CENTURYTEL OF CHATHAM, LLC, ET AL. Plaintiffs - Appellees
SPRINT COMMUNICATIONS COMPANY, L.P. Defendant-Appellant
from the United States District Court for the Western
District of Louisiana
BARKSDALE, GRAVES, and HIGGINSON, Circuit Judges.
HAWKINS BARKSDALE, Circuit Judge.
the amount Sprint Communications Company, L.P., was required
to pay for the right to access the telephone-service
subscribers of various local administrators (collectively,
CenturyLink), primarily at issue is the proper application of
the 1996 Telecommunications Act as applied by the Federal
Communications Commission (FCC). Sprint partnered with cable
companies to, inter alia, convert calls from
Internet-based calling technology for delivery to CenturyLink
customers with otherwise-incompatible traditional-format
telephone services. Pursuant to federal and state regulatory
regimes, CenturyLink billed Sprint at CenturyLink's
exchange- access tariff rates for Sprint's being able to
connect to CenturyLink's subscribers; and Sprint paid
these rates without dispute until 2009, when it began
claiming its transfer service was exempt from the tariff
a bench trial, the district court concluded, inter
alia, that Sprint's transfer service was subject to
the tariff rates. CenturyTel of Chatham, LLC, et al. v.
Sprint Commc'ns Co., L.P., 185 F.Supp.3d 932, 946
(W.D. La. 2016). Also at issue is the court's imposing,
inter alia, attorney's fees against Sprint for
violating the 1996 Act by using "unjust and
unreasonable" practices. Id. AFFIRMED.
without saying that, for a bench trial, "findings of
fact are reviewed for clear error". In re Mid-South
Towing Co., 418 F.3d 526, 531 (5th Cir. 2005). In any
event, neither party challenges the court's factual
findings. Accordingly, they are relied upon and cited.
(again, CenturyLink) are various entities operating in
numerous States as "local exchange carriers" (local
administrators). CenturyTel, 185 F.Supp.3d at
933-34. This action against Sprint claimed damages resulting
from, inter alia, Sprint's refusal to pay over
$8.7 million in "access charges". Id. at
934. Sprint counterclaimed, seeking a declaration it was not
required to pay CenturyLink the higher statutory
"tariff" rates under federal and state laws.
in 2004, Sprint partnered with cable companies offering
"voice-over-internet-protocol services" (VoIP) to
provide, inter alia, the conversion of VoIP
telephone calls to a "time division multiplexing"
protocol (traditional format) to facilitate calls between the
two types of networks. Id. at 935-36. Conversion for
these two types of calling is necessary because they are
otherwise incompatible; VoIP is a newer technology that
delivers telephone calls by splitting data into tiny packets
traveling the most efficient pathways available, rather than
the traditional format, which transmits data over a single
pathway. Id. at 935 n.4.
for a VoIP subscriber to call someone still using
traditional-format technology, a conversion is required.
Id. at 935. Once converted, Sprint transmitted the
calls to, inter alia, local administrators, like
CenturyLink, which administer the distribution of telephone
calls for termination to their subscribers. Id. at
Sprint also transferred calls originating in traditional
format to CenturyLink's traditional-format customers.
Id. During the period relevant to this dispute,
CenturyLink did not distinguish between the originating
format of calls it received from Sprint, and, concomitantly,
charged Sprint the same rates for calls from both VoIP
callers and traditional-format callers; by the time
CenturyLink received the calls from Sprint, they had already
been converted. Id. "The VoIP-originated calls
were thus in the same format as and intermingled with
[traditional-format-originated] calls." Id.
for a company like Sprint to connect long-distance
telephone-service subscribers to local administrators'
customers, like CenturyLink's, it must pay an
exchange-access tariff, as approved either by the FCC for
interstate calls, or by state regulators for intrastate
calls. Id. CenturyLink "properly filed with
[the FCC] one or more tariffs for the provision of interstate
switched access service", and accordingly, "its
federal tariffs were legally binding". Id. The
same was true for its state tariffs, relevant to the
intrastate calls. Id. As discussed infra,
the rates varied, based on the type of service being
to July 2009, Sprint paid, without dispute, the tariffs
billed by CenturyLink, which, as discussed, included
traditional-format and VoIP- originated calls. Id.
