377 F.3d 1081 (9th Cir. 2004), 03-15453, Verizon Delaware, Inc. v. Covad Communications Co.

Docket Nº:03-15453
Citation:377 F.3d 1081
Party Name:Verizon Delaware, Inc. v. Covad Communications Co.
Case Date:July 27, 2004
Court:United States Courts of Appeals, Court of Appeals for the Ninth Circuit
 
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Page 1081

377 F.3d 1081 (9th Cir. 2004)

VERIZON DELAWARE, INC.; Verizon New England, Inc.; Verizon Maryland, Inc.; Verizon New Jersey, Inc.; Verizon New York, Inc.; Verizon Pennsylvania, Inc.; Verizon Washington, D.C., Inc., Plaintiffs-Appellants,

v.

COVAD COMMUNICATIONS COMPANY; Dieca Communications, Inc., Defendants-Appellees.

Verizon Delaware, Inc.; Verizon New England, Inc.; Verizon Maryland, Inc.; Verizon New Jersey, Inc.; Verizon New York, Inc.; Verizon Pennsylvania, Inc.; Verizon Washington, D.C., Inc., Plaintiffs-Appellees,

v.

Covad Communications Company; Dieca Communications, Inc., Defendants-Appellants.

Nos. 03-15453, 03-15557.

United States Court of Appeals, Ninth Circuit

July 27, 2004

Page 1082

John Thorne, Arlington, VA, for plaintiffs-appellants/ cross-appellees Verizon Delaware, Inc., et al.

Merril Hirsh, Washington, D.C., for defendants-appellees/ cross-appellants Covad Communications Co., et al.

Appeal from the United States District Court for the Northern District of California; Jeremy Fogel, District Judge, Presiding. D.C. No. CV-01-20524-JF.

Before: REINHARDT, NOONAN, and PAEZ, Circuit Judges.

NOONAN, Circuit Judge:

The plaintiffs (collectively Verizon) appeal the judgment of the district court in favor of the defendants (collectively Covad). Federal question and diversity jurisdiction exist. The district court granted summary judgment to Covad, ruling that Verizon's state law claims against Covad were barred by the filed rate doctrine governing the charges of regulated carriers. The district court further denied Verizon's motion, filed after the judgment, to amend its complaint to sue on the basis of the filed tariffs.

We agree with the district court that the filed rate doctrine prevents the recovery of any charge not specified in the relevant tariff. We hold, however, that there is no barrier to Verizon suing to enforce what it has filed.

Covad cross-appeals the district court's denials of its motions to strike Verizon's original and first amended complaints. Covad also cross-appeals the dismissal of its counter-claims with prejudice. We affirm the denials of Covad's motions to strike Verizon's complaints but hold that summary judgment against Covad's counterclaims was improper because Covad was not given adequate notice that the sufficiency of its claims would be at issue or an opportunity to respond.

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FACTS

The several telephone companies here denominated "Verizon" are the corporate descendants of Bell Atlantic, a fusion of two former "baby Bell" telephone companies with another company. As an "incumbent local exchange" carrier or ILEC, Verizon is required to lease access to its network, "on rates, terms, and conditions that are just, reasonable, and nondiscriminatory," to newer market entrants described as "competitive local exchange carriers" or CLECs. Telecommunications Act of 1996, Pub.L. 104-104, § 251(c)(2)(D), 110 Stat. 56, 62 (codified at 47 U.S.C. § 251(c)(2)(D)). Covad is such a competitor. As required by the Telecommunications Act, Verizon has entered into interconnection agreements (IAs) with Covad setting out the rates, terms and conditions. 47 U.S.C. § 251(c)(1). Each IA is lengthy and detailed; the IA governing service in Delaware, for example, is 78 pages long and incorporates more than 140 pages of schedules and appendices plus an 11-page amendment. As mandated by the Telecommunications Act, the IAs have been approved by the relevant State commissions in the jurisdictions in which Verizon and Covad operate and filed for public inspection and copying. See 47 U.S.C. § 252(e),(h).

We take from Verizon's complaint its clear description of the technical side of the business:

Verizon's telecommunications network consists of three basic components: (1) low-capacity circuits running from each customer, (2) switches, and (3) high-capacity circuits between switches for bulk transmissions. The high-capacity circuits, or interoffice transport facilities, create a network backbone between switches. The switches are located in buildings known as "central offices." This part of the network is largely invisible to the public.

