Lssi Data Corp. v. Time Warner Cable, Inc.

• Decision Date: 23 May 2012
• Docket Number: No. 11 Civ. 7780(PAE).,11 Civ. 7780(PAE).
• Citation: 892 F.Supp.2d 489
• Parties: LSSI DATA CORP., Plaintiff, v. TIME WARNER CABLE, INC., Defendant.
• Court: U.S. District Court — Southern District of New York

892 F.Supp.2d 489

LSSI DATA CORP., Plaintiff,

v.TIME WARNER CABLE, INC., Defendant.

No. 11 Civ. 7780(PAE).

United States District Court,

S.D. New York.

May 23, 2012.

Bradley Mcarthy Davis, Claiborne Benson Smith, Daniel Nathan Anziska, Sharon H. Stern, Troutman Sanders LLP, New York, NY, Robert P. Williams, II, Troutman Sanders, Atlanta, GA, for Plaintiff.

Virginia Foster Tent, Latham & Watkins, LLP, New York, NY, David M. Pernini, Michael Scott French, Paul G. Sherman, Wargo & French LLP, Atlanta, GA, Matthew A. Brill, Matthew T. Murchison, Latham & Watkins LLP, Washington, DC, for Defendant.

OPINION & ORDER

PAUL A. ENGELMAYER, District Judge:

Plaintiff LSSi Data Corp. (“LSSi”) moves, pursuant to 47 U.S.C. §§ 202(a), 251(b)(3), and 406, for a preliminary injunction compelling defendant Time Warner Cable, Inc. (“TWC”) to provide it with all directory assistance listing data for TWC's telephone subscribers. For the following reasons, LSSi's motion is denied.

I. Regulatory Background

LSSi's primary claim in this case is made under the Telecommunications Act of 1996, Pub.L. No. 104–104, 110 Stat. 56 (1996) (the “TCA”). The provision on which LSSi relies, 47 U.S.C. § 251(b)(3), as interpreted by the Federal Communications Commission (“FCC”), entitles certain telecommunications industry participants to access, under nondiscriminatory terms, the directory assistance (“DA”) listing data of industry participants known as “local exchange carriers,” or LECs. TWC is, in many states, a LEC, and LSSi claims that it is entitled under § 251(b)(3) to TWC's DA data. Alternatively, LSSi claims that it is entitled to the same data under 47 U.S.C. § 202(a), a provision of the Communications Act of 1934 (“the Communications Act”), 47 U.S.C. § 151 et seq., which prohibits a common carrier from engaging in discriminatory practices “in connection with its provision of communications services.”

Understanding the complex regulatory framework is imperative to understanding LSSi's claims and the parties' respective arguments.

The Communications Act put in place the initial framework for federal regulation of the telecommunications industry. Enacted in response to the dominance of the telephone industry by American Telephone & Telegraph Company and its affiliates, the Communications Act gave the FCC broad authority to regulate interstate telephone service. See, e.g., Global Crossing Telecomms., Inc. v. Metrophones Telecomms., Inc., 550 U.S. 45, 48, 127 S.Ct. 1513, 167 L.Ed.2d 422 (2007); MCI Telecomms. Corp. v. AT & T Co., 512 U.S. 218, 235, 114 S.Ct. 2223, 129 L.Ed.2d 182 (1994) (Stevens, J., dissenting). The FCC, in turn,

used this authority to develop a traditional regulatory system much like the systems other commissions had applied when regulating railroads, public utilities, and other common carriers. A utility or carrier would file with a commission a tariff containing rates, and perhaps other practices, classifications, or regulations in connection with its provision of communications services. The commission would examine the rates, etc., and, after appropriate proceedings, approve them, set them aside, or, sometimes, set forth a substitute rate schedule or list of approved charges, classifications, or practices that the carrier or utility must follow.

Global Crossing Telecomms., 550 U.S. at 48, 127 S.Ct. 1513.

The Communications Act also included provisions specifically aimed at “eliminat[ing] the use of monopolistic power to stifle competition.” Law Offices of Curtis V. Trinko v. Bell Atl. Corp., 305 F.3d 89, 99 (2d Cir.2002), rev'd on other grounds by Verizon Commc'ns v. Trinko, 540 U.S. 398, 124 S.Ct. 872, 157 L.Ed.2d 823 (2004); see also MCI Telecomms. Corp., 512 U.S. at 235, 114 S.Ct. 2223. One such provision, codified at 47 U.S.C. § 202(a), provides a remedy for market participants aggrieved by discriminatory practices of a common carrier. Section 202(a) provides:

It shall be unlawful for any common carrier to make any unjust or unreasonable discrimination in charges, practices, classifications, regulations, facilities, or services for or in connection with like communication service, directly or indirectly, by any means or device, or to make or give any undue or unreasonable preference or advantage to any particular person, class of persons, or locality, or to subject any particular person, class of persons, or locality to any undue or unreasonable prejudice or disadvantage.

