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Before the
FEDERAL COMMUNICATIONS COMMISSION
Washington, D.C. 20554
In the Matter of )
)
APCC Services, Inc., )
)
Complainant, ) File No.: EB-10-MD-002
)
v. )
)
Intelco Communications, Inc., )
)
Defendant. )
MEMORANDUM OPINION AND ORDER
Adopted: March 5, 2013 Released: March 5, 2013
By the Chief, Enforcement Bureau:
I. INTRODUCTION
1. In this Memorandum Opinion and Order (Order), we grant in part an
unopposed Motion for Default Judgment^ against Intelco
Communications, Inc. (Intelco), thereby resolving a formal complaint
filed by APCC Services, Inc. (APCC)^ against Intelco pursuant to
section 208 of the Communications Act of 1934, as amended (Act).^ The
Complaint alleges that Intelco violated sections 201(b) and 276(b) of
the Act^ by failing to comply with the Commission's rules that require
Intelco to pay dial-around compensation to APCC for calls originating
from APCC's payphones.^ For the following reasons, we grant APCC's
Motion for Default Judgment and order Intelco to pay APCC damages in
the amount of $1,026,267.84, plus interest.
II. BACKGROUND
A. Per-Call Payphone Compensation
2. Section 276 of the Act directed the Commission to establish a per-call
compensation plan to ensure that all payphone service providers (PSPs)
are fairly compensated for "each and every completed intrastate and
interstate call using their payphone."^ Included among the calls
subject to this payment mandate are certain categories of coinless
payphone calls--known as "dial-around calls"--during which the caller
makes a coinless call using an access code or toll-free number to
reach a carrier other than the payphone's presubscribed long distance
carrier.^ The Commission's implementing rules place the responsibility
for paying such "dial-around compensation" on the "Completing
Carrier," which is the "long distance carrier or switch-based long
distance reseller that completes a coinless access code or subscriber
toll-free payphone call."^ From April 21, 1999, to September 26, 2004,
the default compensation per-call rate for these calls, to be paid by
the Completing Carrier to the PSP, was $.24, and after September 27,
2004, the default compensation rate is $.494.^
B. The Parties
3. APCC is an agent for certain PSPs for the billing and collection of
dial-around call compensation.^ According to APCC, Intelco was at all
relevant times a common carrier that provided interexchange
telecommunications service in the United States as a switch-based
reseller of long distance calls, including calls originating from
payphones owned by PSPs represented by APCC, and was the Completing
Carrier with respect to the calls at issue.^
4. On March 12, 2010, APCC filed the instant Complaint against Intelco
seeking to recover unpaid dial-around compensation allegedly due under
section 276 of the Act and the Commission's rules.^ Specifically, APCC
alleges that Intelco failed to pay dial-around compensation from July
1, 2004, to September 30, 2009 (the Complaint Period) for calls
originating from APCC's PSPs' payphones and completed by Intelco.^
APCC also alleges that Intelco has violated Commission rules requiring
payphone call tracking systems, quarterly reports, financial
certification, and annual audits and audit reports.^
C. Procedural History
5. In June 2006, pursuant to section 208 of the Act, and sections
1.711-1.718 of the Commission's rules,^ APCC filed two informal
complaints against Intelco^ alleging that Intelco had violated
sections 201(b) and 276 of the Act, and sections 64.1300-64.1320 of
the Commission's rules,^ by failing to pay payphone dial-around
compensation allegedly due to PSPs represented by APCC. Intelco
responded to the second informal complaint,^ thus establishing a
six-month period within which the parties could try to resolve the
dispute without the need for APCC to file a formal complaint.^ On
March 12, 2010, after both parties had jointly sought and received
numerous extensions of the deadline for APCC to "convert" the
unresolved informal complaints to a formal complaint under rule
1.718,^ APCC filed the instant Complaint against Intelco.^
6. On March 26, 2010, pursuant to section 1.735 of the Commission's
rules,^ the Commission sent a copy of the Complaint to Intelco, with
April 16, 2010, as the deadline for filing an answer.^ Intelco did
not, however, file an answer to the Complaint, as required by the
Commission's formal complaint rules.^ ^ Consequently, on April 23,
2010, the Commission notified Intelco in writing that the Commission
has authority to impose penalties for failure to respond to a
Commission request for information or for a violation of Commission
rules, and that the Commission may also enter a default judgment
against a defendant that fails to participate in a formal complaint
proceeding.^ The Commission also directed Intelco to indicate, by
April 29, 2010, whether it intended to respond to the Complaint. ^ ^
7. On April 27, 2010, Intelco informally indicated in a facsimile to
Commission staff, i.e., not in a pleading properly filed with the
Secretary's office or in conformance with any other Commission
procedural rule, that Intelco would "not be filing a response to the
formal complaint" because, as a purported Canadian company, Intelco
believed the Commission lacked personal jurisdiction over it.^
Notably, the Intelco Fax acknowledged that Intelco was "in receipt of"
Commission staff's April 23 Notification Letter, thus showing that
Intelco received actual notice of the Complaint.^
8. In a letter ruling dated May 14, 2010,^ Commission staff weighed the
consequences of Intelco's failure to submit an answer, and determined
that, on or before June 7, 2010, APCC should either withdraw the
Complaint (in order to file an informal complaint against Intelco
alleging identical claims) or file a motion for default judgment.^
Commission staff also stated that a failure to take either of these
steps could result in a dismissal for failure to prosecute.^ On June
7, 2010, APCC filed a Motion for Default Judgment.^ Intelco did not
file an opposition to APCC's Motion for Default Judgment.
