Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca7-16-01237/USCOURTS-ca7-16-01237-0/pdf.json

Nature of Suit Code: 890
Nature of Suit: Other Statutory Actions
Cause of Action: 

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In the 

United States Court of Appeals 

For the Seventh Circuit ____________________

No. 16‐1237

CBEYOND COMMUNICATIONS, LLC,

Plaintiff‐Appellant,

v.

BRIEN J. SHEAHAN, et al., in their official capacities as Com‐

missioners of the Illinois Commerce Commission,

Defendants‐Appellees,

and

ILLINOIS BELL TELEPHONE COMPANY d/b/a AT&T Illinois,

Intervenor Defendant/Appellee.

____________________

Appeal from the United States District Court for the

Northern District of Illinois, Eastern Division.

No. 13 C 3731 — Charles R. Norgle, Judge.

____________________

ARGUED SEPTEMBER 14, 2016 — DECIDED OCTOBER 18, 2016

____________________

Before POSNER, EASTERBROOK, and SYKES, Circuit Judges.

Case: 16-1237 Document: 43 Filed: 10/18/2016 Pages: 6
2 No. 16‐1237

POSNER, Circuit Judge. The plaintiff, Cbeyond, provides

telephone and broadband telecommunications service to

small and medium‐sized business customers in Illinois. It

endeavors to send data through telephone lines with maxi‐

mum efficiency. The principal defendant, a local exchange

carrier that the parties mainly refer to as AT&T Illinois, pro‐

vides telecommunications service similar to Cbeyond’s but

on a much larger scale. The two firms’ networks are inter‐

connected; federal law entitles a new entrant (Cbeyond en‐

tered the Illinois market in 2005) to connect with existing lo‐

cal exchange carriers on terms favorable to the entrant so

that it can serve more customers without having to create its

own network. See 47 U.S.C. § 251; Sprintcom, Inc. v. Commis‐

sioners of Illinois Commerce Commission, 790 F.3d 751, 753–54

(7th Cir. 2015); MCI Telecommunications Corp. v. Illinois Bell

Tel. Co., 222 F.3d 323, 328 (7th Cir. 2000). Those terms are in

the first instance negotiated by the local exchange carrier

and the new entrant, see 47 U.S.C. § 252(a)(1), but if the par‐

ties are unable to agree on terms the issue is referred to arbi‐

tration. 47 U.S.C. § 252(b). Whatever agreement emerges ei‐

ther from voluntary negotiations or from arbitration must be

submitted to a state commission (in this case the Illinois

Commerce Commission) for approval. § 252(e).

In 2004 the commission approved the agreement that

Cbeyond and AT&T Illinois had worked out. Any party who

wishes to dispute or enforce its interconnection agreement

may file a petition with the state commission and if it loses

there may sue in federal district court to determine whether

the commission’s approval is consistent with the rules that

47 U.S.C. §§ 251(b) and (c) impose on local exchange carriers,

such as AT&T Illinois. And that is what Cbeyond did eight

years later: file a complaint with the Illinois Commerce

Case: 16-1237 Document: 43 Filed: 10/18/2016 Pages: 6
No. 16‐1237 3

Commission (actually part of a complaint that it had filed

the previous year, a detail we can ignore) against AT&T Illi‐

nois, complaining that when Cbeyond leases new circuits

from AT&T Illinois that are called digital signal level 1

(“DS1”) loops, AT&T Illinois overcharges it by charging a

separate price for the “Clear Channel Capability” (“CCC”)

built into the loops.

Invented in 1980, CCC is a method of coding the electri‐

cal pulses in a transmission line to make the streaming of da‐

ta through the line more efficient. See P. A. Johnson & D. R.

Walker, “A Standard for Clear Channel Capacity,” 90 Tele‐

phone Engineer & Management 112, 112 (August 15, 1986).

Cbeyond argues that the price of new DS1 loops should cov‐

er CCC because there’s no extra work involved in setting it

up once AT&T Illinois has agreed to send a crew out to pro‐

vision a new line. “Provisioning” in telecom‐speak refers to

all the measures that a carrier like AT&T Illinois must take to

activate a service, and thus might include sending a crew to

a customer’s premises to install or repair or replace terminal

equipment there, making hardware changes on the utility

pole or at the transport office where all the telephone lines in

an area code are bundled, or software changes, or whatever

other changes are needed to make sure that everything is

running smoothly.

