Judges: Posner
Filed: Oct. 18, 2016
Latest Update: Mar. 03, 2020
Summary: In the United States Court of Appeals For the Seventh Circuit _ No. 16-1237 CBEYOND COMMUNICATIONS, LLC, Plaintiff-Appellant, v. BRIEN J. SHEAHAN, et al., in their official capacities as Com- missioners of the Illinois Commerce Commission, Defendants-Appellees, and ILLINOIS BELL TELEPHONE COMPANY d/b/a AT&T Illinois, Intervenor Defendant/Appellee. _ Appeal from the United States District Court for the Northern District of Illinois, Eastern Division. No. 13 C 3731 — Charles R. Norgle, Judge. _ AR
Summary: In the United States Court of Appeals For the Seventh Circuit _ No. 16-1237 CBEYOND COMMUNICATIONS, LLC, Plaintiff-Appellant, v. BRIEN J. SHEAHAN, et al., in their official capacities as Com- missioners of the Illinois Commerce Commission, Defendants-Appellees, and ILLINOIS BELL TELEPHONE COMPANY d/b/a AT&T Illinois, Intervenor Defendant/Appellee. _ Appeal from the United States District Court for the Northern District of Illinois, Eastern Division. No. 13 C 3731 — Charles R. Norgle, Judge. _ ARG..
More
In the
United States Court of Appeals
For the Seventh Circuit
____________________
No. 16‐1237
CBEYOND COMMUNICATIONS, LLC,
Plaintiff‐Appellant,
v.
BRIEN J. SHEAHAN, et al., in their official capacities as Com‐
missioners of the Illinois Commerce Commission,
Defendants‐Appellees,
and
ILLINOIS BELL TELEPHONE COMPANY d/b/a AT&T Illinois,
Intervenor Defendant/Appellee.
____________________
Appeal from the United States District Court for the
Northern District of Illinois, Eastern Division.
No. 13 C 3731 — Charles R. Norgle, Judge.
____________________
ARGUED SEPTEMBER 14, 2016 — DECIDED OCTOBER 18, 2016
____________________
Before POSNER, EASTERBROOK, and SYKES, Circuit Judges.
2 No. 16‐1237
POSNER, Circuit Judge. The plaintiff, Cbeyond, provides
telephone and broadband telecommunications service to
small and medium‐sized business customers in Illinois. It
endeavors to send data through telephone lines with maxi‐
mum efficiency. The principal defendant, a local exchange
carrier that the parties mainly refer to as AT&T Illinois, pro‐
vides telecommunications service similar to Cbeyond’s but
on a much larger scale. The two firms’ networks are inter‐
connected; federal law entitles a new entrant (Cbeyond en‐
tered the Illinois market in 2005) to connect with existing lo‐
cal exchange carriers on terms favorable to the entrant so
that it can serve more customers without having to create its
own network. See 47 U.S.C. § 251; Sprintcom, Inc. v. Commis‐
sioners of Illinois Commerce Commission, 790 F.3d 751, 753–54
(7th Cir. 2015); MCI Telecommunications Corp. v. Illinois Bell
Tel. Co., 222 F.3d 323, 328 (7th Cir. 2000). Those terms are in
the first instance negotiated by the local exchange carrier
and the new entrant, see 47 U.S.C. § 252(a)(1), but if the par‐
ties are unable to agree on terms the issue is referred to arbi‐
tration. 47 U.S.C. § 252(b). Whatever agreement emerges ei‐
ther from voluntary negotiations or from arbitration must be
submitted to a state commission (in this case the Illinois
Commerce Commission) for approval. § 252(e).
In 2004 the commission approved the agreement that
Cbeyond and AT&T Illinois had worked out. Any party who
wishes to dispute or enforce its interconnection agreement
may file a petition with the state commission and if it loses
there may sue in federal district court to determine whether
the commission’s approval is consistent with the rules that
47 U.S.C. §§ 251(b) and (c) impose on local exchange carriers,
such as AT&T Illinois. And that is what Cbeyond did eight
years later: file a complaint with the Illinois Commerce
No. 16‐1237 3
Commission (actually part of a complaint that it had filed
the previous year, a detail we can ignore) against AT&T Illi‐
nois, complaining that when Cbeyond leases new circuits
from AT&T Illinois that are called digital signal level 1
(“DS1”) loops, AT&T Illinois overcharges it by charging a
separate price for the “Clear Channel Capability” (“CCC”)
built into the loops.
Invented in 1980, CCC is a method of coding the electri‐
cal pulses in a transmission line to make the streaming of da‐
ta through the line more efficient. See P. A. Johnson & D. R.
Walker, “A Standard for Clear Channel Capacity,” 90 Tele‐
phone Engineer & Management 112, 112 (August 15, 1986).
