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File pnmc5021 (.txt & .wp) is in directory \pub\Public_Notices\Miscellaneous. ************************************************************************* Before the FEDERAL COMMUNICATIONS COMMISSION Washington, D.C. 20554 In the Matter of ) ) DA 96-834 ERDMAN TECHNOLOGIES CORP., ) ) Complainant, ) ) v. ) File No. E-94-20 ) US SPRINT COMMUNICATIONS ) COMPANY, ) ) Defendant. ) MEMORANDUM OPINION AND ORDER Adopted: May 16, 1996; Released: May 29, 1996 By the Chief, Common Carrier Bureau: I. INTRODUCTION 1. In this Memorandum Opinion and Order, we address a complaint filed by Erdman Technologies Corporation (Erdman) against US Sprint Communications Company (Sprint). In its complaint, Erdman alleges that Sprint unlawfully disconnected and refused to reinstate service to two 800 numbers used by Erdman. Erdman seeks reinstatement of service to the two 800 numbers, $300,000 in damages, and the initiation of enforcement proceedings against Sprint. For the reasons discussed below, we deny Erdman's complaint. II. BACKGROUND A. The Dispute 2. In the first half of 1989, Erdman began receiving 800 service from Sprint over four 800 numbers that Erdman had selected for use in its telemarketing business. Using the letters associated (on a telephone dial or keypad) with each digit in the four numbers, the words "Penthouse," "Prochoice," "Redbook," and "Panasonic" could be spelled out or approximated. 3. In June 1991, Erdman contacted Sprint and requested disconnection of at least one of the numbers. Erdman claims that it requested disconnection of only the Penthouse number. Sprint, in contrast, claims that Erdman requested disconnection of all four numbers. In any event, Sprint subsequently disconnected service to all four numbers. After some time, Erdman realized that all four numbers had been disconnected and requested reconnection of the Redbook, Prochoice, and Panasonic numbers. Because the Panasonic and Prochoice numbers had been reassigned in the interim, Sprint did not reconnect them. It did, however, reconnect the Redbook and, apparently incorrectly, the Penthouse numbers. B. Procedural History 4. Erdman filed the instant complaint after a federal district court in New York determined in a civil action between Erdman and Sprint that issues raised in that action were within the primary jurisdiction of the Commission. In its initial and amended complaints, Erdman sought both equitable relief and monetary damages. Sprint filed a motion to dismiss alleging, inter alia, that Erdman was seeking damages in both the federal court action and this proceeding in violation of Section 207 of the Communications Act of 1934, as amended (Act), 47 U.S.C.  151, et seq. Subsequently, the parties, by their respective counsel, entered into a stipulation in which it was agreed that Erdman would not seek monetary damages in this proceeding. Erdman later obtained new counsel, who filed a second amended complaint, an opposition to the motion to dismiss, and motions to strike the stipulation and for leave to file an amended complaint. On November 22, 1995, Erdman filed a motion for summary judgment on the pleadings or expedited processing of the action. Sprint filed oppositions to the motions to strike and for summary judgment. III. DISCUSSION A. Motion for Leave to Amend Complaint 5. Erdman, by its new counsel, requests leave to amend its complaint to correct deficiencies that were raised by Sprint in its motion to dismiss. Sprint does not oppose this motion. Considering that Sprint does not object, we grant Erdman's motion and accept its second amended complaint. B. Motion for Summary Judgment 1. Contentions 6. Erdman argues in its motion for summary judgment that there are no material questions of fact outstanding. Specifically, Erdman argues that an attorney for Sprint admitted in a telephone conversation secretly taped by Erdman that the 800 numbers at issue were disconnected as a result of a clerical error by Sprint. Erdman, after discussing the protracted procedural history of this dispute, also asks for expedited action on its complaint. 