Court Opinion

ID: 1027841
Source: CourtListenerOpinion
Date Created: 2013-07-05 07:30:49.519301+00
Date Added: 2024-06-11T12:29:49.259766
License: Public Domain

UNPUBLISHED

                  UNITED STATES COURT OF APPEALS
                      FOR THE FOURTH CIRCUIT

                             No. 07-1401

MCIMETRO   ACCESS   TRANSMISSION  SERVICES   OF   VIRGINIA,
INCORPORATED, d/b/a Verizon Access Transmission Services of
Virginia,

                Plaintiff - Appellant,

          v.

MARK C. CHRISTIE, in his official capacity as Chairman of
the State Corporation Commission of Virginia; THEODORE V.
MORRISON, JR., in his official capacity as Commissioner of
the State Corporation Commission of Virginia; JUDITH
WILLIAMS JAGDMANN, in her official capacity as Commissioner
of the State Corporation Commission of Virginia,

                Defendants - Appellees,

          and

XO COMMUNICATION SERVICES, INCORPORATED; CAVALIER TELEPHONE,
LLC;   DIECA  COMMUNICATIONS,   INCORPORATED,  d/b/a   Covad
Communications Company,

                Intervenors/Defendants – Appellees,

          and

STATE CORPORATION COMMISSION OF VIRGINIA,

                Defendant.

-------------------------------------

UNITED STATES OF AMERICA; FEDERAL COMMUNICATIONS COMMISSION,

                Amici Curiae.
Appeal from the United States District Court for the Eastern
District of Virginia, at Richmond.   James R. Spencer, Chief
District Judge. (3:06-cv-00740-JRS)

Argued:   December 5, 2008               Decided:   February 11, 2009

Before NIEMEYER, SHEDD, and DUNCAN, Circuit Judges.

Dismissed,   vacated,   and   remanded   by   unpublished   per   curiam
opinion.

ARGUED: Scott H. Angstreich, KELLOGG, HUBER, HANSEN, TODD, EVANS
& FIGEL, P.L.L.C., Washington, D.C., for Appellant.    Robert A.
Dybing, THOMPSON & MCMULLAN, Richmond, Virginia, for Appellees.
ON BRIEF: Michael E. Glover, Michael D. Lowe, VERIZON,
Arlington,  Virginia;   Lydia  R.   Pulley,  VERIZON,   Richmond,
Virginia; Gregory G. Rapawy, KELLOGG, HUBER, HANSEN, TODD, EVANS
&   FIGEL,  P.L.L.C.,   Washington,   D.C.;  Robert   M.   Tyler,
MCGUIREWOODS, L.L.P., Richmond, Virginia, for Appellant.     John
F. Dudley, William H. Chambliss, STATE CORPORATION COMMISSION OF
VIRGINIA, Richmond, Virginia, for Appellees.   Matthew B. Berry,
General Counsel, Joseph R. Palmore, Deputy General Counsel,
Richard K. Welch, Acting Deputy Associate General Counsel,
Christopher L. Killion, Deputy Associate General Counsel,
Nicholas A. Degani, Counsel, FEDERAL COMMUNICATIONS COMMISSION,
Washington, D.C.; Thomas O. Barnett, Assistant Attorney General,
James J. O’Connell, Jr., Deputy Assistant Attorney General,
Catherine G. O’Sullivan, Attorney, Nancy C. Garrison, Attorney,
UNITED STATES DEPARTMENT OF JUSTICE, Washington, D.C., for Amici
Curiae.

Unpublished opinions are not binding precedent in this circuit.

                                   2
PER CURIAM:
       Verizon Access appeals the district court’s dismissal of

its     challenge       to     conditions           placed     on     its     interstate

communications        services        by    the     Virginia        State     Corporation

Commission (“VSCC”).            The VSSC moved this court to dismiss the

appeal    as   moot    because       of    its    subsequent        rescission      of   the

contested conditions and its explicit recognition of exclusive

FCC jurisdiction over the interstate communications services at

issue.    For the reasons that follow, we agree that the appeal is

moot and dismiss on that basis.

                                             I.

       “Verizon Access,” the plaintiff here, is the result of the

2005 merger of the Virginia subsidiaries of telecommunications

companies MCI and Verizon Communications.                           The merger of MCI

into     Verizon     required        the    approval      of    federal       and    state

regulatory         agencies,        including       the   Federal          Communications

Commission (“FCC”) and the VSCC, both of which imposed certain

conditions.        The FCC, pursuant to its authority over regulation

of interstate communications services under the Communications

Act, 47 U.S.C. § 151, issued an order (“FCC Order”) requiring

that,    for   a    period     of    30    months    following       the    merger   date,

Verizon/MCI “shall not increase the rates paid by MCI’s existing

customers.”        JA 91.    The FCC also stated that its conditions were

                                             3
not intended “to restrict, supersede, or otherwise alter state or

local jurisdiction under the Communications Act.”                 JA 90.

