990 Federal Register / Vol. 63, No. 4 / Wednesday, January 7, 1998 / Rules and Regulations

FEDERAL COMMUNICATIONS

COMMISSION

47 CFR Parts 0 and 1

[CC Docket No. 96–238; FCC 97–396]

Procedures To Be Followed When

Formal Complaints Are Filed Against

Common Carriers

AGENCY: Federal Communications

Commission.

ACTION: Final rule.

SUMMARY: The Commission adopted a

Report and Order that changed the rules

for processing formal complaints filed

against common carriers. The Report

and Order adopted rules that are

necessary to implement certain

provisions contained in the 1996 Act

that prescribe deadlines ranging from 90

days to 5 months for resolution of

certain types of complaints against

common carriers. The rules adopted in

the Report and Order require or

encourage parties to engage in pre-filing

activities, change service requirements,

modify the form and content of initial

pleadings, shorten filing deadlines,

eliminate pleading opportunities that

were not useful or necessary, and

modify the discovery process.

EFFECTIVE DATE: March 18, 1998.

FOR FURTHER INFORMATION CONTACT:

Deena Shetler (202) 418–7296. For

additional information concerning the

information collections contained in

this Report and Order contact Judy

Boley at 202–418–0214, or via the

Internet at jboley@fcc.gov.

SUPPLEMENTARY INFORMATION: This is a

summary of the Commission’s Report

and Order in CC Docket No. 96–238,

adopted and released on November 25,

1997. The full text of the Report and

Order is available for inspection and

copying during normal business hours

in the FCC Reference Center, Room 239,

1919 M Street, N.W., Washington D.C.

The complete text of this decision may

also be purchased from the

Commission’s duplicating contractor,

International Transcription Services,

1231 20th Street NW, Washington D.C.

20036, (202) 857–3800.

This Report and Order contains new

or modified information collections

subject to the Paperwork Reduction Act

of 1995 (PRA). It has been submitted to

the Office of Management and Budget

(OMB) for review under the PRA. OMB,

the general public, and other federal

agencies are invited to comment on the

proposed or modified information

collections contained in this

proceeding.

Paperwork Reduction Act

This Report and Order contains either

a new or modified information

collection. The Commission, as part of

its continuing effort to reduce

paperwork burdens, invites the general

public and the Office of Management

and Budget (OMB) to comment on the

information collections contained in

this Order, as required by the Paperwork

Reduction Act of 1995, Pub. L. 104–12.

Written comments by the public on the

information collections are due

February 6, 1998. OMB notification of

action is due March 9, 1998. Comments

should address: (1) whether the new or

modified collection of information is

necessary for the proper performance of

the functions of the Commission,

including whether the information shall

practical utility; (b) the accuracy of the

Commission’s burden estimates; (c)

ways to enhance the quality, utility, and

clarity of the information collected; and

(d) ways to minimize the burden of the

collection of information on the

respondents including the use of

automated collection techniques or

other forms of information technology.

OMB Approval Number: 3060–0411.

Title: Procedures for Formal

Complaints Filed Against Common

Carriers.

Form No.: FCC Form 485.

Type of Review: Revision.

Respondents: Individuals or

households; businesses or other for

profit, including small business; not-forprofit institutions; state, local or tribal

government.

Section/title No. of respondents Est. time per

respondent

Total annual

burden

(hours)

a. Service ...................................................................................... 760 ...................................................................... 1.0 760

b. Pleading Content Requirements .............................................. 760 ...................................................................... 3.0 2,280

c. Discovery .................................................................................. 380 (complainants) ............................................. 2.25 855

380 (defendants) ................................................. 1.5 570

Estimate for recordkeeping ........................................................... 760 ...................................................................... 0.5 380

d. Scanning ................................................................................... 38 ........................................................................ 5.0 190

e. Damages .................................................................................. 380 ...................................................................... 1.0 380

f. Briefs .......................................................................................... 760 ...................................................................... 3.0 2,280

g. Directory of Service Agents ...................................................... 4,965 ................................................................... 0.25 1,241.25

h. Joint Statement of Stipulated Facts and Status Conferences 760 ...................................................................... 2.0 1,520

i. Filing of Copies of Proposed Orders on Disks .......................... 760 ...................................................................... 0.5 380

j. FCC 485-Intake Form ................................................................ 380 ...................................................................... 0.5 190

Total Annual Burden: 11,026.25

hours.

Estimated Costs Per Respondents:

$150.00 for each respondent that files a

complaint against a common carrier, it

is estimated that 380 complaints will be

filed in the next year.

Needs and Uses: The information has

been and is currently being used by the

FCC to determine the sufficiency of

complaints and to resolve the merits of

disputes between the parties.

The Report and Order requires all

complainants to personally serve their

formal complaint on the defendant, as

well as serve copies of the complaint

with the Mellon Bank, the Secretary of

the Commission, and the responsible

Bureau or Bureaus. This requirement

will speed up the proceeding by

eliminating delays in the defendant

receiving a copy of the complaint.

Regarding changes to the pleading

requirements, the Report and Order

concludes that complaints, answers, and

any necessary replies must contain

complete statements of relevant facts

and supporting documentation; an

inventory of all documents relevant to

the complaint; an identification of all

individuals with information relevant to

the complaint; and a computation of any

damages claimed. The Report and Order

concludes that each complaint must

contain verification of payment of the

filing fee, a certificate of service, and

certification that each complainant has

mailed a certified letter to each

defendant outlining the allegations that

form the basis of the complaint it

anticipated filing with the Commission

to the defendant carrier that invited a

response within a reasonable time
Federal Register / Vol. 63, No. 4 / Wednesday, January 7, 1998 / Rules and Regulations 991

period and a summary of all additional

steps taken to resolve the dispute prior

to the filing of the complaints, or an

explanation of why no such steps were

taken. The Report and Order concludes

that each answer must contain

certification that each defendant has

discussed the possibility of settlement

with each complainant prior to the

filing of the complaint, or an

explanation of why such discussion was

not feasible. The Report and Order also

concludes that Answers must be filed

within 20 days of service of the

complaint on the defendant by the

complainant. The Report and Order

requires that all pleadings be

accompanied by copies of relevant

tariffs. The Report and Order concludes

that all dispositive motions be

accompanied by proposed finding of

facts and conclusions of law in both

hard copy and on a computer disk,

formatted to be compatible with the

Commission’s word processing

software. The Report and Order

concludes that no amendments to

complaints will be allowed and no

cross-complaints or counterclaims may

be filed. The Report and Order further

requires parties to submit a joint

statement of disputed and undisputed

facts and key legal issues at least two

business days prior to the scheduled

date of the initial status conference.

These proposals will promote agreement

on a significant number of disputed

facts and legal issues, as well as serving

to better inform the Commission of the

factual and legal areas in dispute.

The Report and Order concludes that

complainants must file and serve any

requests for interrogatories, up to a limit

of 10, concurrently with their

complaints, defendants must file and

serve any requests for interrogatories, up

to a limit of 10, prior to or concurrently

with their answer, and complainants

must file and serve any requests for

interrogatories that are directed solely at

facts underlying affirmative defenses

asserted by the defendant in its answer,

up to a limit of 5, within 3 calendar

days of service of the defendant’s

answer. The Report and Order

concludes further that individuals who

are provided access to proprietary

information shall sign a notarized

statement affirmatively stating that the

individual has personally reviewed the

Commission’s rules and understands the

limitations they impose on the signing

party. Parties must maintain a log

recording the number of copies made of

all proprietary materials and the persons

to whom the copies have been provided.

Upon termination of a formal complaint

proceeding, all originals and

reproduction of any proprietary

materials disclosed in that proceeding,

along with the log recording persons

who received copies of such materials,

shall be provided to the producing

party. These requirements will lead to

the disclosure of information relevant to

the resolution of formal complaints

earlier in the complaint proceeding,

thus, allowing for timely resolution of

these complaints.

The Report and Order also concludes

that the Commission may impose a

scanning or other electronic formatting

requirement for submission of large

numbers of documents in certain cases.

This requirement will assist in the

efficient management of documents in

those cases where the review of large

numbers of documents is necessary to

the resolution of a dispute.

The Report and Order requires that,

where the Commission has ordered

parties to attempt to negotiate a damages

amount according to an approved

damages formula, the parties must

submit to the Commission, within thirty

days, the written results of such

negotiations. The written statement

shall contain one of the following: (1)

the parties’ agreement as to the amount

of damages; (2) a statement that the

parties are continuing to negotiate in

good faith and a request for an extension

of time to continue such negotiations; or

(3) the bases for the continuing dispute

and the reasons why no agreement can

be reached. This requirement will

encourage parties to negotiate the

resolution of damages claims diligently

and ensure that the failure of parties to

so negotiate will be remedied by the

Commission.

The Report and Order resolves that

briefs may be prohibited or limited.

Where permitted, briefs must contain all

claims and defenses that the party wants

the Commission to address. Each brief

must attach all documents on which it

relies and explain how each attachment

is relevant to the issues. Brief length has

been shortened to 25 pages for initial

briefs and 10 pages for reply briefs. This

requirement will ensure that briefs will

not be filed where they would be

redundant of filings already made with

the Commission and that briefs will be

filed where necessary to the full

resolution of a formal complaint.

The Report and Order requires all

carriers subject to the Communications

Act of 1934, as amended, to file in

writing a designation of agent for service

of process with the Commission, to

facilitate service of process in all

Commission proceedings.

The Report and Order concludes that

parties must file a joint statement of

stipulated facts, disputed facts and key

legal issues at least two business days

prior to the initial status conference.

This requirement will serve to narrow

the issues in dispute and serve as

further information to be considered in

determining the necessity of any

discovery sought by the parties. The

Report and Order also concludes that

parties must submit a joint proposed

order memorializing the rulings made at

each status conference by the close of

business on the business day following

the date the status conference was held.

Alternatively, parties may submit a

transcript of the rulings made at each

status conference by the close of

business on the third business day

following the date the status conference

was held. This requirement will save

Commission staff time and ensure that

the parties fully understand the rulings

that will impact the proceedings.

The Report and Order concludes that

all proposed orders must be submitted

both as hard copies and on computer

disk formatted to be compatible with the

Commission’s computer system and

using the Commission’s current

wordprocessing software. This

requirement increasing the efficiency of

the formal complaint process by

providing Commission staff with the

ability to adopt proposed rules either in

whole or in part where necessary.

Finally, the Report and Order

concludes that complainants are

required to submit a completed intake

form with its formal complaint to

indicate that the complaint meets the

threshold requirements for stating a

cause of action. This requirement will

help to prevent the filing of

procedurally deficient complaints.

Summary of Report and Order

[Report and Order in CC Docket No. 96–238]

I. Introduction

1. In February 1996, Congress passed

and the President signed the

Telecommunications Act of 1996 (‘‘1996

Act’’). One of the main goals of the 1996

Act is to establish a ‘‘pro-competitive,

deregulatory’’ national policy

framework for the telecommunications

industry. In accordance with this goal,

sections 208, 260, 271, and 275 of the

Act contain deadlines ranging from

ninety days to five months for the

Commission’s resolution of certain

complaints filed against the Bell

Operating Companies (‘‘BOCs’’), local

exchange carriers (‘‘LECs’’), and other

telecommunications carriers that are

subject to the requirements of the Act.

Provisions of the 1996 Act further direct

the Commission to establish such

procedures as are necessary for the

review and resolution of such
992 Federal Register / Vol. 63, No. 4 / Wednesday, January 7, 1998 / Rules and Regulations

complaints within the statutory

deadlines. Prompt and effective

enforcement of the Act and the

Commission’s rules is crucial to

attaining the 1996 Act’s goals of full and

fair competition in all

telecommunications markets. Such

widespread competition will ensure that

the American public derives the full

benefit of such competition through

new and better products and services at

affordable rates.

2. We conclude that, in order to fulfill

the goals and meet the statutory

deadlines of the 1996 Act, we must

revise our formal complaint rules to

provide a forum for prompt resolution

of all complaints of unreasonably

discriminatory or otherwise unlawful

conduct by telecommunications

carriers, and thus to reduce

impediments to robust competition in

all telecommunications markets.

Consistent with the Congressional

mandate to expedite the processing of

formal complaints, on November 26,

1996, the Commission released a Notice

of Proposed Rulemaking, 61 FR 67978

(December 26, 1996) (‘‘NPRM’’)

proposing changes to the rules that

govern formal complaints against

common carriers. In the NPRM we

articulated our goal of expediting the

resolution of all formal complaints, not

just those enumerated in the 1996 Act.

The NPRM sought public comment on

comprehensive rule changes and

additions that would: (1) encourage

parties to attempt to settle their disputes

before filing formal complaints; (2)

facilitate the filing and service of

complaints and related pleadings; (3)

improve the content and utility of the

initial pleadings filed by both parties,

while reducing reliance on discovery

and subsequent pleading opportunities;

and (4) eliminate unnecessary or

redundant pleadings and other

procedural devices.

3. In this Report and Order, we adopt

certain of the proposed rules, with some

modifications. The amended rules will

foster our ability to meet the statutory

complaint resolution deadlines of the

1996 Act and expedite the resolution of

all formal complaints, while

safeguarding the due process interests of

affected parties. The rules we adopt

today apply to all formal complaints,

except complaints alleging violations of

section 255. A uniform approach will

ensure that the Commission places on

all formal complaints the same procompetitive emphasis underlying the

1996 Act’s complaint resolution

deadlines. The rules we adopt in this

Report and Order shall be important

tools for promptly assessing a common

carrier’s compliance with the

requirements of the Act and our rules.

In addition, these rules provide for

suitable remedial actions where

appropriate.

4. We intend to closely monitor the

effectiveness of our new streamlined

rules in promoting the pro-competitive

goals of the Act. We will not hesitate to

re-visit the rules and policies adopted in

this Report and Order if we later

determine that further modifications are

needed to ensure that complaint

proceedings are promptly and fairly

resolved and, more generally, to

promote the Act’s goal of full and fair

competition in all telecommunications

markets.

5. In addition, Commission staff

retains considerable discretion under

the new rules to, and is indeed

encouraged to, explore and use

alternative approaches to complaint

adjudication designed to ensure the

prompt discovery of relevant

information and the full and fair

resolution of disputes in the most

expeditious manner possible. We

recently established an Enforcement

Task Force, the principal mission of

which is to promote timely and

appropriate enforcement of the procompetitive policies of the 1996 Act.

Among other duties, the Enforcement

Task Force has been charged with

identifying and investigating actions by

common carriers that may be hindering

competition in telecommunications

markets and with initiating enforcement

actions where necessary to remedy

conduct that is unreasonable, anticompetitive or otherwise harmful to

consumers. The Enforcement Task Force

is considering whether to recommend

alternative forms of complaint

adjudications and enforcement actions

to ensure that the goals underlying the

pro-competitive policies of the 1996 Act

and the Commission’s implementing

rules and orders are met. Any such

recommendation may form the basis for

a subsequent Report and Order to be

considered by the Commission at a later

date.

6. Finally, we note that section 207 of

the Act gives any person the option of

pursuing claims for damages against

common carriers based on alleged

violations of the Act either at the

Commission or before a federal district

court of competent jurisdiction. Thus,

parties looking to recover monetary

damages are free to weigh the

advantages of bringing their claims

before a federal district court against the

benefits of proceeding under the

Commission’s expedited complaint

procedures.

II. Background

A. Statutory Framework for Complaints

Against Common Carriers

7. Prior to enactment of the 1996 Act,

sections 206 to 209 of the Act provided

the statutory framework for our rules for

resolving formal complaints filed

against common carriers. Section 206 of

the Act establishes the liability of a

common carrier for damages sustained

by any person or persons as a

consequence of that carrier’s violation of

any provision of the Act. Section 207 of

the Act permits any person claiming to

be damaged by the actions of any

common carrier either to make a

complaint to the Commission or bring

suit in federal district court for the

recovery of such damages. Section

208(a) authorizes complaints by any

person ‘‘complaining of anything done

or omitted to be done by any common

carrier’’ subject to the provisions of the

Act. Section 208(a) specifically states

that ‘‘it shall be the duty of the

Commission to investigate the matters

complained of in such manner and by

such means as it shall deem proper.’’

Section 209 of the Act specifies that, if

‘‘the Commission shall determine that

any party complainant is entitled to an

award of damages under the provisions

of this Act, the Commission shall make

an order directing the carrier to pay to

the complainant the sum to which he is

entitled on or before a day named.’’

8. In 1988, Congress added subsection

208(b) to require that complaints filed

with the Commission concerning the

lawfulness of a common carrier’s

charges, practices, classifications or

regulations, must be resolved by the

Commission in a final, appealable order

within twelve months from the date

filed, or fifteen months from the date

filed if ‘‘the investigation raises

questions of fact of . . . extraordinary

complexity.’’ In addition, Congress

amended subsection 5(c)(1) to require

that such decisions be made by the

Commission, not the Bureau staff

pursuant to delegated authority.

B. Complaint Provisions Amended and

Added by the 1996 Act

9. As amended or added by the 1996

Act, sections 208, 260, 271, and 275 of

the Act all contain deadlines for the

Commission’s resolution of formal

complaints alleging violations under the

particular section by a common carrier.

10. Section 208. The 1996 Act

amended section 208, entitled

‘‘Complaints to the Commission.’’

Section 208(b)(1) now mandates that

‘‘the Commission shall, with respect to

any investigation under [section 208(b)]

of the lawfulness of a charge,
Federal Register / Vol. 63, No. 4 / Wednesday, January 7, 1998 / Rules and Regulations 993

classification, regulation, or practice,

issue an order concluding such

investigation within 5 months after the

date on which the complaint was filed,’’

rather than the twelve to fifteen month

deadline previously imposed. In

addition, subsection 208(b)(2) provides

that any such investigation initiated

prior to enactment of subsection

208(b)(2) must be concluded within

twelve months after the date of

enactment.

11. Section 260. The 1996 Act added

section 260, entitled ‘‘Provision of

Telemessaging Service.’’ Section 260(b)

provides that:

[T]he Commission shall establish

procedures for the receipt and review of

complaints concerning violations of [section

260(a)] or the regulations thereunder that

result in material financial harm to a

provider of telemessaging service. Such

procedures shall ensure that the Commission

will make a final determination with respect

to any such complaint within 120 days after

receipt of the complaint. If the complaint

contains an appropriate showing that the

alleged violation occurred, the Commission

shall, within 60 days after receipt of the

complaint, order the local exchange carrier

and any affiliates to cease engaging in such

violation pending such final determination.

12. Section 271. The 1996 Act added

section 271, entitled ‘‘Bell Operating

Company Entry into InterLATA

Services.’’ Section 271(d)(6)(B) directs

the Commission to ‘‘establish

procedures for the review of complaints

concerning failures by [BOCs] to meet

conditions required for approval’’ under

section 271(d)(3) to provide in-region

interLATA services. Section

271(d)(6)(B) further provides that,

‘‘[u]nless the parties otherwise agree,

the Commission shall act on such

complaint within 90 days.’’

13. Section 275. The 1996 Act added

section 275, entitled ‘‘Alarm Monitoring

Services.’’ Section 275(c) requires the

Commission to ‘‘establish procedures

for the receipt and review of complaints

concerning violations of [section 275(b)]

or the regulations thereunder that result

in material financial harm to a provider

of alarm monitoring service.’’ Section

275(c) further provides that:

[S]uch procedures shall ensure that the

Commission will make a final determination

with respect to any such complaint within

120 days after receipt of the complaint. If the

complaint contains an appropriate showing

that the alleged violation occurred, * * * the

Commission shall, within 60 days after

receipt of the complaint, order the incumbent

local exchange carrier * * * and its affiliates

to cease engaging in such violation pending

such final determination.

14. The 1996 Act also added several

provisions that reference complaint

proceedings but do not contain

resolution deadlines.

15. Section 255. The 1996 Act added

section 255, entitled ‘‘Access by Persons

with Disabilities.’’ Section 255 requires

manufacturers of telecommunications

equipment or customer premises

equipment to ensure that the equipment

is ‘‘designed, developed, and fabricated

to be accessible to and usable by

individuals with disabilities’’ and

further requires any providers of

telecommunications services to ‘‘ensure

that the service is accessible to and

usable by individuals with disabilities.’’

Section 255 provides that ‘‘[t]he

Commission shall have exclusive

jurisdiction with respect to any

complaint under this section’’ but

imposes no specific resolution deadline

for such complaints. We have initiated

a separate proceeding to implement the

provisions of section 255.

16. Section 274. The 1996 Act added

section 274, entitled ‘‘Electronic

Publishing by Bell Operating

Companies.’’ Section 274(e)(1) provides

that ‘‘any person claiming that an act or

practice of any [BOC], affiliate, or

separated affiliate constitutes a violation

of [section 274] may file a complaint

with the Commission or bring suit in

federal district court as provided in

section 207 of the Act’’ and that a

‘‘[BOC], affiliate, or separated affiliate’’

shall be liable for damages as provided

in section 206 of the Act. Similarly,

subsection 274(e)(2) permits an

aggrieved person to apply to the

Commission for a cease-and-desist order

or to a U.S. District Court for an

injunction or order compelling

compliance with section 274. None of

the complaint provisions in section 274

contain deadlines for Commission

action.

17. In addition, the 1996 Act imposed

other requirements on the BOCs and

other common carriers which could lead

to formal complaint actions under

section 208. For example, section

254(k), entitled ‘‘Subsidy of Competitive

Service Prohibited,’’ prohibits

telecommunications carriers from using

non-competitive services to subsidize

services that are subject to competition.

The 1996 Act also added section 276,

entitled ‘‘Provision of Payphone

Service.’’ section 276(a) prohibits a BOC

from subsidizing its payphone service

through its telephone exchange service

operations or its exchange access

operations. Timely, responsive

enforcement of provisions such as these

will be necessary to promote the 1996

Act’s goal of fostering competitive

telecommunications markets.

18. We tentatively concluded in the

NPRM that the provisions of the 1996

Act that specifically refer to complaint

procedures do not diminish the

Commission’s broad authority to

investigate formal complaints under

section 208. AT&T, the sole commenter

to address this issue, agrees with our

tentative conclusion, explaining that

section 261(a) states that:

nothing in this part [Part II] shall be

construed to prohibit the Commission from

enforcing regulations prescribed prior to the

date of enactment of the Telecommunications

Act of 1996 in fulfilling the requirements of

this part, to the extent that such regulations

are not inconsistent with the provisions of

this part.

According to AT&T, specific references

in the Act to the Commission’s duties to

resolve formal complaints under section

271 and elsewhere in the Act affect only

the time in which such matters must be

decided, but do not affect the

Commission’s existing authority under

section 208.

19. We find that Congress’ actions in

specifying certain complaint procedures

and deadlines for those procedures do

not restrict the Commission’s authority

to resolve formal complaints pursuant to

section 208. Section 261 is entitled,

‘‘Effect on Other Requirements’’ and

subsection (a) indicates Congress’’

intent to leave intact the Commission’s

authority except where it would be

inconsistent with the Act itself. We

conclude that any references to

complaint resolution deadlines in Title

II of the Act are intended to affect only

the time in which specific matters must

be decided, and do not decrease the

Commission’s existing authority under

section 208.

III. Amendments to Rules of Practice

and Procedure

A. Overview

20. The focus of this proceeding is on

establishing rules and procedures to

implement the expedited complaint

provisions set forth by the 1996 Act and

to speed the resolution of all formal

complaints in accordance with the procompetitive policies underlying the

1996 Act. Three objectives form the

basis for the amendment of the formal

complaint rules, which focus on

settlement efforts, enhanced pleading

content, and streamlined procedures.

21. Our first objective is to promote

settlement efforts to enable parties to

resolve disputes on their own before

resorting to adjudication before the

Commission. We conclude that more

dialogue between parties prior to the

complaint process will reduce, and in

some cases, eliminate, the need to file

formal complaints with the

Commission. Consequently, we require

complainants and defendant carriers to
994 Federal Register / Vol. 63, No. 4 / Wednesday, January 7, 1998 / Rules and Regulations

certify in their respective complaints

and answers that the possibility of

settlement was discussed before the

complaint was filed with the

Commission. Certification of settlement

attempts will promote pre-filing

discussions and information exchanges

among the disputing parties. In

situations in which disputes are not

resolved, we expect that pre-filing

discussions and information exchanges

will enable parties to narrow the

number and scope of the issues to be

presented to the Commission for

resolution under the expedited

complaint procedures.

22. Our second objective is to improve

the utility and content of pleadings, so

that the complaint, answer, and any

necessary reply may serve as the

principal basis upon which the

Commission will make a decision on the

merits of the complaint. Under the

format and content rules, absent a

waiver for good cause shown,

complainants and defendants must

make factual allegations in their

pleadings and supply documentation to

support such facts. To the extent that

the Commission determines that

additional information is needed in the

record to resolve a complaint fully, the

parties will be required to respond

quickly.

23. Our third objective is to

streamline the formal complaint process

by eliminating or limiting procedural

devices and pleading opportunities that

have contributed to undue delays in

formal complaints. For example, we

conclude that we should modify

discovery to increase staff control over

the process and limit the filing, timing,

and scope of briefs, as well as

streamline the service process by having

complainants serve complaints directly

on defendants. In addition, we eliminate

certain pleading opportunities that have

been of little value to the complaint

resolution process, including crosscomplaints, counterclaims, motions to

make a complaint definite and certain,

and amendments to complaints.

24. To advance these three objectives,

we have designed rules to speed the

processing of all formal complaints. By

encouraging dialogue among the parties

prior to the filing of formal complaints,

many conflicts will be settled and those

complaints that are filed will have been

narrowed in scope. By requiring initial

pleadings to contain complete

information and documentation, the

parties and the Commission will be

better prepared to resolve disputed

issues at an early stage of the complaint

process. And finally, by streamlining

and eliminating unnecessary pleading

opportunities, the parties and the

Commission will be able to focus early

on the essential activities and

information needed to more quickly

resolve formal complaints.

B. Applicability of the Rules

1. Uniform Application of the Rules.

a. The NPRM. 25. In the NPRM, we

tentatively concluded that the procompetitive goals and policies

underlying the short complaint

resolution deadlines in the Act should

apply to all formal complaints, not just

to those specifically added or amended

by the 1996 Act. The NPRM proposed to

implement uniform procedures and

pleading requirements to expedite the

resolution of all formal complaints and

sought comment on the need for

specialized rules or procedures for

handling complaints arising under

particular provisions of the Act.

b. Comments. 26. BellSouth supports

applying the same procedures to all

formal complaints and the National

Association for the Deaf (‘‘NAD’’)

agrees, stating that separate sets of

procedures could be confusing for

complainants. The majority of parties

commenting on this issue, however,

argue for special expedited procedures

for those complaints that are subject to

specific statutory deadlines, with other

complaints proceeding under more

relaxed or flexible timetables. American

Public Communications Council

(‘‘APCC’’) expresses concern that the

new procedures will place significant

burdens on complainants and

defendants. Cincinnati Bell Telephone

(‘‘CBT’’) states that sections 260(b),

271(d)(6)(B), and 275(c), which require

complaints to be resolved under ninety

or 120-day deadlines, involve very

specialized subject matters, while

section 208 complaints may involve any

aspect of telecommunications and

therefore parties to section 208

complaints may need more time to

develop and resolve issues. GTE

suggests using separate proceedings for

‘‘fast-track’’ cases, stating that the

Commission should wait until it has

gained more experience with

application of the provisions of the 1996

Act before attempting to apply the same

expedited procedures to all formal

complaints.

27. Some commenters also urge the

Commission to establish expedited

procedures for those complaints that are

not specifically covered by a statutory

deadline but which, they argue, are

needed to ensure full and fair

competition. For example, MCI

proposes expedited procedures for

interconnection-related complaints

pursuant to sections 251 and 252 of the

Act. Telecommunications Resellers

Association (‘‘TRA’’) argues that

complaints filed by resale carriers

should be processed under expedited

procedures because of the size and

resource disparities between resellers

and their underlying network service

providers, and because of the unusual

circumstances in which resellers have

dual status as both customers and

competitors of network service

providers.

28. The NAD references its comments

to the Section 255 NOI, 61 FR 50465

(September 26, 1996), in which it

proposed that the Commission create

procedures to coordinate with the

Department of Justice (‘‘DOJ’’) to

determine the appropriate governmental

authority for reviewing complaints that

arise out of a lack of access to

telecommunications services for persons

with disabilities. Such complaints could

result either from the failure of a place

of public accommodation or state or

local governmental entity to follow the

requirements of the Americans with

Disabilities Act of 1990 (‘‘ADA’’) or

from the failure of a

telecommunications manufacturer or

service provider to comply with section

255. The NAD states that its proposal

will aid parties who file section 255

complaints that may raise jurisdictional

issues.

c. Discussion. 29. We affirm our

tentative conclusion that uniform

streamlined procedures and pleading

requirements should be applied to all

formal complaints filed against common

carriers, even those that are not subject

to specific statutory deadlines, with the

exception of complaints alleging

violations of section 255. All formal

complaints should be resolved as

expeditiously as possible. We find that

uniform procedures and pleading

requirements will promote efficiency in

the Commission’s administration of

complaints and will minimize

confusion among the parties. Uniform

procedures for all formal complaints

will promote the Commission’s goal of

expediting the resolution of these

disputes by allowing the Commission

and all parties to follow one set of rules.

30. We disagree with the commenters

who support expedited procedures only

for complaints that have statutory

deadlines or that involve competitive

issues for the following reasons. First,

we agree with NAD that having separate

sets of procedures for certain types of

complaints would create confusion for

parties who might be unclear as to

which rules to follow and might even

lead to repeated and inadvertent

violations of our procedural rules.

Second, we conclude that separate

complaint procedures would permit
Federal Register / Vol. 63, No. 4 / Wednesday, January 7, 1998 / Rules and Regulations 995

parties to exploit our rules by alleging

certain violations in order to manipulate

the time frame or level of evidentiary

support required in a particular

complaint. For example, a complainant

alleging that a BOC has violated certain

provisions of the Act might be tempted

to add an allegation that the BOC has

also failed to meet a condition required

for approval for provision of interLATA

services in violation of section 271, in

order to take advantage of the ninetyday resolution deadline mandated by

section 271(d)(6)(B). Third, to the extent

that certain commenters contend that

subjecting all complaints to expedited

procedures will unnecessarily work

hardships on complainants and

defendants in cases without statutory

deadlines, we note that the Commission

has considerable discretion under the

amended rules to accommodate the

needs of parties in cases where no

statutory deadline applies. Finally,

separate sets of procedures would be

administratively burdensome for the

Commission. Not only would it be

cumbersome to promulgate separate sets

of procedures, but it would decrease

staff efficiency to apply different

procedural rules to different complaints.

31. We defer consideration of NAD’s

proposal to establish coordination

procedures with the DOJ regarding

jurisdiction of accessibility complaints

in this proceeding. We will address this

proposal in our section 255

implementation rulemaking, so as to

permit the Commission to take a

comprehensive approach to

implementation of section 255.

2. Applicability of the Section

208(b)(1) Deadline. a. The NPRM. 32.

We stated in the NPRM that the new

five-month resolution deadline in

section 208(b)(1) applies only to those

formal complaints that investigate the

‘‘lawfulness of a charge, classification,

regulation or practice.’’ Section 208(b),

as originally added by Congress in 1988

in the FCCAA, has been interpreted

previously as applicable only to

complaints about matters contained in

tariffs filed with the Commission. In

other words, under this interpretation,

only those complaints challenging the

‘‘lawfulness of a charge, classification,

regulation or practice’’ reflected in a

tariff filed with the Commission

pursuant to section 203 of the Act have

been viewed as subject to the resolution

deadlines contained in former section

208(b).

b. Comments. 33. Several commenters

take a much broader view of the scope

of section 208(b). According to these

commenters, the five-month resolution

deadline in section 208(b)(1), in the

absence of a specific statutory resolution

deadline such as in sections 260, 275,

and 271, applies to all formal

complaints filed pursuant to section

208. Although the commenters provide

little argument to support this view, the

crux of their claim appears to be that the

language in section 208(b)(1) referring to

‘‘investigation[s] into the lawfulness of

a charge, classification, regulation or

practice’’ is broad enough to cover any

unlawful act or omission by a common

carrier which could subject it to a

complaint filed pursuant to section 208.

Under this broad interpretation of

section 208(b)(1), the Commission

would have a maximum of five months

to resolve any formal complaint filed

pursuant to section 208.

c. Discussion. 34. The plain language

of the Act establishes that the class of

complaints subject to the deadline in

section 208(b)(1) is narrower than the

class of complaints that can be filed

under section 208(a). Section 208(a),

inter alia, gives any person the right to

complain about ‘‘anything done or

omitted to be done’’ by a common

carrier in contravention of the Act. The

complaint resolution deadline in section

208(b)(1), on the other hand, refers only

to those complaints involving

investigations into the lawfulness of a

‘‘charge, classification, regulation, or

practice’’ of a carrier.

35. While there is little guidance in

section 208 itself for defining the subset

of complaints covered by section 208(b),

we conclude that section 208(b)(1)

covers complaints relating to the

lawfulness of those matters required to

be in tariffs. Stated another way, the

deadline covers complaints relating to

the lawfulness of matters with respect to

which the Commission could exercise

its prescription power under section

205. The deadlines in sections

204(a)(2)(A) (pertaining to the nature

and timing of tariff investigations by the

Commission) and 208(b)(1) are identical

in both the Act, as amended by the

FCCAA, and the 1996 Act. In addition,

the provision in the 1996 Act

establishing the effective date for the

changes to the tariff investigation and

complaint resolution deadlines

specifically states that the new

deadlines in sections 204 and 208(b)

shall apply only with respect to charges,

practices, classifications, or regulations

‘‘filed’’ on or after one year after the date

of enactment. The use of the word

‘‘filed’’ connotes a tariff filing pursuant

to section 203 of the Act because it is

generally pursuant to section 203 that a

‘‘charge, classification, regulation, or

practice’’ would be ‘‘filed’’ with the

Commission.

36. We note, moreover, that the 1996

Act added specific resolution deadlines

for complaints filed pursuant to sections

260, 271, and 275. It may be inferred

that, because Congress added specific

deadlines in certain sections of the 1996

Act for resolving identified types of

complaint actions, and was silent as to

deadlines for resolving complaints

arising from other sections of the Act,

Congress did not intend to mandate

deadlines for resolving all complaints.

37. We therefore conclude that section

208(b) applies only to formal complaints

which involve ‘‘investigation[s] into the

lawfulness of a charge, classification,

regulation or practice’’ contained in

tariffs filed with the Commission. In

light of our complete detariffing policy

for the domestic interstate,

interexchange services of nondominant

interexchange carriers and our

permissive detariffing policy for

competitive access providers and

competitive LECs, however, we

conclude that the interpretation should

be modified to ensure that our

forbearance decisions do not eviscerate

Congress’ intent in establishing the fivemonth resolution deadline for 208(b)(1)

complaints. As noted above, the

application of the 5-month 208(b)(1)

deadline to investigations concerning a

carrier’s ‘‘charge, classification,

regulation, or practice’’ is triggered by

the filing of any such charge,

classification, regulation or practice

with the Commission. To the extent that

our detariffing decisions relieve carriers

of any obligations to make such filings,

it could be argued that complaints about

matters not filed with the Commission

by carriers are not encompassed by

section 208(b)(1). We conclude that

Congress clearly did not intend this

result. We hold, therefore, that the

section 208(b)(1) deadline shall apply to

any complaint about the lawfulness of

matters included in tariffs filed with the

Commission, and those matters that

would have been included in tariffs but

for the Commission’s forbearance from

tariff regulation. For example,

complaints alleging that a

carrier,through its non-tariffed charges,

has failed to meet the rate integration or

rate averaging requirements of section

254(g) of the Act would be subject to the

section 208(b)(1) deadline. Similarly,

complaints contending that a carrier has

imposed unjust and unreasonable terms

and conditions on the provision of a

service that would have been tarrifed

but for our forbearance decision would

fall within the requirements of section

208(b)(1).

C. Pre-Filing Procedures and Activities

38. In the NPRM we asked parties to

identify specific pre-filing activities

available to potential complainants and
996 Federal Register / Vol. 63, No. 4 / Wednesday, January 7, 1998 / Rules and Regulations

defendants that could serve to settle or

narrow disputes, or facilitate the

compilation and exchange of relevant

documentation or other information

prior to the filing of a formal complaint

with the Commission. It has been our

experience that there is generally little

exchange of information or discussion

of the dispute between parties prior to

the filing of a formal complaint and that

such exchange of information and

discussion of a dispute will often lead

to settlement. We stated in the NPRM

that our intent was to adopt rules or

procedures that would promote actions

that could either foster the resolution of

disputes prior to filing or narrow the

scope of the issues to be resolved in

formal complaints.

1. Certification of Settlement

Attempts. a. The NPRM. 39. We

tentatively concluded in the NPRM that

we should require that a complainant

certify in its complaint that it discussed,

or attempted to discuss, in good faith

the possibility of settlement with the

defendant carrier’s representative(s)

prior to filing the complaint, and,

further, that failure to comply with this

certification requirement would result

in dismissal of the complaint.

b. Comments. 40. Most commenters

support the proposal to require a

complainant to certify in its complaint

that it discussed, or attempted to

discuss, the possibility of settlement

with the defendant carrier prior to filing

its complaint. These commenters agree

that settlement should be encouraged

and that the certification requirement

would provide an additional incentive

for parties to settle or narrow disputed

issues, thereby resulting in fewer and

better-focused complaints. GST

Telecom, Inc. (‘‘GST’’), KMC Telecom,

Inc. (‘‘KMC’’), MFS Communications,

Co. (‘‘MFS’’), and TRA additionally

suggest that answers should be required

to contain certification that the parties

discussed, or attempted to discuss, the

possibility of settlement prior to the

filing of the formal complaint. In their

Joint Reply, Jones Intercable, Inc.,

Centennial Cellular Corp., Texas Cable

and Telecommunications Association,

Cable Television Association of Georgia,

South Carolina Cable Television

Association, and Tennessee Cable

Telecommunications Association

(collectively, the ‘‘Cable Entities’’)

recommend mirroring the Commission’s

pole attachment procedures, which

require a complaint to either summarize

all steps taken to resolve the dispute

prior to filing or explain why no steps

were taken. AT&T opposes such a precertification requirement, arguing that it

would unduly restrict a party’s

‘‘unconditional statutory right’’ to file a

section 208 complaint, citing AT&T v.

FCC as support for its proposition.

BellSouth disagrees with AT&T, arguing

that there is no section 208 right to file

a complaint that is not based on facts,

and that encouraging pre-complaint

negotiations will facilitate all parties’

understanding of the facts. Bell Atlantic,

NYNEX, and Pacific Telesis Group

(‘‘PTG’’) also disagree with AT&T’s

argument, stating that AT&T v. FCC

deals only with the Commission’s

prohibition of tariff revisions for certain

services and does not deal with section

208 complaints. Competitive

Telecommunications Association

(‘‘CompTel’’) opposes the requirement

of certification of settlement attempts,

arguing that parties already have

sufficient motivation to settle their

disputes and that mandatory settlement

discussions might force some parties to

accept unfavorable settlements.

c. Discussion. 41. We conclude that

both the complainant and defendant, as

part of the complaint and answer,

respectively, must certify that they

discussed, or attempted in good faith to

discuss, the possibility of settlement

with the opposing party prior to the

filing of the complaint. We agree with

GST, KMC, MFS, and TRA that

defendant carriers should be given equal

responsibility for exploring settlement

options prior to the filing of a formal

complaint. To help facilitate meaningful

discussion between disputing parties,

we will adopt a requirement that the

complainant mail a certified letter

outlining the allegations that form the

basis of the complaint it anticipates

filing with the Commission to the

defendant carrier that invites a response

within a reasonable period of time. We

further conclude that the rule setting

forth the certification requirement shall

be modeled on the Commission’s

existing pole attachment procedures in

§ 1.1404(i) of the rules. Therefore, each

settlement certification must include a

brief summary of all steps taken to

resolve the dispute prior to filing. If no

steps are taken, then each such

certification must state the reason(s) for

such failure to conduct settlement

discussions. We find that mandating

settlement discussions prior to filing a

formal complaint will result in (1) more

disputes being settled amicably, and (2)

the scope of the issues in dispute in

formal complaints being narrowed

where possible.