7. Sprint responds that Erdman caused any delays in this proceeding and that Erdman is not in a position to request expedited action. Sprint also argues that viewing the record in the light most favorable to Sprint, as the Commission must in resolving Erdman's motion, Sprint's actions were justified and did not violate the Act. According to Sprint, the record could be interpreted to show that Erdman in fact requested that all four numbers be disconnected, but months later decided that it wanted the numbers back. 2. Discussion 8. Erdman's motion for summary judgment is denied. Summary judgment is appropriate where there is no genuine issue of material fact and the movant is entitled to a judgment in its favor as a matter of law. In this case, the key fact is in dispute. On the record before us, we cannot determine whether a clerical error by Sprint or a request by Erdman, later repudiated, was the basis for the disconnection. Erdman has presented evidence that tends to suggest that a clerical error was in fact the cause. On the other hand, Sprint has submitted a verified answer that states that Erdman requested disconnection of all four numbers. The transcripts of the calls recorded by Erdman also demonstrate that Sprint's records show that Erdman requested disconnection as alleged by Sprint. Accordingly, we find that a genuine issue of material fact exists. Moreover, as is discussed below, Erdman has not shown that it is otherwise entitled to judgment as a matter of law. C. Discussion of the Merits 9. Although no discovery has been conducted and no briefs have been filed in this proceeding, we will proceed to a decision on the merits. Erdman has made it clear that it wishes a decision on the record, and the times for conducting discovery and filing briefs have passed without action by either party. 1. Alleged Violations 10. In its second amended complaint, Erdman alleges that Sprint violated Section 203 of the Act and acted contrary to its own Tariff No. 2 by failing to give written notice to Erdman prior to disconnecting Erdman's 800 service, by failing to get authorization from Erdman to disconnect, and by reassigning the numbers within six months of the disconnection. Erdman also alleges that Sprint violated Section 202 by failing to reconnect the 800 numbers in dispute within the three-month window provided for in Sprint's Tariff No. 2. Additionally, Erdman alleges that Sprint violated the Bellcore and Number Administration Service Center (NASC) Guidelines and the SMS Tariff by reassigning the numbers before they were "properly aged" and within the three-month window within which a customer may have 800 numbers reconnected, and by disconnecting Erdman's 800 service without cause so that Sprint could then broker the numbers. Erdman further alleges that Sprint's tariff violates the industry guidelines by denying customers the right to have their 800 numbers reconnected within three months. Finally, Erdman alleges that Sprint's tariff violates the Commission's rules and policies regarding 800 number portability and therefore violates the Act. 11. Sprint answers that Erdman lacks standing to bring a private cause of action based on industry guidelines. Sprint further argues that Erdman's delay in discovering and reporting that all four numbers had been disconnected shows that Erdman was not using the numbers, but was instead hoarding the numbers in violation of Sprint's tariffs and the public interest. In support of this claim, Sprint states that in the 18 months preceding disconnection, the four numbers had a total of 540 calls averaging 0.34 minutes each and total average usage charges, including taxes, of 77 cents per line per month. Sprint also points to a deposition of Victor H. Method, an executive with Matrixx Marketing, in which Mr. Method describes an arrangement in which, according to Sprint, Erdman would, in exchange for a "consultant's fee," transfer the Panasonic number to Matrixx for its use in a marketing campaign that it was trying to arrange with Panasonic. Finally, Sprint argues that it does not have to provide service to a customer who violates its tariffs and Commission policies by attempting to traffic in 800 numbers or by secretly recording telephone conversations. 12. To support its allegations, Erdman argues in its motion for summary judgment that it has provided extensive evidence that the disconnection and subsequent refusal to reconnect the numbers violated Sprint's own tariff as well as industry guidelines. Erdman also argues that Sprint's attempts to discredit the transcripts of telephone calls between Erdman's president and Sprint employees are flawed and that Sprint has offered no evidence to controvert the facts as described by Erdman. According to Erdman, the Commission's rules about recording telephone conversations are enforced only through their inclusion in the tariffs of common carriers and are not otherwise enforceable. Erdman argues that because its president did not originate any of the taped telephone calls over Sprint's network, no violation of Sprint's tariffs occurred. Moreover, Erdman notes, many of the taped calls were intrastate and were therefore subject to New York law, which permits such recording. In any event, Erdman argues, the courts have held that parties to conversations may tape them and use them as evidence. Additionally, Erdman claims that Sprint has unclean hands by virtue of what it describes as "brokering" of telephone numbers in an attempt to maximize its profits and is therefore in no position to complain that Erdman has unclean hands. Finally, Erdman argues that Sprint's standing argument is irrelevant because Erdman is not attempting to press a private cause of action under the industry guidelines, but is using them to demonstrate that Sprint's actions were unreasonable. 