Western Union Tel. Co. v. F. C. C.

• Decision Date: 28 July 1976
• Docket Number: No. 75-1796,75-1796
• Citation: 541 F.2d 346
• Parties: The WESTERN UNION TELEGRAPH COMPANY, Petitioner, v. FEDERAL COMMUNICATIONS COMMISSION and United States of America, Respondents, American Telephone and Telegraph Company ("AT&T") et al., Intervenors.
• Court: U.S. Court of Appeals — Third Circuit

Page 346

541 F.2d 346

The WESTERN UNION TELEGRAPH COMPANY, Petitioner, v. FEDERAL COMMUNICATIONS COMMISSION and United States of America, Respondents American Telephone and Telegraph Company ("AT&T") et al., Intervenors.

No. 75-1796.

United States Court of Appeals Third Circuit.

Argued May 6, 1976.

Decided July 28, 1976.

Wm. Warfield Ross, William R. Weissman, J. Michel Marcoux, Wald, Harkrader & Ross, Jack Werner, Joel Yohalem, Laurence Singer, Washington, D.C., for petitioner; Richard C. Hostetler, Vice President and Gen. Counsel, Western Union Telegraph Co., Upper Saddle River, N.J., of counsel.

Ashton R. Hardy, Gen. Counsel, Daniel M. Armstrong, Associate Gen. Counsel, John E. Ingle, Counsel, F.C.C., Thomas E. Kauper, Asst. Atty. Gen., Carl D. Lawson, John Powers, Dept. of Justice, Washington, D.C., for respondents.

Charles A. Horsky, E. Edward Bruce, Stephen G. Ryan, Gary L. Reback, Covington & Burling, Washington, D.C., Alfred C. Partoll, Lee S. Cutcliff, M. Jean Dabney, New York City, for intervenors; F. Mark Garlinghouse, New York City, of counsel.

Before SEITZ, Chief Judge, and ALDISERT and GARTH, Circuit Judges.

OPINION OF THE COURT

ALDISERT, Circuit Judge.

This petition for review of an order of the Federal Communications Commission presents issues concerning the scope and applicability of exchange of facilities contracts in force between Western Union (WU) and American Telephone and Telegraph (AT&T). The Commission concluded that the contracts did not cover AT&T facilities to be used by WU to provide foreign exchange (FX) and common control switching arrangement (CCSA) services, ¹ and that in accepting its satellite authorization WU had waived any contract rights it might have had in connection with facilities for its domestic satellite service. WU, therefore, would be obliged to lease facilities for these services at the higher rates set forth in AT&T tariffs filed with the Commission, not at the lower contract rates. We hold that the Commission acted within its statutory authority and that its conclusions were not arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law. ² Accordingly, we deny WU's petition for review.

I.

A detailed history of the disputes underlying this litigation is set forth in Bell Telephone Co. v. FCC, 503 F.2d 1250 (3d Cir. 1974), cert. denied, 422 U.S. 1026, 95 S.Ct. 2620, 45 L.Ed.2d 684 (1975), and will not be repeated here. That decision constitutes the legal predicate for the litigation at bar. There we affirmed a decision and order of the FCC which in pertinent part (a) required AT&T to furnish to all specialized common carriers among them WU interconnection facilities to provide authorized communications services including FX and CCSA services, and (b) rejected AT&T tariffs insofar as they covered interconnection facilities and services already covered by Bell-Western Union exchange of facilities contracts. Bell Telephone Co. v. FCC established that the Communications Act does not authorize the modification or abrogation of contracts by subsequently filed tariffs. But the order of the Commission there affirmed also said that, with respect to facilities not covered by exchange of facilities contracts, AT&T was to charge pursuant to tariffs. 503 F.2d at 1282-84.

Following the decision in Bell Telephone Co. v. FCC, AT&T refused WU's requests to lease facilities for FX, CCSA, and domestic satellite services at contract rates although AT&T leased identical facilities at those rates when the facilities were used for other services. WU sought relief in administrative proceedings before the Commission. On October 16, 1974, the Commission decided that WU had waived any contract rights it might have had in connection with facilities for its domestic satellite service when it accepted its satellite authorization, but emphasized that AT&T was required to interconnect with WU to permit WU to provide FX and CCSA services. The Commission did not, at that time, decide whether the required FX and CCSA interconnections were to be pursuant to tariff or contract, but asked the parties to brief the question. 49 F.C.C.2d 321 (1974). On June 24, 1975, the Commission released its Memorandum Opinion and Order rejecting WU's contention that the exchange of facilities contracts covered FX and CCSA services and denying reconsideration of its prior decision that domestic satellite contract rights, if any, had been waived. 53 F.C.C.2d 1045 (1975).

