Advamtel, LLC v. At & T Corp.

• Decision Date: 27 October 2000
• Docket Number: No. CIV. A. 00-643-A.,CIV. A. 00-643-A.
• Citation: 118 F.Supp.2d 680
• Court: U.S. District Court — Eastern District of Virginia
• Parties: ADVAMTEL, LLC et al., Plaintiffs and Counterclaim-Defendants, v. AT & T CORP., Defendant and Counterclaim-Plaintiff.

Page 680

118 F.Supp.2d 680

ADVAMTEL, LLC et al., Plaintiffs and Counterclaim-Defendants, v. AT & T CORP., Defendant and Counterclaim-Plaintiff.

No. CIV. A. 00-643-A.

United States District Court, E.D. Virginia, Alexandria Division.

October 27, 2000.

Douglas Paul Lobel, Kelley, Drye & Warren, Washington, DC, for Plaintiffs.

Mary Catherine Zinsner, Mays & Valentine, McLean, VA, for Defendant.

MEMORANDUM OPINION

ELLIS, District Judge.

Sixteen competitive local exchange carriers ("CLECs")¹ bring this severed action² against AT & T Corporation ("AT & T") to collect fees allegedly owed to them pursuant to a published tariff. AT & T contends it has no obligation to pay the fees because the tariff rate is unreasonable and because AT & T never ordered the services or agreed to pay the tariff rates. As a result of a threshold motion, the parties' dispute concerning the reasonableness of the published tariff rates has been referred to the Federal Communications Commission ("FCC"). See Advamtel, LLC v. AT & T Corp., 105 F.Supp.2d 507 (E.D.Va.2000). At issue now on the parties' cross-motions for summary judgment are (i) AT & T's defense that it never "ordered" service from the plaintiffs and therefore that it had no obligation to pay and (ii) plaintiffs' claim that if AT & T is not obligated to pay the tariff rates, plaintiffs are nonetheless entitled to recover from AT & T the value of the services on a quantum meruit basis.

I

The instant dispute arises from plaintiffs' thus far unsuccessful effort to collect fees allegedly owed to them by AT & T pursuant to a published tariff for use of plaintiffs' local exchange networks in routing long distance telephone calls. Plaintiffs argue that AT & T, once it received plaintiffs' services, was obligated to pay the published tariff charges it owed, rather than employ the self-help measure of refusing to pay. According to plaintiffs, if AT & T considered plaintiffs' published tariff rates exorbitant, its sole remedy was to initiate a proceeding before the FCC challenging the reasonableness of plaintiffs' rates.³ AT & T has filed a partial motion for summary judgment, arguing that plaintiffs have no claim because AT & T never ordered any of plaintiffs' services. As part of their response to this argument, plaintiffs seek to recover for the services rendered on a quantum meruit basis. Given the nature of the parties' contentions, a brief description of the relationship between CLECs, such as plaintiffs, and long-distance carriers, such as AT & T, is warranted.⁴

Local exchange carriers ("LECs") provide local telephone service to subscribers in the areas where they operate. The local telephone network begins with local "loops" — the cable strung on telephone poles or buried underground — that connect each telephone subscriber in a LEC's service area to local "central office" switches. These switches are, in turn, connected to each other through various transport facilities and serve to route calls along the network. LECs own and control most of the plant and facilities used to provide local telephone service in their geographic area.

There are two types of LECs, CLECs, such as plaintiffs, and established or incumbent LECs ("ILECs"). ILECs, such as Bell Atlantic, operated as monopolies in a given area until the local phone service market was opened by the Telecommunications Act of 1996, which provided for the emergence of new LECs, the CLECs, to compete with the so-called "Baby Bells."⁵ See 47 U.S.C. § 251 et seq.

Local telephone networks are needed not only for making local calls, but also to originate and terminate long-distance calls. Typically, when an end user dials a long-distance number, the LEC serving that customer routes it to the customer's long-distance carrier. This service is referred to as "originating access." The long-distance carrier then routes the call to the local carrier serving the called customer, and that local carrier completes the call by routing it to the called customer. This service is referred to as "terminating access." Thus, long-distance calls generally cannot be completed without originating and terminating access from an LEC. Thus, AT & T and other long-distance carriers must order access services from the LEC, whether a CLEC or an ILEC, that serves the end user. These LECs then impose access charges on the long-distance carriers in exchange for access to the local network to originate and terminate long-distance calls. Because the ILECs' wires are usually the only connection between a household or business and the rest of the local network, and because duplicating those wires would be prohibitively expensive, the CLECs generally interconnect with the ILECs' local network in providing local service, and the long-distance carriers' networks generally connect to the ILEC's network, not the CLEC's network. Thus, when an end user who subscribes to a CLEC's local service places a long-distance call, the CLEC directs the call to the long-distance carrier's network via the ILEC's facilities and equipment. The CLECs impose access charges on long-distance carriers for calls that travel over the ILECs' network, but only after the fact. Thus, when a long-distance carrier receives calls from an ILEC's network, it does not know, at that time, the identity of the CLEC or ILEC that directed the call to the long-distance carrier.

