Discussion
On November 20, 2008, CVT filed an application for a certificate of public convenience and necessity to provide inter- and intra-local access and transport area services in California as a non-dominant interexchange carrier. The Consumer Protection and Safety Division of the California Public Utilities Commission (CPSD) filed a protest to the CVT application on January 2, 2009.1 Among other things, the CPSD protest alleged that:
1. CVT has been operating in California since August 2008 without the appropriate registration under Public Utilities Code Section 1013.
2. CVT failed to disclose that STi Prepaid, LLC (STi) is an affiliate of CVT.
3. In its application CVT did not disclose that it previously entered into a settlement with the Florida Attorney General for deceptive advertising.
4. CVT did not disclose that in a former incarnation, as Orion Telecommunications, it filed for Chapter 7 bankruptcy and had at least one formal complaint against it granted by the Federal Communications Commission.
On January 27, 2009, CPSD was informed that CVT had been acquired by its former affiliate, STi. Thus, it appeared that the circumstances of the CVT application had changed. By ruling dated March 19, 2009 notice was sent to the CPSD and CVT (the parties to the proceeding), and STi that a Prehearing Conference (PHC) had been set to clarify CVT's status as an applicant and entity. The PHC was held on Wednesday, April 15, 2009, at the Commission. CVT did not appear and the only appearance made was by CPSD. By email dated April 16, 2009, counsel for STi informed the Administrative Law Judge (ALJ) and representatives of CPSD that its failure to appear was the result of an inadvertent mistake, that STi was not representing CVT, and that the transcript of the PHC reflected some misconceptions that STi would like to clarify. STi reiterated these points at a telephonic conference with the ALJ and representatives of CPSD on April 24, 2009.2
On May 12, 2009, CVT filed a Motion to Withdraw Application
(A.) 08-11-022. CVT's motion states that on December 1, 2008, less than two weeks after the application was filed, CVT consummated a transaction that transferred all of its assets related to the provision of prepaid calling card services, including tangible prepaid card inventory, customer agreements and contracts, and vendor agreements, and contracts, to STi.3 According to CVT, "as a result of STi's acquisition of its calling card assets, CVT is no longer in the prepaid calling card business and not otherwise providing or seeking to provide regulated telecommunications services in the State of California."4 As CVT no longer requires the requested authorization, it has requested that its application in this proceeding be withdrawn.
CPSD responded to CVT's request to withdraw its application on June 11, 2009. CPSD noted that the facts uncovered in its investigation suggested several violations. Among other things, CPSD's investigation found that CVT appears to have been operating illegally for several months in California prior to filing its application for registration; that CVT may have failed to disclose affiliates as required by the application form; that CVT may have failed to disclose a settlement with the Florida Attorney General for deceptive advertising; and that CVT may have failed to disclose bankruptcies and prior administrative sanctions against its predecessor entity.5 CPSD therefore requests that if CVT's motion to withdraw is granted, the applicant or any of its current directors, officers or owners of more than 10% of outstanding shares be required to reference this application, CPSD's protest and the decision granting the motion to withdraw the application in any future applications for authorization to provide telecommunications services in California. CVT did not seek permission to reply to CPSD's response.
Given the relief sought by CVT and the uncontested conditions CPSD seeks to place on the withdrawal of the application, consistent with our rules of practice and procedure, it is more appropriate to treat CVT's motion as seeking dismissal pursuant to Rule 11.2 rather than withdrawal.
1 Decision (D.) 09-01-003 which erroneously granted CVT's application was rescinded by D.09-01-005.
2 CPSD served a data request on STi on April 21, 2009. Because STi was not and is not a party to this proceeding, a dispute related to the data request was not addressed in the phone conference.
3 By CVT's account, the transfer of its assets to STi occurred before CPSD filed its protest.
4 Neither CVT nor STi claims to have either sought or obtained Commission approval for this transaction.
5 If true, these potential violations would make the failure to obtain Commission approval prior to transferring CVT's assets to STi a violation of Pub. Util. Code ยง 854.
