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Federal Communications Commission
Washington, D.C. 20554
In the Matter of )
C.F. Communications Corp., et ) EB Docket No. 01-99
Complainants, ) File Nos. E-89-170, E-89-
) 171, E-89-172, E-89-179, E-
v. ) 89-180, E-89-181, E-89-182,
) E-92-97, E-93-34, E-93-35,
Century Telephone of Wisconsin, ) E-93-36, E-93-37, E-93-38,
Inc., et al., ) E-93-39, E-93-40, E-93-41,
) E-93-42, E-93-43, E-93-44,
Defendants. ) E-93-45, E-93-46, E-93-47,
) E-93-48, E-93-49, E-93-50,
E-93-56, E-93-57, E-93-58,
E-93-59, E-93-60, E-93-61,
E-93-62, E-93-73, E-93-74,
HEARING DESIGNATION ORDER
Adopted: April 20, 2001 Released: April 24, 2001
By the Chief, Enforcement Bureau:
1. Pursuant to the Commission's rules,1 we initiate a
consolidated hearing in this Hearing Designation Order
(``HDO'') for the above-captioned formal complaints to
determine the Complainants' damages.2 The Commission has
previously ruled that the defendant local exchange
carriers (``LECs'' or ``Defendants'') violated section
201(b) of the Communications Act of 1934, as amended,
(``Act'') and Part 69 of the Commissions' rules3 by
improperly assessing End User Common Line (``EUCL'')
charges upon the Complainants, a group of independent
payphone providers (``IPPs'' or ``Complainants'').4 This
HDO resolves certain outstanding issues and refers others,
including whether Complainants are entitled to an award of
damages, to an Administrative Law Judge (``ALJ'').
II.A. Procedural Status
2. A number of LECs have sought review of the Liability
Order to the U.S. Court of Appeals for the D.C. Circuit.5
Also, several IPPs have sought review of the
Reconsideration Order in that Court.6 The Court has not
issued a ruling to date in either case. Sprint recommends
that the hearing be held in abeyance pending resolution of
the Liability Order's appeal.7 We reject this proposal
because we believe that proceeding promptly and
efficiently with the disposition of the claims for damages
will provide guidance in other similar disputes currently
before the Commission.8
3. Pursuant to its finding that Defendants were liable for
the improper assessment of EUCL charges, the Commission
authorized Complainants to file supplemental complaints
for damages.9 In order to facilitate settlement
discussions, the Commission temporarily waived the 60-day
deadline for filing such complaints and stated that a
filing date would be announced at a status conference with
all the parties.10 During the status conference,
Enforcement Bureau staff informed the parties that the
damages phase of this proceeding could well be referred to
an ALJ for formal hearings.11 The parties were directed
to file proposed HDOs, as well as comments reflecting
their views on how any such hearing should proceed.12
After review of these proposed HDOs and consideration of
the accompanying comments, we designate the above-
captioned complaints for hearing before an ALJ in the
manner set forth below. 13
II.B. The End User Common Line Charge
4. During the period at issue in these cases, the
application of the end user common line charge on payphone
providers depended on whether or not a payphone was
``public'' or ``semi-public.''14 In 1983, the Commission
created the public/semi-public distinction, explaining
that "[a] pay telephone is used to provide semi-public
telephone service when there is a combination of general
public and specific customer need for the service, such as
at a gasoline station or pizza parlor."15 By contrast,
"[a] pay telephone is used to provide public telephone
service when a public need exists, such as at ``an airport
lobby, at the option of the telephone company and with the
agreement of the owner of the property on which the phone
5. Given that the end users of public payphones are the
``transient general public,'' the Commission determined
that the owners and operators of these payphones would not
be assessed a EUCL charge because there was no fair and
practical mechanism for passing the charge on to the
actual cost causers, i.e., the end user callers.17 Yet,
the Commission held that payphones classified as "semi-
public" would be subject to a EUCL charge.18 Amendments
to the Commission's rules following passage of the
Telecommunications Act of 1996 mandate that both IPPs and
LECs pay EUCL charges for all of their payphones, and thus
this proceeding concerns rules that are not currently in
II.C. The Commission's Liability Order
II.C.1. IPPs Not End Users
6. The Commission's Liability Order responded to the
court's remand of an earlier Commission ruling.20 The
Commission's earlier ruling held that IPP payphones were
subject to a EUCL charge because the IPPs were "end users"
pursuant to section 69.2(m) of the rules.21 But on remand
from an appeal of that decision, the Commission reversed
itself and concluded in the Liability Order that, although
C.F. Communications and other IPPs own the payphones, they
cannot be considered "end users" under section 69.2(m),
