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Saturn v. BellSouth

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Released: April 4, 2013

Federal Communications Commission

DA 13-616

Before the

Federal Communications Commission

Washington, D.C. 20554

In the Matter of
)
)

Saturn Telecommunication Services, Inc.,
)
)

Complainant,
)
)

File No.: EB-09-MD-008
v.
)
)

BellSouth Telecommunications, Inc.,
)
d/b/a/ AT&T Florida,
)
)

Defendant.
)

MEMORANDUM OPINION AND ORDER

Adopted: April 4, 2013

Released: April 4, 2013

By the Associate Chief, Enforcement Bureau:

I.

INTRODUCTION

1.
This Memorandum Opinion and Order (Order) dismisses with prejudice the formal
complaint1 that Saturn Telecommunication Services, Inc. (STS) filed against BellSouth
Telecommunications, Inc., d/b/a/ AT&T Florida (AT&T or BellSouth) under Section 208 of the
Communications Act of 1934, as amended (Act).2 STS alleges that AT&T violated Sections 201(a),
201(b), 202(a), 251(c)(2)(B)–(D), 251(c)(3), and 271(c)(2)(B) of the Act3 by refusing to permit STS to
purchase special access service commingled with certain “non-designed” DS-0 loops rather than
commingled with higher-priced, “designed” DS-0 loops.4 In addition, STS alleges that AT&T violated
Sections 202(a) and 251(c)(2)(C) of the Act by failing to have a process by which AT&T could
“seamlessly convert” STS’s existing customers in bulk from “UNE-P” arrangements to arrangements


1 Formal Complaint, File No. EB-09-MD-008 (filed July 20, 2009) (Compl.). AT&T filed an answer and an
amended answer to the Complaint. See AT&T’s Answer to STS’s Formal Complaint, File No. EB-09-MD-008
(filed Sept. 4, 2009); AT&T’S Legal Analysis, File No. EB-09-MD-008 (filed Sept. 4, 2009) (AT&T’s Legal
Analysis); AT&T’s Amended Answer to STS’s Formal Complaint, File No. EB-09-MD-008 (filed Sept. 18, 2009)
(Answer). STS then filed a Reply to the Answer. See Saturn Telecommunication Services, Inc.’s Reply to
AT&T’s Amended Answer and Legal Analysis to STS’s Formal Complaint, File No. EB-09-MD-008 (filed Sept.
28, 2009) (Reply). Thereafter, the parties filed a joint statement of undisputed facts. See Further Revised Joint
Statement of Undisputed Facts, File No. EB-09-MD-008 (filed July 16, 2010) (Joint Statement).
2 47 U.S.C. § 208.
3 47 U.S.C. §§ 201(a), 201(b), 202(a), 251(c)(2)(B)–(D), 251(c)(3), and 271(c)(2)(B).
4 See, e.g., Compl. at 68–85, Counts I–IX.

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commingling special access service with loops.5 STS further alleges that AT&T violated its duty under
Section 251(c)(1) of the Act to negotiate an interconnection agreement in good faith.6
2.
For the reasons discussed below, we dismiss Counts I–IX and XI–XIII because STS
released the claims stated in those Counts under the terms of a prior settlement agreement with AT&T.
Because these are the only Counts remaining in the Complaint,7 we dismiss the Complaint in its entirety.

II.

BACKGROUND

3.
During all relevant periods, STS was a competitive local exchange carrier (CLEC) and
interexchange carrier (IXC) certified by the Florida Public Service Commission (FPSC) to provide
telecommunications services in Florida.8 STS offered local and long distance services to businesses and
residential consumers in an area that included South Florida.9 Prior to 2006, pursuant to an
interconnection agreement with AT&T,10 STS served most, if not all, of its customers by purchasing from
AT&T a service known as “UNE-P,” which consisted of unbundled local switching combined with local
loops and shared transport.11
4.
For purposes relevant to this proceeding, AT&T is an incumbent local exchange carrier
(ILEC) certified by the FPSC to provide local exchange services in Florida.12 AT&T is also a Bell
Operating Company (BOC), and its affiliate BellSouth Long Distance, Inc. d/b/a AT&T Long Distance
Service is an IXC authorized by this Commission and the FPSC to provide long distance services.13
5.
On February 4, 2005, the Commission released the Triennial Review Remand Order
(TRRO), which, inter alia, eliminated a requirement that ILECs such as AT&T sell UNE-P service to
CLECs such as STS.14 The Commission established a 12-month transition period for CLECs to purchase
from ILECs services other than UNE-P to serve the CLECs’ customers.15


5 See, e.g., Compl. at 91–93, Counts XI and XII.
6 See, e.g., Compl. at 95–96, Count XIII. Pursuant to Section 1.722(d) of the Commission’s rules, 47 C.F.R §
1.722(d), STS requested that a determination of damages be made in a proceeding separate from and subsequent to
the proceeding to determine liability. Compl. at 127, para. 415.
7 STS voluntarily dismissed Count X of the Complaint, which alleged a violation of Section 272 of the Act, 47
U.S.C. § 272. Notice of Voluntary Dismissal, File No. EB-09-MD-008 (filed May 19, 2010); Letter Order from
Lisa Saks, Assistant Chief, Market Disputes Resolution Division, EB-FCC, to Counsel for AT&T and STS, File
No. EB-11-MD-005 (dated June 7, 2010).
8 See, e.g., Joint Statement at 2, para. 1.
9 See, e.g., Joint Statement at 2, para. 2.
10 Compl. at 14, para. 23.
11 See In the Matter of Review of the Section 251 Unbundling Obligations of Incumbent Local Exchange Carriers,
Notice of Proposed Rulemaking, 16 F.C.C.R. 22781, 22802 n. 102 (2001).
12 See, e.g., Joint Statement at 2, para. 4.
13 See, e.g., Joint Statement at 2, para. 4.
14 See Unbundled Access to Network Elements, Review of the Section 251 Unbundling Obligations of Local
Exchange Carriers
, Order on Remand, 20 FCC Rcd 2533, 2641–42, at para. 199 (2005), aff’d, 450 F.3d 528 (D.C.
Cir. 2006) (TRRO); Joint Statement at 5, para. 14. The TRRO was issued following the appeal of an earlier
(continued . . .)
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6.
By late 2004, prior to the release of the TRRO, AT&T and STS had already begun
discussing the design and construction of a new AT&T network to which STS could migrate its UNE-P
customers.16 Working with AT&T through 2005, STS ultimately decided on a network consisting of the
commingling of Section 251(c)(3) unbundled network elements with a special access facility called a
SMARTRing (henceforth, the “commingled network”).17 The commingled network design called for
STS’s customers to be connected to the SMARTRing through “DS-0” and “DS-1” loops,18 with
collocation arrangements located at eight AT&T wire centers.19
7.
During the negotiations in 2005, AT&T advised STS that STS could purchase two types
of “non-designed” DS-0 loops for use in the commingled network: either an Unbundled Copper Loop
Non-Designed (UCL-ND) loop or a Service Level 1 (SL1) loop.20 During those same discussions, STS
told AT&T that, to transition STS’s customers from UNE-P to the new commingled network as quickly
as possible, STS wanted AT&T to use a “bulk migration” process capable of moving customers in large
increments.21 At that time, STS had approximately 18,200 UNE-P lines, provisioned mostly to small
business and residential customers in South Florida.22
8.
In about March 2006, shortly before the TRRO transition deadline and while the parties
were negotiating the terms of a new interconnection agreement, AT&T changed its earlier advice and
informed STS for the first time that it was technically infeasible to use a non-designed DS-0 loop in the
(. . . continued from previous page)


