624 F.3d 123 (2nd Cir. 2010), 08-4518-cv, Southern New England Telephone Co. v. Global NAPs Inc.

Docket Nº:08-4518-cv.
Citation:624 F.3d 123
Opinion Judge:DEBRA ANN LIVINGSTON, Circuit Judge:
Party Name:SOUTHERN NEW ENGLAND TELEPHONE COMPANY, Plaintiff-Counter-Defendant-Appellee, v. GLOBAL NAPS INC., Defendant-Counter-Claimant-Appellant, Ferrous Miner Holdings, Ltd., Global NAPs Networks, Inc., Global NAPs New Hampshire, Inc., Global NAPs Realty, Inc., Defendants-Appellants.
Attorney:Joel Davidow, Kile Goekjian Reed & McManus, PLLC, Washington, D.C.; William J. Rooney, Jr., Jeffrey C. Melick, Global NAPs Inc., Norwood, MA, for Defendants-Appellants Global NAPs Inc., et al. Hans J. Germann, Christian F. Binnig, Mayer Brown LLP, Chicago, IL; Scott A. Chesin, Mayer Brown LLP, Ne...
Judge Panel:Before: POOLER, HALL, and LIVINGSTON, Circuit Judges.
Case Date:August 25, 2010
Court:United States Courts of Appeals, Court of Appeals for the Second Circuit
 
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624 F.3d 123 (2nd Cir. 2010)

SOUTHERN NEW ENGLAND TELEPHONE COMPANY, Plaintiff-Counter-Defendant-Appellee,

v.

GLOBAL NAPS INC., Defendant-Counter-Claimant-Appellant,

Ferrous Miner Holdings, Ltd., Global NAPs Networks, Inc., Global NAPs New Hampshire, Inc., Global NAPs Realty, Inc., Defendants-Appellants.

No. 08-4518-cv.

United States Court of Appeals, Second Circuit.

August 25, 2010

Argued: Aug. 6, 2009.

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Joel Davidow, Kile Goekjian Reed & McManus, PLLC, Washington, D.C.; William J. Rooney, Jr., Jeffrey C. Melick, Global NAPs Inc., Norwood, MA, for Defendants-Appellants Global NAPs Inc., et al.

Hans J. Germann, Christian F. Binnig, Mayer Brown LLP, Chicago, IL; Scott A. Chesin, Mayer Brown LLP, New York, NY; Timothy P. Jensen, Hinckley, Allen & Snyder LLP, Hartford, CT, for Plaintiff-Appellee Southern New England Telephone Co.

Scott H. Angstreich, Kelly P. Dunbar, Kellogg, Huber, Hansen, Todd, Evans & Figel, PLLC, Washington, D.C.; Richard P. Owens, Verizon, Boston, MA, for amicus curiae Verizon Telephone Cos.

Before: POOLER, HALL, and LIVINGSTON, Circuit Judges.

DEBRA ANN LIVINGSTON, Circuit Judge:

This case presents a number of questions arising from a dispute between Plaintiff-Appellee The Southern New England Telephone Company (" SNET" ) and Defendant-Appellant Global NAPs Inc. (" Global" ), its affiliated companies Global NAPs Networks, Inc., Global NAPs New Hampshire, Inc., and Global NAPS Realty, Inc., and its parent company Ferrous Miner Holdings, Inc. (" Ferrous Miner" ) (collectively " defendants" or " appellants" ) over Global's alleged failure to pay SNET for twenty-six special access servers Global ordered from SNET between 2002 and 2004. On March 26, 2007, the United States District Court for the District of Connecticut (Janet C. Hall, District Judge ) granted in part SNET's motion for summary judgment on Count I of SNET's

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complaint, which alleged that Global owed SNET payment for twenty-one of the twenty-six servers at issue at a rate determined by SNET's federal tariff. The district court thereafter granted SNET's motion for a default judgment against both Global and the remaining appellants for failure to comply with various discovery orders related to their corporate structure and financial information, and the court entered a default judgment against all defendants on July 9, 2008. The default judgment in turn incorporated two earlier court orders: an order of July 9, 2007, sanctioning Global for civil contempt for failure to comply with separate discovery orders and an April 25, 2008, order imposing on Global the obligation to pay SNET's fees and costs in connection with the litigation of SNET's contempt motion. The default judgment resulted in a joint and several award to SNET in the amount of $5,247,781.45, plus $645,761.41 in fees and costs. We affirm, holding that 1) the district court had subject matter jurisdiction over this action, 2) the district court had personal jurisdiction over the appellants, and 3) the imposition of a civil contempt order and a default judgment as discovery sanctions pursuant to Federal Rule of Civil Procedure 37 was not an abuse of the district court's discretion. In a summary order filed contemporaneously with this opinion, we also conclude that the district court properly entered summary judgment in favor of SNET on the merits of Count I of its complaint.

I. Background

A.

