IN THE UNITED STATES COURT OF FOR THE DISTRICT OF COLUMBIA CIRC

Transcription

1 Case: Document: Filed: 05/13/2010 Page: 1 IN THE UNITED STATES COURT OF FOR THE DISTRICT OF COLUMBIA CIRC PAETEC COMMUNICATIONS, INC., V. COMMPARTNERS, LLC, Plainti ff-petitioner, Defendant-Respondent. On Appeal from the United States District Court for the District of Columbia Civ. Action. No. 1 :08-CV (JR) PAETEC COMMUNICATIONS INC. PETITION FOR PERMISSION To APPEAL PURSUANT To F.R.A.P. RULE 5 AND 28 U.S.C.!$1292(B) JOHN B. MESSENGER PAETEC COMMUNICATIONS INC. JEFFREY J. BINDER THE WATERGATE ONE PAETEC PLAZA 2510 VIRGINIA AVENUE, N.W. 600 WILLOWBROOK OFFICE PARK WASHINGTON, D.C FAIRPORT, NY TELEPHONE: (202) (585) J. J.BINDER@VERIZON.NET MAY 13,2010 ATTORNEYS FOR PLAINTIFF PAETEC COMMUlvlCA TIONS, INC.

2 Case: Document: Filed: 05/13/2010 Page: 2 TABLE OF CONTENTS TABLE OF CONTENTS... i.. TABLE OF AUTHORITIES I. Introduction Statement of Facts Question Certified... 4 IV. Relief Sought... 5 V. PAETEC s Appeal is Authorized Under 28 U.S.C (b)... 5 A. B. PAETEC s issues present a controlling question of law and may materially advance the termination of the litigation There is substantial ground for difference of opinion on the Court s decision to exempt CommPartners from an obligation to pay access charges to PAETEC pursuant to PAETEC s tariffs... 7 I. There is substantial ground for difference of opinion as to the District Court s holding that, notwithstanding the filed tariff doctrine, CommPartners need not pay PAETEC s tariffed rates for VoIP traffic, even though the District Court found that PAETEC s tariff language covered that type of traffic There is substantial ground for difference of opinion as to the District Court s conclusion that it could refbse to require CommPartners to pay PAETEC s tariffed rates for VoIP traffic, even though PAETEC s tariff was deemed lawful under 47 U.S.C. tj 204(a)(3) There is substantial ground for difference of opinion as to the District Court s determination that PAETEC s tariff is inconsistent with the statutory framework pursuant to which it is promulgated VI. Conclusion Addendum... I D.C. Circuit Rule 28(a)( l)(a) Certificate of Parties and Amici Curiae... I1 Circuit Rule 26.1 Disclosure February 18, 2010 Memorandum Order... IV May 3, Order Granting Motion for 1292(b) Certification... XVII - 1-

3 Case: Document: Filed: 05/13/2010 Page: 3 TABLE OF AUTHORITIES FEDERAL CASES * ACS of Anchorage, Inc. v. FCC, 290 F.3d 403 (D.C. Cir. 2002) APCC Services, Inc. v. Sprint Communications Company, L. P., 297 F. Supp. 2d 90 (D. D.C. 2003)... 5, 6, 7 AT&T Co. v. Intrend Ropes & Twine, Inc., 1996 U.S. Dist. LEXIS 16991, adopted by 944 F. Supp. 701 (C.D. Ill. 1996)... 9 * American Telephone & Telegraph Co. v. Central Office Telephone, lnc., 524 U.S. 214 (1998)... 4, 8 Cahnmann v. Sprint Corp., 133 F. 3d. 484 (7th Cir. 1998)... 8 * Cincinnati Bell Tel. Co. v. Allnet Communications Sews, Inc., 17 F.3d 921 (6th Cir. 1994)... 9 Frontier Comm 'ns of Mt. Pulaski, Inc. v. AT&T Corporation, 957 F. Supp. 170 (C.D. Ill. 1997)... 8 Iowa Network Services v. Qwest, 363 F.3d 683 (8th Cir. 2004) Iowa Network Services v. Qwest, 385 F. Supp. 2d 850 (S.D. Iowa 2005)... 10, 11 Iowa Network Services v. Qwest, 466 F.3d 1091 (8th Cir. 2006)... 9, 10, 11, 13 Iowa Network Services v. Qwest, 2002 WL (S.D. Iowa 2002)

4 Case: Document: Filed: 05/13/2010 Page: 4 Iowa Tel. Sew's., Inc. v. Iowa Utils. Bd., 563 F. 3d 743 (8th Cir, 2009) * * Judicial Watch, Inc. v. Nat'l Energy Policy Dev. Group, F. Supp. 2d 16 (D. D.C. 2002) 576 Maislin Industries v. Primary Steel, Inc., 497 US, 1 16 (1990)... 8 Reiter v. Cooper, 507 U.S. 258 (1993)... 9 Sprint Comm. Co. LP v. Nebraska Pub. Serv. Comm., 2007 WL (D. Neb., Sept. 7, , 18 S WBT v. Missouri PSC, 461 F. Supp. 2d 1055 (E.D. Mo. 2006) Verizon California, Inc. v. F.C.C., 555 F.3d 270 (D.C. Cir. 2009) In Re Vitamins Antitrust Litigation, 2000 WL (D. D.C. 2000),... 6 Vonage v. Minn. PUC, 290 F. Supp. 2d 993 (D. Minn. 2003) * Vonagev. Minn. PUC, 394 F.3d 568 (8th Cir. 2004) WorldCom v. FCC, 288 F.3d 429 (2002)... 18, 19, 20 FEDERAL STATUTES 28 U.S.C. tj 1292(b)... 1, 5, U.S.C. 201(b)

