CallerID4u, Inc. v. MCI Commc'ns Servs. Inc.

• Decision Date: 22 January 2018
• Docket Number: No. 15-35029,No. 15-35028,15-35028
• Citation: 880 F.3d 1048
• Parties: CALLERID4U, INC., Plaintiff-Appellant, v. MCI COMMUNICATIONS SERVICES INC., dba Verizon Business Services, Defendant-Appellee. CallerID4u, Inc., Plaintiff-Appellant, v. Bellsouth Long Distance, Inc., dba AT&T Long Distance Service, Defendant, and AT&T Corp., Defendant-Appellee.
• Court: U.S. Court of Appeals — Ninth Circuit

880 F.3d 1048

CALLERID4U, INC., Plaintiff-Appellant,

v.MCI COMMUNICATIONS SERVICES INC., dba Verizon Business Services, Defendant-Appellee.

CallerID4u, Inc., Plaintiff-Appellant,

v.Bellsouth Long Distance, Inc., dba AT&T Long Distance Service, Defendant,andAT&T Corp., Defendant-Appellee.

No. 15-35028

No. 15-35029

United States Court of Appeals, Ninth Circuit.

Argued and Submitted June 6, 2017, Seattle, Washington

Filed January 22, 2018

Matthew Alexander Henry (argued), McCollough Henry PC, West Lake Hills, Texas, for Plaintiff-Appellant.

Joshua D. Branson (argued), Melanie L. Bostwick, and Scott H. Angstreich, Kellogg Huber Hansen Todd Evans & Figel PLLC, Washington, D.C.; Demetrios G. Metropoulos, Mayer Brown LLP, Chicago, Illinois; for Defendants-Appellees.

Before: Ferdinand F. Fernandez, Consuelo M. Callahan, and Sandra S. Ikuta, Circuit Judges.

IKUTA, Circuit Judge:

Under the Communications Act of 1934 and Federal Communications Commission (FCC) rules, CallerID4u was required to either file a valid tariff setting rates for local telecommunications services or enter into a negotiated agreement regarding compensation for services rendered. See 47 U.S.C. § 203 ; see also Access Charge Reform , 16 FCC Rcd. 9923, 9934 (2001) (" Access Reform Order "); 47 C.F.R. § 61.26. But CallerID4u had neither a tariff nor a contract in place during a six-month period in which it provided telecommunications services to AT&T and Verizon. When AT&T and Verizon refused to pay for these services, CallerID4u brought claims against them under Washington state law equitable principles for the value of services rendered. We conclude that CallerID4u was subject to the tariff-filing requirements of Section 203 of the Communications Act, 47 U.S.C. § 203, because it did not have a negotiated agreement. We also conclude that CallerID4u’s state law equitable claims are preempted under Section 203 of the Communications Act. We therefore affirm the district court’s dismissal of CallerID4u’s claims.

I

In order to provide the context necessary to address CallerID4u’s arguments, we begin by reviewing the relevant regulatory history and legal framework.

A

The Communications Act of 1934 (the Communications Act), 47 U.S.C. §§ 151 et seq., gave the FCC "broad authority to regulate interstate telephone communications." Glob. Crossing Telecomms., Inc. v. Metrophones Telecomms., Inc. , 550 U.S. 45, 48, 127 S.Ct. 1513, 167 L.Ed.2d 422 (2007). At the time the Communications Act was passed, AT&T and its subsidiaries "enjoyed a virtual monopoly over the nation’s telephone service industry," Ting v. AT&T , 319 F.3d 1126, 1130 (9th Cir. 2003), which at that time consisted of wire communications (i.e., landlines). The Communications Act was intended in part "to address the unique problems inherent in a monopolistic environment." Id.

The wire communications provisions of the Communications Act "authorized the [FCC] to regulate the rates charged for communication services to ensure that they were reasonable and nondiscriminatory." MCI Telecomms. Corp. v. Am. Tel. & Tel. Co. , 512 U.S. 218, 220, 114 S.Ct. 2223, 129 L.Ed.2d 182 (1994). Section 201 of the Communications Act requires that "[a]ll charges, practices, classifications, and regulations for and in connection with [interstate wire] communication service[s], shall be just and reasonable." 47 U.S.C. § 201(b). If the FCC concludes that a common carrier’s charges or practices are unjust or unreasonable, they will be "declared to be unlawful," id. , and the FCC may "determine and prescribe what will be the just and reasonable" charges and practices, id. § 205(a).

