Click here for Adobe Acrobat version
Click here for Microsoft Word version
********************************************************
NOTICE
********************************************************
This document was converted from Microsoft Word.
Content from the original version of the document such as
headers, footers, footnotes, endnotes, graphics, and page numbers
will not show up in this text version.
All text attributes such as bold, italic, underlining, etc. from the
original document will not show up in this text version.
Features of the original document layout such as
columns, tables, line and letter spacing, pagination, and margins
will not be preserved in the text version.
If you need the complete document, download the
Microsoft Word or Adobe Acrobat version.
*****************************************************************
Before the
Federal Communications Commission
Washington, D.C. 20554
)
)
)
In the Matter of )
Qwest Communications Corporation, )
Complainant, )
v. ) File No. EB-07-MD-001
Farmers and Merchants Mutual Telephone )
Company,
)
Defendant.
)
)
)
)
ORDER ON RECONSIDERATION
Adopted: January 29, 2008 Released: January 29, 2008
By the Commission:
I. introduction
1. In this Order, we grant in part the Petition for Partial
Reconsideration of our October 2, 2007 Order filed by Qwest
Communications Corporation ("Qwest"). Qwest has identified evidence
concerning the relationship between Farmers and Merchants Mutual
Telephone Company ("Farmers") and certain conference calling companies
that should have been produced in the initial underlying proceeding,
and we grant the Petition to the extent that we initiate additional
proceedings to consider the relevance of that new evidence. We also
grant Qwest's Motion to Compel Production of Documents, and direct
Farmers to produce certain documents that it produced in a related
proceeding before the Iowa Utilities Board ("IUB").
II. background
2. The October 2 Order found that Farmers had entered into a number of
commercial agreements with conference calling companies as a means to
increase its interstate switched access traffic and revenues. These
agreements, entered into contemporaneously with Farmers' exit from the
traffic-sensitive cost and revenue pool administered by the National
Exchange Carrier Association ("NECA"), dramatically increased usage of
Farmers' network, with the result that Farmers vastly exceeded the
prescribed rate of return. The October 2 Order therefore held that
Farmers violated section 201(b) of the Act, but ruled that Qwest could
not recover damages because the Farmers tariff at issue was "deemed
lawful" pursuant to section 204(a)(3) of the Act.
3. The October 2 Order also denied Qwest's claim that Farmers' imposition
of interstate access charges was inconsistent with its tariff.
Specifically, the Complaint alleged that Farmers could not, under its
tariff, impose terminating access charges on calls to the conference
calling companies. Farmers' tariff provides that terminating access
service allows the customer to terminate calls "to an end user's
premises." Qwest asserted that the conference calling companies are
not end users, so that delivering calls to them does not constitute
terminating access service. The Commission found that the conference
calling companies are end users, relying on Farmers' representation
that the companies purchased interstate End User Access Service and
paid the federal subscriber line charge. The Petition argues that
Farmers' representation was untrue, and that Farmers backdated
contract amendments and invoices to make it appear that the conference
calling companies had been purchasing tariffed services.
4. On November 1, 2007, Qwest filed the Petition and the Motion to
Compel. Both filings allege that Farmers withheld critical facts
concerning its relationship with the conference calling providers.
Specifically, Qwest points to Farmers' statement, after the October 2
Order was released, that Farmers did not create certain contract
amendments and bills contemporaneously with delivery of traffic to the
conference calling companies. Rather, an affidavit by James Troup,
Farmers' counsel, dated April 13, 2007, indicated that "Farmers had
back-billed the [conference calling companies] to ensure compliance
with its tariff." Qwest further maintains that Farmers delivered
backdated bills and contracts even after this complaint proceeding
began. The Motion to Compel asks that we direct Farmers to produce all
documents that it submitted in discovery in the IUB Proceeding.
5. Farmers argues that Qwest could have, and should have, raised this
evidence sooner, and that we should therefore not consider it now.
Farmers also maintains that the evidence that contracts and invoices
were backdated is irrelevant.
III. Discussion
6. We grant the Petition for Reconsideration in part by initiating
additional proceedings that will allow us to rule on the merits of
Qwest's arguments concerning the newly-identified evidence. We take
no view at this time as to whether that evidence ultimately will
persuade us to change our decision on the merits, but we believe that
it is important to consider all the facts underlying this case.