Pursuant to FCC requirements, telecommunications carriers, such as plaintiffs, file tariffs which, upon FCC approval, govern their rate structure. See 47 U.S.C. § 153(h); MCI Telecomm. Corp. v. Dominican Communication Corp., 984 F.Supp. 185, 187 (S.D.N.Y.1997). Tariffs have been defined as "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). As tariffs are filed with the FCC, they are available for public view. See MCI Telecomm. Corp. v. Dominican, 765 F.2d 1186, 1189 (D.C.Cir.1985). Plaintiffs filed tariffs with the FCC, and these tariffs governed their dealings with other common carriers, such as Sprint and AT & T. See Cincinnati Bell Tel. Co. v. Allnet Communication Serv. Inc., 17 F.3d 921, 924 n. 4 (6th Cir.1994).

AT & T began receiving originating and terminating access service from plaintiffs in April 1997. Since that time, plaintiffs have submitted invoices to AT & T, containing information reflecting the access services utilized by AT & T and the applicable tariffs. While initially paying these charges in full, since November 1998, AT & T has refused to pay the tariff rates for these access services, claiming that it is not obligated to pay the plaintiffs' tariff rates because they are "unreasonable" and in violation of 47 U.S.C. § 201(a), (b).

In April, plaintiffs filed a two-count complaint against Sprint and AT & T. Count I seeks to collect access charges at the published tariff rate for originating and terminating long-distance calls, and Count II states a claim for violations of the Telecommunications Act, 47 U.S.C. § 201, for unjust and unreasonable practices by a common carrier. In August, plaintiffs were granted leave to amend their complaint to add two additional counts. See Advamtel, LLC, v. AT & T Corp., 105 F.Supp.2d 507, Order dated August 18, 2000. Count III added an implied-in-fact contract claim. Count IV seeks recovery based on the formation of a quasi-contract. In June, AT & T filed a counterclaim asserting six claims against plaintiffs for: (i) engaging in unreasonable practices, in violation of § 201 of the Communications Act, (ii) imposing charges different from the charges specified in the applicable tariffs, in violation of § 203 of the Communications Act, (iii) charging unreasonable rates, in violation of § 201 of the Communications Act, (iv) using illegal cross-subsidies, in violation of § 254(k) of the Communications Act,⁶ (v) engaging in intentional and prospective interference with contract in violation of state common law, and (vi) a declaratory judgment, under 28 U.S.C. § 2201, that AT & T has the right to refuse to order plaintiffs' access services.

Threshold dismissal motions filed by both AT & T and Sprint resulted in the referral of Counts III and IV of AT & T's counterclaim, which relate to the reasonableness of the tariff rates, to the FCC on primary jurisdiction grounds. No stay of the proceedings was imposed pending a ruling from the FCC. See Advamtel, LLC, et al. v. AT & T Corp., et al., 105 F.Supp.2d 507, Order dated July 21, 2000. Finally, plaintiffs' claims against AT & T and Sprint were severed. See Advamtel, LLC, et al. v. AT & T Corp., et al., Civ. A. No. 00-643-A, Order dated June 23, 2000.

At issue now are the parties' cross-motions for summary judgment.

II.

On a motion for summary judgment, the moving party must demonstrate that "there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(c). The facts themselves, and the inferences to be drawn from those facts, must be viewed in the light most favorable to the nonmoving party. See Ross v. Communications Satellite Corp., 759 F.2d 355, 364 (4th Cir.1985). Summary judgment is appropriate when a party "fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial." Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). The opposing party must do more than "simply show that there is some metaphysical doubt as to the material facts." Matsushita Elec. Indus. Co., Ltd., v. Zenith Radio Corp., 475 U.S. 574, 586, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986). Moreover, "the mere existence of some alleged factual dispute between the parties will not defeat an otherwise properly supported motion for summary judgment." Anderson v. Liberty Lobby Inc., 477 U.S. 242, 247, 106 S.Ct. 2505, 91 L.Ed.2d 202 (...