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If you need the complete document, download the WordPerfect version or Adobe Acrobat version, if available. ***************************************************************** Before the FEDERAL COMMUNICATIONS COMMISSION Washington, D.C. 20554 In the Matter of ) ) Jeffrey Krauss, ) ) Complainant, ) File No. E-96-24 ) v. ) ) MCI Telecommunications Corporation,) ) Defendant. ) MEMORANDUM OPINION AND ORDER Adopted: February 8, 1999; Released: February 8, 1999 By the Chief, Common Carrier Bureau: I. INTRODUCTION 1. In this Order, we address the formal complaint filed by complainant Jeffrey Krauss (Krauss) alleging that MCI Telecommunications Corporation (MCI) caused the unauthorized conversion of Krauss's presubscribed interexchange carrier (PIC) for his telephone and facsimile lines. Krauss seeks monetary damages purportedly incurred as a consequence of MCI's action and further requests that the Commission assess monetary fines against MCI for its apparent unlawful conversion of other telephone service subscribers. Krauss has also filed an application for review (Application) of discovery rulings made by the staff pursuant to section 1.733 of the Commission's rules. For the reasons discussed below, we grant the complaint in part and otherwise deny the complaint. The Commission will address Krauss's Application after the Bureau issues this ruling on the merits of the complaint, pursuant to the Commission's discussion in Halprin, Temple, Goodman, & Sugrue v. MCI Telecommunications, Corp. II. BACKGROUND 2. Krauss, a self-employed telecommunications consultant, filed a formal complaint (Original Complaint) against MCI, a telecommunications carrier, for changing the PIC for two of his phone lines and his facsimile line on February 8, 1996, without his authorization, in violation of the Commission's rules and orders and section 258 of the Communications Act of 1934, as amended (the Act). The Original Complaint requested that the Commission issue a cease and desist order, issue a forfeiture, and conduct a special audit of MCI's sales procedures. It also requested that MCI pay any direct costs for the unauthorized transfer, including any costs incurred in filing the complaint. In its answer, MCI admitted responsibility for the unauthorized conversion of Krauss's phone and facsimile lines, but claimed that it did so inadvertently as a result of a service request submitted by an MCI customer to MCI, which was subsequently given to Bell Atlantic for implementation. The service request leading to the conversion of Krauss's phone and facsimile lines indicated that all numbers between the range of 301-309-3400 and 301- 309-9899 (inclusive) had been converted, at the same time Krauss's lines were converted. Responding to Krauss's requests for relief, MCI stated that Krauss had already received, or MCI had agreed to provide, all the damages to which Krauss was entitled. On April 26, 1996, Krauss filed an amendment to his complaint (Amended Complaint), requesting that the Commission issue a forfeiture of $288 million against MCI for its apparent conversion of hundreds of other consumer phone lines. MCI filed a motion to dismiss (Dismissal Motion) on May 23, 1996. MCI, citing Maurice R. Franks v. U.S. Telephone, Inc., argued that Krauss had already been made whole and that in the interest of conserving Commission resources, the proceeding should be terminated. 3. After discussing the above-referenced pleadings at a December 17, 1996 status conference, the Common Carrier Bureau's Enforcement Division (Division) issued a letter ruling on December 23, 1996. In the Letter Ruling, the Division denied MCI's Dismissal Motion, reasoning that although Franks was instructive on the proper amount of damages in the slamming context, its analysis was not sufficiently broad, or its precedential value sufficiently constraining, to warrant granting MCI's Dismissal Motion based on the facts at issue. The Letter Ruling informed Krauss that the decision to institute a forfeiture action was solely within the discretion of the Commission and that a private party could not, as a matter of right, initiate such a proceeding. Further, the Division expressed its concern that the damages sought in Krauss's Amended Complaint were tantamount to a class action claim, a remedy neither expressly contemplated by, nor consistent with, the private remedies created under sections 206 through 209 of the Act. Both parties were encouraged to discuss settlement. 4. The parties failed to reach a settlement, and Krauss filed a second amended complaint on March 12, 1996 (Second Amended Complaint). The Second Amended Complaint deleted the paragraph in the Amended Complaint detailing Krauss's request for damages and replaced it with: "Damages are requested and will be specified in a Supplemental Complaint." Krauss filed a request for waiver and motion to compel on the same day he filed his Second Amended Complaint, requesting that the Bureau waive section 1.729 of the Commission's rules to allow him to submit more than the allowable 30 interrogatories. 5. The Division conducted a second status conference on June 10, 1997, and issued a letter ruling memorializing staff rulings made during the conference. The Division's Second Letter Ruling denied Krauss's outstanding motion to compel answers to interrogatories, filed on January 24, 1997, and his motion to compel production of documents, filed February 11, 1997. The Second Letter Ruling also granted the April 11, 1997 MCI motion to strike Krauss's Second Amended Complaint. Section 1.722(b)(1) of the Commission's rules permits a party to file a supplemental complaint detailing specific damages after the Commission has made a finding of liability. The Division ruled that such a bifurcated proceeding was not necessary in light of MCI's admission of liability. The Division determined that the only remaining issue in the case was the amount of damages, if any, suffered by Krauss in light of MCI's unauthorized conversion of his phone and facsimile lines. 