42. We disagree with CompTel’s

assertion that a rule requiring

mandatory settlement discussions could

be used to coerce parties into accepting

unfavorable settlements. This rule

requires good faith settlement attempts,

not settlement itself. Furthermore,

requiring good faith settlement attempts

will not impose undue restrictions on

the right of any person to file a

complaint with the Commission. We

disagree with AT&T’s interpretation of

the ruling in AT&T v. FCC as it applies

to the issues under consideration here.

In AT&T v. FCC, the court held that the

Commission’s requirement that a carrier

obtain special permission, i.e., prior

Commission approval, before filing a

tariff under section 203 unlawfully

interfered with the carrier’s right to file

a tariff. In addition to the fact that AT&T

v. FCC considers the application of

section 203, not section 208, the issue

considered in AT&T v. FCC is

distinguishable from the issue before us

in that the pre-filing requirements we

impose here only dictate that parties

explore settlement possibilities and do

not require any Commission approval

prior to filing a formal complaint. If

settlement attempts are unsuccessful,

the complainant is free to file a formal

complaint. The certification

requirement will benefit the parties and

the Commission by requiring the parties

to discuss the facts and issues in dispute

prior to the filing of the complaint. Such

requirement may, therefore, lead to an

informal resolution of the dispute or, at

the very least, may reduce or clarify the

number and scope of the issues in

dispute, consistent with Congress’

intent to expedite the resolution of

disputes.

2. Neutral Industry Committee. a. The

NPRM. 43. We also sought comment on

whether a committee composed of

neutral industry members would serve a

needed role or useful purpose in

addressing disputes over technical and

other business disputes, before parties

bring their disputes to the Commission

in the form of formal complaints. We

asked commenters to address the extent

to which there would be a need for

outside experts to deal with technical

issues that are likely to arise in formal

complaints and whether, if such a need

exists, the use of a committee of such

experts in the form of a voluntary

preliminary alternative dispute

resolution (‘‘ADR’’) procedure would

expedite the resolution of complaints

b. Comments. 44. Most commenters

oppose the creation of an industry

committee. Several parties argue that it

would be impossible to construct a

neutral committee, PTG and TRA argue

that the use of such a committee would

delay the resolution of important

marketplace issues, and AT&T and GTE

argue that the committee would lack the

expertise to handle a wide variety of

disputes. CBT, Communications and

Energy Dispute Resolution Associates

(‘‘CEDRA’’), and NYNEX contend that
Federal Register / Vol. 63, No. 4 / Wednesday, January 7, 1998 / Rules and Regulations 997

such options are already available to

parties. NYNEX additionally states that

complaints before the Commission

typically involve disputes between

individual companies, rather than broad

issues affecting the industry. Some

commenters, however, support the

proposal. Association of Telemessaging

Services International (‘‘ATSI’’),

BellSouth, Southwestern Bell

Telephone (‘‘SWBT’’), and United States

Telephone Association (‘‘USTA’’)

support the use of an industry

committee to assist in resolving

technical and business disputes.

BellSouth added that an industry

committee could be used in conjunction

with ADR mechanisms. ATSI asserts

that committee proceedings would have

to be completed within clearly

established deadlines to prevent delay

in resolving disputes involving

competitive issues and to ensure

compliance with the statutory

complaint resolution deadlines. In

addition, GST, KMC, and MFS suggest

permitting the parties and the

Commission to utilize such a committee

during the complaint process, as well as

at the pre-filing stage, to resolve certain

factual issues.

c. Discussion. 45. We decline to

establish a committee of neutral

industry members to resolve disputes

over technical and other business

issues, before parties file such disputes

with the Commission as formal

complaints. We note that the majority of

commenters oppose this proposal.

Several factors weigh against

establishing such a committee. First,

because the committee’s decisions

would not be binding on the

Commission, it is possible that the

committee and the Commission might

rule differently on identical issues. The

usefulness of committee decisions to

resolve disputes would be diminished

by such uncertainty, as a losing party

would have little incentive to accept the

committee’s recommendation. Second,

we agree with commenters that it would

be difficult to establish a standing

committee with sufficient expertise to

resolve a range of technical and

business issues because of the breadth

of knowledge and expertise that would

be required. Third, we agree with

commenters that it would be

administratively burdensome to

assemble a new committee for each

conflict parties sought to submit to such

committee. Finally, we agree with the

commenters who argue that the

potential for conflicts of interest among

the committee members is too great to

be able to provide a guarantee of

neutrality.

3. Additional Commenters’

Suggestions. a. The NPRM 46. In the

NPRM, we invited commenters to

suggest additional pre-filing

requirements or procedures to help

settle or narrow disputes, or facilitate

the compilation and exchange of

relevant documentation or other

information.

b. Comments. 47. ATSI, NYNEX, and

USTA suggest that formal ADR efforts

be made a prerequisite to filing a

complaint, while MCI and Sprint

oppose such a proposal. MCI, ICG

Telecom Group (‘‘ICG’’), and Sprint

suggest that parties be required to begin

their information exchange before a

complaint is filed, in order to prepare

for the rapid pace of the complaint

process. PTG opposes this suggestion,

arguing that requiring such information

exchanges would lead to fishing

expeditions and raise confidentiality

concerns. Bell Atlantic proposes that a

potential complainant be required to

provide the defendant carrier with a

statement of its claim and specify

documents and information that it

believes would be material to the

resolution of the dispute, and that the

carrier be required to respond in full

within a reasonable period of time

before a complaint is filed. Similarly,

CEDRA and BellSouth suggest that

complainants be required to serve

advance copies of their complaints on

defendant carriers prior to filing such

complaints with the Commission.

Finally, CompTel, Nextlink and various

cable entities suggest that the

Commission offer binding arbitration or

mediation as an alternative to formal

complaints, arguing that Commission

staff would be more persuasive and

knowledgeable than outside mediators

or arbitrators.

c. Discussion. 48. We decline to adopt

these proposals because, for the most

part, they raise potential problems that

would outweigh their potential benefits.

We reject suggestions that would

impose rigid requirements for pre-filing

activities. We find that these proposals

could either stifle the parties’ ability to

develop creative solutions to their

differences or delay unnecessarily the

filing of complaints, or both. For

example, we agree with MCI and Sprint

that requiring formal ADR efforts prior

to the filing of a formal complaint could

permit defendant carriers to delay the

filing of formal complaints to the

detriment of customers and competitors

alike. For the same reason, we reject the

suggestions by MCI, ICG, and Sprint that

we should mandate the exchange of

documents and materials by potential

complainants and defendant carriers

prior to the filing of a formal complaint.

Although the proposals of Bell Atlantic,

BellSouth, and CEDRA, to require the

exchange of specific information

identifying claims and key facts in

advance of the filing of the formal

complaint, would promote pre-filing

discussions, we conclude that parties

should be afforded the widest possible

latitude in conducting their settlement

efforts and not be subjected to rigid

requirements. We also reject the

proposals of CompTel, Nextlink, and the

cable entities to require the Commission

to arbitrate or mediate disputes at the

request of the disputing parties as an

alternative to formal complaints. Such a

requirement would unnecessarily tax

the Commission’s resources when there

are many qualified ADR experts outside

the Commission. We note that

Commission staff will work with

industry members and formal complaint

parties to resolve disputes informally,

both before and after formal complaints

have been filed. We see little benefit,

however, in requiring the staff to

conduct such mediation or arbitration

efforts in all cases.

D. Service

49. Under section 208 of the Act and

the Commission’s existing complaint

rules, the staff is responsible for serving

formal complaints on defendant

carriers. Currently, all formal

complaints must be initially filed with

the Mellon Bank in Pittsburgh,

Pennsylvania; forwarded by the Bank to

the Commission’s Secretary; and then

distributed to the Common Carrier

Bureau. The Common Carrier Bureau

then forwards complaints against

common carriers and complaints against

international telecommunications

providers to the Common Carrier

Bureau’s Enforcement Division;

complaints against wireless carriers are

forwarded to the Wireless

Telecommunications Bureau. As a

result, ten days or more may pass before

the staff receives official copies of a

complaint, reviews it for minimum

compliance with the rules, and serves it

on the defendant carrier(s). It has been

common for a defendant carrier to

receive a complaint twenty days after it

was filed with the Commission.

Pleadings filed subsequent to the

complaint are currently served by

regular U.S. mail, which may delay

actual receipt of such pleadings from

three days to a week. Because of the

new ninety to 120-day statutory

deadlines, the NPRM proposed to

eliminate delays associated with the

current filing and service procedures by

streamlining the service process.

1. Personal Service of Formal

Complaints on Defendants. a. The
998 Federal Register / Vol. 63, No. 4 / Wednesday, January 7, 1998 / Rules and Regulations

NPRM. 50. In the NPRM we sought

comment on our proposals to modify

the service of formal complaints. We

proposed to authorize or require a

complainant to effect service

simultaneously on the following

persons: the defendant carrier, the

Commission, and the appropriate staff

office at the Commission, i.e., the Chief,

Formal Complaints and Investigations

Branch, Enforcement Division, Common

Carrier Bureau; the Chief, Compliance

and Litigation Branch, Enforcement and

Consumer Information Division,

Wireless Telecommunications Bureau;

or the Chief, Telecommunications

Division, International Bureau. With

regard to service on the defendant, we

proposed that a complainant would

personally serve the complaint on an

agent designated by the defendant

carrier to receive such service. We

proposed that the answer period would

begin to run once the complaint has

been served by the complainant on the

defendant.

51. We also noted that requiring

complainants to serve complaints

directly on defendants would eliminate

the staff’s initial review of the complaint

prior to the defendant’s receipt of the

complaint. To alleviate concerns about

service of deficient complaints, the

NPRM proposed to require that parties

submit a completed checklist or

‘‘intake’’ form with each copy of the

formal complaint to indicate: (1) that the

complaint satisfies minimum format

and content requirements; (2) that the

complaint meets the various threshold

requirements for stating a cause of

action under the Act and the

Commission’s rules; and (3) the

statutory provisions allegedly violated

and any applicable statutory resolution

deadline. We based this proposal on our

belief that such an intake form could be

a useful tool both to speed the

preparation and filing of complaints and

to avoid or reduce the time and

resources involved in processing

procedurally defective or substantively

insufficient complaints. We further

noted that the intake form could serve

another useful purpose, by quickly

identifying for the staff and defendant

carrier the relevant statutory provisions

and any associated statutory time

constraints.

b. Comments. 52. The commenters

generally support the proposal to

require parties to serve complaints

simultaneously on defendants, the

Office of the Secretary, and the Bureau

responsible for processing the

complaint. BellSouth, GTE, and CBT,

however, are concerned that defendants

may be required to respond to deficient

complaints if the Commission

eliminates its practice of reviewing

complaints prior to serving them on

defendants. By contrast, MCI argues that

Commission review of a complaint is

unnecessary because a defendant would

undoubtedly raise the issue if a

complaint was deficient. CompTel

suggests that the Commission send the

defendant a notice of receipt of the

complaint to safeguard against faulty

service. BellSouth states that section

208(a) mandates that only the

Commission may serve complaints on

defendants, and suggests that the

complainant serve the defendant with a

copy of the complaint and notice of

intent to file prior to the filing of the

complaint with the Commission. AT&T

and NYNEX state that, while section

208(a) does require the Commission to

serve complaints on defendants, this

requirement is fulfilled by allowing

complainants to serve complaints on

defendants as agents of the Commission

for that limited purpose only. PTG asks

the Commission to clarify that personal

service is required for the complaint.

53. Almost all of the commenters,

including ATSI, BellSouth, CBT,

CompTel, GST, GTE, KMC, MFS, and

TRA, support the proposal to require

complainants to submit a completed

checklist or ‘‘intake’’ form with each

copy of the formal complaint. ATSI

stated that using ‘‘check-off boxes’’ to

clearly indicate the specific complaint

category utilized would assist all parties

and the Commission in determining

quickly the special standards and

applicable deadlines. BellSouth

additionally suggests that the form

include a waiver of the section

271(d)(6)(B) 90-day resolution deadline.

MCI argues that this form would be

useless because a party filing a defective

complaint would be unlikely to

complete this form correctly.

c. Discussion. 54. We conclude that

complainants shall be required to effect

personal service of the complaint on the

defendant carrier/designated agent

simultaneously with the filing of the

complaint with the Commission’s

Secretary, the Chief of the division or

branch responsible for handling the

complaint within the Bureau

responsible for handling the complaint,

and the Mellon Bank. The complainant

shall serve two copies of the complaint

with the Chief of the division or branch

responsible for handling the complaint

within the Bureau responsible for

handling the complaint. The Chief will

then forward one of those copies to the

defendant, in compliance with the

mandate in section 208(a) that

complaints ‘‘shall be forwarded by the

Commission’’ to the defendant. The

allowable time period for filing an

answer begins to run on the date the

complainant serves the complaint on

the defendant. Because the Common

Carrier Bureau coordinates with the

International Bureau to handle

international telecommunications

complaints, any formal complaint that is

filed with the International Bureau must

also be filed simultaneously with the

Chief, Formal Complaints Branch,

Enforcement Division, Common Carrier

Bureau. Requiring service of the

complaint on the defendant carrier

simultaneously with filing the

complaint with the Commission will

enable the parties and the Commission

to begin prompt resolution of the

complaint, by eliminating delays that

existed under the former rules. This

requirement satisfies the Commission’s

goal of expediting the processing of

formal complaints.

55. After consideration of

commenters’ concerns regarding notice

to the defendant in the event of

defective service of the complaint, we

conclude that the Commission will send

each defendant notice of receipt of the

complaint as a precaution against

defective service. Upon receipt of the

complaint, the Commission shall

promptly send notice of receipt of the

complaint by facsimile transmission to

the defendant. In addition to mailing a

copy of the complaint to the defendant,

the staff will send to all parties a

schedule detailing the date the answer

is due and the date of the initial status

conference. The date of service of the

formal complaint upon the defendant

shall be presumed to be the same date

as service on the Commission. Where,

however, a complainant fails to properly

serve the complaint on the defendant,

the complaint will be dismissed without

prejudice.

56. We further conclude that the

complainant must file the complaint,

along with the appropriate fee, with the

Mellon Bank on the same day that it

serves the complaint on the Commission

and the defendant. Although this

requirement was not specifically

proposed in the NPRM, we find that

requiring the complaint to be filed with

the Mellon Bank on the same day as

service on the defendant and the

Commission is a natural extension of

the proposal in the NPRM to require

simultaneous service of the complaint

on the defendant and the Commission.

Such requirement is further justified by

the fact that the date on which the

complaint is filed with the Mellon Bank

is the official commencement date of the

complaint with the Commission. Thus,

the date on which the complaint is filed

with the Mellon Bank is the date on

which any statutory deadlines begin to
Federal Register / Vol. 63, No. 4 / Wednesday, January 7, 1998 / Rules and Regulations 999

run and timely prosecution of such

complaints requires service on the

defendant at the earliest date possible.

Additionally, requiring delivery of the

complaint and fee payment to the

Mellon Bank by the day of service of the

complaint on the Commission and

defendant will help the Commission to

determine quickly whether the fee has

been properly paid. We also require the

complainant to attach to each copy of

the intake form, a photocopy of its fee

payment (check, etc.) as well as a

certificate of service. Attachment of a

copy of the fee payment will provide

some assurance to the Commission and

a defendant that payment was made.

Where a fee is not properly paid, the

Commission will notify both parties

promptly that the complaint has been

dismissed without prejudice.

57. BellSouth, GTE, and CBT raise

some valid concerns about the

possibility of defendants having to

respond to deficient complaints under

our new service requirements. To

address these concerns, we require a

complainant to submit a completed

intake form with its formal complaint to

indicate that the complaint satisfies the

procedural and substantive

requirements under the Act and our

rules. The completed intake form shall

identify all relevant statutory

provisions, any relevant procedural

history of the case, and, in the case of

a section 271(d)(6)(B) complaint,

whether the complainant desires to

waive the ninety-day resolution

deadline. We disagree with MCI’s

assertion that a complainant who files a

defective complaint will probably be

unable to fill out the intake form

properly. Rather, we find that the intake

form will serve as a checklist to guide

complainants who may be unfamiliar

with the necessary components of a

formal complaint and in that way

reduce the number of defective

complaints filed. We conclude further

that this requirement will permit the

Commission to eliminate the delay

associated with the initial review of a

complaint. To the extent that frivolous

complaints are filed, the intake form

requirement will assist in weeding out

such complaints prior to Commission

review. The form will identify for the

Commission staff any relevant statutory

provisions and associated deadlines.

Furthermore, the staff will be alerted if

there is relevant procedural history that

will require review of related nonCommission records by the staff. We

note that a defendant is not relieved of

its obligation to file and serve its answer

on time by the fact that a complainant

failed to correctly complete the intake

form.

58. In addition, we reject NAD’s

proposal to permit service of complaints

by facsimile transmission because we

conclude that service of the complaint

must be accomplished in the most

reliable manner possible. Because we

are requiring the defendant to submit its

answer within twenty days of receipt of

the complaint, any delay or uncertainty

in the receipt of the complaint and

associated documents through facsimile

transmission could unduly infringe on

the defendant’s due process rights.

2. Expediting Service Generally. a.

The NPRM. 59. In the NPRM, we

proposed to require service of all

documents filed subsequent to the

complaint (answer, motions, briefs, etc.)

by overnight delivery. Alternatively,

parties would be permitted to serve

pleadings by facsimile transmission, to

be followed by hard copies sent by

regular mail delivery.

60. We further proposed to establish

and maintain an electronic directory,

available on the Internet, of agents

authorized to receive service of

complaints on behalf of carriers that are

subject to the provisions of the Act and

of the relevant Commission personnel

who must be served. We noted that

section 413 of the Act requires all

carriers subject to the Act to designate

in writing an agent in the District of

Columbia for service of all process. The

proposed directory would list, in

addition to the name and address of the

agent, at least one of the following: his

or her telephone or voice-mail number,

facsimile number, or Internet e-mail

address. We sought comment on this

proposal and on what information

should be included within the service

directory.

61. Finally, we recognized that the

practice of routing formal complaints

against wireless telecommunications

providers was unwieldy and timeconsuming. We noted that under the

current rules, wireless complaints are

routed from the Common Carrier Bureau

lock box at the Mellon Bank in

Pittsburgh to the Commission’s

Secretary, who forwards the complaint

to the Formal Complaints and

Investigations Branch of the Common

Carrier Bureau’s Enforcement Division,

which then reviews and forwards the

complaints to the Wireless

Telecommunications Bureau. Therefore,

we sought comment on our proposal to

revise our rules to provide for a separate

lock box at the Mellon Bank for the

receipt of complaints against wireless

telecommunications service providers.

b. Comments. 62. Commenters

strongly support these proposals.

BellSouth suggests that facsimile service

would be facilitated by requiring

pleading signature blocks to include

facsimile and phone numbers. SWBT

additionally suggests that service

include delivery by certified mail. ICG

argues that service should be by hand

delivery or overnight mail only. GST,

KMC, MFS, and NAD suggest permitting

service by Internet, with NAD

particularly encouraging Internet or

facsimile service of complaints and

related documents to facilitate service

by consumers with disabilities. CBT

opposes service by Internet because of

technical difficulties and problems with

verification. CBT asks the Commission

to clarify that it will take responsibility

for updating the electronic directory and

make allowances for improper service

due to mistakes in the directory.

America’s Carriers Telecommunication

Association (‘‘ACTA’’) suggests that

carriers be able to designate someone

other than an agent located in the

District of Columbia for receipt of

service, arguing that limiting service to

what in many cases will be an ‘‘artificial

agent’’ in the District of Columbia is

inefficient in light of the availability of

national overnight delivery. MCI

suggests that a paper directory of service

agents be kept in the Secretary’s office

for those parties lacking Internet access.

c. Discussion. 63. We conclude that

parties must serve documents or

pleadings filed subsequent to the

complaint by either hand delivery,

overnight delivery, or facsimile

transmission followed by mail delivery.

Any facsimile transmission or hand

delivery must be completed by 5:30

p.m., local time of the recipient, in order

to be considered served on the date of

receipt. Service by overnight delivery

will be deemed served the business day

following the date it is accepted for

overnight delivery by a reputable

overnight delivery service. Although we

are permitting service of pleadings

subsequent to the complaint to be by

facsimile transmission, we also require

that facsimile service be accompanied

by mailed hard copies to alleviate the

effects of possible faulty facsimile

transmission. These requirements will

ensure timely and verifiable service. To

facilitate facsimile delivery, we require

pleading signature blocks to include

facsimile and telephone numbers, as

suggested by BellSouth.

64. We decline to authorize service by

Internet at this time because we have

received insufficient comments on the

issue, given the significance of

permitting electronic filing or service of

complaint pleadings. We may revisit

this issue at a later date, following our

consideration of possible procedures for
1000 Federal Register / Vol. 63, No. 4 / Wednesday, January 7, 1998 / Rules and Regulations

the electronic filing of documents in

rulemaking proceedings in GC Docket

97–113.

65. We also reject SWBT’s proposal to

deliver pleadings by certified mail.

Although SWBT presumably offered

this suggestion to improve verification

of service rather than speed of service,

we did not seek comment on

verification procedures in the NPRM

because we have not found verification

of service to be a significant problem.

66. Although we considered

establishing an electronic directory of

agents designated by carriers to receive

service of process, we decline to

establish such a directory at this time.

We have concluded that more review is

needed to determine the most efficient

means for collecting the data necessary

to establish such a directory. This data

collection may be combined with other

collections of data from common

carriers by the Commission in the

future. The Commission intends to

reconsider this issue in conjunction

with streamlining its other data

collection procedures.

67. We recognize the need to provide

complainants with the information

necessary to effect personal service on

defendant carriers as required by our

rules. Accordingly, the Commission will

provide access to a listing of agents

designated by carriers to receive service

of process in the Office of the

Commission Secretary. In order to

establish this listing, all common

carriers are required to designate service

agents within the District of Columbia,

although they may additionally identify

an alternative service agent outside the

District of Columbia. For each

designated agent for service of process,

each carrier is required to identify its

name, address, telephone or voice-mail

number, facsimile number, and Internet

e-mail address if available. In addition,

the carrier shall identify any other

names by which it is known or under

which it does business, and, if the

carrier is an affiliated company, its

parent, holding, or management

company. This information shall be

provided to the Commission by filing it

with the Formal Complaints and

Investigations Branch of the Common

Carrier Bureau. Parties are required to

notify the Commission within one week

of any changes in their information. We

note that ACTA’s proposal to permit

designation of service agents outside of

the District of Columbia was based on

the incorrect premise that overnight

delivery would fulfill our requirement

of having the complainant personally

serve the complaint on the defendant. It

will not. Only hand delivery constitutes

personal service for the purposes of our

service requirement. We note, however,

that the complainant is not required to

hand deliver the complaint to the

Commission Secretary, the Chief of the

division or branch responsible for

handling the complaint within the

Bureau responsible for handling the

complaint, or the Mellon Bank.

68. We establish a separate lock box

at the Mellon Bank in Pittsburgh for the

receipt of complaints against wireless

telecommunications service providers.

Currently, all formal complaints against

common carriers, including Wireless

Telecommunications Bureau complaints

and International Bureau complaints,

are filed in the lockbox of the Common

Carrier Bureau at the Mellon Bank.

Because the Common Carrier Bureau

coordinates with the International

Bureau to handle international

telecommunications complaints, filing

the International Bureau’s complaints in

the Common Carrier Bureau’s lockbox

does not delay the complaint process.

Providing the Wireless

Telecommunications Bureau with its

own lockbox, however, will both

expedite the delivery of the complaint

and verification of fee payment to the

Wireless Telecommunications Bureau,

and relieve the Common Carrier Bureau

of the responsibility of reviewing

wireless complaints for routing to the

Wireless Telecommunications Bureau.

E. Format and Content Requirements

69. The short resolution deadlines

contained in the Act place greater

burdens on parties to provide facts and

legal arguments in their respective

complaints and answers to support or

defend against allegations of

misconduct by common carriers.

Similarly, the short resolution deadlines

place greater demands on the

Commission and its staff to expedite the

review and disposition of these

complaints.

70. The Commission’s rules have

always required fact-based pleadings.

That is, all complaints, answers and

related pleadings are required to contain

complete statements of fact, supported

by relevant documentation and

affidavits. In actual practice, however,

many parties file what amount to

‘‘notice’’ pleadings similar to filings that

would be made in federal district court.

Both complainants and defendants have

placed substantial reliance on selfexecuting discovery and additional

briefing opportunities to present their

respective claims and defenses to the

Commission.

71. A principal goal of this

rulemaking that was set forth in the

NPRM was to improve the utility and

content of the complaint and answer by

requiring complainants and defendants

to exercise diligence in compiling and

submitting full legal and factual support

in their initial filings with the

Commission. The proposals in the

NPRM were designed to promote factbased pleadings and to shift the focus of

fact-finding away from costly, timeconsuming discovery and towards the

pre-filing and initial complaint and

answer periods.

1. Support and Documentation of

Pleadings. a. The NPRM. 72. In the

NPRM, we proposed to require that any

party to a formal complaint proceeding

must, in its complaint, answer, or any

other pleading required during the

complaint process, include full

statements of relevant facts and attach to

such pleadings supporting

documentation and affidavits of persons

attesting to the accuracy of the facts

stated in the pleadings. This would

effectively prohibit defendants from

making general denials in their answers.

We proposed to require a complainant

to append to its complaint documents

and other materials to support the

underlying allegations and requests for

relief, and tentatively concluded that

failure to append such documentation

would result in summary dismissal of

the complaint. Although our rules

already required each complainant to

provide a complete statement of the

facts and description of the nature of the

alleged violation, we tentatively

concluded that we should require more

specifically that a complainant include

a detailed explanation of the manner in

which a defendant has violated the Act,

Commission order, or Commission rule

in question in the formal complaint.

Such a rule, for example, would require

a complainant alleging that a BOC has

ceased to meet any of the conditions

that were required for approval to

provide interLATA services pursuant to

section 271(c)(2)(B) of the Act to include

in its complaint a detailed explanation

of the manner in which the defendant

BOC has ceased to meet such condition

or conditions, along with any associated

documentation. The NPRM also sought

comment on whether we should

prohibit complaints that rely solely on

assertions based on ‘‘information and

belief.’’ We stated that, while assertions

based on information and belief may not

be useful in deciding on the merits of a

complaint, prohibiting such assertions

might inhibit a complainant’s ability to

present claims of unlawful behavior

against carriers under applicable

provisions of the Act.

73. We proposed to require the

complaint, answer, and any authorized

reply include two sets of additional

information: (1) the name, address, and
Federal Register / Vol. 63, No. 4 / Wednesday, January 7, 1998 / Rules and Regulations 1001

telephone number of each individual

likely to have discoverable information

relevant to the disputed facts alleged

with particularity in the pleadings,

identifying the subjects of information;

and (2) a copy of, or a description by

category and location of, all documents,

data compilations, and tangible things

in the possession, custody, or control of

the party that are relevant to the

disputed facts alleged with particularity

in the pleadings. We noted that this

proposal, which would enable the

Commission and parties to identify

quickly sources of information,

comported with an analogous

requirement under the Federal Rules of

Civil Procedure. We also sought

comment on what benefits, if any,

would be realized by the parties or the

Commission by requiring the identified

relevant documents to be filed with the

Commission along with the complaint

and answers.

74. The NPRM proposed to require

parties to append copies of relevant

tariffs or tariff provisions to their

complaints, answers, and replies, noting

that the current rules only encourage

parties to append such tariffs. The

NPRM also proposed to modify the rules

to include expressly pleadings filed

solely to effect delay in the prosecution

or disposition of a complaint as filings

for improper purpose within the

meaning of § 1.734 of our rules.

b. Comments. 75. Most commenters,

including AT&T, BellSouth and TRA,

strongly support the proposals to

require all pleadings to include

complete facts and documentation.

AT&T states that supporting affidavits

and documentation are ‘‘critical to

understanding the parties’ positions on

the matters at issue.’’ NYNEX agrees

with the observation in the NPRM that

‘‘[t]ypically, complainants file ‘bare

bones’ complaints with numerous

allegations, but with little or no

documentation’’ and that the proposal

would allow the Commission to

‘‘process complaints more quickly, since

it would have access to the relevant

information from the beginning[.]’’

BellSouth suggests that the Commission

impose requirements similar to its rules

for pole attachment complaints which

require detailed, fact-based complaints,

supported by extensive documentation

and verifications detailing the alleged

violations.

76. Several commenters, including

CBT, NYNEX, and PTG, only support

our proposals regarding complaints, and

oppose our proposals regarding

answers. They state that the format and

content proposals for complaints are not

overly burdensome because

complainants control the timing of the

filing of the complaint and can gather

information prior to bringing the

complaint. They oppose the format and

content proposals with regard to

answers, however, because they argue

that the requirements will be too

onerous for defendants who will have

little time to respond with such

specificity in their answers, especially

in light of our proposal to reduce the

time to file answers to twenty days.

77. AT&T agrees that general denials

should be prohibited. MCI, however,

contends that general denials should be

permitted where a complainant has

been uncooperative with the defendant

prior to the filing of the complaint and

the defendant lacks the necessary

information upon which to respond to

the complaint in detail. The cable

entities state that general denials should

be permitted in accordance with the

Federal Rules of Civil Procedure

(‘‘FRCP’’), subject to Rule 11 sanctions,

if the party intends in good faith to

controvert all the averments of a

pleading or specific paragraph.

78. AT&T and PTG endorse the

proposal to prohibit assertions based

solely on information and belief, stating

that it would help to reduce the number

of frivolous complaints, including those

brought to harass defendants or as

fishing expeditions. Many commenters,

however, including APCC, Bell Atlantic,

CompTel, MCI, NYNEX, NAD, TRA, and

Teleport Communications Group

(‘‘TCG’’), argue that allowances should

be made for situations in which a

complainant will have difficulty

obtaining access to information that may

be in the sole possession of a defendant

or third parties who might be unwilling

to relinquish such information. APCC,

GTE, ICG, and TCG propose that

information and belief allegations

should be permitted if the complainant

pleads with particularity facts that

would establish a credible case, or

supplies affidavits stating that the

necessary information is in the

possession of the defendant or an

uncooperative third party. ATSI, KMC,

and MFS oppose the proposal because

of the potential hardship on small or

emerging businesses. APCC and ICG

also seek clarification on whether the

Commission’s proposal is to prohibit

complaints based solely on information

and belief, or only those allegations

based solely on information and belief.

79. AT&T and PTG note that the

identification of individuals with

discoverable information should not

include phone numbers because such

individuals should be contacted only

through counsel. Regarding the

document production proposal, Bechtel

& Cole and Ameritech support requiring

all relevant documents to be produced

to the opposing party and the

Commission. Most commenters,

however, such as CBT, BellSouth, MCI,

the cable entities, and PTG, express

concern that the information produced

might be overbroad and argue that

requiring the filing of numerous

documents with only tangential

relevance to the dispute is likely to

overwhelm the Commission with

materials of marginal or no use in

resolving the complaint. CBT notes that

many federal courts have opted out of

compliance with the federal rule and

that it would be more efficient to

respond to discovery requests than to

identify and gather the universe of

available information. MCI questions

whether this requirement will be useful,

stating that a party would identify as

relevant only those documents already

attached as documents upon which that

party intends to rely and that party

would be unable to guess at what

materials another party might find

relevant. ACTA, BellSouth, and GTE

propose requiring parties to file only the

documents relied upon concurrently

with the complaint and answer and any

subsequently filed brief, rather than

requiring the production of all

potentially relevant documents. GST,

KMC, and MFS argue that, to prevent

the copying of millions of unnecessary

documents, parties should only be

required to identify documents and

provide the opportunity to copy such

documents. AT&T supports the

identification or attachment of

documents to complaints and answers

only with respect to section 271(d)(6)(B)

complaints; otherwise, AT&T argues, all

document production should occur at

the initial status conference. CBT,

NYNEX, and SWBT express concern

that defendants will not have time to

execute document identification and

production of this broad scope. Bell

Atlantic states that, because the

Commission seldom permits

depositions or broad document

searches, the provision of this

information would rarely be utilized.

PTG and USTA suggest that parties be

allowed to amend their information

designations without leave. Several

parties, including MCI, express doubt

that such information disclosure

requirements could entirely substitute

for discovery.

80. All commenters who discussed

the proposal to require parties to

append copies of relevant tariffs or tariff

provisions to their complaints, answers,

and replies support the proposal. No

parties commented on the proposal, to

include expressly within the meaning of
1002 Federal Register / Vol. 63, No. 4 / Wednesday, January 7, 1998 / Rules and Regulations

§ 1.734 of our rules, that pleadings filed

solely to effect delay in the prosecution

or disposition of a complaint are filings

for improper purpose.

c. Discussion. 81. We conclude that

the complaint, answer, reply, and any

other required pleading are required to

include full statements of relevant,

material facts with supporting affidavits

and documentation. This requirement

will improve the utility and content of

pleadings by requiring parties to plead

their cases with specific, material facts

and supply documentation early in the

complaint process. In order to speed

resolution of all formal complaints, the

Commission must adhere to the factpleading process. Such quick resolution

of certain formal complaints is

necessitated by the Act. Further, such

quick resolution of all formal

complaints where possible is consistent

with the overall goals of the Act to

promote and protect competition in the

marketplace.

82. We conclude that complainants

shall be required to provide, in their

complaints, a detailed explanation of

the manner in which a defendant has

violated the Act, Commission order, or

Commission rule in question.

Substantive claims, or ‘‘counts,’’ based

solely upon information and belief shall

be generally prohibited. A complainant

may be permitted, however, to file

claims based on information and belief

if such claims are made in good faith

and the complainant attaches an

affidavit to the complaint that explains

why the supporting facts could not be

reasonably ascertained. Our goal is to

discourage complainants from filing

claims based solely upon information

and belief without firsthand knowledge

of the violation alleged. Because quick

resolution of formal complaints is

essential to the Commission’s goal of

fostering and preserving competition in

today’s deregulated telecommunications

markets, strict adherence to the

Commission’s fact pleading

requirements is necessary. A general

rule prohibiting assertions based solely

upon information and belief will ensure

that complainants exercise diligence in

preparing and submitting allegations of

misconduct against a carrier. We have

considered, however, commenters’

concerns that complainants may not

always have in their possession the

information that would substantiate

their claims and that such information

may be in the sole possession or control

of the defendant carrier or of

uncooperative third parties. Each

complainant has the general duty to

provide, whenever possible, full

statements of fact supported by relevant

documentation and affidavits.

Complainants should not, however, be

penalized or prevented from filing a

formal complaint in those situations in

which the necessary information could

not have been reasonably obtained prior

to the filing of the complaint. We

conclude that this requirement strikes

an equitable balance between the

Commission’s need for complete

information as early as possible, and the

complainant’s potential difficulty in

obtaining that information.

83. We disagree with the comments of

the cable entities that defendants should

be permitted to make general denials if

the defendant intends in good faith to

controvert all the averments of a

pleading or specific paragraph.

Requiring the answer to include full

statements of relevant, material facts

with supporting affidavits and

documentation will prohibit defendants

from making general denials in their

answers. Specific denials supported by

facts and documentation will aid the

Commission staff in understanding the

nature of the dispute and facilitate its

resolution. Formal complaints often

raise questions about a rate, charge, term

or condition of a particular service

offering. In our staff’s experience,

defendant carriers have the requisite

knowledge to specifically deny a

complainant’s allegations about such

charges, practices or service

requirements in the vast majority of

cases. A diligent defendant should

almost always have sufficient

information with which to make

specific denials. We conclude further

that, contrary to MCI’s suggestion, the

benefits to speedy resolution of a

complaint that arise from specific

denials outweigh the potential benefit of

allowing general denials as a

mechanism to enforce compliance with

the pre-filing activities requirements.

84. We conclude that parties must

include in the complaint, answer, and

any necessary reply, an ‘‘information

designation’’ that identifies individuals

known or believed by the parties to have

knowledge about the matters in dispute.

This information designation must

identify such individuals by name and

business or other address and include a

description of the information possessed

by that source and its relevance to the

dispute. We conclude that such

mandatory information designation will

simplify, expedite, and, in some cases,

eliminate the need for time-consuming

discovery. We agree with AT&T and

PTG that parties should not be required

to supply the phone numbers of

individuals who should only be

contacted through counsel. Therefore

parties are required to identify in the

complaint, answer, and any necessary

reply only the name and address of each

individual likely to have discoverable

information relevant to the disputed

facts alleged with particularity in the

pleadings.

85. We conclude further that parties

shall also be required to identify in their

information designations all documents

in their possession or control believed

to be relevant to the matters in dispute,

including an inventory that contains for

each document the date, the source, the

intended recipient(s), and a description

of the document’s relevance to the

dispute. We disagree with MCI’s

assertion that parties will be unable to

guess what kinds of material the

opposing party would regard as

relevant. In most cases, parties to formal

complaints before the Commission are

sophisticated business entities who

fully understand the issues before them

and know which documents in their

possession or control are relevant to

those issues. We find CBT’s arguments

that many federal courts have opted out

of compliance with this rule’s

equivalent in the FRCP unpersuasive.

We note that, while we looked to the

FRCP for some guidance during this

proceeding, that guidance was limited

by the many differences between federal

court proceedings and Commission

proceedings. Not only does the

Commission require fact-based

pleadings, but certain of the

Commission’s formal complaint

proceedings are subject to statutory

resolution deadlines shorter than any

deadline applicable to the federal

courts. Although some federal courts

have opted out of compliance with

FRCP 26(a)(1), we adopt its equivalent

for Commission proceedings because it

will aid us greatly in meeting statutory

deadlines under our individual

procedural constraints as well as in

expediting the resolution of competitive

issues that affect the

telecommunications marketplace.

86. We disagree with CBT’s statement

that it would be more efficient to have

parties respond to discovery requests

than to have parties identify all relevant

documents in their information

designations. We find that requiring

such information designations early in

the dispute will facilitate the

Commission’s ability to focus on the

facts and issues in the case quickly.

Having such information on hand will

further expedite the Commission’s

consideration of the necessity of any

discovery requests early in the

proceeding. We also disagree with the

suggestions by PTG and USTA to permit

parties to amend their information

designations without leave. We

conclude that this would run contrary to
Federal Register / Vol. 63, No. 4 / Wednesday, January 7, 1998 / Rules and Regulations 1003

our objective of procuring as much

information as early as possible. The

allowance of amendments would reduce

parties’ incentives to file thorough

information designations with their

complaints, answers, and replies

because they will rely on their right to

supplement their designations at a later

time. Accepting routinely late-obtained

information will only delay the

resolution of complaints. We do

recognize, however, that parties may

occasionally, after submitting their

initial pleadings, discover information

that should be included in their

information designations. Accordingly,

a party may submit a request for

permission to amend its information

designations, along with an explanation

of why the information was not

designated at the time of the filing of the

complaint, answer, or reply.

87. We do not find it necessary to

require the production or exchange of

all documents identified as relevant to

a dispute as a matter of course in all

cases. It will be helpful and often

necessary, however, in light of the Act’s

complaint resolution deadlines and the

Commission’s goal of expediting the

resolution of all complaints, to have

certain documents identified by the

parties readily accessible to the staff and

opposing parties. Therefore we require

parties to file concurrently with the

complaint, answer, and any necessary

reply, only those documents and

affidavits upon which they intend to

rely to support their respective claims

and defenses. Required attachments

include relevant tariffs or tariff

provisions where applicable. Because it

is in each party’s self-interest to support

its most persuasive arguments, we

conclude that it is reasonable to rely on

each party’s judgment to identify the

key documents in the dispute. We

acknowledge that a party may be

reluctant to divulge information that

would weaken its case, and, therefore,

would probably not attach such

information to its complaint, answer, or

reply. We conclude that this concern

can be adequately addressed by

requiring each party to identify all such

information in their information

designations, however, and opposing

parties will therefore be aware of, and

have subsequent opportunity to request,

such information at the initial status

conference.

