20070405Response to new arguments.pdf

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4 April 2007
Ms. Jean Jewell
Commission Secretary
Idaho Public Utilities Commission
POBox 83720
Boise ID 83720-0074
Via HAND DELIVERY
RE: Case No. QWE-06-
Dear Ms. Jewell:
Enclosed please find an original and seven (7) copies of AT&T'
SUBMISSION OF SUPPLEMENTAL AUTHORITY AND RESPONSE TO NEW
ARGUMENTS IN QWEST'S RESPONSE TO ORDER NO. 30247.
I have also enclosed an extra copy of each of the foregoing pleading to
be date-stamped and returned to us for our files. Thank you.
encl.
Molly O'Leary (ISB No. 4996)
RICHARDSON & O'LEARY PLLC
515 North 2ih Street
O. Box 7218
Boise, Idaho 83707
Telephone: [phone]
Fax: [phone]
E- Mail: molly(~,richardsonandoleary .com
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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~mayerbrown.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~att.com
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.
Case No. QWE-06-
Complainant
Respondent.
AT&T'S SUBMISSION OF
SUPPLEMENTAL AUTHORITY
AND RESPONSE TO NEW
ARGUMENTS IN QWEST'S
RESPONSE TO ORDER NO. 30247
vs.
QWEST CORPORATION
AT&T Communications of the Mountain States, Inc. ("AT&T") respectfully submits this
memorandum to call to the Commission s attention supplemental authority and to respond
briefly to new arguments raised in Qwest Corporation s ("Qwest") response to the Commission
questions in Order No. 30247.
AT&T respectfully brings to the Commission s attention a recent decision by a
federal district court in Minnesota in a related case between AT&T and Qwest.AT&T
Communications of the Midwest, Inc. v. Qwest Corp.Civil No. 06-3786, at 3 (D. Minn. Mar. 29
2007) ("Minnesota Decision ) (attached as Exhibit 1). AT&T respectfully submits that the
comprehensive and well reasoned decision of the Minnesota court strongly supports AT&T's
contentions in this matter, including with respect to the "gravamen" of its complaint and the
applicable statute of limitations.
As in the case before this Commission, in the Minnesota action AT&T has asserted inter
alia state law claims of breach of contract." Minnesota Decision, at 3. In seeking dismissal of
AT&T's complaint , Qwest argued - as it has here - that AT&T's claims are "barred by the two
year statute of limitations" in Section 415 of the federal Communications Act of 1934. !d.
The Minnesota court denied Qwest's motion in its entirety. Minnesota Decision, at 4-
Rejecting Qwest's argument that AT&T is engaged in "artful pleading (id. at 4), the court held
that the "applicable state statutes of limitations" apply to all of AT&T's claims (id. at 5-6),
including its breach of contract claims.In Minnesota, that period is six years. !d. at 7.
Accordingly, even accepting arguendo the accrual date proposed by Qwest, the court determined
that all of AT&T's "claims are timely as this case was commenced in September 2006, well
before the six year limitation would have run.Id. at 8.
1 It is undisputed that if the five-year statute of limitations in Idaho Code ~ 5-216 applies
AT&T's claims in this Commission are timely under any conceivable accrual date.
AT&T'S SUPPLEMENTAL AUTHORITY AND
RESPONSE TO NEW ARGUMENTS IN
QWEST'S RESPONSE TO ORDER NO. 30247 - 2
The Minnesota court found that the Eighth Circuit's decision in Connect
Communications Corp. v. Southwestern Bell Tel. LP.467 F.3d 703 (8th Cir. 2006), "lends
support to the Court's determination that the state claims should be governed by the applicable
state statutes of limitations." Minnesota Decision, at 6. As the court explained, in Connect the
Eighth Circuit "recognized that federal law 'plays a large role in this dispute (involving the
interpretation of an interconnection agreement),' but nonetheless held that 'the ultimate issue ' in
the case was contract interpretation, and that such claim would be governed by state law.Id.
