The Prepaid Press - March 15, 2008 - (Page 19)

CALLING CARDS March 15 · 2008 - 19 Commission’s findings and determinations. The end result is the present regimen of DAC. Regular readers of The Prepaid Press will recognize that this is a topic we have frequently covered. PSPs do have a right to be compensated for calls made from a payphone under a system prescribed by the FCC. The individual PSPs are clearly “Parties of Interest” where and when they bring their individual claims against common carriers which do not compensate them, as a presumptive violation of Section 276 under Section 207 claims for damages. This brings us to the merits of Sprint Communications Co. v. APCC Services, Inc., Case No. 07-55, now before the U.S. Supreme Court. To date, the thrust of federal court enforcement on the collection DAC has been largely brought by Plaintiff, APCC Services, Inc., as a third-party aggregator of PSPs, based upon an assignment of the individual PSPs standing under Section 276 and Section 207 damage claims. Upon collection, APCC Service, Inc. distributes the collected DAC, interest, attorney fees and damages to the PSP owners and is paid, not on contingency, but based upon on the number of phone lines that the PSP owner actually operated and/or continues to operate. This aggregation is a tremendous leverage tool in litigation as it has allowed small PSPs to be grouped with larger PSPs (that may be better equipped to foot the legal expenses) and consolidate their collection of DAC against individual common carriers. For small common carrier businesses sued by the APCC, this aggregation of collection claims can potentially be an economic death knell as it functions almost like a class action lawsuit, without the requirements or defenses of class formation. The Supreme Court has now granted certiorari to decide whether the constitutional requirements of standing are properly satisfied by a suit brought by a plaintiff who has not itself suffered an actual injury as a Party of Interest, but has had the legal claim assigned to them “for purposes of collection” on behalf of that party. The D.C. Appellate Circuit has already ruled such a contract and assignment is sufficient to confer standing under Section 276 and Section 207 damage claims. Legal commentators, lawyers and law professors now have jumped on this legal issue because it raises constitutional concerns as to what extent, or under what parameters, a non-Party of Interest can “contract or assign into” Article III standing. This may impact the entire arena of constitutional and statutory claims, as Parties of Interest may see the right to recover on statutory and constitutional violations as a fungible and transferable intangible to be weighed with other assets or receivables they possess. If fungible and transferable interest, it would undoubtedly make an interesting work-out alternative for individuals and businesses with standing on statutory and constitutional violations now facing debt and possible bankruptcy with creditors. However, to get back on track, the contract for assignment of claim is what Sprint’s appellate attorneys dug into in their original Motion to Dismiss for lack of standing at the District level, later appealed to the D.C. Appellate Circuit. However, the D.C. Appellate Circuit concluded as a matter of law the assignment of a legal right to bring a claim gives the assignee a personal stake in the litigation sufficient to confer standing under Article III and in turn F.R.C.P. 17 (a) and (b). The U.S. Supreme Court will now decide the issue. Amicus briefs in support of Sprint were due on February 21, 2008 and amicus briefs in support of APCC Services, Inc. are due on March 19, 2008. It will be interesting to see who, beyond those in the telecommunications industry, also decides to take on this issue. My personal perspective is that I see this case as having a greater impact on all statutory and constitutional claims. The issue of allowing Plaintiffs, who are true Parties of Interest for violations of statutory or constitutional claims, the unfettered ability to contract away their rights to recovery is a problematic proposition. Likewise, the idea that one’s right to seek relief for statutory and constitutional violations is something fungible, or transferable, in nature that should be governed by a contract is problematic. This type of thinking really erodes and PSPs have a right to be compensated for calls made from a payphone under a system prescribed by the FCC. defeats the purpose of such claims, particularly true violations of constitutional