PUBLISHED

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

CENTRAL TELEPHONE COMPANY OF 

VIRGINIA, a Virginia Corporation;

UNITED TELEPHONE SOUTHEAST,

LLC, a Virginia Limited Liability

Company; EMBARQ FLORIDA, INC.,

a Florida Corporation; UNITED

TELEPHONE COMPANY OF INDIANA,

INC., an Indiana Corporation;

UNITED TELEPHONE COMPANY OF

KANSAS, a Kansas Corporation;

UNITED TELEPHONE COMPANY OF

EASTERN KANSAS, a Delaware

Corporation; UNITED TELEPHONE  No. 12-1322

COMPANY OF SOUTHCENTRAL

KANSAS, an Arkansas Corporation;

EMBARQ MISSOURI, INC., a Missouri

Corporation; EMBARQ MINNESOTA,

INC., a Minnesota Corporation;

UNITED TELEPHONE COMPANY OF

THE WEST, a Delaware

Corporation; CENTRAL TELEPHONE

COMPANY, a Delaware Corporation;

UNITED TELEPHONE COMPANY OF

NEW JERSEY, INC., a New Jersey

Corporation; 
CAROLINA TELEPHONE AND 

TELEGRAPH COMPANY, LLC, a

North Carolina Limited Liability

Corporation; UNITED TELEPHONE OF

OHIO, an Ohio Corporation;

UNITED TELEPHONE COMPANY OF

THE NORTHWEST, an Oregon

Corporation; THE UNITED

TELEPHONE COMPANY OF

PENNSYLVANIA, LLC, a

Pennsylvania Limited Liability

Corporation; UNITED TELEPHONE

COMPANY OF THE CAROLINAS LLC, a

South Carolina Limited Liability

Corporation; UNITED TELEPHONE

COMPANY OF TEXAS, INC., a Texas

Corporation; CENTRAL TELEPHONE 

COMPANY OF TEXAS, a Texas

Corporation,

Plaintiffs-Appellees,

v.

SPRINT COMMUNICATIONS

COMPANY OF VIRGINIA, INC., a

Virginia Corporation; SPRINT

COMMUNICATIONS COMPANY L.P., a

Delaware Limited Partnership,

Defendants-Appellants.

VERIZON; FEDERAL COMMUNICATIONS

COMMISSION,

Amici Curiae. 

2 CENTRAL TELEPHONE COMPANY OF VIRGINIA v. SPRINT
Appeal from the United States District Court

for the Eastern District of Virginia, at Richmond.

Robert E. Payne, Senior District Judge.

(3:09-cv-00720-REP)

Argued: January 29, 2013

Decided: April 29, 2013

Before NIEMEYER, DUNCAN, and FLOYD,

Circuit Judges.

Affirmed by published opinion. Judge Duncan wrote the opinion, in which Judge Niemeyer and Judge Floyd joined. 

COUNSEL

ARGUED: Timothy J. Simeone, WILTSHIRE & GRANNIS,

LLP, Washington, D.C., for Appellants. Michael J. Lockerby,

FOLEY & LARDNER, LLP, Washington, D.C., for Appellees. Scott H. Angstreich, KELLOGG, HUBER, HANSEN,

TODD, EVANS & FIGEL, PLLC, Washington, D.C., for

Amicus Curiae Verizon. ON BRIEF: Christopher J. Wright,

Rachel W. Petty, WILTSHIRE & GRANNIS, LLP, Washington, D.C., for Appellants. Jennifer M. Keas, Benjamin R. Dryden, FOLEY & LARDNER, LLP, Washington, D.C.; Bradley

D. Jackson, FOLEY & LARDNER, LLP, Madison, Wisconsin, for Appellees. Michael E. Glover, Edward Shakin, Curtis

L. Groves, VERIZON, Arlington, Virginia; Joshua D. Branson, KELLOGG, HUBER, HANSEN, TODD, EVANS &

FIGEL, PLLC, Washington, D.C., for Amicus Curiae Verizon. Peter Karanjia, Deputy General Counsel, Jacob M.

Lewis, Associate General Counsel, Laurel R. Bergold, Counsel, FEDERAL COMMUNICATIONS COMMISSION,

CENTRAL TELEPHONE COMPANY OF VIRGINIA v. SPRINT 3
Washington, D.C., for Amicus Curiae Federal Communications Commission.

OPINION

DUNCAN, Circuit Judge:

Pursuant to the provisions of the Telecommunications Act

of 1996, 47 U.S.C. §§ 151 et seq., Sprint Communications

Company of Virginia, Inc., and Sprint Communications Company L.P. (collectively "Sprint" or the "Sprint Defendants")

entered into interconnection agreements with nineteen incumbent local exchange carriers (collectively "CenturyLink" or

the "CenturyLink Plaintiffs") providing for the mutual

exchange of telecommunications traffic. When Sprint began

to withhold payments under the agreement, CenturyLink

brought a breach of contract claim in federal district court.

After rejecting Sprint’s threshold argument that its jurisdiction was limited to reviewing determinations by State utilities

commissions, the district court entered judgment in favor of

CenturyLink on the merits. The district court judge subsequently also concluded that a belatedly discovered financial

interest in CenturyLink held in a managed Individual Retirement Account did not require his recusal. Sprint appeals all of

the district court’s rulings; for the reasons that follow, we

affirm.

I.

A.

Prior to the Telecommunications Act of 1996 (the "1996

Act"), telephone service within a local calling area was provided by an incumbent local exchange carrier ("ILEC") operating as a state-licensed monopoly. The purpose of the 1996

Act was to create competition within these local telephone

markets.

4 CENTRAL TELEPHONE COMPANY OF VIRGINIA v. SPRINT
At the core of the 1996 Act is a requirement that ILECs

"interconnect" their facilities and equipment with competitive

local exchange carriers ("CLECs"), such as Sprint, for the

mutual exchange of traffic. Defined as "the linking of two networks for the mutual exchange of traffic," 47 C.F.R. § 51.5,

interconnection allows CLEC customers to call ILEC customers and vice versa. While the carriers may reach agreement

through arbitration or negotiation, the product of the process

is an interconnection agreement (an "ICA"), which must

include "a detailed schedule of itemized charges for interconnection and each service or network element included in the

agreement." 47 § 252(a)(1).

B.

A brief description of the corporate relationship between

Sprint and CenturyLink, and the latter’s organizational parentage, provides necessary background for our consideration of

the recusal issue. We then set out the underlying facts and

procedural history of the appeal before us.

When Sprint sought negotiation of the ICAs at issue in

April 2004, it and the nineteen companies that comprise the

CenturyLink Plaintiffs were wholly owned subsidiaries of

Sprint Corporation.1 The CenturyLink Plaintiffs were a part of

Sprint Corporation’s local telephone division. In May 2006,

Sprint Corporation spun off the CenturyLink Plaintiffs, which

then formed a separate company known as Embarq Corporation ("Embarq"). In July 2009, CenturyTel, Inc.

