HomeMy WebLinkAbout20070202Vol I.pdfORIGINAL
BEFORE THE IDAHO PUBLIC . UTILITIES COMMISSION
AT&T COMMUNICATIONS OF THE
MOUNTAIN STATES, INC.,
RESPONDENT.
CASE NO. QWE-T-06-
COMPLAINANT,
vs.
QWEST CORPORATION
ORAL ARGUMENT
BEFORE
COMMISSIONER DENNIS HANSEN (Presiding)
COMMISSIONER MARSHA H. SMITH
COMMISSIONER PAUL KJELLANDER
PLACE:Commission Hearing Room
472 West Washington
Boise, Idaho
DATE:January 24 , 2007
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VOLUME I - Pages 1 - 33
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CSB REPORTING
Constance S. Bucy, CSR No. 187
17688 Allendale Road * Wilder, Idaho 83676
(208) 890-5198 * (208) 337-4807
Email csb(q)safelink.net
For AT&T Communications:RICHARDSON & 0' LEARY
by Molly 0 I Leary, Esq.
Post Office Box 7218Boise, Idaho 83701
and-
MAYER , BROWN, ROWE & MAW
by Theodore Livingston , Esq.
71 South Wacker Drive
Chicago, Illinois 60606
and-
AT&T SERVICES, INC.
Dan Foley, Esq.
General Attorney
Post Office Box 11010Reno, Nevada 89520
For Qwest Corporation:Mary S. Hobson , Esq.
Attorney at Law
999 Main Street, Suite 1103Boise, Idaho 83702
and-
HOGAN & HARTSON
by Douglas Nazarian , Esq.
111 South Calvert Street
Suite 1600Baltimore, Maryland 21202
CSB REPORTINGWilder, ID 83676
APPEARANCES
BOISE , IDAHO, WEDNESDAY , JANUARY 24, 2007 , 10: 00 A. M.
COMMISSIONER HANSEN:Well , good morning,
ladies and gentlemen.This is the time and place set by
the Idaho Public Utilities Commission for oral arguments
in Case No. QWE-T-06-17 with respect to the issues
presented by Qwest in its motion to dismiss.
Commissioner Dennis Hansen and I'll be Chairman of
today s hearing.At my left is Commissioner Marsha
Smith.At my right is Commission President Paul
Kj ellander.The three of us make up the Commission.
d like to begin this morning by taking
the appearances of the parties and maybe we can start
wi th Qwest.
MS. HOBSON:Thank you.Good morning,
Mr. Chairman.I I m Mary Hobson representing Qwest
Corporation.With me today is Doug Nazarian of the Hogan
& Hartson law firm who has been previously admitted Pro
Hac Vice and will be presenting the argument today for
Qwest.
MR. NAZARIAN:Thank you, Commissioners.
COMMISSIONER HANSEN:AT&T.
MS. 0' LEARY:Good morning, Commissioners.
I I m Molly 0' Leary with Richardson & 0' Leary and we are
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here representing AT&T Communications of the Mountain
States, Inc. and we are the plaintiff in this proceeding,
and with me today, to my right, immediate right, is Ted
Li vingston and he is with Mayer, Brown, Rowe & Maw LLP
and representing AT&T Pro Hac Vice and he will be giving
the argument today on behalf of AT&T, and to
Mr. Livingston s right is Mr. Foley, Dan Foley, and he is
in-house counsel with AT&T and he has also been admitted
Pro Hac Vice in this matter.
COMMISSIONER HANSEN:Thank you.Well,
the order of events today is that we will start with
Qwest and allow them to present their argument first and
then we ll see if the Commission has questions that they
would want to ask, then we ll allow AT&T an opportunity
to present their argument, after which we will allow
Qwest , if they have desire, to make a closing statement
or thoughts that they might want to make.
I would like to just mention that we do
appreciate the briefs that you filed and today we would
encourage that you highlight those points that you wish
to draw the Commission s attention to, so if we re ready,
then, we would begin with Qwest.
MR. NAZARIAN:Thank you, Mr. Chairman and
Commissioners, good morning.We appreciate very much the
opportuni ty to argue these issues and answer any
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questions the Commission may have.I want to be mindful
of the questions that the Commission laid out in its oral
argument Order and I will not repeat at great length
anything in our briefs , but I do think that ultimately
the answer to this motion and to the issues before the
Commission are really subsumed in the first of the
Commission s five questions, which is whether AT&T'
claim in this matter is governed by the federal
Telecommunications Act of 1996 or Idaho state law.
