Central Telephone Co. v. Sprint Communications Co. of Virginia, Inc.
759 F. Supp. 2d 789
E.D. Va.2011Background
- CenturyLink and Sprint entered into ICAs from 2004 to 2005 under the Telecommunications Act of 1996.
- Section 38.4 requires VoIP-originated traffic to be compensated the same as voice traffic, using reciprocal or tariff-based charges.
- Sprint paid VoIP access charges for years following ICA execution, but began disputing them in mid-2009 amid cost-cutting pressures.
- Sprint had a complex corporate structure; in 2006 Sprint spun off its local telephone division, including CenturyLink’s predecessors, into Embarq, later CenturyLink.
- Plaintiffs allege Sprint’s post-2009 disputes violated the ICAs by not paying tariff-based access charges for VoIP traffic, as incorporated by reference.
- The court held that Section 38.4 unambiguously obligates Sprint to pay access charges for VoIP-originated traffic in accordance with jurisdictional endpoints, and that Sprint breached the ICAs.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Section 38.4 unambiguously requires VoIP traffic to pay access charges | CenturyLink: Section 38.4 directs VoIP traffic to be compensated like voice traffic. | Sprint: Section 38.4 is ambiguous or allows flexibility given federal law context. | Unambiguous; VoIP traffic must be compensated as voice traffic. |
| Whether ICAs incorporate tariffs by reference to set access rates | Tariffs are incorporated by reference to determine applicable rates for VoIP access charges. | ICAs do not incorporate tariffs, or incorporation is limited by integration clause. | Tariffs are incorporated by reference; rates are determined by tariffs referenced in the ICAs. |
| Whether the ICAs' scope extends to non-local traffic | ICAs govern interconnection and compensation for local and non-local traffic, including VoIP. | ICAs primarily cover local interconnection and do not extend to long-distance traffic. | ICAs extend to interconnection of both local and non-local traffic; not limited to local traffic. |
| Whether Section 38.4 was written to be intentionally ambiguous | Section 38.4 was not intended to be ambiguous; drafting favored clear obligation. | Section 38.4 was drafted to be broad/ambiguous to give Sprint flexibility. | Section 38.4 is not ambiguous; interpretation resolves to payment of charges as written. |
| Did Sprint breach its contractual obligation by refusing to pay billed VoIP charges | Sprint breach by refusing to pay charges that Section 38.4 requires to be paid per tariff rates. | Sprint contends it was not obligated to pay certain VoIP charges under the ICAs. | Sprint breached the ICAs; judgment for Plaintiffs for compensatory damages and related amounts. |
Key Cases Cited
- Hertz Corp. v. Zurich Am. Ins. Co., 496 F. Supp. 2d 668 (E.D. Va. 2007) (incorporation of documents requires readily ascertainable secondary document terms)
- U.S. West Commc'ns, Inc. v. Sprint Commc'ns Co., L.P., 275 F.3d 1241 (Tenth Cir. 2002) (tariff-based incorporation of terms into ICAs allowed)
- Silicon Image, Inc. v. Genesis Microchip, Inc., 271 F. Supp. 2d 840 (E.D. Va. 2003) (contract interpretation—plain meaning governs when unambiguous)
- Trex Co., Inc. v. ExxonMobil Oil Corp., 234 F. Supp. 2d 572 (E.D. Va. 2002) (contracts construed as written; look to plain language first)