DATE:	September 23, 2004
TO:	Director, Division of the Commission Clerk & Administrative Services (Bayó)
FROM:	Office of the General Counsel (Susac) Division of Competitive Markets & Enforcement (Vinson, Dowds, Duffey)
RE:	Docket No. 040301-TP – Petition by Supra Telecommunications and Information Systems, Inc. for arbitration with BellSouth Telecommunications, Inc.
AGENDA:	10/05/04 – Regular Agenda – Motion to Dismiss/Motion for Partial Summary Final Order – Decision Prior to Hearing - Parties May Participate
CRITICAL DATES:		None
SPECIAL INSTRUCTIONS:		None
FILE NAME AND LOCATION:		S:\PSC\WP\GCL\040301.RCM.DOC

Case Background

            On April 5, 2004, Supra Telecommunications & Information Systems, Inc. (Supra) filed a petition for arbitration with BellSouth Telecommunications, Inc. (BellSouth).  On June 23, 2004, Supra filed a Motion For Leave to file its First Amended Petition for Arbitration with BellSouth.  The Motion was granted and on July 21, 2004, BellSouth filed its Answer and Response to Supra’s Amended Petition For Arbitration, as well as a Motion to Dismiss.

 

            In its Amended Petition, Supra requests expedited relief for the purpose of resolving a rate(s) for an individual hot cut and asks that an interim rate be established during the pendency of the case.  At the September 21, 2004 Agenda conference, the Commission denied the request for an interim rate.

 

            On July 23, 2004, an issue identification conference was held at which both parties agreed to staff’s wording of the proposed issues.  On July 30, 2004, Supra filed its Response to BellSouth’s Motion to Dismiss.[1]  On that same day, BellSouth filed a Motion to Hold Discovery in Abeyance pending resolution of the Motion to Dismiss.  The Motion to Hold Discovery in Abeyance was denied.[2]

 

On August 4, 2004, Order No. PSC-04-0752-PCO-TP was issued denying Supra’s request for expedited treatment and reforming the proceeding as a complaint rather than an arbitration.  Supra filed a Motion for Reconsideration of that Order and at the September 21, 2004 Agenda conference, the Commission denied its Motion.

On September 1, 2004, Supra filed a Motion for Partial Summary Final Order claiming two of the four issues to be purely contractual.  BellSouth responded on September 8, 2004.

            This is staff’s recommendation regarding: (1) BellSouth’s Motion to Dismiss; and (2) Supra’s Motion for Partial Summary Final Order.

Discussion of Issues

Issue 1:  Should the Commission grant BellSouth Telecommunications, Inc.’s (BellSouth’s) Motion to Dismiss Supra Telecommunications & Information Systems, Inc.’s (Supra’s) Amended Petition for failure to state a cause of action upon which relief can be granted?

Recommendation:  No.  Taking all material allegations in Supra’s First Amended Petition as facially correct, Supra has stated a cause of action upon which relief can be granted.  In addition, staff recommends that this proceeding remain a two-party complaint proceeding and not be taken up in a generic docket.  (Susac, Dowds, Vinson, Broussard, Duffey)

Position of the Parties

            BellSouth:  

            BellSouth argues that Supra’s Amended Petition is nothing but a relitigation of Order No. PSC-01-1181-FOF-TP, issued on May 25, 2001 (Cost Order), in Docket No. 990649A-TP (Cost Docket).  BellSouth argues: (1) Supra’s Amended Petition seeks to undo the Cost Order and establish separate rates for dispatch and non-dispatch; (2) the Commission approved and established nonrecurring rates for SL1 and SL2 loops in its Cost Docket; (3) the hot cut rate for an SL1 and SL2 loop is comprised of the nonrecurring rates for the loop, a cross-connect and service order processing.

            First, BellSouth claims that in the Cost Order, the Commission established the cost methodology by which non-recurring UNE rates would be set in Florida (i.e.,  typically, a melded rate).  BellSouth claims that Supra is attempting to use a two-party complaint process to reverse a Commission decision in an industry-wide generic docket over three years ago.  BellSouth argues that Supra’s claim that it wants a new rate for UNE-P to UNE-L conversions is nothing more than a request for two nonrecurring rates for SL1 loops: one for 100% dispatch and one for 100% non-dispatch.

