20070813Motion to Stay Proceedings.pdf

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Mary S. Hobson
Attorney & Counselor
999 Main, Suite 1103
Boise ID 83702
208-385-8666
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August 10, 2007
VIA HAND DELIVERY
Jean D. Jewell, Secretary
Idaho Public Utilities Commission
472 West Washington
Boise, ID 83702-5983
RE:Docket No. QWE-O6-
Dear Ms. Jewell:
Enclosed for filing with this Commission is the original and seven (7) copies of QWEST
CORPORATION'S MOTION TO STAY PROCEEDINGS in the above referenced
matter.
If you have any questions, please contact me. Thank you for your cooperation in this
matter.
Very truly yours
d::t~
Enclosurescc: Service List
Mary S. Hobson (ISB. No. 2142)
999 Main, Suite 1103
Boise, ID 83702
Tel: [phone]
mary.hobson~qwest.com
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ALGID Pi1i~:53
if;" iCY i;J\LIC
UTILiTIES COi'l;i/iiSSICi,
Attorney for Qwest Corporation
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
AT&T COMMUNICATIONS OF THE
MOUNTAIN STATES, INC.
Complainant,Case No. QWE-O6-
QWEST CORPORATION'
MOTION FOR STAY OF PROCEEDINGS
QWEST CORPORATION
Respondent.
INTRODUCTION
Qwest Corporation ("Qwest") files this Motion for a stay of the proceedings before the
Idaho Public Utilities Commission (the "Commission ), pending a decision from the United
States District Court for the District of Idaho ("federal Court") on Qwest's motion to dismiss
the complaint filed by AT&T Communications of the Mountain States, Inc. ("AT&T"). Grant
of this stay will preserve the resources of the Commission and the parties while the federal
Court considers the dispositive federal question of whether, as Qwest contends, AT&T's
complaint is barred by the two-year statute oflimitations in Section 415 ofthe Federal
Communications Act.
This process is appropriate because the federal Court is the final arbiter on this
QWEST CORPORATION'S MOTION FOR STAY OF PROCEEDINGS
- 1 -
dispositive question of federal law. While the Commission and the federal Court have
concurrent jurisdiction, the Commission s orders on questions of federal law are subject to
novo review under the Telecommunications Act of 1996 ("Federal Act"
).
See 47 US.
252(e)(6). Thus, staying this case until the federal Court decides Qwest's motion to dismiss
will save resources and potentially avoid unnecessary and duplicative discovery and trial in
two fora.
In this case, no damage or inequity would result to AT&T or the Commission from
granting a stay. AT&T will not be prejudiced by a stay of this proceeding because it - not
Qwest - initiated actions contemporaneously in two fora, and all of its rights and claims are at
issue in the federal Court. In contrast, allowing this case to proceed would work material
unfairness against Qwest, which would unnecessarily be forced to expend substantial resources
to defend against a complaint that the federal Court may (and Qwest has elsewhere shown
should) dismiss as untimely. Because a stay would further the orderly and efficient cause of
justice by simplifying the issues and potentially disposing of the cases in their entirety, Qwest
respectfully requests that the Commission stay the current proceedings pending resolution of
Qwest's motion to dismiss by the federal Court.
BACKGROUND
AT&T's Complaint relates to events that ended over four years ago. Specifically,
AT&T's claim arises from two allegedly "secret" Qwest interconnection agreements - one with
Eschelon and another with McLeod. Qwest and the respective parties entered into these
interconnection agreements pursuant to Sections 251 and 252 of the Federal Act. The
agreements were terminated in 2002. AT&T was an active participant in proceedings before
state commissions since 2002. Notwithstanding those opportunities, AT&T sat on its hands and
QWEST CORPORATION'S MOTION FOR STAY OF PROCEEDINGS
- 2 -
did not file a complaint against Qwest before this Commission until August 21 , 2006, when it
attempted to resurrect the same allegations.
Qwest moved to dismiss AT&T's complaint on September 27 2006 because 47 U.
~ 415 barred its claim. After briefing and oral argument, the Commission issued Order No.
30247 on February 16, 2007 , finding that it had authority under the federal Act to interpret and
enforce an interconnection agreement. AT&T Commc 'ns of the Mountain States v. Qwest
Corp.Case No. QWE-06-, Order No. 30247 (Idaho P.c. Feb. 16 2007). The
Commission also found "that the Agreement (was to J be construed under state law while
recognizing that the parties must also comply with various federal requirements.Id. at 4.
Recognizing a role for both state and federal law, the Commission left open the question of the
applicable limitations period and found "additional briefing is necessary to determine the
complaint's gravamen and address the statute oflimitations issue.!d. at 5.
The Commission subsequently issued Order No. 30297, which directed the parties to
confer "for the purpose of developing a schedule to process this case.AT&T Commc 'ns of the
Mountain States v. Qwest Corp.Case No. QWE-06-, Order No. 30297 (Idaho P.C. Apr.
2007). The briefing schedule contemplates further dispositive motions.
In the midst of briefing on Qwest's motion to dismiss , AT&T filed a duplicative
complaint in the District Court of the Fourth Judicial District of the State of Idaho (Ada
County) on January 31 2007. AT&T Complaint, attached as Exh. 1. AT&T served the
complaint on Qwest on May 30, 2007, and Qwest then removed the action to federal court on
June 19 2007. Qwest then filed a motion to dismiss the action because Section 415 barred
AT&T's complaint. Qwest Motion to Dismiss, attached as Exh. 2. AT&T responded to
Qwest's motion to dismiss and also filed motions to stay and remand the federal action , which
QWEST CORPORATION'S MOTION FOR STAY OF PROCEEDINGS
- 3 -
Qwest is opposing. AT&T Motion to Stay Proceedings, attached as Exh. 3; AT&T Motion to
Remand, attached as Exh. 4. Although AT&T is seeking to stay the federal Court case, Qwest
opposes that motion on the basis that the dispositive issue is one of federal law and nothing
otherwise supports federal abstention.
As the Commission acknowledged, its jurisdiction to interpret and enforce
interconnection agreements arises under the Federal Act. See Order No. 30247, at 2-
Federal law indicates that a Commission does have authority to interpret and enforce an
interconnection agreement."The Federal Act also imposes a unique system of judicial
review that directs appeals of Commission orders and decisions involving interconnection
agreements to federal court. See 47 U.C. ~ 252(e)(6) (providing that "(iJn any case in which
a State commission makes a determination under this section, any party aggrieved by such
determination may bring an action in an appropriate Federal district court to determine whether
the agreement or statement meets the requirements of section 251 of this title and this
section ). Under this system, the Commission s determinations of federal law are reviewed by
federal courts de novo and all other determinations, such as factual findings, are reviewed
under a substantial evidence standard. US WEST Commn 'ens, Inc. v. Jennings 304 F.3d 950
958 (9th Cir. 2002). State courts are expressly excluded from this system. See 47 U.C. ~
252(e)(4) (stating that "(nJo State court shall have jurisdiction to review the action of a State
commission in approving or rejecting an agreement under this section ). Not only does the
federal Court have concurrent jurisdiction with the Commission in this matter, but the federal
Court also has jurisdiction over any direct appeals from this case. See Verizon Md, Inc.
Public Servo Comm n of Md 535 U.S. 635, 643-44 (2002) (finding that the Federal Act
expressly precluded state court review in 47 U.C. ~ 252(e)(6) and that federal courts retained
QWEST CORPORATION'S MOTION FOR STAY OF PROCEEDINGS
- 4 -
their general federal jurisdiction under 28 U.C. ~ 1331). Thus, the pending federal case may
dispose conclusively the federal question of whether Section 415 applies and entirely resolve
both actions.
STANDARD
Courts and commissions generally have discretion to grant or deny a stay. Landis v.
Am. Co., 299 U.S. 248 , 254-55 (1936). Under Idaho law
, "
there may be some circumstances
which would justify a state court in staying a state court action pending the termination of a
similar controversy pending (inJ the federal courts.Roberts v. Hollandsworth 616 P.2d 1058
1061 (Idaho 1980) (finding that trial court did not err in dismissing state court action where
federal action was already pending, which could adequately resolve entire controversy). In
deciding whether to stay proceedings, Idaho courts must evaluate (1) "the identity of the real
parties in interest and the degree to which the claims or issues are similar " (2) "whether the
court in which the matter already is pending is in a position to determine the whole controversy
and to settle all the rights of the parties " and (3) "the occasionally competing objectives of
judicial economy, minimizing costs and delay to litigants, obtaining prompt and orderly
disposition of each claim or issue, and avoiding potentially inconsistent judgments.Diet
Center, Inc. v. Basford 855 P.2d 481 , 483-84 (Idaho App. Ct. 1993) (citing Wing
Amalgamated Sugar Co.684 P.2d 307, 310 and 21 c.J.S. Courts ~ 188 , at 222 (1990)).
Consideration of these factors here compels staying proceedings pending the federal Court'
resolution of Qwest's motion to dismiss and the dispositive issue of whether Section 415 bars
AT&T's complaint.
ARGUMENT
Under the circumstances, the Commission should stay this action at least until a
QWEST CORPORATION'S MOTION FOR STAY OF PROCEEDINGS
- 5 -
determination of Qwest's Motion to Dismiss AT&T's similarly-filed complaint by the federal
Court. As AT&T has acknowledged, the complaints are identical. See Exh. 1; Exh. 3 , at,-r 1.
In both cases, AT&T asserts a purported breach of contract claim under its interconnection
agreement with Qwest and seeks recovery for Qwest's failure to have interconnection
agreements with two of AT&T's competitors approved pursuant to 47 U.c. 252 , which
failure allegedly thwarted AT&T's opportunity to opt-in under Section 252(i). Thus, the first
factor - "the identity of the real parties in interest and the degree to which the claims or issues
are similar" - is clearly met.
Second, while AT&T filed the Commission proceeding first and it is slightly further
along, this is not a compelling consideration because here, under the unique structure of the
Federal Act, the federal Court has the authority to review the Commission s orders and
conclusively resolve the federal issues presented here. See e.g., In re Application for Water
Rights of us.101 P.3d 1072, 1083 (Colo. 2004) ("The fact that the state water court obtained
jurisdiction over the Black Canyon case before the federal case was initiated does not persuade
us that the water court abused its discretion in granting the stay.). With all respect to the
Commission, the Commission may be unable to determine the whole controversy and settle all
the rights of the parties, whereas the federal Court is in a position to determine the whole
controversy and to settle all the rights of the parties.
