Before the Public Utilities Commission of the State of Filed California 10/30/20 04:59 Pm

BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF FILED CALIFORNIA 10/30/20 04:59 PM

Pacific Bell Telephone Company d/b/a AT&T California (U 1001 C), Complainant C.17-09-023 vs. (Filed September 29, 2017)

VAYA Telecom, Inc. (U 7122 C), Defendants

VAYA TELECOM, INC. (U 7122 C) APPLICATION FOR REHEARING OF THE DECISION REGARDING PHASE II ISSUES

Michel Singer Nelson Anita Taff-Rice Vaya Telecom, Inc. iCommLaw Counsel and Vice President of Regulatory 1547 Palos Verdes, #298 and Public Policy Walnut Creek, CA 94597 2865 Sunrise Ave., Suite 220 Phone: (415) 699-7885 Rancho Cordova, CA 95742 Fax: (925) 274-0988 Phone: (916) 235-2028 Email: [email protected] Email: [email protected] Counsel for Vaya Telecom, Inc.

October 30, 2020

1 / 34

Pursuant to Rule 16.1 of the Commission’s Rules of Practice and Procedure, Vaya

Telecom, Inc. (U-7122-C) (“Vaya”) hereby files its Application for Rehearing of the Decision

Regarding Phase II Issues (D. 20-09-029).1 As grounds therefor, Vaya states that D. 20-09-029 is based on factual and legal errors that must be corrected.

I. INTRODUCTION

The purpose of an Application for Rehearing is to alert the Commission as to legal or factual errors, in order to permit the Commission to correct it expeditiously. Rule 16.1(c)2 As discussed in detail below, the Commission should modify or set aside the findings of fact and conclusions of law of D. 20-09-029 because they are unlawful or erroneous.

II. ARGUMENT

A. D. 20-09-029 errs in holding that the Commission has jurisdiction to resolve disputes over and to enforce AT&T’s federal switched access tariff.

At pages 5-6 of the Decision, the Commission incorporates by reference its earlier rejection of Vaya’s argument that the Commission lacked jurisdiction to award AT&T damages.3

Before the hearing in Phase II, Vaya challenged the Commission’s jurisdiction to adjudicate

AT&T’s claim that it owed AT&T federally tariffed switched access facilities charges because

Vaya allegedly misrouted interLATA traffic.4 D. 20-09-029 lists three bases that the

Commission purportedly has jurisdiction over the issues here, but none of those grounds actually

1 Decision 20-09-029 was issued on October 2, 2020. Rule 16.1 (a) permits Applications for Rehearing to be filed within 30 days after the date that the Commission mails the order or decision. This Application is timely filed. 2 Unless otherwise stated, Sections referred to in this Brief are to the Public Utilities Code. 3 ALJ Ruling Denying Vaya’s Motion to Strike AT&T California’s Testimony and Dismiss Claims for Damages. 4 Vaya’s Expedited Motion to Stay Proceeding Pending Resolution of Commission Jurisdiction. 1

2 / 34 confer jurisdiction.

First, both parties are certificated as public utilities in California and Section 701 allows

the Commission to “supervise and regulate every public utility in the State and to do all things …

which are necessary and convenient in the exercise of such power and jurisdiction.” D. 20-09-

029 at 5. Section 701, however, cannot authorize the Commission to adjudicate activities of

utilities that fall outside of its jurisdiction. In this case, the issue is the application of AT&T’s

federal tariff, a matter that falls outside of the Commission’s jurisdiction.

Second, the Commission asserts jurisdiction based on Sections 1702 and 1707, which

authorize the Commission to hear complaints. Id. at 6. Again, these generic statutory sections do not, and cannot, authorize the Commission to hear complaints about subject matter outside of the Commission’s jurisdiction.

Third, D. 20-09-029 found that Section 252 of the Telecommunications Act (the “Act”) authorizes state commissions to arbitrate, interpret and enforce interconnection agreement disputes, including charges arising out of ICAs. Id. Section 252 authorizes the Commission to adjudicate ICA disputes, but only disputes arising from the subject matter in the ICA. When the subject matter relates to an issue outside of the four corners of the ICA (here AT&T seeks payment of charges under a federal tariff rather than the charges set forth in the ICA). Indeed, an ICA may include only intrastate services, not interstate services, so by definition, awarding consequential damages pursuant to a federal tariff is outside of the ICA and the Commission’s jurisdiction.

D. 20-09-029 errs in finding the Commission has jurisdiction to issue the following

Findings of Fact:

3 / 34 No. 16: “Direct Trunk Transport is required to connect an IXC’s facilities from the serving wire center to AT&T California’s tandem switch.”

No. 24: “AT&T California’s Installation of Service charge covers connecting the trunks riding the Direct Trunked Transport within the access tandem office to the Tandem Trunk Ports on the tandem switch; establishing the necessary trunk translations so traffic can flow to the trunks and tandem switch; establishing a FGD billing account for the trunk; and covering the costs of future disconnection.”

No. 27: “Vaya avoided a total of $3,364,692 in one-time Installation of Service Charges and monthly Tandem Trunk Port charges during the Record Period.”

No. 28: “Vaya avoided a maximum of $406,323 in monthly Tandem Trunk Port charges under the default disconnection schedule in D.19-08-028 OP 3, as modified by the Executive Director’s letter dated January 23, 2020.”

No. 31: “Vaya’s misrouting of interLATA traffic over LIS Trunks after issuance of D.14-01-006 resulted in economic harm to AT&T California, consisting of one-time Installation of Service charges and monthly Tandem Trunk Port charges.”

No. 34: “Vaya’s offense caused economic harm to AT&T California, consisting of one-time Installation of Service charges and monthly Tandem Trunk Port charges avoided.”

D. 20-09-029 also errs in the following Conclusions of Law:

No. 1: The Commission has jurisdiction to hear this case pursuant to Pub. Util Code Sections 701, 1702 and 1707.

No. 8: Vaya’s payment for switched access charges is governed by Section 1.5.3.1 of the parties’ ICA and FCC Tariff No. 1. No. 9: In the event of conflict between the ICA and the tariff, Section 1.5.3.1 of the ICA shall prevail.

No. 13: Vaya should pay reparations of $3,364,692 for one-time installation of services charges and monthly Tandem Trunk Port charge avoided by misrouting interLATA and no-CPN calls during the Record Period.

No. 15: Vaya should pay reparations for monthly Tandem Trunk Port charges avoided during the 360-day default schedule period ordered in D. 19-08-028, up to a maximum of $406,323.

4 / 34 In order to issue the above Findings and the Conclusions requiring Vaya to pay AT&T

damages, the Commission had to resolve the parties’ disputes over the application and

interpretation of AT&T’s FCC Tariff No. 1. The disputes concern duties, charges and liabilities

of AT&T pursuant to its interstate tariff, which is subject to the FCC’s exclusive jurisdiction. In

its attempt to justify Commission jurisdiction over AT&T’s damages claim, D. 20-09-029

improperly characterizes the damages as those resulting from Vaya’s alleged violation of the

ICA’s routing restrictions.5 In reality, however, the record is clear that AT&T’s damages claim arises out of its assertion that Vaya’s should have purchased services from AT&T’s FCC Tariff

No. 1 rather than the services in the ICA. As discussed more fully below, Vaya never ordered,

AT&T never provided and AT&T never billed for services from AT&T’s FCC Tariff No. 1.

AT&T simply wishes that Vaya had done so. The correct forum for resolving a claim that services should have been provided pursuant to a federal tariff is the Federal Communications

Commission (“FCC”), not this Commission.

