Brown v. MCI Worldcom Network Serv.

• Decision Date: 17 January 2002
• Docket Number: DEFENDANT-APPELLEE,No. 00-56171,PLAINTIFF-APPELLANT,00-56171
• Citation: 277 F.3d 1166
• Parties: (9th Cir. 2002) WILLIAM J. BROWN, III, ON BEHALF OF HIMSELF AND ALL OTHERS SIMILARLY SITUATED, AND ON BEHALF OF THE GENERAL PUBLIC,v. MCI WORLDCOM NETWORK SERVICES, INC.,
• Court: U.S. Court of Appeals — Ninth Circuit

Page 1166

277 F.3d 1166 (9th Cir. 2002)

WILLIAM J. BROWN, III, ON BEHALF OF HIMSELF AND ALL OTHERS SIMILARLY SITUATED, AND ON BEHALF OF THE GENERAL PUBLIC, PLAINTIFF-APPELLANT v. MCI WORLDCOM NETWORK SERVICES, INC., DEFENDANT-APPELLEE

No. 00-56171

UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT

Argued and Submitted December 7, 2001

Filed January 17, 2002

[Copyrighted Material Omitted]

Michael Padilla, O'Mara & Padilla, San Diego, California, for plaintiff-appellant William J. Brown.

Jeffrey A. Rosenfeld, Daniel J. Schultz, Antony E. Buchignani, Piper Marbury Rudnick & Wolfe Llp, Los Angeles, California; Thomas F. O'Neil III, David T. Smorodin, Mci WorldCom, Inc., Washington DC, for defendant-appellee Mci WorldCom Network Services, Inc.

Appeal from the United States District Court for the Central District of California Gary A. Feess, District Judge, Presiding D.C. No. CV-99-11522-GAF

Before: Thomas G. Nelson and William A. Fletcher, Circuit Judges, and Ann L. Aiken, District Judge.^*

OPINION

W. Fletcher, Circuit Judge

William Brown appeals the district court's dismissal of his class-action complaint alleging overcharging by telephone service provider MCI WorldCom, Inc. (MCI). The district court held that Brown's suit was barred by the filed-rate doctrine. The district court further held that Brown's claim must be resolved in the first instance by the Federal Communications Commission (FCC) pursuant to the doctrine of primary jurisdiction. We hold that because Brown seeks only to enforce an existing, FCC-approved tariff, he has properly stated a claim under federal law. Accordingly, we reverse and remand.

I.

In his amended complaint, Brown alleged that he entered into a two-year contract with MCI to provide telephone service to his two office locations. Each location was to have three phone lines. MCI assigned a separate "account number" to each of the six lines. MCI also assigned a "customer number" to Brown, and then assigned an additional account number to Brown's customer number at each of the two locations. Brown alleged MCI improperly charged him $10 per month for the account numbers assigned to his two customer numbers, even though there were no associated phone lines. The result, according to Brown, was that he was charged as if he had eight lines, even though he had only six.

Brown contacted MCI to complain of the overcharge to one of his two office locations. MCI told Brown the overcharge was due to a computer error, issued him a credit, and modified his account so that he would no longer be charged the $10 minimum fee on his customer number. However, Brown did not notice or complain of the overcharge to his second office location. MCI did not modify that account. It is not clear from the complaint if or when the charges on the second location's account were ever modified.

The district court dismissed Brown's amended complaint with prejudice for failure to state a claim upon which relief could be granted. See Fed. R. Civ. P. 12(b)(6). The district court did not address whether MCI's tariff permits the billing practice Brown challenges. Rather, it concluded that because Brown's claim was related to MCI's tariff, the claim was barred by the filed-rate doctrine. The court additionally held that Brown's claim was barred by the doctrine of primary jurisdiction, and stated that Brown must seek relief before the FCC. The district court denied Brown's request for a stay, refusing to "speculate" as to whether the statute of limitations might run while Brown pursued his claim with the FCC. We review de novo the district court's dismissal. See Evanns v. AT&T Corp., 229 F.3d 837, 839 (9th Cir. 2000).

II.

Rates charged by "common carriers," including telephone service providers such as MCI, are regulated by the FCC pursuant to the Federal Communications Act of 1934 (FCA), 47 U.S.C. §§ 151 et seq. Every carrier is required to file a tariff with the FCC listing its schedule of charges. Id. §§ 203(a). Once a tariff is approved, it "bind[s] both carriers and shippers with the force of law." Lowden v. SimondsShields Lonsdale Grain Co., 306 U.S. 516, 520 (1939). See also AT&T Corp. v. City of New York, 83 F.3d 549, 552 (2d Cir. 1996) (stating that filed tariffs attain "the force of law and are not simply contractual").