As discussed, this case arises out of federally-mandated interconnection agreements
that were created by the Federal Act. AT&T alleges a breach of its interconnection agreement
with Qwest flowing from Qwest's alleged failure to follow federal law and obtain regulatory
approval for certain interconnection agreements that Qwest had with AT&T's competitors, and
from Qwest's failure to make those agreements available for AT&T to seek to adopt pursuant
QWEST CORPORATION'S MOTION FOR STAY OF PROCEEDINGS
- 6 -
to federal law. To the extent that AT&T has any such claim, that claim is subject to the two-
year statute oflimitations found in the Federal Act. See 47 U.C. ~ 415. The Commission left
open the applicable statute of limitations period, finding "that additional briefing is necessary
to. . . address the statute oflimitation question.See Order No. 30247, at 5. Even if the
Commission had expressly disposed of the question of whether Section 415 bars AT&T'
complaint, the Commission s decision on a question of federal law would be subject to de novo
review by federal Court.
The dispositive question - whether AT&T's purported breach of contract claim arises
under federal law and is therefore barred by Section 415 - is a clear question of federal law. The
issue of whether a limitations period creates a jurisdictional bar to untimely claims is itself a
question purely of statutory construction.Iavorski v. US. INs.232 F.3d 124, 134 (2d Cir.
2000). Questions of statutory construction do not pose "the danger of venturing into areas of
special agency expertise" and therefore federal law does not provide for any deference to the
commission s interpretations of federal law.Id.; Bamidele v. INS 99 F.3d 557, 561 (3d
Cir.1996) ("A statute of limitations is not a matter within the particular expertise of the INS.
Rather, we consider this a clearly legal issue that courts are better equipped to handle.) (internal
quotation marks and citations omitted). Because federal law provides the rule of decision, a stay
pending the federal Court's resolution of Qwest's motion to dismiss is appropriate. In re
Applicationfor Water Rights of US.101 P.3d at 1072 (staying "proceedings pending resolution
ofthe federal questions raised in the Complaint filed in Federal District Court"
Not only does the federal Court have concurrent jurisdiction with the Commission in this
matter see Verizon Md, Inc.535 U.S. at 643-, but the federal Court also has jurisdiction over
any direct appeals from the proceedings here. See 47 US.C. ~ 252(e)(6). This is one point of
QWEST CORPORATION'S MOTION FOR STAY OF PROCEEDINGS
- 7 -
law where the cases cited by AT&T are actually applicable. See, e.g., Southwestern Bell Tel. Co.
v. Brooks Fiber Comm 'ens of Okla., Inc.235 F.3d 493, 497 (10th Cir.2000) (finding that
limiting federal court jurisdiction to matters involving state commission s approval or rejection
of interconnection agreement "would lead to results Congress could not have intended"
Southwestern Bell Tel. Co. v. Pub. Uti!. Comm n of Tex.208 F.3d 475 (5th Cir.2000) (finding
that "federal court jurisdiction extends to review of state commission rulings on complaints
pertaining to interconnection agreements and that such jurisdiction is not restricted to mere
approval or rejection of such agreements
);
MCI Telecomm. Corp. v. Bell Atl.Pa.271 F.3d 491
512 (3d Cir. 2001) (finding "(fJederal jurisdiction for the review of commission decisions on
interconnection agreements is exclusive given Section 252(e)(4) and 252(e)(6)); MCI
Telecomm. Corp. v. Illinois Bell Tel. Co.222 F.3d 323 , 337-38 (7th Cir.2000) (finding that
Congress envisioned suits reviewing 'actions' by state commissions, as opposed to suits
reviewing only the agreements themselves, and that Congress intended that such suits be brought
exclusively in federal court"). Other than the Commission s authority under the Federal Act
state courts have no role in this system of adjudicating interconnection agreements. See
C. ~ 252(e)(4).
Finally, judicial and agency economy are served. By staying this action pending the
federal Court's ruling on Qwest'smotion to dismiss, the parties may obtain a prompt and
orderly disposition ofthe action without a risk of inconsistent decisions. The federal Court'
determination of the statute of limitations question would control in the Commission
proceedings and potentially dispose of both cases. Moreover, the reality is that the federal
Court will have to address and decide these matters whether it does so now or later on appeal
from the Commission. It is unlikely that the proceedings here will be resolved finally and
QWEST CORPORATION'S MOTION FOR STAY OF PROCEEDINGS
- 8 -
conclusively without, as discussed above, resorting to the federal Court.
AT&T has conceded as much by filing the second action in the first place. As
acknowledges in its motion before the federal Court, the case may have to be heard by
the federal Court because of concerns about the Commission s authority to grant the
relief requested by AT&T. See Exh. 3 at 3 (claiming that the federal action "was filed
purely as a protective measure in case the Idaho PUC were ultimately to find it could
not grant all the reliefto which AT&T is entitled (particularly money damages)"
These considerations raise substantial doubt that the Commission proceeding will
completely resolve all the issues. To the contrary, the federal Court likely will have to
address the identical claim whether in the present action before it or on appeal. Thus
grant of Qwest's motion to stay will save the Commission and the parties from
expending resources unnecessarily in discovery and trial, particularly ifthe federal
Court finds that Section 415 bars AT&T's action.
Furthermore, stay of this case causes no damage, hardship, or inequity to AT&T
because AT&T's claim can be adequately and conclusively addressed by the federal
Court. Both AT&T and Qwest will be treated fairly in not having to expend additional
resources unless necessary. Moreover, a stay will preserve judicial and Commission
resources, simplify the course of subsequent proceedings, and further the orderly and
efficient course of justice.
CONCLUSION
For the above reasons, Qwest respectfully requests that this Commission stay this case
QWEST CORPORATION'S MOTION TO STAY PROCEEDINGS
conclusively without, as discussed above, resorting to the federal Court.
AT&T has conceded as much by filing the second action in the first place. As
acknowledges in its motion before the federal Court, the case may have to be heard by the
federal Court because of concerns about the Commission s authority to grant the relief
requested by AT&T. See Exh. 3 at 3 (claiming that the federal action "was filed purely as a
protective measure in case the Idaho PUC were ultimately to find it could not grant all the
relief to which AT&T is entitled (particularly money damages)"). These considerations raise
substantial doubt that the Commission proceeding will completely resolve all the issues. To
the contrary, the federal Court likely will have to address the identical claim whether in the
present action before it or on appeal. Thus, grant of Qwest's motion to stay will save the
Commission and the parties from expending resources unnecessarily in discovery and trial
particularly if the federal Court finds that Section 415 bars AT&T's action.
Furthermore, stay of this case causes no damage, hardship, or inequity to AT&T
because AT&T's claim can be adequately and conclusively addressed by the federal Court.
Both AT&T and Qwest will be treated fairly in not having to expend additional resources
unless necessary. Moreover, a stay will preserve judicial and Commission resources, simplify
the course of subsequent proceedings, and further the orderly and efficient course of justice.
CONCLUSION
For the above reasons, Qwest respectfully requests that this Commission stay this case
QWEST CORPORATION'S MOTION FOR STAY OF PROCEEDINGS
- 9 -
pending the outcome of the federal Court's decision on Qwest's motion to dismiss. Stay will
promote judicial and agency economy, will not prejudice AT&T, and will avoid substantial
prejudice to Qwest.
DATED this 10th day of August, 2007.
Respectflliga2:-
Mary S.' obson (ISB. No. 2142)
999 Main. Suite 1103
Boise, ID 83702
Attorney for Qwest Corporation
QWEST CORPORATION'S MOTION FOR STAY OF PROCEEDINGS
- 10-
CERTIFICATE OF SERVICE
I do hereby certify that a true and correct copy of the foregoing Motion for Stay of
Proceedings was served on the 10 day of August, 2007 on the following individuals:
Jean D. Jewell Hand DeliveryIdaho Public Utilities Commission U. S. Mail
472 West Washington Street Overnight DeliveryO. Box 83720 Facsimile
Boise, ID 83702 Email
Telephone [phone]
Facsimile: [phone]
i i ewell((ppuc. state.id. us
Molly O'Leary
Richardson & O'Leary
515 North 2ih Street
O. Box 7218
Boise, Idaho 83707
mo II y~richardsonandol eary. com
Theodore A. Livingston
Dennis G. Friedman
Mayer, Brown, Rowe & Maw LLP
71 South Wacker Drive
Chicago , IL 60606-4637
dfri edman~ma yerbrown. com
Dan Foley
General Attorney & Assistant General Counsel
AT&T West
O. Box 11010
Reno, Nevada 89520
df6929~att.com
Hand Delivery
--.X- U. S. Mail
Overnight Delivery
Facsimile
Email
Hand Delivery
---X U. S. Mail
Overnight Delivery
Facsimile
----X- Email
Hand Delivery
U. S. Mail
Overnight Delivery
Facsimile
Email
~I!r)tz
Mary S. son
Attorney for Qwest Corporation
QWEST CORPORATION'S MOTION FOR STAY OF PROCEEDINGS
- 11 -
Qwest Corporation
Motion for Stay
Of Proceedings
Exhibit 1
FiECEi
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05-30-2007 15:40 From-EBERLE BERLIN [phone] T-ceo p CC4/CCr H71
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Molly O'Leary (1SB No. 4996)
RlCHARDSON & O'LEARY, PLLC
515 North 27m Street
O. Box 7218
Boise, Idaho 83707
Telephone: [phone]
Fax: [phone]
E-Mail: mollv~.richardsonandoleary .com
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"'AN 1 2007
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Attorneys for Complainant AT&T Communica,tions of the Mountain States, Inc.
IN THE DISTRICT COURT OF THE FOURTH JUDICIAL DiSTRICT OF THE
STATE OF IDAHO, IN AND FOR THE COUNTY OF ADA
AT&T COMMUNICATIONS OF THE MOUNTAIN )
STATES, INc.CV OC 0702105
CASE NO.
Plaintiff,
vs.COMPLAINT
QWEST CORPORATION.
Defendant.
COMPLAINT
AT &1 Communications of the Mountain Suues, Inc. C" AT &1"), by itS undersigned
auomeys, hereby files this complail1t agaiDst Qwest Corporation C'QWe$f"). AT&T seeks damages
for Qwest's breach of a contraCl: with AT&T. A CMe alleging the same breach of conttaet is
curremly pending ~fore the Idaho Public Utilities Commission and AT &1 therefore is. 2.1 this Lioi.;
filing this complaint only a$ a pl~eholder protective measure in the event limits on the
Commission) s jurisdiction or other factors require AT&T to seek full or partial relief in court.
AT&T COMP1-AfNT AGAINST QWEST
OHO-2007 15 :~O From~EBERLE BERLIN +2083~~85~2 r-o90 005/0O7 F-271
AT&T currently intench; to seek a stay afmis proceeding pending the outcome of me procf;eding
before the Commission.
