At & T Com. of Virginia v. Bell Atlantic-Virginia

• Citation: 35 F.Supp.2d 493
• Decision Date: 05 February 1999
• Docket Number: Civ. Action No. 98-1721-A.
• Court: U.S. District Court — Eastern District of Virginia
• Parties: AT & T COMMUNICATIONS OF VIRGINIA, INC., Plaintiff, v. BELL ATLANTIC-VIRGINIA, INC., Defendant.

Page 493

35 F.Supp.2d 493

AT & T COMMUNICATIONS OF VIRGINIA, INC., Plaintiff, v. BELL ATLANTIC-VIRGINIA, INC., Defendant.

Civ. Action No. 98-1721-A.

United States District Court, E.D. Virginia, Alexandria Division.

February 5, 1999.

Mary Catherine Zinser, Mays & Valntine, McLean, VA, for plaintiff.

Richard C. Sullivan, Jr., Alexandria, VA, for defendant.

MEMORANDUM OPINION

BRINKEMA, District Judge.

Before the Court are the parties' cross-motions for summary judgment. There are three issues now before the Court: (1) whether a settlement agreement between the parents of these parties prohibits AT & T Communications of Virginia, Inc. (AT & T) from bringing this action; (2) whether this action should be dismissed without prejudice as a result of the Supreme Court's recent decision in AT & T Corp. v. Iowa Util. Bd., ___ U.S. ___, 119 S.Ct. 721, 142 L.Ed.2d 835 (1999); and (3) whether the Telecommunications Act of 1996 (1996 Act) requires Bell Atlantic-Virginia, Inc. (Bell Atlantic) to offer dialing parity for intrastate intraLATA toll calls in the absence of implementing regulations by the FCC or the Virginia State Corporation Commission. The parties agree that there are no disputes as to material facts and we find the issues ripe for summary judgment.

BACKGROUND

LATAs (local access transport areas) are contiguous geographical areas by which telephone service is organized. Most states have more than one LATA and some LATAs cover parts of more than one state. Long-distance calls are those between two LATAs, or interLATA calls. Local calls are calls within a close geographical area that is generally smaller than a single LATA. IntraLATA toll calls are calls within the same LATA but beyond the range for local calls. The instant action is solely concerned with intrastate intraLATA toll calling.

After the break-up of AT & T in 1982, Bell Atlantic and other Bell operating companies (BOCs)¹ were granted monopolies in intraLATA toll markets but were prohibited from carrying interLATA toll calls. In 1995, the Virginia State Corporation Commission (SCC) partially eliminated Bell Atlantic's monopoly by authorizing other carriers to provide intraLATA toll calls, but only on an access code basis. This means that while Bell Atlantic is the default carrier when a customer dials "1" plus the area code and phone number, that customer can use the services of a separate carrier by first dialing an access code, usually in the form "10-10-è#". Implementation of "dialing parity" means offering customers the choice of pre-subscribing, or choosing a different carrier to be the default carrier for toll calls. Bell Atlantic has not implemented dialing parity for intrastate intraLATA toll calls.

On February 8, 1996, Congress passed the 1996 Act in order "to foster competition in local telephone service." GTE South Inc. v. Morrison, 957 F.Supp. 800, 801 (E.D.Va. 1997). In doing so, it "ended the longstanding regime of state-sanctioned monopolies ... [by] fundamentally restructur[ing] local telephone markets." AT & T Corp. v. Iowa Util. Bd., ___ U.S. ___, 119 S.Ct. 721, ___, 142 L.Ed.2d 835, 1999 WL 24568, *3 (1999). "States may no longer enforce laws that impede competition, and incumbent LECs are subject to a host of duties intended to facilitate market entry." Id. One of these duties applicable to all LECs is "[t]he duty to provide dialing parity to competing providers of telephone exchange service and telephone toll service". 47 U.S.C.A. § 251 (Supp.1998). Another provision of the 1996 Act requires BOCs that exercise the authority to provide interLATA (i.e., long distance) services to provide intraLATA toll dialing parity. See id. at § 271(e)(2)(A). However, BOCs that were not required to implement intraLATA toll dialing parity by December 19, 1995 and that are not located in single-LATA states are protected from any state action requiring implementation of intraLATA toll dialing parity until the earlier of their being authorized to provide interLATA services or February 8, 1999. See id. at § 271(e)(2)(B).

In accord with its obligations under the 1996 Act, see id. at 251(d)(1), the FCC promulgated regulations providing that "[a] LEC that does not begin providing in-region, interLATA or in-region, interstate toll services in a state before February 8, 1999, must implement intraLATA and interLATA toll dialing parity throughout that state on February 8, 1999...." 47 C.F.R. § 51.211 (1997). Consistent with the FCC regulations, Bell Atlantic submitted an IntraLATA Presubscription Implementation Plan to the Virginia SCC on December 4, 1996. The Virginia SCC approved this plan on May 9, 1998 in an order requiring intraLATA toll dialing parity by February 8, 1999.

