Global Naps, Inc. v. Bell Atlantic-New Jersey, Civil Action No. 99-4074 (JAG).

• Decision Date: 30 September 2003
• Docket Number: Civil Action No. 99-4074 (JAG).
• Citation: 287 F.Supp.2d 532
• Parties: GLOBAL NAPS, INC., Plaintiff, v. BELL ATLANTIC-NEW JERSEY, INC., et al., Defendants.
• Court: U.S. District Court — District of New Jersey

Page 532

287 F.Supp.2d 532

GLOBAL NAPS, INC., Plaintiff, v. BELL ATLANTIC-NEW JERSEY, INC., et al., Defendants.

Civil Action No. 99-4074 (JAG).

United States District Court, D. New Jersey.

September 30, 2003.

COPYRIGHT MATERIAL OMITTED

James H. Laskey, Norris, McLaughlin & Marcus, PC, Somerville, N.J., Christopher W. Savage, Cole, Raywid, & Braverman, Washington, DC, for Plaintiffs.

Anne S. Babineau, Wilentz, Goldman & Spitzer, Woodbridge, NJ, Aaron M. Panner, Kellogg, Huber, Hansen, Todd & Evans, Washington, DC, for Defendant Verizon.

OPINION

GREENAWAY, District Judge.

INTRODUCTION

This matter comes before the Court on defendant's, Bell Atlantic-New Jersey, Inc. ("Verizon"), motion for judgment on the pleadings dismissing Counts IV and V of plaintiff's, Global NAPs, Inc. ("GNAPs"), complaint. For the reasons discussed below Counts IV and V are dismissed.

FACTS

GNAPs is a telecommunications corporation that provides, or is authorized to provide, telecommunications services in various states. In the instant case, GNAPs sought to enter Verizon's local telephone market by negotiating an interconnection agreement with Verizon. After negotiations between the parties regarding the interconnection agreement failed, GNAPs pursued its administrative remedies before the New Jersey Board of Public Utilities (the "BPU"). This case arises out of the arbitration between GNAPs and Verizon, and the aftermath of the proceedings.

The following represents a summary of the relevant background and facts gleaned from GNAPs's Complaint and the parties' submissions on Verizon's Motion for Judgment on the Pleadings.

I. The Telecommunications Act of 1996

Congress passed the Telecommunications Act of 1996 ("the 1996 Act"), Pub.L. No. 104-104, 110 Stat. 56 (1996) (codified at scattered sections of 47 U.S.C.), to promote competition in the telecommunications industry, including the previously monopolized local telephone markets. See Telecommunications Act of 1996, Pub.L. No. 104-104, 110 Stat. 56, 56; see also H.R. Conf. Rep. No. 104-458, at 113 (1996), reprinted in 1996 U.S.C.C.A.N. 124; 142 Cong. Rec. S718 (1996) (statement of Sen. Robert Dole ®-Kan.) commenting that the 1996 Act will "provide for a pro-competitive, deregulatory national policy framework designed to accelerate rapid private sector deployment of advanced telecommunications and information technologies and services to all Americans by opening all telecommunications markets to competition".

To support the goal of increased competition, the 1996 Act imposes certain obligations on incumbent local exchange companies ("ILECs"). These obligations are designed to allow new entrants, known as competitive local exchange companies ("CLECs"), to use some or all of the ILECs' established networks to offer competitive local telephone service.

Section 251 of the 1996 Act describes the various ways ILECs are required to share their networks with competitors in order to promote market entry by CLECs, and sets out detailed rules implementing the general duty of telecommunications carriers to interconnect with each other's facilities and equipment. See 47 U.S.C. § 251. When a CLEC seeks to enter a new market, the ILEC must "provide ... interconnection with" the incumbent's existing network, § 251(c)(2), and the parties must then establish "reciprocal compensation arrangements" for transporting and terminating the calls placed by each others' customers. § 251(b)(5). Section 251 of the 1996 Act also outlines the substantive ways in which potential competitors may enter local telephone markets by using an incumbent provider's existing networks. To this end, § 251 details the ILEC's obligation to provide requesting CLEC's interconnection, unbundled network elements, and services for resale. See 47 U.S.C. §§ 251(c)(2)-(4).

Section 252 of the 1996 Act sets forth procedures by which CLECs may request and obtain interconnection, unbundled network elements and services for resale from an ILEC, pursuant to § 251. Specifically, § 252 codifies the framework for the negotiation, arbitration, and approval of interconnection agreements between ILECs and CLECs. See 47 U.S.C. § 252. Under the 1996 Act, ILECs and CLECs are required to engage in good faith negotiations regarding the terms and conditions of the interconnection agreement. See 47 U.S.C. § 252(b)(5). If negotiations fail, either party may petition the state commission for arbitration of any unresolved issues. See 47 U.S.C. § 252(b)(1). If a state commission elects not to assume responsibility, the FCC retains authority to conduct arbitration proceedings. See 47 U.S.C. § 252(e)(5). All agreements, whether adopted by mutual negotiation or arbitration, are subject to review by the state commission or the FCC. See 47 U.S.C. § 252(e)(1). If the state commission does not take action on an arbitrated agreement within the allotted time period, the agreement is deemed approved. See 47 U.S.C. § 252(e)(4).