("CenturyTel") acquired Embarq and its subsidiaries. The

resulting entity began doing business as "CenturyLink."

Between 2004 and 2005 Sprint and CenturyLink executed the

nineteen ICAs that are the subject of this dispute, and which

were approved by the appropriate State commissions.2

1We distinguish between Sprint (or the Sprint Defendants), the defendant in this case, and Sprint Corporation, of which the former is a part. 

2The parties stipulated below that each ICA contains terms that are

materially the same as the terms contained in the Master Interconnection

CENTRAL TELEPHONE COMPANY OF VIRGINIA v. SPRINT 5
Some general information about telecommunications traffic

provides context for our discussion of the issues in this case.

There are three ways to place a call: landline, wireless, and

Voice-over Internet Protocol ("VoIP"), which, as its name

suggests, relies on the internet to originate voice communications. See Vonage Holdings Corp. v. Nebraska Pub. Serv.

Comm’n, 564 F.3d 900, 902 (8th Cir. 2009) ("VoIP is an

internet application used to transmit voice communication

over a broadband internet connection."). Likewise, a call

placed through any of these three formats can be classified

into three categories of traffic, depending on the locational

relationship of those speaking: local,3 long distance intrastate,4

and long distance interstate. The facts giving rise to the underlying dispute revolve around the ICA’s compensation structure for these three categories of traffic.

In assessing the appropriate compensation for a local, long

distance intrastate, and long distance interstate call, the relevant metrics are where a call originated and where it terminated.5

This determination is often referred to in the telecommunications industry as the "jurisdictionalizing" of a call. All the

calls at issue in this case originated on Sprint’s network and

were terminated by one of the CenturyLink Plaintiffs on its

local network.

Agreement for the State of Virginia (the "Virginia ICA") executed

between Sprint and Central Telephone Company of Virginia, which is one

of the CenturyLink Plaintiffs. J.A. 316. Thus, when considering CenturyLink’s breach of contract claim, we refer to each of the ICAs at issue

simply as "the ICA," and, when discussing the ICA, we look to the provisions of the Virginia ICA found in the J.A. at 710-86. 

3Local calling areas—also known as Local Access and Transport Areas,

or LATAs—were formed in 1984 following the breakup of AT&T. They

do not necessarily follow existing state, province, or area code borders. 

4A long distance intrastate call originates and terminates within the borders of a state, but travels from one LATA to another. 

5A carrier "terminates" a call by routing it from another carrier to a customer in its own network. 

6 CENTRAL TELEPHONE COMPANY OF VIRGINIA v. SPRINT
The ICA first addresses local traffic. In salient part, the

ICA defines local traffic as traffic "that is originated and terminated within Sprint’s local calling area." J.A. 718. The ICA

applies to local traffic a practice known as "Bill & Keep" or

"reciprocal compensation." As § 38.1 of the ICA explains,

"[u]nder Bill and Keep, each Party retains the revenues it

receives from end user customers, and neither Party pays the

other Party for terminating Local Traffic which is subject to

the Bill and Keep compensation mechanism." J.A. 744. In

brief, no payments exchange hands for the termination of

local traffic.

By contrast, the ICA provides for "access charges"6 for the

two categories of long distance traffic discussed above: intrastate and interstate. Under the ICA, the applicable access

charge depends on the category of long distance traffic.

All three categories of traffic—local, long distance intrastate, and long distance interstate—travel across "trunks." See

47 C.F.R. § 69.2(x) (defining "trunk" as including "transmission media such as radio, satellite, wire, cable and fiber optic

cable means of transmission"). The parties stipulated below

that Sprint delivers some traffic to CenturyLink via local

interconnection trunks, and other traffic by way of Feature

Group D ("FGD") trunks. J.A. 315. FGD trunks carry long

distance traffic only. Id. at 316. FGD trunks attach to local

interconnection trunks, and thus enable long distance traffic to

be terminated on one of CenturyLink’s local networks.

The dispute in this case only involves VoIP traffic, which

travels over FGD trunks (for a long distance call) and over

6A carrier typically pays an access charge when a long distance call

originating from its own network is terminated on the local network of

another carrier. See 47 C.F.R. § 69.2(a). The FCC defines "access charge"

as a "fee charged subscribers or other telephone companies by a local

exchange carrier for the use of its local exchange networks." See FCC,

Glossary of Telecommunication Terms, available at http://

transition.fcc.gov/glossary.html. 

CENTRAL TELEPHONE COMPANY OF VIRGINIA v. SPRINT 7
local interconnection trunks.7

 Section 38.4 of the ICA

addresses the compensation system for the termination of

VoIP traffic: "Voice calls that are transmitted, in whole or in

part, via the public Internet or a private IP network (VoIP)

shall be compensated in the same manner as voice traffic (e.g.

reciprocal compensation, interstate access and intrastate

access)." J.A. 746.

Sprint paid CenturyLink access charges for VoIP traffic as

set out in § 38.4 from the time of the execution of the ICAs

between the parties in 2004 and 2005 until June 2009. At that

point, Sprint began filing written disputes with CenturyLink.

Although the nature of Sprint’s objections changed, its core

contention appeared to be twofold: (1) that the ICA did not

apply to long distance VoIP traffic that traveled over FGD

trunks; and (2) that CenturyLink had billed Sprint at an

improperly high rate for VoIP traffic since May 1, 2007.

Instead of following the Dispute Resolution Procedure

established in the ICA, Sprint unilaterally reduced the rate for

termination of VoIP-originated traffic. It demanded that CenturyLink apply Sprint’s recalculated rate going forward and

remit portions of previous payments made by Sprint which

Sprint deemed to be in excess of what it should have paid.

Sprint withheld payments for both VoIP and non-VoIP traffic,

although no dispute concerning the latter existed.

C.

In November 2009, CenturyLink filed a complaint in the

United States District Court for the Eastern District of Virginia alleging one count of breach of contract based on the

7CenturyLink’s breach of contract claim only concerns long distance

VoIP traffic, i.e., VoIP traffic that traveled over FGD trunks before CenturyLink terminated it on a local network. Sprint’s counterclaim, which we

describe in the next section, concerns whether certain VoIP traffic is properly deemed local or long distance. 

8 CENTRAL TELEPHONE COMPANY OF VIRGINIA v. SPRINT
facts recounted above. Sprint moved to dismiss CenturyLink’s

complaint for lack of jurisdiction due to failure to exhaust

administrative remedies, or, alternatively, to stay the case

under the doctrine of primary jurisdiction. Sprint also filed a

counterclaim alleging, inter alia, that CenturyLink breached

the North Carolina ICA (the "NC ICA") by billing Sprint for

local traffic not subject to access charges.

The district court denied Sprint’s motion to dismiss in a

lengthy opinion. It concluded that it had federal question

jurisdiction under Supreme Court and circuit precedent interpreting the 1996 Act. It then decided that the 1996 Act

imposed no requirement for CenturyLink to exhaust its remedies before a State commission. Finally, it declined to stay the

case under the doctrine of primary jurisdiction, which allows

a court to refer a case within its jurisdiction to an administrative agency.

