6. Discussion
The Commission has a long, well-established policy of supporting the resolution of disputed matters through settlement.31 In doing so, the Commission has acknowledged that settlements advance several important goals, such as reducing the time and expense of litigation, conserving scarce Commission resources, and allowing the parties to reduce risks associated with litigation.32
6.1. Standard of Review
We review this uncontested settlement pursuant to Rule 12.1(d) which provides that, prior to approval, the Commission must find a settlement "reasonable in light of the whole record, consistent with the law, and in the public interest." Initially, we note that the circumstances of the settlement, particularly its endorsement by all parties, generally support its adoption. We find the Settlement Agreement meets the criteria for a settlement pursuant to Rule 12.1(d), and discuss each of these three criteria below.
6.2. Reasonable in Light of the Whole Record
In assessing settlements, the Commission considers all of the settlement provisions. In light of strong public policy favoring settlements, the Commission will not base its conclusions on whether any single provision is the optimal result, but rather, "whether the settlement as a whole produces a just and reasonable outcome."33
The Settling Parties have engaged in extensive discovery, including written data requests, and both CPSD and Americatel prepared and served testimony supporting their litigation positions. The record also shows that both parties voluntarily participated in mediation and the Settlement Agreement was reached after substantial give-and-take between the parties which occurred over two days.
CPSD, which represents consumer interests, initiated the investigation of Americatel and recommended the Commission launch the OII. It submitted a voluminous Staff Report that detailed its investigation of numerous complaints against Americatel and concluded there were substantial violations of §2890(a) and §451. In a supplemental report on Americatel's credits and refunds to customers, CPSD also concluded that Americatel had failed to make all customers whole. Americatel vigorously disputed several key aspects of CPSD's investigation, findings and recommendations in its rebuttal testimony and exhibits. It argued no fines or sanctions were appropriate, but agreed to make some operational changes.
Thus, the Settlement Agreement was reached after careful analysis of the positions of the affected parties. An examination of the complete record demonstrates that each of the Settling Parties made significant concessions to resolve the issues in this proceeding in a manner that reflects a reasonable compromise among their respective litigation positions.
In particular, Americatel agreed to numerous operational changes, some of which it had already implemented. These include much better screening and more direct oversight of its telemarketers, enhanced training for its customer service and billing employees, bilingual customer service representatives, and regular trend analysis of customer inquiries to quickly identify problems. These changes will significantly reduce the likelihood of a "rogue" telemarketing agent defrauding Americatel's customers, minimize billing errors, and substantially improve customer service.
Based on the foregoing, the Settlement Agreement addresses the issues in the proceeding in a reasonable manner in light of the record as a whole.
6.3. Consistent With the Law
The Settlement Agreement is consistent with the law and precedent. It does not contravene any statute or Commission decision or rule. Americatel does not contest the Commission's jurisdiction over their operations and accept that fraudulent marketing practices are prohibited and billing errors must be immediately corrected. The Settlement Agreement also provides for Americatel to make a substantial payment of $503,000 which is within the range of authorized penalties of $500 to $20,000 per offense authorized by §2107 which could have been imposed for violation of Commission rules.
6.4. In the Public Interest
The Settlement Agreement is in the public interest and in the interest of Americatel's customers who will be better protected and better served as a result of the terms and conditions of the Settlement Agreement. Furthermore, the substantial fine imposed on Americatel serves as a warning and future deterrent to Americatel and all re-sellers of inter-LATA services that they must carefully scrutinize their marketing agents and billing systems.
The Settlement Agreement is consistent with the Commission's well-established policy of supporting the resolution of disputed matters through settlement, reflects a reasonable compromise between the Settling Parties' positions, and will avoid the time, expense and uncertainty of evidentiary hearings and further litigation. Accordingly, the Settlement Agreement is in the public interest and should be adopted by the Commission without material change.
Based on the foregoing, we approve the Settlement Agreement as proposed.
31 See, e.g., D.05-03-022, at 8-9.
32 D.05-11-005, at 16.
33 D.05-11-005, at 16.