(quoting Connect 467 F.3d at 713).2
The Minnesota court further noted that it had "accepted" and "considered" in its
determination numerous letter briefs calling to the court's attention supplemental authorities
including "commission decisions and the district court decision from the District of Nebraska
* * * that have adopted Qwest's arguments and dismissed similar cases on the basis such cases
were time barred pursuant to (Section 415)." Minnesota Decision, at 6-7. However, the court
expressly held that "(n)one of those decisions are binding on this Court, nor are they persuasive.
Id. at 7.
2 As this Commission noted in Order No. 30427 (at 4), the Ninth Circuit reached precisely the
same conclusion in Pacific Bell v. Pac-West Telecomm.325 F.3d 1114, 1128 (9th Cir. 2003).
3 The Minnesota court's decision not to follow the Nebraska court's rationale or conclusion is
hardly surprising. The Nebraska court's brief analysis of the legal issues in the case (see AT&T
Communications of the Midwest, Inc. v. Qwest Corp.No. 8:06-cv-00625-LES, at 5-6 (D. Neb.
Feb. 27, 2007) ("Nebraska Decision ) (attached as Exhibit 1 to Qwest's March 26 Response to
Order No. 30247), appeal pending, No. 07-1735 (8th Cir.)) completely overlooked many key
issues. Most notably, the court did not even cite, much less discuss or distinguish, the Eighth
Circuit's controlling decision in Connect Communications Co. v. Southwestern Bell Tel. Co.467
3d 703, 708 (8th Cir. 2006). Ironically, the Nebraska court described AT&T's claims as
seeking damages "for Qwest's alleged failure to comply with the requirements of the
Telecommunications Act pursuant to AT&T's and Qwest'interconnection agreements.
AT&T'S SUPPLEMENTAL AUTHORITY AND
RESPONSE TO NEW ARGUMENTS IN
QWEST'S RESPONSE TO ORDER NO. 30247 - 3
Qwest also asserts for the first time in its response to the Commission s questions
in Order No. 30427 arguments (at 2, 11-16) that interconnection agreement disputes should be
treated as federal in nature to avoid Tenth Amendment concerns.Specifically, Qwest's
argument rests on a syllogism: (a) some state commissions lack authority under state law to hear
breach of contract claims; (b) Congress has no power under the Tenth Amendment to compel
state commissions to hear such claims; (c) therefore, those claims must be federal in nature or the
scheme under the 1996 Act would violate the Tenth Amendment.
That argument is a complete non-starter. To begin with, the Commission already has
rejected prongs (a) and (c) of Qwest's argument. As to prong (a), the Commission explained that
the Idaho Supreme Court "has clearly stated that the Commission does have the authority to
interpret and enforce an interconnection agreement." Order No. 30427, at 2 (citing McNeal
Idaho Public Uti!. Comm '142 Idaho 685 , 132 P.3d 442 (Idaho 2006)). Accordingly, the
Commission concluded that it has "jurisdiction to hear this matter.Id. at 3. And as to prong
( c), in light of the "substantial body of cases" in which courts have concluded that "state law
governs the interpretation and enforcement of interconnection agreements " the Commission
held that "state law governs this dispute.Id at 4.
Prong (b) of Qwest's argument is equally flawed , for Congress has compelled nothing.
Rather, Congress invited the states, through their public utility commissions, to playa role in the
formation, approval, interpretation and enforcement of interconnection agreements.To the
Nebraska Decision, at 6 (emphasis added). Yet the court held that AT&T's claims could not be
characterized "as state law claims" and that "the ultimate issue" in the case "is an interpretation
of federal law (id.
),
in direct conflict with the Eighth Circuit's binding determination that "the
ultimate issue" in a case involving interpretation of an interconnection agreement "is a state law
issue.Connect 467 F.3d at 708.