What AT&T has pled, looking past the label
of breach of contract, which is a label , but nonetheless,
looking to the substance of the claim, what AT&T alleges
here and what AT&T has alleged in courts and utility
commissions across the region is that Qwest failed in
2000 , 2001 and 2002 to fulfill its obligations under
Section 252 of the Telecommunications Act of 1996; that
is, Qwest failed to file certain agreements, certain
interconnection agreements, it was required to file with
this Commission for approval and therefore, those
agreements were not available to other carriers such
AT&T for them to opt into under Section 252 (i) of the
Telecommunications Act.
The Commission may remember the unfiled
agreements filing that was made here in 2002.It may be
familiar with the unfiled agreements of litigation that
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took place in a number of commissions across Qwest' s
region, but what AT&T brings to this Commission now under
the heading of breach of contract is a claim.It says we
should get damages from this Commission flowing from
Qwest's failure to fulfill its obligations under the
federal Telecommunications Act, and the only reason that
AT&T is putting a state law label on this federal claim
is to avoid the operation of the two-year limitations
period that applies to these claims under 47 U. S. C.
Section 415.
There is no question that AT&T has known
about these agreements, the McLeod and Eschelon
agreements, into which it seeks to opt since at least the
summer of 2002.They don t dispute that.There s no
dispute there.There s no explanation for why in the
intervening four years AT&T made no effort In any venue
or any forum in the State of Idaho to raise these damages
claims.The only thing we know is that it has now styled
them as a state law claim in this Commission and
attempted to get in on the Idaho state law contract
statute of limitations which is five years, and we ask
this Commission to dismiss these claims because they are
at their core federal.
Now, if the Commission looks at AT&T'
complaint, you ll see that the breach entirely takes the
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form of, again , this failure on Qwest I s part to file
certain agreements back when they were formed in 2000 and
failure to make them available to other carriers to opt
into.Those interconnection , the interconnection
agreements at issue here of the one between Qwest and
AT&T and the interconnection agreements between Qwest and
these other carriers, those are all creatures of federal
law.There was no such thing as an interconnection
agreement before the Telecommunications Act of 1996.
There was no obligation by one carrier to interconnect
wi th another prior to the Telecommunications Act of 1996.
These contracts are created under a structure and by
mechanisms that the federal Telecommunications Act
creates.
If parties, as is the case in many states
between Qwest and AT&T, can t agree on terms in these
contracts, under the normal law of contracts, there would
be no meeting of the minds, there would be no agreement.
Under the Telecommunications Act of 1996, they can go to
arbi tration and force the agreement or bring the
agreement to closure with decisions by other parties, by
commissions.Under the Telecommunications Act of 1996,
parties can opt into another party s agreement without
having to negotiate anything.They can just say I'
another carrier , I see that there I s this agreement
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between Qwest and AT&T , I'd like to have the same terms
and conditions.The federal Act allows you to do that
so the agreement that they re saying is breached is a
creature of federal law.The conduct that they say
breaches it reflects rights and obligations that exist
purely under federal law.
There is no right other than through
Section 252 for another carrier to opt into these Qwest
agreements with McLeod or Eschelon, and so what we
have
--
and how is AT&T damaged?AT&T claims it is
damaged because it was deprived of the opportunity to get
the same terms and conditions , to opt into the same
agreement that Qwest had with McLeod and Eschelon.That
is a federal -- that right, to whatever extent it applied
to AT&T, arises totally under federal law, and so there
is no state law claim here.There is instead a federal
claim and part of the bargain that Congress struck , part
of the structure in creating this alternative mode of
entering into contracts and this new environment in the
telecommunications industry, part of that bargain is the
two-year limitations period.
These claims are stale.There s no reason
why AT&T could not and should not have raised them
wherever it was appropriate to raise them wi thin the two
years prescribed by the federal Act's limitations period
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and they don t offer any explanation for why they
wai ted this long, so the claims are at their core federal
and they re barred by the federal limitations period.
We had in our -- Qwest has in its briefs,
its original brief , asked this court to invoke the
Doctrine of Collateral Estoppel and preclude AT&T from
arguing anything contrary to the ruling of the Oregon
Commission this summer.In the time since, as the
Commission is aware from AT&T's filings , the Washington
Transportation Utilities Commission has come to a
contrary result.We respectfully believe that
commission s analysis is incorrect, but for purposes of
today I S proceedings, I think the Washington Commission
ruling overtakes by events, in essence , our Collateral
Estoppel argument and I don t think I can credibly sit
here and tell this Commission that it has to hold AT&T to
the Oregon Commission ruling any more than it should hold
, hold Qwest, to the Washington Commission decision.