Local exchange carriers (“LECs”), including AT&T California, file access tariffs with the

FCC pursuant to Section 203 of the federal Communications Act of 1934, as amended ("the

Act"), 47 U.S.C. § 203. These tariffs "conclusively and exclusively control the rights and liabilities between a carrier and its customer." MCI Telecommunications Corporation v. Graham,

7 F.3d 477, 479 (6th Cir. 1993). In addition, Section 207 provides:

Any person claiming to be damaged by any common carrier subject to the provisions of this chapter may either make complaint to the Commission as hereinafter provided for, or may bring suit for the recovery of the damages for which such

5 In D.19-08-028, the Commission’s order in Phase I, the Commission considered AT&T’s request for damages to be relating to “calls made by California callers to other Californians that are carried over telephone lines within California using the Public Switched Telephone Network.” Id. at 9. Here, in contrast, AT&T’s damages concern services contained in AT&T’s interstate tariff that carry interLATA calls across LATA boundaries and state boundaries. 4

5 / 34 common carrier may be liable under the provisions of this Act, in any district court of the United States of competent jurisdiction; but such person shall not have the right to pursue both such remedies. 47 U.S.C. Section 207.

Section 207 plainly states that an aggrieved party may either file a complaint with the FCC or bring suit in federal court for the recovery of damages. The case law is well established that the federal government has exclusive jurisdiction to resolve disputes over the duties, charges and liabilities of carriers concerning tariffed interstate access services. Ivy Broadcasting Co. v.

AT&T, 391 F.2d 486 (2nd Cir. 1968).

In Ivy, the court concluded that “questions concerning the duties, charges and liabilities of … telephone companies with respect to interstate communications service are to be governed solely by federal law and that the states are precluded from acting in this area.” 391 F. 2d at 491

(emphasis supplied). The court held that a claim for unpaid telephone service charges arises under the Communications Act to the extent the claim relies on tariffs filed with the FCC under

Section 203. The court ruled therefore that a complaint seeking to enforce the obligation of a user of interstate telephone service to pay the tariffed charges is a federal question that is properly brought in federal court. Id. at 493-494; see also MCI Telecommunications Corp. v.

Graham, 7 F.3d at 479 (citations omitted) (because tariffs filed with the FCC “conclusively and exclusively control the rights and liabilities between a carrier and its customer … a complaint to collect ‘arises under’ federal law); (cited by PBS Telecom, Inc. v. Qwest Communs. Corp., 2002

U.S. Dist. LEXIS (C.D. Cal. 2002). (“The duty to pay a certain price for phone service is a federal obligation” that is enforceable in federal court). Here, D. 20-09-029 awards damages to

AT&T based solely on its resolution of disputes regarding, and enforcement of, FCC Tariff No.

1, requiring Vaya to pay interstate tariffed charges.

6 / 34 Numerous other courts have employed the reasoning of Ivy Broadcasting to hold that an

action seeking payment of interstate communications service charges provided under an FCC

tariff (1) is one that arises under federal law and (2) is an issue over which federal district courts

have subject matter jurisdiction. See, e.g., MCI Telecommunications Corp. Teleconcepts, Inc. 71

F.3d 1086, 1093-1096 (3rd Cir. 1995.) The Seventh Circuit explained: A tariff filed with a

federal agency is the equivalent of a federal regulation, and so a suit to enforce it, and even more

clearly a suit to invalidate it, is unreasonable under federal law … arises under federal law. And

since the federal regulation defines the entire contractual relation between the parties, there is no

contractual undertaking left over that state law might enforce.

Federal law does not merely create a right; it occupies the whole field, displacing state

law. Cahnmann v. Sprint, 133 F.3d 484, 488-489 (7th Cir. 1998) (internal citations omitted); see

also WorldCom, Inc. v. Graphnet, Inc., 343 F.3d 651, 653-654 (3rd Cir. 2003) (complaint

concerning the duties, charged and liabilities with respect to interstate communications services

“arises under” federal law, and is thus properly brought before federal court). In ruling that

questions concerning the application of federally tariffed charges are to be governed solely by

federal and not state law, the courts have emphasized that a “uniform” regulatory approach

administered by the federal government is essential to ensure that Congress’ goals for interstate

communications are achieved. Ivy Broadcasting, 391 F.2d at 491. The CPUC’s venture into

resolving the parties’ disputes over FCC Tariff No. 1 improperly interferes with this uniform

federal regulatory approach interpreting and enforcing AT&T’s interstate tariff.

Before the 1996 amendments to the Act, the FCC had general rule-making authority to regulate interstate services and state commissions had general authority to regulate intrastate

7 / 34 services.6 In 1996, the federal Telecommunications Act was passed to enable competitors to enter

into the monopoly local and intraLATA market.7 Sections 251 and 252, which prescribe the

process designed to open local markets to competition, created “Interconnection Agreements” to

set forth the rates, terms and conditions for incumbent LECs (“ILECs”)8 to enable new competitive

LECs (“CLECs”) to provide local and intraLATA services.9 The 1996 amendments granted the

FCC regulatory authority over those intrastate matters governed by the Act and granted state

commissions limited authority over ICAs developed under Sections 251 and 252.10 ILECs and

CLECs were to negotiate the terms of their ICAs and, to the extent disputed issues remained,

mediate or arbitrate before the state utilities commissions to resolve their issues.11 As the 9th

Circuit observed in PacBell, “[i]t is clear from the structure of the Act, however, that the authority granted to state regulatory commissions is confined to the role described in Section 252 – that of

arbitrating, approving, and enforcing interconnection agreements.”12

The 1996 Act did not modify switched access for long distance. ICAs were not intended

to dictate the rates, terms and conditions for exchanging access traffic. In its Order implementing

the 1996 Act, the FCC describes the legal distinction between traffic subject to the 1996 Act and

access traffic, which continues to be subject to tariffs and Sections 201 and 202:

1034. We conclude that section 251(b)(5) reciprocal compensation obligations should apply only to traffic that originates and terminates within a local area, as

6 Local Competition Order, 11 FCC Rcd. 15499 at ⁋83. 7 47 U.S.C. Section 151 et. seq. (“1996 Act”) 8 Section 251(h) defines “incumbent local exchange carrier” as a local carrier that “on the date of enactment of the Telecommunications Act of 1996 [enacted Feb. 8, 1996], provided telephone exchange service in such area…” 9 While the ICAs also include terms for the LEC exchange of “Exchange Access” traffic, typically over Meet Point Trunks, the rates applicable to the sale of Exchange Access are contained in PBTC tariffs, as shown in Mertz Exs. JM-17 and JM-18 attached to his Declaration in support of this Opposition. 10 MCI Corp. v. Bell Atlantic, 271 F.3d 491, 510 (3rd Cir. 2001) 11 Mertz Dec. II at ⁋⁋6-7. 12 Pacific Bell Telephone Company v. Pac-West Telecomm, Inc. 325 F.3d 1114 (2003) at 1126. 7

8 / 34 defined in the following paragraph. …. Access charges were developed to address a situation in which three carriers -- typically, the originating LEC, the IXC, and the terminating LEC collaborate to complete a long-distance call. … By contrast, reciprocal compensation for transport and termination of calls is intended for a situation in which two carriers collaborate to complete a local call. … We note that our conclusion that long distance traffic is not subject to the transport and termination provisions of section 251 does not in any way disrupt the ability of IXCs to terminate their interstate long-distance traffic on LEC networks. Pursuant to section 251(g), LECs must continue to offer tariffed interstate access services just as they did prior to enactment of the 1996 Act. We find that the reciprocal compensation provisions of section 251(b)(5) for transport and termination of traffic do not apply to the transport or termination of interstate or intrastate interexchange traffic.13

Thus, AT&T’s tariffs continue to govern the rates, terms and conditions concerning access to its

local network to complete interLATA calls. In fact, as the FCC noted, Section 251(g) of the

1996 Act expressly preserved AT&T’s obligations to continue to provide “exchange access” to

long distance and other providers until those regulations are explicitly superseded by the FCC.14

Like the AT&T/Vaya ICA involved here, to the extent that ICAs discuss traffic other than local

and intraLATA traffic, they refer the parties to LEC tariffs.

