P.R. Tel. Co. v. Worldnet Telecomm., Inc.
| Decision Date | 15 September 2014 |
| Docket Number | Civ. No. 14–1062SCC. |
| Citation | 52 F.Supp.3d 370 |
| Court | U.S. District Court — District of Puerto Rico |
| Parties | P.R. TEL. CO., INC., Plaintiff, v. WORLDNET TELECOMM., INC., Defendant. |
Eduardo R. Guzman–Casas, Drinker Biddle & Reath LLP, Washington, DC, for Plaintiff.
Lawrence Ross–Freedman, Edwards Wildman Palmer LLP, Washington, DC, Miguel J. Rodriguez–Marxuach, Rodriguez Marxuach, P.S.C., San Juan, PR, for Defendant.
Plaintiff Puerto Rico Telephone Co. (“PRTC”) seeks to vacate a final award issued after binding arbitration in favor of Defendant WorldNet Telecommunications, Inc. Docket No. 1. WorldNet opposes PRTC's motion to vacate, seeks dismissal of this case, and requests confirmation of the award. Docket Nos. 29–30. After considering all of the parties' arguments, I deny PRTC's motion and grant one of WorldNet's cross-motions, and I confirm the arbitrator's award.
Though this case's procedural history is complex, the basic facts giving rise to the present dispute can be summarized quickly.
Under the Telecommunications Act of 1996, incumbent local exchange carriers (“ILECs”), like PRTC, must allow competing local exchange carriers (“CLECs”), like WorldNet, to use their networks for a reasonable price.See 47 U.S.C. § 251. To this end, the parties entered into an interconnection agreement in 2010 (“the 2010 ICA”). The 2010 ICA was the result of bargaining between the parties and, where the parties could not agree, arbitration by the Puerto Rico Telecommunications Regulatory Board (“the Board”). The Board furthermore approved the full 2010 ICA. The 2010 ICA contains an expedited dispute resolution provision providing that when the parties have a dispute under the 2010 ICA, either party may seek expedited resolution by the American Arbitration Association.
At some point, a disagreement arose between WorldNet and PRTC over the proper pricing of certain facilities leased by WorldNet from PRTC (“the Disputed Facilities”). When the parties could not resolve the disagreement themselves, WorldNet filed, on May 9, 2012, a demand for arbitration. PRTC tried to enjoin the arbitration in Commonwealth court, but it ultimately lost that fight.1 It then objected, within the arbitration, to the arbitrator's jurisdiction, and it lost that argument as well.
Arbitration finally began on June 6, 2013, more than a year after the demand for “expedited” resolution had been filed. After briefing and two days of hearings, the arbitrator released his Final Award on October 14, 2013. The Final Award found in favor of WorldNet in all respects. The arbitrator subsequently rejected PRTC's motion to modify the award. PRTC filed its motion to vacate the Final Award on January 24, 2014, 92 days after the Final Award.
Before discussing the merits of the motion to vacate, I will discuss—and reject—some preliminary objections that WorldNet has raised to PRTC's motion.
The Federal Arbitration Act (“FAA”) requires that a motion to vacate be “served upon the adverse party or his attorney within three months after the award is filed or delivered.” 9 U.S.C. § 12. The statute further provides that where the “adverse party is a resident of the district within which the award was made, such service shall be made” as if one were serving a motion. Id. But if the party is not a resident of that forum, the FAA requires service be made as if one were serving process. Id. Thus, what constitutes “service” under the FAA varies depending on the residency of the party to be served: where the party is a resident, the motion may be served as a motion; where the party is a non-resident, it must be served like a complaint. See, e.g., Technologists, Inc. v. MIR's Ltd., 725 F.Supp.2d 120, 125 (D.D.C.2010) (); cf. Escobar v. Shearson Lehman Hutton, Inc., 762 F.Supp. 461, 463 (D.P.R.1991) ().
In support of its argument, WorldNet cites three cases, none of which is clearly on point. See Docket No. 20, at 16 n. 24. To be sure, each of these cases dismisses motions to vacate arbitration awards on the grounds that the movant failed to timely serve the adverse party with a summons. See Gosser v. Merrill Lynch, Pierce, Fenner & Smith Inc., Civ. No. 07–672, 2007 WL 4365385, at *4 (N.D.Ill.Dec. 13, 2007) ; Jason v. Halliburton Co., Civ. No. 02–1593, 2002 WL 31319945, at *3 (E.D.La. Oct. 15, 2002) ; Carmel v. Circuit City Stores, Inc., Civ. No. 99–240, 2000 WL 1201891, at *3 (E.D.Pa. Aug. 22, 2000). What each lacks, however, is any indication that the adverse party was a resident of the forum state. Without that information, there is no reason to think that the courts were applying the rule that WorldNet asks to be applied here.2
WorldNet does not dispute that it is a resident of Puerto Rico, and the Final Award was made in Puerto Rico, see Docket No. 3–2, at 24. Of course, I am sitting in the United States District Court for the District of Puerto Rico. The FAA is exceedingly clear about how WorldNet was to be served under such circumstances, and that service was timely accomplished. WorldNet has advanced no compelling reason why more is required than the statute prescribes, and so WorldNet's timeliness argument is rejected.