Accordingly, we therefore grant the Motion for Leave and Motion to
Compel, and direct Farmers to produce in this proceeding all documents
that it submitted in discovery in the IUB Proceeding.
7. When we ruled on whether Farmers properly charged Qwest terminating
access for calls to the conference calling companies, a key issue was
whether those companies were "end users." That question, in turn,
depended on whether the companies were customers that "subscribe[d] to
the services offered under [Farmers'] tariff." We found that the
conference calling companies did subscribe to services under Farmers'
tariff based on Farmers' representation that they purchased interstate
End User Access Service and paid the federal subscriber line charge.
Qwest now calls that representation into question, however, by
pointing out that Farmers' invoices to, and agreements with, the
conference calling companies were backdated. In fact, Qwest suggests
that this backdating may have occurred after the legality of Farmers'
access charges was called into question. According to Qwest, this
backdating indicates that the conference calling companies were not
Farmers' customers during the relevant time period, but rather were
its business partners. Farmers does not dispute that documents were
backdated, but argues that the backdating was a legitimate business
practice, and is not relevant here. Qwest suggests that documents
produced in the IUB Proceeding may shed further light on the facts
surrounding, and significance of, the backdating of contracts and
invoices, and asks that we direct Farmers to make those documents part
of this record.
8. We order Farmers to produce all the documents it produced in the IUB
Proceeding. Documents relating to the decision to backdate contract
amendments and invoices may be relevant to our decision in this case.
In order to protect the integrity of our process, we must have access
to a full record, including these newly-identified documents.
Moreover, it appears that Farmers should have produced the documents
during discovery in this case. Although Farmers argues that Qwest's
document requests in the IUB proceeding were broader than its requests
here, it fails to show that the requests here did not encompass the
documents now at issue. The discovery ordered in our proceeding
included all documents and communications relating to Farmers'
commercial relationships with the conferencing calling companies.
These requests were sufficient to capture all documents relating to
the decision to backdate the agreements and invoices in question, not
just the agreements and invoices themselves. Farmers produced nothing
in our proceeding, however, that indicated that the agreements or
invoices were created long after the dates shown on the documents.
9. Farmers raises two additional objections to Qwest's Petition and
Motion. First, Farmers argues that there is no "new" evidence because
Qwest knew, or should have known long before the reconsideration stage
of this proceeding that Farmers backdated contracts and invoices. We
disagree. The contracts and invoices that Farmers produced bear no
indication that they were backdated. [Redacted confidential
information regarding the dates of the contracts and invoices produced
in discovery.]
10. Farmers also asserts that the protective order in the IUB Proceeding,
combined with the IUB's decision interpreting that protective order,
insulates the documents produced there from discovery here. We find
this objection to be unfounded. Farmers asserts that the IUB has
already refused to allow Qwest to use the discovery responses from the
IUB proceeding here, and that the Motion to Compel essentially asks us
to overrule the IUB. That is not the case at all. First, the IUB Order
says nothing about whether the same documents produced in that case
could be subject to discovery in another proceeding. The IUB ruled
only that it would not reclassify the documents at issue as
non-confidential. Qwest does not propose that we reclassify the
documents ourselves, or that we permit Qwest to produce them here.
Rather, Qwest asks that we order Farmers to produce documents in
Farmers' possession, which we have full authority to do. The fact that
those documents have been produced subject to a protective order in
another case does not preclude them from being produced here.
11. In sum, we find that Qwest has identified documents that are
potentially relevant to this case, and that Farmers ought to have
produced. The questions raised about the integrity of our process, and
about the reliability of Farmers' representations, warrant granting
the Petition, the Motion for Leave, and the Motion to Compel. Ordering
Farmers to produce the IUB documents here, subject to the protective
order in this proceeding, will impose little burden. Farmers already
has identified and compiled the documents, and need only produce a
duplicate set. Accordingly, we order Farmers to produce all documents
that it produced in discovery in the IUB Proceeding within ten
business days of the release of this Order. If Qwest wishes to make
any additional discovery requests relating to the contents of those
documents, it must do so within five business days of Farmers'
production. Qwest shall supplement its Petition for Reconsideration
to reflect any new evidence within ten business days after the
production of all the documents called for by this Order, unless we
extend that deadline in order to allow additional discovery to be
taken. Farmers shall file its Opposition to the supplemented Petition
within ten business days after Qwest's filing.
