Court Opinion

ID: 4181520
Source: CourtListenerOpinion
Date Created: 2017-06-28 00:01:18.15987+00
Date Added: 2024-06-11T14:39:26.690423
License: Public Domain

Case: 16-30634    Document: 00514050733    Page: 1     Date Filed: 06/27/2017

         IN THE UNITED STATES COURT OF APPEALS
                  FOR THE FIFTH CIRCUIT

                                                                   United States Court of Appeals

                                 No. 16-30634
                                                                            Fifth Circuit

                                                                          FILED
                                                                      June 27, 2017
                                                                     Lyle W. Cayce
CENTURYTEL OF CHATHAM, LLC, ET AL.                                        Clerk

                                           Plaintiffs - Appellees
v.

SPRINT COMMUNICATIONS COMPANY, L.P.

                                           Defendant - Appellant

                 Appeals from the United States District Court
                     for the Western District of Louisiana

Before BARKSDALE, GRAVES, and HIGGINSON, Circuit Judges.
RHESA HAWKINS BARKSDALE, Circuit Judge:
       Regarding the amount Sprint Communications Company, L.P., was
required to pay for the right to access the telephone-service subscribers of
various local administrators (collectively, CenturyLink), primarily at issue is
the proper application of the 1996 Telecommunications Act as applied by the
Federal Communications Commission (FCC). Sprint partnered with cable
companies to, inter alia, convert calls from Internet-based calling technology
for   delivery   to    CenturyLink   customers   with      otherwise-incompatible
traditional-format telephone services.      Pursuant to federal and state
regulatory regimes, CenturyLink billed Sprint at CenturyLink’s exchange-
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                                  No. 16-30634
access tariff rates for Sprint’s being able to connect to CenturyLink’s
subscribers; and Sprint paid these rates without dispute until 2009, when it
began claiming its transfer service was exempt from the tariff rates.
      Following a bench trial, the district court concluded, inter alia, that
Sprint’s transfer service was subject to the tariff rates.         CenturyTel of
Chatham, LLC, et al. v. Sprint Commc’ns Co., L.P., 185 F. Supp. 3d 932, 946
(W.D. La. 2016). Also at issue is the court’s imposing, inter alia, attorney’s fees
against Sprint for violating the 1996 Act by using “unjust and unreasonable”
practices. Id. AFFIRMED.
                                        I.
      It goes without saying that, for a bench trial, “findings of fact are
reviewed for clear error”. In re Mid-South Towing Co., 418 F.3d 526, 531 (5th
Cir. 2005). In any event, neither party challenges the court’s factual findings.
Accordingly, they are relied upon and cited.
      Plaintiffs (again, CenturyLink) are various entities operating in
numerous States as “local exchange carriers” (local administrators).
CenturyTel, 185 F. Supp. 3d at 933–34. This action against Sprint claimed
damages resulting from, inter alia, Sprint’s refusal to pay over $8.7 million in
“access charges”. Id. at 934. Sprint counterclaimed, seeking a declaration it
was not required to pay CenturyLink the higher statutory “tariff” rates under
federal and state laws. Id.
      Beginning in 2004, Sprint partnered with cable companies offering
“voice-over-internet-protocol services” (VoIP) to provide, inter alia, the
conversion of VoIP telephone calls to a “time division multiplexing” protocol
(traditional format) to facilitate calls between the two types of networks. Id.
at 935–36. Conversion for these two types of calling is necessary because they
are otherwise incompatible; VoIP is a newer technology that delivers telephone
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calls by splitting data into tiny packets traveling the most efficient pathways
available, rather than the traditional format, which transmits data over a
single pathway. Id. at 935 n.4.
      Therefore, for a VoIP subscriber to call someone still using traditional-
format technology, a conversion is required. Id. at 935. Once converted, Sprint
transmitted the calls to, inter alia, local administrators, like CenturyLink,
which administer the distribution of telephone calls for termination to their
subscribers. Id. at 936.
      But, Sprint also transferred calls originating in traditional format to
CenturyLink’s traditional-format customers. Id. During the period relevant
to this dispute, CenturyLink did not distinguish between the originating
format of calls it received from Sprint, and, concomitantly, charged Sprint the
same rates for calls from both VoIP callers and traditional-format callers; by
the time CenturyLink received the calls from Sprint, they had already been
converted. Id. “The VoIP-originated calls were thus in the same format as and
intermingled with [traditional-format-originated] calls.” Id.
      Historically, for a company like Sprint to connect long-distance
telephone-service subscribers to local administrators’ customers, like
CenturyLink’s, it must pay an exchange-access tariff, as approved either by
the FCC for interstate calls, or by state regulators for intrastate calls. Id.
CenturyLink “properly filed with [the FCC] one or more tariffs for the provision
of interstate switched access service”, and accordingly, “its federal tariffs were
legally binding”. Id. The same was true for its state tariffs, relevant to the
intrastate calls. Id. As discussed infra, the rates varied, based on the type of
service being provided.
      Prior to July 2009, Sprint paid, without dispute, the tariffs billed by
CenturyLink, which, as discussed, included traditional-format and VoIP-
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originated calls. Id. Beginning in July 2009, however, Sprint began disputing
the tariff-rate access charges assessed in invoices from CenturyLink,
specifically the rates applied to VoIP-originated calls. Id. For those invoices,
instead of paying the billed tariff rates, Sprint instead paid $0.0007 per
minute—the rate the FCC applied to local Internet-service-provider-bound
traffic—for its VoIP-originated calls converted for transfer to CenturyLink’s
traditional-format customers; but, CenturyLink “did not agree or acquiesce”.
Id. at 937 & n.7. On the other hand, Sprint continued to pay the undisputed
amount billed for its calls originating in traditional format. Id. With its
resulting partial payments, it submitted an explanation: “To date, although
the FCC has asserted jurisdiction over VoIP services and has determined that
information services [as discussed infra] are not subject to access [tariffs], the
FCC has not yet rendered a determination as to the applicable inter-carrier
compensation for VoIP traffic”. Id. at 937. Sprint stated it would continue this
partial-payment practice until guidance was offered by the FCC. Id.
      In addition to withholding the amount it deemed unjustified for ongoing
VoIP-originated calls transferred to CenturyLink, Sprint retroactively
estimated a percentage of VoIP-originated calls transferred to CenturyLink for
the period August 2007 to July 2009, and calculated an amount of
“overpayment” for that period. Id. Sprint deducted this “overpayment” from
its July 2009 approved payments going forward. Id.
      The   disputed    period   ended       October   2011,    when     the   FCC’s
Comprehensive Reform Order was issued. Id. at 935, 938 (citing In the Matter
of Connect Am. Fund, Report and Order and Further Notice of Proposed
Rulemaking, 26 FCC Rcd. 17663 (2011) (Comp. Reform Order)). That order,
inter alia, expressly clarified that, going forward, VoIP-originated calls would
be subject to the interstate exchange-access tariff rates, Comp. Reform Order,
