This week, the Fourth Circuit issued an important decision concerning the jurisdiction and role of federal courts in the interpretation and enforcement of state-approved Interconnection Agreements (“ICAs”). In Central Telephone Co. v. Sprint Communications Co., the Fourth Circuit held that plaintiffs are not required to bring claims relating to the interpretation and enforcement of state-approved ICAs to a state commission before they can be heard in federal court. Instead, the court ruled that a party may bring a claim for breach of contract in federal court directly. This decision opens a new option for parties seeking to interpret and enforce ICAs, at least in the states within the Fourth Circuit (which encompasses Maryland, Virginia, North Carolina, South Carolina and West Virginia).
At the outset, the court noted two propositions that are roundly accepted and not in dispute in the case. First, it noted that a federal court has jurisdiction to interpret the terms of an ICA under 28 U.S.C. section 1331. Second, it also noted that “every circuit to have considered the question” has concluded that a state commission also has such authority to interpret the terms of an ICA. The question presented by Sprint, however, was the “more particularized” question of whether a state commission must interpret an ICA before a federal district court can do so.
In finding that the federal courts have jurisdiction in the first instance, the court held that neither the text of the 1996 Act nor the FCC decisions applying it provide state commissions with exclusive jurisdiction to interpret and enforce state-approved ICAs. Notably, relying in part on an FCC amicus brief disavowing the interpretation, the court disagreed with a Third Circuit decision, that held state commissions had exclusive authority to resolve disputes over ICAs in the first instance. Instead, the Fourth Circuit ruled that the FCC’s Starpower decision only stands for the proposition that state commissions have authority to interpret and enforce ICAs when asked to do so and not that state commissions have exclusive authority to do so.
The Court further found that prudential exhaustion considerations do not require presentation to a state commission prior to heading to federal court either. The Court disagreed with Sprint that state commissions have a special expertise on matters relating to interconnection that courts lack. Because of that and the fact that the Act imposes no explicit exhaustion requirement, the Court declined to impose one.