because they do not own the premises where their payphones
II.C.2. IPPs Must Pay EUCL Charge
7. Nonetheless, the Liability Order did not relieve the
IPPs of the obligation to pay EUCL charges for their use
of the Defendants' common lines in all instances. The
Commission concluded that, irrespective of whether an IPP
was an ``end user,'' the primary determination... was
whether the payphone is ``public'' or ``semi-public.''23
The Liability Order found that the LECs chose to assess
EUCL charges on all IPP payphones without regard to where
they were located or the manner in which they were used.24
The Liability Order concluded that the Defendants had
imposed an unreasonable charge in violation of section
201(b)25 and Part 69 of the Commission's rules to the
extent that they assessed and collected EUCL charges
against the Complainants' public payphones.26
III. SUBSTANTIVE MATTERS
III.A. Untimely Issues
8. When the Bureau sought proposed HDOs from the parties,
it stated that parties could also submit comments
regarding the procedure of the hearing.27 A number of
Complainants, however, included numerous substantive
arguments apparently intended to expand the scope of their
damages complaints.28 Each of these arguments is rejected
as untimely because each should have been raised in a
timely filed reconsideration petition to the Liability
Order.29 Complainants are, therefore, barred from
asserting any of these claims in their supplemental
III.B. Statute of Limitations
9. In this section, we address various arguments raised by
the parties regarding the statute of limitations.
III.B.1. October 1997 Court of Appeals Decision
10. Certain Complainants contend that the ``cause of action
for recovery of EUCL charges did not accrue for purposes
of the two year statute of limitations set forth in 47
U.S.C. § 415 until the October 1997 decision by the Court
of Appeals'' to enable ``each complainant to recover all
EUCL charges they incurred so long as they filed a formal
complaint no later than two years after that decision.''30
Because all of the complaints at issue in this HDO were
filed well before 1997, we find that this argument is
irrelevant and decline to address it at this juncture.31
III.B.2. American Public Communication Council
11. Certain Complainants argue that a 1989 Petition for
Declaratory Ruling filed by the American Public
Communications Council (``APCC'') concerning the EUCL
assessment on IPPs should be considered a section 208
complaint.32 In its view, such a complaint would enable
some or all of the Complainants (who are APCC members) to
recover damages for the two-year period prior to the
filing of that 1989 petition. We note, however, that APCC
did not invoke the section 208 process and did not seek
any damages in its petition. Moreover, our formal
complaint filing rules in effect at that time did not
provide for such petitions to be converted into formal
complaints. Thus, APCC's petition cannot be deemed a
section 208 complaint.
III.B.3. Damages Recovery Back To September 6, 1995
12. Certain Complainants also contend that Complainants who
filed their complaints after September 6, 1995 -- the date
the Commission issued the order33 upholding the Bureau's
denial of the complaints -- should be permitted to recover
EUCL damages back to September 6, 1993.34 These Certain
Complainants assert that the Common Carrier Bureau's
October 14, 1993 Order35 and the Commission's September 6,
1995 Order denying them the relief they sought ``made it
futile'' for Complainants to file complaints for EUCL
charges at that time. Because the last complaint at issue
in this proceeding was filed in 1993, we decline to
address this argument at this time, as it is irrelevant to
any of the complaints affected by this HDO.
III.C. Equity Considerations
13. Because the LECs assessed EUCL charges indiscriminately
on the IPPs' public and semi-public payphones, Certain
Complainants contend that Defendants are estopped from
claiming EUCL charges for Complainants' semi-public
payphones.36 We reject this view. As a way of recovering
their costs, the LECs were lawfully entitled to assess the
EUCL on semi-public payphones. Thus, the Defendants may
retain the EUCL charge for the IPPs' semi-public
IV. PROCEDURAL DESIGNATIONS
A. Procedural and Evidentiary Rules
14. This Proceeding shall be governed by section 1.201
through 1.36437 of the Commission's rules of practice for
hearing proceedings, to the extent practicable for the
adjudication of these issues.38 The ALJ may, in his
discretion, require that the parties submit all or any
portion of their case in writing if he determines that
such written submission would contribute significantly to
the disposition of the proceeding.39
15. We conclude that consolidating the supplemental
complaints into a single proceeding will provide greater
IV.B. Statute Of Limitations
16. Consistent with prior Commission precedent, when ruling
on the time period of a damages complaint, the ALJ must
consider the following elements.
