Advamtel, LLC v. At & T Corp.

• Decision Date: 21 July 2000
• Docket Number: No. Civ.A. 00-643-A.,Civ.A. 00-643-A.
• Citation: 105 F.Supp.2d 507
• Court: U.S. District Court — Eastern District of Virginia
• Parties: ADVAMTEL, LLC, et al., Plaintiffs, v. AT & T CORP., Defendant.

105 F.Supp.2d 507

ADVAMTEL, LLC, et al., Plaintiffs, v. AT & T CORP., Defendant.

No. Civ.A. 00-643-A.

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

July 21, 2000.

Douglas P. Lobel, Joseph F. Yenouskas, Kelley, Drye & Warren, L.L.P., Washington, DC, for plaintiffs.

Mary Catherine Zinsner, James C. Roberts, Dabney J. Carr, IV, Mays & Valentine, L.L.P., McLean, VA, for defendant.

MEMORANDUM OPINION

ELLIS, District Judge.

In this collection action brought by sixteen¹ competitive local exchange carriers ("CLECs"), against two long distance carriers, AT & T Corp. ("AT & T") and Sprint Communications Company ("Sprint"),² a threshold dismissal motion raises several issues, including (i) whether all or portions of the case should be referred to the Federal Communications Commission ("FCC") under the doctrine of primary jurisdiction,³ (ii) whether any portions of the case not referred should be stayed or dismissed pending the FCC's resolution of the referred claims, and (iii) whether plaintiffs' cases and the cases against AT & T and Sprint should be severed under Rule 20, Fed.R.Civ.P.

I.

The instant dispute arises from plaintiffs' thus far unsuccessful efforts to collect fees allegedly owed to them by AT & T for use of plaintiffs' local exchange networks in routing long distance telephone calls. AT & T denies it ordered routing services from plaintiffs, and has refused to pay the fees. Accordingly, warranted here is a brief description of the relationship between CLECs, such as plaintiffs, and long-distance carriers, such as AT & T.⁴

Local exchange carriers ("LECs") provide local telephone service to subscribers in the areas where they operate. There are two types of LECs, CLECs, such as plaintiffs, and established or incumbent LECs, such as Bell Atlantic, which operated as monopolies in a given area until the Telecommunications Act of 1996 opened the local phone service market by providing 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." As long-distance calls generally cannot be completed without originating and terminating access from the local telephone network, AT & T and other long distance carriers must order access services from the LEC, whether a CLEC or an incumbent LEC, 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 incumbent LECs' wires are usually the only connection between a household or business and the rest of the local network, the CLECs generally interconnect with the incumbent LECs' local network in providing local service, and the long-distance carriers' networks generally connect to the incumbent LECs' network, not the CLECs' network. The CLECs impose access charges on long-distance carriers for calls that travel over the incumbent LECs' network, but only after the fact. Thus, when a long-distance carrier receives calls from an incumbent LEC's network, it does not know, at that time, the identity of the CLEC or incumbent LEC 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 and establish procedures for ordering and canceling a carrier's service. 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. FCC, 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 AT & T. See Cincinnati Bell Telephone Co. v. Allnet Communications 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. Since November 1998, however, AT & T has refused to pay the tariff rates for these access services, claiming that it did not order plaintiffs' services because it considered plaintiffs' tariff rates to be unreasonable.⁶ In short, AT & T contends, it has no obligation to pay for services it did not request.

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 Communications Act, 47 U.S.C. § 201, unjust and unreasonable practices by a common carrier. In June, AT & T filed a counterclaim in which it stated six claims: (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,⁷ (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,⁸ (v) engaging in intentional and prospective interference with contract in violation of state common law, and (vi) a claim for a declaratory judgment, under 28 U.S.C. § 2201, that AT & T has the right to refuse to order plaintiffs' access services. Sprint also filed a counterclaim.⁹ Threshold dismissal motions by both AT & T and Sprint raise several issues, namely (i) whether all or portions of the case should be referred to the FCC under the doctrine of primary jurisdiction, (ii) whether any portions of the case not referred should be stayed or dismissed pending the FCC's resolution of the referred claims, and (iii) whether the claims against AT & T and Sprint should be severed under Rule 20, Fed.R.Civ.P.

II.

A. Primary Jurisdiction

Although AT & T has not moved for referral of the case to the FCC on primary jurisdiction grounds,¹⁰ it is apparent that AT & T's counterclaims implicate the doctrine of primary jurisdiction, and accordingly, the appropriateness of referral to the FCC must be addressed. Under the doctrine of primary jurisdiction, when a claim pending before a court "requires the resolution of issues which, under a regulatory scheme, have been placed within the special competence of an administrative body," judicial proceedings are stayed "pending referral of such issues to the administrative body for its views." United States v. Western Pac. R.R. Co., 352 U.S. 59, 63-64, 77 S.Ct. 161, 1 L.Ed.2d 126 (1956). The purpose of the doctrine is to "coordinate administrative and judicial decision-making by taking advantage of agency expertise and referring issues of fact not within the conventional expertise of judges or cases which require the exercise of administrative discretion." Environmental Tech. Council v. Sierra Club, 98 F.3d 774, 789 (4th Cir.1996). By dividing decision-making authority, the doctrine serves to promote "proper relationships between the courts and administrative agencies charged with particular regulatory duties." Western Pac., 352 U.S. at 63, 77 S.Ct. 161. It also serves judicial economy because the dispute may be decided by the administrative agency and obviate the need for court intervention. See Ryan v. Chemlawn Corp., 935 F.2d 129, 131 (7th Cir.1991). But, courts must also balance the advantages of applying the doctrine against the potential costs resulting from complications and delay in the administrative proceedings. See Ricci v. Chicago Mercantile Exch., 409 U.S. 289, 321, 93 S.Ct. 573, 34 L.Ed.2d 525 (1973).

A relevant example illustrates the application of the doctrine. One issue typically referred to the FCC under the primary jurisdiction doctrine is the reasonableness of a carrier's tariff because that question requires the technical and policy expertise of the agency,¹¹ and because it is important to have a uniform national standard concerning the reasonableness of a carrier's tariff, as a tariff can affect the entire telecommunications industry. See MCI Telecommunications Corp. v. Ameri-Tel, Inc., 852 F.Supp. 659, 665 (N.D.III.1994). On the other hand, the doctrine of primary jurisdiction does not apply to an action seeking the enforcement of an established tariff. Because a tariff is essentially an offer to contract,¹² such an action is simply one for the enforcement of a contract. As such, enforcement of a tariff to collect amounts due under it is well within the ordinary competence of courts. See AT & T Corp. v. PAB, 935 F.Supp. 584, 590 (E.D.Pa.1996).

Under this approach, only Counts III (unreasonable rates in violation of § 201 of the Communications Act) and IV (cross-subsidy in violation of § 254(k) of the Communications Act) of AT & T's counterclaim are amenable to referral on primary jurisdiction grounds. Count III plainly should be referred to the FCC because it is a direct challenge to the reasonableness of plaintiffs' rates. See National Communications Ass'n. v. AT & T Co., 46 F.3d 220, 223 (2d Cir.1995); PAB, 935 F.Supp. at 590. As to...