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Before the
Federal Communications Commission
Washington, D.C. 20554
Broadview Networks, Inc., )
)
Co- )
mplainant, )
) File No. EB-03-MD-021
)
v. )
)
Verizon Telephone Companies and )
Verizon New York, Inc., )
De-
fendants.
MEMORANDUM OPINION AND ORDER
Adopted: November 9, 2004 Released: November 10,
2004
By the Chief, Enforcement Bureau:
I. INTRODUCTION
1. In this Memorandum Opinion and Order, we grant a Motion
to Dismiss or, in the Alternative, Defer filed by Verizon New
York Inc. (``Verizon'').1 The Motion requests that the
Commission either dismiss the formal complaint filed by Broadview
Networks, Inc. (``Broadview'') against Verizon,2 or defer further
proceedings in connection with the Complaint, in light of a
recent order issued by the Supreme Court of the State of New York
directing the parties to proceed to commercial arbitration.3 As
discussed below, we grant the Motion to the extent that we defer
proceedings relating to the Complaint, pending the outcome of the
court-ordered arbitration. Additionally, for internal
administrative purposes only, we convert the Complaint into an
informal complaint.
II. BACKGROUND
A.The Parties and Their Dispute
2. Broadview is a competitive provider of local exchange,
exchange access, interexchange, and information services in New
York and other states.4 Verizon is an incumbent local exchange
carrier (``incumbent LEC''), as defined by section 251(h) of the
Communications Act of 1934, as amended (``Act''), 47 U.S.C. §
251(h).5
3. On December 18, 1998, Broadview and Verizon entered
into their first interconnection agreement pursuant to sections
251 and 252 of the Act, 47 U.S.C. §§ 251-252.6 They subsequently
entered into three other interconnection agreements, the last of
which became effective on July 20, 2003, and remains in force
today.7
4. The Interconnection Agreement provides that the dispute
resolution procedures set forth in the Agreement are the
``exclusive remedy for all disputes between Verizon and
[Broadview] arising out of th[e] Agreement or its breach.''8
Those procedures require that, if certain informal mechanisms
fail to resolve a dispute, ``the Parties shall initiate an
arbitration in accordance with the AAA rules for commercial
disputes.''9 The New York Public Service Commission required
inclusion of the mandatory arbitration provisions in the
Interconnection Agreement.10
5. Pursuant to section 251(c)(6) of the Act,11 the
Interconnection Agreement addresses Verizon's provision of
``Collocation'' to Broadview.12 Specifically, the
Interconnection Agreement states that ``Collocation shall be
provided pursuant to Verizon's applicable federal and state
Tariffs as amended from time to time.''13 The Interconnection
Agreement further states that Broadview ``shall purchase Cross
Connection to Verizon services or facilities as described in
Verizon's applicable Tariffs.''14 The Interconnection Agreement
also states that ``[e]ach Party hereby incorporates by reference
those provisions of its Tariffs that govern the provision of any
of the services or facilities provided hereunder.''15 Between
May 27, 1999 and February 24, 2000, Broadview submitted
approximately 112 applications to Verizon ordering collocation
pursuant to the Interconnection Agreement and Verizon's
tariffs.16
6. In 2001, Broadview and Verizon became embroiled in a
dispute concerning charges that Verizon levied for cable
terminations and associated equipment - known as ``terminations''
or ``cross-connects'' - used to physically connect Broadview's
collocated equipment with Verizon's equipment.17 In short,
Verizon asserted that (i) Broadview failed to pay Verizon for
voice-grade terminations that Broadview ordered pursuant to the
Interconnection Agreement and Verizon's New York state tariff;18
and (ii) as result of certain November 13, 2000 amendments to
Verizon's FCC Tariff No. 11, Broadview owes Verizon additional
amounts for DS1 and DS3 terminations that Broadview ordered in
1999 and 2000.19
B. Verizon's Arbitration Demands
7. Following a series of unsuccessful settlement
discussions between the parties in 2002 and 2003,20 on October 9,
2003, pursuant to Part 28.11 of the parties' Interconnection
Agreement, Verizon sent Broadview a Demand for Arbitration
regarding Broadview's voice-grade terminations in New York, and
filed documents with the American Arbitration Association
(``AAA'').21 After the AAA inquired of Verizon whether both
parties consented to AAA administration of the arbitration,
Verizon sent a letter to the AAA requesting that the AAA return
the paperwork and filing fee submitted with the Demand for
Arbitration.22 On October 21, 2003, Broadview transmitted a
letter to Verizon pursuant to section 1.721 of the Commission's
rules (47 C.F.R. § 1.721(a)(8)), indicating, inter alia, that if
the parties were unable to resolve their dispute, Broadview would
file a formal complaint with the Commission.23 On November 3,
2003, Verizon sent Broadview a second Demand for Arbitration and
filed the demand with the AAA.24 The next day, Broadview sent a
letter to the AAA opposing the second Demand for Arbitration.25
The AAA subsequently advised the parties that it will accept an
arbitration demand only if both parties submit to AAA
administration of the arbitration.26 On November 17, 2003,
Broadview sent a letter to the AAA reiterating its view that the
AAA is not the proper forum for resolution of the dispute.27
C. This Complaint Proceeding
8. Broadview filed its Complaint with the Commission on
December 30, 2003. In the Complaint, Broadview asserts that
Verizon accepted Broadview's collocation applications,
provisioned the collocation arrangements and terminations, and
submitted bills ``for all associated charges,'' which Broadview
paid on a timely basis.28 Broadview maintains that Verizon
subsequently sent further bills for those terminations more than
two years after it provisioned the terminations.29 The
Complaint alleges that Verizon violated the Act by (i) improperly
``backbilling'' for the additional collocation charges; (ii)
imposing charges that are not listed in Verizon's federal tariff
(FCC Tariff No. 11); and (iii) imposing charges from a state
tariff for services ordered under a federal tariff.30 Verizon
filed an answer to the Complaint,31 asserting, inter alia, that
the Interconnection Agreement's mandatory arbitration provision
bars the Complaint.32 Thereafter, Broadview filed a reply.33
D. The New York Order
