Opinion ID: 699532
Heading Depth: 3
Heading Rank: 2

Heading: The Commission's approach to establishing a violation of

Text: 21 the act 22 The IXCs base their damage claims upon Sec. 206 of the Communications Act, which provides: 23 In case any common carrier shall do ... any act, matter, or thing in this [Act] prohibited or declared to be unlawful ... such common carrier shall be liable to the person ... injured thereby for the full amount of damages sustained in consequence of any such violation of the provisions of this [Act].... 24 47 U.S.C. Sec. 206. Although the LECs' earnings exceeded the maximum rates of return prescribed by the Commission, they contend that such overearning does not by itself constitute a violation of the Communications Act and therefore cannot serve as the sole basis for their damage liability pursuant to Sec. 206. We disagree. 25 As discussed above, in NETCO, 826 F.2d at 1106-07, we held that the Commission has the statutory authority to prescribe a carrier's maximum rate of return and to require a LEC that fails to comply to refund earnings in excess thereof. More important, we held that:The Commission's chief concern in issuing [rate-of-return] prescriptions is protecting just and reasonable rates.... The idea of a prescription ... is that the agency has proclaimed that a certain situation--here a return in excess of 10%--is unlawful and shall not occur. 26 Id. at 1106 (emphasis in original). Relying upon our earlier decision in Nader we further explained that a rate-of-return prescription has the force of a statute and is no less binding than an order establishing the maximum rate that a carrier may lawfully charge. Id. at 1107. In AT & T we reconfirmed all this, explaining that in Nader we had held that the Commission has power under [the Communications Act] to prescribe rates of return as well as rates, and that in NETCO we had held that the prescription of a rate of return ... represent[s] a proclamation by the Commission that earnings in excess of the prescribed rate are unlawful.... 836 F.2d at 1392. Hence, all these cases--Nader, NETCO, and AT & T--stand squarely in opposition to the LECs' position: We have repeatedly held that a rate-of-return prescription has the force of law and that the Commission may therefore treat a violation of the prescription as a per se violation of the requirement of the Communications Act that a common carrier maintain just and reasonable rates, see 47 U.S.C. Sec. 201(b). 27 The LECs attempt to avoid this seemingly inevitable conclusion by relying once again upon our Virgin Islands decision. There, after holding the Commission's refund order invalid because it was imposed as of the middle of a monitoring period, we went on to note that: 28 the prescribed rate of return is but one component of a carrier's tariff schedules. Projected operating expenses, market forecasts and competitive conditions must also be considered by carriers when they settle on a final access rate. Given this multitude of inputs, the prospective selection of a tariff that will generate the prescribed rate of return is necessarily an imprecise endeavor. Thus, once the Commission finds that a carrier has exceeded (as a pure mathematical matter) its prescribed rate of return, it should then consider other relevant factors in determining whether a rate is unreasonable and a refund warranted. 29 989 F.2d at 1239. We also went on to list the sort of factors that the Commission should consider in deciding whether to order a refund, including: (1) whether the LEC's projections were reasonable when made; (2) the actual harm suffered by the ratepayer; and (3) any overriding equitable considerations. Id. at 1240. 30 Seen in context, however, we do not think that our Virgin Islands decision is a bar to the Commission's decision to treat earning more than the prescribed rate of return as a per se violation of the Act for the purpose of adjudicating a damage claim. Virgin Islands arose under Sec. 204 of the Communications Act, which provides that, under certain circumstances, the Commission itself may ... require [a carrier that has collected an excessive amount] to refund, with interest, ... such portion of such charge ... as by its decision shall be found not justified. 47 U.S.C. Sec. 204. Because the Sec. 204 refund remedy is couched in permissive terms, the court was in effect advising the Commission of the issues it must consider in exercising its discretion whether to require a refund. In the present cases, by contrast, the Commission is responding to complaints brought by customers of the LECs under Sec. 206 of the Act, which is phrased in mandatory terms: A carrier that has violated the Act shall be liable to the person or persons injured thereby for the full amount of damages sustained in consequence of any such violation.... 47 U.S.C. Sec. 206. Therefore, the factors that we set out in the Virgin Islands case do not apply where, as here, the Commission is adjudicating a damage claim made by a customer pursuant to Sec. 206. 31