13. Sprint responds that because some of the calls were interstate, these calls were subject to the Commission's rules and the anti-recording provisions of all interstate common carriers' tariffs. Sprint claims that these provisions would not be effective if a customer could escape losing its service for recording conversations merely by jumping to other carriers; thus, Sprint claims that it does not have to provide service to Erdman. Sprint also responds that Erdman's second amended complaint merely claimed that Sprint violated the industry guidelines and said nothing about violations of the guidelines demonstrating that Sprint's practices were unreasonable. In any event, Sprint claims, the guidelines were not intended to control a carrier's 800-service offerings and are irrelevant. Further, Sprint claims, Erdman's arrangement with Matrixx violated its tariff and Erdman has provided no evidence to the contrary. Finally, Sprint argues that the Commission has no authority to award attorney's fees and that Erdman is not entitled to damages because it has failed to prove any violation of the Act by Sprint. Moreover, with respect to the equitable relief sought by Erdman, Sprint states that with the advent of 800 number portability and the SMS database, Sprint no longer controls the Panasonic number and Erdman is free to get that number from any carrier so long as the number is not reserved in the database. 2. Discussion 14. The bulk of Erdman's claims rely on the SMS tariff and guidelines, rules, and policies that apply to 800 number portability under the SMS regime, which came into effect two years after the events of which Erdman complains. Accordingly, all of the tariffs, procedures, rules, and policies established with regard to 800 number portability under the SMS are irrelevant to Erdman's complaint. Thus, counts five through eight of Erdman's second amended complaint are without merit. 15. The remaining counts refer to and rely in some measure on "Sprint's Tariff No. 2." Counts one through three allege that Sprint violated its own tariff and consequently Section 203, which requires carriers to act in accordance with their tariffs. Erdman did not refer to or provide copies of the specific tariff provisions upon which it relies as is required by the formal complaint rules. It is therefore unclear what tariff provisions Erdman relied upon and whether those tariff provisions were in effect at the time of Sprint's alleged violations. Accordingly, Erdman has failed to prove the violations of Sprint's tariff and the Act it alleged in counts one through three. Count four, which also relies on "Sprint's Tariff No. 2," alleges that Sprint reassigned two of the disputed 800 numbers before the time provided in its tariff, but does not allege that Sprint thereby violated Section 203. Instead, count four alleges that this is unreasonable discrimination in violation of Section 202. Accordingly, we examine Sprint's reassignment of the numbers under a Section 202 analysis. 16. Applicable judicial precedents establish a three-prong test for determining whether a Section 202(a) violation has occurred. The first prong requires the Commission to determine whether the services at issue are like one another. If so, the Commission must, under the second prong, determine whether there is disparate pricing or treatment between the like services. Third, if disparate pricing or treatment are found to exist, the Commission must decide whether the disparity is justified and, therefore, not unreasonable. In the context of a Section 208 complaint proceeding, the complainant has the evidentiary burden of establishing that like services are involved and that disparate treatment or pricing exists between them. 17. Erdman has presented ample evidence from which we can conclude that the services at issue are like services. In fact, the services provided to Erdman and the customer to whom Sprint reassigned the Panasonic number are identical. We are not persuaded, however, that Erdman has demonstrated disparate treatment. Erdman claims that Sprint favored the other customer over it in deciding what to do in response to the disconnection of the four numbers. Erdman was seeking to get a number back that had allegedly been disconnected by mistake. In contrast, the other customer merely asked for and received service over an 800 number. To show disparate treatment