20070214Supplemental authority in support of motion to dismiss.pdf

February 14, 2007
VIA HAND DELIVERY
Jean D. Jewell, Secretary
Idaho Public Utilities Commission
472 West Washington
Boise, ill 83702-5983
Mary S. Hobson
Attorney & Counselor
999 Main, Suite 1103
Boise, ID 83702
208-385-8666
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RE:Docket No. QWE-O6-
Dear Ms. Jewell:
Enclosed for filing with this Commission are an original and seven (7) copies of QWEST
CORPORATION'S SUPPLEMENTATL AUTHORITY IN SUPPORT OF MOTION TO
DISMISS in the above referenced matter.
If you have any questions, please contact me. Thank you for your cooperation in this matter.
Very truly yours
Mfl/~. !-Ioh--
Mary s1Iobson
Enclosurescc: Service List
Douglas R. M. Nazarian
Hogan & Hartson
111 South Calvert Street
Baltimore, MD 21202
Tel: [phone]
drmnazarian~hhlaw . com
Mary S. Hobson (ISB No. 2142)
999 Main, Suite 1103
Boise, ill 83702
Tel: [phone]
mary.hobson~qwest.com
Attorneys for Qwest Corporation
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
AT&T COMMUNICATIONS OF THE
MOUNTAIN STATES, INc.,
Complainant,Case No. QWE-O6-
QWEST CORPORATION,
QWEST CORPORATION'
SUPPLEMENTAL AUTHORITY IN
SUPPORT OF MOTION TO DISMISS
Respondent.
Qwest Corporation ("Qwest") respectfully submits, and asks the Commission to consider
the February 13, 2007 decision of the United States District Court for the District of Utah
denying Complainant AT&T Communications of the Mountain States, Inc.' s ("AT&T") motion
to remand a companion case to state court. See Memorandum and Order Addressing Motion to
QWEST CORPORATION'
SUPPLEMENTAL AUTHORITY IN SUPPORT OF MOTION TO DISMISS
Case No. QWE-O6-17
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Page of3
\\\BA - 066983/000055 - 220706 vI
Remand AT&T Communications of the Mountain States, Inc. v. Qwest Corporation Case No.
2:06CYOO0783 DS (D. Utah Feb. 13, 2007) ("Utah Remand Order ), attached as Exhibit 1.
The Utah Court's decision is directly relevant to Qwest's pending Motion to Dismiss
because the Court was considering a materially identical case. Like the United States District
Court for the District of Wyoming before it see Qwest Corporation s Response to the
Commission s Notice of Oral Argument, filed December 21 2006, Ex. 1 (the "Wyoming
Remand Order ), the Utah Court has similarly found that "the legal and contractual duties
alleged to have been breached are imposed by the 1996 (Telecommunications) Act " and that
those duties "are at the heart of AT&T's Complaint and their resolution depends on the
application and interpretation of federal law.See Utah Remand Order at 9-10. The Utah Court
rejected AT&T's argument that because it pled state law claims, federal law did not apply. In
doing so, the Court adopted Qwest's reading of Southwestern Bell Tel. v. Brooks Fiber
Communs. of Oklahoma, Inc.235 F.3d 493 (10th Cir. 2000), and similar cases, and noted its
reliance on the Wyoming Remand Order as well. Id. at 7-10 and nn.7. For those reasons
, "
well as generally for the reasons set forth by Qwest in its responsive pleadings " the Utah Court
held that it has federal question jurisdiction to consider AT&T's claims there - the same claims
AT&T has asked this Commission to resolve.
Because this new ruling confirms, as Qwest argued in its motion to dismiss, that federal
law governs AT&T's claims here , regardless of their state law titles, Qwest respectfully requests
QWEST CORPORATION'
SUPPLEMENTAL AUTHORITY IN SUPPORT OF MOTION TO DISMISS
Case No. QWE-O6-17
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Page of3
\\\BA - 066983/000055 - 220706 vi
that the Commission accept and consider the Utah Remand Order in connection with that
motion.
DATED this 14th day of February 2007.