The district court conducted a bench trial on CenturyLink’s

breach of contract claim during August and September 2010.

It subsequently entered judgment in favor of CenturyLink,

and issued a memorandum opinion setting out findings of fact

and conclusions of law. The district court concluded that "in

refusing to pay the access charges as billed, Sprint breached

its duties under the ICAs, which clearly included paying

access charges for VoIP-originated traffic according to the

jurisdictional endpoints of the calls." Cent. Tel. Co. of Va. v.

Sprint Commc’ns Co. of Va., Inc., 759 F. Supp. 2d 789, 792

(E.D. Va. 2011). Central to the district court’s decision was

its finding that § 38.4 of the ICA operated to apply the compensation regime for local, long distance intrastate, and long

distance interstate traffic to VoIP calls.8 Although the district

8

In reaching this conclusion, the district court relied on, inter alia, the

prepared direct testimony submitted to the Florida Public Service Commission by James R. Burt, Director of Regulatory Policy for Sprint Corporation, in 2004. Explaining Sprint’s interpretation of language identical to

§ 38.4 in the ICA at issue in this case, Mr. Burt observed: 

CENTRAL TELEPHONE COMPANY OF VIRGINIA v. SPRINT 9
court did not find the relevant portions of the ICA to be

ambiguous, it noted that if ambiguity existed, it would be construed against Sprint as the drafter of the ICA.9

 The district

court then awarded CenturyLink $23,376,213.76, which consisted of damages under the breach of contract claim and prejudgment interest.

The second phase of the litigation, the bench trial on

Sprint’s counterclaim, took place over two days in December

2010. Unlike CenturyLink’s breach of contract claim, which

focused on long distance VoIP traffic, Sprint’s counterclaim

alleged that CenturyLink had improperly charged it for local

VoIP calls.10 Recognizing that the ICA’s "Bill and Keep" provision did not provide for access charges for local traffic, the

district court rejected Sprint’s argument that the ICA did not

permit CenturyLink’s use of the Billing Telephone Number

("BTN") method for determining whether a call should be

deemed local. Under the BTN method, a carrier classifies a

call as local or nonlocal for billing purposes based on a

unique account number that is assigned to a specific facility.

Sprint contended that CenturyLink was required to use

another method for "jurisdictionalizing" a call known as the

It is Sprint’s position that a VoIP call that originates or terminates

on Sprint’s network should be subject to the jurisdictionally

appropriate inter-carrier compensation rates. In other words, if

the end points of the call define the call as an interstate call, interstate access charges apply. If the end points define the call as

intrastate, intrastate access charges apply. If the end points define

the call as local traffic, reciprocal compensation charges apply. 

J.A. 694. 

9The district court found as a factual matter that "the dominant influence

that Sprint employees outside the company’s local telephone division

wielded respecting the ICAs’ terms, for all practical purposes, made Sprint

the singular drafter. . . ." Cent. Tel. Co. of Va., 759 F. Supp. 2d at 804.

Sprint does not challenge this factual finding on appeal. 

10We provide here only a cursory description of the facts relevant to

Sprint’s counterclaim, and discuss them in more detail infra in III.B. 

10 CENTRAL TELEPHONE COMPANY OF VIRGINIA v. SPRINT
"Calling Party Number" or "CPN." CenturyLink used BTN

throughout the period in dispute, in part because at the time

the parties executed the NC ICA, CenturyLink did not have

the software in place to use the CPN method. See J.A. 490-91.

The district court found that the NC ICA did not specify a

method for identifying local calls, but instead incorporated by

reference a telecommunications industry publication that

explicitly permitted use of the BTN method. Alternatively, the

district court again construed any ambiguity in the NC ICA

against Sprint as the drafter.

D.

By May 10, 2011, the district court judge had presided over

both bench trials, had ruled on Sprint’s jurisdiction motion,

had entered judgment for CenturyLink on its breach of contract claim, including the issuance of an accompanying 50-

page memorandum opinion, and had begun drafting the opinion on Sprint’s counterclaim. On that date, as the district

judge was preparing his financial disclosure for financial year

2010, he discovered that he had owned eighty shares of CenturyLink in a managed Individual Retirement Account

("IRA") during the time he presided over this case. 

Fund managers made decisions to buy and sell stocks in the

IRA, which at any given time held shares in as many as 200

companies, without input from the judge. The fund managers

initially purchased shares in Embarq, which subsequently

converted into forty-seven shares in CenturyTel following its

acquisition of Embarq. The fund managers’ subsequent purchases of CenturyTel stock in October 2009 and March 2010

brought the district court judge’s total holdings up to eighty

shares, which represented between 0.52% and 0.81% of the

value of the IRA. In July 2010, the district court judge had

filed his 2009 financial disclosure form, which reflected that

the IRA held eighty shares in CenturyTel.11 Because Century11In June 2010, the name was changed to CenturyLink. To minimize

confusion, we refer to "CenturyLink shares" throughout. 

CENTRAL TELEPHONE COMPANY OF VIRGINIA v. SPRINT 11
Tel was not a party to this case, the computerized system used

to identify potential conflicts did not register any conflict. J.A.

139-40. 

As soon as the district court judge discovered that his IRA

owned shares in CenturyLink, he initiated a conference call to

inform the parties. He explained the situation, and stated that

he was "not qualified under the canons of ethics to sit as a

judge in this case." J.A. 129. He then noted: "I don’t know

that there’s any alternative but for me to vacate the orders that

I’ve entered in the case and recus[e] myself and hav[e] the

case reassigned to some other judge to make a decision." J.A.

130. Counsel for CenturyLink requested time to research the

recusal and vacatur issues before the judge took any action.

Hearing no objection from counsel for Sprint, the district

court judge gave CenturyLink one week to conduct research

and, if desired, file a brief.

On May 16, 2011 CenturyLink moved for the district court

judge to divest from CenturyLink, or, in the alternative, to

recuse without vacating any of the previous orders and opinions. In the interval between the conference call and the filing

of CenturyLink’s motion, the district court judge conducted

additional research, and came to the conclusion that his earlier

statements rested on a misinterpretation of the ethical rules.

He therefore had the parties agree to a briefing schedule to

address the recusal issue. He also directed the IRA fund manager to sell the shares of CenturyLink immediately, which

was done on May 17, 2011.

After considering briefing from the parties, the district

court judge concluded that (1) his statements during the conference call did not constitute recusal; (2) allowing briefing of

the recusal issue as a response to CenturyLink’s request was

permissible; and (3) neither relevant subsection of the statutory provision governing recusal, 28 U.S.C. § 455, required

recusal or vacatur. He issued a written opinion on the recusal

issue on December 12, 2011, and, on the following day, a sep12 CENTRAL TELEPHONE COMPANY OF VIRGINIA v. SPRINT
arate opinion in which he ruled in favor of CenturyLink on

the merits of Sprint’s counterclaim.