88. We conclude that each party shall

be required to attach supporting

affidavits and documents to any allowed

briefs, along with a full explanation in

the brief of the material’s relevance to

the issues and matters in dispute. Such

attachments shall have been previously

identified in the parties’ information

designations, but need not have been

attached to the complaint, answer, or

any necessary reply. We find that this

strikes an appropriate balance between

the needs of the Commission and

opposing parties to have readily

available information and the hardships

of producing unnecessary materials. We

agree with PTG and USTA that parties

may, despite good faith efforts to file

complete submissions, later acquire

documents or information upon which

they wish to rely but which they did not

identify as relevant information in their

information designations. Therefore we

permit a party to attach such

subsequently obtained documents, upon

which the party intends to rely, to any

subsequent brief filed in the matter,

provided it is accompanied by a full

explanation in the brief of the material’s

relevance to the issues and matters in

dispute and why such material was not

identified in the party’s information

designation.

89. We disagree with AT&T’s

suggestion that all document production

should occur at the initial status

conference, except in section

271(d)(6)(B) complaints under 90-day

resolution deadlines. This document

production requirement is intended to

work in conjunction with the other

requirements adopted in this

rulemaking, including the requirement

that parties discuss, before the initial

status conference, issues such as

settlement prospects and stipulations of

facts and disputed facts. It is essential

that parties be able to review the

documents produced with the initial

pleadings in order to meet and discuss

these issues knowledgeably prior to the

initial status conference. Furthermore,

we conclude that requiring the

identification of individuals and the

identification, inventory, and

production of documents will facilitate

the staff’s ability to require further

disclosure of information about

individuals with relevant information

and/or further production of documents

when necessary.

90. We are not persuaded by the

arguments of some commenters, such as

CBT, NYNEX, PTG, and SWBT, that

twenty days is an insufficient amount of

time in which to prepare answers with

the level of information contemplated

under these rules. We do not view

defendants as having only twenty days

in which to prepare their answers. The

pleading requirements are intended to

work in conjunction with the pre-filing

requirements. Thus, by the time parties

reach the stage of participating in a

formal complaint before the

Commission, settlement talks will have

narrowed the number and scope of

issues in dispute, and parties will have

already commenced the collection and/

or exchange of relevant information that

will be used to substantiate the

defendant’s answer. We conclude that

the imposition of these format and

content requirements on defendants is

not unduly burdensome, particularly in

light of Congress’ clear intent to

expedite resolution of complaints to

promote the competitive goals of the

Act.

91. We also disagree with Bell

Atlantic that the information produced

would only be useful for depositions or

broad document searches, which are

seldom permitted by the Commission.

Early identification of individuals

knowledgeable about the matters in

dispute will be an important tool for the

parties and the staff, particularly in

those cases where additional affidavits

or other forms of factfinding become

necessary. Given our experience, and in

light of the short complaint resolution

deadlines, we conclude that it is

necessary and appropriate to require

parties to identify knowledgeable

individuals and potentially relevant

documents early in the complaint

process.

92. We also conclude that pleadings

filed solely to effect delay in the

prosecution or disposition of a

complaint are filings for improper

purpose within the meaning of § 1.734

of our rules. No commenters opposed

this proposal. Adoption of this

definition will work in conjunction with

the new rules to further deter parties

from filing unnecessary pleadings in

formal complaints before the

Commission.

2. Waivers for Good Cause Shown. a.

The NPRM. 93. In the NPRM, we

recognized that many of the proposed

pleading requirements could be

burdensome on some individuals or

parties, particularly those desiring or

compelled to proceed without the

assistance of legal counsel due to

financial and other reasons. Therefore,

we proposed to waive format and

content requirements for complaints,

answers, and replies upon an

appropriate showing of financial

hardship or other public interest factors.

We tentatively concluded that this

waiver provision would help to ensure

that full effect is given to the provision

in section 208 of the Act that ‘‘any

person, any body politic, or municipal

organization, or State Commission,’’

may complain to the Commission about

anything ‘‘done or omitted to be done’’

by a common carrier in contravention of

the Act. We sought comment on this

proposal and tentative conclusion, as

well as on what standards should be
1004 Federal Register / Vol. 63, No. 4 / Wednesday, January 7, 1998 / Rules and Regulations

used to determine ‘‘good cause’’ for

waiving format and content

requirements.

b. Comments. 94. All parties

commenting on this proposal support it.

APCC and NYNEX suggest that waivers

should be granted primarily for

financial hardship or public interest

reasons and suggest specific revenue or

asset levels to define ‘‘financial

hardship.’’ ATSI argues that

complainants alleging violations of

section 260, regarding the provision of

telemessaging service, should not have

to make special requests to receive good

cause waivers. GST, KMC, MFS, and

USTA suggest that the Commission

issue form complaints and model

pleadings that pro se complainants

could either fill out or follow. GTE

warns against routine granting of

waivers. The NAD suggests establishing

an ombudsman within the Commission

to assist with accessibility complaints.

c. Discussion. 95. We conclude that

parties may petition the staff for waivers

of the format and content requirements

for complaints, answers, and any

authorized replies. Such waiver requests

shall be considered on a case-by-case

basis and may be granted upon an

appropriate showing of financial

hardship or other public interest factors.

We note this waiver provision will work

in conjunction with the Commission’s

existing general authority to waive any

provision of the rules on its own motion

or on petition if good cause is shown.

The discretion to grant waivers of the

format and content requirements based

on financial hardship and other public

interest factors will ensure, pursuant to

section 208, that ‘‘any person’’ has the

right to complain to the Commission

about acts or omissions by a carrier that

contravene the Act. For this reason, we

do not agree with APCC or NYNEX that

financial hardship should be

determined solely based on set revenue

or asset levels. The range of potential

complainants under section 208 is broad

and may include individuals, state

commissions, municipalities,

associations, and other entities of all

forms and sizes. Likewise, the size and

makeup of defendant carriers will vary

greatly. Thus we conclude that waiver

determinations should be made on a

case-by-case basis. The Commission

shall make every effort to apply its

discretion in a consistent and fair

manner to strike an appropriate balance

between strict compliance with the

rules and the needs of certain parties for

more lenient requirements and

timetables. Furthermore, the

Commission shall have discretion to

waive or modify some or all of its rules

as appropriate when a waiver is granted

for good cause shown. For example, if

the Commission grants a waiver of the

document production requirements to a

party who demonstrates financial

hardship, the Commission may establish

an appropriate alternative method for

review and production of documents in

that matter.

96. We find that § 1.721(b) of the rules

contains a suggested format for formal

complaints that is clear and explicit and

that no further form complaints or

model pleadings for pro se

complainants are necessary.

Furthermore, the Enforcement Division

of the Common Carrier Bureau currently

provides, via the Internet, direct

mailings, and public reference room

access, a fact sheet designed to instruct

consumers on how to file a formal

complaint with the Commission.

Finally, we conclude that the range of

subjects that could conceivably be

contained within a pleading is too broad

for a model pleading form to be of much

utility to pro se parties.

97. We decline to address in this

proceeding NAD’s proposal to establish

a Commission ombudsman to assist

with accessibility complaints in this

proceeding. Such a proposal should be

addressed in our section 255

implementation rulemaking, so as to

permit the Commission to take a

comprehensive approach to

implementation of section 255.

F. Answers

1. Reduction of Time to File Answers.

a. The NPRM. 98. In the NPRM we

proposed to reduce the permissible time

for a defendant to file an answer to a

complaint from thirty to twenty days

after service or receipt of the complaint.

We tentatively concluded that this

reduction was consistent with the

changes we proposed regarding the form

and content of pleadings and would not

unduly prejudice the rights of any

defendant. We further tentatively

concluded that this reduction in time to

answer struck the appropriate balance

in distributing the burdens of

compliance with the new formal

complaint resolution deadlines among

the complainants, defendants and the

Commission.

b. Comments. 99. The majority of

commenters, including AT&T, Bell

Atlantic, CBT, CompTel, the cable

entities, MCI, TRA, and USTA support

this proposal. Ameritech, BellSouth,

GTE, PTG, and SWBT contend,

however, that because complainants

will have months to prepare their

complaints, requiring defendant carriers

to submit detailed responses with full

legal and factual support within a

twenty day window would be unfair

and unreasonably burdensome in most

cases. PTG suggests that defendants be

required to file their answers within

twenty days only in complaints filed

pursuant to section 271(d)(6)(B). ACTA

and USTA suggest that defendants be

permitted to supplement their answers

at a later time.

c. Discussion. 100. We conclude that

a defendant shall be required to file its

answer to a complaint within twenty

days after receipt of service of the

complaint by the complainant. We find

that reducing the time in which to file

an answer is necessary in light of the

Congressional intent to expedite the

resolution of complaints alleging anticompetitive behavior by defendant

carriers. We disagree with commenters

who assert that defendant carriers will

be overly burdened by having to file

answers that comply with the format

and content requirements within twenty

days from the date of service. As stated

earlier, we view the defendants as

having far more than twenty days in

which to prepare their answers because

the pre-filing and format and content

requirements adopted in this proceeding

are intended to work in conjunction

with the reduction in time to file an

answer. The pre-filing requirements will

alert the defendant as to the basis of the

dispute. The actions taken by a

defendant in participating in good faith

settlement negotiations should require

the same collection of information and

documents that will be necessary to

support its answer in compliance with

the format and content requirements.

The requirement of fully supported and

thoroughly prepared complaints,

furthermore, will facilitate a defendant

carrier’s ability to prepare a full

response to a complaint within the

twenty day period. Such pre-filing and

format and content requirements will

eliminate any need to allow defendants

to supplement their answers. Permitting

defendants to supplement their answers

routinely would only encourage

defendants to submit incomplete

answers.

G. Discovery

101. The NPRM sought comment on a

variety of ways to modify the discovery

process in light of the new statutory

deadlines. Discovery is inherently timeconsuming and often fails to yield

information that aids in the resolution

of a complaint. The NPRM, in

conjunction with other proposals

designed to improve the content and

utility of the complaint, answer, and

related pleadings, sought comment on

discovery proposals that would balance

the parties’ legitimate need for

discovery with the twin goals of (1)
Federal Register / Vol. 63, No. 4 / Wednesday, January 7, 1998 / Rules and Regulations 1005

meeting statutory resolution deadlines,

and (2) facilitating prompt resolution of

all formal complaints.

1. Permissible Requests for Discovery.

a. The NPRM. 102. In our experience,

discovery has been the most contentious

and protracted component of the formal

complaint process. In the NPRM, we

stated that one of the key elements to

streamlining the enforcement process

was to maximize staff control over the

discovery process. We stated our

intention to examine carefully what

role, if any, discovery should continue

to play in resolving formal complaints,

and sought comment on a range of

options to either eliminate or modify the

current discovery process.

103. For our first approach, we sought

comment on the benefits and drawbacks

of eliminating the self-executing

discovery permitted under our current

rules by prohibiting discovery as a

matter of right. This proposal placed the

emphasis of developing facts and

arguments at the complaint and answer

stages of the proceeding, rather than on

discovery and subsequent briefing

opportunities. Under this proposal, if

the record presented through such

pleadings failed to provide a basis for

resolving disputes over material facts or

was otherwise insufficient to permit our

resolution of a complaint, the staff

would have the discretion to authorize

limited discovery at the initial status

conference, that would be held shortly

after receipt of the defendant’s answer

to the complaint. We sought comment

on various aspects of eliminating

automatic discovery, including whether

discovery was necessary in all cases,

whether such a rule would pose a

hardship for any particular segment of

complainants, and what standards

should apply in the event that discovery

was authorized by the staff.

104. For our second alternative

approach, we sought comment on the

benefits and drawbacks of a proposed

rule that would limit self-executing

discovery to something other than the

thirty written interrogatories authorized

under the current rules. We asked

parties to comment on whether a more

limited form of discovery as a matter of

right would accommodate a party’s

ability, where necessary, to identify and

present to the Commission material

facts that may be in the possession or

control of the other party; whether

allowing a limited amount of discovery

as a matter of right might decrease the

staff’s burden in deciding discovery

requests on a case-by-case basis; and

whether limiting discovery in this

manner would detract from full

compliance with our rules regarding the

level of detail that should be offered in

support of complaints and answers.

Pursuant to this approach, the staff

would permit additional discovery only

in extraordinary cases. We sought

comment on various aspects of this

approach, including whether a

reduction in the number of allowable

written interrogatories would be

appropriate, and whether interrogatories

should be limited to questions designed

to illuminate specific factual assertions

or denials.

105. In our third alternative approach,

we sought comment on continuing to

allow some limited discovery as a

matter of right, but allowing

Commission staff to set limits on the

scope of that discovery and to set

specific timetables for such discovery.

We noted that authorizing the staff to

limit the scope of the written

interrogatories could be an effective

deterrent to attempts by parties to use

discovery for purposes of delay or to

gain tactical leverage for settlement

purposes. In conjunction with this

approach, we proposed to require that

objections to interrogatories be filed by

the date of the initial status conference,

thereby enabling staff to rule on such

objections at that time. We noted that

under this proposal, extensions of time

to initiate limited discovery and file

objections and motions to compel

would be granted only in extraordinary

circumstances.

b. Comments. 106. The majority of

commenting parties argue that the

Commission should continue to allow

discovery as a matter of right. CBT, ICG,

and MCI argue that eliminating

discovery as a matter of right will cause

delay due to the fact that motions

requesting discovery will almost always

be filed and ICG argues further that such

motions may produce inconsistent

discovery rulings. PTG argues that the

prohibition of discovery would inhibit

the development of facts. Bechtel & Cole

argue that the right to discovery is

necessary because defendants have the

power to protect information in their

sole possession. APCC, CompTel and

TRA argue that discovery is especially

necessary where the defendant has sole

possession of the information a

complainant needs to make its case,

such as in the case of allegations of

cross-subsidies or discrimination. ACTA

and CompTel argue that due process

requires that a complainant be able to

direct its case as it sees fit.

107. Parties objecting to the

elimination of discovery as a matter of

right propose several ways to streamline

the discovery process. PTG and TCG

suggest that the Commission could limit

discovery to twenty written

interrogatories, while USTA and GTE

suggest that fifteen interrogatories

would be the appropriate number. The

cable entities, however, suggest

allowing thirty discovery requests,

including interrogatories, requests for

production of documents, and requests

for physical inspection of materials and

facilities, to be filed ten days after

service of the complaint, an additional

fifteen such discovery requests to be

filed within five days of the filing of the

answer, and allowing parties to request

additional discovery thereafter. The

cable entities argue that the certainty of

prompt resolution of discovery disputes

will discourage parties from making

frivolous requests or objections.

108. A number of the parties that

oppose the elimination of discovery as

a matter of right suggest that discovery

disputes should be resolved at the

initial status conference. Several parties

argue that it would be useful for

Commission staff to use the initial status

conference to control the scope and/or

scheduling of discovery. U S West and

TRA, however, argue that discovery

should be limited by the staff only with

regard to timetables. TRA states that

even Rule 26 of the FRCP provides for

traditional discovery, in addition to

voluntary disclosure, and states further

that Commission staff should not

control the prosecution of an action.

MCI suggests that requiring discovery to

be discussed at the initial status

conference will help Commission staff

maintain control over the discovery

process, although MCI asserts that the

proposed timing of the initial status

conference is too early in formal

complaint proceedings to rule on

objections to discovery.

109. To promote the resolution of

discovery disputes at the initial status

conference, several parties argue that

discovery requests and objections

thereto should be served and filed prior

to the initial status conference. MCI

argues, however, that it would be unfair

to complainants to require discovery

requests to be filed with complaints and

answers because the defendants would

be able to formulate their requests after

seeing the complaint, while the

complainants would be required to

formulate their requests prior to seeing

the answer. CompTel argues that the

proposed timetables for objecting to

interrogatories provides insufficient

time for parties to review the

interrogatories, and that therefore

parties will always file objections to

interrogatories rather than answer them.

CompTel suggests instead that parties be

required to respond promptly to

interrogatories for which their

objections are denied. While they

support retaining discovery as a matter
1006 Federal Register / Vol. 63, No. 4 / Wednesday, January 7, 1998 / Rules and Regulations

of right, GST, KMC and MFS argue that

interrogatories should be prohibited or

limited because they are often useless.

If allowed, interrogatories should not be

served until after the parties file their

joint statement of stipulated facts and

key legal issues, to facilitate the

targeting of disputed areas. APCC

suggests that the Commission require

early discovery, including expedited

rulings on discovery disputes.

110. GTE, MCI, Nextlink and TCG

argue that discovery as a matter of right

is necessary because all prior

disclosures are ‘‘voluntary’’ and parties

would disclose only those facts solely in

their possession that are most favorable

to their case. ICG argues that the

absence of discovery as a matter of right

would preclude parties from checking

the accuracy of their opponent’s

disclosures. TRA is concerned that

elimination of discovery as a matter of

right would result in fewer complaints

being filed with the Commission

because injured parties would lack

access to information.

111. AT&T, BellSouth, NYNEX, and

SWBT argue that there should be no

discovery as a matter of right. AT&T

argues that abuses will continue to

occur if parties are entitled to a fixed

number of interrogatories. BellSouth

argues that full discovery is always

available in federal court. MCI counters

this argument by asserting that

discovery should not be the exclusive

province of federal courts because

courts often make primary jurisdiction

referrals to the Commission in section

207 cases. SWBT’s support of the

elimination of discovery is contingent

upon two requirements: (1) providing

defendants with the right to remove a

formal complaint proceeding to federal

court, and (2) a complete prohibition on

motions for discovery to prevent the

routine filing of such motions. TRA

opposes SWBT’s suggestion that the

Commission provide defendants with

the right to remove formal complaints to

federal court because it argues that

defendants would use such a procedure

to their tactical advantage to avoid

expedited resolution.

112. SWBT argues that discovery is

not needed because parties do not have

a right to file a formal complaint and

then use discovery to determine if a

claim exists. SWBT suggests that parties

be required to certify that they engaged

in good faith discovery discussions and

exchanges prior to the filing of the

complaint.

113. AT&T and NYNEX argue that the

Commission should control all

discovery, including the scope, timing

and number of interrogatories, and issue

discovery rulings at the initial status

conference. NYNEX proposes that

parties be required to propound up to

thirty interrogatories with the complaint

and answer and file any opposition to

such discovery five days prior to the

initial status conference. AT&T argues

that discovery requests in addition to

interrogatories should be (1) only

allowed in extraordinary circumstances,

(2) requested at the initial status

conference, and (3) discussed with the

opposing party prior to the filing of the

motion requesting such discovery, with

any opposition to such motion due in

five days.

114. AT&T suggests that responses to

interrogatories should be filed with the

Commission. APCC suggests that a

‘‘good cause waiver’’ should be

available to grant relief to parties from

discovery limitations. Ameritech

suggests, and BellSouth concurs in its

Reply comments, that the Commission

implement procedures such as those

contained in section 252(b)(2) of the

Act, that are applicable to compulsory

arbitration of interconnection disputes.

GST, KMC and MFS suggest the

implementation of mandatory ‘‘meet

and confer’’ conferences between the

parties to address procedural issues and

potential disputes prior to the initial

status conference. AT&T supports the

meet and confer concept. CBT opposes

mandatory meet and confer conferences,

arguing that the Commission should not

be adding unnecessary requirements for

the parties to fulfill. ICG suggests that

the Commission make clear that it will

not tolerate form objections and

answers. In light of the Commission’s

proposals to permit interrogatories only

when it determines such discovery is

appropriate, AT&T suggests deleting

§ 1.729(e) of the Commission’s rules

because it would be superfluous.

c. Discussion. 115. For the reasons

discussed below, we eliminate the rule

authorizing the parties to initiate selfexecuting discovery. In its place, we

have adopted rules and policies that

carefully balance the rights of the

parties and the need to expedite the

resolution of complaints in a number of

important aspects. These new rules: (1)

require complainants and defendants to

exercise diligence in compiling and

submitting facts to support their

complaints and answers; (2) discourage

reliance on the often protracted

discovery process as a means to identify

or develop information needed to

support a complaint or answer; (3) give

parties an opportunity to make their

cases for or against limited discovery

early in the proceedings; (4) reduce the

need for time-consuming motions to

compel; (5) provide Commission staff

with more control over the discovery

process; and (6) limit each party’s

ability to use discovery for delay or

other purposes unrelated to the merits

of the dispute. The 1996 Act imposed

both statutory deadlines on certain

complaints and an overall procompetitive policy on the handling of

all formal complaints, thus signifying an

intent that we resolve quickly disputes

involving allegations of interference in

the development of competition in

telecommunications markets. The

discovery procedures under the old

rules were time consuming and were

susceptible to abuses that often caused

undue delays in our consideration of the

merits of a complainant’s claims. The

discovery rules adopted in this

proceeding expedite the discovery

process, which, in turn, expedites the

resolution of all formal complaints, in

accordance with the requirements and

policies of the 1996 Act.

116. The new procedures and policies

allow the staff to consider and rule on

reasonable, properly focused requests

for interrogatories and other discovery

on an expedited basis as follows:

(a) With its complaint, a complainant

may file with the Commission and serve

on the defendant requests for ten

written interrogatories. A defendant

may file with the Commission and serve

on the complainant requests for ten

written interrogatories during the period

beginning with the service of the

complaint and ending with the service

of the answer.

(b) Within three calendar days

following service of the answer, a

complainant may file with the

Commission and serve on the defendant

requests for five written interrogatories.

Such additional interrogatories shall be

directed only at specific factual

allegations made by the defendant in

support of its affirmative defenses.

(c) Requests for interrogatories shall

contain (1) a listing of the

interrogatories requested; and (2) an

explanation of why the information

sought in each interrogatory is necessary

to the resolution of the dispute and

unavailable from any other source.

(d) Oppositions and objections to the

requests for interrogatories shall be filed

with the Commission and served on the

propounding party (1) by the defendant,

within ten calendar days of service of

interrogatories served simultaneously

with the complaint and within five

calendar days of interrogatories served

following service of the answer, (2) by

the complainant, within five calendar

days of service of the interrogatories,

and (3) in no event less than three

calendar days prior to the initial status

conference.
Federal Register / Vol. 63, No. 4 / Wednesday, January 7, 1998 / Rules and Regulations 1007

(e) Section 1.730 of the current rules,

which expressly authorizes parties to

petition for additional ‘‘extraordinary’’

discovery in the form of requests for

document production, depositions and

additional interrogatories, shall be

deleted.

(f) Commission staff will be inclined

to grant all reasonable requests for

interrogatories and other forms of

discovery to the extent permitted under

any applicable statutory deadlines. It

will issue rulings and direct the parties

accordingly at the initial status

conference.

(g) Commission staff retains the

discretion to order on its own motion,

additional discovery including, but not

limited to, document production,

depositions, and/or interrogatories. The

staff also retains discretion to limit the

scope of permissible interrogatories and

to modify or otherwise relax the

discovery available in particular cases

where appropriate.

117. These rules and policies are

designed to work in conjunction with

our pre-filing and format and content

requirements, which are designed to

improve the utility and content of the

initial complaint and answer filed in a

section 208 proceeding. The rules as a

whole are intended to change

fundamentally the nature of the formal

complaint process to enforce the

Commission’s long-standing

requirement that ‘‘[a]ll matters

concerning a claim [be pled] fully and

with specificity.’’ In adhering to these

fact-pleading requirements, we will

further the pro-competitive policies of

the 1996 Act by expediting the

resolution of all formal complaints. We

find that these new requirements strike

a reasonable balance between, on the

one hand, providing for discovery

where necessary to ensure the

development of a complete record and,

on the other hand, preventing the use of

discovery as the primary means of

determining if a claim exists.

118. Some commenters express doubt

that parties will disclose unfavorable

information, and argue that discovery is

needed to verify the accuracy of initial

disclosures. The format and content

rules address this concern by requiring

that parties reveal the means by which

they determine what documents and

information to disclose. Disclosure of

the nature of the inquiry should

significantly reduce concerns about

accuracy, since a failure to address a

patently relevant topic will be readily

apparent. The arguments of some

commenters are based on the use of the

phrase ‘‘voluntary disclosure.’’ We

emphasize that the phrase ‘‘voluntary

disclosure’’ refers to the fact that the

parties are obligated to disclose all

information that is relevant to the

resolution of a dispute in the absence of

a specific discovery request. Use of the

term ‘‘voluntary disclosure’’ does not

limit the obligation of the disclosing

party to identify all information that is

relevant to the facts in dispute,

including information that is

unfavorable to the disclosing party.

119. The rules adopted address MCI’s

concerns that it is unfair to require

complainants to file their discovery

requests without an opportunity to

review the answer. First, because the

parties must make a good faith effort to

resolve their dispute prior to the filing

of the complaint, the complainant will

know what to expect in the defendant’s

answer. Second, the rules provide the

complainant with an opportunity to

seek discovery on affirmative defenses

first raised in the answer. In light of

these factors and the time constraints of

statutory deadlines, MCI’s fairness

argument fails.

120. We disagree with the argument

that the Commission should provide

discovery as a matter of right because

federal court rules provide for discovery

as a matter of right, in addition to

required initial disclosures. While the

Commission has often found the federal

rules instructive, it has consistently

rejected wholesale adoption of them. A

significant difference exists in the

procedural requirements of actions

brought before the different fora. Federal

court rules require notice pleading

while the Commission’s rules require

fact pleading. Notice pleading

anticipates the use of discovery to

obtain evidence of the facts to support

a complainant’s claims, while fact

pleading requires that a complainant

know the specific facts necessary to

prove its claim at the time of filing.

Neither section 208 of the Act nor the

Commission’s own rules and policies

contemplate the expansive discovery

available in federal district court, and in

fact, section 207 of the Act gives parties

the option of filing their complaints in

federal district court rather than with

the Commission. We, further, disagree

with the argument that self-executing

discovery is necessary because due

process requires that a complainant be

able to direct its case as it sees fit. As

we have stated, our rules require that

parties plead all matters fully and

specifically, and commission staff will

be inclined to grant reasonable requests

for discovery to the extent permitted

under any applicable statutory

deadlines. In this context, a party’s due

process rights are fulfilled by being

provided with the opportunity to

request discovery and present its

argument to the Commission as to why

discovery is necessary in its particular

case. The fact that the Commission may

deny a party’s discovery request,

following consideration of the merits of

such request, does not negate the party’s

right to the opportunity to make its case

for discovery.

121. We disagree with the

commenters who state that ending selfexecuting discovery will result in an

avalanche of motions for discovery,

which would lengthen the discovery

process and could result in inconsistent

discovery rulings. Our rules will

provide for the quick resolution of

discovery disputes by the date of the

initial status conference, which will be

held ten days after the answer is filed.

We note that these same commenters

strongly support proposals requiring the

staff to play a more active role in the

discovery process by defining the timing

and scope of necessary discovery. These

rules allow Commission staff to take a

more active role in the discovery

process to meet statutory deadlines and

expedite the resolution of all formal

complaints.

122. We conclude that SWBT’s

suggestion that the Commission require

the parties to engage in good faith

discovery discussions prior to the filing

of the complaint is unduly burdensome.

The Commission is already requiring

parties to engage in good faith

settlement negotiations prior to the

filing of a complaint. As part of that

obligation, we anticipate that parties

will exchange relevant documentation

to the extent that it would help to

resolve conflicts. We also conclude that

SWBT’s suggestion would be likely to

raise numerous disputes after the filing

of the complaint, e.g., concerning what

constitutes ‘‘good faith discovery,’’ that

would consume more time and

resources than would be saved by the

implementation of such a requirement.

123. SWBT suggests that the

Commission adopt a rule providing

defendants with the right to remove

disputes to federal court where broader

discovery is available. We decline to

adopt this suggestion because it would

eliminate rights provided to

complainants in the Act. The Act

provides complainants with the choice

of filing claims with the Commission or

in federal court. The 1996 Act further

provides complainants with the right to

have the Commission resolve certain

types of complaints within statutory

deadlines. Because those deadlines are

enforceable only at the Commission,

providing a defendant with the right to

remove any claim to federal court would

provide it with the ability to eliminate

the complainant’s right to have its
1008 Federal Register / Vol. 63, No. 4 / Wednesday, January 7, 1998 / Rules and Regulations

dispute resolved within the applicable

statutory deadline. SWBT, furthermore,

made this proposal in conjunction with

its support for the proposal to eliminate

all discovery, which we have declined

to adopt.

124. Additionally, we reject

Ameritech’s proposal that, as a means to

effective discovery, the Commission

adopt disclosure requirements similar to

those in section 252(b)(2), which are for

compulsory arbitration of

interconnection agreements. Such a

proposal is unworkable in light of the

fact that section 252(b)(2) procedures

would not accommodate the variety of

complaints that may be brought before

the Commission. Section 252(b)(2)

disclosure procedures are directed at

arbitration of disputes of a particular

nature before state commissions. Our

voluntary disclosure rules will provide

the benefits of that provision, the initial

disclosure of relevant documentation,

while the discovery rules adopted

herein contain sufficient flexibility to be

adapted to the unique circumstances of

individual cases.

125. The issue of requiring a meet and

confer conference to discuss discovery

disputes is addressed in the Status

Conference section of this Report and

Order.

2. Reduction of the Administrative

Burden of Filing Documents. a. The

NPRM. 126. In the NPRM we sought

comment on methods to reduce the

administrative burden on the

Commission of accepting filed

documents, either identified in initial

filings or obtained through discovery,

including implementation of a computer

scanning requirement for large

document productions.

b. Comments. 127. Those parties that

commented on this proposal oppose the

imposition of a scanning requirement.

CBT argues that such a requirement

would be a waste of resources while

CompTel argues it would be too

burdensome.

c. Discussion. 128. We decline to

adopt a scanning requirement for all

large document productions. Instead,

we shall provide Commission staff with

the discretion, in individual cases

involving the review of a large number

of documents, to require the parties to

provide the documents to the

Commission in a scanned or other

electronic format. Material in any

electronic format shall be indexed and

submitted in such manner as to

facilitate the staff’s review of the

information. Commission staff shall

have discretion to reach an agreement

with the parties about the appropriate

technology to be used in light of the

needs of the staff and the current cost

and availability of document

management technology. Commenters

opposed to the imposition of a scanning

requirement make general statements

that a scanning requirement would be

unjustifiably costly and burdensome to

implement. Because such a requirement

will be imposed on an individualized

basis, the staff shall decide on a case-bycase basis whether the nature of the

production involved will justify the cost

and burden of electronic formatting.

129. We also recognize that a

significant number of complex technical

issues that are beyond the scope of the

NPRM would have to be addressed prior

to the implementation of a

comprehensive document scanning

requirement. Because scanning

technology is varied and not universally

compatible, the implementation of a

standardized scanning requirement

would require us to choose a single type

of scanning technology. Several

complex questions would therefore

arise, including, but not limited to, what

information should be placed in

identifying fields and whether the

documents must be searchable by text.

Because of these complex technical

questions, we decline to impose a

scanning requirement at this time,

although we may address this issue

again at a later date, following our

consideration of possible procedures for

allowing the electronic filing of

documents in GC Docket 97–113.

3. Voluntary Agreements for the

Recovery of Discovery Costs. a. The

NPRM. 130. One of the goals in the

NPRM was to identify ways to

encourage parties to exercise diligence

in identifying and satisfying their

discovery needs. For example, although

the Commission does not have authority

to award costs in the context of a formal

complaint proceeding, we sought

comment on whether encouraging

formal complaint parties to agree among

themselves to a cost-recovery system for

discovery would facilitate the prompt

identification and exchange of

information. As an example, we

suggested that the parties could

stipulate that the losing party in the

complaint proceeding would bear the

reasonable costs associated with

discovery, including reasonable

attorneys’ fees.

b. Comments. 131. Although GST,

KMC and MFS support the Commission

encouraging parties to enter into

voluntary cost recovery agreements,

Ameritech, CBT, CompTel, PTG, SWBT,

and TCG oppose such a position.

CompTel, GTE, PTG, and SWBT argue

that parties will be unable to agree to a

cost recovery system. Ameritech argues

that parties will be tempted to convince

the decisionmaker to award enough

money to the ‘‘losing’’ party to offset the

costs of discovery. Ameritech suggests

the alternative of giving the factfinder

the discretion to decide cost recovery

issues and award financial damages for

the filing of frivolous complaints. TCG

argues that, if the Commission

encouraged such agreements, parties

might not comply with discovery

requests unless they are compensated.

CBT argues that discovery abuse would

not be lessened by having the loser pay

the cost of discovery, since the winning

party is as likely to have abused

discovery. CBT supports, however,

requiring parties to compensate each

other for extraordinary efforts to comply

with discovery requests. CompTel

suggests that the Commission should set

a reasonable copying fee.

c. Discussion. 132. We decline to

encourage voluntary cost recovery

agreements among parties for several

reasons. We conclude that recovery of

discovery costs will not be a significant

problem in formal complaints because

the rules we adopt today will make

extensive discovery the rare exception

rather than the general rule, regardless

of the willingness of parties to pay for

discovery. Furthermore, most of the

commenters oppose this proposal. Since

the majority of the commenters are

potential parties to formal complaints

before the Commission, we find it

unlikely that parties would enter into

such voluntary cost recovery

agreements.

4. Referral of Factual Disputes to

Administrative Law Judges. a. The

NPRM. 133. In the NPRM we proposed

to amend our rules to authorize the

Common Carrier Bureau and the

Wireless Telecommunications Bureau,

on their own motion, to refer disputes

over material facts in formal complaint

proceedings to an administrative law

judge (‘‘ALJ’’) for expedited hearing.

The disputes referred would be those

that cannot be resolved without

resorting to formal evidentiary

proceedings, although adjudication of

novel questions of law or policy would

remain outside of the delegated

authority of the ALJ. We noted that, as

a practical matter, the Bureaus would

refer issues only where necessary to

determine acts or omissions, and not to

determine the legal consequences of

such acts or omissions. We tentatively

concluded that expanding the Bureaus’

delegated authority in this limited way

would provide the staff with an

important tool for resolving disputes

over material facts that cannot be

resolved without resort to formal

evidentiary proceedings.
Federal Register / Vol. 63, No. 4 / Wednesday, January 7, 1998 / Rules and Regulations 1009

b. Comments. 134. The majority of

commenters support the adoption of a

rule authorizing the Common Carrier

Bureau and the Wireless

Telecommunications Bureau to refer

factual disputes to an ALJ for resolution.

Bechtel & Cole’s support for authorizing

such referral, however, is contingent

upon the establishment of deadlines for

ALJs to resolve such disputes, as well as

a clear definition of the role and

responsibility of the ALJ in each case.

CBT suggests that the ALJ hearing be

located at the site of the alleged

violation. GST, KMC and MFS argue

generally that the procedures for referral

of factual disputes to ALJs should be

clarified. BellSouth, however, opposes

the referral of factual issues to ALJs,

except as a last resort, arguing that it

would only add a layer of procedural

rules while still requiring the

Commission to make a legal

determination on the case itself.

BellSouth supports referral of disputes

to ALJs for hearing only if the

Commission adopts the pole attachment

complaint rules.

c. Discussion. 135. We amend § 0.291

of the rules to authorize the Chief of the

Common Carrier Bureau to designate

factual disputes for evidentiary hearings

before an ALJ and clarify that the

change in the Bureau’s delegated

authority is intended to authorize the

Bureau to designate factual disputes for

hearing even in those cases where the

facts to be determined may be

considered ‘‘novel.’’ We retain,

however, the existing prohibition on the

Common Carrier Bureau designating for

hearing those issues involving novel

questions of law or policy which cannot

be resolved under outstanding

precedents or guidelines. No revision is

required in the existing delegated

authority of the Wireless

Telecommunications Bureau, which

now permits it to delegate novel factual

issues for hearing.

136. Factual disputes that are referred

to an ALJ for hearing shall be referred

to such ALJ through a hearing

designation order. The hearing

designation order may set a

recommended deadline for the ALJ to

certify the record by, and, if time

permits, issue a recommended decision

on the factual dispute. The presiding

judge shall certify the record and if time

permits, issue a recommended decision,

pursuant to the instructions contained

in the hearing designation order, before

referring the matter back to the

Commission for, inter alia, final

resolution of all outstanding factual,

legal and policy issues. We clarify that,

where the Common Carrier Bureau or

the Wireless Telecommunications

Bureau designates a dispute for

expedited hearing, the designating

Bureau may authorize the presiding

judge to schedule the proceedings to

enable such deadline to be met. We

further clarify that the Common Carrier

and Wireless Telecommunications

Bureaus will not refer a factual dispute

to an ALJ for hearing where the time

required by the ALJ to complete a

hearing on such dispute would preclude

the Commission from meeting an

applicable statutory deadline.

137. There is broad support among

the commenters for the use of ALJs to

resolve factual disputes. After due

consideration of commenters’ concerns

about compliance with statutory

deadlines, we conclude that the existing

rules provide the Commission with the

authority to request, in a hearing

designation order, that disputes be

resolved by an ALJ within a set period

of time consistent with the final

Commission decision complying with

the statutory deadline and to authorize

ALJs to use discretion in the application

of their hearing rules to ensure

compliance with the deadline

recommended by the Commission. We

conclude, in addition, that the concerns

of some commenters about such

referrals slowing down the complaint

process are unwarranted. The

Commission’s obligation to comply with

statutory deadlines is not eliminated by

such referral. Referral of factual disputes

to ALJs will, in fact, expedite the

process because referrals will be used in

those circumstances where the factual

disputes cannot be resolved promptly, if

at all, on a written record. In such cases,

it would take longer for the Commission

to resolve such disputes itself without a

hearing than it would for the

Commission to do so after a hearing

before an ALJ. ALJs are, furthermore,

expert triers of fact and are well-situated

to conduct their proceedings within the

time frames given by the Commission,

such that sufficient time will remain for

the Commission to issue its decision in

compliance with the statutory deadline.

We also conclude that ALJ hearings will

be held at the offices of the Commission

in Washington, D.C., unless otherwise

ordered by the Commission. It would be

impractical to provide for hearings at

the location of each dispute in light of

both the time limitations that may be

imposed on the ALJs and the limited

resources of the Commission.

138. Additionally, we note that the

Enforcement Task Force is currently

evaluating whether it may be

appropriate, in certain limited

categories of disputes, to conduct minitrials or some other form of live

evidentiary proceeding, either before an

ALJ or the Task Force. If adopted, this

test procedure, subject to careful time

constraints, would allow parties a

substantially greater opportunity to

present live testimony and oral

argument than is contemplated by the

hearings conducted pursuant to

designation orders.

H. Status Conferences

139. The NPRM proposed to use

status conferences to speed up the

formal complaint process in order to

enable compliance with the newly

imposed statutory deadlines and overall

streamlining of the formal complaint

procedures. The status conference

proposals were intended to work in

conjunction with the modifications of

the briefing and discovery rules.

1. The Initial Status Conference. a.

The NPRM. 140. We proposed to modify

our rules concerning status conferences

to improve the ability of the

Commission staff to render prompt

decisions and order any necessary

actions by the parties. We proposed to

require that, unless otherwise ordered

by the staff, an initial status conference

take place in all formal complaint

proceedings ten business days after the

defendant files its answer to the

complaint. Such an early status

conference would be used to discuss

such issues as claims and defenses,

settlement possibilities, scheduling,

rulings on outstanding motions, the

necessity of and, if necessary, scope

and/or timetable of discovery.

b. Comments. 141. A number of

commenters support scheduling the

initial status conference ten days after

the filing of the answer. Several

commenters, such as CompTel, MCI,

Nextlink, and PTG, however, assert that

it may be unrealistic for parties to be

required to argue all discovery issues in

that short a time period. They suggest

either a second status conference or that

the initial status conference be held

twenty to thirty days after the filing of

the answer. AT&T, CBT, PTG, and U S

West argue that parties should continue

to be permitted to attend status

conferences by telephone conference

call.