9. After Broadview filed the Complaint, Verizon filed a
Petition to Compel Arbitration with the Supreme Court of the
State of New York.34 In the Petition to Compel Arbitration,
Verizon argued that the dispute between the parties arises under
and is governed by the parties' Interconnection Agreement, which
requires arbitration of all disputes arising from the
Interconnection Agreement or its breach.35 Broadview opposed the
Petition to Compel Arbitration, arguing that the services at
issue in the Complaint were not provided under the
Interconnection Agreement, but rather were ordered under
Verizon's federal or state tariff, and, accordingly, that the
Commission should resolve the matter. 36 Broadview maintained
that, because the tariffs ``conclusively and exclusively
enumerate the rights and liabilities of the contracting
parties,''37 the terms of the Interconnection Agreement cannot
apply as a matter of law, and the arbitration provision is
inapposite.38
10. The Supreme Court of the State of New York granted
Verizon's Petition to Compel Arbitration on July 28, 2004, and
directed the parties to proceed to arbitration within 20 days
after service of the order.39 The New York Order found, inter
alia, that there is a valid written agreement between the parties
to arbitrate disputes,40 and that the instant dispute ``clearly
falls within the broad scope of the arbitration agreement,''
because it is a dispute ``arising out of the [Interconnection]
Agreement or its breach.''41 The Court described Broadview's
assertion that the dispute arises out of Verizon's tariffs, not
the Interconnection Agreement, as being ``without merit,''
explaining that the ``terms of the tariff(s) are part of the
Interconnection Agreement.''42 Moreover, the Court rejected
Broadview's contention that enforcement of the arbitration
provision would violate the filed tariff doctrine.43 Finally,
the Court dismissed Broadview's argument that the claim Verizon
seeks to arbitrate is an ``inarbitrable statutory claim,''44 and
noted that the Interconnection Agreement provides a mechanism for
dealing with any inconsistent rulings that may result from a
Commission decision to exercise jurisdiction over Broadview's
Complaint.45
11. Verizon thereafter filed the Motion with the
Commission, which Broadview opposes.46 In a conference call on
September 7, 2004, Commission staff informally granted the Motion
and indicated that a formal order would follow. This Memorandum
Opinion and Order formally grants the Motion and provides the
reasons for our ruling.
III. DISCUSSION
A.The New York Order Is Reasonable and Warrants Deference.
12. We first examine whether the mandatory arbitration
provision of the parties' Interconnection Agreement applies to
this dispute. That question has two subparts: (i) whether the
Interconnection Agreement, rather than Verizon's tariffs standing
alone, governs the collocation orders at issue, and if so, (ii)
whether the language of the Interconnection Agreement's mandatory
arbitration provision encompasses this dispute. The New York
Order answered both of those questions in the affirmative.47 For
the following reasons, we reject Broadview's contention that we
should ignore the determinations of the Supreme Court of New
York.48
13. First, the New York Order's conclusion that the
Interconnection Agreement (including its mandatory arbitration
provision), rather than Verizon's tariffs standing alone, governs
this dispute is reasonable, given that (i) the Interconnection
Agreement clearly incorporates the tariffs with respect to the
collocation orders at issue here,49 and (ii) at least one federal
court of appeals has held that, when an interconnection agreement
incorporates a tariff, the parties thereafter act through the
agreement, not the tariff.50 Moreover, the New York Order's
conclusion that the Interconnection Agreement's mandatory
arbitration provision encompasses this dispute is reasonable, in
light of (i) the breadth of the provision's language,51 and (ii)
the federal policies favoring arbitration and resolving any doubt
in favor of arbitrability.52
14. Second, we do not believe that deferring to the
conclusions of the New York Supreme Court results in any
unfairness to Broadview, because it appears that Broadview had an
ample opportunity to make its arguments before the New York
court. Based on our review of the record, which includes
pleadings filed by the parties in the New York court proceeding,
we conclude that Broadview extensively litigated in the New York
court proceeding the questions of whether the parties'
Interconnection Agreement applies and whether the Agreement
requires arbitration of this dispute. Indeed, the New York Order
thoroughly examines not only the arguments that Broadview made in
its court papers, but also arguments that Broadview made only in
its papers here.53 Thus, the Supreme Court of New York was
clearly informed by Broadview's arguments when it issued the New
York Order, and we see no reason to ignore that Court's
conclusions.
15. Finally, the questions whether the parties'
Interconnection Agreement applies and requires arbitration of
this dispute do not involve such preeminent federal concerns that
we should disregard the New York Order's holdings.54 Instead,
those questions raise garden variety matters of contract
interpretation that state tribunals have ample ability and
authority to resolve. Indeed, the Act expressly contemplates
that state tribunals will play a central role in arbitrating,
approving, and interpreting interconnection agreements.55
Moreover, the Commission has emphasized the importance of abiding
by the terms of interconnection agreements, including valid
forum-selection clauses.56
16. In sum, we defer to the New York Order's determination
that the Interconnection Agreement's mandatory arbitration
provision applies and requires arbitration of the parties'
dispute. As explained below,57 the arbitration should resolve
approximately 90 percent of the parties' disputes. To the extent
disputes remain unresolved, the Commission can address them after
arbitration.
B. We Reject Broadview's Argument That, Even if the
Mandatory Arbitration Provision Applies, We
Should Not Honor It.
17. According to Broadview, even assuming, arguendo, that
the Interconnection Agreement's mandatory arbitration provision
applies to this dispute, the Commission should decline to enforce
the provision and, instead, proceed to ruling on the merits of
Broadview's claims here.58 We disagree, for the following
reasons.