That said , I want to point out that the
Oregon Commission , the Iowa Utilities Board and the
Uni ted States District Court for the District of Wyoming
have all in one way or another looked through the state
law labels that AT&T has placed on these claims and has
found them to be federal.Now , the Oregon Commission
decision we attached did exactly what we re asking this
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Commission to do.It found that the claims were subj ect
to the federal limitations period and it dismissed them.
The Iowa Utilities Board , while it had a slightly
different situation because it had a docket in 2002, an
unfiled agreements docket, as it were, and it found that
AT&T's claims now were barred by res adjudicata , by that
they could have and should have been brought in the
context of that case.
m not making that argument here because
this Commission didn t have such a proceeding, but one
thing that the Iowa Utili ties Board did find, though, was
that there would not be
--
AT&T would not have the same
claims it made there and the same claims it makes here
but for the unfiled agreements transactions, but for the
same rights and obligations under federal law that were
litigated in these dockets back in 2002 and under which
they re seeking to recover now , and in the United States
District Court for the District of Wyoming,
Mr. Livingston and I are going to be there on Monday next
week arguing this same motion to dismiss , but that court
already has found in denying AT&T's motion to remand that
case to state court that there is federal jurisdiction
there because despite, again, the state law labels, and
there they invoked not only breach of contract but some
Wyoming state statutes, that the rights and obligations
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that are being contested flowing from AT&T's allegations
are federal in nature.
Now, that court hasn t dismissed the
claims yet.I don t want to suggest that that ruling has
come yet , I think it will , but the federal judge in
Wyoming already has found that you look past the label,
the state law label , on these claims and you look at
their substance and when you look at the substance,
particularly as AT&T has alleged it , the substance is
purely federal.
Now , AT&T will almost certainly argue from
a series of reciprocal compensation cases in a number of
circuits , federal circuits , that those cases stand for
the proposition that interpretation and enforcement of
interconnection agreements is governed by state law.
have two responses to that.First, AT&T is not asking
this Commission to interpret its interconnection
agreement with Qwest.What it is asking this Commission
to do is to find that Qwest' s failure to file agreements
In 2000 under 252 , Section 252, and to make those
agreements available that that conduct breached the
interconnection agreement.
That's not an interpretative question.
That's not anything that requires this Commission to
parse the language of the interconnection agreement, but
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secondly, it is not true that interconnection agreements
are creatures of state law and governed by state law.
They re creatures of federal law.They re created by
Section 252 of the Telecommunications Act, and those
reciprocal compensation cases , including the Connect case
from the Eighth Circuit and the Brooks Fiber case from
the Tenth Circuit that are all cited in the briefs, those
cases all arise in a context where the FCC faced with
that reciprocal compensation dispute said we are going to
make a ruling now at a point in time going forward as to
how this is going to be handled under federal law , but we
also now direct the parties who have this dispute to go
back to their state commissions and have the state
commissions determine whether the language of the
interconnection agreement provided for reciprocal
compensation one way or the other.
That sort of parsing, meeting of the
minds, you know , what did the parties intend when they
entered into the contract, that's got a state law
component.There s a place where state law can fill in
the gaps , as it were , particularly the FCC says so.This
dispute doesn t raise any such interpretative question.
What AT&T is saying is look at the broad language about
parties ' obligations to act consistently with the federal
Act, look at the most-favored-nation-clause that refers
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to Section 252 and find from the fact that Qwest violated
certain federal obligations five years ago , six years
ago , going on seven years ago, find that we are entitled
to damages as a result of Qwest' s violations of federal
law.That's not interpretation of the interconnection
agreement.That is an attempt to convert a federal claim
into a state law claim in order to get in on a different
limi tations period.
I am happy, Commissioners , to answer any
questions.I guess with respect to
--
I think the core
of our argument answers just about all of the
Commission s specific questions and I think they are
answered in the briefs and I don t want to get too deeply
into it unless there are questions.I guess I would say
with respect to the 62-605 (b) code question , as I
understand it, Qwest elected to proceed under Title 62 in
southern Idaho going back to 1989 and so there isn t any
question of Qwest' s services in this state being
regulated in that region at least since then.
Commissioner Kj ellander is shaking his head.Do I have
that wrong?
COMMISSIONER KJELLANDER:I believe your
timing could be off.That was advanced services, I
believe , that began in '89.Ms. Hobson might be able to
at least provide some clarification there.