142. The commenters agree that the

issues to be resolved at the initial status

conference should include the scope

and scheduling of discovery and the

briefing schedule. The cable entities

state that they envision the initial status

conference as the ‘‘focal point of the

complaint proceeding.’’ PTG suggests

the scheduling of a formal settlement

conference at that time. GST, KMC, and

MFS also propose to have parties attend

‘‘meet and confer’’ conferences prior to

the initial status conference so that
1010 Federal Register / Vol. 63, No. 4 / Wednesday, January 7, 1998 / Rules and Regulations

agreements reached and disputes

remaining unresolved after the meet and

confer may be reduced to writing and

given to the staff at the initial status

conference. GST, KMC, and MFS

suggest that the following subjects be

discussed at the meet and confer: (1) the

necessity and/or scope of discovery

beyond the exchange of documents and

information designations; (2) if

depositions or affidavits are necessary,

and if so, the number and proposed

dates; (3) the timetable for completion of

discovery; (4) the need or desirability of

referring technical issues to an neutral

expert; (5) settlement possibilities; (6) if

briefing is necessary; (7) whether parties

are willing to have damages claims

resolved separately from liability issues

using the supplemental complaint

process, where such action has not

already taken place; (8) disagreements

over designation of documents as

confidential or proprietary; (9) in

section 271(d)(6)(B) cases, whether

parties can agree to waive the ninetyday resolution deadline; and (10) the

draft joint statement of stipulated facts

and key legal issues. AT&T and the

cable entities support requiring the meet

and confer, while CBT opposes the meet

and confer because it argues that the

Commission should not impose

additional requirements on parties.

c. Discussion. 143. We require that the

initial status conference take place ten

business days after the date the answer

is due to be filed unless otherwise

ordered by the staff. Setting the initial

status conference date for ten business

days after the date the answer is due to

be filed will enable Commission staff to

render decisions and/or order necessary

actions promptly. Commission staff

retain the discretion to permit parties to

attend status conferences by telephone

conference call on a case-by-case basis.

144. Commenters that oppose

scheduling the initial status conference

for ten business days after the date the

answer is due to be filed claim that it

may be unrealistic to require the parties

to address discovery issues so early in

the proceeding. In response to these

commenters, we shall use a complaint

with a ninety-day resolution deadline as

an example. In a ninety-day complaint,

the date of the initial status conference

is 34 days into the proceeding under the

amended rules. In other words, over one

third of the time allocated for resolution

of such complaint will have passed

before the status conference takes place.

In the remaining fifty-six days, the

parties will be required to comply with

any discovery ordered and to draft briefs

to include such discovery findings, and

the staff will be required to consider all

submissions by the parties and issue a

decision taking appropriate action.

Given these requirements, it is

necessary for the parties and the

Commission to move the proceeding

along with great speed. Even if the

complaint is not subject to such an

abbreviated schedule, the expedited

resolution of all formal complaints is

essential to fostering and maintaining

competition in accordance with the

goals of the 1996 Act. Furthermore, the

requirement of an early initial status

conference will not be as burdensome as

some commenters envision. Our status

conference requirement must be

considered in conjunction with the

establishment of requirements for prefiling activities, format and content of

pleadings, and discovery procedures.

The pre-filing activities will narrow the

scope of disputed issues. The format

and content requirements will reduce

the amount of discovery that is

necessary by requiring the disclosure of

relevant evidence at the complaint and

answer stage of a formal complaint

proceeding. The new discovery

procedures will require the filing of all

requests for discovery, as well as

objections and oppositions thereto, prior

to the initial status conference, to enable

the staff to address discovery issues at

the initial status conference. Finally,

Commission staff will retain the

discretion to modify the scheduling of

the initial status conference when it is

warranted by the facts and

circumstances of an individual case.

145. We also adopt, in part, the

proposal made by GST, KMC, and MFS

to require the parties to meet and confer

prior to the initial status conference.

Parties will be required to schedule and

attend a meet and confer conference

amongst themselves prior to the initial

status conference to discuss the

following issues: (1) settlement

prospects; (2) discovery; (3) issues in

dispute; (4) schedules for pleadings; (5)

joint statements of stipulated facts,

disputed facts, and key legal issues; and

(6) in a section 271(d)(6)(B) proceeding,

whether the parties agree to waive the

ninety-day resolution deadline. All

proposals agreed to and disputes

remaining must be reduced to writing

and submitted to the staff two business

days prior to the initial status

conference. This submission is to be

made separately from the joint

statement of disputed and undisputed

facts and key legal issues that is due on

the same date. Our requirement that the

parties meet and confer will prepare the

parties for a productive status

conference because it will require the

parties to consult early on substantive

and procedural issues. The requirement

to meet and confer should also

eliminate any element of surprise that

might prevent parties from reaching

agreements at the status conference, due

to a party needing time to consider an

opponent’s newly disclosed position on

a particular issue. CBT’s argument

against the imposition of further

requirements is unpersuasive. The meet

and confer will not require the parties

to address any new issues, but rather

imposes an earlier deadline for

completing activities which the parties

would have to perform in any case.

2. Status Conference Rulings. a. The

NPRM. 146. In the NPRM, we proposed

to modify the requirement that the staff

memorialize oral rulings made in status

conferences. We proposed that, within

twenty-four hours of a status

conference, the parties in attendance,

unless otherwise directed, would

submit to the Commission a joint

proposed order memorializing the oral

rulings made during the conference.

Commission staff would review and

make revisions, if necessary, prior to

signing and filing the submission as part

of the record. To facilitate the

submission of these joint proposed

orders, we further proposed that parties

be allowed, but not required, to tape

record the staff’s summary of its oral

rulings or, alternatively, to transcribe

the status conference proceedings. We

sought comment on these proposals and

any other alternative proposals.

b. Comments. 147. Most commenters,

including ACTA, ATSI, Bell Atlantic,

GTE, and ICG, support requiring parties

to file a joint proposed order within

twenty-four hours of a status

conference. ACTA, AT&T and GTE

suggest that the Commission provide an

alternative procedure for parties that

cannot agree on a proposed order. Bell

Atlantic suggests that the Commission

provide the parties with resources to

draft the proposed order on-site

following the conference, with staff

remaining available for consultation.

CBT, NYNEX, and PTG oppose

requiring parties to file a joint proposed

order memorializing the status

conference rulings. They argue that

parties will be unable to agree on the

content of such an order and that the

Commission staff member making the

ruling is in the best position to know

what was intended by the ruling. AT&T

suggests that joint proposed orders

would be unnecessary if the parties

have made a stenographic record.

148. Commenters are split regarding

the allowance of audio recording and/or

the use of stenographers at status

conferences. ICG supports audio

recording of the entire status

conference. GST, KMC, and MFS
Federal Register / Vol. 63, No. 4 / Wednesday, January 7, 1998 / Rules and Regulations 1011

support the audio recording of a

summary of the staff’s oral rulings, but

oppose the use of a stenographer as

being unnecessary. SWBT opposes

using a stenographer because of concern

that a transcribed record may have a

chilling effect on the free flow of

discussions at status conferences.

c. Discussion. 149. We require parties

to provide the Commission with a joint

proposed order memorializing the

rulings made at each status conference.

Because of the many important issues

that will be resolved during the status

conference, a written record of the

rulings will be an essential reference

and organizational tool for the parties

and the Commission. Requiring the

parties to provide a joint proposed order

will allow the Commission to focus its

scarce resources on other aspects of the

complaint process. Requiring the parties

to submit such joint proposed order by

the end of the business day following

the status conference is necessary

because compliance with rulings made

at status conference may require action

within a matter of days. Such time

sensitivity requires that any confusion

or dispute among the parties over

rulings made at the status conference be

brought to the attention of Commission

staff as early as possible. It is instructive

to note that the Commission’s ex parte

rules require parties making oral ex

parte presentations to file a written

memorandum with the Commission’s

Office of the Secretary that summarizes

the data and arguments presented on the

next business day after the presentation.

It has been our experience that parties

do not have difficulties complying with

such requirement. As explained below,

we have eased the burden of compliance

with this requirement by providing

parties with the opportunity to submit

either the joint proposed order or a

transcript of the status conference.

150. The joint proposed order shall

summarize the rulings made by the staff

in the status conference. If the parties

cannot agree on all rulings in the joint

proposed order they may submit instead

a joint proposed order that contains the

proposed rulings upon which they agree

and alternative proposed rulings for

those rulings upon which they cannot

agree. The joint proposed order shall

comply with the format and content

requirements for proposed orders, and

shall be filed with the Commission by

5:30 p.m. on the business day following

the date of the status conference, unless

otherwise directed by Commission staff.

151. If parties choose to make an

audio recording or stenographically

transcribe parts of the status conference,

they shall submit, in lieu of a joint

proposed order, either a transcript of the

audio recording or the stenographic

transcript of such status conference

within three business days following the

conference, unless otherwise directed

by Commission staff. Parties will be

permitted to make an audio recording of

or stenographically transcribe only

those parts of a status conference that

are deemed ‘‘on the record’’ by

Commission staff at its discretion. We

shall prohibit any recording in any

manner of those parts of the status

conference deemed ‘‘off-the-record’’ by

the staff. Any party wishing to make an

audio recording of the staff’s summary

of oral rulings only must notify the staff

and all attending parties in writing of its

intent at least three business days prior

to the scheduled conference. Any party

wishing to make an audio recording of

those portions of a status conference

that are ‘‘on-the-record’’ must secure the

agreement of the attending parties and

notify the staff of such intent at least

three business days prior to the

scheduled conference. Such audio

recordings shall be transcribed and such

transcript submitted as part of the

record no later than three business days

after the conference, unless otherwise

directed by the staff. Parties wishing to

transcribe by stenographer those

portions of a status conference that are

‘‘on-the-record’’ must secure the

agreement of the attending parties and

notify the staff in writing of such intent

at least three business days prior to the

scheduled conference. Such transcript

shall be submitted as part of the record

no later than three business days after

the status conference, unless otherwise

directed by the staff. It is the sole

responsibility of the party or parties

choosing to make an audio recording of

or stenographically transcribe any part

of a status conference to make all

arrangements for such recording or

transcription, including, but not limited

to, arrangements for payment of the

costs of such recording or transcription.

152. The commenters have raised

legitimate concerns that the making of a

formal record of a status conference by

any means may have a chilling effect on

the free exchange of information by the

parties. We emphasize that the staff will

retain significant discretion to

determine in each case what is ‘‘on-therecord’’ and what is ‘‘off-the-record’’ to

prevent parties from using the record to

stifle such exchanges.

I. Cease Orders, Cease and Desist

Orders, and Other Forms of Interim

Relief

153. Certain provisions added by the

1996 Act authorize the Commission to

take interim actions against LECs

pending final resolution of complaints

in some instances and to order

permanent injunctive relief in others.

Sections 260 and 275 of the Act contain

nondiscrimination provisions governing

the provision of telemessaging service

and the provision of alarm monitoring

service, respectively, by incumbent

LECs. Sections 260(b) and 275(c) require

the Commission to issue, upon an

appropriate showing by the complainant

of a violation that resulted in ‘‘material

financial harm,’’ an order directing the

incumbent LEC ‘‘to cease engaging’’ in

such violation ‘‘pending a final

determination’’ by the Commission.

Both sections provide that such cease

orders ‘‘shall’’ be issued within 60 days

of the filing of a complaint that satisfies

the stated criteria. In addition, section

274, pertaining to electronic publishing

by BOCs, authorizes the Commission (or

federal district court) to issue cease and

desist orders for violations of the

section. Unlike sections 260 and 275,

however, section 274 contains no

deadline for issuing such orders, nor

does it predicate the issuance of such

orders on a showing of material

financial harm.

1. Cease and Cease and Desist Orders

Under Title II of the Act and Other

Forms of Interim Relief. a. The NPRM.

154. In the NPRM, we invited comment

on our tentative conclusion that the

procedures prescribed in Title III

(section 312) of the Act for issuing cease

and desist orders are not mandatory in

section 208 and related Title II

complaint proceedings, and that the

complaint provisions added by the 1996

Act give the Commission additional

authority to issue cease or cease and

desist orders in certain cases.

155. Section 312 prescribes certain

‘‘Administrative Sanctions’’ available to

the Commission to remedy violations of

the Act and the Commission’s rules and

orders. Subsection 312(a) provides that

the Commission ‘‘may’’ revoke a station

license or construction permit under

any one of seven enumerated factual

circumstances. 47 U.S.C. 312(a).

Subsection 312(b) similarly provides

that the Commission ‘‘may’’ order ‘‘any

person’’ who has failed to operate

substantially as set forth in a license or

has otherwise violated a provision of the

Act, certain provisions of Title 18 of the

United States Code, or any rule or

regulation of the Commission, to ‘‘cease

and desist’’ from such action. 47 U.S.C.

312(b). Before taking the actions

prescribed in Subsections 312 (a) and

(b), Subsections 312 (c) and (d) require

that the Commission conduct ‘‘show

cause’’ proceedings in which the

Commission bears both the burden of

proceeding with the introduction of

evidence and the burden of proof. 47
1012 Federal Register / Vol. 63, No. 4 / Wednesday, January 7, 1998 / Rules and Regulations

U.S.C. 312 (c) and (d). We also asked

commenters to address whether an

order to ‘‘cease engaging in’’ violations

under sections 260(b) and 275(c) would

be the same as an order to ‘‘cease and

desist’’ violations under section

274(e)(2).

2. Comments. 156. Apart from

comments regarding the evidentiary

showing that should be required to

obtain cease and cease and desist

orders, few commenting parties draw a

distinction between the cease orders

contemplated under sections 260(b) and

275(c) and the cease and desist order

described in section 274(e)(2). Voice-Tel

asserts that cease and cease and desist

orders are the same and that the

language between sections 260 and 275

differs only because section 274 gives

the complainant the option of obtaining

relief in federal court.

157. Commenters are evenly divided,

however, on the issue of whether the

Commission must follow the procedures

prescribed in section 312 of the Act

before issuing cease and cease and

desist orders in Title II complaint

proceedings. Bechtel & Cole, GST, KMC,

MFS, and TRA argue that, in light of the

requirement in the 1996 Act for prompt

issuance of cease orders in cases

alleging violations of sections 260 and

275, Congress did not intend for section

312 hearings to apply to cease and cease

and desist orders pursuant to section

208 and related Title II complaint

proceedings. These commenters argue

that the application of section 312 show

cause hearings would contravene

Congressional intent. Bell Atlantic,

CompTel, PTG, and SWBT, on the other

hand, contend that section 312 hearings

are a prerequisite to the issuance of any

cease or cease and desist order pursuant

to the Act. These commenters maintain

that the D.C. Circuit Court decision in

General Telephone Co. of California v.

FCC (‘‘General Telephone’’) establishes

that section 312 show cause hearings are

required before the Commission can

issue cease and cease and desist orders.

c. Discussion. 158. Congress clearly

distinguished between cease orders in

sections 260 and 275 and cease and

desist orders in section 274. Both

sections 260(b) and 275(c) provide that,

if a complaint contains an appropriate

showing of a violation that results in

material financial harm, the

Commission ‘‘shall,’’ within 60 days,

issue an order directing incumbent LECs

to ‘‘cease engaging in’’ the violation

pending resolution of the complaint.

Section 274(e)(2), on the other hand,

authorizes ‘‘any person’’ claiming that a

BOC or BOC affiliate has violated

section 274 ‘‘to make application’’ to the

Commission or the federal district

courts for a cease and desist order, but

does not specify circumstances in which

a cease and desist order must be issued.

In addition, unlike sections 260(b) and

275(c), section 274(e)(2) contains no

deadline for Commission action on

applications for cease and desist orders,

nor does it predicate issuance of such

orders on a showing of material

financial harm by the petitioner. We

therefore disagree with VoiceTel’s

argument that Congress intended

section 260 and 275 cease orders to be

identical to section 274 cease and desist

orders.

159. Based on the express language of

sections 260(b) and 275(c), we conclude

that any order issued by the

Commission pursuant to these sections

must be in the nature of an injunction

directed against a defendant incumbent

LEC pending a final determination on

the merits of a complainant’s

discrimination claims. As is customarily

the case with permanent or preliminary

injunctive actions, orders issued under

sections 260(b) and 275(c) directing a

LEC to ‘‘cease engaging in’’ a particular

act will either be discharged or made

final depending on the outcome of the

complaint. We further conclude that,

apart from the interim enforcement

actions authorized under sections 260(b)

and 275(c), the Commission retains

discretion under section 4(i) of the Act

to entertain requests for interim relief in

other Title II complaint proceedings

involving alleged violations of the Act

or our rules and orders. We disagree

with commenters who claim that

section 312 procedures must be applied

to requests for cease orders under

sections 260(b) and 275(c), particularly

since these sections make it clear that

the complainants, not the Commission,

have the burden of proof. By contrast,

section 312(c) states that ‘‘both the

burden of proceeding with the

introduction of the evidence and the

burden of proof shall be upon the

Commission.’’ The commenters’

reliance on General Telephone is

misplaced. That case stands for the

proposition that the Commission may

properly invoke section 312(b) in

carrying out its functions under Title II,

not that the Commission is compelled to

use section 312 procedures in

determining if a carrier should be

required to discontinue a particular

practice on a temporary or interim basis.

Sections 260(b) and 275(c), and section

4(i) generally, clearly empower the

Commission to act promptly to restrain,

on a temporary or interim basis,

apparent or prima facie violations of the

Act and our rules and orders without

resorting to section 312 procedures.

160. With regard to cease and desist

orders under section 274(e)(2), we

conclude that Congress intended to

assign the same meaning to ‘‘cease and

desist’’ orders in section 274(e)(2) as

used for ‘‘cease and desist’’ orders in

section 312 of the Act. Section 274(e)(2)

simply authorizes parties to petition the

Commission for cease and desist orders

based on alleged violations of the

requirements of section 274. There is no

support in section 274 or elsewhere in

the Act for applying procedures other

than those prescribed in section 312 for

acting on requests for such cease and

desist orders. We conclude that, in

contrast to the permanent or

preliminary injunctive relief required

under sections 260(b) and 275(c),

Congress intended the cease and desist

orders contemplated under section

274(e)(2) to be in the nature of final

injunctive orders to be issued in

conformance with the notice and

opportunity for hearing requirements of

section 312 of the Act.

2. Legal and Evidentiary Standards. a.

The NPRM. 161. We proposed to amend

our rules to delineate the legal and

evidentiary standards necessary for

obtaining cease and cease and desist

orders pursuant to Title II of the Act and

other forms of interim relief in section

208 formal complaint cases. We noted

that creating minimum legal and

evidentiary standards would expedite

the issuance of cease and cease and

desist orders within statutory deadlines

and create more certainty in the

industry as to the legal and factual basis

for obtaining such injunctive or interim

relief. We noted further that, when a

court considers requests for various

types of interim or injunctive relief,

such as a temporary restraining order, it

generally requires that the plaintiff

demonstrate four factors: (1) likelihood

of success on the merits; (2) the threat

of irreparable harm absent the grant of

the injunctive relief requested; (3) no

substantial injury to any other party;

and (4) that issuance of the order will

further the public interest. Courts have

also required the posting of bond in

some cases prior to granting interim

relief.

162. Few parties responded in detail

to our requests for comment in the

Sections 260, 274, 275 NPRM regarding

(1) the ‘‘appropriate showing’’ required

for the Commission to issue a ‘‘cease’’

order pursuant to section 260(b) or

275(c); (2) whether it would be

sufficient for the complainant to make a

prima facie showing of discrimination

to obtain a cease order; (3) the meaning

of ‘‘cease engaging in’’ under sections

260(b) and 275(c); and (4) whether

sections 260(b) and 275(c) give the
Federal Register / Vol. 63, No. 4 / Wednesday, January 7, 1998 / Rules and Regulations 1013

Commission the authority to issue a

cease and desist order similar to the

action contemplated in section 274(e)(2)

and, if so, whether the showing required

to obtain cease orders and cease and

desist orders should differ in any

material way. Accordingly, the NPRM

sought additional comment on these

issues and emphasized that all

comments pertaining to enforcement

issues in response to the Sections 260,

274, 275 NPRM would be incorporated

by reference into the instant proceeding.

We also asked parties to comment on (1)

the meaning of the terms ‘‘material

financial harm’’ as used in sections 260

and 275; (2) whether a showing of

material financial harm should also be

required in order to obtain a cease and

desist order under section 274; and (3)

the level of proof required to establish

material financial harm in the context of

a section 208 complaint proceeding.

b. Comments. 163. Many of the

commenters, including BellSouth,

CompTel, PTG, NYNEX, SWBT, and U

S West, support the use of the

traditional four-prong injunction test

articulated in Virginia Petroleum

Jobbers (i.e., likelihood of success,

threat of irreparable harm, no

substantial injury to other parties, and

the furtherance of the public interest)

for issuing cease orders pursuant to

sections 260 and 275 and cease and

desist orders pursuant to section 274.

These commenters claim that this test

will minimize the chance of harm to a

carrier should the allegations ultimately

prove to be groundless. GST, CompTel,

KMC, MFS, and PTG also argue that

complainants should be required to post

a bond to pay for the carrier’s damages

if the Commission later finds that the

complaint was without merit.

164. TRA, ICG and the cable entities

argue for more relaxed standards,

especially for resellers and small market

entrants. They urge the Commission to

retain only the elements of the

traditional test relating to advancement

of the ‘‘public interest’’ and ‘‘no

substantial injury to other parties.’’ ICG

contends that the ‘‘likelihood of

success’’ and ‘‘irreparable harm

elements’’ inherently favor the status

quo, which is contrary to Congress’ goal

of expediting effective local exchange

competition. According to the cable

entities, the Commission should require

a moving party to show only that it has

mounted a ‘‘substantial challenge’’ to a

carrier’s practice. TRA recommends that

if the Commission decides to apply the

traditional four-part test for injunctive

or interim relief, it should define

‘‘irreparable harm’’ to include a showing

of ‘‘serious damage to a resale carrier’s

business.’’

165. The Alarm Industry

Communications Committee (‘‘AICC’’)

and Voice-Tel argue that a prima facie

showing of discrimination should be

sufficient to warrant issuance of a cease

order against an incumbent LEC

pursuant to either section 260(b) or

section 275(c). ATSI contends that an

‘‘appropriate showing’’ for a cease order

under section 260 would be a

complainant’s showing it had requested

service or access from an incumbent

LEC and that such request was denied

or unduly delayed in violation of

section 260 on more than one occasion

and that such violations would continue

absent a cease order. According to ATSI,

the Commission should apply the

following two presumptions in

considering requests for cease orders in

such cases: (1) if any incumbent LEC is

offering a basic service pursuant to

section 260, then any other incumbent

LEC should have the capability to do the

same; and (2) if an incumbent LEC has

the capability to provide telemessaging

service, then a telemessager should be

able to access the LEC’s network for

purposes of providing similar

telemessaging service.

166. Bell Atlantic argues that a cease

or cease and desist order could be

issued under sections 260, 274, or 275

only if a complainant produces facts

that show that (1) the alleged

discriminatory behavior has occurred or

will soon occur, (2) that the behavior

violates the Act and/or the

Commission’s rules, and (3) that it has

or will cause substantial harm to the

complainant. PTG contends that cease

orders should be issued pursuant to

section 260 only after the complainant

has shown by a preponderance of the

evidence that an incumbent LEC has

violated section 260(a) and that the

violation was the proximate cause of the

complainant’s material financial harm.

PTG argued that an order to ‘‘cease

engaging’’ under sections 260 and 275

should be more difficult to obtain than

an order to ‘‘cease and desist’’ under

section 274 because sections 260 and

275 require a showing of ‘‘material

financial harm.’’ SWBT contends that

the standard under section 274(e),

which authorizes any person to ‘‘make

application to the Commission’’ for a

cease-and-desist order, should be at

least as demanding as § 1.722 of the

Commission’s rules, which requires

complainants seeking damages to

demonstrate or quantify the harm

suffered or damages incurred with

reasonable certainty. SWBT maintains

that cease orders under sections 260(b)

and 275(c), on the other hand, should

require more stringent proof because

those sections direct the Commission to

issue such orders upon an appropriate

showing of material financial harm in

the complaint. Voice-Tel asserts that the

Commission’s authority under sections

260, 274 and 275 is the same,

contending that the language between

the two provisions is different only

because section 274 gives the

complainant the option of obtaining

relief in federal court.

167. Several commenters contend that

what constitutes material financial harm

under sections 260 and 275 should be

decided on a case-by-case basis. AICC,

ATSI, and Voice-Tel proposed that all

cases involving denial of access or delay

would always result in material

financial harm and that material

financial harm need not be quantified in

such cases. BellSouth maintains that a

showing of material financial harm must

establish a causal relationship between

the harm and the defendant carrier’s

actions and should exclude

unsupported claims of ‘‘lost

opportunity.’’ According to PTG, a

showing of material financial harm

should consist of testimony, supported

by affidavit, regarding (1) the magnitude

of the alleged harm; (2) the relationship

of the harm to the alleged violation, and

(3) the impact of the harm on the

complainant’s business prospects. PTG,

SWBT, and USTA all argue that a prima

facie case of material financial harm

must include some quantification of the

alleged harm.

168. Finally, none of the commenters,

either in this proceeding or in the

Sections 260, 274, 275 NPRM, addressed

the issue of whether a showing of

material financial harm, as the term is

used in sections 260 and 275, should

also be required in order to obtain a

cease-and-desist order under section

274, although some argued that the

same standards and procedures should

(or should not) apply to cease and cease

and desist orders.

c. Discussion. 169. Notwithstanding

our proposals in the NPRM, we

conclude that, apart from the specific

requirements set forth in the Act and

our implementing rules and orders, it is

unnecessary at this time to prescribe the

legal and evidentiary showings required

to obtain cease orders in section 260(b),

275(c), and other section 208 complaint

proceedings. We similarly conclude that

we need not delineate the showing

needed for a cease and desist order

under section 274(e)(2). The

commenters differ sharply over these

issues. Many argue that the fourpronged test set forth in Virginia

Petroleum Jobbers should be relaxed to

promote the pro-competitive goals of the

Act, while an equal number contend
1014 Federal Register / Vol. 63, No. 4 / Wednesday, January 7, 1998 / Rules and Regulations

that the Virginia Petroleum Jobbers

standard, or its equivalent, is necessary

to protect the due process rights of

defendant carriers. After weighing the

various comments, we conclude that it

is more appropriate to consider requests

for interim or injunctive relief on a caseby-case basis. It is impossible to

anticipate all of the various factual

circumstances that could form the basis

of a complaint. Similarly, the level and

types of information necessary to

sustain or refute allegations of

misconduct by carriers is likely to vary

widely. We note that the rules we adopt

today will foster our ability to consider

requests for interim and injunctive relief

and to order such relief promptly in

appropriate cases. In particular, our prefiling settlement discussion requirement

should promote the ability of both

complainants and defendants to

ascertain the legal and factual bases of

their dispute and submit detailed, factbased complaints and answers

accordingly. Our new format and

content requirements are designed to

ensure that both complaints and

answers contain full legal and factual

support for or against the relief

requested in the complaint. Thus, as a

practical matter, we do not anticipate

that the absence of specific legal and

evidentiary guidelines in this Report

and Order will require complainants

and defendant carriers to incur any

additional or otherwise unreasonable

burdens in presenting and defending

against requests for interim injunctive

relief.

170. We also conclude that we need

not describe the specific showing

required of a complainant to establish

‘‘material financial harm’’ within the

meaning of sections 260 and 275 of the

Act. Generally, a complainant alleging

material financial harm will be expected

to demonstrate some nexus between its

financial condition or results and the

defendant carriers’ allegedly unlawful

behavior within the meaning of sections

260 or 275 during the period at issue in

the complaint. In addition, the plain

language of sections 260 and 275

indicate that Congress sought to enjoin

only those activities that would cause

material financial harm, rather than any

financial harm whatsoever. Beyond

these guidelines, we do not believe it

necessary or appropriate to delineate

specific factual situations that would

satisfy this burden since the evidentiary

proof of material financial harm will

likely vary widely in different cases. We

agree with PTG, SWBT, and USTA,

however, that allegations of material

financial harm should be supported by

documentation and affidavits sufficient

to enable the Commission to quantify

such harm with reasonable certainty.

J. Damages

1. Bifurcation by the Commission and

the Supplemental Complaint Process. a.

The NPRM. 171. In the NPRM we sought

comment on whether the Commission

legally could and/or should bifurcate

liability and damages issues on its own

motion in certain circumstances. In our

experience, the damages phase of the

formal complaint process is often

cumbersome and protracted largely due

to the scope and magnitude of discovery

typically requested to substantiate or

refute damages claims. The Commission

noted that damages discovery is a waste

of the time and resources of both the

Commission and the parties when no

violation or liability is found. The

Commission further noted that the

deadlines mandated by the new

statutory complaint provisions allow

very little time for complainants to

present evidentiary arguments sufficient

to establish both a violation of the Act

and a proper measure of damages

incurred as a consequence of such

violation within the applicable

deadlines. We stated in the NPRM that

our goal was to eliminate or minimize

the delay that is often inherent in

damages issues.

172. In the NPRM, we proposed to

encourage complainants to bifurcate

voluntarily their liability and damages

issues by reserving the right to

voluntarily file a supplemental

complaint for damages after liability has

been determined. This procedure was

available under the previous rule

§ 1.722(b). Where a complainant

voluntarily bifurcated a complaint

proceeding using the supplemental

complaint procedure, the Commission

would defer adjudication of all damages

issues until after a finding of liability.

We proposed that a complainant’s use of

this provision in a formal complaint

proceeding subject to a statutory

deadline would enable the Commission

to make a liability finding within such

deadline and still preserve the

complainant’s right to establish a

damage award under a less pressing

schedule. We noted that, while

bifurcation could result in a faster

complaint proceeding if no liability

were found, the overall proceeding

could be significantly longer if liability

was found and damages were decided in

a second, separate proceeding. We

emphasized, however, that

complainants would want to avail

themselves of the supplemental

complaint bifurcation approach in most

instances to avoid the possibility that

the deadlines would not provide them

with enough time to develop their

damages claims. We noted that

bifurcation through the voluntary

supplemental complaint process would

be particularly appropriate in those

cases in which a complainant sought

both prospective relief and damages

incurred as the consequences of a

defendant carrier’s violation of the Act

or a Commission rule or order. For

example, we stated that a decision by

the Commission requiring a defendant

carrier to terminate a particular practice

or to provide service to a complainant

under more reasonable terms and

conditions would constitute a final,

appealable order, as would a decision

denying a complainant such relief. This

would be the case even if issues of

damages remained to be resolved as a

result of the complainant’s decision to

file a supplemental complaint. We

sought comment on the relative benefits

to be gained by bifurcating liability and

damages issues in section 208

proceedings through complainants’

voluntary use of the supplemental

complaint process. We also asked

parties to identify bifurcation standards

that might help ensure that both liability

and damages issues are fully resolved

within the earliest practicable time

frame.

b. Comments. 173. Bell Atlantic and

NYNEX comment that the Commission

currently has the authority to bifurcate

a complaint without the complainant’s

acquiescence. BellSouth argues that not

all complaints are appropriate for

bifurcation.

174. The majority of commenters

support voluntary bifurcation of liability

and damages issues. CompTel, GST,

ICG, KMC, MCI, MFS, TCG, and TRA

support bifurcation only if it is

voluntary. CompTel argues that forced

bifurcation could impair a

complainant’s due process rights by

causing undue delay. ICG argues that

complainants need assurances that their

damages claims will be resolved

promptly following a finding of liability

with expedited discovery. TRA argues

that bifurcation should remain

voluntary in light of the delay in

recovering damages which is inherent in

a bifurcated proceeding.

175. CBT argues that bifurcation will

reduce the time pressure of resolving

claims within five months because each

phase of the case will be simpler to deal

with and, if liability is not established,

the damages claim will no longer be at

issue. CBT argues further that such

bifurcation will result in a less

compressed schedule and, therefore,

increase discovery opportunities. CBT

contends, however, that the damages

phase would still have to be resolved
Federal Register / Vol. 63, No. 4 / Wednesday, January 7, 1998 / Rules and Regulations 1015

within the statutory deadline. GTE

argues that bifurcation will prevent the

domination of discovery with damages

issues. GTE and NYNEX assert that once

liability is found, a defendant will have

more incentives to settle informally.

NYNEX argues that the proposed

bifurcation rules will make it easier for

the Commission to resolve substantive

liability issues within the statutory

deadlines while preserving the rights of

the parties to a full investigation into

injury and damages. NYNEX further

argues that bifurcation decreases

unnecessary costs, as a complainant will

not have to go through the expense of

quantifying its damages until it has

prevailed on liability. TRA asserts that

bifurcation benefits the parties because

it will speed the resolution of liability

issues and preclude unnecessary

expenditures of time and resources.

SWBT contends that bifurcation will be

beneficial to the parties because the

substantial time required to resolve

damages issues will not be wasted

where no liability is found. GST, KMC

and MFS argue that bifurcation benefits

the parties because the extensive

discovery required for damages issues

will not be unnecessarily undertaken if

no liability is established.

176. MCI argues that the statutory

deadline for a particular formal

complaint should be applied separately

to each phase because otherwise the

parties would not have sufficient time to

develop their cases fully. TRA asserts

that bifurcation effectively waives any

statutory deadline with regard to

damages issues. TCG argues that

bifurcation will enable the Commission

to make a liability finding within the

statutory deadlines and preserve a

complainant’s right to a damages award.

177. PTG, GST, and Ameritech seek

clarification that a complainant must

establish ‘‘injury’’ for a finding of

liability to proceed to the damages

phase in a bifurcated proceeding. PTG

argues that ‘‘injury’’ is a necessary

element of liability, however, it is not

interchangeable with ‘‘damages’’ which

are the quantification of losses that

result from an injury.

c. Discussion. 178. We find that the

Commission has discretion to bifurcate

liability and damages issues on its own

motion pursuant to section 208(a) of the

Act. Section 208(a) authorizes the

Commission ‘‘to investigate . . . matters

complained of in such manner and by

such means as it shall deem proper.’’

We note, however, that the Commission

only has such discretion to the extent

that such bifurcation will not violate the

statutory deadline applicable to the

complaint as filed. Therefore, all claims,

that are subject to a statutory complaint

resolution deadline and include a

properly supported request for damages,

require that the Commission issue a

final order within the deadline on both

the liability and damages claims.

179. However, we both permit and

encourage complainants to use the

supplemental complaint procedures to

separate liability and damages issues

voluntarily such that damages issues

will be resolved in separate formal

complaints. By using the term

‘‘bifurcate’’ in connection with the

supplemental complaint procedures, we

contemplate the filing of two separate

complaints: (1) the initial complaint for

liability and any applicable prospective

relief; and (2) the supplemental

complaint for damages. Resolution of

the liability and prospective relief issues

on the complaint that only seeks a

determination of those issues complies

with the applicable statutory deadline

because such a determination resolves

all issues properly brought before the

Commission. The damages issues will

not have been brought before the

Commission until, and unless, the

supplemental complaint for damages is

actually filed. We modify § 1.722 of the

rules to clarify this procedure.

180. Given the new complaint

provisions, requiring final Commission

orders resolving certain complaints

within specified time frames,

encouraging the parties to separate their

liability and damages claims into

separate complaints is the most

practical means to focus scarce

resources on the determination of

liability issues and, when necessary,

granting prospective relief quickly. In

addition, in cases where no liability has

been found, significant resources will

have been saved as a damages complaint

will not have been necessary. Promoting

voluntary separation of liability and

damages issues is consistent with the

pro-competitive goals and policies

underlying the 1996 Act’s complaint

resolution deadlines and will not

adversely affect the Commission’s

ability to resolve complaints raising

competitive and other marketplace

disputes on an expedited basis. On the

contrary, such separation will enable

the Commission and the parties to focus

initial resources on addressing

allegations of anti-competitive conduct

and any necessity for prospective

injunctive relief.

181. We disagree with CBT’s assertion

that a complainant should be required

to prosecute its liability and damages

claims in a single complaint. Nothing in

the Act prohibits a complainant from

choosing to bring its liability and

damages claims in separate complaints.

The supplemental complaint process is

voluntary and the decision to pursue

damages in a separate proceeding is

made solely by the complainant.

Further, the Commission has no basis

on which to make a finding regarding

damages if such claims have not yet

been presented by the complainant.

Thus, a decision on a liability complaint

that reserves the right to file a

supplemental complaint for damages is

a final decision on all matters the

complainant has presented to the

Commission in its complaint.

182. As a policy matter, we note that

a notice of intent to seek damages in a

supplemental complaint contained in a

complaint for liability has the effect of

tolling the statute of limitations for

damages claims. Moreover, a

complainant may file a supplemental

complaint for damages following a

finding of liability even if it gave no

notice of such intent at the time it filed

its original complaint. Thus, the

distinction between the treatment of a

supplemental complaint for damages

when the complainant gave notice of its

intent to file such supplemental

complaint in its complaint for liability

and when the complainant failed to give

notice of its intent to file such

supplemental complaint in its

complaint for liability is solely the

period of time for which damages may

be assessed against a defendant. Under

the circumstances, a rule that would

require complainants to prosecute

damages within the statutory deadline,

regardless of whether the complainant

chose to reserve its right to file a

supplemental complaint for damages,

would, in fact, shorten the statute of

limitations for bringing complaints for

damages in those complaints that are

subject to a statutory resolution

deadline. We do not find that it was the

intent of Congress to limit the rights of

complainants in this manner.

183. We find that complainants will

elect to pursue their liability and

damages claims in separate proceedings

because it will be to their advantage to

postpone expending time and money

developing proof of their damages

claims until after liability and issues of

prospective relief have been established.

Complainants will also benefit from

being provided an extended period

within which to support their damages

claims factually. Most importantly,

complainants will benefit from swifter

resolution of liability issues through the

filing of separate complaints for the

resolution of liability and damages

issues, and, therefore, swifter provision

of the prospective relief needed to halt

allegedly anti-competitive conduct. For

this reason, the provision in the rules

for complainants to file such separate
1016 Federal Register / Vol. 63, No. 4 / Wednesday, January 7, 1998 / Rules and Regulations

complaints is consistent with the Act’s

goal of timely resolution of competitive

issues to open markets for all potential

entrants and competitors, not just the

parties to the complaint.

184. We also recognize the

importance of swift resolution of

damages complaints once the liability of

a defendant carrier has been established.

We agree with commenters who argue

that many complainants will bifurcate

liability and damages claims only if they

expect that the Commission will

conclude the damages phase rapidly.

While we believe that parties will

benefit substantially from complaint

bifurcation in many instances, rules and

polices must be in place to ensure

resolution of damages complaints

promptly and effectively. A paramount

concern of a complainant seeking

damages is to obtain monetary relief for

harm suffered as a consequence of the

defendant carrier’s actions. Similarly,

defendant carriers have an interest in

quickly resolving any uncertainty about

the amount or extent of their damages

liability. Therefore, we will endeavor to

resolve supplemental damages

complaints in the same length of time

within which the liability phase was

resolved. As a general rule, damages

proceedings will be resolved within the

same amount of time required to rule on

the preceding liability complaint. For

example, a provider of alarm monitoring

services that elects to file a

supplemental complaint for damages,

based on a finding by the Commission

that the defendant carrier is liable for a

violation of section 275 of the Act, can

reasonably expect to have its damages

claims resolved within a similar 120-

day period. In addition, with respect to

supplemental complaints for damages

that are filed following a finding of

liability on a matter that was not subject

to a statutory deadline, we will

endeavor to resolve such complaints

within five months of the date of filing.

This approach furthers the intent

underlying the deadlines that Congress

established for different types of

complaints. Establishing rules and

policies that promote swift

determination of damages claims

provides a significant incentive for

common carriers to comply with the Act

and the Commission’s rules and orders.

It also gives all complainants reasonable

assurances of the length of time a

damages phase is likely to take. Such

information will help parties that plan

to seek damages weigh the benefits of

bifurcating the liability and damages

aspects of their claims prior to filing a

complaint with the Commission.

