20070110Response to notice of oral argument.pdf

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: mollv(q),richardsonandolearv.com
Theodore A. Livingston
Dennis G. Friedman
MAYER, BROWN, ROWE & MAW LLP
71 South Wacker Drive
Chicago, IL 60606-4637
Telephone: [phone]
Fax: [phone]
E- Mail: dfriedmanCq),maverbrown. 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: df6929Cq),att.com
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Attorneys for Complainant AT&T Communications of the Mountain States, Inc.
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
AT&T COMMUNICATIONS OF THE MOUNTAIN )
STATES , INC.
Complainant
vs.
QWEST CORPORATION
Respondent.
Case No. QWE-06-
AT&T'S RESPONSE TO
COMMISSION'
NOTICE OF ORAL ARGUMENT
AT&T Communications of the Mountain States, Inc. ("AT&T") respectfully submits this
response to the Commission s Notice of Oral Argument and to Qwest Corporation s ("Qwest"
response to that Notice ("Qwest Notice Resp.As demonstrated below and in AT&T's
response to Qwest's motion to dismiss, AT&T's breach of contract claim arises under Idaho state
law and therefore is subject to the five-year statute of limitations provided under Idaho Code ~ 5-
216, not a federal statute of limitations, as Qwest erroneously contends.
Is AT&T's claim in this matter governed by the federal Telecommunications Act of
1996 or Idaho state law?
The validity of AT&T's claim turns on the terms of its interconnection agreement
with Qwest. In this case, AT&T claims that language that the parties agreed to include in their
interconnection agreement gave AT&T a right to the lowest price at which Qwest contracted
with other carriers for certain products and services, and that Qwest breached the agreement by
denying AT&T discounts that Qwest provided to certain other carriers.Qwest, in fact
acknowledges that AT&T's claim rests on a right that AT&T asserts through its own
interconnection agreement.Qwest Notice Resp. at 4 (emphasis added).
The federal courts almost unanimously have held that disputes over the
interpretation and enforcement of interconnection agreements are governed by state law. All
but one of the federal courts of appeals to have considered the issue has held that claims that
require the interpretation and enforcement of interconnection agreements are governed by state
law, not federal law. As the Ninth Circuit put it, a central purpose of the 1996 Act is "to replace
state regulated system with a market-driven system that is self-regulated by binding
interconnection agreements.Pacific Bell v. Pac-West Telecomm, lnc" 325 F.3d 1114, 1128 (9th
Cir. 2003). Within this new, contract-based system, parties are free to negotiate and agree to any
AT&T's RESPONSE TO
COMMISSION'S NOTICE
OF ORAL ARGUMENT - 2
terms they like
, "
without regard to" the requirements of federal law, and thus can incorporate
modify, or ignore that law as they see fit. 47 US.C. ~ 252(a).
Once finalized, the voluntarily assumed terms become the "binding" statement of the
parties' rights and obligations to one another (id ~ 252(a)(l)) as a matter of private contract, not
of federal compulsion. Accordingly, the Ninth Circuit has held that 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 325 F.3d at
1128 (quoting Southwestern Bell v. Pub. Util. Comm '208 F.3d 475, 485 (5th Cir. 2000)). And
the Fifth, Sixth, Seventh, Eighth, and Tenth Circuits agree.Connect Comms. Corp,
Southwestern Bell Tel.467 F.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 ofthe Interconnection Agreement - is a state law issue
);
Michigan Bell
Tel. Co, v. MClmetro Access Transmission Servs" Inc.323 F.3d 348 355-56 (6th Cir. 2003) ("
state commission s contractual interpretation of an interconnection agreement is governed by
state, not federal, law
);
Southwestern Bell Tel. Co. v, Brooks Fiber Comms, of Oklahoma, Inc.
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 terms creates a different kind of problem - one under
the law of contracts, and therefore one for which a state forum can supply a remedy
1 Only the Fourth Circuit has reached a contrary result. That decision, which has a well-reasoned and
persuasive dissent, is discussed below.
AT&T's RESPONSE TO
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OF ORAL ARGUMENT - 3
The parties ' decision to incorporate a federal standard into their agreement does
not transform the interpretation of the agreement into an issue of federal law,The courts
consistently have rejected Qwest's suggestion that the mere fact that the parties agree to a
provision that tracks or incorporates federal requirements transforms a question concerning the
interpretation of that provision from state to federal law. The courts instead have held that where
the parties elect as a matter of private contract to track or incorporate federal requirements, the
resolution of disputes over such terms remains a matter for state contract law.Thus, for
example, in resolving the contract claim in Brooks Fiber the Tenth Circuit concluded that
reciprocal compensation was owed on calls to Internet Service Providers "not because federal
law requires such compensation, but because the Agreement, as construed under Oklahoma state
law, requires it." 235 F.3d at 495 , 499. The court applied state law even though the agreement
terms at issue merely tracked federal law. ld The Seventh Circuit found that even though the
interconnection agreement terms at issue "precisely track the (1996) Act " a dispute over
enforcement of those terms was nevertheless a matter of state law for a state forum. Illinois Bell
179 F.3d at 574. The Eighth Circuit likewise held that notwithstanding the fact that "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.Connect Comms. Corp" 467 F.3d at 707-09.
And those holdings in cases involving interconnection agreements are fully consistent with long-
standing precedent in other contexts. See , Gully v, First Nat l Bank of Meridian 299 U.
109, 117 (l936) (explaining that the fact that federal law may be "lurking in the background"
does not turn a state contract claim into a federal claim); International Armor Limousine Co.
Moloney Coachbuilders lnc" 272 F.3d 912 (7th Cir. 2001) (holding that claims for breach of
contracts involving copyrights, patents, or trademarks arise under state law
, "
even though the
AT&T's RESPONSE TO
COMMISSION'S NOTICE
OF ORAL ARGUMENT - 4
dispute could not exist but for the property right created by" the federal law); Hunter v, United
Van Lines 746 F.2d 635, 647 (9th Cir. 1985) (contract claims arose under state law
, "
without
regard to their genesis" in federal law).
Qwest s attempts to evade the overwhelming weight of authority are unavailing.
The only time Qwest has acknowledged the cases cited above is in its reply brief on the motion
to dismiss, and even there Qwest simply tried to sweep the entire line of decisions under the rug
by contending that those cases indicate that state law applies only as gap filler "where federal
law has not spoken." Qwest Reply in Support of Motion to Dismiss at 5; see also Qwest Notice
Resp. at 11. But none of the cases cited above holds or even implies any such thing. Moreover
the 1996 Act itself refutes any such notion. The federal scheme for establishing interconnection
agreements under Section 252 expressly preserves a role for state law in interpreting and
enforcing the terms that parties choose to include in their agreements, whether those terms
adhere to or deviate from the baselines established in the 1996 Act. Congress and the FCC have
no more mandated a national rule - and state law thus is no more a gap filler - with respect to
opt-in rights under Section 252(i) than with respect to the reciprocal compensation rights under
Section 251(b)(5) at issue in Brooks Fiber, Connect and Illinois Bell. Thus, for example, parties
remain free to negotiate a provision that preserves or gives up their Section 252(i) rights or
Section 251(b)(5) reciprocal compensation rights. Whatever the parties ' election in that regard
under the decisions of every circuit to have considered the issue except for the Fourth Circuit, the
resulting agreement is enforceable as a matter of private contract as interpreted under state law
whether or not it incorporates federal standards.
Qwest's other attempts to distinguish the controlling cases also fail. Qwest contends that
the Ninth Circuit "held" in Pacific Bell that FCC rules trump any inconsistent interpretation of an
AT&T's RESPONSE TO
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OF ORAL ARGUMENT - 5
interconnection agreement by a state commission. Qwest Reply in Support of Motion to Dismiss
at 6 (citing Pacific Bell 325 F.3d at 1130); see also Qwest Notice Resp. at 5. But all that the
cited portion of Pacific Bell says is that state commissions must follow FCC rules when
arbitrating the terms of interconnection agreements before they are created; it says nothing about
negotiated contract terms. The threshold question in an interpretation and enforcement dispute
over negotiated terms, like the dispute here, is whether the parties meant to incorporate or track
federal law. If they did, a decision maker could consult federal law in resolving the issue - just
as the decision maker may consult a Treasury Department bulletin if the parties had incorporated
the Consumer Price Index as a term of their contract - but the mere fact that the parties may elect
to use federal standards for private purposes does not change the fact that federal law is not
operating of its own force or that the contract claim arises under state law. Connect Comms.467
3d at 709; Gully, 299 U.S. at 117. Finally, Qwest's contention that AT&T's claim must be
treated as federal because the power of state commissions to enforce interconnection agreements
derives from Section 252 of the 1996 Act proves too much. Qwest Reply in Support of Motion
to Dismiss at 7-8; see also Qwest Notice Resp. at 5 n.15. That argument obviously would have
applied in all of the cases cited above by AT&T, yet everyone of those courts proceeded to treat
the contract enforcement claims as state law claims.
Just last month, the Washington Utilities and Transportation Commission
WUTC") ruled in AT&T'sfavor on precisely the same issues, finding "AT&T's analysis " to be
persuasive and rejecting Qwest's arguments "to the contrary.In Washington, as here
AT&T has asserted a breach of contract claim against Qwest arising out of provisions in the
parties' interconnection agreements that track or incorporate the "most favored nation
requirements of the 1996 Act. And, as here
, "
the principal issue presented for decision" before
AT&T's RESPONSE TO
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OF ORAL ARGUMENT - 6
the Commission was whether "federal or state law determiners) principles relating to the
establishment and enforcement of interconnection agreements governing intrastate services.
Washington Order ~ 50 (Att. 1 hereto)?
