and whose rates would
be applied.176 T-Netix maintains that there can only be one OSP for any given
According to T-Netix, the FCC rule for which it sought a waiver dealt directly with
inmate calling services, not the general OSP rule.178 T-Netix explains that the email
from Mr. Roth which AT&T cites to was taken out of context.179 T-Netix asserts that
Mr. Roth was merely confirming that Verizon was the OSP for prisons located in its
territory and that T-Netix, as the equipment supplier for Verizon, would enable
Verizon to comply with its OSP regulatory responsibilities.180
T-Netix contends that there is no evidence that Mr. Roth qualifies as a “speaking
agent” for T-Netix and thus his statements would not be admissible under Washington
Rule of Evidence (WRE) 801(d)(2).181 According to T-Netix, whether a declarant is a
Exhibit T-25, ¶ 28.
T-Netix acknowledges that it performed this branding function on behalf of AT&T. Id. ¶ 29.
Id. T-Netix admits that it billed the recipients on behalf of AT&T. Id.
Id. ¶ 30.
Id. ¶ 31.
Exhibit T-29, ¶ 63.
Id. ¶ 66.
speaking agent for purposes of WRE 801(d)(2) is a question of preliminary fact
governed by WRE 104(a).182
T-Netix acknowledges that it did petition the Commission for authority to acquire
Gateway‟s OSP certificate, but the company argues that Gateway was not a party to
any of the contracts at issue in this case.183 T-Netix originally petitioned for transfer
of the certificate on January 9, 2001, and the Commission granted it on January 25,
2001.184 Not only was this transfer subsequent to any of the telephone calls received
by the Complainants, T-Netix asserts that Gateway never provided equipment to any
of the four correctional facilities at issue in this case.185
T-Netix asserts that Complainants‟ witness, Mr. Wilson, draws conclusions that are
irrelevant, since they are not based upon the “connection” standard for determining
the OSP and use a theory of the term “connection” that would make the OSP
regulations useless.186 Specifically, T-Netix contends that Mr. Wilson based his
testimony upon an incorrect legal standard, namely that connection occurs at the point
when the call is terminated to the call recipient and an end-to-end connection is
established.187 T-Netix quotes WRE 702 as mandating that “[i]f scientific, technical,
or other specialized knowledge will assist the trier of fact to understand the evidence
or to determine a fact in issue, a witness qualified as an expert by knowledge, skill,
experience, training, or education, may testify thereto in the form of an opinion or
otherwise.”188 According to T-Netix, Mr. Wilson‟s testimony cannot be of assistance
to the Commission.189 In addition, T-Netix argues that the Commission cannot rely
upon Mr. Wilson‟s testimony because he provides a legal opinion in declaring that
Id. See Condon Bros. v. Simpson Timber Co., 92 Wash.App. 275, 285, 966 P.2d 355 (1998).
Exhibit T-1HC, ¶¶ 32-33.
Id. ¶ 34.
Id. ¶ 35.
Exhibit T-25, ¶ 32.
Id. ¶ 34-35.
Id. ¶ 33.
T-Netix, not AT&T, was the OSP.190 According to the company, WRE 704 prohibits
reliance upon expert legal opinions or opinions that address mixed questions of facts
T-Netix quotes AT&T as counseling the Commission in a prior rulemaking to amend
WAC 480-120-021 in 1988, such that, “if the Commission is concerned that a
facilities-based carrier such as AT&T or [Qwest] would attempt to charge a unique
rate to telephone customers of a particular aggregator – beyond the rate offered to the
general pubic [sic] – AT&T suggests that the definition now in WAC 480-12-021
[sic] and WAC 480-120-141 remain.”192 T-Netix points out that the Commission did
as AT&T proposed and declined to revise its regulatory definition.193
3. Complainants’ Arguments
According to Complainants, T-Netix not only provisioned equipment to the
correctional facilities but also engaged in the regulated activity of providing operator
services.194 T-Netix, asserts Complainants, performed the duties of an OSP and
received remuneration for its performance.195 Complainants allege that T-Netix
controlled the P-III platform which provided operator services such as identifying the
corrections facility and the name of the inmate, branding the call, and detecting threeway calls.196 Though T-Netix argues that Amendment No. 3 only designated the
company as a “station provider,” Complainants point out that T-Netix is obligated
under Amendment No. 3 to pay a commission to the DOC for local calls for which it
Id. ¶ 37.
Exhibit T-13, ¶ 22 and Exhibit T-21 at 4.
Exhibit C-1C, ¶ 41.
Id. ¶ 19, 22 and Exhibit C-6C.
would not have to if it were simply an equipment supplier.197 The company engaged
in a regulated activity and should have to abide by the rules of doing so.198
With regard to T-Netix‟s claim that the rate disclosure waivers the LECs received
demonstrate that these companies were the OSPs, Complainants declare that there is
no evidence that the LECs performed OSP duties at the facilities in question.199
Instead, Complainants contend that it was T-Netix‟s platform that was present and
operating at each of these locations and providing operator services.200
Complainants point out that AT&T understood that it was the OSP when it sought a
waiver of its own for some of the OSP rules.201 Additionally, they claim that AT&T
attempted to comply with the Commission‟s rate disclosure requirements in 2000
after it was sued by the Complainants.202 As is evidenced by a letter dated August 25,
2000, AT&T and T-Netix engaged in negotiations to implement rate disclosures for
intrastate inmate telephone calls in the state of Washington.203 This attempt at
compliance with the rate disclosure regulations, argues Complainants, shows that
AT&T knew it was also the OSP and that it had a responsibility to comply with the
OSP regulations along with T-Netix.204 Complainants allege that T-Netix was
AT&T‟s subcontractor, and AT&T had ultimate control over T-Netix to ensure that
the rate quotes were provided.205
Id. ¶ 53 and Exhibit A-8, Amendment No. 3.