G~NERAL ALLEGATIONS
In 2001 and 2002 AT&T and Qwes! were parties to an agreement, approved by the
Idaho Public Utilities Commission, pursuant to which Qwes't provi4ed various products and services
to AT&T in Idaho ("AT&T Agreement ). The AT&T Agreement also required Qwesno make
available to AT&T the rates, terms and conditions of any oth~ similar agreements to which Qwest
was a pany in Idaho. See AT&T Agreement (Ex. 1 hereto), Section 2.1; see also id., Scope of
Agreement, Section B.
Beginning in Or about February 2000, Qwest entered into secret agree:mems with
Eschelon Telecom e'Eschelon ). Those agreements (the "Eschelon Agreements ) established rates
terms, and conditions for telecommLlnications service and facilities tha.t Qwest provided, or agreed to
provide, to E$chelon. including rates, terms, and conditions ilia.'!: were not contained in agreements
with other similarly sirnatt:d companies, inducting AT&T. These 'term$ included a discount for
Eschelon of up to 10%1 on all products and services it obtained from QwesT-, and Qwest provided
those discounts while the Eschelon Agreements were in dfecL Qwest did not make these c!iscounts
~vailable to AT&T a:s required by the AT&T Agreement.
Beginning in or about April 2000, Qwest entered into secret agreements witb
McL.eodUSA relecomm~ca.tions Services, Inc. ("McLeodUSA"). Those agreements (the
McLeodUSA Agreements ) established rates, terms and conditions for telecommunications
services and facilities that QwesT- provickd. Or agreed to provide, to McLeodUSA-, including r~tes
terms, and conditions that were nOt contained in agreements with other similarly siwated companies
including AT&T. These tenns included a discounT- for McLeodUSA of 1.+p to 10% on all products
and services it obtained from Qwest, and Qwest provided those discountS while 1:be McLeodUSA
AT&T CO1v1PLAINT AGAINST QWEST -
Q5~3Q-2QQ7 15 :40 From-EBERLE BERL IN [phone] T-OSO p, OOS/OO7 F-271
Agreements were in effect. Qwest did not make these discoum:s availabl~ to AT&T as required by
the AT&T Agreement.
If Qwes! had made the discounts in the secret agreementS whh Eschelon and
McLeodUSA available to AT&T, AT&T 'Would have availed itself of them.
The amount that AT&T paid Qwest for services during the rime period in which the
EschdOI1 and McLeodUSA Agreemems were in effect was approximately ten percent bigher than
the amounts that Eschelon and McLeodUSA paid Qwest for the same or comparable services
purSQant to the:: secret agreementS.
As a consequence of Qwest s breach of the AT&T Agreement, AT&T has suffered
damages consisting at: at a minimum, the difference between what it paid Qwe'St and the amount
would have paid if Qwest had charged it the lower rates it should have charged to it. Those damages
exceed $650 000.
THE PARTIES
AT&T is a Colorado corporation with its principal place of bus mess in New Jersey.
AT&T provides tl!;:lephone exchange $~rvice, exchange acceS$ and other telecommunications and
information services within the State of Idaho.
QwesT: is a Colorado corporation with its principal place ofbu$iness in Colorado.
Qwest provi4es telephone exchange service, exchange access aIle! other rel~communica!icm$ and
ioformation services within the State of Idaho.
JURISDICTION AND VENUE
AT&T brings this Complaint pursuant ro itS contrac~ with QweSt and Idaho
common law of Contract.
COUNT I
Breacb of Contract
AT&T COMPLAINT AGAINST QWEST - 3
05-30-1007 15:40 From-EBERLE BERLIN [phone] T-D90 P.O07l00T F-271
10.The allegations of paragraphs 1 through 9 are repeated and realleged as paragraph 10
of Count I.
11.Qwest s conduct as alleged above breached Qwest s obligations under the AT&T
Agreement ro make the discounts in the EscheJon and McLt;:odUSA Agreements available to AT&T.
12.Qwest s breaches of itS contract with AT&T damaged AT&T in an amount equal to at
least the aggregate anlOun:t of the price differential betWeen what it paid Qwest and what. it would
h&ve paid Qwest ifi! had been permitted to avail itself of the discounts in the Eschelon and
McLeodUSA Agreements.
WHEREFORE, AT &1 respectfully requeStS this Court to enter judgment in itS favor and
against Qwe$t in the aggregate amounT- of the price differential between what it paid QWt;st and what
it would have paid Qwest had me discountS in Qwesr's agreementS with Eschelon and McLeodUSA
been made available TO AT &1, plus punitive damages, interest, and costs, and su.ch oilier and furmer
relief as This Coun deems jU$t-
Dared this 31St day of January, 2007 AT&T. ~OMMUNICATIONS OF THE
MOU r, STATES, INC.
AT&T COMPLAINT AGA!NST QWEST - 4
Qwest Corporation
Motion for Stay
Of Proceedings
Exhibit 2
Mary S. Hobson (ISB No 2142)
999 Main, Suite 1103
Boise, ID 83702
Tel: [phone]
Fax: [phone]
mary .hobson~qwest.com
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF IDAHO
Case No. 07-cv-272-MHW
AT&T COMMUNICATIONS OF THE
MOUNTAIN STATES, INe.
Plaintiff
QWEST CORPORATION
Defendant
QWEST CORPORATION'S MOTION TO DISMISS
Qwest Corporation moves to dismiss the Complaint filed by Plaintiff AT&T
Communications of the Mountain States, Inc. ("AT&T") pursuant to Rule 12 of the Federal
Rules of Civil Procedure.
AT&T's Complaint must be dismissed because its claim is barred by the
applicable limitations period or preempted by the filed-rate doctrine. Although AT&T asserts a
breach of contract claim, AT&T studiously fails to mention the Federal Telecommunications Act
for it inevitably would lead AT&T back to the fact that the interconnection agreements - and
claims - at issue here arose under federal law and that the underlying operative facts occurred
Qwest Motion to Dismiss
\ \ \DC . 066983/000055 . 2567327 vi
over four years ago. The Federal Act's limitations period of two years thereby bars AT&T's
present action.
DATED this 26th day of June, 2007.
Respectfully Submitted
Isl
Mary S. Hobson (ISB No 2142)
999 Main, Suite 1103
Boise, ID 83702
Tel: [phone]
Fax: [phone]
Qwest Motion to Dismiss
\ \ \DC . 066983/000055 . 2567327 vi
CERTIFICATE OF SERVICE
HEREBY CERTIFY that on the 26th day of June, 2006, I filed the foregoing electronically
through the CM/ECF system, which caused the following parties or counsel to be served by
electronic means, as more fully reflected on the Notice of Electronic Filing:
Molly O'Leary
Richardson & O'Leary
515 North 27th Street
O. Box 7218
Boise, Idaho 83707
mo 11 y~ri chardsonando I eary. com
AND I FURTHER CERTIFY that on such date I served the foregoing on the following non-
CM/ECF Registered Participants in the manner indicated:
Via first class mail, postage prepaid addressed as follows:
Theodore A. Livingston
Dennis G. Friedman
Mayer, Brown, Rowe & Maw LLP
71 South Wacker Drive
Chicago, IL 60606-4637
dfriedman~ma yerbrown. com
Dan Foley
General Attorney & Assistant General Counsel
AT&T West
O. Box 11010
Reno, Nevada 89520
df6929~att.com
Isl
Mary S. Hobson
999 Main, Suite 1103
Boise, ID 83702
Tel: [phone]
Fax: [phone]
mary.hobson~qwest.com
Attorney for Defendant
Qwest Motion to Dismiss
'\ '\ '\DC . 066983/000055 . 2567327
Qwest Corporation
Motion for Stay
Of Proceedings
Exhibit 3
Case 1 :07-cv-00272-MHW Document 8 Filed 07/16/2007 Page 1 of 9
Molly O'Leary (ISB No. 4996)
RICHARDSON & O'LEARY PLLC
515 North 27th Street
O. Box 7218
Boise, Idaho 83707
Telephone: [phone]
Fax: [phone]
Mail: molly(ii;ric hardsonandolcar;LSom
Theodore A. Livingston
Dennis G. Friedman
MAYER, BROWN, ROWE & MAW LLP
71 South Wacker Drive
Chicago, IL 60606-4637
Telephone: [phone]
Fax: [phone]
Mail: dfricdman(dimaverbrown.com
Dan Foley
General Attorney & Assistant General Counsel
AT &T WEST
P. O. Box 11010; 645 E. Plumb Lane, B132
Reno, Nevada 89520
Telephone: [phone]
Fax: [phone]
Mail: df6929(d'attcO111
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF IDAHO
AT&T COMMUNICATIONS OF THE MOUNTAIN )
STATES , INC.
Case No. 07-CV-272-mhw
Plaintiff
vs.
QWEST CORPORATION
Defendant.
AT&T'S MOTION TO STAY PROCEEDINGS
PENDING OUTCOME OF PRIOR PROCEEDING ON
IDENTICAL CLAIM AT IDAHO PUBLIC UTILITIES COMMISSION
Case 1 :07 -cv-00272-MHW Document 8 Filed 07/16/2007 Page 2 of 9
AT &T Communications of the Mountain States, Inc. ("AT&T") respectfully submits its
motion to stay this proceeding pending the outcome of a prior proceeding on the identical claim
that is currently pending before the Idaho Public Utilities Commission ("Idaho PUC"). That case
has been underway for nearly a year and is well ahead of this one. Addressing the identical
issues and claims here would merely create a risk of inconsistency and conflict and needlessly
waste the Court's and parties ' resources. In support of this motion, AT&T states as follows:
BACKGROUND
Nearly a year ago, on August 21 2006, AT&T filed a complaint against Qwest
Corporation ("Qwest") at the Idaho Public Utilities Commission. Att. 1 hereto. That complaint
contains a single count, which alleged breach of contract by Qwest. That claim is identical to the
sole claim in AT&T's complaint here, which alleges the same breach of contract by Qwest.
Compare Cmplt. ~~ 11-12 with Att. 2 hereto (Amended Cmplt. at Idaho PUC), ~~ 13-14.
Qwest filed a motion to dismiss AT&T's complaint in the Idaho PUC case. After
full briefing on that motion, supplemental briefing on questions raised by the PUC, and oral
argument, the PUC denied Qwest's motion on February 16 2007. Att. 3 hereto. The PUC also
directed AT&T to amend its complaint to provide more detail and ordered AT&T and Qwest to
file supplemental briefs addressing specific questions. Id.
AT&T filed its amended complaint (Att. 2) and AT&T and Qwest filed briefs
addressing the PUC's questions. On April 12 , 2007, the PUC, standing by its prior denial of
Qwest's motion to dismiss, ordered the parties to develop a schedule to process the full case.
Att. 4 hereto. The parties then did so, developing a schedule for settlement discussions
discovery, three rounds of written testimony, evidentiary hearings, and post-hearings briefs. Att.