Beginning in July 2009, however, Sprint began disputing the
tariff-rate access charges assessed in invoices from
CenturyLink, specifically the rates applied to
VoIP-originated calls. Id. For those invoices,
instead of paying the billed tariff rates, Sprint instead
paid $0.0007 per minute-the rate the FCC applied to local
Internet-service-provider-bound traffic-for its
VoIP-originated calls converted for transfer to
CenturyLink's traditional-format customers; but,
CenturyLink "did not agree or acquiesce".
Id. at 937 & n.7. On the other hand, Sprint
continued to pay the undisputed amount billed for its calls
originating in traditional format. Id. With its
resulting partial payments, it submitted an explanation:
"To date, although the FCC has asserted jurisdiction
over VoIP services and has determined that information
services [as discussed infra] are not subject to
access [tariffs], the FCC has not yet rendered a
determination as to the applicable inter-carrier compensation
for VoIP traffic". Id. at 937. Sprint stated it
would continue this partial-payment practice until guidance
was offered by the FCC. Id.
addition to withholding the amount it deemed unjustified for
ongoing VoIP-originated calls transferred to CenturyLink,
Sprint retroactively estimated a percentage of
VoIP-originated calls transferred to CenturyLink for the
period August 2007 to July 2009, and calculated an amount of
"overpayment" for that period. Id. Sprint
deducted this "overpayment" from its July 2009
approved payments going forward. Id.
disputed period ended October 2011, when the FCC's
Comprehensive Reform Order was issued. Id. at 935,
938 (citing In the Matter of Connect Am. Fund,
Report and Order and Further Notice of Proposed Rulemaking,
26 FCC Rcd. 17663 (2011) (Comp. Reform Order)). That order,
inter alia, expressly clarified that, going forward,
VoIP-originated calls would be subject to the interstate
exchange-access tariff rates, Comp. Reform Order, 26 FCC Rcd.
at 18002, ¶ 933; but, the tariff regime would be phased
out completely by 2020. Id. at 17934, ¶ 801.
action originated in 2009, before being transferred to
multidistrict litigation in the northern district of Texas,
with the claims at issue here being severed and remanded to
the western district of Louisiana. See In re IntraMTA
Switched Access Charges Litig., No. 3:14-MD-2587, 2015
WL 7252948 (N.D. Tex. 17 Nov. 2015). After a two-day bench
trial, followed by post-trial briefing, the court ruled in
favor of CenturyLink. CenturyTel, 185 F.Supp.3d at
the federal tariffs, at issue was the proper application of
§ 251(g) of the 1996 Telecommunications Act, 47 U.S.C.
§ 251(g). CenturyTel, 185 F.Supp.3d at 940-41.
That provision is a grandfather clause, preserving the
pre-Act "restrictions and obligations (including receipt
of compensation) that apply . . . under any court order,
consent decree, or regulation, order or policy of the [FCC],
until such restrictions and obligations are explicitly
superseded by regulations prescribed by the [FCC]". 47
U.S.C. § 251(g).
to the passage of the 1996 Act, local administrators, like
CenturyLink, were allowed monopolies over local services.
See AT&T Corp. v. Iowa Utils. Bd., 525 U.S. 366,
371 (1999). An "interexchange carrier" (IXC), like
Sprint, provided the long-distance service, connecting
callers in one locality to those in others.
CenturyTel, 185 F.Supp.3d at 940. (As discussed
infra, Sprint's being an "IXC" is
critical to resolving this appeal.) Under the pre-Act
framework, the local monopolies could impose an
exchange-access tariff on the long-distance provider in
exchange for access to that local network. Id.
(citing In re IntraMTA, 2015 WL 7252948, at *2,
these local monopolies were abolished under the 1996 Act, the
already-established local administrators continued to be
permitted to charge tariffs to telecommunications carriers
for access unless and until the FCC explicitly superseded
that system. Id. at 940-41. In that regard, however,
the FCC in 1980 had recognized an exemption from the
higher-tariff rates for "enhanced service"
providers. See Nat'l Cable & Telecomm. Ass'n
v. Brand X Internet Svcs., 545 U.S. 967, 976-77 (2005)
(citing In re Amendment of Section 64.702 of the
Comm'n's Rules and Regulations (Second Computer
Inquiry), 77 FCC 2d 384, 420-22 (1980)). Enhanced
services were distinct from "basic services".
services "meant a communications path that enabled the
consumer to transmit an ordinary-language message to another
point, with no computer processing or storage of the
information, other than the processing or storage needed to
convert the message into electronic form and then back into
ordinary language for purposes of transmitting it over the
network-such as via a telephone or facsimile".