rights. While I do believe that PSPs are entitled to collect the statutory compensation of DAC under Section 207, I do not see the contractual assignment of Article III standing as the only way to “aggregate” the claims of these small PSPs. The FRCP Rule 19 “Joinder of Persons Needed for Just Adjudication” and FRCP Rule 18 “Joinder of Claims and Remedies” equally serve the “aggregation” issue of small PSPs by allowing them to join together as individuals entitled to the DAC and seek redress against individual common carriers. This would be particularly fair in circumstances where small PSPs are seeking DAC enforcement from a small to mid-sized carrier. In many such circumstances, several Plaintiffs can be represented by one set of attorneys and easily share costs without any unfair advantage. Another problem with the implications of the D.C. Appellate Circuit decision on FRCP 17 being upheld has to do with its impact on Telephone Consumer Protection Act of 1991. Codified into the Telecommunication Act of 1996 under 47 USC § 227, consumers and businesses have statutory redress and statutory minimal damages for violations of Junk Faxes, use of Auto-dialers by telemarketers, and unwanted telephone solicitations. The purpose is to give the ordinary person or business an individual right to sue without having to prove actual damages by establishing a default damage of $500.00 USD per incident and attorney fees. In recent years, attorneys looking for a repeatable niche of work have aggressively gone after the civil prosecution of such actions in federal court. Some have built entire legal practices, which function as a factory, prosecuting such cases. I can only imagine what would happen if these attorneys, or unaffected third-parties, could be contracted, or assigned, the consumer’s standing on such claims under the Act. I can envision the mass-marketing of it now: “We’ll buy your Section 227 Telephone Consumer Protection Act claim for $100.00 USD cash upfront…sign here please”. No, opening the door to unfettered ability contracting away one’s standing on statutory and constitutional injuries is not good policy. I only hope the Supreme Court Justices see that. As far as the overall impact to you, AFL, even if Sprint prevails on the U.S. Supreme Court appeal, it will not make DAC go away for common carriers that have not paid it to their respective PSPs. It may change the way DAC is collected, and possibly reduce the leverage of aggregating hundreds of PSPs, but it will not negate a PSPs entitlement to DAC. The individual PSPs, as Parties of Interest, still hold their legal standing. However, should Sprint prevail, it is questionable how APCC Services, Inc. will justify standing under F.R.C.P. Rule 17 without directly fitting into the categories expressed under Rule 17(a), particularly as a party with whom or in whose name a contract has been made for the benefit of another (third-party beneficiary), or a party authorized by statute. Perhaps the APCC may need to lobby Congress again. Good Luck and Success in the Industry. Attorney Edward A. Maldonado is the president of the Maldonado Group and the Regnum Group, and can be reached at eam@maldonado-group.com THE PREPAID GRAPEVINE 1700 members and growing! The Prepaid Grapevine is the only interactive meeting place for the prepaid industry. 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Table of Contents Feed for the Digital Edition of The Prepaid Press - March 2008

The Prepaid Press - March 2008 tppEXPO’08 Slated for August 19-21 AT&T Strikes Back Contents The Retske Report: Net Neutrality 5 Minutes With Terry Maher, NBPCA Counsel Regulatory Rundown: FCC Enforcements Prepaid Wireless Roundup Prepaid Wireless in Brief tppEXPO’08 Spotlight BlackBerry Prepaid Option to be Offered Virgin Mobile USA Ringbacks Growing The Splitting of a Titan The State of Prepaid Technology: Part II – The Other Prepaid Calling Spot Rates Calling Cards in Brief IVR and Stratus to Offer SIP Platform PhoenixSoft Completes Integrated IP Transcoding The Legal Line Web Streamlines Bill Pay & Prepaid Distribution Travelex Debuts New Foreign Currency Packs TSYS and Telrock to Provide Mobile Solutions Payments in Brief NBPCA Offers Tips to Fight Money Laundering Hypercom Responds to Ingenico Inquiry Kiosks Change the Face of Prepaid Prepaid 101: Prepaid Wireless Coinstar to Expand Centers in Wal-Mart Locations Meta and MoneyGram Partner NRF Battles Retail Crime Retail Focus in Brief Our Advertisers Contact Us

The Prepaid Press - March 2008

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