5 hereto.
AT &T MOTION TO STAY PROCEEDING - 2
Case 1 :07-cv-00272-MHW Document 8 Filed 07/16/2007 Page 3 of 9
The PUC case has proceeded on that schedule, with a few agreed extensions along
the way. Settlement discussions have been held. AT&T has served a first round of discovery
and Qwest has responded. The parties have entered a protective agreement. AT&T's first round
of written testimony is now due at the end of July.
During briefing on Qwest's motion to dismiss at the PUC , Qwest raised an issue
regarding whether the PUC has authority to grant to full reliefrequested by AT&T. The PUC
has not addressed that issue. Out of an abundance of caution, however, and to avoid any possible
future problems under the Idaho statute of limitations, AT&T filed a materially identical
complaint in Idaho state court on January 31 , 2007. This was filed purely as a protective
measure in case the Idaho PUC were ultimately to find it could not grant all the relief to which
AT&T is entitled (particularly money damages). AT&T served that complaint on Qwest on May
, 2007.
AT&T asked Qwest to agree to stay the state court proceeding pending the
outcome of the ongoing case at the Idaho PUC, but Qwest refused. Instead, Qwest removed the
case to federal court and filed a motion to dismiss that is in substance nearly identical to the
motion to dismiss that the Idaho PUC already fully considered and denied.
AT&T is today filing its response to that motion to dismiss as well as its own
motion to remand. It is critical to note, however, that AT&T is making these filings only to meet
filing deadlines and avoid waiving any rights while there is not yet a stay in place, and believes
that no further action should be taken on them at this time. Rather, the Court should decide
AT&T's motion to stay before doing anything else , for if granted that will remove any present
need to review or require further briefing on the motions to dismiss and remand.
AT&T MOTION TO STAY PROCEEDING - 3
Case 1 :07 -cv-00272-MHW Document 8 Filed 07/16/2007 Page 4 of 9
ARGUMENT
Under well settled case law
, "
the power to stay proceedings is incidental to the
power inherent in every court to control the disposition of causes on its docket with economy of
time and effort for itself, counsel, and for litigants.Landis v. North Am. Co.299 U.S. 248
253-54 (1936). Under that "rule " as then-Judge (now-Justice) Kennedy explained
, "
(a J trial
court may, with propriety, find it is efficient for its own docket and the fairest course for the
parties to enter a stay of an action before it, pending resolution of independent proceedings
which bear upon the case * * * whether the separate proceedings are judicial, administrative, or
arbitral in character.Leyva v. Certified Grocers of California, Ltd.593 F,2d 857, 863 (9th Cir.
1979), citing Kerotest Mfg. Co. v. C-Two Fire Equip. Co.342 u.S. 18091952) ; see also
Mediterranean Enterprises, Inc.v. Ssangyong Corp.708 F.2d 1458 , 1465 (9th Cir. 1983).
stay is appropriate if the decision in the other case may "'narrow the issues in the pending case(J
and assist in the determination of the questions oflaw involved.
'"
Landis 299 u.S. at 253-54.
This rule squarely applies here. The Idaho PUC proceeding will not only "bear
upon" this case, it will resolve the identical claim. Barring unforeseen circumstances, the PUC
proceeding will not simply "narrow the issues" or "assist" here, but will completely resolve all
issues, so that this Court may never need to take any action.
10.Moreover, staying this case will avoid the risk of inconsistent or conflicting
decisions on the same issues, promote judicial and administrative economy, and conserve the
resources of the Court and parties. The Idaho PUC proceeding is significantly farther along than
this one, as described above. The PUC has ruled on Qwest's motion to dismiss (holding oral
argument and twice calling for supplemental briefing to address its own specific questions),
AT &T has issued its first (and largest) round of discovery and Qwest has responded, AT&T's
AT&T MOTION TO STAY PROCEEDING - 4
Case 1 :07 -cv-00272-MHW Document 8 Filed 07/16/2007 Page 5 of 9
direct testimony is due in a few weeks, and hearings and merits briefing have been scheduled.
By contrast, nothing has happened in the case at bar except Qwest's notice of removal.
American Int'l Underwriters , (Philippines), Inc. v. Continental Ins. Co.843 F.3d 1253, 1258 (9th
Cir. 1987) (stay was appropriate where "substantive progress ha( dJ been made" in the state
actions, including rulings on motion and conducting discovery, whereas "(v Jery little progress
ha(dJ occurred in the federallawsuit."
11.Staying this case also will avoid "(p Jiecemeallitigation " which "occurs when
different tribunals consider the same issue, thereby duplicating efforts and possibly reaching
different results.Id. That risk is very real here. Indeed, the only reason for Qwest's motion to
dismiss and refusal to agree to a stay is that it wants this court to duplicate all of the effort
already spent by the parties and Idaho PUC in that proceeding, yet reach a different result than
the Idaho PUC on the identical issue. That risk can only be avoided by a stay. In this respect the
situation is similar to American Int ' I Underwriters where "( t Jhe New York state court had
already decided several substantive issues " meaning that "(iJfthe district court decided to
exercise jurisdiction, it would have to decide these matters anew, requiring duplicative effort and
creating a strong possibility of inconsistent results." 843 F .3d at 1258.
12.In addition, while Qwest claims in its Motion to Dismiss that this case involves
questions of federal law, the only issue raised by AT&T's breach-of-contract claim is whether
Qwest has breached the terms of its interconnection agreement with AT&T. The Ninth Circuit
has held that in disputes over the interpretation and enforcement of interconnection agreements
it is "'the agreements themselves and state law principles'" - not federal law - that "'govern the
questions of interpretation of the contracts and enforcement of their provisions.
'"
Pacific Bell v.
Pac-West Telecomm, Inc.325 F.3d 1114, 1128 (9th Cir. 2003), quoting Southwestern Bell v.
AT&T MOTION TO STAY PROCEEDING - 5
Case 1 :07 -cv-00272-MHW Document 8 Filed 07/16/2007 Page 6 of 9
Pub. Uti!. Comm '208 F.3d 475, 485 (5th Cir. 2000).1 Relying on these cases, the Idaho PUC
likewise held that "state law governs this dispute." Att. 3 at
13.Finally, issuing a stay in these circumstances will help prevent forum shopping.
See American Int'l Underwriters 843 F.2d at 1259. AT&T promptly asked Qwest to agree to a
stay after AT&T served its complaint in this purely protective case. Qwest refused, even though
proceeding on the same claim in both forums is plainly inefficient and would cause the parties to
spend money on duplicate proceedings. The only possible motivation for this refusal is that
Qwest seeks a different result on its motion to dismiss here, having already lost at the PUC.
While Qwest may be willing to waste resources in hopes of getting inconsistent decisions, the
Court does not have to play along.
14.Qwest will not be prejudiced by a stay. Qwest has already had its chance to
present its motion to dismiss to a qualified decisionmaker. It also will have a complete
opportunity to present its case before the Idaho PUC and pursue any appeal, if necessary, in
court. In addition, this case concerns past events and does not affect Qwest's current business or
conduct. AT&T, by contrast, would be prejudiced by a stay, by having to expend resources on
I The Fifth, Sixth, Seventh, Eighth, and Tenth Circuits agree. Connect Comms, Corp. v. Southwestern Bell Tel.467
3d 703 , 707-09 (8th Cir. 2006) (applying "Arkansas contract law" to resolve dispute over enforcement of
interconnection agreement, because "the ultimate issue is this case - interpretation of the Interconnection Agreement
- is a state law issue
);
Michigan Bell Tel. Co, v. MClmetro Access Transmission Servs" Inc.323 F.3d 348, 355-
(6th Cir. 2003) ("a state commission s contractual interpretation of an interconnection agreement is governed by
state, not federal, law
);
Southwestern Bell Tel. Co. v, Brooks Fiber Comms, o(Oklahoma, lnG.235 F.3d 493 498
(lOth Cir. 2000) ("The (interconnection) Agreement itself and state law principles govern the questions of
interpretation of the contract and enforcement of its provisions
);
Southwestern Bell 208 F.3d at 485; Illinois Bell
Tel. Co. v, WorldCom Technologies, Inc.179 F.3d 566, 574 (7th Cir. 1999) (a decision "'interpreting' an
(interconnection) agreement contrary to its tenDS creates a different kind of problem - one under the law
contracts, and therefore one for which a state forum can supply a remedy ), Only the Fourth Circuit has reached a
contrary result, in a decision with a well-reasoned and persuasive dissent. Verizon Maryland, Inc. v. Global Naps
lnc" 377 F,3d 355 (4th Cir. 2004).
2 Notably, Qwest has never argued that the PUC lacks jurisdiction over AT&T's claim (and the Idaho Supreme
Court has held the PUC has such jurisdiction McNeal v. Idaho Pub, Utils. Coml11 '132 P.3d 442, 446 (Idaho
2006)), nor has Qwest contended that this Court has exclusive jurisdiction.
AT&T MOTION TO STAY PROCEEDING - 6
Case 1 :07-cv-00272-MHW Document 8 Filed 07/16/2007 Page 7 of 9
what everyone recognizes is a placeholder/protective case and having to defend against Qwest
taking two bites at every apple.
15.F or these reasons, the Court should stay this case pending the final outcome of the
already pending proceeding at the Idaho PUC, and take no further action, including on AT&T's
motion to remand (which it must file soon to meet the statutory deadline, unless the court were to
stay this case immediately) or on Qwest's motion to dismiss. AT&T would be happy to provide
the Court with periodic status reports on the PUC proceeding and to notify the Court when that
proceeding is complete. In the meantime, however, any further proceedings here will only serve
to needlessly waste the resources of both the Court and the parties and pose the risk of
inconsistency, conflict, and duplication of effort between the Court and the Idaho PUe.
16.If for any reason the Court were not to stay the case entirely, it should at a
minimum defer any action on Qwest's motion to dismiss until it rules on AT&T's motion for
remand, which is being filed today in order to meet statutory deadlines in the absence of a
current stay. Putting first things first, the Court should not rule on Qwest's substantive motion to
dismiss until it first decides whether it even has jurisdiction.
WHEREFORE, AT&T respectfully requests that the Court stay this proceeding and take
no further action until the prior proceeding on the identical claim at the Idaho PUC is completed.
If no stay is issued, the Court should at a minimum defer action on the motion to dismiss until
first addressing the jurisdictional issue raised in AT&T's motion to remand.
