American Tel. & Tel. Co. v. City of New York

• Decision Date: 26 April 1996
• Docket Number: 514,Nos. 350,D,s. 350
• Citation: 83 F.3d 549
• Parties: 3 Communications Reg. (P&F) 101 AMERICAN TELEPHONE AND TELEGRAPH COMPANY, Plaintiff-Cross-Appellee, v. The CITY OF NEW YORK and the New York City Corrections Department, Defendants-Third-Party-Plaintiffs- Appellees-Cross-Appellants, v. NEW YORK TELEPHONE COMPANY, Third-Party-Defendant-Appellant. ockets 95-7486, 95-7488.
• Court: U.S. Court of Appeals — Second Circuit

Page 549

83 F.3d 549

3 Communications Reg. (P&F) 101

AMERICAN TELEPHONE AND TELEGRAPH COMPANY, Plaintiff-Cross-Appellee, v. The CITY OF NEW YORK and the New York City Corrections

Department, Defendants-Third-Party-Plaintiffs- Appellees-Cross-Appellants, v. NEW YORK TELEPHONE COMPANY, Third-Party-Defendant-Appellant.

Nos. 350, 514, Dockets 95-7486, 95-7488.

United States Court of Appeals, Second Circuit.

Argued Nov. 22, 1995.

Decided April 26, 1996.

Appeal and cross-appeal from summary judgments entered in the United States District Court for the Southern District of New York (Duffy, J.).

Robert J. Aurigema, New York City (B. Haven Walling, Jr., New York City, of counsel), for Plaintiff-Cross-Appellee.

John Hogrogian, Assistant Corporation Counsel, New York City (Paul A. Crotty, Corporation Counsel, New York City; Pamela Seider Dolgow, Diana M. Murray, New York City, of counsel), for Defendants and Guy Struve, Davis, Polk & Wardwell, New York City (Richard H. Wagner, White Plains, New York; Michael J. Toolan, New York City, of counsel), for Third-Party Defendant-Appellant.

Third-Party Plaintiffs-Appellees-Cross-Appellants.

WALKER, JACOBS, and PARKER, Circuit Judges.

WALKER, Circuit Judge:

This action arises from the refusal of the City of New York and the New York City Department of Corrections (collectively "the City") to pay long-distance charges assessed by American Telephone and Telegraph Company ("AT & T") for telephone calls made from the City's prison facility on Rikers Island, and the refusal on the part of New York Telephone Company ("NYT") to indemnify the City. The City and NYT appeal from summary judgments entered in the United States District Court for the Southern District of New York (Kevin T. Duffy, District Judge ) for AT & T against the City and for the City against NYT for indemnification in the amount of the judgment entered for AT & T.

BACKGROUND

Plaintiff AT & T, an interstate common carrier that provides interstate and foreign telecommunications services, brought this action to recover $201,871.88 from the City for unpaid long-distance telephone charges attributable to calls made by prison inmates and administrative personnel over telephone lines installed in the correctional facility operated by the New York City Department of Corrections ("DOC") on Rikers Island. The City denied liability for the calls as unauthorized and impleaded NYT on the ground that NYT failed to provide services ordered by the City that would block long-distance and special toll calls.

The DOC has more than 120 accounts with NYT totalling 2,008 separate telephone lines. Pursuant to the DOC's internal regulations, prison facilities are required to allow prison inmates to make periodic telephone calls: at least one per day for pretrial detainees and two per week for sentenced prisoners. See Minimum Standards for New York City Correctional Facilities § 1-11. Inmates who call long distance must do so collect or at their own expense.

For all of the telephone lines accessible to inmates, the DOC ordered from NYT a special blocking service, known as "SO-1 service." SO-1 service has the following specific characteristics: 1) no incoming calls are permitted; 2) outgoing calls may be made only to area codes 212, 718, local 516, local 914, and local 201; 3) no access to the operator is permitted; 4) collect and third-party-billing calls are prohibited; and 5) no access is allowed to interactive/group area codes 411, 611, 911, 976, 555, 540, 770, 900, and 970. Some of the DOC's administrative lines are similarly limited except that incoming calls are permitted; other administrative lines are limited to service within the DOC.

For reasons not evident from the record, the blocking services ordered by the City were ineffective so that unauthorized long-distance phone calls were made on DOC phones for the three years from late 1990 to late 1993. These unauthorized long-distance calls, which were carried by AT & T, were made on 307 telephone lines. Twenty-nine of the DOC's 120 accounts with NYT were affected; twenty-six of these accounts related to inmate telephone lines, and the other three related to telephone lines accessible to DOC personnel but not inmates.