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26 FCC Rcd. at 18002, ¶ 933; but, the tariff regime would be phased out
completely by 2020. Id. at 17934, ¶ 801.
        This action originated in 2009, before being transferred to multidistrict
litigation in the northern district of Texas, with the claims at issue here being
severed and remanded to the western district of Louisiana. See In re IntraMTA
Switched Access Charges Litig., No. 3:14-MD-2587, 2015 WL 7252948 (N.D.
Tex. 17 Nov. 2015). After a two-day bench trial, followed by post-trial briefing,
the court ruled in favor of CenturyLink. CenturyTel, 185 F. Supp. 3d at 934,
946.
        Regarding the federal tariffs, at issue was the proper application of
§ 251(g) of the 1996 Telecommunications Act, 47 U.S.C. § 251(g). CenturyTel,
185 F. Supp. 3d at 940–41. That provision is a grandfather clause, preserving
the pre-Act “restrictions and obligations (including receipt of compensation)
that apply . . . under any court order, consent decree, or regulation, order or
policy of the [FCC], until such restrictions and obligations are explicitly
superseded by regulations prescribed by the [FCC]”. 47 U.S.C. § 251(g).
        Prior to the passage of the 1996 Act, local administrators, like
CenturyLink, were allowed monopolies over local services. See AT&T Corp. v.
Iowa Utils. Bd., 525 U.S. 366, 371 (1999). An “interexchange carrier” (IXC),
like Sprint, provided the long-distance service, connecting callers in one
locality to those in others. CenturyTel, 185 F. Supp. 3d at 940. (As discussed
infra, Sprint’s being an “IXC” is critical to resolving this appeal.) Under the
pre-Act framework, the local monopolies could impose an exchange-access
tariff on the long-distance provider in exchange for access to that local network.
Id. (citing In re IntraMTA, 2015 WL 7252948, at *2, *4–5).
        Although these local monopolies were abolished under the 1996 Act, the
already-established local administrators continued to be permitted to charge
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tariffs to telecommunications carriers for access unless and until the FCC
explicitly superseded that system. Id. at 940–41. In that regard, however, the
FCC in 1980 had recognized an exemption from the higher-tariff rates for
“enhanced service” providers. See Nat’l Cable & Telecomm. Ass’n v. Brand X
Internet Svcs., 545 U.S. 967, 976–77 (2005) (citing In re Amendment of Section
64.702 of the Comm’n’s Rules and Regulations (Second Computer Inquiry), 77
FCC 2d 384, 420–22 (1980)). Enhanced services were distinct from “basic
services”.
      Basic services “meant a communications path that enabled the consumer
to transmit an ordinary-language message to another point, with no computer
processing or storage of the information, other than the processing or storage
needed to convert the message into electronic form and then back into ordinary
language for purposes of transmitting it over the network—such as via a
telephone or facsimile”. Id. at 976. Enhanced services, on the other hand, were
services “in which ‘computer processing applications [were] used to act on the
content, code, protocol, and other aspects of the subscriber’s information,’ such
as voice and data storage services, as well as ‘protocol conversion’ (i.e., ability
to communicate between networks that employ different data-transmission
formats)”. Id. at 976–77 (quoting Second Computer Inquiry, 77 FCC 2d at 420–
22, ¶¶ 97, 99) (internal citations omitted). Basic services were subject to
common-carrier regulation; but, enhanced services were exempt, in order to
avoid negatively restraining “the fast-moving, competitive market”. Id. at 977
(quoting Second Computer Inquiry, 77 FCC 2d at 434, ¶ 129).
      In Brand X, the Supreme Court determined these terms were carried
over, under new nomenclature, by the 1996 Telecommunications Act, with
basic services restyled as “telecommunications services”, and enhanced
services as “information services”, as referenced supra, in the explanation
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Sprint provided CenturyLink for why Sprint was paying less than it was billed.
Id. at 977. Both services are “telecommunications”, which is “the transmission,
between or among points specified by the user, of information of the user’s
choosing, without change in the form or content of the information as sent and
received”. 47 U.S.C. § 153(50).
      Telecommunications service is “the offering of telecommunications for a
fee directly to the public . . . regardless of the facilities used”, id. § 153(53),
while information service is “the offering of a capability for generating,
acquiring, storing, transforming, processing, retrieving, utilizing, or making
available information via telecommunications”, id. § 153(24). Of these two
services, only telecommunications services are subject to common-carrier
regulation and the exchange-access tariffs, while information services enjoy
the enhanced-services exemption. Brand X, 545 U.S. at 977.
      Despite Sprint’s emphasis on these differences, the district court
concluded it need not determine whether Sprint’s VoIP-to-traditional-format
transfer services qualified as information services or telecommunications
services. CenturyTel, 185 F. Supp. 3d at 941. Instead, citing the FCC’s 2011
Comprehensive Reform Order, the court stated that the FCC “reject[ed] the
claim that intercarrier compensation for VoIP[-to-traditional-format] traffic is
categorically excluded from” the Act’s grandfather clause, 47 U.S.C. § 251(g),
which maintained aspects of the exchange-access tariff regime. CenturyTel,
185 F. Supp. 3d at 942 (quoting Comp. Reform Order, 26 FCC Rcd. at 18016–
17, ¶ 957). Accordingly, such calls were still subject to pre-1996 exchange-
access charges, even if classified as “information services”. Id.
      The district court also found persuasive that “the FCC was ‘mindful of
the need for a measured transition for carriers that receive substantial
revenues from intercarrier compensation’”. Id. at 942 (quoting Comp. Reform
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Order, 26 FCC Rcd. at 18003, ¶ 935). The court noted the FCC did not
expressly state the tariff regime was superseded, but instead was being phased
out to ultimately be completely replaced by 2020. Id. (quoting Comp. Reform
Order, 26 FCC Rcd. at 17934, ¶ 801).
      Accordingly, the court upheld the imposition of the federal tariff rates
against Sprint. Id. The court also ruled in favor of CenturyLink with regard
to state tariffs, holding, inter alia, they were not preempted. Id. at 945.
      Therefore, the court awarded damages against Sprint for the total access
charges and applicable late-payment fees. Id. at 946. At issue were $1.1
million in interstate tariff charges, and $7.6 million for intrastate.
CenturyLink claimed an additional approximate $3.2 million in late fees
accrued through February 2016, with approximately $650,000 for interstate,
and $2.5 million for intrastate.
      Finally, the court ruled in favor of CenturyLink on its claim that Sprint
violated the 1996 Act’s bar against “unjust and unreasonable” practices. Id.
Under 47 U.S.C. § 201(b), a private right of action exists for damages for “any
‘practice’ in connection with providing communications services ‘that is unjust
or unreasonable’”. CenturyTel, 185 F. Supp. 3d at 945 (quoting § 201(b)); see
also Global Crossing Telecomms., Inc. v. Metrophones Telecomms., Inc., 550
U.S. 45, 53 (2007).
      Section 207 provides that “[a]ny person claiming to be damaged by any
common carrier . . . may bring suit for the recovery of damages for which such
common carrier may be liable under the provisions of this chapter”. 47 U.S.C.
§ 207. A carrier is liable for “damages sustained in consequence of” the carrier’s
doing “any act, matter, or thing in this chapter prohibited or declared to be
unlawful”, as well as “a reasonable counsel or attorney’s fee”. Id. § 206.