Respectfully submitted
Mary S. obson (ISB No. 2142)
999 Main, Suite 1103
Boise, ill 83702
Douglas R. M. Nazarian
Hogan & Hartson
111 South Calvert Street
Baltimore, MD 21202
Attorneys for Qwest Corporation
QWEST CORPORATION'
SUPPLEMENTAL AUTHORITY IN SUPPORT OF MOTION TO DISMISS
Case No. QWE-O6-17
--
Page3 of3
\\\BA - 066983/000055 - 220706 vI
Case 2:06-cv-00783-Document 37 Filed 02/13/2007 Page 1 of
AT&T COMMUNICATIONS OF THE
MOUNTAIN STATES, INC. ET AL.,
THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF UTAH
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TRIer GOURT
* * * * * * * * * * * * * * * * * * * * * * * * * * * *
1~81
fEU IJ A ro: I 2
Case No. 2:06CVO0783
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CENTRAL DIVISION
Plaintiffs,
vs.MEMORANDUM OPINION
AND ORDER ADDRESSING
MOTION TO REMAND
QWEST CORPORATION,
Defendant.
* * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * *
INTRODUCTION
Asserting that the Court lacks original jurisdiction over this
case, Plaintiffs AT&T Communications of the Mountain States, Inc.
and TCG Utah collectively "AT&T"pursuant to
1447 (c), move to remand this matter to the state court from which
it was removed. For the reasons that follow, AT&T's Motion to
Remand is denied.
AT&T contends that no federal claim is stated on the face of
its Complaint.It argues that because both of its claims for
On August 22, 2006, Plaintiffs filed a Complaint in Utah'
Third Judicial District Court alleging breach of contract and
breach of the implied covenant of good faith and fair dealing
relating to the parties interconnection agreements, which set forththe terms under which the networks of telephone companies areconnected. Defendant filed its Notice of Removal on September 15,
2006.
E)(hib\t 1
Case 2:06-cv-00783-Document 37 Filed 02/13/2007 'Page 2 of
relief seek enforcement the terms its contracts with
Defendant Qwest Corporation (~Qwest"), only state law claims are
alleged.
Qwest counters that removal was proper under 28 U.C ~ 1441
because federal law created the cause of action and because AT&T'
right to relief necessarily depends on resolution of a substantial
question of federal law.
II.DISCUSSION
The Federal Telecommunications Act of 1996 (the "1996 Act"
47 U.C. '151 et seq.,requires telecommunications carriers
competing within the same area to interconnect their networks in
order that customers of one carrier may call customers of other
carriers.In the instant dispute,AT&T asserts that Qwest charged
it more than competing carriers under unfiled interconnection
agreements in violation of federal and state law.The issue
presented is whether the Court has federal question jurisdiction
over claims that duties mandated by the 1996 Act and referenced in
the parties ' interconnection agreements were breached.
Interconnection agreements,as noted,are provided for by
federal law and have been characterized by the Tenth Circuit as
Case 2:06-cv-00783-Document 37 Filed 02/13/2007 Page 3 of
follows:
The Telecommunications Act of 1996 ... aims to encourage
competition in the telephone services industry. Amongother things, the Act requires telephone companies
competing wi thin the same area to "interconnect" their
networks to ensure that callers who subscribe to one
local telephone service can receive calls from, and placecalls to, those who subscribe to a different local
telephone service.
...
The terms under which the networks are connected are
contained in "interconnection agreements.The Act
directs telephone companies to attempt to agree upon the
terms of interconnection through negotiation. Id.
252 (a) (1) . If they cannot agree, the Act directs the
governing state commission to arbitrate or mediate
disputed issues. Id. ~ 252 (b) (1). The duties which the
Act imposes are only minimum requirements, and telephone
companies may enter into interconnection agreements
without regard" to the Act'requirements. Id.
252 (a) (1). The state commission must, however, approve
the final agreement. Id. ~ 252 (e) (1). ...
Southwestern Bell Tel. v. Brooks Fiber Communications of Oklahoma,
Inc., 235 F.3d 493, 494 (10th Cir. 2000).
The Court's jurisdictional inquiry begins with the Complaint.
In general,original jurisdiction is lacking unless there is
diversity of citizenship or 'a federal question is presented on the
face of the plaintiff's properly pleaded complaint.Topeka
Housing Authori ty Johnson,404 3d 1245,1248 (loth Cir.
2005) (quoting Caterpillar Inc.Williams,482 U. s.386,392
(1987)) .If the Court lacks subject matter jurisdiction over a
removed case,the case must be remanded to state court.Id.,
Case 2:06-cv-00783-Document 37 Filed 02/13/2007 Page 4 of
1447(c).Qwest contends that the Court has federal
question jurisdiction over the dispute.
determining federal question jurisdiction,the Tenth
Circui t instructs as follows:
District courts have ~original jurisdiction of all
civil actions arising under the Constitution, laws, or
treaties of the United States." 28 U.C. ~ 1331. "
case arises under federal law if its 'well-pleaded
complaint establishes either that federal law creates the
cause of action or that the plaintiff' s right to reliefnecessarily depends on resolution of a substantial
question of federal law.
