Appeals from the Superior Court of the District of Columbia (CAB-4766-10) (Hon. Anita M. Josey-Herring, Trial Judge)
The opinion of the court was delivered by: Beckwith, Associate Judge:
Before OBERLY, BECKWITH, and EASTERLY, Associate Judges.
This appeal stems from a dispute between a public utility and its regulator over the utility‟s failure to turn over the entirety of an outsourcing contract the regulator wanted to review as part of its consideration of a request for a rate increase. From the perspective of the regulator, the Public Service Commission of the District of Columbia, the behavior of the utility, Washington Gas Light Company, in furnishing the body of the agreement but not all of its appendices constituted a knowing and willful flouting of its obligation to turn over whatever records the Commission demanded and thus warranted the steep sanction imposed in a Superior Court action enforcing that forfeiture. In the view of Washington Gas, the appellant and cross-appellee in this case, its actions stemmed from a benign misunderstanding or good faith response to the Commission‟s order borne of some confusion surrounding the Commission‟s issuance of another order in a separate but related discovery matter involving other parties to the rate proceedings.
We affirm the Superior Court‟s determination that Washington Gas knowingly and willfully violated the Commission‟s order to produce the contract and that it was therefore subject to daily $5,000 fines. We conclude, however, that those fines began accruing only once the time for seeking reconsideration of the Commission‟s order demanding production of the documents had expired. We likewise affirm the trial court‟s determination that appellees are liable for the conversion of the $350,000 Washington Gas paid the Commission under protest before this court ruled in a prior appeal that the Commission did not have authority to impose a forfeiture sanction without bringing a court action.
Appellant Washington Gas is a public utility that provides natural gas to customers in the Washington, D.C., area. The Public Service Commission, which along with the District of Columbia is an appellee in this case, is an independent government agency that regulates utility companies operating in D.C. As part of its oversight role, the Commission has broad authority to regulate "all aspects of public utility rates and services," Washington Gas Light Co. v. Pub. Serv. Comm'n, 856 A.2d 1098, 1105 (D.C. 2004), and, more specifically, broad authority to demand the production of relevant documents during rate proceedings, D.C. Code § 34-907 (2001).In December of 2006, that authority came into play when Washington Gas filed a request to increase its rates.
In 2007, within a year after it had instituted proceedings seeking to increase the rates it charges its District of Columbia customers, Washington Gas entered into a ten-year $350 million contract with Accenture LLP to outsource various customer service functions. The contract-sometimes referred to by the parties as the Master Services Agreement or MSA-totaled more than 600 pages, including the 75-page body of the agreement and its various appendices and exhibits.
The Commission wanted to see this contract. On July 16, 2007, it issued Data Request No. 4, which sought "a copy of the executed agreement" between Washington Gas and Accenture. Around the same time, the D.C. Office of People‟s Counsel (OPC), which represents utility ratepayers, and the Office and Professional Employees International Union Local 2 (OPEIU), which represents some Washington Gas employees, also requested copies of the contract. On July 18 and 19, 2007, Washington Gas responded to Data Request No. 4 by stating, among other things, that "due to public disclosure requirements the Company is unable to allow copies of the document," but noting that the staff of the Commission could "view the information at Washington Gas‟s . . . offices, or the Company is willing to bring the documents to the Commission for viewing."
On Thursday, July 19, 2007, with the ratemaking hearing approaching on the following Monday, OPC filed a motion to compel immediate production of the entire contract. The next day, on Friday, July 20, 2007, the Commission issued Order 14383. That order acknowledged Washington Gas‟s statement that it was unable to file copies of the outsourcing contract but that it was "willing to make arrangements" for the Commission to view the material. In a short discussion section, however, the order stated that the Commission was authorized under D.C. Code § 34-905 (2001) "to order the production of any records or documents of any public utility at any time," noted its concern with Washington Gas‟s "failure to provide information to the Commission and the parties as requested in the discovery phase of this proceeding," warned Washington Gas that "any subsequent failure" to comply with the Commission‟s directives may result in a show cause order or fine, and ordered Washington Gas to file its response to Data Request No. 4 by 9 a.m. on the hearing date. On that same day, the Commission also entered Order 14384, which partially granted OPC‟s motion to compel while giving Washington Gas the option of providing the records to OPC or delivering them to the Commission Secretary‟s Office "for in camera inspection, by 12:00 noon on Saturday, July 21, 2007."
The next day, which was Saturday, July 21, 2007, Washington Gas submitted to the Commission a copy of the 75-page document that it described as "the Confidential Master Services Agreement between Accenture and Washington Gas that contains the critical features of the relationship between the parties." It also submitted two exhibits, stated that there were "other exhibits and attachments to the [contract] that are not related to the significant issues in this case," then noted that if the Commission nonetheless "wishes to review in camera exhibits and appendices referred to in the [contract], Washington Gas will make those documents available to the Commission."*fn1 Washington Gas further asserted that it was neither "appropriate" nor "necessary to the vigorous airing of the issues in the rate case" for Washington Gas to "provide the parties with actual copies of the documents."
