Qwest Communications Co. v. Aventure Communications Technology, LLC (86 F. Supp. 3d 933, 2015)

ORDER

JAMES E. GRITZNER, Chief Judge.

TABLE OF CONTENTS

I. INTRODUCTION.939

II. JURISDICTION.940

III. BACKGROUND.

A. Telecommunication Regulatory Backdrop.

1. Communications Act of 1934 .

2. Anti-trust Litigation.

3. Telecommunications Act of 1996 .

4. The Act: IXCs, ILECs, and CLECs.

5. Relevant Provisions of the Act.

B. “Traffic Pumping” Litigation.

1. Farmers v. Qwest .

a. FCC: Farmers I .

b. FCC: Farmers Reconsideration I.

c. FCC: Farmers II.

d. FCC: Farmers Reconsideration II.

e. D.C. Circuit: Farmers & Merchants v. FCC.

2. FCC: All American Tel. Co. v. AT & T Corp. .'..

a. FCC: All American I.

b. FCC: All American Reconsideration I.

e. FCC: All American II_.

d. FCC: All American Reconsideration II.¡...

3. FCC: AT & T v. YMax.

4. Northern Valley Cases.

a. FCC: Qwest v. Northern Valley (N. Valley I) _

b. FCC: N. Valley Reconsideration I.

c. FCC: Sprint v. Northern Valley (N. Valley II) ...

d. FCC: N. Valley Reconsideration II.

e. D.C. Circuit: N. Valley v. FCC.

5. Sancom and Splitrock Cases.

a. FCC: Qwest v. Sancom (Sancom I).

b. FCC: Sancom Reconsideration I.

c. Qwest v. Free Conferencing 4:07-cv-04147 (D.S.D.)

6. Tekstar Cases.

7. Connect America.

Procedural History.

Factual Background.

1. Factual Allegations in Qwest’s Second Amended Complaint

a. Qwest’s Claims.

2. Factual Allegations in Dixon’s Counterclaims.

a. Dixon.

3. Factual Allegations in Aventure s Claims and Counterclaims.

a. Aventure’s Claims/Counterclaims.

4. Factual Allegations in Futurephone’s Counterclaims.

a. Futurephone’s Counterclaims .

5. Factual Allegations in Free Conferencing’s Counterclaims.

a. Free Conferencing’s Counterclaims.

6. LECs’ Tariff Definitions: Customer, End User, Switched Access

a. Dixon: NECA Tariff FCC No. 5.

b. Reasnor: ICORE Tariff FCC No. 2.

c. Aventure: Tariff FCC No. 1 .

IV. DISCUSSION.

A. Motions to Dismiss.

1. Standard for Motion to Dismiss .

2. Hometown’s Motion to Dismiss for Insufficient Service of Process

3. Reasnor’s Motion to Dismiss.

a. Primary Jurisdiction of the FCC.

b. Filed Rate Doctrine.

c. Dismissal under the Doctrine of Primary Jurisdiction...

4. Aventure’s Motion to Dismiss Claims under the Act.

a. 12(b)(1) Dismissal for Lack of Standing. '

b. 12(b)(6) Dismissal for Failure to State a Claim. W

i. § 201(b) claim(s). i — 1

ii. § 203(e) claim. H-1

5. Aventure’s/FCSC Defendants’ Motions to Dismiss State Law Claims. 1005

a. Unfair Competition. 1005

b. Fraudulent Concealment . 1010

c. Tortious Interference with Contract. 1014

d. Civil Conspiracy. 1016

e. Unjust Enrichment. 1018

B. Qwest’s Motion for Judgment on the Pleadings on Non-Tariff Counterclaims. 1019

1. Standard for Motion for Judgment on the Pleadings . 1019

2. Communications Act Claims . 1019

3. Unjust Enrichment and Quantum Meruit Counterclaims_ 1023

V. CONCLUSION. .1026

I. INTRODUCTION

Before the Court and addressed in this Order are Motions for Judgment on the

Pleadings filed by Plaintiff /Counterclaim Defendant Qwest Communications Corporation (Qwest) against local exchange carrier (LECs) Defendants/Counterclaim Plaintiffs Aventure Communication Technology, LLC (Aventure); Dixon Telephone Company (Dixon); and Reasnor Telephone Company, LLC (Reasnor) (collectively, LEC Defendants); and free conferencing service companies (FCSCs) Audiocom, LLC (Audiocom); Free Conferencing Corporation (Free Conferencing);Future-phone.com, LLC (Futurephone); and Hometown Telecom, Inc. (Hometown) (collectively, FCSC Defendants). Also before the Court and addressed in this Order are Motions to Dismiss filed by Reasnor, Free Conferencing, Hometown, and Aventure against Qwest.

On July 23 and July 24, 2014, the Court conducted omnibus hearings on the motions in this case and on the motions in related cases 4:07-cv-00043, 4:07-cv-00194, 4:08-cv-00005, and 5:07-cv-04095 (NDIA). Representing Qwest were attorneys Charles Steese and Sandra Potter; representing Aventure were attorneys Paul Lundberg and Gary Joye; representing Dixon were attorneys Steven Nelson and Kris Tilley; representing Reasnor were attorneys William “Scott” McCol-lough and Matthew Henry; representing Audiocom were attorneys Larry Espel and Paul Lundberg; representing Free Conferencing was attorney Scott Swier; and representing Futurephone was attorney Gary Joye. The motions are fully submitted and ready for disposition.

II. JURISDICTION

Qwest filed this action asserting jurisdiction based on federal question pursuant to 28 U.S.C. § 1331 and diversity of citizenship pursuant to 28 U.S.C. § 1332. Qwest alleges claims against Aventure, Dixon, and Reasnor that arise under the Telecommunications Act of 1996, 47 U.S.C. § 201 et seq., as well as claims that arise under Iowa state law. This Court has original jurisdiction over the federal law claims, see 28 U.S.C. § 1331, and supplemental jurisdiction over the state law claims, see id. § 1367.

Qwest’s claims against Audiocom, Free Conferencing, Futurephone, and Hometown are all state law causes of action. The Court ordered Qwest as the party asserting jurisdiction to demonstrate that at the time this action was filed, complete diversity existed between Qwest and Audi-ocom, Free Conferencing, Futurephone, and Hometown. See Jones v. Gale, 470 F.3d 1261, 1265 (8th Cir.2006). The Court specifically required Qwest to identify the citizenship and principal places of business of every member of any Defendant that was a limited liability entity, see OnePoint Solutions, LLC v. Borchert, 486 F.3d 342, 346-47 (8th Cir.2007).