185. We also recognize that damages

complaints often raise issues of

extraordinary factual and/or legal

complexity, the resolution of which may

require substantial expenditures of time

and resources by the parties. In the

paragraphs below, we discuss rules that

are designed to facilitate the

computation of damages by

complainants and defendants and

promote the prompt resolution of

damages disputes. We believe that these

rules will help us attain our goal of

resolving all damages complaints within

five months from the date filed.

Nonetheless, we believe that cases of

extraordinary complexity could require

substantially more time. As a general

rule, we will endeavor to resolve such

complex complaints within twelve

months from the date filed.

186. We recognize the distinction

commenters make between ‘‘injury’’ and

‘‘damages,’’ and agree that a party that

has not shown that it suffered an injury

has not met a threshold requirement for

substantiating a claim for damages. We

disagree, however, with the assertion by

these commenters that a determination

of ‘‘injury’’ in a liability complaint is

necessary to proceed to a supplemental

complaint for damages when a

complainant chooses to use the

supplemental complaint procedures.

Contrary to the commenters’ claims,

proof of ‘‘injury’’ is not necessary to

establish a violation of the Act within

the meaning of section 208. Section 208

of the Act only requires proof that the

defendant carrier has violated the Act or

a Commission rule or order for a

complainant to prevail. Additionally,

determining whether an individual

complainant has been injured and is

entitled to monetary damages does not

further the pro-competitive goals and

policies underlying the 1996 Act in the

same way that addressing allegations of

anti-competitive conduct and the need

for injunctive relief does. That is, the

question of injury goes to the resolution

of an individual dispute rather than the

resolution of a disputed issue that

affects competition in an industry. For

that reason, we conclude that, where the

fact of injury does not need to be

established to prevail on the issue of

liability in a complaint proceeding, a

prior determination of injury is not a

prerequisite to the filing of a

supplemental complaint for damages. A

complainant must always, however,

prove injury and quantify its monetary

damages with reasonable certainty to

prevail on its claim for damages.

2. Detailed Computation of Damages.

a. The NPRM. 187. In the NPRM we

proposed to require that any complaint

or supplemental complaint seeking an

award of damages contain a detailed

computation for such claim. That is,

every complaint for damages would

include a computation for every

category of damages claimed, as well as

identification of all documents or

material on which such computation

was based. For example, in cases in

which a complainant is challenging the

reasonableness of charges or rate levels

applied by a carrier to particular

services taken by the complainant, the

complainant’s computations would

have to identify clearly the precise

nature of the service taken and

applicable charges broken down by such

factors as minutes of use, traffic mileage

and volume, as well as any applicable

discounts or other adjustment factors.

b. Comments. 188. ACTA, BellSouth,

CBT, GST, KMC, MFS, NYNEX, and

U S West support requiring complaints

seeking an award of damages to contain

a detailed computation of damages

claimed. SWBT asserts that such a

requirement should reduce the filing of

frivolous claims for speculative damages

that are not subject to proof. GST, KMC

and MFS argue that such a requirement

should encourage settlement by

clarifying a party’s claim. The cable

entities and MCI oppose such a

requirement, expressing concern that

complainants may not have access to

sufficient information prior to discovery

to prepare and submit detailed damages

computations or computation formulas.

189. ICG argues that the proposed

detailed computation of damages should

only be required to be made in good

faith and that complainants should be

provided with the opportunity to amend

the complaint to reflect an updated

computation of damages following

discovery. MCI argues that requiring the

complaint to contain a detailed

computation of damages would violate

a complainant’s due process rights and

suggests, as an alternative, requiring a

complainant to outline its damages

methodology and identify what damages

information it lacks. While they do not

oppose the proposed requirement that a

complaint contain a detailed

computation of damages, U S West

argues that the Commission must take

into account the reasonable availability

of necessary information, and TRA

asserts that the Commission must be

careful not to impose an overly rigid or

binding requirement with regard to a

detailed or definitive damages

calculation prior to the receipt of an

answer and completion of discovery.

c. Discussion. 190. After considering

the concerns raised by the commenters,

we modify the proposed rule. We

require that a complainant seeking

damages must file in its complaint or

supplemental complaint either a

detailed computation of damages or a
Federal Register / Vol. 63, No. 4 / Wednesday, January 7, 1998 / Rules and Regulations 1017

detailed explanation of why such a

computation is not possible at the time

of filing. Commenters raise valid

concerns about the ability of

complainants to substantiate damages

claims at the beginning of a formal

complaint proceeding. In light of these

considerations, we require all

complaints or supplemental complaints

seeking an award of damages to contain

either:

(a) A detailed computation of

damages, including supporting

documentation and materials; or

(b) An explanation of:

(i) What information not in the

possession of the complaining party is

necessary to develop a detailed

computation of damages;

(ii) Why such information is

unavailable to the complaining party;

(iii) The factual basis the complainant

has for believing that such evidence of

damages exists; and

(iv) A detailed outline of the

methodology that would be used to

create a computation of damages with

such evidence.

191. This rule strikes the appropriate

balance between the need for

complainants to be diligent in

establishing their claims and our

recognition that, in certain instances, a

complainant may not possess sufficient

facts at the initial stages of a complaint

proceeding to prepare a detailed

computation of damages alleged. This

rule also is consistent with the

Commission’s adoption of a policy of

encouraging complainants to have

damages claims resolved separately

from liability issues using the

supplemental complaint process,

because it provides the complainant

with the benefit of additional time to

develop and support factually an

accurate computation of damages

following a finding of liability. It would

have been unduly burdensome to

require a complainant who has been

unable to obtain access to substantiating

information, after it has made good faith

efforts to obtain such information, to

support factually its damages claim

without providing a means to

substantiate such claims. Further, such

a rule would have reduced the

incentives on defendants to negotiate

damages issues in good faith.

3. Ending Adjudication With a

Determination of the Sufficiency of a

Damages Calculation Method. a. The

NPRM 192. In the NPRM we proposed

that the Commission’s adjudication of

damages should end with a

determination of the sufficiency of the

computation method submitted by the

complainant, instead of making a

finding as to the exact amount of

damages incurred. We stated that the

benefit of such a procedure would be

that the Commission would be spared

the detailed and time-consuming

investigation of the facts necessary to

establish an exact amount of damages.

As an example of how such a procedure

would be implemented, we noted that a

similar procedure is used in complaints

dealing with pole attachments. We

sought comment on this proposal.

b. Comments. 193. CBT, CompTel,

GST, and SWBT oppose a rule ending

the Commission’s adjudication of

damages with a determination of the

sufficiency of the computation method.

CBT and CompTel argue that parties

will be unable to resolve issues

remaining in dispute, such as the

numbers to be plugged into an approved

method. CBT argues that such disputes

will require further Commission

involvement to resolve. GST argues that

parties are entitled to a final resolution

of all substantive issues, a category it

contends includes the actual amount of

damages incurred. SWBT argues that

because such a procedure would not

require a complainant to meet its

burden of proof, it would be a denial of

a defendant’s due process rights. AT&T

supports this proposal if the

Commission remains available to

resolve further disputes among the

parties and provide a final resolution if

the parties cannot agree to one.

c. Discussion. 194. In cases where

liability and damages claims have been

severed using the supplemental

complaint process, the Commission may

end adjudication of damages with a

determination of the sufficiency of the

damages computation method

submitted by the complainant. After

considering the concerns raised by the

commenters, we modify the proposed

rule to reflect that if the Commission

finds the damages computation

submitted by the complainant

unsatisfactory, the Commission may, in

its discretion, modify such computation

method or require the complainant to

resubmit such computation. In addition,

the rule specifically prohibits the

computation method from incorporating

an offset for a claim of a defendant

against a complainant. To ensure the

parties are diligent in their negotiations

to apply the approved calculation

method, we shall require that, within

thirty days of the date the damages

computation method is approved and

released, the parties must file with the

Commission a joint statement which

will do one of the following: (1) detail

the parties’ agreement as to the amount

of damages; (2) state that the parties are

continuing to negotiate in good faith

and request that the parties be given an

extension of time to continue such

negotiations, or (3) detail the bases for

the continuing dispute and the reasons

why no agreement can be reached. In

this way, the Commission will monitor

the parties’ compliance with its

directive to negotiate a resolution of the

dispute in good faith using the

mandated computation method.

195. This rule permits the

Commission to avoid the detailed and

time-consuming investigation of the

facts necessary to establish an exact

amount of damages where such

investigation may reasonably be

delegated to the parties. At the same

time, however, it provides a means for

parties to return to the Commission for

resolution of ongoing disputes if parties

are unable to agree to a final amount of

damages. This rule encourages good

faith negotiation among the parties by

requiring parties to provide detailed

explanations if they fail to resolve their

dispute. We emphasize that the

Commission will always retain the right

to determine the actual amount of

damages in those cases where the

establishment of damages does not lend

itself to such a means of resolution. We

also conclude that requiring parties to

reach an agreement within a limited

time addresses the concerns raised by

some commenters that the parties would

have no recourse if they are unable to

apply a damages computation method

successfully.

4. Settlement Period. a. The NPRM.

196. In the NPRM we proposed, in

conjunction with the proposals to

resolve liability and damages claims

separately using the supplemental

complaint process, to set aside a limited

period, following a finding of liability

and prior to the damages phase, during

which the parties could engage in

settlement negotiations or submit their

damages claims to voluntary ADR

mechanisms in lieu of further

proceedings before the Commission.

b. Comments. 197. GST, SWBT, TRA

and U S West support setting aside a

limited time period, following a finding

of liability, in which to encourage

settlement and/or participation in ADR.

SWBT asserts that a finding of liability

increases the defendant’s incentive to

settle. U S West argues that the

Commission does not go far enough and

that ADR procedures should be used

wherever possible to resolve entire

complaints.

c. Discussion. 198. In cases where

liability and damages claims have been

severed using the supplemental

complaint process, the Commission may

suspend proceedings for a period of

fourteen days following the filing of a

supplemental complaint for damages, to
1018 Federal Register / Vol. 63, No. 4 / Wednesday, January 7, 1998 / Rules and Regulations

allow parties to attempt to negotiate a

settlement or use ADR procedures. The

staff has the discretion to delay this

period until later in the damages phase,

when warranted by the facts of an

individual case.

199. Encouraging parties to settle their

disputes is in the interests of the

Commission and the parties.

Commenting parties recognize the

benefits of settlements reached by the

parties and support the establishment of

this settlement period to further

settlement negotiations. The timing of

this settlement period is especially

useful because it follows the

determination of liability. A finding of

liability will increase the parties’

incentives to settle, as a major issue

formerly in dispute will have been

resolved. We recognize, however, that

information disclosures may be

necessary in some cases for parties to

assess adequately the amount of

damages incurred. In such cases, a

settlement period immediately

following the filing of the supplemental

complaint for damages may be too early

in the proceeding to be useful.

Providing the staff with the discretion to

delay the settlement period until after

information disclosures have been made

maximizes the Commission’s ability to

encourage settlement on a case-by-case

basis.

5. Referral of Damages Issues. a. The

NPRM. 200. In conjunction with the

proposals to resolve liability and

damages claims separately using the

supplemental complaint process, we

sought comment on the benefits of

referring damages issues to ALJs for

either decision following a finding of

liability or, by agreement of the parties,

mediation. We noted that such referral

would be at the discretion of the

Commission staff pursuant to delegated

authority, depending on the particular

facts and circumstances involved. We

also sought alternative proposals that

would serve to minimize or reduce the

need for costly and protracted

proceedings on the issue of damages.

b. Comments. 201. Commenters

generally support the referral of

damages issues to ALJs. ICG compared

this procedure to the federal courts’ use

of special masters. BellSouth suggests

that parties should have the option of

mediation or referral to a special master.

KMC asserts that parties need to have

the right to appeal any decision on

damages made by an ALJ. GTE argues

that the ALJ should have the authority

to request production of evidence. GTE

seeks clarification that an ALJ’s

authority would be restricted to the

resolution of damages issues.

c. Discussion. 202. We adopt a rule

authorizing the Chiefs of the Common

Carrier Bureau and Wireless

Telecommunications Bureau to refer

damages disputes to ALJs for either

decision following a finding of liability

or, by agreement of the parties,

mediation. This rule would work in

conjunction with cases in which

liability and damages claims have been

severed using the supplemental

complaint process. The commenters

generally support the use of ALJs to

resolve damages issues. We conclude,

despite GTE’s concerns regarding the

authority of ALJs in damages hearings,

that special rules or procedures are not

needed to guide the ALJs in their

deliberations given the narrow focus of

damages proceedings. The hearing rules

provide for the designation of specific

issues in the hearing designation order.

Once liability has been determined, the

question of damages is largely a factual

one. ALJs are expert triers of fact well

suited to conduct fact-finding

proceedings. Regarding appeals of ALJ

decisions, we note that the ALJ hearing

rules provide the means for parties to

seek review of an ALJ decision. If the

parties agree to mediation, however, the

right to seek review of the ALJ’s

mediation resolution would be

contained within the terms pursuant to

which the parties agreed to such

mediation.

6. Deposit of Funds into an Escrow

Account. a. The NPRM. 203. In the

NPRM we proposed that the

Commission be given discretion to

require a defendant to place a deposit in

an interest-bearing escrow account

following a finding of liability in cases

in which liability and damages claims

have been severed using the

supplemental complaint process. The

purpose of such a deposit would be to

cover all or part of the damages for

which the defendant carrier may be

found liable in order to provide a

complainant with some assurance that a

judgment can be readily collected. We

proposed that, in exercising this

discretion, the Commission would

apply standards similar to those used to

determine whether a preliminary

injunction is appropriate. We

emphasized that the Commission would

not administer any such account. We

sought comment on this proposal as

well as alternative proposals that would

serve to facilitate and expedite the

resolution of damages claims.

b. Comments. 204. Commenters are

split over whether or not the

Commission could or should require the

deposit of funds into an escrow account

following a finding of liability. AT&T,

TRA, GST, KMC and MFS support such

a procedure. AT&T, GST, KMC and MFS

further support allowing the posting of

a bond as an alternative to depositing

funds into an escrow account as a

means to ensure payment. GST, KMC,

and MFS argue that preliminary

injunction standards do not need to be

met to require such a bond because

liability will already have been

determined. GST, KMC, and MFS argue

that the Commission should require a

showing of irreparable harm and the

likelihood that the defendant will

default on the damages award before

requiring the posting of a bond or the

deposit of funds into an escrow account.

205. CBT, SWBT, GTE, and PTG

oppose the proposal, arguing that the

Commission lacks authority to impose

such a requirement. CBT, SWBT, and

PTG argue that a Commission order for

payment of damages pursuant to section

209 of the Act is not an enforceable

money judgment. CBT and SWBT argue

that prospective money damages are

insufficient to justify a preliminary

injunction, and that the proper

compensation for any delay in a

damages award is the payment of

interest. PTG asserts that such a rule

creates an unnecessary administrative

burden in light of the fact that there is

no evidence of a problem in collecting

damages from carriers.

c. Discussion. 206. In cases in which

liability and damages claims have been

severed using the supplemental

complaint process, following a finding

of liability, the Commission shall have

discretion to require a defendant either

to post a bond for, or place in an escrow

account, an amount the Commission

determines is likely to be awarded, if

such relief is justified following

consideration of the following factors:

(a) The likelihood of irreparable

injury in the absence of such a deposit;

(b) The extent to which damages can

be accurately estimated;

(c) The balance of hardships between

complainant and defendant; and

(d) Whether public interest

considerations favor the posting of a

bond or establishment of an escrow

account.

207. Requiring the posting of a bond

or the deposit of funds into an escrow

account both protects against a

defendant’s future inability to satisfy an

enforceable judgment and removes the

benefit a defendant receives from

delaying payment in a case. Contrary to

what several commenters suggest,

neither the posting of a bond nor the

deposit of funds into an escrow account

is the enforcement of a money

judgment. The rule does not provide

that a complainant may execute its

judgment on the bond or account
Federal Register / Vol. 63, No. 4 / Wednesday, January 7, 1998 / Rules and Regulations 1019

following a Commission order of

damages. The rule merely requires the

bond or account to be set up as a

protective measure. Further, this

protective measure may only be taken

following a finding of liability and a

Commission assessment of likely

damages.

208. Precedent for the Commission

requiring a defendant to deposit funds

into an escrow account following a

determination of liability is found in

Western Union Telegraph Co. v. TRT

Telecommunications Corp., and FTC

Communications, Inc.

7. Additional Suggestions From

Commenters. a. The NPRM. 209. In the

NPRM we sought alternative proposals

that would serve to facilitate and

expedite the resolution of damages

claims and/or minimize or reduce the

need for costly and protracted

proceedings on the issue of damages.

b. Comments. 210. ACTA suggests

that the Commission codify the

procedure for a complainant to litigate

damages in federal court following a

finding of liability by the Commission.

211. GST suggests providing for

targeted discovery during a damages

phase, arguing such discovery should be

limited to initial disclosures of

witnesses, exchange of documents and

one deposition for each party.

c. Discussion. 212. We decline to

adopt ACTA’s proposal to codify a

procedure for litigating damages claims

in federal court following a finding of

liability by the Commission. The Act

does not provide the Commission with

the authority to establish federal court

procedures. Although federal courts

occasionally refer cases to the

Commission for resolution of liability

issues, while retaining authority over

damages issues pending the

Commission’s liability determination,

such referrals are initiated by the courts,

not the Commission.

213. We decline to adopt GST’s

proposal to establish special discovery

rules for a supplemental complaint

proceeding. A supplemental complaint

is a formal complaint that is limited to

the issue of damages because the issue

of liability has already been determined

in a separate, prior proceeding.

Supplemental complaints are, therefore,

subject to the formal complaint

discovery rules. We conclude that the

formal complaint discovery rules are

adequate to address damage claims and

the creation of a separate set of

discovery rules is unwarranted at this

time.

K. Cross-Complaints and Counterclaims

214. The Act imposes new deadlines

for actions on certain complaints

ranging in length from ninety days to

five months from the date of filing. The

NPRM recognized that the filing of

cross-complaints or counterclaims

during a complaint proceeding could

inhibit the Commission’s ability to fully

resolve disputes within the mandated

time frames.

a. The NPRM. 215. We proposed to

allow compulsory counterclaims only if

filed concurrently with the answer, such

that the failure to file with the answer

would bar the defendant from filing

such compulsory counterclaim. We also

proposed that a defendant electing to

file permissive counterclaims and crossclaims would be required to file such

pleadings concurrently with its answer,

leaving the defendant with the option of

filing any barred permissive

counterclaims or cross-claims in a

separate proceeding, provided that the

statute of limitations has not run. We

also proposed to revise our rules to

clarify the applicability of filing fees to

complaints, cross-complaints, and

counterclaims.

b. Comment. 216. CompTel and TRA

support the Commission’s proposals.

Most commenters, however, oppose

establishing a category of compulsory

counterclaims that will be barred if not

filed concurrently with an answer.

AT&T, BellSouth, PTG, and NYNEX

argue that the time to answer (twenty

days) is insufficient to allow a

defendant to answer the complaint,

ascertain all possible counterclaims and

prepare such counterclaims for filing

and service in accordance with the

proposed format and content

requirements. GTE further argues that

defendants may be reasonably unaware

of their counterclaims prior to the date

an answer is due. CBT, GST, KMC, and

MFS suggest that compulsory

counterclaims filed with the answer

should not be subjected to the same

high levels of evidentiary support as

required of the complaint. AT&T and

NYNEX support a rule requiring

counterclaims and cross-complaints not

filed concurrently with the answer to be

brought in separate proceedings. CBT

and U S West argue that the

Commission’s jurisdiction over

counterclaims is limited to instances

where both parties to a proceeding are

carriers and the counterclaim involves

an allegation of a violation by the

complainant that could itself be the

subject of a separate complaint before

the Commission.

c. Discussion. 217. We require all

cross-complaints and counterclaims to

be filed as separate, independent

actions. While the NPRM originally

proposed to distinguish between the

treatment of compulsory and permissive

cross-complaints and counterclaims, we

have decided that banning all crosscomplaints and counterclaims is

necessary in light of the statutory

deadlines in the 1996 Act. Crosscomplaints and counterclaims would

not be filed until twenty days into an

ongoing proceeding, thereby shortening

the time within which the Commission

may adequately consider and resolve

such claims. Establishing a category of

compulsory counterclaims, furthermore,

would have created an inconsistency

between the treatment of claims by

complainants and counterclaims by

defendants. Under such a rule,

complainants would be permitted to file

separate formal complaints based on

claims arising out of the same

transaction or occurrence as a pending

formal complaint, but defendants would

be barred from filing counterclaims once

the answer had been filed.

218. The rule we adopt also satisfies

the concerns of some commenters that

the Commission only has jurisdiction to

consider those claims that the defendant

could have filed against the

complainant independent of the

ongoing litigation. That is, the

Commission does not have the authority

to assert pendent jurisdiction over

disputes for which no independent

jurisdictional ground exists. In light of

both the time constraints within which

the Commission must work and the

nature of allowable cross-complaints

and counterclaims, we conclude that all

such claims are better treated as

individual complaints. To preclude the

possibility of inconsistent rulings on

identical facts, a complainant filing a

formal complaint that shares any factual

basis with another formal complaint to

which the complainant is a party,

whether ongoing or finally resolved,

must include this fact in such formal

complaint and its accompanying formal

complaint intake form. We note that,

under the broad powers of section 208,

the Commission always has the

authority to consolidate separate

complaint cases. Where appropriate, the

staff will have discretion to consolidate

cases so that all claims arising out of the

same transaction or occurrence may be

adjudicated in a single proceeding.

219. We decline to adopt our proposal

to revise our rules to clarify the

applicability of filing fees to crosscomplaints and counterclaims. Such a

rule would be moot in light of the rule

adopted prohibiting all cross-complaints

and counterclaims.

L. Replies

a. The NPRM. 220. We proposed to

prohibit replies to answers unless

specifically authorized by the
1020 Federal Register / Vol. 63, No. 4 / Wednesday, January 7, 1998 / Rules and Regulations

Commission. We noted that our rules

made filing a reply voluntary, and that

failure to reply was not deemed to be an

admission of any allegation contained in

the answer, except for facts contained in

affirmative defenses. We proposed to

authorize replies only upon a

complainant’s motion, filed within five

days of service of the answer, showing

good cause to reply to any affirmative

defenses supported by factual

allegations that were different from any

denials also contained in the answer.

We also proposed to provide that a

complainant’s failure to file a reply to

an answer would be deemed a denial of

any affirmative defenses.

221. We also proposed to prohibit

replies to oppositions to motions. We

stated our belief that such replies

seldom aid the Commission in resolving

factual or legal issues and were often

used to repeat information already

contained within the original motion

itself. We sought comment on this and

any other alternative proposals.

b. Comments. 222. Many commenters,

including AT&T, BellSouth, GST, KMC,

MFS, GTE, NYNEX, and TRA support

our proposals to prohibit, in most

instances, replies to defendants’

answers. They agree that replies are

unnecessary and redundant as long as

complainants are deemed to have

denied all affirmative defenses and are

permitted to respond for good cause,

such as a showing that a defendant has

misrepresented pertinent facts. ATSI

and the cable entities, however, argue

that a reply is necessary to give a

complainant the opportunity to respond

to matters that might be raised for the

first time in the answer and to withdraw

claims that may have been satisfactorily

addressed in the answer. NYNEX argues

that a complainant should be permitted

to file a reply to an answer if it is

replying to an affirmative defense and it

is relying on factual allegations that are

different from any denials contained in

the answer. ICG argues that prohibiting

replies would generate more work for

the Commission, in the form of

responding to motions for leave to file

replies.

223. Regarding our proposal to

prohibit replies to oppositions to

motions, PTG points out that § 1.727(f)

of the Commission’s existing rules

already prohibits replies to oppositions

to motions. CompTel, GST, KMC, MFS,

and GTE assert that replies to

oppositions to motions may be

warranted where the opposition distorts

facts or where matters are raised for the

first time in the opposition.

c. Discussion. 224. We modify our

proposed rule and permit complainants

to file replies that respond only to

affirmative defenses. We shall deem any

failure to reply to an asserted affirmative

defense as an admission of such

affirmative defense and of any facts

supporting such affirmative defense that

are not specifically contradicted in the

complaint. We note that the NPRM

originally proposed to require parties to

move for leave to file replies to

affirmative defenses and that failure to

reply to an affirmative defense would be

deemed a denial of such defense. The

rule we adopt departs from our proposal

in the NPRM because we are persuaded

by the commenters that requiring

complainants to seek leave to file replies

to affirmative defenses is likely to

generate unnecessary work for the staff.

Instead, we have chosen to limit replies

to those that respond to new allegations

raised in an answer in the form of

affirmative defenses. Complainants will

be required to support their replies to

affirmative defenses in the same manner

that they are required to support their

claims in the complaint. This

requirement will aid the staff by the

presentation of specific evidence

regarding each affirmative defense.

General replies to answers, however, are

often redundant and unnecessary

because complainants simply repeat

claims that were filed with the original

complaint. Such general replies are

prohibited. We do not modify the

existing rule that prohibits replies to

oppositions to motions.

M. Motions

225. The NPRM proposed to modify

the rules pertaining to motions in order

to enhance the efficiency of the formal

complaint process, expedite the filing

and consideration of motions, and

eliminate unnecessary or duplicative

pleadings.

1. The Filing of Motions. a. The

NPRM. 226. In the NPRM, we proposed

to require a party filing a motion to

compel discovery to certify that it had

made a good faith attempt to resolve the

matter before filing the motion. We also

proposed to eliminate motions to make

the complaint ‘‘definite and certain,’’

stating that, under the proposed rules,

complaints would have to be very

definite and certain to avoid being

dismissed at the outset.

b. Comments. 227. All parties that

commented on this issue agree that the

Commission should require certification

of good faith attempts to resolve

discovery disputes informally as a

condition to the filing of any motion to

compel. Commenters also support the

proposal to eliminate motions to make

a complaint more definite and certain.

BellSouth supports eliminating motions

to make complaints ‘‘definite and

certain’’ as long as the Commission will

consider motions to dismiss for failure

to state a claim or failure to comply with

procedural requirements.

c. Discussion. 228. We require a party

that files a motion to compel answers to

discovery requests to certify that it has

made a good faith attempt to resolve the

matter before filing the motion. We

conclude, and commenting parties

agree, that adoption of this rule will

limit Commission involvement in

conflicts that may be easily resolved by

the parties themselves.

229. Motions to make the complaint

‘‘definite and certain’’ are prohibited, as

such motions should be superfluous

under the new format and content

requirements for initial pleadings.

BellSouth’s suggestion that the

Commission consider motions to

dismiss is inapposite to our decision to

eliminate motions to make a complaint

‘‘definite and certain.’’ The rationale for

eliminating motions to make complaints

more ‘‘definite and certain’’ is that our

newly-adopted stringent pleading

requirements will ensure the filing of

complaints that are ‘‘definite and

certain.’’ We do not intend to prohibit

the filing of motions to dismiss a

complaint for failure to state a claim or

failure to comply with procedural

requirements.

2. Oppositions To Motions. a. The

NPRM. 230. In the NPRM, we stated our

intent to expedite further formal

complaint proceedings by modifying the

rules regarding oppositions to motions.

We proposed to make failure to file an

opposition to a motion possible grounds

for granting the motion, although the

filing of oppositions to motions would

remain permissive. Additionally, we

proposed to shorten the deadline for

filing oppositions to motions from ten to

five business days.

b. Comments. 231. GST, KMC, MFS,

NYNEX, and SWBT support the

proposal to make failure to file an

opposition to a motion possible grounds

for granting the motion, arguing that it

is reasonable to require a party to

articulate its reasons for opposing a

motion. ACTA, however, opposes such

a proposal, arguing that if the failure to

file an opposition can be grounds for

granting a motion, the filing of an

opposition will not be permissive in any

real sense. AT&T warned that failure to

file an opposition to a motion should

not be an automatic basis for granting

the motion.

232. Many commenters, including

AT&T, BellSouth, GTE, PTG, SWBT,

and TRA, support the shortening of the

period to file an opposition to a motion

to five business days. GTE suggests that

the rules provide a procedure to seek an
Federal Register / Vol. 63, No. 4 / Wednesday, January 7, 1998 / Rules and Regulations 1021

extension of time to oppose a motion

when circumstances warrant it. PTG

suggests that motions be served by

facsimile to give parties more time to

respond. CBT opposes the shortening of

time, arguing that more time is needed

to respond to complex motions, and

suggests instead that the time for filing

be reduced to ten calendar days rather

than five business days.

c. Discussion. 233. A party’s failure to

file an opposition to a motion is

possible grounds for granting such

motion. We note that the commenters

misconstrue the meaning of the

statement that it is ‘‘permissive’’ to file

an opposition to a motion. This

statement merely means that the

Commission does not require a party to

take affirmative steps to oppose a

motion against it. This rule does not,

however, alleviate any party’s burden to

represent fully its own interests before

the Commission. Any party that chooses

not to file an opposition to a motion

runs the risk that the motion will be

granted without consideration of that

party’s views. Because the Commission

is prohibited from acting in an arbitrary

and capricious manner, staff will not

grant unopposed motions that are

frivolous, inconsistent with the

Commission’s rules, or that may create

unnecessary delay.

234. The deadline to file an

opposition to a motion is five business

days, with the time running from the

date service is effective. Reduction of

the number of days a party has to

respond to a motion will speed up the

motions process. We disagree with

CBT’s suggestion to use ten calendar

days rather than five business days to

determine filing due dates because we

find that a reduction to ten calendar

days will not save sufficient time in

light of the statutory deadlines in the

Act. Five business days will provide the

opposing party with seven calendar

days to prepare, file and serve an

opposition, with exceptions for when a

holiday falls in the five business day

period. Ten business days would

provide the opposing party with

fourteen calendar days to prepare, file

and serve an opposition, with

exceptions for when a holiday falls in

the ten business day period. In contrast

to this, CBT’s proposed ten calendar

days would provide the opposing party

with ten to thirteen calendar days,

depending on the day of the week the

motion is served and filed and the

existence of holidays. In response to

PTG’s suggestion that motions be served

by facsimile, we note that this

proceeding adopts rules requiring

service of motions by hand-delivery,

overnight delivery, or facsimile

transmission followed by mail delivery.

3. Format, Content, and

Specifications of Motions and Orders. a.

The NPRM. 235. To ease the burden on

Commission staff in drafting decisional

documents within short time frames, the

NPRM proposed to require all pleadings

seeking Commission orders to contain

proposed findings of fact and

conclusions of law with supporting

legal analysis. The NPRM also proposed

that all parties submit with their

procedural or discovery motions and

oppositions to such motions, proposed

orders, in both hard copy and disk, that

incorporate the legal and factual bases

for granting the requested relief. The

NPRM proposed that the computer disk

submissions be formatted in

WordPerfect 5.1, the wordprocessing

system currently used by the

Commission. Furthermore, we proposed

to require parties to conform the format

of any proposed order to that of a

reported FCC order. Such proposals

would reduce the burden on

Commission staff in drafting orders and

letter rulings by enabling the staff to

either incorporate relevant portions of

the parties’ submissions into the

required orders or use the parties’

submissions in their entirety.

b. Comments. 236. ACTA and

BellSouth agree with the proposal to

require all pleadings seeking

Commission orders to contain proposed

findings of fact and conclusions of law

with supporting legal analysis. ACTA

states that the added cost to the parties

of such submissions would be offset by

the value of such filing in expediting the

resolution of cases. On the other hand,

MCI, PTG, and CBT argue that such

inclusions would only be appropriate

for certain pleadings, such as briefs or

motions for summary judgment, because

parties may be unprepared to make such

conclusions prior to conducting

discovery and reviewing opposing

pleadings.

237. Commenters generally did not

oppose the proposals to require parties

making or opposing procedural or

discovery motions to submit proposed

orders, in both hard copy and disk, that

conform to the format of reported FCC

orders. CBT additionally suggests that

parties be allowed to submit proposed

orders in formats other than

WordPerfect 5.1. MCI opposes requiring

parties to submit proposed orders with

their motions and oppositions proposal,

arguing that such a rule will be largely

inapplicable because most motions will

be discovery motions, which are

resolved by informal letter orders that

are not in the format of Commission

orders. NAD argues that this proposal

will be too burdensome for consumers

with disabilities.

c. Discussion. 238. After

consideration of the comments received,

we modify the rule proposed and will

require only those pleadings seeking

dispositive orders to contain proposed

findings of fact and conclusions of law

with supporting legal analysis. We

define a dispositive order as an order

that finally resolves one or more claims

in a complaint. We conclude that this

requirement is justified in these limited

circumstances because it will help to

ensure that issues and arguments are

better framed and presented to the

Commission. We agree with MCI, PTG,

and CBT that such a requirement would

not be appropriate for interlocutory

motions, such as those seeking

discovery or extensions of time.

Requiring complete support for

dispositive motions will decrease

substantially the number of unnecessary

motions filed with the Commission

because parties will be reluctant to file

motions for which they have no factual

or legal basis. This requirement will also

give Commission staff the option of

incorporating the proposed findings of

fact and conclusions of law with

supporting legal analysis into orders,

thereby easing the burden of drafting

orders.

239. To further facilitate the drafting

of orders and letter rulings, we adopt

our proposals to require parties to

submit with their procedural or

discovery motions and oppositions to

such motions, proposed orders, in both

hard copy and disk, that incorporate the

legal and factual bases for granting the

requested relief. Although some

commenters argue that such a

requirement may often be inapplicable

to discovery and too burdensome for

persons with disabilities, we conclude

that the benefits of such a rule justify it.

The Commission anticipates addressing

a large number of complaints on an

expedited basis. In light of the

Commission’s limited resources, it will

be of great assistance to Commission

staff to have the relief sought or opposed

by motion, and the basis therefore, set

out clearly and concisely in a proposed

order format. Having such a proposed

order, in hard copy and on disk, will

assist in the timely release of orders or

letter rulings on motions. Requiring a

party to articulate the relief sought in an

order may also produce more clearly

focused arguments. We also conclude

that this requirement does not overly

burden parties, who merely have to

transfer a portion of the text of their

motions or oppositions into the format

of an order. Finally, if submission of

such a draft order does place a large
1022 Federal Register / Vol. 63, No. 4 / Wednesday, January 7, 1998 / Rules and Regulations

burden on a particular party, the staff

retains the discretion to waive this

requirement on a case-by-case basis.

240. We modify our proposed rule

concerning the submission of proposed

orders on disk. We require that

computer disk submissions be formatted

in the Commission’s designated

‘‘wordprocessing program,’’ rather than

specifically ‘‘WordPerfect 5.1,’’ because

the Commission may decide to utilize

different software in the future. We also

decline to adopt CBT’s proposal to

permit parties to submit documents in

alternative wordprocessing formats.

Because of conversion difficulties,

parties will not be permitted to submit

documents in any wordprocessing

format not used by the Commission. The

staff has discretion to grant waivers of

this requirement to parties upon a

showing that such wordprocessing

program is unavailable to them.

4. Amendments To Complaints. a.

The NPRM. 241. We stated in the NPRM

that compliance with deadlines in the

Act requires that a complaint be fully

developed prior to filing. In furtherance

of this goal, we proposed to prohibit the

amendment of complaints except for

changes necessary under 47 CFR

1.720(g), which requires that

information and supporting authority be

current and updated as necessary in a

timely manner. This would preclude a

complainant from introducing new

issues late in the development of the

case.

b. Comments. 242. BellSouth, PTG,

and SWBT support prohibiting

amendments to complaints because

such a bar will encourage compliance

with the proposed pre-filing

requirements and result in a fully

developed complaint that conforms to

format and content requirements.

Several commenters, however, oppose

the prohibition. ACTA, GTE, ICG, MCI,

and TRA suggest allowing complaints to

be amended for good cause, e.g. if the

complainant could not have reasonably

ascertained certain facts at the time of

filing of the complaint. MCI expresses

concern that such a prohibition might

reward monopoly carriers who withhold

information. CBT and PTG suggest that

any amended complaint be treated as a

new complaint to restart the statutory

resolution deadline.

c. Discussion. 243. The Act requires

expedited resolution of certain

complaints. An amendment to a

complaint subject to a statutory

deadline on a showing of good cause

would require the resolution of that

claim in a shorter period than provided

for in the statutory deadline. We believe

that the cost of expediting complaint

resolutions more than Congress

anticipated would outweigh any benefit

to be had from allowing such

amendments. Further, we are not

persuaded by the arguments of ACTA,

GTE, ICG, TRA, and MCI that

prohibiting amendments to complaints

will unduly prejudice complainants to

the benefit of defendants. We also

decline to adopt the suggestion of CBT

and PTG that, instead of prohibiting

amendments to complaints, we treat

amended complaints as new complaints

and restart any statutory deadline on the

date of the ‘‘new complaint.’’ We are not

persuaded that our ‘‘treatment’’ of an

amended complaint as a new complaint

would comply with the statutory

deadline requirements. We note that a

complainant is not prohibited from

filing a separate formal complaint if it

discovers a new claim at some later

point in the complaint process. In

addition, where appropriate, the staff

may consolidate two or more

complaints to adjudicate all claims

arising out of the same transaction or

occurrence in one proceeding. Thus, we

adopt a rule generally prohibiting all

amendments to complaints. We note

that this prohibition on amendments in

no way relieves the parties of their

obligation under § 1.720(g) of the

Commission’s rules to maintain the

accuracy and completeness of all

information and supporting authority

furnished to the Commission in a

pending proceeding. In addition, we

note that complainants always have the

option of filing their complaints in

federal court if they conclude that the

Commission’s rules will not afford them

the pleading opportunities they need.

The Commission’s rules have long

included a fact pleading requirement

designed to ensure that a party has

sufficient knowledge of its claims before

filing its complaint.

5. Additional Suggestions From

Commenters. a. The NPRM. 244. In the

NPRM, we sought alternative proposals

to modify the rules regarding motions.

b. Comments. 245. BellSouth suggests

that any request for an interlocutory

ruling be deemed a voluntary waiver of

any applicable statutory deadline

shorter than five months. BellSouth

reasons that, given the Commission’s

limited resources, such a rule is the only

way to discourage the filing of timeconsuming motions that will preclude

Commission staff from meeting the

statutory deadlines.

246. AT&T and ICG suggest requiring

parties to give advance notice of

motions to be filed.

247. PTG suggests that the

Commission make a commitment to

decide all motions within thirty days of

filing, rather than waiting until the final

order is issued.

c. Discussion. 248. We decline to

adopt BellSouth’s suggestion that a

request for an interlocutory ruling be

deemed a waiver of the applicability of

any statutory deadline shorter than five

months. As discussed in the ‘‘Damages’’

section, the parties to a formal

complaint proceeding do not have the

authority to waive statutory deadlines,

with the exception of the section

271(d)(6)(B) ninety-day deadline. Even

if the parties did have such authority, a

rule that allowed a party to waive a

statutory deadline by filing any type of

interlocutory motion would provide a

means for such party to manipulate the

deadline and, thereby, eviscerate the

intent of the Act to provide expedited

resolution for certain complaints.

249. We decline to adopt a rule

requiring parties to provide notice of

their intent to file a motion because we

find that such a requirement would not

further the timely resolution of motions.

We do require parties to certify in any

motions to compel discovery that good

faith efforts to resolve the discovery

dispute were undertaken prior to the

filing of the motion. That rule will

provide early notice of a party’s intent

to file such a motion. Other types of

motions do not slow down formal

complaint proceedings significantly

because, unlike discovery disputes, they

generally do not need to be resolved to

enable parties to support their claims in

briefs. Furthermore, the delivery of all

motions will be expedited by our

requirement that parties serve all

motions by hand delivery, overnight

delivery, or facsimile transmission

followed by mail delivery.

250. We decline to adopt a rule

requiring the Commission to rule on all

motions within thirty days. The intent

of this rulemaking is to speed up

resolution of formal complaints and, to

the extent the early disposition of a

pending motion would further such

intent, the Commission will rule on

motions as expeditiously as possible.