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      Accordingly, because § 201(b) declares “unjust or unreasonable”
practices to be unlawful, a remedy for damages is available. Global Crossing,
550 U.S. at 52–53. The court construed Sprint’s retroactively withholding
payment as improper “self-help”, and, therefore, an “unjust or unreasonable”
practice in violation of § 201(b), entitling CenturyLink to, inter alia, attorney’s
fees. CenturyTel, 185 F. Supp. 3d at 945–46.
                                        II.
      Sprint challenges the district court’s concluding Sprint: was required to
pay CenturyLink the challenged tariff-rate access charges; and engaged in
“unjust or unreasonable” practices when it retroactively “clawed-back” funds
by not paying charges it undisputedly owed. Sprint contends: the court erred
in holding the tariff rates applied to its VoIP-to-traditional-format transfer;
and its claw-back practices were reasonable under industry standards.
      The parties do not dispute the well-known standard of review. The
district court’s conclusions of law and application of the law to the facts are
reviewed de novo, e.g., Dresser v. Meba Med. & Benefits Plan, 628 F.3d 705,
708 (5th Cir. 2010); its findings of fact, for clear error, e.g., In re Mid-South
Towing Co., 418 F.3d at 531. As stated supra, the findings of fact are not
challenged.
                                        A.
      Sprint disputes two categories of tariff-rate charges: state and federal.
Many States imposed their own tariff rates for exchange-access transfer
services, similar to those imposed by the FCC. We address the two categories
separately.
                                        1.
      As noted, the vast majority of the challenged amounts are state-imposed
access charges ($7.6 million), rather than federal charges ($1.1 million). And,
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more than one-third of the total disputed amounts are charges based on
intrastate traffic in Missouri. CenturyTel, 185 F. Supp. 3d at 943. Missouri
explicitly dictates that VoIP-originated calls are subject to its intrastate access
tariffs. Mo. Rev. Stat. § 392.550(2).
      In district court, Sprint challenged all of the state-imposed amounts as
being preempted by the federal tariff scheme. The court concluded, however:
“the state access tariff rates are not preempted”, based on deference to the
FCC’s 2011 Comprehensive Reform Order’s explicitly rejecting federal
preemption as applied to VoIP-to-traditional-format transfers. CenturyTel,
185 F. Supp. 3d at 944–45 (citing Comp. Reform Order at 18002–03, ¶ 934;
18017–18, ¶ 959).
      In its opening brief here, Sprint did not challenge the court’s preemption
ruling, nor did it challenge any particular State’s tariff regime as being
misapplied here, as noted by CenturyLink in its response brief. In that regard,
CenturyLink stated Sprint “abandoned its preemption argument on appeal”,
and “has come forth with no basis for avoiding its payment obligations under
any of CenturyLink’s State Access Tariffs”. (Emphasis in original.) In its reply
brief, Sprint contends it “straightforwardly” presented its preemption
contentions in its opening brief, and that CenturyLink simply appears “not to
understand”.    To support this assertion, however, Sprint cites only the
jurisdictional statement in its opening brief, which invoked “the Constitution
and laws of the United States, including the Supremacy Clause . . . and the
Communications Act of 1934”.
      Pressed for clarification during its opening oral argument here, Sprint
conceded it did not raise the issue, stating “it’s not an argument we’ve made
here” in response to being asked if it waived preemption; CenturyLink urged
preemption was therefore waived; and, on rebuttal, Sprint reversed course
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from its earlier concession and claimed it was not raising on appeal a field-
occupation preemption theory, but rather its preemption contention is based
on conflict preemption. In that regard, however, Sprint conceded the reference
to the Supremacy Clause in its opening brief’s statement of jurisdiction is the
only manner in which it could be deemed to have raised conflict preemption on
appeal.
      Sprint never raised preemption in its opening brief, and its reply-brief
efforts are not availing. At best, the issue was insufficiently briefed; at worst,
abandoned. Under either rubric, Sprint failed to raise preemption on appeal;
as a result, the state-law tariffs cannot be challenged here.       See Cinel v.
Connick, 15 F.3d 1338, 1345 (5th Cir. 1994) (“An appellant abandons all issues
not raised and argued in its initial brief on appeal. . . . A party who
inadequately briefs an issue is considered to have abandoned the claim.”)
(emphasis in original).
      Even assuming arguendo Sprint’s reply-brief contentions could be
construed as adequate, “this court will not consider issues raised for the first
time in a reply brief”. Wright v. Excel Paralubes, 807 F.3d 730, 736 (5th Cir.
2015). Our court has recognized an exception to this rule “whereby we will
consider a point of error not raised on appeal when it is necessary to prevent a
miscarriage of justice”. United States v. Whitfield, 590 F.3d 325, 346–47 (5th
Cir. 2009) (internal quotation marks omitted). Although the general rule is
“view[ed] . . . differently when a new issue is raised in the appellee’s brief and
the appellant responds in his reply brief”, United States v. Ramirez, 557 F.3d
200, 203 (5th Cir. 2009), that exception does not apply here; in its response
brief, CenturyLink merely points out Sprint’s failure to brief the issue.

