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                           Before the
                Federal Communications Commission
                     Washington, D.C.  20554

In the Matter of                 )
   Complainant,                  )
                                )    File No. EB-00-MD-19
              v.                 )
VERIZON SOUTH INC.,              )
    Respondent.                          )


 Adopted: April 16, 2004              Released:  April 21, 2004

By the Commission:


     1.   In this Order, we deny the parties' joint motion to 
vacate1 the Commission's November 7, 2003 Memorandum Opinion and 
Order granting a supplemental complaint for damages filed by 
Starpower Communications, LLC (``Starpower'') against Verizon 
South Inc. (``Verizon South'').2  According to the Motion, we 
should grant the parties' request because vacatur of the Damages 
Order is an ``integral part of a global settlement of the 
parties' long running disputes'' at the Commission and in other 
fora.3  As discussed below, although we strongly support efforts 
by parties to settle disputes, we deny the Motion because the 
parties have not satisfied their heavy burden of demonstrating 
that there are special circumstances beyond the mere fact of 
settlement that warrant vacatur of the Commission's decision.


     2.   In the Damages Order, the Commission awarded damages to 
Starpower in the amount of $12,059,149 for reciprocal 
compensation that Verizon South owed for Starpower's delivery of 
traffic to Starpower's Internet Service Provider (``ISP'') 
customers, including customers served by Starpower through 
``virtual NXX'' arrangements.4  The Commission concluded that 
Starpower was entitled to damages because Verizon South had 
stipulated in the liability phase of the proceeding that it rated 
and billed the ISP-bound calls in dispute as local traffic under 
its applicable state tariff, and because the interconnection 
agreement between the parties required Verizon South to pay 
reciprocal compensation for the termination of local traffic as 
defined in that tariff.5  

     3.   On November 25, 2003, Starpower and Verizon South filed 
the Motion, which explains that the parties reached an agreement 
to settle not only the dispute associated with the Damages Order, 
but also other disputes (pending and future) between Starpower 
and various Verizon entities.6  According to the Motion, most of 
the disputes involve the parties' obligations to pay reciprocal 
compensation, including a matter before this Commission,7 a 
matter before the United States Court of Appeals for the Fourth 
Circuit,8 and a matter before the District of Columbia Public 
Service Commission,9 all of which were pending when the Motion 
was filed.10  Since the filing of the Motion, however, the 
parties have sought and obtained dismissal of these three 
proceedings.11  As part of the settlement, the parties 
purportedly have reached agreement on how compensation for ISP-
bound traffic will be addressed on a going-forward basis in their 
interconnection agreements.12


     4.   The parties argue that we should vacate the Damages 
Order because such vacatur, like the vacatur in Cavalier v. 
VEPCO,13 ``is an integral part of the parties' global settlement 
of numerous pending and future disputes in a variety of fora, 
including before the 
Commission . . . .''14  For the following reasons, we disagree.

     5.   The Commission previously has articulated the legal 
standard that it follows for granting a motion to vacate one of 
its orders.  Specifically, consistent with the Supreme Court's 
decision in U.S. Bancorp Mortgage v. Bonner Mall Partnership,15 
the Commission has concluded that it should deny requests to 
vacate unless the parties meet the significant burden of 
demonstrating ``some special circumstances beyond the mere fact 
that the case has been settled.''16  In other words, the 
Commission presumes that its orders should remain intact, and may 
hold otherwise only if the parties make an exceptional 
demonstration of good cause.  The Commission also may consider 
whether vacatur will eliminate substantial and numerous disputes 
other than the one in which the order at issue was released.17  
In making this determination, the Commission considers the public 
interest in maintaining any precedential effect of the order in 

     6.   In our view, the parties have not made a compelling 
showing of any special circumstances that warrant vacating the 
Damages Order.  First, the parties have not demonstrated that, 
but for vacatur of the Damages Order, the parties' disputes will 
continue and grow.  Indeed, the parties already have sought and 
obtained dismissal of the three proceedings mentioned in their 
Motion as a part of their global settlement of reciprocal 
compensation disputes.19  Therefore, although seeking vacatur of 
the Damages Order may have been integral to the global 
settlement, actually obtaining such vacatur was not integral.20  
Moreover, the parties have not explained how vacating the Damages 
Order will eliminate future litigation more effectively than 
their own agreement governing reciprocal compensation 
arrangements in the future.21  Accordingly, vacatur of the 
Damages Order is not necessary to eliminate other disputes 
between the parties.