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MS. HOBSON:That is correct
Mr. Commissioner.Qwest deregulated all services except
the basic local exchange services in southern Idaho in
1989 , basic local exchange services of Qwest being sort
of dial tone and for the small business and residence
customers and I think what Mr. Nazarian was stating is
the kinds of services purchased by the AT&Ts of the world
at that time were not those that remained regulated by
the Commission.
COMMISSIONER KJELLANDER:That
clarification is helpful.Thank you.
MR. NAZARIAN:So with that Commissioners
that's what we re here to argue and at the core and I'
happy to answer any questions the Commission might
have.
COMMISSIONER HANSEN:And that completes
your argument , then?
MR. NAZARIAN:It does, subj ect to if
could have a brief rebuttal.
COMMISSIONER HANSEN:Let's see if we have
any questions , then , from the Commission.
COMMISSIONER HANSEN:Commissioner Smith?
COMMISSIONER SMITH:No.
COMMISSIONER HANSEN:I have none
ei ther.
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MR. NAZARIAN:Thank you.
COMMISSIONER HANSEN:Let's go to AT&T
now.
MS. 0' LEARY:Thank you.
MR. LIVINGSTON:Thank you , Chairman
Hansen , Commissioners.Our claim is a state law breach
of contract claim.It isn t a claim for violation of the
federal Act masquerading as a state law claim.We aren
engaging in artful pleading.A state law breach of
contract claim is the only claim we have.We couldn
bring a claim for violation of the 1996 Act even if we
wanted to.A simple straightforward examination of the
language and structure of the Act and a simple
straightforward examination of the key contract provision
at issue in this case show why that's the case.
First, the Act.The local competition
provisions , as the Commission knows , are contained in 251
and 252 of the ' 96 Act and they set out some baseline
requirements , but those baseline requirements are not
directly enforceable.Instead, these provisions are
implemented through interconnection agreements and even
though the Act contains the baseline requirements , these
baseline standards , it doesn t require that
interconnection agreements contain any specific
provisions.
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The parties are free to negotiate their
interconnection agreements without regard , that's a
quote , without regard to the baseline requirements of the
Act.The parties can choose to track and incorporate
baseline requirements or not , but if they do, it's an act
of private negotiation , an act of self-government, not
because the Act requires it, so once there s an executed
final interconnection agreement , the baseline
requirements of 251 and 252 operating by their own force
become irrelevant.All that counts is the
interconnection agreement.Its terms become the sole
source of the parties ' rights and obligations and those
terms are binding.
That's also a quote right out of the Act,
252(a) (1), and what this means is that the only thing
Qwest could violate after there was an agreement was the
agreement itself , that Qwest, AT&T had no independent
stand-alone rights under the Act and as to AT&T , Qwest
had no stand-alone obligations , so the only thing we
could bring was a breach of contract claim.
Now , Qwest seems fixated on the idea that
our contract claim is a thinly-veiled claim for violation
of the federal Act.That can t be the case because we
have no claim like that.I want to provide an
illustration.Assume that AT&T negotiates a deal with
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Qwest under which AT&T obtains access to fewer unbundled
network elements than 251 (c) (3) as construed by the FCC
requires , in other words , taking fewer UNI rights than
the Act on its own would infer.
Now , assume after the interconnection
agreement is signed , sealed and delivered AT&T has second
thoughts and assume it asks to opt into an agreement
between Qwest and McLeod , for instance, so that it can
get McLeod's unbundled network element price which
correspond to 251 (c) (3) .Now , let's assume that Qwest
responds by saying well , a deal is a deal in refusing
that request.Now , if AT&T had independent stand-alone
rights , it could sue Qwest under 251 (c) (3) and under
252 (i), the opt-in provision , to get those additional
unbundled network element rights, but if it could do
that , that would gut both the interconnection agreement
and the Act.
It would make the agreement not binding
and that would violate 252 (a) (1) and it would render the
parties ' right to negotiate without regard to the
requirements of the Act meaningless , so once there s an
interconnection agreement, the Act has no stand-alone
significance.The Act itself demands that conclusion
because that's the only way interconnection agreements
can be binding and that's the only way the parties could
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have a meaningful right to negotiate without regard to
the requirements of the Act.
I think that the key agreement at issue in
this case which is most-favored-nation terms and
treatment, provides a perfect example of a provision that
stands without regard to the baseline requirements of the
Act.It also provides a good example of the mischief
that could occur or would occur if AT&T was able to sue
for a violation of the Act on a stand-alone basis.
of course, this was entered into at a time when U S WEST
was the incumbent before Qwest acquired it , U S WEST
shall make available to AT&T the terms and conditions of
any other agreement for interconnection , unbundled
network elements and resale services approved by the
Commission under 252 of the Act in that agreement'
entirety.