When a state commission makes a determination, any party "aggrieved" by such determination may file suit in District Court regarding "whether the agreement or statement meets the requirements of Section[s] 251 ... and [§ 252]." See 47 U.S.C. § 252(e)(6). When a state commission opts not to act and the FCC assumes the regulatory role, the Hobbs Act, 28 U.S.C. § 2342, authorizes federal appellate court review of orders of the FCC.

Finally, a CLEC need not negotiate a customized interconnection agreement to enter an ILEC's existing market. Section 252(i) provides an alternate means for establishing interconnection. Under § 252(i), "[a] local exchange carrier shall make available any interconnection, service, or network element provided under an agreement approved under this section to which it is a party to any other requesting telecommunications carrier upon the same terms and conditions as those provided in the agreement." See 47 U.S.C. § 252(i). This provision allows a CLEC to adopt or "opt into" the terms and conditions of an existing interconnection agreement between the ILEC and a different telecommunications carrier.

II. Procedural History

On January 26, 1998, GNAPs sought to enter into an interconnection agreement with Verizon and requested interconnection and network elements from Verizon pursuant to 47 U.S.C. § 251(c) and 252(a).¹ (Compl. ¶ 34.)² The parties could not agree on all the issues, and when negotiations between the parties failed to yield a binding executed interconnection agreement GNAPs filed a petition "for Arbitration of Interconnection Rates, Terms and Conditions and Related Relief" with the BPU on June 30, 1998, pursuant to 47 U.S.C. § 252(b)(1).³ (Compl ¶¶ 34-35.)

In September 1998, after they filed for arbitration, and while the requested arbitration was still pending, GNAPs decided to try another strategy for interconnection and sought to "opt into" an existing interconnection agreement, previously approved by the BPU, between Verizon and MFS Intelenet of New Jersey, Inc. (the "MFS Agreement"). (Compl.¶ 36.) The parties however, could not reach an agreement regarding GNAPs's "opt in" rights. (Compl.¶ 37.)

On September 15, 1998, the BPU appointed an arbitrator to hear the parties' dispute. (Compl.¶39.) Following the parties' submissions to the Arbitrator regarding the unresolved issues, an arbitration hearing was held on October 21, 1998. (Compl.¶ 39.) On October 26, 1998, the Arbitrator issued his Interim Final Decision (the "Interim Decision"). (Compl.¶ 40.)

In his Interim Decision, the Arbitrator concluded inter alia, that (1) Global was entitled to opt into the MFS Agreement; (2) the duration of the agreement between GNAPs and Verizon should be the same, approximately three years, as that of the original MFS Agreement; and (3) calls to internet service providers ("ISPs") were eligible for reciprocal compensation under the MFS Agreement, and therefore calls to ISPs would be eligible for reciprocal compensation under the agreement to be executed between Verizon and GNAPs.⁴ (Compl.¶ 40.)

Under BPU rules, the parties had five (5) business days following the arbitrator's decision to enter into an interconnection agreement implementing the arbitrator's decision, and to submit the agreement to the BPU for review. (Compl.¶ 41.) Thus, an executed GNAPs/Verizon interconnection agreement was due to the BPU on November 1, 1998; however, neither party submitted an interconnection agreement on that date. According to GNAPs, this failure resulted from Verizon's wrongful refusal to enter into an agreement. (Compl.¶ 41.)⁵

Throughout November 1998, the parties submitted various motions, responses, and other pleadings to the BPU regarding their continuing dispute over the terms of the interconnection agreement. (Compl.¶ 42.) The BPU did not take final action to resolve this matter until July 12, 1999, when it issued its Decision and Order (the "BPU Decision and Order"). (Compl.¶ 43.) The BPU Decision and Order rejected the two key points in the Arbitrator's Interim Decision of most significance to GNAPs and Verizon. (Compl.¶ 43.) Specifically, the BPU determined: 1) not to grant reciprocal compensation for ISP-bound traffic; and 2) that the duration of the interconnection agreement between GNAPs and Verizon should not be three full years, but that the agreement should instead terminate on March 2, 2001, the termination date for the preexisting MFS agreement. (Compl.¶¶ 44, 45.)

The BPU Decision and Order also directed the parties to submit for approval a fully executed interconnection agreement reflecting its decision within five (5) business days of the date of the BPU Decision and Order. By letter dated July 19, 1999, and expressly pursuant to the BPU Decision and Order, Verizon filed an interconnection agreement executed by both Global and Verizon to become effective as of July 26, 1999 (hereinafter, the "Agreement").

III. The Instant Action

GNAPs commenced this lawsuit on August 26, 1999, alleging violations...