Opinion
C.A. No. 03A-06-001 JTV.
Submitted: August 1, 2003.
Decided: December 30, 2003.
Upon Consideration of Plaintiff's Motion to Stay. GRANTED.
William E. Manning, Esq., Klett, Rooney, Lieber Schorling, Wilmington, Delaware. Attorney for Appellant.
Wendie C. Stabler, Esq., and Michael F. Bonkowski, Esq., Saul, Ewing, Remick Saul, Wilmington, Delaware. Attorneys for Appellees.
Gary A. Myers, Esq., Department of Justice, Dover, Delaware. Attorney for Appellees.
ORDER
Upon consideration of a motion to stay proceedings filed by the appellant, Verizon Delaware, Inc. ("Verizon"), the opposition of the Public Service Commission of Delaware ("the Commission"), and the record of the case, it appears that:
1. It is alleged by Verizon that the Federal Telecommunications Act of 1996 ("the Act") imposes a duty on competing local telephone companies to agree to pay each other "reciprocal compensation" for local telephone calls that originate on one carrier's network and terminate on another carrier's network. In order to comply with that duty, Verizon and ATT Communications of Delaware ("ATT"), both of whom are "Local Exchange Carriers" under the Act, became parties to an "interconnection agreement" in which they agreed to pay each other reciprocal compensation on local calls, defined as calls that originate and terminate within the same local calling, or "exchange" area. A dispute arose between the parties as to whether "Internet-bound traffic," that is, traffic that a local exchange carrier delivers to an Internet Service Provider for transmission to the Internet, can be local traffic for which reciprocal compensation must be paid, or whether it is interstate traffic not subject to reciprocal compensation. ATT filed a petition with the Commission seeking a determination that Verizon owed it reciprocal compensation payments for Internet-bound traffic. Verizon contended that payments were not owed. The Commission ruled in favor of ATT.
2. Verizon appealed the Commission's decision to this Court. A few minutes before doing so, however, it filed a complaint in the Federal District Court for Delaware in which it asked the Federal Court to declare that the Commission's decision violates the Act and to enjoin enforcement of the decision. In its appeal to this Court, Verizon presents the same federal question and, in addition, argues that the Commission's decision is contrary to the plain language of the agreement, constitutes plain legal error, and is not supported by substantial evidence. Verizon now asks this Court to stay proceedings in this Court while it pursues its federal action.
3. In support of its motion, Verizon contends that the Federal District Court has jurisdiction to review the Commission's order and grant the relief which it requests; that this Court has discretion to stay the appeal pending the outcome of the federal proceeding; that the appeal to this Court was filed to preserve the right to pursue an appeal if it is determined that the Federal Court does not have jurisdiction; that due regard should be given to a party's preferred choice of forum; that the federal action was filed first; and that this appeal should be stayed in the interest of judicial economy.
4. In opposition to the motion, the Commission contends that the agreement provides that interpretation of its terms is to be governed by the law of the State of Delaware; that it decided the case by applying Delaware contract law principles; that Verizon's motion asks this Court to defer to the Federal District Court to decide Delaware contract law; that where there are parallel federal and Delaware cases, Delaware law does not favor a stay of the Delaware proceeding insofar as issues of Delaware law are concerned; and that this Court should proceed without any stay to decide issues governed by Delaware state law.
ATT does not oppose Verizon's motion.
5. When similar actions between the same parties involving the same issues are in progress simultaneously in separate jurisdictions, either court may, in its discretion, hold that action in abeyance pending the outcome of the other action. This inherent power to stay proceedings is part of a court's prerogative in managing its docket. This rule applies equally to actions involving issues which, while similar, are not identical to those in the pending action.
General Foods Corp. v. Cyro-Maid, Inc., 198 A.2d 681, 682-83 (Del. 1964); See also McWane Cast Iron Pipe Corp.v. McDowell-Wellman Engineering Corp., 263 A.2d 281, 283 (Del. 1970).
Welsbach Corp. v. Sley, 1971 WL 3 (Del.Ch.an.), Marvel V.C. (May 7, 1971) (Mem. Op.); At *1-2 citing Lanova Corp. v. Atlas Imperial Diesle Engine Co., 64 A.2d 419 (Del.Super. 1949).