5 Case: Document: Filed: 05/13/2010 Page: 5 * 47 U.S.C. tj 204(a)(3)... 1, 2, 3, 4, 6, 7, 12, U.S.C. tj 251(g)... 4, 5, 13, 14, 18, 19 FEDERAL ADMINISTRATIVE DECISIONS Amendment of Section of the Commission's Rules and Regulations (Computer IIO, Phase 11 Order, 2 F.C.C.R (1987) Communications Protocols under Section of the Commission's Rules and Regulations, 95 F.C.C. 2d 584 (1983) Connecting America: The National Broadband Plan, F.C.C. NBP-01 (Mar. 16, 2010)... 10, 15, 16 Developing a UnlJied Intercarrier Compensation Regime, 16 F.C.C.R (2001) Developing a Unified Intercarrier Compensation Regime, 20 F.C.C.R (2005) IP-Enabled Services, 19 F.C.C.R (2004) In the Matter of Implementation of the Local Competition Provisions of the Telecommunications Act of 1996, 1 1 F.C.C.R In the Matter of Implementation of the Non-Accounting Safeguards in Sections 271 and 272 of the Communications Act of 1934, as amended, Order on Reconsideration, 12 F.C.C.R (1997) * In the Matter of Implementation of Section 402(b)(l)(A) of the Telecommunications Act of 1996, 12 F.C.C.R (1997) iv -

6 Case: Document: Filed: 05/13/2010 Page: 6 * Northwestern Bell Telephone Company Petition for a Declaratory Ruling, 2 F.C.C.R (1987) vacated as moot, 7 F.C.C.R. 5644,y 1 (1992) Petition for Declaratory Ruling that AT&T s Phone-to-Phone IP Telephony Services are Exempt from Access Charges, 19 F.C.C.R (2004) Petition of Time Warner Cable for Declaratory Ruling that Competitive Local Exchange Carriers May Obtain Interconnection under Section 251 of the Communications Act of 1934, as Amended, to Provide Wholesale Telecommunications Sewices to VoIP Providers, 22 F.C.C.R (2007) FEDERAL REGULATIONS * 47 C.F.R. tj , 19 STATE ADMINISTRATIVE DECISIONS Blue Ridge v. Global NAPs, Request for Expedited Declaratory Ruling as to the Applicability of the Intrastate Access Tarffs of Blue Ridge Telephone Company, Docket No , Order Adopting in Part And Modifying in Part the Hearing Officer s Initial Decision, (Ga. P.S.C. July 3 1, 2009) Illinois Bell Tel. Co. v. Global NAPs Illinois, Inc., No (Ill. C.C. Feb. 11, 2009) Palmerton Telephone Company v. Global NAPs, C , Sprint Comm. Co LP, 2006 WL (Pa PUC, Nov. 30, 2006) v-

7 Case: Document: Filed: 05/13/2010 Page: 7 TREATISES Charles Alan Wright, Arthur R. Miller, & Edward H. Cooper, 16 Fed. Prac. & Proc. Juris (2d ed.) (2010)... 5,697 - vi -

8 Case: Document: Filed: 05/13/2010 Page: 8 I. Introduction Plaintiff PAETEC Communications, Inc. ( PAETEC ), respectfully petitions for permission to appeal pursuant to F.R.A.P. and Circuit Rule 5 and 28 U.S.C. tj 1292(b). The District Court issued its Memorandum Order ( Order ) on Summary Judgment on February 18,2010 and granted PAETEC s Motion for Certification pursuant to (b) on May 3,2010. PAETEC and defendant CommPartners, LLC ( CommPartners ) are telecommunications carriers. PAETEC sued to recover access charges from CommPartners for service PAETEC provided under its lawhlly filed tariffs. The Court should grant interlocutory review of the District Court s grant of summary judgment in favor of CommPartners because (1) the District Court s Memorandum Order ( Order ) is in substantial disagreement with the well-established filed tariff doctrine and 47 U.S.C. tj 204(a)(3), which require payment of PAETEC s tariffed rates for service that the District Court found was covered by the tariffs terms; (2) there is substantial disagreement with the Order s conclusion that general intercarrier compensation law immunizes from access charges calls originated in Voice over Internet Protocol (VoIP ) format and that such immunity extends to telecommunications carriers such as CommPartners that do not originate the calls; and (3) the Order involves a controlling question of law, the resolution of 1 - Case No. 1 :08-CV (JR) (Attached as Addendum).

9 Case: Document: Filed: 05/13/2010 Page: 9 which would greatly simpliq subsequent proceedings. 11. Statement of Facts CommPartners, while operating as a telecommunications Carrie$ on a wholesale basis (referring to itself as a carrier s carrier 72) transported calls placed by customers of other carriers, as well as providers of VoIP service. When one carrier sends a long distance call to another carrier to be terminated to the second carrier s end user, the second carrier is entitled to charge the first carrier a switched access charge. If the call is interstate, this fee is covered by the billing carrier s Federal Communications Commission ( FCC ) tariff. If the call is intrastate, this fee is covered by the billing carrier s state tariff. CommPartners does not dispute that it sent long-distance calls to PAETEC for termination and has not paid PAETEC s switched access invoices. Nor does it dispute that it owes PAETEC for the calls placed in the traditional Time Division Multiplexing ( TDM ) format. CommPartners contends, however, that approximately 90% of the long-distance telephone calls that it sent to PAETEC for termination were placed in the newer VoIP format and that such calls are not subject to access charges. PAETEC disagrees. PAETEC s federal tariff, applying to interstate calls, was filed under 47 Tr. 11/14/08 at (remarks of Mr. Twomey, counsel for CommPartners). See Declaration of David S. Clark in Support of Defendant s Mot. to Dismiss and/or Mot. to Transfer, filed May 2, 2008, at 77 5, 7 ( Clark Decl. ). -2-