18. Broadview and Verizon agree, correctly, that three
appellate cases - Duke Power,59 Ivarans I,60 and Ivarans II61 -
establish principles that should guide the Commission in
determining the enforceability of an arbitration clause contained
in an interconnection agreement. Distilled to their essence,
these cases stand for the following propositions: The parties'
agreement to arbitrate disputes cannot divest a federal agency of
jurisdiction to decide a case.62 Nonetheless, a federal agency
should honor agreements to arbitrate absent a compelling reason
not to do so.63 Such compelling circumstances may exist when (1)
the complaint concerns a dispute that lies at the core of an
agency's enforcement mission;64 (2) the dispute ``inevitably
touches commercial relationships'' among many participants in the
relevant industry;65 (3) the dispute involves interpretation of
facially clear contract language (as opposed to the
interpretation of ambiguous contract language or the application
of contract language to particular facts);66 or (4) arbitration
would be a waste of time.67 Moreover, where, as here, the
arbitration provision was included in the interconnection
agreement at the specific direction of a state commission, acting
pursuant to its authority under sections 251 and 252 of the Act,
68 we must honor the arbitration provision under all but the most
compelling circumstances; otherwise, we would do violence to the
statutory scheme, which provides specific mechanisms for the
creation, approval, and judicial review of the provisions of
interconnection agreements.
19. None of those factors warrants departure here from the
general rule favoring enforcement of mandatory arbitration
clauses. First, the gravamen of the Complaint is that Verizon
improperly backbilled Broadview for termination charges.69
Although the Commission may possess jurisdiction to resolve this
backbilling claim,70 such a claim does not lie at the ``core'' of
the Commission's enforcement mission, but instead more closely
resembles a ``routine contract dispute.''71 Further, as noted
above, the Commission has expressed a strong interest in
encouraging compliance with interconnection agreements, including
deference to valid forum-selection provisions contained in
interconnection agreements.72 This broader interest clearly
outweighs any interest in adjudicating the merits of this
particular dispute.
20. Moreover, resolving a backbilling claim such as
Broadview's does not require the Commission's expertise.
Assessing whether the timing of a carrier's bills is unlawful
generally involves standards of commercial reasonableness and a
``totality-of-the-circumstances'' test.73 Experienced commercial
arbitrators selected by the parties pursuant to the arbitration
procedures set forth in their Interconnection Agreement will be
well-equipped to handle that task.
21. With respect to the second factor, because this dispute
concerns an agreement between only the two named parties, a
resolution will have no direct and immediate impact on third
parties.74 Broadview is correct that a Commission order on the
merits in this case would, to some extent, ``set a standard for
the propriety of carriers' practices in many other
interconnecting carrier relationships,''75 but only because of
the order's status as precedent, which is true of all Commission
orders.
22. As to the third factor, this case does not involve a
purely legal question of interpreting clear contract language.
Rather, it involves an assessment of the reasonableness of
Verizon's billing practices, based on both contract and tariff
language and ``resort to extrinsic evidence.''76 As noted above,
this type of reasonableness assessment and evidentiary analysis
is well-suited to the arbitration process that the parties agreed
in their Interconnection Agreement to undertake.
23. Concerning the fourth factor, we do not view
arbitration as a waste of time. Pursuant to the New York Order,
arbitration should be underway,77 and the arbitration proceedings
will resolve the bulk of Broadview's claims.78 Moreover,
although the initial pleading cycle here is complete, and the
parties attended an initial status conference,79 the parties have
not yet submitted briefs on the merits addressing the numerous
substantive issues the Commission staff identified in its
briefing order.80 Thus, holding this case in abeyance while the
parties engage in arbitration will conserve the resources of the
parties and the Commission. Finally, Broadview cannot credibly
complain about the stage of the litigation before the
Commission,81 because that is a situation of Broadview's own
making. Verizon first attempted to initiate arbitration almost
three months before Broadview filed its Complaint.82 Broadview
resisted (and continues to resist) Verizon's efforts at every
turn, which resistance the Supreme Court of New York now has held
to have been baseless.
24. Although we need not decide the issue in light of our
decision to defer, rather than dismiss, the Complaint, we do not
agree with Broadview that section 208 of the Act (47 U.S.C. §
208) requires the Commission to resolve all complaints by issuing
a substantive order on the merits.83 Section 208 requires the
Commission to ``investigate the matters complained of in such
manner and by such means as it shall deem proper.''84 An
``investigation,'' however, does not entitle every complainant to
a ruling on the merits of a complaint. The Commission, like
courts, often has the right and the obligation to conclude an
``investigation'' of a complaint by issuing an order that does
not reach the underlying merits of the complaint's claims when,
for example, the Commission declines to exercise its jurisdiction
to adjudicate a complaint or the complaint is otherwise
defective.85 Concluding a complaint investigation, were we to do
so here, by honoring a mandatory arbitration clause would be no
different.86
25. Finally, we make clear that we grant the Motion only to
the extent that the Complaint is deferred, not dismissed. The
claims in the Complaint involve billing for DS1/DS3 terminations
and for voice-grade terminations, whereas the New York Order
requires arbitration regarding only the voice-grade
terminations.87 We thus agree with Broadview that the claims in
the Complaint are somewhat broader than those that will be
arbitrated pursuant to the New York Order.88 Therefore, outright
dismissal of the Complaint would be inappropriate at this time.89
Because the charges pertaining to voice-grade terminations
comprise approximately 90 percent of Broadview's claims,90
however, we believe that arbitration will involve the majority of
issues in the Complaint. To the extent that other issues remain
after the arbitration is concluded, the Commission can address
them then.
26. For administrative purposes, we revise the status of
the Complaint to an informal complaint pending the outcome of the
parties' court-ordered arbitration. We do this for purposes of
internal docket organization only, and we do not intend this
action to affect the rights and obligations of either party. If
the proceeding resumes, it will do so under its current
designation, File No. EB-03-MD-021. Converting the informal
complaint back to formal complaint File No. EB-03-MD-021 will
occur only if we receive notice from a party that it wishes to do
so within 60 days of the final, non-appealable conclusion of the
arbitration ordered in the New York Order. In the meantime,
every 90 days (starting from the date of this Order), the parties
shall jointly file in the informal complaint docket a report on
the status of the arbitration proceeding.
27. In sum, we find that good cause exists to grant the
Motion, to the extent described herein, in order to allow the
parties to follow the mandate of the New York Order and proceed
to arbitration. We also convert the Complaint into an informal
complaint for internal administrative purposes only.