AT&T'S SUPPLEMENTAL AUTHORITY AND
RESPONSE TO NEW ARGUMENTS IN
QWEST'S RESPONSE TO ORDER NO. 30247 - 4
extent that any state does not regulate in this area either by choice or because its state
commission is not authorized to undertake the functions designated by Congress - the Act
expressly provides in Section 252(e)(5) that the FCC will stand in the shoes of that state. Not
surprisingly, then, the courts have rejected Tenth Amendment challenges to the 1996 Act's
cooperative federalism" scheme. See g., Mich. Bell Tel. Co. v. Climax Tel. Co.202 F.
862, 868 (6th Cir. 2000) ("The United States did not compel (the state commission s) actions
and, consequently, the Tenth Amendment does not bar Ameritech's suit"
Finally, AT&T is compelled to respond to Qwest's erroneous assertion (at 8 n.
that Illinois Bell Tel. Co. v. WorldCom Technologies, Inc.179 F.3d 566 573-74 (7th Cir. 1999),
is "bad law." That contention rests on a fundamental misunderstanding of the issues that the
Supreme Court decided in Verizon Maryland, Inc. v. Pub. Servo Comm n of Md.535 U.S. 635
(2002). In Verizon Maryland the sole question before the Court was "whether federal district
courts have jurisdiction over a telecommunications carrier s claim that the order of a state utility
commission requiring reciprocal compensation for telephone calls to Internet Service Providers
violates federal law." Id. at 638 (emphasis added). Because the complaint at issue alleged that
the state commission had "violated the (1996 federal) Act and (an) FCC ruling," the Court had
no difficulty holding that "federal courts have jurisdiction under ~ 1331 to entertain such a suit."
Id. at 642. Because the complaint alleged a straightforward violation of federal law, the Court
did not have before it - and thus plainly did not decide - any question concerning the Seventh
Circuit's holding that state commission decisions interpreting and enforcing interconnection
agreements present only a question of state law for a state forum, not a federal claim under the
1996 Act. Illinois Bell 179 F.3d at 573-74. In fact, the Court denied Illinois Bell's petition that
AT&T'S SUPPLEMENTAL AUTHORITY AND
RESPONSE TO NEW ARGUMENTS IN
QWEST'S RESPONSE TO ORDER NO. 30247 - 5
sought review of that holding (Illinois Bell Tel. Co. v. WorldCom Techs., Inc.535 U.S. 1107
(2002)) - although the Court did initially grant, and then dismissed as improvidently granted
(Mathias v. WorldCom Techs., Inc.535 U.S. 682 (2002)), the Illinois Commission s petition
seeking review of the Seventh Circuit's decision in Illinois Bell on the questions that ultimately
were resolved in Verizon Maryland.
Dated this 4th day of April, 2007 AT&T COMMUNICATIONS OF THE
MOUNTAIN STATES, INC.
Attome s for AT&T COMMUNICATIONS OF
THE OUNTAIN STATES, INC.
AT&T'S SUPPLEMENTAL AUTHORITY AND
RESPONSE TO NEW ARGUMENTS IN
QWEST'S RESPONSE TO ORDER NO. 30247 - 6
CERTIFICATE OF SERVICE
I HEREBY CERTIFY that on the 4th day of April, 2007 a true and correct copy ofthe
within and foregoing AT&T'S SUBMISSION OF SUPPLEMENTAL AUTHORITY AND
RESPONSE TO NEW ARGUMENTS IN QWEST'S RESPONSE TO ORDER NO. 30247 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: mary.hobson~qwest.com
- Hand Delivery
S. Mail, postage pre-paid
Facsimile
2L Electronic Mail
Douglas RM. Nazarian
Hogan & Hartson
111 South Calvert St
Baltimore MD 21202
E-mail: drmnazarian~hhlaw.com
- Hand Delivery
X-U.S. Mail, postage pre-paid
Facsimile
2L Electronic Mail
Certificate of Service - 1
Case 0:06-cv-03786-MJD-SRN Document 47 Filed 03/29/2007 Page 1 of 9
(';(/~;. '
UNITED STATES DISTRICT COURT
DISTRICT OF MINNESOTA
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AT & T Communications of the Midwest,
Inc., an Iowa corporation
and
TCG Minnesota, Inc., a Delaware
corporation
Plaintiffs
MEMORANDUM OPINION
AND ORDER
Civil No. 06-3786
Qwest Corporation, a Colorado
corporation
Defendant.