Sprint’s appeal followed.

II.

This appeal raises questions of federal and state jurisdiction

under the 1996 Act, and also implicates a decision of the Federal Communications Commission (the "FCC"). We therefore

requested the FCC to submit an amicus brief.12 We incorporate the FCC’s views in our discussion as appropriate.

Sprint advances two reasons why the district court should

not have reached the merits of this case. It first argues that the

district court had no authority under the 1996 Act to interpret

and enforce an ICA because its role is limited to reviewing a

State commission determination, and no such determination

occurred here. It further contends that the district court judge

should have recused himself and vacated all orders and judgments issued in the case. Before considering each argument,

we briefly describe pertinent parts of the 1996 Act.

A.

Section 252 of the 1996 Act requires carriers to submit

their proposed ICA to the applicable State commission, which

"shall approve or reject the agreement, with written findings

as to any deficiencies." 47 U.S.C. § 252(e)(1) If a State commission fails to approve or reject a proposed ICA within

ninety days of an ICA adopted by negotiation or within thirty

days of an ICA adopted by arbitration, the ICA is deemed

12Specifically, we asked the FCC to address the effect our decision

might have on parallel proceedings pending before the FCC and its position, if any, on whether disputes over ICA provisions must be presented

to a State commission before they are subject to review in a federal district

court. 

CENTRAL TELEPHONE COMPANY OF VIRGINIA v. SPRINT 13
approved. § 252(e)(4). By contrast, if the State commission

fails to "carry out its responsibility under [section 252] in any

proceeding or other matter under [section 252]," the FCC

must preempt the State commission and assume whatever

responsibility it otherwise possessed. § 252(e)(5). The 1996

Act does not define what constitutes a "responsibility" for

purposes of § 252(e)(5).

Section 252(e)(6) provides for review of State commission

actions in two distinct ways. First, when the FCC preempts a

state commission under section 252(e)(5), section 252(e)(6)

makes the FCC proceeding and any judicial review of that

proceeding the "exclusive remedies for a State commission’s

failure to act." Second, section 252(e)(6) provides that "[i]n

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 this title and this section."

B.

Sprint urges us to read the 1996 Act as permitting only

State commissions to interpret and enforce ICAs in the first

instance. In Sprint’s view, because no State commission considered the ICA dispute before the district court did, the district court lacked authority to do so. Sprint first argues the

1996 Act contains a statutory exhaustion requirement. Even if

the text and structure of the 1996 Act do not mandate initial

State commission consideration, Sprint contends that we

should impose such a requirement as a prudential matter. Both

arguments raise legal questions, which we review de novo.

See Cavalier Tel., LLC. v. Va. Elec. & Power Co., 303 F.3d

316, 322 (4th Cir. 2002). We begin with the former.

1.

In considering whether the 1996 Act bestows on State commissions the exclusive responsibility to interpret and enforce

14 CENTRAL TELEPHONE COMPANY OF VIRGINIA v. SPRINT
ICAs in the first instance, it is useful to begin by identifying

what is not at issue in this case. Following the Supreme

Court’s decision in Verizon Maryland, Inc. v. Public Service

Commission of Maryland, 535 U.S. 635 (2002), and our decision in Verizon Maryland, Inc. v. Global NAPS, Inc., 377 F.3d

355 (4th Cir. 2004), it is clear that a federal court has jurisdiction to interpret the terms of interconnection-related compensation provisions in an ICA under 28 U.S.C. § 1331. Sprint

does not argue otherwise. Instead, Sprint contends that

although the 1996 Act confers federal question jurisdiction

over the dispute in this case, it restricts federal courts to

reviewing initial determinations made by State commissions.

Sprint’s argument assumes that a State commission has the

authority to interpret and enforce an ICA. Interestingly, nothing in the 1996 Act’s text so provides. Nonetheless, every circuit to have considered the question has concluded that a State

commission does have such authority. See Core Commc’ns,

Inc. v. Verizon Pa., Inc., 493 F.3d 333, 342–44 (3d Cir. 2007);

Sw. Bell Tel., L.P. v. Pub. Util. Comm’n, 467 F.3d 418, 422

(5th Cir. 2006); E.SPIRE Commc’ns, Inc. v. N.M. Pub. Regulation Comm’n, 392 F.3d 1204, 1207 (10th Cir. 2004); Iowa

Network Servs., Inc. v. Qwest Corp., 363 F.3d 683, 691–92

(8th Cir. 2004); BellSouth Telecomms., Inc. v. MCImetro

Access Transmission Servs., Inc., 317 F.3d 1270, 1277 (11th

Cir. 2003) (en banc); MCI Telecomms. Corp. v. Ill. Bell Tel.

Co., 222 F.3d 323, 337–38 (7th Cir. 2000); Sw. Bell Tel. Co.

v. Brooks Fiber Commc’ns of Ok., Inc., 235 F.3d 493, 497

(10th Cir. 2000).13 The FCC has as well. In re Starpower

Commc’ns, LLC, 15 F.C.C.R. 11277, 11280 (F.C.C. 2000).

13Although the Ninth Circuit in Pacific Bell v. Pac-West Telecomm, Inc.

did not directly address this question, it used language suggesting that a

State commission had the authority to enforce an ICA. See 325 F.3d 1114,

1126 (9th Cir. 2003) ("It is clear from the structure of the Act, however,

that the authority granted to state regulatory commissions is confined to

the role described in § 252—that of arbitrating, approving, and enforcing

interconnection agreements." (emphasis added)). 

CENTRAL TELEPHONE COMPANY OF VIRGINIA v. SPRINT 15
Although we have yet to address this issue,14 we need not do

so here because we reject Sprint’s more particularized claim

that a State commission must interpret an ICA before a federal district court can do so.

We begin with the text of the 1996 Act. Just as there is no

statutory text granting State commissions the authority to

interpret and enforce the provisions of ICAs, there is similarly

none granting them the exclusive authority to do so in the first

instance. See Core Comm’cns, 493 F.3d at 340 ("[T]he [1996]

Act is simply silent as to the procedure for post-formation disputes."). Congress could have made review by a State commission in the first instance an exclusive remedy; it used this

very phrase when discussing the review of an FCC preemption action. See 47 U.S.C. § 252(e)(6) ("In a case in which a

State fails to act as described in [§ 252(e)(5)], the proceeding

by the [FCC] under such paragraph and any judicial review of

the [FCC]’s actions shall be the exclusive remedies for a State

commission’s failure to act." (emphasis added)). But Congress did not do so.

Notwithstanding the 1996 Act’s textual silence on this

point, Sprint argues that language in § 252(e)(6) requires a

State commission to make a "determination" before a federal

district court can act. Specifically, Sprint points to the following: "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. . . ." § 252(e)(6). We disagree. The plain import

of this language is to provide for federal court review of a

State commission’s decision to approve or reject a proposed

ICA.15 This conclusion is reinforced by the fact that the 1996

14In an unpublished opinion, we have reviewed a State commission’s

interpretation of an ICA without commenting on that State commission’s

authority to interpret the ICA. See dPi Teleconnect LLC v. Owens, 413 F.

