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North County Communications Corporation v. Qwest Corporation

United States District Court, D. Oregon

March 5, 2014

NORTH COUNTY COMMUNICATIONS CORPORATION OF OREGON, Plaintiff,
v.
QWEST CORPORATION, SUSAN AKERMAN, JOHN SAVAGE, STEPHEN BLOOM, all in their capacity as Commissioners of the Public Utility Commission of Oregon, Defendants.

ANTHONY EDWARD MCNAMER, DEBORAH E. GUMM, McNamer and Company, PC Portland, OR.

R. DALE DIXON, JR. Law Offices of Dale Dixon Del Mar, CA. Attorneys for Plaintiff

LAWRENCE H. REICHMAN, Perkins Coie, LLP Portland, OR. Attorneys for Defendant Quest Corporation

ELLEN F. ROSENBLUM, Attorney General MICHAEL TODD WEIRICH, Oregon Department of Justice, Salem, OR.

DARSEE STALEY, Oregon Department of Justice, Portland, OR. Attorneys for Defendant Commissioners of the Public Utility Commission Of Oregon (hereinafter collectively referred to as the Commission)

OPINION AND ORDER

ANNA J. BROWN, District Judge.

This matter comes before the Court on the Motion (#21) of Plaintiff North County Communications Corporation of Oregon (NCC) for Summary Judgment, the Cross-Motion (#29) for Summary Judgment of Defendant Qwest Corporation, and the Cross-Motion (#34) for Summary Judgment of the Commission.

For the reasons that follow, the Court DENIES NCC's Motion (#21) and GRANTS the Cross-Motions (#29, #34) of Qwest and the Commission.

BACKGROUND

NCC brings this action against Qwest and the Commission seeking declaratory and injunctive relief from the determinations and the orders of the Public Utility Commission of Oregon (PUC). NCC alleges the determinations and orders violate the Communications Act of 1934, 47 U.S.C. § 151, et seq., as amended by the Telecommunications Act of 1966 (the Act), Pub L. No. 104-104, 110 Stat. 56 and are preempted by the Act.

I. Facts

The facts in this matter are undisputed unless otherwise noted.

A. The 1997 Interconnection Agreement (1997 ICA)

NCC is certified by the PUC as a competitive local exchange carrier (CLEC). Defendant Qwest was and is an incumbent local exchange carrier (ILEC). Defendants Susan Ackerman, John Savage, and Stephen Bloom were Commissioners of the PUC at all relevant times. NCC and Qwest entered into the 1997 ICA, which the Commission approved in Docket No. ARB 39 by Order No. 97-449 and which went into effect on approximately November 20, 1997.

Section XXXIV(V) of the 1997 ICA provides:

This Agreement shall be effective for a period of 2 ½ years, and thereafter the Agreement shall continue in force and effect until a new agreement, addressing all of the terms of this Agreement, becomes effective between the Parties. The Parties agree to commence negotiations on a new agreement no later than two years after this Agreement becomes effective.

Section XXXIII of the 1997 ICA provides:

Within 4 months from the date of final approval of this Agreement, the Parties agree to make a good faith effort to complete each of the following interconnection arrangements:... [Signaling System No. 7 (SS7)] Interconnection and Certification.

B. Administrative Proceedings

NCC and Qwest amended the 1997 ICA several times between September 1997 and April 2011. In July 2008 NCC received a request for negotiation from Qwest regarding a new ICA pursuant to 47 U.S.C. § 252(a). Qwest sought a new ICA because the 1997 ICA was outdated due to technological changes in Qwest's processes and products and NCC's use of multifrequency (MF) (analog) signaling was archaic. Thus, even though Qwest was willing to accommodate MF signaling for traffic terminating to NCC, Qwest requested the new ICA include a provision that NCC must use SS7 (digital) signaling if it wished to begin terminating traffic with or through Qwest. NCC, in turn, contended Qwest's proposed new ICA would force NCC to get rid of its existing network in favor of an "unnecessary technological update and an untested agreement." AR at 1445. NCC also asserted Qwest was not legally permitted to dictate NCC's technology choices and did not have a valid justification for changing the terms of the then-existing 1997 ICA.

NCC and Qwest agreed to a series of extensions of the arbitration window for the filing of a petition for arbitration. They were unable to settle the matter informally. On April 5, 2010, NCC filed a Motion to Dismiss Qwest's request for arbitration in which NCC challenged the Commission's jurisdiction to arbitrate a new ICA. The arbitrator denied the Motion. On May 14, 2010, NCC filed with the Commission a Request to Certify the Arbitrator's May 10, 2010, Ruling denying the Motion to Dismiss. The Commission affirmed the arbitrator's May 10, 2010, Ruling.

The Parties exchanged testimony and exhibits in June, July, and August 2010. The arbitration was heard on August 18, 2010, before PUC Administrative Law Judge, Shani Pines (the Arbitrator).

On January 21, 2011, [1] the Arbitrator issued her ruling in which she approved the proposed ICA (2011 ICA) submitted by Qwest with certain modifications. The Arbitrator's ruling addressed the following four issues as presented by the parties:

Signaling (ICA 2011 Sections 7.1.1 and 7.2.1.1): The Arbitrator concluded although North County is entitled to request interconnection with Qwest, it may not force Qwest to continue using an outdated technology such as MF signaling to do so. AR 1447. The Arbitrator, therefore, approved Sections 7.1.1 and 7.2.1.1 of Qwest's proposed ICA. AR at 1446-47.
Billing Methodology (ICA 2011 Section 7.8): Qwest proposed a cap on billable minutes of use (MOU) because Qwest is unable to verify traffic with NCC's use of MF signaling (and thus determine if all minutes billed by North County are compensable). The Arbitrator found Qwest adequately demonstrated through testimony and evidence that its proposed cap to permit North County to use MF signaling "without exposing Qwest to undue risk as a result." Accordingly, the Arbitrator ...

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