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Before the
Federal Communications Commission
Washington, D.C. 20554
)
)
)
)
In the Matter of ) File No. EB-03-MD-011
APCC Services, Inc., Data Net Systems, LLC, )
Davel Communications, Inc., Jaroth, Inc.
d/b/a Pacific Telemanagement Services, and ) REDACTS Information
Intera Communications Corp., Designated
Complainants, ) as Confidential Under
47 C.F.R. S 1.731
v.
)
)
)
)
)
)
NetworkIP, LLC, and Network Enhanced
Telecom, LLP, )
Defendants. )
)
ORDER
Adopted: May 21, 2007 Released: May 21, 2007
By the Chief, Market Disputes Resolution Division, Enforcement Bureau:
1. In this Order, we deny a motion filed by defendants NetworkIP, LLC and
Network Enhanced Services, LLP (collectively, "Network") to stay
pending appeal the effect of the Commission's Damages Order in this
proceeding. For the following reasons, we conclude that Network has
failed to meet its burden of demonstrating entitlement to such interim
equitable relief.
2. Procedural background: Pursuant to sections 201(b) and 208 of the
Communications Act of 1934, as amended (the "Act"), and Rule 1.722,
the Damages Order granted the supplemental complaint filed against
Network by the above-named Complainants (collectively, "APCC"), and
directed Network to pay APCC approximately $2.8 million in payphone
compensation, plus prejudgment interest, within 90 days of the Damages
Order's release on February 23, 2007. On April 12, 2007, Network
petitioned for review of the Damages Order in the United States Court
of Appeals for the District of Columbia Circuit ("D.C. Circuit"). On
April 20, 2007, Network filed the instant Motion seeking a stay of the
Damages Order pending appeal. On May 2, 2007, APCC opposed the Motion.
As explained below, we agree with APCC that Network has failed to show
that (i) Network will suffer imminent irreparable harm in the absence
of a stay, or (ii) its appeal is likely to succeed on the merits.
3. Standard for granting a stay pending appeal: The parties correctly
agree that our consideration of Network's Motion for stay of the
Damages Order pending appeal may follow the traditional four-pronged
test set forth in Petroleum Jobbers. Specifically, to prevail on its
Motion, Network must demonstrate that: (1) it will imminently suffer
irreparable harm in the absence of a stay; (2) its appeal will likely
succeed on the merits; (3) a stay will not cause substantial harm to
APCC; and (4) the public interest would be served (or would not be
disserved) by grant of a stay.
4. Imminent irreparable harm: Network argues that [ * * * REDACTED * * *
], and that this fully satisfies the "irreparable harm" prong of the
Petroleum Jobbers test. In response, APCC asserts, inter alia, that
Network's allegedly irreparable harm must be "imminent;" and such
imminence is absent here because, in APCC's view, APCC can collect on
the Damages Order's monetary award only by filing suit in state or
federal court and obtaining a court judgment under section 407 of the
Act. Thus, according to APCC, it will not be able to force Network to
pay any of the Damages Order's monetary award for many months, if not
years, i.e., only after a full court proceeding under section 407 of
the Act.
5. We agree with APCC that, under a proper application of the Petroleum
Jobbers test, Network must show that the allegedly irreparable harm
would be imminent in the absence of a stay. We also conclude that,
given APCC's view that it cannot collect on the Damages Order's
monetary award unless and until it has obtained a court judgment under
section 407 of the Act, Network's allegedly irreparable harm is too
remote and speculative to satisfy the Petroleum Jobbers test.
6. Likelihood of prevailing on the merits: Network argues that the
Commission Liability Order and the Damages Order contain numerous
fatal flaws, and thus Network is likely to prevail on the merits of
its court appeals. Most, if not all, of these arguments have already
been fully addressed and decided in the Commission's Orders, and,
after further careful consideration, we conclude that the Motion does
not raise any basis - new or repeated - for believing that Network has
a substantial likelihood of obtaining reversal or vacatur of any of
the Commission's decisions in those Orders. Thus, Network fails to
satisfy this prong of the 4-part Petroleum Jobbers test, as well.
