DICKINSON WRIGHT PLLC

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1 DICKINSON WRIGHT PLLC COUNSELLORS AT LAW 215 S. W ASHINGTON SQUARE, SUITE 200 L ANSING, M ICHIGAN T ELEPHONE: (517) FACSIMILE: (517) May 8, 2006 J OHN M. D EMPSEY jdempsey@dickinsonwright.com Via E-file Mary Jo Kunkle Executive Secretary Michigan Public Service Commission 6545 Mercantile Way Lansing, MI Re: In the matter of Ameritech Michigan s submission on performance measures, reporting, and benchmarks, pursuant to the October 2, 1998 order in Case No. U MPSC Case No. U Dear Ms. Kunkle: Enclosed for filing in the above-referenced case is AT&T Michigan s Reply to Exceptions of Climax Telephone Company And CMC Telecom, Inc., and Proof of Service. If you should have any questions, please contact me. Very truly yours, JMD:jkt Enclosure cc: All Parties of Record John M. Dempsey LANSING v30 C o u n s e l l o r s A t L a w D ETROIT B LOOMFIELD H ILLS L ANSING G RAND R APIDS A NN A RBOR W ASHINGTON, D.C.

2 STATE OF MICHIGAN BEFORE THE MICHIGAN PUBLIC SERVICE COMMISSION Ameritech Michigan's submission on performance ) measurements, benchmarks, and reporting in ) compliance with the October 2, 1998 Order in ) Case No. U MPSC Case No. U ) ) AT&T MICHIGAN S REPLY TO EXCEPTIONS OF CLIMAX TELEPHONE COMPANY AND CMC TELECOM, INC. Pursuant to the Notice of Proposal For Decision filed April 10, 2006 ("Notice"), Michigan Bell Telephone Company, d/b/a AT&T Michigan, submits this reply to the exceptions filed by Climax Telephone Company and CMC Telecom, Inc. ( Climax/CMC ). The exceptions filed by Climax/CMC should be rejected for a number of reasons. A. Climax/CMC's exceptions were not timely filed. The Notice specified the time for filing of exceptions as Monday, April 24, On that date, according to the Commission's website, Climax/CMC filed a document entitled "Exceptions to the Proposal for Decision." On Wednesday, April 26, 2006, again according to the Commission's website and the filing letter served on all parties, Climax/CMC filed, with no explanation as to its tardiness or request to accept a late filing, a document purporting to be "Attachment A to the original Climax Telephone Company and CMC Telecom, Inc.'s Exceptions to the Proposal for Decision." Pursuant to Rule 341(2) of the Commission's Rules of Practice and Procedure, MAC R (2), "[i]f a party does not file exceptions to a proposal for decision within the time

3 permitted... any objection to the proposal for decision is waived." Subsection (4) of the same Rule requires that "[m]aterials incorporated by reference shall be attached." Consistent with this Rule, the Notice specified the following: At the expiration of the period for filing of exceptions, an Order of the Commission will be issued in conformity with the attached Proposal for Decision and will become effective unless exceptions are filed seasonably or unless the Proposal for Decision is reviewed by action of the Commission. To be seasonably filed, exceptions must reach the Commission on or before they are due. Both of these provisions track the requirements of Section 81 of the Administrative Procedures Act, MCL (3). The Climax/CMC exceptions were not filed completely, timely, or seasonably. 1 Thus, the filing failed to comply with all the requirements cited above. Climax/CMC made part of its filing on the day required April 24 and filed the remainder of its exceptions two days later April 26. Pursuant to the Commission's own rule, the Notice, and the APA, Climax/CMC has waived its ability to file exceptions. The Commission should reject the exceptions out of hand, lacking jurisdiction or authority to consider them. 2 B. Climax/CMC s request for remedy payments back to 2003 violates the Court of Appeals' mandate. By requesting additional remedy payments from AT&T Michigan on the ground that the Commission s decision to eliminate the K table on March 26, 2003 was appropriate and correct, Climax/CMC fails to cite any authorities in support of this request and ignores legal 1 2 "Seasonably" means "occurring in good or proper time." Similarly, because no other party filed a timely exception on this issue, all such parties have waived any exception. 2