Consequently, the FCC and federal courts continue to exercise exclusive jurisdiction over

interstate tariffed charges and state public utilities commissions, including this one, have no

jurisdiction to adjudicate claims requesting the award of federally tariffed interstate charges.

Westcom Long Distance, Inc. v. Citizens Utilities Company of California, CPUC D. 00-09-071

(1990). In Westcom, the CPUC held:

In resolving this dispute, the Commission needs to make clear that the extent of the Commission’s power to adjudicate some of the billing discrepancies raised in this proceeding. There is a need to address this jurisdictional issue because the FGB access services provided to Westcom by Citizens were billed entirely at the interstate tariff rate on file with the FCC. As discussed below, the FCC tariff provisions are beyond this Commission’s jurisdiction to resolve. … We conclude

13 Local Competition Order, 11 FCC Rcd. 15499 (1996), ⁋⁋ 1033-1034; see e.g., Alma Tel. Co. v. PSC, 183 S.W. 3d 575 (Mo. 2006); Ronan Tel. Co., v. Alltel Communs., Inc., 2007 U.S. Dist. LEXIS 8022 (Mt. 2007) at *9. 14 47 U.S.C. Section 251(g) 8

9 / 34 that the alleged overcharge of Westcom by Citizens for FGB services billed the interstate rate in the amount of $35,168.12 is an issue that this Commission has no jurisdiction over.

Id., at *19; see also, Conclusions of Law 9-10 at *192 (“Although the Commission has complete control over the rates charged by public utilities operating within the state, if the FCC tariff applies, then this Commission has no jurisdiction to adjudicate the matter.”)

AT&T’s Testimony makes it clear that in Phase II, AT&T only sought recovery of charges for interstate access services that AT&T asserts Vaya should have purchased out of

AT&T’s FCC Tariff No. 1 for “FGD trunks, including the number of trunks, mileage of those trunks, as well as the number of trunk ports.” AT&T 2-1C at 16-17; see also 18, footnote 18

(“All the NRCs and MRCs I discuss are set forth in AT&T’s FCC Tariff No. 1 …”). While the

ICA refers the parties to switched access tariffs for rates, terms and conditions for access traffic, such tariffs could only be state tariffs because an ICA does not apply to interstate (i.e. federal) services. It is undisputed that D. 20-09-029’s award of damages is exclusively for interLATA services provided by AT&T under its federal tariff; the damage award does not include Local or

IntraLATA charges subject to the ICA.

AT&T’s request that the Commission award consequential damages based on the rates, terms and conditions of its FCC Tariff No. 1 is beyond the scope of jurisdiction that the Act gave to the states regarding ICAs. Instead of arbitrating, approving or enforcing an interconnection agreement (which AT&T’s Amended Complaint asked the Commission to do), AT&T has asked the Commission in Phase II to interpret and enforce the rates, terms and conditions of AT&T’s

10 / 34 interstate access tariff, a document separate from the ICA and which remains in the exclusive

jurisdiction of the FCC and federal courts.15

In sum, federal law and the Commission’s own precedent make it clear that the

Commission has no jurisdiction over AT&T’s claim for damages arising out of FCC Tariff No.

1. This is particularly true since the parties dispute whether the tariff applies and which rate

elements and charges would be appropriate, if it did apply.

Thus, while the Commission may have had jurisdiction to hear the dispute over whether

Vaya’s routing practices breached the ICA, once AT&T introduced evidence supporting its

damage claims solely on Vaya’s alleged failure to purchase services that AT&T sells out of FCC

Tariff No. 1, the Commission’s jurisdiction over the damages phase of this proceeding ended.

Rather than resolving the above listed factual issues and legal issues arising exclusively out of

FCC Tariff No. 1, the Commission should have declined jurisdiction and instructed AT&T to

pursue its federally tariffed damages claims before the FCC or a federal court.

Because D. 20-09-029 commits legal error in holding that the Commission has

jurisdiction over the parties’ disputes over interstate federally tariffed charges, its finding of

jurisdiction and its award of damages must be set aside. AIG Ret. Servs. v. Altus Fin. S.A., 2011

U.S. Dist. LEXIS 162994, **9-10 (finding it “elementary” that subject matter jurisdiction is not

a waivable matter, citing Emerich v. Touche Ross & Co., 846 F. 2d 1190, 1194 no. 2 (9th Cir.

1988)); Capitol Industries-EMI Inc. v. Bennett, 681 F. 2d 1107, 1118 (9th Cir. 1982) (the proper

15 This is distinguishable from the issues in Cox v. Global Naps, D. 07-01-004 (2007), for example. There, the Commission found that it had jurisdiction over the access charges at issue because it was undisputed that they were intraLATA charges properly subject to the ICA. D. 07-01-004 at 3-6. Here it is undisputed that the calls are interLATA calls not within the scope of the 1996 Act and the laws governing ICAs. 10

11 / 34 remedy when a court determines that it lacks subject matter jurisdiction is to remand with

directions to dismiss the action for lack of jurisdiction).

B. D. 20-09-029 errs in applying a three-year statute of limitations to AT&T’s FCC Tariff No. 1 damage claims instead of the federal Communications Act’s two- year statute of limitations that applies to unpaid charges contained in federal tariffs.

Although the Commission lacks jurisdiction to interpret federal tariffs, once having delved into the federal subject matter, D. 20-09-029 should have applied the two-year

statute of limitations applicable to federal tariffs. The Decision, however, inconsistently and

erroneously applies the state three-year statute of limitations even though the charges on

which the damages are calculated come from a federal tariff. The federal two-year statute of

limitations is set forth in 47 U.S.C. §415, which applies to unpaid federally tariffed charges.

This error leads to the incorrect Findings of Fact and Conclusions of Law listed in Section

II. A., and the D. 20-09-029’s Finding of Fact No. 18, which determines that the Record

Period for AT&T’s damage claim covers the period between May 1, 2015 and August 31,

2019.

Sections 201 and 202 of the Act provide, in pertinent part, “all charges, practices, classifications, and regulations for communication service shall be just and reasonable; and that it shall be unlawful for any common carrier to make any unjust or unreasonable discrimination in charges, practices, classifications, regulations, services, or facilities in connection with communications service. And, as set forth above, Section 203(c)(3) makes it clear that it is unlawful for a carrier to “extend to any person any privileges or facilities in such communication, or employ or enforce any classifications, regulations, or practices affecting such charges, except as specified” in the tariffs that carriers are required to file with the FCC. MCI v. Graham, supra., 7 F.3d at 479.

12 / 34 The statute of limitations provision of the Communications Act, Section 415(a), requires that, “[a]ll actions at law by carriers for recovery of their lawful charges, or any part thereof, shall be begun, within two years from the time the cause of action accrues, and not after.” The FCC considers Section 415(a) to act as an “absolute, non-discretionary bar.” In the Matter of Am. Cellular Corp., 22 FCC Rcd. 1083, 1089. It not only “bars the remedy, it destroys liability.” Armstrong Utilities, Inc. v. General Telephone Co., of PA, 25 FCC 2d 385, 389 (1970) (“claims for damages based upon violations accruing more than one year [now two years] before filing are clearly foreclosed.” citing Thornell Barnes Co. v. Illinois Bell, 1 FCC 2d 1247 (1965)). AT&T filed its Complaint against Vaya on September 29, 2017. In D.19-08-028, the

Commission’s decision in Phase I of this proceeding, the Commission held that, because the

Complaint sought damages out of the ICA, Cal. Pub. Util. Code Section 736’s three year statute of limitation applies to AT&T’s claim for damages. D.19-08-028 at 20.