7. One new Network argument merits mention, however. Network asserts
that the Commission's focus on who was the "last" facilities-based
carrier was unlawful because the Commission had never previously
announced a "last-switch" rule for liability. But neither Network nor
APCC had presented that argument to either the Bureau or the
Commission; rather, the parties stipulated that the question presented
in this case was which carrier was the last "facilities-based" carrier
in the call chain. APCC argued that Network was the last
"facilities-based" carrier; Network argued that its
debit-card-provider customers were the last "facilities-based"
carriers. Both parties agreed that either Network or its
debit-card-provider customers were liable, and neither party ever
suggested that some other entity either "upstream" or "downstream" in
the call chain might be liable. The Commission's decision that
Network was the last facilities-based carrier in the call chain turned
only on the meaning of "facilities-based," and the Commission's
assessment of that issue had nothing to do with its assessment of who
was "last." Thus, Network cannot justify a stay on the basis of this
argument, which has little likelihood of success on appeal.
8. Given Network's failure to satisfy the "irreparable harm" and
"likelihood of success" prongs of the 4-part Petroleum Jobbers test,
we need not reach the "harm to APCC" and "public interest" prongs.
Accordingly, for the reasons explained above, we conclude that Network
has failed to meet its burden of demonstrating its entitlement to the
equitable relief of a stay.
9. Pledge of Security Interests: Network offers to post security
"sufficient to protect APCC," and notes that "it is well within the
FCC's discretion to grant a stay solely on the posting of security
aimed at maintaining the status quo, even if less than the full amount
of the judgment." It is true that, on a few occasions, the Commission
has, upon the defendant's pledge to secure the judgment, granted a
stay pending appeal, without applying the Petroleum Jobbers test. In
those cases, however, the defendant pledged security (or placed funds
in escrow) in the full amount of the judgment. Here, by contrast,
Network pledges security [ * * * REDACTED * * * ]. Consequently, those
cases do not support Network's Motion for a stay here.
10. Network contends that we should accept its pledge of security of less
than the full judgment amount, because federal courts may do so when
the defendant convincingly demonstrates that it [ * * * REDACTED * * *
]. Assuming, arguendo, that the Commission would find federal court
decisions useful in this regard, those decisions do not support
Network's position here. The cited court decisions rest on the premise
that, absent a stay pending appeal, the plaintiff could execute on the
judgment [ * * * REDACTED * * * ] "at once." Here, by contrast, APCC
repeatedly asserts that it cannot execute on the Damages Order's
monetary award "at once," but rather can execute only after filing and
successfully prosecuting a collection action in a court under section
407 of the Act, a process that could take many months, if not longer.
Therefore, as stated above, allowing Network to obtain a stay by
pledging security of less than the full judgment amount is not
necessary to prevent any imminent [ * * * REDACTED * * * ]. In turn,
the record does not demonstrate that federal case law supports
Network's request for a stay absent a pledge of security for the full
judgment amount.
11. Accordingly, IT IS ORDERED, pursuant to sections 4(i), 4(j), and 208
of the Communications Act of 1934, as amended, 47 U.S.C. SS 154(i),
154(j), 208, sections 1.720-1.736 of the Commission's rules, 47 C.F.R.
S1.720-1.736, and the authority delegated in sections 0.111 and 0.311
of the Commission's rules, 47 C.F.R. SS 0.111, 0.311, that Network's
Motion to Stay the Damages Order IS DENIED, and IT IS FURTHER ORDERED
that Network's Motion for Leave to File a Reply IS DENIED.
FEDERAL COMMUNICATIONS COMMISSION
Alexander P. Starr
Chief, Market Disputes Resolution Division
Enforcement Bureau
APCC Services, Inc. v. NetworkIP, LLC and Network Enhanced Services, LLP,
Motion to Stay Damages Order, File No. EB-03-MD-011 (filed April 20, 2007)
("Motion").
APCC Services, Inc. v. NetworkIP, LLC and Network Enhanced Services, LLP,
Memorandum Opinion and Order, File No. EB-03-MD-011, 2007 WL 580778, FCC
07-14 (rel. Feb. 23, 2007) ("Damages Order").
47 U.S.C. SS 201(b), 208.
47 C.F.R. S1.722.
The parties agree that, adding in the specified prejudgment interest, the
total amount of the damages award is currently over $4 million. See, e.g.,
Motion at 2,19; APCC Services, Inc. v. NetworkIP, LLC and Network Enhanced
Services, LLP, Opposition to Motion to Stay Damages Order, File No.
EB-03-MD-011 (filed May 2, 2007) ("Opposition to Stay") at 7, 9, 52.
See, e.g., Damages Order at 30, P 68. In June 2003, APCC filed a formal
complaint for payphone compensation against Network under Section 208 of
the Act. APCC Services, Inc. v. NetworkIP, LLC and Network Enhanced
Services, LLP, Formal Complaint, File No. EB-03-MD-011 (filed June 3,
2003) ("Liability Complaint", which stemmed from two previous informal
complaints). APCC chose to "bifurcate" the proceeding into liability and
damages phases pursuant to Rule 1.722. See, e.g., Liability Complaint at
1-2; APCC Services, Inc. v. NetworkIP, LLC and Network Enhanced Services,
LLP, Memorandum Opinion and Order, 20 FCC Rcd 2073, 2074 n.6 (Enf. Bur.