4 authorities that directly contradict their position. Climax/CMC Exceptions at 3. Their argument, based on the appropriateness or correctness of the Commission's March 26, 2003 Order (and August 25, 2003 Order on rehearing), has already been definitively rejected by the Michigan Court of Appeals. The Court decided that the Commission's 2003 Orders were not appropriate or correct when it reversed those Orders in its May 10, 2005 Opinion in Case No ( May 2005 Opinion ). This reversal means that the Commission's 2003 decisions to eliminate the K table are null and void. Sumner v General Motors Corp (On Remand), 245 Mich App 653, 664; 633 NW2d 1 (2001) (noting that to reverse a judgment means to "overthrow it by contrary decision, make it void, undo or annul it for error" quoting Black's Law Dictionary (6th ed), p 1319); id at 665 (noting that "reverse" "describes an appellate court's change to the opposite result from that by the lower court in a given case" quoting A Dictionary of Modern Legal Usage (2d ed), p 632). Reversal also means that the Michigan Remedy Plan with the K table component is and has been effective since 2001, when the Commission lawfully approved them. Michigan Educational Employees Mutual Ins Co v Morris, 460 Mich 180, 189; 596 NW2d 142 (1999) ("[T]he general rule is that judicial decisions are to be given complete retroactive effect...") (internal quotations omitted). Nothing in the May 2005 Opinion suggested that, despite concluding the Commission acted outside the scope of its authority, the Court's judgment operated only prospectively or with only limited retroactive effect. Further, because neither Climax, CMC, nor any other party sought further appellate review from the May 2005 Opinion, it is binding in this remand proceeding. Nor is this proceeding an appropriate forum in which to award remedy payments for any alleged noncompliant performance that may have occurred in the past. As the Court of Appeals also made clear, the Remedy Plan sets forth the adverse consequences of certain acts or 3

5 omissions and does not involve punishment for a past violation or a penalty. May 2005 Opinion at 4. Climax/CMC request monies based on a claim that AT&T Michigan provided discriminatory service in the past; therefore, these CLECs are not asking the Commission to award them monies under the existing Remedy Plan. Instead, they are asking the Commission to expand the Remedy Plan so that, for the first time ever, it includes payments representing past instances of discriminatory conduct. The Michigan Telecommunications Act ("MTA") precludes the Commission from taking this step. MTA Section 601, MCL (1), requires that any remedy or penalty for a past violation be preceded by a hearing in which the Commission finds a person has violated" the Act. It requires the Commission to provide notice and hold a full contested case hearing and find evidence that each and every remedy payment is based on AT&T Michigan s violation of the MTA. This evidentiary hearing requirement is not consistent with the Remedy Plan s liquidated damages provisions, which assume as a matter of law that damages have been incurred and require AT&T Michigan to pay remedies without a hearing or evidence of a violation. CMC/Climax Attachment A, at 5. The Commission lacks jurisdiction and authority to provide Climax/CMC with either the financial or the procedural relief they seek. The Court of Appeals made clear that the Commission s decision to eliminate the K table in 2003 exceeded its authority. May 2005 Opinion at 6. Further, the Commission has no authority under the MTA to eliminate the K table retroactively. Contrary to the implication of the exceptions, the Commission's authority is prospective only. Moreover, the August 1, 2005 order remanding this case to the ALJ for evidentiary proceedings framed the issue as to whether the K table "should be eliminated in order to better ensure that [AT&T] Michigan allows the [CLECs] to purchase network elements on a 4

6 nondiscriminatory basis." (p. 4) 3 Eliminating the K table as of 2003 would do and could do nothing to alter the level of performance that AT&T Michigan already delivered in that prior time period. In short, such a request is unlawful, beyond the scope of the Commission's remand order and jurisdiction, violative of the Court of Appeals May 10, 2005 Opinion, and must be rejected. C. The PFD correctly recognized that there was no evidentiary basis for a decision to award additional remedy payments back to Even if the Commission could lawfully reach the issue presented by Climax/CMC in their untimely exceptions (which AT&T Michigan denies), these CLECs are wrong to argue that their submissions to the ALJ could provide a basis for eliminating the K table from the Michigan Remedy Plan beginning in As the Court of Appeals made clear, it decided to reverse the Commission s 2003 Orders eliminating the K table because the Commission lacked authority to make that change to the Michigan Remedy Plan in The Commission's 2003 Orders were unlawful because they eliminated the K table without citing or developing a firm evidentiary basis for concluding that [AT&T Michigan] invited such change by some degree of failure to fulfill its obligation to provide the CLECs with nondiscriminatory access and services. May 2005 Opinion at 6. On remand, the Commission directed the ALJ to conduct a hearing and gather evidence on this issue. August 1, 2005 Order at 4. As the PFD makes clear, evidence presented at the hearing provides no basis for finding that AT&T Michigan invited change by failing to meet its nondiscrimination obligations during the 2003 to 2005 time period. That issue 3 By contrast, the August 1, 2005 order did not remand for any consideration of whether the K table "should be eliminated in order to remedy any past instances of discriminatory conduct." 5