involving an allegation that Sprint favors larger customers, Erdman would have to show that a larger customer had a number disconnected and was then able to recover it under the same circumstances as existed with regard to Erdman. Erdman has presented no evidence to that effect. Moreover, with respect to the third prong, Sprint's actions after the fact of the disconnection appear to be reasonable. In considering the reasonableness of Sprint's actions, we note that the other customer claimed to have printed the number in thousands of catalogs while Erdman admitted that it had done no advertising based on the number. We further note that had Sprint taken the number from the second customer, that customer could then have complained against Sprint for disconnection of service without cause in violation of Sprint's tariff and the Act. Additionally, when an alleged clerical error results in the disconnection and reassignment of a number previously used by one customer to another customer, the carrier is faced with a choice between disrupting two customers or one. It seems reasonable that the carrier would attempt to reach a satisfactory accommodation with the first customer while avoiding inconveniencing or alienating the other customer. As the transcripts of the recorded telephone conversations bear out, this is what Sprint did by permitting the second customer to keep the Panasonic number and by offering Erdman both a refund of non-usage charges it had paid for service via that number as well as an additional sum of money for the inconvenience. Sprint also reconnected those numbers that had not been reassigned. 18. Further, Sprint's actions seem especially reasonable in light of the fact that Erdman had no proprietary interest in the Panasonic number. Sprint's tariff, like those of other 800 carriers, provides that no customer has any proprietary right or interest in the 800 numbers it uses. These tariff provisions are consistent with guidelines issued by the North American Numbering Plan Administrator that were in effect at the time of the relevant events. These guidelines state that even the 800 carrier has no proprietary interest in any 800 number. Moreover, the Commission has found that the "stockpiling of 800 numbers is not in the public interest." D. Procedural and Other Matters 19. As noted above, Sprint moved to dismiss Erdman's initial complaint on the grounds that the complaint failed to state a cause of action and that Erdman was seeking damages in both federal court and before the Commission in violation of Section 207 of the Communications Act. Erdman subsequently stipulated that it would not seek monetary damages in the instant proceeding. Then, after retaining new counsel, Erdman filed a motion to strike the stipulation. Both motions are mooted by our ruling on the merits. Accordingly we dismiss these motions. 20. Further, Erdman requests that we award it attorney's fees to the present time and bifurcate this proceeding by establishing a separate proceeding to address damages issues. These requests are denied. We do not have the authority to award attorney's fees. Further, having found that Sprint did not violate the Act or a Commission rule or order, neither equitable relief, damages, nor a separate proceeding on damages issues is warranted. Similarly, enforcement proceedings, which are initiated solely in the Commission's discretion, are not warranted. IV. CONCLUSION AND ORDERING CLAUSES 21. We conclude that Erdman has failed to prove its allegations that Sprint violated the Communications Act or the Commission's rules by disconnecting and failing to reconnect certain 800 numbers used by Erdman. Accordingly, Erdman is not entitled to the equitable relief or damages it seeks. Further, we conclude that initiation of enforcement proceedings against Sprint is not warranted. 22. Accordingly, IT IS ORDERED pursuant to Sections 1, 4(i), 4(j), and 208 of the Communications Act of 1934, as amended, 47 U.S.C.  151, 154(i), 154(j), and 208, that the above- captioned complaint filed by Erdman Technologies Corporation IS DENIED. 23. IT IS FURTHER ORDERED that Erdman's motion for summary judgment IS DENIED. 24. IT IS FURTHER ORDERED that Erdman's requests for an award of attorney's fees, the establishment of a separate proceeding on damages issues, and the initiation of enforcement proceedings against Sprint ARE DENIED. 25. IT IS FURTHER ORDERED that Erdman's motion to strike the stipulation IS DISMISSED. 26. IT IS FURTHER ORDERED that Erdman's motion for leave to file an amended complaint IS GRANTED. 27. IT IS FURTHER ORDERED that Sprint's motion to dismiss IS DISMISSED. 28. IT IS FURTHER ORDERED that this proceeding IS TERMINATED. FEDERAL COMMUNICATIONS COMMISSION Regina M. Keeney Chief, Common Carrier Bureau