Qwest argued in Washington, as it does here, that AT&T's contract claims should be
treated as federal in nature and as a result are barred by the two-year federal statute of limitations
set forth in 47 U.C. ~ 415. The WUTC rejected Qwest's position and , in a thorough discussion
of the same arguments and same cases relied on by the parties here, found "AT&T's analysis to
be persuasive." Washington Order ~ 53 & n.25. In so doing, the WUTC explained that "Section
252(a)(l) of the (1996) Act speaks clearly to the matters at issue in providing that parties may
negotiate terms of their interconnection agreements on a voluntary basis 'without regard to '" the
other requirements of the 1996 Act, and, accordingly, that state commissions (and courts) are
require ( d)" to "apply state law when resolving disputes about interconnection agreements
governing intrastate services.ld ~~ 53-54. The WUTC specifically quoted the Ninth Circuit's
holding that "(t)he (interconnection) Agreements themselves and state law principles govern the
questions of interpretation of the contracts and enforcement of their provisions" and further
noted that "(o)ther courts are in accord.!d. ~~ 56-57. In short, the WUTC concluded that a
claim for breach of an interconnection agreement is "an action on a contract for performance
within the state " which "is not a federal matter.ld ~ 61.
The WUTC specifically rejected "Qwest's contention that the (1996) Act transforms
clearly state law issues relating to negotiated provisions of interconnection agreements into
federal issues." Washington Order ~ 62. Following the Eighth Circuit's decision in Connect
2 Order 06: Order Affinning Interlocutory Order; Allowing Amendment of Complaint; Denying Motion
for Summary Detennination AT&T Comms. of the Pacific Northwest, lnc, v. Qwest Corp.Docket UT-
051682 (Wash. Utils. and Transp. Comm , Dec. 21 , 2006).
AT&T's RESPONSE TO
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OF ORAL ARGUMENT - 7
Comms.467 F.3d at 709, and the Tenth Circuit's decision in Brooks Fiber 235 F.3d at 495, the
WUTC held that (e)ven if an interconnection provision tracks or incorporates provisions of the
(1996) Act or FCC rules!,) state law governs the interpretation and enforcement of that
provision.Washington Order ~ 62 & n.27 (emphasis added).As the WUTC explained
although the application of federal law may have a role in resolving the issuesL) (t)he questions
are whether the parties entered a contract governing intrastate services, whether the contract
contained a specific term assuring ( AT&T) that Qwest would offer it the best terms given to
other carriers, and whether Qwest failed to meet that obligation.ld ~ 66. Those questions are
fundamental issues of state, not federal, law.ld And thus having ruled that AT&T's claims
raised issues of state law, the WUTC could "see no reason why the state statute of limitations
would not likewise be the controlling authority.ld ~ 67. The same analysis applies here and
supports rejection of Qwest's argument for dismissal of AT&T's claims under the two-year
limitations period under Section 415.
The Washington Commission decision in fact demonstrates that the issue that
Qwest posits as the "threshold" issue in this case whether AT&T may "evade Section 415
the Federal Telecommunications Act " (Qwest Notice Resp. at 2) - is in fact not an issue at all.
To begin with, as demonstrated above, a state statute of limitations applies where, as here, the
underlying claim arises under state law. Moreover, even if Qwest had been correct in contending
that AT&T's claims are both federal in nature and governed by a federal limitations period
Qwest points to the wrong federal statute. As the WUTC explained, instead of applying the two-
year period under the Communications Act of 1934
, "
several federal court decisions" have held
that the four-year period set forth in 28 US.C. ~ 1658(a) applies to claims arising under statutes
AT&T's RESPONSE TO
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OF ORAL ARGUMENT - 8
enacted after 1990 " which plainly includes the 1996 federal Act. Washington Order ~~ 68-70 &
30.
The Washington Order eviscerates Qwest s suggestion that this Commission
should accord collateral estoppel effect to the Oregon Public Utilities Commission s decision.
As AT&T explained in its response to Qwest's motion to dismiss , giving collateral estoppel
effect to a decision from another state would be inappropriate and unfair when multiple states
have ruled on the same issue and their decisions conflict - even where the decision would
otherwise satisfy the requirements for the application of collateral estoppel (which, as
demonstrated in AT&T's response to Qwest's motion to dismiss (at 11-22), the Oregon decision
would not in any event). The Oregon Supreme Court itself has held that it "would work an
injustice" and be "fundamentally offensive" to give one decision collateral estoppel effect when
others have ruled differently on the same issue. State Farm Fire Cas. Co. v. Century Home
Components, Inc.550 P.2d 1185 , 1191 (Or. 1976). That is precisely the case here. The
Washington Order is contrary to - and expressly rejects (Washington Order at n.26) - the
Oregon Commission s decision, eliminating any plausible argument for giving collateral
estoppel effect to the Oregon decision.
The Wyoming decision was wrongly decided and is inapposite in any event
because the court was simply addressing subject matter jurisdiction, not the applicable
limitations period Largely ignoring the cases cited above, which directly address whether a
claim for breach of an interconnection agreement is governed by state law or the 1996 Act
3 Qwest contends that "the Ninth Circuit and other circuits have ruled that interconnection agreements are
subject to the federal law, including the federal statute of limitations." Qwest Notice Resp. at 5 & n.15.
None of those courts have held any such thing. The Pavlak, Cole and MFS lnt cases that Qwest cites
have nothing to do with interconnection agreements at all, and thus do not support Qwest's assertion in
any way. Qwest also cites the Ninth Circuit'Pacific Bell and the Seventh Circuit's Illinois Bell
AT&T's RESPONSE TO
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OF ORAL ARGUMENT - 9
Qwest relies on a recent decision by a Wyoming district court. That decision should not carry
any weight here.
In Wyoming, AT&T sued Qwest in state court for violation of the parties
interconnection agreement and a state statute prohibiting such discrimination. Qwest removed
the case to federal court, alleging that AT&T's claims raised a federal question. AT&T moved
to remand to state court, arguing that its claims are governed by state law, not federal law, and
citing the cases listed above. Because Wyoming is in the Tenth Circuit, AT&T relied primarily
on Brooks Fiber in which the Tenth Circuit squarely held that such claims arise under state law.
235 F.3d at 499. The Wyoming court, however, elected to follow the Fourth Circuit's outlier
decision in Verizon Maryland, Inc. v. Global NAPs, Inc. 377 F.3d 355 (4th Cir. 2004) - which
again, is the only court of appeals decision to treat claims for interpretation or enforcement of
interconnection agreements as federal law claims. Specifically, the Wyoming court asserted that
the situation in Verizon Maryland was analogous to the case before it and that Brooks Fiber was
distinguishable.Order Denying Motion to Remand AT&T Comms. of the Mountain states
inc. V., Qwest Corp.Case No. 06-CV-232-, at 7, 9 (D. Wyo. Dec. 13 , 2006) ("Wyoming
Order
) ("
The Court is persuaded by the Fourth Circuit's reasoning, which is applicable here
The fatal flaw in the Wyoming court's analysis is that Brooks Fiber and Verizon
Maryland are, for all relevant purposes identical and the Wyoming court therefore erred in not
following the controlling Brooks Fiber decision. Both Verizon Maryland and Brooks Fiber
decisions, which, as discussed in the text, both find that state law governs disputes over the interpretation
and enforcement of interconnection agreements. Qwest's reliance on an Eighth Circuit decision from
2000 is misplaced. Even if Qwest' s reading of that case were correct - and it is not - the Eighth Circuit
2006 decision in Connect Comms. squarely held that interpretation of an interconnection agreement "is a
state law issue." 467 F.3d at 709. Thus, the only case that Qwest can muster in which a court actually
held that the interpretation and enforcement of an interconnection agreement is governed by federal rather
than state law is the Fourth Circuit's decision in Verizon Maryland, Inc. v. Global NAPs, Inc.377 F.3d
355 363-64 (4th Cir. 2004).
AT&T's RESPONSE TO
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involve claims that seek the interpretation and enforcement of provisions in interconnection
agreements that deliberately track and incorporate the requirements of the federal 1996 Act and
the FCC's implementing regulations relating to reciprocal compensation. Verizon Maryland
377 F.3d at 363-64; Brooks Fiber 235 F.3d at 495. Section 251(b)(5) of the 1996 Act requires
that carriers pay each other reciprocal compensation for completing calls originating on one
carrier s network and terminating on the other s; the FCC's implementing regulations at the
relevant time limited this reciprocal compensation obligation to "local traffic" and defined "local
traffic" to mean calls that both originate (begin) and terminate (end) in the same local calling
area.In both cases the parties in their negotiated agreements deliberately tracked and
incorporated the requirements of Section 251(b)(5) and the FCC's implementing rules, including
the FCC's definition of "local traffic.4 Thus, the only distinction between the two cases is that
the Fourth Circuit in Verizon Maryland (over a strong and compelling dissent) held that those
claims arise under and are governed by federal law, and the Tenth Circuit in Brooks Fiber held
that they arise under and are governed by state law.
AT&T therefore agrees with the Wyoming court's conclusion that the circumstances
present in Verizon Maryland are analogous to the circumstances present in AT&T's Wyoming
Verizon Maryland 377 F.3d at 363-64 ("the interconnection agreement defines 'Local Traffic' in a
manner that corresponds to the then-existing FCC regulations ; describing in detail how the
interconnection agreement tenus for reciprocal compensation tracked and incorporated the 1996 Act and
FCC rules on the matter); id.Brief for Appellants/Cross-Appellee Verizon Maryland, Inc., at 12 (4th Cir.
filed June 4, 2003) (in the interconnection agreements at issue "the parties explicitly sought to confonn
their (reciprocal compensation) obligations to those imposed by section 251(b)(5) of the (1996) Act, as
interpreted by the FCC" and "(t)he Agreement's definition of 'Local Traffic' also tracks then-existing
FCC regulations almost word for word") (Att. 2 hereto); Brooks Fiber 235 F.3d at 495 (FCC defined
local traffic as that which originates and tenninates in the same local calling area, and the parties
(a)ccordingly" defined it the same way in their agreement); id.Brief for Appellant Southwestern Bell
Telephone Company, at 9-, Case No. 99-5222 (lOth Cir., filed Dec. 29, 1999) ("The reciprocal
compensation language of the Agreement is strikingly similar to that used by the FCC in interpreting the
reciprocal compensation provisions of the Act. . . . It is clear from its tenus that the Agreement was
intended to mirror the reciprocal compensation requirements of the Act as interpreted by the FCC's
implementing rules.) (Att. 3 hereto).