17. Complaints for damages are subject to a two-year
statute of limitations period starting from the date on
which the formal complaint was filed.41 Several
Complainants may have filed informal complaints about
improper EUCL charges prior to their filing of formal
complaints. The Liability Order states, pursuant to
section 1.718 of the Commission's rules, that a formal
complaint is deemed to relate back to the filing of an
informal complaint if the formal complaint: (1) is filed
within six months from the date of the carrier's response
to the informal complaint; (2) makes reference to the date
of the informal complaint; and, (3) is based on the same
cause of action as the informal complaint.42 If the
unsatisfied informal complainant fails to file a formal
complaint within the six-month period, the complainant is
deemed to have abandoned the informal complaint and the
statute of limitations runs from the date the formal
complaint was filed.43
18. In the Reconsideration Order, the Commission deferred
to the damages phase of this proceeding the issue of
whether each formal complaint for damages would qualify
under the relating back rules.44 Accordingly,
Complainants and Defendants may present arguments
concerning the application of the relating-back rule to
any particular complaint or Complainant.
19. There is an outstanding issue as to whether Ascom is
subject to the same limitations period as its bankrupt
predecessor.45 We find that this issue requires a factual
determination which the Bureau cannot make without
additional information provided by Ascom. We, therefore,
refer this issue to the ALJ for a decision.
20. Discovery shall be conducted in accordance with
sections 1.311-1.325 of the Commission's rules.46
IV.D. The Burdens of Proceeding and Burden of Proof
21. Complainants have both the burden of proceeding with
the introduction of evidence and the burden of proving
damages.47 Given the passage of time, determining the
exact number of public and semi-public payphones may be
difficult. We therefore encourage the parties to consider
proxies that can be used to obtain a reasonable estimation
of that number.48
IV.E. Bureau Participation
22. The Enforcement Bureau shall be a party to the
proceeding and will determine its level of participation,
as appropriate, on an issue-by-issue basis. Pursuant to
section 1.47(c) of the Commission's rules, the Bureau
shall be served with documents in the same manner as other
V. DAMAGES INSTRUCTIONS
V.A. Measure of Damages
23. The scope of the hearing is limited to determining the
proper amount of damages to which Complainants are
entitled.49 The measure of damages is the amount of EUCL
payments Defendants assessed and collected from the
Complainants for their public payphones.50 Based on the
Liability Order's findings, each Complainant must
demonstrate the number of public payphones it had, under
the definition established in the First Reconsideration
Order,51 as clarified in the Liability Order,52 and the
amount of EUCL charges it paid for those public
payphones.53 In addition, each Complainant must calculate
the applicable amount of interest due on those improperly
V.B. Defenses to Damages Claim
24. During the liability phase, the Commission rejected
Defendants' argument that Complainants had not been
damaged financially by the improper assessment of EUCL
charges.55 Given that this no-damages defense has been
thoroughly considered, Defendants are barred from raising
it during the hearing. Defendants may, however,
demonstrate that the improperly assessed EUCL charges were
VI. ORDERING CLAUSES
25. ACCORDINGLY, IT IS ORDERED, pursuant to sections 1,
4(i), 4(j), 201(b), 203(c), 206, 207 and 208 of the
Communications Act of 1934 as amended, 47 U.S.C. §§
151,154 (i), 154 (j), 201 (b), 203(c), 206, 207, and 208
and sections 0.111, 0.311, 1.722(d)(1) and 69.105(a) of
the Commission's rules, 47 C.F.R. §§ 0.111, 0.311,
1.722(d)(1) and 69.105(a), that the above-captioned
complaints ARE DESIGNATED FOR A CONSOLIDATED HEARING
before an Administrative Law Judge, at a time and place to
be specified in a subsequent Order, upon the following
(1) To determine the relevant time period of each complaint
pursuant to section 415 of the Act, section 1.718 of the
Commission's rules, and the Waiver Order;
(2) To determine how many payphones each Complainant owned
during the period covered in issue (1) were ``public'';56
(3) To determine the amount of EUCL charges paid for the
``public'' payphones identified in Issue (2) above, over the time
period determined under Issue (1) above;
(4) To determine, in light of the evidence adduced under the
foregoing issues, the amount of damages, if any, to which
each Complainant is entitled;
(5) To determine the amount of interest, if any, that each
Complainant shall be awarded.
