MCI Commc'ns Servs. v. Berkshire Tel. Corp. (In re Core Commc'ns Inc.)
| Decision Date | 11 March 2020 |
| Docket Number | Adversary Proceeding No. 19-10003,Case No. 17-00258 |
| Parties | In re CORE COMMUNICATIONS INC., Debtor. MCI COMMUNICATIONS SERVICES, INC., et al., Plaintiffs, v. BERKSHIRE TELEPHONE CORPORATION, et al., Defendants. |
| Court | United States Bankruptcy Courts – District of Columbia Circuit |
Not for publication in West's Bankruptcy Reporter.
MCI Communications Services, Inc. and Verizon Select Services Inc., the plaintiffs and counterclaim-defendants in this adversary proceeding, have filed a motion to dismiss the amended counterclaims of Core Communications, Inc. ("Core"), the defendant and counterclaim-plaintiff in this adversary proceeding and the debtor in the main bankruptcy case. The pertinent facts regarding each of the two plaintiffs are the same, and I will refer to them collectively as "Verizon" and treat them as though they are a single entity.
In its Amended Counterclaims (Dkt. No. 38), Core, a local exchange carrier ("LEC") asserts counterclaims against Verizon, an interexchange carrier ("IXC"), to collect amounts that it billed for switched access services that Core allegedly provided to Verizon under its filed tariffs. Counts I and II of the Amended Counterclaims allege that Verizon breached the express terms of Core's federal (Count I) and state (Count II) tariffs by failing to pay the tariffed rates that Core billed for those services. Count III alleges a breach of contract arising from Verizon's alleged failure to pay for access services offered by Core, which Verizon has accepted and continued to use. Count IV alleges that Verizon breached implied contracts with Core by failing to pay Core's invoices, and Court V alleges that Verizon was unjustly enriched by retaining the unpaid amounts. Finally, Count VI seeks declaratory relief as to Verizon's continuing failure to make payments under any of the legal theories raised in Counts I-V with respect to Verizon's past conduct.
Verizon has moved to dismiss all of the Amended Counterclaims. I will grant Verizon's Motion to Dismiss as to Counts III, IV, and V, and as to Count VI to the extent it seeks declaratory relief as to ongoing injuries of a nature similar to Counts III, IV, and V, but will deny the motion as to Counts Iand II and as to Count VI to the extent it seeks declaratory relief as to ongoing breaches of tariff claims.
The Federal Rules of Civil Procedure require that a plaintiff "give the defendant fair notice of what the plaintiff's claim is and the grounds on which it rests." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 545 (2007) (quoting Conley v. Gibson, 355 U.S. 41, 47 (1957)). A complaint survives a motion to dismiss if it contains enough factual allegations "to state a claim to relief that is plausible on its face." Id. at 570. The factual allegations in a complaint "must be enough to raise a right to relief above the speculative level." Id. "A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009).
In addition, "[i]n addressing a motion to dismiss, the court accepts the complaint's factual allegations as true." Browning v. Clinton, 292 F.3d 235, 242 (D.C. Cir. 2002). However, the court is not bound to accept an inference drawn by the plaintiff if the inference is not supported by the facts in the complaint. See Iqbal, 556 U.S. at 679 (). The court may consider "any documents either attached to or incorporated in the complaint and matters of which [the court] may take judicial notice." In re Wube, Case No. 12-00577, 2013 WL 2109315, at *1 (quoting Equal Emp't Opportunity Comm'n v. St. Francis Xavier Parochial Sch., 117 F.3d 621, 624 (D.C. Cir. 1997)).
FEDERAL AND STATE TARIFF CLAIMS (COUNTS I AND II)
In Counts I and II of the Amended Counterclaims, Core pleads claims for breach of its federal and state tariffs. The elements of a breach of tariff claim are: (1) that the LEC operated under a filed tariff; (2) that the LEC provided services to a customer under that tariff; and (3) that the LEC billed the customer for services provided under its tariffs at rates listed in those same tariffs. See Advamtel, LLC v. AT&T Corp., 118 F. Supp. 2d 680, 683-84 (E.D. Va. 2000). Verizon contends that Counts I and II must be dismissed because:
Core seeks to recover charges for switched access services allegedly provided under Core's federal and state tariffs, but fails to allege that it provided any tariffed service to Verizon, and still less which services, or at what rate. Core alleges only that it provided "access services" and "switched access" to Verizon, but those are not tariffed services that Core actually could provide or for which Verizon could be required to pay.