9. Because the record lacked information regarding damages (that is, the
only information regarding the number of calls completed by Intelco
was information provided by intermediate carriers regarding the number
of calls delivered to Intelco), on August 5, 2010, Commission staff
directed the parties to "supplement the record with information that
would provide a basis for calculating or estimating the number or
percentage of total calls that were completed."^ On August 20, 2010,
APCC provided a summary of data that could be used to calculate the
number of calls that Intelco completed.^ Again, Intelco failed to file
a response that complied with the Commission's rules. Rather, on
August 24, 2010, Intelco sent a letter to APCC, copying Commission
staff (but not filed with the Commission's Secretary) that (1)
acknowledged receipt of Commission staff's August 2010 Letter, and (2)
objected to the disclosure of certain information in the APCC Data
Letter.^ Subsequently, on September 8, 2010, APCC proposed a proxy for
estimating the number of completed calls.^
III. DISCUSSION
10. The key facts of this proceeding are not in dispute because Intelco
purposefully chose not to participate in this proceeding. We therefore
need only address two threshold issues before addressing damages:
first, we discuss the Commission's personal jurisdiction over Intelco;
and second, we consider APCC's request for a default judgment. As
explained below, we find the Commission has personal jurisdiction over
Intelco, and based on APCC's unopposed submissions, we grant the
request for default judgment.
A. The Commission Has Personal Jurisdiction Over Intelco.
11. Under section 1.724 of the Commission's rules, a defendant in a formal
complaint proceeding, unless otherwise directed by the Commission,
must file an answer within twenty days of service of the formal
complaint, and "[t]he answer shall advise the complainant and the
Commission fully and completely of the nature of any defense, and
shall respond specifically to all material allegations of the
complaint."^ Section 1.724 also provides that "[a]verments in a
complaint . . . are deemed to be admitted when not denied in the
answer."^ Thus, in an ordinary case, a defendant in a formal complaint
proceeding must raise the affirmative defense of lack of personal
jurisdiction in the answer (or alternatively seek to make a limited
appearance for purposes of contesting jurisdiction), or it waives this
defense.^
12. But this is not the ordinary case of a domestic defendant filing an
answer and failing to raise in the answer a defense of lack of
personal jurisdiction. Instead, here, a putatively foreign defendant
has failed to file any answer or otherwise officially participate at
all in this formal complaint proceeding. And the complainant is now
seeking a default judgment as a result. These circumstances are not
directly addressed by our formal complaint rules. Accordingly, it is
appropriate for us to consult federal court procedural law for
guidance.^
13. Under similar circumstances, federal courts have ruled that, before
entering a default judgment against a foreign defendant, a court
should determine, sua sponte, whether the court has personal
jurisdiction over the foreign defendant who may not have technically
appeared in a case, and whether adequate notice has been provided.^
The plaintiff's burden of proving personal jurisdiction, however, is
relatively low: the plaintiff need only make a prima facie showing,
and such showing may rest on documentation only, such as pleadings,
affidavits and other written materials.^ We believe that approach
makes sense and apply it here.
14. Therefore, although Intelco failed to appear in this proceeding and,
under normal circumstances, would have waived the defense of lack of
personal jurisdiction, in the interest of fairness we consider sua
sponte whether the Commission has personal jurisdiction over this
(apparently) foreign defendant.^ As discussed below, in response to
Commission staff's May 14 Letter requiring APCC to withdraw the
complaint or seek default judgment, APCC describes how Intelco's
activities support specific personal jurisdiction, which can be
justified by a single significant contact - also known as the "minimum
contacts doctrine."^ We agree and conclude that the Commission has
jurisdiction here because Intelco had more than sufficient "minimum
contacts" with the United States such that the exercise of
jurisdiction "does not offend traditional notions of fair play and
substantial justice."^
15. In International Shoe, the Supreme Court recognized that jurisdiction
over a defendant corporation not physically present in the forum state
would exist where that defendant had availed itself of that forum's
benefits, such that it would be reasonable to require it to defend a
suit related to those activities.^ Applying that standard here, we
find that Intelco could reasonably have anticipated defending an
action involving calls it completed from APCC's payphones, i.e., calls
that Intelco purposefully received and from which it benefitted. In
particular, the record reflects that Intelco had arrangements with
telecommunications carriers to carry 3,414,812 calls^ over several
years^ from APCC's United States-based payphones to Intelco's calling
card platform, and that these arrangements, and the Intermediate
Carrier Reports that resulted from (and provide evidence of) them,
show substantial continuous contacts with the United States and the
PSPs' payphones.^ Further, APCC provides uncontested testimony
indicating that Intelco marketed calling cards in the United
States--cards that were used to make dial-around calls from APCC's
payphones.^ APCC's President and General Manager, with extensive
experience dealing with Intermediate Carriers and Completing Carriers,
describes in detail how APCC collected data and determined Intelco was
the Completing Carrier for the calls at issue.^ We are persuaded that
APCC's evidence shows Intelco purposefully sought to reap the benefits
of calls originating from APCC's United States-based payphones, i.e.,
Intelco directed its business activities towards the United States.