IV. ORDERING CLAUSES
28. Accordingly, IT IS ORDERED that, pursuant to sections
4(i), 4(j), and 208 of the Communications Act of 1934, as
amended, 47 U.S.C. §§ 154(i), 154(j), and 208, and sections
0.111, 0.311, and 1.727 of the Commission's rules, 47 C.F.R. §§
0.111, 0.311, and 1.727, Verizon's Motion to Dismiss or, in the
Alternative, Defer, is GRANTED to the extent indicated herein.
29. IT IS FURTHER ORDERED that, pursuant to sections 4(i),
4(j), and 208 of the Communications Act of 1934, as amended, 47
U.S.C. §§ 154(i), 154(j), and 208, and sections 1.3, 1.716-1.718,
and 1.720-1.736 of the Commission's rules, 47 C.F.R. §§ 1.3,
1.716-1.718, and 1.720-36, and the authority delegated in
sections 0.111 and 0.311 of the Commission's rules, 47 C.F.R. §§
0.111 and 0.311, Broadview's formal complaint of December 30,
2003 SHALL BE CONVERTED into an informal complaint with a
designated filing date of December 30, 2003, and that the formal
complaint and answer filed in the above-captioned proceeding
satisfy sections 1.716-1.717 of the Commission's rules, 47 C.F.R.
§§ 1.716-1.717.
30. IT IS FURTHER ORDERED that, pursuant to sections 4(i),
4(j), and 208 of the Communications Act of 1934, as amended, 47
U.S.C. §§ 154(i), 154(j), and 208, and sections 1.3, 1.716-1.718,
and 1.720-1.736 of the Commission's rules, 47 C.F.R. §§ 1.3,
1.716-1.718, and 1.720-1.736, and the authority delegated in
sections 0.111 and 0.311 of the Commission's rules, 47 C.F.R. §§
0.111 and 0.311, the file number for the informal complaint is
EB-04-MDIC-0105.
31. IT IS FURTHER ORDERED that, pursuant to sections 4(i),
4(j), and 208 of the Communications Act of 1934, as amended, 47
U.S.C. §§ 154(i), 154(j), and 208, and sections 1.3, 1.716-1.718,
and 1.720-1.736 of the Commission's rules, 47 C.F.R. §§ 1.3,
1.716-18, and 1.720-1.736, and the authority delegated in
sections 0.111 and 0.311 of the Commission's rules, 47 C.F.R. §§
0.111 and 0.311, the docket established in the above-captioned
formal complaint proceeding shall be transferred in its entirety
to the newly established informal complaint docket.
32. IT IS FURTHER ORDERED that, pursuant to sections 4(i),
4(j), and 208 of the Communications Act of 1934, as amended, 47
U.S.C. §§ 154(i), 154(j), and 208, and sections 1.3, 1.716-1.718,
and 1.720-1.736 of the Commission's rules, 47 C.F.R. §§ 1.3,
1.716-18, and 1.720-1.736, and the authority delegated in
sections 0.111 and 0.311 of the Commission's rules, 47 C.F.R. §§
0.111 and 0.311, every 90 days (starting from the date of this
Order), the parties shall jointly file in the informal complaint
docket a report on the status of the court-ordered arbitration
proceeding, until the arbitration is concluded.
33. IT IS FURTHER ORDERED that, pursuant to sections 4(i),
4(j), and 208 of the Communications Act of 1934, as amended, 47
U.S.C. §§ 154(i), 154(j), and 208, and sections 1.3, 1.716-1.718,
and 1.720-1.736 of the Commission's rules, 47 C.F.R. §§ 1.3,
1.716-18, and 1.720-1.736, and the authority delegated in
sections 0.111 and 0.311 of the Commission's rules, 47 C.F.R. §§
0.111 and 0.311, the Commission will convert the informal
complaint back to formal complaint File No. EB-03-MD-021 if,
within 60 days of the final, non-appealable conclusion of the
arbitration ordered in the New York Order, a party notifies the
Commission that it desires such action.
FEDERAL COMMUNICATIONS COMMISSION
David H. Solomon
Chief, Enforcement Bureau
_________________________
1 Motion to Dismiss or, in the Alternative, Defer, File No. EB-
03-MD-021 (filed Aug. 4, 2004) (``Motion'').
2 Formal Complaint of Broadview Networks, Inc., File No. EB-03-
MD-021(filed Dec. 30, 2003) (``Complaint'').
3 Motion, Exhibit 1 (Verizon New York Inc. v. Broadview Networks,
Inc., Index No. 103080/2004, slip op. (N.Y. Sup. Ct. July 28,
2004) (``New York Order'')).
4 Joint Statement, File No. EB-03-MD-021 (filed Mar. 5, 2004)
(``Joint Statement'') at 2, ¶ 1.
5 Joint Statement at 2, ¶ 2.
6 Joint Statement at 3, ¶ 8.
7 Joint Statement at 3-4, ¶ 8. We hereafter refer to the
parties' current agreement as the ``Interconnection Agreement.''
The Interconnection Agreement stems from Broadview's opting into
a pre-existing interconnection agreement between Verizon and AT&T
pursuant to 47 U.S.C. § 252(i). Joint Statement at 3, ¶ 8. See
Answer, Exhibit M (Interconnection Agreement under Sections 251
and 252 of the Telecommunications Act of 1996 by and between
Verizon New York, Inc. and AT&T Communications of New York, Inc.)
(VZ 00294-002207).
8 Answer, Exhibit M (Interconnection Agreement) at Part
28.11.2(a) (VZ 002185).
9 Answer, Exhibit M (Interconnection Agreement) at Part
28.11.5(a) (VZ 002187).
10 Answer, Exhibit M (Opinion and Order Resolving Arbitration
Issues, Petition of AT&T Communications of New York, Inc. for
Arbitration of an Interconnection Agreement with New York
Telephone Company; Petition of New York Telephone Company for
Arbitration of an Interconnection Agreement with AT&T
Communications of New York, Inc., Case Nos. 96-C-0723, 96-C-0724,
1996 N.Y. PUC LEXIS 704, at *95-96 (N.Y. Pub. Serv. Comm'n Nov.
29, 1996) (VZ 003516-55) (``NYPSC Order'').
