2. Procedural History
A prehearing conference was held on May 5, 2010 where Freeman spoke for all Respondents since none had retained counsel. The Respondents individually confirmed they had attached the ADADs to the payphone lines but asserted, as they had during the investigation, that they did not know it was illegal.23
The Assigned Commissioner's Ruling and Scoping Memo (Scoping Memo) was issued on May 24, 2010, set the procedural schedule, and identified the issues, as summarized below:
· Whether Respondents violated Pub. Util. Code24 §§ 2871-2875.5 by unlawfully connecting and operating ADADs to a telephone line in California;
· Whether Respondents should be penalized and their ADADs permanently disconnected;
· Whether Respondents Calnev and 1st Capital should be ordered to refund any dial-around compensation collected by Respondents; and
· Whether Respondents CSGI, Limo Services, Intella II, Inc., A&M, and TNT should be ordered to forfeit the DAC generated by their payphones that is currently being held in escrow.
The Scoping Memo established that CPSD's Opening Testimony was due to be served on June 7, 2010 and Respondents' Rebuttal Testimony was due on June 28, 2010. CPSD timely served Opening Testimony and Respondents were granted additional time to serve Rebuttal Testimony by July 2, 2010. However, instead of serving Rebuttal Testimony, on June 16, 2010 and July 1, 2010, Freeman filed two separate Motions to Dismiss the OII on behalf of all Respondents. CPSD opposed the motions and both motions were denied by the ALJ's August 10, 2010 ruling.
On July 14, 2010, CPSD, TNT, and Intella II jointly filed a motion for Approval of Settlement Agreement (Joint Motion #1). On July 21, 2010, CPSD and Limo Services jointly filed a Motion for Approval of Settlement Agreement (Joint Motion #2) and a related Motion to Substitute Respondent with its individual owners, Barbara and Jose Quezada. No opposition to these motions has been voiced or filed.
Also on July 14, 2010, CPSD filed a Motion for Summary Adjudication as to the Facts Regarding Liability (Motion for Summary Adjudication), combined with a Motion to Forego Hearings and Proceed to Briefing the Remaining Legal Issues (Motion to Forego Hearings) based on Respondents' failure to serve any Rebuttal Testimony. CPSD argued that there were no triable issues of material fact because Respondents presented no evidence at all, despite an opportunity to do so. CPSD also asked the Commission to forego evidentiary hearings as a matter of judicial economy. Freeman, apparently representing all non-settling Respondents, filed opposition to these motions but offered no evidence to rebut the underlying charges. With the ALJ's permission, CPSD filed a reply to Freeman's Opposition.
On August 18, 2010 and August 19, 2010, respectively, Respondent
Freeman and Respondent Massimo Cavallaro (Cavallaro) on behalf of A&M Communications sent the ALJ (and the service list) emails in which they requested evidentiary hearings in this proceeding citing due process concerns, particularly seeking to tell their "version of the truth" and to confront witnesses.25 Although CPSD characterized the emails as improper ex parte contacts, the ALJ instead broadly construed the communications as a request to serve late rebuttal testimony. In an abundance of deference to due process concerns, the ALJ issued a ruling on August 25, 2010 that permitted the non-settling Respondents to serve Rebuttal Testimony by August 31, 2010 and CPSD to serve Reply Testimony by September 8, 2010.
In conformity with that ruling, Freeman timely served "Rebuttal Testimony" from the non-settling Respondents and CPSD timely served Reply Testimony. However, the Rebuttal Testimony did not clearly dispute any material facts alleged in the OII. Instead the testimony was focused on alleged improper conduct by CPSD, rebuttal of CPSD's claims of Respondents' fraudulent motive and intent, and dispute of elements of the analysis that concluded the calls were placed by ADADs.
On September 22, 2010, the ALJ held a status conference with CPSD, Freeman and Cavallaro to determine whether the remaining non-settling Respondents actually disputed their improper use of the ADADs hooked up to their payphone lines. The Respondents agreed they did not dispute that they had connected the ADADs to their payphone lines, and conceded they had violated the statutory restrictions on use of ADADs.26 All parties agreed that no further argument as to Respondents' violations was necessary, CPSD's motion could be granted, and the remaining disputes centered only on potential penalties and remedies.
In an October 1, 2010 ruling, the ALJ summarized the results of the status conference and authorized non-settling Respondents to file a brief by October 15, 2010 which set forth their arguments for mitigation or elimination of penalties authorized by § 2876. CPSD was ordered to file a brief that responded to six specific questions about various potential remedies including imposition of fines and distribution options for the DAC held in escrow. These parties were also permitted an additional week to file and serve a final reply to the other brief(s). Opening and Reply briefs were filed by CPSD, and jointly filed by Freeman and Cavallaro.
The Opening, Rebuttal, and Reply Testimony are hereby entered into the record of this proceeding.27 This testimony, along with the briefs and other documents filed, shall constitute the record for the proceeding which is submitted as of December 10, 2010.28
23 Reporter's Transcript (RT) (May 5, 2010) at 9-10.
24 Unless otherwise indicated, all future references to "section" means the Public Utilities Code.
25 Respondents' Exhibit 1 and 1A.
26 RT (September 22, 2010) at 3, 10, 22.
27 See Attachment A for list of admitted exhibits.
28 The original submission date was extended to allow time for Respondents to correct deficiencies in their filing of the closing briefs.
