[00:00:00] Speaker 04:
Case number 15-1354, All American Telephone Company, Inc.

[00:00:04] Speaker 04:
at ELL Petitioners versus Federal Communications Commission at ELL.

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Mr. Canis for the petitioners, Mr. Pasch for the respondent.

[00:00:18] Speaker 01:
Good morning.

[00:00:19] Speaker 01:
My name is John Tannis.

[00:00:21] Speaker 01:
I represent the petitioners in this case, three service providers.

[00:00:26] Speaker 01:
In February 2007, these carriers filed a collection action in the Southern District of New York against AT&T.

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They asserted that they provided service to AT&T for which AT&T did not pay.

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The judge in that case, William Pauli, referred questions to the FCC under primary jurisdiction.

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In March of 2008 and February of 2009, Judge Pauli referred a total of 15 questions to the Federal Communications Commission.

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The FCC started a formal complaint proceeding.

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to address those issues and to respond to the court.

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Four years later, the FCC issued its first order, the liability order.

[00:01:14] Speaker 01:
It found in that case that the tariff rates did not apply, that in fact the... Did you challenge the FCC's jurisdiction in the liability order?

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In the liability order?

[00:01:32] Speaker 03:
We didn't... But you say they had no jurisdiction over the damages order, right?

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That's correct.

[00:01:38] Speaker 03:
I don't understand that.

[00:01:39] Speaker 01:
Okay.

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By dint of what they found in the liability order, they looked at the test of a common carrier under the Federal Communications Act.

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And these, your clients have held themselves out as common carriers, right?

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They believed they were common carriers.

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And they were not disabused to that knowledge.

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Isn't that enough on the damages order that they had held themselves out as common carriers and so?

[00:02:06] Speaker 01:
Not at all.

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What the brief for the respondents basically says is ignore the statutory definition of common carrier.

[00:02:20] Speaker 01:
They said it adds nothing.

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In fact, they posit a brand new theory of exercising jurisdiction.

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They said,

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The petitioners thought they were common carriers.

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They held themselves out as common carriers.

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Therefore, they must be common carriers.

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If substantive belief and actions are enough to confer common carrier status, then anybody who believes they were a common carrier could collect universal service subsidies.

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Why wouldn't you have said during the liability proceeding,

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that the first thing you decide is common carrier.

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And if you decide we're not common carriers, you can't do anything else even on liability.

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Shouldn't you go challenged?

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their ability to, anything beyond the liability to saying, once you decide we're not common carriers, you don't get to decide anything else.

[00:03:09] Speaker 01:
Well, and the consequences of that decision were considered in the damages order.

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The FCC- So why shouldn't they have just had a, find that you're not a common carrier and stop there?

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Were they forbidden to say anything else after that?

[00:03:22] Speaker 01:
Well, we asked them to on reconsideration, Your Honor, and they declined.

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They said that that issue was not right, and then when we raised that again in the damages proceeding,

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They dismissed it.

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They cited this court's decision on farmers and merchants.

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And they said, well, that would be absurd.

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You can't say, I violated the communications of the FCC's rules.

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Therefore, I am insulated from the commission's rules.

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But that's not the issue here.

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If they had not bifurcated the proceeding, if they had just done a single proceeding with everything in it, would you have the same argument?

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If they came up with the same theory,

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What they did in the liability case is we sought the benefits of being a common carrier, the benefit of being able to file a tariff, to collect regulated access fees under that tariff, and using the filed rate doctrine.

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They said, you are not a common carrier.

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You don't meet the definition of common carrier.

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Therefore, all those benefits are not available to you.

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In the damages order, they ignored all that and said, well,

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We can deny you the benefits because you're not a common carrier, but we can still impose all the detriments.

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We can subject you to a two-way formal complaint.

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We can subject you to damages under 209, all these Title II applications.

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And our argument is you can't have it both ways.

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But let's assume we don't agree with you about that.

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I want to ask you about your argument that the commission inappropriately improperly decided a question of state law, right?

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I mean, that's your major argument here, right?

[00:05:10] Speaker 01:
Yes, sir.

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And does that, do you have paragraph 13 in front of you from the commission's order?

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Of the damages order?

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So am I right that you're relying on this paragraph that begins even assuming, correct?

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That's where you're, this is your argument, right?

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You're saying?

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I'm sorry.

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I'm sorry if I'm not getting my case.

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All right.

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A paragraph where?

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You're saying, even assuming they can make these arguments, defendants have failed to establish, that's your case, right?

