N. Cnty. Commc'ns Corp. of Or. v. Qwest Corp.

Decision Date05 March 2014
Docket Number3:13-CV-00375-BR
CourtU.S. District Court — District of Oregon
PartiesNORTH COUNTY COMMUNICATIONS CORPORATION OF OREGON, Plaintiff, v. QWEST CORPORATION, SUSAN AKERMAN, JOHN SAVAGE, STEPHEN BLOOM, all in their capacity as Commissioners of the Public Utility Commission of Oregon, Defendants.
OPINION AND ORDER

ANTHONY EDWARD MCNAMER

DEBORAH E. GUMM

McNamer and Company, PC

R. DALE DIXON, JR.

Law Offices of Dale Dixon

Attorneys for Plaintiff

LAWRENCE H. REICHMAN

Perkins Coie, LLP

Attorneys for Defendant

Quest Corporation
ELLEN F. ROSENBLUM

Attorney General

MICHAEL TODD WEIRICH

Oregon Department of Justice

DARSEE STALEY

Oregon Department of Justice

Trial Division, CC&E Section

Attorneys for Defendant

Commissioners of the Public

Utility Commission Of Oregon

(hereinafter collectively

referred to as the Commission)

BROWN, Judge.

This matter comes before the Court on the Motion (#21) of Plaintiff North County Communications Corporation of Oregon (NCC) for Summary Judgment, the Cross-Motion (#29) for Summary Judgment of Defendant Qwest Corporation, and the Cross-Motion (#34) for Summary Judgment of the Commission.

For the reasons that follow, the Court DENIES NCC's Motion (#21) and GRANTS the Cross-Motions (#29, #34) of Qwest and theCommission.

BACKGROUND

NCC brings this action against Qwest and the Commission seeking declaratory and injunctive relief from the determinations and the orders of the Public Utility Commission of Oregon (PUC). NCC alleges the determinations and orders violate the Communications Act of 1934, 47 U.S.C. § 151, et seq., as amended by the Telecommunications Act of 1966 (the Act), Pub L. No. 104-104, 110 Stat. 56 and are preempted by the Act.

I. Facts

The facts in this matter are undisputed unless otherwise noted.

A. The 1997 Interconnection Agreement (1997 ICA)

NCC is certified by the PUC as a competitive local exchange carrier (CLEC). Defendant Qwest was and is an incumbent local exchange carrier (ILEC). Defendants Susan Ackerman, John Savage, and Stephen Bloom were Commissioners of the PUC at all relevant times. NCC and Qwest entered into the 1997 ICA, which the Commission approved in Docket No. ARB 39 by Order No. 97-449 and which went into effect on approximately November 20, 1997.

Section XXXIV(V) of the 1997 ICA provides:

This Agreement shall be effective for a period of 2 ½ years, and thereafter the Agreement shall continue in force and effect until a new agreement, addressing allof the terms of this Agreement, becomes effective between the Parties. The Parties agree to commence negotiations on a new agreement no later than two years after this Agreement becomes effective.

Section XXXIII of the 1997 ICA provides:

Within 4 months from the date of final approval of this Agreement, the Parties agree to make a good faith effort to complete each of the following interconnection arrangements: . . . [Signaling System No. 7 (SS7)] Interconnection and Certification.
B. Administrative Proceedings

NCC and Qwest amended the 1997 ICA several times between September 1997 and April 2011. In July 2008 NCC received a request for negotiation from Qwest regarding a new ICA pursuant to 47 U.S.C. § 252(a). Qwest sought a new ICA because the 1997 ICA was outdated due to technological changes in Qwest's processes and products and NCC's use of multifrequency (MF) (analog) signaling was archaic. Thus, even though Qwest was willing to accommodate MF signaling for traffic terminating to NCC, Qwest requested the new ICA include a provision that NCC must use SS7 (digital) signaling if it wished to begin terminating traffic with or through Qwest. NCC, in turn, contended Qwest's proposed new ICA would force NCC to get rid of its existing network in favor of an "unnecessary technological update and an untested agreement." AR at 1445. NCC also asserted Qwest was not legally permitted to dictate NCC's technology choices and did not have a valid justification for changing the terms of the then-existing 1997 ICA.

NCC and Qwest agreed to a series of extensions of the arbitration window for the filing of a petition for arbitration. They were unable to settle the matter informally. On April 5, 2010, NCC filed a Motion to Dismiss Qwest's request for arbitration in which NCC challenged the Commission's jurisdiction to arbitrate a new ICA. The arbitrator denied the Motion. On May 14, 2010, NCC filed with the Commission a Request to Certify the Arbitrator's May 10, 2010, Ruling denying the Motion to Dismiss. The Commission affirmed the arbitrator's May 10, 2010, Ruling.

The Parties exchanged testimony and exhibits in June, July, and August 2010. The arbitration was heard on August 18, 2010, before PUC Administrative Law Judge, Shani Pines (the Arbitrator).