In Phase II of this proceeding, however, AT&T changed its theory of the case and

“superseded” the damages analysis that it performed in Phase I and instead, based its damages calculation on its theory that Vaya should have purchased transport facilities contained in

AT&T’s FCC Tariff No. 1: “ I performed an analysis of charges owed, which supersedes the analysis discussed [in the Phase I testimony]” …“Vaya should have paid for the FGD charges that would have applied to carry that interLATA traffic under AT&T California’s FCC Tariff

No. 1.” AT&T 2-1C at 16. Vaya not only disputed AT&T’s claim that it was required to purchase AT&T FGD transport to route its interLATA traffic to AT&T; it also disputed the rate elements that AT&T argued would apply, if it had purchased FGD facilities. See, e.g., Vaya 2-

2C at 2-3, 5-16.

The damages awarded by D. 20-09-029 based on AT&T’s new theory therefore do not 12

13 / 34 actually arise out of charges unpaid under the ICA; rather they are unpaid charges that Vaya

allegedly would have owed if it would have ordered, and AT&T would have provided, federally

tariffed services. See, AT&T 2-1C at 6-24. Under these circumstances, the alleged unpaid

charges arise out of FCC Tariff No. 1, not the parties’ ICA. As a matter of law, the two-year

statute applies to any award for unpaid charges for services that AT&T alleges Vaya should

purchased as FGD facilities under AT&T’s FCC Tariff No. 1.

To rule otherwise violates the Communications Act’s requirement that AT&T’s tariff be

applied uniformly and, the FCC’s strict, non-discretionary bar to allowing recovery for unpaid

federally tariffed charges that accrued more than two years before the complaint is filed.

Because Section 415 “destroys liability” for claims for payment for services subject to federal

tariffs prior to two years of the cause of action accruing, D. 20-09-029 erred in awarding

damages to AT&T under FCC Tariff No. 1 prior to September 29, 2015. Applying the federal

two-year statute of limitations would reduce the Record Period by 4 months, from beginning

May 1, 2015 to beginning September 30, 2015.

C. AT&T failed to sustain its burden of proof on an essential element of damages: that Vaya would have purchased AT&T’s tariffed interstate FGD services if it had not routed its interLATA traffic over Interconnection Trunks.

As the plaintiff, AT&T bears the burden to prove the claims and allegations of its

Complaint.16 The Commission stated in Arco, consistent with the California Evidence Code:

Complainants correctly observe that they bear the burden of establishing a prima facie case to support the relief they claim in the complaint. In the first instance, that burden is to produce evidence.17

16 ARCO Products Co. v. SFPP, L.P., D. 98-08-033, 81 Cal.P.U.C.2d 573, 1998 Cal. PUC LEXIS 593 (“Arco”); cf. Cal. Evid. Code § 110 (the “‘burden of producing evidence’ means the obligation of a party to introduce evidence sufficient to avoid a ruling against him on the issue.”). 17 Id. 13

14 / 34 Further, the evidence presented by AT&T must meet the “preponderance of the evidence”

standard of proof.18 California Evidence Code, Section 115, states:

“Burden of proof” means the obligation of a party to establish by evidence a requisite degree of belief concerning a fact in the mind of the trier of fact or the court. The burden of proof may require a party to raise a reasonable doubt concerning the existence or nonexistence of a fact or that he establish the existence or nonexistence of a fact by a preponderance of the evidence, by clear and convincing proof, or by proof beyond a reasonable doubt. Except as otherwise provided by law, the burden of proof requires proof by a preponderance of the evidence.

[T]he phrase “preponderance of evidence” is usually defined in terms of probability of truth, e.g., such evidence as, when weighted with that opposed to it, has more convincing force and the greater probability of truth.19

AT&T bears the burden to prove each fact that is essential to the claim for relief that it is

asserting, including its claim that damages were proximately caused by Vaya’s conduct.20

The Commission has generally applied this standard of proof in its proceedings unless

circumstances not present here mandate otherwise. On the other hand, “[i]t [is] sufficient for

defendant to produce evidence that casts doubt upon complainant’s evidence.” A defendant

may do so in a variety of ways.21 It need not produce its own study in order to cast doubt upon plaintiff’s evidence.

Significantly, even if the evidence is so evenly balanced that the Commission is unable to say that the evidence on either side of an issue preponderates, the Commission’s finding on that

18 See, In Re CTS, D.97-05-089, (1997) 72 CPUC2d 621, 642, Conclusion of Law 1, 2; In Re Qwest, D.03-01-087 at 8-9. 19 Utility Consumers' Action Network v. Pub. Util. Comm’n of Cal., 187 Cal.App.4th 688, 698-700 (2010), 2010 Cal. App. LEXIS 1443 (citations omitted); see also CACI No. 200 ("more likely true than not true"). 20 D. 14-01-037, at p. 16 (Jan. 16, 2014) (citing California Evidence Code § 500). 21 Arco at *9 (holding that “Defendant did not need to present its own … study to carry its burden of production of evidence.”) 14

15 / 34 issue must be against the party who had the burden of proving it.22 Therefore, any failure by

AT&T to satisfy its burden of proof to rebut Vaya’s evidence requires a finding against AT&T

California and rejection of its claim.23

In addition to the error in finding that the Commission has jurisdiction over AT&T’s damages claim, critical mistakes in D. 20-09-029 that erroneously resulted in a damages award in

AT&T’s favor are Findings: (31) “Vaya’s misrouting of interLATA traffic over LIS Trunks after issuance of D.14-01-006 resulted in economic harm for AT&T California, consisting of a one-time Installation of Services charges and monthly tandem Trunk Port charges” and (34)

“Vaya’s offense caused economic harm to AT&T California, consisting of the one-time

Installation of Service charges and monthly Tandem Trunk Port charges avoided. D. 20-09-029

Findings of Fact Nos. 31 and 34 (emphasis supplied).24

Proving the causation element is critical to entitle a party to damages for a breach of a

contract:

To recover damages from [Vaya] for breach of contract, [AT&T California] must prove all of the following … That [Vaya’s] breach of contract was a substantial factor in causing [AT&T California’s] harm.

22 Utility Consumers' Action Network, 187 Cal. App. 4th at 698-699; see also, Application of Pacific Gas and Electric Company for Authority, Among Other Things, to Increase Rates and Charges for Electric and Gas Service Effective on January 1, 2011. (U39M), D.11-05-018 at 68-69. 23In the Matter of the Application of SCEcorp and its public utility subsidiary SOUTHERN CALIFORNIA EDISON COMPANY (U 338-E) and SAN DIEGO GAS & ELECTRIC COMPANY (U 902-M) for Authority to Merge SAN DIEGO GAS & ELECTRIC COMPANY into SOUTHERN CALIFORNIA EDISON COMPANY, 1991 Cal. PUC LEXIS 253, 40 CPUC2d 159 at **16-18 (“SCEcorp”) ("Preponderance of the evidence" means evidence that has more convincing force than that opposed to it. If the evidence is so evenly balanced that you are unable to say that the evidence on either side of an issue preponderates, your finding on that issue must be against the party who had the burden of proving it.”) (California Jury Instructions, Civil, (BAJI 7th Ed.), No. 2.60.) (emphasis added). 24 Additional Findings and Conclusions are subsumed in FOF Nos. 31 and 34, including FOF No. 22, 25, 27, 28, 41 and Conclusions of Law Nos. 10, 11, 13, 15. This Application requests that they be set aside for all the reasons discussed in this Section. 15

16 / 34 California Jury Instructions, Breach of Contract – Essential Factual Elements CACI No.