Commission order. See Review of the Section 251 Unbundling Obligations of Incumbent Local Exchange
Carriers, Implementation of the Local Competition Provisions of the Telecommunications Act of 1996,
Deployment of Wireline Services Offering Advanced Telecommunications Capability
, Report and Order and Order
on Remand and Further Notice of Proposed Rulemaking, 18 FCC Rcd 16978 (2003) (TRO), vacated and
remanded in part
, aff’d in part, United States Telecom Ass'n v. FCC, 359 F.3d 554 (D.C. Cir. 2004). See also
Joint Statement at 8, para. 29.
15 See, e.g., TRRO, 20 FCC Rcd at 2641–42, para. 199.
16 See, e.g., Joint Statement at 6, para. 19.
17 See, e.g., Joint Statement at 7, para. 22. “Commingling” is defined in the Commission’s rules as “the … linking
of an unbundled network element, or a combination of unbundled network elements, to one or more facilities or
services that a requesting telecommunications carrier has obtained at wholesale from an incumbent LEC, or the
combining of an unbundled network element, or a combination of unbundled network elements, with one or more
such facilities or services.” 47 C.F.R. § 51.5. The Commission affirmatively permitted requesting carriers to
commingle UNEs with services and required ILECs to perform functions to effectuate these arrangements upon
request. TRO, 18 FCC Rcd at 17342, para. 579.
18 A DS-0 loop is a voice-grade digital channel of 64 Kbps, and DS-1 loops are the next higher capacity digital
transmission facilities. See Compl. at 19 n.57; Newton’s Telecom Dictionary at 298 (25th ed. 2009).
19 See, e.g., Joint Statement at 7, para. 23.
20 See, e.g., Joint Statement at 13, para. 51. We use the term, “designed loop” in this proceeding to denote a loop
as to which AT&T claims to undertake design work before the loop is provisioned. See, e.g., Answer at 80, para.
192. A “non-designed loop,” as used in this proceeding, means a loop that does not require any such design work,
according to AT&T. Whether and to what extent AT&T actually performs design work on its “designed” SL2
loops was a disputed issue in this proceeding that need not be addressed here.
21 See, e.g., Joint Statement at 13, para. 49.
22 See, e.g., Joint Statement at 5, para. 14.
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commingled network.23 According to AT&T, only a certain “designed” DS-0 UNE loop—known here as
a Service Level 2 (SL2) Loop—would work in the commingled network, and such designed loops would
cost STS substantially more than non-designed loops.24 Further, AT&T informed STS that it had not
created a bulk migration process to convert STS’s UNE-P customers to the kind of commingled network
STS had chosen.25
9.
STS expressed great dissatisfaction with these late revelations and demanded that AT&T
compensate STS for the additional costs STS would incur as a result of AT&T’s changed requirements.26
The parties engaged in a series of discussions, and exchanged several settlement proposals, in an effort to
resolve this dispute.27 During those discussions, STS questioned AT&T about its failure to develop a
bulk migration process and about the basis for AT&T’s determination that commingling using non-
designed DS-0 loops was technically infeasible.28 STS expressed skepticism—both internally and in
communications with AT&T—about the veracity of the answers it received29 and harbored doubts about
whether AT&T was conducting these discussions in good faith.30


23 See, e.g., Joint Statement at 14, 18–19, 45, paras. 57, 72, 177; Compl, Aff. of Keith G. Kramer (Kramer Aff.),
Ex. 1 at KK00208-09 (E-mail from Keith Kramer, STS, to Mark Amarant, STS, et al. (March 22, 2006)); Compl.
at 93, para. 285. We note that, in the documents and pleadings filed in this proceeding, the parties generally use
the terms “non-designed DS-0 loop,” “non-designed loop,” “UCL-ND loop,” and “SL1 loop” interchangeably,
although there is some difference, e.g., in price, between a UCL-ND loop and a SL1 loop. See, e.g., Joint
Statement at 43, paras. 168–69. In this Order, we use the single term “non-designed DS-0 loop.”
24 See, e.g., Joint Statement at 14, 19, 43, 45, paras. 57, 73, 168, 170, 177, 180. For example, AT&T’s recurring
charges for a SL2 loop are approximately 15% more than for a SL1 loop, and the non-recurring charge for an SL2
loop is more than twice the non-recurring charge for an SL1 loop. Joint Statement at 15, 43, paras. 63, 170–171.
The cost differential between an SL2 loop and a UCL-ND loop is even greater. Id. at 43, paras. 168–70.
25 See, e.g., Joint Statement at 15–16, para. 64.
26 See, e.g., Joint Statement at 14–15, paras. 58–59, 61–62; Answer, Ex. 32 (Letter via e-mail from Keith Kramer,
STS, to Donna Hartley, AT&T (May 3, 2006) (STS May 3, 2006 Letter)); Kramer Aff., Ex. 1 at KK00331–35
(“STS Position on Network and TRRO Compliance” (undated)); id. at KK00216–17 (E-mail from Keith Kramer,
STS, to James Tamplin, AT&T, et al. (March 27, 2006)); id. at KK00220 (E-mail from Ronald Curry, STS, to
LSM Group, AT&T, et al. (March 27, 2006)).
27 See, e.g., Joint Statement at 17–19, paras. 66, 68–73.
28 STS submitted a set of questions to AT&T concerning AT&T’s proposed settlement terms, the technical
feasibility of commingling non-designed DS-0 loops, and the availability of bulk migration, and AT&T provided
responses to these questions on June 2, 2006. See, e.g., Joint Statement at 19, para. 73; Kramer Aff., Ex. 1 at
KK00339–45 (“STS UVL-SL 2 & Collocation Proposal Comments and Questions for Understanding Between the
Parties” (undated)); STS May 3, 2006 Letter; Kramer Aff. Ex. 1 at KK00353–366 (Letter from Tosha Davis,
AT&T, to Keith Kramer, STS (June 2, 2006) (stating STS’s questions and AT&T’s responses). Keith Kramer, the
STS executive who took the lead in these discussions with AT&T, prepared internal notes commenting on
AT&T’s responses to STS’s questions. Id. at KK00367–83 (Kramer Comments on AT&T Responses).
29 After reviewing AT&T’s responses to STS’s questions, Keith Kramer of STS observed “several problems” with
AT&T’s statement that the commingling of non-designed DS-0 loops is not technically feasible, see Kramer
Comments on AT&T Responses at KK00367, and suggested that AT&T’s failure to allow such commingling was
contrary to Commission policy as expressed in the TRO and TRRO. Id. at KK00367; KK00369–70. Kramer also
questioned (a) AT&T’s assertion that a commingled loop must be provisioned in AT&T’s Trunk Inventory Record
Keeping System (TIRKS) and (b) AT&T’s explanation of why the loops STS sought to commingle could not be
included in TIRKS, calling AT&T’s explanation “misdirection and meaningless.” Id. at KK00367–68. Kramer
testified that AT&T’s responses to STS’s questions “raised concerns for STS” because AT&T’s explanation of
(continued . . .)
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10.
In June 2006, after the parties had failed to achieve a resolution, STS filed a complaint
against AT&T before the FPSC,31 and also filed comments with this Commission opposing AT&T’s then-
proposed merger with BellSouth.32 In both filings, STS assailed AT&T’s alleged failure to timely migrate
STS’s UNE-P customers to another arrangement, and asserted that AT&T had misled STS regarding the
use of non-designed DS-0 loops in the commingled network and imposed arbitrary commingling rules.33
STS also asserted in both filings that AT&T had improperly refused to provide a bulk migration process
to transfer STS’s UNE-P customers to the commingled network, and had made misrepresentations to STS
concerning the availability and operation of AT&T’s bulk migration process.34 STS further argued in
both filings that AT&T had acted fraudulently, anti-competitively, and in bad faith in dealing with STS
on the commingling and migration issues.35 In its FPSC Complaint, STS sought prospective relief in the
(. . . continued from previous page)


