Guglielmo v. Worldcom, Inc.

• Decision Date: 16 September 2002
• Docket Number: No. 2001–718.,2001–718.
• Court: New Hampshire Supreme Court
• Parties: Michael GUGLIELMO, Sr. and another v. WORLDCOM, INC. and another.

148 N.H. 309

808 A.2d 65

Michael GUGLIELMO, Sr. and another

v.WORLDCOM, INC. and another.

No. 2001–718.

Supreme Court of New Hampshire.

Argued May 16, 2002.

Opinion Issued Sept. 16, 2002.

Bouchard & Kleinman, P.A., of Manchester (Kenneth G. Bouchard and Nicholas D. Wright on the brief, and Mr. Wright orally) and Mittelholzer, Ferrini & Dibble, P.L.L.C., of Hampton (Thomas Ferrini on the brief), for the plaintiffs.

Orr & Reno, P.A., of Concord (James P. Bassett and Phillip S. Bixby on the brief) and Adam H. Charnes, of Washington, D.C., by brief and orally for defendant WorldCom, Inc.

Ransmeier & Spellman, Professional Corporation, of Concord (Garry R. Lane and Tina L. Annis on the brief) and Burr & Forman LLP of Atlanta, Georgia (Gregory F. Harley on the brief), for defendants ILD Telecommunications, Inc. and ILD Teleservices, Inc.

DALIANIS, J.

This is an interlocutory appeal from the order of the Superior Court (McHugh , J.) denying the motion by the defendants, WorldCom, Inc., ILD Teleservices, Inc. and ILD Telecommunications, Inc., to dismiss the plaintiffs' claims for violations of the anti-monopoly statute, see RSA 356:2, :3 (1995), and the Consumer Protection Act (CPA), see RSA 358–A:2 (1995). See Sup.Ct. R. 8. The parties have transferred, and we have accepted, the following question of law: Does the federal filed rate doctrine bar the plaintiffs' anti-monopoly statute and CPA claims? We answer the transferred question in the affirmative and reverse the denial of the motion to dismiss. We do not address issues briefed by the parties concerning questions we specifically declined.

Upon review of the ruling on this motion to dismiss, we assume the following facts to be true for purposes of this appeal. See Hobin v. Coldwell Banker Residential Affiliates, 144 N.H. 626, 627, 744 A.2d 1134 (2000). We also accept the statement of the case presented in the interlocutory transfer. See Trovato v. DeVeau, 143 N.H. 523, 524, 736 A.2d 1212 (1999).

The plaintiffs are friends and family of New Hampshire State Prison (NHSP) inmates who receive and pay for interstate collect calls from inmates. The defendants provide interstate payphone services to NHSP inmates, pursuant to exclusive contracts with the State. These contracts require inmates to make only collect calls. To place collect calls, the inmates must use the defendants' services, and may not use any other collect-call service, such as "1–800–Collect" or calling cards. Regardless of whether they have their own contracts with telephone service providers, the plaintiffs must accept collect calls from inmates, at the defendants' rates, or forego telephone contact with NHSP inmates.

The original agreements between the State and the defendants provided for a "commission" to be paid the State in return for the exclusive rights to telephone service at NHSP. The contracts also stated that the rates charged would not exceed those charged the inmates under the previous or current agreements and would conform to those set by the New Hampshire Public Utilities Commission.

In December 1997, the warden of the NHSP issued a prison memo regarding telephone charges, setting forth the rates that would be charged for interstate collect calls. The rates subsequently charged the plaintiffs, however, were higher than those set forth in the December 1997 memo.

In July 1999, the contracts between the State and the defendants were modified. According to newspaper articles, the amended contracts reduced the per-minute rate and also the initial fee for inmate-initiated interstate collect calls. Despite the "general understanding that the rates had been reduced," the defendants raised both the per-minute charge and initial access fee in July and August 1999.

In February 2000, the plaintiffs brought a four-count class action against the defendants in superior court, alleging that the defendants: (1) negligently failed to conform to the price structure in a 1997 contract with the State and, as a result, overcharged the plaintiffs; (2) were liable, under the doctrine of respondeat superior, for their employees' failure to inform the inmates and the plaintiffs of the correct rates; (3) violated New Hampshire's anti-monopoly statute by unreasonably restraining trade and establishing a monopoly over inmate-initiated collect calls; and (4) violated the CPA by engaging in unfair competition and trade practices. In their writ, the plaintiffs sought monetary damages only.

Initially, the defendants removed the case to federal court, asserting that the Federal Communications Act (FCA) completely preempted the plaintiffs' claims, and thus deprived the superior court of jurisdiction. See Louis & Nash. R.R. v. Maxwell, 237 U.S. 94, 97, 35 S.Ct. 494, 59 L.Ed. 853 (1915). The federal court disagreed and remanded the case to superior court.

The defendants then moved to dismiss the plaintiffs' writ, arguing that the plaintiffs' claims were barred by the filed rate doctrine. The superior court granted the defendants' motion to dismiss the negligence and respondeat superior claims, and denied the motion to dismiss the anti-trust and CPA claims.