Id. at 976. Enhanced services, on the other hand,
were services "in which 'computer processing
applications [were] used to act on the content, code,
protocol, and other aspects of the subscriber's
information, ' such as voice and data storage services,
as well as 'protocol conversion' (i.e.,
ability to communicate between networks that employ different
data-transmission formats)". Id. at 976-77
(quoting Second Computer Inquiry, 77 FCC 2d at 420-
22, ¶¶ 97, 99) (internal citations omitted). Basic
services were subject to common-carrier regulation; but,
enhanced services were exempt, in order to avoid negatively
restraining "the fast-moving, competitive market".
Id. at 977 (quoting Second Computer
Inquiry, 77 FCC 2d at 434, ¶ 129).
Brand X, the Supreme Court determined these terms
were carried over, under new nomenclature, by the 1996
Telecommunications Act, with basic services restyled as
"telecommunications services", and enhanced
services as "information services", as referenced
supra, in the explanation Sprint provided
CenturyLink for why Sprint was paying less than it was
billed. Id. at 977. Both services are
"telecommunications", which is "the
transmission, between or among points specified by the user,
of information of the user's choosing, without change in
the form or content of the information as sent and
received". 47 U.S.C. § 153(50).
service is "the offering of telecommunications for a fee
directly to the public . . . regardless of the facilities
used", id. § 153(53), while information
service is "the offering of a capability for generating,
acquiring, storing, transforming, processing, retrieving,
utilizing, or making available information via
telecommunications", id. § 153(24). Of
these two services, only telecommunications services are
subject to common-carrier regulation and the exchange-access
tariffs, while information services enjoy the
enhanced-services exemption. Brand X, 545 U.S. at
Sprint's emphasis on these differences, the district
court concluded it need not determine whether Sprint's
VoIP-to-traditional-format transfer services qualified as
information services or telecommunications services.
CenturyTel, 185 F.Supp.3d at 941. Instead, citing
the FCC's 2011 Comprehensive Reform Order, the court
stated that the FCC "reject[ed] the claim that
intercarrier compensation for VoIP[-to-traditional-format]
traffic is categorically excluded from" the Act's
grandfather clause, 47 U.S.C. § 251(g), which maintained
aspects of the exchange-access tariff regime.
CenturyTel, 185 F.Supp.3d at 942 (quoting Comp.
Reform Order, 26 FCC Rcd. at 18016- 17, ¶ 957).
Accordingly, such calls were still subject to pre-1996
exchange-access charges, even if classified as
"information services". Id.
district court also found persuasive that "the FCC was
'mindful of the need for a measured transition for
carriers that receive substantial revenues from intercarrier
compensation'". Id. at 942 (quoting Comp.
Reform Order, 26 FCC Rcd. at 18003, ¶ 935). The court
noted the FCC did not expressly state the tariff regime was
superseded, but instead was being phased out to ultimately be
completely replaced by 2020. Id. (quoting Comp.
Reform Order, 26 FCC Rcd. at 17934, ¶ 801).
the court upheld the imposition of the federal tariff rates
against Sprint. Id. The court also ruled in favor of
CenturyLink with regard to state tariffs, holding, inter
alia, they were not preempted. Id. at 945.
the court awarded damages against Sprint for the total access
charges and applicable late-payment fees. Id. at
946. At issue were $1.1 million in interstate tariff charges,
and $7.6 million for intrastate. CenturyLink claimed an
additional approximate $3.2 million in late fees accrued
through February 2016, with approximately $650, 000 for
interstate, and $2.5 million for intrastate.
the court ruled in favor of CenturyLink on its claim that
Sprint violated the 1996 Act's bar against "unjust
and unreasonable" practices. Id. Under 47
U.S.C. § 201(b), a private right of action exists for
damages for "any 'practice' in connection with
providing communications services 'that is unjust or
unreasonable'". CenturyTel, 185 F.Supp.3d
at 945 (quoting § 201(b)); see also Global Crossing
Telecomms., Inc. v. Metrophones Telecomms., Inc., 550
U.S. 45, 53 (2007).
207 provides that "[a]ny person claiming to be damaged
by any common carrier . . . may bring suit for the recovery
of damages for which such common carrier may be liable under
the provisions of this chapter". 47 U.S.C. § 207. A
carrier is liable for "damages sustained in consequence
of" the carrier's doing "any act, matter, or
thing in this chapter prohibited or declared to be