Id. ¶ 41.
Id. ¶ 57.
Id. ¶ 57.
Id. ¶ 21. See, Exhibit C-5.
Id. ¶ 28.
Exhibit C-1C, ¶ 25.
Id. ¶ 28.
With regard to AT&T‟s argument that it is not liable under RCW 80.36.520 for the
failures of T-Netix to provide rate disclosures, Complainants argue that AT&T has
failed to demonstrate that the Commission intended to exclude companies that
contract their OSP responsibilities from compliance with the OSP regulations.206
Complainants maintain that T-Netix provided the connection to intrastate
telecommunications services from call aggregator locations.207 In this instance,
Complainants note that the Court of Appeals has found that “[w]ords of a statute,
unless otherwise defined, must be given their usual and ordinary meaning.”208 The
logical meaning of the word „connection‟ is when the call is completed end-to-end.209
Complainants‟ witness, Mr. Wilson, asserts that, traditionally, when an operator
receives a collect call request, the operator would pull another line to contact the
called party for verification that this party will accept the charges for the call.210 Once
the called party has agreed to accept the charges, the operator connected the calling
party and the recipient by “plugging them together, completing the call.”211
Complainants maintain that this is the “connection” referred to in the statute and the
Complainants contend that T-Netix‟s interpretation of “connection” would mean that
the call is connected even before the called party listens to the voice prompt asking if
they will accept the call or possibly before the call transmission reaches the called
party.213 Complainants assert that “[t]he T-Netix platform is the gateway for the call
Id. ¶ 38.
Id. ¶ 41.
Id. ¶ 44, quoting East v. King County, 22 Wash.App. 247, 253, 589 P.2d 805 (1978).
Id. ¶ 46 and Exhibit C-2HC, ¶ 9.
Id. ¶ 48.
going anywhere in the system” and if “the call placed by the inmate [does not pass]
the initial security checks on the T-Netix platform, the call doesn‟t get beyond the
prison walls.”214 Thus, Complainants contend that it is this platform that creates the
Complainants disagree with T-Netix‟s assertion that prisons cannot be considered call
aggregators under the Commission‟s regulations. Complainants argue that “[t]here
has never been any doubt that prisons are among the places covered by the rate
disclosure statute and the Commission‟s rate disclosure rules.”216 According to
Complainants, the Commission specifically included “prisons” in its 1989 regulation,
WAC 480-120-141(2)(b), when defining OSPs as those carriers with which hotels,
motels, hospitals, prisons, campuses, et cetera., contract to provide operator services
to its customers.217 The Commission‟s 1991 modification of the regulation stated in
its introductory remarks that “[p]rison service waivers can be accomplished on a caseby-case basis.”218 For that matter, T-Netix was granted a waiver of some of its OSP
responsibilities in 1993 including the requirement to include informational stickers on
its inmate payphones stating how to contact the operator.219
In addition, Complainants argue that while the FCC opined that the term “call
aggregator” did not include inmate payphones, the FCC also clarified that “states are
not precluded from adopting greater safeguards or more stringent rules regarding OSP
services and aggregator practices with regard to intrastate operator services than those
that we have adopted herein for interstate services.”220 Contrary to T-Netix‟s
suggestion that the Commission was required to follow the FCC‟s lead in adopting a
separate and specific rule setting out the inclusion of correctional facilities in the rate
Id. ¶ 49.
Id. ¶ 7.
Id. ¶ 62.
Id. ¶ 63.
Id. ¶¶ 64-65 and Exhibit C-12.
Id. ¶¶ 70-71, citing to Exhibit T-20, ¶ 54.
disclosure requirements, Complainants assert that would have been unnecessary given
the Commission‟s 1989 regulation, adopted before the FCC‟s determination.221
Decision. Only T-Netix has alleged that there is any genuine issue of material fact
and that AT&T‟s Amended Motion should not be granted. Complainants and AT&T
did not but instead argue that the T-Netix‟s Motion and Amended Motion should be
denied because the company is not entitled to judgment as a matter of law. However,
T-Netix has failed to demonstrate that Complainants‟ witness, Mr. Wilson, and its
own witness, Mr. Rae, have presented a genuine issue of material fact. T-Netix does
not cite to any specific examples of the two witnesses disagreeing on any material
facts. The selected portions of Mr. Wilson‟s deposition which we received from
T-Netix support the conclusion that Mr. Wilson was attempting to shed light on a
question of law, namely the interpretation of one of our regulations and the term
“connection” contained therein. T-Netix also points to Mr. Wilson‟s assertion that an
OSP necessarily provides operator services. Again, it is apparent from the context of
Mr. Wilson‟s remarks that he is endeavoring to flesh out a legal definition, not raise
contentious facts. Statutory construction is a question of law, not a question of fact.222
T-Netix‟s lack of proof as to any genuine issue of material facts leaves us with no
choice but to decline to accept T-Netix‟s argument. We find that no genuine issues of
material facts exist, and thus move on to the merits of each party‟s Motion.
In addressing the first part of the Superior Court‟s referral, namely whether either
AT&T or T-Netix were the OSP, we first examine the regulations at issue. During
the time frame which Complainants claim to have received operator-assisted inmate
telephone calls, WAC 480-120-021, defined an OSP as:
any corporation, company, partnership, or person other than a local
exchange company providing a connection to intrastate or interstate
long-distance or to local services from locations of call aggregators.
The term „operator services‟ in this rule means any intrastate
telecommunications service provided to a call aggregator location that
Id. ¶ 74.