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Yes, sir.

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Right?

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OK.

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I mean, I just want to ask you about how I read this, and you tell me what's wrong with it.

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So right before that, in the paragraph before that, the commission ruled in a section that you don't challenge, that your client didn't provide any services.

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Right?

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Yes, sir.

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You don't challenge that at all.

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OK.

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So then in the paragraph after that,

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Right.

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In the paragraph after that, the commission goes on and rejects your alternative position, right?

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That notwithstanding that, your client did provide a service to AT&T that was valued, right?

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And they reject that because, number one, they say there's no evidence for it.

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And number two, they say a common carrier can't provide untariffed or uncontacted services, right?

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Okay, and then at the end it says, therefore, the other issue certified by the district court at its number, whatever it is, three, the state one, is moot.

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So it didn't decide the state law question.

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It said it didn't have to because of what I just explained.

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The issue was just unresolved.

[00:07:16] Speaker 01:
Well, that's the essence of the ambiguity here.

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Wait, what's ambiguous about that?

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Tell me what's ambiguous about what I just said.

[00:07:28] Speaker 01:
So let's look at paragraph 21, section G. The remaining issues of the court are predicated on the assumption that the defendant's provided a service.

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We found they did not provide a service.

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Therefore, the issue by the court is moot.

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Now, the way I read that,

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is to say, why would the issue of state claims be moot unless the FCC preempted those state claims?

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No, no, what the FCC said was they're moot because, again, it's just the way I read it.

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It's moot because for two reasons.

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One is there's no evidence that your client actually provided any service anyway.

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Let me just finish my question.

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There was no evidence of that.

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And in any event, they say, a common carrier under the Federal Communications Act can't provide any service other than through a tariff.

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Therefore, your state law claim is, quote, moot.

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They didn't decide.

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So what's the matter?

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I don't see anything ambiguous about that.

[00:08:41] Speaker 01:
Well, the ambiguity comes to what does the FCC mean when it says we did not provide service.

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What the FCC found was we did not provide service pursuant to our tariff.

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Their decision was purely that we did not provide cognizable regulated service within the definition of our tariff that is compensable through federal regulated access charges.

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That is what they found.

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The record is very clear.

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There are stipulations by the parties that a service was actually provided.

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All right?

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So the FCC acted within the area of its expertise and said, we are interpreting our own rules, our own tariffs, and we do not recognize the service as a regulated service compensable through tariff rates.

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That is their finding.

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The ambiguity comes in the fact that they... Is it your argument that that finding is somehow binding on the federal district court in New York?

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It cannot be, but the FCC will not say it.

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If the finding has no authority in the 7th District of New York, it's not binding in any way, then what's the harm?

[00:09:55] Speaker 01:
The harm is that I'm going to go back to the Southern District of New York, and AT&T has already told you exactly what it's going to tell Judge Pauling, that the FCC did in fact preempt by dent of the filed rate doctrine, by dent of field preemption, because its regulatory regime is so precluded.

[00:10:14] Speaker 01:
You're not arguing.

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It is not.

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And that is the legal answer.

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But AT&T is going to argue that before Judge Poley.

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And unless there's a clear decision from the FCC, at a minimum, I'm going to have to defend those arguments.

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And at worst,

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Judge Pauli could make a decision that is absolutely the wrong decision as a matter of law.

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Why would this court countenance that kind of an outcome where the answer is absolutely clear, it's a yes or no answer, and I don't know why the FCC will not answer this question, but I can tell you the effect.

[00:10:52] Speaker 01:
My collection action has been stayed for 10 years as a result of eight years directly attributable to the FCC's refusal to answer this very straightforward question.

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What's the source of your preemption argument?

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Just say it to me once again.

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What did they preempt?

[00:11:12] Speaker 01:
The FCC says

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Judge Pauli said, if the tariff doesn't apply, can these carriers, entities, pursue claims under quantum meruit or unjust enrichment under state law?

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The SEC says, that's moot.

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It's moot because we found they didn't provide any service, which suggests.

[00:11:38] Speaker 02:
But that's also what the, in Farmer, the commission quotes the statute as saying.

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Section 203, it makes it unlawful for a common carrier's provision of service to provide service outside of its tariff.

[00:11:51] Speaker 01:
Can't do it.

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That's true.

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In terms, and the FCC was speaking within its area of expertise, you can't provide regulated service for which you can collect access charges under your tariff.