In compliance with that order, Qwest demonstrated to the Court’s satisfaction that at the time this case was filed (1) Plaintiff Qwest was a Delaware corporation with its principal place of business in Denver, Colorado; (2) Defendant Free Conferencing was a Nevada corporation with its principal place of business in Long Beach, California; (3) Defendant Hometown was a Nevada corporation with its principal place of business in Inglewood, California; and (4) Defendant Audiocom was a limited liability company organized under the laws of Nevada, with its principal place of business in Los Angeles, California, and that the three members of Au-diocom’s limited liability company were natural persons — two were citizens of California, and one was a citizen of Texas; and Defendant Futurephone was a limited liability company organized under the laws of Nevada, with its principal place of business in Reno, Nevada, and that the two members of Futurephone’s limited Lability company were both natural persons — one was a citizen of California, and the other was a citizen of Nevada.

The Court finds complete diversity of citizenship exists under 28 U.S.C. § 1332(c) and that Qwest’s claims against each defendant exceed the minimum amount in controversy, id. § 1332(a). See LaPree v. Prudential Fin., 385 F.Supp.2d 839, 842 (S.D.Iowa 2005) (“Generally, a complaint that alleges the jurisdictional amount in good faith will suffice to confer jurisdiction, but the complaint will be dismissed if it ‘appear[s] to a legal certainty that the claim is really for less than the jurisdictional amount.’ ” (alteration in original) (quoting Larkin v. Brown, 41 F.3d 387, 389 (8th Cir.1994) (quoting St. Paul Mercury Indemnity Co. v. Red Cab Co., 303 U.S. 283, 289, 58 S.Ct. 586, 82 L.Ed. 845 (1938)))); see generally 14AA Charles Alan Wright & Arthur R. Miller, Federal Practice and Procedure § 3704 (4th ed.2011).

III. BACKGROUND

A. Telecommunication Regulatory Backdrop

The Communications Act of 1934, 47 U.S.C. § 151 et seq., is the comprehensive act that codified telecommunication regulations and created the Federal Communications Commission (FCC or Commission) to oversee and regulate the telecommunications industry.

1. Communications Act of 1934

The stated purpose of the Communications Act of 1934 was

regulating interstate and foreign commerce in communication by wire and radio so as to make available, so far as possible, to all the people of the United States, a rapid, efficient, Nation-wide, and world-wide wire and radio communication service with adequate facilities at reasonable charges, for the purpose of the national defense, for the purpose of promoting safety of life and property through the use of wire and radio communications, and for the purpose of securing a more effective execution of this policy by centralizing authority heretofore granted by law to several agencies and by granting additional authority with respect to interstate and foreign commerce in wire and radio communication, there is created a commission to be known as the “Federal Communications Commission” [FCC], which shall be constituted as hereinafter provided, and which shall execute and enforce the provisions of this chapter.

47 U.S.C. § 151 (1934).

The Communications Act of 1934 required telecommunications carriers to file tariffed rates with the FCC and to provide notice to the FCC and to the public when they changed their tariffs, see § 203(c), but it did nothing to regulate or protect equipment sellers or competitors, see Essential Commc’ns Sys., 610 F.2d at 1120. Thus, American Telephone and Telegraph (AT & T), the parent company of the Bell System, continued to dominate the telecommunication industry. See id.

2. Anti-trust Litigation

In the 1980s, fifty years after the 1934 Communications Act was passed, and following decades of litigation between the U.S. Department of Justice (DOJ) and AT & T, the telecommunication industry confronted a massive corporate reorganization. As part of a consent decree in the second of two cases between the DOJ and AT & T, United States v. Am. Tel. & Tel. Co., 552 F.Supp. 131 (D.D.C.1982), aff'd sub nom. Maryland v. United States, 460 U.S. 1001, 103 S.Ct. 1240, 75 L.Ed.2d 472 (1983), AT & T was divested of the local arms of the Bell System — the Bell Operating Companies (BOCs) — which were reorganized into seven Regional BOCs (RBOCs). United States v. W. Elec. Co., 569 F.Supp. 990, 993-94 & n. 11 (D.D.C.1983). The Bell System territories were divided into 164 local access and transport areas (LATAs) that “mark[ed] the boundaries beyond which a Bell Operating Company [could] not carry telephone calls.” Id. The BOCs (1) performed exchange telecommunications, that is, transported traffic between telephones located within a LATA; and (2) provided exchange access within a LATA, that is, linked a subscriber’s telephone to their long distance carrier’s nearest transmission facility, but only to and from telephones located within the same LATA (intra-LATA traffic). Id. Because BOCs held local monopoly positions, they could not carry calls between different LATAs (inter-LATA traffic); only AT & T and its competitors, such as MCI and Sprint, could carry telecommunications traffic that originated in one LATA and terminated in another. Id.

Predictable obstacles and pervasive changes in technology compounded judicial oversight of the consent decree and resulted in more than a decade of subsequent litigation. See generally SBC Commc’ns, Inc. v. FCC, 154 F.3d 226, 231 (5th Cir.1998) (“[The consent deeree]’s enforcement and alteration in the light of technological progress and changing market circumstances ultimately required substantial monitoring on the part of the district court, and the extensive judicial tinkering that resulted prompted many pundits to dub District Judge Greene the country’s ‘telecommunication’s czar.’ ”). “Congress — responding, in part, to the argument that competition in the huge telecommunications industry should no longer be governed by an antitrust consent decree administered by a single federal district judge, see S.Rep. No.104-23, at 5, 9 (1995) — set forth a new legislative framework, the Telecommunications Act of 1996....” SBC Commc’ns Inc. v. FCC, 138 F.3d 410, 412 (D.C.Cir.1998).

3. Telecommunications Act of 1996

The Senate Report on the Telecommunications Act of 1996 (the Act) cited several reasons for the legislation.

The 1934 Act has not been rewritten since its original passage. Its provisions are no longer adequate in a world of competition for telephone services and increasing diversity of media. Further, much of current communications policy is being set by a single Federal district court enforcing the [consent decree]. Reducing regulation of the telecommunications industry will spur the development of new technologies and increase investment in these industries, which will create jobs and greater choices for consumers. The United States telecommunications industry is competitive worldwide. By reducing regulation and barriers to competition, the bill will help ensure the future growth of these industries domestically and internationally.

S. Rep. 104-23, at 9-10 (1995).

The preamble of the Act declares it is: “An Act to promote competition and reduce regulation in order to secure lower prices and higher quality services for American telecommunications consumers and encourage the rapid deployment of new telecommunications technologies.” Telecommunications Act of 1996, Pub.L. No. 104-104, S. 652, 110 Stat. 56 (codified as amended in scattered sections of Title 47 of the United States Code).