Two days later, on the day of the ratemaking hearing and shortly before the hearing began, the Commission entered Order 14385. Rejecting Washington Gas‟s reasons for withholding the contract, the Commission ordered Washington Gas to produce, to the Commission itself and to OPC and OPEIU, "[t]he whole MSA agreement, including all of its Appendices[.]" Washington Gas was ordered to submit these documents "to OPC, OPEIU, and the Commission Secretary‟s Office" by 5 p.m. that day, and the hearing was stayed upon Washington Gas‟s indication of its intent to move for reconsideration of Order 14385. Before the hearing was adjourned, Washington Gas challenged OPC‟s contention that the contract affected the rate change it was seeking, and OPC responded by requesting sanctions against Washington Gas. The Commission‟s chair stated that "the Commission also asked for a copy of the contract. It‟s just not OPC. It‟s OPC, it is the Commission, and it is the order."
On July 24, 2007, Washington Gas filed its motion for reconsideration of Order No. 14385, arguing that the requested documents were not relevant to Washington Gas‟s application to increase rates and that the material sought was proprietary and protected by a confidentiality agreement between Washington Gas and Accenture. The Commission took this motion and OPC‟s motion for sanctions under advisement, and on September 28, 2007, issued two separate orders: the first one denying reconsideration and denying OPC‟s request to sanction Washington Gas for its failure to comply with the Commission‟s discovery orders, and the second one imposing a $350,000 forfeiture against Washington Gas for its failure to comply with the Commission‟s orders to submit the complete Accenture outsourcing agreement to the Commission for in camera inspection. Emphasizing the Commission‟s "broad and unfettered authority" under D.C. Code § 34-907 "to require any public utility to produce any and all contracts" and Washington Gas‟s failure to produce the contract with all of its appendices, the Commission concluded that Washington Gas had committed "egregious violations" of the statutes granting the commission that authority*fn2 and had clearly violated the Commission‟s Orders 14383 and 14384.*fn3 The Commission stated that although Washington Gas had also violated Order 14384, which ordered Washington Gas to produce "complete unredacted copies" of its contract with Accenture to OPC or deliver them to the Commission for in camera inspection, the Commission "want[ed] to make it absolutely clear" that its Order was based upon its own statutory authority to demand documents from public utilities, "which differs from any rights the parties have to receive documents under the discovery rules[.]" For these violations, the Commission sanctioned Washington Gas $350,000-$5,000 for each day the utility failed to turn over the whole contract. It imposed this sanction under D.C. Code § 34-706 (a) (2001), which provides for a $5,000 fine for a failure to obey a Commission order, and under D.C. Code § 34-708 (2001), which establishes that every day that a public utility "knowingly or willfully" fails to comply with a Commission order constitutes "a separate and distinct violation of such order[.]" Later that day, Washington Gas produced the MSA, with all of its attachments and exhibits, to the Commission.
Washington Gas moved for reconsideration of the forfeiture order, arguing that it had "never refused to provide the complete MSA to the Commission," and stressing that it had immediately provided the contract to the Commission the day it received what it described as "the first Order where the Commission clearly required the Company to produce the entire MSA"-meaning Order 14587, the September 28, 2007, forfeiture order.*fn4 Upon the Commission‟s denial of that reconsideration motion, Washington Gas paid the forfeiture and appealed to this court. On October 8, 2009, this court held that the Commission did not have the legal authority to impose a forfeiture under D.C. Code § 34-706 (a) for alleged violations of its orders, and reversed the $350,000 forfeiture, indicating that the Commission was required to bring an action in Superior Court. Washington Gas Light Co. v. Pub. Serv. Comm'n (Washington Gas I),982 A.2d 691, 696, 722 (D.C. 2009).
The Commission subsequently filed a complaint in Superior Court seeking a declaratory judgment imposing a $350,000 sanction against Washington Gas based upon its violation of Orders 14383 and 14384. Washington Gas filed a counterclaim alleging that the Commission was liable for conversion for failing to return the $350,000 payment to Washington Gas, plus interest, in light of this court‟s decision in Washington Gas I. On July 11, 2011, Superior Court Judge Anita Josey-Herring granted summary judgment to Washington Gas on the counterclaim, and the Commission subsequently paid Washington Gas $350,000 plus interest. In an oral ruling issued on September 30, 2011, the court granted summary judgment to the Commission on the forfeiture claim, concluding later in its written findings of fact that the Commission had been clear in requesting a complete copy of the Accenture contract, appendices and all, that "any production tendered by Washington Gas could not be considered complete without the inclusion of those attachments and addendums," and that Washington Gas had willfully violated Order 14383. Because Washington Gas‟s refusal to provide the Commission a complete copy of the contract was willful and knowing, the trial court imposed a statutory forfeiture of $335,000 under D.C. Code §§ 34-706 and 34-708-$5,000 for each of the 67 days ...