10 Case: Document: Filed: 05/13/2010 Page: 10 U.S.C. tj 204(a)(3) and was not suspended or rejected by the FCC. It is therefore deemed lawhl. The tariff defines access service to include: all services and facilities provided by the Company [PAETEC] for the origination or termination of any interstate or foreign telecommunications or origination or termination of other services utilizing the same Company network services or hnctionality regardless of the technology used in transmission. This includes, but is not limited to, Internet Protocol [VoIP] or similar services. CommPartners initially moved to dismiss the Complaint, arguing that it was within the primary jurisdiction of the FCC, and asserting that the FCC has not pronounced a rule addressing the applicability of carrier access charges for VoIP- originated calls. 4 While the District Court denied this motion, the record strongly supports CommPartners claim that the issue of whether access charges are owed for VoIP-originated calls is unsettled? After CommPartners motion to dismiss was denied, the parties filed cross motions for summary judgment. Judge Robertson ruled that PAETEC s tariff applied to the traffic in dispute and ruled in PAETEC s favor with respect to the calls originated in TDM, but ruled in CommPartners favor with respect to the calls CommPartners Memorandum Of Points And Authorities In Support of Defendant s Motion To Dismiss And/or Transfer, filed May 2,2008, at E.g., Letter of Kristopher E. Twomey, Regulatory Counsel, CommPartners to Lori Blakely, PAETEC, Nov. 7, 2007, Att. to PAETEC Motion for Summary Judgment, filed April 1, 2009 ( Twomey Letter ) at 1, 2 (asserting that CommPartners was justified in not paying PAETEC s access bills because the issue is currently the subject of much debate at the FCC. ). -3-

11 Case: Document: Filed: 05/13/2010 Page: 11 originated in VoIP. Absent interlocutory review, the District Court will have to determine the amount of damages that CommPartners owes PAETEC for terminating the TDM-originated calls. This will require the parties to invest significant resources to determine which of the calls that CommPartners sent to PAETEC for termination were VoIP-originated and which were TDM-originated. CommPartners has claimed that no more than 10% of its traffic was TDMoriginated. PAETEC disagrees, but there is no verifiable way for PAETEC (absent discovery and extensive litigation) to show conclusively that a call was originated in TDM as opposed to IP! 111. Question Certified Whether both the expressed Congressional directive in tj 204(a)(3) of the Communications Act, requiring that streamlined tariffs be deemed lawful and not subject to retroactive liability or refbnds, and the well-established filed tariff doctrine (see American Telephone & Telegraph Co. v. Central office Telephone, Inc., 524 US. 214 (1998)), can be overridden, in the absence of unambiguous language under the Act or an FCC ruling that such traffic is not subject to access charges: (A) by the Court s conclusion that VoIP-originated traffic carried by an intermediate carrier is not subject to access charges; or (B) by the Court s conclusion 25 l(g) does not permit the imposition of access charges on VoIP- 6 - See, e.g., Tr. 12/2/09 at

12 Case: Document: Filed: 05/13/2010 Page: 12 originated traffic, purportedly because VoIP technology did not exist prior to the enactment of 251(g) in IV. Relief Sought PAETEC seeks the reversal of the District Court s grant of partial summary judgment for defendant and, to the extent appropriate, the grant of partial summary judgment with respect to the VoIP-originated calls in favor of PAETEC. V. PAETEC s Appeal is Authorized Under 28 U.S.C (b) Section 1292(b) requires PAETEC to show that the Order involves (1) a controlling question of law, (2) as to which there is substantial ground for difference of opinion, and (3) that an immediate appeal from the order may materially advance the ultimate termination of the litigation. A. PAETEC s issues present a controlling question of law and may materially advance the termination of the litigation. Pursuant to 1292(b), an issue presents a controlling question of law if the issue would require reversal if decided incorrectly or [it] could materially affect the course of litigation with resulting savings of the court s or the parties resources. Judicial Watch, Inc. v. Nat 1 Energy Policy Dev. Group, 233 F. Supp. 2d 16, 19 (D. D.C. 2002) or if the issue determines the outcome or even the future course of the litigation. APCC Services, Inc. v. Sprint Communications 7-28 U.S.C. tj 1292(b); Charles Alan Wright, Arthur R. Miller, & Edward H. Cooper, 16 Fed. Prac. & Proc. Juris at 422 (2d ed.) (2010) (section 1292(b) factors are guiding criteria rather than jurisdictional requisites ). -5-

13 Case: Document: Filed: 05/13/2010 Page: 13 Company, L. P., 297 F. Supp. 2d 90, 96 (D. D.C. 2003) quoting Judicial Watch, 233 F. Supp. 2d. at 19. As shown below, the District Court misinterpreted the filed tariff doctrine and 47 U.S.C. fj 204(a)(3), incorrectly concluding that it could deny PAETEC recovery under a filed tariff that the court found applied to the service PAETEC provided to CommPartners simply because the court believed (erroneously) that the tariff was inconsistent with the law when applied to VoIP-originated traffic. Reversal of the District Court s Order would materially affect the course of the litigation with resulting savings of the court s [and] the parties resources and determine[] the outcome or even the future course of the litigation. Judicial Watch, 233 F. Supp. 2d at 19, citing In Re Vitamins Antitrust Litigation, 2000 WL at * 2 (D. D.C. 2000). Absent interlocutory reversal, the District Court and the parties will invest significant resources to separate VoIP-originated and TDMoriginated calls. The first and third factors are closely related because interlocutory resolution of controlling questions curtails and simplifies subsequent pretrial and trial activities. See 16 Fed. Prac. & Proc. Juris. fj 3930 at 422. As CommPartners counsel has admitted, the process of determining which calls are VoIP-originated and which are TDM-originated is very complex; it is difficult to show whether a call was originated in TDM or VoIP because there is no field in a call record -6-

14 Case: Document: Filed: 05/13/2010 Page: 14 stating whether the call originated in TDM or VOIP.~ Sorting out the minutes based on whether they were VoIP-originated or TDM-originated will thus involve protracted discovery, expert testimony and trial. If, however, this Court reverses the District Court s Order and finds that PAETEC s tariffs require payment of access charges for both VoIP and TDM-originated calls, it will be unnecessary for the parties to sort through the calls. Thus, this case falls in the category where interlocutory reversal might save time for the district court, and time and expense for the litigants. 16 Fed. Prac. & Proc. Juris. tj 3930 at 423. See APCC, 297 F. Supp 2d at 100. B. There is substantial ground for difference of opinion on the Court s decision to exempt CommPartners from an obligation to pay access charges to PAETEC pursuant to PAETEC s tariffs Both the filed tariff doctrine and 47 U.S.C tj 204(a)(3) require that PAETEC s tariffs must be enforced with respect to the VoIP-originated traffic that PAETEC terminated for CommPartners. The unprecedented exception to these principles that the District Court mistakenly fashioned cannot be allowed to stand. 1. There is substantial ground for difference of opinion as to the District Court s holding that, notwithstanding the filed tariff doctrine, CommPartners need not pay PAETEC s tariffed rates for VoIP traffic, even though the District Court found that PAETEC s tariff language covered that type of traffic The District Court correctly recognized that under the Communications Tr. 11/14/08 at 23-24,