       The     VSCC   considered    and    ultimately     approved    the   merger

pursuant to its authority under the Transfers Act, Va. Code §

56-88. 1        However,    its    order       required   that   Verizon    Access

“continue to offer to [current and future] wholesale customers

in    Virginia    its     available   intrastate      and   interstate      special

access private line or its equivalent [which provide dedicated

bandwidth for a customer’s usage] . . . at pre-merger terms and

conditions and at prices that do not exceed pre-merger rates.”

VSCC Order I; JA 58.           Unlike the FCC’s rate constraints, which

were to continue for 30 months, the VSCC’s condition was to

remain in effect indefinitely, until the VSCC lifted it.                    JA 52-

53, 58.

       In April 2006, Verizon Access petitioned the VSCC to remove

the        restriction,     arguing    that       regulation     of   interstate

       1
      The Transfers Act requires VSCC approval of any transaction
that involves the acquisition or disposal of control of a
telephone company in Virginia.    The Act provides that the VSCC
must issue conditions “as it may deem proper and the
circumstances require” in order to ensure that the proposed
combination will neither impair nor jeopardize “adequate service
to the public at just and reasonable rates.” Va. Code § 56-90.
The Act defines “control” as “(1) the acquisition of twenty-five
percent or more of the voting stock or (ii) the actual exercise
of any substantial influence over the policies and actions of
any . . . telephone company.” Va. Code § 56-88.1.

                                           4
communications             services       falls        exclusively          under        federal

jurisdiction.          In July 2006, the VSCC denied the petition.

       These        arguments      were    then       repeated       in   federal       district

court, with Verizon Access asserting, and the VSCC resisting,

federal preemption.                In March 2007, the district court found

that       the    VSCC’s    authority      was       not    preempted      and    granted      its

motion to dismiss.              This appeal followed.

       In        January   2008,    this    court          requested      that    the    federal

government          file   an    amicus    brief           setting    forth      its    view    on

whether the challenged conditions on the merger are preempted by

federal law.           In February 2008, the FCC and the Department of

Justice (“DOJ”) filed their joint amicus brief (“FCC/DOJ Brief”)

supporting Verizon Access’s preemption argument.                              The government

offered extensive statutory, regulatory and judicial authority 2

       2
      For instance, the government pointed out that the
provisions of the Communications Act, which created the FCC and
granted it oversight authority, “apply to all interstate and
foreign communication by wire.”    47 U.S.C. § 152(a) (emphasis
added).    The government also presented several FCC orders
supporting its preemption argument.     See, e.g., In re Vonage
Holdings Corp., 19 FCC Rcd. 22404, 22412, para. 16 (2004)
(stating that the FCC has “exclusive jurisdiction over all
interstate and foreign communication”) (quotation and citation
omitted); Mobile Telecomm. Techs. Corp., 6 FCC Rcd. 1938, 1941
n.6 (1991) (“The [Communications] Act grants this Commission
exclusive authority to regulate the charges and services of
interstate common carriers.”).    Finally, the government cited
extensive judicial precedent on point.        See, e.g., Global
Crossing Telecomms., Inc. v. Metrophones Telecomms., Inc., 127 S.
     (Continued)

                                                 5
in support of its argument that “the general rule that the FCC

has   exclusive         jurisdiction        over     interstate       communications

services applies” here. FCC/DOJ Br. at 12.                        Specifically, the

brief asserted that the Communications Act generally grants the

FCC   exclusive      authority    to     regulate      the       rates,   terms,    and

conditions on interstate communications services.                         The federal

government       concluded   that      in    light    of    the     FCC’s   exclusive

jurisdiction, the VSCC lacked jurisdiction to regulate Verizon

Access’s interstate communications services. 3                   Id. at 7; 14.

      On   May    30,    2008,   the    VSCC       issued    a    superseding      order

accepting    the     federal     government’s         position       regarding      the

exclusivity of the FCC’s regulatory jurisdiction in this context

Ct. 1513, 1516–17 (2007) (noting that the Communications Act sets
up a “traditional regulatory system” in which the FCC was
“granted broad authority to regulate interstate telephone
communications,” including the authority to “determine a rate’s
reasonableness.”); Crockett Tel. Co. v. FCC, 963 F.2d 1564, 1566
(D.C. Cir. 1992) (“The FCC has exclusive jurisdiction to regulate
interstate common carrier services including the setting of
rates.”).
      3
      In order to clarify its jurisdiction, the FCC has drawn a
bright line to distinguish interstate communications (over which
it has jurisdiction) and intrastate communication (over which
the states retain jurisdiction).    Communications services are
classified as “interstate” for rate regulation and other
purposes “if the interstate traffic on the line involved
constitutes more than ten percent of the total traffic on the
line.” 47 C.F.R. § 36.154(a).