In order to " promote competition and reduce regulation" in the provision of local telephone service, which up until that point had been supplied through a system of monopoly local carriers, Congress passed the Telecommunications Act of 1996, Pub.L. No. 104-104, 110 Stat. 56 (codified as amended in scattered sections of 47 U.S.C.) (" Telecommunications Act" or " Act" ). See id. pmbl., 110 Stat. 56; see also Global NAPs, Inc. v. Verizon New England, Inc., 454 F.3d 91, 94 (2d Cir.2006); Peter W. Huber et al., Federal Telecommunications Law: 2004 Cumulative Supplement (2d ed. 1999) § 1.2. To effectuate these purposes, the Act requires telecommunications carriers to " interconnect" with each other's networks. See 47 U.S.C. § 251(a)(1). Because new entrants into a local telecommunications market, lacking the established network of the preexisting carrier, face high barriers to entry, so-called " incumbent local exchange carriers" (" ILECs" )-the preexisting local carriers that had provided telephone services to a given area prior to the effective date of the Act, see id. § 251(h)(1)-have a duty to negotiate agreements with so-called competing local exchange carriers (" CLECs" ), newcomer carriers who request to interconnect with the ILEC's network. See id. §§ 251(c)(1); 252(a)-(b); see also BellSouth Telecomms., Inc. v. MCImetro Access Transmission Servs., Inc., 317 F.3d 1270, 1273 (11th Cir.2003) (en banc). These agreements, called interconnection agreements (" ICAs" ), must provide a requesting CLEC with interconnection into the ILEC's network " for the transmission and routing of telephone exchange service and exchange access" according to standards set forth in the Act. 47 U.S.C. § 251(c)(2)(A)-(D).

The Act lays out a detailed procedure for carriers to follow in entering into ICAs. Carriers may adopt an ICA either through voluntary negotiation or through a process referred to as " arbitration" in the relevant state public utilities commission (" PUC" ). Under the first option, upon receiving a request to interconnect from a CLEC an ILEC may enter into a binding agreement

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with the CLEC for the provision of interconnection and related services. 47 U.S.C. § 252(a)(1). Alternatively, if the parties cannot agree privately on the terms of an agreement, either party may petition the relevant state PUC to " arbitrate" " any open issues." Id. § 252(b)-(c). In either case, the state PUC must also approve the final ICA. Id. § 252(e)(1). The state PUC may reject a voluntarily negotiated agreement if it concludes that the agreement results in " discriminat[ion] against a ... carrier not a party to the agreement" or if the agreement is " not consistent with the public interest, convenience, and necessity." Id. § 252(e)(2)(A). The PUC may reject an agreement adopted after an arbitration proceeding if it finds that the agreement does not conform to the standards for ICAs laid out in § 251 of the Act. Id. § 252(e)(2)(B).1

The Telecommunications Act provides varying routes to judicial review at this " approval stage" of an ICA, depending on whether the state PUC has acted on the agreement within a statutory time limit. The PUC has a limited amount of time in which to grant or deny its final approval of an ICA. Id. § 252(e)(4). If the PUC makes a " determination" under § 252, " any party aggrieved by such determination may bring an action in an appropriate Federal district court to determine whether the agreement ... meets the requirements of [§§ 251 and 252]." Id. § 252(e)(6). If, however, a state PUC fails to take an action either granting or denying its final approval to an ICA within the § 252(e)(4) time limits, the Federal Communications Commission (" FCC" ) may " preempt[ ]" the state PUC's jurisdiction over the ICA and undertake to itself the role of approving or rejecting the agreement. Id. § 252(e)(5). In such a case, the FCC proceeding and any judicial review that follows is the " exclusive remed[y]" for a state PUC's failure to act on an ICA. Id. § 252(e)(6).

As a separate matter, beginning with the Communications Act of 1934, ch. 652, 48 Stat. 1064 (1934) (codified as amended at 47 U.S.C. § 151 et seq. ), federal law has required common carriers of communications to file a list of tariffs with the FCC specifying the charges the carriers will impose for the transmission of communications over their systems and between their systems and others. See 47 U.S.C. § 203(a); ICOM Holding, Inc. v. MCI Worldcom, Inc., 238 F.3d 219, 221 (2d Cir.2001). Pursuant to the " filed rate doctrine," once its tariff is filed and approved by the FCC, a carrier may not charge a rate for a particular service different from that specified in the tariff, and it may not " extend to any person any privileges or facilities in [any] communication" except as specified in the tariff. 47 U.S.C. § 203(c); see also Am. Tel. & Tel. Co. v. Cent. Office Tel., Inc., 524 U.S. 214, 222, 118 S.Ct. 1956, 141 L.Ed.2d 222 (1998); ICOM, 238 F.3d at 221. Until replaced by a new tariff, filed with and approved by the FCC pursuant to the same procedure, a common carrier's tariff has the force of law; parties may not alter the rights and liabilities defined in the tariff by contract or through any other means. ICOM, 238 F.3d at 221.

B.

In 2000, Global, a CLEC, asked SNET, an ILEC, to enter into an ICA pursuant to the Telecommunications Act. Among the issues to be resolved in this agreement were " the terms and conditions under which the parties would physically interconnect

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their networks at a ‘ point of interconnection,’ or ‘ POI.’ " S. New England Tel. Co. v. Global Naps, Inc., 482 F.Supp.2d 216, 219 (D.Conn.2007) (summary judgment ruling) (" SNET I " ). The parties submitted to arbitration before the Connecticut Department of Public Utility Control (" DPUC" ), which approved the inclusion of certain language in the ICA relevant to which party would bear the responsibility of transporting so-called " FX" or " foreign exchange" traffic. In October 2002, the parties physically interconnected their networks in New Haven, Connecticut.

Between 2002 and 2005, Global ordered a number of circuits and signaling links from SNET to carry Global traffic. According to SNET's complaint, SNET billed Global for providing these services in accordance with the rates set out in SNET's federal tariff, but Global...

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