4. The Act: IXCs, ILECs, and CLECs

The Act “revis[ed] the regulatory scheme under which local exchange carriers (“LECs”) assess costs to long-distance (“IXCs”) and other carriers for use of the LECs’ local telephone networks to complete interstate telephone calls.” Sw. Bell Tel. Co. v. FCC, 153 F.3d 523, 535 (8th Cir.1998). The Act subdivided the LECs into the former local telephone companies — incumbent local exchange carriers (ILECs) — and the new emergents to the local exchange arena — competitive local exchange carriers (CLECs). Id. at 536. Under § 203 of the Act, ILECs “are required to file and maintain tariffs with the Commission.” In re: Establishing Just & Reasonable Rates for Local Exch. Carriers (Access Stimulation NPRM), 22 FCC Rcd. 17989, 17990 (2007). CLECs, on the other hand, are allowed “to tariff interstate access charges if the charges are no higher than the rate charged for such services by the competing incumbent LEC (the benchmarking rule).” Id. at 17994 (citing 47 C.F.R. § 61.26; In re: Access Charge Reform, Reform of Access Charges Imposed by Competitive Local Exchange Carriers, Seventh Report and Order and Further Notice of Proposed Rulemaking (Seventh Report and Order), 16 FCC Rcd. 9923, 9925 (2001)). CLECs “may not tariff rates that are higher than [the benchmark], but may negotiate any such higher charges with interexchange carriers (IXCs).” Id.

At issue in this litigation are commercial arrangements LECs formed with conference calling services (FCSCs) who advertise free services, such as, conference bridge lines, chat rooms, international calling, podcasts, and pornographic and other adult calling. Under these arrangements, the FCSCs’ equipment is installed at locations controlled by the LECs, the LECs assign telephone numbers to the FCSCs, and when a consumer calls the phone number provided by the FCSC, the respective IXC is required to deliver the call to the LEC’s exchange area, or in some cases, outside that area. The LEC then bills the respective IXC for the switched access service. When the LEC receives payment from the IXC, the LEC sends the FCSC an agreed upon portion of the access revenues. These arrangements, referred to as access stimulation or traffic pumping, resulted in dramatic increases in the volume of long distance calls the IXCs delivered to the LECs and for which the IXCs were billed at the LECs’ higher tariffed rates. (By way of example, as alleged in Qwest’s second amended complaint, in June 2006, Qwest delivered approximately 15,000 minutes of long distance traffic to the 180 customers of ILEC Superior Telephone Cooperative (Superior). Qwest’s Second Am. Compl. 11, ECF No. 318. By November 2006, after Superior entered into arrangements with several FCSCs, the traffic volume to Superior increased to over 6.4 million minutes per month, an increase of over 42,000 percent. Id. Superior billed Qwest switched access charges for this traffic.)

Qwest, and other IXCs, disputed these charges arguing the services provided were not tariffed services, and therefore the LECs could not bill the IXCs under the tariff for those services. The IXCs eventually stopped paying the LECs’ billed charges. The IXCs and the LECs filed actions against one another with the FCC, state utility boards and commissions, as well as in federal and state court, alleging causes of action under the Act, state communications law, and common law.

5. Relevant Provisions of the Act

The IXCs allege that consequent to the LECs’ arrangements with the FCSCs, the LECs violated various provisions of the Act, including by billing the IXCs switched access charges for services not covered by the LECs’ tariffs. Contrariwise, the LECs allege the IXCs violated the Act by refusing to pay the switched access charges.

The sections of the Telecommunications Act relevant to these claims and discussed in this order are 47 U.S.C. §§ 201(a), (b); 203(c); 206; 207; 223(a)(1); and 254(k).

Section 201(a) (Service):

(a) It shall be the duty of every common carrier engaged in interstate or foreign communication by wire or radio to furnish such communication service upon reasonable request therefor; and, in accordance with the orders of the Commission, in cases where the Commission, after opportunity for hearing, finds such action necessary or desirable in the public interest, to establish physical connections with other carriers, to establish through routes and charges applicable thereto and the divisions of such charges, and to establish and provide facilities and regulations for operating such through routes.

Section 201(b) (Charges):

(b) All charges, practices, classifications, and regulations for and in connection with such communication service, shall be just and reasonable, and any such charge, practice, classification, or regulation that is unjust or unreasonable is declared to be unlawful: Provided, ... That nothing in this chapter or in any other provision of law shall be construed to prevent a common carrier subject to this chapter from entering into or operating under any contract with any common carrier not subject to this chapter, for the exchange of their services, if the Commission is of the opinion that such contract is not contrary to the public interest: Provided further, That nothing in this chapter or in any other provision of law shall prevent a common carrier subject to this chapter from furnishing reports of positions of ships at sea to newspapers of general circulation, either at a nominal charge or without charge, provided the name of such common carrier is displayed along with such ship position reports. The Commission may prescribe such rules and regulations as may be necessary in the public interest to carry out the provisions of this chapter.

Section 203(c) (Overcharges and rebates):

(c) No carrier, unless otherwise provided by or under authority of this chapter, shall engage or participate in such communication unless schedules have been filed and published in accordance with the provisions of this chapter and with the regulations made thereunder; and no carrier shall (1) charge, demand, collect, or receive a greater or less or different compensation for such communication, or for any service in connection therewith, between the points named in any such schedule than the charges specified in the schedule then in effect, or (2) refund or remit by any means or device any portion of the charges so specified, or (3) extend to any person any privileges or facilities in such communication, or employ or enforce any classifications, regulations, or practices affecting such charges, except as specified in such schedule.

Section 203(e) (Penalty for violations):

In case of failure or refusal on the part of any carrier to comply with the provisions of this section or of any regulation or order made by the Commission thereunder, such carrier shall forfeit to the United States the sum of $6,000 for each such offense, and $300 for each and every day of the continuance of such offense.

Section 206 (Carrier’s liability for damages):

In case any common carrier shall do, or cause or permit to be done, any act, matter, or thing in this chapter prohibited or declared to be unlawful, or shall omit to do any act, matter, or thing in this chapter required to be done, such common carrier shall be liable to the person or persons injured thereby for the full amount of damages sustained in consequence of any such violation of the provisions of this chapter, together with a reasonable counsel or attorney’s fee, to be fixed by the court in every case of recovery, which attorney’s fee shall be taxed and collected as part of the costs in the case.

Section 207 (Recovery of damages):

Any person claiming to be damaged by any common carrier subject to the provisions of this chapter may either make complaint to the Commission as hereinafter provided for, or may bring suit for the recovery of the damages for which such common carrier may be liable under the provisions of this chapter, in any district court of the United States of competent jurisdiction; but such person shall not have the right to pursue both such remedies.