William E. Flynn , Thomas F. Pursell and Meghan M. Elliott, Lindquist &
Vennum, PLLP, for and on behalf of Plaintiffs.
Larry D. Espel and William J. Otteson, Greene Espel , PLLP, for and on
behalf of Defendant.
This matter is before the Court upon Defendant Qwest Corporation
Qwest") motion to dismiss.
Background
On September 20 , 2006 , Plaintiffs AT&T Communications of the Midwest,
Inc. ("AT&T") and TCG Minnesota, Inc. ("TCG") filed this action against Qwest
Case 0:06-cv-03786-MJD-SRN Document 47 Filed 03/29/2007 Page 2 of 9
Corporation ("Qwest ) in Minnesota state court. In their Complaint, Plaintiffs
allege that pursuant to the federal Telecommunications Act of 1996 (the "1996
Act") incumbent telecommunications carriers , such as Qwest, are required to
enter into contracts with other telecommunications carriers that request access to
the incumbent's network. Complaint ~ 1. These contracts, called
interconnection agreements," set out the incumbent's obligations to provide
interconnection , services, and/or network elements to competing carriers and the
applicable rates. Id.Plaintiffs also allege that the 1996 Act requires that all
interconnections must be filed with the appropriate state commission, and once
approved, the incumbent carrier must make available any interconnection, service
or network element provided under the agreement to any other requesting
carrier. Id.
Plaintiffs allege that Qwest entered into secret interconnection agreements
with two telecommunications providers in Minnesota, Eschelon Telecom
Eschelon ) and McLeodUSA Telecommunications Services, Inc. ("McLeodUSA"
Id.~ 3. These secret agreements provided a lower rate to Eschelon and
McLeodUSA, and Qwest did not file these agreements with the Minnesota Public
Utilities Commission ("MPUC"). Id.Because these agreements were not filed
Plaintiffs did not know about them, and could therefore not demand the same
discounted rate as they were entitled to do by law. Id.
Case 0:06-cv-03786-MJD-SRN Document 47 Filed 03/29/2007 Page 3 of 9
Plaintiffs allege that the MPUC later determined that Qwest "knowingly and
intentionally violated" the 1996 Act and state anti-discrimination laws by failing to
file the interconnection agreements, and by providing lower rates to some carriers
and not others. Id.~ 4. Plaintiffs allege that in addition to violating state and
federal law, Qwest's intentional concealment of the secret agreements constituted
a breach of its interconnection agreements with Plaintiffs , as well as fraud. Id.
5 and 6.
Based on this conduct, Plaintiffs have asserted the following claims against
Qwest: Minnesota state law claims of breach of contract and fraud, and violations
of Minnesota anti-discrimination statutes, Minn. Stat. ~~ 237.09,237.60, subd. 3,
and 237.121 , subd. 5.
In lieu of an answer , Qwest has filed this motion to dismiss. It is Qwest's
position that Plaintiffs' claims, although styled as state law claims, are really based
in federal law, and are therefore barred by the two year statute of limitations
provided in the 1996 Act, 47 U.C. ~ 415. By contrast , the applicable state
statute of limitations is six years. Minn. Stat. ~ 541.05 (1) (2) and (6)(governing
actions for breach of contract, statutory liability and fraud). Qwest further argues
that the claims are barred by the doctrines of collateral estoppel and res judicata.
Case 0:06-cv-03786-MJD-SRN Document 47 Filed 03/29/2007 Page 4 of 9
Standard
For the purposes of Qwest's motion to dismiss, the Court takes all facts
alleged in Plaintiffs' Complaint as true. Westcott v. Omaha, 901 F.2d 1486, 1488
(8th Cir. 1990) 0 Further , the Court must construe the allegations in the Complaint
and reasonable inferences arising from the Complaint favorably to Plaintiffs.