            Specifically, BellSouth directs the Commission’s attention to page 335 of the Cost Order where BellSouth used probabilities to assign dispatch and non-dispatch provisioning for SL1 loops.  The Order reads, “one of the changes to the SL1 loop nonrecurring cost study was an increase in the field dispatch rate from 20 percent to 38 percent .  . .”  BellSouth states that later in the Cost Order the Commission compared the 100 percent dispatch rate used for xDSL loops with the 38 percent dispatch rate for an SL1 loop.  Id. at 348.  Further, BellSouth argues that while the Commission reduced work times associated with loop provisioning, the Commission did not alter either the 100 percent dispatch probability for xDSL loops or the 38 percent dispatch probability for SL1 loops (Id. at 349-350).  Therefore, BellSouth claims that the Commission has already approved a methodology that melds dispatch and non-dispatch activities into one rate.

            Next, BellSouth argues that the hot cut charges for an SL1 or SL2 loop are comprised of the nonrecurring rates for the loop, a cross-connect, and service order processing.  BellSouth cites to MCI’s position in the Cost Order to illustrate this issue.  In the Cost Docket, MCI describes the nonrecurring costs associated with effectuating a hot cut.[3]  The process of moving an SL1 and SL2 loop from a BellSouth switch to a CLEC switch is comprised of the work activities necessary to provision the UNE loops.  BellSouth argues that the costs associated with the work activities consist of the nonrecurring cost of the loop, a cross-connect charge and a service order processing charge.

            Further, BellSouth argues that the Commission and the parties to the Cost Docket agreed that the calculation of nonrecurring costs included the assignment of probabilities.  As argued above, BellSouth directs the reader’s attention to MCI’s position in the Cost Docket.

            Last, BellSouth argues that the following facts cannot be disputed: (1) the Commission established non-recurring rates for SL1 and SL2 loops; (2) the Commission-approved methodology for calculating those rates used a weighting of dispatch/non-dispatch probabilities; and (3) all CLECs had an opportunity to participate in the Cost Docket, and all CLECs in Florida are bound by the results of that docket.  Thus, BellSouth argues Supra has failed to state a cause of action upon which relief can be granted.

            BellSouth recommends that if the Commission were to entertain the Amended Petition that it do so by way of a generic docket.[4]

            Supra:

            Supra argues that the Commission must confine its review to the four corners of Supra’s First Amended Petition, must take all material factual allegations made by Supra as true, and is prohibited from considering any extraneous matters.  Martin v. Principal Mutual Life Ins. Co., 557 So.2d 128 (Fla. 3^rd DCA 1990); Lewis State Bank v. Travelers Ins. Co., 356 So.2d 1344 (Fla. 1^st DCA 1978); Connoly v. Sebeco, 89 So.2d 482 (Fla. 1956).  Supra first argues that BellSouth’s Motion is based on extrinsic information that is not contained in Supra’s First Amended Petition that includes facts relating to another Commission proceeding, and therefore should be denied.  Further, Supra argues that BellSouth’s Motion is really a Motion For Summary Final Order masquerading as a Motion to Dismiss, and that it is well-settled “[a] motion to dismiss is not a substitute for a summary judgment.”  Response at p. 4, citing Combs v. City of Naples, 834 So.2d 194, 198 (Fla. 2^nd DCA 2002).

            Second, Supra argues that BellSouth previously submitted a cost study for the installation of a new SL1 or SL2 loop, and a separate study for a retail/resale to UNE-P conversion.  Of the $49.57 SL1 NRC, Supra claims just $0.102 is properly charged when converting from a working retail to resale service to UNE-P.  (Response, p. 5)  However, Supra argues that no study of the costs of a UNE-P to UNE-L conversion was undertaken in the Cost Docket.

            Supra also claims that BellSouth’s cost study does not address the realities of moving IDLC-served customers to a CLEC owned switch.  Supra also claims that BellSouth’s argument that the current rate represents the conversion process from UNE-P to UNE-L is contrary to its position in Federal Bankruptcy Court.[5]  Further, Supra argues that BellSouth’s cost study does not address six of the eight most efficient methods of converting a UNE-P customer served via IDLC to a UNE-L.  In sum, Supra argues that there is no record of the costs of a UNE-P to UNE-L conversion.

            Last, Supra argues that BellSouth has compounded its error by improperly charging an $8.22 cross-connect NRC.  Supra claims that a cross-connect already exists in the underlying cost study put forth in Docket No. 990649-TP, and therefore there should not be a separate charge.