AT&T's RESPONSE TO
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case. But those, of course, are the same circumstances present in Brooks Fiber. Accordingly,
because Brooks Fiber is controlling in the Tenth Circuit, it is that decision that the Wyoming
court (which sits in the Tenth Circuit) was duty bound to follow. See also Washington Order
, ~
53 n.23 (declining to follow majority in Verizon Maryland instead preferring the "careful
analysis" in the dissent in that case).
Finally, even if the Commission were to assume that the Wyoming decision were correct
all that the Wyoming court decided in denying AT&T's remand motion was that the court has
federal subject matter jurisdiction over the case. The court made no ruling of any kind on the
merits of the claims, including with respect to the applicable statute of limitations. And there is
no basis for inferring any predisposition from the court's actual ruling, for it is beyond dispute
that a federal cause of action is not a prerequisite to the assertion of federal jurisdiction. A case
arises under federal law if the "well-pleaded complaint establishes either that federal law creates
the cause of action or that the plaintiff s right to relief necessarily depends on resolution of a
substantial question of federal law." Wyoming Order at 5 (emphasis added) (quoting Empire
HealthChoice Assurance, Inc. v. McVeigh 126 S. Ct. 2121 , 2131 (2006)).In short, the
Wyoming court's decision to keep the case in federal court in no way answers the question
whether AT&T's claims arise under state or federal law or are governed by a state or a federal
statute of limitations.
The Iowa Utilities Board ("IUB decision on which Qwest relies is completely
inapposite. Qwest also contends that in another breach of contract suit by an AT&T affiliate
against Qwest, the IUB issued a "finding that AT&T's complaint arose under federal law " and
reject( ed)" AT&T's argument that disputes over the interpretation and enforcement of
5 AT&T is also asking the Wyoming court to reconsider its decision,
AT&T's RESPONSE TO
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interconnection agreements arise under state law. Qwest Notice Resp. at 7. That is absolutely
false. The IUB dismissed AT&T's contract and state statutory claims exclusively on the basis of
Iowa state law res judicata principles not on any federal statute of limitations or any
characterization of AT&T's claims as federal. Indeed, the IUB stressed that "(b)ecause it is
ruling on the basis of res judicata, the Board will not address the claims regarding the federal
statute of limitations(.)" IUB Order (Ex. 2 to Qwest's Notice Resp.) at 15. The IUB therefore
did not make any finding with regard to whether AT&T's claims were governed by a state or
federal statute of limitations, and its limited decision on res judicata - which Qwest has not
asserted here6 - has no bearing outside the IUB itself (where AT&T has sought
reconsideration).
Qwest s remaining claims are baseless. Qwest's final allegations fare no better.
Qwest first claims that "AT&T's complaint depends on and is replete with references to federal
law." Qwest Notice Resp. at 8. In truth, however, the references to federal law in AT&T's
Complaint are mere background describing interconnection agreements, and none are essential to
AT&T's contract claim. Qwest also contends that "AT&T has acknowledged repeatedly that
these claims arise under federal law.ld. That is completely untrue. AT&T demonstrated in its
6 Qwest's motion to dismiss does contain the tenn "res judicata" (at 2, 17-18), but only in connection with
Qwest's argument that a decision by the Oregon Public Utilities Commission has collateral estoppel effect
in Idaho. Qwest's motion appears to have (mistakenly) used res judicata as a synonym for collateral
estoppel. In any event, suffice it to say that this case presents a far different situation from the ruB
proceeding, where Qwest argued, separately from its collateral estoppel claim, that a specific prior
proceeding before the ruB had res judicata effect on AT&T's 2006 complaint at the ruB for breach of
contract.
7 Qwest also claims that "(0 Jther state commissions" have applied a two-year federal limitations period to
claims under interconnection agreements. Qwest Notice Resp. at 6. Qwest relies on decisions from
Texas and Oregon, but fails to mention that the Texas decision is contrary to the law ofthe Fifth Circuit
Southwestern Bell 208 F.3d at 485 , or that the Oregon decision is contrary to the law of the Ninth Circuit
Pacific Bell 325 F.3d at 1128. (Texas is in the Fifth Circuit and Oregon is in the Ninth.
AT&T's RESPONSE TO
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response to Qwest's motion to dismiss that its claim arises under state law , and Qwest's claim
rests on a flat misrepresentation of AT&T's Complaint. Qwest cites paragraphs 1 and 4 of the
Complaint as the basis for AT&T's alleged admission (Qwest Notice Resp. at nn. 27-28), but
paragraph 4 plainly states that Qwest's conduct "constituted a breach of its interconnection
agreement with AT&T" and the lone count of AT&T's Complaint is titled "Breach of Contract."
Thus, Qwest's statement that AT&T's claim is for "deni(al)" of AT&T's "federal 'opt-' rights
under Section 252(i)" (Qwest Notice Resp. at 9) is incorrect. AT&T's claim is for breach of
contract.
What is the effect and meaning of the Governing Law provision (Section 21.1) of the
Interconnection Agreement with respect to the Complaint?
Section 21.1 and Section 27.confirm that state law governs the interpretation and
enforcement of interconnection agreements, and nothing in Section 21.supports the application
of a federal statute of limitations to breach of contract disputes. Section 21.1 of the parties
interconnection agreement states that "(t)his 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 aspect of this Agreement, in which case the domestic laws of the State of Idaho. . .
shall govern.This provision has no effect on the discussion above showing that AT&T's
contract claim arises under state law. Where parties have incorporated or tracked aspects of the
1996 Act in their interconnection agreement, it is not surprising that one would consult the 1996
Act in analyzing a dispute over those contract terms. That, however, does not change the fact
that the breach of contract dispute itself is a matter for state law, just like any other breach of
contract case, and is governed by the applicable state statute of limitations. See Washington
Order, ~~ 67 73-74. As the Eighth Circuit put it, even when "federal law plays a large role in (a)
AT&T's RESPONSE TO
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dispute" over an interconnection agreement
, "
the ultimate issue" of how to interpret and enforce
the agreement "is a state law issue.Connect Comms.467 F.3d at 709. Section 21.1 similarly
recognizes that state law has a key role in enforcing interconnection agreements. Section 27.
reinforces this by stating that, in the specific context of a dispute under the interconnection
agreement
, "
(t)he laws of Idaho shall govern the construction and interpretation of this
Agreement. "
Qwest's contention that Section 21.1 "reflects Qwest's position" is baseless. Qwest
Notice Resp. at 11. To begin with, the "Act" referred to in Section 21.1 is the 1996 Act and the
FCC's rules and regulations" are those implementing the 1996 Act. The statute of limitations
that Qwest relies on, however, is 47 U.C. ~ 415 , which is part of the Communications Act of
1934, not the 1996 Act. Accordingly, Section 21.1 in no way supports the application of 47
C. ~ 415, since the parties never agreed to be governed by the 1934 Act. Furthermore
Qwest's assertion that "AT&T's claims in this case do not require the Commission to interpret or
enforce any provision of the interconnection agreements" is nonsensical. ld. AT &T' s only
claim in this case is for breach of contract. That claim rests on Section 2.1 of the agreement
(Complaint ~ 16) and on the implied covenants of good faith and fair dealing that arise in every
contract under Idaho law. Complaint ~~ 20-22. This claim obviously calls for the interpretation
and enforcement of the agreement and "requires the application of state law." Qwest Notice
Resp. at 11. Indeed, even if one improperly read Section 21.1 as narrowly as Qwest does, this
case squarely presents a dispute over an "aspect of the Agreement" - whether Qwest breached
Section 2.1 and the implied covenants of good faith and fair dealing - as to which "state law. . .
control(s)." Agreement, Section 21.1.
AT&T's RESPONSE TO
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What actions have been taken by either party to resolve this dispute under Section
27 of the Interconnection Agreement? What effect and meaning does Section 27.
have with respect to the present dispute? What effect and meaning does Section
27.2 of the Interconnection Agreement have with respect to the present dispute?
Section 27 does not impose any requirement to negotiate or arbitrate over contract
disputes, nor were such paths likely to lead to an amicable resolution. AT&T therefore exercised
its option to take its complaint directly to the Commission. AT&T agrees with Qwest that
Section 27 and its subsections have no bearing here, aside from Section 27.1 confirming the
parties' concurrence that "(t)he laws ofIdaho shall govern the construction and interpretation of
this Agreement." The dispute resolution options discussed in Sections 27.1 and 27.2 are not
mandatory or exclusive. Rather, they merely state that the parties "may" seek to resolve contract
disputes through arbitration under the rules of the American Arbitration Association (Section
27.1) or at the Commission (Section 27.2). AT&T did not elect to pursue either path with
Qwest, nor was it required to do so. Rather, in light of AT&T's past experience with Qwest on
various issues and AT&T's affiliates ' experience with Qwest on issues regarding the secret
agreements in other states, AT&T decided that such a path would be futile and lead only to
delay. Instead, AT&T elected, as is its right under the agreement, to take this straightforward
breach of contract case directly to the Commission.
What is the effect, if any, of Idaho Code ~ 61-642 on AT&T's claim in this matter?
Qwest states that Idaho Code ~ 61-642 "is not applicable to this case" because it deals
with "claims by retail customers" rather than by wholesale customers like AT&T. Qwest Notice
Resp. at 14-15. Although it is not clear from the face of the provision that the Section s reach is
as limited as Qwest suggests, there is no need to debate the point. AT&T has elected to avoid
any such debate and to pursue instead a claim for breach of its interconnection agreements
where both Qwest's liability and AT&T's right to recover are clear.
AT&T's RESPONSE TO
COMMISSION'S NOTICE
OF ORAL ARGUMENT - 16
How does Idaho Code ~ 62-605(b) confer either jurisdiction or venue on this
Commission?
