Opinion ID: 3032515
Heading Depth: 2
Heading Rank: 1

Heading: US West Communications v. MFS Intelenet, Inc.

Text: The majority distinguishes US West on the basis that “neither the legitimacy of interim rates nor possible adjustment by later pricing proceedings (a so-called true up) is accepted by Verizon,” slip op. at 7841, suggesting that, by contrast, US West did not contest “the legitimacy of interim rates.” I take this to mean that, according to the majority’s reading, US West did not contest the legitimacy of rates that, by virtue of being interim, need not be in compliance with the Act so long as US West was later made whole. With this I do not agree. As we explained there, “US West challenge[d] several of the pricing provisions as inconsistent with the pricing standards fixed by the Act.” Id. at 1117-18. We nevertheless concluded that the claims were not ripe for judicial review primarily because US West conceded that the true-up would make it whole and, thus, might moot the appeal. Id. at 1118-19. This does not mean that US West did not contest the legitimacy of such interim rates. Indeed, we expressly said otherwise: US West challenges the interim rates, but says its concerns would be resolved if TCG and MFS were ordered to compensate U.S. West for any differences between the interim rates and the permanent prices, referred to as an “administrative true-up.” . . . . Accordingly, we avoid unnecessary adjudication by declining to review the interim prices now. VERIZON v. PEEVEY 7843 If a true-up is ordered, this appeal might become moot, as U.S. West has indicated it would be satis- fied with such an order. Id. at 1118-19 (emphasis added). Thus, I find US West distinguishable from the case here not because US West did or did not contest the legitimacy of interim rates that do not comply with the Act and TELRIC methodology, but because it conceded that a true-up would make it whole whereas, by contrast, Verizon has made no similar concession. To the contrary, as I address more fully in Part II.B.1 below, Verizon has affirmatively alleged that the true-up will not make it whole in two different respects: (1) the loss of retail customers suffered during the period until permanent rates are established, which loss is claimed to be due to unlawfully low interim rates; and (2) the credit risk of nonpayment by CLECs of the difference between the rates as set by the interim rate order and as ultimately adjusted by the true-up, a risk Verizon has been and is presently forced to bear. Further, the CPUC agrees that these two elements of loss claimed by Verizon will not be considered in the true-up. Thus, to the extent that the district court here was obliged to accept Verizon’s allegations of uncompensable losses as true, an issue which I address in Part II.B.3 below, contrary to what was conceded in US West, any future true-up here cannot moot this appeal. Nor is there any merit in the argument of the CPUC and the intervenors that our rationale in US West applies here with even greater force than it did there because the true-up here is more certain to occur than it was in US West. Presumably the argument is that even in US West, we denied review where there was a possibility that US West would suffer losses that would not be compensated if, ultimately, the state utilities commission decided not to order a true-up. But here, to the extent Verizon’s allegations must be taken as true, Verizon has suffered, is suffering and will continue to suffer losses 7844 VERIZON v. PEEVEY uncompensable by a true-up; it is not a mere possibility. At the procedural phase in which we find ourselves and given Verizon’s allegations, it must be deemed a certainty. Finally, as alluded to above, the possibility that the appeal would be mooted was not the sole ground on which we relied in holding that the claims raised in US West were not ripe for judicial review. Rather, as we stated: Even if the appeal does not become moot, either because the true-up is denied or because [the CLECs] appeal[ ] the award of a true-up, this court will benefit from the Commission’s and the district court’s legal analysis of whether a true-up is authorized by the Act and from their assessment of whether it should be imposed in these particular cases. Id. at 1119. This rationale is inapplicable here because none of the parties are contesting whether a true-up is authorized nor whether it should be imposed here. It is admitted by all: The CPUC made the interim rates subject to a true-up, 2003 Cal. PUC LEXIS 168, at  (Cal. Pub. Util. Mar. 13, 2003); there will be a true-up. In short, absent even the remotest possibility that Verizon’s claimed losses will be compensated through a true-up (assuming Verizon’s allegations to be true) thereby rendering this appeal moot, and in the absence of any suggestion that the parties intend to challenge the propriety of conducting a trueup either generally or as applied here, US West does not bind us. See Hart v. Massanari, 266 F.3d 1155, 1170 (9th Cir. 2001) (“In determining whether it is bound by an earlier decision, a court considers . . . the ‘reason and spirit of cases’ [and] also ‘the letter of particular precedents.’ This includes not only the rule announced, but also the facts giving rise to the dispute . . . .”) (citation omitted). VERIZON v. PEEVEY 7845