We do not, however, see the benefit of

constraining Commission staff by

imposing a requirement that all motions

be resolved within thirty days.

N. Confidential or Proprietary

Information and Materials

251. In 1993, the Commission revised

its rules to require a party asserting the

confidentiality of any materials subject

to a discovery request to mark clearly

the relevant portions as being

proprietary information. If the

proprietary designation is challenged,

that party bears the burden of

demonstrating, by a preponderance of
Federal Register / Vol. 63, No. 4 / Wednesday, January 7, 1998 / Rules and Regulations 1023

the evidence, that the material falls

under the standards for nondisclosure

enunciated in the Freedom of

Information Act (‘‘FOIA’’).

a. The NPRM. 252. Because the format

and content proposals may require

parties to exchange information and

materials with their initial pleadings,

the Commission proposed to allow

parties to designate as confidential or

proprietary any materials generated in

the course of a formal complaint, and

not limit such designation to materials

produced in response to discovery

requests. We sought comment on this

proposal as well as on whether

additional procedures were needed in

light of the shortened complaint

resolution deadlines in the Act and our

proposals in the NPRM to eliminate

certain pleading and discovery

opportunities.

b. Comments. 253. All of the parties

who commented agree that the proposal

will encourage parties to exchange

information without fear of public

dissemination. While it supports the

Commission’s goals, ACTA notes that

the potential for abuse exists because

parties may excessively and

unnecessarily label documents and

information as confidential or

proprietary. MCI requests that the

Commission clarify that information

considered confidential due to its

proprietary, sensitive or competitive

nature cannot be withheld from

production on that ground.

c. Discussion. 254. We conclude that

parties shall be allowed to designate as

confidential or proprietary any materials

generated in the course of a formal

complaint proceeding. The commenters

support imposing this requirement. We

find that, because all parties may have

information that is both relevant to a

dispute and competitively sensitive,

parties must be assured of protection for

their confidential or proprietary

information if we want to avoid the time

consuming process of resolving disputes

over the treatment of documents and

information sought to be exchanged,

regardless of whether the information is

produced in response to discovery

requests or not. We disagree with

ACTA’s contention that this

requirement might be more subject to

abuse than the prior requirement

limiting confidential or proprietary

designations to materials produced in

response to discovery requests. We

emphasize that designating information

or materials as confidential or

proprietary will not prevent the

information or materials from being

produced, therefore, parties will have

little to gain by falsely claiming that

materials are confidential or proprietary.

Furthermore, if a proprietary

designation is challenged, the party

claiming confidentiality will continue to

bear the burden of demonstrating, by a

preponderance of the evidence, that the

material designated as proprietary falls

under the FOIA’s standards for

nondisclosure.

255. The modification of the rule

providing for designation of material

disclosed in the course of a formal

complaint proceedings is merely an

extension of the previous rule, which

allowed for the designation of materials

that were disclosed in response to

discovery as confidential and

proprietary. In current practice, parties

that reference facts in or attach materials

to briefs that have been designated as

confidential or proprietary serve two

copies on opposing parties, a public

copy that has had confidential materials

redacted and is clearly marked ‘‘Public

Copy’’ and a confidential copy that

contains the material that was redacted

from the public copy and is clearly

marked ‘‘Confidential Copy.’’ In

addition, the filing party files the public

copy with the Office of the Secretary

and files the confidential copy directly

with the Commission staff attorney that

is handling the matter. This practice

will not change. In addition, where a

complainant references facts in or

attaches materials to its complaint that

have been designated as confidential or

proprietary, the procedure is

substantially the same. A confidential

copy of the complaint must be filed

under seal directly with the Branch

Chief on which it is required to serve

two copies of the complaint.

O. Other Required Submissions

1. Joint Statement of Stipulated Facts.

a. The NPRM. 256. The NPRM proposed

to require parties to submit a joint

statement of stipulated facts and key

legal issues five days after the answer is

filed. We noted that the ‘‘rocket docket’’

rules in the United States District Court

for the Eastern District of Virginia

require parties to submit written

stipulations of all uncontested facts

prior to trial. We stated our belief that

requiring the parties to submit a joint

statement of stipulated facts and key

legal issues at this stage might promote

agreement on a significant number of

the disputed facts and legal issues, as

well as help the Commission to

determine whether or to what extent

discovery is necessary.

b. Comments. 257. Most parties

support this proposal. Many

commenters, however, suggest that the

joint statement be submitted later in the

process to give parties more time to

meet and negotiate. U S West

additionally suggests requiring a joint

statement of facts in dispute. Bechtel &

Cole suggest requiring a joint statement

that includes an outline of factual

claims and legal arguments, and

BellSouth suggests permitting parties to

file unilateral statements if the parties

cannot reach agreement in time. PTG

opposes requiring a filing of a joint

statement of facts because it believes

that parties would never stipulate to

facts. CompTel also opposes the

proposal, arguing that nothing will be

gained because parties will maintain the

same positions taken in their fact-based

complaints or answers.

c. Discussion. 258. We conclude that

parties shall be required to submit a

joint statement of stipulated facts and

key legal issues. We find that the

drafting of such a statement, including

the discussions between the parties that

are necessary to the drafting of such a

document, will promote settlement

among the parties or, at the very least,

narrow the factual and legal issues the

Commission will need to resolve. The

joint statement will further assist the

Commission in discerning exactly what

the parties believe to be the most

important issues. We disagree with

PTG’s argument that the proposal

should be rejected because parties will

be unable to stipulate to any facts. We

find it highly improbable that parties

will be unable to stipulate to any facts

whatsoever. We further conclude, after

consideration of U S West’s proposal,

that parties shall be required to file a

joint statement of disputed facts because

such a document will pinpoint the exact

facts in dispute. Thus, even where

parties are unable to agree on a single

fact, that can be made clear to the staff

through the joint statement because it

will include disputed facts. A clear and

unequivocal identification of the issues

on which the parties cannot agree will

be especially beneficial to Commission

staff when it is resolving the need for

requested discovery at an initial status

conference. We also disagree with

CompTel’s argument that parties will

simply maintain the same positions

taken in their complaints and answers.

We find that compelling parties to meet

after submission of the complaint,

answer, and any necessary reply will

encourage parties to negotiate their

positions, resulting in agreement on

some issues and, at a minimum,

clarification of the areas in which they

disagree. Indeed, we have occasionally

required parties to submit stipulations

of fact in past complaints, and have

found that the parties often are able to

reduce significantly the legal and factual

issues in dispute.
1024 Federal Register / Vol. 63, No. 4 / Wednesday, January 7, 1998 / Rules and Regulations

259. Because several commenters

expressed concerns about the timing of

the joint statement of stipulated facts,

disputed facts and key legal issues, we

have extended the time for the filing of

the statement. Such joint statement shall

be submitted to the Commission by no

later than two business days prior to the

initial status conference. We conclude

that it would provide less of a benefit to

the complaint proceeding if we

extended the filing date of the joint

statement any further. We have timed

the filing of the joint statement to

coincide with our requirements for

interrogatory requests and the ‘‘meet

and confer’’ conference that must take

place prior to the initial status

conference. We find that it is important

to require the parties to discuss the

factual and legal issues at this particular

stage. Parties will have just reviewed the

opposing parties’ initial pleadings,

documentation, and interrogatories but

will not yet have participated in the

more formal initial status conference.

Compelling parties to disclose their

positions on all issues in an informal

manner, prior to the initial status

conference, may be more productive in

terms of settling or narrowing the issues

than if the same discussion took place

after the initial status conference. The

parties may feel obliged to take firm

positions on the issues in dispute after

the initial status conference has

occurred. Furthermore, we emphasize

that the staff has discretion to grant

additional time to submit the joint

statement where necessary or

appropriate.

260. We reject BellSouth’s suggestion

to allow the filing of unilateral

statements. The joint statement is

beneficial in large part because it is a

single document and does not require

the Commission to compare two

documents to determine on which facts,

each articulated slightly differently in

the separate documents, the parties

agree and disagree. The other significant

benefit arises from requiring the parties

to meet and discuss all relevant facts

and fully articulate their disagreements.

Neither of these benefits would be

obtained by allowing the parties to file

unilateral documents, which would

most likely be highly repetitive of the

facts laid out in the complaint, answer

and any necessary reply. Although

Bechtel & Cole suggests that the joint

statement include an outline of factual

claims and legal arguments, we

conclude that the requirement we adopt

here effectively encompasses this

suggestion.

2. Briefs. a. The NPRM. 261. The

NPRM sought comment on changes to

our current briefing process. First, we

sought comment on prohibiting the

filing of briefs in cases in which

discovery is not conducted and

requiring parties to include proposed

findings of fact, conclusions of law and

legal analysis with their complaints and

answers. We sought comment on

whether parties could reasonably

prepare proposed findings of fact,

conclusions of law and legal analysis

before reviewing the responses to their

pleadings and statements of stipulated

facts. Second, we sought comment on

continuing to allow parties to file briefs,

but permitting the Commission staff to

limit the scope of such briefs. This

option would add some delay to the

process but would enable the parties to

review both sides of the case before

briefing their legal arguments to the

Commission.

262. We also sought comment on

whether the staff should be permitted to

set the timetable for completion of any

briefs to give the staff maximum

flexibility and control in order to meet

the various statutory resolution

deadlines. We also asked parties to

identify reasonable timetables for

completion of such briefs. The NPRM

proposed to limit initial briefs to

twenty-five pages and reply briefs to ten

pages in all cases.

b. Comments. 263. Bell Atlantic and

NYNEX support the proposal to prohibit

briefs in cases in which discovery is not

conducted. Bell Atlantic argues that

under the pre-filing procedures, parties

will have sufficient notice of the nature

and basis of the complaint to argue the

legal issues fully in the complaint and

answer. NYNEX states that, if the

Commission adopts its proposals to

require the complainant to include all of

the legal and factual support in the

initial filing, subsequent briefs would be

superfluous. Both Bell Atlantic and

NYNEX agree that, while briefs will

probably be unnecessary in most cases

in which discovery is not conducted,

parties should be able to ask, at the

initial status conference, for permission

to file briefs on certain narrowlytailored issues. Most of the commenters

feel that parties must be allowed to file

briefs because parties may lack the

requisite information to file findings of

fact and conclusions of law in their

complaints and answers. For example,

GST, MCI, PTG, Sprint, and U S West

argue that parties cannot be expected to

submit findings of fact, conclusions of

law, and legal analysis prior to

reviewing their opponents’ pleadings.

AT&T argues that briefs are necessary to

complete the record.

264. AT&T, Bell Atlantic, GST, KMC,

MFS, GTE, MCI, and SWBT support the

proposal to allow the staff to limit the

scope of briefs. GTE states that

permitting parties to file briefs but

limiting the subjects of those briefs will

expedite the complaint process while

allowing each party to establish a

complete record. MCI argues that the

initial status conference will enable the

Commission to tailor the briefing

process to fit the needs of each

individual case. ACTA, ICG, and PTG,

however, oppose permitting staff to

limit the scope of briefs, arguing that

parties must be permitted to argue their

cases as they see fit and on the issues

they deem relevant. CBT supports

allowing the staff to limit the scope of

briefs to disputed issues only, but

argues that imposing any further

limitations might prejudge the outcome

of the case.

265. The commenters support the

proposal to reduce the time in which

briefs must be filed. Several parties

suggested specific timetables, while

others were comfortable with allowing

the Commission to set the timetable at

the initial status conference.

266. Most commenters support the

proposal to reduce brief page limits to

twenty-five pages for initial briefs and

ten pages for reply briefs. Several

commenters, such as AT&T and PTG,

request that the staff be able to set

flexible page limits or that the parties be

permitted to file for leave to file longer

briefs. ACTA, ICG, and the cable entities

argue that a twenty-five page limit is

insufficient.

c. Discussion. 267. The format and

content rules adopted in this proceeding

require that complaints, answers, and

any necessary replies contain complete

legal analysis, full documentary

support, and proposed findings of fact,

conclusions of law at the time of filing.

It has been our experience that parties

have used the briefing opportunity to

file documents that merely restate the

arguments already contained in the

complaint, answer, and reply in cases in

which discovery is not conducted. In

those cases where discovery is

conducted and new material facts are

introduced into the case as a result of

such discovery, briefs are necessary to

provide the parties the opportunity to

revise or further support their existing

analysis in light of the new information

disclosed. Eliminating briefs where

discovery is not conducted, however,

will avoid wasting the Commission’s

resources reviewing documents that are

of little utility, as well as provide parties

with incentive to submit complete and

fully documented complaints, answers,

and replies initially. Thus, we conclude

that parties shall be generally prohibited

from filing briefs in cases in which no

discovery is conducted. The
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commenters who oppose this proposal

are concerned that parties might lack

the information necessary to file

findings of fact and conclusions of law

in their complaints and answers, or that

briefs are needed to complete the

record. As noted by Bell Atlantic and

NYNEX, however, under the new prefiling activities and format and content

requirements, complainants and

defendants alike should have sufficient

information with which to prepare and

file proposed findings of fact and

conclusions of law in their complaints,

answers, and necessary replies. We

emphasize that this rule is not a

complete prohibition on the filing briefs

in cases in which discovery is not

conducted. The Commission may

request briefs where briefing would be

helpful or is necessary. Further, where

a party believes that briefing is essential

to fully present its case, it may request

such briefing and explain to the

Commission why briefing is necessary

in that particular case. We note that

parties may still file briefs as a matter

of right in cases in which discovery is

conducted.

268. In those cases in which briefs are

permitted, each party is required to

attach all documents upon which it

intends to rely to its briefs. Parties are

permitted to attach to their briefs

documents that were previously

identified, and affidavits of persons

previously identified, in their

information designations, along with a

full explanation in the brief of the

material’s relevance to the issues and

matters in dispute. Such materials need

not have been attached to the complaint,

answer, or necessary reply.

269. In those cases in which briefs are

permitted, such briefs are required to

include all legal and factual claims and

defenses previously set forth in the

complaint, answer or any other prior

pleading submitted in the proceeding

that the parties wish the Commission to

consider in rendering its decision.

Claims and defenses previously made

but not reflected in the briefs shall be

deemed abandoned. Where, however,

the staff limits the scope of the briefs in

a manner that does not permit parties to

include claims previously raised, the

failure to include claims previously

raised will not be deemed to be an

abandonment of such claims. Although

the NPRM did not specifically propose

to require briefs to include all claims

previously set forth in the proceeding,

we find that this requirement will

maximize the utility of briefs.

Authorized briefs are a means to

facilitate the staff’s ability to identify

readily all legal and factual claims and

defenses made by the parties, along with

full citations to the law and the

evidentiary record. This requirement

should minimize the need for the staff

to sift through multiple pleadings

submitted by the parties in an effort to

identify and address each of their

respective claims. In addition, this

requirement will prevent staff from

having to rule on claims of questionable

merit that were identified in initial

pleadings, but that the parties do not

intend to support or rely on in their

briefs.

270. The Commission may limit the

scope of any authorized briefs where

appropriate, and set timetables for the

filing of such briefs. Most of the

commenters support these

requirements, because they understand

that the Commission needs such

limitations and flexibility to accomplish

its goal of meeting the statutory

deadlines provided for in the Act and

expediting the processing of all formal

complaints. ACTA, CBT, ICG, and PTG

argue that the staff should not limit the

scope of briefs because parties should be

permitted to brief the issues that the

parties themselves deem relevant. These

commenters ignore, however, that

parties are given the opportunity to file

proposed findings of fact and

conclusions of law and a complete legal

analysis on the issues they deem

relevant with their complaint, answer

and any necessary reply. To the extent

that discovery discloses new material

facts, briefs are allowed as a matter of

right. The parties also have several

opportunities to explain to the staff why

particular issues should be briefed. The

staff’s decision regarding the scope and

timing of briefs will be based on the

content of the parties’ initial pleadings

and their joint statement, as well as on

information garnered from discussions

with the parties at the initial status

conference and any other status

conferences held. Through these

vehicles, parties have an opportunity to

identify issues they feel should be

briefed and to explain any special

circumstances that may warrant a

shorter or longer filing time for briefs.

Limiting the scope of briefs, when

appropriate, will help avoid

unnecessary or redundant pleadings

that do not facilitate the decisionmaking process. The Commission’s

discretion to set timetables on a case-bycase basis for the completion of briefs

will help to tailor schedules to the

needs of individual complaints.

271. The page limits for allowed briefs

shall be twenty-five pages for initial

briefs and ten pages for reply briefs. The

statutory deadlines imposed by the Act

place great burdens on the Commission

to evaluate briefs and prepare

recommended decisions within short

timeframes. We find that reducing the

page limits for initial briefs and reply

briefs to twenty-five and ten pages,

respectively, should yield more focused

and concise legal and factual arguments,

as well as discourage the filing of briefs

containing unnecessary and redundant

information. We adopt the suggestion of

several commenters to permit parties to

request leave to file longer briefs. This

provision should alleviate the concern

of certain commenters that the page

limits may be insufficient in some cases.

Parties shall be granted waivers of these

page limits for good cause shown.

3. Commenters’ Additional

Suggestions. a. The NPRM. 272. The

NPRM asked commenters to identify

alternative procedures that would

facilitate the preparation and

submission of clear and concise briefs

within the time constraints imposed by

the Act.

b. Comments. 273. AT&T, ICG, MCI,

SWBT, and U S West suggest that the

briefing process should mirror that used

in federal district court, in which the

complainant files a single initial brief,

followed by the defendant’s opposition

brief, followed by the complainant’s

reply brief. They argue that

simultaneous briefing forces a defendant

to reply to a position not yet articulated,

and does not give a complainant an

opportunity to reply to a defendant’s

reply brief, while sequential briefing

permits parties to meet each other’s

arguments directly.

c. Discussion. 274. We decline to

adopt the suggestions of AT&T, ICG,

MCI, SWBT, and U S West to require a

sequential briefing process. Sequential

briefing consists of three stages: the

complainant’s initial brief, the

defendant’s opposition brief, and the

complainant’s reply brief. Each party

must be provided with sufficient time to

respond to the brief filed in the

preceding stage. We conclude that

simultaneous briefing, which can be

accomplished in two stages (initial brief

and reply brief) is more appropriate in

light of the time constraints imposed by

the Act. While sequential briefing is

appropriate in a notice-pleading

context, in which the parties may lack

information regarding the positions of

opposing parties, the benefits to be

gained by sequential briefing under the

Commission’s fact-pleading rules are

minimal. Under the requirements

imposed in this proceeding, parties

must submit fact-pleadings and a joint

statement of disputed and undisputed

facts and key legal issues, as well as

attend an early status conference, where

the scope of the briefing will be

discussed and may be limited. We find
1026 Federal Register / Vol. 63, No. 4 / Wednesday, January 7, 1998 / Rules and Regulations

that these requirements will ensure that

parties are fully aware of their

opponents’ positions on all key factual

and legal issues by the briefing stage.

Simultaneous briefing should not result

in parties being prejudiced in any way.

P. Sanctions

275. The NPRM proposed rules that

will place greater burdens on

complainants and defendants to be more

diligent when presenting or defending

against allegations of misconduct in

violation of the Act or the Commission’s

rules. Such diligence must be enforced

in order to meet the complaint

resolution deadlines contained in the

Act and attain the goal of generally

improving the formal complaint

process.

a. The NPRM. 276. In the NPRM, we

outlined the need for sanctions which

would provide sufficient incentives to

ensure compliance with the new rules.

We asked interested parties to provide

us with their proposals for appropriate

sanctions. We provided several

examples of specific sanctions for

certain anticipated rules violations,

including: (1) summary dismissal of a

complaint for a complainant’s failure to

satisfy format and content requirements;

(2) summary ruling or other judgment in

favor of the complainant for a

defendant’s failure to respond fully and

with specificity to a complainant’s

allegations; and (3) the imposition of

monetary fines under the Act’s

forfeiture provisions for failure to file

pleadings in accordance with our rules.

We asked parties to comment on these

and other alternatives that might help to

ensure full compliance with the

expedited complaint procedures

proposed in the NPRM.

b. Comments. 277. Most of the parties

who commented generally support the

proposed sanctions. Most state that

failure to satisfy the form and content

requirements should result in summary

dismissal of the complaint without

prejudice. GST, GTE, KMC, MFS and

SWBT argue that, in most cases, the

imposition of monetary forfeitures

would be preferable to summary grant

or dismissal, which they contend

should be used only for: (1) failure by

complainants to set forth allegations

with specificity; (2) failure by

defendants to respond to the complaint;

or (3) failure by either party to certify

that they engaged in good faith

settlement attempts. CBT, GST, KMC,

and MFS suggest issuing a notice of

deficiency or show cause order prior to

imposing a sanction. MCI suggests that

a defendant should be penalized for its

failure to cooperate in the pre-filing

stages of a complaint proceeding by

permitting the complainant to file a

complaint without sufficient facts or

documentation. MCI also suggests that a

complainant should be penalized for its

failure to cooperate in the pre-filing

stages by permitting general denials

where the defendant lacks necessary

information. U S West argues that,

because parties seldom violate the

Commission’s rules, the Commission

should make quick and decisive rulings

in discovery conflicts rather than

emphasize sanctions. Communications

Venture Services, Inc. (‘‘CVS’’) and

SWBT suggest imposing sanctions on

attorneys as well as clients. ACTA states

that the Commission should draw an

adverse inference as to material facts to

sanction discovery abuses or failure to

comply with discovery rulings.

c. Discussion. 278. We conclude that

no rule modifications are necessary with

regard to sanctions at this time. We have

at our disposal a wide range of sanctions

to address violations or abuses of our

formal complaint rules, including

summary grant or dismissal of a

complaint (in whole or in part), the

drawing of adverse inferences as to

material facts, monetary forfeitures,

admonishment rulings, and show cause

proceedings. Because sanctionable

behavior may entail a wide range of

conduct by complainants and defendant

carriers, the Commission has

considerable discretion to tailor

sanctions to the individual

circumstances of a particular violation.

Sanctions for a failure to meet pleading

requirements should be directed at the

nature of the failure. For example, a

complainant that fails to properly

support a statement of material fact may

have such statement treated as an

unproven assertion. Sanctions for

discovery abuses should provide

sufficient incentives for parties to view

full and early disclosure as preferable to

any potential benefits from dilatory

tactics.

Q. Other Matters

279. The NPRM sought comment on

the meaning of the term ‘‘act on’’ in

section 271(d)(6)(B) of the Act

pertaining to complaints concerning

failures by BOCs to meet conditions

required for approval to provide inregion interLATA services. In addition,

the Commission stated in the Sections

260, 274, 275 First Report and Order

and the Sections 260, 274, 275 Second

Report and Order that certain issues

concerning possible evidentiary

standards for complaints alleging

violations of sections 260, 274, and 275

would be addressed in the Formal

Complaints rulemaking proceeding.

a. Section 271. i. The NPRM. 280.

Section 271(d)(6)(B) of the Act provides

that the Commission shall ‘‘act on’’

complaints alleging certain violations of

the section within ninety days of the

date filed, unless otherwise agreed to by

the parties. This is in contrast to other

complaint provisions added by the 1996

Act which mandate ‘‘final’’ action by

the Commission within prescribed time

periods. We tentatively concluded in

the NPRM that ‘‘act on’’ as used in

section 271(d)(6)(B) may be satisfied,

where appropriate, by a determination

of the Common Carrier Bureau whether

a BOC has ceased to meet the conditions

required for approval to provide inregion interLATA services, and need not

require final action by the full

Commission. We sought comment on

this tentative conclusion and on the

appropriate procedure or mechanism for

early notice to the Commission of the

parties’ agreement to extend or waive

the ninety-day resolution deadline.

ii. Comments. 281. Commenters

disagree on the meaning of ‘‘act on’’ in

section 271(d)(6)(B). BellSouth,

CompTel, GST, KMC, MFS, and MCI

state that a Common Carrier Bureau

decision constitutes ‘‘acting on’’ within

the meaning of section 271(d)(6)(B)

because the abbreviated deadline for

resolution is a statutory mandate for

prompt relief, which would not be

fulfilled by waiting for a decision by the

entire Commission. In addition, MCI

argues that a Common Carrier Bureau

decision is sufficient because the right

to decide cases under section

271(d)(6)(B) is not specifically reserved

to the Commission under § 0.291 of the

Commission’s rules. CVS, NYNEX, ICG,

PTG, and SWBT, however, argue that

section 271(d)(6)(B) requires a

Commission decision because it would

be contrary to Congressional intent to

deny parties the immediate right of

judicial review. PTG argues that the

Commission must decide section

271(d)(6)(B) cases because, under

§ 0.291, the Commission has not

delegated its authority to designate for

hearing any formal complaints which

present ‘‘novel questions of fact, law or

policy[,]’’ nor to ‘‘impose, reduce, or

cancel forfeitures pursuant to Section

203 or Section 503(b) * * * in amounts

of more than $80,000.’’

282. Regarding the notification of

waiver of the section 271(d)(6)(B)

ninety-day deadline, BellSouth suggests

that the complainant be required to

indicate its willingness to waive the

ninety-day resolution deadline in the

formal complaint intake form proposed

by the Commission to aid in the

preparation and filing of formal

complaints. GST, KMC, and MFS
Federal Register / Vol. 63, No. 4 / Wednesday, January 7, 1998 / Rules and Regulations 1027

suggest that such agreement take place

during ‘‘meet and confer’’ conferences,

which would occur prior to the initial

status conferences pursuant to other

proposals in the NPRM.

iii. Discussion. 283. Notwithstanding

our tentative conclusion in the NPRM

that a decision by the Common Carrier

Bureau on the merits of the complaint

satisfies the ‘‘act on’’ requirement in

section 271(d)(6)(B), we conclude that

we need not address this issue in this

Report and Order. We recognize the

importance that Congress assigned to

the resolution of complaints alleging

violations of the competitive checklist

requirements as reflected in the ninetyday ‘‘act on’’ requirement. We fully

intend to act promptly on all matters

pertaining to those requirements to

assure that full effect is given to the

competitive goals underlying section

271 of the Act.

284. To facilitate our handling of

section 271(d)(6)(B) complaints, we

adopt a rule requiring parties to indicate

whether they are willing to waive the

ninety-day deadline in their initial

filings to the Commission or, at the very

latest, by the date of the initial status

conference. Parties will have the

opportunity to reach an agreement about

waiver of the section 271(d)(6)(B)

ninety-day deadline during the prefiling activities. A complainant should

indicate whether or not it is willing to

waive the ninety-day deadline in the

formal complaint intake form

accompanying the complaint. The

defendant carrier will have opportunity

to respond to the complainant’s request

for waiver either in its answer or at

some earlier date. Parties will have an

additional opportunity to discuss the

waiver of the ninety-day deadline in

their ‘‘meet and confer’’ held prior to

the initial status conference. Because

meeting a resolution deadline of ninety

days will require both strong

commitment and meticulous

preparation at the very start of the

complaint process, from the parties and

from the Commission, a request by the

parties to waive the ninety-day deadline

will be not considered after the initial

status conference. Permitting parties to

waive the ninety-day deadline at any

point in the complaint process could

result in the wasteful expenditure of

time and resources by the staff and the

parties. In addition, we note that even

if the parties agree to waive the ninetyday deadline in a section 271(d)(6)(B)

case, it is our intent to resolve such

cases as expeditiously as possible. Thus,

parties should not relax their diligence

in meeting our format and content

requirements to the fullest extent

possible as a consequence of having

agreed to waive the ninety-day deadline.

b. Sections 260, 274 and 275 of the

Act. 285. In the Sections 260, 274, 275

First Report and Order, 62 FR 7690

(February 20, 1997), and the Sections

260, 274, 275 Second Report and Order,

62 FR 16093 (April 4, 1997), we

deferred to the Formal Complaints

rulemaking the issue of what specific

acts or omissions might be sufficient to

state a prima facie claim for relief under

sections 260, 274, and 275. In that same

proceeding, we noted that the

complainant has the burden of

establishing that a carrier has violated

the Act or a Commission rule or order

and that burden generally does not shift

at any time to the defendant carrier. We

also deferred to the Formal Complaints

rulemaking the issue of whether shifting

the burden of proof from the

complainant to the defendant in

complaints alleging violations of

sections 260, 274, and 275 would

advance the pro-competitive goals of the

Act.

i. Prima facie Claim. (a). The Sections

260, 274, 275 NPRM. 286. In the

Sections 260, 274, 275 NPRM, 61 FR

39385 (July 29, 1996), we asked parties

to comment on what prima facie

showing should be required of a

complainant who alleges that an

incumbent LEC has violated sections

260 or 275, or that a BOC has violated

section 274. Commenters were asked to

describe what specific acts or omissions

would constitute a prima facie claim for

relief under those sections of the Act.

(b). Comments. 287. Commenters did

not address in this rulemaking the issue

of what acts or omissions might

constitute a prima facie claim in

complaints alleging violation of sections

260, 274, and 275. In response to the

Sections 260, 274, 275 NPRM, however,

many parties commented on this issue.

Several commenters contend that the

same standard for a prima facie case

should apply to all complaints,

including complaints alleging violations

of sections 260, 274, or 275; that is, a

complainant would establish a prima

facie case by alleging facts that, if true,

would constitute a violation of the Act.

Several parties, however, suggest

specific standards for stating a prima

facie claim for relief under sections 260,

274, and 275. ATSI states that a

complainant alleging a violation of

section 260 should be allowed to

establish a prima facie case by any

showing of denied or delayed access, or

any showing of cost or quality

differentials between the incumbent’s

own telemessaging operations and those

offered by the complainant. ATSI

further suggests that the Commission

establish certain safeguards to prevent

anti-competitive conduct, and declare

that facts demonstrating a violation of

these safeguards should be sufficient to

state a prima facie case of unlawfulness.

According to ATSI, because section 260

was not intended to ‘‘mimic a legal

proceeding’’ complainants should not

have to undertake costly or timeconsuming preparatory work prior to

filing a complaint.

288. A number of commenters oppose

ATSI’s proposals. U S West argues that

a section 260 complaint is a legal

proceeding in which both the

complainant’s and defendant’s rights

should be respected. BellSouth

maintains that a prima facie case should

include specific allegations of fact

showing that a defendant carrier has

engaged in prohibited discrimination or

cross-subsidization. A number of other

commenters argue that ATSI’s

proposals, if adopted, would open the

floodgates for unsubstantiated

complaints against the incumbent LECs

and their affiliates.

289. NYNEX states that, in order to

establish a prima facie case pursuant to

section 274, the complaint would have

to contain a description of the

complainant and its interest; be sworn

and notarized and state with

particularity the facts on which the

complaint is based, distinguishing

between facts based on personal

knowledge and facts based on

information and belief; provide a

verifiable source of statements based on

information and belief; be accompanied

by supporting documentation; and

identify materials the complainant has

been unable to obtain after due inquiry

which it asserts are in the possession of

the BOC or its separate affiliate.

(c). Discussion. 290. We decline to

adopt a rule prescribing specific acts or

omissions that would be prima facie

unlawful under sections 260, 274, and

275. Instead, we will review section

260, 274, or 275 complaints on a caseby-case basis to resolve compliance

issues. We believe that, beyond the

specific requirements of the Act and the

Commission’s implementing rules and

orders, it would be impracticable to

attempt to delineate specific acts or

omissions that would constitute

violations of sections 260, 274 and 275.

Acts or omissions that might raise the

specter of violations under sections 260,

274 and 275 are likely to vary widely.

Moreover, it is possible that a particular

act or omission deemed unlawful in one

context may be perfectly reasonable in

another. Therefore we will continue our

existing practice of requiring that, in the

context of a section 208 complaint

proceeding, a prima facie showing must
1028 Federal Register / Vol. 63, No. 4 / Wednesday, January 7, 1998 / Rules and Regulations

include allegations of fact, which if true,

would establish that a BOC has violated

the Act or any implementing rule or

order.

ii. Shifting the Burden of Proof to

Defendant Carriers in Complaints

Alleging Violations of Sections 260, 274

and 275 of the Act. (a). The Section 260,

274, 275 NPRM. 291. In the Sections

260, 274, 275 NPRM, we noted that in

a formal complaint proceeding the

complainant generally has the burden of

establishing, by a preponderance of the

evidence, that a common carrier has

violated the Act or a Commission rule

or order. Ordinarily, this burden of

proof does not, at any time in the

proceeding, shift to the defendant

carrier. We sought comment in the

Sections 260, 274, 275 NPRM on

whether, for purposes of complaints

arising under Sections 260, 274, 275,

shifting the ultimate burden of proof

from the complainant to the defendant

would advance the pro-competitive

goals of the Act.

(b). Comments. 292. Commenters did

not address in this rulemaking the issue

of shifting the burden of proof from the

complainant to the defendant BOC or

incumbent LEC in complaints alleging

violations of Sections 260, 274, and 275.

A number of parties, however,

commented on this issue in response to

the Sections 260, 274, 275 NPRM. The

BOCs oppose shifting the burden of

proof to the defendant carrier after a

complainant establishes a prima facie

case, arguing that such a practice would

force defendants to prove a negative;

e.g., lack of undue delay, unavailability

of requested services, or technical

impossibility. The BOCs assert that the

Administrative Procedures Act (‘‘APA’’)

requires that the burden of persuasion

in complaint cases remain on the

complainant throughout and that

shifting the burden of proof in the

manner proposed would encourage the

filing of frivolous complaints. SWBT

and U S West object to shifting the

burden of proof in section 274 cases,

claiming that, because section 274 has

no statutory resolution deadline and

complainants have the option of filing

their claims in federal district court,

burden shifting would promote ‘‘forum

shopping’’ by parties wishing to litigate

their claims before the Commission

under more relaxed standards. In

addition, U S West argues that shifting

the burden in section 274 cases would

be particularly inappropriate because

section 274 involves First Amendment

(private and commercial speech) issues.

BellSouth and PTG state that a

defendant would bear the burden of

producing evidence only if it asserted

an affirmative defense, such as the

reasonableness of its actions. Ameritech

and PTG concede that, at most, a

defendant might be expected to bear the

burden of production, but not of

persuasion. NYNEX proposes that,

rather than shifting the burden of proof

to a defendant after a complainant has

established a prima facie case, a

defendant should be required to

provide: (1) a sworn and notarized

response containing an admission or

denial of all allegations in the

complaint; (2) a summary of the facts on

which the response is based,

distinguishing between facts based on

personal knowledge and facts based on

information and belief; (3) a verifiable

source of statements based on

information and belief; (4) its defenses;

and (5) supporting documentation if

available or if it can be reasonably

acquired within the time allowed for

response.

293. ATSI, AT&T, AICC, MCI, and

Voice-Tel all support shifting the

burden of proof to defendants once the

complainant has established a prima

facie case. These commenters maintain

that burden shifting is appropriate in

section 260, 274 and 275 cases because

of short resolution deadlines and the

fact that the relevant information will

generally be in the possession or control

of the defendant BOC or incumbent

LEC. AICC states that the BOCs’

argument that the APA prohibits

shifting the burden of proof to a

defendant is inapplicable to section 275,

because the applicable section of the

APA, section 556, only pertains to

certain hearings and rulemakings

required by sections 553 and 554,

respectively, of the APA. AICC adds that

the Commission should follow its

tentative conclusion in the BOC InRegion NPRM, 61 FR 39397 (July 29,

1996), and not adopt a presumption of

reasonableness favoring an incumbent

LEC or its alarm monitoring affiliate

when reviewing complaints alleging

violations of section 275.

(c). Discussion. 294. We decline to

adopt a rule that would shift the burden

of proof to defendant BOCs or

incumbent LECs in expedited complaint

proceedings pursuant to sections 260,

274 and 275 of the Act. We do not agree

with the arguments of many

commenters that shifting the burden of

proof in such cases is necessary to

advance the pro-competitive goals of the

1996 Act. Nor do we agree that a rule

is required to formally shift the burden

of production to a defendant carrier

after a complainant has demonstrated a

prima facie case of a violation of section

260, 274, or 275. The rules adopted in

this proceeding, particularly those

pertaining to pre-filing activities and the

form and content of pleadings, are

designed specifically to require both

complainants and defendants to

exercise diligence in presenting and

defending against alleged violations of

sections 260, 274 and 275, as well as

other sections of the Act. The new rules

require full identification of relevant

documents and information in the

possession, or within the control, of

both the complainant and defendant

carrier, along with prompt production

or exchange of the information the

parties intend to rely on in presenting

and defending against claims of

unlawfulness under provisions of the

Act and the Commission’s rules and

orders.

295. In addition, the staff retains in all

cases the discretion to effectively shift

the burden of production in particular

cases by directing defendant carriers to

produce relevant information deemed to

be within their exclusive possession or

control. We note that this discretion is

conferred under section 208 of the Act

which authorizes the Commission to

investigate complaints ‘‘by such means

and in such manner as it shall deem

proper.’’ Moreover, even in the absence

of such action by the staff, it will be

incumbent upon a defendant carrier to

respond fully to any prima facie

showing made by a complainant, with

full legal and evidentiary support. A

defendant that fails to provide such a

response runs the risk of an adverse

ruling or an adverse inference on a

material fact.

296. We note that our decision not to

adopt a rule to formally shift the burden

of production to a defendant carrier

after a complainant has demonstrated a

prima facie violation of section 260,

274, or 275 is in contrast to our decision

regarding section 271(d)(6)(B)

complaints in the BOC In-Region Order,

62 FR 2927 (January 21, 1997). There,

we concluded that the burden of

production with respect to an issue will

shift to the defendant BOC after a

complainant has made a prima facie

showing that the BOC has ceased to

meet the conditions for its approval to

provide interLATA services under

section 271(d)(3). The specificity and

nature of the competitive checklist

requirements that would form the basis

of a section 271(d)(6)(B) complaint

justify a rule requiring a defendant BOC

to come forward with evidence of

continued compliance with section

271(d)(3). It would be difficult,

however, to attempt to anticipate all of

the various factual circumstances that

could form the basis of section 260, 274,

or 275 complaints. A rule that would

automatically shift the burden of

production in all cases would be
Federal Register / Vol. 63, No. 4 / Wednesday, January 7, 1998 / Rules and Regulations 1029

prejudicial or otherwise unreasonably

burdensome on defendant carriers. As

discussed in the preceding paragraph,

the new rules give Commission staff

ample authority to effectively shift the

burden of production in cases where it

is necessary to promote the full and fair

resolution of the matters in dispute.

297. Finally, we conclude, as we did

in our BOC In-Region Order, that we

should not employ a presumption of

reasonableness in favor of incumbent

LECs in complaint actions under

sections 260 and 275, regardless of

whether the incumbent LEC is regulated

as a dominant or non-dominant carrier.

As we pointed out in the BOC In-Region

Order, the ‘‘presumption of lawfulness

given to non-dominant carrier rates and

practices is employed in the context of

complaints alleging violations of

sections 201(b) and 202(a) of the Act,

where the complainant must

demonstrate that the defendant’s rates

and practices are ‘‘ ’unjust and

unreasonable.’ ’’ Sections 260 and 275

contain unqualified prohibitions on

discrimination by incumbent LECs and

do not require considerations of

reasonableness as is the case under

sections 201(b) and 202(a).

IV. Conclusion

298. In this Report and Order, we

amend our rules governing the filing of

formal complaints to implement certain

complaint provisions added or amended

by the 1996 Act, as well as to facilitate

the full and fair resolution of all

complaints filed against common

carriers before the Commission. These

rules of practice and procedure will

promote competition in all

telecommunications markets by

providing a forum for the prompt

resolution of complaints of

unreasonable, discriminatory, or

otherwise unlawful conduct by

telecommunications carriers.

V. Procedural Matters

A. Petitions for Reconsideration and Ex

Parte Presentations

299. Parties must file any petitions for

reconsideration of this Report and Order

within thirty days from publication in

the Federal Register. Parties may file

oppositions to the petitions for

reconsideration pursuant to § 1.106(g) of

the rules.

300. To file a petition for

reconsideration in this proceeding,

parties must file an original and ten

copies of all petitions and oppositions.