Section 223(a)(1) (Obscene or harassing telephone calls....):

(a) Prohibited acts generally. (1) Whoever — in interstate or foreign communications — (A) by means of a telecommunication device knowingly — (i) makes, creates, or solicits, and (ii) initiates the transmission of, any comment, request, suggestion, proposal, image, or other communication which is obscene or child pornography, with intent to abuse, threaten, or harass another person ...

Section 254(k) (Universal service — Subsidy of competitive services prohibited):

(k) A telecommunications carrier may not use services that are not competitive to subsidize services that are subject to competition. The Commission, with respect to interstate services, and the States, with respect to intrastate services, shall establish any necessary cost .allocation rules, accounting safeguards, and guidelines to ensure that services included in the definition of universal service bear no more than a reasonable share of the joint and common costs of facilities used to provide those services.

B. “Traffic Pumping” Litigation

Around the same time traffic pumping cases were filed in this Court, similar cases were filed in other federal district courts. In many, if not all, cases filed in other federal district courts, the district court stayed the litigation and referred questions to the FCC. Recognizing that the tariffs and the arrangements between the LECs and the FCSCs in the cases before this Court were essentially indistinguishable from those in the cases that had already referred questions to the FCC, this Court determined that referral of the same questions to the FCC would be duplicative and cause unnecessary expense and therefore stayed these cases to await the rulings in those cases already before the FCC. This procedure was also intended to retain some control over when activity could resume in this Court in what promised to be a long litigation process.

As will be discussed, see discussion infra Parts III.B.1-III.B.6, in all the referral cases, the IXCs and the LECs settled their claims during the pendency of the referral. Accordingly, the referring district courts never ruled on the merits of the dispositive motions between the LECs and the IXCs. With two exceptions, see discussion infra Parts III.B.5.C. and III. B.6., the IXCs and the FCSCs also settled their claims. Due to those settlements, the referral courts had no reason to consider dispositive motions on the claims between the LECs and the IXCs in light of the FCC’s decisions. Although this Court must do so now, it does not do so in a vacuum. The Court’s determinations must reflect the extensive, expert guidance provided in the FCC decisions that have been released over the years of this protracted traffic pumping litigation. Thus, in consideration of the motions before it, having stayed these cases in anticipation of this guidance, and to reflect the details of the analysis, this Court finds it essential and unavoidable to provide a comprehensive discussion of the background and dispositions of the other traffic pumping cases.

1. Farmers v. Qwest

Farmers and Merchants Mutual Telephone Company of Wayland, Iowa (Farmers), an ILEC that served approximately 800 access fines for local residents, provided access services that Qwest purchased to terminate calls to customers located in Farmers’ exchange. See Qwest Commc’ns Corp. v. Farmers & Merchs. Mut Tel. Co. (Farmers I), 22 FCC Rcd. 17973, 17974 (2007). In June 2005, Farmers left the National Exchange Carrier Association (NECA) tariff pool and filed a tariff (the Kiesling Tariff) that contained Farmers’ switched access rates. Id.

At the same time Farmers left the NECA pool, it entered into multiple commercial arrangements with several FCSCs as a method of increasing interstate switched access traffic and revenues, also referred to as traffic pumping. Id. at 17976. Under the terms of the arrangements, Farmers paid the FCSCs. Id. As result of these arrangements, the number of minutes delivered to the Farmers exchange increased exponentially and those minutes of use (MOUs) were directly attributable to the traffic delivered to the FCSCs and not due to an increase in the number of lines Farmers serviced. Id. In June 2007, instead of revising its tariff based on its traffic for the prior two years as required by Commission Rule § 61.39, Farmers elected to reenter the NECA pool. Id. Confronted with skyrocketing monthly access charges, Qwest stopped paying the full amount of Farmers’ invoices. Id. at 17973.

a. FCC: Farmers I

On May 7, 2007, Qwest filed a complaint with the FCC against Farmers alleging, inter alia, violations of federal tariffs. Qwest asserted that beginning July 1, 2005, Farmers earned a rate of return far in excess of the prescribed maximum and thus those rates were unjust and unreasonable in violation of § 201(b) and were not entitled to deemed lawful status or protection because Farmers’ acts were a deliberate, bad-faith plan to dramatically increase its access revenues and earn a rate of return that was in gross excess of the Commission’s precepts. Id. at 17976-77. Qwest asked the Commission to declare Farmers’ rates void ab initio and to hold Farmers liable for retrospective damages. Id. at 17977. In the alternative, Qwest contended that the traffic at issue was not terminating access traffic under Farmers’ tariff, and therefore Farmers violated §§ 201(b) and 203(c) of the Act by applying charges inconsistent with its tariff. Id.

In its decision dated October 2, 2007, the Commission rejected Farmers’ argument that its tariffs deemed lawful status insulated Farmers prospectively from overcharge claims explaining that “[sjection 204(a)(3) does not mean that tariff provisions that are deemed lawful when they take effect may not be found unlawful subsequently” because “the Commission retains its ability to find under section 208 that a rate will be unlawful if charged in the future.” Id. at 17980 (internal quotation marks and citations omitted). In determining the lawfulness of Farmers’ rate of return, the Commission applied the NECA average schedule formula noting that Farmers chose not to produce its actual cost data, and concluded Farmers revenues increased many fold without a concomitant increase in costs and that Farmers vastly exceeded the prescribed rate of return. Id. at 17982-83. Although the Commission agreed with Qwest that Farmers earned an unlawful rate of return, the Commission declined to either rule that Farmers’ tariff was void ab initio or award Qwest damages reasoning that to do so would be a departure from the Commission’s prohibition against awarding retrospective relief in conjunction with “deemed lawful” tariffs. Id. at 17983. The Commission reasoned that while it agreed with Qwest that “Farmers manipulated the Commission’s rules to achieve a result unintended by the rules,” Qwest had not identified the use of any improper accounting techniques nor had Qwest alleged that Farmers’ revenue-sharing arrangements with the FCSCs constituted a per se violation of § 201(b). Id. at 17984.

The Commission denied Farmers’ request to rule that Qwest’s withholding partial payment of Farmers’ tariffed charges was unlawful self-help in violation of §§ 201(b) and 203(c), stating that the request was akin to a cross-complaint prohibited under Commission’s rules and that any complaint Farmers might file to recover fees Qwest allegedly owed would constitute a collection action, which the Commission would not consider. Id. at 17984-85.