15 Case: Document: Filed: 05/13/2010 Page: 15 Act, tariffs are the law, and not contracts, that customers may not bring an action against a carrier that would invalidate, alter, or add to the terms of a filed tariff, and that courts are precluded from deciding whether a tariff is reasonable. Order, at 8. The doctrine encompasses both the rates and the services covered by the tariff. Central Office Tel., 524 U.S. at The District Court also found that the service PAETEC provided in terminating VoIP-originated traffic for CommPartners was covered by the tariff. This should have ended the District Court s inquiry, because as it recognized, a tariff filed with a federal agency is the equivalent of a federal regulation. Id. at 9, quoting Cahnmann v. Sprint Corp., 133 F. 3d. 484,488 (7th Cir. 1998). Having used the service provided by PAETEC s tariff, CommPartners was compelled by the filed tariff doctrine to pay PAETEC s tariffed rates, and in a suit to recover on the tariff, the courts cannot question the reasonableness of PAETEC s tariff. See Maislin Industries v. Primary Steel, Inc., 497 U.S. 116, 130 (1990). Under the filed rate doctrine, [a carrier s] filed rates have the force of law and are absolutely binding on all users until found invalid in an FCC proceeding or by a federal court. Frontier Comm ns of Mt. Pulaski, Inc. v. AT&T Corporation, 957 F. Supp. 170, 176 (C.D. Ill. 1997). The alleged unreasonableness of a tariff is Order at 4 ( The terms of the tariff are unambiguous; access charges apply regardless of the technology used at any Doint in transmission ) (emphasis in original). -8-

16 Case: Document: Filed: 05/13/2010 Page: 16 not a defense to an action to collect under the tariff; rather, it may give rise to a separate cause of action which may only be asserted as a counterclaim pursuant to 47 U.S.C. 2Ol(b). See AT&T Co. v. Intrend Ropes & Twine, Inc., 1996 U.S. Dist. LEXIS at [*28] (C.D. Ill.), adopted by 944 F. Supp. 701,714 (C.D. Ill. 1996) ( customer is...required to present its contention of unreasonableness in the form of a counterclaim instead of an affirmative defense ); Cincinnati Bell Tel. Co. v. Allnet Communications Servs, Inc., 17 F.3d 921, 923 (6th Cir. 1994) citing Reiter v. Cooper, 507 U.S. 258 (1993) (claim of unreasonableness of tariff is a claim in its own right and, if asserted in response to a collection action in district court, should be raised by counterclaim ). Ignoring these principles and absent any counterclaim, the District Court crafted an unprecedented exception to the filed tariff doctrine, one in which a court can refhe to enforce a filed tariff with respect to traffic covered by the tariff if it finds the tariff to be inconsistent with the statutory framework pursuant to which it is promulgated. Order. p. 9. In support of this novel concept, the District Court relied on its misreading and misapplication of a single case, Iowa Network Services, Inc. Corp., 466 F.3d 1091 (8th Cir. 2006) ( IN3 ). The District Court s reliance on INS, despite its recognition of differences between INS and this case, Order p. 9, was misplaced for several reasons. First, the FCC had, long before the INS court was faced with the issue, -9-

17 Case: Document: Filed: 05/13/2010 Page: 17 clearly established that the calls at issue in INS were not subject to access charges. In the Matter of Implementation of the Local Competition Provisions of the Telecommunications Act of 1996, 11 F.C.C.R , I[ 1036 (1996). This FCC ruling is cited in each of the four federal court decisions addressing the INS v. Qwest litigation. 1o The decision in INS was thus based on the conflict between the tariff and well established law, as clearly articulated by the FCC. Here, in contrast, as the District Court acknowledged, although the FCC has had the controversy over whether access charges apply to VoIP-originated traffic on its docket for a decade, the FCC has been unable to decide it. Order, p. 6. Unlike INS, there was therefore no basis in a ruling of the expert agency for 1o INS, 466 F.3d at See also INS v. Qwest, 363 F.3d 683,687 (8th Cir. 2004); INS v. Qwest, 385 F. Supp. 2d 850, 860 (S.D. Iowa 2005); INS 2002 WL at * 3 (S.D. Iowa 2002) See Developing a Unified Intercarrier Compensation Regime, 16 F.C.C.R (2001) (FCC initiated but has not resolved rulemaking); IP-Enabled Services, 19 F.C.C.R. at , (asking the extent to which access charges should apply to VoIP... services ); Developing a Unfied Intercarrier Compensation Regime, 20 F.C.C.R. 4685,180 (2005) (asking whether intrastate access charges should be preempted for calls that originate or terminate with... types of VoIP service ); Connecting America: The National Broadband Plan, FCC NBP-01 (rel. Mar. 16,2010) (FCC acknowledged in tj 8.3 the regulatory uncertainty about whether or what intercarrier compensation payments are required for VoIP traffic and recommended ($ 8.7) that it should address the treatment of VoIP traffic for purposes of [ intercarrier compensation]. ). CommPartners repeatedly asserted that the issue is unsettled. CommPartners Mem. of Points and Authorities in Support of Def. Mot. to Dismiss, filed May 2, 2008, at 9-10 (asserting that that The FCC has not pronounced a rule addressing the applicability of carrier access charges for VoIP-originated calls ); Tr. 1 1/14/08-10-