Cbeyond argues that the price of new DS1 loops should cov‐
er CCC because there’s no extra work involved in setting it
up once AT&T Illinois has agreed to send a crew out to pro‐
vision a new line. “Provisioning” in telecom‐speak refers to
all the measures that a carrier like AT&T Illinois must take to
activate a service, and thus might include sending a crew to
a customer’s premises to install or repair or replace terminal
equipment there, making hardware changes on the utility
pole or at the transport office where all the telephone lines in
an area code are bundled, or software changes, or whatever
other changes are needed to make sure that everything is
running smoothly.
But the only activities of AT&T Illinois that Cbeyond
mentioned to the Illinois Commerce Commission were soft‐
ware updates, tests, and administrative changes, none of
which contradicted or undermined, let alone invalidated, the
interconnection agreement between AT&T Illinois and Cbe‐
yond. And that agreement designates CCC as an “optional
feature” available to Cbeyond from AT&T Illinois only “at
4 No. 16‐1237
an additional cost” specified in the agreement’s pricing
schedule. It was that additional cost that AT&T Illinois
charged Cbeyond for CCC.
Cbeyond claims that CCC should have been available to
Cbeyond at no cost beyond that of provisioning the loops,
because the cost of CCC is built into the cost of that provi‐
sioning. But CCC was deemed optional rather than integral
to the loops that Cbeyond bought from AT&T Illinois, and
indeed some of the loops didn’t have CCC built into them,
suggesting that the price of the loops did not include the full
price of CCC. More to the point, the interconnection agree‐
ment was explicit that there would be “an additional cost” if
the purchaser of loops from AT&T Illinois wanted CCC,
even if the price of the loops included that cost. That was the
deal.
Cbeyond goes on to complain that some of AT&T Illinois’
other customers were charged less than Cbeyond for CCC—
even nothing—for a predecessor of CCC called Alternate
Mark Inversion (“AMI”). But as CCC is a more advanced
product, it’s not surprising that it should command a higher
price; nor has Cbeyond shown that it’s the only purchaser of
CCC that pays the optional charge.
It doesn’t help Cbeyond’s case that its briefs are virtually
devoid of facts. We are not told what the price of the DS1
loops is with and without the CCC add‐on, how the prices
differ from those paid AT&T Illinois by other telecommuni‐
cations companies that buy such loops with or without CCC,
how the capabilities of CCC differ from those of AMI, or
why Cbeyond agreed to the contractual terms that have pre‐
cipitated this litigation. All we know is that Cbeyond made a
contract with AT&T Illinois that it later regretted and has
No. 16‐1237 5
resorted to litigation in an effort to squirm out of the con‐
tract.
Cbeyond may be right that AT&T’s charges are incon‐
sistent with the well‐known federal pricing standard called
“TELRIC,” see 47 C.F.R. § 51.505, which constrains incum‐
bent carriers to lease network elements to newcomers (even
just relative newcomers) like Cbeyond (which dates back to
2005) at a price just a bit higher than the incumbent’s mar‐
ginal cost. As far as we know, by 2016 Cbeyond’s orders for
CCC required no new hardware, or other embellishments of
the product, and if so that would drive the marginal cost of
CCC to zero; yet AT&T Illinois continued charging Cbeyond
for CCC. But 47 U.S.C. § 252(a)(1) allows a new entrant and
an incumbent to contract around TELRIC pricing, provided
they create a “detailed schedule of itemized charges,” and
Cbeyond and AT&T Illinois did that. The Pricing Schedule
in the agreement includes a charge for CCC that as far as we
can tell was never amended or deleted.
So we can’t find a violation of federal law by the Illinois
Commerce Commission or AT&T Illinois. All we discern is a
dispute over a price term in a contract, and the resolution of
such a dispute, as of Cbeyond’s other state‐law claims, is a
matter for state rather than federal law. Illinois Bell Telephone
Co., Inc. v. Global NAPS Illinois, Inc., 551 F.3d 587, 591 (7th
Cir. 2008); Illinois Bell Telephone Co. v. Worldcom Technologies,
Inc., 179 F.3d 566, 572, 574 (7th Cir. 1999). Although a federal
district court can resolve state‐law disputes under its sup‐
plemental jurisdiction if (as in this case) it has original juris‐
diction (in this case because of Cbeyond’s claims), see 28
U.S.C. § 1367, exercising supplemental jurisdiction over the
state‐law claims in this case would require us first to decide
6 No. 16‐1237
that the state (Illinois) cannot invoke its sovereign immuni‐
ty—a doubtful proposition in light of MCI Telecommunica‐
tions Corp. v. Illinois Commerce Commission, 168 F.3d 315, 320
(7th Cir. 1999), where we said that it was “clear that … fed‐
eral courts may review a state commission’s actions with re‐
spect to an agreement only for compliance with the require‐
ments of § 251 and § 252 of the Telecommunications Act, and
not for compliance with state law” (emphasis added). And state
sovereign immunity to one side, Cbeyond has imposed an
excessive and unnecessary burden on the district court by
bringing this sloppy lawsuit, and should not be permitted to
impose further on the district court or our court.
AFFIRMED