See, e.g., Trinko, 305 F.3d at 98–99;National Commc'ns Ass'n Inc. v. AT & T, 238 F.3d 124, 127 (2d Cir.2001); Li Xi v. Apple Inc., 603 F.Supp.2d 464, 471 (E.D.N.Y.2009); Net2Globe Int'l v. Time Warner Telecom of NY., 273 F.Supp.2d 436, 460 (S.D.N.Y.2003). As noted, LSSi brings this suit based, in part, on § 202(a).

In 1996, Congress enacted the TCA, which dramatically altered the regulatory landscape. The TCA sought to move the telecommunications industry from an environment characterized by close regulation, a finite number of competitors, and high barriers to entry, to one marked by a “procompetitive, 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.” S. Conf. Rep. No. 104–230, 104th Cong., 2d Sess. 1 (1996).

In implementing that policy, Congress recognized that a significant barrier to entry was presented by the fact that incumbent local exchange carriers (“ILECs”) tended to “own[ ] the local exchange networks[,] the physical equipment necessary to receive, properly route, and deliver phone calls among customers.” Talk Am., Inc. v. Mich. Bell Tel. Co., ––– U.S. ––––, 131 S.Ct. 2254, 2257–58, 180 L.Ed.2d 96 (2011) (citing Verizon Commc'ns, Inc. v. FCC, 535 U.S. 467, 490, 122 S.Ct. 1646, 152 L.Ed.2d 701 (2002)). Without congressional action, “a new, competitive LEC could not compete with an incumbent carrier without basically replicating the incumbent's entire existing network” at prohibitive cost. Talk Am., Inc., 131 S.Ct. at 2258. To redress that competitive disadvantage, the TCA “imposed a number of duties on incumbent providers of local telephone service in order to facilitate market entry by competitors.” Id. at 2257. Most relevant here, Congress “requir [ed] incumbent LECs to share their networks with competitive LECs.” Id. at 2258.¹

In enacting the TCA, Congress further recognized that “the competitive provision of directory assistance is a necessary element of a competitive local telecommunications market.” Provision of Directory Listings Information Under the Communications Act of 1934, as Amended, First Report and Order (the “2001 Order”), 16 FCC Rcd. 2736, at ¶ 2 (2001). As the FCC has explained, giving local exchange carriers access to local directory assistance data is vital to the goal of attaining robust competition in local telecommunications markets. That is because, “[w]ithout nondiscriminatory access to the incumbents' directory assistance databases, competing DA providers may be unable to offer a competitive directory assistance product. This, in turn, may affect the ability of both DA providers and the [competing LECs] that rely on them to compete in the local exchange marketplace.” 2001 Order, 16 FCC Rcd. 2736 at ¶ 3.

To achieve these ends, Congress enacted § 251(b)(3), which is central to this litigation. It provides:

(b) Obligations of all local exchange carriers. Each local exchange carrier has the following duties:

...

(3) Dialing parity. The duty to provide dialing parity to competing providers of telephone exchange service and telephone toll service, and the duty to permit all such providers to have nondiscriminatory access to telephone numbers, operator services, directory assistance, and directory listing, with no unreasonable dialing delays.

47 U.S.C. § 251(b)(3).

The TCA does not itself amplify on the standards by which an entity in the industry may qualify as a “competing provider[ ] of telephone exchange service” under § 251(b)(3), so as to require a LEC (hereinafter, the “providing LEC”) to provide it with access to its DA data. However, the FCC has addressed this issue, in a series of orders construing the TCA. These include the 2001 Order, supra, and In the Matter of Implementation of the Telecommunications Act of 1996: Telecommunications Carriers' Use of Customer Proprietary Network Information and Other Customer Information; Implementation of the Local Competition Provisions of the Telecommunications Act of 1996; Provision of Directory Listing Information under the Communications Act of 1934, as Amended (the “2005 Order”), 20 FCC Rcd. 9334 (2005).

Specifically, the FCC has determined that three categories of market participants are entitled under § 251(b)(3) to nondiscriminatory access to the DA data of a providing LEC: (1) a competing LEC, known as a “CLEC”; (2) an agent of a competing LEC who provides directory assistance services for that CLEC; and (3) a competing provider of “call competition services.” 2005 Order, 20 FCC Rcd. 9334, at ¶ 3; 2001 Order, 16 FCC Rcd. 2736, at ¶¶ 14, 22, 27–29. In its orders, the FCC has explained why affording these entities access to a providing LEC's DA data vindicates the statute's text and procompetitive purpose. The FCC has also elaborated on the contours of the three categories. Later in this opinion, the Court addresses each category in detail, in the course of discussing LSSi's claims to fit within each.

II. Background to the Current Dispute²A. The Parties

The plaintiff, LSSi, is a subsidiary of VoltData Resources LLC (“Volt”). LSSi has consistently held itself out as a data aggregator and seller—an entity that collects,combines, and sells data relating to telephone subscribers. LSSi Supp. Br. 1,3. As LSSi described itself to another federal court:

LSSi is an aggregator of data from all of the carriers in North American and in other countries. What we do is we take...