IV. ordering clauses
12. Accordingly, IT IS ORDERED, pursuant to sections 4(i), 4(j), and 208,
and 405 of the Communications Act of 1934, as amended, 47 U.S.C. S:S:
154(i), 154(j), 208, and 405, and section 1.106 of the Commission's
rules, 47 C.F.R. S: 1.106, that Qwest's Petition for Partial
Reconsideration IS GRANTED IN PART to the extent indicated herein.
13. IT IS FURTHER ORDERED, pursuant to sections 4(i), 4(j), and 208 of the
Communications Act of 1934, as amended, 47 U.S.C. S:S: 154(i), 154(j),
and 208, that Qwest's Motion for Leave to Compel Production of
Documents and Motion for Leave to File Supplement to Petition for
Partial Reconsideration ARE GRANTED.
14. IT IS FURTHER ORDERED, pursuant to sections 4(i), 4(j), and 208 of the
Communications Act of 1934, as amended, 47 U.S.C. S:S: 154(i), 154(j),
and 208, that Qwest's Motion to Compel Production IS GRANTED IN PART
to the extent indicated herein.
15. IT IS FURTHER ORDERED, pursuant to sections 4(i), 4(j), and 208 of the
Communications Act of 1934, as amended, 47 U.S.C. S:S: 154(i), 154(j),
and 208, that Farmers and Merchants Mutual Telephone Company and Qwest
Communications Corporation shall comply with the schedule set forth in
paragraph 11 herein.
FEDERAL COMMUNICATIONS COMMISSION
Marlene H. Dortch
Secretary
Qwest Communications Corp. v. Farmers and Merchants Mutual Tel. Co.,
Order, 22 FCC Rcd 17973 (2007) ("October 2 Order").
Qwest Communications Corporation's Petition for Partial Reconsideration,
File No. EB-07-MD-001 (filed Nov. 1, 2007) ("Petition" or "Petition for
Reconsideration").
47 C.F.R. S:S: 1.106(c), (j) and (k).
Motion to Compel Production of Documents, File No. EB-07-MD-001 (filed
Nov. 1, 2007) ("Motion to Compel"). In addition, we grant Qwest's Motion
for Leave to File Motion to Compel Production of Documents, File No.
EB-07-MD-001 (filed Nov. 1, 2007) ("Motion for Leave").
Qwest Communications Corporation v. Superior Telephone Cooperative, et
al., IUB Docket No. FCU-07-02 ("IUB Proceeding"). Qwest filed a complaint
with the IUB in February 2007. Qwest alleged that several
telecommunications carriers, including Farmers, violated their intrastate
tariffs with respect to their relationships with the conference calling
companies. Answer of Farmers and Merchants Mutual Telephone Company, File
No. EB-07-MD-001 (filed May 29, 2007).
October 2 Order, 22 FCC Rcd at 17976, P: 9.
October 2 Order, 22 FCC Rcd at 17974-76, P:P: 4-11.
October 2 Order, 22 FCC Rcd at 17983, P: 25.
47 U.S.C. S: 201(b); October 2 Order, 22 FCC Rcd at 17983, P: 25.
47 U.S.C. S: 204(a)(3); October 2 Order, 22 FCC Rcd at 17983-84, P:P:
26-27.
October 2 Order, 22 FCC Rcd at 17987-88, P:P: 38-39.
Formal Complaint of Qwest Communications Corp., File No. EB-07-MD-001,
(filed May 2, 2007) ("Complaint") at 22-26, P:P: 42-55.
Farmers' tariff incorporates the NECA tariff's terms with respect to
switched access services. See Complaint, Exhibit 9 (Kiesling Tariff) at S:
6. The quoted language appears in the NECA Tariff. See Complaint, Exhibit
8 (NECA Tariff) at S: 6.1.
Complaint at 23-25, P:P: 46-48.
October 2 Order, 22 FCC Rcd at 17987-88, P:P: 35-38.
Petition at 4-9.
See n.2 and n.4, supra. Qwest subsequently filed a Motion for Leave to
File Supplement to Petition for Partial Reconsideration, File No.
