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Federal Communications Commission
Washington, D.C. 20554
In the Matter of )
STARPOWER COMMUNICATIONS, LLC, )
) File No. EB-00-MD-19
VERIZON SOUTH INC., )
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
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,
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
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
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
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).