7 was outside the immediate scope of this proceeding, PFD at 5 n10, and the ALJ addressed only whether the K table should be eliminated on a going-forward basis. See PFD at 91. Climax/CMC s presentation to the ALJ provides no basis for a conclusion different from that reached in the PFD. Their exceptions do not even cite any evidence related to the level of performance that AT&T Michigan provided from 2003 to present, much less attempt a showing that this performance was discriminatory so as to invite change during that time period. Instead, this is an issue these CLECs never addressed in their submissions to the ALJ. The CLECs witness, Dr. Ankum, did not even make a claim of diminished performance in 2003 or Tr (As explained in AT&T Michigan s exceptions, Dr. Ankum also failed to show discriminatory performance after the K table was reinstated in 2005). 4 Because there is no record evidence of discriminatory performance to these CLECs from 2003 to present, there is no basis for awarding Climax/CMC any payments designed to compensate them for discrimination during this time period. Thus, from 2003 to the present time, the record contains no evidence to cure the fatal evidentiary deficiency in the Commission s 2003 Orders. Nor can Climax/CMC rescue their position by pointing to the PFD s discussion of remedy payments as the best available estimate of damages CLECs incur from discriminatory performance. Exceptions at 3; PFD at p That discussion simply states that liquidated damages required by the Remedy Plan are merely a proxy, as failure to meet a given performance measure provides no meaningful way to evaluate actual damages. PFD pp AT&T Michigan also incorporates by reference arguments in its opening and reply briefs to the ALJ and exceptions to this Commission, both of which show the lack of evidentiary basis for any decision to eliminate the K table on this record. The Climax/CMC exceptions cite to the wrong page of the PFD for this quote. 6

8 79. 6 The amount of remedy payments does not provide evidence of actual damages caused by discrimination or poor performance. The Court of Appeals already recognized as much when it reversed the Commission s 2003 decisions to increase the amount of remedy payments regardless of AT&T Michigan s performance. D. Conclusion Contrary to the arguments advanced by Climax/CMC, the decision of the Michigan Court of Appeals is controlling. The Commission should reject the Climax/CMC exceptions as untimely filed and decline the request to reinstate the 2003 Orders reversed in the Court's May 2005 Opinion. The Commission should also refrain from awarding these CLECs further remedies for the time period of 2003 to present because, as the PFD properly recognizes, the submissions presented to the ALJ provide no evidentiary basis for doing so. 6 As Mr. Ehr testified, moreover, AT&T Michigan s liquidated damage payments under the Remedy Plan are not based on any specific proof of damages. Tr. at 476. The Remedy Plan itself reflects this fact. Section 6.2 states that CLECs may not use [AT&T] s payment of Tier-1 liquidated damages of Tier-2 assessments as evidence that [AT&T] has discriminated in the provision of any facilities or services under Sections 251 or 252, or has violated any state or federal law or regulation. See Exhibit CL-2. 7

9 Respectfully submitted, Craig A. Anderson (P28968) Lisa M. Bruno (P52954) AT&T MICHIGAN 444 Michigan Avenue, Room 1700 Detroit, MI (313) and DICKINSON WRIGHT PLLC By: John M. Dempsey (P30987) Christine Anne Chabot (P65506) Attorneys for AT&T Michigan 215 South Washington Square, Suite 200 Lansing, MI (517) Dated: May 8, 2006 LANSING v2 8

10 STATE OF MICHIGAN BEFORE THE MICHIGAN PUBLIC SERVICE COMMISSION Ameritech Michigan's submission on performance ) measurements, benchmarks, and reporting in ) compliance with the October 2, 1998 Order in ) Case No. U MPSC Case No. U ) ) STATE OF MICHIGAN ) ) SS COUNTY OF WASHTENAW ) PROOF OF SERVICE Jacqueline K. Tinney, being first duly sworn, deposes and says she is employed at Dickinson Wright PLLC, and that on May 8, 2006 she caused a copy of AT&T Michigan s Replies to Exceptions of Climax Telephone Company And CMC Telecom, Inc., to be served via on all parties listed on the attached service list. Subscribed and sworn to before me, a Notary Public in and for said County, this 8 th day of May, Jacqueline K. Tinney Elaine M. Masters, Notary Public Washtenaw County, Michigan Acting in Washtenaw County, Michigan My Commission Expires: 9/23/07 1

11 SERVICE LIST U ALJ MPSC Staff Climax CMC Covad MCI McLeodUSA Talk America XO and LDMI Sharon Feldman: Angie Fadley: Orjiakor Isiogu: Robin Ancona: Rodney Gregg: Maggie Bierlein: Paul Negin: Gary L. Field: Stewart Binke: Stacey Owens: Jeanne Beachnau: Katherine Mudge: Stewart Binke: Stacey Owens: Jeanne Beachnau: James Denniston: Roderick S. Coy: Leland R. Rosier: Bill Haas: Julia Redman-Carter: Michael Ashton: LANSING v30 2