In its opposition to the Motion to Dismiss (Dkt. No. 41), Core contends that because a "[c]omplaint need only contain a 'shortand plain statement of the claim showing that the pleader is entitled to relief,'" Kingman Park Civic Ass'n v. Williams, 348 F.3d 1033, 1040 (D.C. Cir. 2003) (citing Fed. R. Civ. P. 8(a)), the allegations in its Amended Counterclaims are sufficient to survive a motion to dismiss. In response, Verizon maintains that after Twombly and Iqbal, such a "short and plain statement" is no longer sufficient.
It is correct that Twombly and Iqbal "are universally recognized as having modified the basic pleading standard in all federal civil cases," American Fed'n of State, Cty. & Mun. Emps. Local 2401 v. District of Columbia, 796 F. Supp. 2d 136, 139 (D.D.C. 2011), and that "whether a particular complaint sufficiently alleges a clearly established violation of law cannot be decided in isolation from the facts pleaded." Iqbal, 556 U.S. at 673. However, Verizon goes too far. Shortly after Twombly, the Supreme Court reiterated in Erickson v. Pardus, 551 U.S. 89, 93 (2007), that "[s]pecific facts are not necessary; the statement need only give the defendant fair notice of what the ... claim is and the grounds upon which it rests." (Ellipsis in original) (quoting Twombly, 550 U.S. at 555). And after Iqbal, several circuits, including the D.C. Circuit, have continued to view Erickson as good law. See Atherton v. District of Columbia Office of Mayor, 567 F.3d 672, 681 (D.C. Cir. 2009) (citing Erickson); Mirkin v. XOOM Energy, LLC, 931 F.3d 173, 176-77 (2dCir. 2019) (same); United States v. $579,475.00 in U.S. Currency, 917 F.3d 1047, 1049 (8th Cir. 2019) (same); Foster v. Principal Life Ins. Co., 806 F.3d 967 (7th Cir. 2015) (same); Burnett v. Mortgage Electronic Registration Systems, Inc., 706 F.3d 1231, 1235 (10th Cir. 2013) (same). Accordingly, taking the factual allegations in the Amended Counterclaims as true, I conclude that the factual allegations in Counts I and II are sufficient to state a claim for relief. Core's Amended Counterclaims allege: (1) that Core provides access services, operating under filed tariffs (¶¶ 21, 24-28); (2) that Core provided access services to Verizon under those tariffs (¶¶ 29-30); and (3) that Core billed Verizon for services provided under its tariffs at rates listed in those same tariffs (¶¶ 39-41). While Core's Exhibit C is only a summary of the invoices it allegedly provided to Verizon, the Amended Counterclaims (¶ 41) specifically aver that the invoices in question "set forth the volume of call traffic underlying each invoice calculation, along with all of the interstate and intrastate rate elements that apply to those volumes for purposes of calculating the final invoice amount." These allegations contain sufficent "factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged" as required by Twombly and Iqbal. Because "courts are not licensed to impose heightened pleading requirements in certain classes of cases simply to avoid the riskthat unsubstantiated claims will burden the courts and opposing parties," $579,475.00 in U.S. Currency, 917 F.3d at 1049 (citing Swierkiewicz v. Sorema N.A., 534 U.S. 506, 512, 514-15 (2002)), Core's Amended Counterclaims suffice to put Verizon on notice of the counterclaims that Core advances. Dismissal of these counts for failure to state a claim is therefore inappropriate.
EQUITABLE RELIEF (COUNTS III, IV, AND V)
Verizon's Motion to Dismiss requests dismissal of Counts III, IV, and V with prejudice, arguing that Core's claims are barred as a matter of law by the filed rate doctrine. See Am. Tel. & Tel. Co. v. Cent. Office Tel., Inc., 524 U.S. 214, 222 (1998) (). "When the filed rate doctrine applies, it generally precludes a regulated party from obtaining any compensation under other principles of federal or state law that is different than the filed rate." CallerID4u, Inc. v. MCI Commc'ns Servs., Inc., 880 F.3d 1048, 1053 (9th Cir. 2018) (citing Keogh v. Chicago & N.W. Ry. Co., 260 U.S. 156, 163 (1922)). The FCC's current permissive de-tariffing policy provides two means by which a "competitive local exchange carrier" (LECs other than certain incumbent LECs) can provide an IXC with and charge for interstate access services: the filed tariff or a privately negotiated contract. See All Am. Tel. Co.v. AT&T Corp., 328 F. Supp. 3d 342, 349 (S.D.N.Y. 2018). Verizon thus argues that Count III, which merely attempts to construe Verizon's "acceptance" of its "offer" of services, which were subject to existing tariff rates, as a contract, and Counts IV and V, which seek equitable remedies, are preempted by the filed rate doctrine.
In response to Verizon's request to dismiss Counts III, IV, and V, Core states that these counts "were alleged...
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