AT&T would like to clarify that the citation to Section 62-605(b) in its Complaint was in
error. The citation should have been to Section 62-605(5)(b). That provision confers both
jurisdiction and venue on this Commission.
To understand the full meaning of Section 62-605(5)(b), one must read it in conjunction
with Section 62-605(5)(a), which specifically confers jurisdiction on this Commission to
continue to regulate all telecommunication companies that were subject to Title 61 ofthe Idaho
Code as of July 1 , 1988
, "
to the extent necessary to implement the federal communications act of
1996, in accordance with section 62-615 , Idaho Code." I.C. ~ 62-605(5)(a). Section 62-615 , in
turn, gives the Commission "full power and authority to implement the federal
telecommunications act of 1996. . . ." I.C. ~ 62-615(1).
It is well settled that, pursuant to Section 252 of the 1996 Act, this Commission, like all
state commissions that have chosen to participate in the implementation of the local competition
provisions of the 1996 Act, has the power and authority to interpret and enforce privately
negotiated interconnection agreements previously approved by the Commission (which of course
would include the agreements at issue here). Brooks Fiber 235 F.3d at 496-97 (state
commissions have "authority to interpret and enforce specific provisions contained in
(interconnection) agreements" they have approved); Southwestern Bell 208 F.3d at 479 ("(T)he
Act's grant to the state commissions of plenary authority to approve or disapprove these
interconnection agreements necessarily carries with it the authority to interpret and enforce the
provisions of agreements that state commissions have approved. "
);
see also Pacific Bell 325
3d at 1128 (noting state commissions
' "
weighty responsibilities of contract interpretation under
AT&T's RESPONSE TO
COMMISSION'S NOTICE
OF ORAL ARGUMENT - 17
~ 252"). And Idaho Code Section 62-615(l) authorizes the Commission, a creature ofIdaho
statutory law, to exercise that "power and authority." Accordingly, it is beyond dispute that the
Commission possesses jurisdiction to interpret and enforce the privately negotiated
interconnection agreements at issue here and to construe and apply the state law of Idaho in
doing so.
Qwest engages in an extended discussion which appears to be directed at supporting the
proposition that the Commission lacks the power to award the money damages that AT&T seeks.
Even if the Commission ultimately determines that to be the case, it remains indisputably true, as
demonstrated above, that the Commission has the authority to construe and interpret the
agreements at issue, using state law contract principles, and issue a declaration of the
agreements' meaning and the parties ' rights and obligations thereunder.
8 In the event that the Commission were to determine that it lacks the power to award damages, AT&T could enforce
the declaration in state court.
AT&T's RESPONSE TO
COMMISSION'S NOTICE
OF ORAL ARGUMENT - 18
CONCLUSION
For the reasons stated herein and in AT&T's prior pleadings , the Commission should
deny Qwest's motion to dismiss.
DATED this 10th day of January, 2007.
RICHARDSON & O'LEARY, P.L.L.C.
Theo re A. Livingston
De is G. Friedman
, BROWN, ROWE & MAW LLP
Dan Foley
General Attorney & Asst. General Counsel
AT&T WEST
Attorneys for AT&T COMMUNICATIONS OF
THE MOUNTAIN STATES, INC.
AT&T's RESPONSE TO
COMMISSION'S NOTICE
OF ORAL ARGUMENT - 19
CERTIFICATE OF SERVICE
I HEREBY CERTIFY that on the 10th day of January, 2007 a true and correct copy of
the within and foregoing AT&T'S RESPONSE TO COMMISSION'S NOTICE OF ORAL
ARGUMENT was filed with the Idaho Public Utilities Commission and parties as indicated
below:
Ms. Jean Jewell
Commission Secretary
Idaho Public Utilities Commission
POBox 83720
Boise ID 83720-0074
X- Hand Delivery
- U.S. Mail, postage pre-paid
Facsimile
Electronic Mail
Mary S. Hobson
999 Main, Suite 1103
Boise, ID 83702
E-mail: marv.hobsonCq),qwest.com
- Hand Delivery
S. Mail, postage pre-paid
Facsimile
K.. Electronic Mail
Douglas R.M. Nazarian
Hogan & Hartson
111 South Calvert St
Baltimore MD 21202
E-mail: drrnnazarianCq),hhlaw.com
- Hand Delivery
x..U.S. Mail, postage pre-paid
Facsimile
K.. Electronic Mail
Certificate of Service - 1
Attachment 1
(Service Date December 22, 2006)
BEFORE THE WASHINGTON STATE
UTILITIES AND TRANSPORTATION COMMISSION
AT&T COMMUNICATIONS OF TIlE DOCKET UT -051682
PACIFIC NORTHWEST, INc., TCG
SEATTLE, AND TCG OREGON;
AND TIME WARNER TELECOM OF ORDER 06
WASHINGTON, LLC,
Complainants
ORDER AFFIRMING
INTERLOCUTORY ORDER;
ALLOWING AMENDMENT OF
QWEST CORPORATION COMPLAINT; DENYING
MOTION FOR SUMMARY
Respondent.DETERMINATION
, . . . , , .. , , , . , , . , . , . . . . . . . , . . , . ..
Synopsis: This order reaffirms an interlocutory order allowing a complaint to go
forward It accepts Qwest's and AT&T ') requested review of the interlocutory
order, rejects the parties ' arguments opposing the order, and allows amendment of
the complaint to allege breach of complainants ' contracts with Qwest as the basis of
their cause of action.
INTRODUCTION
Nature of Proceeding. This docket involves a complaint filed by competitive local
exchange carriers AT&T Communications' of the Pacific Northwest , Inc" TCG
Seattle and TCG Oregon (collectively, AT&T) and Time Warner Telecom of
Washington, LLC (Time Warner or TWTC) against Qwest Corporation (Qwest) , The
complaint alleges that Qwest charged the complainants more for certain facilities and
services than Qwest charged other competitive local exchange caITiers (CLECs) under
unfiled agreements with them, that this practice violated federal and state laws and
that complainants are entitled to compensation for the difference between the actual
charges and the lower, unfiled rates,
Procedural history. Qwest moved for summary detennination and dismissal of the
complaint under WAC 480-07-380(1) and (2),2 arguing that the pertinent statute of
Time Warner Telecom of Washington is not participating in the motion to amend the complaint, but
otherwise remains a party, For convenience, as AT&T is participating in all argwnents, we will use the
term AT&T to include all of the allied parties that are involved in the issue under discussion,1 The initial order treated the motion as one for swnmary determination, rather than dismissal. The motion
does not seek detennination of any substantive issues in the complaint, but instead seeks dismissal based on
DOCKET ill -051682
ORDER 06
PAGE 2
limitations would operate to bar the complaint. Complainants opposed the motion.
The initial order proposed to grant the motion and dismiss the complaint, finding that
the complaint accrued on June 8, 2004, and that the six-month limitation period of
RCW 80.04.240 applied to bar the complaint.
Qwest and AT&T each challenged portions of the initial order. On review, we
entered an interlocutory order modifying the initial order, Our order found that a
complaint for breach of contract accrued on July 15, 2002, but that a six-year statute
of limitations (RCW 4,16.040(1)) applies, and the action for breach survives. The
order authorized AT&T to modify the complaint to allege breach of contract.
Both Qwest and AT&T now challenge the interlocutory order, and each answers in
support of the order against the other s challenge. AT&T and TCG seek to modify
the complaint, as contemplated in the interlocutory order. Qwest again moves for
summary detennination and dismissal of the complaint.
Appearances. Gregory 1. Kopta, attorney, Seattle, Washington, represents
complainants AT&T and Time Warner. Lisa A. Anderl and Adam Sherr, attorneys
Seattle, Washington, represent Qwest.
Decision on review. We deny the challenges to the interlocutory order, finding it
legally sound; we grant AT&T's request to modify the complaint; and we deny
Qwest's motion for summary detennination and dismissal.
ll.BACKGROUND3
The original complaint seeks reimbursement for alleged Qwest overcharges, The
parties agree in most respects - for purposes of this motion - about the relevant facts
leading to the complaint, but disagree about the interpretation of some of those facts.
Under section 251 of the Telecommunications Act of 1996 4 competitive local
exchange carriers ("CLECs " such as the complainants) may enter interconnection
agreements with incumbent local exchange companies ("ILECs" such as the
respondent) to receive services from the incumbents that enable them to serve their
own customers, Other competitive carriers in similar situations may "opt into" terms
of filed, approved agreements.
complainants' asserted procedural failure to file within the statutory time frame, The intention of the
motion is clear, iITespective of the label applied to it.3 The initial and interlocutory orders contain a more comprehensive explication of relevant facts. We here
recite only the necessary infonnation for lU1derstanding of this order, in context.4 The Telecommunications Act of 1996 is referred to in this order, for ease in reference, as "the Telecom
Act"
DOCKET UT-051682
ORDER 06
PAGE 3
Qwest failed to file with the Commission certain agreements between Qwest and
Eschelon Telecom (Eschelon) and between Qwest and McLeodUSA
Telecommunications Services, Inc, (McLeodUSA). Among other tenus, these
agreements granted the contracting CLECs a 10% discount on certain services. These
agreements were not initially filed and were not disclosed to other companies who
might have received similar services under agreements entitling them to the same
rate,
In March, 2002, Minnesota regulators filed an administrative complaint against Qwest
regarding unfiled agreements in that state,5 In May, 2002, AT&T brought the
Minnesota proceeding to this Commission s attention in Qwest's then-pending
request to provide long distance service under 47 US,C. 271 (271 proceeding).6 The
Commission declined to consider the unfiled agreements allegations in the 271
proceeding, both in the final order and in an order entered July 15 2002, deferring the
issue to some indefinite later time.
Qwest "willfully and intentionally violated" both state and federal law "by not filing,
in a timely manner, its transactions with Eschelon and McLeodUSA relating to rates
and discounts off of rates for intrastate wholesale services.,,8 Qwest accepted
responsibility for the omission and paid a penalty of $7,8 million for the violations,
AT&T and Time Warner filed this complaint on November 4 2005, Qwest moved
for summary detennination and dismissal, contending that the complaint is baITed by
the pertinent statute of limitations.