By:
AT&T MOTION TO STAY PROCEEDING - 7
Case 1 :07 -cv-00272-MHW Document 8 Filed 07/16/2007 Page 8 of 9
Boise, Idaho 83707
Telephone: [phone]
Fax: [phone]
E- Mail:molly(d;richardsonando leafY .com
Theodore A. Livingston
Dennis G. Friedman
MAYER, BROWN, ROWE & MAW LLP
71 South Wacker Drive
Chicago, IL 60606-4637
Telephone: [phone]
Fax: [phone]
Mail: dfriedman(Zi,:maverbrown.l)l
Dan Foley
General Attorney & Assistant General Counsel
AT&T WEST
P. O. Box 11010; 645 E. Plumb Lane, B132
Reno, Nevada 89520
Telephone: [phone]
Fax: 775.333,2175
Mail: df692%!)attcom
AT&T MOTION TO STAY PROCEEDING - 8
Case 1 :07-cv-00272-MHW Document 8 Filed 07/16/2007 Page 9 of 9
CERTIFICATE OF SERVICE
I hereby certify that on the 16th day of July, 2007, I served a copy of the foregoing on
CM/ECF Registered Participants as reflected on the Notice of Electronic Filing.
;~(~
Moll ~Y=Y'
AT&T MOTION TO STAY PROCEEDING - 9
Qwest Corporation
Motion for Stay
Of Proceedings
Exhibit 4
Case 1 :07-cv-00272-MHW Document 6 Filed 07/16/2007 Page 1 of 11
Molly O'Leary (ISB No. 4996)
RICHARDSON & O'LEARY, PLLC
515 North 27th Street
O. Box 7218
Boise, Idaho 83707
Telephone: [phone]
Fax: [phone]
E-mail: molly(tijrichardsonandolearY.com
Theodore A. Livingston
Dennis G. Friedman
MAYER, BROWN, ROWE & MAW LLP
71 South Wacker Drive
Chicago, IL 60606-4637
Telephone: [phone]
Fax: 312,706.8630
Mail: dfricdman((l)mavcTbrmvn.cOll1
Dan Foley
General Attorney & Assistant General Counsel
AT&T WEST
P. O. Box 11010; 645 E. Plumb Lane, B132
Reno, Nevada 89520
Telephone: [phone]
Fax: [phone]
Mail: df6929(d'attcom
Attorneys for Plaintiff AT&T Communications of the Mountain States, Inc.
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF IDAHO
AT&T COMMUNICATIONS OF THE
MOUNTAIN STATES, INC.
: MOTION TO REMAND
Plaintiff
vs.: Case No. 07-CY-272-mhw
QWEST CORPORATION
Defendant.
(J L'
\:
1/ ~
Case 1 :07-cv-00272-MHW Document 6 Filed 07/16/2007 Page 2 of
Plaintiff AT&T Communications of the Mountain States, Inc. ("AT&T"), by and through
its counsel and pursuant to 28 U,e. 9 l447(c), moves that this matter be remanded to the
District Court of the Fourth Judicial District of Ada County, State of Idaho , on the ground that
the claims asserted in AT&T's complaint do not lie within the original jurisdiction of this Court.
In support of this motion, AT&T states as follows:
SUMMARY OF ARGUMENT
In this case, AT&T seeks damages against Qwest Corporation ("Qwest") for an alleged
breach of a contract that set forth the tenDS and conditions by which AT&T's and Qwest'
telecommunications networks would "interconnect."AT &T has brought this lawsuit as a
protective measure in the event that limits on the jurisdiction of the Idaho Public Utilities
Commission ("PUC") or other factors of which AT&T is not now aware prevent AT&T from
having an opportunity to seek or obtain full relief in the parallel proceeding that is now pending
before the PUC. Because the claim asserted in this case is identical to the claim in the PUC
action, AT&T respectfully submits that its court action should be stayed until the PUC issues a
final decision.! However, because (i) as both the PUC and the Ninth Circuit have concluded, a
claim the requires the interpretation and enforcement of an interconnection agreement between
telecommunications carriers presents a state law issue and (ii) the thirty-day period for filing a
remand motion expires on July 19, AT&T files this motion to remand this case to state court.
The claim in this case belongs in state court because, as the PUC concluded after briefing
and oral argument
, "
state law governs this dispute.AT&T Communications of the Mountain
States, Inc. v. Qwest Corp.Case No. QWE-06-, Order No. 30247 at 4 (Idaho PUC Feb. 16
2007) (Ex. A). As the PUC recognized
, "
a substantial body of cases support(sJ our finding that
state law governs the question of interpretation and enforcement of interconnection agreements.
I AT&T accordingly has filed a motion to stay proceedings in this case.
AT&T MOTION TO REMAND - 2
Case 1 :07-cv-00272-MHW Document 6 Filed 07/16/2007 Page 3 of
rd. Most significantly, the Ninth Circuit case cited by the PUC expressly states that "(t)he
Agreement itself and state law principles govern the questions of interpretation of the contract
and enforcement of its provisions.Pacific Bell v. Pac-West Telecomm.325 F.3d 1114, 1128
(9th Cir. 2003) (emphasis added). All but one of the other federal courts of appeals to have
addressed the issue has agreed that a claim based on interpretation, and seeking enforcement, of
an interconnection agreement presents a question of state contract law that arises under state law.
Accordingly, the only conceivable basis for federal jurisdiction over a claim like the claim
asserted in AT&T's complaint would be supplemental jurisdiction under 28 US.C. 9 1367 , not
original jurisdiction under 9 1331. Id. at 498. And because there is no federal claim in this case
that does lie within the court's original jurisdiction, there is no basis for supplemental
jurisdiction, and this case should be remanded to state court.
INTRODUCTION
The Contracts at Issue
During the relevant period, Qwest and AT&T were parties to a contract pursuant to
which Qwest provided various products and services to AT&T. PUC Complaint ~ 1. While the
Qwest/ AT&T contract was in effect, Qwest entered into two contracts with other competing
carriers, Eschelon Telecom ("Esche Ion ) and McLeodUSA Telecommunications Services, Inc.
McLeod"
).
Id.,-r~ 3. The terms of those cont acts rovided Eschelon and McLeod with at
least a 10% discount below the rates that AT&T ~)aid Qwest for the same or similar
services. Id. Qwest did not make those discounts available to AT&T as required by the terms of
the Qwest-AT&T agreement. Id.
AT&T's Complaint in the Idaho PUC
On August 21 , 2006, AT&T filed a complaint against Qwest in the Idaho PUC. The
complaint alleged that Qwest had breached its contract with AT&T by not providing AT&T the
AT&T MOTION TO REMAND - 3
Case 1 :07-cv-00272-MHW Document 6 Filed 07/16/2007 Page 4 of
same discounts that it made available to other carriers for the same or similar products and
servIces.
Qwest answered and filed a motion to dismiss AT&T's complaint on the grounds that the
(i) the breach of contract claim is federal in nature, (ii) the applicable statute of limitations for
that claim is the two-year federal limitations period provided in 47 US.c. 9 415 , and (iii)
AT&T's claim is time barred because the claim accrued more than two years prior to the date on
which AT&T filed its complaint.
After briefing and oral argument, the PUC issued an Order on February 16 , 2007, in
which it denied Qwest's motion to dismiss. In that Order, the Commission concluded that "state
law governs this dispute." Order No. 30247 at 4. In support of that conclusion, the PUC noted
that, under the Governing Law provision of the agreement
, "
the parties intended that the
Agreement be construed under state law while recognizing that the parties must also comply with
various federal requirements.Id. The PUC further observed that "(t)here is a substantial body
of cases supporting our finding that state law governs the question of interpretation and
enforcement of interconnection agreements.Id. (citing Pacific Bell v. Pac-West Telecomm.
325 F.3d 1114, 1128 (9th Cir. 2003)). The PUC then directed the parties to file additional
briefing to aid the PUC in "determin(ing) the complaint's gravamen and address the statute of
limitations issue.Id. at 5.
Following the submission of the requested supplemental briefs, the PUC issued another
Order on April 12 , 2007 , in which it directed the parties to confer "for the purpose of developing
a schedule to process this case.AT&T Communications of the Mountain States, Inc. v. Qwest
Corp.Case No. QWE-06-, Order No. 30297, at 2 (Idaho PUC Apr. 12 2007) (Ex. B). The
AT&T MOTION TO REMAND - 4
Case 1 :07-cv-00272-MHW Document 6 Filed 07/16/2007 Page 5 of
parties and PUC Staff subsequently established a schedule for pre-filed testimony and summary
judgment motions.
AT &T's State Court Complaint
On January 31 , 2007, AT&T filed a one-count complaint in the District Court of the
Fourth Judicial District of the State of Idaho (Ada County). As AT&T explained in the initial
paragraph of that complaint, its state court lawsuit asserts essentially the same claim that is raised
in AT&T's complaint before the PUe. See State Court Complaint, at 1 (noting that "(aJ case
alleging the same breach of contract is currently pending before the Idaho Public Utilities
Commission As AT&T further explained, it filed the state court lawsuit "only as a
placeholder protective measure in the event limits on the Commission s jurisdiction or other
factors require AT&T to seek full or partial relief in state court.Id.
AT&T served its state court complaint on Qwest on May 30, 2007. Removal Notice at 3
& Ex. 2 (state court docket sheet). Qwest filed its notice of removal to this Court on June 19
2007.
ARGUMENT
THIS MATTER SHOULD BE REMANDED BECAUSE AT&T'S CLAIM DOES
NOT LIE WITHIN THIS COURT'S ORIGINAL JURISDICTION.
Removal is Proper Only if the Complaint Alleges a Claim Within this
Court's Original Federal Question Jurisdiction.
Under 28 US.C. 9 1441(a), "(oJnly state-court actions that originally could have been
filed in federal court may be removed by the defendant" Cate/pillar, Inc. v. Williams 482 U.
386, 392 (1987). Here, the asserted basis for removal is the existence of a federal question (see
Notice of Removal at 1), over which this Court would have original jurisdiction pursuant to 28
AT&T MOTION TO REMAND - 5
Case 1 :07-cv-00272-MHW Document 6 Filed 07/16/2007 Page 6 of
US.C. ~ 1331 , which encompasses "all civil actions arising under the Constitution, laws, or
treaties ofthe United States.
The "presence or absence of federal-question jurisdiction is governed by the 'well-
pleaded complaint rule,'" which provides that "federal jurisdiction exists only when a federal
question is presented on the face of the plaintiffs properly pleaded complaint." Caterpillar 482
US. at 392. Under the well pleaded complaint rule
, "
the party who brings a suit is master to
decide what law he will rely upon.The Fair v. Kohler Die Specialty Co.228 US. 22 , 25
(1913) (Holmes, 1.). In light of that principle, courts have been admonished to "interpret the
removal statute narrowly and presume that the plaintiff may choose his or her forum" and have
imposed the burden of establishing that removal is proper on the party seeking removal. Doe
Allied-Signal, Inc.985 F.2d 908 911 (7th Cir. 1993).