303 (6).

“Substantial harm” requires a showing of more than a “slight, trivial, negligible, or

theoretical factor in producing a particular result.” See Haley v. Casa Del Rey Homeowners

Assn., (2007) 153 Cal. Appl. 4th 863, 871-872.

Here, AT&T California failed to prove a critical element of its damages claim -- causation. D. 20-09-029 concluded that Vaya should not have routed interLATA traffic over LIS and Meet Point trunks but then concluded that Vaya’s only option was to use FGD trunks from

AT&T California’s federal tariff. But AT&T California did not prove that FGD trunks were

Vaya’s only option if it were no longer able to use the LIS trunks. It failed to overcome Vaya’s undisputed testimony that no compensation was owed under the tariff because (1) AT&T did not provide FGD facilities to Vaya and (2) Vaya was not required under the ICA or FCC Tariff No.

1 to order FGD facilities in order to route its interLATA traffic to AT&T. Instead, the charges would have been owed only if AT&T had provided Vaya with FGD services. Vaya Opening

Brief at 8; Vaya Reply Brief at 2 and 8. Even AT&T’s Tariff on which D. 20-09-029 bases

AT&T’s damages claims, does not permit AT&T to recover charges from a customer for services that AT&T does not provide. Vaya 2-2C at 5-6.

D. 20-09-029 committed a significant error in assuming that if Vaya had not routed

interLATA traffic over LIS and MP Trunks, Vaya’s only option was to have purchased AT&T’s

FGD facilities and not less expensive services from third parties. Vaya Opening Brief at 9; Vaya

Reply Brief at 2 and 8. Vaya’s undisputed testimony demonstrates that it would have explored

other methods available to route its interLATA terminating traffic and interLATA transit traffic

17 / 34 to AT&T that would not have required Vaya to pay AT&T for expensive FGD trunks. Vaya 2-

2C at 4-6 For example, Vaya would have routed its interLATA traffic indirectly to AT&T

through intermediate carriers, including Vaya’s affiliate O1 Communications, Inc., whose ICA

with AT&T expressly permits it to route interLATA traffic to AT&T using LIS Trunks. Vaya

Opening Brief at 17-18 and footnote 15; Vaya Reply Brief at 7, 11.

The lack of causation and speculation involved in the award of damages in this case

based on AT&T’s claim that Vaya’s ICA breach caused AT&T to lose access revenue from FCC

Tariff No. 1 is most easily understood in the context of the damages award based on its error in

assuming that Vaya would purchase of FGD trunks for routing interLATA traffic to AT&T

territory after the Commission issued D. 19-08-028. D. 20-09-029 at 13-14 and 18-19.

Like the unsupported assumption for the retroactive damages award, D. 20-09-029

wrongly assumes that Vaya’s interLATA traffic would unequivocally be routed to AT&T’s FGD

trunks over the 360-day period after D. 19-08-028. Id. at 14. D. 20-09-029 issues a daily damage

figure and relies on the Joint Case Management Statement and the Executive Secretary’s Letter

granting Vaya’s request for an extension of time for this assumption. Id.

The parties’ November 1, 2019 Joint Case Management Statement does not, however,

state that Vaya was committing to purchase FGD facilities to route its interLATA traffic to

AT&T. Instead, it states that Vaya would “possibly establish[] Feature Group D trunks.”

Second JCM Statement at ⁋2. Vaya’s discussion mostly focused on problems it incurred timely disconnecting the Meet Points because of AT&T’s slow processes. At paragraph 5, rather than express an intention to buy AT&T’s FGD facilities, consistent with its testimony and briefing,

Vaya explains that it had not yet decided to purchase AT&Ts FGD facilities and instead

18 / 34 continued to explore its options. Vaya’s decision would be based on the ultimate costs AT&T

would impose for services contained in its FCC Tariff No. 1 compared to Vaya’s other options

for routing interLATA traffic.

5. With regard to migration of traffic to Feature Group D facilities, Vaya states that it is unable to decide whether to migrate its interLATA traffic to AT&T California’s Feature Group D facilities until it confirms the costs associated with these facilities in various scenarios. Although AT&T’s tariff sets rate elements that apply to the services, Vaya is unclear as to when each rate element applies. To date, AT&T has been unable to provide Vaya with the cost information necessary to enable Vaya to make an informed business decision concerning whether to migrate its traffic to AT&T’s Feature Group D facilities or to use alternative service providers. The parties discussed Vaya placing a test order to help it understand what charges would apply.

Likewise, the Executive Secretary’s Letter granting Vaya’s extension of time to

disconnect the second 25% of its Meet Points only discusses the disconnection process. It does

not state that Vaya represented that it would route its interLATA traffic to AT&T over FGD

facilities going forward. Vaya’s January 21, 2020 letter to the Commission’s Executive Director

explains the delay caused by AT&T’s slow processes for disconnecting the second 25% of the

Meet Points by the deadline and requested an extension of time to complete the second phase of

disconnections. It also restated its need to understand the costs that would apply before it made

an informed decision as to whether to route its interLATA traffic to AT&T’s FGD facilities.

Vaya Letter at 1-2.25 It does not support the Decision’s assumption that Vaya purchased

AT&T’s FGD facilities post D. 19-08-028.

25 D. 20-09-029 leaves the record open to the parties’ submission of evidence relating to the actual costs imposed on Vaya as a result of its purchase of AT&T’s FGD facilities. D. 20-09-029 at 14. The evidence will show that because of the high cost of routing interLATA traffic over FGD facilities, Vaya did not ultimately purchase AT&T FGD facilities. Instead, Vaya chose to route its interLATA traffic to AT&T’s territory in California using other intermediate provider services, including O1 Communications’ LIS trunks. This further demonstrates D. 20-09-029’s error in assuming that the FGD services were Vaya’s only option. 18

19 / 34 D.20-09-029 errs by creating a contractual obligation for Vaya to purchase FGD trunks

from AT&T and by charging Vaya with such obligation by awarding AT&T damages for

services that Vaya did not purchase and clearly announced it had not committed to purchase.

The unsupported, false assumptions underlying the prospective damages award illuminate the

error in the Commission’s decision to order both retroactive and prospective damages to AT&T

based on AT&T’s unproven theory that Vaya’s breach of the ICA was a significant cause of

AT&T’s lost interstate access facilities revenue. The record shows instead that Vaya would not have purchased AT&T’s FGD facilities if cheaper options existed for routing its interLATA traffic to AT&T’s territory in California. If Vaya chose another option, AT&T would have earned zero in FGD interstate access revenue. AT&T never submitted evidence to rebut record evidence on this point.

In summary, in finding Vaya liable for damages, D. 20-09-029 improperly ignored

Vaya’s undisputed evidence that defeats an essential element of AT&T’s claim for damages for

Vaya’s breach of the ICA. D. 20-09-029 erroneously assumes that but for Vaya’s routing of interLATA traffic over interconnection agreement trunking, AT&T would have earned revenue for FGD services contained in its federal tariff. AT&T, however, never established this “but for” causation. Rather, the undisputed record demonstrates that Vaya had several choices to route interLATA traffic to AT&T, including routing the interLATA traffic over O1’s LIS Trunks. In that scenario, AT&T would have earned zero for services contained in its federal tariff. The

Commission’s conclusion that Vaya could only have purchased services from AT&T out of FCC

Tariff No. 1 is based on speculation, not evidence. In fact, the evidence cited by D. 20-09-029 to support the award is contrary to the Vaya’s representations. Because D. 20-09-029 errs in

20 / 34 finding that AT&T carried its burden to prove by a preponderance of the evidence that Vaya’s breach of the ICA was a significant cause in AT&T’s loss of FGD revenue, it must be set aside.

