At&T Corp. v. Federal Communications Commission

317 F.3d 227, 354 U.S. App. D.C. 325, 2003 U.S. App. LEXIS 1124
CourtCourt of Appeals for the D.C. Circuit
DecidedJanuary 24, 2003
Docket01-1188 and 01-1201
StatusPublished
Cited by37 cases

This text of 317 F.3d 227 (At&T Corp. v. Federal Communications Commission) is published on Counsel Stack Legal Research, covering Court of Appeals for the D.C. Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
At&T Corp. v. Federal Communications Commission, 317 F.3d 227, 354 U.S. App. D.C. 325, 2003 U.S. App. LEXIS 1124 (D.C. Cir. 2003).

Opinion

Opinion for the Court filed by Chief Judge GINSBURG.

GINSBURG, Chief Judge:

Atlas, Total, and AT&T appeal different parts of a single order of the Federal Communications Commission. The Commission held that Atlas, an incumbent local exchange carrier (ILEC), created Total, ostensibly a competitive access provider, as a sham entity solely in order to increase the rates charged to AT&T, an interexchange carrier (IXC), and thereby engaged in an unjust and unreasonable practice, in violation of § 201(b) of the Communications Act of 1934, 47 U.S.C. § 151 et seq. The Commission also held that AT&T had legitimately blocked calls to Total; Atlas must pay damages to AT&T in the amount that AT&T paid to Atlas for tandem switched transport; and AT&T is liable to Atlas for reasonable access charges. The Commission then dismissed AT&T’s counterclaim under the Telephone Disclosure and Dispute Resolution Act (TDDRA), 47 U.S.C. § 228, “as moot, without prejudice.”

We reject all Atlas’ claims and deny its petition for review. We reject the Commission’s argument that AT&T does not have standing to seek review of the Order, the preclusive effect of which could prejudice AT&T in defending against Total’s pending lawsuit to collect access charges. We grant in part AT&T’s petition for review and remand the Order to the Commission to consider AT&T’s argument that Total did not provide access service and to clarify the effect of its having dismissed AT&T’s counterclaim.

I. Background

Atlas Telephone Co., Inc. is the ILEC in Big Cabin, Oklahoma, where it serves approximately 1,500 customers. Atlas provides local exchange service to the end users and provides originating and terminating access service to IXCs. Total Telecommunications Services, Inc., formed in 1995, offers service to only one customer, Audiobridge of Oklahoma, Inc., which runs a free chat-line service allowing multiple callers to dial in and talk to one another. During the relevant time period, a long-distance call to Audiobridge placed by an AT&T customer went through that customer’s local telephone company to AT&T, which provided interexchange service by transporting the call across its network to a point of presence (POP) located near Big Cabin and served by Southwestern Bell Telephone Company. From the POP, Southwestern Bell transmitted the call through its facilities to a “meet point” with Atlas, which then carried the call through its tandem switch to Total. As the “terminating access provider,” Total completed the call to Audiobridge. (Total provided no local exchange or originating access service.)

Atlas and Total have a close relationship — to say the least. The President of Atlas is the Chairman of Total’s Board of Directors; Total received a $20,000 startup loan from the Atlas pension fund; Total’s *231 only office is in an Atlas building; and Total leased all its transmission facilities from Atlas.

As an ILEC, Atlas was subject to “dominant carrier” regulation of its rates and therefore had to get its tariffs preapproved by the Commission. To that end, Atlas elected to charge the rates in the tariff filed by the National Exchange Carriers Association (NECA), which prepares and files a joint tariff on behalf of 1100 small ILECs. NECA participants pool their revenues, and each receives an amount equal to its costs and its pro rata share of all earnings. Thus, for calls to Audiob-ridge, Atlas charged AT&T the tandem switching transport fee in the NECA tariff.

In July 1995 Total, as a non-dominant carrier, filed its own tariff, which was effective immediately, pursuant to which it charged AT&T at a rate 27 percent higher than what Atlas was charging under the NECA tariff. Total then split with Au-diobridge the revenues Total received from AT&T. This was Audiobridge’s only source of income.

Total began completing calls from AT&T customers to Audiobridge in August 1995. When AT&T received from Total unexpected bills for terminating access service — in addition to Atlas’ bills for tandem switching transport — and found out about the relationship between Total and Atlas, it first threatened to, and starting on November 22 did, block calls from its customers to Audiobridge. AT&T also refused to pay Total, which had already terminated about 10 million minutes of calls. Unbeknownst to AT&T, in July 1996 Total gave Audiobridge different numbers that AT&T did not block.

On November 24 Atlas and Total filed suit against AT&T in the United States District Court for the Northern District of Oklahoma. That court referred the case to the Commission pursuant to the doctrine of primary jurisdiction. See Total Telecommunications, Inc. v. AT&T, Civ. Action. No. 95-C-1163 (N.D. Okla.); see also Reiter v. Cooper, 507 U.S. 258, 268-69, 113 S.Ct. 1213, 1220-21, 122 L.Ed.2d 604 (1993). Atlas and Total then brought essentially the same suit in the United States District Court for the District of Columbia, with the same result. See Total Telecommunications Services, Inc. v. AT&T Co., 919 F.Supp. 472, 483-84 (D.D.C.1996), aff'd, 99 F.3d 448 (D.C.Cir.1996).

Finally Atlas and Total filed a complaint with the Commission, alleging that AT&T’s blocking calls to Audiobridge violated the Communications Act of 1934. AT&T counterclaimed, alleging that Atlas and Total had violated the Act by creating a sham entity and charging unreasonable rates.

The Commission denied Atlas’ and Total’s claims. 16 F.C.C.R. 5726, 2001 WL 830660 (2001) (Order). The Commission first concluded that “Atlas created Total as a sham entity designed to impose increased access charges on calls made to Audiobridge.” Id. at ¶ 14. Therefore, the Commission held, Atlas and Total had engaged in an unjust and unreasonable practice, in violation of 47 U.S.C. § 201(b). Order, 16 F.C.C.R. 5726 at ¶ ¶ 15-18. As a consequence, AT&T did not have an obligation under 47 U.S.C. § 201(a) to complete calls to Audiobridge through Total: “Requests by AT&T’s customers to send traffic to Audiobridge via Total do not constitute ‘reasonable requests’ for service for purposes of section 201(a), because they would require AT&T to purchase access service that we have previously determined is unreasonably priced and the product of a sham arrangement.” Id. at ¶ 21.

Atlas and Total had argued that AT&T’s blocking calls also violated the IXC’s duty *232 under 47 U.S.C. § 251

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Bluebook (online)
317 F.3d 227, 354 U.S. App. D.C. 325, 2003 U.S. App. LEXIS 1124, Counsel Stack Legal Research, https://law.counselstack.com/opinion/att-corp-v-federal-communications-commission-cadc-2003.