In re Detention of Strand, 167 Wash.2d 180, 186, 217 P.3d 1159 (2009) (citing to In re Det. Of
Martin, 163 Wash.2d 501, 506, 182 P.3d 951 (2008).
includes as a component any automatic or live assistance to a consumer
to arrange for billing or completion, or both, of an intrastate telephone
call through a method other than (1) automatic completion with billing
to the telephone from which the call originated, or (2) completion
through an access code use by the consumer with billing to an account
previously established by the consumer with the carrier.223
The 1999 version of the regulation eliminated the LEC exemption.224 As a result, if
we find that AT&T was the OSP, we will then ascertain whether or not the company
falls within the LEC exemption as AT&T claims.
Critical to our analysis is what, specifically, the term “connection” means within the
regulatory definition of an OSP. The parties have proposed contradictory
interpretations. Therefore, it is imperative that we examine the meaning of the OSP
definition and the “connection” requirement.
When interpreting the meaning of agency regulations, the courts look no further than
the plain language of a facially unambiguous administrative regulation.225 An agency
regulation is unambiguous if it is susceptible to only one reasonable interpretation
after considering the entire statutory scheme, including related regulations.226
The plain meaning of a statutory provision is discerned from the ordinary meaning of
the language at issue, the context of the statute in which the provision is found,
related provisions, and the statutory scheme as a whole.227 The courts have found that
WAC 480-120-021 (1991).
WAC 480-120-021 (1999).
State, Dept. of Labor & Indus. v. Tyson Foods, Inc., 143 Wash.App. 576, 582, 178 P.3d 1070
(2008), citing to Cockle v. Dept. of Labor & Indus., 142 Wash.2d 801, 807, 16 P.3d 583 (2001).
Tyson Foods, Inc., 143 Wash.App. at 582, citing to Wash. Cedar & Supply Co., Inc. v. Dept. of
Labor and Indus., 137 Wash.App. 592, 599-600, 154 P.3d 287 (2007) and Dept. of Labor and
Indus. v. Gongyin, 154 Wash.2d 38, 45, 109 P.3d 816 (2005).
Det. of Strand, 167 Wash.2d at 188 (citing to Udall v. T.D. Escrow Servs., Inc., 159 Wash.2d
903, 909, 154 P.3d 882 (2007) (quoting to Tingey v. Haisch, 159 Wash.2d 652, 657, 152 P.3d
a word should not be read in isolation when attempting to ascertain plain meaning.228
There is no part of a statute that should be viewed as inoperative or superfluous unless
that part is the result of clear error or mistake.229 Rules of statutory construction are
also applicable to the interpretation of agency regulations.230
T-Netix‟s interpretation of the term is flawed when the regulation is read in its
entirety. First, our definition of an OSP in WAC 480-120-021 never references
switching, routing, access, and transporting as services necessary to the classification
of an OSP. For that matter, “connection” cannot indicate, under the regulatory
definition, every time a call is switched or transported during the journey of a
telephone call. A typical telephone call can go through two, three, or more carriers
and if the OSP were to be the company that transported or switched the call, there
would be several OSPs for one call. We would never be able to determine who the
OSP was, and that result obviously cannot be what the regulation intends.
In addition, our inclusion of the definition of “operator services” within the definition
of an OSP is quite telling. As the case law indicates, both regulatory definitions must
be read together.231 As a result, an OSP is both a “corporation, company, partnership,
or person other than a local exchange company providing a connection to intrastate or
interstate long-distance or to local services from locations of call aggregators” and the
merchant of “any intrastate telecommunications service provided to a call aggregator
location that includes as a component any automatic or live assistance to a consumer
to arrange for billing or completion, or both, of an intrastate telephone call through a
method other than (1) automatic completion with billing to the telephone from which
Id. (citing State v. Roggenkamp, 153 Wash.2d 614, 623, 106 P.3d 196 (2005) (quoting State v.
Jackson, 137 Wash.2d 712, 729, 976 P.2d 1229 (1999)).
Id. at 189, (citing to Klein v. Pyrodyne Corp., 117 Wash.2d 1, 13, 810 P.2d 917 (1991)).
Linville v. State,137 Wash.App. 201, 209, 151 P.3d 1073 (2007) (citing State v. Reier, 127
Wash.App. 753, 757-58, 112 P.3d 566 (2005).
Silverstreak, Inc., v. Dep’t. of Labor and Indus., 159 Wash.2d 868, 884, 154 P.3d 891 (2007),
where the Court found that interpretations must “give meaning to every word in a regulation.”
the call originated, or (2) completion through an access code use by the consumer
with billing to an account previously established by the consumer with the carrier.”232
The P-III Premise platform linked the calling party at the prison to the local or longdistance provider. If the inmate attempted to dial out using a number that was
prohibited, it was the platform that prevented that connection to the local or longdistance service from being provided. It was the admitted gatekeeper for calls from
the correctional facilities.
We find that the P-III platform performed the operator services at the correctional
facilities. It validated the telephone numbers the inmates dialed, recorded the call
details, and provided automated announcements to the call recipients indicating that
they had received a call from a particular inmate. The call flow diagram that T-Netix
provided supports our analysis as does Mr. Wilson‟s description of the collect call‟s
path. An examination of the call path indicates that the P-III platform took the call
and, after verifying that the call was valid and not prohibited, out pulsed it as a „1+‟
call. Based on this analysis, we find that the owner of the P-III platform, having
connected the „0+‟ call to the local or long-distance service provider and outpulsing it
as a „1+‟ call, is the OSP.