D. D. 20-09-029 exceeds the Commission’s legal authority by awarding AT&T consequential damages.

D. 20-09-029 concludes that damages are due to AT&T based on the mischaracterization of those damages as “reparations.” Conclusion of Law Nos. 10-13. D. 20-09-029 includes no analysis to explain how it reached this conclusion, but the plain meaning of the term

“reparations” makes clear that AT&T’s damages are misclassified. Reparations are defined as “a refund or adjustment of part of all of the utility charges for a service or group of related services.” Thus, reparations are refunds of overcharges, and are within the Commission’s authority to award. D. 20-09-029 at 15.

D. 20-09-029 actually awarded AT&T consequential damages, however, which clearly are not within the Commission’s authority to award. Consequential damages are an amount of money sufficient to compensate an injured party for all the injury proximately caused by a tortious act. Southern California Public Power Authority v. Southern California Gas Company,

2020 Cal. PUC LEXIS 81 (D. 20-02-032) at *15.

The California Legislature and the Commission have drawn a clear distinction between the Commission's authority to award reparations as opposed to compensatory or consequential damages. In Walker v. P.T. & T. Co., 1971 Cal. PUC LEXIS 1288, the Commission noted that it has repeatedly ruled that only the Superior Court has the power to award consequential damages as opposed to reparations. D. 20-02-032, at *15 (citing Order Denying Rehearing of Decision

17-11-033, Application of San Diego Gas & Electric Company (U902E) for Authorization to

21 / 34 Recover Costs Related to the 2007 Southern California Wildfires Recorded in the Wildfire

Expense Memorandum Account (2018) D.18-07-025).

The Commission’s precedent is equally clear that if consequential damages are allowed by a contract or tariff, they must be recovered in court. PT&T. Co., 1971 Cal. PUC LEXIS 187,

*11(“only a court and not the Commission has the power to award consequential damages as opposed to reparations.”); Garcia v. PT&T Co., 1980 Cal. PUC LEXIS 376, *10-11 (same);

Southern California Public Power Authority, supra., 2020 Cal. PUC LEXIS 81 at *15 (same).

Consequential damages are defined as “an amount of money sufficient to compensate an injured party for all the injury proximately caused by a tortious act, or to replace the value of performance of a breach obligation.” D. 20-09-029 at 15. In addition to incorrectly classifying

AT&T’s claimed damages as reparations instead of consequential damages, D. 20-09-029 errs in awarding consequential damages in excess of the Commission’s authority.

The regulatory background on the distinction between reparations and consequential damages is instructive. Pursuant to the California Constitution, the CPUC “has broad authority to regulate utilities.” Art. XII, Sections 1-6. The Legislature enacted the Public Utilities Act, which authorized the Commission to supervise and regulate every public utility in California and to do all things which are “necessary and convenient in the exercise of such power and jurisdiction.” Section 701. In Southern California Public Power Authority, supra., the

Commission found, “granting and exercising this regulatory authority to provide remedies, the

Legislature and the Commission drew a distinction between the Commission’s authority to award reparations as opposed to compensatory or consequential damages.” Id., at **14-15. The

Commission then went on to cite numerous cases where the Commission instructed the parties to

22 / 34 seek relief in the courts and not at the CPUC, because the relief sought constituted damages, not authorized to be awarded by the Commission. Id. at **15-17. Even in situations where it is clear that the plaintiff utility suffered harm as a result of defendant’s action, when a plaintiff seeks the “difference in price between what it paid … and what it would have paid” if the defendant had not committed a tort or breached the contract, the law does not permit the

Commission to grant recovery. Id. at *18; see also, Westcom, supra at 49-53; PT&T. Co., 1971

Cal. PUC LEXIS 187, *11; Garcia v. PT&T Co., 1980 Cal. PUC LEXIS 376, *10.

AT&T witness, Mr. Mensinger, describes AT&T’s damages as the difference between what Vaya paid AT&T to complete interLATA calls over interconnection trunks compared to what Vaya would have paid if it had ordered and routed its interLATA traffic over separate FGD facilities purchased not out of the ICA, but out of AT&T’s FCC Tariff No. 1. AT&T 2-1C at 16; see also AT&T 2-2C at 3 (“[I]nterLATA traffic that Vaya improperly sent over meet-point trunks and LIS trunks should, instead, have been sent over FGD trunks. Accordingly, Vaya should have paid for the FGD charges that would have applied to carry that interLATA traffic under AT&T’s California FCC Tariff No. 1.”) This loss of revenue is therefore not related to a refund or adjustment of what Vaya was invoiced by AT&T under the ICA; rather, it is a loss of revenue that AT&T claims to have suffered for Vaya’s failure to purchase separate services sold by AT&T out of FCC Tariff No. 1. See Westcom, supra at 49-51.

In a similar case, PBTC v. AT&T Communications of California, Inc., 1992 Cal. PUC

LEXIS 20, 43 CPUC2d 100, the Commission held that PBTC’s claim of lost revenues resulting from AT&T and other interexchange carriers’ unlawful carriage of intraLATA traffic constituted damages and not reparations and therefore, it had no authority to award PBTC its claimed

23 / 34 damages. Id. at *8. There, like here, PBTC characterized its damages as the “difference between the access charge revenues it received from the [interexchange carriers] and the toll revenues it would have received had the [interexchange carriers] not carried the intraLATA traffic.” Id. at *6. The Commission held, “[t]he basis for Pacific’s monetary award is that it has lost profits and revenues which would have been returned to ratepayers under the “sharing mechanism.” No matter how such an award was to be calculated, Pacific’s requested relief is clearly a request for damages.” Id. at *7.

AT&T’s damages claim here likewise fits squarely within the Commission’s definition of consequential damages: It is intended to “replace the value of performance of a breached obligation.” In other words, Vaya breached the ICA by misrouting interLATA traffic over interconnection trunking and, as a result, AT&T lost interstate tariffed FGD revenue from an entirely different service that it argues it would have earned if Vaya had not breached the contract. Like the damages sought by the plaintiff in the PBTC and the Southern California cases, these are compensatory damages and not reparations.

Under these circumstances, D. 20-09-029 oversteps the Commission’s authority in awarding AT&T consequential damages and the award of damages must be set aside.

E. D. 20-09-029 errs by violating the plain terms of the ICA by including intraLATA toll traffic to determine the number of FGD trunks that would have been in service had Vaya purchased them.

The following Findings of Fact also must be set aside because they violate the terms of the ICA, which expressly allow intraLATA toll traffic to be sent over LIS Trunks. Under the

ICA and the Commission’s decisions, intraLATA toll traffic may be routed over LIS Trunks.

24 / 34 Only interLATA traffic should have been used in the Trunks in Service calculation for the speculative FGD facilities’ damage calculations.26

No. 8: “No-CPN calls treated as intraLATA switched access traffic incur both a per- minute of use charge and facilities charges.”

No. 9: IntraLATA switched access traffic is subject to per minute of use and facilities charges.

No. 10: IntraLATA switched access facilities charges are the same or higher than interLATA switched access facilities charges.

Conclusions of Law resulting from this error include:

No. 4: Vaya’s no-CPN calls should be subject to intraLATA switched access facilities charges as provided in Section 5.4 of the parties’ ICA.

No. 5: It is reasonable to assess interLATA switched access facilities charges to Vaya’s no-CPN traffic as a conservative estimate of intraLATA switched access facilities charges Vaya owes to AT&T California for no-CPN traffic because (1) more than 10 percent of Vaya’s traffic contained no-CPN traffic an (2) interLATA facilities charges cost the same or less than intraLATA switched access facilities charges.