But the only activities of AT&T Illinois that Cbeyond

mentioned to the Illinois Commerce Commission were soft‐

ware updates, tests, and administrative changes, none of

which contradicted or undermined, let alone invalidated, the

interconnection agreement between AT&T Illinois and Cbe‐

yond. And that agreement designates CCC as an “optional

feature” available to Cbeyond from AT&T Illinois only “at

Case: 16-1237 Document: 43 Filed: 10/18/2016 Pages: 6
4 No. 16‐1237

an additional cost” specified in the agreement’s pricing

schedule. It was that additional cost that AT&T Illinois

charged Cbeyond for CCC.

Cbeyond claims that CCC should have been available to

Cbeyond at no cost beyond that of provisioning the loops,

because the cost of CCC is built into the cost of that provi‐

sioning. But CCC was deemed optional rather than integral

to the loops that Cbeyond bought from AT&T Illinois, and

indeed some of the loops didn’t have CCC built into them,

suggesting that the price of the loops did not include the full

price of CCC. More to the point, the interconnection agree‐

ment was explicit that there would be “an additional cost” if

the purchaser of loops from AT&T Illinois wanted CCC,

even if the price of the loops included that cost. That was the

deal.

Cbeyond goes on to complain that some of AT&T Illinois’

other customers were charged less than Cbeyond for CCC—

even nothing—for a predecessor of CCC called Alternate

Mark Inversion (“AMI”). But as CCC is a more advanced

product, it’s not surprising that it should command a higher

price; nor has Cbeyond shown that it’s the only purchaser of

CCC that pays the optional charge.

It doesn’t help Cbeyond’s case that its briefs are virtually

devoid of facts. We are not told what the price of the DS1

loops is with and without the CCC add‐on, how the prices

differ from those paid AT&T Illinois by other telecommuni‐

cations companies that buy such loops with or without CCC,

how the capabilities of CCC differ from those of AMI, or

why Cbeyond agreed to the contractual terms that have pre‐

cipitated this litigation. All we know is that Cbeyond made a

contract with AT&T Illinois that it later regretted and has

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No. 16‐1237 5

resorted to litigation in an effort to squirm out of the con‐

tract.

Cbeyond may be right that AT&T’s charges are incon‐

sistent with the well‐known federal pricing standard called

“TELRIC,” see 47 C.F.R. § 51.505, which constrains incum‐

bent carriers to lease network elements to newcomers (even

just relative newcomers) like Cbeyond (which dates back to

2005) at a price just a bit higher than the incumbent’s mar‐

ginal cost. As far as we know, by 2016 Cbeyond’s orders for

CCC required no new hardware, or other embellishments of

the product, and if so that would drive the marginal cost of

CCC to zero; yet AT&T Illinois continued charging Cbeyond

for CCC. But 47 U.S.C. § 252(a)(1) allows a new entrant and

an incumbent to contract around TELRIC pricing, provided

they create a “detailed schedule of itemized charges,” and

Cbeyond and AT&T Illinois did that. The Pricing Schedule

in the agreement includes a charge for CCC that as far as we

can tell was never amended or deleted.

So we can’t find a violation of federal law by the Illinois

Commerce Commission or AT&T Illinois. All we discern is a

dispute over a price term in a contract, and the resolution of

such a dispute, as of Cbeyond’s other state‐law claims, is a

matter for state rather than federal law. Illinois Bell Telephone

Co., Inc. v. Global NAPS Illinois, Inc., 551 F.3d 587, 591 (7th

Cir. 2008); Illinois Bell Telephone Co. v. Worldcom Technologies,

Inc., 179 F.3d 566, 572, 574 (7th Cir. 1999). Although a federal

district court can resolve state‐law disputes under its sup‐

plemental jurisdiction if (as in this case) it has original juris‐

diction (in this case because of Cbeyond’s claims), see 28

U.S.C. § 1367, exercising supplemental jurisdiction over the

state‐law claims in this case would require us first to decide

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6 No. 16‐1237

that the state (Illinois) cannot invoke its sovereign immuni‐

ty—a doubtful proposition in light of MCI Telecommunica‐

tions Corp. v. Illinois Commerce Commission, 168 F.3d 315, 320

(7th Cir. 1999), where we said that it was “clear that ... fed‐

eral courts may review a state commission’s actions with re‐

spect to an agreement only for compliance with the require‐

ments of § 251 and § 252 of the Telecommunications Act, and

not for compliance with state law” (emphasis added). And state

sovereign immunity to one side, Cbeyond has imposed an

excessive and unnecessary burden on the district court by

bringing this sloppy lawsuit, and should not be permitted to

impose further on the district court or our court.

AFFIRMED

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