James Valley Coop. Tel. Co. v. S.D. Network, LLC

292 F. Supp. 3d 938
CourtUnited States District Court
DecidedNovember 13, 2017
Docket1:17–CV–01022–RAL
StatusPublished
Cited by1 cases

This text of 292 F. Supp. 3d 938 (James Valley Coop. Tel. Co. v. S.D. Network, LLC) is published on Counsel Stack Legal Research, covering United States District Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
James Valley Coop. Tel. Co. v. S.D. Network, LLC, 292 F. Supp. 3d 938 (usdistct 2017).

Opinion

ROBERTO A. LANGE, UNITED STATES DISTRICT JUDGE

This case began with a state court complaint filed in Brown County, Fifth Judicial Circuit, South Dakota, back in 2015. Doc. 3-2 (Complaint dated March 25, 2015); Doc. 1 (Notice of Removal indicating service occurred on June 6, 2015). On August 30, 2017, Defendant South Dakota Network, LLC (SDN) filed a Notice of Removal in this Court, asserting federal question jurisdiction under 28 U.S.C. § 1331. Doc. 1. SDN filed with its Notice of Removal two motions: 1) a Motion to Consolidate Related Actions, Doc. 5, seeking to consolidate this case with the factually *940related case of Northern Valley Communications, LLC v. AT & T Corp., 14-CV-1018-RAL, long pending in this Court; and 2) a Motion for Modified Confidentiality Agreement and Access to Certain Filings in 14-CV-1018-RAL, Doc. 7. Plaintiffs James Valley Cooperative Telephone Company, James Valley Communications, Inc., and Northern Valley Communications, LLC (collectively "Plaintiffs") filed a Motion to Remand on September 14, 2017. Doc. 17. This Court held a motion hearing on October 25, 2017, on the pending motions. For the reasons explained below, Plaintiffs' Motion to Remand, Doc. 17, is granted; the Motion to Consolidate Related Actions, Doc. 5, is denied as moot; and the Motion to Modify Confidentiality Agreement, Doc. 7, is denied without prejudice to seeking relief otherwise.

I. Summary of Facts Relevant to Pending Motions

SDN is a South Dakota limited liability company existing under Federal Communications Commission (FCC) and State Public Utility Commission orders. SDN provides for centralized equal access (CEA) service in South Dakota using an access tandem switch in Sioux Falls. SDN is owned by a group of 17 incumbent local exchange carriers (ILECs) and provides a centralized point for the aggregation and exchange of long distance telecommunication traffic. SDN is governed by a board of managers.

Plaintiff James Valley Cooperative Telephone Company (JVT) is a member of SDN. JVT is an ILEC that provides telephone services in Brown County, South Dakota. JVT owns Plaintiff James Valley Communications, Inc., which is the sole member of Plaintiff Northern Valley Communications, LLC (NVC). NVC is a competitive local exchange carrier (CLEC) that provides telecommunications and information services in certain areas of Brown County and Spink County in northeastern South Dakota. Over 90% of NVC's telecommunications business comes from a practice known as "access stimulation," by affiliation with out-of-state entities that generate high volumes of calls, such as free conference calling services. Access stimulation is a controversial business practice that has led to litigation before the FCC and elsewhere.

NVC's access stimulation business and its dispute with AT & T over billing for those calls gave rise to both this lawsuit and the related lawsuit pending as 14-CV-1018-RAL. AT & T is an interexchange carrier (IXC), which is responsible for carrying telephone traffic between local exchange carriers (LECs) and different geographic areas, enabling long-distance phone service. As a LEC, NVC is responsible for a service known as "exchange access," which connects local customers to the IXC in order to call and receive calls from other LECs. NVC has used SDN's access tandem switch services to do so.

Because of uncertainty with the rules surrounding access stimulation and charges resulting therefrom, AT & T and NVC have had and settled disputes in the past regarding AT & T's payments to NVC. Doc. 1-1 at 42 of 86. The FCC addressed the access stimulation practice in In re Connect America Fund, A National Broadband Plan For Our Future, 26 FCC Rcd. 17663, 17874-90 (2011) [hereafter Connect Am. Fund Order ], in which the FCC sought to provide greater clarity to the access stimulation practice. Id. at 17667, 17676. After the Connect Am. Fund Order , NVC filed a new tariff with the FCC that took effect in January of 2012. AT & T paid NVC's invoices until the March 2013 invoice, after which AT & T paid NVC for its end office switching charges, but not for transport charges. Doc. 1-1 at 42 of 86. FCC decisions have provided some guidance on how CLECs *941like NVC can collect from an IXC like AT & T when the CLEC is engaged in access stimulation. In short, NVC may collect from AT & T based on either a negotiated rate with AT & T or a properly "benchmarked" rate. See Quest Commc'ns Co., LLC v. N. Valley Commc'ns, LLC, 26 FCC Rcd. 8332, 8334-35 (2011) ; Connect Am. Fund Order, 26 FCC Rcd. at 17886 ; see also N. Valley Commc'ns v. AT & T Corp., 245 F.Supp.3d 1120, 1130 (D.S.D. 2017). However, an IXC like AT & T may be able to install a direct trunk from the IXC's point of presence to the end office of the CLEC, thereby avoiding tandem switching functions and the transport charges that make access stimulation potentially so profitable to an entity like NVC. In re Access Charge Reform, 23 FCC Rcd. 2556, 2565 (2008) (decision known as " PrairieWave"); N. Valley Commc'ns, 245 F.Supp.3d at 1131.

As part of its CEA services, SDN provides tandem switch services for the exchange of telecommunications traffic between LECs like JVT and NVC with IXCs like AT & T. Doc. 3-531 at 3. NVC has utilized the CEA services of SDN since 1999 pursuant to lease agreements and other contracts. Doc. 3-53 at 3. SDN bills AT & T separately for its services related to the CLEC NVC's calls connected to the IXC AT & T. A month after AT & T began withholding payment from NVC, AT & T in April of 2013 began withholding payment from SDN as well. Doc. 3-53 at 4.

Some communications had occurred between NVC and AT & T for some alternative arrangement for handling the access stimulation generated volume of calls, but no agreement resulted. Doc. 3-53 at 4. SDN's board of managers met in November of 2013 without the Plaintiffs' participation to address the billing dispute with AT & T. Doc. 3-53 at 4. After that meeting, SDN notified NVC that it intended to negotiate separately with AT & T, NVC objected and sent a cease and desist letter to SDN, and SDN then attempted to work with NVC to resolve the dispute with AT & T. Doc. 3-53 at 4.

Free access — add to your briefcase to read the full text and ask questions with AI

Related

Cite This Page — Counsel Stack

Bluebook (online)
292 F. Supp. 3d 938, Counsel Stack Legal Research, https://law.counselstack.com/opinion/james-valley-coop-tel-co-v-sd-network-llc-usdistct-2017.