At the time the parties were putting this
agreement together , the Eighth Circuit had ruled that the
FCC's pick and choose rule implementing 252 (i) was
unreasonable, but it didn t rule that 252 (i) required
that a CLEC take the entire agreement; instead , it
vaca ted the pick and choose rule and remanded.Now , the
remand , of course, was overtaken by the fact that the
Supreme Court in January of 1999 overturned the Eighth
Circui t and upheld the pick and choose rule , the rule
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under which a CLEC like AT&T could take individual terms
from an agreement without having to take the entire
agreement under 252 (i) .
Following the Supreme Court's decision
the parties did not amend this agreement, so throughout
its life , this agreement provided for fewer 252 (i) rights
than the Act standing alone would infer , and that Act --
that Act , that agreement , excuse me , is binding and was
binding throughout its life, and if AT&T had really done
what Mr. Nazarian claims and sued to enforce 252 (i) as it
existed in 2000 and 2001 and 2002 , the agreement would
have been nullified.The interconnection agreement would
be rendered not binding and the right of Qwest to
negotiate without regard to the requirements of the Act
would be gutted, but AT&T hasn t done that and didn t do
it.The only thing it could do was to bring an action to
enforce the deal it struck , and the deal it struck was an
obligation on the part of Qwest to make available the
terms and conditions of any other agreement for
interconnection , unbundled network elements and resale
services in those agreements ' entirety.
That obligation deviates from 252 (i), but
in a way we agreed to and it doesn t rely at all on a
failure on the part of Qwest to file its interconnection
agreements with McLeod and Eschelon with the Commission.
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It relied solely on a violation of the terms of the
agreement , so at the end of the day, then , the only claim
we have and the only claim we ve brought is a breach of
contract claim and that's a classic state law claim.
presents the Commlssion with the questions what the
contract says,what the contract means what the parties
intended and what the rights and obligations are that
creates, and these are questions that are answered by
applying state law contract principles and that's why all
the federal courts, save one , that have considered the
issue have held that the claims , like AT&T's, are
governed by state law contract principles.
That's the Ninth Circuit.The Ninth
Circuit Court includes Idaho.Its decision is not
strictly binding on this Commission , but we think it'
persuasi ve authority and the court in the Pacific Bell
case in 2000 said that while a state commission has
authori ty under 252 to hear and decide claims seeking
interpretation and enforcement of an interconnection
agreement , the actual interpretation and enforcement is
governed by "the agreements themselves and state law
principles " and the Fifth Circuit , the Sixth Circuit
the Seventh Circuit , the Eighth Circuit and the Tenth
Circui t have said exactly the same thing.
The only exception is the Verizon Maryland
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case in the Fourth Circuit and it held the claim is in
fact a contract claim , but it's governed by federal law
federal common law.It didn t decide what statute of
limi tations would apply to such a claim and in any event
unli ke all the other circuits , the Fourth Circuit is not
a unanimous decision , it's a two-to-one split and we
think that the dissent which , of course , agrees with us
is well reasoned and compelling and , of course , the
Washington Commission , the decision that came out just
before Christmas has said just that.
Now , Qwest tries to say that these are a
special category of cases , reciprocal compensation cases
but the rules announced in those cases are not limited.
The rules announced in those cases say that all claims
no exceptions , all claims seeking interpretation and
enforcement of interconnection agreements are governed by
state law.Qwest in its briefs talks about state law
applying as a gap filler where federal law is silent.
Well , the fact is the contract provisions at issue in
each of those cases deliberately and precisely tracked
and incorporated the requirements of federal law , the
requirements of 251 (b) (5), the requirements of the FCC
rules implementing 251 (b) (5), including the FCC'
defini tion of local traffic.
Yet, the courts in these cases had no
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problem saying that the interpretation and enforcement of
the contract was governed by state law contract
principles.In fact , the Seventh Circuit went out of its
way in the Illinois Bell case , which I'm familiar having
been on the losing side , went out of its way to say that
the enforcement of a contract provision that precisely
tracks the requirements of federal law presents only an
issue of state law that can only be heard in a state
forum.I think our case presents an even stronger case
for applying state law.
Our provision is based on 252 (i), no
question about that , but it doesn t precisely track it
and it deviates in a way, as I've explained earlier , that
gives us fewer , lesser 252 (i) rights than the Act would
on a stand-alone basis , so looking at the cases that we
ci te from all these circuits , if the interpretation and
enforcement of provisions that deliberately and precisely
track the federal Act is governed by state law
principles , then our provision which does deviate from
federal law has to be governed by state law.