26. IT IS FURTHER ORDERED, that to avail themselves of the
opportunity to be heard and the right to present evidence,
the designated parties, pursuant to section 1.221 (c) of
the Commission's rules SHALL FILE in triplicate, within
twenty (20) days of the mailing of this Order by the
Secretary, a WRITTEN NOTICE OF APPEARANCE, stating an
intention to appear on the date fixed for the hearing and
present evidence on the issues specified in this Order.
27. IT IS FURTHER ORDERED, that the rules of practice and
procedure governing this hearing will be in accordance
with the Commission's Hearing Proceedings, 47 C.F.R. §§
1.201 - 1.364 subject to the ALJ's discretion to regulate
28. IT IS FURTHER ORDERED, that all Discovery shall be
conducted in accordance with 47 C.F.R. §§ 1.311 - 1.325,
subject to the ALJ's discretion.
29. IT IS FURTHER ORDERED, that Complainants shall have
both the burden of proceeding with the introduction of
evidence and the burden of proof on all issues.
30. IT IS FURTHER ORDERED, that the Enforcement Bureau
shall be a party to the proceeding.
31. IT IS FURTHER ORDERED, that the Secretary of the
Commission shall cause to have this Order published in the
FEDERAL COMMUNICATIONS COMMISSION
David H. Solomon, Chief
American Payphone, Inc.
Ascom Communication, Inc
B.D.A. Sales Inc.
Bell Telephone Co. of Pennsylvania
Best Payphones, Inc.
C&P Telephone Co. of Maryland
C&P Telephone Co. of Virginia
C.F. Communications Corp.
Carolina Telephone Co.
Century Telephone of Wisconsin, Inc.
GTE Florida, Inc.
GTE North, Inc.
GTE South, Inc.
Just Telephone Inc.
Michigan Bell Telephone Co.
Millicom Services Co.
Mosinee Telephone Co.
New England Telephone and Telegraph Co.
New Jersey Bell Telephone Co.
NYPAY Communications Co.
New York Pay Phone Systems, Inc.
New York Telephone Co.
North West Telephone Co.
Southern Bell Telephone and Telegraph
Southwestern Bell Telephone Co.
Turtle Lake Telephone Co.
United Telephone Co. of Florida
United Telephone Co. of Pennsylvania
Wisconsin Bell, Inc.
1 47 C.F.R. § 1.722(d)(1) (``Issues concerning the amount, if
any, of damages may be either designated by the Enforcement
Bureau for hearing before, or, if the parties agree, submitted
for mediation to, a Commission Administrative Law Judge.'').
See also Implementation of the Telecommunications Act of 1996,
Amendment of Rules Governing Procedures to Be Followed When
Formal Complaints Are Filed Against Common Carriers, Report and
Order, 12 FCC Rcd 22497, 22555 (1998); Implementation of the
Telecommunications Act of 1996, Amendment of Rules Governing
Procedures to Be Followed When Formal Complaints Are Filed
Against Common Carriers, Order on Reconsideration, FCC 01-78
(rel. Mar. 7, 2001).
2 See Appendix A for a list of the parties.
3 47 U.S.C. § 201(b); 47 C.F.R. §§ 69.1 et seq. Unless
otherwise indicated, all C.F.R. references are to the 2000
edition. We refer to prior C.F.R. editions in instances where
the prior rules were different than the current rules.
4 C.F. Communications Corp., et al. v. Century Telephone of
Wisconsin, Inc., et. al., Memorandum Opinion and Order on
Remand, 15 FCC Rcd 8759 (2000) (``Liability Order''); recon.
denied, 15 FCC Rcd 22906 (2000). This order reversed a
previous decision of the Commission that had been vacated by the
D.C. Circuit and remanded to the Commission for further
consideration consistent with that court's opinion. See C.F.