The Commission next rejected Qwest’s allegation that Farmers violated §§ 201(b) and 203 by imposing terminating access charges on traffic bound for FCSCs that did not terminate in Farmers’ exchange but merely passed through and terminated elsewhere. Id. at 17985. The Commission agreed with Farmers’ characterization that calls using FCSC numbers were connected and then terminated at the conference bridge. Id. at 17985-86. Referring to the record before it, the Commission found that under the terms of Farmers’ tariff, the FCSCs were customers and end users because the FCSCs did subscribe to a service. Id. at 17987.

b. FCC: Farmers Reconsideration I

Qwest filed a petition for partial reconsideration of Farmers I identifying evidence that Farmers withheld critical facts regarding Farmers’ relationship with the FCSCs that should have been produced in the initial underlying proceeding. Qwest Commc’n Corp. v. Farmers & Merchs. Mut. Tel. Co. (Farmers’ Recon. I), 23 FCC Rcd. 1615, 1615 (2008). Qwest identified statements by Farmers after the Commission released Farmers I that indicated certain contract amendments and bills were not contemporaneously created with the delivery of traffic to the FCSCs; statements contained in the April 13, 2007, affidavit of Farmers’ counsel, which indicated Farmers back-billed the FCSCs to ensure compliance with its tariff; and backdated bills and contracts Farmers delivered even after the complaint proceeding began. Id. at 1616.

In granting the petition for reconsideration, the Commission explained that in Farmers /, it made the key determination that the FCSCs were end users who subscribed to services offered under Farmers’ tariff, in reliance upon Farmers’ representation that the FCSCs purchased interstate End User Access Service and paid federal subscriber line charges, a representation that was brought into question by evidence that purportedly showed Farmers’ invoices and agreements with the FCSCs were backdated. Id. at 1617-18. The Commission initiated additional proceedings to allow review of the newly discovered evidence and ordered Farmers to produce all discovery documents submitted in discovery in the IUB proceeding. Id. at 1617. The Commission rejected Farmers’ assertion that the protective order issued in the IUB proceeding insulated the documents from being produced, explaining that the Commission had the authority to order a party to produce that party’s documents in a proceeding before it irrespective of whether those same documents were produced and subject to a protective order in a different proceeding. Id. at 1619.

c. FCC: Farmers II

On November 25, 2009, the Commission released its order on reconsideration finding the evidence Qwest presented after the release of Fanners I warranted a change of that ruling and compelled the conclusion that Farmers violated §§ 203(c) and 201(b) of the Act and was liable to Qwest for damages suffered as a result of those violations. Qwest Commc’n Corp. v. Farmers & Merchs. Mut. Tel. Co. (Farmers II), 24 FCC Rcd. 14801, 14801 (2009).

The Commission clarified that in Farmers I, it found the FCSCs were customers and thus end users based upon Farmers’ representations that the FCSCs purchased tariffed access service and paid federal subscriber line charges (SLC) and that evidence came to light afterward calling those representations into question. Id. at 14803. The Commission found evidence presented on reconsideration demonstrated that the FCSCs had never taken tar-' iffed services and that after Farmers’ activities came under legal scrutiny, Farmers “undertook to fabricate evidence of a tar-iffed customer-carrier relationship that did not in fact exist, sending backdated bills to the [FCSCs] and executing contract ‘addenda’ purporting to have taken effect months or years earlier,” and then selectively submitted some of the documents in the earlier proceeding without disclosing that those documents had not been issued contemporaneous with the service provided. Id. at 14804 (internal quotation marks and citations omitted).

Revisiting its Farmers I end user determination in light of the new evidence, the Commission noted that Farmers’ tariff defined that (1) “[s]witched access service allows a customer to, originate calls from an end user’s premises to a customer designated premises and to terminate calls from a customer designated premises to an end user’s premises,” (2) “[a]n end user is any customer of an interstate or foreign telecommunications service that is not a carrier,” and (3) “[a] customer is any entity that subscribes to the services offered under this tariff” Id. at 14805 (internal quotation marks and citations omitted). The Commission reasoned that to be an end user, an entity must also be a customer and to be a customer the entity must subscribe to the services offered under the tariff, but because the FCSCs did not subscribe to a services offered under Farmers’ tariff, the FCSCs were not customers and thus could not be end users. Id. The Commission noted that the evidence showed “Farmers expressly structured their telecommunications service contracts to avoid strict adherence to the terms of Farmers’ filed tariff.” Id. Based upon these determinations, the Commission concluded “Farmers was not entitled to charge Qwest switched access charges under the terms of Farmers’ tariff.” Id.

In examining the contracts between the FCSCs and Farmers, the Commission found that the FCSCs received a free service accessed by way of toll calls placed over long-distance networks that were delivered to the FCSCs over Farmers’ network, and that in exchange, Farmers provided support services to the FCSCs and paid the FCSCs a per-minute fee for the traffic generated through this relationship. Id. at 14806. Notably, the Commission found that unlike ordinary end-user customers under the tariff, nothing in the Farmers-FCSCs’ contracts suggested the FCSCs subscribed to any Farmers’ tar-iffed service or paid Farmers for connecting the FCSCs to the interexchange network. Id.

The Commission also noted that Farmers provided the FCSCs connections that differed from those provided to customers of Farmers’ tariffed services, including high-capacity DS3 trunks that fed into a new soft switch that Farmers purchased specifically to handle traffic bound for the FCSCs rather than the standard circuit switch used to serve all of its other customers. Id.

Another difference the Commission observed was that Farmers — FCSCs’ agreements did not resemble traditional tariffed switched access service agreements, noting that those agreements (1) included provisions prohibiting Farmers from providing services to the respective FCSC’s competitors, which were antithetical to the nondiscriminatory notion of tariffed services; (2) the agreements contained terms not available under Farmers’ tariff, which reinforced the conclusion the parties did not establish tariffed-defined carrier/customer relationships; and (3) various terms, such as, the per minute fee paid, volume of traffic generated, duration of the agreement,- and terms of cancellation, varied between the different FCSC agreements. Id. The Commission found it telling that “the parties in no way behaved as if they were operating under tariff until after Farmers became embroiled in litigation over the traffic stimulation plan.” Id. The Commission reasoned that its conclusion that Farmers never intended to treat the FCSCs as tariff service customers was supported by Farmers having never entered FCSCs’ account information into its customer billing systems, Farmers had no business records of FCSCs having purchased end user services under Farmers’ tariff, Farmers did not contemporaneously bill FCSCs for any services, and Farmers did not take any steps to bill FCSCs until shortly before discovery began in the underlying proceeding. Id. at 14808. The Commission found Farmers’ justification that backdating was standard practice unpersuasive given Farmers’ conduct throughout its business relationships with the FCSCs and that the conduct was inconsistent with provision of tariffed services. Id. The -Commission concluded that “[t]he evidence overwhelmingly demonstrates that Farmers willingly incurred all of the expenses associated with providing the underlying services to the conference calling companies, including the payment of a fee to these companies, in exchange for these companies directing the free service they offered to the public to Farmers’ exchange.” Id. at 14809 (internal quotation marks omitted).