Further, we note that Intelco could have requested to appear in this
proceeding for the limited purpose of addressing jurisdiction; it did
not, however, submit such a request.^
16. Lastly, as discussed above, we note again that the record shows that
Intelco had adequate notice of this proceeding at each stage.^ For
example, the record shows that:
* Intelco actively participated in the related informal complaint
process;^
* Intelco was served with, and responded to, the Complaint (albeit
not with an answer as required by the Commission's rules);^
* Intelco was served with, and responded to, several
Complaint-related communications from Commission staff;^ and
* Intelco was served with, and acknowledged, the Motion for Default
and APCC's subsequent supplementation regarding damages.^
* Accordingly, based on the record evidence showing that Intelco
purposefully directed, and benefitted from, its substantial
contacts with APCC's payphones in the United States, we find that
the Commission has personal jurisdiction over Intelco.
B. Request for Default Judgment
18. In connection with the requirement in section 1.724(a) of the
Commission's rules, described above, to file an answer,^
section 1.724(d) of the Commission's rules states that
"[a]verments in a complaint . . . are deemed to be admitted
when not denied in the answer."^ If the defendant fails to
file an answer, the Commission has at its disposal "a wide
range of sanctions to address violations or abuses of [its]
formal complaint rules, including summary grant or dismissal
of a complaint."^ Although the Commission's formal complaint
rules do not specifically address default judgments, when a
defendant knowingly fails to answer a complaint against it,
the Commission may find the defendant in default, and may
consider the material facts alleged in the complaint to be
admitted.^
19. In determining whether to issue a default judgment, the
Commission has considered Federal Rule of Civil Procedure 55
for guidance.^ Rule 55 states that, when a party against whom
a judgment for affirmative relief is sought has failed to
plead or otherwise defend, a default judgment may be entered
against it.^ In APCC v. TS Interactive, we utilized the
courts' approach to applying Rule 55, and considered the
following factors: whether the facts alleged in the complaint
state a valid claim; whether the defendant has clearly failed
to defend; whether the defendant's failure to defend has
continued for a significant period of time; whether the
defendant's failure to defend derives from excusable neglect
or a good faith mistake; whether the defendant's failure to
defend has substantially prejudiced the plaintiff's rights;
whether the plaintiff has prosecuted the matter properly;
whether the claim concerns important matters of public policy;
and whether the claim seeks substantial monetary damages.^ We
find it appropriate here to again consider these factors, and
for the reasons described below, we conclude that APCC is
entitled to a default judgment on liability.
20. First, the alleged facts, if true, constitute a violation of
law.^ As stated previously, for payphone traffic during the
Complaint Period, the Commission's rules and orders required a
long distance carrier or switch-based reseller to pay
compensation to a PSP for every dial-around call originated
from the PSP's payphones and completed by that long distance
carrier or switch-based reseller.^ In this case, the unopposed
Complaint and Motion for Default Judgment credibly allege that
Intelco was the Completing Carrier for the calls described in
the Intermediate Carrier Reports, as modified below in the
damages discussion.^ Specifically, the unrebutted testimony
and evidence submitted by APCC shows that Intelco purposefully
carried, and benefitted from, well over 3 million calls from
APCC's U.S.-based payphones over several years.^ Thus,
applying the alleged facts to the applicable law, we conclude
that the Complaint states a valid basis for requiring Intelco
to pay dial-around compensation to APCC for dial-around calls
pertaining to the Complaint Period.
21. Next, we conclude that Intelco has clearly failed to defend
the Complaint; that Intelco's failure to defend has continued
for a significant period of time; and that Intelco's failure
to defend does not derive from excusable neglect or a good
faith mistake. First, we note that Intelco actively
participated in the informal complaint process and only later
chose to refrain from further participation in our
proceedings.^ The Intelco Fax shows that Intelco received
notice of the Complaint and of the deadline for filing the
answer. Also, as evidenced by the Intelco Fax, Intelco
consciously elected to not file an answer, or to respond to
subsequent correspondence sent by Commission staff^ setting
forth procedures for APCC to move for a default judgment,
i.e., Intelco's failure to respond was clearly not due to
excusable neglect or a good faith mistake. This failure to
participate or otherwise defend the Complaint has continued
for over two years, and Intelco has not offered a legitimate
rationale for its failure to participate or indicated that it
will change its position. We therefore find that Intelco
clearly, knowingly, and repeatedly failed to defend against
the Complaint for a significant period of time.
22. We also conclude that APCC has been substantially prejudiced
by the delay caused by Intelco's failure to defend the
Complaint. As described above, the unopposed Complaint
demonstrates that APCC is entitled to dial-around
compensation, and Intelco's failure to participate in this
proceeding has significantly delayed the payment of this
compensation. We further find that APCC has properly
prosecuted this case. APCC complied with the Commission's
formal complaint rules (including the rules regarding service
and filing),^ and has been responsive to staff's requests for
additional information. Moreover, the record reflects that
APCC entered into settlement negotiations with Intelco during
the initial stage of this proceeding.^ Only when further
settlement talks appeared fruitless, and Intelco failed to
participate in this proceeding, did APCC file its Motion for
Default Judgment.