'"
Thus, even though a
plaintiff asserts only claims under state law, federal-
question jurisdiction may be appropriate if the state-law
claims implicate significant federal issues.
Even if a federal question appears on the face of awell-pleaded complaint, federal jurisdiction is not
automatic. It is by now axiomatic that "federal
jurisdiction demands not only a contested federal issue,but a substantial one, indicating a serious federal
interest in claiming the advantages thought to
inherent in a federal forum.Grable Sons, 125 S. Ct.at 2367. Finally even when the state action discloses a
contested and substantial federal question, the exercise
of federal jurisdiction is subj ect to a possible veto.
For the federal issue will ultimately qualify for a
federal forum only if federal jurisdiction is consistent
with congressional judgment about the sound division of
labor between state and federal courts governing the
application of ~ 1331.
Nicodemus v. Union Pacific Corp., 440 F.3d 1227 1232 (10th Cir.
2006) (citations omitted).
What appears to the Court to be the heart of the dispute
stated by AT&T in its Complaint as follows.
Case 2:06-cv-00783-Document 37 Filed 02/13/2007 Page 5 of
Notwi thstanding these legal requirements and
prohibitions, and in violation of the 1996 Act and Utah
law, Qwest entered into, secret interconnection agreements
with two telecommunications providers in Utah. The
secret agreements permitted those providers to purchase
certain products and services at discounts of up to ten
percent off the rates that other similarly situated
carriers, including AT&T and TCG, were paying Qwest for
the same services. Qwest unlawfully did not file these
interconnection agreements with the PSC, and, because
they were not filed and remained undisclosed, AT&T and
TCG did not know about them and therefore could not
demand the same discounted rates, as they were entitled
to do.
Compl. at CjJ: 14.AT&T claims in its First Cause of Action that
Qwest breached the parties Interconnection Agreement.And in its
Second Ca;use of Action AT&T claims that Qwest breached implied
covenants of good faith and fair dealing.
A fair reading reflects that the Complaint alleges rights and
duties imposed by the 1996 Act and the violation of those duties by
Qwest when it allegedly breached the parties interconnection
agreements.2 Among other things AT&T complains that Qwest violated
Section 252) (a) (1) and (e) of the 1996 Act by failing to file the
agreements at issue with state commissions. Campi. CjJ:CjJ: 10,14,24.
AT&T also complains that had Qwest not violated the 1996 Act by not
filing the competing agreements, it could have adopted the rates,
terms and conditions those more favorable interconnection
See e.g. Compi. CjJ:CjJ: 6, 7, 8, 9, 10, 11, 14, 15, 16, 17, 18,19, 20, 21, 22, 23, 24, & 27.
se 2:06-cv-00783-Document 37 Filed 02/13/2007 Page 6 of
agreements pursuant to Section 252 (i) of the Act.Compl. cncn 14,
24.
The obligation of Qwest to file the subject interconnection
agreements arose under Section 252 (a) and (e)of the 1996 Act.
Similarly,any right AT&T may have had the terms
competitor s interconnection agreement arose under Section 252 (i)
of the 1996 Act and under provisions of the parties interconnection
agreement which reference the 1996 Act.AT&T's breach of contract
claim depends,at least in part,on establishing that Qwest' s
conduct as alleged breached its obligations under the 1996 Act and
the parties interconnection agreements referencing the 1996 Act~
See Compl. '.1(27.Likewise, AT&T's breach of the covenant of good
fai th and fair dealing claim identifies the source of those alleged
breaches claiming that Qwest violated its duty of good faith and
fair dealing ~by failing to apprise AT&T and TCG of the terms of
its secret agreements with Eschelon and McLeodUSA, and by failing
to file those agreements as required by law, in order to induce
AT&T and TCG to continue to pay the higher rates in their
interconnection agreements rather than to avail themselves of the
discounts in the secret agreements.rd. '11:40.AT&T specifically
alleges that the implied covenants breached include "an obligation
Qwest contends that ~ (0) nce the competitor s agreement was no
longer in effect, AT&T had no right under Section 252 (i) to opt-in
to the terminated provisions.Mem. Opp n, p.