11 47 U.S.C. § 251(c)(6) (requiring incumbent LECs ``to provide,
on rates, terms, and conditions that are just, reasonable, and
nondiscriminatory, for physical collocation of equipment
necessary for interconnection or access to unbundled network
elements at the premises of the local exchange carrier . . .'').
12 Answer, Exhibit M (Interconnection Agreement) at Part 13.0 (VZ
002153-54). The Interconnection Agreement defines
``Collocation'' as ``an arrangement in which the equipment of
[Broadview] is installed and maintained at the premises of
Verizon for the purpose of Interconnection with Verizon and
access to the unbundled Network Element[s] of Verizon.'' Answer,
Exhibit M (Interconnection Agreement) at Part 1.17 (VZ 002101).
13 Answer, Exhibit M (Interconnection Agreement) at Part 13.1 (VZ
002153). The Interconnection Agreement defines ``Tariff'' as
``any applicable federal or state tariff of a Party, as may be
amended by the Party from time to time, under which a Party
offers a particular service, facility, or arrangement.'' Answer,
Exhibit M (Interconnection Agreement) at Part 1.79 (VZ 002108).
14 Answer, Exhibit M (Interconnection Agreement) at Part 13.4 (VZ
002154).
15 Answer, Exhibit M (Interconnection Agreement) Part 2.3 (VZ
002110) (emphasis added).
16 Joint Statement at 8, ¶ 27 (Chronology description of
``Event'' on May 27, 1999).
17 Joint Statement at 3, ¶ 5. See, e.g., Joint Statement at 10,
¶ 27 (Chronology citing Complaint, Exhibits 10, 17) .
Terminations are available in different capacities, including 2-
Wire and 4-Wire voice grade, DS1, and DS3. Joint Statement at 4,
¶ 9.
18 Answer, Legal Analysis at 15-17. According to the
Interconnection Agreement's ``Detailed Schedule of Itemized
Charges,'' the ``rates for Intrastate Collocation are based upon
the rates set forth in PSC NY No. 8 Tariff, as amended from time
to time.'' Answer, Exhibit M (Interconnection Agreement),
Exhibit A, Part VIII (VZ 002201).
19 Answer, Legal Analysis at 17-18.
20 Joint Statement at 10-12, ¶ 27 (Chronology citing settlement
negotiations on April 12, 22, and 29, 2002; May 17, 24, and 31,
2002; June 10, 2003; September 10-October 8, 2003).
21 Joint Statement at 12, ¶ 27 (Chronology citing Complaint,
Exhibit 21). See Answer at 20; Motion at 2.
22 Joint Statement at 12, ¶ 27 (Chronology citing Complaint,
Exhibit 22). See Answer, Exhibit F (Declaration of Edward
Keenan) at 6, ¶ 19.
23 Joint Statement at 12, ¶ 27 (Chronology citing Complaint,
Exhibit 23).
24 Joint Statement at 12, ¶ 27 (Chronology citing Complaint,
Exhibit 27). See Answer, Exhibit F (Declaration of Edward
Keenan) at 6, ¶ 21.
25 Joint Statement at 12, ¶ 27 (Chronology citing Complaint,
Exhibit 29).
26 Joint Statement at 12, ¶ 27 (Chronology citing Complaint,
Exhibit 30).
27 Joint Statement at 12, ¶ 27 (Chronology citing Complaint,
Exhibit 31).
28 Complaint at 6, ¶ 14.
29 Complaint at 7-13, ¶¶ 15-36.
30 Complaint at 22-25, ¶¶ 59-79. Pursuant to 47 C.F.R. §
1.722(d), the Complaint requested that a determination of damages
be made in a separate proceeding subsequent to the proceeding in
which the determination of liability and prospective relief are
made. Complaint at 26-27, ¶ 82.
31 Verizon New York Inc.'s Answer to Broadview Networks, Inc.'s
Formal Complaint, File No. EB-03-MD-021 (filed Jan. 29, 2004)
(``Answer'').
32 See, e.g., Answer at 27.
33 Reply of Broadview Networks, Inc., File No. EB-03-MD-021
(filed Feb. 17, 2004) (``Reply'').
34 Supplement to Information Designation, File No. EB-03-MD-021
(filed Mar. 2, 2004) (Verizon New York Inc. v. Broadview
Networks, Inc., Index No. 103080/2004, Petition to Compel
Arbitration (N.Y. Sup. Ct. Feb. 27, 2004) (``Petition to Compel
Arbitration'') (VZ 004328-VZ 004442)).
35 Petition to Compel Arbitration at 1-3, 5-11.
36 E-mail from Todd Daubert, counsel for Broadview, to Rhonda
Lien, FCC, File No. EB-03-MD-021 (Mar. 16, 2004) (Verizon New
York Inc. v. Broadview Networks, Inc., Index No. 103080/2004,
Respondent Broadview Network, Inc.'s Memorandum of Law in
Opposition to Petitioner Verizon New York Inc.'s Petition to
Compel Arbitration at 2, 8-10, (N.Y. Sup. Ct. Mar. 12, 2004)
(``Opposition to Petition to Compel Arbitration'')).
37 Opposition to Petition to Compel Arbitration at 10 (quoting
Marcus v. AT&T Corp., 138 F.3d 46, 58 (2d Cir. 1998)). See Reply
at 7-13 & nn.41-42.
38 Opposition to Petition to Compel Arbitration at 10.
39 New York Order at 4, 12.
40 New York Order at 4.
41 New York Order at 5.
42 New York Order at 7.
43 New York Order at 8-10.
44 New York Order at 11.
45 New York Order at 11-12.
46 Opposition of Broadview Networks, Inc. to Verizon's Motion to
Dismiss, or, in the Alternative, Defer, File No. EB-03-MD-021
(filed Aug. 11, 2004) (``Opposition to Motion''). See also
Defendant's Reply Brief to Opposition to Motion to Dismiss or, in
the Alternative, Defer, File No. EB-03-MD-021 (filed Aug. 17,
2004) (``Reply in Support of Motion''). Subsequent to the filing
of Verizon's Reply in Support of Motion (which Commission staff
directed Verizon to file), Broadview filed three additional
pleadings: (1) an August 19, 2004 letter highlighting the manner
in which Verizon purportedly had ``changed the basis for the
relief it seeks'' and the existence of ``factual inaccuracies and
omissions'' in the Reply in Support of Motion (see Letter to Alex
Starr, Chief, Market Disputes Resolution Division, from Brad E.