6. On July 8, 1997, Krauss filed the Application, asking that the Commission overturn the rulings memorialized in the Division's Second Letter Ruling. On July 28, 1997, Krauss filed a request for extension of time, asking for 30 days from when the Commission ruled on his Application in which to file his brief on damages. On July 30, 1997, the Division denied Krauss's request and gave the parties a briefing schedule setting dates by which they should file briefs and reply briefs on the issue of damages. III. CONTENTIONS AND DISCUSSION A. Liability 7. Krauss claims that MCI converted his phone and facsimile lines without his authorization in violation of section 64.1100 of the Commission's rules and section 258 of the Act. Krauss's Amended Complaint asserts that MCI is also liable for the unauthorized conversion of at least 600 other long distance subscribers. MCI admits that it converted Krauss's long distance service without his authorization, but claims that it did so inadvertently as a result of a service request submitted by an MCI customer to MCI, which was subsequently given to Bell Atlantic for implementation. MCI denies all allegations pertaining to the unauthorized transfer of other long distance subscribers. 8. MCI admits that it caused the unauthorized transfer of Krauss's phone and facsimile lines in violation of the Commission's PIC-change rules and orders. Accordingly, we see no reason to discuss the issue of liability to Krauss further, and we grant the complaint to this extent. We do not find it appropriate, however, to determine MCI's liability for alleged unauthorized conversions of other subscribers in the context of this complaint proceeding. Such action would, in effect, transform this section 208 complaint proceeding into a class action suit, a result neither contemplated by, nor consistent with, the private remedies created under sections 206 through 209 of the Act. B. Damages and Forfeiture 9. In his brief filed August 11, 1997, Krauss posits three arguments regarding damages: that MCI is liable for damages to all who were harmed; that the Commission is obligated to investigate MCI's actions regarding the potential conversion of other consumers' phone lines to determine the amount of these damages; and, finally, that Krauss is entitled to punitive damages in the amount of twenty-five thousand dollars ($25,000) pursuant to section 208 of the Act. MCI argues in its brief that Krauss has already been made whole and is not entitled to any additional relief. MCI contends that while the Bureau has issued forfeitures against carriers beyond the amount that would make a complainant whole, those forfeitures are fines paid to the government, not damages paid to private individuals. Further, MCI claims that there is no basis for finding MCI liable for punitive damages because MCI did not engage in any wanton, willful, or grossly negligent conduct. In his reply brief, Krauss asserts that there is no Commission policy against punitive damages. Krauss further argues that MCI's actions in converting his phone and facsimile lines were not inadvertent, but willful, therefore entitling him to punitive damages. 10. We find all three arguments raised in Krauss's brief for damages legally untenable. First, we address Krauss's claim that we should award damages to all who may have been slammed by MCI. The Commission has clearly stated that class action lawsuits are neither contemplated by, nor consistent with, the private remedies created under sections 206 through 209 of the Act. Although it is true that other subscribers who may have been converted to MCI without authorization might be entitled to damages pursuant to section 208(a) of the Act, the remedy available to these subscribers is to file their own section 208 complaints with the Commission. Krauss, however, cannot seek damages on their behalf. 11. Krauss's argument, that the Commission must undertake its own wide-ranging investigation to determine the damages he has suffered, misses the mark. Krauss, not the Commission, has the burden of proof in a section 208 complaint proceeding. Moreover, whatever compensatory damages Krauss has suffered are ascertainable by him and cannot be influenced by whatever MCI may have done in other cases to other parties. The private remedies available through the section 208 complaint process are separate and distinct from the public remedies available through section 503 forfeiture proceedings. Section 208 provides for private remedies for individuals aggrieved by carriers, while section 503 gives the Commission the discretion to assess forfeitures. 12. Finally, we reject Krauss's claim of punitive damages in this instance. Assuming, without deciding, that we have the authority to award punitive damages, the facts here do not justify any consideration of such damages. As MCI readily admits, it changed Krauss's PIC on the basis of an erroneous message from a major corporate customer. Krauss has failed to show that MCI acted "maliciously, wantonly or with a recklessness that betokens improper motive or vindictiveness." 13. Krauss's Original Complaint contained a count alleging economic injury. Specifically, Krauss claimed that MCI's unauthorized PIC change deprived Krauss of the record of the assignment to specific projects of calls made and time spent. Krauss never assigned any particular damage figure to this loss, and MCI subsequently provided the call detail associated with Krauss's telephone numbers during the period of unauthorized conversion. In addition, MCI states, and Krauss does not deny, that MCI paid Krauss all charges incurred from changing his PIC back to the one he selected. In light of this record, we find no basis upon which to award Krauss damages for economic injury. IV. CONCLUSION AND ORDERING CLAUSES 14. For the reasons explained above, we find that Krauss has failed to articulate sustainable damages beyond those already provided to him by MCI for the unauthorized conversion of Krauss's phone and facsimile lines, nor did Krauss justify and consideration of punitive damages. Krauss has failed to plead consequential damages, and class action relief is not available to him under the Act. 15. Accordingly, IT IS ORDERED pursuant to sections 4(i) and 208 of the Communications Act of 1934, 47 U.S.C.  154(i), 208, and under the authority delegated in sections 0.91 and 0.291 of the rules, 47 C.F.R.  0.91, 0.291, that the complaint filed by Jeffrey Krauss on March 4, 1996, IS GRANTED IN PART and otherwise DENIED. FEDERAL COMMUNICATIONS COMMISSION Lawrence E. Strickling Chief, Common Carrier Bureau