Case 2:06-cv-00783-Document 37 Filed 02/13/2007 Page 7 of
by Qwest to comply with all applicable public utility and public
telecommunications laws.Id. fj30.The Complaint repeatedly and
specifically references the 1996 Act. 4
In Verizon Maryland, Inc. V. Global Naps, Inc., 377 F.3d 355
(4th Cir.2004) ,the Fourth Circuit found that federal question
jurisdiction under 28 u. s. C. ~ 1331 existed in an action seeking
review order the Maryland utili ties commission
interpreting an interconnection agreement, in part, because the
complaint called for an interpretation of a federally mandated
agreement which incorporated federal law, and because the contract
at issue involved duties that are creations of federal law.That
Court viewed interconnection agreements as a creation of federal
law.
Interconnection agreements are thus the vehicles chosen
by Congress to implement the duties imposed in ~ 251.
They are, in short, federally mandated agreements, and
" (t) 0 the extent (an agreement) imposes a duty consistent
with the Act ... that duty is a federal requirement.
Central Airlines, 372 u.s. at 695, 83 S. Ct. 956. The
contractual duty at issue in this case-to pay reciprocal
compensation "for transport and termination of LocalTraffic" is a duty imposed by the 1996 Act. The scope of
this duty is at the heart of Verizon s contract claim,and the resolution of that claim depends on the
interpretation and application of federal law. ...
Finally, we recognize that " (t) he determination of
whether a federal issue is sufficiently substantialshould be informed by whether the (exercise) of
See, e.g., Id. fjfj 6,10,11,14,20,23, & 24.
Case 2:06-cv-00783-Document 37 Filed 02/13/2007 Page 8 of
federal judicial power is both appropriate and
pragmatic." ... This area of consideration takes us to
the basic purpose of the 1996 Act. As the Supreme Court
said, the Act took ~the regulation of local (telephone
service) away from the States " and established ~a new
federal regime " designed to promote competition. ...
Verizon Maryland, 377 F. 3d at 364-65 (citations omitted).That
Court also noted:The jurisdictional analysis must take into
account the broader federal interest; it must recognize that the
interconnection agreement and the duties specified therein
. ..
have
the imprimatur federal law. "rd.365 (citing
International Association of Machinists v. Central Airlines, Inc.,
375 u.s. 682, 692 (1963).See also, Core Communications v. Verizon
Pennsylvania, Inc., 423 F. Supp. 2d 493, 498 (E.D. Pa. 2006) (citing
Verizon Maryland court observed that ~ 1331 jurisdiction would be
present because determining whether statutory duties imposed by the
1996 Act were breached involved interpretation and application of
federal law); rCG Telecom Group, Inc. V. Qwest Corp., 375 F. Supp.
2d 1084, 1087 (D. Colo. 2005) (finding persuasive the reasoning of
Verizon Maryland,that Congress intended the 1996 Act and
agreements thereunder to remove regulation of local telephone
markets from states and to substitute a federal scheme, the court
concl uded that federal question jurisdiction existed because
resolution of dispute required interpretation of interconnection
agreement subject to the 1996 Act) .
Case 2:06-cv-00783-Document 37 Filed 02/13/2007 Page 9 of
This Court finds the analysis Veri son Maryland,id.
persuasi ve . 5 Here, the legal and contractual duties alleged to
The Court does not find AT&T' 5 argument to the contraryconvincing. In moving for remand , AT&T relies on Brooks Fiber, 235
3d at 498-99, for the proposition that claims like those
presented here arise under state law and must be resolved applying
state law principles, and, therefore, this Court lacks originaljurisdiction over those claims. In the Court'view, AT&T'
reliance on Brooks Fiber is misplaced. The relevant issue in that
case arose in the context of whether the district court was limitedto reviewing actions of the Oklahoma Corporations Commissions
OCC") in interpreting the parties interconnection agreement "only
for compliance with federal law, or whether the court's review may
extend to application of state contract law Id. at 498.
Reasoning that to conclude otherwise would be a waste of judicial
resources, the Tenth Circuit held that the district court could
also review OCC determinations of state law. Noting that the OCC
required reciprocal compensation in that instance, "not because
federal law requires such compensation, but because the Agreement,
as construed under Oklahoma state law, requires it"id. at 499,the court stated that " (t) he Agreement itself and state law
principles govern the questions of interpretation of the contract
and enforcement of its provisions.Id. This Court finds nothing
in Brooks Fiber at odds with concluding that the Court has originaljurisdiction here. As Qwest observes, Brooks Fiber recognized the
primacy of federal law, even where there is a role for state law:
The OCC has an obligation to interpret the Agreement within the
bounds of existing federal law.Id. Exercising original
jurisdiction to determine issues of federal law as contemplated in
Verizon is not inconsistent with the suggestion in Brooks Fiber
that courts may proceed with state law determinations exercising
supplemental jurisdiction pursuant to 28 U.C. ~ 1367 (a).