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                                          2.
      For the federal tariffs, the key disputes rest in the application, vel non,
of terms defined under the 1996 Telecommunications Act. According to Sprint,
the key to resolving this action in its favor is whether its VoIP-to-traditional-
format   transfer   service   qualified    as   an   information   service   or   a
telecommunications service under 47 U.S.C. § 153. CenturyLink counters that
this distinction is irrelevant; it asserts the proper distinction is between
interexchange carriers (again, IXCs) and information-service providers, and
that the FCC’s rulemaking applicable to IXCs requires affirmance.
                                          a.
      The FCC’s Comprehensive Reform Order makes clear the 1996
Telecommunications Act’s grandfather clause maintained the exchange-access
tariff regime, including its tariff rates and exemptions. 26 FCC Rcd. at 18016,
¶ 957 (“[T]o the extent that interexchange VoIP services are transmitted to the
[local administrator] directly from an information service provider, such traffic
is subject to pre-1996 Act obligations regarding ‘exchange access,’ although the
access charges imposed on information service providers were different from
those by IXCs.”). Sprint asserts this statement favors its contention: the FCC
declined to clarify “whether particular VoIP services are telecommunications
services or information services”, but stated, “because they were subject to
these exchange access charges, interexchange information service traffic was
subject to the over-arching [FCC] rules governing exchange access prior to the
1996 Act, and therefore subject to the grandfathering provision of [47 U.S.C. §]
251(g)”. Id. at 18016–17, ¶ 957. This grandfathering would include the earlier-
discussed enhanced-service exemption, as applied to information services. Id.
at 18016, ¶ 957.

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      According to Sprint, the next step is determining its VoIP-to-traditional-
format transfer service qualified as an information, not a telecommunications,
service. It points to the language of the 1996 Act’s defining information service
as “the offering of a capability for . . . transforming . . . information via
telecommunications”. 47 U.S.C. § 153(24). In support, Sprint relies on two
unpublished district court opinions from outside our circuit, as well as an FCC
ruling the parties refer to as “IP-in-the-Middle”. See PAETEC Comms., Inc. v.
CommPartners, LLC, No. 08-0397, 2010 WL 1767193 (D.D.C. 2010); Sw. Bell
Tel., L.P. v. Mo. Pub. Serv. Comm’n, 461 F. Supp. 2d 1055 (E.D. Mo. 2006); In
re Petition for Declaratory Ruling That AT&T’s Phone-to-Phone IP Tel. Svcs.
Are Exempt From Access Charges, 19 FCC Rcd. 7457 (2004) (IP-in-the-Middle).
      Sprint contends these authorities stand for the proposition that, when
there is a “net protocol conversion” from Internet-protocol format (like VoIP)
into another format (like traditional format), the service is an “information
service”. Sprint urges its proposed rule applies here, and states that, because
the calls at issue originated in VoIP and terminated in traditional format, there
was a net protocol conversion, making Sprint’s transfer service an information
service exempted from the tariff rate.
      CenturyLink responds that the distinctions posited by Sprint are
irrelevant. Instead, CenturyLink maintains, the key distinction is between the
way the FCC, in its 2011 Comprehensive Reform Order, treats IXCs and
information-service providers.     Paragraph 957 of that order makes this
distinction in explaining that the rates for IXCs and information-service
providers were “different”. Comp. Reform Order, 26 FCC Rcd. at 18016, ¶ 957.
      Crucial to this issue, the district court made the following finding of fact:
“Sprint acts as a telecommunications carrier providing telecommunications
services as a common carrier and as an interexchange carrier (‘IXC’)”.
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CenturyTel, 185 F. Supp. 3d at 934–35. The court then stated: “It is Sprint’s
role as an IXC that is at issue in this case”. Id. Accordingly, the court expressly
found Sprint to be an IXC for the purposes of this action; that finding, of course,
can only be overturned on a showing of clear error. Hall v. Nat’l Gypsum Co.,
105 F.3d 225, 228 (5th Cir. 1997). But, as noted supra, Sprint does not even
challenge the district court’s findings of fact.
                                         b.
      Presented with this factual finding, the FCC’s Comprehensive Reform
Order controls the outcome if it is entitled to deference under Chevron v.
Natural Resources Defense Council, Inc., 467 U.S. 837 (1984).                 When
considering an agency’s interpretation of a statute it is charged with
administering, two questions arise: whether Congress has “directly spoken to
the precise question at issue”; but if, instead, “the statute is silent or
ambiguous with respect to the specific issue, the question for the court is
whether the agency’s answer is based on a permissible construction of the
statute”. Id. at 842–43. “A court’s prior judicial construction of a statute
trumps an agency construction otherwise entitled to Chevron deference only if
the prior court decision holds that its construction follows from the
unambiguous terms of the statute and thus leaves no room for agency
discretion.” Brand X, 545 U.S. at 982.
      Along that line, although the two district-court decisions cited by Sprint
addressed the question now before us, both did so while conceding the FCC’s
specific guidance would settle the matter. See PAETEC, 2010 WL 1767193, at
*3 n.3; Sw. Bell, 461 F. Supp. 2d at 1081. Because, for the following reasons,
the FCC’s ruling in its 2011 Comprehensive Reform Order is reasonable, we
defer to the FCC’s interpretation of the 1996 Act as applied to the issues at
hand. See Chevron, 467 U.S. at 844.
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      The FCC expressly delineates between IXCs and information-service
providers. In its Comprehensive Reform Order, the FCC frames the issue as
“whether there was a ‘pre-Act obligation relating to intercarrier compensation
for’ particular traffic exchanged between a [local administrator] and ‘[IXC] and
information service providers’”. 26 FCC Rcd. at 18015, ¶ 956. The order states:
“Regardless of whether particular VoIP services are telecommunications
services or information services, there are pre-1996 Act obligations regarding
[local administrators’] compensation for the provision of exchange access to an
IXC or an information service provider”. Id. at 18015–16, ¶ 957. And, the
order notes “the [FCC] has already found that toll telecommunications services
transmitted (although not originated or terminated) in [Internet protocol] were
subject to the access charge regime, and the same would be true to the extent
that telecommunications services originated or terminated in [Internet
protocol]”. Id. at 18016, ¶ 957.
      This statement is crucial because it makes clear that telephone calls
originating in VoIP format can qualify as telecommunications services even if
they terminate in a different format. Therefore, the net-protocol-conversion
rule proposed by Sprint fails, and the telecommunications-services-versus-
information-services distinction does not resolve the dispute.
      Rather, the decisive distinction is the FCC’s analysis regarding IXCs and
information-service providers:
            [T]o the extent that interexchange VoIP services are
            transmitted to the [local administrator] directly from
            an information service provider, such traffic is subject
            to pre-1996 Act obligations regarding “exchange
            access,” although the access charges imposed on
            information service providers were different from
            those paid by IXCs. Specifically, under the [enhanced-
            services] exemption, rather than paying intercarrier