In concluding that FX and CCSA services were not covered by the exchange of facilities contracts, the Commission relied upon the language of the contracts. Conceding that facilities available under the contract are technically capable of furnishing FX and CCSA services, the Commission asked instead "whether the contracts allow the use of these facilities for FX and CCSA services." 53 F.C.C.2d at 1050. This question it resolved by reference to contract sections 3(b) ³ and 3(d), ⁴ finding the controlling language in section 3(d): "Connection of Western Union private line services with Telephone Company services shall be allowed only under the tariffs of the Telephone Company . . . " The contracts distinguish between services and facilities. ⁵ Section 3(d) applies expressly to services. In the Commission's view, however, section 3(d) served a definitional purpose, referencing the contracts themselves to services allowed at the date of contracting and, thereby, limiting contract facilities to use for such services:

The purpose of this provision is to define those situations in which Western Union services utilizing facilities obtained under the contracts, may be connected to Bell services. Since this provision references the applicable telephone company tariffs, the question before us is whether the cross reference to the applicable tariffs is to be made as of the time of contracting (e. g., January 1, 1970) or as of the date the interconnection of services is to be made. The law is well settled that all parts or sections of a contract must be given effect, force and meaning, if possible, and if it can fairly and reasonably be done; and that a construction rendering a provision or term meaningless or superfluous should be avoided. If there were no Section 3(d) in the contract, then the terms and conditions governing the connection of Bell services with the services of other common carriers would be found in the then effective applicable Bell System customer tariffs. If the cross reference to the applicable telephone company tariffs is meant to be to the then effective tariff provisions, then Section 3(d) would be superfluous. Therefore, in order to give meaning to Section 3(d), we conclude that the cross reference to applicable telephone company tariffs is to be made as of the time of contracting (e. g., January 1, 1970). Since the telephone company tariffs, at that time, did not allow Western Union to interconnect its private line services with Bell's services for the purpose of providing its own FX and CCSA services, we conclude that Western Union may not obtain under the contracts, facilities which would be used in the provision of FX and CCSA services. Western Union may, of course, obtain such facilities pursuant to Bell tariffs on file with this Commission, in the same manner and at the same rates as other common carriers offering FX and CCSA type services.

53 F.C.C.2d at 1051 (footnotes omitted).

The FCC authorized WU's domestic satellite application on January 18, 1973, subject to the condition that WU's "facilities shall be operated in accordance with all Commission policies adopted in Docket No. 16495 (which established basic domestic satellite policy objectives) and all rules and policies subsequently made applicable to domestic satellite communications. . . ." 38 F.C.C.2d 1197, 1199 (1973). Some eight months later, in the context of AT& T's domestic satellite application, the Commission decided that tariffs, not private contracts, were the means most conducive to achieving its basic policy objectives of reasonable and non-discriminatory satellite licensee access to AT&T facilities. ⁶ The effect of the quoted conditional language, the Commission here concluded, was to waive any contract rights WU might have had in connection with its satellite operations, and to subject those operations to the subsequently articulated tariff policy. "We conclude that Western Union willingly and knowingly accepted a condition in its domestic satellite authorization, as implemented by the unchallenged AT&T decision, which constituted a voluntary waiver of its contract rights if any existed." 53 F.C.C.2d at 1054.

WU petitions for review under § 402(a) of the Communications Act, as amended, 47 U.S.C. § 402(a), and 28 U.S.C. § 2342(1).

We turn now to review of the Commission's conclusions: first, concerning FX and CCSA services, and, second, concerning domestic satellite service.

II.

Preliminarily, we must address a question raised concerning the proper scope of our review of the FCC's conclusions concerning FX and CCSA services. Both parties, correctly, agree that the pertinent statute is § 706 of the Administrative Procedure Act, note 2 supra, which provides that a reviewing court shall set aside agency conclusions found to be arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law. WU argues, however, that the Commission here was not applying the Communications Act which is the agency's expert province, but was applying general common law precepts of contract construction in which the agency has no particular expertise. Accordingly, the argument continues, the Commission here is entitled to no greater deference from this court than would be due a district court in a breach of contract action. We cannot agree.

WU makes no attempt to harmonize its argument for a more stringent standard of review with the apparently clear language of the Administrative Procedure Act. We find no...