why it was technically infeasible to commingle a non-designed DS-0 loop “made no sense.” Kramer Aff. at 29,
para. 45. Further, in a June 8, 2006 e-mail to STS’s counsel recounting a conversation he had with AT&T
employee Daryl Ducote concerning AT&T’s position on technical infeasibility, Kramer observed: “We both knew
that was bull_ _ _ _. The reason it is not technically feasible is because it is five dollars less per line. That is the
only reason, he knows it and now I know it.” Id., Ex. 1 at KK00384–85 (E-mail from Keith Kramer, STS, to Alan
Gold, STS Counsel, et al. (June 8, 2006)). Kramer testified that after receiving AT&T’s responses to STS’s
questions on June 2, 2006 and conferring with Daryl Ducote of AT&T, Kramer concluded that AT&T “would not
convert STS’ embedded base of UNE-P customers and that [AT&T] had no intention of allowing STS to
commingle a DS0 level UNE loop on STS’ commingled network”). Kramer Aff. at 37, para. 47. See also STS
May 3, 2006 Letter at ATT000243–44 (asserting that use of the SL2 designed loop with its additional features
“does not appear to be necessary” for the migration of STS’s embedded base of customers).
30 See Kramer Comments on AT&T Responses at KK00379 (“how can [AT&T] state that they were acting in good
faith. . .What part of good faith am I missing?”); id. at KK00372 (“they are not giving us accurate truthful answers
even in a settlement offer”); id. at KK00383. See also Kramer Aff., Ex. 1 at KK00346–47 (E-mail from Keith
Kramer, STS, to Alan Gold, STS Counsel, et al. (May 26, 2006) (stating that AT&T employee Robby Pannel
“dilibertly [sic] has been misleading [STS employee] Kathy Cicero over the past couple of weeks while we have
been waiting for a settlement.”)).
31 Compl., Aff. of Nancy M. Samry (Samry Aff.), Ex. 2 (Emergency Pet. of Saturn Telecommunication Services,
Inc. Against BellSouth Telecommunications, Inc. to Require BellSouth to Honor Commitments and to Prevent
Anticompetitive and Monopolistic Behavior
, Docket No. 060435-TP (filed June 5, 2006) (FPSC Compl.)); Joint
Statement at 19, para. 74.
32 Compl., Samry Aff., Ex. 3 (Application for Consent to Transfer of Control Filed by AT&T Inc. and BellSouth
Corp.
, WC Docket No. 06-74, Saturn Telecommunication Services, Inc.’s Comments (filed June 5, 2006) (FCC
Comments)); Joint Statement at 19, para. 74. The Commission concluded, without addressing the substance of the
allegations, that the STS Comments did not provide a basis for finding that AT&T lacked the fitness to acquire the
BellSouth authorizations and licenses. Application for Consent to Transfer of Control Filed by AT&T Inc. and
BellSouth Corp.
, WC Docket No. 06-74, Memorandum Opinion and Order, 22 FCC Rcd 5662, 5757-58, para. 194
(2007).
33 See, e.g., Joint Statement at 19, 49–50, paras. 74, 201–202; FPSC Compl. at 4–6, 8–16, paras. 5, 8, 19, 21, 26,
28–29, 34, 36, 44–47, 49–50, 54–55, 62; FCC Comments at 4, 6–7, 9–11, 13, paras. 10, 17–19, 26, 28, 32–34, 36–
37, 41–43. See also Compl. at 34, para. 88.
34 See, e.g., Joint Statement at 19, 49, paras. 74, 201; FPSC Compl. at 5–10, 13, 15–16, paras. 5, 8, 14–16, 18, 22–
24, 30, 43, 48, 54–55, 58, 62; FCC Comments at 3–7, 10, 11, paras. 9–11, 13–16, 20, 31, 36. See also Compl. at
34, para. 88.
35 See, e.g., FPSC Complaint at 4–6, 14–16, paras. 5–6, 49–51, 54, 60–61; id. at 17 (Prayer for Relief) ; FCC
Comments at 11–13, 15–17, paras. 37–40, 43, 45, 49, 53.
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form of an order requiring AT&T to transfer STS’s existing UNE-P customers, and to add new STS
customers in the future, to the commingled network at the lower rates for non-designed DS-0 loops.36
11.
Following these filings, representatives of AT&T and STS engaged in a mediation of
their dispute in July 2006 and ultimately reached a settlement.37 Pursuant to that settlement, in late 2006,
STS and AT&T entered into a Confidential Settlement Agreement (Settlement Agreement)38 and a new
Interconnection Agreement (ICA).39
12.
Under the Settlement Agreement, the parties agreed that AT&T would provide STS with
certain billing credits40 and that STS would withdraw all billing disputes regarding the difference between
the rates for a non-designed DS-0 loop and an SL2 loop, regardless of whether the disputed charges were
assessed under the existing or the new ICA.41 The Settlement Agreement also permitted STS to migrate
2,500 of STS’s existing UNE-P lines to SL2 loops commingled with special access transport using a
“bulk migration work-around process.”42
13.
The Settlement Agreement acknowledged that STS had withdrawn the FPSC Complaint
and the FCC Comments without prejudice, and STS expressly agreed not to re-file the FPSC Complaint
or the FCC Comments “or the allegations raised in or associated with” them, in any forum.43 In addition,
STS agreed in the Settlement Agreement to “release[], acquit[], and discharge[] [AT&T] from all
Demands, Actions and Claims, whether known or unknown, asserted or which could have been asserted,


36 See, e.g., FPSC Compl. at 6, para. 6; id. at 17–18 (Prayer for Relief).
37 See, e.g., Joint Statement at 19, 20, paras. 75–76. The mediation resulted in the parties’ execution of a Term
Sheet on July 12, 2006 setting forth the terms under which STS had agreed to withdraw its claims against AT&T
and indicating that the parties would negotiate and execute a new Interconnection Agreement and a new Market
Based Rates (MBR) Agreement. Joint Statement at 19–21, paras. 75–76, 81; STS’s Initial Response to Legal
Issues for Briefing, File No. EB-09-MD-008 (filed Jan. 31, 2011) (STS Initial Br.), Ex. App., Tab 10 (Term Sheet)
at 1, paras. 1–8.
38 Answer, Ex. App., Tab 40 (Settlement Agreement). The Settlement Agreement was entered into on November
8, 2006. Id. at 1 (ATT144159).
39 See, e.g., Answer, Ex. App., Tab 33 (“Interconnection Agreement Between Bell South Telecommunications,
Inc. and Saturn Telecommunication Services Inc. dba STS”). STS apparently executed the ICA on October 23,
2006, id. at ATT144197, and AT&T apparently executed the ICA on November 1, 2006. Id. See also Answer,
Ex. App., Tab 128 (Saturn Telecommunication Services, Inc. v. BellSouth Telecommunications, Inc., Case No.
4:08-cv-00271-SPM-WCS, Amended Complaint and Demand for Jury Trial (filed June 27, 2008) (Federal District
Ct. Compl.) at 2, paras. 5, 8. Pursuant to their settlement, the parties also executed a new MBR Agreement in late
2006. Joint Statement at 21, para. 81.
40 Settlement Agreement at 4, paras. 9–10.
41 Settlement Agreement at 4, para. 11.
42 Joint Statement at 21–22, 66–67, 70, paras. 85–87, 286, 290, 295; Settlement Agreement at 4–5, para. 13.
43 Settlement Agreement at 3, para. 5 (“STS has withdrawn the FPSC Complaint without prejudice. STS agrees
not to re-file the FPSC Complaint or the allegations raised in or associated with the FPSC Complaint at the FPSC
or in any other forum.”); id. at 3, para. 6 (“STS has withdrawn its Comments in the FCC Docket without
prejudice. STS agrees not to re-file the Comments or the allegations raised in or associated with the Comments at
the FCC or in any other forum.”); Joint Statement at 21, para. 83.
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against [AT&T] related to” the FPSC Complaint or the FCC Comments.44 The parties agreed that the
Settlement Agreement would be construed in accordance with Florida law.45
14.
The parties agree that the ICA, executed just days prior to the Settlement Agreement,
limits STS to commingling certain kinds of DS-0 loops, including SL2 loops, but not including non-
designed DS-0 loops, such as SL1 loops.46 The parties disagree about whether the ICA requires AT&T to
provide bulk migrations to commingled arrangements.47
15.
In the months that followed execution of the Settlement Agreement, the parties
experienced difficulties in implementing the Settlement Agreement’s provisions allowing bulk migration
of 2,500 of STS’s existing UNE-P lines to the commingled arrangement.48 Each party blames the other
for these difficulties.49 In the end, only about eighty-five of STS’s UNE-P lines were moved to the
commingled network utilizing a bulk migration work-around process.50
16.
On May 30, 2008, pursuant to Commission rules 1.716–1.718,51 STS filed an informal
complaint against AT&T with this Commission.52 The Informal Complaint asserted violations of
Sections 271 and 251 of the Act based primarily on AT&T’s allegedly faulty implementation of a new
Operating Support System (OSS) in April 2008.53 The Informal Complaint also alleged that AT&T had
“misled STS into believing that [AT&T] had perfected the process” for converting STS’s existing UNE-P
customers to a commingled network when, according to STS, AT&T was “unable to do this conversion in
a proper manner.”54
17.
A few weeks later, in June 2008, STS filed a three-count complaint against AT&T with
the United States District Court for the Northern District of Florida.55 In Count I of the Federal District
Court Complaint, STS alleged that AT&T had breached the Settlement Agreement by failing to convert


