AMERICAN TEL. & TEL. v. JIFFY LUBE INTERN.

• Citation: 813 F. Supp. 1164
• Decision Date: 18 February 1993
• Docket Number: Civ. No. K-90-2400.
• Parties: AMERICAN TELEPHONE AND TELEGRAPH COMPANY v. JIFFY LUBE INTERNATIONAL, INC.
• Court: U.S. District Court — District of Maryland

813 F. Supp. 1164

AMERICAN TELEPHONE AND TELEGRAPH COMPANY v. JIFFY LUBE INTERNATIONAL, INC.

Civ. No. K-90-2400.

United States District Court, D. Maryland.

February 18, 1993.

Pamela J. White, John M.G. Murphy and Ober, Kaler, Grimes & Shriver, Baltimore, MD, for plaintiff.

James K. Archibald, John T. Prisbe and Venable, Baetjer & Howard, Baltimore, MD, for defendant.

FRANK A. KAUFMAN, Senior District Judge.

This case involves the liability of defendant Jiffy Lube International, Inc. (Jiffy Lube), as a customer of plaintiff American Telephone and Telegraph Company (AT & T), for charges resulting from the unauthorized use of a long distance telephone line by a third party or parties. The latter gained access to the line through use of a remote access feature in Jiffy Lube's telephone system. AT & T seeks summary judgment against Jiffy Lube for payment for such service which AT & T provided to Jiffy Lube under AT & T Tariff FCC No. 1 (the Tariff). Jiffy Lube denies responsibility for those charges, asserting that they were caused by the fraudulent use of Jiffy Lube's long distance line by one or more third parties. Jiffy Lube, in a cross motion, asks this Court to enter summary judgment for it with respect to such charges.

I

The underlying facts in the within case are largely undisputed. AT & T provided Jiffy Lube with Long Distance Message Telecommunications Service (LDMTS), or long-distance telephone service, the terms and conditions for which are set forth in the Tariff, filed with the Federal Communications Commission (FCC) by AT & T.

In June, 1988, Jiffy Lube acquired a new telephone system for its corporate headquarters in Baltimore, Maryland. At that time, or soon thereafter, that telephone system included a remote access feature, by which an off-premises caller could dial an (unpublished) 800 number (provided by MCI Telecommunications Corp.) (MCI), access Jiffy Lube's private branch exchange (PBX),¹ and obtain a local dial tone. Once the local dial tone was received, the caller was required to input a special code to complete the call. Upon entering the code, the caller could then make long distance calls, international or domestic, on Jiffy Lube's long distance line, provided by AT & T. The code, together with the arrangement that the 800 number be unpublished, constituted Jiffy Lube's security system against unauthorized use of its remote access feature. The access code which Jiffy Lube chose was "LUBE." AT & T only provided Jiffy Lube with long distance service; it did not advise Jiffy Lube concerning its phone system or security measures, nor did it supply Jiffy Lube with the equipment for its phone system.

Jiffy Lube contends that within a few months of the installation of the remote access feature, an unauthorized caller or callers gained access to its long distance line through the remote access feature. Specifically, Jiffy Lube asserts that a "computer hacker" accessed Jiffy Lube's 800 number by use of a random-dialing device on his/her personal computer. Once the "hacker" accessed Jiffy Lube's PBX, he/she was able to break the four character "LUBE" code and make unlimited long distance calls on Jiffy Lube's long distance line provided by AT & T. Jiffy Lube also charges that the "computer hacker" published Jiffy Lube's 800 number and "LUBE" code on a computer "bulletin board" for use by other "hackers."

When Jiffy Lube learned of a large number of allegedly unauthorized international long distance calls made through its PBX, it totalled the charges for those calls and other allegedly unauthorized calls and refused to pay for them when billed by AT & T. Jiffy Lube deactivated its remote access feature. The disputed charges total $55,727.39, were due for payment on November 12, 1988, and have not been paid. AT & T filed the within suit on September 12, 1990.

AT & T argues that under the Tariff, a customer such as Jiffy Lube is responsible for calls originated at its numbers, whether authorized or not. Section 2.4.1.A of the Tariff provides in pertinent part:

The Customer is also responsible for the payment of bills for LDMTS. This includes payment for LDMTS calls or services:

— Originated at the Customer's number(s),

— Accepted at the Customer's number(s) (e.g., Collect Calls),

— Billed to the Customer's number via Third Number Billing if the Customer is found to be responsible for such call or service, the use of a Calling Card, or the use of a Company-assigned Special Billing Number, and

— Incurred at the specific request of the Customer.

