SACRAMENTO — The U.S. District Court for the Eastern District of California has partially ruled in favor of MCI Communications and Verizon Select Services in a dispute with O1 Communications.
In the ruling on Jan. 18, the court denied the defendants’ motion to stay O1’s breach of contract claim, granted the defendants’ cause of action for violation of Section 201 of the Communications Act and granted the defendants’ motion to dismiss O1’s Unfair Competition Law claim.
According to the opinion, O1 Communications sued MCI Communications Services and Verizon Select Services alleging that Verizon improperly withheld and continues to withhold payments for switched access services that O1 provided to Verizon.
O1 is a competitive local exchange carrier based in El Dorado Hills, providing Verizon with switched access services, routing and connecting long-distance calls for customers, the opinion stated.
“Verizon contends O1 exclusively partners with over-the-top VoIP providers and so the FCC’s interpretation of the VoIP Symmetry Rule, which would impact the appropriate tariffed rate, is directly raised in the contractual dispute with O1,” the opinion stated.
The district court added that the interpretation of the VoIP Symmetry Rule is pending before the FCC, but Verizon’s argument fails.
According to the opinion, the primary jurisdiction doctrine does not apply because O1’s breach of contract claim does not implicate the FCC’s interpretation of the VoIP Symmetry Rule.
“Rather, the breach of contract claim can be properly adjudicated based on the plain language of the Settlement Agreement,” the opinion stated.
The settlement agreement, according to the opinion, states that O1 “shall bill Verizon” “at a rate not to exceed” a certain dollar amount per minute of use.
“The contract makes no mention of O1’s tariffed rates and the contractual rates provided are owed to O1 irrespective of such tariffed rates,” the opinion stated.
“The express language of the Settlement Agreement is clear, and the flat-rate payment provisions do not implicate O1’s tariffed rates and are therefore not contingent on the FCC’s interpretation of the VoIP Symmetry Rule,” the court said.
The district court added that O1’s cause of action for violation of Section 201 of the Communications Act is dismissed with prejudice because a claim against Verizon, in its role as a customer, for withholding such payments is not actionable under Section 201 of the Communications Act.
The district court said O1 also alleges that Verizon is engaging in an unfair business practice by knowingly taking advantage of O1’s legal obligation to continue providing switched access service to Verizon while Verizon refuses to pay for those services based on unsubstantiated allegations, in collusion with AT&T and in effort to deprive O1 of cash flows.
“O1 thus argues the predicate unfair conduct goes beyond a mere breach of contract—which alone cannot sustain a UCL claim—because Verizon has colluded with AT&T in withholding the payments to harm O1, a competitor,” the opinion stated.
The district concluded that “O1’s allegation of collusion, upon which its UCL claim rests, is conclusory and insufficient to support the claim.”