44 Settlement Agreement at 3, paras. 5–6; Joint Statement at 21, para. 84. As discussed below, the phrase,
“Demands, Actions and Claims” is a defined term in the Settlement Agreement. Settlement Agreement at 2–3,
para. 8 (Definitions).
45 Settlement Agreement at 5, para. 16. The parties also consented to jurisdiction and venue in the United States
District Court for the Northern District of Florida. Id.
46 See, e.g., Joint Statement at 45, para. 178; Reply at 64, para. 129.
47 See, e.g., Joint Statement at 21 n.17; Reply at 30, para. 45; AT&T’s Statement of Facts Disputed by STS, File
No. EB-09-MD-008 (filed Mar. 8, 2010) (AT&T’s Statement of Disputed Facts) at 74, para. 108.
48 See, e.g., Joint Statement at 22–35, paras. 89–131.
49 See, e.g., Saturn Telecommunication Services, Inc.’s Amended Statement of Disputed Facts, File No. EB-09-
MD-008 (filed March 9, 2010) (STS’s Statement of Disputed Facts) at 33–38, paras. 41–43.
50 See, e.g., Joint Statement at 35, para. 133.
51 47 C.F.R. §§ 1.716–1.718.
52 STS Initial Br., Ex. App., Tab 14 (Informal Complaint, File No. EB-08-MDIC-0034 (filed May 30, 2008)
(Informal Compl.)). See Joint Statement at 35, para. 136.
53 Informal Compl. at 2–6.
54 Informal Compl. at 2–3, 6. The Informal Complaint did not address the negotiations that led to the ICA or
accuse AT&T of violating its duty under Section 251(c)(1) of the Act to negotiate the ICA in good faith.
55 See, e.g., Joint Statement at 35, para. 137; Federal District Ct. Compl.
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2,500 of STS’s lines from UNE-P to the commingled network.56 In Count II, STS alleged that AT&T had
fraudulently induced STS to enter the Settlement Agreement by falsely stating that AT&T was able to
convert the 2500 lines.57 And in Count III, STS alleged that AT&T had breached the ICA by failing
properly to (i) implement the new OSS and (ii) migrate STS’s UNE-P customers to the commingled
network utilizing SL2 loops.58
18.
On November 28, 2008, the District Court granted AT&T’s motion to dismiss STS’s
fraudulent inducement claim in Count II, ruling that under Florida law, STS could not have reasonably
relied on AT&T’s alleged misrepresentations because the parties were in adverse positions at the time the
alleged misrepresentations were made.59 The Court also granted AT&T’s motion to dismiss Count III
based on a dispute resolution clause in the ICA that designated the FPSC as the appropriate forum for
addressing disputes arising under the ICA.60 The Court denied AT&T’s Motion to Dismiss Count I of the
Complaint because the parties had explicitly chosen that Court as the appropriate forum for any dispute
regarding the Settlement Agreement.61 The Court further ruled that STS’s prior filing of the Informal
Complaint with this Commission did not preclude STS from filing suit in court for breach of the
Settlement Agreement.62
19.
On June 22, 2009, STS filed a motion in the District Court seeking to amend its
complaint to add an alternative count for rescission of the Settlement Agreement.63 On the following day,
however, STS and AT&T entered a stipulation agreeing to dismiss the entire court action without
prejudice, and the Court then dismissed the case on June 30, 2009 without ruling on STS’s motion to
amend the complaint.64
20.
Less than one month later, on July 20, 2009, STS filed the instant Complaint.65 In Counts
I through IX and XIII, STS alleges that AT&T violated Sections 201(a), 201(b), 202(a), 251(c)(1),
251(c)(2)(B)–(D), 251(c)(3), and 271(c)(2)(B) of the Act by refusing to permit STS to commingle special
access with non-designed DS-0 loops and requiring STS to purchase the higher-priced SL2 loops instead,


56 See, e.g., Joint Statement at 35, para. 138; Federal District Ct. Compl. at 4–6, paras. 19–26.
57 See, e.g., Joint Statement at 35–36, para. 138; Federal District Ct. Compl. at 6–9, paras. 27–42.
58 See, e.g., Joint Statement at 36, para. 138; Federal District Ct. Compl. at 9–17, paras. 43–93.
59 See, e.g., Joint Statement at 36, para. 139; Compl., Samry Aff., Ex. 7 (Saturn Telecomm. Servs., Inc. v.
BellSouth Telecomms., Inc.
, No. 4:08-cv-00271-SPM-WCS, Order Granting Defendant’s Mot. to Dismiss in Part
and Denying Defendant’s Mot. to Dismiss in Part (N.D. Fla. Nov. 25, 2008) (Order Granting Mot. to Dismiss in
Part), at 17–20).
60 See, e.g., Joint Statement at 36, para. 139; Order Granting Mot. to Dismiss in Part at 6, 7–11.
61 See, e.g., Joint Statement at 36, para. 139; Order Granting Mot. to Dismiss in Part at 11–17.
62 See, e.g., Joint Statement at 36, para. 139.
63 See, e.g., Joint Statement at 37, para. 144; Compl., Samry Aff., Ex. 6 (Saturn Telecommunication Services, Inc.
v. BellSouth Telecommunications, Inc.
, No. 4:08-cv-00271-SPM-WCS, Motion for Leave to File Second Amended
Complaint and Supporting Memorandum (filed June 22, 2009)).
64 Joint Statement at 37, paras. 145–46.
65 The original deadline for STS to convert its informal complaint to a formal complaint pursuant to 47 C.F.R. §
1.718 was January 21, 2009. That deadline was ultimately moved to July 21, 2009, after the Commission
approved a series of joint or agreed requests from the parties seeking to extend that deadline. Joint Statement at
37–38, paras. 147–151.
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and by intentionally misrepresenting that the commingling of non-designed DS-0 loops was technically
infeasible.66 In short, STS alleges that in order to sell STS a commingled network that included an
expensive special access SMARTRing, AT&T represented to STS in 2005 that it could use low cost non-
designed DS-0 loops in the commingled network rather than the more expensive designed SL2 loops.67 In
2006, after STS had committed to moving forward with the commingled network, AT&T advised STS for
the first time that a non-designed DS-0 loop would not work in a commingled network and that the more
costly SL2 loop was required.68 STS alleges that AT&T intentionally misrepresented to STS that the
commingling of non-designed DS-0 loops was technically infeasible, prior to and during the negotiations
of the ICA.69 According to STS, AT&T imposed these commingling restrictions in bad faith, in order to
raise barriers to STS’s entry into the local service market and prevent STS from effectively competing
with AT&T for residential and small business customers.70 A selection of the Complaint allegations that
form the basis for Counts I through IX and XIII is set forth in Appendix A to this order.71
21.
In Counts XI and XII, STS alleges that AT&T violated Sections 202(a) and 251(c)(2)(C)
of the Act by failing to provide “seamless conversions” of STS’s UNE-P customers to the commingled
network through use of a bulk migration process.72 STS alleges that in 2005, it requested information
about the sufficiency of AT&T’s bulk migration process for converting STS’s embedded base of
customers to its planned commingled network and AT&T advised STS that these customers could be
migrated to the new network in a timely manner and that the network could be built and operated
profitably.73 However, in 2006, AT&T advised STS that it had no bulk migration process for converting
STS’s customers.74 Instead, AT&T suggested a manual process involving an expensive disconnect that
would leave STS customers out of service for a significant period of time.75 STS contends that AT&T has
refused its request to develop a bulk migration process to convert STS’s new or existing customers to its
commingled network.76 STS charges that AT&T’s failure to provide a process for seamless migration of
STS customers amounts to a barrier to entry and makes commingling uneconomical for a CLEC, such as
STS.77 A selection of the Complaint allegations that form the basis for Counts XI and XII is set forth in
Appendix A to this order.78


66 The allegations that form the basis of STS’s claims in Counts I through IX and XIII appear mainly in paragraphs
25 through 143, paragraphs 155 through 204, paragraphs 223 through 248, and paragraphs 285 through 292 of
STS’s Complaint. Compl. at 68–72, 74, 81, 83–84, 93, paras. 205, 208, 211, 214, 217, 220, 249, 252, 255, 293.
67 See, e.g., Compl. at 19–21, 23, 75, 77, paras. 46, 48, 51, 58, 223, 233.
68 See, e.g., Compl. at 26–28, 54, 75–76, paras. 68, 72, 73, 163, 225, 227, 229.
69 See, e.g., Compl. at 93–95, paras. 285–89, 291.
70 See, e.g., Compl. at 54, 58, 64, 78, 95, paras. 163, 175, 192, 237, 291.
71 See App. A (Part I).
72 The allegations that form the basis of STS’s claims in Counts XI and XII appear mainly in paragraphs 25
through 143 and paragraphs 261 through 278 of STS’s Complaint. Compl. at 91–92, paras. 279, 282.
73 See, e.g., Compl. at 16, 19, paras. 31, 45.
74 See, e.g., Compl. at 28, 30, paras. 75, 78.
75 See, e.g., Compl. at 30, para. 78.
76 See, e.g., Compl. at 54, 59, 65, paras. 164, 178, 196.
77 See, e.g., Compl. at 86, para. 261.
78 See App. A (Part II).
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22.
STS claims that it has suffered damages as a result of AT&T’s alleged violations,79 and
requests that damages be determined in a separate proceeding following a decision on liability, as
permitted under Section 1.722(d) of the Commission’s rules.80

III.

DISCUSSION

23.
For the reasons explained below, we find that the parties’ Settlement Agreement bars all
of the claims STS asserts in this action. Accordingly, we dismiss the Complaint in its entirety.

A.

STS Agreed to Release its Claims Relating to AT&T’s Refusal to Permit
Commingling with Non-Designed DS-0 Loops and Relating to AT&T’s Failure to
Provide a Bulk Migration Process.