     7.   Second, unlike the order vacated by Cavalier v. VEPCO, 
the Damages Order did not itself spawn any of the other disputes 
between the parties.  The parties in Cavalier v. VEPCO 
demonstrated that the relevant Order failed to clarify their 
rights and obligations and was subject to competing 
interpretations that were hindering settlement.22  Starpower and 
Verizon South have not made a similar showing here and, indeed, 
do not assert that the Damages Order is unclear in any respect.  
Rather, the parties argue that they could dispute the 
applicability of the Damages Order to their other interconnection 
agreements, thereby engendering further litigation, but then 
admit that the other agreements contain terms different from 
those construed in the Damages Order.23  We are reluctant to 
eliminate any precedential effect that the Damages Order may 
provide on the issue of reciprocal compensation when the parties 
only can state, at best, that the Damages Order potentially could 
generate unspecified litigation between the parties in the 
future.  In particular, the Damages Order is the first time that 
the Commission has adjudicated an interconnection agreement 
dispute concerning reciprocal compensation obligations associated 
with the delivery of virtual NXX traffic.  Finally, we note that 
we strongly encourage parties to settle disputes when they can.  
However, parties should endeavor to settle such disputes before 
the Commission spends time and resources to decide them, not 

     8.   In light of the above, vacatur of the Damages Order is 
not in the public interest.  Accordingly, IT IS ORDERED, pursuant 
to sections 1, 4(i), 4(j), and 252(e)(5) of the Act, 47 U.S.C.  
151, 154(i), 154(j), and 252(e)(5), that the Joint Motion for 
Vacatur filed by Starpower and Verizon South is DENIED.