AT & T Tariff FCC No. 1, § 2.4.1.A. Moreover, AT & T asserts that the case law going back to Southwestern Tel. & Tel. Co. v. Sharp & White, 118 Ark. 541, 177 S.W. 25 (1915) holds that a telephone call will be charged to the number from which it originates, whether authorized or not. Finally, AT & T contends that from a public policy point of view, it would be disastrous to hold that AT & T cannot collect for unauthorized calls, because so to do would create an unlimited expense for AT & T, which it would be powerless to control. That, says AT & T is true because only customers are in the position to research and choose phone systems and security measures tailored to their needs, and any incentive on the part of customers to implement necessary security measures would be absent if Jiffy Lube's position in this case were to prevail.

By way of response and in support of its own motion for summary judgment, Jiffy Lube principally advances two arguments. First, Jiffy Lube contends that the Tariff distinguishes between fraudulent calls, on the one hand, and authorized calls, on the other hand, and that the unauthorized fraudulent calls in this case did not originate at Jiffy Lube's number, but at the "computer hacker's" number, so that, under the Tariff, Jiffy Lube is not responsible for the unauthorized calls. Second, Jiffy Lube argues that, even if the unauthorized calls originated, under the Tariff, at its number, AT & T's policy of holding customers absolutely liable for unauthorized calls is unjust and unreasonable, thereby violating 47 U.S.C. § 201(b) of the Communications Act.² Jiffy Lube bases that latter argument upon the contentions that 1) AT & T knew of the "computer hacker" fraud problem and did not warn Jiffy Lube about it, 2) AT & T, having control of the telephone network, is in a better position than its customers to implement measures to control fraud through remote access features, and 3) AT & T did not sufficiently assist Jiffy Lube in tracking the unauthorized caller(s).

II

The principles to be applied by this Court in considering a motion for summary judgment under Rule 56, F.R.Civ.P., are well established. In Phoenix Savings & Loan, Inc. v. Aetna Casualty Company, 381 F.2d 245, 249 (4th Cir.1967), the Fourth Circuit summarized those principles as follows: "It is well settled that summary judgment should not be granted unless the entire record shows a right to judgment with such clarity as to leave no room for controversy and establishes affirmatively that the adverse party cannot prevail under any circumstances." Id. Hence, the party opposing a motion for summary judgment is entitled to all favorable inferences which can be drawn from the evidence. See, e.g., Adickes v. S.H. Kress & Co., 398 U.S. 144, 158-59, 90 S.Ct. 1598, 1609, 26 L.Ed.2d 142 (1970); Cram v. Sun Ins. Office, Ltd., 375 F.2d 670, 674 (4th Cir.1967).

The burden is on the party moving for summary judgment to demonstrate clearly that there is no genuine issue of fact, and that it is entitled to judgment as a matter of law. Barwick v. Celotex Corp., 736 F.2d 946, 958 (4th Cir.1984). That burden can be met by the filing of affidavits, exhibits, depositions, discovery, and other appropriate Federal Civil Rule 56 documents. Id. The Fourth Circuit has stated that, with regard to motions for summary judgment, trial judges have "an affirmative obligation ... to prevent `factually unsupported claims and defenses' from going to trial." Felty v. Graves-Humphreys Co., 818 F.2d 1126, 1128 (4th Cir.1987), quoting Celotex Corp. v. Catrett, 477 U.S. 317, 323-24, 106 S.Ct. 2548, 2553, 91 L.Ed.2d 265 (1986).

Nevertheless, "the facts, and the inferences to be drawn from the facts, must be viewed in the light most favorable to the party opposing the motion." Ballinger v. North Carolina Agricultural Extension Serv., 815 F.2d 1001, 1004-05 (4th Cir.1987) (Timbers, J.), cert. denied, 484 U.S. 897, 108 S.Ct. 232, 98 L.Ed.2d 191 (1987) (citing Ross v. Communications Satellite Corp., 759 F.2d 355, 364 (4th Cir.1985)). But a mere scintilla of evidence in favor of the non-moving party will not suffice to defeat a summary judgment motion. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 251, 106 S.Ct. 2505, 2511-12, 91 L.Ed.2d 202 (1986).

Rule 56(e), F.R.Civ.P., provides that "when a motion for summary judgment is made and supported as provided in this rule, an adverse party may not rest upon the mere allegations or denials of the adverse party's pleadings, but the adverse party's response, by affidavits or as otherwise provided in this rule, must set forth specific facts showing that there is a genuine issue for trial." See Rivanna Trawlers Unlimited v. Thompson Trawlers, Inc., 840 F.2d 236, 240 (4th Cir.1988). The party opposing summary judgment must produce pretrial evidence countenanced by Rule 56(e) to establish all matters as to which it bears the burden of proof.

III

In this case, there is, in the view of this Court, no genuine dispute as to any material fact, despite Jiffy Lube's claims to the contrary. Jiffy Lube asserts that there are at least three factual disputes, namely 1) what is the proper meaning and interpretation of the Tariff, 2) where does a long distance call "originate," and 3) whether AT & T's policy of imposing absolute liability upon the customer is just and reasonable. Those contentions may not prevail in the face of the record in this case. There is no...