In the seminal case enshrining the well pleaded complaint rule, the Supreme Court
explained that a claim arises under federal law when "the plaintiffs statement of his own cause
of action shows that it is based upon (federal) laws or (the federal) Constitution.Louisville
NR. Co. v. Mottley, 211 U.S. 149, 152 (1908); see also Cobb v. Contract Transport, Inc.452
3d 543, 548 (6th Cir. 2006) (same). "(I)f a complaint alleges only state law based causes of
action, it cannot be removed from state court to federal court even if there is a federal defense.
Hernandez v. Conriv Realty Associates, 116 F.3d 35, 38 (2d Cir. 1997); see also Weathington
United Behavioral Health 41 F.Supp.2d 1315 , 1319 (M.D. Ala. 1999) (holding that a complaint
that "asserts only state law causes of action * * * fails to state a federal question on its face
AT&T's Claim Does Not Arise Under Federal Law.
As the Idaho PUC correctly held, the breach of contract claim asserted in the current
proceedings before the Commission - and, as a protective matter, in this Court as well - arises
AT&T MOTION TO REMAND - 6
Case 1 :07 -cv-00272-MHW Document 6 Filed 07/16/2007 Page 7 of
under and is governed by state law. Order No. 30247 at 4 ("state law governs this dispute ). In
reaching that conclusion, the PUC looked to the agreement itself.In particular, the PUC
observed that the Governing Law provision of the agreement demonstrated that "the parties
intended that the Agreement be construed under state law while recognizing that the parties must
also comply with various federal requirements.Id. The PUC further observed that "(tJhere is a
substantial body of cases supporting our finding that state law governs the question of
interpretation and enforcement of interconnection agreements (id.), citing the Ninth Circuit's
decision in Pacific Bell v. Pac-West Telecomm.325 F.3d 1114, 1128 (9th Cir. 2003).
The PUC's ruling follows directly from the nature of the contracts at issue and is fully
consistent with the pertinent case law, not only in the Ninth Circuit but also in the vast majority
of other circuits that have addressed the matter. See , Connect Communications Corp.
Southwestern Bell Tel. Co., LP.467 F.3d 703 (8th Cir. 2006) ("the ultimate issue in this case-
interpretation of the Interconnection Agreement - is a state law issue
);
Southwestern Bell Tel.
LP. v. Public Util. Comm '467 F ,3d 418, 422 (5th Cir. 2006) ("The interconnection agreement
and state law principles govern the interpretation and enforcement of agreement provisions
Michigan Bell Tel. Co. v. MCIMetro Access Transm. Serv., Inc.323 F.3d 348 , 355 (6th Cir.
2003) (noting that "state commission s contractual interpretation of an interconnection
agreement is governed by state, not federal, law" and applying Michigan contract law in
analyzing the alleged breach of the agreement); Brooks Fiber 235 F.3d at 498-99 (holding that a
state commission detennination interpreting and enforcing an interconnection agreement is an
application of state contract law" and that therefore the basis for the federal courts' jurisdiction
to review such a detennination is "supplemental jurisdiction" under 28 U.C. 9 1367, not
original jurisdiction under 9 1331); Southwestern Bell Tel. Co. v. Pub. Uti!. Comm 'n of Tex.208
AT&T MOTION TO REMAND - 7
Case 1 :07-cv-00272-MHW Document 6 Filed 07/16/2007 Page 8 of
3d 475, 485 (5th Cir. 2000) ("(S)tate law principles govern the questions of interpretation of
the (interconnection) contracts and enforcement of their provisions ). As the Seventh Circuit has
explained
, "
(a) decision 'interpreting an agreement contrary to its terms creates a * * * problem
* * * under the law of contracts.Illinois Bell Tel. Co. v. WorldCom Techs., Inc.179 F.3d 566
574 (7th Cir. 1999). Accordingly, the court held that the federal courts lack jurisdiction over a
claim seeking interpretation or enforcement of an interconnection agreement and that such a
claim raises an "issuer) of state law" for which a "state forum" could "supply a remedy.Id.
short, that nearly unbroken line of court of appeals decisions, including Pacific Bell plainly hold
that claims like AT&T's here to enforce interconnection agreements arise under state law and
must be resolved applying state law principles.2 And because
Pacific Bell is controlling here, it
compels the conclusion that remand is required.
The reason that the courts have come to that conclusion is simple: the parties to an
interconnection agreement are free to fashion the terms of their agreements as they see fit.
Parties may contract "without regard" to the Telecommunications Act of 1996 or they may
contract "with regard" to the Act; it is their choice. See Verizon Maryland v. Pub. Servo Comm '
of Md.535 U.S. 635, 638 (2002); AT&T Corp. V. Iowa Utils. Bd.525 U.S. 366, 371-73 (1999);
Brooks Fiber 235 F.3d at 495; 47 US.e. ~ 252(a)(1). Thus , to the extent that federal law relates
in any way to this case, it does so not of its own force, but solely because the parties chose to
include references to federal law in their agreement. Interconnection agreements that incorporate
federal law by reference no more arise under federal law than contracts that incorporate German
law by reference arise under German law. Correspondingly, actions seeking interpretation and
2 The Fourth Circuit reached a contrary result in Verizon Maryland, Inc. v. Global NAPs, Inc.377 F.
355, 363-65 (4th Cir. 2004). That was a split decision, however, and the dissent presents a
comprehensive and compelling case for why the majority should have reached the same result as all the
other federal courts of appeal to have addressed the issue. See id. at 369-96 (Niemeyer, J., dissenting).
AT&T MOTION TO REMAND - 8
Case 1 :07-cv-00272-MHW Document 6 Filed 07/16/2007 Page 9 of
enforcement of those contracts correspondingly arise under state contract law, as the Idaho PUC
has held in a matter involving precisely the same claim, citing controlling Ninth Circuit
precedent.
Here, the sole claim in AT&T's complaint seeks enforcement of the tenus of AT&T's
contracts with Qwest.There is no federal claim stated on the face of that well pleaded
complaint. Moreover, the fact that Qwest's interconnection agreement with AT&T references or
incorporates federal standards does not transfonn a state law claim based on that contract into a
federal question. More than a century ago, the Supreme Court stressed that "(t)he fact that the
state statute and the mortgage refer to certain acts of Congress as prescribing the rule and
measure of the rights granted by the state does not make the detennination of such rights a
Federal question.Shoshone Mining Co. v. Rutter 177 u.S. 505 , 509 (1900). Similarly, in
Gully v. First Nat 'I Bank of Meridian 299 u.s. 109 (1936), the Court held that a lawsuit against
a bank to enforce the tenus of a contract made under Mississippi law, pursuant to which the bank
assumed the liabilities of an insolvent national bank for non-payment of a state tax on bank
shares, did not arise under federal law despite the fact that a federal statute was the source of the
state s authority to tax national bank shares. Id. at 114-15; see also g., Mabe v. G.Servs.
Ltd. P'ship, 32 F.3d 86 88 n.2 (4th Cir. 1994) ("A private contract cannot create federal question
jurisdiction simply by reciting a federal statutory standard"
More recently, in telecommunications cases that are directly on point, the courts have
upheld those same principles. As the Tenth Circuit noted, the contract at issue in Brooks Fiber
tracked the language of an FCC rule setting forth the scope of the parties reciprocal
compensation obligations under Section 25l(b)(5) ofthe 1996 Act. 235 F.3d at 495. Yet the
court had no difficulty concluding that "(t)he Agreement itself and state law principles govern
AT&T MOTION TO REMAND - 9
Case :07 -cv-00272-MHW Document 6 Filed 07/16/2007 Page 10 of
the questions of interpretation of the contract and enforcement of its provisions.Id. at 499.
Similarly, the Seventh Circuit has determined that the interpretation and enforcement of
provisions of interconnection agreements that "precisely track the Act" present a question of
state contract law, not a federal claim under the 1996 Act. Illinois Bell 179 F.3d at 573-74; see
also Connect 467 F.3d at 703 ("(a)lthough federal law plays a large role in this dispute, the
ultimate issue in this case - interpretation of the Interconnection Agreement - is a state law
issue
CONCLUSION
For the foregoing reasons, this matter should be remanded to the District Court of the
Fourth Judicial District of Ada County, State of Idaho, and AT&T should be awarded its
reasonable costs and attorneys ' fees "incurred as a result of the removal." 28 D.c. 9 l447(c).
DATED this 16th day of July, 2007.AT&T COMMUNICATIONS OF THE
MOUNTAIN STATES, INe.
Theod re . Livingston
Dennis . Friedman
MAY R, BROWN, ROWE & MAW LLP
Dan Foley
General Attorney & Assistant General Counsel
AT&T WEST
Attorneys for Plaintiff AT&T Communications of the
Mountain States, Inc.
AT&T MOTION TO REMAND - 10
Case 1 :07-cv-00272-MHW Document 6 Filed 07/16/2007
CERTIFICATE OF SERVICE
Page 11 of
I hereby certify that on the 16th day of July, 2007 I served a copy of the foregoing on CM/ECF
Registered Participants as reflected on the Notice of Electronic Filing.
(' "'-/
leiLr
Molly OIL~/ .
/' \ \/ "
AT&T MOTION TO REMAND -
Case 1 :07-cv-00272-MHW Document 6-Filed 07/16/2007 Pag~ffiaf ~the Secretary
Service Date
February 16 2007
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
AT&T COMMUNICATIONS OF THE
MOUNTAIN STATES, INC.CASE NO. QWE- T -06-
COMPLAINANT,
VS.
QWEST CORPORATION
ORDER NO. 30247
RESPONDENT.
On August 21 , 2006, AT&T Communications of the Mountain States filed a
complaint against Qwest Corporation, alleging that Qwest entered into "secret" interconnection
agreements with Eschelon Telecom and McLeodUSA Telecommunications Services. The
complaint alleged a single claim of breach of contract, stating that Qwest violated unspecified
terms of an interconnection agreement between AT&T and Qwest (the "Interconnection
Agreement") by not disclosing these "secret" agreements. Complaint at 7-
On September 6, 2006, the Commission issued a summons to Qwest to answer the
complaint. The Commission also granted the Motions for Limited Admission filed by AT&T's
out-of-state counsel. Order No. 30125. Qwest timely filed its answer to the complaint as a
Motion to Dismiss on September 27 2006. AT&T then filed a response to Qwest's Motion to
Dismiss on October 26, 2006.
On November 7, 2006, Qwest filed a Motion for Oral Argument with respect to the
issues presented in the Motion to Dismiss. AT&T filed its response joining in Qwest's request.
The Commission granted the Motion, and set the oral argument for January 24, 2007. Order No.
30195. The Commission also directed the parties to file briefs addressing certain issues about
which the Commission required further information. ld.
