CenturyTel of Chatham, LLC v. Sprint Communications Co.
861 F.3d 566
5th Cir.2017Background
- Sprint contracted with cable companies to convert VoIP calls into traditional time-division multiplexing format and deliver those calls to local exchange carriers (CenturyLink) for termination. CenturyLink billed Sprint exchange-access tariff rates for termination (interstate via FCC tariffs; intrastate via state tariffs).
- Sprint paid CenturyLink’s tariffed access charges without dispute until July 2009, when it began paying a lower rate for VoIP-originated traffic and retroactively deducting estimated overpayments for 2007–2009.
- CenturyLink sued for unpaid access charges (≈ $8.7 million) and late fees; Sprint counterclaimed seeking a declaration that it owed lower rates or none for VoIP-originated traffic.
- After a two-day bench trial, the district court found Sprint acted as an interexchange carrier (IXC) for the disputed service, upheld both federal and state tariff charges, awarded damages and late fees, and held Sprint violated 47 U.S.C. § 201(b) by unlawfully clawing back previously paid amounts (awarding attorney’s fees).
- The FCC’s 2011 Comprehensive Reform Order clarified that pre‑1996 exchange‑access obligations (preserved by 47 U.S.C. § 251(g)) apply to VoIP-originated traffic and treated IXCs and information‑service providers differently; it also phased out the tariff regime by 2020.
Issues
| Issue | CenturyLink (Plaintiff) Argument | Sprint (Defendant) Argument | Held |
|---|---|---|---|
| Whether federal exchange‑access tariffs apply to Sprint’s VoIP‑to‑traditional transfers | Tariffs apply because Sprint acted as an IXC and § 251(g) preserves pre‑1996 exchange‑access obligations for IXCs | Sprint’s transfer is an information service (protocol conversion) exempt from tariff rates | Federal tariffs apply; district court’s finding Sprint acted as an IXC controls and FCC deference supports tariffs |
| Whether state access tariffs are preempted by federal law | State tariffs are not preempted; FCC Order rejected federal preemption for such VoIP traffic | State tariffs preempted (argument raised insufficiently on appeal) | State tariffs not subject to challenge on appeal (Sprint waived/failed to brief preemption) |
| Whether Sprint’s retroactive deductions (claw‑back) violated 47 U.S.C. § 201(b) | Withholding and retroactive deductions were unlawful self‑help and unjust/unreasonable practices | Withholding prospective payments was allowed; retroactive deductions were reasonable industry practice | Retroactive claw‑backs based on unreasonable estimates were unlawful self‑help and violated § 201(b); attorney’s fees proper |
| Standard of review / deference to FCC | FCC’s Comprehensive Reform Order interpretation of Act controls and merits Chevron deference | Same statutory text; Sprint urged different statutory application to its services | Court afforded Chevron deference to FCC and applied its reasonable interpretation distinguishing IXCs from information‑service providers |
Key Cases Cited
- AT & T Corp. v. Iowa Utils. Bd., 525 U.S. 366 (1999) (background on local exchange monopolies and regulatory framework)
- Brand X Internet Servs. v. FCC, 545 U.S. 967 (2005) (agency interpretations of ambiguous statutory terms can receive deference)
- Global Crossing Telecomms., Inc. v. Metrophones Telecomms., Inc., 550 U.S. 45 (2007) (private right of action under § 201(b) and § 207 for unjust or unreasonable carrier practices)
- Chevron U.S.A., Inc. v. Natural Res. Def. Council, Inc., 467 U.S. 837 (1984) (two‑step test for deference to agency statutory interpretation)
- AT & T Corp. v. FCC, 317 F.3d 227 (D.C. Cir. 2003) (self‑help risk and limited exception for refusal to pay sham charges)
- In re Mid‑South Towing Co., 418 F.3d 526 (5th Cir. 2005) (bench‑trial factual findings reviewed for clear error)