Petitions and oppositions should be sent

to the Office of the Secretary, Federal

Communications Commission,

Washington, D.C. 20554. If parties want

each Commissioner to have a personal

copy of their documents, an original

plus fourteen copies must be filed. In

addition, participants should submit

two additional copies directly to the

Common Carrier Bureau, Enforcement

Division, Room 6008, 2025 M Street,

N.W., Washington, D.C. 20554. The

petitions and oppositions will be

available for public inspection during

regular business hours in the Dockets

Reference Room (Room 230) of the

Federal Communications Commission,

1919 M Street, N.W., Washington, D.C.

20554. Copies of the petition and any

subsequently filed documents in this

matter may be obtained from ITS, Inc.,

2100 M Street, N.W., Suite 140,

Washington, D.C. 20037, (202) 857–

3800.

301. Petitions for reconsideration

must comply with § 1.429 and all other

applicable sections of the Commission’s

rules. Petitions also must clearly

identify the specific portion of this

Report and Order for which relief is

sought. If a portion of a party’s

arguments does not fall under a

particular topic listed in the outline of

this Report and Order, such arguments

should be included in a clearly labelled

section at the beginning or end of the

filing.

B. Final Regulatory Flexibility Analysis

302. As required by the Regulatory

Flexibility Act (‘‘RFA’’), an Initial

Regulatory Flexibility Analysis

(‘‘IRFA’’) was incorporated in the

Implementation of the

Telecommunications Act of 1996,

Amendment of Rules Governing

Procedures to be Followed When Formal

Complaints Are Filed Against Common

Carriers, Notice of Proposed

Rulemaking. The Commission sought

written public comment on the NPRM,

including comment on the IRFA. The

comments received were not specific to

the IRFA, but are discussed below to the

extent they raise concerns or make

suggestions relevant to this analysis.

This present Final Regulatory Flexibility

Analysis (‘‘FRFA’’) conforms to the

RFA.

a. Need for and Objectives of the

Implementation of the

Telecommunications Act of 1996,

Amendment of Rules Governing

Procedures to be Followed When Formal

Complaints Are Filed Against Common

Carriers, Report and Order, and the

Rules Adopted Herein. 303. The

Commission is issuing this Report and

Order to implement certain complaint

provisions added or amended by the

1996 Act and to improve generally the

speed and effectiveness of our formal

complaint process. The 1996 Act added

and, in some cases, amended, key

complaint provisions that, because of

their resolution deadlines, necessitate

substantial modification of our current

rules and policies for processing formal

complaints filed against common

carriers pursuant to section 208 of the

Act. Some of the requirements adopted

in this Report and Order may have a

significant impact on a substantial

number of small businesses as defined

by section 601(3) of the RFA. Generally,

amended rules will require or encourage

complainants and defendants to engage

in certain pre-filing activities, change

service requirements, modify the form

of initial pleadings, shorten filing

deadlines, eliminate certain pleading

opportunities that do not appear useful

or necessary, and modify the discovery

process.

b. Summary of Significant Issues

raised by the Public Comments in

Response to the IRFA. 304. In the IRFA,

the Commission found that the rules we

proposed to adopt in this proceeding

may have a significant impact on a

substantial number of small businesses

as defined by section 601(3) of the RFA.

The IRFA solicited comment on

alternatives to our proposed rules that

would minimize the impact on small

entities consistent with the objectives of

this proceeding. No comments were

submitted directly in response to the

IRFA. However, as described below in

Section 5, we have taken into account

the comments submitted generally by

small entities.

c. Description and Estimate of the

Number of Small Entities to Which the

Rules Adopted in the Report and Order

in CC Docket No. 96–238 Will Apply.

305. The RFA generally defines small

entity as having the same meaning as

the terms ‘‘small business,’’ ‘‘small

organization,’’ and ‘‘small governmental

jurisdictions.’’ In addition, the term

‘‘small business’’ has the same meaning

as the term ‘‘small business concern’’

under the Small Business Act, 15 U.S.C.

632, unless the Commission has

developed one or more definitions that

are appropriate to its activities. Under

the Small Business Act, a ‘‘small

business concern’’ is one that: (1) is

independently owned and operated; (2)

is not dominant in its field of operation;

and (3) meets any additional criteria

established by the Small Business

Administration (‘‘SBA’’). Moreover, the

SBA has defined a small business for

Standard Industrial Classification

(‘‘SIC’’) categories 4812

(‘‘Radiotelephone Communications’’)

and 4813 (‘‘Telephone Communications,

Except Radiotelephone’’) to be small

entities when they have no more than

1,500 employees. We first discuss the
1030 Federal Register / Vol. 63, No. 4 / Wednesday, January 7, 1998 / Rules and Regulations

estimated number of potential

complainants, which may include

entities that are not telephone

companies. Next we discuss generally

the estimated number of potential

defendants, which would be included in

the total number of small telephone

companies falling within the SBA’s

definitions of small business concerns

and small businesses. Then, we discuss

the number of small businesses within

the SIC subcategories, and attempt to

refine further those estimates to

correspond with the categories of

telephone companies that are commonly

used under our rules.

306. Consistent with our prior

practice, we shall continue to exclude

small incumbent LECs from the

definition of ‘‘small entity’’ and ‘‘small

business concerns’’ for the purpose of

this FRFA. We do this because the small

incumbent LECs subject to these rules

are either dominant in their field of

operations or are not independently

owned and operated, they are excluded

from the definition of ‘‘small entity’’

and ‘‘small business concerns.’’ Out of

an abundance of caution, however, for

regulatory flexibility analysis purposes,

we will consider small incumbent LECs

within this analysis and use the term

‘‘small incumbent LECs’’ to refer to any

incumbent LECs that arguably might be

defined by SBA as ‘‘small business

concerns.’’

i. Potential Complainants. 307.

Section 208(a) provides that formal

complaints against a common carrier

may be filed by ‘‘[a]ny person, any body

politic or municipal organization.’’

Beyond this definition, the FCC has no

control or information regarding the

filing frequency of complaints, nor

identities of parties that will file

complaints. The filing of complaints

depends entirely upon the

complainant’s perception that it

possesses a cause of action against a

common carrier subject to the Act, as

amended, and it is the complainant’s

decision to file its complaint with the

FCC. Therefore we are unable at this

time to estimate the number of future

complainants that would qualify as

small business concerns under SBA’s

definition.

308. As noted, the RFA includes

‘‘small businesses,’’ ‘‘small

organizations’’ (non-profits), and ‘‘small

governmental jurisdictions.’’

Nationwide, there are 4.44 million small

business firms, according to SBA

reporting data. A small organization is

generally ‘‘any not-for-profit enterprise

which is independently owned and

operated and is not dominant in its

field.’’ Nationwide, there are 275,801

small organizations. Last, ‘‘small

governmental jurisdiction’’ generally

means ‘‘governments of cities, counties,

towns, townships, villages, school

districts, or special districts, with a

population of less than 50,000.’’ As of

1992, there were 85,006 such

jurisdictions in the United States.

ii. Potential Defendants. 309. Estimate

of Potential Defendants that may be

Classified as Small Businesses. Section

208(a) provides for the filing of formal

complaints for ‘‘anything done or

omitted to be done by any common

carrier subject to this Act[.]’’ The FCC

has no control as to the filing frequency

of complaints because such filing

depends entirely upon the

complainant’s perception that it

possesses a cause of action against a

common carrier subject to the

Communications Act of 1934, as

amended, and it is the complainant’s

decision to file its complaint with the

FCC. This inability to predict the

number of future defendants

necessitates conducting this FRFA

based on the number of potential small

business defendants, which is the

number of common carriers that qualify

as small business concerns under SBA’s

definition.

310. Total Number of Telephone

Companies Affected. The decisions and

rules adopted herein may have a

significant effect on a substantial

number of small telephone companies

identified by the SBA. The United

States Bureau of the Census (‘‘Census

Bureau’’) reports that, at the end of

1992, there were 3,497 firms engaged in

providing telephone service, as defined

therein, for at least one year. This

number contains a variety of different

categories of carriers, including local

exchange carriers, interexchange

carriers, competitive access providers,

cellular carriers, mobile service carriers,

operator service providers, pay

telephone operators, PCS providers,

covered SMR providers, and resellers. It

seems certain that some of those 3,497

telephone service firms may not qualify

as small entities or small incumbent

LECs because they are not

‘‘independently owned and operated.’’

For example, a PCS provider that is

affiliated with an interexchange carrier

having more than 1,500 employees

would not meet the definition of a small

business. It seems reasonable to

conclude, therefore, that no more than

3,497 telephone service firms are small

entity telephone service firms or small

incumbent LECs that may be affected by

this Order. We estimate below the

potential defendants affected by this

order by service category.

311. Wireline Carriers and Service

Providers. The SBA has developed a

definition of small entities for

telecommunications companies other

than radiotelephone (wireless)

companies (Telephone

Communications, Except

Radiotelephone). The Census Bureau

reports that there were 2,321 such

telephone companies in operation for at

least one year at the end of 1992.

According to the SBA’s definition, a

small business telephone company

other than a radiotelephone company is

one employing no more than 1,500

persons. Of the 2,321 nonradiotelephone companies listed by the

Census Bureau, 2,295 companies (or, all

but twenty-six) were reported to have no

more than 1,000 employees. Thus, at

least 2,295 non-radiotelephone

companies might qualify as small

incumbent LECs or small entities based

on these employment statistics.

However, because it seems certain that

some of these carriers are not

independently owned and operated, this

figure necessarily overstates the actual

number of non-radiotelephone

companies that would qualify as ‘‘small

business concerns’’ under the SBA’s

definition. Consequently, we estimate

using this methodology that there are no

more than 2,295 small entity telephone

communications companies (other than

radiotelephone companies) that may be

affected by the actions taken in this

Report and Order.

312. Non-LEC wireline carriers. We

next estimate more precisely the

number of non-LEC wireline carriers,

including interexchange carriers

(‘‘IXCs’’), competitive access providers

(‘‘CAPs’’), Operator Service Providers

(‘‘OSPs’’), Pay Telephone Operators, and

resellers that may be affected by these

rules. Because neither the Commission

nor the SBA has developed definitions

for small entities specifically applicable

to these wireline service types, the

closest applicable definition under the

SBA rules for all these service types is

for telephone communications

companies other than radiotelephone

(wireless) companies. However, the TRS

data provides an alternative source of

information regarding the number of

IXCs, CAPs, OSPs, Pay Telephone

Operators, and resellers nationwide.

According to our most recent data: 130

companies reported that they are

engaged in the provision of

interexchange services; fifty-seven

companies reported that they are

engaged in the provision of competitive

access services; twenty-five companies

reported that they are engaged in the

provision of operator services; 271

companies reported that they are

engaged in the provision of pay
Federal Register / Vol. 63, No. 4 / Wednesday, January 7, 1998 / Rules and Regulations 1031

telephone services; and 260 companies

reported that they are engaged in the

resale of telephone services and thirty

reported being ‘‘other’’ toll carriers.

Although it seems certain that some of

these carriers are not independently

owned and operated, or have more than

1,500 employees, we are unable at this

time to estimate with greater precision

the number of IXCs, CAPs, OSPs, Pay

Telephone Operators, and resellers that

would qualify as small business

concerns under SBA’s definition. Firms

filing TRS Worksheets are asked to

select a single category that best

describes their operation. As a result,

some long distance carriers describe

themselves as resellers, some as OSPs,

some as ‘‘other,’’ and some simply as

IXCs. Consequently, we estimate that

there are no more than 130 small entity

IXCs; fifty-seven small entity CAPs;

twenty-five small entity OSPs; 271 small

entity pay telephone service providers;

and 260 small entity providers of resale

telephone service; and thirty ‘‘other’’

toll carriers that might be affected by the

actions and rules adopted in this Report

and Order.

313. Local Exchange Carriers.

Although neither the Commission nor

the SBA has developed a definition of

small providers of local exchange

services, we have two methodologies

available to us for making these

estimates. The closest applicable

definition under SBA rules is for

telephone communications companies

other than radiotelephone (wireless)

companies (SIC 4813) (Telephone

Communications, Except

Radiotelephone) as previously detailed.

Our alternative method for estimation

utilizes the data that we collect annually

in connection with the

Telecommunications Relay Service

(‘‘TRS’’). This data provides us with the

most reliable source of information of

which we are aware regarding the

number of LECs nationwide. According

to our most recent data, 1,347

companies reported that they were

engaged in the provision of local

exchange services. Although it seems

certain that some of these carriers are

not independently owned and operated,

or have more than 1,500 employees, we

are unable at this time to estimate with

greater precision the number of

incumbent LECs that would qualify as

small business concerns under SBA’s

definition. Consequently, we estimate

that there are no more than 1,347 small

LECs (including small incumbent LECs)

that may be affected by the actions taken

in this Report and Order.

314. Radiotelephone (Wireless)

Carriers: The SBA has developed a

definition of small entities for Wireless

(Radiotelephone) Carriers. The Census

Bureau reports that there were 1,176

such companies in operation for at least

one year at the end of 1992. According

to the SBA’s definition, a small business

radiotelephone company is one

employing no more than 1,500 persons.

The Census Bureau also reported that

1,164 of those radiotelephone

companies had no more than 1,000

employees. Thus, even if all of the

remaining twelve companies had more

than 1,500 employees, there would still

be 1,164 radiotelephone companies that

might qualify as small entities if they

are independently owned and operated.

Although it seems certain that some of

these carriers are not independently

owned and operated, and, we are unable

to estimate with greater precision the

number of radiotelephone carriers and

service providers that would both

qualify as small business concerns

under SBA’s definition. Consequently,

we estimate that there are no more than

1,164 small entity radiotelephone

companies that might be affected by the

actions and rules adopted in this Report

and Order.

315. Cellular and Mobile Service

Carriers: In an effort to further refine our

calculation of the number of

radiotelephone companies affected by

the rules adopted herein, we consider

the categories of radiotelephone carriers,

Cellular Service Carriers and Mobile

Service Carriers. Neither the

Commission nor the SBA has developed

a definition of small entities specifically

applicable to Cellular Service Carriers

and to Mobile Service Carriers. The

closest applicable definition under SBA

rules for both services is for telephone

companies other than radiotelephone

(wireless) companies. The most reliable

source of information regarding the

number of Cellular Service Carriers and

Mobile Service Carriers nationwide of

which we are aware appears to be the

data that we collect annually in

connection with the TRS. According to

our most recent data, 792 companies

reported that they are engaged in the

provision of cellular services and 138

companies reported that they are

engaged in the provision of mobile

services. Although it seems certain that

some of these carriers are not

independently owned and operated, or

have more than 1,500 employees, we are

unable at this time to estimate with

greater precision the number of Cellular

Service Carriers and Mobile Service

Carriers that would qualify as small

business concerns under SBA’s

definition. Consequently, we estimate

that there are no more than 792 small

entity Cellular Service Carriers and no

more than 138 small entity Mobile

Service Carriers that might be affected

by the actions and rules adopted in this

Report and Order.

316. Broadband PCS Licensees: In an

effort to further refine our calculation of

the number of radiotelephone

companies affected by the rules adopted

herein, we consider the category of

radiotelephone carriers, Broadband PCS

Licensees. The broadband PCS spectrum

is divided into six frequency blocks

designated A through F. As set forth in

47 CFR 24.720(b), the Commission has

defined ‘‘small entity’’ in the auctions

for Blocks C and F as a firm that had

average gross revenues of less than $40

million in the three previous calendar

years. Our definition of a ‘‘small entity’’

in the context of broadband PCS

auctions has been approved by SBA.

The Commission has auctioned

broadband PCS licenses in Blocks A

through F. We do not have sufficient

data to determine how many small

businesses bid successfully for licenses

in Blocks A and B. There were 183

winning bidders that qualified as small

entities in the Blocks C, D, E, and F

auctions. Based on this information, we

conclude that the number of broadband

PCS licensees that might be affected by

the decisions in this Report and Order

includes, at a minimum, the 183

winning bidders that qualified as small

entities in the Blocks C through F

broadband PCS auctions.

d. Description of Projected Reporting,

Recordkeeping and other Compliance

Requirements. 317. Below, we analyze

the projected reporting, recordkeeping,

and other compliance requirements that

may apply to small entities and small

incumbent LECs, and we mention some

of the skills needed to meet these new

requirements. Overall, we anticipate

that the impact of these rules will be

beneficial to small businesses and other

filers. By requiring better and more

complete submissions earlier in the

process, these rules will reduce the need

for discovery and other information

filings, thereby significantly reducing

the burden on small entities.

318. Formal Complaint Intake Form.

Section 1.721 will require all

complainants to complete and submit a

Formal Complaint Intake Form with

their complaints. The intake form

requirement is designed to help

complainants avoid procedural and

substantive defects that might affect the

staff’s ability to quickly process

complaints and delay full responses by

defendant carriers to otherwise

legitimate complaints. In addition, the

completed form will enable the staff and

the defendant carriers to quickly

identify the specific statutory provisions
1032 Federal Register / Vol. 63, No. 4 / Wednesday, January 7, 1998 / Rules and Regulations

under which relief is being sought in the

complaint. Because the proposed form

would solicit information that would be

already contained in the body of the

formal complaint, no additional

professional skills would be necessary

to complete the form. No commenters

propose alternatives to the Formal

Complaint Intake Form that would both

ease the burden of small businesses and

accomplish the Commission’s

objectives.

319. Pre-Filing Activities. The

amended rules will require a

complainant to certify that it discussed

the possibility of settlement with the

defendant carrier’s representative(s)

prior to filing the complaint. Although

this may delay slightly a complainant’s

filing of a formal complaint, we

conclude that this requirement will

serve to settle or narrow disputes, or

facilitate the compilation and exchange

of relevant documentation or other

information prior to the filing of a

formal complaint with the Commission.

No commenters propose alternatives to

the pre-filing activities proposals in the

NPRM that would both ease the burden

of small businesses and accomplish the

Commission’s objectives.

320. Service. The amended rules will

require complainants to personally

serve complaints directly on defendants

or their registered agents for service of

process, such that the defendant’s time

to answer will begin to run upon receipt

of the complaint from the complainant.

Parties will be required to serve all

pleadings subsequent to the complaint

by hand delivery, overnight delivery, or

by facsimile transmission followed by

regular U.S. mail delivery.

321. Pleadings and Discovery. The

complaint, answer, and any authorized

reply must include: (1) full statements

of relevant, material facts with all such

documents and affidavits that the party

intends to rely on to support its claims

or defenses; (2) the name and address of

each individual likely to have

discoverable information relevant to the

disputed facts alleged in the pleadings,

identifying the subjects of information;

(3) a description by category and

location of all documents in the

possession, custody, or control of the

party that are relevant to the matters in

dispute; (4) an inventory of all

documents and affidavits produced or

identified and of all individuals

identified; (5) proposed findings of fact,

conclusions of law, and legal analysis.

Claims based on information and belief

will only be accepted if they are made

in good faith and the complainant states

in an affidavit why the supporting facts

could not be reasonably ascertained.

Amendments to complaints will be

generally prohibited. The defendant

must file its answer within twenty days

after service of the complaint. General

denials are prohibited. Replies will only

be permitted to respond to affirmative

defenses and failure to reply to an

affirmative defense will be considered

an admission of the affirmative defense.

All motions to compel discovery must

contain a certification that a good faith

attempt to resolve the dispute was made

prior to filing the motion. A party’s

failure to file an opposition to a motion

may constitute grounds for granting the

motion. Oppositions to motions must be

filed within five business days of the

filing of the motion. All pleadings that

seek Commission orders, as well as the

orders themselves, must contain

proposed findings of fact and

conclusions of law, with supporting

legal analysis, and these submissions

must be submitted in both hard copy

and on computer disks in ‘‘read only’’

mode and formatted in the

Commission’s wordprocessing program.

The parties will be required to submit

a joint statement of stipulated facts,

disputed facts, and key legal issues two

days prior to the initial status

conference. Briefs will be generally

prohibited in cases in which no

discovery is conducted and staff will

have discretion to limit the scope and

timing of any authorized briefs.

322. Self-executing discovery is

eliminated and all discovery requests

shall be subject to staff authorization.

The complainant must file and serve ten

written interrogatory requests

concurrently with its complaint and the

defendant must file and serve ten

written interrogatory requests by the

time it serves its answer. The

complainant will be permitted to file

and serve an additional five written

interrogatory requests within three

calendar days following service of the

answer, provided that such

interrogatory requests shall only be

directed at specific factual allegations

made by a defendant in support of its

affirmative defenses. Additional

‘‘extraordinary’’ discovery in the form of

requests for document production,

depositions and additional

interrogatories will be generally

prohibited. The staff will consider the

interrogatory requests propounded,

issue rulings and direct the parties

accordingly at the initial status

conference and retain discretion to limit

the scope of permissible interrogatories

and modify or otherwise relax the

discovery procedures in particular cases

(including possible document

production, depositions, and additional

interrogatories). Staff will have

discretion to require the use of scanning

or other technology on an individual

case basis where review of large

numbers of documents is necessary.

323. Status Conferences. An initial

status conference will take place ten

business days after the filing of the

answer unless otherwise ordered by the

staff. Prior to the initial status

conference, the parties must meet and

confer regarding: (1) settlement

prospects; (2) discovery; (3) issues in

dispute; (4) schedules for pleadings; (5)

joint statements of stipulated facts,

disputed facts, and key legal issues; and

(6) in a section 271(d)(6)(B) proceeding,

whether the parties agree to waive the

section 271(d)(6)(B) ninety-day

resolution deadline. All proposals

agreed to and disputes remaining after

the ‘‘meet and confer’’ must be reduced

to writing and submitted to the staff two

business days prior to the initial status

conference. Parties must submit a joint

proposed order of the rulings made in

a status conference within twenty-four

hours of the conference, unless

otherwise directed by the staff.

Alternatively, if an audio recording or a

stenographer’s transcription of a status

conference is made, the parties must

submit, within three business days,

unless otherwise directed by the staff,

and in lieu of a joint proposed order,

either a transcript of such recording and

a copy of the audio recording or a copy

of the stenographer’s transcript.

324. These amended rules may place

a greater burden on parties, including

small business entities, to decide issues

such as discovery within a short time

frame. These rules, however, will enable

the Commission to resolve many

preliminary issues efficiently at the

initial status conference and thereby

prevent the parties from wasting

resources through delay. The

Commission retains the discretion to

reschedule the status conference to

provide more time to parties who are

not under statutory deadlines.

325. Cease, Cease and Desist Orders

and Other Forms of Interim Relief. We

will not delineate specific legal and

evidentiary standards for issuance of

cease and cease and desist orders, but

will consider such requests on a caseby-case basis.

326. In the NPRM, in conjunction

with our proposal to establish legal and

evidentiary standards for issuance of

cease and cease and desist orders, we

had noted that some courts consider the

following factors prior to issuing interim

relief: (1) likelihood of success on the

merits; (2) the threat of irreparable harm

absent the injunction; (3) no substantial

injury to other parties; and (4) the

furtherance of the public interest.
Federal Register / Vol. 63, No. 4 / Wednesday, January 7, 1998 / Rules and Regulations 1033

Several commenters stated that a more

relaxed standard should apply,

especially for resellers and small market

entrants. We conclude that it is more

appropriate to consider requests for

interim or injunctive relief on a case-bycase basis. It is impossible to anticipate

all of the various factual circumstances

that could form the basis of a complaint.

Similarly, the level and types of

information necessary to sustain or

defend against allegations of

misconduct by carriers is likely to vary

widely.

327. Damages. The Commission may

exercise discretion to process a

complaint in separate liability and

damages complaints on its own motion

in cases that do not involve one or more

of the statutory resolution deadlines and

may also encourage complainants to

voluntarily separate their complaints

into liability and damages complaints.

All complaints or supplemental

complaints seeking an award of

damages must contain either a detailed

computation of damages, including

supporting documentation and

materials, or an explanation why such

computation is not included. The

Commission may end its adjudication of

damages with the determination of the

sufficiency of the damages computation

method submitted by the complainant,

but retain jurisdiction over the

proceeding to the extent that the parties

are unable to agree on an exact amount

of damages by applying the mandated

computation method. Parties may

request a fourteen day suspension of the

damages proceedings, during which

parties may attempt to negotiate a

settlement or use ADR procedures. Staff

will have discretion to require a

defendant to either post a bond for or

place in an escrow account the amount

the Commission determines is likely to

be awarded.

328. Cross-Complaints and

Counterclaims. All counterclaims and

cross-complaints will be required to be

filed in separate actions. No

commenters propose alternatives to the

proposals for cross-complaints and

counterclaims in the NPRM that would

both ease the burden of small businesses

and accomplish the Commission’s

objectives. Although this rule may

require small businesses to litigate

certain related claims as independent

actions, the existence of statutory

deadlines makes this necessary.

Prohibiting the introduction of

counterclaims and cross-complaints late

in the complaint proceeding will

prevent parties from losing such claims

because they did not have sufficient

time during which to substantiate their

claims.

329. Upon an appropriate showing of

financial hardship or other public

interest factors, format and content

requirements shall be waived. In

addition, the staff will retain discretion

to take into account the burden of most

of these new requirements on a party

that is a small business entity. Finally,

these rules apply only to section 208

complaints that are filed with the

Commission. Complainants wishing to

assure themselves of the ability to

utilize full discovery, for example, are

not precluded from filing their

complaints in federal district court.

e. Steps Taken to Minimize

Significant Economic Impact on Small

Entities, and Significant Alternatives

Considered. 330. NAD proposes that

consumers, especially pro se consumers

with disabilities, be permitted to serve

complaints by facsimile transmission or

Internet. We have rejected NAD’s

proposal. We decline to authorize

service by Internet at this time because

we have received insufficient comments

on the issue, given the significance of

permitting electronic filing or service of

complaint pleadings. This issue may be

addressed at a later date, following

implementation of procedures pursuant

to our rulemaking regarding the

electronic filing of documents in

rulemaking proceedings. We reject

NAD’s proposal to permit service of

complaints by facsimile transmission

because we conclude that service of the

complaint must be accomplished in the

most reliable manner possible. Although

we are permitting service of pleadings

subsequent to the complaint to be by

facsimile transmission, such service

must be accompanied by mailed hard

copies in the event of faulty

transmission. Because we are requiring

the defendant to submit its answer

within twenty days of receipt of the

complaint by the complainant, any

delay or uncertainty in the receipt of the

complaint would unduly infringe on the

defendant’s due process rights.

331. Some commenters suggest

alternatives to the rules adopted

regarding format and content and

discovery. The NPRM had proposed that

information and belief allegations be

prohibited. ACTA, ATSI, Bechtel &

Cole, KMC, MFS, and NAD propose that

complainants be permitted to submit

allegations based on information and

belief because some small complainants

and small businesses would be unable

to obtain information in the possession

of large defendants. We agreed with

these commenters and the rule we adopt

will permit information and belief

allegations if they are made in good

faith and the complainant states in an

affidavit why the supporting facts could

not be reasonably ascertained.

332. ATSI proposes that different, less

rigorous complaint procedures be

implemented for complainants alleging

violations of section 260, pertaining to

the provision of telemessaging service,

because many of those complainants

would be fledgling small businesses.

TRA proposes special expedited

procedures for resale carrier

complainants, who may be dwarfed in

size and resources by their underlying

network service providers. For the

following reasons, we decline to adopt

the proposals of ATSI and TRA to

establish separate complaint procedures

for small business complainants. First,

we conclude that having separate sets of

procedures for certain types of

complaints would create confusion for

parties who might be unclear as to

which rules to follow and might even

lead to continuous and inadvertent

violations of our procedural rules.

Second, we conclude that separate

complaint procedures would permit

parties to exploit our rules by alleging

certain violations in order to manipulate

the time frame or level of evidentiary

support required in a particular

complaint. For example, a complainant

alleging that a BOC has violated certain

provisions of the Act might be tempted

to add an allegation that the BOC has

also failed to meet a condition required

for approval for provision of interLATA

services in violation of section 271, in

order to take advantage of the ninetyday resolution deadline mandated by

section 271(d)(6)(B). Third, to the extent

that certain commenters contend that

subjecting all complaints to expedited

procedures will unnecessarily work

hardships on complainants and

defendants in cases without statutory

deadlines, we note that the Commission

will retain considerable discretion to

accommodate the needs of parties in

cases where no statutory deadline

applies. Finally, separate sets of

procedures would be administratively

burdensome for the Commission. Not

only would it be cumbersome to

promulgate separate sets of procedures,

but it would decrease staff efficiency to

apply different procedural rules to

different complaints.

333. Several commenters object to the

complete prohibition on discovery that

was mentioned in the NPRM, on the

grounds that small complainants might

be unable to obtain information in the

sole possession of large defendant

carriers. We have taken these concerns

into account in our rule which permits

parties to submit discovery requests to

be ruled upon by the initial status

conference. This rule gives parties,
1034 Federal Register / Vol. 63, No. 4 / Wednesday, January 7, 1998 / Rules and Regulations

including small businesses, an

opportunity to make their cases for or

against limited discovery early in the

proceedings and also limits each party’s

ability to use discovery for delay or

other purposes unrelated to the merits

of the dispute. This abbreviation of the

discovery process and subsequent

expedited complaint resolution is

necessary to enable the Commission to

foster the pro-competitive policies of the

1996 Act by resolving promptly

marketplace issues that could impede

the development of competition in the

telecommunications field.

334. Although these amended rules

may place a greater burden on a small

business entity to provide better legal

and factual support early in the process,

we conclude that it does not

significantly alter the level of

evidentiary and legal support that

would be ultimately required of parties

in formal complaint actions pursuant to

the past rules. It may, however, make it

more difficult for complainants,

including small businesses, to gather the

information needed to prevail on their

complaints. Potentially higher initial

costs may be somewhat offset by the

prompt resolution of complaints and the

avoidance of protracted and costly

discovery proceedings and briefing

requirements. It has been noted, for

example, that the overall litigation costs

of ‘‘rocket docket’’ cases in the U.S.

District Court for the Eastern District of

Virginia are lower than the costs of

cases that take longer to resolve. Indeed,

by requiring better and more complete

submissions earlier in the process, these

amended rules reduce the need for

discovery and other information filings,

thereby significantly reducing the

burden on small business entities.

Although the requirement for

certification of attempted settlement of

discovery disputes may delay slightly

the filing of a motion to compel, we

conclude that this requirement will

serve to settle or narrow many discovery

disputes.

335. CBT suggests that parties be

permitted to attend status conferences

by telephone conference call to decrease

burdens and expenses for parties

located outside of Washington, D.C. We

agree and will permit parties to attend

by telephone conference call.

336. No commenters propose

alternatives to the damages proposals in

the NPRM that would both ease the

burden of small businesses and

accomplish the Commission’s

objectives. Although these damages

rules may require small business

entities to postpone litigation of

damages issues, any increased costs will

be somewhat offset by the prompt

resolution of the liability issues in

complaints and the avoidance of

protracted and costly discovery

proceedings and briefing requirements

in the initial proceeding. Permitting

parties with a settlement period during

a damages phase can contribute to

parties reaching a mutually satisfactory

solution. The bond and escrow account

requirements would only be

implemented in certain situations,

based upon staff consideration of

several factors, including the balance of

hardships between the complainant and

defendant.

337. As noted, upon an appropriate

showing of financial hardship or other

public interest factors, format and

content requirements shall be waived.

APCC and NYNEX propose specific

revenue levels that would qualify a

party to be eligible for a good cause

waiver. GST, KMC, and MFS suggest

having parties complete a ‘‘waiver’’

form which would contain a statement

of financial hardship. We conclude that

waiver requests shall be considered on

a case-by-case-basis and should not be

limited to financial hardship reasons.

Such discretion to grant waivers of the

format and content requirements based

on financial hardship and other public

interest factors will ensure, pursuant to

section 208, that ‘‘any person’’ has the

right to complain to the Commission

about acts or omissions by a carrier that

contravene the Act. For this reason, we

do not agree with APCC or NYNEX that

financial hardship should be

determined solely based on set revenue

or asset levels. The range of potential

complainants under section 208 is broad

and may include individuals, state

commissions, municipalities,

associations, and other entities of all

forms and sizes. Likewise, the size and

makeup of defendant carriers will vary

greatly. Thus we conclude that waiver

determinations should be made on a

case-by-case basis. The Commission

shall make every effort to apply its

discretion in a consistent and fair

manner to strike an appropriate balance

between strict compliance with the

rules and the needs of certain parties for

more lenient requirements and

timetables. APCC also suggests that a

party that receives a good cause waiver

should also be granted relief from

discovery limitations. We conclude that

the Commission shall have discretion to

waive or modify some or all of its rules

as appropriate when a waiver is granted

for good cause shown.

338. MFS, GST, and USTA

additionally suggest that the

Commission promulgate model or form

complaints or pleadings for pro se

parties. We find that § 1.721(b) of the

rules contains a suggested format for

formal complaints that is clear and

explicit and that no further form

complaints or model pleadings for pro

se complainants are necessary.

Furthermore, the Enforcement Division

of the Common Carrier Bureau currently

provides, via the Internet, direct

mailings, and public reference room

access, a fact sheet designed to instruct

consumers on how to file a formal

complaint with the Commission.

Finally, we conclude that the range of

subjects that could conceivably be

contained within a pleading is too broad

for a model pleading form to be of much

utility to pro se parties.

339. Overall, we conclude that there

will be a significant positive economic

impact on small entity carriers that, as

a result of this rulemaking, will find

their complaints resolved expeditiously.

The establishment of these rules of

practice and procedure shall, by

providing a forum for prompt resolution

of complaints of unreasonable,

discriminatory, or otherwise unlawful

conduct by BOCs and other

telecommunications carriers, will foster

robust competition in all

telecommunications markets.

f. Report to Congress. 340. The

Commission will send a copy of the

Amendment of Rules Governing

Procedures To Be Followed When

Formal Complaints Are Filed Against

Common Carriers, Report and Order,

including this FRFA, in a report to be

sent to Congress pursuant to the Small

Business Regulatory Enforcement

Fairness Act of 1996, see 5 U.S.C. 801

(a)(1)(A). A summary of this Report and

Order and this FRFA will also be

published in the Federal Register, see 5

U.S.C. 604(b), and will be sent to the

Chief Counsel for Advocacy of the Small

Business Administration.

V. Ordering Clauses

341. Accordingly, It is ordered that

pursuant to sections 1, 4, 201–205, 208,

260, 271, 274, and 275 of the

Communications Act of 1934, as

amended, 47 U.S.C. 151, 154, 201–205,

208, 260, 271, 274, and 275, the

policies, rules, and requirements set

forth herein are adopted.

342. It is further ordered that 47 CFR

Parts 0 and 1, Are amended as set forth

below effective March 18, 1998.

343. It is further ordered that the

Commission’s Office of Public Affairs

Shall send a copy of this Report and

Order, including the FRFA, to the Chief

Counsel for Advocacy of the Small

Business Administration in accordance

with paragraph 603(a) of the Regulatory

Flexibility Act Pub. L. 96–354, 94 Stat.

1164, 5 U.S.C. 601, et seq. (1981).
Federal Register / Vol. 63, No. 4 / Wednesday, January 7, 1998 / Rules and Regulations 1035

344. The Report and Order Is adopted,

and the requirements contained herein

will become effective March 18, 1998.

List of Subjects

47 CFR Part 0

Organization and functions

(Government agencies).

47 CFR Part 1

Communications common carriers.

Federal Communications Commission.

Magalie Roman Salas,

Secretary.

Rule Changes

Parts 0 and 1 of title 47 of the Code

of Federal Regulations are amended as

follows:

PART 0—COMMISSION

ORGANIZATION

1. The authority citation for Part 0

continues to read as follows:

Authority: Sec. 5, 48 Stat. 1068, as

amended, 47 U.S.C. 155, 225, unless

otherwise noted.

2. Section 0.291 is amended by

revising paragraph (d) to read as

follows:

§ 0.291 Authority delegated.

* * * * *

(d) Authority to designate for hearing.

The Chief, Common Carrier Bureau

shall not have authority to designate for

hearing any formal complaints which

present novel questions of law or policy

which cannot be resolved under

outstanding precedents or guidelines.

The Chief, Common Carrier Bureau

shall not have authority to designate for

hearing any applications except

applications for facilities where the

issues presented relate solely to whether

the applicant has complied with

outstanding precedents and guidelines.

* * * * *

PART 1—PRACTICE AND

PROCEDURE

3. The authority citation for Part 1

continues to read as follows:

Authority: 47 U.S.C. 151, 154, 303, and

309(j) unless otherwise noted.

4. Section 1.47 is amended by revising

paragraphs (b) and (d), and adding new

paragraph (h) to read as follows:

§ 1.47 Service of documents and proof of

service.

* * * * *

(b) Where any person is required to

serve any document filed with the

Commission, service shall be made by

that person or by his representative on

or before the day on which the

document is filed.

* * * * *

(d) Except in formal complaint

proceedings against common carriers

under §§ 1.720 through 1.736,

documents may be served upon a party,

his attorney, or other duly constituted

agent by delivering a copy or by mailing

a copy to the last known address. See

§ 1.736.

* * * * *

(h) Every common carrier subject to

the Communications Act of 1934, as

amended, shall designate an agent in the

District of Columbia, and may designate

additional agents if it so chooses, upon

whom service of all notices, process,

orders, decisions, and requirements of

the Commission may be made for and

on behalf of said carrier in any

proceeding before the Commission.

Such designation shall include, for both

the carrier and its designated agents, a

name, business address, telephone or

voicemail number, facsimile number,

and, if available, Internet e-mail

address. The carrier shall additionally

list any other names by which it is

known or under which it does business,

and, if the carrier is an affiliated

company, the parent, holding, or

management company. Such

information shall be filed with the

Formal Complaints and Investigations

Branch of the Common Carrier Bureau.

Carriers must notify the Commission

within one week of any changes in their

information. A paper copy of this

designation list shall be maintained in

the Office of the Secretary of the

Commission. Service of any notice,

process, orders, decisions or

requirements of the Commission may be

made upon such carrier by leaving a

copy thereof with such designated agent

at his office or usual place of residence.

If a carrier fails to designate such an

agent, service of any notice or other

process in any proceeding before the

Commission, or of any order, decision,

or requirement of the Commission, may

be made by posting such notice,

process, order, requirement, or decision

in the Office of the Secretary of the

Commission.

5. Section 1.720 is amended by

revising the introductory paragraph and

paragraph (h) and adding paragraph (j)

to read as follows:

§ 1.720 General pleading requirements.

Formal complaint proceedings are

generally resolved on a written record

consisting of a complaint, answer, and

joint statement of stipulated facts,

disputed facts and key legal issues,

along with all associated affidavits,

exhibits and other attachments.

Commission proceedings may also

require or permit other written

submissions such as briefs, written

interrogatories, and other

supplementary documents or pleadings.

All written submissions, both

substantively and procedurally, must

conform to the following standards:

* * * * *

(h) Specific reference shall be made to

any tariff provision relied on in support

of a claim or defense. Copies of relevant

tariffs or relevant portions of tariffs that

are referred to or relied upon in a

complaint, answer, or other pleading

shall be appended to such complaint,

answer, or other pleading.

* * * * *

(j) Pleadings shall identify the name,

address, telephone number, and

facsimile transmission number for either

the filing party’s attorney or, where a

party is not represented by an attorney,

the filing party.

6. Section 1.721 is amended by

revising paragraphs (a)(5), (a)(6), (a)(7),

(a)(8) and adding paragraphs (a)(9),

(a)(10), (a)(11), (a)(12), (a)(13), (a)(14), (c)

and (d) to read as follows:

§ 1.721 Format and content.