The initial order determined that complainants ' cause of action accrued on June 8
2004, when the Commission Staff served an amended Commission complaint in the
unfiled Washington interconnection agreements proceeding. The initial order also
found applicable the six-month limitation period in RCW 80.04.220. Since the
complaint was not filed within that period, the initial order concluded that Qwest's
motion should be granted.
Both parties challenged the initial order. On review, the Commission ruled that the
initial order correctly found the six-month statute to apply to the cause of action
pleaded, and affinned the initial order s use of the "discovery rule" to find the accrual
date.
In the A/atter a/the Complaint a/the Afinnesota Department a/Commerce Against Qwest Corporation
Regarding U/ljiled Agreements Docket No, P-421 /C-02-197,
In re Investigation into Qwest Compliance with Section 271 (C), Docket UT -003022, This proceeding
commenced on March 30 2000,7 Docket UT -003022, 40th Supp. Order, ~ 7 (July 15, 2002),
IVUTC v. Advanced Telecom Group. et al.Docket No, 01'033011, Order No, 21 (Feb, 28 2005),
!d.
DOCKET UT -051682
ORDER 06
PAGE 4
The Commission disagreed with the initial order as to the point of accrual. The
Commission, however, found that the complainants' inquiry accrued on entry of the
Commission order in July, 2002 that declined to pursue the issue of hidden
agreements in the 271 docket. At that point, the order noted, no definite agency
action was planned, the complainants were aware of the existence of the Minnesota
agreements and the possibility of secret Washington agreements (a claim that they
brought to the Commission), and are charged with knowledge that a statute of
limitations as short as six months could be running.
The order on review reversed the initial order s decision that Washington s six-year
statute would not apply to a claim for breach of the interconnection agreement. We
found that the contract theory was viable, that the accrual date fell within the state
six-year statute oflimitations, for actions on written contracts that the complainants
could amend the complaint and that the matter could proceed,
Both parties seek interlocutory review. Qwest challenges consideration and
acceptance of the breach of contract cause of action; AT&T challenges the order
acceptance of the proposed accrual date, AT&T also petitions to amend the
complaint to allege breach of contract under state law as a basis for the action, and
Qwest again moves for summary detennination.
II.DISCUSSION AND ANALYSIS
When did complainants' cause of action accrue?
The responsibility to use reasonable diligence to discover facts leading to injury is
called the "discovery rule." The parties agree to application of the "discovery rule" to
detennine the accrual date of AT&T's cause of action. A person who has notice of
facts sufficient to prompt a person of reasonable prudence to inquire is deemed to
have notice of all the facts that a reasonable inquiry would disclose. The parties do
disagree about when to find accrual on the facts presented,
The interlocutory order detennined that the cause of action accrued on July 15 2002.
That was when the Commission entered the 40th Supplemental Order in the 271
docket, UT -003022, reaffinning a decision that the Commission would not explore
the issue of un filed agreements at all in that docket. The order did not establish a
docket or process to follow up on the issues, and it committed only to the imposition
of penalties as warranted. 10
10 "If after considering a complaint by a third-party or upon the Commission s own motion concerning
these agreements, the Commission detennines that Qwest has violated federal or state law, then the
Commission can and \vill impose appropriate penalties,Paragraph -loth Supplemental Order, UT-
003022.
DOCKET UT-051682
ORDER 06
PAGE 5
Did the Commission err in making any factual determination in an order
on summary determination?
AT&T argues that the interlocutory order was wrong to make any factual
detenninations about accrual, because the initial and interlocutory orders were styled
as orders on summary detennination, It argues that it is improper to resolve factual
matters in such a proceeding, It points out that in the order the Commission resolved
the disagreed fact, date of accrual. 11 Qwest responds that the order correctly found
the proper accrual date.
We think that AT&T too restrictively views the administrative process. It is true that
the parties, the administrative law judge (ALI) and the Commission s order used the
tenn "summary detennination " although WAC 480-07-38012 states that such a
proceeding is characterized by a lack of factual disputes. The name applied to a
process should not exclude a reasonable detennination of matters offered by the
parties for resolution, as it does not affect the parties' right to a considered decision
on matters the parties brought forward,
This is particularly true in an administrative hearing process where the "trier of fact
and "decider of law" are one and the same and sufficient evidence is already in the
record. In the context of this case, a further fact-finding hearing is unnecessary and
inefficient.
Moreover, AT&T and Qwest each presented factual assertions inconsistent from the
assertions of the other, and all parties asked both the administrative law judge and the
Commission to resolve the disputed facts, The result is a waiver of any error
associated with labeling the motion as one for summary detennination.
We find AT&T's contention without merit.
11 Inter alia whether a plaintiff exercised reasonable diligence to discover a cause of action is a question of
fact (Virgil v, Spokane County, 42 Wn,2d 796, 714 P,2d 692 (1986)).12 WAC 480-07-380(2) Motion for summary determination. (a) General. A party may move for
summary determination of one or more issues if the pleadings filed in the proceeding, together with any
properly admissible evidentiary support (e,g" affidavits, fact stipulations, matters of which official notice
may be taken), show that there is no genuine issue as to any material fact and that the moving party is
entitled to judgment as a matter of law. '" '" "'
Compare WAC 480-07-380(1), regarding motions for dismissal, which directs that the matter be
considered as summary detennination if a party presents factual material in support of the motion,
13 See WAC 480-07 -395(4), noting the Conunlssion s policy of liberal construction to disregard errors not
affecting the substantial rights of the parties-
DOCKET UT -051682
ORDER06
PAGE 6
Was it wrong to make a factual determination on an assertedly-
inadequate record?
AT&T also contends that the Commission erred in making factual detenninations on
an inadequate record. AT&T argues that it had no opportunity to present witnesses or
to cross-examine others ' witnesses on the topic of accrual.
Each party had the opportunity to present any written information and could have
requested the opportunity to make an oral presentation or reserve the issue until trial
and call witnesses. The parties could have objected to the presentations of the other
party or to the process implemented by the administrative law judge, but did not.
Instead, both parties repeatedly asked her for a decision on contested matters and
affinnatively agreed with the process being used. Although they disagreed with her
decision, they made no objection to process at the review level. They obtained a
decision on the issues they raised, based on the paper record that was totally under
their control, either by presentation or by right to object. Preparing and accepting the
process, the parties waived objections to findings of fact or mixed findings of fact and
law that were inherent in their presentations. We find this contention also without
merit.
Is the accrual date immaterial and therefore inappropriate for resolution?
AT&T contends that because the final order finds applicable a statutory limitation
period that includes the asserted accrual date, the accrual date thus becomes
immaterial and should not be the subject of a finding or conclusion.
It bases its argument on RCW 34.05.461(3), which requires initial and final orders to
explain the reasoning for resolving certain matters:
(3) Initial and final orders shall include a statement of
findings and conclusions, and the reasons and basis
therefor, on all the material issues of fact, law, or
discretion presented on the record
, . . ,
(Emphasis
added)
AT&T's narrow view of materiality is inappropriate in application to administrative
proceedings.
Material" in this context may be defined as "both relevant and consequential "14 or
Of such a nature that knowledge of the item would affect a person s decision-making
process; significant; essential",15
14 American Heritage Dictionary of the English Language, Third Edition (Houghton Mifflin Co" 1996
page 1109),
DOCKET UT -051682
ORDER 06
PAGE 7
The parties argued strenuously before the administrative law judge and the
Commission that the accrual date was material, by urging the adoption of their own
proposal and the rejection of their opponent's proposal. The accrual date is material
to determining whether a cause of action remains, under any detennination of facts
and law. That all proposed accrual dates occur within a six-year limitation period
does not lessen need to resolve matters material to each party s case, nor does it
lessen the legal need to detennine that the actual accrual date occurred at a point
within an appropriate limitation period,
Moreover, the parties remain in disagreement about factual and legal issues, and if the
matter is appealed, the accrual date may become crucial to the final result. The
statute requires a detennination of the accrual date, which is relevant and
consequential.
We reject this contention,
Is the accrual date in the interlocutory order correct?
Finally, AT&T challenges the selected accrual date as improperly early in the process,
It argues that the initial order was correct, in that only after release in Washington in
the Staff amendment to the Washington complaint were the documents in the public
domain and only then did complainants know of their injury. Qwest responds that the
accrual date is too late, and should be set at the earlier point when Minnesota
regulators first complained against Qwest for failure to file the agreements.
We reject these claims.
The discovery rule is limited to claims in which the plaintiffs could not have
immediately known of their injuries due to such factors as concealment by the
defendant 16 as Qwest admittedly did. One who has notice of facts sufficient to
prompt a person of reasonable prudence to inquire is deemed to have notice of all the
facts that a reasonable inquiry would disclose.
We found that the correct date was July 15 2002, when the Commission rejected
urgings by AT&T and others to explore and resolve issues in the 271 docket that
related to unfiled agreements. At that point, AT&T knew that the Minnesota
agreements existed (including Minnesota counterparts of the relevant Washington
agreements) and knew that there were similar agreements in Washington (as they had
been filed in the 271 docket),
15 Garner, Bryan (Ed,
),
Black's Law Dictionary, Seventh Edition (West Group, 81. Paul, rvIN, 1999, page
991)
16 I~ re Estates of Hibbard 118 Wn,2d 737, 826 P,2d690 (1992),
l7 Enterprise Timber Inc, v. Washington Title Ins, Co.79 Wn,2d 479, 457 P,2d 600 (1969),
DOCKET UT -051682
ORDER 06
PAGE 8
AT&T's action in bringing the matter forward for a Commission investigation could
be construed as reasonable under the circumstances, not occasioning accrual of its
own cause,18 However, when the Commission entered the order declining to explore
the issue, a person of reasonable prudence would realize that a six-month limitations
period for possible damages might apply and that steps should be taken immediately
to pursue an individual remedy for possible financial hann, However, AT&T failed
to act in 2002. That was not reasonable under the circumstances, for purposes of
finding the accrual date,
-10 AT&T also challenges as without factual basis the statement in our interlocutory
order (assuming the contracts were in fact designated as confidential documents and
that AT&T did not have actual or constructive knowledge of their contents) that
refusal to release the relevant contracts at that point was not conceivable. That is not
a factual detennination but a legal detenni nati on.