POSITION OF THE PARTIES
Qwest asked the Commission to dismiss AT&T's complaint on two grounds. First
Qwest asserted that AT&T's claim is actually a "federal claim masked in state law clothes.
Motion to Dismiss at 2. Given the federal claim, Qwest insisted the federal statute of limitations
of two years applies to any claim brought under the federal Telecommunications Act of 1996
ORDER NO. 30247
Case 1 :07 -cv-00272-MHW Document 6-Filed 07/16/2007 Page 2 of 6
(the " 1996 Act"). Qwest argued that the only reason AT&T is bringing this complaint as a
breach of state contract law is to avoid the operation of the two-year limitations period that
applies to these claims under 47 U.C. 9 415.1 TI. at 4. Second, the Oregon Public Utility
Commission s recent decision to dismiss a similar complaint against Qwest under the two-year
statute of limitations should collaterally estop AT&T from filing this complaint. At oral
argument, counsel for Qwest conceded that the second ground should be stricken in light of the
Washington Utilities and Transportation Commission s contrary decision. Thus, we will not
consider the second ground. TI. at 7.
AT&T asserted that "all claims seeking interpretation and enforcement of
interconnection agreements are governed by state law.TI. at 19. At oral argument AT&T's
counsel explained that the interconnection agreement included "an obligation on the part of
Qwest to make available the terms and conditions of any other agreement for interconnection
unbundled network elements and resale services in those agreements' entirety.Id. at 17.
AT &T concedes this "obligation" is based upon Section 252(ii of the 1996 Act but insisted that
their interconnection agreement deviates from or "doesn t precisely track the language of 252(i)"
and it is this deviation or difference that requires interpretation of the agreement by the
Commission. Id. at 24, 20.
DISCUSSION AND FINDINGS
At the outset, we first address our jurisdiction. In its Motion to Dismiss, Qwest
stated that "(tJhis Commission jurisdiction to hear actions to enforce the terms of
interconnection agreements derives , not from state law, but from the Federal Act. ... Thus
without delegated authority, the Commission lacks jurisdiction to act." Motion to Dismiss at 10.
We are puzzled that Qwest declares this, even after our Supreme Court has clearly stated that the
Commission does have the authority to interpret and enforce an interconnection agreement.
McNeal v. Idaho Public Uti!. Comm '142 Idaho 685, 132 PJd 442 (Idaho 2006). In McNeal
the Court held that "Federal law indicates that a Commission does have the authority to interpret
I "There is no question that AT&T has known about these (undisclosed) agreements, the McLeod and Eschelon
agreements, ... since at least the summer of 2002." Tr. at 4.
47, U.C. 9 252(i) provides in pertinent part: A local exchange calTier shall make available any interconnection
service, or network element provided under an agreement approved under this section to which it is a party to any
other requesting telecommunications calTier upon the same terms and conditions as those provided in the agreement.
ORDER NO. 30247
Case 1 :07 -cv-00272-MHW Document 6-Filed 07/16/2007 Page 3 of 6
and enforce an interconnection agreement." Id. at 689, 132 P.2d at 446. In light of this ruling,
we find that we have jurisdiction to hear this matter.
It is axiomatic that the interpretation of a contract begins with the language of the
contract itself. Albee v. Judy, 136 Idaho 226, 31 P.3d 248 , 252 (2001). If the contract terms are
clear and unambiguous, the meaning and effect of the contract are questions of law to be
determined from the plain meaning of its words. Id. If the contract terms are ambiguous, then
the interpretation of those provisions is a question of fact which focuses upon the intent of the
parties. Bream v. Benscoter 139 Idaho 364, 79 P.3d 723 (2003).
Turning to the Agreement to see what its terms provide regarding a choice of law, we
look at Section 21.1 (Governing Law). This provision states:
This Agreement shall be governed by and construed in accordance with the
Act and the FCC's rules and regulations, except insofar as state law may
control any part of this Agreement, in which case the domestic laws of the
State of Idaho, without regard to its conflicts of law principles shall govern
(Emphasis added). Like the 1996 Act, the section quoted above "is not a model of clarity" upon
first reading. AT&T v. Iowa Utilities Board 525 u.S. 366, 397, 19 S.Ct.72l , 738 (1999). When
we asked the parties to address the effect and meaning of this provision with respect to the
complaint, the parties offered little illumination. Qwest asserted that state law would "come into
play in the relatively rare instances. .. where federal law and/or FCC rulings leave a role for state
law " and otherwise reiterated its argument that AT&T's claim was federal in nature and federal
law would apply to its claim. Qwest Brief at 11. AT&T stated that this section "confirm( s) that
state law governs the interpretation and enforcement of intercollllection agreements " and noted
that there is a role for state law, such as when a breach of contract occurs, and that "state law has
a key role in enforcing intercollllection agreements.AT&T Brief at 14, 15.
Fortunately, there are other contract terms that, when read together, clarify the point.
Throughout the Agreement there are provisions that require compliance with various
requirements of federal and state law. As the parties state themselves
This Agreement is a combination of agreed terms and terms imposed by the
(Commission sJ arbitration under Section 252 of the Communications Act of
1934, as modified by the Telecommunications Act of 1996, the rules and
regulations of the Federal Communications Commission and the orders, rules
and regulations of the Idaho Public Utilities Commission... .
ORDER NO. 30247
Case 1 :07-cv-00272-MHW Document 6-Filed 07/16/2007 Page 4 of 6
Agreement (Recitals) at 4 (emphasis added). Thus, it is no surprise that the Agreement
addresses requirements of both federal and state law.
We also turn to Section 27., Dispute Resolution, in the Agreement. This provision
provides that a dispute regarding the Agreement may be resolved by arbitration. When coupled
with Section 27., it states a fairly detailed set of instructions for how such arbitration should be
conducted. Pertaining to our examination here is the Parties' agreement that "(t)he laws ofIdaho
shall govern the construction and interpretation of this Agreement." (Emphasis added). If the
matter were submitted to arbitration, there is no question as to what law would be applied to the
dispute. Based upon these provisions together, we find that the Governing Law provision is
unambiguous, and that the parties intended that the Agreement be construed under state law
while recognizing that the parties must also comply with various federal requirements.
There is also a substantial body of cases supporting our finding that state law governs
the question of interpretation and enforcement of interconnection agreements. See, e,g, Pacific
Bell v. Pac-West Telecomm 325 F.3d 1114, 1128 (9th Cir. 2003). In order to determine whether
Qwest violated the Interconnection Agreement as alleged by AT&T, we will have to interpret its
provisions. If a violation is found, we will need to explore how to enforce the provisions. Thus
we conclude that state law governs this dispute.
Having found that state law applies, we must next decide whether the statute of
limitations would put an end to this complaint. As noted above, Qwest argued that the federal
two-year statute of limitations found at 47 D.c. ~ 415 should be applied because AT&T is
actually hiding a federal law matter in state law clothes and federal law should govern. AT&T
argued that the five-year statute of limitations provided by Idaho Code ~ 5-16 for a breach of
contract action should apply because the matter is governed by state law. In the alternative,
AT&T argued that if federal law is applied, the four-year statute of limitations provided by 28
C. ~ l658(a) should apply.
In answering this question, we note that the Idaho Supreme Court has recently held
that "the true gravamen of the plaintiffs' claims should control the question of which statute of
limitations is applicable, rather than the manner in which the claims are actually pled.Hayden
Lake Fire Protection District v. Alcorn, 141 Idaho 388, 111 PJd 73 (Idaho 2005) (emphasis in
original). Thus, if the gravamen of the complaint is a breach of contract, the five-year statute of
ORDER NO. 30247
Case 1 :07 -cv-00272-MHW Document 6-Filed 07/16/2007 Page 5 of 6
limitations would likely apply. If the gravamen of the complaint is a violation of the federal
statute, a federal statute of limitations might apply.
To muddy the water even more, more than one federal statute of limitations might
apply to this complaint: Either the two-year statute of limitations provided under 47 D.C. ~
415 or the four-year statute oflimitations under 28 D.C. ~ l658(a) might apply, if we were to
find that the gravamen of AT&T's claim is federal in nature. The 1996 Act merely amended the
federal Act of 1934, and thus the two-year statute of limitations provided by the 1934 Act seems
the logical statute to apply. See AT&T v. Iowa Utilities Board, 525 U.S. at 377; Pub. L. 104-104
110 Stat. 56, 9 1 (b). However, certain case law indicates that the catch-all statute of limitations
under 28 US.e. ~ l658(a) may be the applicable law for a breach of a provision in the 1996
Act.
Turning back to AT&T's complaint , we find that additional briefing is necessary to
determine the complaint's gravamen and address the statute of limitation issue. Therefore, we
direct AT&T to amend its complaint by March 9,2007 to state with particularity the provisions
of the Interconnection Agreement that were allegedly breached and the timeframe applicable for
calculating damages. We further direct AT&T to concurrently file a brief that addresses the
following issues:
1. When did AT&T have notice of the "secret" agreements such that the
Idaho statute of limitations would start to run?
2. Three statutes of limitations have been proposed by the parties as
potentially applying to this matter: (1) a two-year statute of limitations
provided by 47 U.C. ~ 415; (2) a four-year statute of limitations
provided by 28 U.C. 9 l658(a); and (3) a five-year statute of limitations
provided by Idaho Code 9 5-16. Which statute of limitations applies to
this matter?
In addition, we direct Qwest to file a brief by March 23, 2007 that addresses the two issues set
forth above.
See City of Rancho Palos Verdes, California v. Abrams 544 U.S. 113, 125 S.Ct. 1453 , 1460 fn. 5 (2005) ("(s1ince
the claim here rests upon violation of the post-1990 (1996 Act1, 9 1658(a) would seem to apply.
);
Spire
Communications, Inc. v. Baca 269 F.Supp.2d 1310, 1320 (D. N., 2003); Verizon Maryland Inc. f/kial Bell
Atlantic-Maryland, Inc. v. RCN Telecom Services, Inc. f/kia RCN Telecom Services of Maryland Inc.232 F.Supp.
539, 554 (D. Md., 2002) ("When the amendment (to the act) itself creates the cause of action upon which the
plaintiff sues, without reference to the preexisting act, the cause of action clearly aris( es) under the post-1990
amendment, and the general four-year statute of limitations applies.
);
Bell Atlantic-Pennsylvania v. Pennsylvania
Public Utility Commission 107 F.Supp.2d 653 (E.Pa" 2000).
ORDER NO. 30247
Case 1 :07 -cy-00272-MHW Document 6-Filed 07/16/2007 Page 6 of 6
ORDER
IT IS HEREBY ORDERED that Qwest's Motion to Dismiss is denied at this time.