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             access charges, information service providers were
             permitted to purchase access to the exchange as end
             users, either by purchasing special access services or
             “pay[ing] local business rates and interstate
             subscriber line charges for their switched access
             connections to local exchange company central offices.”

Id. In other words, IXCs were required to pay the higher tariff rates under the
pre-1996 regime that was maintained through 47 U.S.C. § 251(g), and
information-service providers were not.
      During the disputed time period, this grandfathered system governed
Sprint’s VoIP-to-traditional-format transfer service. And, because the district
court did not clearly err—as discussed supra—in finding Sprint was operating
as an IXC in providing this service, rather than as an information-service
provider, Sprint was obligated to pay the federal tariff rates billed by
CenturyLink.     (Concerning the partial dissent, we do not hold Sprint
Communications Company, L.P., is only an IXC; of course, it provides a wide
variety of services.   Here, however, we are bound by the district court’s
undisputed finding that Sprint functioned as an IXC in administering the
transfer service at issue.)
                                       B.
      As noted, the court imposed, inter alia, attorney’s fees against Sprint for
violating § 201(b) of the 1996 Telecommunications Act.          That provision
dictates: “All charges, practices, classifications, and regulations for and in
connection with [a] communication service, shall be just and reasonable, and
any such . . . practice . . . that is unjust or unreasonable is declared to be
unlawful”.   47 U.S.C. § 201(b).    A private right of action is available for
“person[s] claiming to be damaged by any common carrier subject to” the 1996
Act, and damages may be recovered. Id. § 207. An entity found liable for