            For these reasons, Supra contends it has stated a cause of action upon which relief can be granted; therefore, BellSouth’s motion should be denied.

Staff Analysis:  

            Standard of Review

            Under Florida law the purpose of a motion to dismiss is to raise as a question of law the sufficiency of the facts alleged to state a cause of action.  Varnes v. Dawkins, 624 So. 2d 349, 350 (Fla. 1st DCA 1993).  In order to sustain a motion to dismiss, the moving party must demonstrate that, accepting all allegations in the petition as facially correct, the petition still fails to state a cause of action for which relief can be granted.  In re Application for Amendment of Certificates Nos. 359-W and 290-S to Add Territory in Broward County by South Broward Utility, Inc., 95 FPSC 5:339 (1995); Varnes, 624 So. 2d at 350.  When "determining the sufficiency of the complaint, the trial court may not look beyond the four corners of the complaint, consider any affirmative defenses raised by the defendant, nor consider any evidence likely to be produced by either side. "  Id. See also Flye v. Jeffords, 106 So. 2d 229 (1st DCA 1958)(consideration should be confined to the allegations in the petition and the motion).  The moving party must specify the grounds for the motion to dismiss, and we must construe all material allegations against the moving party in determining if the petitioner has stated the necessary allegations.  Matthews v. Matthews, 122 So. 2d 571 (2nd DCA 1960).

 

            Discussion

 

            As stated by the Court in Varnes v. Dawkins, “[t]he function of a motion to dismiss is to raise as a question of law the sufficiency of facts alleged to state a cause of action.”  624 So. 2d 349, 350 (Fla. 1st DCA 1993).  In order to sustain a motion to dismiss, the moving party must demonstrate that, accepting all allegations in the petition as facially correct, the petition still fails to state a cause of action for which relief can be granted.  In re Application for Amendment of Certificates Nos. 359-W and 290-S to Add Territory in Broward County by South Broward Utility, Inc., 95 FPSC 5:339 (1995); Varnes, at 350.

 

            In the case at hand, Supra has put forth an issue – what is the non-recurring rate for a UNE-P to UNE-L hot cut - that more than likely does not fall squarely within prior Commission Orders, and therefore is not barred by the doctrine of administrative finality.[6]  Specifically, Supra alleges that neither Docket No. 990649A-TP or 001797-TP addressed a conversion process from UNE-P to UNE-L.  Supra alleges that the current rate represents a conversion from “active BellSouth retail end users” to UNE-L and that this process is different from a UNE-P to UNE-L conversion.  Therefore, Supra’s First Amended Petition is not barred by the doctrine of administrative finality, because it states an issue not litigated in Docket No. 990649A-TP or 001797-TP.  However, it should be noted that pursuant to the doctrine of administrative finality, this Commission should not entertain Supra’s argument that the prior Commission Orders are incorrect.

 

            It is staff’s recommendation that taking all material allegations contained in Supra’s First Amended Petition as true, Supra has stated a cause of action upon which relief can be granted by this Commission.  Under Florida law, the Commission must confine its review to the four corners of Supra’s First Amended Petition and take all material factual allegations made by Supra as true, and the Commission is prohibited from considering any extraneous matters.  Martin v. Principal Mutual Life Ins. Co., 557 So.2d 128 (Fla. 3^rd DCA 1990); Lewis State Bank v. Travelers Ins. Co., 356 So.2d 1344 (Fla. 1^st DCA 1978); Connoly v. Sebeco, 89 So.2d 482 (Fla. 1956).  However, pursuant to the doctrine of administrative finality, staff recommends that it would be impermissible to allow Supra to reargue the issues resolved in Docket No. 990649A-TP and 001797-TP.

 

            First, Supra alleges that BellSouth’s cost study contains a cost for installation of a new SL1 or SL2 loop when one already exists, and a separate study for a retail/resale to UNE-P conversion.  Second, Supra alleges that of the $49.57 SL1 NRC, just $0.102 is properly charged when converting from a working retail or resale service to UNE-P.  Third, Supra states in its Amended Petition that Section 3.8 of the parties’ interconnection agreement applies to hot cuts, but only to converting “active BellSouth retail end users” to UNE-L.  Supra argues that these rates for the retail-to-UNE-L conversion process cannot and should not apply to a UNE-P to UNE-L conversion.  These arguments, if correct, could lead to a different rate for a UNE-P to UNE-L hot cut.  Therefore, taking these allegations as facially correct, Supra states a cause of action for which relief can be granted.