Mutschelknaus, Edward A. Yorkgitis, Jr. and Todd D. Daubert,
Counsel for Broadview, File No. EB-03-MD-021 (filed Aug. 19,
2004) (``August 19 Letter'')); (2) a September 1, 2004 Motion to
Strike the Reply in Support of Motion (see Broadview Networks,
Inc. Motion to Strike Reply Brief or, in the Alternative, File a
Response, File No. EB-03-MD-021 (filed Sept. 1, 2004) (``Motion
to Strike'')); and (3) a Response to the Reply in Support of
Motion (see Response of Broadview Networks, Inc. to Reply Brief,
File No. EB-04-MD-021 (filed Sept. 1, 2004) (``Response to Reply
in Support of Motion'')). Broadview did not seek leave to file
the August 19 Letter or the Response to Reply in Support of
Motion. See 47 C.F.R. § 1.727 (authorizing only one response to
a motion, as of right). Nevertheless, in reaching the ruling
discussed herein, we have considered the arguments made in those
submissions, which largely are duplicative of the arguments
contained in the Opposition to Motion to Dismiss.
47 New York Order at 6-7 (``Broadview contends that the parties'
dispute . . . does not arise out of the Interconnection
Agreement, but, rather, out of the tariff(s) . . . [T]hat
contention is without merit.''); 5 (``The dispute which Verizon
seeks to have arbitrated clearly falls within the broad scope of
the arbitration agreement contained in the Interconnection
Agreement, because it is a dispute `arising out of [the
Interconnection] Agreement or its breach.''').
48 See, e.g., Opposition to Motion at 11; August 19 Letter at 2
n.1; Response to Reply in Support of Motion at 6, 16, 18, 28.
49 See Part II(A) at ¶ 5. Indeed, Broadview itself states that
the Interconnection Agreement ``establishes the contractual terms
under which Verizon provides collocation and related services to
Broadview in New York.'' Complaint at 3, ¶ 8.
50 U.S. West Communications, Inc. v. Sprint Communications Co.,
L.P., 275 F.3d 1241, 1251 (10th Cir. 2002).
51 See Part II(A) at ¶ 4.
52See, e.g., Mastrobuono v. Shearson Lehman Hutton, Inc., 514
U.S. 52, 62 n.8 (1995) (``The Arbitration Act establishes that,
as a matter of federal law, any doubts concerning the scope of
arbitrable issues should be resolved in favor of arbitration,
whether the problem at hand is the construction of the contract
language itself or an allegation of waiver, delay, or a like
defense to arbitrability.'') (citing Moses H. Cone Mem'l Hosp. v.
Mercury Constr. Corp., 460 U.S. 1, 24-25 (1983)); Volt Info.
Sciences, Inc. v. Board of Trustees of the Leland Stanford Junior
Univ., 489 U.S. 468, 475-76 (1989) (``[I]n applying general
state-law principles of contract interpretation to the
interpretation of an arbitration agreement within the scope of
the Act . . . due regard must be given to the federal policy
favoring arbitration, and ambiguities as to the scope of the
arbitration clause itself resolved in favor of arbitration.'');
Oldroyd v. Elmira Sav. Bank, FSB, 134 F.3d 72, 76 (2d Cir. 1998)
(courts construe arbitration clauses as broadly as possible, and
resolve any doubts concerning the scope of arbitrable issues in
favor of arbitration); David L. Threlkeld & Co., Inc. v.
Mettalgesellschaft Ltd., 923 F.2d 245, 250-51 (2d Cir. 1991)
(``[W]e are mindful of the Supreme Court's directive with respect
to broad arbitration clauses: `[I]n the absence of any express
provision excluding a particular grievance from arbitration, we
think only the most forceful evidence of purpose to exclude the
claim from arbitration can prevail.''') (quoting AT&T
Technologies, Inc. v. Communications Workers of Am., 475 U.S.
643, 650 (1986); United Steel Workers of Am. v. Warrior & Gulf
Navigation Co., 363 U.S. 574, 584-85 (1960)).
53 New York Order at 11.
54 Cf. Arapahoe County Pub. Airport Auth. v. Federal Aviation
Admin., 242 F.3d 1213, 1220-21 (10th Cir. 2001) (holding that the
strong policy of federal supremacy in the field of aviation
prevailed over full faith and credit principles that would have
required the Federal Aviation Administration to give preclusive
effect to a state court ruling); American Airlines, Inc. v.
Department of Transp., 202 F.3d 788, 800 (5th Cir. 2000) (holding
that, because aviation regulation is an area where federal
concerns are preeminent, and the Department of Transportation
(``DOT'') is charged with representing those concerns, the DOT
was not required to grant preclusive effect to the outcome of a
state court proceeding).
55 See generally 47 C.F.R. §§ 251, 252; Verizon Communications v.
FCC, 535 U.S. 467, 487-89 (2002).
56 See Core Communications, Inc. v. Verizon Maryland Inc.,
Memorandum Opinion and Order, 18 FCC Rcd 7962, 7973 n.81 (2003)
(``Core v. Verizon'') (observing that ``nothing in this order
indicates that the Commission would ignore a valid forum-
selection clause in an interconnection agreement.''). Cf. In the
Matter of Unbundled Access to Network Elements, Order and Notice
of Proposed Rulemaking, FCC 04-179, 2004 WL 1900394, ¶¶ 22-23
(Aug. 20, 2004) (preserving incumbent LECs' ``contractual
prerogatives to initiate change of law proceedings to the extent
consistent with their governing interconnection agreements'' to
effectuate whatever final unbundling rules the Commission
enacts).
57 See Part III(B) at ¶ 25.
58 Opposition to Motion at ii-v, 4-7, 12-14; August 19 Letter at
3-4; Response to Reply in Support of Motion at i-ii, 7-26.
59 Duke Power Co. v. Federal Energy Regulatory Comm'n, 864 F.2d
823, 829 (D.C. Cir. 1989) (``Duke Power'').