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That's the area of expertise, and that's the only area where the FCC could make a decision within its expertise.

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Other issues, whether service, compensable under state law, falls within the expertise of the state, and the FCC cannot do that.

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And what type of service did your clients provide?

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That's going to have to be decided.

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They worked at whether you want to define it as agents.

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They were directly responsible for causing service to be provided to AT&T.

[00:12:34] Speaker 01:
They worked with Beehive Communications, who the FCC found was the service provider.

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The question is, were we a reseller?

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Were we an agent?

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That's going to have to be determined in court.

[00:12:46] Speaker 05:
I'm concerned then that the Commission said there was no evidence you were a billing or sales agent as well.

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Is that part of, is that within their wheelhouse?

[00:12:53] Speaker 01:
No, I consider that, Dr. Your Honor, and I don't see that dispositive or binding on the Southern District at all.

[00:13:02] Speaker 02:
Okay.

[00:13:02] Speaker 02:
Okay, thank you.

[00:13:03] Speaker 02:
We'll hear from the Commission.

[00:13:04] Speaker 02:
Yeah.

[00:13:16] Speaker 00:
Good morning, Your Honor.

[00:13:17] Speaker 00:
My name is Craig Page.

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I'm the counsel for the Federal Communications Commission.

[00:13:21] Speaker 00:
If I could address a couple of factual points to begin with.

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One, the most significant one is Mr. Cannes' assertion that what we know is some service was provided to AT&T.

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I guess we do know that.

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What we also know is that all Americans didn't provide that service.

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The record is clear to that.

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The commission had two holdings as to that.

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The commission said you did not provide service pursuant to a lawful tariff.

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Your tariff that you filed with the FCC would not have permitted you to provide this service.

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And in any event, the record is clear you did not provide any service AT&T.

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You billed AT&T.

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for $13 million of service.

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AT&T paid you a quarter of a million dollars.

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You didn't provide them any service.

[00:14:01] Speaker 00:
So that was in the liability orders.

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All American has not challenged those.

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That's the final order.

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Now, they can go back to the district court and argue that they provided some service, or they can argue that they were billing and collection agents.

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The commission rejected those arguments.

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As to the billing and collection issue, the commission said, look, there's no evidence that you did this.

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It was up to you to deduce evidence.

[00:14:25] Speaker 05:
Is that part of the FCC's area of expertise, whether they were acting as billing agents as opposed to commentaries?

[00:14:31] Speaker 00:
It's part of the, well, the Commission was responding to all Americans' presentation of this, that point as a defense.

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So I think it certainly was within the Commission's area of expertise to determine the facts related to that, and it didn't,

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It didn't say we reject your interpretation of these facts.

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It said you didn't induce any facts at all.

[00:14:54] Speaker 05:
So you would disagree with him, then you would say that there's a conclusive commission determination that they are not billing or service agents.

[00:15:00] Speaker 05:
It's not just dictum.

[00:15:02] Speaker 00:
No, it's not dictum.

[00:15:03] Speaker 00:
It's in response to a claim that they made.

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Determination by the commission.

[00:15:06] Speaker 00:
Right.

[00:15:07] Speaker 00:
And I would point out that All American did not raise this point until the damages phase of the proceeding.

[00:15:15] Speaker 00:
I never so far as I know and I think that's what the commission's order said.

[00:15:18] Speaker 03:
Do you think it's binding on the southern district then?

[00:15:22] Speaker 00:
It's not I don't I don't think it's necessarily binding.

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I think the only the only record that well, there is no record on it.

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So I think the southern district would have to allow petitioners to do additional evidence some way.

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But I don't I don't think I don't think it's binding in the sense that the southern district couldn't look at the evidence before yet.

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If there is any, I don't think there is any.

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But if there were, they could make you could make a different determination.

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I mean, it's clear.

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I'm sorry.

[00:15:55] Speaker 02:
Did I read this order correctly, that the state law question, the commission ultimately decided was moot because there was no service provided, and in any event, it couldn't be provided outside of a tariff?

[00:16:12] Speaker 00:
Yes.

[00:16:12] Speaker 00:
Is that the correct reading?

[00:16:13] Speaker 00:
No, that is the correct reading.

[00:16:15] Speaker 02:
So everything would have been a lot easier if the commission had included this even assuming paragraph, wouldn't it?

[00:16:22] Speaker 02:
It would have been a lot easier without that paragraph.

[00:16:26] Speaker 02:
Oh, yes, I think that's probably true.