Morton v. Becker, 793 F.2d 185, 187 (8th Cir. 1986). The Court applies those
standards in the following discussion.
Analysis
Qwest argues that notwithstanding Plaintiffs' artful pleading, Plaintiffs
claims arise under the 1996 Act, and are thus subject to the Act's two year statute
of limitations. Qwest asserts that throughout the Complaint, Plaintiffs repeatedly
discuss the requirements of the 1996 Act that incumbent carriers file
interconnection agreements with the MPUC , and make available any
interconnection, service or network provided under the agreement to any other
requesting carrier. It is Qwest's position that based on these allegations , Plaintiffs
are simply claiming that Qwest violated the 1996 Act.
Neither the Eighth Circuit nor the United States Supreme Court has
addressed the narrow issue of whether the statute of limitations period contained
in the 1996 Act applies to state common law and statutory claims involving
allegations that a carrier did not file interconnection agreements as required by
Case 0:06-cv-03786-MJD-SRN Document 47 Filed 03/29/2007 Page 5 of 9
state and federal law.
Qwest asserts that decisions from other circuits support its position. One
such case is MFS Int'l. Inc. v. Int'! Tekom Ltd., 50 F. Supp. 2d 517, 520 (E.D. Va.
1999). In MFS , the court found that state law claims of breach of contract and
conversion, seeking to enforce contract provisions as to rates and services that rely
on an underlying tariff, are preempted by the Federal Communications Act. The
court thus determined the Act's two year statute of limitations applied.
If Plaintiffs' claims relied only on federal law, the analysis in MFS could be
applied here. But that is not the case, however. In addition to the common law
claims of breach of contract and fraud , Plaintiffs have also asserted that Qwest's
failure to file the interconnection agreements violates Minn. Stat. 99 237.09,
237., subd. 3 and 237.121 , subd. 5. A previous decision from this Court has
held that these state statutes are not preempted by 9 252 (i) of the 1996 Act.
Qwest Corporation v. The Minnesota Public Utilities Commission , 2004 WL
1920970, at *6 (D. Minn. 2004) (recognizing that "Congress did not intend for 9
252 (i) to thoroughly occupy discrimination analysis regarding an ILEC's failure to
file an ICA.). Qwest has not provided the Court any argument or authority to
support its position that the federal statute of limitations should apply to state
statutory claims that are not preempted. Because Plaintiffs' common law claims
rely on both federal and state law, the Court further finds the applicable state
Case 0:06-cv-03786-MJD-SRN Document 47 Filed 03/29/2007 Page 6 of 9
statutes of limitation apply to the common law claims as well.
Although not specifically on point, the Eighth Circuit Court of Appeals
decision in Connect Communications Corporation v. Southwestern Bell
Telephone. LP., 467 F.3d 703 (8th Cir. 2006) lends support to the Court's
determination that the state claims should be governed by the applicable state
statutes of limitation. At issue in Connect was whether ISP bound calls were local
calls, which would subject them to the reciprocal compensation under the
interconnection agreement between the parties. Id.at 704. The court found that
at the time the parties entered into the interconnection agreement, the FCC had
not determined whether traffic transmitted to ISPs was subject to reciprocal
compensation as local traffic under the Act or not. Id.at 705. The court
recognized that federal law "plays a large role in this dispute , but nonetheless
held that "the ultimate issue" in the case was contract interpretation, and that
such claim would be governed by state law. Id.at 713.
The Court acknowledges the multiple commission decisions and the district
court decision from the District of Nebraska in AT&T Communications et al. v.
Qwest Corp., Civil No. 8:06CV625 (D. Neb. Feb. 27, 2007)1 that have adopted
Qwest's arguments and dismissed similar cases on the basis such cases were time
These decisions have been submitted to the Court pursuant to numerous letter briefs
requesting permission to file supplemental authority. The Court has accepted these submissions
and has considered them in its determination.