WorldNet argues that PRTC has waived its right to object to the arbitrator's jurisdiction because it “has spent the last two years challenging (unsuccessfully) the jurisdiction of the arbitrator in this case at every level of the Puerto Rico courts.” Docket No. 20, at 19. The facts, briefly, are these. After the arbitrator released the Final Award, PRTC sought to enjoin that award in the Court of First Instance. PRTC made various arguments to that court, including the arguments that it repeats here: that the FCC and the Board have exclusive or primary jurisdiction over this dispute, so the arbitrator was without jurisdiction to act. The Court of First Instance granted PRTC's injunction request, but it did not do so on primary/exclusive jurisdiction grounds. Instead, it held that under the language of the 2010 ICA, the parties had not agreed to arbitrate pricing disputes. See Docket No. 39–2, at 19–20.
When WorldNet appealed, PRTC did not persist in its jurisdictional objections before the court of appeals. According to WorldNet, this means that PRTC abandoned those objections and is “collaterally estopped” from making those arguments to this Court. Docket No. 20, at 19. But WorldNet's arguments misunderstand the law of collateral estoppel, which requires that the issue to estopped have been “actually litigated” and “determined by a valid and binding final judgment.” Ramallo Bros. Printing, Inc. v. El Dia, Inc., 490 F.3d 86, 90 (1st Cir.2007). Here, of course, the jurisdictional objections were not determined by either of the Commonwealth courts. Accordingly, there is no collateral estoppel. Neither has PRTC abandoned these arguments, as they were not properly before the court of appeals; rather, because the trial court decided the matter on other grounds, the issues were narrowed on appeal. PRTC properly restricted its arguments on appeal to scope of the trial court's opinion.
PRTC has not abandoned its arguments, and it timely served WorldNet with the motion to vacate. As such, I consider the merits of the parties' motions below.
PRTC's motion to vacate focuses principally on the arbitrator's supposed lack of jurisdiction. In effect, PRTC argues that the questions posed to the arbitrator were of the sort that were in the exclusive or primary jurisdiction of the FCC and the Board, and so they could not properly be presented for arbitration. In the alternative, PRTC makes several less expansive arguments against the arbitration award. Below, I discuss each in turn.
Before delving into the merits, it is useful to give some brief background on the relationship between WorldNet and PRTC, as well as the dispute that brought them to arbitration in the first place. The 2010 ICA defines the terms and rates by which WorldNet may lease facilities from PRTC. Simplified, the ICA provides that these facilities will be leased under two regimes. First is under a tariff framework, which exists outside of the 2010 ICA.3 Second is under the 2010 ICA itself, which, pursuant to the Telecommunications Act, provides special pricing (known as TELRIC) for interconnection and unbundled network elements (“UNEs”). The dispute between the parties concerns whether certain facilities are covered by the first or second of these regimes.
The Disputed Facilities are “DS3 tie cables,” which are “relatively short, physical length[s] of coaxial cable that connect[ ] two pieces equipment.” Docket No. 3–2, at 3–4. These cables are located within PRTC buildings called “central offices” and connect port-of-termination (“POT”) bays to Digital Cross Connect (“DCC”) ports. Id. at 4. According to WorldNet, the Dispute Facilities are UNEs, and so they are to be priced under the 2010 ICA; according to PRTC, they are “entrance facilities” priced according to the tariff.4 See id.
The arbitrator found in favor of WorldNet, and its analysis was extraordinarily straightforward. First, he noted that Section 1.1 of the Pricing Attachment to the 2010 ICA “defines the Unbundled Dedicated Transport UNE” as “comprising three pieces, including a ‘Dedicated Transport Port.’ ” Id. at 17–18. He then noted that Section 1.1.3 of the same Attachment defined “Dedicated Transport Port” as “(1) the DCC Port at each end of the Unbundled Dedicated Transport, and (2) the tie cables between the DCC Port and the POT Bay.” Id. at 18. Thus, the 2010 ICA's...
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