23. Finally, the claim presented here is not an important matter
of public policy, such as a constitutional or statutory
construction issue, but rather is a straightforward, private
payment dispute under the Commission's payphone rules.
Moreover, we find that the amount of damages--as described
below and based on APCC's submission provided at staff's
request (and unopposed by Intelco)--is not so large as to
preclude a default judgment.^
24. For all of the foregoing reasons, we find that Intelco is in
default regarding the liability alleged in the Complaint.
Thus, we grant APCC's Motion for Default Judgment on
liability.
C. Damages
25. In accordance with APCC v. Radiant,^ we estimate the number
of completed calls and determine that APCC is entitled to
per-call compensation from Intelco in the amount of
$1,026,267.84, plus interest. As discussed above, APCC is
entitled to be paid for completed calls. While certain key
facts regarding the calls at issue are not in dispute, the
Complaint and the Motion for Default Judgment are unclear
regarding the number of completed calls. That is, the record
does not contain a set of audited data to calculate completed
calls, and because Intelco apparently failed to comply with
the Commission's call tracking rules, we cannot ascertain the
exact number of calls for which Intelco is liable.
26. In APCC v. Radiant, the Commission recognized that it would be
"implausible" for every call delivered to the defendant
carrier to have been actually completed.^ Moreover, as the
Commission explained in APCC v. Radiant, to accept a damages
proposal "for all calls regardless of whether they are
actually completed would contravene section 276's directive
that compensation be paid only for `completed intrastate and
interstate call[s].'"^ Thus, the Commission endeavored to find
an appropriate proxy "to ensure that the represented PSPs
collect the monies they are owed and that [the defendant] is
not unjustly enriched."^ In APCC v. Radiant, however, as here,
the defendant failed to comply with the Commission's rules
regarding implementing an audited and certified call tracking
system.^
27. Nonetheless, APCC requested in the Complaint and the Motion
for Default Judgment that the Commission assume 100% of the
calls delivered to Intelco were completed.^ That is, APCC
originally calculated its damages amount by "multiplying the
FCC-prescribed compensation rate by the number of dial-around
calls reported by Intermediate Carriers in their respective
Intermediate Carrier Reports as delivered to [Intelco]" for
the period in question, plus accrued interest.^ Previously,
when similarly faced with unaudited/uncertified payphone data,
the Commission sought to arrive at a proxy for calculating
completed calls.^ Accordingly, on August 5, 2010, in light of
the lack of information in the record regarding the actual
number of completed calls, Commission staff directed the
parties to supplement the record, stating that "[s]uch
supplementation might include data regarding the use of
proxies for call completion calculations, and might involve
industry standards or practices, expert opinion, evidence
provided in other cases, or other persuasive documentation."^
28. APCC submitted a supplement; Intelco did not.^ Based on the
approaches taken in APCC v. Radiant and APCC v. CCI, where the
Commission recognized not every call would have been
"completed,"^ APCC proposes the Commission average the results
from those cases, with the proposed completion percentage here
as 63.64% of the delivered calls to Intelco.^ We find this
proposal reasonable, and due in large part to Intelco's
failure to provide audited data, otherwise comply with the
Commission's call tracking rules, or to respond to the
Commission's request or to APCC's proposal, we believe this
estimate provides a sufficient basis to meet the requirements
of section 276. Therefore, applying this percentage to APCC's
original damages figure of $1,612,614.46, we find that Intelco
must compensate APCC, before interest, in the amount of
$1,026,267.84. Regarding the interest calculation, as we
stated in APCC v. Radiant, interest in unpaid dial-around
compensation cases during the period in question accrues at an
annual rate of 11.25%, starting on the first day of the
quarter that is one quarter after the one in which the billed
call was made.^ Intelco must also pay APCC this interest.
IV. ORDERING CLAUSES
29. Accordingly, IT IS ORDERED, pursuant to sections 1, 4(i),
4(j), 208 and 276 of the Communications Act of 1934, as
amended, 47 U.S.C. SS 151, 154(i), 154(j), 208, and 276,
sections 1.720-1.736 and 64.1300-64.1320 of the Commission's
rules, 47 C.F.R. SS 1.720-1.736, 64.1300-64.1320, and
authority delegated by sections 0.111 and 0.311 of the
Commission's rules, 47 C.F.R. SS 0.111, 0.311, that the Motion
for Default Judgment IS GRANTED to the extent indicated
herein.
30. IT IS FURTHER ORDERED, pursuant to sections 1, 4(i), 4(j),
208, and 276 of the Communications Act of 1934, as amended, 47
U.S.C. SS 151, 154(i), 154(j), 208, and 276, sections
1.720-1.736 and 64.1300-64.1320 of the Commission's rules, 47
C.F.R. SS 1.720-1.736, 64.1300-64.1320, and authority
delegated by sections 0.111 and 0.311 of the Commission's
rules, 47 C.F.R. SS 0.111, 0.311, that the Defendant in this
proceeding IS IN DEFAULT and the factual averments contained
in the Complaint ARE DEEMED ADMITTED to the extent indicated
herein.
