824 F.3d 830
9th Cir.2016Background
- North County (CLEC) had 1997 interconnection agreements (ICAs) with Qwest (ILEC); § XXXIV(V) required parties to commence negotiations for a new agreement two years after the 1997 ICA became effective and the ICA continued until replaced.
- Industry transitioned from MF signaling (older) to SS7 (digital); North County continued to use MF which impeded Qwest’s ability to verify and audit billed traffic.
- Qwest initiated renegotiation in 2008, parties extended the § 252(b) arbitration window multiple times, negotiations failed, and Qwest petitioned the Arizona and Oregon Commissions for arbitration in 2009.
- State commissions arbitrated and approved new 2011 ICAs; North County sued in federal district courts arguing the commissions lacked authority to arbitrate because Qwest (the ILEC) initiated negotiations and challenging multiple substantive ICA provisions.
- District courts granted summary judgment for Qwest and the state commissions; Ninth Circuit affirmed, holding (1) the 1997 ICAs themselves authorized Qwest to initiate negotiations and compel arbitration, and (2) the contested 2011 ICA provisions comported with the Act or were not arbitrary or capricious.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether state commissions had authority to arbitrate 2011 ICAs when Qwest (ILEC) initiated negotiations | North County: §252 permits arbitration only after an ILEC receives a request; Qwest lacked statutory authority to force arbitration | Qwest: FCC TRO interpretation allows either party to request in interconnection-amendment context; alternatively, 1997 ICAs granted reciprocal negotiation and arbitration rights | Held: Court avoided deciding the statutory issue; found 1997 ICAs granted Qwest the contractual right to commence negotiations and compel arbitration, so commissions had authority |
| Legality of direct-only interconnection requirement (no third-party tandem) | North County: federal law allows CLECs to choose indirect interconnection and thus Qwest cannot force direct-only terms | Qwest/Commissions: ICAs allowed direct exchange; FCC precedent permits CLECs to choose but does not give unilateral right to force indirect exchange; Commissions reasonably approved direct interconnection | Held: Approved; Commission decision not arbitrary or capricious given record and opportunity to renegotiate later |
| Requirement to use SS7 signaling when North County originates calls | North County: §252(i) non-discrimination entitles it to use MF like other carriers | Qwest: SS7 is industry standard, MF is obsolete, and no other CLEC was using MF; requirement is supported by evidence | Held: Requirement upheld; substantial evidence supports transition to SS7 and no showing of discrimination |
| Other ICA provisions: Relative Use Factor (99:1), call-detail record fees, billing caps, VoIP interconnection | North County: provisions overcharge/violate nondiscrimination/misallocate costs and bar VoIP interconnection | Qwest/Commissions: factors based on usage evidence, subject to adjustment/renegotiation, some claims waived for failing to raise before commissions | Held: Relative use factor and minute caps upheld as supported by evidence; call-detail record and VoIP claims waived where not raised before commissions; overall provisions not arbitrary or unlawful |
Key Cases Cited
- AT&T Corp. v. Iowa Utils. Bd., 525 U.S. 366 (explains purpose of the Telecommunications Act to promote competition and interconnection duties)
- Verizon Cal., Inc. v. Peevey, 462 F.3d 1142 (standards for appellate review of summary judgment and compliance of arbitrated ICAs)
- Pac. Bell v. Pac W. Telecomm, Inc., 325 F.3d 1114 (state commission decisions arbitrary-and-capricious standard; ICAs interpreted as contracts)
- U.S. Telecom Ass’n v. FCC, 359 F.3d 554 (D.C. Cir. opinion addressing parts of the FCC Triennial Review Order)
- CoreTel Va., LLC v. Verizon Va., LLC, 752 F.3d 364 (ICA is a private agreement interpreted like other contracts)
- Sebelius v. Auburn Reg’l Med. Ctr., 133 S. Ct. 817 (jurisdictional limits and the requirement for a clear statement when treating statutory limits as jurisdictional)