-11 Given the existence of the Minnesota and Washington contracts and the questions
suITounding them, we believe it would be clear eITor in a properly pleaded docket for
the Commission to refuse enforcement of an adequately worded data request for a
copy of a properly described unfiled agreement. WAC 480-07-400(3) provides an
entitlement (subject to exceptions not here relevant) in an adjudicative proceeding to:
Infonnation that is relevant to the issues in the adjudicative
proceeding or that may lead to the production of i nfonnati on
that is relevant.
Similarly, in the context of this dispute, we believe that a court would be very
unlikely to bar the release ofinfonnation, even if confidential under RCW 80.04.095
when withholding the infonnation in question could lead to, rather than prevent
commercial hann.
In summary, we reject the parties' contentions that the interlocutory order erred in
detennining that the cause of action accrued on July 15, 2002,
What limitation period applies?
The initial order ruled at paragraphs 32-36 (incorrectly, we found in the interlocutory
order) that the six-year limitation statute for actions for breach of contract was
inapplicable because AT&T offered no legal support for its contention that the
Commission had jurisdiction to hear "a pure breach of contract action which would
18 As discovery is an affirmative defense, the party claiming the defense has the burden of proof. However
in a motion for summary determination, we resolve contested factual issues relating to the defense against
the movant, Qwest.
DOCKET UT-o51682
ORDER 06
PAGE 9
fall outside the scope of an interconnection agreement enforcement action," 19 The
interlocutory order determined that federal statutes relating to interconnection
agreements preserve independent breach of contract actions under state law.
Qwest vociferously challenges the Commission s decision to reverse the initial order
alleging several procedural and legal grounds in support of its arguments,
Did the interlocutory order err in authorizing amendment of the
complaint?
Qwest contends that the Commission prematurely authorized the amendment
inasmuch as AT&T had merely indicated a desire to offer the amendment in the
future if the Commission found against it on claims otherwise argued against the
initial order.
We reject the contention. The issue was adequately posed, the Commission has
plenary authority to review an initial order 2O the Commission corrected the initial
order s rejection of this theory, AT&T's offer to amend was clear in its pleadings, and
the parties have had ample opportunity to argue the point in response to the
interlocutory order. There is no harm to Qwest and no error.
Does the Commission have jurisdiction under state law to hear a dispute
involving breach of an interconnection agreement?
Qwest asserts that the Commission has no jurisdiction to hear and resolve disputes
involving breach of contract. We disagree,
A Washington statute, RCW 80,36,610 21 authorizes us to hear matters arising under
the Telecom Act, including the enforcement of interconnection agreements, While
the parties have not argued this matter extensively, we believe that this grant of
jurisdiction, coupled with the federal preservation of state remedies, allows us to
proceed.
\9 Order No., paragraph 36,20 RCW 34,05.464(4) reads in part, "The reviewing officer (here, the Commissioners) shall exercise all the
decision-making power that the reviewing officer would have had to decide and enter the fmal order had
the reviewing officer presided over the hearing, except to the extent that the issues subject to review are
limited by a provision of law or by the reviewing officer upon notice to all the parties,2\ RCW 80,36.610 provides, in part
, "
(1) The Commission is authorized to take actions, conduct
proceedings, and enter orders as pennitted or contemplated for a state commission under the federal
telecommunications act of 1996, P.L. 104-104 (110 Stat. 56), , , ,
DOCKET UT-051682
ORDER 06
PAGE 10
Does federal or state law determine principles relating to the
establishment and enforcement of interconnection agreements governing
intrastate services?
This is the principal issue presented for decision. We have found the parties' briefing
to be helpful and have considered numerous federal, state and commission decisions.
We recognize that the decisions reflect apparent and in some instances actual
differences in their conclusions, We determine that the Telecom Act in particular
sections 251 and 252, delegates to states the primary jurisdiction to hear and resolve
interconnection contract issues relating to intrastate services, according to state law,
Qwest argues that the dispute arises under and must be resolved according to federal
law, and therefore a two-year federal communications statute oflimitations must
apply, Qwest cites state commission decisions in Oregon and Minnesota, and federal
judicial decisions that federal law applies to resolve disputes.
AT&T, on the other hand, argues that the decision is proper, that the enforcement of
lCAs has been delegated to the states, and that federal Courts of Appeal decisions
support its position that state law - and thus the state statute of limitations - controls
on enforcement issues.
We have reviewed the cited decisions and find AT&T's analysis to be persuasive.
The Act requires state commissions to apply state law when resolving disputes about
interconnection agreements governing intrastate services,
Section 252(a)(1) of the Act speaks clearly to the matters at issue in providing that
parties may negotiate tenus of their interconnection agreements on a voluntary basis
without regard" to the requirements set forth in section 251,
AT&T argues that language in the complainants' agreements with Qwest give them
the right to the lowest prices at which Qwest contracts with other carriers for
substantially the same products and services as a matter of state contract law
irrespective of - that is
, "
without regard to" - whatever rights AT&T might have
under federal law,
22 The parties tacitly acknowledged this in earlier phases of the proceeding when they were arguing whether
RCW 80,04.220 or 80,04,230 would apply, not whether either was barred because offederal preemption,
See, Order 03 (initial order), paragraph 14, page 6.
23 See the careful analysis in Judge Niemeyer s dissenting opinion in VerizonMaryland v, Global Naps
377 F,3d 355, 369ff (2004).
24 See, AT&T Corp, v, Iowa Utils, Ed.525 US, 366 371-73 (1999); Verizon Maryland v, Pub, Servo
Comm 'n ofMd.535 US, 635 638 (2002)
DOCKET ur -051682
ORDER 06
PAGE 11
Supporting AT&T's argument , the Ninth Circuit has held:
(TJhe (interconnection) Agreements themselves and state law
principles govern the questions of interpretation of the contracts
and enforcement of their provisions.
Other courts are in accord.
Qwest argues strenuously to the contrary, It urges creatively that AT&T's cited
authority is distinguishable because the FCC in its 271 docket order found Qwest'
arguments "persuasive" that the specific contracts at issue here (but not those at issue
in the judicial decisions we cite) did not present ongoing issues that would cause the
agency to reject Qwest's bid to provide long distance service, We understand that
order to mean that the underlying behavior - hiding interconnection agreements -
was no longer of a continuing nature, not that all issues relating to prior misdeeds
were resolved as a matter of law. The FCC did not specifically address the question
we face here - potential remedies for violations of interconnection agreements.
Qwest argues that the Commission cannot consider the violations because the
agreements were filed more than four years ago, and the federal statute of limitations
has expired, That appears to be a bootstrap argument that does not address the courts
detenninations that state law applies. If state law applies, the federal statute of
limitations would not apply and the distinction makes no difference.
Qwest disputes the relevance of the Connect decision, arguing that here it has had no
obligation to have on file interconnection agreements that are terminated and not in
existence. Qwest states that this is not a matter where state law is necessary to
interpret" an interconnection agreement. Again, we find no relevance in the
argument. The relevant issue is whether or not state law applies to the resolution of
interconnection contract disputes, and we believe that it does.
Qwest disputes application of the decision in Connect because the Oregon
commission found that the CLECs' claims must be resolved under federal law. Here
however, we determine that the amended complaint presents an action on a contract
for perfonnance within the state, which is not a federal matter. 26 Qwest also urges
25 Pacific Bell v, Pac-West Telecomm, Inc.325 F,3d 1114, 1128 (9th Cir, 2003), Connect Communications
Corp. v, Southwestern Bell Tel. LP" 467 F.3d 703 2006 WL 3040611 (8th Cir. Oct. 27 2006),
Southwestern Bell Tel. Co. v. Brooks Fiber Comm/mications of Oklahoma, 1nc" 235 F,3d 493, 495, 499
(lOth Cir. 2000), Southwestern Bell Tel. Co. v. Public Utilities Comm , 208 F,3d 475 485 (5th Circuit
2003); Afichigan Bell Tel, Co, v. AfCIMetro Access Transmission servs., Inc., 323 F,3d 348 355-6 (6th Cir.
2003); Illinois Bell Tel. Co, v. Worldcom Technologies, Inc.179 F,3d 574 Oth Cir" 1999); Global NAPS
Inc" v. Verizon New England Inc.332 F, Supp,2d 341 360 (D. Mass" 2004),26 We acknowledge the decision of the Oregon Public Utilities Conunission accepting Qwest's views
AT&T, et al.. v. Qwest Corporation Order No, 06-230 (May 11 2006), but respectfully disagree with its
reasoning and decline to apply it to Washington intrastate issues of contract law.
DOCKET UT-051682
ORDER 06
PAGE 12
that the Connect decision s deference to a state law on interconnection contract
interpretation has no applicability to contract claims based on different
interconnection disputes. We believe that is a distinction without a difference,
Qwest's contention that the Telecom Act transfonns clearly state law issues relating
to negotiated provisions of interconnection contracts into federal issues is incorrect.
Even if an interconnection provision tracks or incorporates provisions of the Act or
FCC rules state law governs the interpretation and enforcement of the provision. .
In sum, we find the appropriate interpretation to be that state law, including state
statutes of limitation, apply to this dispute.
If interconnection agreement enforcement is a matter generally of state
law, should a federal statute of limitations nonetheless apply?
Qwest argues that a federal statute oflimitations should apply because complex issues
of responsibilities and rights under federal telecommunications statutes and rules will
apply to govern the result. AT&T responds that interconnection agreements are
contracts, and enforcement of intrastate contracts is subject to contractual principles
in the state in which they apply, AT&T notes that courts have affinned the
application of state law in other, similar proceedings.
