UNITED SYSTEMS ACCESS TELECOM INC v. NORTHERN NEW ENGLAND TELEPHONE OPERATIONS LLC et al
Filing
29
DECISION AND ORDER ON MOTIONS TO WITHDRAW re: granting 2 Motion to Withdraw Reference; granting 17 Motion to Withdraw Reference By JUDGE D. BROCK HORNBY. (mjlt)
UNITED STATES DISTRICT COURT
DISTRICT OF MAINE
UNITED SYSTEMS ACCESS
TELECOM, INC.,
DEBTOR/MOVANT
v.
NORTHERN NEW ENGLAND
TELEPHONE OPERATIONS, LLC,
ET AL.,
RESPONDENTS
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NO. 2:11-MC-123-DBH
DECISION AND ORDER ON MOTIONS TO WITHDRAW REFERENCE
In these consolidated matters, the motions to withdraw reference of (1)
the adversary proceeding and (2) matters that have not yet been decided by the
Bankruptcy Court on the Motion to Enforce Compliance with Utilities Order are
GRANTED.
The plaintiff/debtor in the bankruptcy proceedings, United Systems
Access Telecom, Inc., and the defendants who are collectively called FairPoint
by the lawyers, have a dispute about amounts due between them. The debtor
is a Competitive Local Exchange Carrier, doing business under the name USA
Telephone.
It leases network assets from FairPoint, an Incumbent Local
Exchange Carrier, also a Regional Bell Operating Company.
In their dispute, the parties disagree over what written agreements are
effective between them,1 and what they provide. Their disputes include, but
are not limited to, whether Performance Assurance Plan (PAP) penalties can be
used
to
offset
amounts
that
the
plaintiff/debtor
otherwise
owes
the
defendants.2 The plaintiff maintains that their dispute requires consideration
of both Title 11 and “other laws of the United States regulating organizations or
activities affecting interstate commerce.”
If that is so, 28 U.S.C. § 157(d)
mandates withdrawal of the reference to the Bankruptcy Court. The federal
law in question, the plaintiff says, is the Telecommunications Act of 1996, Pub.
L. No. 104-104, 110 Stat. 56 (codified as amended in scattered sections of Title
47 of the United States Code). Alternatively, the plaintiff relies upon the recent
Supreme Court decision of Stern v. Marshall, 131 S. Ct. 2594 (2011), arguing
that if I conclude that state law rather than federal law governs these disputes,
then the Constitution demands that the disputes be tried in this Article III
court.
The defendants disagree, arguing that no interpretation of federal
telecommunication law is required to resolve the disputes, and that under
Stern, the public rights exception allows the state law issues to be adjudicated
in the Bankruptcy Court.
1 There are at least two agreements in dispute: the Interconnection Agreement and the
Wholesale Advantage Services Agreement.
2 The Bankruptcy Judge explicitly did not decide this issue in ruling on the Motion to Enforce
Compliance.
2
I conclude that the plaintiff/debtor is correct.3
Telecommunication is
subject to extensive Federal Communications Commission (FCC) regulation
under federal statute. FairPoint’s predecessor, Verizon New England, Inc. and
related entities, applied to the FCC for authority to provide long-distance
service in Maine pursuant to 47 U.S.C. § 271.
As part of the section 271
approval process, Verizon agreed to be bound by the Maine PAP, and when
FairPoint acquired Verizon’s business operations in Maine, it agreed to comply
with the existing PAP.4 It is true that some authority in this area is delegated
to state public utilities commissions, and that parties can enter into
consensual agreements, but it is all within the context of overall federal
regulation, and I agree with the plaintiff/debtor that adjudication of the dispute
will require “consideration” of federal telecommunications law.
Withdrawal,
therefore, is mandatory.
I need not reach the issue whether Stern would alternatively require
withdrawal of the reference, and I do not decide the contours of the public
rights exception.
The Clerk’s Office shall schedule a conference with the Magistrate Judge
to orchestrate the preparation of the case for adjudication in this court,
including arrangements so that all relevant filings are included on this court’s
The motion is timely, there is no waiver, and forum shopping is irrelevant given the
mandatory withdrawal.
4 See In re Application by Verizon New England, Inc. et al. for Authorization to Provide InRegion, InterLATA Services in Maine, 17 F.C.C. Rcd. 11659 (2002); Verizon New England, Inc.
et al., Joint Application for Approvals Related to Verizon’s Transfer of Property and Customer
Relations to Company to be Merged with and into FairPoint Communications, Inc., Maine
Public Utilities Commission Order, Docket No. 2005-155 (Feb. 1, 2008).
Cf. Verizon
Communications Inc. v. Law Offices of Curtis V. Trinko, LLP, 540 U.S. 398, 413 (2004).
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ECF docket, and discussion of what if anything remains open on the Motion to
Enforce Compliance.
SO ORDERED.
DATED THIS 5TH DAY OF AUGUST, 2011
/S/D. BROCK HORNBY
D. BROCK HORNBY
UNITED STATES DISTRICT JUDGE
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