18 Case: Document: Filed: 05/13/2010 Page: 18 the Court s conclusion that PAETEC s tariff was inconsistent with the statutory framework. Order, p. 9. It is one thing for a court to find-as the Eighth Circuit did in INS-that a tariff that attempts to override an unequivocal, controlling ruling of the FCC cannot be valid. It is quite a different matter to determine-as the District Court did here-that PAETEC s filed tariff is invalid even though the lower court and CommPartners have agreed that the law is uncertain whether access charges are owed on VoIP-originated traffic, and absent any FCC ruling declaring that it is unlawhl for carriers to impose tariffed access charges on VoIP-originated traffic. In addition, the District Court here found expressly that the access charges set forth in PAETEC s filed tariffs apply to CommPartners traffic regardless of the technology used by CommPartners at any point in the transmission. Order, p. 4. In contrast, in INS, as the Eighth Circuit explained, the lower court never -- reached the filed rate doctrine issue because it upheld the Iowa Utilities Board ( IUB ) decision that the tariffs at issue in this case did not apply to the type of traffic involved in this dispute. INS, 466 F. 3d at 1097; see INS, 385 F. Supp. 2d at 899 ( the Court finds that the tariffs at issue do not apply to the traffic at issue ). ~~ at (CommPartners argued that the FCC had had the issue before it since 2001 without deciding it); Twomey Letter, 1-2 (asserting that CommPartners was justified in not paying access charges because the issue is currently the subject of much debate at the FCC. )

19 Case: Document: Filed: 05/13/2010 Page: There is substantial ground for difference of opinion as to the District Court s conclusion that it could refuse to require CommPartners to pay PAETEC s tariffed rates for VoIP traffic, even though PAETEC s tariff was deemed lawful under 47 U.S.C. $j 204(a)(3). The District Court s reliance on INS also conflicts with the plain language of tj 204(a)(3) of the Act, the FCC s decision in Implementation of Section 402(b) (I) (A) ofthe Telecommunications Act of 1996, 12 F.C.C.R., 2 170, (1997) implementing tj 204(a)(3), and this Court s decision interpreting tj 204(a)(3) in ACS v. Anchorage, 290 F.3d 403,411 (D.C. Cir. 2002). Section 204(a)(3) provides that a tariff provision filed according its streamlined procedure is deemed lawful. 47 U.S.C. tj 204(a)(3). PAETEC filed its FCC tariff pursuant to tj 204(a)(3) and its tariff filing at the FCC was not challenged or otherwise disturbed. PAETEC. St. of Mat. Facts Ex. B, Decl. Ambrosi As this Court has held, once a rate is lawful, it cannot be deviated from, either by the issuance of refbnds or by a customer s refusal to pay, as that would effectuate impermissible retroactive ratemaking in violation of the non-discrimination principles underlying the tariff regime and the filed rate doctrine. ACS, 290 F.3d at The District Court, after finding that PAETEC s tariff applied to the services it provided CommPartners, nevertheless ruled that despite tj 204(a)(3), PAETEC s Tariff must give way. Order, p. 9. As shown above, the District Court mistakenly construed the INS decision to hold that the disputed terms [of the tariff] were -12-

20 Case: Document: Filed: 05/13/2010 Page: 20 simply ultra vires and lacked legal force. Order p. 9. That reading of INS is fundamentally at odds with the Eighth Circuit s opinion, which never reached the deemed lawhl issue, instead holding that the tariffed charges do not apply to the type of traffic at issue. 466 F.3d at Moreover, neither INS nor any other precedent suggests that a tariff provision filed under the deemed lawfbl provision of the Act can be overridden in the absence of any unambiguous law rendering such tariff provision unlawfbl. To hold otherwise runs afoul of the plain language of 204(a)(3) and substitutes the District Court s judgment for that of Congress. 3. There is substantial ground for difference of opinion as to the District Court s determination that PAETEC s tariff is inconsistent with the statutory framework pursuant to which it is promulgated. The District Court s underlying finding that PAETEC s tariff is inconsistent with the statutory framework, Order, p. 9, is itself subject to substantial ground for difference of opinion. The District Court supported that finding on two alternative theories: (1) its conclusion that because VoIP-originated traffic is subject to a net protocol conversion, it is an information service that is not subject to access charges, id. at 6-7; and (2) its conclusion that under 47 U.S.C (g), which allowed access charges to continue only where there was a pre- [ Act obligation relating to inter-carrier compensation, there cannot be a pre-act obligation relating to intercarrier compensation for VoIP, because VoIP

21 Case: Document: Filed: 05/13/2010 Page: 21 was not developed until the 1996 Act was passed. Id. at 7-8. As shown below, there is a substantial ground for difference of opinion as to each of these theories. a. There is substantial ground for difference of opinion as to the District Court s determination that VoIPoriginated traffic sent by CommPartners to PAETEC for termination is immune from access charges. The District Court s Order rests on the proposition that the VoIP-originated calls transmitted by CommPartners to PAETEC should be classified as an information service and are therefore automatically exempt from interstate access charges. Order, pp 6-7? The underpinnings of this decision, however, remain subject to a substantial difference of opinion. The two district court rulings upon which the Order relied in support of exemption do not conclusively resolve the ambiguity in the FCC s access charge regime. The Minnesota decision did not address access charges, but preempted an attempt by the Minnesota Public Utilities Commission to impose entry requirements on Vonage, a retail VoIP provider. Vonage v. Minn. PUC, 290 F. Supp. 2d 993 (D. Minn. 2003). Nothing in Vonage suggests that state regulation of wholesale telecommunications service, as provided by CommPartners, is preempted by federal law merely because its customer is providing retail VoIP. Further, the decision in SWBT v. Missouri PSC, 461 F. 12 The Court stopped short of applying the information service exemption to intrastate access charges. Order, p. 7, n The precedential value of this holding is limited because the Eighth Circuit never resolved the Minnesota PUC s appeal of the classification, instead affirming - 14-