We note that both parties argued for the application of state law (albeit different
provisions) at the outset of this dispute. Only now - unhappy with the outcome-
does Qwest argue that state law cannot or should not apply. Further, over the years
the parties have joined in many interconnection disputes before the Commission
where state law has been applied to decide the matters. No persuasive argument has
been advanced as to why the state statutes of limitations are somehow different.
The amended complaint involves fundamental issues of state, not federal, law
although the application of a federal law may have a role in resolving the issues. The
questions are whether the parties entered a contract governing intrastate services
whether the contract contained a specific tenn assuring the CLECs that Qwest would
offer it the best tenus given to other carriers, and whether Qwest failed to meet that
obligation.
We see no reason why the state statute of limitations would not likewise be the
controlling authority,
27 See the Brooks Fiber decision, above at footnote 25, where a disputed contract provision tracked FCC
regulations defming the requirements of Section 251 (b)(5) of the Act. The court concluded that "(tJhe
Agreement itself and state law principles govern " nonetheless, to the interpretation and enforcement of the
proVIsIOn,
DOCKET UT-051682
ORDER 06
PAGE 13
If interconnection agreement enforcement is subject to a federal
limitation period, should a two-year or a four-year statute apply?
Qwest argues that the Telecom Act's original 2-year limitation statute 28 Section 415
should apply to bar a lawsuit here. Qwest notes that the 1996 Telecom Act did not
amend the 1934 provision, and therefore the 2-year statute should control.
AT&T responds that even if the dispute is governed by federal law, or by a federal
statute of limitations, Section 415's limitation period does not apply to the 1996
Telecom Act, which did not specify a limitation period for its provisions, because the
latter is governed by a 1990 statute, Federal law (28 u.S,C. ~ 1658(a)) provides a
new limitations period for later laws: "Except as otherwise provided by law, a civil
action arising under an Act of Congress enacted after the date of the enactment of this
section may not be commenced later than 4 years after the cause of action accrues, ,,29
AT&T's argument is supported by several federal court decisions that the 1934 2-year
limitation statute does not apply to the 1996 Telecom Act amendments,30 Because
AT&T's complaint was filed within four years of the accrual date of July 15 2002, its
contract claim would be timely even it arose under federal law,
Should a more specific statute of limitations apply in lieu of a more
general statute?
Qwest urges, particularly under the specialized and complex law in question, that a
statute of limitations that specifically applies to that field of law should take
precedence over a general statute oflimitations.
As AT&T points out, there are two persuasive flaws that prevent application of this
principle in the manner Qwest suggests.
First, specificity is in the eye of the lawyer, In this application, the fundamental issue
is not the application of telecommunications law, but the application of the state
principles of contract law that apply specifically to issues of this type, We find in this
instance that the state statute is the more specific.
28 The original 1934 statute was enacted as a one-year limitation, Congress extended the period to two
years in 1974,
29 Verizon New England, lnc, v. New Hampshire Public Uti/s. Comm ', 2005 WL 1984452, *5 n,5 (D.N,
2005), citingPepepscot Indus. Park, lnc, v, Maine Cent, R.R. Co" 215 F,3d 195 203 n,5 (lst Cir, 2000),
30 City a/Rancho Palos Verdes v. Abrams 544 US, 113 , 124 n,5 (2005; spire Comms. Co.. inc. v. Baca
269 F, Supp, 2d 1310, 1320 (D.N,M, 2003) ("Because the Telecommunications Act was enacted after
December 1 , 1990, the four-year statute of limitations applies to the claims WIder the federal
Telecommunications Act
);
Verizon Maryland Inc. v. RCN Telecom Servs" Inc.232 F, Supp, 2d 539, 552-
54 (D. Md, 2002); Bell Atlantic-Pennsylvania, lnc, v, Pennsylvania Pub. Uti/s, Comm 107 F, Supp, 2d
653 668 (E,D. Pa, 2000); MCI Telecomms, Corp. v, Illinois Bell Tel, Co" 1998 WL 156674, *3-*5 (ND,
Ill. 1998),
DOCKET UT -051682
ORDER 06
PAGE 14
7-1 A second and equally valid reason to reject Qwest's argument is that - as we
detennined above - the federal statute is no more applicable here than an Arkansas
rule or a Wyoming statute even one specifically governing remedies for breaches of
written interconnection contracts in those jurisdictions. Under its delegated authority,
Washington State law applies as a matter of law, not the law of another jurisdiction,
III.Conclusion
The Commission rejects both parties' challenges to the interlocutory order and directs
the administrative law judge to convene a preheaTing conference for the purpose of
detennining a schedule to proceed on the amended complaint.
IV.ORDER
On review of the interlocutory order, the Commission denies challenges to the order
and the renewed motion for summary detennination, The Commission authorizes
amendment of the complaint.
Dated at Olympia, Washington, and effective December 21 2006.
WASHINGTON UTll."ITIES AND TRANSPORT AnON COMMISSION
MARK H. SIDRAN, Chainnan
PATRICK 1. OSHIE, Commissioner
PHll..IP B. JONES, Commissioner
NOTICE TO PARTIES: This is an order on review of an Interlocutory Order of
the Commission that governs the remainder of the proceeding. Further
administrative review of this order is not available.
DOCKET lIT -051682
ORDER 06
PAGE 15
GLOSSARY
TERM DESCRlPl10N
CLEC Competitive local exchange company, Not an ILEC, and generally
subject to limited regulation.
ILEC Incumbent local exchange company; a company in operation at the
time the Act was enacted (Au~st 1996).
Interconnection Connection between facilities or equipment of a telecommunicahons
carrier with a local exchange carrier s network under Section
251(c)(2).
Interconnection An agreement between an !LEC and requesting telecommunications
Agreement carrier (which may be a CLEC) addressing tenus, conditions and
pnces for interconnection, services or network elements pursuant to
Section 251.
Section 25l(c)(3)The section of the Act that requires ILECs to provide unbundled
access to network elements, or UNEs.
Section 271 The portion of the Act under which Bell Operating Companies, or
BOCs, could obtain authority from the FCC to provide long distance
service in addition to service within their in-state service areas.
Telecom Act or "Act Telecommunications Act of 1996, 110 Stat. 56, Public Law 104-104
Feb. 8, 1996.
Nos. 03-1448 & 03-1449
IN THE UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
VERIZON MARYLAND INC..
P laintiff-Appellant/Cross- Appellee
MCIMETRO ACCESS TRANSMISSION SERVICES LLC, et aI.,
Defendants-Appellees
THE PUBLIC SERVICE COMMISSION OF MARYLAND, et al.,
Del en don t3-Appel lees/Cross. Appe I/an Is
and .
UNITED STATES OF AMERICA,
Intervenor IDefen cUlnt A ppe 11 ee.
On Appeal from the United States District Court
for the District of Maryland, Northern Division
Hon. Frederic N. SmaIkin
BRIEF FOR APPELLANT/CROSS-APPELLEE
VERIZON MARYLAND INC.
DA YID A. Hn..L
VICE PRESIDENT AND GENERAL COUNSEL
VERIZON MARYLAND INC.
One East Pratt Street
Baltimore, MD 21202
(410) 393- 7725
MARK L. EVANS
SEAN A. LEV
AARON M. PANNER
KELLOGG, HUBE~ HANSEN,
TODD & EVANS. P.LLC.
1615 M Street, N., Suite 400
Washington, D.C. 20036-3209
[phone]
June 4, 2003
JAMES P. GARLAND
MILES & STOCKBRIDGE. P.
lO Light Street
Baltimore, MD 21202
[phone]
Counsel for Verizon Maryland Inc.
Attachment 2
FILED
,. L
...:.:;
. 4-. .. '1;"1-...OJ
us. Court uf Ap
Fou.'1b CIrcuIt
TABLE OF CONTENTS
Page
TABLE OF AUTHORI'I'IES .....
..., ................... ..................... ....... ..........
""'" .... .................. .......... iii
JtJRISDICTION . .......................................... """""'"
...... .............. .......................... """""'" ....... ....
ISSUES PRESENTED FOR REVIEW ........................................ ...................................................
STATEMENT OF TIlE CASE...... ..................... """ ............................
............ ""'" ............ ........ ....
ST A TE1'vIENT OF FACTS ............
"""""""""""'" """""""""""" ...... ........ ..................... ..............
Interconnection Agreements Under the 1996 Act ...................................................
Reciprocal Compensation and the IntCInct ..................
..................... ....... .... ............
The Dispute Below........................... ...........................
............. ........... ..................
1 0
The Interconnection Agreement ......................
....... ...................................
1 0
Proceedings Bcfore the PSC ............................ ........................... """'" ......
Prior Developments in This Litigation ..........................
......................... ............. ..
The Decisions Below........................ ............................. ..............
...................... ....
The November 19 Order
....... .............. ...... """ ............... ....................... .....
1 5
The March 5 Order........ ........
.. """ """""""""""""""'" ..... .......... .............
SUMMARY OF ARGUMENT .............................................. .................
.......... ....... .... .................
STANDARD OF REVIEW.. ........................... ................ ""'" ....................... U.. no....." ...., ............ .
ARGUMENT .........
"" """"""" .......................... ............... """""""""""""""'" .................... ....... .
VERIZON'S CLAIM: THAT THE PSC MISINTERPRETED ITS
INTERCONNECTION AGREEMENT ARISES UNDER FEDERAL
LAW.... ............. ......
...... """"""" """"""'" """""" ........... ......... ""'" ........... """'" .
A State Commission s Authority To Interpret Interconnection
Agreements Derives from the Act; Accordingly, an Action Seeking
Rcview of Such a Determination Arises Under Federal Law....................
II.
Authority To Approve or Reject Interconnection Agreements
Carnes with It the Authority To InteIpret the Terms of Such
Agreements ....................... ......................... ........ ......................... ...