Even without examining the schematics of an inmate-initiated collect call, the
contracts themselves point to the owner of the platform as an OSP. In construing a
written contract, the basic principles require that: 1) the intent of the parties controls;
2) the court ascertains the intent from reading the contract as a whole; and 3) a court
will not read an ambiguity into a contract that is otherwise clear and unambiguous.233
Interpretation of an unambiguous contract is a question of law.234
See, WAC 480-120-021. T-Netix has drawn a confounding distinction between operator
services and operator functions in contending that it did not provide operator services. However,
T-Netix fails to coherently distinguish between these two terms and has cited to no precedent for
the distinction in the first place. Therefore, whether T-Netix labels them operator services or
operator functions, an OSP is, by logic, a provider of operator services as defined under the
Mayer v. Pierce County Med. Bureau, 80 Wash.App. 416, 420, 909 P.2d 1323 (1995) (citing
to Felton v. Menan Starch Co., 66 Wash.2d 792, 797, 405 P.2d 585 (1965)).
Id. quoting Absher Constr. Co. v. Kent School District No. 415, 77 Wash.App. 137, 141, 890
P.2d 1071 (1995).
The DOC contract provided that AT&T would provide the equipment and services as
required by the DOC‟s request for proposal. For reasons unknown to the
Commission, the DOC contract also mandates that the LECs will provide the operator
services at the prisons in question. That being said, it was AT&T, not the LECs, who
purchased the P-III Premise call control platform from T-Netix for use at each of the
Amendment No. 2 to the DOC contract, executed in 1995, provided that AT&T
would install and operate such call control features through its subcontractor, TeleMatic Corporation. Tele-Matic was later acquired by T-Netix. Of particular
importance, the contract between AT&T and T-Netix, which was executed on June 4,
1997, provides that AT&T bought the platform from T-Netix and took title to it.
T-Netix solely provided the technical and training services. AT&T has failed to
establish otherwise. In fact, the August 2000 letter from AT&T to T-Netix clearly
shows that AT&T had certain responsibility for the implementation of rate quotes
using the platform for the Washington State correctional facilities. Therefore, AT&T,
through the P-III platform, provided the connection between the call aggregator and
long-distance or local service providers.
In contrast to AT&T‟s assertion that the LECs had retained T-Netix to provide
operator services at the correctional facilities in question, the company has provided
us with no evidence that this is the case. In fact, the only contract we have clearly
demonstrates that it was AT&T who purchased title to the P-III platform.
In addition, the legislature and the Commission‟s order adopting the OSP rules
indicated that the OSP disclosure rules were created, at least in part, to protect the
consumer from accepting collect calls without being properly informed as to who was
providing the service and at what charge. This is the reason that the regulations
required the OSP to ensure that the call aggregator with whom it has contracted posts
a notice of how the consumer may obtain rate information. Specifically, the rates
over which the Commission expressed concern would have been AT&T‟s for longdistance service and the LECs‟ for local service, not T-Netix‟s. T-Netix did not
directly contract with the DOC. Additionally, the rule provided that the OSP must
disclose the identity of the OSP providing the service to the consumer. It was
AT&T‟s service that was carrying the call to the call recipient and it was AT&T‟s
name that was branded during the telephone call. AT&T presented no evidence that
T-Netix charged the Complainants for any of the calls they received or that T-Netix
provided Complainants with telecommunications services that required branding. To
have required T-Netix to announce its own name as the OSP would have been
nonsensical and serve only to confuse the consumer.
It should be emphasized that call connection is not the same as call completion.
There are many connections made throughout the journey that a telephone call takes.
Call completion is just one of these. According to the rules, the crucial connection in
establishing the OSP is the connection from the correctional facilities to the
appropriate LEC service provider or to AT&T. The definition does not require that
the OSP complete the call from end-to-end or even provide the connection between
the calling party and the call recipient.
T-Netix has incorrectly argued that, since our regulations mirror the federal statute235
and the FCC‟s regulations,236 and as the FCC did not include prisons per se in the
definition of call aggregators until 1998, that prisons are not a part of our definition.
While the FCC did find that the federal law, the Telephone Operator Consumer
Service Improvement Act (TOCSIA) did not intend for the term “aggregator” to
include correctional facilities, T-Netix overlooks the fact that the federal statute and
RCW 80.36.520 have several fundamental differences. First, TOCSIA‟s language
defining an aggregator does not include any examples of these entities, whereas RCW
80.36.520 provides a list of aggregators including four enumerated examples as well
as the important caveat that these four are not exclusive.
Further, TOCSIA contains a much more specialized and limited definition of call
aggregators than RCW 80.36.520 or any of our regulations. TOCSIA provides that an
aggregator “in the ordinary course of its operations, makes telephones available to the
public or to transient users of its premises, for interstate telephone calls using a
provider of operator services.”237 When the FCC determined that TOCSIA did not
Exhibit T-13, ¶ 30. The federal statute is the Telephone Operator Consumer Services
Improvement Act of 1990 (TOCSIA), 47 U.S.C. § 226.
Id. See, 47 C.F.R. §§ 64.703-708.
47 U.S.C. § 226(a)(2).
apply to inmate-only phones at correctional facilities, it focused, in particular, on the
fact that inmates are not members of “the public” and are not “transient users of [the
facility‟s] premises.”238 RCW 80.36.520 and the associated regulations do not
contain such narrowly tailored provisions.239
The cases cited by T-Netix to advance its theory that our regulation like does not
apply to correctional institutions, are inapposite. The decisions in State v. Bobic and
State v. Williams support the proposition that a state statute that is “substantially
similar” to a federal statute carries the same construction as the federal law.