                              FEDERAL COMMUNICATIONS COMMISSION

                              Marlene H. Dortch


1 Joint Motion for Vacatur, File No. EB-00-MD-19 (filed Nov. 25, 
2003) (``Motion'').
2 Starpower Communications, LLC v. Verizon South Inc., Memorandum 
Opinion and Order, 18 FCC Rcd 23625 (2003) (``Damages Order'').
3 Motion at 1-2.
4 Damages Order at  7-17, 22.  Virtual NXX arrangements refer 
to telephone traffic that is routed from Verizon South to a 
Starpower ISP customer that has a telephone number that 
corresponds to a particular Verizon South rate center, even 
though the Starpower customer is physically located in a 
different rate center.  Id. at  7-9.
5  Damages Order at  7-17.  Prior to issuing the Damages Order, 
the Commission adjudicated the liability issues in Starpower's 
initial complaint against Verizon South.  Starpower 
Communications, LLC v. Verizon South Inc., Memorandum Opinion and 
Order, 17 FCC Rcd 6873 (2002) (``Liability Order'').  Previously, 
Starpower had filed a petition with the Virginia State 
Corporation Commission (``Virginia SCC'') seeking a declaration 
requiring Verizon South to pay reciprocal compensation for 
Starpower's delivery of ISP-bound traffic under the terms of the 
parties' interconnection agreement.  The Virginia SCC declined 
jurisdiction.  Starpower then filed a petition with this 
Commission requesting that, pursuant to section 252(e)(5) of the 
Communications Act of 1934, as amended (``Act''), 47 U.S.C.  
252(e)(5), the Commission preempt the jurisdiction of the 
Virginia SCC over the reciprocal compensation dispute.  Liability 
Order, 17 FCC Rcd at 6880-81,  18-19.  The Commission granted 
the preemption petition, stating that it would resolve the 
question of whether the interconnection agreement requires 
Verizon South to pay reciprocal compensation to Starpower for the 
delivery of ISP-bound traffic.  Id. at 6880-81,  18-20 (citing 
Starpower Communications, LLC Petition for Preemption of 
Jurisdiction of the Virginia State Corporation Commission 
Pursuant to Section 252(e)(5) of the Telecommunications Act of 
1996, Memorandum Opinion and Order, 15 FCC Rcd 11277, 11281,  9 
(2000)).  Starpower and Verizon South have not sought to vacate 
the Liability Order.
6  Motion at 1-2.  
7 Starpower Communications, LLC v. Verizon Virginia Inc., File 
No. EB-00-MD-20 (FCC filed Nov. 28, 2000). 
8 Verizon Md., Inc. v. MCImetro Access Transmission Servs., LLC, 
Nos. 03-11448, 03-1449 (4th Cir.).
9 Starpower Communications, LLC v. Verizon Washington, D.C. Inc., 
TAC 16 (D.C. PSC).
10 Motion at 2.
11 Letter dated January 23, 2004, to Marlene Dortch, Secretary, 
FCC, from Aaron M. Panner, Counsel for Verizon Virginia, File No. 
EB-00-MD-19 (filed Jan. 23, 2004) at 1 (``January 23 Letter'').  
See Starpower Communications, LLC v. Verizon Virginia Inc., 
Order, DA 03-3787 (Enf. Bur. MDRD rel. Nov. 25, 2003) 
(``Starpower Dismissal Order'') (granting parties' joint motion 
to dismiss complaint with prejudice based on their settlement of 
the dispute).
12 Motion at 2.
13 Cavalier Telephone, LLC v. Virginia Electric and Power Company 
d/b/a Virginia Power, Order, 17 FCC Rcd 24414 (Enf. Bur. 2002) 
(``Cavalier v. VEPCO'') (vacating a Bureau-level Order in light 
of circumstances attendant to the parties' global settlement, 
particularly the resolution of myriad legal actions resulting 
from vacatur).
14 Motion at 3.
15 513 U.S. 18, 29 (1994) (``U.S. Bancorp Mortgage'') (requiring 
``exceptional circumstances'' to justify vacatur of a judgment 
under review due to settlement).
16 Cavalier v. VEPCO, 17 FCC Rcd at 24419-20,  16 (citing 
Applications of Crystal Communications, et al., Order, 12 FCC Rcd 
2149, 2151,  6 (1997)).
17 Cavalier v. VEPCO, 17 FCC Rcd at 24420,  17-18.
18 Cavalier v. VEPCO, 17 FCC Rcd at 24419-20,  16 (citing Aetna 
Casualty and Surety Co. v. Home Insurance Co., 882 F. Supp. 1355 
(S.D.N.Y. 1995)).
19 January 23 Letter at 1.
20 Further evidence of this fact is the parties' decision to 
allow the Damages Order to become final while the Motion was 
pending, rather than seeking reconsideration of, or appealing, 
the Damages Order.
21 Motion at 2.
22  Cavalier v. VEPCO, 17 FCC Rcd at 24419,  15; Cavalier 
Telephone, LLC v. Virginia Electric and Power Co., PA 99-005, 
Joint Motion to Vacate (filed Nov. 6, 2002) at 10-11.
23  Motion at 3.
24  See U.S. Bancorp Mortgage, 513 U.S. at 27-28 (``...while the 
availability of vacatur may facilitate settlement after the 
judgment under review has been rendered and certiorari granted 
(or appeal filed), it may deter settlement at an earlier stage.  
Some litigants, at least, may think it worthwhile to roll the 
dice rather than settle in the district court, or in the court of 
appeals, if, but only if, an unfavorable outcome can be washed 
away by a settlement-related vacatur.'') (emphasis in original).