Global Naps, Inc. v. Verizon New England, Inc.

Decision Date26 August 2004
Docket NumberNo. 02-11501-MLW.,02-11501-MLW.
Citation332 F.Supp.2d 341
PartiesGLOBAL NAPS, INC., Plaintiff, v. VERIZON NEW ENGLAND INC., et al., Defendants.
CourtU.S. District Court — District of Massachusetts

Cameron F. Kerry, Mintz, Levin, Cohn, Ferris, Glovsky & Popeo, PC, Boston, MA, Jeffrey C. Melick, Global NAPS, Inc, Norwood, MA, for Global NAPs, Inc., Plaintiff.

Bruce P. Beausejour, Keefe B. Clemons, Verizon Communications, Boston, Scott H. Angstreich, Kellogg, Huber, Hansen, Todd & Evans, P.L.L.C., Washington, DC, Susan Paulson, Attorney General's Office, Boston, MA, for Verizon New England, Inc., Massachusetts Department of Telecommunications and Energy, Paul B. Vasington, In his capacity as Commissioner, James Connelly, In his capacity as Commissioner, W. Robert Keating, In his capacity as Commissioner, Deirdre K. Manning, In her capacity as Commissioner, Eugene J. Sullivan, In his capacity as Commissioner, Defendants.

MEMORANDUM AND ORDER

WOLF, District Judge.

I. INTRODUCTION AND SUMMARY

Global NAPs, Inc. has sued Verizon New England Inc. ("Verizon"), the Massachusetts Department of Telecommunications and Energy (the "DTE" or the "Department") and the Commissioners of the Department in an attempt to overturn an Order of the DTE interpreting and approving an interconnection agreement ("ICA") between Global NAPs and Verizon because the DTE has construed that agreement as not requiring Verizon to make certain payments to Global NAPs. After filing suit to seek reversal of the original decision of the DTE, Global NAPs petitioned the DTE for reconsideration. When the DTE denied that request, Global NAPs filed a second suit seeking reversal of the denial of its petition for reconsideration. The court allowed the joint motion of all parties to consolidate the two cases.

The parties have filed cross-motions for summary judgment. On March 9, 2004, the court heard oral argument on those motions. For the reasons described in this Memorandum: there are no material facts in dispute; Global NAPs' Motion for Summary Judgment in being allowed in part; Verizon and the DTE's Motions for Summary Judgment are being denied; and this case is being remanded to the DTE for further proceedings consistent with this Memorandum.

This case presents complex questions of law arising from a complicated statute, the Telecommunications Act of 1996 (the "Act"). Judges have understandably differed, and undoubtedly will continue to differ, on how the complex and not always clear Act apportions authority among state regulatory agencies, the Federal Communications Commission (the "FCC"), state courts, and federal courts. In what appears to be an issue of first impression in this circuit if not the nation, the court concludes that, in the facts and circumstances of this case, the Full Faith and Credit Clause of the Constitution mandates that if a first state's regulatory agency acting in a judicial capacity issues a final decision interpreting an interconnection agreement, a second state must give that decision whatever preclusive effect the courts of the first state would give it. Since the DTE did not observe this mandate in the instant case, the court is remanding the case to the DTE so that it can conduct any necessary further proceedings and, in any event, issue a decision consistent with this requirement.

However, as summarized below, while the DTE must accept the interpretation of the Rhode Island Public Utilities Commission (the "RIPUC") on common language in agreements between the parties, the ultimate question of whether Verizon was, during the relevant period, required to pay Global NAPs reciprocal compensation for calls to internet service providers completed by Global NAPs ("ISP Traffic" or "ISP-bound Traffic") subject to the Massachusetts agreement remains open and must be decided by the DTE.

In summary, this Memorandum explains the following. In November 1999, the RIPUC decided a complaint brought by Global NAPs against Verizon. Record ("R.") at 313. The complaint was assigned to docket number 2967. Id. Global NAPs complained that Verizon was refusing to pay reciprocal compensation that it owed under Section 5.7.2.3 of their agreement concerning Rhode Island. Id. Section 5.7.2.3 provides, in pertinent part, that:

The Parties ... disagree as to whether ... "ISP Traffic" ... constitutes Local Traffic as defined herein, and the charges to be assessed in connection with such traffic. The issue of whether such traffic constitutes Local Traffic on which reciprocal compensation mus[t] be paid pursuant to the 1996 Act is presently before the FCC in CCB/CPD 97-30 and may be before a court of competent jurisdiction. The Parties agree that the decision of the FCC in that proceeding, or [of] such court, shall determine whether such traffic is Local Traffic (as defined herein) and the charges to be assessed in connection with ISP Traffic. If the FCC or such court determines that ISP Traffic is Local Traffic, as defined herein, or otherwise determines that ISP Traffic is subject to reciprocal compensation, it shall be compensated as Local Traffic under this Agreement unless another compensation scheme is required under such FCC or court determination. Until resolution of this issue, [Verizon] agrees to pay GNAPS Reciprocal Compensation for ISP traffic.

