CGM, LLC v. BellSouth Telecommunications, Inc.

664 F.3d 46, 54 Communications Reg. (P&F) 1147, 2011 U.S. App. LEXIS 24306, 2011 WL 6091728
CourtCourt of Appeals for the Fourth Circuit
DecidedDecember 8, 2011
Docket10-1693
StatusPublished
Cited by155 cases

This text of 664 F.3d 46 (CGM, LLC v. BellSouth Telecommunications, Inc.) is published on Counsel Stack Legal Research, covering Court of Appeals for the Fourth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
CGM, LLC v. BellSouth Telecommunications, Inc., 664 F.3d 46, 54 Communications Reg. (P&F) 1147, 2011 U.S. App. LEXIS 24306, 2011 WL 6091728 (4th Cir. 2011).

Opinion

Affirmed by published opinion. Judge WYNN wrote the opinion, in which Judge SHEDD and Senior Judge KEITH concurred.

OPINION

WYNN, Circuit Judge:

“The Telecommunications Act of 1996 ... represents a comprehensive effort by Congress to bring the benefits of deregulation and competition to all aspects of the telecommunications market in the United States, including especially local markets.” Goldwasser v. Ameritech Corp., 222 F.3d 390, 391 (7th Cir.2000). The 1996 Act imposes new duties on incumbent local telecommunications carriers, which had previously enjoyed monopolies in local telecommunications markets; those duties include the duty to sell telecommunications services at wholesale rates to would-be competitors for resale to consumers.

In this ease, CGM, LLC, a billing agent for competitive local exchange carriers (“competitive LECs”), brought a declaratory judgment action against BellSouth Telecommunications, Inc., an incumbent local exchange carrier (“incumbent LEC”). CGM claimed that BellSouth offered long-term promotional discounts to its own customers but failed, in violation of the 1996 Act and rules implementing it, to pass the full value of those discounts on to CGM’s client competitive LECs, none of which is a party to this suit. Because CGM has no statutory standing under either the 1996 Act or a seemingly broadly worded but nonetheless inapplicable statute from the Federal Telecommunications Act of 1934, we affirm the district court’s dismissal of CGM’s complaint.

I.

In an effort to introduce competition into local telephone markets, Congress enacted the 1996 Act, which amended and supplemented the 1934 Act. See BellSouth Telecomms., Inc. v. Sanford, 494 F.3d 439, 441, 444 (4th Cir.2007). The 1996 Act requires, among other things, that large telephone companies with existing telecommunications infrastructure share that infrastructure with their smaller competitors. Upon request, the incumbent LECs must provide network access to their competitors, the competitive LECs. Id. at 444-45; 47 U.S.C. § 251(c)(2).

In connection with the mandate to provide competitive LECs with access, the 1996 Act also requires incumbent LECs to offer competitive LECs “resale at wholesale rates any telecommunications service that the [incumbent LEC] provides at retail to subscribers who are not telecommunications carriers.... ” Id. § 251(c)(4). Put differently, competitive LECs may purchase services from incumbent LECs at a discounted rate and then resell those services to individual customers at market rates.

To implement the provisions of the 1996 Act, the Federal Communications Commission (“FCC”) promulgated regulations. See 47 C.F.R. § 51.1. Under those regulations, the “resale duty” extends to promotional offers incumbent LECs provide to their retail customers lasting longer than ninety days. 47 C.F.R. § 51.613(a). 47 C.F.R. § 51.613(a) prevents incumbent LECs from devising retail promotional schemes enabling them to offer discounts *50 to their retail customers without extending the value of those discounts to competitive LECs.

The terms and conditions of the access arrangements between incumbent LECs and competitive LECs are developed through private contracts know as “interconnection agreements.” 47 U.S.C. § 252; Verizon Md., Inc. v. Global NAPs, Inc., 377 F.3d 355, 364 (4th Cir.2004). Interconnection agreements can be reached through voluntary negotiation or compulsory arbitration, but regardless of whether negotiated or arbitrated, all interconnection agreements must be submitted to and approved by the appropriate state utilities commissions. Id.; 47 U.S.C. § 252(e). 1

Interconnection agreements, not the general duties mentioned in Section 251(c), govern incumbent LECs’ 1996 Act resale duties. In other words, “section 251(c)’s obligations are not generally self-executing. Rather, incumbents are required to implement them through voluntary good-faith negotiations with prospective entrants....” Peter W. Huber et al., Federal Telecommunications Law § 5.6.2 (2d ed. Supp. 2011); cf. Verizon Md., 377 F.3d at 364 (“Once the [interconnection agreement] is approved, the 1996 Act requires the parties to abide by its terms. Interconnection agreements are thus the vehicles chosen by Congress to implement the duties imposed in § 251.” (internal citation omitted)).

BellSouth provides local exchange telephone service in a nine-state region in the southeastern United States. 2 In each of those states, BellSouth operates as an incumbent LEC. CGM is a billing agent for certain unidentified competitive LEC resellers of BellSouth telecommunications services in the nine-state BellSouth region. CGM itself, however, provides no telecommunications services.

CGM is neither an incumbent LEC nor a competitive LEC and does not assert that it is a party to an interconnection agreement. Nevertheless, in 2009, CGM filed a “Complaint for Expedited Declaratory Judgment” in the Western District of North Carolina. J.A. 10. CGM is the only named plaintiff, and nothing in the record indicates that CGM was authorized to bring, or was in fact bringing, its suit on behalf of anyone other than itself. CGM’s primary grievance: BellSouth is overcharging for its services to competitive LECs in violation of 47 U.S.C. § 251(c)(4) and 47 C.F.R. § 51.613(a). Specifically, CGM contends that BellSouth provided cash-back promotions to its retail customers but provided CGM’s competitive LEC clients with only around eighty percent of the value of those promotions. CGM argues that, absent a contrary determination by the applicable state utilities commission, the competitive LECs are entitled to the full value of those promotions.

Significantly, CGM does not contend that BellSouth owes it money directly. Instead, CGM maintains that BellSouth owes CGM’s competitive LEC customers over $14 million as a consequence of this over *51 charging dispute. 3 According to CGM, those competitive LECs in turn owe CGM over $360,000 in fees.

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Cite This Page — Counsel Stack

Bluebook (online)
664 F.3d 46, 54 Communications Reg. (P&F) 1147, 2011 U.S. App. LEXIS 24306, 2011 WL 6091728, Counsel Stack Legal Research, https://law.counselstack.com/opinion/cgm-llc-v-bellsouth-telecommunications-inc-ca4-2011.