31. IT IS FURTHER ORDERED, pursuant to sections 1, 4(i), 4(j), 208
and 276 of the Communications Act of 1934, as amended, 47
U.S.C. SS 151, 154(i), 154(j), 208, and 276, sections
1.720-1.736 and 64.1300-64.1320 of the Commission's rules, 47
C.F.R. SS 1.720-1.736, 64.1300-64.1320, and authority
delegated by sections 0.111 and 0.311 of the Commission's
rules, 47 C.F.R. SS 0.111, 0.311, that the above-captioned
Complaint IS GRANTED to the extent indicated herein.
32. IT IS FURTHER ORDERED, pursuant to sections 1, 4(i), 4(j),
201, 208, and 209 of the Communications Act of 1934, as
amended, 47 U.S.C. SS 151, 154(i), 154(j), 201, 208, and 209,
and sections 1.720-1.736 and 64.1300-64.1320 of the
Commission's rules, 47 C.F.R. SS 1.720-1.736, 64.1300-64.1320,
that, within ninety (90) days of the release of this Order,
Intelco Communications, Inc. shall pay APCC Services, Inc.
damages in the amount of $1,026,267.84, together with interest
on such damages at the rate of 11.25%, accruing on the first
day of the quarter that is one quarter after the one in which
the billed call was made.
FEDERAL COMMUNICATIONS COMMISSION
P. Michele Ellison
Chief, Enforcement Bureau
^ Motion for Default Judgment with Supporting Memorandum of Law,
File No. EB-10-MD-002 (filed June 7, 2010) (Motion for Default
Judgment).
^ Formal Complaint, File No. EB-10-MD-002 (filed Mar. 12, 2010)
(Complaint).
^ 47 U.S.C. S 208.
^ 47 U.S.C. SS 201(b), 276(b).
^ See 47 C.F.R. SS 64.1300-64.1320. The Commission promulgated
these rules to implement section 276 of the Act, 47 U.S.C. S 276.
^ 47 U.S.C. S 276(b)(1)(A).
^ See, e.g., Request to Update Default Compensation Rate for
Dial-Around Calls from Payphones, Report and Order, 19 FCC Rcd
15636, 15638, para. 3 & n.9 (2004) (Rate Increase Order)
(subsequent history omitted).
^ 47 C.F.R. S 64.1300(a)-(b), (d). "Dial-around compensation"
refers to the per-call payments that interexchange carriers (IXCs)
must make to PSPs for certain categories of completed coinless
calls originating from payphones, including access code calls and
calls to subscriber toll-free numbers. 47 C.F.R. SS
64.1300-64.1310.
^ See, e.g., Rate Increase Order, 19 FCC Rcd at 15637, 15640-41,
paras. 1, 8-13 (modifying the default compensation rate from $.24
to $.494); 47 C.F.R. S 64.1300(d).
^ Complaint at 4; Complaint, Exhibit 4, Declaration of Ruth Jaeger
(Jaeger Decl.) at paras. 5-6. Because APCC is the agent for the
PSPs at issue, APCC is referred to herein as if it were the
relevant PSP. The list of the represented PSPs is attached to the
Complaint as Exhibit 1.
^ See, e.g., Complaint at 5, paras. 9-10; Jaeger Decl. at paras.
8-11; Complaint, Exhibit 7, Intermediate Carrier Report Data
(Intermediate Carrier Reports).
^ See, e.g., Complaint at 2; 47 C.F.R. SS 64.1300-64.1310; 47
U.S.C. S 276.
^ Under Commission rule 1.718, 47 C.F.R. S 1.718, the Complaint
relates back to the filing date of the two informal complaints to
establish the "Complaint Period."
^ See, e.g., Complaint at 2-3; 47 C.F.R. SS 64.1310-64.1320.
^ 47 U.S.C. S 208; 47 C.F.R. SS 1.711-1.718.
^ See Informal Complaint for Collection of Unpaid Payphone
Compensation, File No. EB-06-MDIC-0038 (filed June 26, 2006);
Informal Complaint for Collection of Unpaid Payphone Compensation,
File No. EB-08-MDIC-0044 (filed June 30, 2008).
^ 47 U.S.C. SS 201(b), 276; 47 C.F.R. SS 64.1300-64.1320.
^ Response to Informal Complaint of APCC Services, Inc., File No.
EB-08-MDIC-0044 (filed Aug. 15, 2008).
^See, e.g., 47 C.F.R. S 1.718 (providing that an informal complaint
complainant must file a formal complaint within six months of the
defendant's response in order for the filing date of the formal
complaint to "relate back" to the filing date of the informal
complaint for purposes of the statute of limitations).
^ See, e.g., Request for Waiver, File No. EB-08-MDIC-0044 (filed
Feb. 6, 2009); Request for Waiver, File No. EB-08-MDIC-0044 (filed
Jan. 5, 2010).
^ This formal complaint proceeding includes the claims from both of
APCC's informal complaints.