[00:16:30] Speaker 00:
I think that's probably true.

[00:16:33] Speaker 02:
Nice to have the commission thorough, but it does cloud its decision here a little bit.

[00:16:39] Speaker 02:
In fact, we've got a whole petition for review based on

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somebody seeking to be extremely thorough in putting that paragraph in there.

[00:16:50] Speaker 00:
Well, I suspect the petition for a V would have come regardless.

[00:16:54] Speaker 02:
My only point is it would have been easier for us without it.

[00:16:57] Speaker 00:
All right, and I'll make a note of that for a future audience.

[00:17:00] Speaker 00:
I mean, I think the commission was, because of the litigious nature of this proceeding, I think the commission was trying to address every question and maybe it addressed a question that it didn't need to.

[00:17:13] Speaker 05:
But it didn't need to or didn't have authority to.

[00:17:16] Speaker 00:
Well, the commission was attempting to avoid deciding a state law claim that it didn't think it either needed to or was responsible for deciding.

[00:17:29] Speaker 02:
Yeah, but wait a minute.

[00:17:30] Speaker 02:
Wait a minute.

[00:17:30] Speaker 02:
Going back to what Judge Millett asked you, I asked you about the paragraph because I thought it clouded things.

[00:17:35] Speaker 02:
But I mean, it actually does on its face purport to decide a state law question, which it later says is moot.

[00:17:44] Speaker 02:
That's the point about this paragraph.

[00:17:47] Speaker 00:
Well, I would not characterize it that way, Judge Tate.

[00:17:49] Speaker 02:
It says, defendants have failed to establish the necessary elements for unjust enrichment.

[00:17:56] Speaker 02:
And then it cites Amjur or something like that, which we don't see that often here.

[00:18:03] Speaker 00:
No, but what the Commission was doing, all Americans presented the unjust enrichment quantum merit point as a defense to AT&T's damages.

[00:18:13] Speaker 00:
That's why the Commission felt it was obligated to respond to it in that context.

[00:18:18] Speaker 00:
Maybe it could have stopped.

[00:18:20] Speaker 05:
What do you mean in that context?

[00:18:22] Speaker 05:
Does that mean that you think the FCC did have authority to decide that state law claim and rule that it was not a viable defense?

[00:18:29] Speaker 05:
Is that your understanding of the even assuming sense?

[00:18:33] Speaker 00:
No, I think what the Commission was attempting to say was that

[00:18:38] Speaker 00:
in response to the defense that all American had presented to AT&T's complaint under the Communications Act.

[00:18:51] Speaker 00:
the commission was saying that number one, it said that equitable documents don't apply in complaint proceedings, and maybe it should have stopped there.

[00:19:02] Speaker 00:
But it also said in the record, Joe, that you provided no service.

[00:19:07] Speaker 00:
And the concept of unjust enrichment, quantum merit, requires that you have provided such service.

[00:19:15] Speaker 00:
It wasn't, I guess that- Why would they be venturing into that area?

[00:19:22] Speaker 00:
Well, they started into the area because the argument was already about America.

[00:19:27] Speaker 03:
And they felt... Well, why isn't the response to that?

[00:19:30] Speaker 03:
That's beyond our jurisdiction.

[00:19:31] Speaker 03:
That's not the dispute that's before.

[00:19:34] Speaker 00:
It's obvious that would have been a better response, but I don't think that makes the Commission's decision arbitrary and capricious, even if it went further than it had authority to do.

[00:19:45] Speaker 00:
What I don't think the Commission was attempting to do was decide a state law equitable action.

[00:19:51] Speaker 00:
The Commission was simply trying to say that for purposes of what we're deciding here,

[00:19:56] Speaker 00:
And trying to answer the question that has been presented by All American, this is our view of how the unjust and racist – Is it too colloquial to point out that Judge Mott taught me this, the famous Will Rogers quote, never miss a good opportunity to shut up?

[00:20:12] Speaker 03:
That's an excellent quote.

[00:20:13] Speaker 03:
I don't think it's talking about you.

[00:20:15] Speaker 00:
I think it's talking about you.

[00:20:20] Speaker 00:
If I could provide you with a short anecdote, I was making an argument with Judge Spottswood Robinson many years ago, and I answered a question, and he said, Mr. Page, I would have thought from your brief that you would have given precisely the opposite answer to that question.

[00:20:35] Speaker 00:
So there are times when you can help me.

[00:20:36] Speaker 00:
And what did you then say?