EB-07-MD-001 (filed Dec. 13, 2007) ("Second Motion for Leave") and a
Supplement to Petition for Partial Reconsideration, File No. EB-07-MD-001
(filed Dec. 13, 2007) ("Supplement"). Farmers opposed the Second Motion
for Leave. Farmers and Merchants Mutual Telephone Company Opposition to
Motion for Leave to Supplement Petition for Partial Reconsideration, File
No. EB-07-MD-001 (filed Dec. 20, 2007). Although we express no view in
this Order as to the ultimate relevance or weight of the evidence Qwest
seeks to introduce in its Supplement, we grant the Second Motion for Leave
in order to ensure there is a complete record.
Petition at 1-2; Motion to Compel at 1-2.
Petition at 6-9. See also Supplement, Exhibit 1.
Petition at 6 (citing Farmers & Merchants Motion to Strike and Resistance
to Qwest's Emergency Motion to Compel Redesignation of Documents and to
Compel Production of Documents, IUB Docket No. FCU-07-2, at Exhibit B,
Affidavit of James Troup ("Troup Affidavit")). See also Supplement at 2-3
and Supplement Exhibit 1.
Petition at 2, 7; Reply, File No. EB-07-MD-001 (filed Nov. 20, 2007)
("Reply") at 2; Supplement at 3 n.5.
Motion to Compel at 12. In its Motion to Compel, Qwest also asked the
Commission to conduct an in camera review of an email message, which was
produced by a third party in the IUB Proceeding. Motion to Compel at 12
n.43. The email at issue was sent by James Troup to an attorney
representing a free conference calling company. The Troup email also was
produced in a Texas court proceeding. Qwest subsequently withdrew its
request after the Texas court ruled that Qwest could file the Troup email
with the Commission subject to the Commission's and the Texas court's
protective orders. Letter from David H. Solomon, Counsel for Qwest, to
Marlene H. Dortch, Secretary, FCC, File No. EB-07-MD-001 (dated Dec. 5,
2007).
Farmers and Merchants Mutual Telephone Company Opposition to Petition for
Reconsideration, File No. EB-07-MD-001 (filed Nov. 13, 2007) ("Farmers'
Opposition") at 13-17; Consolidated Opposition, File No. EB-07-MD-001
(filed Nov. 8, 2007) ("Consolidated Opposition") at 7-11.
Farmers Opposition at 4-6.
If the Commission grants a petition for reconsideration in whole or in
part, it need not rule on the merits immediately, but may "[o]rder such
other proceedings as may be necessary or appropriate." 47 C.F.R. S:
1.106(k)(iii). If the Commission does initiate further proceedings, "a
ruling on the merits of the matter will be deferred pending completion of
such proceedings. Following completion of such further proceedings, the
Commission . . . may affirm, reverse, or modify its original order . . ."
47 C.F.R S: 1.106(k)(2).
We disagree with Farmers' contention that Qwest's Motion to Compel is
untimely. Consolidated Opposition at 8. As discussed in this Order, it
appears possible that Farmers did not produce relevant evidence in
response to discovery requests in this proceeding. Accordingly, we now
initiate additional proceedings pursuant to section 1.106(k)(ii) of the
Commission's rules to ensure the record here is complete.
October 2 Order, 22 FCC Rcd at 17987, P:P: 35-36.
October 2 Order, 22 FCC Rcd at 17987, P: 36.
October 2 Order, 22 FCC Rcd at 17987, P: 37.
Petition at 5-14.
Petition at 2, 7; Reply at 2; Supplement at 3 n.5 (Farmers back-dating
took place on "the same day that Farmers filed its Answer in this
proceeding").
Petition at 4.
Farmers Opposition at 4-6, 19; Consolidated Opposition at 10.
Motion to Compel at 11; Petition at 5-7, 13-14.
Consolidated Opposition at 3-5, 89.
See Letter from Lisa B. Griffin, Deputy Division Chief, EB, MDRD, FCC, to
David H. Solomon, Counsel for Qwest, and James U. Troup, Counsel for
Farmers, File No. EB-07-MD-001 (dated June 14, 2007) ("Discovery Order").