2005) ("Bureau Liability Order"). In February 2005, the Enforcement Bureau
released its Bureau Liability Order finding Network liable to APCC for
payphone compensation, which Order the Commission affirmed on review in
September 2006. APCC Services, Inc. v. NetworkIP, LLC and Network Enhanced
Services, LLP, Memorandum Opinion and Order and Order on Review, 21 FCC
Rcd 10488 (2006) ("Commission Liability Order"). The following month,
Network petitioned for review of the Commission Liability Order in the
D.C. Circuit. NetworkIP, LLC v. FCC, Petition for Review, Case No. 06-1364
(D.C. Cir. filed Oct. 30, 2006) ("Liability Appeal"). Meanwhile, shortly
after the Bureau Liability Order, APCC filed a supplemental damages
complaint pursuant to section 208 of the Act and Rule 1.722. APCC
Services, Inc. v. NetworkIP, LLC and Network Enhanced Services, LLP,
Supplemental Complaint, File No. EB-03-MD-011 (filed Apr. 4, 2005)
("Damages Complaint"). Consequently, Network sought and obtained from the
D.C. Circuit an abeyance of Network's Liability Appeal pending Commission
resolution of APCC's Damages Complaint. Liability Appeal, Per Curiam Order
(D.C. Cir. Dec. 21, 2006).
NetworkIP, LLC v. FCC, Petition for Review, Case No. 07-1092 (filed Apr.
12, 2007) ("Damages Appeal"). On April 23, 2007, APCC sought to intervene,
NetworkIP, LLC v. FCC, Motion to Intervene, Case No. 07-1092 (filed Apr.
23, 2007), moved to dismiss on jurisdictional grounds, NetworkIP, LLC v.
FCC, Intervenor's Motion to Dismiss, Case No. 07-1092 (filed Apr. 23,
2007) (attached as Ex. 1 to Opposition to Stay), and moved for expedited
briefing and argument, NetworkIP, LLC v. FCC, Motion for Expedited
Briefing and Argument, Case No. 07-1092 (filed Apr. 23, 2007). On May 7,
2007, the Commission filed, inter alia, an Opposition to APCC's Motion to
Dismiss. NetworkIP, LLC v. FCC, Opposition to Motion to Dismiss, Case No.
07-1092 (filed May 7, 2007).
On May 14, 2007, Network filed with the D.C. Circuit a Motion to Stay
Damages Order. Damages Appeal, Motion to Stay (D.C. Cir., filed May 14,
2007 under seal). This Motion to Stay appears to have no additional,
relevant information compared to the Motion filed with the Commission on
April 20, 2007.
Opposition to Stay. On May 14, 2007, Network filed a Motion for Leave to
File a Reply, and Reply. APCC Services, Inc. v. NetworkIP, LLC and Network
Enhanced Services, LLP, Motion for Leave to File a Reply; Reply, File No.
EB-03-MD-011 (filed May 11, 2007). Because the [ * * * REDACTED * * * ]
information Network seeks to provide in its Reply is not germane to the
bases of our determination here, see n.16, infra, and Network has made no
showing of extraordinary circumstances to justify the filing of a reply
not contemplated by the rules, we deny that motion. See generally 47
C.F.R. S 1.45(d). We therefore need not address APCC's filings regarding
Network's request: APCC Services, Inc. v. NetworkIP, LLC and Network
Enhanced Services, LLP, Opposition to Defendant's Motion for Leave to File
a Reply, File No. EB-03-MD-011 (filed May 16, 2007); APCC Services, Inc.
v. NetworkIP, LLC and Network Enhanced Services, LLP, Conditional
Motion for Leave to File Opposition to Defendant's Reply (filed May 16,
2007); APCC Services, Inc. v. NetworkIP, LLC and Network Enhanced
Services, LLP, Opposition to Defendant's Reply, File No. EB-03-MD-011
(filed May 16, 2007).
Virginia Petroleum Jobbers Assoc'n v. Federal Power Comm'n, 259 F.2d 921
(D.C. Cir. 1958) ("Petroleum Jobbers"). See, e.g., Motion at 16-17;
Opposition to Stay at 10-11. APCC also argues that, even if Network were
to satisfy the 4-part test, we should still deny Network the equitable
relief of a stay, because Network's recent [ * * * REDACTED * * * ]
renders Network's hands unclean. See, e.g., Opposition to Stay at 1-10.