The Commission squarely rejected Farmers’ assertion that the application of the filed rate doctrine compelled a finding that the services it provided were pursuant to its tariff, and therefore customer status should be imputed to the FCSCs even though the services they were provided were outside the scope of the tariff. Id. at 14810. The Commission reasoned that “[t]he purpose of the filed rate doctrine is to prevent unreasonable and unjust discrimination among similarly-situated customers of a particular common carrier’s service, and to ensure that carriers impose like charges for like services,” but that the overwhelming evidence developed on reconsideration demonstrated “a purposeful deviation from the tariffs terms that allowed the conference calling companies to reap benefits from a free service offered only to them, which thereby enabled Farmers to dramatically increase its access charge billing to Qwest,” making it abundantly clear that Farmers intentionally avoided a customer relationship under the tariff. Id. Accordingly, the Commission found Farmers did not provide Qwest switched access service for the FCSCs’ calls, and therefore the filed rate doctrine did not require Farmers to charge Qwest its tariffed switched access charges nor require Qwest to pay such charges for terminating the FCSCs’ calls. Id. at 14811.

Next, the Commission rejected Farmers’ argument that the voluminous tariff provisions had to be construed as a whole to determine exchange access, explaining that each of the provisions Farmers relied upon were subsections of section 6.1 of the NECA tariff, which limits the scope of the tariff to traffic transmitted to end users. Id. at 14811-12 (distinguishing that under the well-established rules of construction, a service that does not constitute switched access under a section cannot constitute switched access under a subordinate section). The Commission found that neither the Act nor Commission rules bolstered Farmers’ theory of what constitutes switched access because “the relevant tariff defines switched access service as providing a communications path to an end user” and “[wjhether 'or not this definition is narrower than that used for purposes of the Act and Commission rules, it is nonetheless the definition to which Farmers is bound for purposes of determining whether its charges are in compliance with its tariff.” Id. at 14812.

The Commission summarized the factors it found to be very strong evidence that Farmers did not believe it was providing, nor intended to provide, the FCSCs tar-iffed services, and thus supported its conclusion that the FCSCs were not end users within the meaning of the tariff provisions: (1) Farmers’ individualized contracts with the FCSCs that involved an exchange of services and business relationship quite distinct from Farmers’ tariffed switched access service; (2) Farmers did not offer the same terms of service to others that requested it; (3) the parties’ actual course of dealing demonstrated no tariffed services were purchased; (4) the absence of an explanation why the FCSCs were not entered into Farmers’ customer systems or why over its two year relationship with the FCSCs, Farmers failed to bill and collect payment from the FCSCs as required under its tariff; and (5) Farmers having sent bills to the FCSCs only after the first round of discovery in the case and then sent no further bills until additional discovery was ordered. Id. at 14812-13. The Commission thus concluded “that Farmers’ practice of charging Qwest tar-iffed switched access rates for its termination of traffic from the conference calling companies is unjust and unreasonable in violation of section 201(b) of the Act.” Id. at 14813.

d. FCC: Farmers Reconsideration II

Farmers filed a petition for reconsideration of Farmers II, which the Commission denied on March 17, 2010. Qwest Commc’n Corp. v. Merchs. Mut. Tel. Co. (Farmers Recon. II), 25 FCC Rcd. 3422, 3422 (2010). Farmers argued the FCC’s Farmers II decision was arbitrary and capricious, contrary to law, and that the Commission lacked jurisdiction to issue it because it was not issued within ninety days of the filing of the petition as required under § 405(b)(1). Id. The Commission dispensed with Farmers’ jurisdiction argument, clarifying that the ninety-day requirement found in § 405(b)(1) refers to the grant or denial of a petition. The Commission noted that it had complied with § 405(b)(1) by granting Qwest’s petition for reconsideration within ninety days of the date Qwest filed that petition and therein ordered additional proceedings. Id. at 3424. The Commission furthermore explained that failure to rule on a petition for reconsideration within ninety days would not have deprived the Commission of jurisdiction to consider the petition. Id. at 3425.

The Commission also rejected Farmers’ assertion that the Commission should not have altered its end user finding in Farmers I without additional evidence. Id. at 3426. The Commission remarked its findings in Farmers I were based on Farmers’ representations at that time that the FCSCs purchased interstate end user services and paid federal subscriber line charges but that upon reconsideration, the landscape shifted dramatically as the new evidence Farmers previously withheld made clear the FCSCs never paid subscriber line charges nor made any other payments to Farmers. Id. Disposing of Farmers’ challenge that by leaving intact Farmers I regarding count one of Qwest’s complaint Farmers II was rendered arbitrary and capricious, the Commission explained that its finding in Farmers I that Farmers received an excessive rate of return was an alternative basis of liability. Id. at 3427.

e. D.C. Circuit: Farmers & Merchants v. FCC

Farmers appealed the Farmers decisions to the U.S. Court of Appeals for the District of Columbia Circuit arguing the Commission ignored jurisdictional requirements, misread the tariff, and failed to adhere to its own precedent and rules. Farmers & Merch. Mut. Tel. Co. of Wayland v. FCC, 668 F.3d 714 (D.C.Cir.2011). The D.C. Circuit rejected each of Farmers’ arguments, holding (1) the Commission complied with § 405(b)(1) in granting Qwest’s petition for reconsideration within ninety days; (2) the Commission’s determination that Farmers’ services were not tariffed service and Qwest was not required to pay Farmers’ tariff, did not result in the Commission being without jurisdiction to consider Qwest’s complaint because § 208(a) provides the Commission the authority to adjudicate acts and omissions of common carriers; (3) the Commission properly interpreted the tariff in finding the FCSCs were not end users as the tariffs switched access service diagram illustrates, an end user is one of the sub-elements of that service; (4) Farmers’ tariff rates were “deemed lawful” until the Commission determined otherwise, which it did in reviewing the new evidence; (5) the Commission found two alternate bases for § 201(b) liability: (a) Farmers did not provide switched access under its tariff making Farmers’ practice of charging Qwest for such services unjust and unreasonable under § 201(b), and (b) even if traffic Farmers carried from Qwest to the FCSCs could be considered switched access service, Farmers violated § 201(b) by earning an excessive rate of return; (6) the Commission’s finding that the FCSCs were not end users did not contravene prior precedent set in AT & T Corp. v. Jefferson Telephone Co., 16 FCC Rcd. 16130 (2001), because in Jefferson Telephone, end user status was assumed; and (7) because the Commission properly concluded the FCSCs were not end users under the tariff, the filed rate doctrine did not apply. Farmers v. FCC, 668 F.3d at 718-24.