NYT provides billing and collection services for AT & T long-distance charges. On approximately seventy-five occasions during the relevant three-year period, NYT billed the City for AT & T long-distance calls. The City disputed these charges and did not pay them. During this period, the City made regular complaints to NYT about the failure of the ordered blocking services and the unauthorized long-distance calls. With these bills unpaid, NYT referred them to AT & T for further collection pursuant to an agreement between the two companies. Between August 27, 1991 and February 5, 1992, AT & T issued five bills to the City that demanded payment for long-distance calls totalling $201,871.88. The City continued to refuse to The City responded to AT & T's complaint by denying liability and, in turn, filed a third-party complaint against NYT. AT & T moved for summary judgment against the City. The City cross-moved for summary judgment against AT & T or, in the alternative, moved for summary judgment against NYT. The district court granted summary judgment both for AT & T against the City and for the City against NYT. Both the City and NYT have appealed.

pay these bills on the ground that the calls were unauthorized and should have been prevented by NYT pursuant to their blocking agreement. This lawsuit followed.

DISCUSSION

As a preliminary matter, the district court had jurisdiction over AT & T's claims for unpaid bills in connection with the provision of interstate telephone service by carriers regulated under the Federal Communications Act of 1934 ("FCA"), 47 U.S.C. §§ 151-612, pursuant to 28 U.S.C. § 1337. See Ivy Broadcasting Co. v. American Tel. & Tel. Co., 391 F.2d 486, 490 (2d Cir.1968). We note, however, that our court is in disagreement with the United States Court of Appeals for the Fifth Circuit, which has held that federal district courts lack subject matter jurisdiction to hear actions such as the one between the City and AT & T. See MCI Telecommunications Corp. v. Credit Builders of Am., Inc., 980 F.2d 1021 (5th Cir.), vacated, 508 U.S. 957, 113 S.Ct. 2925, 124 L.Ed.2d 676, prior opinion reinstated, 2 F.3d 103 (5th Cir.), cert. denied, 510 U.S. 978, 114 S.Ct. 472, 126 L.Ed.2d 424 (1993). The district court exercised supplemental jurisdiction over the City-NYT state law dispute pursuant to 28 U.S.C. § 1367(a). Our jurisdiction over the entire appeal derives from 28 U.S.C. § 1291.

The district court disposed of the claims of AT & T and the City by summary judgment. It is well-settled that in ruling on a motion for summary judgment, a

judge must ask himself not whether he thinks the evidence unmistakably favors one side or the other but whether a fair-minded jury could return a verdict for the [non-movant] on the evidence presented. The mere existence of a scintilla of evidence in support of the [non-movant's] position will be insufficient; there must be evidence on which the jury could reasonably find for the [non-movant].

Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 252, 106 S.Ct. 2505, 2512, 91 L.Ed.2d 202 (1986). Furthermore, a district judge must view the evidence in the light most favorable to the non-moving party and must draw all inferences in favor of that party. See Buttry v. General Signal Corp., 68 F.3d 1488, 1492 (2d Cir.1995). When reviewing the grant of a summary judgment motion, we must determine whether "there are any genuine factual issues that properly can be resolved only by a finder of fact because they may reasonably be resolved in favor of either party." Anderson, 477 U.S. at 250, 106 S.Ct. at 2511.

I. Is the City a "Customer" of AT & T?

At the outset, we are faced with the question of whether the district court, in granting summary judgment to AT & T, correctly concluded that no material fact question existed from which a jury could find that the City was not AT & T's "customer." Much turns upon this question, for if the City is not AT & T's "customer," the City has no obligation to pay AT & T.

The legal relationship between AT & T and its customers is defined by the tariffs, which consist of the terms and conditions of the common carrier's service and rates, that AT & T is required to file and maintain with the Federal Communications Commission ("FCC") under the FCA. 47 U.S.C. § 203(a). These federal tariffs have the force of law and are not simply contractual. MCI Telecommunications Corp. v. Teleconcepts, Inc., 71 F.3d 1086, 1095 (3d Cir.1995); MCI Telecommunications Corp. v. Garden State Inv. Corp., 981 F.2d 385, 387 (8th Cir.1992). Relevant to this case is AT & T Tariff No. 1, which governs AT & T's provision of Long Distance Message Telecommunications Service ("LDMTS"), i.e., long-distance telephone service. This tariff provides:

The Customer is responsible for placing any necessary orders and complying with tariff regulations for LDMTS and for assuring --Originated at the Customer's number(s)

that its Users comply with tariff regulations. The Customer is also responsible for the payment of bills for LDMTS. This includes payment for LDMTS calls or services:

--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 No. 1 § 2.4.1.A.

The City concedes that the above definition of responsibility for long-distance billing is "wide" and includes liability for unauthorized long-distance calls. See American Tel. & Tel. Co. v. Jiffy Lube Int'l, Inc., 813 F.Supp. 1164, 1168 (D.Md.1993); Industrial Leasing Corp. v. GTE Northwest, Inc....