24.
AT&T argues that we should dismiss STS’s claims in Counts I–IX, and XI–XIII because
STS released those claims in the parties’ Settlement Agreement.81 We agree, for the reasons discussed
below.82
25.
The Settlement Agreement contains the following release:
STS releases, acquits, and discharges [AT&T] from all Demands,
Actions, and Claims, whether known or unknown, asserted or which
could have been asserted, against [AT&T] related to the FPSC
Complaint . . . [or] the FCC Comments.83
The Settlement Agreement broadly defines the phrase “Demands, Actions, and Claims” to include, inter
alia
:
all obligations, promises, covenants, agreements, contracts,
endorsements, controversies, suits, actions, causes of action, rights of
action, trespasses, variances, judgments, executions, damages, claims,
demands, rights, charges, encumbrances or liens of any kind or sort
whatsoever or howsoever or whenever arising, in law or in equity,


79 See, e.g., Compl. at 68–74, 82–84, 91–93, paras. 207, 210, 213, 216, 219, 222, 251, 254, 257, 281, 284.
80 See Compl. at 127, paras. 414–15; 47 C.F.R. § 1.722(d).
81 See, e.g., AT&T’s Legal Analysis at 13–23; AT&T’s Brief in Response to Additional Legal Issues, File No. EB-
09-MD-008 (filed Feb. 1, 2011) (AT&T Initial Br.) at 24–38; AT&T’s Reply Brief Regarding Additional Legal
Issues, File No. EB-09-MD-008 (filed Feb. 15, 2011) (AT&T Reply Br.) at 14–17.
82 Neither party challenges our authority to construe the Settlement Agreement and apply it to the claims raised by
the complaint here. We note that the Commission has, in the past, construed and applied the terms of a settlement
agreement, under which it found certain claims to have been waived. See Nova Cellular West, Inc. v. AirTouch
Cellular
, Memorandum Opinion and Order, 17 FCC Rcd 15026 (2002) (Nova v. AirTouch) (construing a
settlement agreement as waiving claims for violations of the Act and Commission rules).
83 Settlement Agreement at 3, paras. 5–6 (emphasis added).
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whether known or unknown . . . that relate to the claims set forth by STS
in the FCC [Comments] and the FPSC Complaint.84
The Settlement Agreement thus released AT&T from liability for all claims, “whenever arising,”
“whether known or unknown,” that relate to claims in the FPSC Complaint or FCC Comments
(collectively, “2006 Proceedings”) and that were “asserted” or “could have been asserted” in the 2006
Proceedings.
26.
Applying the broad language of the release, STS’s claims in Counts I–IX and XIII of its
Complaint are barred because they are clearly “related to” (or the same as) claims that STS “asserted” or
“could have [] asserted” in the 2006 Proceedings. As previously recounted, in Counts I–IX and XIII, STS
alleges that AT&T violated various provisions of the Act by refusing to permit commingling of non-
designed DS-0 loops, misrepresenting in bad faith that such commingling was technically infeasible, and
requiring STS to use higher-priced SL2 loops. STS alleges that AT&T imposed these commingling
restrictions for anticompetitive reasons in an effort to raise STS’s barriers to entry.85 In so alleging, those
Counts describe conduct by AT&T that is the same, or related to, conduct that formed the basis of STS’s
claims in the 2006 Proceedings. Indeed, comparing the key allegations of the Complaint previously
recounted86 with representative excerpts from STS’s FPSC Complaint plainly shows that the two
Complaints raise closely related (or nearly identical) claims.87
27.
For example, after AT&T advised STS that the commingling of non-designed DS-0 loops
was technically infeasible, STS alleged in the 2006 Proceedings, as it argues here, that AT&T had
imposed arbitrary commingling rules, and had required STS to purchase the costlier SL2 loops. STS
asserted that AT&T’s objective was to raise STS’s costs and undermine its profitability.88 STS also
alleged in the 2006 Proceedings, as it does here, that AT&T had made misrepresentations to STS about
DS-0 loop commingling and negotiated with STS in bad faith.89 The claims STS asserts here in Counts I-
IX and XIII thus relate to STS’s claims in the 2006 Proceedings, and were asserted or could have been
asserted in those Proceedings. In particular, we find that STS’s claim in Count XIII that AT&T falsely
represented that non-designed DS-0 commingling was technically infeasible is a claim that STS could
have brought before the FPSC. Under the Commission’s rules, the FPSC had authority to determine the
validity of AT&T’s claim that commingling of non-designed DS-0 loops is technically infeasible, and
STS had a right to demand that AT&T prove that claim by clear and convincing evidence.90 Indeed, the


84 Settlement Agreement at 2–3, para. 8 (emphases added). As noted above, the parties also agreed that STS
would not re-file the FPSC Complaint or the FCC Comments “or the allegations raised in or associated with”
them, in any forum. Settlement Agreement at 3, paras. 5–6.
85 See, e.g., Compl. at 54, 58, 64, 78, 95, paras. 163, 175, 192, 237, 291.
86 See supra paragraph 20 and App. A.
87 See App. A (Parts I and III). STS’s FCC Comments contain very similar allegations as those in STS’s FPSC
Complaint, so in the interest of brevity we will not quote or paraphrase them here. See, e.g., FCC Comments at 4–
17, paras. 12, 17–19, 24, 26–28, 32–41, 43, 45, 49, 53.
88 See, e.g., FPSC Compl. at 13–14, paras. 44–47, 49.
89 See, e.g., FPSC Compl. at 5, 14–16, paras. 5, 49, 54, 60–61; App. A (compare Parts I and III).
90 See 47 C.F.R. § 51.5 (definition of “Technically feasible”) (stating in part that “Interconnection, access to
unbundled network elements, collocation, and other methods of achieving interconnection or access to unbundled
network elements at a point in the network shall be deemed technically feasible absent technical or operational
concerns that prevent the fulfillment of a request by a telecommunications carrier for such interconnection, access,
or methods. . . . An incumbent LEC that claims that it cannot satisfy such request because of adverse network
(continued . . .)
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FPSC likely would have made such a determination if the parties had not settled their dispute, since
technical infeasibility was the reason AT&T offered for denying the type of DS-0 commingling that STS
had requested.91
28.
Similarly, applying the language of the parties’ release, STS’s claims in Counts XI and
XII of its Complaint are barred because they are related to (or the same as) claims that STS asserted in the
2006 Proceedings. As previously recounted, in Counts XI and XII, STS alleges that AT&T violated
various provisions of the Act by misleading STS about, and failing to provide, a bulk migration process to
“seamlessly” convert STS’s UNE-P customers to the commingled network. Once again, a comparison of
the key allegations of the Complaint92 with representative allegations from STS’s FPSC Complaint shows
that the two Complaints are based on essentially the same conduct.93
29.
STS repeatedly claimed in the 2006 Proceedings that AT&T violated the law by
misleading STS about, and failing to provide, a bulk migration process to convert STS’s UNE-P
customers to the commingled arrangement. That claim is nearly identical to the claims STS asserts in
Counts XI and XII of the Complaint; at the very least, the claims in the two proceedings are “related.”
Accordingly, both Counts are released under the terms of the Settlement Agreement.
(. . . continued from previous page)


reliability impacts must prove to the state commission by clear and convincing evidence that such interconnection,
access, or methods would result in specific and significant adverse network reliability impacts.”). See also
Implementation of the Local Competition Provisions in the Telecommunications Act of 1996
, First Report and
Order, 11 FCC Rcd 15499, 15602-06, paras. 198-205 (1996) (Local Competition Order). STS also could have
sought a ruling on technical infeasibility in an arbitration proceeding before the FPSC under Section 252 of the
Act. See, e.g., 47 C.F.R. § 51.319(b)(3)(i) (if parties are unable to reach agreement through voluntary negotiations
as to whether the unbundling of copper subloops is technically feasible “the incumbent LEC shall have the burden
of demonstrating to the state commission, in state proceedings under section 252 of the Act . . . that it is not
technically feasible to unbundle the subloop at the point requested.”).
91 Because the record shows that in the spring of 2006, STS questioned the veracity of AT&T’s infeasibility claim
and had accused AT&T of negotiating in bad faith, see supra notes 29–30, FPSC Compl. at 5, 14–16, paras. 5, 49–
51, 54, 60–61, we reject STS’s assertion that it “had no reason to disagree with AT&T’s representation about
technical infeasibility” at the time the parties were negotiating the ICA “because AT&T intentionally misled STS
and failed to provide STS with material information that would have allowed STS to make a reasonable
determination about the truthfulness of AT&T’s claim.” STS’s Reply to AT&T’s Brief in Response to Additional
Legal Issues, File No. EB-09-MD-008 (filed Feb. 14, 2011) (STS Reply Br.) at 20 n.71; see also STS Initial Br. at
23 (“STS did not discover or even suspect AT&T’s misrepresentations concerning SL1 loops until shortly before it
filed the pending Formal Complaint.”). Moreover, STS was represented by counsel at the time of its negotiations
with AT&T in 2006, and was in a position to assess whether AT&T had provided sufficient information to
establish that commingling non-designed DS-0 loops was technically infeasible under the standard set forth in the
Commission’s rules. See 47 C.F.R. § 51.5. If STS doubted whether AT&T had provided sufficient information to
satisfy that standard—and the record indicates that STS harbored such doubts—it could have demanded that
AT&T prove its claim of technical infeasibility before the FPSC. See supra note 90.
92 See supra paragraph 21.
93 See App. (Parts II and IV). In this area, too, STS’s FCC Comments contain very similar allegations as those in
STS’s FPSC Complaint, so in the interest of brevity we will not quote or paraphrase them here. See, e.g., FCC
Comments at 2–7, 10–11, 13–15, paras. 6, 9–11, 13–16, 20, 30–31, 36, 40, 43, 45.
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B.

