U.S. District Court Makes Significant Ruling Affecting CLECs’ Rights for Interconnection

Earlier this month, the U.S. District Court for the Eastern District of Missouri (“District Court”) made a potentially significant pronouncement regarding the procedure affecting interpretation and enforcement of interconnection agreements and the types of claims that can be brought. In Level 3 Communications, LLC and Broadwing Communications, LLC v. Illinois Bell Telephone Co., et al., 4:13-cv-01080-CEJ (E.D. Mo. Feb. 4, 2014), the District Court granted in part a motion to dismiss filed by several AT&T ILECs against two CLECs whose complaint claims that the AT&T ILECs were, among other things, violating their interconnection agreements and Sections 201, 202, 251, and 252 of the Communications Act of 1934, as amended, 47 U.S.C. §§201, 202, 251, and 252 (the Telecom Act”), by not providing interconnection at cost-based rates.

Several aspects of the District Court’s Memorandum Opinion and Order (“Order”) merit mention. In the absence of direct authority in the Eighth Circuit, in which the District Court sits, the Order found that breach of interconnection agreement disputes may directly be filed in federal courts, i.e., without the need to first go to the state commission that arbitrated and/or approved it. The Order noted a split among federal appellate courts on whether disputes regarding interpretation and enforcement of interconnection agreements should first be filed before a state public service commission, and the Level 3 Court adopted the rationale of the Fourth. In contrast, the Third and Eleventh Circuits (and potentially the Seventh Circuit) continue to require such disputes first be filed with a state public service commission.

In addition, the District Court concluded the plaintiffs had successfully stated a claim that the AT&T ILECs violated Sections 251 and 252 as a result of an ILEC’s breach of an interconnection agreement. Relying in part on the Federal Communications Commission’s decision in Core Communications Inc. v. Verizon MD., Inc., 18 FCC Rcd. 7962, 7971-7973 (2003), the Order explained that Section 251(c)(2) expressly requires defendants to provide interconnection on rates… in accordance with the terms and conditions of any agreement.’” However, the District Court dismissed the CLECs’ claim that the AT&T ILECs violated Sections 201 and 202 of the Telecom Act by engaging in unjust, unreasonable charges, practices, classifications, regulations, facilities, or services, and unjust and unreasonable discrimination. The District Court agreed with the AT&T ILECs’ argument that the incumbent carriers were not acting as common carriers” under the Telecom Act when providing Section 251 interconnection because fulfillment of the duty to interconnect under Section 251 was equate to the provision of telecommunications service.” The District Court relied on the analysis in Global Naps, Inc. v. Bell Atlantic-New Jersey, Inc., 287 F. Supp. 2d 532 (D. NJ. 2003) to reach the result.

While the immediate impact of the Order may be limited to within the other federal trial courts of the Eighth Circuit, the Order does highlight the split in authority among the federal appellate courts. Of course, the case may be appealed to the Eighth Circuit which has yet to pass on this issue. Moreover, the Order highlights possibly evolving views on the distinctions between obligations imposed on ILECs under Section 201 and 202, and Sections 251 and 252 in terms of claims for breach of interconnection agreements.