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                                  No. 16-30634
violating the Act “shall be liable to the person . . . injured thereby for the full
amount of damages sustained in consequence of any such violation . . . together
with a reasonable counsel or attorney’s fee”. Id. § 206.
      The district court ruled “[t]he FCC has recognized that self-help is an
unlawful telecommunications practice”. CenturyTel, 185 F. Supp. 3d at 945
(citing In re Bus. WATS, Inc., 7 FCC Rcd. 7942 (1992); In re MCI Telecomm.
Corp., 62 F.C.C. 2d 703, 706 (1976)). Accordingly, the court concluded Sprint
violated § 201(b) when it “unjustly and unreasonably withheld payments . . .
to reduce its retroactive refund claim”. Id. at 946.
      In challenging this conclusion, Sprint asserts “the FCC expressly
interpreted section 201(b) to hold that a failure to pay a tariffed charge does
not violate the provision”, citing All American Telephone Co., et al. v. AT&T
Corp., 26 FCC Rcd. 723, 727 (2011). Moreover, it contends, the FCC has never
held “self-help” constitutes a § 201(b) violation, also citing All American
Telephone, 26 FCC Rcd. at 729.
      CenturyLink agrees Sprint’s withholding the disputed amounts
prospectively did not violate the 1996 Act. On the other hand, CenturyLink
takes issue with Sprint’s clawing-back retroactively-disputed amounts it had
already paid by deducting them from undisputed charges billed by
CenturyLink.
                                        a.
      The deductions, which began in July 2009, were based on estimates
calculated by a Sprint engineer. CenturyTel, 185 F. Supp. 3d at 937. Before
August 2009, however, Sprint never provided the exact or estimated minutes
of VoIP-originated calls it transferred to CenturyLink for termination. Id. at
936. Moreover, Sprint’s estimate was based solely on its engineer’s review of
VoIP-originated versus traditional-format-originated calls delivered to
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CenturyLink during the month of February 2009, with that amount applied
each month during the August 2007 to July 2009 disputed period. Id. at 937.
      Quoting In re Business WATS, CenturyLink asserts a customer in
Sprint’s position “is not entitled to the self-help measure of withholding
payment for tariffed services duly performed but should first pay, under
protest, the amount allegedly due and seek redress”. The proper procedure,
according to CenturyLink, was to initiate a grievance proceeding with the FCC
pursuant to 47 U.S.C. § 208.
      The FCC has not squarely addressed the propriety of the claw-back
scheme Sprint utilized, and at issue are the terms “unjust or unreasonable”.
See id. § 201(b).     For the reasons that follow, Sprint violated the Act’s
prohibition against “practices” that are “unjust or unreasonable”.
      While it is true the FCC stated “[t]he law is settled that a carrier-
customer’s failure to pay tariffed access charges does not violate” the statute,
the practices at issue in that matter are not contested here. All Am. Tel., 26
FCC Rcd. at 732, ¶ 21. There, a local administrator claimed AT&T “engaged
in ‘unlawful self-help’ . . . by failing to bring a ‘rate complaint’ against the [local
administrators] if AT&T believed their access charges were unlawful and
instead refusing to pay the charges”. Id. at 726, ¶ 7. There was no allegation
that AT&T retroactively deducted, from undisputed invoices, amounts already
paid. In fact, AT&T alleged payments it made for a few invoices were “paid by
mistake” and “requested a refund”. Id. at 725, ¶ 4.
      Moreover, as the district court correctly determined, FCC precedent
makes clear “self-help” is not necessarily permissible.             See In re MCI
Telecomm., 62 F.C.C. 2d at 705–06 (“We cannot condone MCI’s refusal to pay
the tariffed rate for voluntarily ordered services.”). The District of Columbia
circuit, exercising its jurisdiction over FCC appeals, instructed: “Any carrier
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                                  No. 16-30634
that engages in self-help . . . runs the risk that the [FCC] will find against it –
even if its underlying position is vindicated – and hold it liable solely for
engaging in self-help”. AT&T Corp. v. FCC, 317 F.3d 227, 234 (D.C. Cir. 2003).
In that action, the D.C. circuit affirmed the FCC’s ruling no violation occurred
when AT&T blocked calls from its customers to those under the administration
of a “sham” local administrator charging rates it was not entitled to impose,
and refused to pay for ten million minutes of calls already terminated. Id. at
231. The D.C. circuit made clear, however, the facts at issue there fit “the
seemingly narrow exception [to the prohibition against self-help] for [refusing
payment to] a sham entity charging an unreasonable rate”. Id. at 234. Here,
there is no allegation of bad faith in CenturyLink’s billing Sprint at tariff rates.
                                         b.
      The FCC’s determination that improper “self-help” can be a violation of
the 1996 Telecommunications Act is a reasonable application of § 201(b)’s
prohibition against “unjust or unreasonable” practices, and we accord it
deference. See Chevron, 467 U.S. at 844. Because the FCC has not squarely
addressed Sprint’s claw-back practice, however, the question is the proper
application of the statute’s language and the guidance provided by the FCC to
the facts at hand.
      Here, Sprint took the extraordinary measure of acting on its own to
recoup money it had already paid without any judicial or administrative
intervention. The parties’ stipulated facts establish that, for more than two
years, Sprint withheld payments to CenturyLink for undisputed traditional-
format-to-traditional-format calls until Sprint had recovered $4.8 million.
Moreover, Sprint’s utilization of one month’s worth of calls as applicable to all
months during a two-year period, without adjustment for seasonal calling
trends or other extrapolation, was not reasonable.           Accordingly, Sprint’s
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retroactive claw-back against undisputed charges based on unreasonable
estimates constitutes unlawful self help, in violation of 47 U.S.C. § 201(b).
                                      III.
      For the foregoing reasons, the judgment is AFFIRMED.

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                                        No. 16-30634
STEPHEN A. HIGGINSON, Circuit Judge, concurring in part and dissenting
in part:
       The majority opinion concludes that because Sprint is an interexchange
carrier (“IXC”) (1) it cannot be an information service provider, (2) it cannot
benefit from the ESP exemption, and accordingly, (3) it must pay the tariff
rates on its VoIP services.             Each conclusion contravenes longstanding
precedent holding that IXCs can provide information services, and when they
do, they can benefit from the ESP exemption. I thus respectfully dissent from
Part II.A.2 and II.B of the majority opinion.
       First, an IXC can also be an information service provider (that is, the
IXCs can provide information services). The FCC has long recognized that
IXCs can provide information (or before 1996, enhanced) services. 1 And in line