22 Case: Document: Filed: 05/13/2010 Page: 22 Supp. 2d 1055, 1074 (E.D. Mo. 2006) involved review of a Missouri Commission arbitration decision regarding terms of interconnection agreements, and did not address the circumstances here where there is an actual billing dispute and no interconnection agreement. Id. at That decision is also inconsistent with the FCC s well-established exception covering protocol conversion[s] in connection with the introduction of new technology. 4 This exception applies when new technology is introduced piecemeal and...conversion equipment is used within the network to maintain compatibility, and remove[ s] such conversions from the enhanced category? The FCC has embraced the industry transition from the TDM-based network to an all IP network. National Broadband Plan, p. 36,49, 59, 148. In light of the transition to an all IP network, there is currently substantial disagreement in the law that protocol conversions involved in the opinion because of the FCC s intervening preemption of the PUC s regulation. See Vonage v. Minn. PUC, 394 F.3d 568, 569 (8th Cir. 2004). 14 Amendment of Section of the Commission s Rules and Regulations (Computer III), 2 F.C.C.R. 3072, and (1987). See Implementation of the Non-Accounting Safeguards in Sections 271 and 272 of the Communications Act of 1934, as amended, 12 F.C.C.R. 2297, (1997) (exception remains in force after 1996 Act). 15 Communications Protocols under Section of the Commission s Rules and Regulations, 95 F.C.C. 2d 584,Y 16 (1983) (discussing protocol conversions from new digital technology to existing analog technology and noting exception to ESP classification when protocol conversion involves no change in an existing service, but merely a change in... interface characteristics to facilitate transitional introduction of new technology. ) Computer III, 2 F.C.C.R. at

23 ~ ~ ~~ Case: Document: Filed: 05/13/2010 Page: 23 VoIP-PSTN calls result in an automatic classification of the traffic as an information service. Finally, other authorities have dealt with the question of whether tariffed access charges are owed on VoIP-originated calls and have arrived at opposite conclusions. For example, in Palmerton Telephone Company v. Global NAPs, C , (P.A. P.U.C. Feb. 11,2010) the Pennsylvania PUC found Global NAPS obligated to pay intrastate tariffed access charges to Palmerton for intrastate VoIP traffic that Global sent to Palmerton for termination to Palmerton s end users, rejecting Global s claims, like those of CommPartners here, that Global was acting as an ESP or that the traffic at issue was enhanced. g The disparity among these authorities demonstrates, at a minimum, that there is substantial ground for a difference of opinion that assessing tariffed access charges on a carrier transmitting VoIP originated traffic is inconsistent with the existing regulatory regime under the Act. Neither the Act nor the FCC s rules lead to an unambiguous determination that CommPartners is exempt from payment of access charges This ruling is particularly significant because some of the traffic at issue in PAETEC s Complaint is Pennsylvania intrastate traffic. Complaint, Many state commissions have reached the same conclusion. E.g., Illinois Bell Tel. Co. v. Global NAPs Illinois, Inc., No , (Ill. C.C. Feb. 11,2009); Blue Ridge v. Global NAPs, Request for Expedited Declaratory Ruling as to the Applicability of the Intrastate Access Tariffs of Blue Ridge Telephone Company, Docket No , Order, (Ga. P.S.C. July 31,2009). -16-

24 Case: Document: Filed: 05/13/2010 Page: 24 The District Court s decision that CommPartners is providing an information service by converting VoIP traffic to TDM also conflicts with other authorities. As an initial matter the District Court s conclusion that CommPartners provides an information service conflicts with the statement of CommPartners that for all of the VoIP-originated traffic in dispute... [it] was acting in its capacity as a Competitive Local Exchange Carrier, not as an information service provider? CommPartners admission that it was acting as a carriep precludes its use of the ESP exemption to avoid access charge liability because such exemption only applies to enhanced services providers ( ESPs ) purchasing interstate services from carriers and do[es] not... create an access charge exemption for those carriers. Northwestern Bell Telephone Company Petition for a Declaratory Ruling, 2 F.C.C.R. 5986, (1987) vacated as moot, 7 F.C.C.R. 5644,Y 1 (1992) CommPartners Statement of Material Facts Not in Dispute The record is replete with CommPartners admissions that it was acting as a carrier s carrier, transmitting telecommunications traffic for its customers - some of whom may or may not be ESPs. See Clark Decl., 77 5, 7; Tr. 11/14/08 at 5 (remarks of Mr. Twomey). Tr. 11/14/08 at (remarks of Mr. Twomey); See Tr. 11/14/08 at 5 (CommPartners describes itself as a regular old regulated entity ); at 24 (describes itself as a regulated telephone company ) The FCC, courts, and state commissions have found that carriers providing wholesale connectivity necessary for providing retail VoIP services are providing telecommunications services. Petition of Time Warner Cable for Declaratory Ruling, 22 F.C.C.R. 3513, (2007); see also Iowa Tel. Sew s., Inc. v. Iowa Utils. Bd., 563 F. 3d 743,747 (8th Cir, 2009); Sprint Comm. Co. LP v

25 Case: Document: Filed: 05/13/2010 Page: 25 b. There is substantial ground for difference of opinion as to the District Court s determination that there cannot be a pre-act obligation relating to intercarrier compensation for VoIP, because VoIP was not developed until the 1996 Act was passed. There also remains considerable dispute regarding the District Court s separate holding that VoIP traffic falls outside the scope of 5 251(g) of the Act, because VoIP was not developed until the 1996 Act was passed, relying on this Court s decision in WorldCom v. FCC, 288 F.3d 429 (2002). Section 251(g) preserved pre-1996 Act intercarrier compensation regimes, such as access charges to interexchange carriers, until superseding action by the FCC. See 47 U.S.C l(g). There is simply no basis in WorZdCom to conclude that the scope of 25 1 (g) hinges on whether the underlying technology existed before Rather, WorldCom addressed the fact that there had been no pre-act obligation relating to intercarrier compensation for ISP-bound traffic; no pre-act, federally created obligation for LECs to interconnect to each other for ISP-bound calls; and that the text of tj 25 1 (g) speaks only of services provided to interexchange carriers and information service providers. Id. at Nebraska P.S. C., 2007 WL (D. Neb., Sept. 7,2007.); See e.g. Sprint Comm. Co LP, 2006 WL (Pa PUC, Nov. 30,2006). See also Verizon California, Inc. v. F.C.C., 555 F.3d 270,275 (D.C. Cir. 2009) (under 5222 of the Act, carriers serving VoIP providers may be classified as telecommunications carriers.). Further, the FCC s rules provide that interexchange carriers that use the facilities of a local exchange carrier ( LEC ) such as PAETEC for terminating interstate telecommunications traffic are subject to access charges. 47 C.F.R