Likewise, AT&T's reliance on Empire HealthChoice Assur., Inc.
v. McVeigh, 126 S. Ct. 2121 (2006), for the proposition that thiscase does not present an issue of federal law for purposes offederal question jurisdiction is rejected. That case, which
involved a suit by a federal employee s health insurance carrier
for reimbursement of benefits, because the employee had recovered
damages for his inj uries in a state court tort action, is easily
distinguished. As the Court noted, the relevant jurisdictional
statute did not encompass contract based reimbursement claims and
the suit did not involve issues of law that belonged in federalcourt. Rather the Court reasoned that the reimbursement claim was
triggered by settlement of the personal injury action launch~d in
Case 2:06-cv-00783-Document 37 Filed 02/13/2007 Page 10 of
have been breached are imposed by the 1996 Act.They are at the
heart of AT&T's Complaint and their resolution depends on the
application and interpretation of federal law.The Court for
purposes of determining jurisdiction,therefore,concludes that
AT&T's claims, at least in part, arise under federal law and that
AT&T'right relief necessarily depends resolution
substantial questions of federal law. 6 Therefore, federal question
jurisdiction is conferred on this Court under 28 U.C. ~ 1331.
state court, rather than by action of any federal agency orservice. In contrast, here AT&T clearly claims that Qwest violated
rights and duties mandated by 1996 Act. As Qwest puts it, "this is
not a case of federal law simply being ' referenced' in a contract.
Rather, the Federal Act governs not only the establishment of the
agreements at issue, but in particular (1) when such agreements
must be made public to other competitors through filing - under
Sections 252 (a) and (e) - and (2) when competitors may or may not
have access to the same terms as their competitors - under Section
252 (i) . " Mem. Opp , p. 12
For example, Qwest contends that its obligation to file the
competing and allegedly more favorable agreements at issue arose
under the 1996 Act, which duty was extinguished once those
agreements were no longer in effect. Determining the scope of
those federally mandated duties and whether Qwest breached any of
its statutory duties requires an interpretation of those duties.
Additionally, as Qwest suggests, the Court may "need to address
whether the federal rights and remedies specified in the Act
...
prevent AT&T from asserting any arguably inconsistent state lawclaim.Mem. Opp ' n pp. 5-6
The Court finds further support for its decision in the
recent opinion of the United States District Court for the District
of Wyoming addressing what appears to be the identical issue
presented here and finding federal question jurisdiction. SeeOrder Den. Mot. Remand, AT&T Commun. of the Mountain States, Inc.
v. Qwest Corp., Case No. 06-cv-232-D (D. Wyo. Dec. 12, 2006) (copy
attached to Qwest's Mot. File Supplemental Authority, Ex. 1).
Case 2:06-cv-00783-Document 37 Filed 02/13/2007 Page 11 of
III.CONCLUSION
For the reasons stated, as well as generally for the reasons
set forth by Qwest in its responsive pleadings, AT&T's Motion to
Remand is denied.
IT IS SO ORDERED.
DATED this --'.:J..:.. day of 2007.
BY THE COURT:
-'i :L
DAVID SAM
SENIOR JUDGE
UNITED STATES DISTRICT COURT
CERTIFICATE OF SERVICE
I do hereby certify that a true and correct copy of the foregoing document, Qwest
Corporation s Supplemental Authority in Support of Motion to Dismiss, was served on the
14th day of February, 2007 on the following individuals:
Jean D. Jewell ..lL
Idaho Public Utilities Commission
472 West Washington Street
O. Box 83720
Boise, ill 83702
Telephone [phone]
Facsimile: [phone]
i iewell(tp.puc.state.id.
Hand Delivery
U. S. Mail
Overnight Delivery
Facsimile
Email
Molly O'Leary
Richardson & O'Leary
515 North 27th Street
O. Box 7218
Boise, Idaho 83707
mo llv(tp.richardsonando leary .com
Hand Delivery
U. S. Mail
Overnight Delivery
Facsimile
Email
Theodore A. Livingston
Dennis G. Friedman
Mayer, Brown, Rowe & Maw LLP
71 South Wacker Drive
Chicago, IL 60606-4637
dfri edman~ma y erbro wn. com
, Hand Delivery
U. S. Mail
Overnight Delivery
Facsimile
Email--X-
Dan Foley
General Attorney & Assistant General Counsel
AT&T West
O. Box 11010
Reno, Nevada
df6929(tp.att.com
Hand Delivery
U. S. Mail
Overnight Delivery
Facsimile
Email--X-
l:s7J~
Attorney for Qwest Corporation