DES MOINES, Iowa (Legal Newsline) - The Iowa Supreme Court last week upheld a district court's ruling that reversed a decision of the state's utilities board penalizing a company for "cramming" a business owner.
Cramming means the addition or deletion of a product or service for which a separate charge is made to a telecommunication customer's account without the verified consent of the affected customer.
Evercom Systems Inc. asked the state's high court to review the decision of the state Court of Appeals reinstating a civil penalty the Iowa Utilities Board imposed on it for a cramming violation.
According to Court documents, a jail inmate placed five collect calls to Quality Services Corp., a Des Moines business owned by Ken Silver.
The next day, Silver received a telephone message from Evercom, which provides telephone services to inmates, informing him that more than $50 of collect calls had been accepted by his business line and that it was placing a temporary block on his line.
Silver's local telephone company then billed him $78.21 for the collect calls on behalf of Evercom.
Over the next several weeks, Silver unsuccessfully attempted to have Evercom remove the charges from his bill.
Finally, he reported his complaint to the Iowa Attorney General's Office.
The utilities board later determined Evercom committed a cram when it billed Silver for collect calls he did not accept and assessed a $2,500 civil penalty.
However, the Court, in its opinion filed Friday, determined that Evercom's actions could not constitute a cram because the acceptance of collect calls is one of the enumerated services that are explicitly excluded from the definition of cramming as the utilities board has defined it in its own rules.
Thuse, the Court vacated the appeals court's decision and affirmed the Polk County District Court's order reversing the agency's decision and imposition of the $2,500 penalty.
Justice Bruce Zager authored the Court's 16-page opinion.
"The issue before us is not whether the calls were verified, authorized, or apparently accepted; it is whether billing a customer for accepting a collect call fits within the definition of cramming," Zager wrote.
"To that end, we find an interpretation of rule 199-22.23 that hinges on whether the call was in fact accepted to be unacceptably narrow."
Rule 199-22.23 requires carriers to obtain verified customer consent before adding services or charges to telephone bills. Consent can be verified by electronic authorization, written authorization or through a third-party verifier.
The rule recognizes, however, that certain services -- in this case, collect calls -- are initiated by the customer and therefore should be exempt from the verification requirements.
In particular, the utilities board found it would be "undesirable" to require carriers to obtain verification before they permit a customer to accept a collect call, dial information or use directory assistance, and therefore decided not to include adding these types of customer-requested services to a customer's bill in the definition of cramming.
"This policy is clearly reflected in the plain language of rule 199-22.23, which excludes these services from the definition of cramming," Zager wrote.
"If the board now wishes to include these services within the definition of cramming, it should use the rule making process to redefine cramming by eliminating the exceptions that are currently listed and not resort to 'making policy by ad hoc decisions on a case-by-case basis.'"
The Court said a "proper reading" of the rule excludes all disputes regarding billing for collect calls from the definition of cramming.
"If the rule were read to only exclude those calls which were actually accepted, it would be stripped of its meaning," Zager wrote. "Collect calls that are rejected are never billed to a customer's account at all, and therefore, cramming allegations could never arise to begin with."
The Court remanded the case to district court for remand to the board for dismissal.
From Legal Newsline: Reach Jessica Karmasek by email at email@example.com.