Level 3 Commc'ns, LLC v. TNT Constr., Inc.

• Decision Date: 14 November 2016
• Docket Number: CIVIL ACTION NO: 3:14–CV–00844–GNS–CHL
• Court: U.S. District Court — Western District of Kentucky
• Parties: LEVEL 3 COMMUNICATIONS, LLC & Wiltel Communications, LLC, Plaintiffs v. TNT CONSTRUCTION, INC., Defendant.

220 F.Supp.3d 812

LEVEL 3 COMMUNICATIONS, LLC & Wiltel Communications, LLC, Plaintiffs

v.TNT CONSTRUCTION, INC., Defendant.

CIVIL ACTION NO: 3:14–CV–00844–GNS–CHL

United States District Court, W.D. Kentucky, Louisville Division.

Signed November 14, 2016

James R. Coltharp, Jr., Whitlow, Roberts, Houston & Straub, PLLC, Paducah, KY, James J. Proszek, Hall, Estill, Harwick, Gable, Golden & Nelson, PC, Tulsa, OK, for Plaintiffs.

Drew B. Meadows, John William Walters, Carmine G. Iaccarino, Gregory M. Funfsinn, Walters Meadows Richardson, PLLC, Lexington, KY, for Defendant.

MEMORANDUM OPINION & ORDER

Greg N. Stivers, United States District Court Judge

This matter is before the Court on Defendant's Motion for Partial Summary Judgment (DN 70). This motion is ripe for adjudication. For the reasons stated below, the motion is GRANTED IN PART AND DENIED IN PART .

I. STATEMENT OF FACTS

Level 3 Communications, LLC ("Level 3") is a telecommunications company that relies on a nationwide network of underground fiber-optic cable to provide its services. (Compl. ¶ 6, DN 1).¹ These cables are essentially pipelines that carry telecommunications traffic from terminal-to-terminal across Level 3's network. Part of that network includes a fiber-optic cable (the "Cable") in the right-of-way along the east side of the intersection of Reedyville Road and Hunt Church Road in Roundhill, Kentucky, which connects Level 3's terminals in Louisville, Kentucky, and Portland, Tennessee. (Compl. ¶ 7; Pls.' Answer to Def.'s Interrog. No. 7, DN 70–3). On October 3, 2012, TNT Construction, Inc. ("TNT") was doing excavation work at or near the southeast corner of the intersection of Reedyville Road and Hunt Church Road. (Compl. ¶ 10). During the job, TNT severed the Cable and damaged a conduit bank. (Compl. ¶ 10).

According to Level 3, the systems that were active, and thus interrupted, when TNT severed the Cable had a capacity of 18,816 DS–3s.² (Pls.' Answer to Def.'s Interrog. No. 7). Level 3 describes a DS–3 as "the common denominator used throughout the telecommunications industry as a measure of capacity." (Pls.' Answer to Def.'s Interrog. No. 7). Technically, a DS–3 is an electrical circuit that transmits data at around 44.7 megabits per second. (Pls.' Mem. Opp'n Def.'s Mot. Summ. J. 5 n.2, DN 76 [hereinafter Pls.' Opp'n] ). In turn, the total capacity affected by the Cable's severance was roughly 841,075.2 megabits per second, or 841.075 gigabits per second.

Level 3's system has redundant capacity. (Pls.' Resp. to Def.'s Req. for Admis. No. 2, DN 70–2). If a cable goes down, Level 3 can reroute the data traffic to spare capacity on other fiber-optic cables in the network so that the data still reaches its final destination. (Pls.' Resp. to Def.'s Req. for Admis. No. 1). Level 3 maintains that it uses this redundant capacity solely for "emergencies." (Fox Decl. 5, DN 76–1). Level 3 claims that, in this case, it was unable to reroute 18,816 DS–3s worth of capacity interrupted by the Cable's severance. (Fox Decl. 8). As a result, according to Level 3, some of its users had their service completely interrupted until it could repair the Cable to working order. (Fox Decl. 8). TNT, however, avers that Level 3 was able to automatically reroute all active traffic affected by the severance so that no service was interrupted. (Def.'s Mem. Supp. Summ. J. 3, DN 70–1 [hereinafter Def.'s Mem. Supp.] ). In any event, Level 3 restored service 6.3 hours after the Cable was cut. (Fox Decl. 8).

Level 3 now seeks $3,369,894.42 in damages from TNT. (Pls.' Answer to Def.'s Interrog. No. 7). This sum includes: (1) $61,288.98 for repair costs; and (2) $3,308,605.44 for loss of use of the Cable. (Pls.' Answer to Def.'s Interrog. No. 7). TNT's summary judgment motion does not challenge Level 3's repair costs, but only the claimed loss-of-use damages.

