Source: http://www2.bloomberglaw.com/public/desktop/document/Central_Tel_Co_of_Virginia_v_Sprint_Communications_Co_of_Virginia
Timestamp: 2013-12-05 01:24:34
Document Index: 779546151

Matched Legal Cases: ['§38', '§ 151', '§ 51', '§ 252', '§ 38', '§ 69', '§\n38', '§ 38', '§ 455', '§ 252', '§ 252', '§ 252', '§\n252', '§ 1331', '§ 252', '§ 252', '§ 252', '§ 252', '§ 252', '§ 252', '§ 252', '§ 252', '§ 455', '§ 455', '§ 455', '§ 455', '§ 455', '§\n455', 'art, 796', '§ 455', '§ 455', '§ 455', '§ 455', '§ 455', '§ 455', '§ 1', '§ 455', 'art, 796', '§ 455', '§ 455', '§ 455', 'art, 796', '§ 455', '§\n455', '§ 38', '§ 38', '§ 38', '§\n2', '§ 37', '§ 1', '§ 51', '§\n38', '§ 38', '§ 38', '§ 1', '§ 42', '§ 1', '§ 42', '§ 1', '§ 1', '§ 69', '§ 38', '§ 252', '§\n252', '§ 455']

Cent. Tel. Co. of Virginia v. Sprint Commc'ns Co. of Virginia, Inc., 715 F.3d 501, 58 CR 277 (4th Cir. 2013), Court Opinion
715 F.3d 501
2013 BL 112848
Cent. Tel. Co. of Virginia v. Sprint Commc'ns Co. of Virginia, Inc., 715 F.3d 501, 58 CR 277 (4th Cir. 2013) [2013 BL 112848]
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 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
No. 12-1322.
Argued: January 29, 2013.
[*502] Hide Headnotes
[1] Telecommunications carriers; interconnection agreements;
jurisdiction of federal district court to interpret interconnection agreements; failure to exhaust administrative remedies. ►CA.201(L)(1) ►CA.252 ►APA.701(C) ►APA.701(E)(2) ►Gen.130 [Show Topic Path]
There is no requirement in the 1996 Act that, when there is a dispute between carriers over the terms of their interconnection agreement (ICA), the relevant state commission must interpret the ICA before the dispute can be brought in federal district court. When Congress intended to create exclusive remedies or jurisdiction in the Act, it used explicit language to do so, but there is no language in the Act granting state commissions exclusive authority to interpret the provisions of ICAs in the first instance. Nor do any structural features of the Act demonstrate any intent by Congress to give state commissions such exclusive authority. While the Third Circuit broadly construed the FCC's Starpower decision [20 CR 974] as possibly conferring exclusive authority on state commissions to resolve disputes over ICAs in the first instance, the FCC, in an amicus brief in this case, disputed that it had taken such a position in Starpower, and characterized the Third Circuit's interpretation as incorrect. Finally, no prudential considerations exist to mandate initial state commission consideration. The 1996 Act's goals of competition and efficiency would be disserved by a requirement that the merits of carrier interconnection disputes be considered by multiple individual state commissions and subject to the risk of disparate interpretations and dispositions. Nor do state commissions necessarily possess superior expertise to resolve such disputes.
[2] Telecommunications carriers; interconnection agreements;
access charge disputes; interpretation of contracts. ►CA.201(A)(1) ►CA.251(I) ►Gen.117 [Show Topic Path]
The district court's ruling that the access charge provisions in an interconnection agreement (ICA) between Sprint and CenturyLink applied to Sprint's long distance VoIP traffic was affirmed. While Sprint argued that the ICA's plain language referred only to interconnection of local networks, the ICA was ambiguous as to whether to whether local interconnection included or excluded the VoIP traffic at issue. Moreover, for several years Sprint had paid CenturyLink's access charge invoices in accordance with §38.4 of the ICA before unilaterally deciding that the ICA did not require such payment. Since Sprint itself drafted the ICA, the ambiguity was properly construed against it, especially considering the parties'
previous course of dealings. For the same reason, the district court correctly rejected Sprint's claim that it had been improperly billed for some local traffic that CenturyLink identified as intrastate long distance based on its use of the Billing Telephone Number (BTN) method of identifying call origin. Sprint's argument that CenturyLink should have used the Calling Party Number (CPN) method instead was rejected because the ICA, which was drafted by Sprint, did not require the use of CPN, and at the time the agreement was entered into, CenturyLink only had the capability to use BTN and nothing in the ICA required it to change that method.
Virginia, Robert E. Payne, Senior District Judge.
[*503] [EDITORS' NOTE: THIS PAGE CONTAINED HEADNOTES AND HEADNOTES ARE NOT AN
[*504] [EDITORS' NOTE: THIS PAGE CONTAINED HEADNOTES AND HEADNOTES ARE NOT AN
[*505] 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, Washington, D.C., for Amicus Curiae Federal Communications
Affirmed by published opinion. [**2] Judge DUNCAN wrote the opinion, in which
Judge NIEMEYER and Judge FLOYD joined.
Pursuant to the provisions of the Telecommunications Act of 1996,
47 U.S.C. § 151et 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.
Prior to the Telecommunications Act of 1996 (the "1996 Act"), telephone
[*506] 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.
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 U.S.C. § 252(a)(1).
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.[fn1] 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 [**3] the subject
of this dispute, and which were approved by the appropriate State
commissions.[fn2]
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,[fn3] long distance intrastate,[fn4] and long
[*507] distance interstate. The facts giving rise to the underlying dispute revolve
around the ICA's compensation structure for these three categories of
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.[fn5] 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.