In reviewing an order on a motion to dismiss, "we ask whether the plaintiffs' allegations are reasonably susceptible of a construction that would permit recovery." Hacking v. Town of Belmont, 143 N.H. 546, 549, 736 A.2d 1229 (1999) (brackets and quotation omitted). "We assume the truth of the plaintiffs' well pleaded allegations of fact and construe all reasonable inferences from them most favorably to the plaintiffs." Id . (brackets and quotation omitted). We need not, however, accept statements in the complaint that are merely legal conclusions. See Mt. Springs Water Co. v. Mt. Lakes Vill. Dist., 126 N.H. 199, 201, 489 A.2d 647 (1985).

I. Filed Rate Doctrine

Section 203(a) of the FCA requires every common carrier to file with the Federal Communications Commission (FCC) "schedules" (tariffs) "showing all charges" and "showing the classifications, practices, and regulations affecting such charges." 47 U.S.C. § 203(a) (1994). Section 203(c) makes it unlawful for a carrier to "charge ... a greater or less[er] ... compensation for such communication, or for any service in connection therewith ... than the charges specified in the schedule then in effect" or to "extend to any person any privileges or facilities in such communication, or employ or enforce any classifications, regulations, or practices affecting such charges, except as specified in such schedule." 47 U.S.C. § 203(c) (1994).

Thus, as a matter of federal law, common carriers, such as the defendants, are prohibited from charging rates or from providing related services other than as set forth in the applicable tariff. See Arkansas Louisiana Gas Co. v. Hall, 453 U.S. 571, 577, 101 S.Ct. 2925, 69 L.Ed.2d 856 (1981) ; American Telephone & Telegraph Co. v. Central Office Telephone, Inc., 524 U.S. 214, 222, 118 S.Ct. 1956, 141 L.Ed.2d 222 (1998) (Central Office ). This is referred to as the "filed rate doctrine."

Where the filed rate doctrine applies, state law claims are preempted. See Nantahala Power & Light Co. v. Thornburg, 476 U.S. 953, 962, 106 S.Ct. 2349, 90 L.Ed.2d 943 (1986) ; Appeal of Northern Utilities, 136 N.H. 449, 453, 617 A.2d 1184 (1992). This type of preemption "is not a rule of administrative law designed to ensure that ... courts respect the decisions of federal administrative agencies, but a matter of enforcing the Supremacy Clause." Nantahala Power & Light Co., 476 U.S. at 963, 106 S.Ct. 2349. This type of preemption also differs from the doctrine of "complete preemption," which is a rule of federal jurisdiction, and not a substantive defense to the merits of the plaintiffs' state law claims. See A.S.I. Worldwide Communications Corp. v. WorldCom, 115 F.Supp.2d 201, 205 n. 6 (D.N.H.2000).

The filed rate doctrine not only "forbids a regulated entity to charge rates for its services other than those properly filed with the appropriate federal regulatory authority," Arkansas Louisiana Gas Co., 453 U.S. at 577, 101 S.Ct. 2925, but also forbids a subscriber to avoid paying the tariff rate "by invoking common-law claims and defenses such as ignorance, estoppel, or prior agreement to a different rate." Reiter v. Cooper, 507 U.S. 258, 266, 113 S.Ct. 1213, 122 L.Ed.2d 604 (1993). The filed tariff is "the exclusive source of the terms and conditions by which the common carrier provides to its customers the services covered by the tariff." Central Office, 524 U.S. at 230, 118 S.Ct. 1956 (Rehnquist, C.J., concurring). "The rights and liabilities as defined by the tariff cannot be varied or enlarged by either contract or tort of the common carrier." Id . at 227, 118 S.Ct. 1956 (quotation omitted). Thus, under the doctrine, a common carrier may not adjust its filed rate upwards or downwards and a subscriber may not seek to enforce any rate other than the filed rate. See id . at 222, 118 S.Ct. 1956.

Ignorance of the filed rate is no excuse. See id . Customers are conclusively presumed to know the contents of the carrier's tariff. See Marcus v. AT & T Corp., 138 F.3d 46, 64 (2d Cir.1998). "[E]ven if a carrier intentionally misrepresents its rate and a customer relies on the misrepresentation, the carrier cannot be held to the promised rate if it conflicts with the published tariff." Central Office, 524 U.S. at 222, 118 S.Ct. 1956.

The filed rate doctrine "is undeniably strict and it obviously may work hardship in some cases, but it embodies the policy which has been adopted by Congress." Id . (quotation omitted). The doctrine "is based both on historical antipathy to rate setting by courts, deemed a task they are inherently unsuited to perform competently, and on a policy of forbidding price discrimination by public utilities and common carriers." Arsberry v. Illinois, 244 F.3d 558, 562 (7th Cir.), cert. denied , 534 U.S. 1062, 122 S.Ct. 661, 151 L.Ed.2d 576 (2001). The doctrine prohibits courts from determining...