Appeal of Presiding Officer's Decision

On May 2, 2001, the Presiding Officer mailed her Presiding Officer's Decision (POD). On May 18, 2001, Sawaya filed an appeal of the POD, to which Worldcom filed a response on June 4, 2001.

In his appeal of the POD, Sawaya alleges ten "critical errors" in the POD. We have carefully considered each of these alleged errors, and revised the POD to clarify certain points. These minor textual changes, however, have not resulted in any substantive revision of the POD.

Each of Sawaya's claims of error is set out in italics below, followed by, in regular text, our resolution of the claim:

1. The POD creates the erroneous impression that WorldCom detected the nonpayment. Sawaya points out that WorldCom only became aware of the nonpayment upon his and another intervenor's complaints to WorldCom. We have modified the decision to clarify this point.

2. The POD erroneously concluded that WorldCom used its best efforts to rectify the violation once it became aware of it. We have revised Finding of Fact 4 and the corresponding discussion in the decision to state that WorldCom used "reasonable efforts" to rectify the violation.

3. The POD erred by overlooking by the fact that WorldCom failed to report its noncompliance with D.00-02-044 to the Commission. The POD has been modified to note that WorldCom did not notify the Commission.

4. The POD does not explain the apparent departure from Commission precedent refusing to condone a "learning period" for public utilities that have no prior experience with particular subjects or standards. In support of this contention, Sawaya cites to Communications TeleSystems International, (1997) 72 CPUC 2d 621, 629. In the cited decision, we imposed a fine of $19.6 million on a long distance telephone company that had transferred 56,000 customers to its service without authorization. Here, however, the scope and severity of WorldCom's actions are not comparable to the widespread and long-term consumer deception at issue in the cited decision.

5. The POD failed to contain a finding of fact that WorldCom violated the terms of D.00-02-044. This fact is contained in Finding of Fact 1, and also addressed by Finding of Fact 4, discussed next.

6. Finding of Fact 4, which stated that "WorldCom did not disregard a Commission directive" is erroneous. Sawaya contends that WorldCom indeed

failed to comply with Commission instructions to prevent, detect, and report its violations of D.00-02-044. We have corrected Finding of Fact 4 to state that WorldCom "did not timely comply with a Commission directive."

7. Finding of Fact 6, which stated that "WorldCom did not prevent the violation but once it had detected the violation, used its best efforts to rectify the violation," is erroneous because WorldCom did not detect the error. Sawaya also disputes whether WorldCom used its best efforts. We have modified Finding of Fact 6 to state that WorldCom "became aware of" rather than "detected" the violation, and to replace "best efforts" with "reasonable efforts," which we believe better characterizes WorldCom's actions. We have also modified the corresponding discussion in the decision accordingly.

8. Finding of Fact 8, which concluded that the totality of the circumstances did not warrant a fine is erroneous. Sawaya contends that this is an extreme position that would set a dangerous precedent of allowing noncompliance with Commission directives, and he recommended that the finding be modified to state the that totality of the circumstances did not merit imposing a large fine. As discussed in the body of the decision, we have carefully considered all the facts of this matter, and conclude that the totality of the circumstances do not warrant a fine.

9. Finding of Fact 10 is "misleading and inferentially and unjustly prejudicial" because it does not indicate the "whole truth." Finding of Fact 10 has been modified, and Findings of Fact 11 and 12 have been added to reflect additional facts contained in the record.

10. The POD erroneously concluded that sanctions are not warranted. Sawaya stated that after making the corrections discussed above, the Commission should conclude that a modest fine is warranted. Notwithstanding the modifications

noted above, we disagree. Therefore, we have not changed the conclusion in the POD.

Findings of Fact

1. WorldCom was 67 days late in making the intervenor compensation payment to Sawaya ordered in D.00-02-004.

2. Sawaya received the full amount, with correct interest, that he was due.

3. The payment of interest prevented Sawaya from incurring economic harm, and WorldCom from accruing gain.

4. WorldCom did not timely comply with a Commission directive.

5. WorldCom's offense is not severe.

6. Once WorldCom became aware of the violation, it took reasonable steps to rectify the violation.

7. WorldCom has substantial financial resources.

8. The totality of the circumstances does not support imposing a fine.

9. At the time it filed its answer, WorldCom had issued two checks to Sawaya for payment of intervenor compensation, because it believed the first check had been misdirected.

10. WorldCom directed its bank to stop payment on the first check.

11. Sawaya, however, received and deposited both checks.

12. WorldCom's bank subsequently refused to honor the first check because of the stop payment request, and Sawaya's account was adjusted accordingly.

Conclusions of Law

1. A fine is not warranted in this case.

2. Sawaya has not met his burden of proving that WorldCom violated Rule 1 of the Commission's Rules of Practice and Procedure.

3. Sawaya's motion for sanctions should be denied, but WorldCom is cautioned to ensure that statements in future pleadings not be misleading in order to avoid sanctions under Rule 1.

4. This complaint should be dismissed.

ORDER

THEREFORE, IT IS ORDERED that:

1. George M. Sawaya's motion for sanctions is denied.

2. This complaint is dismissed with prejudice.

3. Case 00-04-029 is closed.

This order is effective today.

Dated November 8, 2001, at San Francisco, California.

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