 

            Last, staff recommends that this proceeding remain a complaint proceeding and not be taken up in a generic docket.

Issue 2:  Should Supra Telecommunications & Information Systems, Inc.’s (Supra) Motion for Partial Summary Final Order be granted?

Recommendation:  No.  Supra’s Motion for Partial Final Summary Order should be denied because there is an issue of fact whether the current rate listed in the parties’ agreement covers a “hot cut” for a UNE-P to UNE-L conversion.  (Susac, Dowds, Vinson, Broussard, Duffey)

Parties’ Positions:

            Supra

            Supra claims that BellSouth is trying to incorporate the UNE-P to UNE-L conversion process into its general SL1 and SL2 UNE loop non-recurring cost study.  Supra argues that the existing agreement either provides for rates, terms or conditions for a hot cut, or it does not.  Supra therefore argues that this is purely a contractual issue.

            Supra claims that the following facts are either admitted to or undisputed by BellSouth: (1) the current agreement does not contain or even reference a rate for UNE-P to UNE-L conversions; (2) the unbundled rates in the current agreement are tied to the Commission Order in Docket No. 990649-TP, which also does not contain or reference a rate for UNE-P to UNE-L conversion; (3) BellSouth’s director in charge of all BellSouth’s cost studies (Daonne Caldwell) testified that she neither prepared a cost study for a retail to UNE-L conversion or a UNE-P to UNE-L conversion; (4) Ms. Caldwell testified that the Commission never referenced a retail to UNE-L conversion or hot cut, or a working UNE-P to UNE-L conversion in any Order in any docket; (5) BellSouth’s cost studies are for the construction of new SL1 and SL2 loops to locations, and do not distinguish between retail to UNE-L conversions or UNE-P to UNE-L conversions; (6) that BellSouth has not submitted any cost studies for its proposed eight different alternatives, with varying degrees of costs and efficiencies, for handling UNE-P to UNE-L conversions when the loops are being served by IDLC.

            BellSouth

            BellSouth argues that Supra’s argument is misdirected because the debate over whether the Interconnection Agreement (ICA) contains a UNE-P to UNE-L conversion process is not the same issue that is before the Commission in this docket.  The issue before the Commission is whether the ICA has non-recurring rates that apply to a UNE-P to UNE-L conversion.  BellSouth argues that the interconnection agreement has rates that include the necessary steps for a UNE-P to UNE-L conversion,[7] and therefore gives rise to a material fact exists.

            BellSouth also argues that the Commission-approved, non-recurring rates upon which BellSouth relies are equally applicable to all hot cuts.  BellSouth argues that the work times and activities for a hot cut process (except for coordination activities) are identical regardless of whether the conversion is from retail to UNE-L, resale to UNE-L, or from UNE-P to UNE-L.

            Last, BellSouth argues that Supra’s Motion for Partial Summary Final Order is an improper collateral attack on a prior Commission Order and granting Supra’s Motion would render Commission rules meaningless.  BellSouth states that any challenge to the rates should have been raised as an issue in the docket in which the rates were established.

Staff Analysis:  

            Standard of Review

            Section 120.57(1)(h), Florida Statutes, provides that a summary final order shall be granted if it is determined from the pleadings, depositions, answers to interrogatories, and admissions on file, together with affidavits, if any, that no genuine issue as to any material fact exists and that the moving party is entitled as a matter of law to the entry of a final summary order.  Rule 28-106.204(4), Florida Administrative Code, states that "[a]ny party may move for summary final order whenever there is no genuine issue as to any material fact.  The motion may be accompanied by supporting affidavits.  All other parties may, within seven days of service, file a response in opposition, with or without supporting affidavits."

            Under Florida law, “the party moving for summary judgment is required to conclusively demonstrate the nonexistence of an issue of material fact,” and every possible inference must be drawn in favor of the party against whom a summary judgment is sought.[8]  The burden is on the movant to demonstrate that the opposing party cannot prevail.[9]  “A summary judgment should not be granted unless the facts are so crystallized that nothing remains but questions of law.”[10]  "Even where the facts are undisputed, issues as to the interpretation of such facts may be such as to preclude the award of summary judgment."[11]  If the record reflects the existence of any issue of material fact, possibility of an issue, or even raises the slightest doubt that an issue might exist, summary judgment is improper.[12]  However, once a movant has tendered competent evidence to support his or her motion, the opposing party must produce counter-evidence sufficient to show a genuine issue because it is not enough to merely assert that an issue exists.[13]