However, these cases can be distinguished from the instant case. The court in Bobic
noted that the Washington statute in contention “does not clearly indicate whether the
Legislature intended to punish a defendant multiple times for a single conspiracy.”240
The Commission‟s intent to include prisons within the definition of a call aggregator
is clear from our order adopting the OSP regulations in 1991, after the FCC‟s rules
were adopted and its order issued. In that order, the Commission stated that “[p]rison
service waivers can be accomplished on a case-by-case basis, so no express provision
is required.”241 There is no question that the Commission intended to include
correctional facilities in the regulatory scheme.
In Williams, the Court of Appeals found that the statutory definition of a “security”
was substantially identical to the federal definition, and in fact, was “basically derived
from the federal act.”242 First, the state statute at issue in Williams did not clearly
identify whether patent and royalty interests were included within the definition of a
“security,” and thus the court found it necessary to interpret the statute using
legislative history.243 The Commissions‟ rule, on the other hand, clearly indicated
Exhibit T-24, at 2752, fn 30.
T-Netix also points to a letter from the Commission Staff which compares the FCC‟s
regulations with our own. However, as the April 30, 1991, letter clearly points out, “this draft is
a staff document.” Exhibit T-23, at 1.
State v. Bobic, 140 Wash.2d 250, 263, 996 P.2d 610 (2000).
Exhibit A-5, at 107.
State v. Williams, 17 Wash.App. 368, 371, 563 P.2d 1270 (1977).
See, Williams, 17 Wash.App. at n 1.
that a call aggregator means a “hotel, motel, hospital, prison, campus, pay telephone,
etc.”244 In addition, the definition of a call aggregator is not “substantially identical”
to the FCC‟s rule. T-Netix admits that the FCC‟s rules were implemented in 1991, at
which time our regulations already stated that OSPs provided services to prisons.245
While the Commission did adopt the OSP definition to more closely reflect the
federal definition, T-Netix has provided no indication that the Commission‟s call
aggregator definition was intended to mirror the FCC‟s. In fact, the Commission‟s
1991 call aggregator definition proclaims that these entities “[make] telephones
available for intrastate service to the public or to users of its premises, including, but
not limited to, hotels, motels, hospitals, campuses, and pay phones.”246 In 1991, the
FCC‟s rule provided that an aggregator is “any person that, in the ordinary course of
its operations, makes telephones available to the public or to transient users of its
premises, for interstate telephone calls using a provider of operator services.”247
Whereas the federal rule does not set out specific examples of call aggregators, the
Commission‟s rule does.
Each of the parties has raised arguments with questionable relevancy to the issues that
the Superior Court referred to this Commission. Complainants argue that AT&T
sought and was granted a waiver of the OSP rules and therefore must have been an
OSP under the Commission‟s rules. AT&T asserts that T-Netix received a waiver
from the FCC‟s OSP rules and so T-Netix must have been the OSP in question.
T-Netix points out that the LECs requested and were given waivers so they must be
the OSPs. If the request for a waiver was enough to establish OSP liability at every
facility that a company operated, there would be at least three OSPs for each of the
calls at issue. Respondents and the LECs may or may not have believed that they
were the OSPs responsible for telephone calls placed from correctional facilities
around the state. The Commission‟s orders waiving the OSP regulations do not
Exhibit A-5, at 112, (Emphasis added). WAC 480-120-141(3).
See, Exhibit A-4, at 74, WAC 480-120-141 (1989).
Exhibit A-5, at 109, WAC 480-120-021 (1991) and (1999).
47 U.S.C. § 226(a)(2).
specify at which correctional facilities the companies were providing OSP services.
Further, at least one company, AT&T, has stated that it filed its request in an
abundance of caution, uncertain at that point whether or not it would be acting as the
OSP under the DOC contract. Even viewing the waivers in a light most favorable to
Complainants, they have not presented evidence to indicate that the waiver of AT&T,
or for that matter, those of the LECs or T-Netix at the federal level, demonstrates the
companies‟ OSP status. Thus, the waivers establish only that the companies involved
were attempting to protect themselves in case they were the OSP. The waivers alone
are not demonstrative proof that any of the parties were the OSP.
AT&T also raised the irrelevant issue of T-Netix‟s acquisition of Gateway, a
certificated OSP. AT&T argued that one of T-Netix‟s witnesses, Nancy Lee, claimed
that T-Netix was in direct competition with Gateway, an OSP, such that T-Netix must
also be an OSP. This, alone, does not demonstrate that T-Netix was an OSP under the
Commission‟s rules. While Ms. Lee may have argued that Gateway and T-Netix
were competitors, Ms. Lee does not state that T-Netix provided operator services to
the four institutions we are examining. For that matter, T-Netix‟s acquisition of
Gateway‟s OSP certificate does not indicate, and none of the parties has alleged, that
Gateway provided the operator services at the institutions in question. Likewise,
AT&T‟s argument that Mr. Roth, a T-Netix employee, admitted that T-Netix was the
OSP proves little except what one employee believes. Our OSP definition is clearly
controlling law and does not rely on popular belief in classifying the OSP.
T-Netix‟s arguments against the reliance on Mr. Wilson‟s testimony and Mr. Roth‟s
e-mail are procedurally inappropriate. Pursuant to WAC 480-07-375(2), these
arguments should have been framed as motions to strike in a separate pleading apart
from its Opposition. As T-Netix‟s arguments are procedurally deficient, they are
With regard to AT&T‟s contention that Complainants are collaterally estopped from
asserting its theory of liability based on RCW 80.36.520, the Supreme Court of
Washington has noted that there are four elements to the doctrine of collateral
1) Identical issues;
2) A final judgment on the merits;
3) The party against whom the plea is asserted must have been a party to or in
privity with a party to the prior adjudication; and
4) Application of the doctrine must not work an injustice on the party against
whom the doctrine is to be applied.