STS’s Attempts to Avoid the Release All Fail.

30.
STS makes little or no argument that the claims in Counts I–IX, and XI–XIII do not
“relate to” the claims it asserted in the 2006 Proceedings within the meaning of the Settlement
Agreement’s release. STS argues, instead, that (i) the claims in Counts I–IX, and XI–XIII pertain to
AT&T’s post-Settlement Agreement conduct, which the release does not temporally reach; and (ii) the
Settlement Agreement’s release should be rescinded or extinguished. As explained below, neither
argument has merit.
1.

STS’s Argument that the Release Does Not Reach Post-Settlement
Agreement Conduct Lacks Merit.

31.
STS argues that the Settlement Agreement’s release does not bar any of the Complaint’s
claims because those claims concern AT&T’s post-Settlement Agreement conduct, and the release does
not reach such “future” conduct.94 STS’s argument has at least two fatal flaws.
32.
First, most of the allegations in the Complaint concern conduct that originated before the
Settlement Agreement was executed.95 In particular, we find no support for STS’s suggestion that the
release does not bar STS’s claim in Count XIII because negotiation of the ICA occurred after the parties
resolved their claims in mediation and entered into a Term Sheet.96 The parties’ earlier execution of a
Term Sheet in July 2006 does not change the fact that they completed the negotiation and execution of the
ICA by November 1, 2006, before they executed the Settlement Agreement, along with its release
provision, on November 8, 2006.97
33.
Further, those Complaint allegations that actually address post-Settlement conduct mostly
concern AT&T’s alleged non-compliance with the bulk migration obligations contained in the Settlement
Agreement itself,98 and STS has expressly disavowed any claim here based on that conduct.99 Instead,
STS chose to pursue such a claim in Federal District Court.100


94 See, e.g., Compl. at 121, para. 388; Reply at 43, para. 74; STS Initial Br. at 25, 29–34; STS Reply Br. at 1–8.
95 See, e.g., supra paragraphs 25–28.
96 See STS Initial Br. at 30 n.81 (“The Settlement Agreement did not release AT&T from its conduct in the
negotiation of the ICA, all of which occurred after both claims were resolved at mediation and binding Term Sheet
executed.”); see also STS Reply Br. at 7–8.
97 Indeed, the Settlement Agreement expressed the parties’ intent to “memorialize the terms contained in the Term
Sheet, as such terms may have been mutually modified herein for purposes of this Settlement Agreement . . . .”
Settlement Agreement at 1–2 (emphasis added). One such modification was the addition of a provision in the
Settlement Agreement, absent from the Term Sheet, affirming that the parties “have not been induced to execute
this Agreement by reason of non-disclosure or suppression of any fact.” Id. at 6, para. 28. This language affirms
that, by entering into the Settlement Agreement, STS released any claims concerning AT&T’s alleged non-
disclosure of information about non-designed DS-0 loop commingling, particularly since STS had a motive and
opportunity to request such information prior to entering into the ICA and the Settlement Agreement. See supra
notes 90–91.
98 See, e.g., Compl. at 36–51, 86–91, paras. 96–101, 106–143, 145, 261–278.
99 See Compl. at 121, para. 388 (asserting that this case is “completely separate” from the District Court case,
which included a claim for breach of the Settlement Agreement: “The district court [case] only concerns the 2,500
lines that were not converted to the commingled network pursuant to the Bulk Migration Work Around Process.
The instant complaint concerns the other 16,000 wholesale UNE-P lines that STS should have been able to convert
(continued . . .)
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34.
Second, and more fundamentally, STS’s argument fails to give meaning to two key
phrases in the release: that the release applies to all demands, actions, and claims—“howsoever and
whenever arising”—that “relate to” claims in the 2006 Proceedings and were asserted, or could have been
asserted, in those Proceedings.101 This language means that STS cannot accuse AT&T of “continu[ing]
[to] violat[e] the law” based on AT&T’s continuation of the very conduct at issue in the 2006
Proceedings.102 Specifically, prior to the Settlement Agreement, AT&T did not commingle non-designed
DS-0 loops with special access and did not provide a bulk migration process for converting former UNE-
P customers to commingled arrangements, and it maintained that it was not legally required to do so.
After the parties settled their dispute, AT&T continued to assert that it had no legal obligation under the
Act to commingle non-designed DS-0 loops with special access or to offer a bulk migration process to
convert UNE-P customers, and it continued its refusal to provide such services, except with regard to the
specific commitments made in the Settlement Agreement or the ICA. Thus, the conduct at issue here—
the refusal to commingle non-designed DS-0 loops with special access and to offer a bulk-migration
process allowing unlimited conversion of UNE-P lines to a commingled arrangement—is the same (or
related to) conduct that STS had already complained of prior to the Settlement Agreement. Accordingly,
the claims in Counts I–IX and XI–XIII are claims “howsoever and whenever arising” that “relate to” the
claims STS made in the 2006 Proceedings.
35.
STS’s argument that the release does not reach post-Settlement Agreement “future”
conduct is further undermined by the fact that its claims in the 2006 Proceedings included demands for
future relief. Specifically, in its FPSC Complaint, STS demanded an order “[r]equiring BellSouth to
continue
to provide new services at just and reasonable rates,” meaning at the rates for non-designed DS-
0 loops instead of the higher SL2 rates.103 STS also asked the FPSC to “[r]equire[] BellSouth to transition
STS’s embedded base to the network at the rates and upon the terms promised, add new customers to the
network at the rates and upon the terms promised, and maintain the embedded base and new customers at
the rates and terms promised.”104 The Settlement Agreement addresses these future looking demands for
relief by, for example, requiring AT&T to provide STS with a bulk migration process to be used in future
(. . . continued from previous page)


…, [and] the 100,000 new lines that STS should have been [able to] convert subsequent to the execution of the …
Settlement Agreement . . . .”); Reply at 29, para. 44 (stating that “[W]hether or not AT&T breached the settlement
agreement regarding the failure to convert the 2500 lines is not determinative of the formal complaint before this
Commission. STS is not complaining or seeking damages about the 2500 lines.”).
100 See, e.g., Joint Statement at 35, para. 138. AT&T concedes that STS “did not release any claim for breach of
the Settlement Agreement itself.” AT&T Reply Br. at 16.
101 Settlement Agreement at 2–3, para. 8 (Definitions) (emphases added); id. at 3, paras. 5–6.
102 Reply at 43, para. 74. See STS Initial Br. at 32 (arguing that the release clause “did not give AT&T a free pass
to continue to violate its legal obligations subsequent to the Settlement Agreement.”).
103 See FPSC Compl. at 18, para. 5 (Prayer for Relief) (emphasis added); id. (demanding that the requested “just
and reasonable rates” be “adjusted for the fact that such services should have been provided by the Company’s
facilities through the represented network of commingled services.”); id. at 6, para. 6 (asking the FPSC to “require
that BellSouth transfer STS’s existing embedded base and new customers to [the commingled network] pursuant
to the rates and charges it had previously agreed upon,” and if this was not possible, to require AT&T to “pay all
fees and costs associated with the implementation of the network” and preclude AT&T from billing and collecting
charges that STS “would not have incurred if BellSouth had honored its commitments”).
104 Id. at 17–18, para. 2 (Prayer for Relief).
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migrations of certain STS customer lines.105 Given that the Settlement Agreement’s release bars claims
that “relate to” any of the “demands” in the 2006 Proceedings—including any demands for future relief—
the release bars STS’s claims for future relief here. Accordingly, STS cannot escape the reach of the
Settlement Agreement’s release provision simply by claiming that STS only challenges “AT&T’s conduct
subsequent to the effective date of” that Agreement.106
36.
The parties presented extensive arguments about whether Florida law supports their
respective positions regarding the scope of the Settlement Agreement’s release.107 The parties cited a
number of precedents that turned largely on the particular facts and contract language at issue.
Collectively, they support the conclusion that a release may bar claims based on post-release conduct, if a
careful review of the language of the release and of the circumstances at issue indicates that the parties
intended the release to reach such conduct.108


105 See Settlement Agreement at 4, para. 13. See also STS Reply Br. at 4 (noting that the Settlement Agreement’s
provision for the migration of 2,500 lines “by a date in the near future” “gave STS partial relief on the future
commercial billing rates . . . .”).
106 Reply at 43, para. 74. Further buttressing this conclusion is the language in the Settlement Agreement’s release
provision stating STS’s agreement not to raise the settled claims in the future: “STS agrees not to re-file the FPSC
Complaint [and the FCC Comments] or the allegations raised in or associated with the FPSC Complaint [and the
FCC Comments] at the FPSC [or the FCC] or in any other forum.” Settlement Agreement at 3, paras. 5–6. This
language barring STS from re-filing its claims in the future undercuts STS’s reliance on other language in the
release affirming that STS had withdrawn its FPSC Complaint and FCC Comments “without prejudice.”
According to STS, this reference to withdrawal “without prejudice” indicates that the release was not intended to
bar claims based on future conduct. See STS Initial Br. at 31 n.82. However, as AT&T explains, because the
FPSC Complaint and the FCC Comments were dismissed prior to the execution of the Settlement Agreement,
dismissal without prejudice left open the possibility that STS could re-file these documents in the event the parties
were unable to reach a final settlement. See AT&T Reply Br. at 14 n.36. Once the parties executed their
Settlement Agreement, STS was expressly barred from re-filing these documents or pursuing the claims associated
with them in any other forum, including this one. See Settlement Agreement at 3, paras. 5–6.
107 See, e.g., AT&T Legal Analysis at 13–21; Reply at 45–52, paras. 81–104; STS Initial Br. at 29–34; AT&T
Initial Br. at 33–36; STS Reply Br. at 1–8; AT&T Reply Br. at 16–17. In support of their respective positions, the
parties primarily rely upon the following precedents: Nova v. AirTouch, cited supra note 82; Gulf Group
Holdings, Inc. v. Coast Asset Management, Corp.
, 516 F.Supp.2d 1253, 1268 (S.D. Fla. 2007); Farese v. Scherer,
297 Fed. Appx. 923, 926 (11th Cir. 2008); Zinz v. Concordia Properties, Inc., 694 So. 2d 120, 121 (4th Fla. Dist.
Ct. App. 1997); Motown Record Corp. v. Wilson, 849 F.2d 1476, 1988 WL 63755 (9th Cir. 1988); Strube v.
American Equity Investment Life Insurance Co.
, 226 F.R.D. 688 (M.D. Fla. 2005); Schwartz v. Dallas Cowboys
Football Club, Ltd.
, 157 F. Supp. 2d 561 (E.D. Pa. 2001); Polsky v. Radio Shack, 666 F.2d 824, 828 (3rd Cir.
1981); and JM Family Enterprises, Inc. v. Winter Part Imports, Inc., 10 So.3d 1133 (Fla. 5th DCA 2009).
108 See, e.g., Nova v. AirTouch, 17 FCC Rcd 15026, 15032 (release stating that both parties “release and forever
discharge each other . . . from any and all claims . . ., known or unknown, that each party has had in the past, or
now has, or may have in the future against each other” coupled with provision imposing future obligations on a
party indicated that the parties intended to bar claims based on post-release conduct); Gulf Group Holdings, 516
F.Supp.2d at 1268-69 (where the language of a release did not appear to cover future actions by, for example,
referring to all claims “known or unknown” which a party “ever had [or] . . . hereafter can, shall or may have” the
question of whether the parties intended the release to bar a claim that accrued after the release was executed was a
fact issue for the jury based on the circumstances at issue); Motown Record Corp., 849 F.2d 1476, 1988 WL
63755, *2 (interpretation of release was governed by the “paramount rule of contract interpretation” that “the
mutual intent of the parties is to be given effect by reviewing the words of the contract, and the circumstances and
conditions of its execution”) (citation omitted). See also Somerset Pharmaceuticals, Inc. v. Kimball, 49 F.Supp.2d
1335, 1339 (M.D. Fla. 1999) (in interpreting a release in a settlement agreement, “’[t]he court's role is to
(continued . . .)
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37.
In this case, the record shows that in 2006 the parties intended to resolve their dispute
concerning DS-0 loop commingling and bulk migration by entering into two related agreements.
Specifically, the parties agreed to execute a Settlement Agreement that released all claims “whenever
arising” that related to claims STS asserted, or could have asserted, in the 2006 Proceedings, and a new
ICA that would cover their future business dealings.109 Indeed, STS has acknowledged that the
Settlement Agreement “was conditioned upon” the parties executing a new ICA agreement that would
“govern the parties’ relationship going forward.”110 We find that by executing the Settlement Agreement
in conjunction with the ICA, the parties intended that STS would give up its right to insist on services that
were the subject of the 2006 Proceedings, including the commingling of non-designed DS-0 loops and the
bulk migration of lines, except to the extent such services were provided for in the Settlement Agreement
or the ICA.
38.
The circumstances of this case resemble those the Commission addressed in Nova
Cellular West v. AirTouch.111 In that case, Nova, a reseller of CMRS service, filed a complaint before the
California Public Utilities Commission challenging AirTouch’s practice of failing to provide a billing
tape when service was ordered under its retail rate plans.112 Nova and Airtouch resolved their dispute by
entering into a settlement agreement stating in part that both carriers “release and forever discharge each
other . . . from any and all claims . . ., known or unknown, that each party has had in the past, or now has,
or may have in the future against each other, arising out of the matters involved in the formal complaint
proceeding.”113 As a condition for Nova’s agreement to dismiss its suit against AirTouch, AirTouch
agreed “to make retail pricing plans . . . available to Nova in a wholesale billing tape format” when it was
“capable of doing so.”114 Nova later claimed that AirTouch failed to provide the billing tapes as required
by the settlement agreement, and brought an action before the Commission alleging, inter alia, violations
of Sections 201 and 202 of the Act.115
39.
The Commission concluded that the release in the parties’ settlement agreement barred
Nova’s claim that AirTouch had an obligation under the Communications Act to provide electronic
billing tapes.116 The Commission noted that “Nova obtained a promise from AirTouch regarding the
(. . . continued from previous page)


determine the intention of the parties from the language of the agreement, the apparent objects to be accomplished,
other provisions in the agreement that cast light on the question, and the circumstances prevailing at the time of the
agreement.’”) (citation omitted).
109 The resolution of the parties’ dispute also involved the execution of the MBR in addition to the Settlement
Agreement and ICA. See, e.g., STS Initial Br. at 32; Joint Statement at 19–21, paras. 75–76, 81. The scope and
construction of the MBR are not at issue here.
110 See STS Initial Br. at 32 (“The Settlement Agreement was conditioned upon the parties executing a new ICA
and MBR agreement.”); id. at 24 (“It was clear that the future business dealings were to be governed by the
agreements the parties were bound by, including without limitation, the new ICA and MBR, and applicable law.”);
id. at 20 (“The ICA was to control the future ongoing business of STS . . . .”); STS Reply Br. at 7 (“the Settlement
Agreement was contingent on the execution of a new ICA to govern the parties’ relationship going forward . . . .”).
111 Nova v. AirTouch, 17 FCC Rcd 15026.
112 Id. at 15028, para. 6.
113 Id. at 15028, para. 7 (internal quotation marks and emphases omitted; alteration in original).
114 Id. at 15028, para. 7 (internal quotation marks and emphasis omitted).
115 Id. at 15030, para. 13.
116 Id. at 15031–34, paras. 14–21.
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provision of electronic billing tapes for future retail rate plans in exchange for Nova relinquishing its right
to seek redress regarding such provision by means other than enforcement of the [settlement
agreement].”117 The Commission thus found that Nova had “expressly and deliberately waived its right”
to challenge AirTouch’s conduct regarding the provisioning of electronic billing tapes.118
40.
Here, as in Nova v. AirTouch, the parties entered into a Settlement Agreement that
involved an exchange of promises.119 AT&T promised to provide STS with a bulk migration process in
the future for the prospective conversion of up to 2500 lines, and to extend specified billing credits, and
STS, in return, agreed to release all claims related to claims asserted in the 2006 Proceedings, to withdraw
its filings in the 2006 Proceedings, and to withdraw all billing disputes regarding the difference between
non-designed DS-0 loops and SL2 loops.120 STS thereby relinquished its right to seek redress for the
conduct it complained of in the 2006 Proceedings—AT&T’s alleged failure to provide the commingling
of non-designed DS-0 loops or bulk migration of STS’s customer base—except through enforcement of
the Settlement Agreement or the ICA.121 Because such conduct forms the basis for STS’s claims in
Counts I–IX and XI–XIII of the Complaint, we find that these Counts are barred by the release.


117 Id. at 15032, para. 16.
118 Id.
119 In Nova v. AirTouch, the Commission observed that “[a]lthough releases typically do not cover claims based on
post-release conduct,” the combination of promises in the parties’ settlement agreement led the Commission to
“conclude that that is precisely what the parties intended here.” Id. at 15032, para. 16. In this case, as in Nova v.
AirTouch,
we have a broad release provision coupled with a promise of future performance that leads us to
conclude that the parties agreed to release post-settlement conduct that is related to the subject matters referenced
in the Settlement Agreement’s release provision.
120 See, e.g., Settlement Agreement at 3–4, paras. 5–8, 11; see also id. at 2–3, para. 8 (Definitions).
121 STS maintains that the ICA provides for bulk migration of all of STS’s embedded customer lines (beyond the
2500 lines referenced in the Settlement Agreement); AT&T disputes that interpretation of the ICA, and contends
that STS had abandoned its plan to migrate its entire embedded base to a commingled arrangement by the time the
parties entered into the ICA. See, e.g., Joint Statement at 21 n.17; Reply at 30, para. 45; AT&T’s Statement of
Facts Disputed by STS, File No. EB-09-MD-008 (filed Mar. 8, 2010) (AT&T’s Statement of Disputed Facts) at
74, para. 108. To the extent the parties dispute whether the terms of the ICA require AT&T to provide bulk
migration of STS’s embedded customer base, they are free to bring that dispute before the FPSC, the parties’
chosen forum for the resolution of such disputes. See ICA, General Terms and Conditions § 8; Order Granting
Motion to Dismiss in Part at 6–11; Joint Statement at 35–36, paras. 138–39; See also Federal District Ct. Compl.
at 13–15, paras. 71–86. STS acknowledges that the ICA does not provide for the commingling of non-designed
DS-0 loops. Compl. at 94, 101, paras. 286, 313; Joint Statement at 45, para. 178. However, the ICA contains a
“Bona Fide Request” (BFR) process that allows STS to request that AT&T provide commingling of elements not
currently eligible for commingling, and to seek resolution before the FPSC if it is not satisfied with AT&T’s
response. See ICA, Attach. 11, § 1.1; id., General Terms and Conditions § 8. See also AT&T’s Legal Analysis at
26. In fact, STS invoked the BFR process in May 2009 to request the commingling of a designed SL1 loop, (see,
e.g., Joint Statement at 82, paras. 340-41; STS Initial Br. at 10-11, 14), but did not seek resolution before the FPSC
when AT&T denied its request.
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2.

STS Cannot Avoid the Release by Rescinding or Extinguishing the
Settlement Agreement.

41.
STS contends that, under Florida law, it can rescind the entire Settlement Agreement,
including the release, because AT&T allegedly failed to migrate 2500 STS UNE-P lines as promised.122
STS’s contention is foreclosed by its failure to assert a claim for rescission of the Settlement Agreement
in its Complaint here. Nevertheless, even if the Complaint included a claim for rescission of the
Settlement Agreement, and assuming, arguendo, that the Commission has authority to grant such relief—
a point that AT&T disputes123—STS has not established on this record that it has a right to rescind the
Settlement Agreement.
42.
Under Florida law, “‘a contract will not be rescinded even for fraud when it is not
possible for the opposing party to be put back into his pre-agreement status.’”124 Moreover, a party’s
right to rescind an agreement in Florida “is subject to waiver if he retains the benefits of a contract after
discovering the grounds for rescission.”125 In this case, STS retained the benefits it received under the
Settlement Agreement, such as billing credits, long after it became aware of the asserted grounds for
rescission, i.e., AT&T’s alleged failure to migrate 2500 STS UNE-P lines under the Settlement
Agreement.126 STS thus has failed to establish that it is entitled to rescind the Settlement Agreement.
43.
Finally, we find no merit in STS’s suggestion that AT&T’s alleged failure to migrate the
2,500 lines under the Settlement Agreement automatically extinguished STS’s obligation to abide by the
Agreement, including the release, without STS having to bring a claim for rescission.127 STS has cited no
Florida law allowing a non-breaching party to escape its obligations under a release in a settlement
agreement based on the other party’s breach of the agreement.128 In fact, the Eleventh Circuit’s opinion in
Farese v. Scherer, which STS cited for another purpose, supports the opposite conclusion.129 There, the
court rejected the plaintiff’s argument that a defendant’s violation of the parties’ settlement agreement
allowed the plaintiff to breach the settlement agreement by bringing claims barred by the agreement,
reasoning:


122 See, e.g., Compl. at 121, 123, paras. 388–89, 393; Reply at 52–57, paras. 105–20.
123 AT&T’s Legal Analysis at 21–22; AT&T Initial Br. at 36-37.
124 Mazzoni Farms, Inc. v. E.I. DuPont De Nemours & Co., 761 So. 2d 306, 313 (Fla. 2000) (citing Bass v. Farish,
616 So.2d 1146, 1147 (Fla. 4th DCA 1993)).
125 Mazzoni Farms, 761 So. 2d at 313 (citing Rood Co. v. Board of Pub. Instruction, 102 So.2d 139, 141–42
(Fla.1958)).
126 STS has known of its asserted grounds for rescission at least since it filed its Federal District Court Complaint
in 2008 alleging that AT&T fraudulently induced it to enter into the Settlement Agreement and breached the
Settlement Agreement by failing to migrate 2500 lines from UNE-P to a commingled network. See supra
paragraph 17 and notes 56 and 57. Yet, the record contains no evidence that STS ever returned to AT&T the value
of the billing credits it received under the Settlement Agreement.
127 See Reply at 54–57, paras. 109–120.
128 Cases cited by STS for the general proposition that breach of an agreement by one party relieves the non-
breaching party of its obligation to perform are inapposite, because none of them involved an alleged breach of a
settlement agreement or the extinguishment of the non-breaching party’s obligation under a release provision. See
Reply at 54–55, 57, paras. 111, 120 (citing Toyota Tsusho America Inc. v. Crittenden, 732 So.2d 472 (Fla. 3d
DCA 1997); Bradley v, Health Coalition, 687 So.2d 329, 333 (Fla. 3d DCA 1997)).
129 Farese v. Scherer, 297 Fed. Appx. at 927.
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Parties are limited to contract remedies following the breach of a
settlement agreement. If the . . . defendants did in fact breach the
settlement agreement—and we express no opinion on that
question—Farese has the option to either bring an action to
rescind the agreement or sue for damages caused by the breach.
Farese has provided no authority—and we can find none—
suggesting that breach of a settlement agreement automatically
rescinds or voids the agreement. Bankruptcy courts have
frequently stated just the opposite; the non-breaching party is
bound by the agreement despite the breach, unless and until he
brings a rescission action.130
44.
For all of these reasons, we reject STS’s attempt to escape the Settlement Agreement’s
release by arguing that STS had a right to rescind the Agreement or to treat the Agreement as a nullity.131

IV.

CONCLUSION

45.
The claims stated in Counts I–IX, and XI–XIII of the Complaint are barred by the release
in the parties’ Settlement Agreement because they are related to claims that STS asserted or could have
asserted in the 2006 Proceedings.

V.

ORDERING CLAUSE

46.
Accordingly, IT IS ORDERED, pursuant to Sections 4(i), 4(j), 201, 202, 251, 271, and
208 of the Communications Act of 1934, as amended, 47 U.S.C. §§ 154(i), 154(j), 201, 202, 251, 271,
and 208, and Sections 1.720–1.736 of the Commission’s rules, 47 C.F.R. §§ 1.720–1.736, that Counts I–
IX and XI–XIII of the Formal Complaint are hereby DISMISSED with prejudice.
FEDERAL COMMUNICATIONS COMMISSION
Christopher L. Killion
Associate Chief, Enforcement Bureau


130 Farese v. Scherer, 297 Fed. Appx. at 927 (citations omitted).
131 Because we have determined that the claims in Counts I–IX and XI–XIII must be dismissed based on the
Settlement Agreement’s release provision, we need not and do not reach the other grounds AT&T raised for
rejecting the Complaint, including, e.g., AT&T’s arguments that (i) STS waived its claims in Counts I-XII by
voluntarily entering into the ICA; (ii) STS’s claim in Count XIII is barred by the statute of limitations, and (iii) all
of STS’s claims should be dismissed on the merits because STS has failed to establish that AT&T has violated the
Act or the Commission’s regulations. See Answer at 119–20, paras. 417–21, and AT&T’s Legal Analysis at 23–
63.
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