App’x 641, 644-45 (4th Cir. 2011). 

15We note that section 252(e) is entitled "Approval by State commission." It is therefore appropriate to interpret the language of § 252(e)(6) in

light of the section’s overall purpose of providing guidance concerning the

approval process for an ICA. 

16 CENTRAL TELEPHONE COMPANY OF VIRGINIA v. SPRINT
Act precludes such review by state courts. See § 252(e)(4)

("No State court shall have jurisdiction to review the action

of a State commission in approving or rejecting [an ICA]

. . . .").

Nonetheless, Sprint seeks to rely on cases that interpret

"determination" in § 252(e)(6) to include a State commission’s post-formation interpretation or enforcement of an

ICA. See e.g., Bellsouth Telecomms., 317 F.3d at 1277; Sw.

Bell Tel. Co. at 497 ("We next conclude that the district court

had jurisdiction to review the decision of the [Oklahoma Corporation Commission] interpreting the Interconnection Agreement."). Sprint’s reliance is misplaced. In recognizing that a

federal court’s authority to review State commission actions

includes the authority to review a State commission’s interpretation or enforcement of an ICA provision, these cases neither explicitly nor implicitly hold that parties must bring a

dispute concerning an ICA to a State commission in the first

instance. Rather, they simply acknowledge that where parties

make a State commission the first stop for interpreting or

enforcing a provision in an ICA, the language of § 252(e)(6)

provides that it need not be the last stop.16

What Sprint terms its "structural" argument—that the structure of the 1996 Act gives State commissions "plenary authority" over the interpretation of an ICA in the first instance, and

limits federal courts to a reviewing role—merely repackages

16For example, although Sprint characterizes the Eleventh Circuit’s en

banc holding in BellSouth Telecommunications as imposing the type of

initial State commission consideration it advocates in this case, this characterization is inaccurate. Instead, the en banc court, reversing a panel

decision holding that the State commission in Georgia lacked authority

under the 1996 Act to interpret an ICA, concluded that "the Georgia Public Service Commission has the authority under federal law to interpret

and enforce the interconnection agreements at issue between the parties

and that its determination is subject to review in the federal courts." 317

F.3d at 1279. The Eleventh Circuit simply did not decide whether the 1996

Act requires a State commission to interpret an ICA in the first instance.

CENTRAL TELEPHONE COMPANY OF VIRGINIA v. SPRINT 17
the same textual argument. Just as Sprint cannot ground its

textual argument in any text, neither can it point to any structural features of the 1996 Act indicating that Congress

intended to mandate initial State commission consideration.

Nor does Sprint’s vague appeal to "cooperative federalism"

advance its argument. As we have observed, adhering to the

1996 Act’s policy of cooperative federalism requires close

attention to the role that Congress (and the FCC) has actually

assigned to State commissions. See BellSouth Telecomms.,

Inc. v. Sanford, 494 F.3d 439, 449 (4th Cir. 2007) ("States’

continuing exercise of authority over telecommunications

issues forms part of a deliberately constructed model of cooperative federalism, under which the States, subject to the

boundaries set by Congress and federal regulators, are called

upon to apply their expertise and judgment and have the freedom to do so." (emphasis added)). Here, neither the plain text

of the 1996 Act nor its structure evince congressional intent

to place exclusive authority to interpret an ICA in the first

instance in a State commission.

Sprint further contends that even if the text and structure of

the 1996 Act do not require initial State commission consideration, deference to the FCC’s Starpower decision should lead

us to construe the statute as imposing such a requirement.17 In

Starpower, the FCC considered whether to preempt the Virginia State Corporation Commission ("Virginia Commission") when the Virginia Commission took no action on a

disputed issue arising from an ICA. The FCC concluded first

that the Virginia Commission had the authority to interpret

and enforce an ICA, and then decided that preemption was

proper because "a state commission’s failure to ‘act to carry

out its responsibility’ under section 252 can in some circum17We agree that where, as here, Congress has not spoken directly to a

particular question in the legislative text, it is appropriate to defer to a permissible construction of that statute by an administrative agency. See FDA

v. Brown & Williamson Tobacco Corp., 529 U.S. 120, 132 (2000); Chevron v. Natural Res. Def. Council, Inc., 467 U.S. 837, 843-44 (1984). 

18 CENTRAL TELEPHONE COMPANY OF VIRGINIA v. SPRINT
stances include the failure to interpret and enforce existing

[ICAs]." Starpower, 15 F.C.C.R. at 11280 (emphasis added).

There is some support for Sprint’s argument that Starpower

advocates initial State commission consideration of ICA provisions. In Core Communications, the Third Circuit purported

to apply Chevron deference to the FCC decision’s in Starpower. 493 F.3d at 338-39. In what it acknowledged to be a

"broad" reading of Starpower, that court interpreted the

FCC’s observation that a State commission’s responsibility

under § 252(e)(6) can "in some circumstances include the failure to interpret and enforce existing [ICAs]," Starpower, 15

F.C.C.R. at 11280, as conferring an exclusive authority on

State commissions to resolve disputes over ICAs in the first

instance. Core Commc’ns, 493 F.3d at 342.

In its amicus brief in this case, however, the FCC disputed

that it had taken such a position in Starpower, describing the

Third Circuit’s interpretation as "incorrect."18 FCC Amicus

Br. at 15. The FCC agrees that Starpower gives State commissions the responsibility to interpret and enforce an ICA "when

asked to do so" by the parties, but emphasizes that the decision "does not hold that state commissions are the only entities with that responsibility." Id. Moreover, the FCC argues

that reading the Act to grant exclusive authority to State commissions to interpret and enforce ICAs would be "inconsistent

with the broad adjudicatory authority that [other sections] of

the [1996] Act confer on the FCC and federal district courts."

Id. at 11. Finding this interpretation of the proper allocation

of decisional authority between federal courts and State commissions consistent with our reading of the 1996 Act, we

decline Sprint’s invitation to follow the Third Circuit and

accord Chevron deference to a position the FCC did not take.

18Verizon also submitted an amicus brief arguing that the district court

had authority to adjudicate CenturyLink’s claims in the first instance

under the 1996 Act. Neither Verizon’s nor the FCC’s amicus brief took

a position on the merits of the dispute between Sprint and CenturyLink.

CENTRAL TELEPHONE COMPANY OF VIRGINIA v. SPRINT 19
Accordingly, we hold that the 1996 Act does not require a

State commission to interpret and enforce an ICA in the first

instance.

2.