Complainants clearly state in their Opposition that:
The statute directing compliance with the rate disclosure rules
established by the Commission requires that those disclosures be made
“by any telecommunications company, operating as or contracting
with an [OSP]. RCW 80.36.520. Here, to the extent that AT&T was
not the OSP itself, it clearly contracted with T-Netix, who it states was
In its 2000 decision, the Superior Court determined that the rate disclosure statutes,
RCW 80.36.510, .520, .524, and .530, and the Commission‟s rules do not create a
separate cause of action under the WCPA for violations of the statutes.249 Put another
way, the claim against Respondents must stem from the Commission‟s rules, not from
a statute, including one that directs the Commission, not the telecommunications
providers, to impose disclosure regulations upon those “contracting with” an OSP.250
We find that the issue Complainants raise in their Opposition is identical to the issue
previously decided by the Superior Court.
As to the second prong of the collateral estoppel test, there must have been a final
judgment on the merits of the issue. The Court of Appeals251 and the Supreme
Exhibit C-1C, ¶ 32. (Emphasis in original).
Judd v. AT&T, 116 Wash.App. at 766.
Id. and Exhibit C-1C, ¶ 37. This is of particular importance to Complainants since our
regulations do not provide for liability of those “contracting with” an OSP.
See, Judd, 116 Wash.App. at 763.
Court252 affirmed the trial court‟s decision. Thus, the courts have already resolved the
Complainants were the party in both actions and there is no indication that applying
collateral estoppel against the Complainants will work an injustice since they have
already had at least three previous opportunities to make the same argument. AT&T
has met its burden of proof, and we find that the Complainants are collaterally
estopped from raising their argument regarding RCW 80.36.520.
In summary, we find that the nonmoving parties have presented no genuine issue of
material fact. Further, AT&T, having purchased the P-III Premise software platform
from T-Netix on June 4, 1997, the platform which connected the long-distance and
local service providers to the call aggregators and provided the operator services to
the four correctional facilities, was the OSP from June 4, 1997 on. We find that
T-Netix provided service and training for the platform but did not hold title to it. In
addition, we find that correctional facilities are included within the regulatory
definition of call aggregators, and Complainants are collaterally estopped from
relitigating their argument that RCW 80.36.520 imposes liability upon an entity that
contracts with an OSP.
B. WAS AT&T A LEC FOR PURPOSES OF THE COMMISSION’S OSP
DEFINITION, AND THUS EXEMPT FROM THE RATE DISCLOSURE
AT&T claims that it was a LEC from 1996 to the present and was therefore exempt
from the OSP disclosure regulations.253 AT&T argues that the comments to the 1991
rule clearly state the Commission‟s intention to focus on non-LECs.254 According to
AT&T, it was certified a LEC by the Commission from January 1997 to the present.
Thus, AT&T claims that it cannot be held liable for compliance with the OSP
disclosure regulations during this time period.255
See, Judd v. AT&T, 152 Wash.2d at 204.
Exhibit A-1HC, ¶ 19.
Exhibit A-1HC, ¶ 20, and Exhibit A-12, ¶ 12.
Complainants acknowledge that the Commission‟s rate disclosure rules exempted
LECs from the definition of an OSP from 1991 to 1999, when the regulation was
revised, and thus the rate quote requirements.256 Yet, Complainants contend that
AT&T was not acting as a LEC during the brief period of time when LECs were
exempt from providing inmates with rate disclosures.257 AT&T‟s own witness, Ms.
Gutierrez, admitted that the company did not provide LEC services at any time under
the DOC contract to any of the correctional facilities.258 As such, Complainants argue
that AT&T should not be allowed to now hide behind its LEC certificate to avoid
responsibility as an OSP.259
Complainants maintain that AT&T refers to the LECs separate and apart from
itself.260 In neither its Response to T-Netix‟s Amended Motion nor its Reply does
AT&T counter the Complainants‟ allegation that it was not functioning as a LEC in
these circumstances and should not be permitted to claim the LEC exemption under
the Commission‟s OSP definition.
Decision. We find that the LEC exemption within the OSP definition does not apply
to AT&T, a carrier who holds certification as both an interexchange carrier261 and a
LEC,262 since AT&T was not acting as a LEC in the matter before us. Furthermore,
allowing the company to appropriate this exemption would produce an absurd result.
When it filed its Amended Motion, AT&T included as an exhibit the Commission‟s
order adopting revisions to WAC 480-120-021, which created the LEC exemption.263
Exhibit C-1C, ¶ 4.
Id. ¶ 40.
Id. and Exhibit A-12, ¶ 12.
See, Exhibit A-22HC, ¶¶ 4 and 36, and Exhibit A-45HC, ¶¶ 13, 20, and 23.
See, AT&T‟s Response to Bench Request No. 2, at 1.
Id. at 2.
See, Exhibit A-5.
In that order, the Commission stated that the reason for the LEC exemption was that,
“[c]onsumers often expect that they are using their LEC when they use a pay phone;
requirements that apply to non-LEC companies to inform the consumer that [they are]
not the LEC is reasonable.”264 AT&T was not acting as a LEC in the correctional
facilities in question and the consumers would, therefore, have no reason to believe
that they were using AT&T‟s services absent disclosure.
The Supreme Court has stated on occasion that “statutes should receive a sensible
construction to effect the legislative intent and, if possible, to avoid unjust and absurd
consequences.”265 If we accepted AT&T‟s argument, interexchange carriers would be
able to escape regulation under the OSP definition simply because they possess LEC
certification, not because they were providing local services. This would circumvent
the disclosure requirement and produce an absurd result. For this reason, as well as
the company‟s failure to defend its argument in either its Response or Reply, we find
that AT&T does not qualify for the LEC exemption under WAC 480-120-021 (1991).