Because the PSC's Authority To Interpret Interconnection
Agreements Is "Under Section 252'" Verizon ' s Claim That
It Misinterpreted the IntercoIU1ection Agreement Necessarily
Arises Under Federal Law.............................................................32 '
Obligations Imposed by Intercolll1ection Agreements Axe FederalLaw Obligations, and the Misinterpretation of Interconnection
Agreements Implicates Issues of Federal Law..........................................41
A Federal District Court Has Jurisdiction To Detennine
Whether the PSC's Interpretation Violates Verizon
Federally Protected Right To Enter into "Binding
Agreement( 5 1"
................. ..... .................. .... ............. ................. ......
Any Claim Based on a 1996 Act Interconnection Agreement
Arises Under Federal Law.............................................................
TIIE PSC LACKED AUTIIORITY TO IMPOSE RECIPROCAL
COMPENSATION OBLIGA TrONS FOR ISP-BOUND TRAFFIC
UNDER STATE LAW.................... ""'" ...........................
........................... .........
CONCLUSION...... ............ """""'"
................................ ................
.....J.....
.............. ........ ..............
REQlJEST FOR ORAL ARGlJI\.1ENl'
.................... ...... .............. ............................................... ..
ADDENDUM
. . . (and ignoring) intermediate points of switching or exchanges between
carriers.Starpower Order 1 7 FCC Rcd at 6884, 1 27. This language
. unambiguously excludes ISP-bound traffic, which is jurisdictionalIy interstate. Id.
, at 6886, , 30
~n derIDing their reciprocal compensation obligations, the parties explicitly
sought to confonn their obligations to those imposed by section 251 (b )(5) of the
Act, as interpreted by the FCC. Section 1.61 of the Agreement provides that
Reciprocal Compensation t is As Described in the Act and refers to the payment
arrangements that recover costs incurred for the transport and tennination ofLoea!
Traffic origjnating on one Party's network and terminating on the other Party'
network." Agreement ~ 1.61 (JA 73) (emphasis added). "As Described in the
Act" is itself defined in the Agreement to mean "as described in or required by the
Act and as from time to time interpreted in the duly authorized rules and
regulations of the FCC or the
(PSCJ," Id. ~ 1.7 (JA 67). The Agreement'
definition of "Local Traffic" also tracks then-existing FCC regulations almost
word for word. The FCC has held that this language "reveal(s) an intent to track
the (FCC's) interpretation of the scope of section 25 I (b)(5), whatever the
(FCC) detennines is compensable under section 25 I (bX5) will be what is
compensable under the agreements.Starpower Order 17 FCC Rcd at 6887, ~ 31.
This language provides an additional and independent basis for the conclusion th~t
the Agreement does not require payment of reciprocal compensation on ISP-bound
traffic: "the (FCC) consistently has concluded that ISP-bound traffic does not fan
within the scope of traffic compensable under section 251(b)(S).ld.
Proceedings Before the PSC: In May 1997 - well before the' FCC
had addressed the issue of reciprocal compensation for Internet-bound traffic-
MFS flIed a complaint with the PSC alleging that Verizon s refusal to pay
reciprocal compensation ()n Internet-bound traffic violated the 1996 Act and the
parties ' interconnection agreement. In September 1997 , the PSC ruled that
Intemet-boW1d calls are local and therefore subject to reciprocal compensation.
JA 79. The PSC promised to revisit its determination, however, in the event that
subsequent FCC rulings had a bearing on the subject. Id.
In February 1999, the FCC expressly ruled that Internet-bound cans are
non-local calls that do not qualify for reciprocal compensation under section
25 1 (b)(5). See Declaratory Ruling, Implementation of the Local Competition
Provisions in the Telecommunications Act of 1996, 14 FCC Rcd 3689 (1999) lSP
Declaratory Ruling J. Immediately thereafter, Verizon asked the PSC to revise its
own prior determination in light of the FCC's controUing interpretation of federal
law.
3 This ruling was vacated by the D.
C. Circuit in Bell Atlantic Telephone Coso v.FCC 206 F.3d 1 (D.C. Cir. 2000). The ISP Remand Order reaffirmed the FCC"'
-' .
or conc:-:s:on.
Attachment 3
Case :--.Io, 99-52::
fJo'fPfI
El, ~J F. D
- t 01:rr
~"rh i~..U! I\r~..l'it
J4N 1 r, r,,
.PA',i'~l('1( lfjEut;.Jl~.R
SOUTHWES1ERN BELL TELEPHONE COlvlP.-'\NY
Appellant,
VS.
BROOKS FIBER COMMUNICATIONS OF OKLAHOMA. INC., BROOKS FillER
COMl'vIUNICATIONS OF TULSA. INC" ED APPLE, CHAIRMAN. BOB ANTHONY, VICE
CHAIRM4.N, AND DENISE BODE, COMMISSIONER IN THEIR OFFICIAL CAPACITIES
AS CO~IMISSIONERS OF THE OKLAHOMA CORPORATION COMlvliSSION, and
OKLAHOMA CORPORATION COMlvUSSION
Appellees.
fN THE UNITED STATES COURT OF APPEALS
FOR THE TENTH CIRCUIT
APPEAL FROM TIlE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF OKLAHOMA
CASE NO. 98-CY-468-
HONORABLE TERRY C. KERN DISTRICT JUDGE
BRIEF FOR APPELLANT
RICHARD C, FORD, OBA # 3028
- Of the Firm -
CROWE &: DUNLEVY
1800 tvlid-America Tower
20 North Broadway
Oklahoma City, Oklahoma 7J 102-8273
[phone]
[phone] FAX
- and -
CHARLES J SCHARNBERG, OBA #7941
800 N. Harvey, Room 3
Oklahoma City, Oklahoma 73 102
[phone]
ATTORNEYS FOR APPELLAJ.'H
SOUTHWESTERN BELL TELEPHONE
COMP Ai'N
December 29, 1999
Oral Argument Desired
I~DEX
-\BLE OF CONTENTS
J L'RIS DICTION
STA TE\(ENT OF THE ISSUES PRESE~TED FOR REVIEW
STATE~lENT OF THE CASE
STATE~(ENT OF FACTS; BACKGROLl'-ID A.l'ID HISTORY
SUT\'IMARY OF THE .-\RGL~IENT , ,
STA:\1DARD OF REVIEW
, ,
ARGUi\lENT AND AUTHORITIES
THE COrvIMISSION'S ERRONEOUS CONTRACT
INTERPRETA nON IS FULLY REVIEWABLE
IN FEDERAL COlJRT
The Language of the 1996 Act ShO\vs that Federal Court
Review is Available Here. , .
Construing the Agreement's Reciprocal Compensation
Provisions Raises Issues of Federal. Not State Law
Federal Court Review is Mandated by the Structure
of the 1996 Act
The District Court Also Had Jurisdiction Under
28 U,c. ~ 1331 "
THE DISTRICT COURT ERRED TN AFFIRMING
DESPITE THE ace's RELIANCE ON AN ERRONEOUS
DETERMINA TION OF FEDERAL LAW,
! 1\THE DISTRICT COURT ERRED IN AFFIRMTNG
BECAUSE THE OCC'S ORDER IGNORES THE PLAIN
LANGUAGE OF THE AGREEfVrENT , .
CONCLUSION, . , . .
ST A TEMENT REGARDING ORAL ARGUMENT. , , ,
CERTIFICA TE OF COMPLlAt"JCE WrTH FRAP RULE 32(a)(7) .
..,
, 25
..,-'-
-\greement \vas made some four months after the FCC issued a Notice of Proposed
Rul~making under the Act advising that the FCC intended to interpret the reciprocal
compensation provisions of the Act "to encompass telecOImnllnIc::lnons traffic that
originates on the network of a LEC and tenninates on the network of a competing
LEC in the same local service area.'v'otice oj'Pl'Oposed RlIlcl11aki/1g, 61 Fed- Reg,
183 t t , t 8345
, ,
230(e). The day before SWBT and Brooks si!:'11ed their Agreement.
and two days before it was submitted to the OCC for approval. the FCC Issued Its
Local Competition Order implementing the Act and finalizing its interpretation that
r~ciprocal compensation under the Act applies only to "local traffic" -- defined as
traffic "that originates and tenninates within a local area -- and llil1 "to the transpol1
or tennination of interstate or intrastate interexchange traffic.IIIlIJle 111 el1fat 1O/1 o(tlle
I-I)(;al Coll1pefltiol1 ProvIsions II1lhe Telecommunications Act oj'1 996, II FCC Red
15499 , 16013 ~ 1034 (1996),
The reciprocal compensation language of the A!:-'Teement is strikingly sundar
to that used by the FCC in interpreting the reciprocal compensation provisions of the
Act. The Agreement provides that calls "shall be classified as local traffic under this
Agreement if the call originates and tenninates in the same SWBT exchange area,
or originates and tenninates within different S\VBT exchanges \-vhieh share a
common mandatory local calling area." (Agreement, ~ III , pp. 3-, Aplt, App, at
1303-1304), The Af,'Teement also provIdes that traffic does not tenninate \VIthlll the
same local calling area unless delivered to an end user located in that area "as a result
of another end users attempt to establish communications bet\veen the parties,
lAb'Teement , APPENDIX DEFINE, p, 4
, "
Tenninating Traffic , Aplt. App, at 13111
Traffic delivered to an end user for the purpose of routing to some other pOlllt -- such
as Internet traffic delivered to an ISP for routing onto the Internet -- cannot be
tenninating traffic under the AL'Teement.It is clear from its tenns that the
Agreement was intended to mirror the reciprocal compensation requirements of the
Act as interpreted by the FCC's implementing mles, This was acknowledged by
Brooks on the record. See Brooks' Appeal of the Report and Reconunendations of the
Administrative Law Judge Aplt. App, at 824-853 (""The Brooks-SWBT
interconnection af,Tfeement must be interpreted in a maimer consistent with the
Telecommunications Act and implementing regulations and decisions, since the
agreement was negotiated, executed and approved by the Commission pursuant to *
252 of the Act
This case arose when Brooks filed an application at the ace to compel SWBT
to pay reciprocal compensation for Internet traffic originated by SWBT customers
and routed onto the Internet via Internet Service Providers served by Brooks, The
case was referred to an Administrative Law Judge who found the reciprocal