^ 47 C.F.R. S 1.735.
^ Letter from Alexander P. Starr, Market Disputes Resolution
Division, FCC, to Bassim Kano and Serge Farman, Intelco, File No.
EB-10-MD-002 (dated Mar. 26, 2010) (Notice of Formal Complaint).
The Commission sent the Notice of Formal Complaint by U.S. Mail and
by e-mail on March 26, 2010. When it became clear that the e-mail
transmission was incomplete, staff contacted Intelco's former
counsel and ascertained a valid e-mail address and fax number, and
the Commission again emailed and faxed the Notice of Formal
Complaint on April 23, 2010.
^ See 47 C.F.R. SS 1.720, 1.724.
^ Letter from Jacqueline Spindler, Market Disputes Resolution
Division, FCC, to Bassim Kano and Serge Farman, Intelco, File No.
EB-10-MD-002 (dated Apr. 23, 2010) (April 23 Notification Letter)
(citing 47 U.S.C. SS 502, 503(b)(1)(B) and APCC Services, Inc. v.
TS Interactive, Inc., Order, 17 FCC Rcd 25523 (Enf. Bur. 2002)).
The Commission sent the April 23 Notification Letter to Intelco by
U.S. Mail, e-mail, and facsimile.
^ Id.
^ Letter sent via facsimile from Adrian Grad Deleanu, Chief
Financial Officer, Intelco, to Jacqueline Spindler, Market Disputes
Resolution Division, FCC (dated Apr. 27, 2010) (Intelco Fax).
Notably, the Intelco Fax includes no evidentiary support (e.g.,
declarations or affidavits), no legal analysis, and no reference to
the File Number of this proceeding. Accordingly, as addressed
below, the Intelco Fax is not a pleading in this proceeding and is
only mentioned to illustrate Intelco's conscious failure to file an
answer to the Complaint. The full text of the Intelco Fax is as
follows: "Intelco Communication, Inc., as a corporate citizen of
Canada, with neither retail customers, nor assets, in the United
States will not concede personal jurisdiction in a formal
adjudicatory proceeding. If the FCC still seeks a more detailed
explanation of why it lacks jurisdiction to regulate Intelco,
please refer to our responses to the informal complaints filed
against it, which you reference on page two of your letter."
Although Intelco implies that it has filed multiple responses to
APCC's informal complaints against Intelco, we have received only
one. Intelco submitted a response to APCC's 2008 related informal
complaint. See supra note 18. Intelco did not respond to APCC's
other related 2006 informal complaint, APCC v. Intelco, File No.
EB-06-MDIC-0038 (filed June 26, 2006).
^ Commission staff transmitted a copy of Intelco's statement to
APCC by e-mail the next day. E-mail from Jacqueline Spindler, FCC,
to Daniel Collins, APCC, File No. EB-10-MD-002 (dated Apr. 29,
2010).
^ Letter from Alexander P. Starr, Market Disputes Resolution
Division, FCC, to Daniel Collins, APCC, and Adrian Grad Deleanu,
Serge Farman, and Bassim Kano, Intelco, File No. EB-10-MD-002
(dated May 14, 2010) (May 14 Letter).
^ May 14 Letter at 1-2.
^ May 14 Letter at 2.
^ APCC served a copy of the Motion for Default Judgment on Intelco
by overnight courier and fax. See Motion for Default Judgment at
20, Certificate of Service.
^ Letter from Jacqueline Spindler, Market Disputes Resolution
Division, FCC, to Daniel Collins, APCC, and Adrian Grad Deleanu,
Serge Farman, and Bassim Kano, Intelco, File No. EB-10-MD-002
(dated Aug. 5, 2010) (August 2010 Letter). Staff suggested that
such supplementation might include data regarding the use of
proxies, industry best practices, evidence provided in other cases,
or other persuasive documentation or arguments.
^ Letter from Daniel Collins, APCC, to Jacqueline Spindler, Market
Disputes Resolution Division, FCC, File No. EB-10-MD-002 (dated
Aug. 20, 2010) (APCC Data Letter). APCC served a copy of the APCC
Data Letter on Intelco by hand delivery and fax. See APCC Data
Letter at 2, Certificate of Service.
^ In a letter to APCC (not filed with the Commission (e.g., the
Secretary), but only copied to Commission staff), Intelco objected
to the APCC Data Letter, arguing that it violated a non-disclosure
agreement between the parties. Letter from Jonathan Lee, Counsel
for Intelco, to Daniel Collins, APCC (dated Aug. 24, 2010) (Intelco
August 24, 2010 Letter). Because this letter was not filed pursuant
to the Commission's rules, it is not part of the record in this
proceeding. Nonetheless, we note that APCC responded, in a letter
filed with the Secretary, stating that throughout this proceeding
Intelco "seeks to maintain the fiction" that it is not "before" the
Commission by writing directly to APCC, and only copying Commission
staff. Letter from Daniel Collins, APCC, to Jacqueline Spindler,
Market Disputes Resolution Division, FCC, File No. EB-10-MD-002, at
4 (dated Sep. 8, 2010). In addition, on August 23, 2010, Commission
staff assigned to this case received a facsimile letter from
Intelco's Controller advising that Adrian Grad Deleanu no longer
worked for Intelco. This facsimile further shows that Intelco had
been receiving the Commission's correspondence. See Facsimile from
Nancy Toroyan, Controller, Intelco, to Jacqueline Spindler, Market
Disputes Resolution Division, FCC (dated Aug. 23, 2010) (Intelco
August 23, 2010 Letter).