R. at 356-57 (emphasis added). Thus, Section 5.7.2.3 provided that until the dispute concerning whether the Act required reciprocal compensation for ISP Traffic (the "issue") was decided by the FCC or a court of competent jurisdiction, Verizon would pay reciprocal compensation to Global NAPs.

Verizon argued that its interim obligation to pay reciprocal compensation was resolved by the FCC when it issued its February 26, 1999 Internet Traffic Order ("ITO"). R. at 313. The RIPUC decided that the ITO did not decide the issue and that the ITO alone did not resolve the parties' dispute. R. at 316. The RIPUC decided that, under the ITO, it had the authority and, implicitly, a duty to resolve disputes concerning reciprocal compensation. Id. It further decided that the fact that Global NAPs filed a complaint against Verizon created a presumption that the issue was not resolved and that Verizon had failed to rebut this presumption by showing that Global NAPs' complaint did not have a good faith basis. R. at 316-17. Accordingly, the RIPUC ordered Verizon to pay Global NAPs reciprocal compensation for ISP Traffic pending the resolution of Docket No. 2967. R. at 317.

In January 2002, the RIPUC decided a second complaint brought by Global NAPs against Verizon in the same docket. R. at 192. Verizon had once again ceased paying reciprocal compensation for ISP Traffic under the parties' agreement. Id. Verizon argued that the FCC's Order on Remand from the D.C. Circuit, which was effective June 14, 2001, resolved the issue of whether ISP Traffic was subject to reciprocal compensation under the Act, thus terminating its interim obligation to pay. R. at 193. Global NAPs asserted that the issue was not resolved because the parties had not yet had an opportunity to fully appeal the Order on Remand. Id.

The RIPUC decided that the Order on Remand resolved the issue within the meaning of the parties' agreement notwithstanding any appeals that might be taken from it. R. at 199. The RIPUC distinguished its earlier decision that the Internet Traffic Order "was not dispositive of the reciprocal compensation issue because: (1) the FCC did not definitively resolve whether ISP-bound traffic was subject to reciprocal compensation, (2) the FCC left jurisdiction with the state commissions to determine whether reciprocal compensation payments were due for ISP-bound traffic, and (3) the FCC had not established a recovery mechanism or interim recovery mechanism for ISP-bound traffic, but rather, had indicated the parties should be bound by their ICAs." R. at 198.

In June 2002, the DTE issued its decision in this case. R. at 353. The parties had asked the DTE to approve their interconnection agreement. R. at 354. That agreement included, verbatim, the language of Section 5.7.2.3 of the Rhode Island agreement. However, Verizon and Global NAPs disputed the impact of Section 5.7.2.3 in Massachusetts. Compare R. at 359 with R. at 363. Verizon also argued that if Global NAPs' interpretation of the agreement were correct, the DTE should reject the agreement because it is contrary to Massachusetts public policy. R. at 360.

Global NAPs asserted that Verizon was collaterally estopped from relitigating the issues decided by the RIPUC. R. at 363. The DTE rejected this argument. R. at 365-66. Instead, the DTE decided that the issue was "resolved in Massachusetts with the issuance of the FCC's Internet Traffic Order." R. at 368. Based on that interpretation of the effect of the ITO, the DTE approved the agreement.

This court finds that the issue of whether the ITO alone "resolved the issue" within the meaning of the parties' identical agreements was litigated and decided by the RIPUC and cannot be relitigated before the DTE. Because the DTE did not, as required, adopt the RIPUC's interpretation and application of Section 5.7.2.3, this case is being remanded. On remand, the DTE must accept that the ITO alone did not, within the meaning of the parties' Massachusetts agreement, resolve the question of whether Verzion was obligated to pay Global NAPs reciprocal compensation for ISP Traffic because the ITO left open the possibility that state legal or equitable principles might establish a duty to pay.

The DTE must then decide, in the first instance, whether and when the Massachusetts state legal or equitable principles that might serve as the foundation of any obligation to pay reciprocal compensation were so well-settled that the issue was resolved within the meaning of the parties' agreement through a combination of the ITO and Massachusetts state law. The RIPUC decided that the issue was not resolved because, in 1999...

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