[00:20:37] Speaker 00:
I didn't say I'd like to go back and start over.

[00:20:42] Speaker 05:
Can I ask you a question about the finding of sham entity?

[00:20:47] Speaker 05:
I'm just having a little understanding of what the commission meant by that.

[00:20:52] Speaker 05:
I take it that means, from the description you've given here, that they were just meehive in disguise.

[00:21:01] Speaker 05:
They were just a frontier concoction for

[00:21:04] Speaker 05:
Is that my understanding?

[00:21:06] Speaker 00:
Is that an accurate understanding?

[00:21:07] Speaker 00:
Yes.

[00:21:08] Speaker 00:
And I think that's, I think it's pretty clear from the record, the record and the liability owner that All-American has not checked.

[00:21:18] Speaker 05:
Okay.

[00:21:18] Speaker 05:
All right.

[00:21:19] Speaker 05:
And so the point here is that the services were provided to them.

[00:21:23] Speaker 05:
It was just Beehive dressed up as All-American.

[00:21:27] Speaker 00:
The services were provided.

[00:21:30] Speaker 05:
Somebody connected the calls.

[00:21:32] Speaker 00:
The record, I think, demonstrates the services were provided by Beehive.

[00:21:36] Speaker 00:
And in fact, the billing was provided by Beehive, but it was on behalf of All American.

[00:21:45] Speaker 00:
If the Court has any questions on the jurisdiction issue, I'm happy to address it.

[00:21:49] Speaker 00:
I think it's a frivolous point.

[00:21:53] Speaker 02:
Um, if you have nothing else on the merits, you don't have to.

[00:21:58] Speaker 00:
The court doesn't have questions.

[00:21:59] Speaker 02:
Okay.

[00:22:00] Speaker 02:
Uh, the council any time left?

[00:22:04] Speaker 02:
Okay, you can take two minutes if you'd like.

[00:22:11] Speaker 01:
Thank you, Your Honor.

[00:22:13] Speaker 01:
Very briefly, you know, there was discussion about whether the FCC addressed state issues of unjust enrichment.

[00:22:21] Speaker 01:
As this Court knows, the FCC was never before the FCC because the FCC cannot hear claims against AT&T.

[00:22:28] Speaker 01:
AT&T in this case, as was determined in the All-American versus AT&T decision, is acting not as a regulated carrier subject of the Title II jurisdiction of the FCC, it is acting as a private customer.

[00:22:45] Speaker 05:
I'm sorry.

[00:22:47] Speaker 05:
The thing that's confused me is that if I've got this procedural history wrong, tell me, was that I thought you all were the ones that asked the district court to certify the quantum marijuana decision to issue to the FCC.

[00:22:58] Speaker 05:
Am I wrong about that?

[00:23:03] Speaker 05:
Right?

[00:23:04] Speaker 04:
Question three, if plaintiffs did not provide a regulated service, are plaintiffs entitled to be compensation under a quantum measure or with positive?

[00:23:10] Speaker 04:
And so you asked them to do that.

[00:23:11] Speaker 01:
I did.

[00:23:12] Speaker 01:
Those questions were drafted, some by Judge Pauley, some by me, some by AT&T.

[00:23:19] Speaker 01:
I wanted that question explicitly before the FCC, because I knew the answer to that.

[00:23:25] Speaker 01:
And Judge Pauley did not.

[00:23:27] Speaker 05:
The answer is the FCC cannot decide that issue.

[00:23:29] Speaker 01:
The FCC cannot determine, cannot preempt state law claims to be heard by a federal district court.

[00:23:39] Speaker 05:
So why would you ask a federal district court to certify to the FCC under a primary jurisdiction?

[00:23:44] Speaker 01:
Because I wanted that clarified on the record.

[00:23:48] Speaker 01:
Remember, we're dealing in a case, this is a series of about 24 federal court cases across the country that all have dealing with the same issue and the district courts are split on this.

[00:24:00] Speaker 01:
Half of the district courts have said state claims cannot be pursued because it's a tariff claims preempted by the filed rape doctrine.

[00:24:08] Speaker 01:
And that's a wrong answer.

[00:24:10] Speaker 01:
But because there was a conflicting precedent out there, I didn't want my judge to be confused by that.

[00:24:17] Speaker 01:
I wanted a statement of the law from the FCC.

[00:24:20] Speaker 02:
OK.

[00:24:21] Speaker 01:
Thank you.

[00:24:21] Speaker 01:
Thank you.