Sprint next argues that even if the 1996 Act does not mandate initial State commission consideration, we should nonetheless impose this step as a prudential exhaustion

requirement. Sprint contends that State commissions necessarily bring a level of expertise to the consideration of interconnection issues that federal courts lack. Where, as here,

Congress has legislated no explicit exhaustion requirement,

we are nonetheless "guided by congressional intent in determining whether application of the [exhaustion] doctrine

would be consistent with the statutory scheme." Cavalier Tel.,

303 F.3d at 322 (quoting Patsy v. Bd. of Regents of Fl., 457

U.S. 496, 501 n.4 (1982)). Cognizant of the "virtually unflagging obligation" to exercise that jurisdiction which we possess, Colorado River Water Conservation District v. United

States, 424 U.S. 800, 818 (1976), we must use our sound judicial discretion to "balance the interest of the individual in

retaining prompt access to a federal judicial forum against

countervailing institutional interests favoring exhaustion,"

Cavalier Telephone, 303 F.3d at 323 (quotation and citation

omitted). Here, that balance tips against imposing an exhaustion requirement.

An exhaustion requirement would neither align with congressional intent nor serve one of the exhaustion doctrine’s

core purposes. As we have noted, the purpose of the 1996 Act

was to introduce the benefits of competition into the local

telecommunications market. An exhaustion requirement exists

in part to promote efficiency. See Woodford v. Ngo, 548 U.S.

81, 89 (2006) ("Claims generally can be resolved much more

quickly and economically in proceedings before an agency

than in litigation in federal court."). The goals of competition

and efficiency would only be disserved by a requirement that

20 CENTRAL TELEPHONE COMPANY OF VIRGINIA v. SPRINT
the underlying merits of a dispute between Sprint and CenturyLink be considered by multiple individual State commissions with the attendant risk of disparate interpretations and

dispositions. Nor are we persuaded that State commissions

necessarily possess superior expertise to resolve such disputes. Congress certainly did not agree, as it expressly provided for the FCC to act when a State commission has failed

to do so, and for federal courts to review such disputes in any

event. For these reasons, we conclude that neither the text of

the 1996 Act nor prudential considerations compel federal

deference to State commissions in the first instance.

C.

In its second challenge to the district court’s authority to

decide the merits of this case, Sprint argues that the district

court judge’s discovery of a financial interest in CenturyLink

required recusal and vacatur of all opinions and orders already

issued. We review a district judge’s recusal decision for abuse

of discretion. Newport News Holdings Corp. v. Virtual City

Vision, Inc., 650 F.3d 423, 432 (4th Cir. 2011).

Sprint advances two arguments under the judicial recusal

statute, 28 U.S.C. § 455. First, in Sprint’s view, recusal here

was mandatory because the district court judge knew that he

had a "financial interest in . . . a party to the proceeding."

§ 455(b)(4). Alternatively, Sprint argues that the district court

judge should have recused himself because "his impartiality

might reasonably be questioned." § 455(a). We consider each

in turn.

1.

Relying in part on the Federal Circuit’s decision in Shell

Oil Co. v. United States, 672 F.3d 1283 (Fed. Cir. 2012),

Sprint contends that the 2009 financial disclosure form that

the district court judge completed in July 2010 established

knowledge of his financial interest in CenturyLink before he

CENTRAL TELEPHONE COMPANY OF VIRGINIA v. SPRINT 21
took any significant action in this case. See Appellant’s Br. at

50. Generally, a "financial interest" is "ownership of a legal

or equitable interest, however small . . . in the affairs of a

party." § 455 (d)(4). And "it is well-established that the ownership of stock constitutes a ‘financial interest’" for purposes

of § 455(b)(4). Shell Oil, 672 F.3d at 1289.

Sprint’s argument, however, fails to distinguish between

direct ownership of securities and ownership of securities in

a common investment fund over which a judge exercises no

management responsibilities. The judicial recusal statute specifically carves out the latter situation from the definition of

a "financial interest": "Ownership in a mutual or common

investment fund that holds securities is not a ‘financial interest’ in such securities unless the judge participates in the management of the fund." § 455(d)(4)(i). Congress created this

exception to enable judges to hold securities without risking

recusal across a broad range of cases. See New York City Dev.

Corp. v. Hart, 796 F.2d 976, 980 (7th Cir. 1986) ("When

Congress amended § 455 in 1974, it designed § 455(d)(4)(i)

as a safe harbor, a way for judges to hold securities without

needing to make fine calculations of the effect of a given suit

on their wealth."). Moreover, the operation of § 455(d)(4)(i)

is "mechanical": "Just as § 455(b)(4) requires disqualification

when there is any financial interest, however small, so

§ 455(d)(4)(i) eliminates any inquiry into the size of the likely

effect of a decision on the value of securities held through a

mutual fund." Id. (citation omitted).

The safe harbor exception created in § 455(d)(4)(i) applies

here. J.A. 514. Although the recusal statute does not define

"common investment fund," the core elements, which include

assets held together in trust in order to provide "satisfactory

diversification" and a "reduction of administrative expenses,"

see 26 C.F.R. § 1.408–2(b)(5)(ii); see also Federal Tax Coordinator ¶ H-12205 (2d.), 1997 WL 511225 (defining "common investment fund" as "a tax-exempt group trust created to

provide a diversification of investments or a reduction of

22 CENTRAL TELEPHONE COMPANY OF VIRGINIA v. SPRINT
administrative expenses" "into which IRA assets may be commingled"), are found here. The record demonstrates that the

district court judge held the CenturyLink shares in an IRA

"along with the assets of many others who hold similar

accounts." J.A. 514. The record also indicates that

"[d]ecisions to buy and sell stocks in the IRA were made by

the fund managers without input from the presiding judge."

J.A. 128. Thus, the shares at issue here were held in a common investment fund in whose management the district court

judge did not participate.19 Accordingly, the district court

judge’s ownership of shares in CenturyLink does not constitute a "financial interest" in CenturyLink for purposes of

§ 455(b). See Hart, 796 F.2d at 980 ("Because the underlying

assets are not a ‘financial interest’ of the judge it is unnecessary and inappropriate to inquire how a case might affect the

value of the fund’s assets.").

2.

Sprint alternatively argues that § 455(a) required recusal

because the district court judge should have known about his

interest in CenturyLink, and a reasonable observer would

ascribe such knowledge to him and call into question his partiality. We note at the outset that a judge whose conduct has

satisfied the § 455(d)(4)(i) safe harbor will almost certainly

have complied with § 455(a) by acting in a reasonable and

impartial manner. See Hart, 796 F.2d at 980 (noting that using

§ 455(a) as a "back door . . . inquiry into the substantiality of

the effect on the value of assets" held in a managed fund is

inappropriate, and holding that "[a] reasonable person would

not question the impartiality of a judge who holds nothing but

19If the judge learned that fund managers had purchased stock in a company which had a case before him, he could instruct the fund managers to

sell that stock. See J.A. 128 n.3. This sensible practice, which the district

court judge employed here soon after learning of his IRA’s ownership of

stock in CenturyLink, does not amount to participation in the management

of the IRA so as to remove the protection of § 455(d)(4)(i)’s safe harbor.