Section 203 of the Communications Act requires most common carriers engaged in the provision of telecommunications services to set the rates and terms of their interstate telecommunications services by filing schedules or "tariffs" with the FCC. See 47 U.S.C. § 203(a).¹ A common carrier’s tariffs "are essentially offers to sell on specified terms, filed with the FCC and subject to modification or disapproval by it." Cahnmann v. Sprint Corp. , 133 F.3d 484, 487 (7th Cir. 1998). Section 203(c) prohibits common carriers from providing any interstate wire telecommunications services without filing tariffs with the FCC, and prohibits common carriers from charging, demanding, collecting, or receiving any compensation for such services except as specified in the carriers’ filed tariffs. 47 U.S.C. § 203(c).²

B

It has long been established that the tariff requirement of § 203 preempts state law. Because § 203 was modeled after similar provisions of the Interstate Commerce Act (ICA), "and share[s] its goal of preventing unreasonable and discriminatory charges," the Supreme Court concluded that "the century-old ‘filed rate doctrine’ associated with the ICA tariff provisions applies to the Communications Act as well." Am. Tel. & Tel. Co. v. Cent. Office Tel., Inc. , 524 U.S. 214, 222, 118 S.Ct. 1956, 141 L.Ed.2d 222 (1998). As applied to state law, the filed rate doctrine "is a form of deference and preemption, which precludes interference with the rate setting authority of an administrative agency." Wah Chang v. Duke Energy Trading & Mktg., LLC , 507 F.3d 1222, 1225 (9th Cir. 2007). Under the doctrine, "the rate of the carrier duly filed is the only lawful charge. Deviation from it is not permitted upon any pretext." Cent. Office Tel. , 524 U.S. at 222, 118 S.Ct. 1956 (quoting Louisville & Nashville R.R. Co. v. Maxwell , 237 U.S. 94, 97, 35 S.Ct. 494, 59 L.Ed. 853 (1915) ). The doctrine "embodies the policy which has been adopted by Congress in the regulation of interstate [telecommunications services] in order to prevent unjust discrimination." Id. (quoting Maxwell , 237 U.S. at 97, 35 S.Ct. 494 ).

When the filed rate doctrine applies, it generally precludes a regulated party from obtaining any compensation under other principles of federal or state law that is different than the filed rate. See Keogh v. Chicago & N.W. Ry. Co. , 260 U.S. 156, 163, 43 S.Ct. 47, 67 L.Ed. 183 (1922). In Keogh , a manufacturer claimed it was entitled to damages under the Sherman Act caused by certain carriers that had conspired to set an unreasonably high filed rate. Id. at 160, 43 S.Ct. 47. The Court rejected this argument, reasoning that the rate approved by the Interstate Commerce Commission (ICC) was the legal rate and could not be "varied or enlarged by either contract or tort of the carrier." Id. at 163, 43 S.Ct. 47. "This stringent rule prevails, because otherwise the paramount purpose of Congress—prevention [sic] of unjust discrimination—might be defeated." Id. The Court reasoned that if one manufacturer was able to recover for damages resulting from paying the filed rate, it effectively received a rate different than the filed rate, and would have a preference over its competitors. Id.

The Supreme Court later applied the doctrine to preclude state courts from awarding damages under state law, where doing so would interfere with the exclusive rate-setting authority of federal administrative agencies. "In this application, the doctrine is not a rule of administrative law designed to ensure that federal courts respect the decisions of federal administrative agencies, but a matter of enforcing the Supremacy Clause." Nantahala Power & Light Co. v. Thornburg , 476 U.S. 953, 963, 106 S.Ct. 2349, 90 L.Ed.2d 943 (1986). In Arkansas Louisiana Gas Co. v. Hall , for example, the Supreme Court overturned a state court’s award of damages for breach of contract to federally regulated sellers of natural gas. 453 U.S. 571, 584, 101 S.Ct. 2925, 69 L.Ed.2d 856 (1981). The sellers had filed rates with the Federal Energy Regulatory Commission (FERC), as required under federal law, but alleged that they were entitled to a higher rate under a contract with their customer than the rate they had filed with FERC. Id. at 573–74, 101 S.Ct. 2925. The state court agreed, and held that the sellers were entitled to damages for breach of contract, notwithstanding the tariff-filing requirements and the filed rate doctrine. Id. at 575, 101 S.Ct. 2925. The state court reasoned that if the sellers had filed rate increases with FERC based on their negotiated contracts, the rate increases would have been approved. Id. The Supreme Court reversed, explaining that, in order to award damages, the state court had to "speculat[e] about what the Commission might have done had it been faced with the facts of this case." Id. at 578–79, 101 S.Ct. 2925. Such an approach, the Court concluded, "would undermine the congressional scheme of uniform rate regulation" by allowing "a state court to award as damages a rate never filed with the Commission and thus never found to be reasonable within the meaning of the Act." Id. at 579, 101 S.Ct. 2925. Because "under the filed rate doctrine, the Commission alone [was] empowered to make that judgment," the Supreme Court concluded that the state court had "usurped a function that Congress has assigned to a federal regulatory body," in violation of the Supremacy Clause. Id. at 582, 101 S.Ct. 2925.

The Supreme Court has consistently applied the filed rate doctrine to preclude the award of any rate other than the filed rate, even where doing so has resulted in harsh consequences. In Maislin Industries, U.S., Inc. v. Primary Steel, Inc. , for example, the Supreme Court considered whether the bankruptcy trustee for a motor common carrier could collect undercharges for the difference between the rate the motor common carrier had negotiated with a shipper and the higher rate the motor common carrier had filed with the ICC. 497 U.S. 116, 122–23, 110 S.Ct. 2759, 111 L.Ed.2d 94 (1990). The Supreme Court held that the trustee could collect undercharges because the filed rate alone governed the legal relationship between the carrier and the shipper. The Court explained that "[i]n order to render rates definite and certain, and to prevent discrimination and other abuses, the statute require[s] the filing...