We talked about the Washington decision.
We discuss it extensively in our briefs.d be happy to
answer any questions.I would say that it's virtually
the same case as the case before Your Honors.
involved very similar contract provisions , very similar
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claims and the same defendant.The Washington Commission
carefully considered the same cases , the same issues, the
same arguments that have been presented here and it
concluded that the claim in question was indeed a breach
of contract claim governed by state law and that that
state law includes the state statute of limitations for
contract actions.
There was talk about a bargain , there was
talk in Mr. Nazarian s remarks about a bargain , some kind
of agreement under which the parties to interconnection
agreements agree that their claims are going to be
governed by a two-year statute of limitations , and so
Qwest says in its brief the key question here is whether
AT&T can evade application of Section 415 of the ' 34
Communications Act which contains this two-year statute
of limitations.Well , the Washington Commission really
concluded that really wasn t an issue at all.It said
that if the claim was a claim for a violation of the ' 96
Act, 415 wouldn t apply.It's part of the '34 Act , it'
not part of the ' 96 Act , and the ' 96 Act claim is
governed by the four-year statute of limitations set out
in 28 U.C. 1658 , the provision that applies to federal
legislation enacted after 1990.Of course , the provision
in question here is a contract provision.re not
attempting to bring a claim for violation of the federal
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Act.In fact, we couldn t do that.
A quick word about the Wyoming District
Court case and the Iowa Utili ties Board Case.As Mr.
Nazarian pointed out, the Wyoming District Court just
decided the subj ect matter of the jurisdictional
question.It basically decided , and I think this is
almost a direct quote , that our claim requires resolution
of the question of federal law.It didn t decide that
our breach of contract claim was governed by federal law
didn t decide the state law versus federal law issue on
that and didn t decide the applicable statute of
limitations.Moreover , it was based on a fundamental
error.
Wyoming, of course , is in the Tenth
Circui t and the court declined to follow the Tenth
Circui t 's decision in Brooks Fiber which is one of the
cases that said claims of this sort are governed by state
law.It decided that the Tenth Circuit was somehow
distinguishable and it found that the Fourth Circuit'
decision in Verizon Maryland to be on point and
persuasive and the court followed that decision.Well
the Tenth Circuit, the Brooks Fiber case , and the Fourth
Circuit, the Verizon Maryland case, those cases are
identical.They involve the same issues and virtually
the same contract provisions, contract provisions that
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track the requirements of the Act with respect to
reciprocal compensation , so if the Fourth Circuit was on
point , and we agree it was, so too was the Tenth Circuit
and the Wyoming District Court was duty bound to follow
the Tenth Circuit.
The IUB case , the IUB case decided that
our claims were barred by state law , Iowa state law
res adj udicata principles; didn t decide the issues
presented by the motion to dismiss in this case; didn
decide that our state contract action is in fact a
federal claim; didn t decide the applicable statute of
limi tations.We think that even on the res adjudicata
point it was incorrectly decided because the commission
itself said that it didn t know whether it had
jurisdiction over the claims it was barring and , of
course, that's an essential element of res adjudicata
didn t know whether it had jurisdiction over those claims
and it didn t need to decide , because if it didn t have
jurisdiction , then our case should be dismissed for one
of jurisdiction , so it expressly confirmed that it didn
decide the critical element for res adj udicata , but even
if that weren t the case , it doesn t decide any issue
that is before this Commission.
Just a few remaining comments.Mr.
Nazarian said our claim is not asking for interpretation
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and enforcement.The fact is even if it wasn t asking
for interpretation , it is asking for enforcement of
contract and that's a classic state law matter , but we
are as king for interpretation.wi th respect to the key
provision in question , we re asking the Commission to
interpret because this does not precisely track the
language of 252 (i), what's within the ambit of
interconnection , what's wi thin the ambit of resale
servlces.You re going to look in vain for the term
resale in 252 (i) and we know that under Idaho law , resale
services include switched access, is that included , and
what does it mean to take an agreement in its entirety?
Does it mean to take it in its entirety only with respect
to certain kinds of products and services or with respect
to all products and services in the agreement?
And we also seek relief under 24.where
it says that each party shall comply with all applicable
state and federal and local laws so long as they are
applicable to the performance under the agreement.Well
re going to have to determine what that means , what is
applicable , what state law is applicable to performance.
ve cited in our complaint 62-609 , is that applicable?