Communications Corp. v. FCC, 128 F.3d 735 (D.C. Cir. 1997)
(``Appeals Court Decision'').
5 In its July 19, 2000 Reconsideration Order, the Commission
affirmed certain of its determinations in the Liability Order.
C.F. Communications Corp., et al. v. Century Telephone of
Wisconsin, Inc., et. al., Order on Reconsideration, 15 FCC Rcd
22906 (2000) (``Reconsideration Order''). See Bell Atlantic
Telephone Companies, et al. v. FCC, No. 00-1207 (D.C. Cir.
filed May 15, 2000).
6 See Alcazar Homes Ltd. d/b/a Alcazar Ltd., et al. v. FCC, No.
00-1404 (D.C. Cir. filed Sept. 10, 2000).
7 Sprint Proposed HDO at 5 (filed Oct. 13, 2000).
8 There are many informal complaints from IPPs raising the same
issues involved in the instant complaints. See Liability Order,
15 FCC Rcd at 8761.
9 Id. at 8771.
11 See Sept. 25, 2000 Letter Ruling from Tejal Mehta,
Enforcement Bureau, FCC, to Counsel for Parties. File Nos. E-93-
060 through 62; E-93-074; E-93-081; E-93-034 through 50; E-93-
056 (``Letter Ruling'').
13 We issue this designation order pursuant to sections 4(i),
4(j) and 208 (a) of the Communications Act and sections 0.111
and 0.311 of the Commission's rules. 47 U.S.C. § § 154 (i), 154
(j), 208 (a); 47 C.F.R. § 0.111, 0.311. See also 47 C.F.R. §
14 Liability Order,15 FCC Rcd at 8768.
15 MTS and WATS Market Structure, Order on Reconsideration, 97
FCC 2d 682, 704, n.40 (1983) (``First Reconsideration Order'').
At the time the Commission developed this scheme for payphone
access charges, the only existing payphones were owned by LECs.
16 Id. at 704, n.41.
17 Id. at 705.
18 Id. at 706.
19 See Liability Order, 15 FCC Rcd at 8761 citing
Implementation of the Pay Telephone Reclassification and
Compensation Provisions of the Telecommunications Act of 1996,
First Report and Order, 11 FCC Rcd 20541, ¶ 187 (1996) (``First
Payphone Order''); Implementation of the Pay Telephone
Reclassification and Compensation Provisions of the
Telecommunications Act of 1996, Report and Order on
Reconsideration, 11 FCC Rcd 21233, ¶ 207 (1996).
20 See Appeals Court Decision, 128 F.3d at 742; see also C.F.
Communications Corp. v. Century Telephone of Wisconsin, Inc. et.
al., Memorandum Opinion and Order, 8 FCC Rcd 7334, 7335-36
(1993) (``Bureau Order''); C.F. Communications Corp. v. Century
Telephone of Wisconsin, Inc., et. al., Memorandum Opinion and
Order, 10 FCC Rcd 9775 (1995); C.F. Communications Corp., et.
al. v. Michigan Bell Telephone Co., et. al., 12 FCC Rcd 2134
21 The Commission's ruling was pursuant to section 69.2(m)
which provides that "a carrier other than a telephone company"
is an end user when it "offers telecommunications services
exclusively as a reseller" and all of its "resale transmissions
... originate on the premises of such reseller." Bureau Order,
8 FCC Rcd at 7336. See also 47 C.F.R. § 69.2(m).
22 Liability Order, 15 FCC Rcd at 8768.
24 Id. at 8766, 8768. See also Appeals Court Decision, 128
F.3d at 741.