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"[fn6] 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." See47 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 local interconnection
trunks.[fn7] Section 38.4 of the ICA addresses the compensation [**4] 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, inter-state 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
[*508] 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 nonVoIP traffic, although no dispute concerning the latter
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 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 [**5] the
compensation regime for local, long distance intrastate, and long distance
interstate traffic to VoIP calls.[fn8] Although the district court did not
find the relevant portions of the ICA to be ambiguous, it noted that if
ambiguity existed, it would be
[*509] construed against Sprint as the drafter of the ICA.[fn9] 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.[fn10] 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 "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.
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 [**6] judge had
filed his 2009 financial disclosure form, which reflected that the IRA held
eighty shares in CenturyTel.[fn11] Because CenturyTel was
[*510] 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 separate opinion in
which he ruled in favor of CenturyLink on the merits of Sprint's
Sprint's appeal followed.
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.[fn12] We incorporate the FCC's views in our discussion as
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 [**7] of the 1996 Act.
Section 252 of the 1996 Act requires carriers to submit their proposed ICA
to the applicable State commission, which
[*511] "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
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."
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.
In considering whether the 1996 Act bestows on State commissions the
exclusive responsibility to interpret and enforce 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, 122 S.Ct. 1753,
152 L.Ed.2d 871 (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
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. [**8] 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);
[*512] 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. III. 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).[fn13] The FCC has as well. In re Staiyower Commc'ns, LLC,
15 F.C.C.R. 11277, 11280 (F.C.C.2000). Although we have yet to address this
issue,[fn14] 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. See47 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.[fn15] This conclusion is reinforced by the fact
that the 1996 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
[*513] 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 [**9] 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.[fn16]
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 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 Star-power decision should lead us to construe the statute as imposing
such a requirement.[fn17] 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 circumstances include the
failure to interpret and
[*514] 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 Star-power.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 [**10] 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."[fn18] 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. Accordingly, we hold that the 1996 Act does not require a State
commission to interpret and enforce an ICA in the first instance.
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, 102 S.Ct. 2557, 73 L.Ed.2d 172 (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, 96 S.Ct. 1236, 47 L.Ed.2d 483 (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
[*515] 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,
126 S.Ct. 2378, 165 L.Ed.2d 368 (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 the underlying merits of a
dispute between Sprint and CenturyLink be considered [**11] 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.
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.
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 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 Neiv
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
[*516] 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 [**12] 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," see26 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 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.[fn19] 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.").
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 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
un-aware, 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
[*517] 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.
Having concluded that the district [**13] 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.[fn20] To succeed on a breach of
contract claim, the 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, 277 Va. 148, 671 S.E.2d 132, 135 (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.,
271 Va. 574, 628 S.E.2d 539, 541 (2006); State v. Philip Morris USA Inc.,
363 N.C. 623, 685 S.E.2d 85, 90 (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., 130 N.C.App. 56,
501 S.E.2d 705, 708 (1998) rev'd on other grounds, 350 N.C. 367,
513 S.E.2d 789 (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., 169 Va. 99, 192 S.E. 764, 771 (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, 313 N.C. 143, 326 S.E.2d 261, 264 (1985). Armed with these
principles, we turn to Sprint's arguments.
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 Keep" reciprocal compensation under § 38.1 of
[*518] 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 [**14] 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.[fn21] 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,[fn22] along with the parties' previous course of 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.2d 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
[*519] 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 [**15] 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.2d at 796. Sprint's change in strategy does not undo the 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.[fn23]
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 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
[*520] 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.[**16] 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-COKE
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 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 dis-allowed 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 earner 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.
[fn1] We distinguish between Sprint (or the Sprint Defendants), the
defendant in this case, and Sprint Corporation, of which the former is a
[fn2] The parties stipulated below that each ICA contains terms that are
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.
[fn3] Local 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.
[fn4] A long distance intrastate call originates and terminates within the
borders of a state, but travels from one LATA to another.
[fn5] A carrier "terminates" a call by routing it from another carrier to a
customer in its own network.
[fn6] A 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. See47 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.
[fn7] CenturyLink'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.
[fn8] 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:
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.
[fn9] The 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
[fn10] We provide here only a cursory description of the facts relevant to
Sprint's counterclaim, and discuss them in more detail infra in III.B.
[fn11] In June 2010, the name was changed to CenturyLink. To minimize
confusion, we refer to "CenturyLink shares" throughout.
[fn12] Specifically, 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.
[fn13] Although 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. See325 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
inter-connection agreements." (emphasis added)).
[fn14] In 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 Fed. Appx. 641, 644-45 (4th Cir.2011).
[fn15] We 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.
[fn16] For 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 inter-connection 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
[fn17] We 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, 120 S.Ct. 1291,
146 L.Ed.2d 121 (2000); Chevron v. Natural Res. Def. Council, Inc.,
467 U.S. 837, 843-44, 104 S.Ct. 2778, 81 L.Ed.2d 694 (1984).
[fn18] Verizon 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.
[fn19] If 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
[fn20] As 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.
[fn21] Sprint acknowledges that FGD trunks connect long distance networks to
local networks. See Appellant's Br. at 37 (quoting J.A. 86).
[fn22] Whether language in a contract is ambiguous is reviewed de novo as a
question of law. Eure v. Norfolk Shipbuilding & Drydock Corp., Inc.,
263 Va. 624, 561 S.E.2d 663, 667 (2002).
[fn23] We 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.