From the central offices, more familiar aspects of the network (such as overhead lines, poles, and boxes) carry individual pairs of copper wires, called "loops," a relatively short distance to a customer's premises. These loops were designed for voice communications and require costly upgrades to transmit large amounts of data efficiently.

Verizon is in the business of providing "plain old telephone service" over its telecommunications networks. Verizon is also in the business of providing high-speed Internet access using DSL [digital subscriber lines] technology. DSL works by placing special equipment at each end of the loop. This equipment enhances the basic loop circuit with a signal that dramatically increases the speed at which data can travel the "last mile" between the central office and the customer's premises....

Covad provides its service by placing DSL equipment in leased space in Verizon's central offices, and by leasing Verizon's loops and high-capacity circuits to connect end users to ISPs [internet service providers]. The practice of placing equipment in leased space in the ILEC central office is known as "collocation." In each central office in its service area, Covad collocates a Digital Subscriber Line Access Multiplexer. This device connects the loops incoming from end users to the high-capacity circuits running to ISPs.

When Covad leases loops, the part of the circuit for which Verizon is responsible is carefully defined.

It runs from the central office to a network interface device ("NID") at the customer's premises. Covad or the customer installs and maintains the inside wiring connecting the customer's computer

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and DSL modem to the NID. In single-family homes inside wiring may consist of a series of wires running from the NID along the baseboards to jacks in a few rooms. In office or apartment buildings the situation is much more complex. Loops come in to a large box of NIDs, each of which may be connected to many wires running to different locations.

As internet users know, problems arise with connections. Where Covad is leasing Verizon network elements, a Covad customer's problem can arise from Covad or from Verizon equipment and infrastructure. Each filed IA stated that "Covad accepts responsibility for initial trouble isolation and providing [Verizon] with appropriate dispatch information based on its test results." Each IA also provided:

If (i) Covad reports to [Verizon] a Customer trouble, (ii) Covad requests a dispatch, (iii) [Verizon] dispatches a technician, and (iv) such trouble was not caused by [Verizon] facilities or equipment in whole or in part, then Covad shall pay [Verizon] a charge set forth in Exhibit A for time associated with said dispatch. In addition, this charge also applies when the Customer contact as designated by Covad is not available at the appointed time.

Six of the nine IAs in the record further provided:

If as the result of Covad instructions, [Verizon] is erroneously requested to dispatch within a [Verizon] Central Office or to a POT [point of termination] Bay ("dispatch in"), [Verizon] may levy on Covad an appropriate charge. If as the result of Covad instructions, [Verizon] is erroneously requested to dispatch outside a [Verizon] Central Office or to a POT Bay ("dispatch out"), [Verizon] may levy on Covad an appropriate charge.

The remaining agreements provided:

If as the result of Covad instructions, [Verizon] is erroneously requested to dispatch within a [Verizon] Central Office or to a POT [point of termination] Bay ("dispatch in"), a charge set forth in Exhibit A will be assessed per occurrence to Covad by [Verizon]. If as the result of Covad instructions,[Verizon] is erroneously requested to dispatch outside a [Verizon] Central Office or to a POT Bay ("dispatch out"), a charge set forth in Exhibit A will be assessed per occurrence to Covad by [Verizon].

Each agreement, as amended, contained a detailed schedule of fixed charges for trouble tickets erroneously requesting Verizon service. The Delaware IA, for example, authorized Verizon to charge Covad $44.63 if Covad erroneously requested a Verizon technician to examine a problem at one of Verizon's Central Offices (dispatch in) and $116.74 if Covad erroneously requested a Verizon technician to examine a problem at a Covad customer's location (dispatch out).

All but one of the agreements also incorporated a schedule governing Covad's right to a "billing credit" from Verizon if Verizon's service fell below performance standards. Trouble reports are factored into the performance metrics. The schedules also provided for an "adjustment of performance credit," stating:

The responsibility for authorizing a dispatch resides with Covad. Reductions will be made in the Performance Credit if necessary access is not available, or if a dispatch is made and no trouble is found, or if trouble is found to be on the Covad...

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