C. DID AT&T AND T-NETIX ESTABLISH A PRINCIPAL/AGENT
RELATIONSHIP SUCH THAT AT&T WOULD BE LIABLE FOR ANY
VIOLATION OF COMMISSION LAW THAT T-NETIX MAY HAVE
AT&T has asserted that Complainants erroneously rely upon agency law to argue that
AT&T is responsible for T-Netix‟s failure to comply with the disclosure regulations.
According to AT&T, T-Netix was, at most, an independent contractor under the DOC
contractual scheme.266 As AT&T points out, “a principal is only liable for the acts of
its agents, not its independent contractors.”267 AT&T notes that there are several
Id. at 107.
State v. Vela, 100 Wash.2d 636, 641, 673 P.2d 185 (1983) (citing to Crown Zellerbach Corp.
v. Department of Labor & Indus., 98 Wash.2d 102, 653 P.2d 626 (1982); Whitehead v.
Department of Social & Health Servs., 92 Wash.2d 265, 595 P.2d 926 (1979).
Exhibit A-45HC., ¶ 24.
Id. citing to Getzendaner v. United Pac. Ins. Co., 52 Wash.2d 61, 67, 322 P.2d 1089 (1958)
and Gaines v. Pierce County, 66 Wash.App. 715, 725, 834 P.2d 631 (1992).
factors that Washington courts examine in determining whether an agency
relationship exists, including:
1) the extent of control the employer may exert over the details of the work;
2) whether or not the one employed is engaged in a distinct occupation or
3) whether the work is usually done under the direction of the employer or by a
4) whether the employer supplies the tools and the place of work for the
5) whether the parties believe they are creating an agency relationship.268
AT&T notes that T-Netix exerted control over its own work product, “working
autonomously by any means, mode, or manner it found most suitable.”269 AT&T
contends that T-Netix‟s own witness, Mr. Rae, acknowledged that T-Netix decided
how frequently its own site administrators visited the correctional facilities and that
he saw nothing to indicate that AT&T had input into that decision.270
AT&T asserts that T-Netix operates its own business apart from AT&T, that T-Netix
performs specialized functions that AT&T cannot provide, that T-Netix controlled its
proprietary platform, and that both believed that their business dealings were among
two, independent contractors.271 For this last assertion, AT&T relies on the 1991
contract between the two where T-Netix admitted that it was serving as an
Id. ¶ 25, quoting Kroshus v. Koury, 30 Wash.App. 258, 263-4, 633 P.2d 909 (1981) (citing
RESTATEMENT (SECOND) OF AGENCY § 220(2) (1958)).
Id. ¶ 27.
Id. citing to Exhibit A-48HC, 131:4-133:18.
Id. ¶ 29.
Id. citing to Exhibit A-43, § 14.5.
AT&T also contends that consideration of Complainants‟ vicarious liability theory
exceeds the scope of the Superior Court‟s referral.273 The Commission was not
directed to determine whether AT&T could be held liable for T-Netix‟s failure to
provide rate quotes to consumers.274 Further, AT&T notes that the Commission has
already concluded that its authority in this matter is constrained and “does not invoke
the independent jurisdiction of the agency.”275 According to AT&T, the principal
behind the doctrine of primary jurisdiction is that the administrative agency is better
able to address certain technical questions which touch upon the agency‟s expertise.276
As AT&T notes, Complainants‟ theory of vicarious liability does not involve the
Commission‟s technical expertise and is a legal question that the Superior Court is
capable of addressing.277
Complainants assert that AT&T is still responsible for providing rate disclosures
despite having contracted away the responsibility to T-Netix.278 Pursuant to
Amendment No. 2 to the DOC contract, it was AT&T‟s responsibility to install and
operate the call control features through its subcontractor, Tele-Matic, which later
became T-Netix.279 AT&T, according to Complainants, is liable if its subcontractor
fails to comply with the law.280 Complainants argue that AT&T contractually agreed
Id. ¶ 31.
Id. ¶ 32, quoting Complainants‟ assertion which the Commission agreed with in Judd v.
AT&T, et. al., Order No. 5, Order Denying T-Netix‟s Motion for Summary Determination and to
Stay Discovery, ¶ 29 (July 18, 2005).
Id. ¶ 33, citing to Tenore v. AT&T Wireless Servs., 136 Wash.2d at 345.
Exhibit C-1C, ¶ 20.
Id. ¶ 10, citing to Exhibit A-8, Amendment No. 2.
Id. ¶ 28 and Exhibit C-2HC, ¶ 21(j). Specifically, the call control features verified that the
inmate was not attempting to call a prohibited telephone number and would inform the call
recipient that the calling party was an inmate and play the inmate‟s name. Exhibit C-2HC, ¶ 13.
The platform providing the call control features would also connect the audio talk path if the call
recipient accepted the collect call. Id.
to provide telephone services that were in compliance with the law.281 Complainants
state that “[t]raditional agency law holds that a principal is not relieved of its
obligations by hiring an agent to perform in its stead.”282 Then, in a perplexing move,
Complainants assert that there is no need to apply agency law in establishing AT&T‟s
responsibility to ensure that its subcontractor performed its obligation.283
Decision. We find that AT&T is correct. The question of whether an agency
relationship existed is outside the scope of the questions referred to us by the Court.
There is no specialized expertise necessary for making a determination of the
existence of such a relationship. As a result, we decline to make a determination on
Based on the foregoing, we find that the P-III Premise platform provided the
connection between long-distance and local services and the correctional facilities.