IT IS FURTHER ORDERED that AT&T shall amend its complaint by March 9
2007 to state with particularity which provisions of the Interconnection Agreement between
AT&T and Qwest were allegedly breached by Qwest, and what is the timeframe for which it
seeks damages.
IT IS FURTHER ORDERED that AT&T shall submit a brief by March 9, 2007
addressing the two issues set forth above, and that Qwest shall submit a brief by March 23 , 2007
addressing the two issues set forth above.
DONE by Order of the Idaho Public Utilities Commission at Boise, Idaho this
/~-f'I..
day of February 2007.
ER, PRESIDENT
MARSHA H. SMITH, COMMISSIONER
ATTEST:
~Ll\~Je D. Jewe
Commission Secretary
O:QWE-O6-cg4
ORDER NO. 30247
Case 1 :07-cv-00272-MHW Document 8-Filed 07/16/2007 Page 1 Attach men t 2
Molly O'Leary (lSB No. 4996)
RICHARDSON & O'LEARY PLLC
515 North 2ih Street
O. Box 7218
Boise, Idaho 83707
Telephone: [phone]
Fax: [phone]
Mail: mollv0Jrichardsonandoleary_com
Theodore A. Livingston
Dennis G, Friedman
J. Tyson Covey
Lauren Frank Noll
MA YER, BROWN, ROWE & MAW LLP
71 South Wacker Drive
Chicago, IL 60606-4637
Telephone: [phone]
Fax: [phone]
E- Mail: dfriedman 0J ma yerbrown.com
Dan Foley
General Attorney & Assistant General Counsel
AT&T WEST
P. O. Box 11010; 645 E. Plumb Lane, B 132
Reno, Nevada 89520
Telephone: [phone]
Fax: [phone]
Mail: df69290Jatt.com
Attorneys for Complainant AT&T Communications of the Mountain States, Inc.
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
QWEST CORPORATION,
AT&T COMMUNICATIONS OF THE MOUNTAIN)
STATES , INc.
CASE NO. QWE-06-
Complainant
vs.AMENDED COMPLAINT
Respondent.
AT&T AMENDED COMPLAINT AGAINST QWEST
CHDB04 13371083, I 09-Mar-07 10:35
Case 1 :07 -cv-00272-MHW Document 8-Filed 07/16/2007 Page 2 of 7
AMENDED COMPLAINT
Complainant AT&T Communications of the Mountain States, Inc. ("AT&T"), by its
undersigned attorneys, complains against Respondent Qwest Corporation ("Qwest") as follows:
INTRODUCTION
During the period at issue here (October 2000 through June 2002), AT&T and Qwest
were parties to an agreement, approved by the Idaho Public Utilities Commission, pursuant to which
Qwest provided various products and services to AT&T in Idaho ("AT&T Agreement ). The AT&T
Agreement required Qwest to make available to AT&T the rates, tenns, and conditions of any other
similar agreements to which Qwest was a party in Idaho. See Ex. 1 hereto, Sections 2.1 and 24.
see also id.Scope of Agreement, Section B.
Beginning on or about November 15,2000, Qwest entered into a secret agreement
with Eschelon Telecom Inc. ("Eschelon ). That agreement (the "Eschelon Agreement ) established
rates, telms, and conditions for telecommunications service and facilities that Qwest provided, or
agreed to provide, to Eschelon, including rates, tenns , and conditions that were not contained in
agreements with other similarly situated companies, including AT&T. These tenns included a
discount for Eschelon of up to 10% on all products and services it obtained from Qwest, and Qwest
provided those discounts to Eschelon while the Eschelon Agreement was in effect. Qwest did not
make these discounts available to AT&T.
Beginning on or about October 26, 2000, Qwest entered into a secret oral agreement
with McLeodUSA Telecommunications Services, Inc. ("McLeod"). That agreement (the "McLeod
Agreement ) established rates, tenns and conditions for telecommunications services and facilities
that Qwest provided, or agreed to provide, to McLeod, including rates, tenns, and conditions that
were not contained in agreements with other similarly situated companies, including AT&T. These
AT&T COMPLAINT AGAINST QWEST - 2
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Case 1 :07-cv-00272-MHW Document 8-Filed 07/16/2007 Page 3 of 7
tenns included a discount for McLeod of up to 10% on all products and services it obtained from
Qwest, and Qwest provided those discounts while the McLeod Agreement was in effect. Qwest did
not make these same discounts available to AT&T.
To the best of AT&T's infonnation and belief , the Eschelon Agreement was in effect
and discounts were provided by Qwest from November 15 2000 through March 1 2002 , and the
McLeod Agreement was in effect and discounts were provided by Qwest from October 26, 2000
through June 30, 2002.
In addition, both Eschelon and McLeod received payments from Qwest for
tenninating the Eschelon Agreement and McLeod Agreement, respectively, earlier than the
agreements otherwise would have been tenninated.
If Qwest had made the tenns of the secret agreements with Eschelon and McLeod
available to AT&T as required by the AT&T Agreement, AT&T would have availed itself of the
benefits of the Eschelon and Mcleod Agreements,
The amounts that AT&T paid Qwest for services during the time period in which the
Eschelon and McLeod Agreements were in effect were approximately ten percent higher than the
amounts that Eschelon and McLeod paid Qwest for the same or comparable services pursuant to the
secret agreements.
As a consequence of Qwest ' s breach of the AT&T Agreement, AT&T has suffered
damages consisting of, at a minimum, (i) the difference between what it paid Qwest and the amount
it would have paid if Qwest had charged it the lower rates it should have charged it during the period
when the Eschelon and Mcleod Agreements were in effect, plus (ii) an amount to reflect the
additional de facto discount provided to Eschelon and Qwest in exchange for tenninating their secret
discount agreements earlier than planned. Those damages exceed $650,000.
AT&T COMPLAINT AGAINST QWEST - 3
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Case 1 :07-cv-00272-MHW Document 8-Filed 07/16/2007 Page 4 of 7
THE PARTIES
A T&T is a Colorado corporation with its principal place of business in New Jersey.
AT&T provides telephone exchange service, exchange access and other telecommunications and
infonnation services within the State of Idaho.
10.Qwest is a Colorado corporation with its principal place of business in Colorado.
Qwest provides telephone exchange service, exchange access and other telecommunications and
infonnation services within the State of Idaho.
JURISDICTION AND VENUE
11.AT&T brings this Complaint pursuant to its contract with Qwest and Idaho
common law of contract.
COUNT I
Breach of Contract
12.The allegations of paragraphs 1 through 11 are repeated and realleged as paragraph
12 of Count
13.Qwest's conduct as alleged above breached Qwest's obligations under Sections 2.1
and 24.1 of the AT&T Agreement, as well as Section B of the "Scope of Agreement." Section 2.1 of
the AT&T Agreement provides that:
Until such time as there is a final court detennination interpreting
Section 252(i) of the Act, (QwestJ shall make available to AT&T the
tenns and conditions of any other agreement for interconnection
unbundled network elements and resale services approved by the
Commission under Section 252 of the Act , in that agreement(' Js
entirety.
As discussed above, Qwest breached Section 2.1 by failing to make available to AT&T the tenns
and conditions of agreements between Qwest and Eschelon and McLeod regarding interconnection
unbundled network elements, and resale services.
AT&T COMPLAINT AGAINST QWEST - 4
CHDB04 13371083,( 09-Mar-07 10:35
Case 1 :07-cv-00272-MHW Document 8-Filed 07/16/2007 Page 5 of 7
Section 24.1 of the AT&T Agreement provides that:
Each Party shall comply with all applicable federal, state, and local
laws, mles and regulations applicable to its performance under this
Agreement.
As discussed above, Qwest breached Section 24.1 by failing to comply with laws, rules , and
regulations applicable to its performance under its contract with AT&T. Specifically, Qwest failed
to provide intrastate access services and other products and services to AT&T in a nondiscriminatory
manner as required by Idaho Code ~ 62-609.
Section B of the "Scope of Agreement" in the AT&T Agreement provides
that:
In the performance of their obligations under this Agreement, the
Parties shall act in good faith and consistently with the intent of the
Act.
As discussed above, Qwest breached this provision by failing to act in good faith, in that it provided
secret discounts to other carriers on the same products and services then being purchased by AT&T
without making those same discounts available to AT&T. Qwest also breached its duty of good
faith by frustrating the purpose of Section 2.1 of the agreement when it failed to have the Eschelon
and McLeod agreements "approved by the Commission under Section 252 of the Act.
14.Qwest's conduct also breached the implied covenants of good faith and fair dealing
that were part of Qwest' s obligations under the AT&T Agreement. Those covenants included an
obligation by Qwest to comply with Section 62-609 of the Idaho Code, which prohibits
telecommunications companies such as Qwest from granting preferences to other telephone
corporations with respect to its prices or charges; from subjecting any telephone corporations to any
prejudice or competitive disadvantage with respect to its prices or charges for providing access to its
AT &T COMPLAINT AGAINST QWEST - 5
CHDB0413371083,1 09-Mar-0710:35
Case 1 :07-cv-00272-MHW Document 8-Filed 07/16/2007 Page 6 of 7
local exchange network, and from establishing or maintaining any unreasonable difference as to its
prices or charges for access to its local exchange network.
15.Qwest s breaches of its contract with AT&T damaged AT&T in an amount equal to at
least
(i) the aggregate amount of the price differential between what AT&T paid Qwest and what
it would have paid Qwest if it had been permitted to avail itself of the discounts in the
Eschelon and McLeod Agreements while they were in effect; specifically, an amount equal
to a 10% discount on all products and services that AT&T purchased from Qwest in Idaho
between October 26, 2000 (the date of the McLeod Agreement) through June 30, 2002 (the
alleged termination date of the McLeod Agreement), plus
(ii) an amount, to be determined at trial, to reflect the additional de facto discount reflected in
the payments that Qwest provided to Eschelon and McLeod in exchange for terminating their
secret discount agreements earlier than planned.
WHEREFORE, AT&T respectfully requests this Court to enter judgment in its favor and
(i)declare that Qwest violated the AT&T Agreement, and
(ii)require Qwest to pay damages to AT&T as described above, plus interest and costs
and such other and fUl1her relief as this Commission deems just.
Dated this 9th day of March, 2007 AT&T COMMUNICATIONS OF THE
MOUNTAIN STATES, INC.
I These dates encompass the effective period of the Eschelon Agreement (November 15,2000 through March L 2002)-
AT &T COMPLAINT AGAINST QWEST - 6
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Case 1 :07-cv-00272-MHW Document 8-
AT &T COMPLAINT AGAINST QWEST - 7
CHDB04 13371083.1 09-Mar-0710:35
Filed 07/16/2007 Page 7 of
Molly O'Leary
Richardson & O'Leary
Attorneys for AT&T COMMUNICATIONS OF
THE MOUNTAIN STATES , INe.