CENTRAL TELEPHONE COMPANY OF VIRGINIA v. SPRINT 23
well diversified mutual funds"). Even if one could imagine a

scenario where § 455(d)(4)(i) applies but a judge’s partiality

might reasonably be questioned, such a scenario is not present

here. Given the small number of shares the district court judge

held, the fact that the CenturyLink shares only came into his

portfolio after a series of mergers about which he was

unaware, and, as we have noted, that he held the shares in an

IRA managed by others, a reasonable observer would have no

cause to question his impartiality. His prompt action to inform

the parties of his stock when he learned of it, and to divest

from CenturyLink shortly thereafter further supports this conclusion.

The district court judge did not violate the recusal statute,

and therefore did not abuse his discretion in deciding that neither recusal nor vacatur was appropriate.

III.

Having concluded that the district court properly reached

the merits of this case, we now consider whether it decided

them correctly. Sprint raises two challenges. First, Sprint

asserts that the district court misconstrued the ICA as applying to long distance VoIP traffic. Second, it contends that

CenturyLink impermissibly billed Sprint for local calls. When

reviewing a district court’s judgments after a bench trial, we

accept factual findings unless they are clearly erroneous and

examine conclusions of law de novo. Plasterers’ Local Union

No. 96 Pension Plan v. Pepper, 663 F.3d 210, 215 (4th Cir.

2011).

As the district court did, we apply Virginia law to CenturyLink’s breach of contract claim, Cent. Tel. Co. of Va., 759

F. Supp. 2d at 797 n.4, and North Carolina law to Sprint’s counterclaim.20 To succeed on a breach of contract claim, the

20As relevant to this case, the applicable North Carolina and Virginia

contract principles are substantively alike. Moreover, because an ICA is

a "creation of federal law," Verizon, Md., 377 F.3d at 364, we also look

to our own precedent. 

24 CENTRAL TELEPHONE COMPANY OF VIRGINIA v. SPRINT
plaintiff must prove by a preponderance of the evidence that

a legally enforceable obligation existed between it and the

defendant; that the defendant breached that obligation; and

that the plaintiff incurred damages as a result of the breach.

See Sunrise Continuing Care, LLC v. Wright, 671 S.E. 2d

132, 135 (Va. 2009) (citation omitted); Birtha v. Stonemor,

N.C., LLC, 727 S.E.2d 1, 9 (N.C. Ct. App. 2012). Both CenturyLink’s claim and Sprint’s counterclaim implicate the first of

these elements. We interpret a contract as written and, when

its terms are clear and unambiguous, we construe the contract

"according to its plain meaning." City of Chesapeake v. States

Self-Insurers Risk Retention Grp., Inc., 628 S.E. 2d 539, 541

(Va. 2006); State v. Philip Morris USA Inc., 685 S.E.2d 85,

90 (N.C. 2009).

Where ambiguities arise, however, the "basic contract law

principle contra proferentem counsels that we construe any

ambiguities in the contract against its draftsman." Maersk

Line, Ltd. v. United States, 513 F.3d 418, 423 (4th Cir. 2008);

Station Assocs., Inc. v. Dare Cnty., 501 S.E.2d 705, 708 (N.C.

Ct. App. 1998) rev’d on other grounds, 513 S.E.2d 789 (N.C.

1999). Finally, a settled rule of contract interpretation allows

consideration of the "practical construction put by the parties

upon the terms of their own contract." First Nat. Exch. Bank

of Roanoke v. Roanoke Oil Co., 192 S.E. 764, 771 (Va. 1937);

see also id. ("No rule for the construction of written instruments is better settled than that which attaches great weight

to the construction of the instrument by the parties themselves." (citation omitted)); Century Commc’ns, Inc. v. Hous.

Auth. of Wilson, 326 S.E.2d 261, 264 (N.C. 1985). Armed

with these principles, we turn to Sprint’s arguments.

A.

Sprint first argues that the ICA does not apply to long distance VoIP traffic carried over FGD trunks. In its thorough

opinion on CenturyLink’s breach of contract claim, the district court explained how local calls are subject to "Bill and

CENTRAL TELEPHONE COMPANY OF VIRGINIA v. SPRINT 25
Keep" reciprocal compensation under § 38.1 of the ICA,

while the ICA set out specific access charges for intrastate

long distance and interstate long distance traffic. In the district

court’s view, § 38.4 of the ICA, which provides that "[v]oice

calls that are transmitted, in whole or in part, via the public

Internet or a private IP network (VoIP) shall be compensated

in the same manner as voice traffic (e.g., reciprocal compensation, interstate access and intrastate access)," J.A. 746,

applied that existing compensation regime to VoIP traffic.

On appeal, instead of directly challenging this interpretation of the ICA, Sprint argues that the ICA’s "plain language"

only covers interconnection of local networks, of which FGD

trunks are not a part.21 Thus, under Sprint’s view, the compensation regime set out in § 38.4 does not apply to VoIP traffic

carried over FGD trunks. Appellant’s Br. at 35. The "plain

language" which Sprint cites includes provisions that (1)

define the scope of the ICA as relating to the establishment

of "Local Interconnection," § 2.1; (2) set out guidance for the

"Local Interconnection Trunk Arrangement," § 37; and (3)

define the "Physical Point of Interconnection" as "the physical

point that establishes the technical interface, the test point,

and the operational responsibility hand-off between CLEC

and Sprint for the local interconnection of their networks,"

§ 1.55, see Appellant’s Br. at 35. But given that federal law

defines interconnection simply as "the linking of two networks for the mutual exchange of traffic," 47 C.F.R. § 51.5,

and nothing in the ICA defines it otherwise, none of these

provisions advances Sprint’s position. Simply put, the ICA is

ambiguous as to whether local interconnection includes or

excludes long distance VoIP traffic carried over FGD trunks.

This ambiguity,22 along with the parties’ previous course of

21Sprint acknowledges that FGD trunks connect long distance networks

to local networks. See Appellant’s Br. at 37 (quoting J.A. 86). 

22Whether language in a contract is ambiguous is reviewed de novo as

a question of law. Eure v. Norfolk Shipbuilding & Drydock Corp., Inc.,

561 S.E.2d 663, 667 (Va. 2002). 

26 CENTRAL TELEPHONE COMPANY OF VIRGINIA v. SPRINT
dealings, compels us to reject Sprint’s argument. The district

court found, and Sprint does not challenge, that it drafted the

ICAs at issue here. Had Sprint intended to exclude FGD

trunks from the scope of the ICA, a simple provision stating

that the established compensation framework for VoIP traffic

in § 38.4 did not apply to any VoIP traffic traveling on FGD

trunks would have accomplished this goal. Instead, Sprint’s

argument seeks to cobble together a handful of other ambiguous provisions—and ignore the language of § 38.4—to support the proposition that VoIP traffic over FGD trunks is

excluded from the ICA’s coverage. As the district court

observed, "only so much can be gained from Sprint referencing other provisions in the ICAs, but ignoring the one provision, Section 38.4, that speaks directly to the issue in

dispute—compensation for termination of VoIP-originated

traffic." Cent. Tel. Co. of Va., 759 F. Supp. at 801. Because

we are required to construe ambiguity against the

drafter—here, Sprint—we conclude that the ICA must be read

to apply to VoIP traffic carried over FGD trunks.