                                            6
and rescinding the contested conditions.                 See VSCC Order, Case

No PUC-2008-00023 (May 30, 2008) (“VSCC Order II”).                     VSCC Order

II stated, in part:

       On February 19, 2008, . . . the [DOJ] and the FCC
       filed an amicus curiae brief . . .     Therein, the DOJ
       and FCC declared the . . . requirements on interstate
       rates, terms, and conditions contained in [VSCC Order
       I]   is  preempted   by  federal   regulation.     Upon
       consideration of the foregoing, it is hereby ordered
       that . . . [t]he condition . . . from [VSCC Order I]
       is rescinded insofar as it applies to interstate
       special, private line or its equivalent, and high
       capacity loop and transport facilities.

VSCC Order II at 2 (emphasis added; original emphases deleted).

       On   June   9,   2008,   the   VSCC   moved     this    court    to   dismiss

Verizon Access’s appeal for mootness.                Motion to Dismiss (June

9, 2008) (“VSCC Motion”).         The VSCC Motion reaffirmed the VSCC’s

recognition of the FCC’s exclusive authority to regulate the

interstate communications services at issue here, stating that

“the   [VSCC]      expressly    recognized     the   scope     of     that   federal

preemption in its May 30, 2008 Order [i.e., VSCC Order II].”

VSCC Motion at 5.

       We   deferred     ruling    on   this    motion        until    after   oral

argument.       At   oral   argument,    the    VSCC    again    reiterated      its

recognition and acceptance of the FCC’s exclusive authority to

regulate the interstate communications services at issue here.

The VSCC stated that it did not object to this court basing a

finding of mootness, in part, on the VSCC’s recognition of FCC

                                        7
preemption; that the government’s analysis was correct; and that

the FCC had spoken with authority.

        We turn now to the VSCC’s mootness argument

                                     II.

        A case is not necessarily mooted by a defendant’s voluntary

cessation of allegedly offensive conduct.               As the Supreme Court

has   held,   “It   is   well   settled    that    a   defendant’s    voluntary

cessation of a challenged practice does not deprive a federal

court of its power to determine the legality of the practice.”

Friends of the Earth, Inc. v. Laidlaw Envtl. Servs. (TOC), Inc.

528 U.S. 167, 189 (2000) (quotation and citation omitted).                  The

Court explained that if such voluntary cessation resulted in

deprivation of jurisdiction to hear the case, “the courts would

be compelled to leave the defendant free to return to his old

ways.”     Id. (punctuation and citation omitted).             To prevent a

party     from   evading    judgment       by     stopping   and     restarting

challenged conduct, the Court narrowly defined conduct in which

mootness following voluntary cessation might be appropriate:                 “A

case might become moot if subsequent events made it absolutely

clear that the allegedly wrongful behavior could not reasonably

be expected to recur.”          Id. (quotation and citation omitted).

Explaining this “stringent” principle, the Court held that the

party asserting mootness bears the “heavy burden of persuading

                                       8
the   court    that       the    challenged        conduct      cannot   reasonably       be

expected      to    start       up   again.”       Id.    (quotation         and    citation

omitted).

      Here, the VSCC voluntarily rescinded its conditions that

affected    Verizon        Access’s     interstate        communications           services.

Standing alone, this rescission would be insufficient for the

VSCC to meet its “heavy burden” of persuading this court that

one   could        not   reasonably      expect      that       it   would    attempt     to

regulate Verizon Access’s interstate communications services in

the   future.            However,     the   VSCC      also      offers   its        explicit

endorsement        of    the    FCC’s   position         (and    so,   the    plaintiff’s

identical position) on preemption. 4                 VSCC Motion at 5.             Given our

general reluctance to assume that a state agency such as the

VSCC would not comply with a properly recognized law, 5 we agree

that the VSCC has met its heavy burden.                         Consequently, we find

there is no reasonable likelihood that the VSCC would seek to

      4
      As the VSSC states, “[h]aving . . . acknowledged federal
preemption over the challenged conditions, it is, at the very
least, extremely unlikely that the Commissioners would flout
that statement of preemption . . . .” VSCC Motion at 5.
      5
      See, e.g., Blackwell v. Thomas, 476 F.2d 443, 445-46 (4th
Cir. 1973) (holding that this court cannot hypothesize that a
state jury commission would not comply with the law).

                                               9
regulate interstate communications services in this manner in

the future.

                                      III.

      Because   the    VSCC   rescinded      the    contested    conditions    and

explicitly recognized the FCC’s exclusive authority to regulate

the   interstate    communications     services       at   issue,   we    conclude

that the complained of activity is unlikely to recur and the

appeal    is   moot.     Therefore,    in     accordance     with   established

practice, 6    we   vacate    the   judgment       below   and   remand    with   a

direction to dismiss.

                                        DISMISSED, VACATED, AND REMANDED

      6
      See Arizonans for Official English v. Arizona, 520 U.S. 43,
71 (1997); United States v. Munsingwear, Inc., 340 U.S. 36, 39
(1950).

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