D. 20-09-029 acknowledges Vaya’s argument that the number of Trunks in Service in

AT&T’s damage calculations is overstated because the calculations included intraLATA traffic.

D. 20-09-029 at 10. The Decision does not, however, justify its rejection of Vaya’s argument with an analysis. It summarily concludes after a brief discussion about Robocalling, that it

“adopts AT&T California’s methodology of determining FGD Trunks in Service based on actual trunks ordered during the Record Period.” Id. This misses a key fact: because the ICA

26 By making this argument, Vaya does not waive its previous arguments that the Commission has no jurisdiction over disputes concerning AT&T’s FCC Tariff No. 1 and that the Commission exceeded its authority in awarding consequential damages. 24

25 / 34 expressly allows intraLATA switched access traffic to be routed over LIS Trunks, no switched access facilities charges apply.

The ICA instructs the parties on what per minute rate to apply when No-CPN traffic (also sometimes referred to as “UNKNOWN” traffic) is transmitted to AT&T. JM Attachment 21, excerpts of Vaya and AT&T’s ICA at page 503 Section 5.4:

Where SS7 connections exist, if the percentage of calls passed with CPN is greater than ninety percent (90%), all calls exchanged without CPN information will be billed as either Local Traffic or intraLATA Toll Traffic in direct proportion to the minutes of use (MOU) of calls exchanged with CPN information. If the percentage of calls passed with CPN is less than ninety percent (90%), all calls passed without CPN will be billed as intraLATA switched access.

Vaya 2-2C at 13:7-23 (emphasis supplied).

Although the ICA attaches an intraLATA switched access per MOU rate to No CPN traffic instead of the lower Local rate, no alternative facilities would be required because LIS

Trunks are acceptable. Consequently, contrary to the Decision’s conclusion, FGD facilities charges would not apply. The ICA expressly provides: LIS Trunks are meant “for the termination of Local Traffic, IntraLATA Toll Traffic and Transit Traffic….” SM-1 at 49 of 620

(definition no. 86) Attachment 18 governing “Interconnection” also provides, “The Parties will establish LIS Trunks to exchange Local Traffic, IntraLATA toll Traffic, and Transit Traffic….”

SM-1 at 488 of 620. “IntraLATA Toll Traffic” means “calls originating and terminating within the same LATA, other than Local Calls.” SM-1 at 47 of 734 (definition no. 74.) “Transit

Traffic” likewise includes both Local and IntraLATA Toll Traffic destined to networks of third party carriers. SM-1 at 467 of 734 (Section 3.18(a))

Not applying switched access facilities charges to No-CPN traffic is also consistent with

26 / 34 AT&T’s billing practice to Vaya for No-CPN traffic over the last 10 years (the ICA was adopted in June 2009). First Amended Complaint at ⁋ 9. AT&T only bills Vaya per MOU charges out of the intrastate switched access tariff; it does not bill Vaya tariffed facilities charges. AT&T 2-2C

at 8-9. AT&T’s historical billing practice conflicts with its new theory that both per MOU and

facilities charges should apply to No-CPN traffic routed over LIS Trunks.

For all these reasons, D. 20-09-029’s decision to include facilities charges for No-CPN traffic MOUs in replacement FGD Trunks, incorrectly overstates potential damages. The only

MOUs that are not allowed over LIS or MP facilities are interLATA MOUs. Consequently, those are the only MOUs that may be used to estimate the number of trunks that Vaya may have

needed if it had used FGD services to route interLATA traffic instead of interconnection

facilities. Vaya Opening Brief at 15-16; Vaya Reply Brief at 5-7; Vaya 2-4C at 7:3-23; 8:1-3.

AT&T’s damage calculations fail to distinguish between intraLATA No-CPN traffic and interLATA No-CPN traffic. Consequently, based on this evidence, the Commission is unable to determine the number of trunks in service that would have been required to route only interLATA traffic over FGD services. Because AT&T failed to satisfy its burden of proof to demonstrate the number of Trunks in Service that would have been required for improperly routed interLATA traffic, D. 20-09-029 erred in accepting AT&T’s flawed study. Reliance on the study must therefore be set aside.

F. D. 20-09-029 errs by adopting the Record Period for damages relating to interLATA traffic routed over Meet Points.

D. 20-09-029 rules that the “Record Period” for the recovery by AT&T of FCC Tariff

No. 1 FGD facilities for interLATA traffic covers the period between May 1, 2015 and August

31, 2019. Findings of Fact No. 18. 26

27 / 34 Several problems with this Finding warrant that it be set aside or modified. First, as demonstrated previously in this Brief, D. 20-09-029 applies the wrong statute of limitations.

Second, D. 2009-029 awards damages for Vaya’s misrouting interLATA traffic over Meet Points before an Order finds that the ICA prohibits Vaya from doing so. Prior to the Order, Vaya had a good faith belief that the ICA allowed it to route interLATA traffic over Meet Points. Third, D.

20-09-029 violates the ICA’s Notice and Dispute Resolution provisions. Under the ICA, failure to provide written Notice of a billing dispute waives the ability to pursue a claim prior to Notice.

Fourth, if AT&T’s damages study cannot separate the amounts due for interLATA traffic over

LIS and interLATA traffic over Meet Points, the study should be rejected for all damages prior to the time the Commission issued D. 19-08-028 or, at a minimum, prior to the time AT&T provided Vaya with Notice of its dispute over Vaya’s Meet Point routing.

In addition to incorrectly applying a three-year statute of limitations to AT&T’s claims, as discussed above, D. 20-09-029’s Record Period overstates the time period during which Vaya was prohibited from routing interLATA traffic over Meet Point Trunks. Until the Commission issued its order in Phase I of this proceeding, D. 19-08-028, routing interLATA traffic over Meet

Points was not prohibited. Rather, the only routing that was prohibited by Commission Order before August 22, 2019, was the routing of interLATA traffic over LIS Trunks. D. 14-01-006; see D. 20-09-029 at 20 (“[W]e must consider the more limited economic impact of Vaya’s routing of interLATA traffic over LIS Trunks only, as D.14-01-006, did not consider the appropriateness of sending interLATA traffic over Meet Point Trunks or routing no-CPN traffic.”) Because Vaya had not been ordered not to route interLATA traffic over Meet Points until August 22, 2019, it should not be liable for damages prior to that holding.

28 / 34 In the Alternative, the Commission should modify the D. 20-09-029’s Record Period for

damages because it includes time before AT&T provided Vaya with Notice required under the

ICA that it disputed Vaya’s routing interLATA traffic over Meet Points. The Notice letter that

AT&T sent Vaya concerned only traffic subject to D. 14-01-006, interLATA traffic over LIS

Trunks. Nowhere did AT&T mention that it disputed Vaya’s routing of interLATA traffic over

Meet Points. Several months later, AT&T filed its initial Complaint in this case. Again,

nowhere in the Complaint does AT&T state that its dispute of Vaya’s routing practices included

interLATA traffic routed over Meet Points. The first that AT&T disclosed to Vaya that AT&T

disputed its Meet Point routing practices was in AT&T’s Opening Testimony in Phase I of this

proceeding on February 2, 2018. AT&T did not even amend its Complaint to properly plead its

claim against Vaya for misrouting interLATA traffic over Meet Points until several months later

on April 6, 2018.

The ICA prohibits an award of damages for interLATA traffic routed over Meet Points

prior to the date that AT&T provided Vaya written Notice of its dispute of Vaya’s routing.

