MCI Telecommunications Corp. v. TCI Mail, Inc., Civ. A. No. 91-0144L.

• Decision Date: 13 September 1991
• Docket Number: Civ. A. No. 91-0144L.
• Citation: 772 F. Supp. 64
• Parties: MCI TELECOMMUNICATIONS CORPORATION v. TCI MAIL, INC. f/k/a Save a Life Publications, Inc.
• Court: U.S. District Court — District of Rhode Island

772 F. Supp. 64

MCI TELECOMMUNICATIONS CORPORATION v. TCI MAIL, INC. f/k/a Save a Life Publications, Inc.

Civ. A. No. 91-0144L.

United States District Court, D. Rhode Island.

September 13, 1991.

Hagop S. Jawharjian, Olenn & Penza, Warwick, R.I., Cynthia A. Raposo, MCI Telecommunications Corp., Washington, D.C., for plaintiff.

Kurt M. Hayes, Pawtucket, R.I., Peter S. Brooks, Brooks and Brooks, Sherbourn, Mass., for defendant.

MEMORANDUM AND ORDER

LAGUEUX, District Judge.

I. INTRODUCTION

Plaintiff, MCI Telecommunications Corporation ("MCI"), brought this action against TCI Mail, Inc. ("TCI"), formerly known as Save a Life Publications, Inc., seeking to recover a deficiency in payment for telecommunications services. MCI is a national and international long-distance telephone carrier. TCI is a professional fund-raising consultant that represents charitable and civic organizations.

TCI filed an Answer and Counterclaim alleging that, before agreeing to provide the service, MCI had represented that it would charge a much lower rate than the rate it ultimately charged. Defendant's Counterclaim, paras. 7-9. TCI claims that it had an oral agreement with MCI, and that MCI breached this contract (Count I) and committed tortious misrepresentation (Count II). Id., paras. 11-16. TCI also alleges that periodic disruptions in TCI's long-distance service constituted an additional breach of contract by MCI, causing TCI to lose thousands of dollars in lost revenue (Count III). Id., paras. 10, 17-18. TCI seeks adjudication that it is not liable to MCI for the alleged deficiency, and it seeks damages from MCI for the alleged lost revenue as a result of the alleged disruptions.

MCI has moved, under Fed.R.Civ.P. 12(b)(6), to dismiss all Counts of TCI's counterclaim. MCI argues that a tariff schedule of rates filed with the Federal Communications Commission ("FCC") at the time of the agreement exclusively governs the rights and duties of the parties, regardless of any inconsistent statements that MCI's representatives may have made. MCI asserts that the terms of this tariff preclude TCI's claims.

For the reasons that follow, MCI's motion with respect to Counts I and II, the primary contract and misrepresentation claims, is denied. MCI's motion to dismiss Count III, which alleges breach of contract as a result of disruptions in service, is granted.

II. DISCUSSION

A. Standards for Rule 12(b)(6)

When considering a motion to dismiss under Fed.R.Civ.P. 12(b)(6), the Court must review the facts and pleadings in the light most favorable to the non-moving party. The moving party, here MCI, carries the burden of establishing that the non-moving party, TCI, can prove no possible set of facts that would entitle it to relief. Harper v. Cserr, 544 F.2d 1121, 1122 (1st Cir. 1976); Mendonsa v. Time, Inc., 678 F.Supp. 967, 968 (D.R.I.1988). The allegations in the counterclaim are presumed true for the purpose of testing the sufficiency of the counterclaim. Seveney v. United States Gov't, Dep't of Navy, 550 F.Supp. 653, 655 (D.R.I.1982). All inferences are resolved against the moving party and in favor of the non-moving party. Gladstone, Realtors v. Bellwood, 441 U.S. 91, 109, 99 S.Ct. 1601, 1612, 60 L.Ed.2d 66 (1979).

B. Background Facts

When the facts and inferences are viewed in the light most favorable to TCI, the following scenario emerges. In 1989, while operating under the name Save a Life Publications, Inc., TCI investigated several long-distance telephone companies, intending to choose one to serve TCI's national telephone marketing center in Rhode Island. Long-distance telephone charges are one of TCI's largest business expenses. During several discussions between TCI and MCI, sales representatives of MCI allegedly promised that TCI's average long-distance rate with MCI would be $.12 per minute, a figure upon which TCI relied in making financial projections. In the months after TCI chose MCI as its long-distance telephone company, however, TCI found that its actual billing rate exceeded the promised rate by nearly 50%, rendering TCI's telephone marketing center unprofitable. TCI alleges that MCI's representatives knew at the time of the representation that MCI could not provide service at the $.12 per minute rate, or, alternatively, that they recklessly disregarded the truth. Additionally, TCI claims that MCI's long-distance service failed on several occasions in 1990, causing TCI to lose several thousand dollars. TCI did not pay MCI the full amount billed. In March 1991, MCI initiated this action to recover $80,774.39, plus interest, from TCI for services rendered.

