2. Background
2.1 Summary of Complaint
By this complaint, as amended on three occasions, CVC contends that AMI has provided interexchange telephone services subject to this Commission's jurisdiction without having first obtained a certificate of public convenience and necessity (CPCN) authorizing it to do so. In support of this contention, CVC alleges that AMI sold 1 plus and 0 plus long distance services; billed for those services; paid commissions to customers; did business under its own name and not that of Com Systems,2 AMI's underlying long distance carrier; marked-up costs billed by Com Systems; paid commissions to rental management companies or owners of rental units; employed salespeople; and used customers' names in its sales literature. CVC also alleges that AMI provided its telecommunications hardware free of charge. According to CVC, this indicates that AMI has an alternative source of revenue. CVC asserts the alternative source is long distance calling revenue.
Pursuant to its CPCN, CVC provides interexchange toll service to subscribers in California on a call-by-call basis. CVC claims that in pursuing the alleged activities, AMI has interfered with contractual relationships between CVC and its customers and has unlawfully caused those customers to cancel and/or repudiate otherwise lawful contractual relationships with CVC.
CVC also claims that AMI has not paid applicable taxes on long distance telecommunications services that AMI purportedly provides. Finally, CVC complains that AMI has failed to post instructions on customer phones identifying the long distance carrier as required by Federal Communication Commission (FCC) rules.
CVC requests injunctive relief preventing AMI from providing interexchange services; a finding that AMI is in contempt of Commission orders; imposition of fines and civil penalties; reparations; an order requiring Com Systems to locate, identify, and disconnect all services unlawfully used to transport interexchange traffic by AMI; and a requirement that AMI backbill for all past switched access taxes on AMI's billings.
2.2 AMI's Answer
AMI contends that it does not provide intrastate interexchange services, and denies that it is engaged in business activities subject to this Commission's jurisdiction. Instead, AMI alleges, it provides specialized telecommunications hardware to a narrowly defined market, i.e., condominium associations whose members lease their property to vacationers most of the year. According to AMI, this equipment blocks 1 plus long distance calling, thereby protecting owners from being charged for long distance calls placed by vacationers. The equipment permits vacationers to make 0 plus and 0 minus calls over the network of a certified presubscribed carrier, Com Systems, or across the network of another carrier. Unless otherwise routed, vacationers' calls are "branded" by Com Systems, and Com Systems, not AMI, bills end-user vacationers for the 0 plus and 0 minus calls routed over Com Systems' network.
AMI admits that it rebilled owners of certain rental units for a de minimus amount of 1 plus calls for a limited time in 1993, but denies that this constituted the provision of regulated service. AMI explains that during the few weeks of the year when owners occupy their vacation rental properties, they often request that AMI unblock the 1 plus access to permit direct dial long distance calling, a service which AMI provides as a courtesy. Due to the configuration of the network, these 1 plus calls were placed over Com Systems' network but billed to AMI. Starting in April 1993, AMI rebilled unit owners on a "pass-through" basis (without markup) for the interexchange services provided by Com Systems. AMI contends that it believed in good faith that it acted in conformance with the Commission's rules and regulations when rebilling these users for services, and that the volume of calls was a minimal amount, approximately $5000. AMI states that it ceased billing functions in October 1993.3
AMI also admits that it provides certain telecommunications hardware free of charge, but denies any implication that this means that AMI must derive revenue from regulated services. AMI alleges that its primary source of revenues is commissions from certificated carriers that pay AMI based on AMI's marketing and sale of their services to the public.
2.3 Procedural Context and History
For a dispute involving two small providers of telecommunications products and services, the proceeding drew heavily on the Commission's resources. The documents filed in this docket include the original complaint and three amendments; 15 motions and associated responses and replies; an initial and amended compensation request by CVC and responses by AMI; nine notices of ex parte communications; and ten Administrative Law Judge (ALJ) rulings. Altogether, the docket card for this matter contains no less than 88 entries. In part, this volume of pleadings is reflective of the unusual degree of acrimony between the parties in this proceeding.
A series of telephone conference calls among the ALJ and the parties were initiated. These included three publicly noticed telephone prehearing conferences (PHCs). A PHC by personal appearance was held on February 9, 1995. In an effort to avoid unnecessary litigation, and at AMI's suggestion, the ALJ Division provided the services of an ALJ who acted as the evaluator for an Early Neutral Evaluation process. Numerous law and motion hearings before a third ALJ were held to resolve discovery disputes.
An evidentiary hearing was held on July 10, 1995. Afterwards, at the request of complainant's president, the schedule for briefing and submission of the proceeding was deferred to give CVC an opportunity to retain substitute counsel.4 This request, and CVC's subsequent failure to retain substitute counsel, required the issuance of three additional ALJ rulings. By the latest of those rulings (ALJ's Ruling dated October 12, 1995) the matter was submitted without further opportunity for briefing.
This proceeding was filed before January 1, 1998, and is not subject to the provisions of Article 2.5 of the Commission's Rules of Practice and Procedure (Rules). Opportunity for comments on the proposed decision and replies to the comments was provided in accordance with Rules 77.2, 77.3, 77.4, and 77.5.
2 Also referred to herein as LDDS, LDDS/Metromedia, and LDDS/Com Systems. Decision (D.) 94-06-001 dated June 3, 1994 approved the merger of Com Systems Network Services, Inc. and other subsidiaries with their corporate parent, LDDS Communications, Inc. doing business as LDDS Metromedia Communications, Inc. (See also D.93-08-039.) CVC later asserted AMI used four underlying carriers. (Exhibit 19, p. 3.) AMI's president testified that 0 plus calls at issue are carried by LDDS/Com Systems, or, in some cases, by Tel-Trust, another certificated carrier. (Exhibit 20, p. 3.) The apparent discrepancy is explained by the fact that AMI operates in other states, and uses two other carriers elsewhere but not in California. (Tr. 86.) 3 Evidence adduced at hearing established that AMI resumed billing for 1 plus calls in April 1994 (Exhibit 20, p. 22 and Attachment C), and again ceased such billing by January 1, 1995 (Exhibit 3, p. 3.)4 CVC's representative in this matter, J. Michael Sunde, became unavailable for representation of CVC shortly after the hearing but before the date set for filing briefs. On July 26, 1995, the United States Attorney for the Eastern District of California announced through a press release that it had filed a criminal complaint charging Sunde with mail fraud and blackmail in connection with an attempt to extort money from the owner of a small California telephone company. According to the press release, Sunde was arrested on those charges on the previous day.