60 A/S Ivarans Rederi v. United States, 895 F.2d 1441, 1445 (D.C.
Cir. 1990) (``Ivarans I'').
61 A/S Ivarans Rederi v. United States, 938 F.2d 1365, 1368 (D.C.
Cir. 1991) (``Ivarans II'').
62 See Ivarans I, 895 F.2d at 1445 (``Private regulated parties
cannot agree to waive the subject matter jurisdiction of the
agency charged with the statutory responsibility to insure that
parties implement agreements as approved by and filed with that
agency.''); Duke Power, 864 F.2d at 829 (``It is uncontested . .
. that the Commission has continuing regulatory jurisdiction over
rates charged under the agreements.'').
63 Duke Power, 864 F.2d at 831 (FERC does not have a ``license to
disregard mandatory arbitration clauses in routine contract
disputes''). Buttressing our conclusion that disregarding an
arbitration provision is the exception, not the rule, is the fact
that, after Duke Power, FERC repeatedly has enforced arbitration
provisions. See, e.g,, PPL EnergyPlus, LLC, 99 FERC 61257
(2002); Indiana Michigan Power Co. and Ohio Power Co., 64 FERC
61184 (1993); North Carolina Eastern Municipal Power Agency v.
Carolina Power & Light Co., 46 FERC 61181 (1989).
64 Ivarans I, 895 F.2d at 1446 (the Federal Maritime Commission
retains the right to hear complaints that an agreement filed
pursuant to the Shipping Acts has been improperly modified
through arbitration); Duke Power, 864 F.2d at 829 (``[T]he
Commission's acceptance for filing of an agreement that contains
an arbitration clause does not legally disable the Commission
from resolving disputes at the core of its enforcement
mission.''). Even when a dispute does concern important agency
interests, however, the agency still lawfully may decide that the
interest in enforcing a contractual obligation to arbitrate
remains preeminent. Duke Power, 864 F.2d at 829 (``[I]f the
Commission finds a violation of the filed rate doctrine, it is
not required to submit the dispute to arbitration despite a
mandatory arbitration clause in the agreements constituting the
filed rate schedule, although it may, in its discretion, do
so.'') (emphasis added).
65 Ivarans II, 938 F.2d at 1367.
66 Duke Power, 864 F.2d at 830 (affirming agency's disregard of
arbitration provision, partly because ``the agreements were clear
on their face and could be interpreted without resort to
extrinsic evidence''); Ivarans II, 938 F.2d at 1367-68.
67 Ivarans II, 938 F.2d at 1368.
68Answer, Exhibit M (NYPSC Order) (VZ 003544) (holding that the
alternative dispute resolution process will ``provide for the
expeditious resolution of all disputes between the parties
arising out of this agreement,'' and will constitute ``the
exclusive remedy for all disputes between the parties arising out
of this agreement or its breach'').
69 See, e.g., Reply at 2 (``The FCC should grant Broadview's
backbilling claims . . . and requested relief, which would
resolve the entire dispute between the parties and obviate the
need to review any of the other Counts on the merits.''); 5
(``Assuming arguendo that Verizon's charges for the VG, DS1 and
DS3 terminations were valid, Verizon engaged in an unjust and
unreasonable practice in violation of Section 201(b) of the Act
by backbilling.''); 15 (``Significantly, because the Commission
can grant all of the relief Broadview has requested by addressing
Counts II and V [principally alleging backbilling], the
Commission does not need to address Section 204(a)(3) at all to
resolve this dispute.''); Opposition to Motion at iv (``Verizon
knows that if the Commission applies this [backbilling] precedent
to the current dispute Verizon will not be entitled to collect
the overwhelming majority of the disputed charges from Broadview,
and that the Commission will not have to reach any of the other
issues in this proceeding, such as the applicability of Section
204(a)(3).''); August 19 Letter at 2 n.1 (``Verizon's unlawfully
delayed backbilling for services ordered under tariff is at the
heart of the dispute.'').
70 Verizon argues, with some persuasive force, that Broadview
ordered the services at issue pursuant to the parties'
Interconnection Agreement and Verizon's New York state tariff
regarding intrastate services, in which case the Commission might
not have jurisdiction to resolve Broadview's backbilling claims.
See, e.g., Answer at 27; Answer, Legal Analysis at 23-27; Reply
in Support of Motion at 14 n.39; Verizon New York Inc.'s
Opposition to Broadview Networks, Inc.'s Motion to Strike Reply
Brief or, in the Alternative, File a Response, File No. EB-03-MD-
021 (filed Sept. 3, 2004) at 6-7 n.17.
71 Duke Power, 864 F.2d at 831.
72 See Part III(A) at n.56.
73 See, e.g., The People's Network, Inc. v. American Telephone &
Telegraph Co., Memorandum Opinion and Order, 12 FCC Rcd 21081,
21090 (1997) (``Our decision regarding the reasonableness of
AT&T's backbilling practices in this particular case should not
be construed as establishing a rule of general applicability. . .
. We will consider such matters on a case-by-case basis to
determine compliance with the just and reasonable requirements of
Section 201(b).''); Brooten v. AT&T Corp., Memorandum Opinion and
Order, 12 FCC Rcd 13343 (Comm. Carr. Bur. 1997) (same); American
Network, Inc.: Petition for Declaratory Ruling Concerning
Backbilling of Access Charges, Memorandum Opinion and Order, 4
FCC Rcd 550, 551-52, ¶ 20 (Comm. Carr. Bur. 1989) (backbilling
may under certain circumstances constitute an unjust and
unreasonable practice in violation of section 201(b) of the Act,
and the limitations period contained in section 415 of the Act
does not authorize backbilling for any particular period). We
note that, because Broadview may have ordered the services at
issue through the Interconnection Agreement, rather than directly
via a tariff, and because the relevant tariff may be Verizon's
New York state tariff regarding intrastate services, the
Commission's precedent concerning backbilling under section
201(b) of the Act may not even be directly applicable. See,
e.g., Answer at 27; Answer, Legal Analysis at 31-33; Reply in
Support of Motion at 14 n.39 (arguing that New York State's six-
year statute of limitations governs Broadview's backbilling
claims).