As the owner of this platform, AT&T provided the connection and was, therefore, the
OSP for the correctional facilities. AT&T did not act as a LEC at any of the facilities
at issue in this case and does not qualify for the LEC exemption to the OSP regulatory
definition. We still have yet to hear evidence on whether AT&T, as the OSP, violated
our disclosure regulations. Following the review period for this initial order, we will
issue a prehearing conference notice to discuss the procedural schedule for that phase
of the referral.
T-Netix, having sold the platform to AT&T and solely providing technical services
and training for the platform, is not the OSP. Thus, we will not address whether TNetix violated any of our OSP regulations at this time
Exhibit C-1C, ¶ 33.
Id. ¶ 32.
FINDINGS OF FACT
In 1992, AT&T Communications of the Pacific Northwest, Inc., entered into a
contract with the State of Washington Department of Corrections to provide
telecommunication services and equipment for various inmate correctional
institutions and work release facilities.
Due to the unique challenges involved in providing inmate
telecommunications services, the original contract was amended in 1995 to
require AT&T to arrange for the installation of call control features for
intraLATA, interLATA, and international calls through its subcontractor,
In 1995, the Commission recognized the acquisition of Tele-Matic
Corporation by T-Netix, Inc.
In 1997, T-Netix and AT&T contractually agreed that AT&T would purchase
title to the P-III Premise software platform from T-Netix and that T-Netix
would solely provide support and training for the platform.
The platform provided call control services including: screening the dialed
number against a list of prohibited telephone numbers; if the number is not
prohibited, seizing a dedicated outbound trunk and outpulsing the destination
number as a 1+ call; and if the recipient accepted the call, the platform would
complete the audio path.
AT&T was not acting as a local exchange company for any of the calls placed
at the four correctional facilities.
AT&T possessed the ability to direct T-Netix to modify the P-III platform.
The parties have not provided sufficient evidence to support a decision as to
whether AT&T violated the Commission‟s rules governing operator service
CONCLUSIONS OF LAW
Summary judgment is properly entered if there is no genuine issue as to any
material fact and that the moving party is entitled to judgment as a matter of
law. WAC 480-07-380(2). CR 56(c).
In resolving a motion for summary judgment, a court must consider all the
facts submitted by the parties and make all reasonable inferences from the
facts in the light most favorable to the nonmoving party. Activate, Inc., v.
State, Dept. of Revenue, 150 Wash.App. 807, 812, 209 P.3d 524, 527 (2009)
(citing Vallandigham v. Clover Park Sch. Dist. No. 400, 154 Wash.2d 16, 26,
109 P.3d 805 (2005).
With regard to AT&T‟s and T-Netix‟s Motions for Summary Determination,
none of the nonmoving parties raised questions of material fact as to the role
of Respondents in connecting the calls in question from the correctional
Connection, based on an examination of the call schematics and the plain
meaning of the regulation, occurs after the P-III Premise platform verifies that
the call is valid and not prohibited, and when the platform passes the „0+‟ call
to the local or long-distance service provider by outpulsing it as a „1+‟ call.
The P-III Premise platform provided the connection between the intrastate or
interstate long-distance or local services and the correctional facilities. WAC
480-120-021(1991) and (1999).
AT&T, as the owner of the platform, was the operator service provider from
June 4, 1997, the date of the execution of the General Agreement for the
Procurement of Equipment, Software, Services, and Supplies Between TNetix, Inc. and AT&T Corp.
T-Netix was not the OSP for the correctional institutions involved in this case.
AT&T does not qualify for the LEC exemption under WAC 480-120-021.
Call aggregators, as defined by WAC 480-120-021, include correctional
The Commission should schedule a prehearing conference to address the
procedural steps to address the second question posed by the Superior Court.
THE COMMISSION ORDERS:
AT&T Communications of the Pacific Northwest, Inc.‟s Amended Motion for
Summary Determination, which requests that the Commission find that AT&T
was not an operator service provider, is denied in part.
T-Netix, Inc.‟s Motion and Amended Motion for Summary Determination are
Dated at Olympia, Washington, and effective April 21, 2010.
WASHINGTON UTILITIES AND TRANSPORTATION COMMISSION
MARGUERITE E. FRIEDLANDER
Administrative Law Judge
NOTICE TO THE PARTIES
This is an Initial Order. The action proposed in this Initial Order is not yet
effective. If you disagree with this Initial Order and want the Commission to
consider your comments, you must take specific action within the time limits
outlined below. If you agree with this Initial Order, and you would like the
Order to become final before the time limits expire, you may send a letter to the
Commission, waiving your right to petition for administrative review.
WAC 480-07-825(2) provides that any party to this proceeding has twenty (20)
days after the entry of this Initial Order to file a Petition for Administrative
Review. What must be included in any Petition and other requirements for a
Petition are stated in WAC 480-07-825(3). WAC 480-07-825(4) states that any
party may file an Answer to a Petition for review within (10) days after service of
WAC 480-07-830 provides that before entry of a Final Order any party may file
a Petition to Reopen a contested proceeding to permit receipt of evidence
essential to a decision, but unavailable and not reasonably discoverable at the
time of hearing, or for other good and sufficient cause. No Answer to a Petition
to Reopen will be accepted for filing absent express notice by the Commission
calling for such answer.
RCW 80.01.060(3) provides that an initial order will become final without
further Commission action if no party seeks administrative review of the initial
order and if the Commission fails to exercise administrative review on its own
One copy of any Petition or Answer filed must be served on each party of record
with proof of service as required by WAC 480-07-150(8) and (9). An Original
and nine (9) copies of any Petition or Answer must be filed by mail delivery to:
Attn: David W. Danner, Executive Director and Secretary
Washington Utilities and Transportation Commission
P.O. Box 47250
Olympia, Washington 98504-7250