^ Letter from Daniel Collins, APCC, to Jacqueline Spindler, Market
Disputes Resolution Division, FCC, File No. EB-10-MD-002 (dated
Sep. 8, 2010).
^ 47 C.F.R. S 1.724(b).
^ 47 C.F.R. S 1.724(d).
^ This requirement parallels Federal Rule of Civil Procedure (Fed.
R. Civ. P.) 12, which provides that the defense of lack of personal
jurisdiction is waived unless it is raised in the defendant's
responsive pleading, or by motion. Fed. R. Civ. P. 12(b)(2), (h);
see, e.g., e360 Insight v. The Spamhaus Project, 500 F.3d 594 (7th
Cir. 2007). As discussed below, where appropriate, we look to the
Federal Rules of Civil Procedure for procedural guidance in
Commission adjudicatory proceedings. See, e.g., APCC Services,
Inc. v. TS Interactive, Inc., Memorandum Opinion and Order, 19 FCC
Rcd 10456, 10460, para. 10 (Enf. Bur. 2004) (APCC v. TS Interactive
Damages Order).
^ See, e.g., APCC Services, Inc. v. TS Interactive, Inc., Order, 17
FCC Rcd 25523, 25526-27, para. 7 (Enf. Bur. 2002) (APCC v. TS
Interactive); 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, 22535, para. 85 (1997) (subsequent history omitted)
(Formal Complaints Order) (adopting a rule similar to Fed. R. Civ.
P. 26(a)(1) for section 208 formal complaint proceedings). See
Implementation of the Telecommunications Act of 1996, Amendment of
Rules Governing Procedures to be Followed When Formal Complaints
are Filed Against Common Carriers, Second Report and Order, 13 FCC
Rcd 17018, 17052, para. 60 (1998) (subsequent history omitted)
(Formal Complaints Second Report and Order) (adopting a rule
similar to Fed. R. Civ. P. 26(a)(2)(B) for Accelerated Docket
proceedings).
^ See, e.g., Mwani v. Bin Laden, 417 F.3d 1, 6-14 (D.C. Cir. 2005);
Dennis Garberg & Associates, Inc. v. Pack-Tech International Corp.,
115 F.3d 767, 772 (10th Cir. 1997) (Garberg v. Pack-Tech); Fed. R.
Civ. P. 4(k)(2).
^ See, e.g., Mwani v. Bin Laden, 417 F.3d at 7; Garberg v.
Pack-Tech, 115 F.3d at 773.
^ See, e.g., Garberg v. Pack-Tech, 115 F.3d at 772. Intelco has not
appeared in this formal complaint proceeding and the procedurally
deficient April 27, 2010, Intelco Fax states without support that
Intelco is a "corporate citizen of Canada." Nonetheless, the record
indicates that certain Intelco employees are in Canada. See Motion
for Default Judgment at 5. Consequently, in the interest of
fairness, we consider sua sponte the Commission's jurisdiction over
Intelco as a foreign defendant that has technically not entered an
appearance.
^ Motion for Default Judgment at 7-10. See, e.g., World-Wide
Volkswagen Corp. v. Woodson, 444 U.S. 286 (1980); Burger King Corp.
v. Rudzewicz, 471 U.S. 462 (1985) (Burger King); Asahi Metal
Industry Co. v. Superior Court of California, 480 U.S. 102 (1987).
^ International Shoe Co. v. State of Washington, 326 U.S. 310, 316
(1945) (International Shoe); see also Burger King, 471 U.S. at 476
("Jurisdiction ... may not be avoided merely because the defendant
did not physically enter the forum State.") (emphasis in original).
See Motion for Default Judgment at 7-10 (describing Intelco's
contacts with the United States in light of International Shoe).
^ International Shoe, 326 U.S. at 316-18; see also 21^st Century
Fax(es) Ltd., Forfeiture Order, 17 FCC Rcd 1384, 1386-87, para. 6
(2002) (stating, in applying International Shoe, that "[c]ontrary
to 21^st Century's suggestion, its status as a foreign-registered
and controlled company with its principal place of business in the
UK does not preclude a finding that the company also is `within the
United States.'").
^ See Jaeger Decl. at para. 11; see also Intermediate Carrier
Reports.
^ Complaint at 2 (describing the "Complaint Period"); Jaeger Decl.
at paras. 8-11.
^ Complaint at 5, 9-10; Intermediate Carrier Reports; Jaeger Decl.
at 8-11; Motion for Default Judgment, Declaration of Ruth Jaeger
(Jaeger Motion Decl.) at paras. 5-10. We note that because specific
information regarding Intelco's practices would largely be in
Intelco's possession, and because Intelco purposefully failed to
respond to APCC's interrogatories, see Complainant's Initial
Interrogatories, File No. EB-10-MD-002 (filed Mar. 12, 2010), we
give significant weight to the Intermediate Carrier Reports
submitted by APCC and the two Jaeger declarations.