1 See, e.g., In Re Policy & Rules Concerning Interstate, Interexchange Marketplace, 16 F.C.C.
Rcd. 7418, 7442 (¶ 40) (F.C.C. 2001) (“[C]arriers not subject to the separate subsidiary
requirement [the Bell Operating Companies] acquire transmission capacity pursuant to the
same prices, terms, and conditions reflected in their tariffs when their own facilities are used,
does not prohibit them from offering packages of telecommunications service, including
interstate, domestic, interexchange service or local exchange service, and enhanced services
at a single price.”); Policy & Rules Concerning the Interstate, Interexchange Marketplace
Implementation of Section 254(g) of the Commc’ns Act of 1934, 13 F.C.C. Rcd. 21531, 21552
(¶ 39) (F.C.C. 1998) (“We seek comment on whether there are any anticompetitive effects of
allowing nondominant interexchange carriers to bundle, or provide discounts on packages of,
enhanced services and interstate, domestic, interexchange services, when such services, in
turn, are packaged with local exchange services.”); Policies & Rules Implementing the Tel.
Disclosure & Dispute Resolution Act, 8 F.C.C. Rcd. 6885, 6892 n. 62 (¶ 40) (F.C.C. 1993) (“We
also note that an IXC who is also an IP [information provider] may not tariff the charge for
the information service, as this would violate the prohibition against an IXC tariffing its
enhanced services.”); Mountain States Tel. & Tel. Co., Nw. Bell Tel. Co., Pac. Nw. Bell Tel.
Co. Petition for Waiver of Section 64.702 of the Comm’n’s Rules & Regulations to Provide
Protocol Conversion as an Adjunct to a Basic Packet Switched Network, 3 F.C.C. Rcd. 3135,
3137 (¶ 11) (F.C.C. 1988) (“[I]f an interexchange carrier also provides an enhanced service in
conjunction with packet switching, it would be afforded the protections established in the
Protocol Waiver Order the same as any other competitive enhanced packet service
provider.”); Pleading Cycle Established for Comments on Amendment to Bellsouth’s Plan for
Comparably Efficient Interconnection for Voice Messaging Servs., 3 F.C.C. Rcd. 5584, 5584 (¶
2) (F.C.C. 1988) (“These network services will be made available to all local exchange
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with those precedents, the FCC has specifically noted that Sprint offers
information services. Policies & Rules Implementing the Tel. Disclosure &
Dispute Resolution Act, 9 F.C.C. Rcd. 6891, 6893 (¶ 14) (F.C.C. 1994);
Application for Consent to Assignment of Licenses & Transfer of Control of
Certain Subsidiaries of GTE Corp. & United Telecomms., Inc. to U.S. Sprint
Commc’ns Co., 1752-CF-AL-(534)-86, 1986 WL 291870, at *4 (F.C.C. June 18,
1986).
       Second, when an IXC offers information services, it benefits from the
ESP exemption. 47 C.F.R. § 69.5 (“Carrier’s carrier charges shall be computed
and assessed upon all interexchange carriers that use local exchange switching
facilities for the provision of interstate or foreign telecommunications services.”
(emphasis added)); Petition for Declaratory Ruling That AT&T’s Phone-to-
Phone IP Telephony Servs. are Exempt from Access Charges (“IP in the
Middle”), 19 F.C.C. Rcd. 7457, 7465 (¶ 14) (F.C.C. 2004) (“Under our rules,
access charges are assessed on interexchange carriers that use local exchange
switching facilities for the provision of interstate or foreign telecommunications
services.” (emphasis added)). Indeed, the FCC expressly rejected the majority
opinion’s view that the ESP exemption cannot benefit IXCs. See In the Matters
of Nw. Bell Tel. Co. Petition for Declaratory Ruling & Wats Related & Other
Amendments of Part 69 of the Comm’n’s Rules., 7 F.C.C. Rcd. 5644, 5645 (¶ 5)
(F.C.C. 1992) (“Nw. Bell Tel.”); In the Matter of Wats Related & Other
Amendments of Part 69 of the Comm’n’s Rules, 3 F.C.C. Rcd. 496, 497 (¶ 10)
(F.C.C. 1988). The FCC explained:

customers on an optional basis, including interexchange carriers using those facilities to
provide enhanced services.”); see also United States v. GTE Corp., 603 F. Supp. 730, 733
(D.D.C. 1984) (“The decree in this case, by contrast, permits GTE to enter the interexchange
business (by acquiring Sprint) and to remain in the information services business even
though it will also continue to engage in the local telephone business.”).
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                   [A commenter] argues that this Commission
            exempted enhanced service providers, rather than
            enhanced services, from interstate access charges and
            that [an IXC] should not receive an access charge
            exemption even when it is offering enhanced services.
            This argument misconstrues our rules. Under those
            rules entities that offer both interexchange services
            and enhanced services are treated as carriers with
            respect to the former offerings, but not with respect to
            the latter. Thus, interexchange carriers . . . are
            eligible for an interstate access charge exemption for
            their enhanced service offerings. Although the access
            charge orders refer to “enhanced service providers,” we
            have never limited that category to entities that
            provide only enhanced services. Rather, any entity
            that actually provides enhanced services should be
            treated as an “enhanced service provider,” regardless
            of any other services that entity might provide.

Nw. Bell Tel., 7 F.C.C. Rcd. at 5645 (¶ 5). And the FCC’s decision that an IXC
providing information services can be regulated like an information service
provider is consistent with both the FCC’s and the courts’ longstanding view
that “one can be a common carrier with regard to some activities but not
others.” Nat’l Ass’n of Regulatory Util. Comm’rs v. F.C.C., 533 F.2d 601, 608
(D.C. Cir. 1976); accord Verizon v. F.C.C., 740 F.3d 623, 653 (D.C. Cir. 2014);
Cellco P’ship v. F.C.C., 700 F.3d 534, 538 (D.C. Cir. 2012); In the Matters of
Amendment of Sections 64.702 of the Comm’n’s Rules & Regulations (Third
Comput. Inquiry), 2 F.C.C. Rcd. 3035, 3060–61 (¶ 179) (F.C.C. 1987), vacated
and remanded on other grounds sub nom. California v. F.C.C., 905 F.2d 1217
(9th Cir. 1990).
      These twin errors result in the majority opinion’s adopting a rule of
decision that has never been blessed by either the FCC or another court. Every
other case or administrative decision to decide whether a VoIP service provider

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                                       No. 16-30634
was required to pay tariff rates or rates pursuant to the ESP exemption focused
on the specifics of the VoIP service at issue to determine whether it was an
information service or a telecommunication. 2 The majority opinion is alone in
focusing on whether the VoIP provider happens to be an IXC. Indeed, even the
Comprehensive Reform Order, the only authority the majority cites, indicates
that determining which payment regime governs VoIP services depends on the
“particular traffic exchanged between a LEC and interexchange carriers and
information service providers.” Comp. Reform Order, 26 F.C.C. Rcd. 17,663,
18,015 (¶ 956) (F.C.C. 2011) (emphasis added) (quotations and citations
omitted).
        Moreover, the majority opinion’s justification for its unique approach is
thin.    The majority opinion exclusively relies on one paragraph of the
Comprehensive Reform Order, paragraph 957, which provides:
                    [T]o the extent that interexchange VoIP services
              are transmitted to the LEC directly from an
              information service provider, such traffic is subject to
              pre-1996 Act obligations regarding “exchange access,”
              although the access charges imposed on information
              service providers were different from those paid by
              IXCs. Specifically, under the ESP exemption, rather
              than paying intercarrier access charges, information
              service providers were permitted to purchase access to
              the exchange as end users, either by purchasing
              special access services or “pay[ing] local business rates
              and interstate subscriber line charges for their

