3. Appeals of Presiding Officer's Decision

All three parties appealed the Presiding Officer's Decision.

AT&T and Comcast assert that the POD commits legal error in finding that the Commission has jurisdiction to hear this case. In reaching that conclusion, the POD follows the reasoning of the Commission in a recent decision involving nearly identical facts, Pac-West v. AT&T D.06-06-055, which was on appeal to the Federal District Court at the time the POD was issued. On August 12, 2008, the District Court ruled in favor of the Commission and Pac-West and against AT&T on cross-motions for summary judgment. In particular, the District Court held that Federal Communication's Commission's so-called "ISP Remand Order" relied on by both Comcast and AT&T as the basis for their jurisdictional argument, did not pre-empt the Commission from hearing and resolving a dispute between two CLECs regarding termination charges for ISP-bound traffic imposed under an intra-state tariff, precisely the situation at issue in this case:

"Accordingly, the Court finds that the question of how two CLECs should be compensated for the exchange of ISP-bound traffic was not before the FCC when it crafted the ISP Remand Order and, therefore, concludes that the ISP Remand Order does not govern the parties' relationship. For the reasons set out above, the Court also concludes that the CPUC decision to apply the Pac-West tariff does not conflict with the [Federal Telecommunications Act] and the FCC's implementing regulations. Accordingly, the CPUC's Decision is not preempted by Federal law."⁴

Following our own precedent and the reasoning of the District Court, we reject the Federal pre-emption argument of AT&T and Comcast.

AT&T asserts that the Release bars Pac-West from recovering against Comcast. AT&T claims that it is solely liable to Pac-West for any unpaid termination charges and that, as found by the POD, the Release is a complete bar to Pac-West regarding any claims for termination services prior to April 30, 2007. Therefore, AT&T argues, the Release also bars Pac-West from recovering against Comcast. This argument assumes its conclusion, i.e., that Comcast is among the entities included in the Release. However, Comcast is neither an AT&T entity nor a party to the Release. In the absence of proof that AT&T assumed Comcast's liability to Pac-West and that Pac-West released Comcast from its obligation to pay termination charges, the Release does not bar Pac-West from pursuing claims against Comcast. As we discuss below, there is no such proof.

The only evidence introduced by AT&T to support the proposition that AT&T is solely liable to Pac-West for any unpaid termination charges consists of the NSA between AT&T and Comcast which appears to obligate AT&T to pay termination charges on behalf of Comcast. However, as explained in the POD, the more persuasive reading of the NSA is that it makes AT&T Comcast's agent for payment. Designating an agent to act on behalf of a principal does not relieve the principal of liability to a third party unless the third party releases the principal. Pac-West did not know of the existence of the NSA prior to this litigation, never gave Comcast a release, and cannot be presumed to have released Comcast simply because AT&T and Comcast entered into the NSA.

Comcast argues that the POD errs in failing to make a determination of the percentage of the traffic at issue which is VNXXX traffic. Comcast asserts that such traffic is not subject to the Pac-West local tariff. However, as pointed out in the POD, the Commission has consistently treated VNXXX traffic as local traffic subject to reciprocal compensation. Accordingly, it is not necessary to separately calculate the proportion of such traffic in order to determine the amounts due Pac-West for terminating calls originated by Comcast.

Comcast argues that the Pac-West complaint is in the nature of a collection action over which the state courts have jurisdiction rather than the Commission. This characterization misconstrues the nature of the complaint. Pac-West does not seek damages for breach of contract; it seeks a Commission ruling that Pac-West's local tariff applies to the calls in dispute and a Commission order enforcing that tariff. Both remedies are within our jurisdiction.

Comcast argues that Pac-West failed to establish that the calls at issue were correctly identified as calls from Comcast customers. However, the testimony of Pac-West's witness Sprague that the transiting carrier specifies the originating carrier for any call delivered to Pac-West was un-rebutted. Nor was there any evidence introduced to demonstrate that the Cat-50 reports which contain the Originating Carrier Number were erroneous. Finally, it was readily within the means of AT&T to provide a witness from its affiliated transiting carrier who could have testified at first-hand regarding the accuracy of the Cat-50 reports and AT&T did not do so. The POD draws the reasonable inference that such witness would have supported the position of Pac-West.

Pac-West argues that the POD commits legal error by declining to order Comcast to pay late payment charges on its unpaid termination fees. While it is true that Pac-West's local tariff provides for late payment charges, we believe that Comcast could reasonably have assumed that the NSA relieved it of the obligation to pay termination charges. Imposing late payment fees on top of the unpaid termination charges at this point is excessively harsh. As Pac-West concedes, it is within our equitable powers to avoid harsh results and we choose to do so here.

Pac-West asks that we make a specific finding regarding the proportion of VNXXX traffic in the calls for which it seeks termination fees. For reasons set out above, we believe such a finding is unnecessary.

⁴ Order on Cross-Motions for Summary Judgment in Case No. C 06-07271 JSW at pp. 17-18. The order is unpublished but is referenced by both AT&T and Pac-West in their pleadings regarding the appeals in this case.