^ Jaeger Motion Decl. at paras. 7-10.
^ See Jaeger Decl. at paras. 1-22; Jaeger Motion Decl. at 1-10.
^ See, e.g., In the Matter of Telerent Leasing Corp., Memorandum
Opinion and Order, 43 FCC 2d 487 (1973) (granting a request by the
North Carolina Utilities Commission to participate in a proceeding
for the limited purpose of addressing the Commission's
jurisdiction) (subsequent history omitted). Because the record
reflects that Intelco purposefully directed its activities at the
United States, Intelco has the burden of presenting a "compelling
case" that other considerations of fair play would render
jurisdiction unreasonable. Burger King, 471 U.S. at 477. Because it
affirmatively chose not to appear in this proceeding, if only for
the purpose of addressing jurisdiction, and therefore provided no
basis for concluding jurisdiction over Intelco is not proper,
Intelco has not met its burden.
^ See supra paragraphs 6-7.
^ See, e.g., supra note 18.
^ See, e.g., supra note 27.
^ See, e.g., supra notes 25, 27, 28, 32, and 35.
^ See, e.g., supra note 35.
^ 47 C.F.R. S 1.724(a).
^ 47 C.F.R. S 1.724(d).
^ Formal Complaints Order, 12 FCC Rcd at 22610, para. 278. See
Formal Complaints Second Report and Order, 13 FCC Rcd at 17054,
para. 65.
^ See, e.g., APCC v. TS Interactive, 17 FCC Rcd at 25526, para. 6.
^ See, e.g., APCC v. TS Interactive, 17 FCC Rcd at 25526-27, para.
7.
^ Fed. R. Civ. P. 55.
^ APCC v. TS Interactive, 17 FCC Rcd at 25526-29, paras. 7-13.
^ Consistent with section 1.724(d) of the Commission's rules, we
consider the facts alleged by APCC to be admitted.
^ See supra paragraph 2.
^ See, e.g., Complaint at 9-10, para. 25; Intermediate Carrier
Reports; Jaeger Decl. at 8-9; Motion for Default Judgment at 6-10.
^ See supra paragraph 15.
^ See, e.g., Intelco Response to Informal Complaint, File No.
EB-08-MDIC-0044 (filed Aug. 15, 2008).
^ See supra notes 27, 33.
^ See, e.g., supra paragraphs 6-9.
^ Complaint at 25-26, paras. 105-10.
^ Section 1.727(e) of the Commission's rules provides that a
"[f]ailure to oppose any motion may constitute grounds for granting
of the motion." 47 C.F.R. S 1.727(e). Here, Intelco failed to
respond to APCC's Motion for Default Judgment. Thus, section
1.727(e) further supports our decision to grant APCC's motion.
^ APCC Services, Inc. v. Radiant Telecom, Inc., Memorandum Opinion
and Order, 23 FCC Rcd 8962 (2008) (APCC v. Radiant).
^ APCC v. Radiant, 23 FCC Rcd at 8971, para. 29.
^ 47 U.S.C. S 276(b)(1)(a) (emphasis added).
^ APCC v. Radiant, 23 FCC Rcd at 8972, para. 30.
^ APCC v. Radiant, 23 FCC Rcd at 8970, para. 25. Jaeger Decl. at
paras. 15-17.
^ Complaint at 21-23, paras. 75-78; Motion for Default Judgment at
16-17.
^ Complaint at 3, para. 3.
^ APCC Services, Inc. v. CCI Communications, LLC, Memorandum
Opinion and Order, 25 FCC Rcd 8224, 8227-28, paras. 10-13 (Enf.
Bur. 2010) (APCC v. CCI).
^ August 2010 Letter.
^ Letter from Daniel Collins, APCC, to Jacqueline Spindler, Market
Disputes Resolution Division, FCC, File No. EB-10-MD-002 (dated
Sep. 8, 2010) at 5 (noting that the Commission's methodology first
articulated in APCC v. Radiant and followed in APCC v. CCI resulted
in the defendants being liable for 61.53% of the Intermediate
Carrier reported calls and 65.75% of the Intermediate Carrier
reported calls, respectively, and asking the Commission to utilize
in this case the average of those percentages - i.e., 63.64%).
Because the record does not contain any credible evidence regarding
the duration of calls, we cannot use the precise formula that the
Commission employed in APCC v. Radiant, i.e., calculating the
number of "completed" calls by adding all of the calls lasting 30
seconds or longer and half of the calls lasting less than 30
seconds.
^ APCC v. Radiant, 23 FCC Rcd at 8971, para. 29; APCC v. CCI, 25
FCC Rcd at 8227-28, paras. 10-13.
^ Letter from Daniel Collins, APCC, to Jacqueline Spindler, Market
Disputes Resolution Division, FCC, File No. EB-10-MD-002, at 5-6
(dated Sep. 8, 2010).
^ APCC v. Radiant, 23 FCC Rcd at 8974, para. 34.
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Federal Communications Commission DA 13-303
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Federal Communications Commission DA 13-303