2. FCC: All American Tel. Co. v. AT &T Corp.

On February 5, 2007, All American Telephone Co. (All American), e-Pinnacle Communications, Inc., and ChaseCom (collectively referred to as CLECs or All American), CLECs located in Utah and Nevada, filed a lawsuit against IXC AT & T, in the U.S. District Court for the Southern District of New York, 1:07-cv-00861-WHP (S.D.N.Y.), asserting claims for collection of amounts AT & T allegedly owed for interstate tariff access services, violation of § 201(b) by invoking self-help and failing to pay tariffed access services, violation of § 203(c) by failing to pay tar-iffed services, and compensation under the theories of quantum meruit for telecommunications services allegedly provided. See All Am. Tel. Co. v. AT & T (All American I), 26 FCC Rcd. 723, 725 (2011). AT & T filed counterclaims against the CLECs for violations of §§ 201(b) and 203(c) of the Act, state law fraud, civil conspiracy, and unjust enrichment alleging the CLECs did not provide AT & T switched access service as defined by the terms of their tariffs, and that even if the services were pursuant to the tariffs, the CLECs committed unreasonable practices by using sham arrangements to inflating access charges. See id. On February 5, 2010, the district court referred two issues to the FCC: (1) did AT & T violate1 § 201(b) or § 203(c), or any other provision of the Act, by refusing to pay the billed charges; and (2) did AT & T violate any provision of the Act by refusing to pay the billed charges and not filing a rate complaint with the FCC. See id.

a. All American I

On May 7, 2010, the CLECs filed a formal complaint with the FCC against AT & T alleging AT & T violated §§ 201(b) and 203(c) by engaging in unlawful self-help by not paying the CLECs for use of their local networks services to complete long distance calls and that AT & T violated § 201(b) by not filing a rate complaint against the CLECs. Id. at 726.

Addressing whether AT & T violated any provision of the Act by refusing to pay the CLECs’ billed charges, the Commission found that the CLECs failed to state a claim reasoning that the Commission only had authority to adjudicate claims that a carrier has violated the Act, and allegations by a carrier that a customer, such as AT & T, refused to pay charges failed to give rise to a claim at the Commission under § 208 or in court under § 206. Id. at 727. The Commission remarked that “[t]his long-standing commission precedent that ‘collection actions’ fail to state a claim for violation of the Act has been acknowledged and followed by courts.” Id. at 727 (footnote omitted). The Commission rejected the CLECs’ attempt to distinguish that the allegations of AT & T’s failure to pay was not a collection action because the action had been filed in district court, and the district court, not the Commission, would determine any damages owed stating, “the CLECs fail to recognize that the reason the Commission does not hear collection actions is that a failure to pay tariffed access charges does not constitute a violation of the Act,” and therefore, “the CLECs have no claim in a court or at the Commission that AT & T violated the Act in its role as a customer.” Id. at 728 (second emphasis added). The Commission also rejected the CLECs’ assertion that the Seventh Report and Order stood for the proposition that an IXC’s failure to pay a CLEC’s access charges constituted a violation of the Act reiterating that while the Seventh Report and Order did observe that failures to pay tariffed rates may constitute breaches of the tariff actionable in the appropriate federal court, the Seventh Report and Order went on to say that “our tariff rules were historically intended to protect purchasers of service from monopoly providers, not to protect sellers from monopsony purchasing power.” Id. at 729 (quoting the Seventh Report and Order, 16 FCC Rcd. at 9957). The Commission noted the irony in the CLECs’ reliance on the Seventh Report and Order given that the focus of the Seventh Report and Order was “to eliminate regulatory arbitrage opportunities that previously [had] existed with respect to tariffed CLEC access charges.” Id. at 729-30 (quoting the Seventh Report and Order, 16 FCC Rcd. at 729-30). The Commission also noted that the Commission’s remark in the Seventh Report and Order that “the Act and the Commission rules require IXCs to pay tariffed CLEC access charges ... merely reinforce[d] the undisputed notion that tariffs govern carrier-customer relationships and that parties are precluded from negotiating separate agreements that affect the rate for services once a tariff has been filed.” Id. at 730 n. 47 (emphasis added) (internal citations and quotation marks omitted).

The Commission next found misplaced the CLECs’ comparison to, and reliance upon, Global Crossing Telecommunications, Inc. v. Metrophones Telecommunications, Inc., 550 U.S. 45, 127 S.Ct. 1513, 167 L.Ed.2d 422 (2007), in which the U.S. Supreme Court held a carrier’s failure to pay charges for payphone usage was a violation of the Act. The Commission explained that at issue in Global Crossing was the Act’s requirement that the Commission adopt rules to ensure payphone service providers received compensation for completed calls originating from their payphones and thus, as the Commission found in subsequent cases, a carrier’s failure to pay those charges was a violation of the Act. Id. at 730. The Commission distinguished that “[b]y stark contrast, the provisions of the Act and the Commission’s rules apply only to the provider of the service, not to the customer; and they govern only what a provider may charge, not what the customer must pay.” Id.

The Commission also dispelled the CLECs’ notion that footnote 96 in Farmers II stood for the proposition that a carrier is always entitled to at least some compensation for a service rendered, whether or not that service is covered by the tariff, and that if a carrier is always entitled to some compensation for service rendered, AT & T’s failure to pay any compensation must be a violation of the Act. Id. at 731 (citing Farmers II, 24 FCC Red. at 14812 n. 96). The Commission explained that Farmers II did not hold that a carrier is always entitled to compensation for a service rendered, rather depending upon the totality of the circumstances, a carrier may be entitled to some compensation for non-tariffed services. Id.