Given our denial of Network's Motion on other grounds, we need not and do
not reach this argument.
Petroleum Jobbers, 259 F.2d at 925. See, e.g., Washington Metropolitan
Area Transit Commission v. Holiday Tours, 559 F.2d 841, 843 (D.C. Cir.
1977) ("WMTC v. Holiday"); In the Matter of 4.9 GHz Band Transferred from
Federal Government Use, Order, 19 FCC Rcd 15270, 15272 at P 5 (2004);
[1]In re Application of Liberty Productions, Order, 16 FCC Rcd 18966,
18969 at P 14 (2001) (subsequent history omitted); General Communication,
Inc. v. Alaska Communications Systems, Order, 16 FCC Rcd 8169, 8169 at P 3
(2001) ("GCI v. ACS") (subsequent history omitted); Expanded
Interconnection with Local Telephone Company Facilities, Order, 8 FCC Rcd
123, 124 at P 6 (1992) (subsequent history omitted); In the Matter of
Regulation of Prepaid Calling Card Services, Order, DA 07-1504, 2007 WL
952102, 952103 at P 7 (Wireline Comp. Bur., March 29, 2007).
See, e.g., Motion at 18-20.
See, e.g., Opposition to Stay at 11-13. Section 407 of the Act provides,
in pertinent part: "If a carrier does not comply with an order [of the
Commission] for the payment of money within the time limit in such order,
the complainant . . . may file in the district court . . . or in any State
court . . . a petition setting forth briefly the causes for which he
claims damages, and the order of the Commission. . . ." 47 U.S.C. S 407.
Opposition to Stay at 3, 5, 11-13, 43-44, 49 n.86. APCC has made the same
argument to the D.C. Circuit. Opposition to Stay at Ex. 1.
See, e.g., In the Matter of Implementation of Section 309(j) of the
Communications Act, Order, 1999 WL 446589, 446592 at P 10 (FCC 1999) ("To
justify a stay, the alleged harm must be great, imminent, and certain to
occur") (subsequent history omitted); Cellularvision of New York, L.P. v.
Sportschannel Associates, Order, 10 FCC Rcd 13192, 13192 at P 4 (1995)
(subsequent history omitted); [2]In the Matter of Implementation of the
Cable Television Consumer Protection and Competition Act of 1992,
Memorandum Opinion and Order, 9 FCC Rcd 6723, 6741 at P 88 (1994)
(subsequent history omitted); Federal-State Joint Board on Universal
Service, Order, 20 FCC Rcd 5167, 5168-69 at P 4 (Wireline Comp. Bur. 2005)
("In order to demonstrate irreparable harm, the harm must be certain and
immediate.") (subsequent history omitted); Improving Public Safety
Communications in the 800 MHz Band, Order, 21 FCC Rcd 678, 682 at P 12
(Pub. Safety and Crit. Info. Div. 2006) ("party seeking a stay must show
that `the injury complained of [is] of such imminence that there is a
`clear and present' need for equitable relief to prevent irreparable
harm") (citing [3]Wisconsin Gas Co. v. FERC, 758 F.2d 669, 674 (D.C. Cir.
1985) and cases cited therein) (subsequent history omitted). See also
Direx Israel v. Breakthrough Medical Corp., 952 F.2d 802, 812 (4^th Cir.
1992) (citing Tucker Anthony Realty Corp. v. Schlesinger, 888 F.2d 969,
975 (2^nd Cir. 1989) ("'irreparable harm' must be `neither remote nor
speculative, but actual and imminent'"); ECRI v. McGraw-Hill Inc., 809
F.2d 223, 226 (3^rd Cir. 1987) ("plaintiff has the burden of proving a
clear showing of immediate irreparable injury"); Wisconsin Gas Co. v.
FERC, 756 F.2d at 674 (internal citations omitted) ("[T]he injury must be
both certain and great; it must be actual and not theoretical . . . [and]
the party seeking injunctive relief must show that `[t]he injury
complained of [is] of such imminence that there is a `clear and present'
need for equitable relief to prevent irreparable harm"') (emphasis in
original).
Given this conclusion, we need not and do not determine whether Network
has shown that, if the Damages Order's monetary award were imminently
enforced, Network would [ * * * REDACTED * * * ]. We also note that
Network has not argued that (i) a failure to pay the Damages Order's
monetary award prior to the conclusion of a court proceeding under section
407 could or would result in Commission sanctions, or (ii) the possibility
or imposition of such sanctions would constitute irreparable harm. Thus,
this Order does not address those issues.