Attachment 13 to the ICA regarding Billing Disputes and the Dispute Resolution process

requires, in pertinent part:

13.1 In the event either Party discovers a billing dispute, that Party may commence a dispute resolution process by sending written notice to the other Party describing the dispute. No Party may pursue any claim related to billing unless such written notice has first been given to the other Party….

SM-1, Attachment 13, Section 13 at 335 of 620 (emphasis supplied).

Because AT&T failed to comply with this requirement, AT&T waived any claim it may have had regarding Vaya’s routing interLATA over Meet Point Trunks before it provided Vaya with

29 / 34 written Notice. Accordingly, the Commission must modify the Record Period for any part of the

damages relating to interLATA traffic routed over Meet Points (if it can be determined from

AT&T’s studies) until after AT&T February 2, 2018.

If AT&T’s studies cannot separate damages attributable to interLATA traffic over Meet

Points from that attributable to interLATA traffic over LIS Trunks, D. 20-09-029 should be set aside for the time period prior to February 2018 on the grounds that AT&T failed to carry its burden of proof.

G. D. 20-09-029 errs in awarding a fine under Pub. Util. Code Section 2107 against Vaya.

For all the reasons discussed above demonstrating that D. 20-09-029 erred in awarding damages to AT&T, D. 20-09-029 also erred in issuing a fine against Vaya. If no damages are justified, re-working the Commission’s balancing factors in light of this conclusion would find that no fine is justified. This Application requests that the Commission modify or set aside the following Findings of Fact and Conclusions of Law relating to the issuance of a fine:

No. 31: Vaya’s misrouting of interLATA traffic over LIS Trunks after issuance of D.14-01-006 resulted in economic harm for AT&T California consisting of one-time installation of Service charges and monthly Tandem Trunk Port charges.

No. 34: Vaya’s offense caused economic harm to AT&T California, consisting of one-time Installation of Service charges and monthly Tandem Trunk Port charges avoided.

No. 37: The penalty is significant but will not impact Vaya’s ability to continue providing service to its customer base, and is still small compared to the value of the reparations owed to AT&T California for misrouting its interLATA and no- CPN calls.

No. 39: Commission precedent supports assessing a penalty on Vaya, as the Commission routinely assessed penalties when an entity violates a Commission order.

30 / 34 Conclusion of Law No. 17. “Issuing a penalty of $40,000 for Vaya’s violation of D.14-01-006 is reasonable in light of the five factors the Commission uses to assess penalties pursuant to Pub. Util. Code Section 2107.

D. 20-09-029’s analysis of whether to award a fine against Vaya pursuant to Section

2107 begins at page 19. Section 2107 provides, in pertinent part: “any public utility that violates or fails to comply with … any part or provision of any order, decision, decree …, in a case in which a penalty has not otherwise been provided, is subject to a penalty of not less than

($500), nor more than one-hundred thousand dollars ($100,000) for each offense.” The factors analyzed include: (1) the severity of the offense; (2) conduct of the utility; (3) totality of the circumstances, (4) financial resources of the utility; and (5) the role of precedent. D. 20-09-029 at 20.

On the severity of the offense, D. 20-09-029 limits its consideration of AT&T’s argument supporting a fine to evidence only showing interLATA traffic routed over LIS trunks during the

Record Period because Meet Point routing of interLATA traffic was not prohibited until the

Commission issued D.19-08-028. D. 20-09-029 also concludes that the interLATA routing over

LIS did not cause the majority of the economic harm to AT&T during the Record Period. But, because D.14-01-006 prohibited Vaya from routing any interLATA traffic over LIS and Vaya admitted that it routed a de minimis amount of interLATA traffic over LIS after the Order, the violation of a Commission Order weighs in favor of issuing a fine. D. 20-09-029 at 20-21.

With regard to consideration of Vaya’s conduct, D. 20-09-029 found that Vaya took significant steps to stop routing interLATA traffic over LIS after the Commission issued D.14-

01-006, and AT&T did not raise the issue to Vaya about properly routing its interLATA traffic over FGD trunks prior to initiating its complaint in this action. These weigh against a fine.

31 / 34 However, based on its erroneous conclusion that Vaya avoided facilities based switched access

charges imposed on other CLECs, it concluded that public interest weighed in favor of a fine. D.

20-09-029 at 21-23. As Vaya has demonstrated repeatedly in this brief, the record contained

undisputed evidence that, in fact other CLECs, including Vaya’s affiliate, O1 Communications,

were not required to purchase FGD facilities to route interLATA traffic to AT&T.

D. 20-09-029 next considered Vaya’s financial resources and concludes, “the $40,000

penalty is significant but it would not impact Vaya’s ability to continue providing services to its

customer base,” basing this conclusion solely on “the size of the payments avoided by Vaya.” D.

20-09-029 also reasons, “we have no indication that Vaya cannot afford to pay the switched

access charges owed or the penalty proposed in this decision.” D. 20-09-029 at 24.

D. 20-09-029’s analysis shows that the fine is based: (1) on the scant evidence in the

record that quantifies the amount of interLATA traffic Vaya routed over the LIS Trunks; (2) D.

14-01-006’s prohibition against Vaya routing any traffic over LIS Trunks, even de minimis

amounts; (3) D. 20-09-029’s mistaken conclusion that Vaya avoided charges imposed by AT&T

on all other CLECs; and (4) Vaya’s financial resources.

No evidence in the record supports D. 20-09-029’s conclusions regarding Vaya’s

financial ability to pay the fine or the damage award, or its ability to continue to serve its

customers if the fine or the damage award were to become final. In fact, the evidence in the

record and Vaya’s briefing is contrary to these conclusions. Vaya’s Opening Testimony in Phase

II explains that if the Commission were to order Vaya to pay additional switched access charges to AT&T, “it would cause significant harm to Vaya.” Vaya 2-1C at 14:13-18. In addition, in its

Opening Brief, Vaya represents, “the financial hardship to Vaya caused by imposition of

32 / 34 penalties would be debilitating; it would likely cause Vaya to go out of business.” Vaya

Opening Brief at 20. Thus, contrary to the assumptions that D. 20-09-029 relies upon to issue a fine, the record shows that Vaya would be significantly harmed both by the imposition of a fine and by an order requiring it to pay AT&T nearly $4,000,000 in damages.

Rather than ignoring this information, the Commission was required to include it in its balancing of the factors weighing for and against awarding a fine. As discussed previously in this brief, D. 20-09-029 also erred in finding that AT&T suffered economic harm as a result of

Vaya’s routing and that other CLECs had no choice but to route interLATA traffic to AT&T over FGD facilities. If the evidence was properly considered, the severity of the offense, public interest and the Vaya’s financial resources would weigh against issuing a fine, not in favor of it.

In particular, because D. 20-09-029 ignored the critical information of Vaya’s finances and relied on the opposite conclusion, which was unsupported by the evidence, the issuance of a fine must be set aside.

III. CONCLUSION

For all these reasons, the Commission must modify or set aside the Findings of Fact and

Conclusions of Law set forth in D. 20-09-029 that result in an award of damages in favor of

AT&T and the issuance of a fine against Vaya because they are unlawful or erroneous.

[signature blocks on next page]

/ / /

33 / 34 Signed and dated October 30, 2020 at Walnut Creek, CA.

Michel Singer Nelson /s/Anita Taff-Rice Vaya Telecom, Inc. iCommLaw Counsel and Vice President of Regulatory 1547 Palos Verdes, #298 and Public Policy Walnut Creek, CA 94597 2865 Sunrise Ave., Suite 220 Phone: (415) 699-7885 Rancho Cordova, CA 95742 Fax: (925) 274-0988 Phone: (916) 235-2028 Email: [email protected] Email: [email protected] Counsel for Vaya Telecom, Inc.