That's going to require an interpretation of the
agreement and the parties ' intent and that's classic
state contract law , so in fact, we are asking for
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interpretation and we I re certainly asking for
enforcement, and I believe that concludes my argument.
d be happy to respond to any questions
the Commission may have.
COMMISSIONER HANSEN:Thank you very much.
Let's see if we have questions from the Commission.
Commissioner Smith.
COMMISSIONER SMITH:I do.Mr.
Li vingston , assume with me that I agree with your
argument that this action doesn t rely on the failure to
file interconnection agreements and is solely a failure
to comply with the terms of the agreement and therefore
it's a breach of contract under state law , in your terms
a classic state law claim.How does that get you before
the Commission instead of the state district court,
because we re not the entity usually that hears contract
claims, that's handled at the district court and we
certainly not an entity that can award damages?
MR. LIVINGSTON:Under , I believe it'
62 -- Your Honor raises a very interesting question and
it obviously affects me and you can tell that from my
hesi tancy.I think the quick answer is this:Under the
statutory provisions that have been cited and discussed
in the briefs, the Commission unquestionably has the
authori ty to implement the 1996 Act and to the extent
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COLLOQUY83676
necessary to do that, it has the authority to regulate
Qwest and all the cases that we ve cited, they stand for
two propositions:One, that under 252 , state commissions
have the authority, included wi thin their authority to
implement is the authority to deal with breach of
contract claims where the contract is a previously
approved interconnection agreement; in other words , under
252 and, therefore, under the state statutes, you do have
the ~uthority to interpret and enforce a previously
approved interconnection agreement.
COMMISSIONER SMITH:But you would agree
wouldn t you , that a federal law can t confer upon a
state commission any authority that the state legislature
hasn t already given it?
MR. LIVINGSTON:I would wholeheartedly
endorse that.
COMMISSIONER SMITH:So your theory is
that even empowering the Commission to implement the ' 96
Act , that included the ability to interpret these
contractual agreements that are under that?
MR. LIVINGSTON:Yes , and I would say the
following and this is where we run into some difficulty:
I believe that it's clear that the Commission has the
authori ty to hear and decide our case to the following
extent:It could declare the parties ' rights and
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obligations under this previously approved
interconnection agreement.If it doesn t have the
authori ty to award money damages , and I think I agree
wi th you , Commissioner Smith , it doesn t appear that this
Commission does have the authority to grant the relief
requested , we would need to enforce that declaration in
the state district court.
COMMISSIONER SMITH:Thank you.
COMMISSIONER HANSEN:Thank you very much
and moving on , then , I would ask Qwest , do you have any
closing comments that you would care to make?
MR. NAZARIAN:I do , Mr. Chairman , and
ll be as brief as I possibly can.I think the colloquy
that Mr. Livingston just had with Commissioner Smith
actually points out some of what's fundamentally wrong
wi th this case.Putting aside AT&T's agreement that the
Commission lacks authority to award the relief they
asked for , which makes you wonder why the case is even
here in the first place , take a look at the two sections
the two paragraphs of their complaint that describe how
AT&T believes it is harmed here.The heading says
Complainants have been damaged by Qwest' s unlawful
behavior.This is on page 7 leading into two paragraphs,
1 7 and 18.It says if AT&T had known about Qwest' s
secret agreements with Eschelon and McLeodUSA in a timely
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manner , AT&T would have availed itself of the discounts
in the Eschelon and McLeodUSA agreements , and paragraph
18 says the amount that AT&T paid Qwest for services
during the time period in which the Eschelon and
McLeodUSA agreements were in effect were approximately
percent higher than the amounts that Eschelon and
McLeodUSA paid Qwest for the same or comparable services
pursuant to the secret agreements.
Now , if you put yourself back in 2002 when
AT&T knew about these agreements , what are AT&T'
options?Well , Mr. Livingston would tell you that AT&T'
execution of an approved interconnection agreement locks
AT&T and Qwest into that interconnection agreement
forever , right?His argument was at that point it
becomes a binding agreement between these two parties and
to the extent that AT&T agreed to something less than its
full complement of 252 rights , then that's what AT&T
agreed to and it stuck with that.
Well , I have a hard time believing that
this Commission would endorse the idea that a party who
signs an interconnection agreement forfeits its rights to
opt into future interconnection agreements down the road
right , so to take Mr. Livingston s hypothetical that AT&T
enters into an agreement with Qwest for fewer UNI rights
than it otherwise might have and then under the operation
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of 252 in the state a new agreement between Qwest and
somebody else is filed , it I S approved, it's made
available to opt AT&T says well , now I want to opt
into that new agreement , Qwest says no, what should
happen?Then AT&T should come to this Commission and say
I should have the opportunity, we should have the
opportuni ty, to opt into that agreement, right?I mean
we have federal law out there that gives carriers rights
not out of benevolence of Qwest' s hard negotiation , but
out of Congress declaring what parties ' rights are.