74 Compare Ivarans II, 938 F.2d at 1366 (describing how a
resolution would affect numerous non-parties to the proceeding,
because the dispute concerned a multiparty ``pooling
agreement'').
75 Opposition to Motion at 6.
76 Duke Power, 864 F.2d at 830.
77 New York Order at 12.
78 See Part III(B) at ¶ 25.
79See Letter from Lisa B. Griffin, Deputy Chief, Market Disputes
Resolution Division, Enforcement Bureau, FCC, to Brad E.
Mutschelknaus and Kathleen Grillo, File No. EB-03-MD-021 (Jan. 6,
2004); Letter from Alexander P. Starr, Chief, Market Disputes
Resolution Division, Enforcement Bureau, FCC, to Brad E.
Mutschelknaus and Catherine K. Ronis, File No. EB-03-MD-021 (Feb.
4, 2004).
80 Letter from Lisa B. Griffin, Deputy Chief, Market Disputes
Resolution Division, Enforcement Bureau, FCC, to Brad E.
Mutschelknaus and Catherine K. Ronis, File No. EB-03-MD-021 (July
6, 2004) (setting forth 38 issues to be briefed, and allowing
each party up to 125 pages to do so). Following the filing of
the Motion, Commission staff made every effort to minimize wasted
effort by the parties by extending the briefing schedule three
times while the Commission considered the Motion. See Letter
from Alexander P. Starr, Chief, Market Disputes Resolution
Division, Enforcement Bureau, FCC, to Brad E. Mutschelknaus and
Catherine K. Ronis, File No. EB-03-MD-021 (Sept. 7, 2004); Letter
from Lisa B. Griffin, Deputy Chief, Market Disputes Resolution
Division, Enforcement Bureau, FCC, to Brad E. Mutschelknaus and
Catherine K. Ronis, File No. EB-03-MD-021 (Aug. 24, 2004); Letter
from Lisa B. Griffin, Deputy Chief, Market Disputes Resolution
Division, Enforcement Bureau, FCC, to Brad E. Mutschelknaus and
Catherine K. Ronis, File No. EB-03-MD-021 (Aug. 9, 2004). Cf.
Reply in Support of Motion at 12 (``The parties would still have
to finish researching and drafting 75-page initial briefs, and
then file 50-page reply briefs, at a minimum.'').
81 Opposition to Motion at 6.
82 See Part II(B) at ¶ 7. Thus, the facts belie Broadview's
contention that Verizon pursued arbitration only after Broadview
filed the Complaint. Opposition to Motion at 2; Motion to Strike
at 2-4.
83 Opposition to Motion at 12-14; Motion to Strike at 7-9.
84 47 U.S.C. § 208(a). See 47 U.S.C. § 208(b).
85 See, e.g., MCI Worldcom Network Servs., Inc. v. FCC, 274 F.3d
542, 543 (D.C. Cir. 2001) (affirming the Commission's dismissal
of complaint alleging breach of merger conditions, given
Commission's holding that state public utility commission was
proper forum); Centennial Communications Corp. v. Tricom USA,
Inc., Memorandum Opinion and Order, 17 FCC Rcd 10794, 10803-05,
¶¶ 21-26 (2002) (dismissing formal complaint due to
considerations of international comity); AT&T Corp. v. Bell
Atlantic-Pennsylvania, Memorandum Opinion and Order, 14 FCC Rcd
556, 565-66, ¶¶ 12-16 (1998) (dismissing claims arising from
conduct occurring outside the two-year limitations period under
47 U.S.C. § 415); Comsat Corp. v. IDB Mobile Communications,
Inc., Order on Review, 15 FCC Rcd 14697, 14698, ¶ 2 (2000)
(upholding Bureau decision dismissing complaint on res judicata
grounds).
86 Contrary to Broadview's assertion, United States Telecom
Association v. FCC, 359 F.3d 554 (D.C. Cir. 2004) (``USTA II''),
is distinguishable from this case. See Opposition to Motion to
Dismiss at 13-14; Response to Reply in Support of Motion at 12-
13. In USTA II, the United States Court of Appeals for the
District of Columbia Circuit held that the Commission could not
delegate to state utility commissions its statutory duty under
section 251(d)(2) of the Act (47 U.S.C. § 251(d)(2)) to determine
which telephone network elements incumbent LECs are required to
unbundle and make available to other carriers. Section 251(d)(2)
states, in relevant part, that ``[i]n determining what network
elements shall be made available for purposes of subsection
(c)(3), the Commission shall consider, at a minimum, whether . .
. the failure to provide access to such network elements would
impair the ability of the telecommunications carrier seeking
access to provide the services that it seeks to offer.'' 47
U.S.C. § 251(d)(2)(A). In contrast, section 208 of the Act does
not require the Commission to make a specific substantive
determination. Rather, it instructs the Commission to
``investigate'' formal complaints ``in such manner and by such
means as it shall deem proper.'' 47 U.S.C. § 208. In this case,
the Commission is investigating Broadview's Complaint by allowing
contractually agreed-upon arbitration to proceed first, and then
assessing what issues between the parties remain. Similarly, we
find unpersuasive Broadview's citation to Core v. Verizon, 18 FCC
Rcd at 7962. Unlike Core v. Verizon, this case presents specific
circumstances (i.e., an arbitration clause that Verizon sought to
invoke prior to the filing of the Complaint, and a New York court
order interpreting the clause as applicable) that make it
appropriate for the Commission to decline presently to exercise
its jurisdiction to adjudicate Broadview's complaint. Core v.
Verizon, 18 FCC Rcd at 7973-74, ¶ 29.
87 See Complaint at 22-26; New York Order at 2, 12.
88 Opposition to Motion at i n.2.
89 Verizon asserts that it served an ``arbitration demand for
DS1/DS3 cross-connects,'' and that it ``has now consolidated [all
of] the cross-connect disputes into a single arbitration.''
Reply in Support of Motion at 2 n.1. Verizon, however, has not
provided any documentation to support this assertion of
consolidation.
90 See Complaint, Tab I (Affidavit of James Lennon) at 8, ¶¶ 35-
36.