26 Case: Document: Filed: 05/13/2010 Page: 26 Tracking the statutory text, the WorZdCom decision was predicated on the fact that LECs services to other LECs, even if en route to an ISP, are not to either an IXC or to an ISP. 288 F.3d at 434. WorldCom never discussed the underlying technology used to transmit the calls in its analysis of 5 25 l(g)? Rather than focusing on the underlying technology, the Court s focus in WorZdCom was on the nature of the carriers involved and whether a pre-1996 Act obligation required one carrier to compensate the other. 288 F.3d at In contrast to WorZdCom, which considered the absence of pre-1996 arrangements between LECs for exchange of traffic, the compensation arrangement in dispute here is between CommPartners, providing interexchange service,23 and PAETEC, the LEC. This is the same IXC-LEC relationship covered by the FCC s access charge rules since their inception, see 47 C.F.R , and the very framework preserved by (g) (covering LEC access services provided to interexchange carriers. ), so the rules in effect before 1996 did apply to VoIP-originated long-distance calls. The District Court s reading of WorZdCom is plainly inconsistent with the FCC s decision requiring payment of access charges for calls made using the same VoIP technology that is the subject of this case. See Petition for Declaratory 22 -Nor should it have, as the dial-up Internet services at issue had been commercially available for years prior to the adoption of the 1996 Act See Tr. 11/14/08 at (remarks of Mr. Twomey discussing switching calls through switches located in Las Vegas, Los Angeles, New York and Atlanta and providing connection between switch and end office)

27 Case: Document: Filed: 05/13/2010 Page: 27 Ruling that AT&T 3 Phone-to-Phone IP Telephony Services are Exempt fiom Access Charges, 19 F.C.C.R (2004). The only difference between the VoIP technology at issue in that case compared to this case is the use of VoIP in the middle of the call, rather than the beginning of the call. Id. at The District Court s reasoning that the presence of VoIP technology disqualifies a call from being subject to access charges would apply equally to VoIP in the middle of a call; yet the FCC ruled that access charges were owed. VI. Conclusion For the aforementioned reasons the Court should exercise its discretion and permit PAETEC to appeal the District Court February 18,2010 Memorandum Order on an interlocutory basis, consistent with 28 U.S.C (b). Respectfully submitted, John B. Messenger, Esq...,-. PAETEC Communications, Inc. [ One PAETEC Plaza Virginia Avenue, N. W. 600 Willowbrook Office Park Washington, D.C Fairport, NY Telephone: (202) (585) j.j.binder@verizon.net,f Attorneys for Plaintiff PAETEC Communications, Inc

28 Case: Document: Filed: 05/13/2010 Page: 28 CERTIFICATE OF SERVICE I hereby certify that on this 13th day of May 2010, a true and correct copy of this Petition for Permission to Appeal was served via hand delivery upon the counsel of record listed below. F Michael B. Hazzard Joseph P. Bowser Arent Fox LLP 1050 Connecticut Avenue, NW Washington, D.C (202) (202) (facsimile) Hazzard.Michael@arentfox.com Bowser. Joseph@arentfox.com Counsel for Defendant, CommPartners, LLC -21 -

29 Case: Document: Filed: 05/13/2010 Page: 29 ADDENDUM Table of Contents D.C. Circuit Rule 28(a)( 1)(A) Certificate of Parties and Amici Curiae Circuit Rule 26.1 Disclosure February 18,2010 Memorandum Order May 3,2010 Order Granting Motion for 1292(b) Certification

30 Case: Document: Filed: 05/13/2010 Page: 30 D.C. Circuit Rule 28(a)(l)(A) Certificate of Parties and Amici Curiae Pursuant to D.C. Circuit 28(a), the following is a statement of the parties, amici, rulings under review, and related cases. (A) Parties and Amici: The parties are: Plainti ff-appellant PAETEC Communications, Inc. Defendant-Appellee CommPartners, LLC (B) Rulings Under Review: PAETEC requests permission to appeal the District Court s (James Robertson) February 18,2010 Memorandum Opinion and Order denying PAETEC s Motion for Summary Judgment in Case No. 1 :08-CV A copy of the decision is attached pursuant to F.R.A.P. 5(b)(e)( 1). (C) Related Cases: None. - Add.11 -

31 Case: Document: Filed: 05/13/2010 Page: 31 Circuit Rule 26.1 Disclosure PAETEC Communications, Inc., is a Delaware corporation engaged in the business of providing telecommunications services in, among other places, the District of Columbia. PAETEC Communications, Inc. is a wholly-owned subsidiary of PAETEC Holding Corp., (NASDAQ: PAET), a publicly traded company. No publicly held company has a 10% or greater ownership interest in PAETEC Holding Corp. other than Ameriprise Financial, Inc. (NYSE: AMP), which indirectly owns approximately 10.7% of the company's common stock by virtue of its recent acquisition of Columbia Wanger Asset Management, L.P. - Add.111 -

32 Case: Document: Filed: 05/13/2010 Page: 32 February 18,2010 Memorandum Order - Add.IV -

33 Case: Document: Filed: 05/13/2010 Page: 33 Case 1 :08-cv JR Document 48 Filed 02/18/10 Page 1 of 12 UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA PAETEC COMMUNICATIONS, INC., Plaintiff, V. : Civil Action No (JR) COMMPARTNERS, LLC, Defendant. MEMORANDUM ORDER PAETEC Communications, Inc., seeks compensation for telephone calls made to individuals on its network that originated on the network of CommPartners, LLC. Now before the court are the parties' cross-motions for partial summary judgment (as to liability). For the reasons set forth below, PAETEC's motion [#36] is granted as to its statutory claim regarding the TDM-originated calls. CommPartners' "counter-motion" [#38] is granted as to the statutory claim regarding the VoIP-originated calls and as to the quasi-contractual claims. Backqround PAETEC and CommPartners are telecommunications companies. A long-distance call by a CommPartners customer to a PAETEC customer is completed, or "terminated," using PAETEC facilities. Decl. of John T. Ambrosi 7, attached to P1. Mot. as Ex. B. In this action, PAETEC seeks compensation for calls it has terminated on behalf of CommPartners. PAETEC's claim is made pursuant to the "access charge" regime of the Communications Act of 1934, as amended, 47 U.S.C. 151 et seq. PAETEC