On January 21, 2011,1 the Arbitrator issued her ruling in which she approved the proposed ICA (2011 ICA) submitted by Qwest with certain modifications. The Arbitrator's ruling addressed the following four issues as presented by the parties:

Signaling (ICA 2011 Sections 7.1.1 and 7.2.1.1): The Arbitrator concluded although North County is entitled to request interconnection with Qwest, it may not force Qwest to continue using an outdated technology such as MF signaling to do so. AR 1447. The Arbitrator,therefore, approved Sections 7.1.1 and 7.2.1.1 of Qwest's proposed ICA. AR at 1446-47.

Billing Methodology (ICA 2011 Section 7.8): Qwest proposed a cap on billable minutes of use (MOU) because Qwest is unable to verify traffic with NCC's use of MF signaling (and thus determine if all minutes billed by North County are compensable). The Arbitrator found Qwest adequately demonstrated through testimony and evidence that its proposed cap to permit North County to use MF signaling "without exposing Qwest to undue risk as a result." Accordingly, the Arbitrator adopted a modified cap of "240,000 minutes of use per service DS1" to be applied on an averaged basis. AR at 1448-49.

Relative Use Factor (ICA 2011 Sections 7.3.1.1.3.1 and 7.3.2.2.1) : RUF appears to have to do with compensation (or "cost sharing") for the exchange of traffic between NCC's and Qwest's network. Qwest proposed 99 percent of the costs should be assigned to it and 1 percent to NCC. The Arbitrator noted neither party submitted data regarding the parties' historical relative use to demonstrate what the cost sharing should be under Qwest's proposed RUF. Accordingly the Arbitrator adopted Qwest's proposed sharing of 99 percent to 1 percent as an initial sharing and, included in the ICA if the actual usage between the parties turns out to be 100 percent to 0 percent, NCC may seek recalculation of the costs. AR at 1449-50.

VNXX Traffic (ICA 2011 Section 7.2.1.2): The Arbitrator adopted language on VNXX Traffic that the Arbitrator found implemented the PUC's requirements regarding VNXX Traffic.2 AR at 1450-51.

On February 3, 2011, NCC filed its Comments on the Arbitrator's decision. The Commission adopted the Arbitrator's decision and deemed the 2011 ICA approved on April 13, 2011.

C. MF Signaling

At all relevant times more than 99 percent of the traffic between NCC and Qwest is transmitted from Qwest to NCC. NCC is the only CLEC in Oregon that interconnects with Qwest using MF signaling exclusively. NCC has never interconnected with Qwest using SS7 signaling.

The 2011 ICA allows NCC to continue using MF signaling as long as the flow of traffic is one-way from NCC to Qwest and provides for a billing procedure for identification of compensable local call minutes. At least one carrier in Oregon currently interconnects with Qwest using the same 1997 ICA that Qwest had with NCC.

II. NCC's Claims

NCC asserts the following claims in its Complaint:

Claim 1: Invalidity of Petition - The Commission erred when it found Qwest's Petition was sufficient to invoke the Commission's jurisdiction.

Claim 2: Lack of Jurisdiction - The Commission erred when it found it had jurisdiction to arbitrate and to approve a renegotiation of the ICA between NCC and Qwest even though the parties already had a controlling and valid ICA (1997 ICA).

Claim 3: Invalidity of Provisions of Arbitrated ICA - NCC challenges the validity of §§ 7.1.1, 7.2.1.1, 7.3.1.1.3.1, 7.3.2.2.1, 7.6, and 7.8 of the 2011 ICA as well as theCommission's alleged refusal to permit NCC to interconnect with Qwest using voice-over Internet protocol (VoIP) technology and the Commission's alleged refusal to require a reciprocal payment obligation on Qwest to pay its portion of use of NCC's mutiplexer (MUX).

STANDARDS

Federal courts have jurisdiction to consider issues arising from the negotiation of ICAs pursuant to 47 U.S.C. § 252(e)(6). Section 252(e)(6) provides: "In any case in which a State commission makes a determination under this section, any party aggrieved by such determination may bring an action in an appropriate Federal district court to determine whether the agreement or statement meets the requirements of section 251 of [title 47] and [section 252]."

In appeals of interconnection arbitration decisions, the Court reviews de novo a state commission's determinations of law and implementing regulations under the Act, but an arbitrary and capricious standard applies to all other issues. Verizon California, Inc. v. Peevey, 462 F.3d 1142, 1150 (9th Cir. 2006). See also U.S. WEST Commc'ns, Inc. v. Jennings, 304 F.3d 950 (9th Cir. 2002); U.S. WEST Commc'ns v. MFS Intelenet, Inc., 193 F.3d 1112, 1117 (9th Cir. 1999). "A state commission's determination is arbitrary and capricious if the decision 'was not supported bysubstantial evidence,' or the commission made a 'clear error of judgment.'"

The Court's review is confined to the record that was before the Commission. Qwest Corp. v. Arizona Corp. Comm'n, 496 F. Supp. 2d 1069, 1074-75 (D. Ariz. 2007), aff'd by 567 F.3d 1109 (9th Cir. 2009).

DISCUSSION
I. The Commission's Authority to Conduct Arbitration

NCC contends the Act prohibited Quest (as an ILEC) from demanding interconnection negotiations with NCC (as a CLEC). NCC asserts,...

To continue reading

Request your trial

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT