A federal appeals court threw out a preliminary injunction and sent a predatory...
A federal appeals court threw out a preliminary injunction and sent a predatory pricing case back to the U.S. District Court for the Northern District of Texas. Budget Prepay and other competitive local exchange carriers had alleged that AT&T and…
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its subsidiaries engaged in an unlawful scheme regarding a promotional offer, Judge Edith Clement wrote in the decision of the U.S. 5th Circuit Court of Appeals. The defendants offered a promotion to retail customers, including customers served by the plaintiffs. The promotion waived connection fees and issued $50 rebates to customers who switched to AT&T for telecom service, Clement said. The telco then offered “all such promotions to Budget Prepay, applying a wholesale discount pursuant to the [Telecom] Act.” In July, AT&T told Budget Prepay that it would stop passing along the full rebate to the CLECs. “Rather, AT&T planned to apply a complicated pricing model to determine the economic value” of the promotion, the ruling said. After applying the wholesale discount rate set by state commissions, “this model sets the economic value of the promotion passed on to Budget Prepay as low as $3.74 in some states.” The district court granted the CLECs a temporary restraining order and a preliminary injunction enjoining AT&T from implementing the plan, the judge said. AT&T filed a motion to dismiss for lack of subject matter jurisdiction, which the court denied. The parties “agreed to adopt the specific FCC regulations concerning resale as binding provisions” and the district court was asked to determine whether the AT&T model was unreasonable. The agreement raises an issue of state law contract interpretation, Clement said. In denying AT&T’s motion to dismiss, the district court relied on a 2002 case in which an ILEC “sued the state commission over the commission’s interpretation of an FCC ruling.” The court said “the district court had federal question jurisdiction over that suit.” Although there are many overlapping substantive issues in each case, “a suit for enforcement of an interconnection agreement (ICA) arises from and is governed by a body of law different from that governing a suit challenging a commission’s interpretation of federal regulations,” the opinion said. “We hold that the appellees’ claim does not arise from a question of federal law."