Motion at 20-45. For example, Network argues that the Commission
misinterpreted its own payphone compensation rules and orders, id. at
21-28, failed to indicate clearly which carrier in a call path was
obligated to compensate payphone service providers, id. at 22-26, did not
provide fair notice of how it would apply its rules, id. at 29-38,
improperly granted APCC a waiver of the statute of limitations, id. at
39-42, and applied the wrong prejudgment interest rate, id. at 42-46.
We understand that Network does not necessarily have to show a likelihood
of success greater than 50%. See, e.g., WMTC v. Holiday, 559 F.2d at 844.
Network's showing still falls short, especially given the absence of
irreparable harm. See, e.g., id.
See, e.g., Motion at 23-26, 31-33, 36-38. We note that, because Network
did not make this argument in its Application for Review of the Bureau
Liability Order, see Network Application for Review, File No. EB-03-MD-011
(filed March 1, 2005) ("AFR") at 10-18, in its Reply to APCC's Opposition
to that AFR, see Reply to Opposition to Application for Review, File No.
EB-03-MD-011 (filed March 25, 2005) at 1 ("The question in this case is
whether NET or its carrier customers are legally responsible for payphone
compensation . . . . It is the customer, not NET, that is responsible for
compensating payphone owners."), or in a petition for reconsideration of
the Commission Liability Order, it will be barred from doing so in the
D.C. Circuit. 47 U.S.C. S 405(a). See, e.g., Bartholdi Cable Co. v. FCC,
114 F.3d 274 (D.C. Cir. 1997).
See, e.g., Revised Joint Statement, File No. EB-03-MD-011 (filed Oct. 22,
2003). For just one example, the parties stipulated that "this case
hinges on whether the Defendants or their Customers ... are liable for
payphone compensation as a matter of law under ... applicable precedent."
Id. at 2.
See, e.g., WMTC v. Holiday, 559 F.2d at 844; Petroleum Jobbers, 259 F.2d
at 924 (despite demonstrating likelihood it would prevail on the merits,
"petitioner's inadequate showing on the remaining previously enumerated
considerations prevents us from granting the stay it has requested."). See
also, In the Matter of Dynamic Cablevision of Florida, Order, 10 FCC Rcd
7738, 7745 at P 16 (Cable Serv. Bur. 1995) ("Because Dynamic has not
satisfied each prong of the four part test for the granting of stays, we
deny its request for stay.").
Motion at 47.
Id. at 3. See Motion at 47-49.
Motion at 3, 47-49. See, e.g., GCI v. ACS, supra; Virgin Islands Telephone
Corp. Tariff FCC No. 1, Order, 7 FCC Rcd 4235, 4236-37 at PP 13-14 (1992);
Time Warner Entertainment Co., Order, 9 FCC Rcd 5815, 1815-16 at PP 1-5
(Cable Serv. Bur. 1994); Heritage Cablevision Associates of Dallas, LP v.
Texas Utilities Elec. Co., Order, 8 FCC Rcd 373, 374 at P 14 (Comm. Carr.
Bur. 1993).
See, e.g., Motion at 47-49; Opposition to Stay at 8, 45 n.83, 50-52.
Motion at 47-50, citing Miami International Realty Co. v. Paynter, 807
F.2d 871 (10^th Cir. 1986); Olympia Equipment Leasing Co. v. Western Union
Telegraph Co., 786 F.2d 794 (7^th Cir. 1986); Poplar Grove Planting and
Refining Co., Inc. v. Bache Halsey Stuart, Inc., 600 F.2d 1189 (5^th Cir.
1979).
See, e.g., Olympia Equipment, 786 F.2d at 800 (Easterbrook, J.,
concurring). See also Alexander v. Chesapeake, Potomac, and Tidewater
Brooks, Inc., 190 F.R.D. 190, 193-194 (E.D. Va. 1999).
See, e.g., Opposition at 3, 5, 11-13, 43-44, 49 n.86. Ex. 1. In its
Opposition to Motion to Dismiss in the D.C. Circuit, the Commission argues
that section 407 of the Act does not affect Network's appellate rights
under 47 U.S.C. S 402(a) and 28 U.S.C. S 2342(1).
In light of this determination, and as stated previously, see n.16,
supra, we take no position regarding the current [ * * * REDACTED * * * ].
(...continued from previous page)
(continued....)
Federal Communications Commission DA 07-2079
2
Federal Communications Commission DA 07-2079
References
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