8. Assignment of Proceeding

Rachelle B. Chong is the assigned Commissioner and Myra J. Prestidge is the assigned ALJ in this proceeding.

Findings of Fact

1. Yak America holds a CPCN authorizing the provision of resold interexchange services in California.

2. Yak America is a wholly-owned subsidiary of Yaktastic.

3. Yaktastic is a recently formed Delaware corporation.

4. Blackbird is a newly formed Florida corporation formed for the purpose of acquiring Yak America from Yaktastic.

5. Blackbird is owned by Jose Cadi, a U.S. citizen.

6. On October 26, 2006, Yak, Yak America, and Yaktastic filed A.06-10-041, seeking Commission authorization to transfer the control of Yak America to Yaktastic, through Yaktastic's acquisition of 100% of the issued and outstanding shares of the capital stock of Yak America.

7. The transfer of Yak America to Yaktastic was completed on approximately November 7, 2006, without prior Commission approval.

8. In D.07-05-004, we approved the transfer of control of Yak America to Yaktastic on a prospective basis only, and denied the request for nunc pro tunc approval of the transaction.

9. In D.07-05-004, we found that the transfer of control of Yak America to Yaktastic without prior Commission approval violated Section 854(a) and imposed a fine of $5,000.

10. Applicants filed this application, seeking Commission authorization to transfer control of Yak America from Yaktastic to Blackbird, on March 1, 2007.

11. Although Applicants obtained advance FCC approval of the transfer of Yak America to Blackbird, the transaction closed on January 16, 2007, approximately 45 days before Applicants filed this application seeking Commission approval of the transaction.

12. Blackbird has the technical, managerial, and financial qualifications necessary to exercise control of Yak America.

13. Applicants state that this transfer will restore the previous management of Yak America to the leadership of the company.

14. Applicants state that Yak America will continue to offer customers the same services at the same rates, terms and conditions after the transfer of the company to Blackbird.

15. Applicants' failure to comply with Section 854(a) did not significantly harm the public, including customers.

16. Applicants' failure to obtain prior Commission approval of the transfer of Yak America to Blackbird is Yak America's and Yaktastic's second violation of Section 854(a) in the recent past.

17. Applicants have not claimed ignorance of the requirements of Section 854(a), but state that they needed to transfer the company to Blackbird quickly in order to ensure that Yak America had competent management.

18. Applicants could have avoided this second violation of Section 854(a) by filing an application for expedited Commission approval of the transfer of Yak America to Blackbird before the transaction closed.

19. Applicants took steps to report and remedy their violation of Section 854(a) by filing this application, approximately 45 days after the transfer of Yak America to Blackbird had been consummated.

20. Applicants have adequate financial resources to pay a moderate fine.

21. The Commission's lenient treatment of parties that violate Section 854(a) has not deterred subsequent violations of Section 854(a) by other parties.

22. The imposition of a moderate fine is necessary in order to deter Applicants and others from future violations of Section 854(a).

Conclusions of Law

1. This is a ratesetting proceeding and no hearing is necessary.

2. Section 854(a) requires Commission authorization to transfer control of a public utility.

3. Any transfer of control of a public utility without prior Commission authorization is void under Section 854(a).

4. The Commission has a policy disfavoring nunc pro tunc approvals of the transfer of control of a public utility. Applicants have not shown sufficient reason to depart from that policy. Section 2107 gives the Commission authority to impose a penalty of between $500 and $20,000 for violations of the Public Utilities Code.

5. Under Section 2108, each day on which a violation of the Public Utilities Code or a Commission decision, rule or order continues to exist is a separate violation.

6. Under D.98-12-075, the Commission will consider the following criteria for determining the amount of a fine: (i) the severity of the offense, (ii) the conduct of the utility, (iii) the financial resources of the utility, (iv) the totality of the circumstances, and (v) the role of precedent.

7. This application should be approved on a prospective basis because the transfer of Yak America to Blackbird is not adverse to the public interest.

8. This application should be denied to the extent it requests retroactive or nunc pro tunc approval of the transfer of control of Yak America to Yaktastic.

9. Applicants violated Section 854(a) by transferring control of Yak America to Blackbird before receiving Commission authorization.

10. Applicants' violation of Section 854(a) is subject to monetary penalties under Section 2107.

11. Applicants should be fined for violating Section 854(a). The amount of the fine should be based on the criteria set forth in D.98-12-075.

12. Applicants' violation of Section 854(a), was a serious offense because this transaction is the second time in the recent past that Applicants have transferred control of Yak America without obtaining prior Commission authorization.

13. The public interest was not significantly harmed by Applicants' violation of Section 854(a).

14. The application of the criteria in D.98-12-075 to the facts of this case indicates that Applicants should pay a fine of $10,000 for violating Section 854(a).

ORDER

IT IS ORDERED that:

1. Application (A.) 07-03-002, for authority under Public Utilities Code Section 854(a) to transfer control of Yak Communications (America) Inc. (Yak America) to Blackbird Corporation (Blackbird), is granted to the extent it requests authority effective as of the date of this order.

2. A.07-03-002 is denied to the extent it requests retroactive or nunc pro tunc authority for the transfer of control of Yak America to Blackbird.

3. Blackbird and Yak America shall notify the Director of the Commission's Communications Division in writing of the transfer of control, as authorized herein, within 10 days of this order. A true copy of the instrument(s) of transfer shall be attached to the notification.

4. Backbird Corporation, Yak America, and Yaktastic Inc., shall pay a fine in the amount of $10,000 for violating Public Utilities Code Section 854(a). Applicants shall pay the fine within 30 days from the effective date of this order by tendering to the Fiscal Office of the California Public Utilities Commission a check in the amount of $10,000 made payable to the State of California General Fund. Applicants shall file proof of payment at the Commission's Docket Office within 40 days of payment.

5. Yak America and Blackbird shall obtain Commission authorization as required by Section 854(a) before consummating the transfer of control of Yak America to any other entity.

6. A.07-03-002 is closed.

This order is effective today.

Dated May 24, 2007, at San Francisco, California.

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