Virgin Islands Telephone Corp. v. FCC

Virgin Islands Telephone Corporation (Vitelco) (plaintiff) provided telephone service to the United States Virgin Islands. AT&T provided long-distance phone service to the Virgin Islands and paid Vitelco to complete AT&T customer calls to the Virgin Islands. Vitelco filed a streamlined tariff schedule of rates, as allowed by § 204(a)(3) of the Communications Act of 1934. Courts have distinguished between lawful and legal tariffs under the Communications Act. A legal tariff was one that had been filed according to correct procedures. A lawful tariff was one that had been filed according to correct procedures and contains just and reasonable rates. If a legal tariff was later deemed unlawful, the entity that filed the tariff would be liable for damages. A streamlined tariff would be deemed lawful unless the FCC took action within 15 days of its filing. AT&T challenged Vitelco’s rates within the streamlined tariff. Ten days after the streamlined tariff was filed, the Federal Communications Commission (FCC) (defendant) suspended the tariff. A month later, the FCC declined to investigate the tariff rates and vacated its suspension order. The FCC deemed Vitelco’s streamlined tariff unlawful and found Vitelco liable for damages. Vitelco appealed, arguing that the FCC erroneously deemed its rates unlawful. Given the structure of the tariff system, Vitelco asserted that its rates should have been deemed lawful when the FCC vacated its suspension order.