Lawsuits filed by incumbent LECs across the country challenging the FCC's regulations, including § 51.211, were consolidated in the United States Court of Appeals for the Eighth Circuit. In August 1997, that Court vacated the FCC's regulations as they affected intrastate communications, finding that the FCC did not have jurisdiction to regulate wholly intrastate activity. See California v. F.C.C., 124 F.3d 934, 938 (8th Cir.1997), rev'd, AT & T Corp. v. Iowa Utils. Bd., ___ U.S. ___, 119 S.Ct. 721, 142 L.Ed.2d 835 (1999). On November 6, 1998, relying on this ruling and at Bell Atlantic's request, the Virginia SCC suspended its previous order setting the February 8, 1999 deadline. On January 25, 1999, the United States Supreme Court reversed the Eight Circuit, finding that the FCC has jurisdiction to promulgate rules regarding intrastate communication pursuant to provisions of the 1996 Act. The FCC will officially regain jurisdiction to regulate intrastate intraLATA toll calls once the mandate is returned to the Eighth Circuit on February 19, 1999 and the court vacates its order vacating the FCC regulations. In the interim, there are no valid federal or state regulations requiring intrastate intraLATA dialing parity.

Bell Atlantic asserts that it will not implement intrastate intraLATA toll dialing parity until it receives authority to offer interLATA services or it is ordered to do so by the FCC or the Virginia SCC. AT & T brings this action for declaratory relief, arguing that Bell Atlantic is required by the 1996 Act to provide dialing parity for intrastate intraLATA toll calls by February 8, 1999; for an injunction requiring Bell Atlantic to take the necessary steps to provide dialing parity by that date; and for an award of damages for any delay that might result from Bell Atlantic's failure to implement dialing parity on time.

ANALYSIS

I. Effect of a Previous Settlement Agreement

Before reaching the merits of AT & T's claim, Bell Atlantic contends that AT & T is prevented from maintaining this action by a 1996 settlement agreement releasing Bell Atlantic from any and all claims relating to intraLATA dialing parity. On April 4, 1995, AT & T filed a counterclaim in a suit brought against it by Bell Atlantic Corporation, Bell Atlantic's parent, alleging, in part, that the parent had violated state and federal antitrust laws by refusing to implement intraLATA toll dialing parity. See Def.Ex. B, Bell Atlantic Corp. v. AT & T Corp, Answer, Counterclaims and Jury Demand, Docket No. 95-610 (D.N.J. Apr. 4, 1995). As part of the settlement of that action, entered on January 23, 1996, AT & T released Bell Atlantic Corporation and all of its subsidiaries, including Bell Atlantic,

from (i) the Counterclaim and (ii) any and all manner of claims, ... liabilities, damages, potential actions, causes of action, suits, ... and controversies of any kind and nature whatsoever, at law, in equity, or otherwise, whether known or unknown, which have arisen or might subsequently arise directly or indirectly from the allegations set forth in the Counterclaim.

See Def.Ex. A, Settlement Agreement at ¶ 2(a). The agreement provided an exception to the general release for

any pending proceeding before any regulatory body or ... AT & T's ability to bring or participate in future regulatory proceedings provided that, in such pending or future proceedings, AT & T does not (a) claim that the AT & T Released Claims violate federal antitrust laws or state antitrust, fair competition or other trade regulations laws or (b) seek damages, refund or reimbursement for the AT & T Released Claims.

Id. The agreement is governed by Delaware law. See id. at ¶ 3.

Bell Atlantic asserts that under this settlement agreement, AT & T gave up its right to pursue any claims related to intraLATA dialing parity, regardless of when the conduct occurred, when the cause of action arose, or when the cause of action was created. Because this action relates to intraLATA dialing parity and because this is not a regulatory proceeding, Bell Atlantic contends that AT & T has no right to bring it. Although it maintains that notice of future causes of action is irrelevant given the breadth of this release, Bell Atlantic also argues that the agreement was signed less than three weeks before the 1996 Act was passed, demonstrating that AT & T had knowledge of the 1996 Act's intraLATA dialing parity provisions and did not reserve the right to sue under those provisions.

AT & T responds that the settlement agreement did not release claims arising from post-release conduct or as a result of subsequently-enacted statutes. Furthermore, if Bell Atlantic's construction of the agreement is accurate, it is void as against public policy. AT & T first asserts that even extremely broad general releases cannot cover post-release conduct. There is no controlling Delaware authority on that point,² although Delaware law recognizes the validity of broad general releases. In Hob Tea Room, Inc. v. Miller, 89 A.2d 851, 856 (Del. 1952), for example, the Delaware Supreme Court discussed

the concept of a general release, one which is intended to cover everything — what the parties presently have in mind, as well as what they do not have in mind, but...