6. Typically, the decision whether or not to stay an action arises where two opposing parties have filed competing actions in different forums. In such cases, if the Delaware action is filed first or the actions are deemed filed simultaneously, it is appropriate to consider the following factors: (1) the relative ease of access to proof; (2) the availability of compulsory processes for witnesses; (3) the possibility of the view of the premises, if appropriate; (4) all other practical problems that would make the trial of the case easy, expeditious and inexpensive; and (5) whether or not the controversy is dependent upon the application of Delaware law which the courts of this state more properly should decide than those of another jurisdiction. In this case, since Verizon alone controlled the order of filing, I consider the appeal and the federal action to have been filed simultaneously.
Acierno v. New Castle County, 679 A.2d 455 (Del. 1996).
7. An analysis based upon the just mentioned factors, however, does not work in this case because the first four factors have no impact at all. This appeal and the federal action will both be decided entirely upon an existing record. In this case, the decision to grant or deny a stay is best made by weighing the relevant factors for and against a stay, including the fifth factor mentioned above, and determining which outweigh the others.
8. Verizon brings to the Court's attention a decision of the Federal Communications Commission which it contends construed the very language at issue in this case to mean that Internet-bound traffic does not constitute compensable local traffic. In addition, a recent Federal District Court decision appears to hold that the Act gives federal courts jurisdiction to review decisions made by state public service commissions concerning interconnection agreements even where the decision is based on state contract law. The dispute in that case, like the one here, involved a state agency interpretation, based on state law, of the terms of an interconnection agreement as they related to reciprocal compensation for Internet-bound traffic. The Federal District Court applied an appropriate standard of review and concluded that the state agency had correctly decided the case based on state law. The case also discusses a split among federal circuit courts of appeals on whether federal courts should exercise jurisdiction when a state agency decision concerning an interconnection agreement is based on state law.
In Re Starpower, 15 F.C.C.R. 11277 (2000).
The Ohio Bell Telephone Company v. ICG Telephone Group, Inc., 2003 U.S. Dist. LEXIS 2363; See also BellSouth Telecommunications Inc. v. MCI Metro Access Transmission Service, Inc., 317 F.3d 1270 (11 Cir. 2003) for a discussion of federal court jurisdiction and review of state agency action with respect to interconnection agreements and the split among the circuits as to the scope of federal court review under 47 U.S.C.A. § 252(e)(6). That case also appears to involve the issue of reciprocal compensation for internet-bound traffic.
9. The Commission cites two Delaware cases in support of its contention that this Court should proceed without a stay because the Commission's decision is based on principles of Delaware law which should be decided by a Delaware court. They are Acierno v. New Castle County and HFTP Investments, L.L.C. v. ARIAD Pharmaceuticals, Inc. Acierno is a land use case. Mr. Acierno and New Castle County filed competing actions. Acierno filed in federal court, contending that New Castle County's refusal to issue a building permit for a commercial project violated constitutional rights. New Castle County filed a declaratory judgment action in the Court of Chancery, contending that its denial of a permit was proper. The Court of Chancery refused to stay the action in that court. Its decision was influenced by the fact that the grant or denial of a building permit is distinctly a local government issue. In HFTP Investments, the relevant forums were Delaware and New York. As between the two, Delaware law predominated in the dispute. The Court of Chancery decided not to stay that case as well.
679 A.2d 455, 458 (Del. 1996).
752 A.2d 115 (Del.Ch. 1999).
10. Having issues of state law, and, for that matter, decisions of Delaware state agencies, reviewed by the courts of this state, are, no doubt, important considerations. It appears, however, that there is already a developing body of case law in the federal courts regarding federal review of state agency enforcement of interconnection agreements, even where the agency decision is based upon state law principles. If the Federal District Court decides that it does have jurisdiction, its decision on the merits should fully dispose of the litigation. For these reasons, I am persuaded that this appeal should be stayed while the appellant pursues its federal action.
11. For the foregoing reasons, the motion for a stay is granted.