b. All American Reconsideration I

The CLECs filed a petition for reconsideration, which the Commission denied finding all the CLECs’ arguments had either been fully considered and rejected in All American I or the CLECs could have raised the arguments during the underlying proceeding. All Am. Recon. I, 28 FCC Rcd. at 3471-72. The Commission noted, for example, that the CLECs “persist in relying on the same out-of-context snippets from old Commission orders” that the Commission already distinguished in All American I. Id. at 3471-72. The Commission remarked that it was perplexed by the CLECs’ request to (1) reverse the All American I decision, (2) find the Commission lacked jurisdiction to hear the questions referred by the district court, and (3) dismiss the complaint without prejudice, noting it was the CLECs, over AT & T’s objection, who requested the referral from the district court, and who now asserted that they knew all along that the Commission was precluded from ruling on the merits of the complaint because.it was a collection action. Id. at 3472-73. Significantly, the Commission dispelled the CLECs’ notion that a claim against an IXC for failure to pay purportedly tariffed access charges was cognizable in a court proceeding, even though the very same conduct did not constitute a cognizable claim in a § 208 Commission proceeding reasoning that “[u]nder the plain language of sections 206-208 of the Act, both the Commission and courts can award relief only upon finding a violation of the Act.” Id. at 3473 (emphasis added) (footnote omitted). The Commission clarified that a “federal court can adjudicate a local exchange carrier’s claim seeking to enforce an IXC’s access charge payment obligations under a federal tariff, whereas the Commission cannot under the longstanding precedent that ‘collection actions’ fail to state a claim for violation of the Act.” Id. (second emphasis added).

c. FCC: All American II

On April 30, 2010, AT & T filed a formal complaint with the FCC alleging the CLECs violated §§ 203 and 201(b) of the Act by billing AT & T for access services that were not pursuant to a valid tariff, and violated § 201(b) of the Act by participating in a traffic pumping scheme to inflate billed access charges to AT & T and other IXCs. AT & T v. All Am. Tel. Co. (All American II), 28 FCC Rcd. 3477, 3477 (2013). The Commission granted AT & T’s complaint concluding the evidence showed that the CLECs participated in a traffic pumping scheme “designed to collect in excess of eleven million dollars of improper terminating access charges.” Id.

The Commission described the revenue-sharing agreement between the LECs Beehive Telephone Co., Nevada, and Beehive Telephone Co., Utah (collectively, Beehive); FCSC Joy Enterprises, Inc. (Joy); and CHR Solutions (CHR), a telecommunications consulting company that provided services to Beehive (and the subsequently-created CLECs) and drafted the tariffs at issue. Id. at 3478-79.

In 1994, Beehive withdrew from the ÑECA pool and became a § 61.39 carrier, which meant Beehive did not have to share revenues with other ILECs in the pool. Id. at 3480. At about the same time, Beehive and Joy entered into an access revenue-sharing agreement, under the terms of which Beehive would pay Joy a portion of the access charges for the long distance traffic routed to Joy’s assigned numbers. Id. As a result of this arrangement, Beehive’s interstate local switched access minutes of use (MOU) grew exponentially from 3.6 million minutes in 1994, to 313.5 million minutes in 2005. Id. Due to the significant increase in traffic between 2001 and 2005, Beehive was required to reduce its rates from 4.59 to 1.02 cents per minute, but instead of continuing to provide terminating access service, and consequently having to further reduce its rates, Beehive reentered the ÑECA pool in mid-2007. Id. at 3480-81.

Beehive then created the CLEC defendants — All American, ePinnacle, and ChaseCom — to assume the role of terminating access carrier and continue the traffic pumping scheme. Id. at 3481. Because they were CLECs rather than ILECs, their rates were not subject to reductions due to the large increases in traffic volume. Id. Defendants were providing the termination service, while Beehive continued charging the IXCs for tandem switching and transport of the traffic. Id.

The CLEC defendants applied for certification to operate as CLECs in Utah, representing to the Utah public service commission (PSC) that they did not intend to operate or provide services in Beehive’s territory. Id. at 3482. Beehive supported and assisted the CLEC defendants in filings it made with the PSC. Id. Although the certification issued to the CLEC defendants by the PSC precluded the CLEC defendants from competing in Beehive’s territory, the CLEC defendants filed switched access tariffs in Utah bench-marked for access service against Beehive’s tariffed rates in Utah. Id. Beehive helped CLEC defendants establish initial operations and set up locations to maximize transport mileage they could charge. Id. at 3483. The Commission observed that Beehive (1) installed and maintained CLEC defendants’ equipment, which was located at Beehive’s facility; (2) coordinated and managed the CLEC defendants’ billing and collections; (3) assigned its equipment to CLEC defendants and allowed them to continue using it at no cost; (4) advised CHR when to revise the CLEC defendants’ tariffs after Beehive had increased its own rate; (5) advanced money to and became co-lessees with CLEC defendants; and (6) decided whether CLEC defendants could relocate their equipment. Id. In addition, the CLEC defendants’ operations were designed and engineered exclusively to provide service to FCSCs, and the CLECs did not market local exchange services. Id. at 3484.

Joy and All American had common directors, officers, and ownership, and shared the same business address. Id. at 3479. All American’s operations only provided services to the chat line and conferencing services of its affiliate Joy; in fact, All American never had its own operating switch, and traffic to All American’s telephone numbers terminated to Joy’s equipment at Beehive’s facilities. Id. at 3484. ChaseCom and e-Pinnacle, likewise, served a total of five FCSCs, and the only equipment either owned was conference bridge equipment; they did not own any of the equipment typically used to provide competitive LEC services to the public. Id. All three CLEC defendants ceased operation without complying with Commission discontinuation of service rules. Id. at 3485.

In 2010, the Utah public service commission (PSC) characterized All American as a mere shell company that lacked technical, financial, and managerial resources to serve customers as it had represented it would; found that All American never intended to comply with its state authorization; revoked All American’s authorization; and ordered All American to withdraw from the state. Id. The state’s revocation order depicted collusion between All American and Beehive and determined Beehive was party to All American’s scheme and aided All American in its illegal operation. Id. at 3486. The state rescinded All American’s authorization concluding All American did not merit the privileges obtained therein, which included the right to levy access charges. Id.

Turning to AT & T’s complaint against the CLEC defendants, the Commission concluded that the extensive record in the case overwhelmingly supported the conclusion that the CLEC defendants were sham CLECs “created to capture access revenues that could not otherwise be obtained by lawful tariffs,” and therefore, billing AT & T for access charges in furtherance of this scheme constituted an unjust and unreasonable practice in violation of § 201(b). Id. at 3487-88 (internal quotation marks omitted). Agreeing with the PSC’s findings, the Commission held that the CLEC defendants never intended to be bona fide CLECs but instead intended to contravene the prohibition from providing service in Beehive’s service areas; Beehive masterminded the sham that allowed the traffic pumping arrangements to continue at rates that would have been unsustainable if Beehive had remained a § 61.39 carrier and created the CLEC defendants who were not subject to NECA’s requirements and thus could benchmark their rates. Id. at 3489. The Commission observed that even after the CLEC defendants took over, the callers still used the same telep