Level 3 bases its loss-of-use damages on what it claims would have been the cost of renting additional capacity from another carrier for the 6.3–hour period during which the Cable was inactive. (Pls.' Answer to Def.'s Interrog. No. 7). Level 3 says it needed 18,816 DS–3s worth of capacity to cover the systems interrupted by the cut cable, so it looked to other carriers' rates for DS–3 lines between Louisville, Kentucky, and Portland, Tennessee. (Pls.' Answer to Def.'s Interrog. No. 7). Apparently, the terminals in Louisville and Portland are in separate Local Access and Transport Areas. (Pls.' Answer to Def.'s Interrog. No. 7). Therefore, according to Level 3, the cost of replacing impacted capacity includes: (1) the cost from the local exchange carrier in Louisville (BellSouth) to transport the traffic from Level 3's terminal to the alternate long distance carrier's (MCI) terminal in Louisville; (2) the cost to transport traffic from MCI's terminal in Louisville to Portland; and (3) the cost from the local exchange carrier in Portland (Bellsouth) to transport traffic from MCI's terminal to Level 3's terminal in Portland. (Pls.' Answer to Def.'s Interrog. No. 7).

The BellSouth rate in Louisville consists of: (1) a monthly recurring charge of $4,112.00 per DS–3; and (2) a one-time installation charge of $1,430.00 per DS–3. (Pls.' Answer to Def.'s Interrog. No. 7). The MCI rate between Louisville and Portland consists of: (1) a monthly recurring charge of $2,700 per DS–3; (2) a monthly recurring charge of $7.00 per mile per DS–3; and (3) a one-time installation charge of $600 per DS–3. (Pls.' Answer to Def.'s Interrog. No. 7). The BellSouth rate in Portland consists of: (1) a monthly recurring charge of $9,982.00 per DS–3; and (2) a one-time installation charge of $1,265.00. (Pls.' Answer to Def.'s Interrog. No. 7). Level 3 states that it prorated these charges to represent only the 6.3 hours it took to repair the Cable to the point traffic was no longer impacted. (Pls.' Answer to Def.'s Interrog. No. 7). Using this methodology, the cost of 18,816 DS–3s in Louisville would be $912,434.88, the cost between Louisville and Portland would be $544,464.48, and the cost in Portland would be $1,851,706.08—for a total of $3,308,605.44 for the period of service interruption. (Pls.' Answer to Def.'s Interrog. No. 7).

Level 3 never actually rented substitute capacity. (Pls.' Resp. to Def.'s Req. for Admis. No 16). Indeed, the Level 3 representative who calculated loss-of-use damages testified that she did not determine whether it was even possible to rent replacement capacity for 6.3 hours. (Fox Dep. 30:2–4, May 04, 2016, DN 77–2). She noted, "[a]s a general course of business, we don't rent ... replacement to get our fiber cuts back up. We repair the fiber cut and get the customers restored." (Fox Dep. 30:2–9). Moreover, she never verified whether the Cable carried DS–3s or investigated the rates for any OC transport systems; rather, she used DS–3s because they supposedly provide "a middle of the road" price. (Fox Dep. 31:11–35:13, 51:3–21). In fact, when pressed on the issue, she stated "[w]e use the DS–3. That's our common denominator. That's just how we do our loss of use calculation." (Fox Dep. 51:3–21). Level 3 has provided no evidence showing that it has ever rented substitute capacity for a period of time less than 30 days and admits it would have taken longer than 6.3 hours to rent substitute capacity or a replacement cable from another carrier. (Pls.' Resp. to Def.'s Req. for Admis. Nos. 15, 17). Importantly, Level 3 has admitted that it is not aware of any profits lost, refunds paid to any customers, customers lost, or any monetary loss whatsoever as a direct result of the interruption in service caused by TNT's severance of the Cable. (Pls.' Resp. to Def.'s Req. for Admis. Nos. 20, 21, 22, 24, 25).

II. JURISDICTION

This Court has jurisdiction under 28 U.S.C. § 1332(a)(1) because there is diversity of citizenship between the parties and the amount in controversy exceeds $75,000, exclusive of interest and costs.

III. STANDARD OF REVIEW

Federal Rule of Civil Procedure 56(a) provides that "the court shall grant summary judgment if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." A genuine dispute of material fact exists when there are "disputes over facts that might affect the outcome of the suit under the governing law." Anderson v. Liberty Lobby, Inc. , 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986).

Generally, "the moving party bears the initial burden of identifying those parts of the record that demonstrate the absence of any genuine [dispute] of material fact." Moldowan v. City of Warren , 578 F.3d 351, 374 (6th Cir. 2009) (citing Celotex Corp. v. Catrett , 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986) ). If, however, the moving party does not bear the burden of proof on the issue for which it seeks summary judgment, it may meet its burden by showing "that there is an absence of evidence to support the nonmoving party's case." Id. (citing Celotex Corp. , 477 U.S. at 325, 106 S.Ct. 2548 ). Once the moving party shows that there is an absence of evidence to support the nonmoving party's case, "its opponent must do more than simply show that there is some metaphysical doubt as to the material facts." Matsushita Elec. Indus. Co. v. Zenith Radio Corp. , 475 U.S. 574, 586, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986).

In ruling on a motion for summary judgment, "the judge's function is not ... to weigh the evidence and determine the truth of the matter, but to determine whether there is a genuine issue for trial." Moldowan , 578 F.3d at 374 (quoting Anderson , 477 U.S. at 249, 106 S.Ct. 2505 ). The Court must view the evidence in the light most favorable to the non-moving party and determine whether "the evidence presents a sufficient disagreement to require submission to a jury or whether it is so one-sided that one party must prevail as a matter of law." Anderson , 477 U.S. at 251, 106 S.Ct. 2505. "The mere existence of a scintilla of evidence in...