The interconnection agreement that Qwest
and AT&T entered into is binding as far as it goes, but
it can be terminated by either party and there seems to
be a fair question about whether AT&T would have the
right to try and opt into some new agreement providing it
did it right and it could assume the range of appropriate
related terms and conditions and all that.This
Commission , then , would properly be the party or the body
that would determine the scope of AT&T's 252 rights,
right , but now we seem to have agreement that this
Commission is not the body to award damages, if there are
any, and the whole analysis flows from the question of
what are AT&T's rights or not under this
federally-created agreement vis-vis the operation of
federal statutory law on their business operations.
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It I S all federal , so the overlay of
federal law here is constant.It drives what
--
I mean
when you look at what AT&T really is complaining about,
they re complaining that they were deprived an
opportuni ty to opt into these agreements that Qwest had
wi th other parties.Whatever rights they had or didn
have to opt into those agreements are federal and so
calling it a state law breach of contract claim
mischaracterizes what it is they re asking for and now
again , we seem to have agreement that they re here asking
this Commission to award relief the Commission isn
authorized by Idaho state law to award anyone , so it
seems to me that means that the Commission should dismiss
this case.
Now , I don t want to get deeply into
arguing the nuances of the reciprocal comp cases, but
Mr. Livingston made a point of noting the Brooks Fiber
case.I want to read one part of or just point out one
part of the Brooks Fiber Tenth Circuit Court's analysis.
After these cases , and this one in particular , were sent
back to the state commissions , in this case Oklahoma, the
Oklahoma Commission was directed by the FCC to determine
whether those parties ' interconnection agreement provided
for reciprocal compensation as a matter of the parties
meeting of the minds , classic first year law school
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contracts question.
The Tenth Circuit , I I m reviewing this
ruling of the Oklahoma State Commission , says we first
consider whether the OCC properly interpreted the
agreement as requiring reciprocal compensation.Why?
Because the FCC told them to do that , and then said the
agreement itself in state law principles govern the
questions of interpretation of the contract and the
enforcement of its provisions.Mr. Livingston read that
part correctly, but the Tenth Circuit goes on after a
short quotation from Oklahoma contract law , says the OCC
the Oklahoma Commission , however, has an obligation to
interpret the agreement wi thin the bounds of existing
federal law.
To the extent there is an interstitial
role for state law here, it is that , that the law that
really drives this bus is federal and so by
recharacterizing this deprivation of federal rights as a
state law breach of contract claim , it's not as simple as
just saying well , Istanbul is Constantinople.I mean
they re changing the characterization of the claim from
the federal law deprivation that they allege to a state
law claim that doesn t make sense anyway and that this
Commission lacks the authority to award in terms of
damages according to them , so I guess what this all
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Wilder , Idaho COLLOQUY83676
points out more than anything is that this doesn t fit
together.
The way they ve alleged it , it doesn t fit
together , that there may well have been remedies that
AT&T could have sought in this Commission in 2002 or
thereabouts , but to come now with a breach of contract
claim nominally .under state law seeking relief this
Commission can t grant for a federal law violation
doesn I t make sense and the case should be dismissed and
m prepared to answer any further questions the
Commission may have.
COMMISSIONER HANSEN:Okay, let's see if
we have any questions from the Commission.We have none.
Thank you very much.
MR. NAZARIAN:Thank you.
COMMISSIONER HANSEN:Well , this would
conclude our hearing today and I would like to thank
those that have participated and the Commission will
deliberate and notify the parties of our decision as soon
as possible and with that said , the oral argument hearing
is now adjourned.Thank you.
MR. NAZARIAN:Thank you, Mr. Chairman
Commissioners.
MR. LIVINGSTON:Thank you.
(The oral argument concluded at10:55 a.
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Wilder , Idaho COLLOQUY83676
This is to certify that the foregoing oral
argument held in the matter of AT&T Communications of the
Mountain States, Inc., Complainant, versus Qwest
Corporation, Respondent , commencing at 10: 00 a., on
Wednesday, January 24 , 2007 , at the Commission Hearing
Room, 472 West Washington, Boise , Idaho, is a true and
correct transcript of said oral argument and the original
thereof for the file of the Commission.
Q~~
CONSTANCE S. BUCY
Certified Shorthand Reporter
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