The parties’ own longstanding "practical construction" of

the ICA bolsters our conclusion. See First Nat. Exch. Bank of

Roanoke, 192 S.E. at 771. Sprint paid the CenturyLink plaintiffs for VoIP traffic carried over FGD trunks in accordance

with § 38.4 from the execution of the ICAs in 2004 and 2005

until June 2009. Although the fact that the parties were for

some of this time both part of Sprint Corporation may explain

Sprint’s reluctance to challenge this arrangement until the

CenturyLink Plaintiffs split off from Sprint Corporation in

May 2006, it does not explain Sprint’s continued payments

until June 2009. The district court’s unchallenged factual

findings, however, offer an explanation: "In the summer of

2009, Sprint, like many companies at the time, embarked on

company-wide cost-cutting efforts. Notably, during this time

period, Sprint launched a coordinated effort to contest access

charges on VoIP-originated traffic with other carriers across

the telecommunications industry." Cent. Tel. Co. of Va., 759

F. Supp. at 796. Sprint’s change in strategy does not undo the

CENTRAL TELEPHONE COMPANY OF VIRGINIA v. SPRINT 27
parties’ shared interpretation of the ICA over a number of

years. When viewed in conjunction with the ambiguity in the

ICA’s coverage of VoIP traffic over FGD trunks, the parties’

course of dealing reinforces our conclusion that the district

court did not err in entering judgment for CenturyLink on its

breach of contract claim.23

B.

Sprint also challenges the district court’s ruling on its counterclaim, which alleges that CenturyLink improperly billed it

for local traffic under the NC ICA. Sprint does not dispute

that the calls are covered by the ICA, but instead contends

that CenturyLink wrongly identified the calls as intrastate

long distance, using an impermissible method. Specifically, in

Sprint’s view, the plain terms of the NC ICA disallowed CenturyLink’s use of the Billing Telephone Number (the "BTN")

method. We disagree.

As noted above, the "Bill & Keep" compensation

regime—under which neither party pays the other—applies to

local traffic, whereas the ICA requires Sprint to pay the applicable access charges for intrastate long distance traffic. Thus,

while no charge would apply to a call deemed local, Sprint

would have to pay access charges for any traffic deemed

intrastate long distance. Moreover, there are at least two different methods for determining whether a call is deemed

local. The BTN method identifies traffic as local or nonlocal

for billing purposes based on a unique account number that is

assigned to a specific facility. By contrast, the "Calling Party

Number" or "CPN" method identifies the actual originating

location of the call in question. In some instances, traffic that

23We fail to understand how Sprint’s additional contention that CenturyLink’s interpretation of the ICA "seeks to circumvent a longstanding,

industry-wide dispute" about treatment of VoIP traffic, Appellant’s Br. at

32, aids its argument. That an interpretation would avoid such a dispute

would seem to counsel in favor of, not against, it. 

28 CENTRAL TELEPHONE COMPANY OF VIRGINIA v. SPRINT
the BTN method identifies as intrastate long distance—and

therefore subject to access charges—the CPN method would

identify as local.

The crux of the question, then, is whether the ICA establishes a method for determining when a call is properly considered local and when it is not. We must therefore determine

whether the ICA required CenturyLink to use the CPN

method instead of the BTN method it actually used.

In its comprehensive opinion, the district court identified

the relevant provisions of the NC ICA at issue. First, § 1.40

defines local traffic under the NC ICA as traffic "that is originated and terminated within Sprint’s local calling area." J.A.

795. Importantly, the text of the NC ICA "does not prescribe

a specific method of ‘jurisdictionalizing’ traffic as local (subject to ‘Bill and Keep’) or non-local (subject to the applicable

access charges) for billing purposes." J.A. 164. Instead, § 42.1

provides that "[e]ach Party shall calculate terminating interconnection minutes of use based on standard AMA recordings

made within each Party’s network, these recordings being

necessary for each Party to generate bills to the other Party."

J.A. 830. Section 1.6 of the NC ICA defines "AMA" as "Automated Message Accounting," and notes that "AMA format

is contained in the Automatic Message Accounting document

published by Telcordia as GR-1100-CORE which defines the

industry standard for message recording." J.A. 792. The parties do not dispute that the industry manual known as the Telcordia GR-1100-CORE permits use of the BTN method.

Both Sprint and CenturyLink invoke the express language

of the NC ICA in support of their respective positions. Sprint

claims that § 1.40’s definition of traffic that "is originated and

terminated within [a] local calling area," J.A. 795, required

CenturyLink to use the Calling Party Number or "CPN"

method to jurisdictionalize the originating and terminating

points of a call. According to Sprint, application of the CPN

method to the calls at issue would transform them from long

CENTRAL TELEPHONE COMPANY OF VIRGINIA v. SPRINT 29
distance into local calls. And to construe the NC ICA as permitting the BTN method, Sprint contends, would lead to

absurd results—akin to treating a cab ride that began and

ended in Richmond but traveled along Interstate 95 as "originating" anywhere along that highway, even as far afield as

Portland, Maine. CenturyLink, by contrast, argues that § 42.1

in conjunction with § 1.6 incorporated by reference the industry standard set out in the Telcordia GR-1100-CORE document, and therefore explicitly permitted use of the BTN

method. The district court credited the latter view. So do we.

Sprint’s argument that the NC ICA disallowed use of the

BTN method suffers from an insurmountable flaw: the NC

ICA nowhere explicitly so provides. As the district court

observed, Sprint’s reliance on the definition set out in § 1.40

overlooks the more rudimentary question of how a carrier can

determine where a call has originated and terminated. At the

time the parties agreed to the NC ICA, CenturyLink only had

the capability to use the BTN method, and although the CPN

method existed, no provision in the NC ICA required that

CenturyLink adopt this method at any point in the future.

Sprint’s argument that the NC ICA only incorporated the Telcordia document for the purpose of calculating minutes, see

Appellant’s Br. at 47-49, finds no grounding in the text of the

relevant provisions. Accordingly, we agree with the district

court’s conclusion that the NC ICA permitted CenturyLink to

identify the origination and termination points of calls using

the BTN method, and therefore to bill Sprint at the applicable

access charges for those calls identified as nonlocal under that

method.

At best, Sprint’s arguments render ambiguous the propriety

of the BTN method for identifying calls as local under the NC

ICA. But as we explained in the context of CenturyLink’s

breach of contract claim, Sprint must do more than identify an

ambiguity in a contract it drafted. In the face of ambiguity, we

construe the relevant provisions of the NC ICA against Sprint

and in favor of CenturyLink.

30 CENTRAL TELEPHONE COMPANY OF VIRGINIA v. SPRINT
IV.

For the reasons discussed above, we affirm.

AFFIRMED

CENTRAL TELEPHONE COMPANY OF VIRGINIA v. SPRINT 31