Customers alleging that a carrier has violated a filed tariff (or otherwise violated the FCA) may choose to bring their complaints to the FCC or to "any district court of the United States of competent jurisdiction." 47 U.S.C.§§ 207. However, the filed-rate doctrine (also called the filed-tariff doctrine) "bars all claims--state and federal--that attempt to challenge the terms of a tariff that a federal agency has reviewed and filed." Evanns, 229 F.3d at 840 (internal quotation marks and citation omitted). Under the filed rate doctrine, no one may bring a judicial challenge to the validity of a filed tariff. As a corollary, no one may bring a judicial proceeding to enforce any rate other than the rate established by the filed tariff. If a carrier contracts to provide a service at a rate different from that of the filed tariff, that contract is unenforceable. See AT&T Corp. v. Central Office Tel., Inc., 524 U.S. 214 (1998). "[S]ince the federal regulation defines the entire contractual relation between the parties, there is no contractual undertaking left over that state law might enforce. Federal law does not merely create a right; it occupies the whole field, displacing state law." Cahnmann v. Sprint Corp., 133 F.3d 484, 489 (7th Cir. 1998).

The purpose of the FCA's tariff-filing requirement is to "prevent[ ] unreasonable and discriminatory charges." Central Office, 524 U.S. at 222. The filing requirement" `render[s] rates definite and certain, and . . . prevent[s] discrimination and other abuses.' " MCI Telecomm. Corp. v. AT&T Corp., 512 U.S. 218, 230 (1994), quoting Arizona Grocery Co. v. Atchison, Topeka, and Santa Fe Ry. Co., 284 U.S. 370, 384 (1932). Neither the carrier nor its customers may deviate from the tariff. A carrier is "forbidden from charging rates other than as set out in its filed tariff, [and] customers are also charged with notice of the terms and rates set out in that filed tariff." Evanns, 229 F.3d at 840. Carriers may not negotiate any form of "rebates or discounts" with customers because this is "the very evil the filing requirement seeks to prevent." Central Office, 524 U.S. at 223. In sum, "[t]he filed-rate doctrine's purpose is to ensure that the filed rates are the exclusive source of the terms and conditions by which the common carrier provides to its customers the services covered by the tariff." Lovejoy v. AT&T Corp., 92 Cal. App. 4th 85, 100 (Cal. Ct. App. 2001), quoting Central Office, 524 U.S. at 230-31 (Rehnquist, C.J., concurring) (emphasis added).

In addition to barring suits challenging filed rates and suits seeking to enforce rates that differ from the filed rates, the filed-rate doctrine also bars suits challenging services, billing, or other practices when such challenges, if successful, would have the effect of changing the filed tariff. Central Office, 524 U.S. at 223. In Central Office, plaintiff Central Office Telephone (COT), a long distance reseller, contracted with AT&T to buy long-distance service in bulk. COT relied on the representations of an AT&T salesperson in signing the contract, although the contract itself provided that it would be governed by the provisions of the tariff. Id. at 218. When AT&T's service and billing did not match its representations to COT, COT brought suit claiming breach of contract and tortious interference with contract. COT argued that its suit was not barred by the filed-rate doctrine because it did not challenge rates or rate-setting, but rather sought to enforce contracts for services and billing.

The Supreme Court disagreed, explaining, "[r]ates . . . do not exist in isolation. They have meaning only when one knows the services to which they are attached. Any claim for excessive rates can be couched as a claim for inadequate services and vice versa." Id. at 223. Even though the billing option chosen by COT was not covered by the tariff, the court held that the claim seeking to enforce the option was barred.

[T]he additional services and guarantees that[COT] claims it was entitled to by virtue of [AT&T's ] representations and petitioner's sales brochures--viz., faster provisioning, the allocation of charges through multilocation billing, and various matters relating to deposits, calling cards, and service support. . .--all pertain to subjects that are specifically addressed by the filed tariff.

Id. at 224-25. As the Court explained, COT's complaint about terms and service was, at bottom, a complaint about rates. The filed-rate doctrine thus prevents suits seeking to enforce agreements outside the tariff (i.e., indirectly challenging the validity of a tariff) as well as suits directly challenging the validity of a tariff. But it "does not serve as a shield" staving off claims against a carrier based on the tariff itself. Lovejoy, 92 Cal. App. 4th at 100 quoting Central Office, 524 U.S. at 230-31 (Rehnquist, C.J., concurring).

Brown does not challenge the validity of the tariff, either directly or indirectly. The portion of MCI's tariff at issue here authorizes MCI to charge a $10 minimum usage fee, providing in part:

Each customer's usage must equal or exceed $10.00 in each monthly billing period. If in any monthly period a customer's [sic] fails to equal or exceed $10.00 the customer will be billed and required to pay the difference between the customer's actual usage and the $10.00 minimum usage threshold. Monthly recurring fees and charges will not count towards satisfying the minimum usage threshold.

Brown's complaint does not allege that the $10 minimum monthly usage fee established by the tariff is unreasonable or invalid. Rather, Brown complains that MCI violated the tariff by...