25 Id. at 8768, 8773.
26 Id. at 8768.
27 See Letter Ruling.
28 See Comments of Certain Complainants Regarding Hearing
Designation Order, filed Oct. 13, 2000 (``Certain Complainants'
Comments'') at 10-13 and Comments of Kayson Communications Inc.
and Best Payphones Inc. Regarding Hearing Designation Order,
filed on Oct. 23, 2000 (``Kayson and Best Comments'') at 3
(arguing that because IPPs were found to not be end-users users
within the meaning of section 69.104(a), the collection of EUCL
charges for semi-public payphones is unlawful); Certain
Complainants' Comments at 14 (contending that the Commission's
Liability Order constitutes a ``new'' construction of the Access
Charge rules); Certain Complainants' Comments at 8 (arguing that
the collection of EUCL charges from IPPs by the LECs violates
section 203 of the Act because IPPs are not end users and the
the LECs' tariffs specify that EUCL charges will be assessed on
``end users'' ); Certain Complainants' Comments at 14-16
(arguing that New York Telephone Company's state tariff should
have bearing on this damages proceeding). In addition, Certain
Complainants contend that Defendants must bear the burden of
proving which payphones were used primarily for semi-public use.
See Certain Complainants' Comments at 16.
29 We note that a number of complainants filed a petition for
reconsideration on May 15, 2000 that could well have
incorporated these arguments but did not. See Complainant's
Petition For Reconsideration. The Commission ruled on the
issues raised in this petition in its Reconsideration Order, 15
FCC Rcd 22906 (2000).
30 Certain Complainants' Comments at 8.
31 The most recent complaint was filed in 1993. See File No.
32 Certain Complainants' Comments at 8.
33 C.F. Communications Corp. v. Century Telephone of Wisconsin,
Inc., et. al., Memorandum Opinion and Order, 10 FCC Rcd 9775
(1995). This decision affirmed the Bureau Order. It was
subsequently vacated by the Appeals Court Decision.
34 Certain Complainants' Comments at 8.
35 Bureau Order, 8 FCC Rcd 7334, 7335-36 (1993).
36 Certain Complainants' Comments at 15.
37 47 C.F.R. §§ 1.201- 1.364.
38 47 C.F.R. § 1.722.
39 See Hi Tech Furnace Systems, Inc. v. FCC, 224 F.3d 781, 786
(D.C. Cir. 2000); 47 U.S.C. §§ 154(i), 154(j); 47 C.F.R. §
40 Certain Complainants' Comments at 17; Kayson and Best
Comments at 4.
41 47 U.S.C. § 415.
43 Id; but see Informal Complaints Filed By Independent Payphone
Service Providers Against Various Local Exchange Carriers
Seeking Refunds of End User Common Line Charges, File No. 89-
170, DA 99-1858, Common Carrier Bureau (rel. Sept. 10, 1999)
(``Waiver Order''). In its Waiver Order, the Common Carrier
Bureau, in the interests of administrative efficiency, tolled
the six month relation back requirement contained in section
1.718 for a number of informal complaints as of June 15, 1998,
as long as the formal complaint is filed with the Commission no
less than 90 days after a final nonappealable order has been
entered in the remand proceeding. Id. at ¶ 5.
44 Reconsideration Order at ¶ 5.
45 See Ascom et. al Comments at 9.
46 47 C.F.R §§ 1.311-1.325.
47 See Hi Tech Furnace Systems, Inc. v. FCC, 224 F.3d 781, 786
(D.C. Cir. 2000); see also New Valley Corporation v. Pacific
Bell Telephone Company, 15 FCC Rcd 5128 at ¶ 14; and Liability
Order, 15 FCC Rcd at 8771. (``Complainants will have to provide
evidence sufficient to prove among other things, how many of
their payphones were in fact `public payphones,' under the
definition established in the First Reconsideration Order, as
clarified in the Liability Order.'')
48 Liability Order, 15 FCC Rcd at 8771.
49 Fidelity Radio, Inc., 1 FCC 2d 66 (1965); Atlantic
Broadcasting Co., 5 FCC 2d 717 (1966).
50 Liability Order, 15 FCC Rcd at 8771.
51 First Reconsideration Order, 97 FCC 2d at 704, n.40 and
52 Liability Order, 15 FCC Rcd at 8771.
53 The rates for the EUCL charges are to be determined from the
LECs' tariffs for the relevant time period.
54 The IRS rate of interest for corporate overpayments is the
appropriate interest rate for this type of proceeding, because
the rate is easily obtainable and revised on a regular basis.
See U.S. Sprint Communications Partnership v. Pacific Northwest
Bell Telephone Co., Memorandum Opinion and Order, 8 FCC Rcd
1288, 1298, ¶ 51, n.109 (1993).
55 See Liability Order, 15 FCC Rcd at 8770.
56 Id. at 8771.