Qwest Corp. v. Utah Telecommunication Open Infrastructure Agency

241 F.R.D. 515, 2007 U.S. Dist. LEXIS 43469, 2007 WL 926971
CourtDistrict Court, D. Utah
DecidedMarch 7, 2007
DocketNo. 2:05 CV 00471 PGC
StatusPublished

This text of 241 F.R.D. 515 (Qwest Corp. v. Utah Telecommunication Open Infrastructure Agency) is published on Counsel Stack Legal Research, covering District Court, D. Utah primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Qwest Corp. v. Utah Telecommunication Open Infrastructure Agency, 241 F.R.D. 515, 2007 U.S. Dist. LEXIS 43469, 2007 WL 926971 (D. Utah 2007).

Opinion

STIPULATED JUDGMENT AND AGREED JUDGMENT OF DISMISSAL

CASSELL, District Judge.

1. Parties.

a. Plaintiff Qwest Corporation (“Qwest”) is a Colorado corporation providing wholesale and retail telecommunications services in fourteen states. It filed this action on June 1, [516]*5162005, and appeared through its attorneys, Stoel Rives LLP.
b. Defendant the Utah Telecommunication Open Infrastructure Agency (“UTOPIA”) is an interlocal governmental entity created by fourteen Utah municipalities under the Utah Interlocal Cooperation Act to construct and operate a wholesale telecommunications network. Defendant appeared through its attorney Steven W. Allred and David J. Shaw.

2. Claims. Although Qwest and UTOPIA at various times had multiple claims and counterclaims against each other, the only claims remaining in the action relate to allegations by Qwest that UTOPIA enjoys various advantages and preferences as a result of its relationship with its member cities and its status as an interlocal entity which Qwest claims (a) violate 47 U.S.C. § 253 of the Telecommunications Act of 1996 (“Section 253”) and (b) violate the Municipal Cable Television and Public Telecommunications Services Act (the “Utah Municipal Telecom Act”), including U.C.A. § 10-18-303.

3. Qwest’s Allegations. The various advantages and preferences alleged by Qwest include the following:

• Qwest claims that between 2002 and early 2004, UTOPIA’S Member Cities loaned UTOPIA more than $1,000,000. Approximately $686,351 of that was repaid in late 2004 without any interest. The remainder has not been repaid.
• From November 2002 through June 2003, a Member City made a loan to UTOPIA, wherein the city paid the salary of an executive administrative assistant working for UTOPIA and paid an additional amount for equipment. In approximately June 2004, UTOPIA reimbursed the city for these expenses, but without paying any amount for interest.
• From 2002 through 2004, a Member City employed and paid the salary and benefits of Paul Morris who was its city attorney. However, during that period, he was also working for UTOPIA. In approximately August 2004. UTOPIA reimbursed the Member City $120,000 for these services. The amount paid was not based on any records supporting the time spent or services performed by Mr. Morris for UTOPIA and included no amount for interest.
• Numerous Member Cities have loaned personnel to UTOPIA to work for UTOPIA while they were employed and paid by the Member Cities. UTOPIA has not repaid these Member Cities any amount whatsoever for the use of these personnel. These personnel include, but are not limited to:
• A Member City’s city attorney served as UTOPIA general counsel from May 2002 through August 2004;
• A Member City’s treasurer served as UTOPIA’S treasurer in 2002;
• Another Member City’s treasurer provided accounting services to UTOPIA from 2002 through 2003; and
• Numerous employees of various cities have provided advisory services to UTOPIA on numerous occasions.
• Even though UTOPIA estimated its accounting services would cost approximately $70,000 in FYE 2005, a Member City agreed to provide an extensive list of services, and to maintain staff that are capable of providing these services whether or not the city inquired such individuals for its own needs, for a monthly payment of $2,000 from UTOPIA.
• Although many of UTOPIA’S Member Cities have ordinances requiring all telecommunications service providers to (a) apply for a franchise, (b) pay an application fee, and (c) post an irrevocable letter of credit or a bond prior to such an application, these Member Cities have not applied this requirement to UTOPIA and UTOPIA’S retail service providers, because of a requirement UTOPIA’S Member Cities agreed to in the First Amended and Restated Interlocal Cooperative Agreement of UTOPIA.
• Qwest claims that several of UTOPIA’S Member Cities have entered into preferential lease purchase agreements with [517]*517UTOPIA for the Member City’s existing telecommunications facilities. Qwest claims that these agreements provide UTOPIA (a) exclusive use of the facilities; (b) long-term financing that does not include any interest; (c) a purchase price that may not reflect the actual fair-market value of the system; and (d) several years of free, exclusive access to existing facilities.
• At least one UTOPIA Member City has paid a private developer to install facilities in new subdivisions, and then sold those facilities to UTOPIA at the City’s cost, without any interest, and on terms that allow UTOPIA to exercise its purchase at any time within the next five years. Qwest contends that for other service providers to provide similar services, they must install the facilities as part of an “overbuild” which Qwest claims is much more expensive.
• Other UTOPIA Member Cities have an ordinance requiring developers to install conduit in new developments at the developer’s cost and to dedicate such facilities to the city for its exclusive use. Qwest claims that UTOPIA’S Member Cities are also contractually obligated to then dedicate such facilities to UTOPIA for its exclusive use. Qwest contends for other service providers to provide similar services, they must install the facilities as part of an “overbuild,” which Qwest claims is much more expensive.
• UTOPIA’S Member Cities have a contractual obligation to approve UTOPIA’S construction permits.
• Qwest claims that UTOPIA’S Member Cities have at various times promoted, advertised and lobbied for or on behalf of UTOPIA.

4. UTOPIA’S Responses to Qwest’s Allegations. UTOPIA denies the advantages and preferences alleged by Qwest under paragraph 3 and has defended as follows:

• UTOPIA has received no monetary loans from any Member Cities. Rather, all monies received by UTOPIA from member Cities were paid in exchange for services rendered and in accord with the Utah Interlocal Cooperation Act. UTOPIA claims that the Act specifically permits the shared use of personnel about which Qwest complains. In any event, UTOPIA claims such transactions took place prior to the passage of S.B. 66 and the limitations contained therein which Qwest alleges prohibit such transaction.
• UTOPIA contends that it owed no interest on the various transactions set forth in paragraph 3, above.
• Qwest testified that it had no methodology that would allow it to acquire data, analyze data, and make an evaluation as to the extent that UTOPIA’S entry into the marketplace has affected Qwest’s service
• Qwest stated that it has not conducted, and does not intend to conduct, any report analysis or other review regarding the effect of UTOPIA’S entry into the marketplace.

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Bluebook (online)
241 F.R.D. 515, 2007 U.S. Dist. LEXIS 43469, 2007 WL 926971, Counsel Stack Legal Research, https://law.counselstack.com/opinion/qwest-corp-v-utah-telecommunication-open-infrastructure-agency-utd-2007.