34 Case: Document: Filed: 05/13/2010 Page: 34 Case 1 :08-cv JR Document 48 Filed 02/18/10 Page 2 of 12 alternatively asserts unjust enrichment and quantum meruit claims. Crucial to this action is the distinction between two formats for transmitting calls: Time-Division Multiplexing ("TDM") and Voice over Internet Protocol ("VoIP"). VoIP is newer than TDM, and VoIP calls can be transmitted over either the public Internet or over closed networks. See Decl. of David S. Clark 10-11, attached to P1. Mot. at Ex. A. Calls initiated in one format can be converted to the other during transmission, and a call may be converted once or multiple times. See P1. Mot. at 6. There are two types of calls at issue, to which different compensation regimes may apply: (1) calls that began on CommPartners' network in VoIP before being converted by CommPartners to TDM for transfer to PAETEC (the "VoIP-originated calls"); and (2) calls that both began and were transferred in TDM (the "TDM-originated calls"). PAETEC contends that both types of calls are subject to access charges. CommPartners concedes that access charges apply to the TDM-originated calls, but argues that they do not apply to VoIP-originated calls. The access charge regime was established in the 1980s to govern compensation for long-distance telephony. See Sw. Bell Tel., L.P. v. Mo. Pub. Serv. Corn., 461 F. Supp. 2d 1055, 1074 (E.D. Mo. 2006). "Access charges historically have included - 2 -

35 Case: Document: Filed: 05/13/2010 Page: 35 Case 1 :08-cv JR Document 48 Filed /10 Page 3 of 12 significant implicit subsidies and by definition have been well above cost." Id. at 1075 (internal quotation marks omitted). VoIP-Oriqinated Calls The central dispute here concerns PAETEC's assertion that its tariffs lawfully require application of access charges to VoIP-originated calls. A. Tariff Each carrier must file with the FCC a schedule of its charges for interstate wire communication using its network. See 47 U.S.C. 203(a). This schedule is known as the carrier's tariff. Tariffs, once approved, "are the law, and not mere contracts.n Bryan v. Bellsouth Comm'ns, Inc., 377 F.3d 424, 429 (4th Cir. 2004). The applicable portion of PAETEC's federal tariff provides that access services, to which access charges.- apply, include: all services and facilities provided by [PAETEC] for the origination or termination of any interstate or foreign telecommunications using [PAETEC's] network or origination or termination of other services utilizing the same [PAETEC] network services or functionality regardless of the technology used in transmission. This includes, but is not limited to, Internet Protocol or similar services. PAETEC FCC Tariff No. 3, 1.2, attached to Def. Cross-Mot. as Ex. 6 (emphasis added).l PAETEC's intrastate tariffs contain similar language

36 I- Case: Document: Filed: 05/13/2010 Page: 36 Case 1 :08-cv JR Document 48 Filed 02/18/10 Page 4 of 12 Relying on the language of its tariff, PAETEC asserts that its termination of VoIP-originated calls is an access service. CommPartners begs to differ, arguing that the words "regardless of the technology used in transmission" refer only to the technology used by PAETEC, the terminating party. CommPartners loses this argument: the tariff contains no express "- or implied limitation on who is doing the transmitting. The terms of the tariff are unambiguous: access charges apply regardless of the technology used at any point in transmission. CommPartners' next argument is more substantial. It is - that, if PAETEC's tariff does cover VoIP-originated calls, it conflicts with general intercarrier compensation law, as established by the Communications Act and regulations promulgated thereunder. Here, PAETEC relies on the so-called "filed-rate doctrine," arguing that its tariff must prevail over any other consideration. The dispositive question, then, is whether the statutory provisions to which CommPartners avers are trumped by PAETEC's tariff. B. Communications Act ComrnPartners asserts two independent reasons why PAETEC's tariff may not be applied to VoIP-originated calls: (1) that its termination of VoIP-originated calls is an "information service" exempt from access charges; and (2) that - 4-

37 Case: Document: Filed: 05/13/2010 Page: 37 Case 1 :08-cv JR Document 48 Filed 02/18/10 Page 5 of 12 access charges cannot apply to VoIP-originated calls because "reciprocal compensation'' applies instead. 1. Information Service Exception 2 Information services are not subject to the access charge regime. See In re AT&T Access Charqe Petition, 19 F.C.C.R. 7457, , 4-7 (2004). Information services are defined as "the offering of a capability for generating, acquiring, storing, transforming, processing, retrieving, utilizing, or making available information via telecommunications." 47 U.S.C. 153 (20). They include "protocol conversion (Le., ability to communicate between networks that employ different data-transmission formats)." Nat'l Cable & Telecomms. Ass'n v. Brand X Internet Servs., 545 U.S. 967, 977 (2005) (citing Second Computer Inquiry, 77 F.C.C. 2d 384, (1980)). Information services are not telecommunications services, which merely transmit without alteration. See 47 U.S.C. 153(43), 153(46); Brand X, 545 U.S. at The two categories are mutually exclusive. See Sw. Bell, 461 F. Supp. 2d at 1078; Stevens Report, 13 F.C.C.R , Under law prior to the 1996 Telecommunications Act, this exception was called the enhanced services exception or ESP exception. See Non-Accountinq Safequards Order, 11 F.C.C.R , , (1998). The Act essentially codified the pre-existing exception. See Nat'l Cable & Telecomm'ns Ass'n v. Brand X Internet Servs., 545 U.S. 967, (2005) (noting similarity of the Act's terminology to that of pre-act FCC decisions)