2See, e.g., Charter Advanced Servs. (MN), LLC v. Lange, 15-cv-3935 (SRN/KMM), 2017 WL
1901414, at *5 (D. Minn. May 8, 2017); PAETEC Commc’ns, Inc. v. CommPartners, LLC, No.
08-0397(JR), 2010 WL 1767193, at *3 (D.D.C. Feb. 18, 2010); Sw. Bell Tel., L.P. v. Mo. Pub.
Serv. Comm’n, 461 F. Supp. 2d 1055, 1082 (E.D. Mo. 2006), aff’d, 530 F.3d 676 (8th Cir. 2008);
Vonage Holdings Corp. v. Minn. Pub. Utils. Comm’n, 290 F. Supp. 2d 993, 999 (D. Minn.
2003); IP in the Middle, 19 F.C.C. Rcd. at 7465–66 (¶¶ 12–14); Petition for Declaratory Ruling
(Pulver), 19 F.C.C. Rcd. 3307, 3314 (¶¶ 12–14) (F.C.C. 2004); Fed.-State Joint Bd. on
Universal Serv., 13 F.C.C. Rcd. 11501, at * 28 (¶¶ 86–88) (F.C.C. 1998).
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            switched access connections       to   local   exchange
            company central offices.”

Comp. Reform Order, 26 F.C.C. Rcd. at 18,015–16 (¶ 957).          The majority
opinion seizes on paragraph 957’s statement that IXCs paid different exchange
access rates than information service providers. In doing so, the majority
opinion ignores the longstanding FCC authority that permitted IXCs to benefit
from the ESP exemption when they provided information services (that is,
acted as information service providers).     Nothing in Paragraph 957 was
intended to depart from this settled rule. On its face, Paragraph 957 is a
historical description of the pre-1996 regulatory regime, not an announcement
of a new regulatory policy. Accordingly, in my view, the better reading of
Paragraph 957 is that it accurately described the established regulatory
regime: IXCs paid tariff access charges when they acted as IXCs and paid the
ESP exemption rate when they acted as information service providers.
      And unfortunately, the majority opinion’s interpretation is not costless;
it contravenes the FCC’s policy decisions. Providing the ESP exemption to only
non-IXCs “raise[s] questions of discrimination and would bestow an unfair
advantage on non-carrier competitors.” Nw. Bell Tel., 7 F.C.C. Rcd. at 5645
(¶5). For this reason the FCC has been careful to ensure that its decisions
classifying VoIP services do not place IXCs at competitive disadvantages. See
IP in the Middle, 19 F.C.C. Rcd. at 7469–70 (¶ 19) (“Commenters argue that it
is inequitable to impose access charges on AT&T’s specific service if access
charges do not apply to other types of IP-enabled voice services.            The
Commission is sensitive to the concern that disparate treatment of voice
services that both use IP technology and interconnect with the PSTN could
have competitive implications. . . . [O]ur ruling here should not place AT&T at

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                                 No. 16-30634
a competitive disadvantage.”).
      Consequently, I would remand to the district court to determine whether
the VoIP calls here are information services or telecommunications.          The
district court did not reach the issue, holding instead that because Sprint owed
CenturyLink access charges regardless of whether the VoIP calls were a
telecommunications or an information service, Sprint was required to pay
CenturyLink’s tariffs.   I believe that this district court’s holding is also
erroneous.
      Under Section 251(g) Sprint was required to pay CenturyLink in
accordance with pre-1996 law. The district court correctly found that before
1996, Sprint owed CenturyLink access charges regardless of whether Sprint
was providing telecommunications or information services. Comp. Reform
Order, 26 F.C.C. Rcd. at 18,015–16 (¶ 957) (“Regardless of whether particular
VoIP services are telecommunications services or information services, there
are pre-1996 Act obligations regarding LECs’ compensation for the provision
of exchange access to an IXC or an information service provider.”). But the
district court erred in concluding that the access charge Sprint owed must have
been the tariffed rate. Instead, if the VoIP calls are information services,
Sprint’s access charge would be an end user rate set pursuant to the ESP
exemption. Id. at 18,016 (¶ 957) (“Similarly, to the extent that interexchange
VoIP services are transmitted to the LEC directly from an information service
provider, such traffic is subject to pre-1996 Act obligations regarding ‘exchange
access,’ although the access charges imposed on information service providers
were different from those paid by IXCs. Specifically, under the ESP exemption,
rather than paying intercarrier access charges, information service providers
were permitted to purchase access to the exchange as end users, either by
purchasing special access services or ‘pay[ing] local business rates and
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interstate subscriber line charges for their switched access connections to local
exchange company central offices.’”(emphases added)).
      This error is understandable. The FCC “at times has used the term
‘access charges’ colloquially as synonymous with carrier’s carrier access
charges [charges at the telecommunications rate], notwithstanding the fact
that access charges actually encompass a broader category of charges.” Id. at
18,016 n.1961. However, properly understood, “access charge” refers to both
the tariff rate IXCs pay to LECs and the end user rate that subscribers pay to
LECs (including entities that pay a subscriber rate under the ESP exemption).
See, e.g., id. at 18,015–16 (¶ 957); Petitions of Qwest Corp. for Forbearance
Pursuant to 47 U.S.C. § 160(c) in the Denver, Minneapolis-St. Paul, Phx., &
Seattle Metro. Statistical Areas, 23 F.C.C. Rcd. 11729, 11748 (¶ 25) (F.C.C.
2008); Deployment of Wireline Services Offering, 15 F.C.C. Rcd. 385, 406 (¶ 45)
(F.C.C. 1999), vacated in part on other grounds sub nom. WorldCom, Inc. v.
F.C.C., 246 F.3d 690 (D.C. Cir. 2001); Mts & Wats Mkt. Structure, 93 F.C.C.2d
241, 250 (¶ 23) (F.C.C. 1983).
      The district court failed to determine whether Sprint was required to pay
CenturyLink’s tariffs or end user access charges under the ESP exemption.
Because this determination governs the rates that Sprint owed to
CenturyLink, I would vacate the district court’s conclusion as to the federal
tariff claim and remand to the district court. Likewise, because the district
court’s Section 201(b) ruling is contingent on a federal law violation, I would
vacate and remand that claim as well.
      I respectfully dissent in part.

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