Case 0:06-cv-03786-MJD-SRN Document 47 Filed 03/29/2007 . Page 7 of 9
barred pursuant to 47 USC. ~ 415(b). None of those decisions are binding on
this Court, nor are they persuasive.
For example , with respect to the decision from the District of Nebraska, this
Court notes that Plaintiffs asserted both state common law and state statutory
claims against Qwest. Otteson Aff., Ex. 5 (Complaint filed in the Nebraska state
court). In granting Qwest's motion to dismiss, the district court found that the
ultimate issue in this case is an interpretation of federal law.AT&T.Civil No.
8:06CV625 at 6. There was no discussion or analysis, however, as to whether the
state statutes were preempted and the impact the state statutes had on the
common law claims. The same is true for many of the commission decisions
submitted by Qwest in support of its motion.
As noted previously, the applicable state statute of limitations for the
Plaintiffs' claim is six years. Minn. Stat. ~ 541.05 (1), (2) and (6). In its brief
Qwest asserts that Plaintiffs "discovered, or by exercise of reasonable diligence
should have discovered , its right to apply for relief" by March 2002. Qwest
Memorandum in Support of Motion to Dismiss, p. 18. Thus, adopting the accrual
date put forth by Qwest, Plaintiffs' claims are timely as this case was commenced
By contrast, the Oregon Commission dismissed the state statutory claims on the basis that
such statutes did not provide the Commission the jurisdiction to grant the relief request. Otteson
Aff., Ex.!, p. 4. Thus, the analysis concerning the applicability of the federal statute of limitations
applied only to the breach of contract claim.
Case O:O6-cv-O3786-MJD-SRN Document 47 Filed 03/29/2007 Page 8 of 9
in September 2006, well before the six year limitation would have run.
Finally, Qwest moves for the dismissal on collateral estoppel grounds.
Qwest asserts that the decision of the Oregon Public Utility Commission ("OPUC'),
dismissing Plaintiffs' claims on the basis such claims are time-barred3 , should be
given preclusive effect in this case. This argument must be rejected.
The Eighth Circuit has recognized that state commissions are not bound by
decisions reached by other state commissions. Connect, 437 F.3d at 713 (citing
Global Naps. Inc. v. Mass. Dep t Telecomm. & Energy , 427 F.3d 34 , 48 (1 st Cir.
2005) ). That numerous state commissions could be addressing similar issues will
affect application of collateral estoppel given the possibility of inconsistent
determinations. Collateral estoppel does not apply when the determination to be
given preclusive effect is inconsistent with another determination of the same
issue. Joslyn Mfg. Co. v. Liberty Mutual Ins. Co., 939 F. Supp. 603, 611 (N.D. III
1996) (citing Restatement (Second) of Judgments, ~ 29(4) (1982)). The parties
note that this case is one of seven pending in federal and state courts or
commissions.
Plaintiffs inform the Court that the Washington State Utilities and
Transportation Commission has issued a decision contrary to that of the OPUC.
See AT&T Commc ns of the Pac. N.W.. Inc. v. Qwest. Corp., Order 06, Order
This decision is attached as Exhibit 1 to the Otteson Declaration.
Case 0:06-cv-03786-MJD-SRN Document 47 Filed 03/29/2007 Page 9 of 9
Affirming Interlocutory Order; Allowing Amendment of Complaint; Denying
Motion for Summary Determination, Docket UT-051682 (Wash. UTC Dec. 22
2006) (Attachment to Plaintiffs' Letter Brief dated December 28 , 2006). Under
these circumstances, the Court finds the OPUC decision should not be given
preclusive effect.
IT IS HEREBY ORDERED that Defendant's Motion to Dismiss (Doc. No.3) is
DENIED.
Date: March 28,2007
s / Michael J. Davis
Michael J. Davis
United States District Court