(a) * * *

(5) A complete statement of facts

which, if proven true, would constitute

such a violation. All material facts must

be supported, pursuant to the

requirements of § 1.720(c) and

paragraph (a)(11) of this section, by

relevant affidavits and documentation,

including copies of relevant written

agreements, offers, counter-offers,

denials, or other related

correspondence. The statement of facts

shall include a detailed explanation of

the manner and time period in which a

defendant has allegedly violated the

Act, Commission order, or Commission

rule in question, including a full

identification or description of the

communications, transmissions,

services, or other carrier conduct

complained of and the nature of any

injury allegedly sustained by the

complainant. Assertions based on

information and belief are expressly

prohibited unless made in good faith

and accompanied by an affidavit

explaining the basis for the plaintiff’s

belief and why the complainant could

not reasonably ascertain the facts from

the defendant or any other source;

(6) Proposed findings of fact,

conclusions of law, and legal analysis

relevant to the claims and arguments set

forth in the complaint;

(7) The relief sought, including

recovery of damages and the amount of

damages claimed, if known;
1036 Federal Register / Vol. 63, No. 4 / Wednesday, January 7, 1998 / Rules and Regulations

(8) Certification that the complainant

has, in good faith, discussed or

attempted to discuss, the possibility of

settlement with each defendant prior to

the filing of the formal complaint. Such

certification shall include a statement

that, prior to the filing of the complaint,

the complainant mailed a certified letter

outlining the allegations that form the

basis of the complaint it anticipated

filing with the Commission to the

defendant carrier that invited a response

within a reasonable period of time and

a brief summary of all additional steps

taken to resolve the dispute prior to the

filing of the formal complaint. If no

additional steps were taken, such

certificate shall state the reason(s) why

the complainant believed such steps

would be fruitless;

(9) Whether a separate action has been

filed with the Commission, any court, or

other government agency that is based

on the same claim or same set of facts,

in whole or in part, or whether the

complaint seeks prospective relief

identical to the relief proposed or at

issue in a notice-and-comment

proceeding that is concurrently before

the Commission;

(10) An information designation

containing:

(i) The name, address, and position of

each individual believed to have

firsthand knowledge of the facts alleged

with particularity in the complaint,

along with a description of the facts

within any such individual’s

knowledge;

(ii) A description of all documents,

data compilations and tangible things in

the complainant’s possession, custody,

or control, that are relevant to the facts

alleged with particularity in the

complaint. Such description shall

include for each document:

(A) The date it was prepared, mailed,

transmitted, or otherwise disseminated;

(B) The author, preparer, or other

source;

(C) The recipient(s) or intended

recipient(s);

(D) Its physical location; and

(E) A description of its relevance to

the matters contained in the complaint;

and

(iii) A complete description of the

manner in which the complainant

identified all persons with information

and designated all documents, data

compilations and tangible things as

being relevant to the dispute, including,

but not limited to, identifying the

individual(s) that conducted the

information search and the criteria used

to identify such persons, documents,

data compilations, tangible things, and

information;

(11) Copies of all affidavits,

documents, data compilations and

tangible things in the complainant’s

possession, custody, or control, upon

which the complainant relies or intends

to rely to support the facts alleged and

legal arguments made in the complaint;

(12) A completed Formal Complaint

Intake Form;

(13) Verification of the filing payment

required under § 1.1105(1)(c) or (d); and

(14) A certificate of service.

* * * * *

(c) Where the complaint is filed

pursuant to § 47 U.S.C. § 271(d)(6)(B),

the complainant shall clearly indicate

whether or not it is willing to waive the

ninety-day resolution deadline

contained within 47 U.S.C. 271(d)(6)(B),

in accordance with the requirements of

§ 1.736.

(d) The complainant may petition the

staff, pursuant to § 1.3, for a waiver of

any of the requirements of this section.

Such waiver may be granted for good

cause shown.

Section 1.722 is revised to read as

follows:

§1.722 Damages.

(a) In a case where recovery of

damages is sought, the complaint shall

contain a clear and unequivocal request

for damages and appropriate allegations

in support of such claim in accordance

with the requirements of paragraph (c)

of this section.

(b) Damages will not be awarded upon

a complaint unless specifically

requested. Damages may be awarded,

however, upon a supplemental

complaint that complies fully with the

requirement of paragraph (c) of this

section, based upon a finding of liability

by the Commission in the original

proceeding. Provided that:

(1) If recovery of damages is first

sought by supplemental complaint, such

supplemental compalint must be filed

within, and recovery is limited to, the

statutory limitations contained in

section 415 of the Communications Act;

(2) If recovery of damages is clearly

and unequivocally requested in the

original complaint, by identification of

the claim giving rise to the damages and

a general statement of the nature of the

injury suffered, such claim for damages

shall relate back to the filing date of the

original formal complaint if:

(i) The complainant clearly states in

the original complaint that it chooses to

have liability and prospective relief

issues resolved prior to the

consideration of damages issues; and

(ii) The complainant files its

supplemental complaint for damages

within sixty days after public notice (as

defined in § 1.4(b)) of a decision on the

merits of the original complaint.

(3) Where a complainant voluntarily

elects to seek the recovery of damages

upon a supplemental complaint in

accordance with the requirements of

paragraph (b)(2) of this section, the

Commission will resolve the liability

complaint within any applicable

complaint resolution deadlines

contained in the Act and defer

adjudication of the damages complaint

until after the liability complaint has

been resolved.

(c) In all cases in which recovery of

damages is sought, it shall be the

responsibility of the complainant to

include, within either the complaint or

the supplemental complaint for

damages filed in accordance with

paragraph (b) of this section, either:

(1) A computation of each and every

category of damages for which recovery

is sought, along with an identification of

all relevant documents and materials or

such other evidence to be used by the

complainant to determine the amount of

such damages; or

(2) An explanation of:

(i) The information not in the

possession of the complaining party that

is necessary to develop a detailed

computation of damages;

(ii) Why such information is

unavailable to the complaining party;

(iii) The factual basis the complainant

has for believing that such evidence of

damages exists; and

(iv) A detailed outline of the

methodology that would be used to

create a computation of damages with

such evidence.

(d) Where a complainant voluntarily

elects to seek the recovery of damages

upon a supplemental complaint in

accordance with the requirements of

paragraph (b)(2) of this section, the

following procedures may apply in the

event that the Commission determines

that the defendant is liable based upon

its review of the original complaint:

(1) Issues concerning the amount, if

any, of damages may be either

designated by the Bureau for hearing

before, or, if the parties agree, submitted

for mediation to, a Commission

Administrative Law Judge. Such

Administrative Law Judge shall be

chosen in the following manner:

(i) By agreement of the parties and the

Chief Administrative Law Judge; or

(ii) In the absence of such agreement,

the Chief Administrative Law Judge

shall designate the Administrative Law

Judge.

(2) The Commission may, in its

discretion, order the defendant either to

post a bond for, or deposit into an

interest bearing escrow account, a sum
Federal Register / Vol. 63, No. 4 / Wednesday, January 7, 1998 / Rules and Regulations 1037

equal to the amount of damages which

the Commission finds, upon

preliminary investigation, is likely to be

ordered after the issue of damages is

fully litigated, or some lesser sum which

may be appropriate, provided the

Commission finds that the grant of this

relief is favored on balance upon

consideration of the following factors:

(i) The complainant’s potential

irreparable injury in the absence of such

deposit;

(ii) The extent to which damages can

be accurately calculated;

(iii) The balance of the hardships

between the complainant and the

defendant; and

(iv) Whether public interest

considerations favor the posting of the

bond or ordering of the deposit.

(3) The Commission may, in its

discretion, suspend ongoing damages

proceedings for fourteen days, to

provide the parties with a time within

which to pursue settlement negotiations

and/or alternative dispute resolution

procedures.

(4) The Commission may, in its

discretion, end adjudication of damages

with a determination of the sufficiency

of a damages computation method or

formula. No such method or formula

shall contain a provision to offset any

claim of the defendant against the

complainant. The parties shall negotiate

in good faith to reach an agreement on

the exact amount of damages pursuant

to the Commission-mandated method or

formula. Within thirty days of the

release date of the damages order,

parties shall submit jointly to the

Commission either:

(i) A statement detailing the parties’

agreement as to the amount of damages;

(ii) A statement that the parties are

continuing to negotiate in good faith

and a request that the parties be given

an extension of time to continue

negotiations; or

(iii) A statement detailing the bases

for the continuing dispute and the

reasons why no agreement can be

reached.

8. Section 1.724 is amended by

revising paragraphs (a), (b), and (c) and

adding new paragraphs (f), (g), (h), (i),

and (j) to read as follows:

§ 1.724 Answers.

(a) Any carrier upon which a copy of

a formal complaint is served shall

answer such complaint in the manner

prescribed under this section within

twenty days of service of the formal

complaint by the complainant, unless

otherwise directed by the Commission.

(b) The answer shall advise the

complainant and the Commission fully

and completely of the nature of any

defense, and shall respond specifically

to all material allegations of the

complaint. Every effort shall be made to

narrow the issues in the answer. The

defendant shall state concisely its

defenses to each claim asserted and

shall admit or deny the averments on

which the complainant relies and state

in detail the basis for admitting or

denying such averment. General denials

are prohibited. If the defendant is

without knowledge or information

sufficient to form a belief as to the truth

of an averment, the defendant shall so

state and this has the effect of a denial.

When a defendant intends in good faith

to deny only part of an averment, the

defendant shall specify so much of it as

is true and shall deny only the

remainder. The defendant may deny the

allegations of the complaint as specific

denials of either designated averments

or paragraphs.

(c) The answer shall contain proposed

findings of fact, conclusions of law, and

legal analysis relevant to the claims and

arguments set forth in the answer.

* * * * *

(f) The answer shall include an

information designation containing:

(1) The name, address, and position of

each individual believed to have

firsthand knowledge of the facts alleged

with particularity in the answer, along

with a description of the facts within

any such individual’s knowledge;

(2) A description of all documents,

data compilations and tangible things in

the defendant’s possession, custody, or

control, that are relevant to the facts

alleged with particularity in the answer.

Such description shall include for each

document:

(i) The date it was prepared, mailed,

transmitted, or otherwise disseminated;

(ii) The author, preparer, or other

source;

(iii) The recipient(s) or intended

recipient(s);

(iv) Its physical location; and

(v) A description of its relevance to

the matters in dispute.

(3) A complete description of the

manner in which the defendant

identified all persons with information

and designated all documents, data

compilations and tangible things as

being relevant to the dispute, including,

but not limited to, identifying the

individual(s) that conducted the

information search and the criteria used

to identify such persons, documents,

data compilations, tangible things, and

information;

(g) The answer shall attach copies of

all affidavits, documents, data

compilations and tangible things in the

defendant’s possession, custody, or

control, upon which the defendant

relies or intends to rely to support the

facts alleged and legal arguments made

in the answer.

(h) The answer shall contain

certification that the defendant has, in

good faith, discussed or attempted to

discuss, the possibility of settlement

with the complainant prior to the filing

of the formal complaint. Such

certification shall include a brief

summary of all steps taken to resolve

the dispute prior to the filing of the

formal complaint. If no such steps were

taken, such certificate shall state the

reason(s) why the defendant believed

such steps would be fruitless;

(i) Where the complaint is filed

pursuant to 47 U.S.C. 271(d)(6)(B), the

defendant shall clearly indicate its

willingness to waive the 90-day

resolution deadline contained within 47

U.S.C. 271(d)(6)(B), in accordance with

the requirements of § 1.736.

(j) The defendant may petition the

staff, pursuant to § 1.3, for a waiver of

any of the requirements of this section.

Such waiver may be granted for good

cause shown.

9. Section 1.725 is revised to read as

follows:

§ 1.725 Cross-complaints and

counterclaims.

Cross-complaints seeking any relief

within the jurisdiction of the

Commission against any carrier that is a

party (complainant or defendant) to that

proceeding are expressly prohibited.

Any claim that might otherwise meet

the requirements of a cross-complaint

may be filed as a separate complaint in

accordance with §§ 1.720 through 1.736.

For purposes of this subpart, the term

‘‘cross-complaint’’ shall include

counterclaims.

10. Section 1.726 is revised to read as

follows:

§ 1.726 Replies.

(a) Within three days after service of

an answer containing affirmative

defenses presented in accordance with

the requirements of § 1.724(e), a

complainant may file and serve a reply

containing statements of relevant,

material facts that shall be responsive to

only those specific factual allegations

made by the defendant in support of its

affirmative defenses. Replies which

contain other allegations or arguments

will not be accepted or considered by

the Commission.

(b) Failure to reply to an affirmative

defense shall be deemed an admission

of such affirmative defense and of any

facts supporting such affirmative

defense that are not specifically

contradicted in the complaint.
1038 Federal Register / Vol. 63, No. 4 / Wednesday, January 7, 1998 / Rules and Regulations

(c) The reply shall contain proposed

findings of fact, conclusions of law, and

legal analysis relevant to the claims and

arguments set forth in the reply.

(d) The reply shall include an

information designation containing:

(1) The name, address and position of

each individual believed to have

firsthand knowledge about the facts

alleged with particularity in the reply,

along with a description of the facts

within any such individual’s

knowledge.

(2) A description of all documents,

data compilations and tangible things in

the complainant’s possession, custody,

or control that are relevant to the facts

alleged with particularity in the reply.

Such description shall include for each

document:

(i) The date prepared, mailed,

transmitted, or otherwise disseminated;

(ii) The author, preparer, or other

source;

(iii) The recipient(s) or intended

recipient(s);

(iv) Its physical location; and

(v) A description of its relevance to

the matters in dispute.

(3) A complete description of the

manner in which the complainant

identified all persons with information

and designated all documents, data

compilations and tangible things as

being relevant to the dispute, including,

but not limited to, identifying the

individual(s) that conducted the

information search and the criteria used

to identify such persons, documents,

data compilations, tangible things, and

information;

(e) The reply shall attach copies of all

affidavits, documents, data compilations

and tangible things in the complainant’s

possession, custody, or control upon

which the complainant relies or intends

to rely to support the facts alleged and

legal arguments made in the reply.

(f) The complainant may petition the

staff, pursuant to § 1.3, for a waiver of

any of the requirements of this section.

Such waiver may be granted for good

cause shown.

Section 1.727 is amended by revising

paragraphs (b), (c), (d), and (e) and

adding new paragraphs (g) and (h) to

read as follows:

§ 1. 727 Motions.

* * * * *

(b) All dispositive motions shall

contain proposed findings of fact and

conclusions of law, with supporting

legal analysis, relevant to the contents of

the pleading. Motions to compel

discovery must contain a certification

by the moving party that a good faith

attempt to resolve the dispute was made

prior to filing the motion. All facts

relied upon in motions must be

supported by documentation or

affidavits pursuant to the requirements

of § 1.720(c), except for those facts of

which official notice may be taken.

(c) The moving party shall provide a

proposed order for adoption, which

appropriately incorporates the basis

therefor, including proposed findings of

fact and conclusions of law relevant to

the pleading. The proposed order shall

be clearly marked as a ‘‘Proposed

Order.’’ The proposed order shall be

submitted both as a hard copy and on

computer disk in accordance with the

requirements of § 1.734(d). Where

appropriate, the proposed order format

should conform to that of a reported

FCC order.

(d) Oppositions to any motion shall be

accompanied by a proposed order for

adoption, which appropriately

incorporates the basis therefor,

including proposed findings of fact and

conclusions of law relevant to the

pleading. The proposed order shall be

clearly captioned as a ‘‘Proposed

Order.’’ The proposed order shall be

submitted both as a hard copy and on

computer disk in accordance with the

requirements of § 1.734(d). Where

appropriate, the proposed order format

should conform to that of a reported

FCC order.

(e) Oppositions to motions may be

filed and served within five business

days after the motion is filed and served

and not after. Oppositions shall be

limited to the specific issues and

allegations contained in such motion;

when a motion is incorporated in an

answer to a complaint, the opposition to

such motion shall not address any

issues presented in the answer that are

not also specifically raised in the

motion. Failure to oppose any motion

may constitute grounds for granting of

the motion.

* * * * *

(g) Motions seeking an order that the

allegations in the complaint be made

more definite and certain are prohibited.

(h) Amendments or supplements to

complaints to add new claims or

requests for relief are prohibited. Parties

are responsible, however, for the

continuing accuracy and completeness

of all information and supporting

authority furnished in a pending

complaint proceeding as required under

§ 1.720(g).

2. Section 1.729 is revised to read as

follows:

§ 1.729 Discovery.

(a) A complainant may file with the

Commission and serve on a defendant,

concurrently with its complaint, a

request for up to ten written

interrogatories. A defendant may file

with the Commission and serve on a

complainant, during the period starting

with the service of the complaint and

ending with the service of its answer, a

request for up to ten written

interrogatories. A complainant may file

with the Commission and serve on a

defendant, within three calendar days of

service of the defendant’s answer, a

request for up to five written

interrogatories. Subparts of any

interrogatory will be counted as separate

interrogatories for purposes of

compliance with this limit. Requests for

interrogatories filed and served

pursuant to this procedure may be used

to seek discovery of any non-privileged

matter that is relevant to the material

facts in dispute in the pending

proceeding, provided, however, that

requests for interrogatories filed and

served by a complainant after service of

the defendant’s answer shall be limited

in scope to specific factual allegations

made by the defendant in support of its

affirmative defenses. This procedure

may not be employed for the purpose of

delay, harassment or obtaining

information that is beyond the scope of

permissible inquiry related to the

material facts in dispute in the pending

proceeding.

(b) Requests for interrogatories filed

and served pursuant to paragraph (a) of

this section shall contain a listing of the

interrogatories requested and an

explanation of why the information

sought in each interrogatory is both

necessary to the resolution of the

dispute and not available from any other

source.

(c) A responding party shall file with

the Commission and serve on the

propounding party any opposition and

objections to the requests for

interrogatories as follows:

(1) By the defendant, within ten

calendar days of service of the requests

for interrogatories served

simultaneously with the complaint and

within five calendar days of the requests

for interrogatories served following

service of the answer;

(2) By the complainant, within five

calendar days of service of the requests

for interrogatories; and

(3) In no event less than three

calendar days prior to the initial status

conference as provided for in § 1.733(a).

(d) Commission staff will consider the

requests for interrogatories, properly

filed and served pursuant to paragraph

(a) of this section, along with any

objections or oppositions thereto,

properly filed and served pursuant to

paragraph (b) of this section, at the

initial status conference, as provided for

in § 1.733(a)(5), and at that time
Federal Register / Vol. 63, No. 4 / Wednesday, January 7, 1998 / Rules and Regulations 1039

determine the interrogatories, if any, to

which parties shall respond, and set the

schedule of such response.

(e) The interrogatories ordered to be

answered pursuant to paragraph (d) of

this section are to be answered

separately and fully in writing under

oath or affirmation by the party served,

or if such party is a public or private

corporation or partnership or

association, by any officer or agent who

shall furnish such information as is

available to the party. The answers shall

be signed by the person making them.

The answers shall be filed with the

Commission and served on the

propounding party.

(f) A propounding party asserting that

a responding party has provided an

inadequate or insufficient response to

Commission-ordered discovery request

may file a motion to compel within ten

days of the service of such response, or

as otherwise directed by Commission

staff, pursuant to the requirements of

§ 1.727.

(g) The Commission may, in its

discretion, require parties to provide

documents to the Commission in a

scanned or other electronic format that

provides:

(1) Indexing by useful identifying

information about the documents; and

(2) Technology that allows staff to

annotate the index so as to make the

format an efficient means of reviewing

the documents.

(h) The Commission may allow

additional discovery, including, but not

limited to, document production,

depositions and/or additional

interrogatories. In its discretion, the

Commission may modify the scope,

means and scheduling of discovery in

light of the needs of a particular case

and the requirements of applicable

statutory deadlines.

13. Section 1.730 is removed.

14. Section 1.731 is amended by

revising the section heading and

paragraph (a) to read as follows:

§ 1.731 Confidentiality of information

produced or exchanged by the parties.

(a) Any materials generated in the

course of a formal complaint proceeding

may be designated as proprietary by that

party if the party believes in good faith

that the materials fall within an

exemption to disclosure contained in

the Freedom of Information Act (FOIA),

5 U.S.C. 552(b)(1) through (9). Any party

asserting confidentiality for such

materials shall so indicate by clearly

marking each page, or portion thereof,

for which a proprietary designation is

claimed. If a proprietary designation is

challenged, the party claiming

confidentiality shall have the burden of

demonstrating, by a preponderance of

the evidence, that the material

designated as proprietary falls under the

standards for nondisclosure enunciated

in the FOIA.

* * * * *

15. Section 1.732 is amended by

revising paragraphs (a), (b), (c), (d), (f),

and adding new paragraph (h) to read as

follows:

§ 1.732 Other required written

submissions.

(a) The Commission may, in its

discretion, or upon a party’s motion

showing good cause, require the parties

to file briefs summarizing the facts and

issues presented in the pleadings and

other record evidence.

(b) Unless otherwise directed by the

Commission, all briefs shall include all

legal and factual claims and defenses

previously set forth in the complaint,

answer, or any other pleading submitted

in the proceeding. Claims and defenses

previously made but not reflected in the

briefs will be deemed abandoned. The

Commission may, in its discretion, limit

the scope of any briefs to certain

subjects or issues. A party shall attach

to its brief copies of all documents, data

compilations, tangible things, and

affidavits upon which such party relies

or intends to rely to support the facts

alleged and legal arguments made in its

brief and such brief shall contain a full

explanation of how each attachment is

relevant to the issues and matters in

dispute. All such attachments to a brief

shall be documents, data compilations

or tangible things, or affidavits made by

persons, that were identified by any

party in its information designations

filed pursuant to §§ 1.721(a)(10)(i),

(a)(10)(ii), 1.724(f)(1), (f)(2), and

1.726(d)(1), (d)(2). Any other supporting

documentation or affidavits that is

attached to a brief must be accompanied

by a full explanation of the relevance of

such materials and why such materials

were not identified in the information

designations. These briefs shall contain

the proposed findings of fact and

conclusions of law which the filing

party is urging the Commission to

adopt, with specific citation to the

record, and supporting relevant

authority and analysis.

(c) In cases in which discovery is not

conducted, absent an order by the

Commission that briefs be filed, parties

may not submit briefs. If the

Commission does authorize the filing of

briefs in cases in which discovery is not

conducted, briefs shall be filed

concurrently by both the complainant

and defendant at such time as

designated by the Commission staff and

in accordance with the provisions of

this section.

(d) In cases in which discovery is

conducted, briefs shall be filed

concurrently by both the complainant

and defendant at such time designated

by the Commission staff.

* * * * *

(f) Initial briefs shall be no longer than

twenty-five pages. Reply briefs shall be

no longer than ten pages. Either on its

own motion or upon proper motion by

a party, the Commission staff may

establish other page limits for briefs.

* * * * *

(h) The parties shall submit a joint

statement of stipulated facts, disputed

facts, and key legal issues no later than

two business days prior to the initial

status conference, scheduled in

accordance with the provisions of

§ 1.733(a).

16. Section 1.733 is amended by

revising paragraphs (a) introductory

text, (a)(2), (a)(4), (a)(5), (a)(6), (b), (c),

(d), and (e) and adding new paragraphs

(f), (g), and (h) to read as follows:

§ 1.733 Status conference.

(a) In any complaint proceeding, the

Commission may, in its discretion,

direct the attorneys and/or the parties to

appear before it for a status conference.

Unless otherwise ordered by the

Commission, an initial status conference

shall take place, at the time and place

designated by the Commission staff, ten

business days after the date the answer

is due to be filed. A status conference

may include discussion of:

* * * * *

(2) The necessity for or desirability of

additional pleadings or evidentiary

submissions;

* * * * *

(4) Settlement of all or some of the

matters in controversy by agreement of

the parties;

(5) Whether discovery is necessary

and, if so, the scope, type and schedule

for such discovery;

(6) The schedule for the remainder of

the case and the dates for any further

status conferences; and

* * * * *

(b)(1) Parties shall meet and confer

prior to the initial status conference to

discuss:

(i) Settlement prospects;

(ii) Discovery;

(iii) Issues in dispute;

(iv) Schedules for pleadings;

(v) Joint statement of stipulated facts,

disputed facts, and key legal issues; and

(vi) In a 47 U.S.C. 271(d)(6)(B)

proceeding, whether or not the parties

agree to waive the 47 U.S.C. 271(d)(6)(B)

90-day resolution deadline.
1040 Federal Register / Vol. 63, No. 4 / Wednesday, January 7, 1998 / Rules and Regulations

(2) Parties shall submit a joint

statement of all proposals agreed to and

disputes remaining as a result of such

meeting to Commission staff at least two

business days prior to the scheduled

initial status conference.

(c) In addition to the initial status

conference referenced in paragraph (a)

of this section, any party may also

request that a conference be held at any

time after the complaint has been filed.

(d) During a status conference, the

Commission staff may issue oral rulings

pertaining to a variety of interlocutory

matters relevant to the conduct of a

formal complaint proceeding including,

inter alia, procedural matters, discovery,

and the submission of briefs or other

evidentiary materials.

(e) Parties may make, upon written

notice to the Commission and all

attending parties at least three business

days prior to the status conference, an

audio recording of the Commission

staff’s summary of its oral rulings.

Alternatively, upon agreement among

all attending parties and written notice

to the Commission at least three

business days prior to the status

conference, the parties may make an

audio recording of, or use a

stenographer to transcribe, the oral

presentations and exchanges between

and among the participating parties,

insofar as such communications are

‘‘on-the-record’’ as determined by the

Commission staff, as well as the

Commission staff’s summary of its oral

rulings. A complete transcript of any

audio recording or stenographic

transcription shall be filed with the

Commission as part of the record,

pursuant to the provisions of paragraph

(f)(2) of this section. The parties shall

make all necessary arrangements for the

use of a stenographer and the cost of

transcription, absent agreement to the

contrary, will be shared equally by all

parties that agree to make the record of

the status conference.

(f) The parties in attendance, unless

otherwise directed, shall either:

(1) Submit a joint proposed order

memorializing the oral rulings made

during the conference to the

Commission by 5:30 pm, Eastern Time,

on the business day following the date

of the status conference, or as otherwise

directed by Commission staff. In the

event the parties in attendance cannot

reach agreement as to the rulings that

were made, the joint proposed order

shall include the rulings on which the

parties agree, and each party’s

alternative proposed rulings for those

rulings on which they cannot agree.

Commission staff will review and make

revisions, if necessary, prior to signing

and filing the submission as part of the

record. The proposed order shall be

submitted both as hard copy and on

computer disk in accordance with the

requirements of § 1.734(d); or

(2) Pursuant to the requirements of

paragraph (e) of this section, submit to

the Commission by 5:30 pm., Eastern

Time, on the third business day

following the status conference or as

otherwise directed by Commission staff

either:

(i) A transcript of the audio recording

of the Commission staff’s summary of its

oral rulings;

(ii) A transcript of the audio recording

of the oral presentations and exchanges

between and among the participating

parties, insofar as such communications

are ‘‘on-the-record’’ as determined by

the Commission staff, and the

Commission staff’s summary of its oral

rulings; or

(iii) A stenographic transcript of the

oral presentations and exchanges

between and among the participating

parties, insofar as such communications

are ‘‘on-the-record’’ as determined by

the Commission staff, and the

Commission staff’s summary of its oral

rulings.

(g) Status conferences will be

scheduled by the Commission staff at

such time and place as it may designate

to be conducted in person or by

telephone conference call.

(h) The failure of any attorney or

party, following reasonable notice, to

appear at a scheduled conference will

be deemed a waiver by that party and

will not preclude the Commission staff

from conferring with those parties and/

or counsel present.

17. Section 1.734 is amended by

revising paragraph (c) and adding new

paragraph (d) to read as follows:

§ 1.734 Specifications as to pleadings,

briefs, and other documents; subscription.

* * * * *

(c) The original of all pleadings and

other submissions filed by any party

shall be signed by the party, or by the

party’s attorney. The signing party shall

include in the document his or her

address, telephone number, facsimile

number and the date on which the

document was signed. Copies should be

conformed to the original. Unless

specifically required by rule or statute,

pleadings need not be verified. The

signature of an attorney or party shall be

a certificate that the attorney or party

has read the pleading, motion, or other

paper; that to the best of his or her

knowledge, information, and belief

formed after reasonable inquiry, it is

well grounded in fact and is warranted

by existing law or a good faith argument

for the extension, modification, or

reversal of existing law; and that it is

not interposed solely for purposes of

delay or for any other improper

purpose.

(d) All proposed orders shall be

submitted both as hard copies and on

computer disk formatted to be

compatible with the Commission’s

computer system and using the

Commission’s current wordprocessing

software. Each disk should be submitted

in ‘‘read only’’ mode. Each disk should

be clearly labelled with the party’s

name, proceeding, type of pleading, and

date of submission. Each disk should be

accompanied by a cover letter. Parties

who have submitted copies of tariffs or

reports with their hard copies need not

include such tariffs or reports on the

disk. Upon showing of good cause, the

Commission may waive the

requirements of this paragraph.

18. Section 1.735 is amended by

revising paragraphs (b), (d), (e), and (f)

to read as follows:

§ 1.735 Copies; service; separate filings

against multiple defendants.

* * * * *

(b) The complainant shall file an

original copy of the complaint,

accompanied by the correct fee, in

accordance with part I, subpart G (see

§ 1.1105(1)(c) and (d)) and, on the same

day:

(1) File three copies of the complaint

with the Office of the Commission

Secretary;

(2) If the complaint is filed against a

carrier concerning matters within the

responsibility of the Common Carrier

Bureau (see § 0.291 of this chapter),

serve two copies on the Chief, Formal

Complaints and Investigations Branch,

Enforcement Division, Common Carrier

Bureau;

(3) If the complaint is filed against a

wireless telecommunications carrier

concerning matters within the

responsibility of the Wireless

Telecommunications Bureau (see

§ 0.331 of this chapter), serve two copies

on the Chief, Compliance and Litigation

Branch, Enforcement and Consumer

Information Division, Wireless

Telecommunications Bureau;

(4) If the complaint is filed against a

carrier concerning matters within the

responsibility of the International

Bureau (see § 0.261 of this chapter),

serve a copy on the Chief,

Telecommunications Division,

International Bureau, and serve two

copies on the Chief, Formal Complaints

and Investigations Branch, Enforcement

Division, Common Carrier Bureau; and

(5) If a complaint is addressed against

multiple defendants, pay a separate fee,

in accordance with part I, subpart G (see
Federal Register / Vol. 63, No. 4 / Wednesday, January 7, 1998 / Rules and Regulations 1041

§ 1.1105(1)(c) and (d)), and file three

copies of the complaint with the Office

of the Commission Secretary for each

additional defendant.

* * * * *

(d) The complainant shall serve the

complaint by hand delivery on either

the named defendant or one of the

named defendant’s registered agents for

service of process on the same date that

the complaint is filed with the

Commission in accordance with the

requirements of paragraph (b) of this

section.

(e) Upon receipt of the complaint by

the Commission, the Commission shall

promptly send, by facsimile

transmission to each defendant named

in the complaint, notice of the filing of

the complaint. The Commission shall

send, by regular U.S. mail delivery, to

each defendant named in the complaint,

a copy of the complaint. The

Commission shall additionally send, by

regular U.S. mail to all parties, a

schedule detailing the date the answer

will be due and the date, time and

location of the initial status conference.

(f) All subsequent pleadings and

briefs filed in any formal complaint

proceeding, as well as all letters,

documents or other written

submissions, shall be served by the

filing party on the attorney of record for

each party to the proceeding, or, where

a party is not represented by an

attorney, each party to the proceeding

either by hand delivery, overnight

delivery, or by facsimile transmission

followed by regular U.S. mail delivery,

together with a proof of such service in

accordance with the requirements of

§ 1.47(g). Service is deemed effective as

follows:

(1) Service by hand delivery that is

delivered to the office of the recipient

by 5:30 pm, local time of the recipient,

on a business day will be deemed

served that day. Service by hand

delivery that is delivered to the office of

the recipient after 5:30 pm, local time of

the recipient, on a business day will be

deemed served on the following

business day;

(2) Service by overnight delivery will

be deemed served the business day

following the day it is accepted for

overnight delivery by a reputable

overnight delivery service such as, or

comparable to, the US Postal Service

Express Mail, United Parcel Service or

Federal Express; or

(3) Service by facsimile transmission

that is fully transmitted to the office of

the recipient by 5:30 pm, local time of

the recipient, on a business day will be

deemed served that day. Service by

facsimile transmission that is fully

transmitted to the office of the recipient

after 5:30 pm, local time of the

recipient, on a business day will be

deemed served on the following

business day.

19. Section 1.736 is added under the

undesignated center heading ‘‘Formal

Complaints’’ to read as follows:

§ 1.736 Complaints filed pursuant to 47

U.S.C. 271(d)(6)(B).

(a) Where a complaint is filed

pursuant to 47 U.S.C. 271(d)(6)(B),

parties shall indicate whether they are

willing to waive the ninety-day

resolution deadline contained in 47

U.S.C. 271(d)(6)(B) in the following

manner:

(1) The complainant shall so indicate

in both the complaint itself and in the

Formal Complaint Intake Form, and the

defendant shall so indicate in its

answer; or

(2) The parties shall indicate their

agreement to waive the ninety-day

resolution deadline to the Commission

staff at the initial status conference, to

be held in accordance with § 1.733 of

the rules.

(b) Requests for waiver of the ninetyday resolution deadline for complaints

filed pursuant to 47 U.S.C. 271(d)(6)(B)

will not be entertained by the

Commission staff subsequent to the

initial status conference, absent a

showing by the complainant and

defendant that such waiver is in the

public interest.

20. Section 1.1105 is amended by

revising (1)(c) and adding (1)(d) to read

as follows:

§ 1.1105 Schedule of charges for

applications and other filings in the

common carrier services.

Action FCC form No. Fee amount Payment

type code Address

1. * * *

c. Formal Complaints and Pole Attachment

Complaints, except those relating to wireless telecommunications services, Filing

Fee.

Corr. & 159 ....... 150 CIZ Federal Communications Commission, Common Carrier Enforcement, P.O. Box 358120,

Pittsburgh, PA 15251–5120.

d. Formal Complaints relating to wireless

telecommunications services, including

cellular telephone, paging, personal communications services, and other commercial mobile radio services, Filing Fee.

Corr. & 159 ....... 150 CIZ Federal Communications Commission, Wireless

Telecommunications Bureau, P.O. Box

358128, Pittsburgh, PA 15251–5120.

* * * * *

Note: This attachment will not be

published in the Code of Federal Regulations

Attachment

[Approved by OMB; 3060–XXXX;

Expires XX/XX/XX; Est. Avg. Burden:

30 min.]

Formal Complaint Intake Form—FCC

Form 485

1. Case Name lllll

2. Complainant’s Name, Address,

Phone and Facsimile Number, e-mail

address (if applicable):

lllllllllllllllllllll

lllllllllllllllllllll

lllllllllllllllllllll

lllllllllllllllllllll

3. Complaint alleges violation of the

following provisions of the

Communications Act of 1934, as

amended:

lllllllllllllllllllll

4. Complaint is subject to the

following statutory resolution deadlines:

lllllllllllllllllllll

lllllllllllllllllllll

Answer (Y)es, (N)o or N/A to the

following:

lll 5. Complaint conforms to the

specifications prescribed by 47 CFR

§§ 1.49, 1.734.

lll 6. Complaint complies with

the pleading requirements of 47 CFR

§ 1.720.

lll 7. Complaint conforms to the

format and content requirements of 47

CFR § 1.721:

lll a. Complaint contains a

complete statement of facts, including a

detailed explanation of the manner in

which the defendant is alleged to have

violated the provisions of the

Communications Act of 1934, as
1042 Federal Register / Vol. 63, No. 4 / Wednesday, January 7, 1998 / Rules and Regulations

amended, or Commission rules or

Commission orders.

lll b. Relevant documentation

and/or affidavits are attached, including

agreements, offers, counter-offers,

denials, or other relevant

documentation.

lll c. If damages are sought,

contains specified amount and nature of

damages claimed.

lll d. Contains certification that

complainant mailed a certified letter

outlining the allegations that form the

basis of the complaint it anticipated

filing with the Commission to the

defendant carrier that invited a response

within a reasonable period of time and

has, in good faith, discussed or

attempted to discuss, the possibility of

settlement with each defendant prior to

the filing of the formal complaint.

lll e. Suit has been filed with the

Commission, in another court, or

government agency on the basis of the

same cause of action or the same set of

facts, in whole or in part. If yes, please

explain:

lllllllllllllllllllll

lllllllllllllllllllll

lll f. Seeks prospective relief

identical to the relief proposed or at

issue in a notice-and-comment

proceeding that is concurrently before

the Commission. If yes, please explain:

lllllllllllllllllllll

lllllllllllllllllllll

lll g. Includes an information

designation that contains:

lll (1) A description by category

and location, of all documents, data

compilations and tangible things in the

complainant’s possession, custody, or

control that are relevant to the facts

alleged with particularity in the

complaint; and

lll (2) The name, address, and

position of each individual believed to

have firsthand knowledge of the facts

alleged with particularity in the

complaint, along with a description of

the facts within any such individual’s

knowledge.

lll h. Attached are copies of all

documents, data compilations and

tangible things in the complainant’s

possession, custody, or control, upon

which the complainant relies or intends

to rely to support the facts alleged and

legal arguments made in the complaint.

lll i. Certificate of service is

attached.

lll j. Copy of payment of $150.00

filing fee, in accordance with 47 CFR

§ 1.1105(1)(c), is attached.

lll 8. If complaint is filed

pursuant to 47 U.S.C. 271(d)(6)(B),

complainant requests waiver of the

ninety day complaint resolution

deadline.

lll 9. All reported FCC orders

relied upon have been properly cited in

accordance with 47 CFR § 1.14.

lll 10. Copy of complaint has

been served on defendant’s registered

agent for service in accordance with 47

CFR § l.47 (b), (d), (h) and 47 CFR

§ 1.735(d).

lll 11. If more than ten pages, the

complaint contains a table of contents as

specified in 47 CFR § 1.49(b).

lll 12. The correct number of

copies, required by 47 CFR § 1.51(c), if

applicable, and 47 CFR § 1.735(b) have

been filed.

lll 13. Complaint has been

properly signed and verified in

accordance with 47 CFR § 1.52.

lll 14. If complaint is by multiple

complainants, it conforms with the

requirements of 47 CFR § 1.723(a).

lll 15. If complaint involves

multiple grounds, it complies with the

requirements of 47 CFR § 1.723(b).

lll 16. If complaint is directed

against multiple defendants, it complies

with the requirements of 47 CFR § 1.735

(a)–(b).

Notice: Sections 206 to 209 of the

Communications Act of 1934, as amended,

provide the statutory framework for rules for

resolving formal complaints filed against

common carriers. Section 208(a) authorizes

complaints by any person ‘‘complaining of

anything done or omitted to be done by any

common carrier’’ subject to the provisions of

the Act. Complainant must submit a

completed FCC form 485 with any formal

complaint to indicate that the complaint

satisfies the procedural and substantive

requirements under the Act and our rules.

The information will be used to determine

the sufficiency of the complaint and to

resolve the merits of the dispute between the

parties. We have estimated that each

response to this collection of information

will take, on average, 30 minutes. Our

estimate includes the time to read the

instructions, look through existing records,

gather and maintain required data, and

actually complete and review the form or

response. If you have any comments on this

estimate, or how we can improve the

collection and reduce the burden it causes

you, please write the Federal

Communications Commission, AMD–PERM,

Paperwork Reduction Project (3060–0411),

Washington, D.C. 20554. We will also accept

your comments via the Internet if you send

them to jboley@fcc.gov. PLEASE DO NOT

SEND COMPLETED FORMS TO THIS

ADDRESS.

Remember—You are not required to

respond to a collection of information

sponsored by the Federal government, and

the government may not conduct or sponsor

this collection, unless it displays a currently

valid OMB control number or if we fail to

provide you with this notice. This collection

has been assigned an OMB control number of

3060–XXXX).

The Foregoing Notice is Required by the

Privacy Act of 1974, Pub. L. 93–579,

December 31, 1994, 5 U.S.C. 552a(E)(3), and

the Paperwork Reduction Act of 1995, Pub.

L. 104–13, October 1, 1995, 44 U.S.C. 3507.

[FR Doc. 98–173 Filed 1–6–98; 8:45 am]

BILLING CODE 6712–01–P