Specifically, Document Request 7 called for "[a]ny Documents or
communications relating to Farmers's agreements and commercial
relationships with any FSP during the Complaint Period." Document Request
8 called for "[a]ny Documents or communications relating to payments made
by any FSP to Farmers during the Complaint Period, including any agreement
addressing compensation by the FSP to Farmers, including but not limited
to any Document identified in response to Interrogatory No. 9." Document
Request 9 called for "[a]ny Documents or communications relating to
payments made by Farmers to any FSP during the Complaint Period, including
any agreement addressing compensation by Farmers to the FSP, including but
not limited to any Document identified in response to Interrogatory No.
9." In addition, it appears that Farmers should have disclosed information
regarding the backdating in response to Interrogatory 9, which called upon
Farmers to "identify and describe any agreement or communication, written
or oral, between Farmers and any FSP addressing the delivery of traffic by
Farmers to the FSP, including but not limited to agreements relating to
any compensation or other consideration paid by either party for provision
of such traffic." Qwest's First Set of Interrogatories and Document
Production, File No. EB-07-MD-001 (filed May 2, 2007) ("Qwest's Discovery
Requests") at 11, 13-14. For purposes of the discovery requests, the term
"relate to" or "relating to" or "relating thereto" in the interrogatory
and document requests meant "constitutes, comprises, contains, consists
of, sets forth, proposes, shows, discloses, describes, discusses,
addresses, explains, evidences, summarizes, concerns, reflects, implies or
authorizes directly or indirectly." Qwest's Discovery Requests at 6.
If Farmers believed that any of this information was privileged, it should
have prepared an appropriate privilege log as we directed. Discovery Order
at 3-4.
Opposition at 13-17; Consolidated Opposition at 7-11.
On October 10, 2007, Qwest filed with the IUB an emergency motion to
compel the redesignation of purportedly confidential documents produced by
Farmers to Qwest during the IUB Proceeding. Qwest sought to have the
documents redesignated as non-confidential so that it could present the
documents to the FCC as part of the Petition. On October 26, 2007, the IUB
denied Qwest's motion, holding that the parties' protective order in that
case precluded redesignating confidential documents for use in another
regulatory proceeding. Consolidated Opposition, Exhibit 1 (Order Denying
Motion to Compel Designation, Denying Motion to Compel Production of
Documents, and Granting Limited Confidential Treatment ("IUB Order")).
Consolidated Opposition at 13-14.
Id.
IUB Order at 8. Farmers claims that "Qwest is barred by the doctrine of
res judicata from resurrecting before this Commission the claims that the
IUB denied," arguing that the IUB has already interpreted the protective
order and ruled on what documents can be used outside the IUB Proceeding.
Consolidated Opposition at 14. The IUB Order, however, did not address the
issues raised by the Petition for Reconsideration and Motion to Compel and
is not a final judgment on the merits. See Comsat Corporation v. Stratos
Mobile Networks (USA), LLC, 15 FCC Rcd 22338, 22343 (Enf. Bur. 2000) at P:
14, application for review denied, 16 FCC Rcd 5030 (2001). Farmers has not
demonstrated that these elements are satisfied.
Motion to Compel at 11.
Motion to Compel at 11-12.
Indeed, the documents in question are Farmers' documents and it is free,
as it has done in this proceeding, to classify documents it previously
designated as confidential subject to a protective order as
non-confidential. See Opposition, Exhibits 1 and 2 (attaching previously
produced confidential documents as public documents).
We disagree with Farmers' contention that allowing additional discovery
would violate the letter and spirit of the Commission's formal complaint
rules. Consolidated Opposition at 12-13. Those rules provide for discovery
where necessary to ensure the development of a complete record. Amendment
of Rules Governing Procedures to be Followed When Formal Complaints Are
Filed Against Common Carriers, Report and Order, 12 FCC Rcd 22497, 22549,
P: 117 (1997). The rules further give Commission staff the discretion to
order additional discovery where appropriate. Id. at 22548-49, P: 116.
See Letter from Lisa B. Griffin, Deputy Division Chief, EB, MDRD, FCC, to
David H. Solomon, Counsel for Qwest, and James U. Troup, Counsel for
Farmers, File No. EB-07-MD-001 (dated July 3, 2007) (adopting the parties'
protective order).
In addition, to the extent there are documents that Farmers did not
produce in the IUB Proceeding or the instant proceeding, but that
nonetheless are responsive to discovery requests in either proceeding,
Farmers must produce them now.
(Continued from previous page)
(continued ...)
Federal Communications Commission FCC 08-29
7
Federal Communications Commission FCC 08-29