            Moreover, staff notes that this Commission has recognized that policy considerations should be taken into account in ruling on a motion for summary final order.  By Order No. PSC-98-1538-PCO-WS,[14] the Commission found that

We are also aware that a decision on a motion for summary judgment is also necessarily imbued with certain policy considerations, which are even more pronounced when the decision also must take into account the public interest. Because of this Commission's duty to regulate in the public interest, the rights of not only the parties must be considered, but also the rights of the Citizens of the State of Florida are necessarily implicated, and the decision cannot be made in a vacuum.  Indeed, even without the interests of the Citizens involved, the courts have recognized that

[t]he granting of a summary judgment, in most instances, brings a sudden and drastic conclusion to a lawsuit, thus foreclosing the litigant from the benefit of and right to a trial on the merits of his or her claim. . . .  It is for this very reason that caution must be exercised in the granting of summary judgment, and the procedural strictures inherent in the Florida Rules of Civil Procedure governing summary judgment must be observed. . . . The procedural strictures are designed to protect the constitutional right of the litigant to a trial on the merits of his or her claim.  They are not merely procedural niceties nor technicalities.

            Discussion

            Supra claims that the current agreement does not contain a rate for a UNE-P to UNE-L hot cut (hot cut).  It is therefore Supra’s burden to demonstrate that BellSouth cannot prevail on this issue,[15] and not the slightest doubt exists as to whether the agreement contains a rate for a UNE-P to UNE-L hot cut.

            In short, it is staff’s recommendation that although the agreement does not explicitly list a rate for a UNE-P to UNE-L “hot cut,” the agreement may contain rates associated with the necessary steps to effectuate such a “hot cut.”  In other words, it is staff’s belief that an issue of fact exists as to whether this rate covers a UNE-P to UNE-L conversion.  Therefore, staff recommends denying Supra’s Motion for Partial Final Summary Order because there is an issue of fact as to whether the current rates in place include the necessary steps to effectuate a hot cut from a UNE-P arrangement to a UNE-L arrangement.

            In the case at hand, Supra asks this Commission to determine whether the parties’ existing interconnection agreement has a non-recurring rate for a hot cut where the lines are served by copper/UDLC and where lines are not served by copper/UDLC.  If the agreement does not address these rates, then the next question is what should be the appropriate non-recurring charge, if any, for the lines served by copper/UDLC and the lines served by non-copper/UDLC.

 

            It is apparent that the current agreement lists rates that are associated with the necessary steps to effectuate a hot cut.  This rate also takes into account dispatching a truck and not dispatching a truck; however, it is unclear whether these rates encompass a UNE-P to UNE-L conversion.  It is also very apparent that these rates stem from Docket No. 990649-TP and 001797-TP.  For example, on page 394 of Order No. PSC-01-1181-FOF-TP, issued on May 25, 2001, Docket No. 990649A-TP, the Commission addresses the issue of dispatching a truck for IDLC and non-IDLC when a CLEC orders a SL1 loop.  However, staff believes that there arguably is an issue of fact as to whether this rate covers a UNE-P to UNE-L conversion.

            In conclusion, staff recommends denying Supra’s Motion For Summary Final Order because there is an issue of fact whether the current rate listed in the parties’ agreement covers a “hot cut” for a UNE-P to UNE-L conversion.  There is an issue of fact as to whether the work times and activities for a hot cut process are identical regardless of whether the conversion is from retail to UNE-L, resale to UNE-L or from UNE-P to UNE-L.  Therefore, staff recommends that Supra’s Motion be denied.

 

 

 

 

 

 

Issue 3:  Should this docket be closed?

Recommendation:  If the Commission denies BellSouth’s Motion to Dismiss in Issue 1, then the docket should remain open to determine the merit(s) of Supra’s First Amended Petition.  However, if the Commission grants BellSouth’s Motion to Dismiss in Issue 1, then the docket should be closed because no further action by the Commission is necessary.  (Susac)

Staff Analysis:  If the Commission denies BellSouth’s Motion to Dismiss in Issue 1, then the docket should remain open to determine the merit(s) of Supra’s First Amended Petition. However, if the Commission grants BellSouth’s Motion to Dismiss in Issue 1, then the docket should be closed because no further action by the Commission is necessary.