C. Tariffs Under the Communications Act of 1934

The Communications Act of 1934, as amended, requires common carriers, including long-distance telephone carriers, to file and maintain a schedule, or tariff, of contractual terms and conditions with the FCC. 47 U.S.C. § 203(a)-(b) (1988); MCI Telecommunications Corp. v. FCC, 765 F.2d 1186, 1188, 1191 (D.C.Cir.1985). A tariff filed with the FCC must set forth the carrier's charges, classifications, practices, and regulations. 47 U.S.C. § 203(a) (1988). The contents of the tariff are subject to FCC regulation and approval. Id. § 203(b)(2). Under the "filed tariff doctrine," a tariff filed with the FCC supersedes all other agreements for interstate telephone services.¹ Id. § 203(c); Marco Supply Co. v. AT & T Communications, Inc., 875 F.2d 434, 436 (4th Cir.1989). Purchasers of interstate telephone services are presumed to know the terms of any relevant tariff. Marco Supply, 875 F.2d at 436.

MCI's contractual relationships with its customers are governed by MCI Tariff FCC No. 1 ("MCI Tariff"). The MCI Tariff, and not the representations of MCI's salespeople, thus determines the terms of the contract between the parties. Accidental or intentional misquotation of a rate governed by a filed tariff cannot alter the terms of a binding contract based on the tariff.

Aside from Marco Supply, 875 F.2d 434, the weight of judicial authority concerning the filed tariff doctrine relates only to the Interstate Commerce Act ("ICA"), 49 U.S.C. §§ 10101-11917 (1988), and not to the Communications Act of 1934, 47 U.S.C. §§ 151-613 (1988). See Maislin Indus., U.S., Inc. v. Primary Steel, Inc., ___ U.S. ___, 110 S.Ct. 2759, 2765, 111 L.Ed.2d 94 (1990); Louisville & Nashville R. Co. v. Maxwell, 237 U.S. 94, 97, 35 S.Ct. 494, 495, 59 L.Ed. 853 (1915); Western Union Tel. Co. v. Esteve Bros. & Co., 256 U.S. 566, 572, 41 S.Ct. 584, 586, 65 L.Ed. 1094 (1921) (interpreting the superseded Act to Regulate Commerce). Judicial construction of the ICA, including recent opinions from the U.S. Supreme Court and the First Circuit Court of Appeals, has consistently reaffirmed the rule that a filed tariff sets the terms of all contracts operating under the ICA, despite any contrary agreements between the parties. Maislin, 110 S.Ct. at 2765-71; Delta Traffic Service, Inc. v. Transtop, Inc., 902 F.2d 101, 102-03 (1st Cir.1990).

This Court can locate no federal opinion, other than Marco Supply, 875 F.2d 434, defining the effect of a tariff filed pursuant to the Communications Act of 1934. In that case, Marco Supply Company ("Marco") alleged that it had contracted with AT & T Communication, Inc. ("AT & T") to provide telephone services, and that it had entered into the contract based on AT & T's oral and written quotation of installation and monthly service rates. When Marco received its first bill, it found that it was charged under a filed AT & T tariff at nearly 50% more than the promised rate. Marco's suit charged breach of contract and willful misrepresentation. The United States District Court for the Western District of Virginia dismissed Marco's complaint, and the Fourth Circuit Court of Appeals affirmed. Applying the filed tariff doctrine, the Fourth Circuit explained that "a regulated carrier must charge the tariff rate established with the appropriate regulatory agency, even if it has quoted or charged a lower rate to its customer." Id. at 436.

The filed tariff doctrine often leads to harsh and seemingly unfair results. See, e.g., Maislin, 110 S.Ct. at 2763, 2766-67; Louisville & Nashville, 237 U.S. at 97, 35 S.Ct. at 495; Locust Cartage Co. v. Transamerican Freight Lines, Inc., 430 F.2d 334, 343 (1st Cir.) (tariff filed under Motor Carrier Act of 1935, 49 U.S.C. §§ 301-327), cert. denied, 400 U.S. 964, 91 S.Ct. 365, 27 L.Ed.2d 383 (1970). This strict rule could permit a carrier deliberately to misrepresent its rates to unwitting customers and then demand the full tariff amount after the contract is performed, even many years after the transaction. See, e.g., Marco Supply, 875 F.2d at 436; Delta Traffic Serv., Inc. v. Armstrong World Indus., Inc., 703 F.Supp. 525, 527-28 (S.D.Miss. 1988).

Despite this potential for injustice, the rationale for the rule is compelling. To allow a regulated carrier, under any circumstances, to charge less than the rate contained in the filed tariff would "be giving a preference to and discriminating in favor of the customer in question." Marco Supply, 875 F.2d at 436. As the Supreme Court has explained in connection with the ICA:

If the rates are subject to secret alteration by special agreement, then the statute will fail of its purpose to establish a rate duly published, known to all, and from which neither shipper nor carrier may depart.... Any other construction of the statute opens the door to the possibility of the very abuses of unequal rates which it was the design of the statute to prohibit and punish.

Armour Packing Co. v. United States, 209 U.S. 56, 81, 28 S.Ct. 428, 435, 52 L.Ed. 681 (1908). Congress has clearly expressed its desire not to allow price discrimination through deviations from published tariffs. Maislin, 110 S.Ct. at 2768; Western Union, 256 U.S. at 573, 41 S.Ct. at 587; Louisville & Nashville, 237 U.S. at 97, 35 S.Ct. at 495; Western Transp. Co. v. Wilson & Co., 682 F.2d 1227,...