Mci Telecommunications v. Dominican Communication

• Decision Date: 10 November 1997
• Docket Number: No. 94 CIV. 1787(JES).,94 CIV. 1787(JES).
• Citation: 984 F.Supp. 185
• Parties: MCI TELECOMMUNICATIONS CORP., Plaintiff, v. DOMINICAN COMMUNICATION CORP., and Hello Card, Inc., Defendants.
• Court: U.S. District Court — Southern District of New York

984 F.Supp. 185

MCI TELECOMMUNICATIONS CORP., Plaintiff, v. DOMINICAN COMMUNICATION CORP., and Hello Card, Inc., Defendants.

No. 94 CIV. 1787(JES).

United States District Court, S.D. New York.

November 10, 1997.

Shaw, Pittman, Potts & Trowbridge, New York, NY, for Plaintiff; Kenneth A. Caruso, Janet A. Broekel, of counsel.

Porzio, Bromberg & Newman, Morristown, NJ, for Plaintiff; Howard J. Schwartz, Cynthia D. Richardson, of counsel.

Andrew H. Perkins, Washington, DC, for Plaintiff.

Riker, Danzig, Scherer, Hyland & Perretti, Morristown, NJ, for Defendants; Kenneth M. Van Deventer, Marianne Santangelo Conklin, of counsel.

MEMORANDUM OPINION AND ORDER

SPRIZZO, District Judge.

Pursuant to 28 U.S.C. §§ 1331 and 1337, and the Communications Act of 1934, 47 U.S.C. § 151 et seq., plaintiff MCI Telecommunications Corp. ("MCI") filed the instant action against defendants Dominican Communication Corp. ("Dominican") and Hello Card, Inc. ("Hello") to recover monies allegedly owed for telecommunication services rendered. Dominican counterclaimed for breach of contract, recision of the contract, willful misconduct, fraud, unjust enrichment, tortious interference with contract, misrepresentation, mutual mistake, and violations of Section 201(b) of the Communications Act of 1934 and New York Gen. Bus. Law. § 349. Pursuant to Federal Rule of Civil Procedure 12, MCI moves to dismiss Dominican's counterclaims. Under the doctrine of primary jurisdiction, Dominican cross-moves to refer MCI's complaint to the Federal Communications Commission ("FCC") for a declaration of the parties' rights and liabilities, and to stay all other court proceedings herein. For the reasons that follow, MCI's motion is denied, Dominican's unreasonable practices counterclaim is referred to the FCC, and Dominican's cross-motion to stay the remainder of the action is denied.

BACKGROUND

MCI is a common carrier of interstate and international telecommunications services for individual and corporate users, with its principal place of business in Washington D.C. See First Amended Complaint ("Am. Compl.") ¶¶ 1, 6. Dominican is a New York State based long distance telephone services provider which serves predominantly Spanish-speaking communities in the United States by providing long distance telephone service to the Dominican Republic. See Am. Compl. ¶¶ 2, 7; Amended Answer and Counterclaims ("Am. Ans.") ¶ 20. Hello is a New York based telecommunications company affiliated with and controlled by Dominican which resells long distance telephone service through prepaid calling cards. See Am. Compl. ¶¶ 3, 8-9.

In or about April, 1993, Dominican began using U.S. Sprint ("Sprint") as the telephone carrier for its New York City operations. See Am. Ans. ¶ 25. Shortly thereafter, MCI approached Dominican with a proposal to have MCI replace Sprint as Dominican's telecommunications provider. See Am. Ans. ¶¶ 25, 26; Am. Compl. ¶ 10. During this initial meeting, Edward Quintana, MCI Senior Account Executive, and Karen Bachmeier, MCI Account Executive Representative, told Dominican that, as a result of various discounts, MCI was offering Dominican an "effective rate" of $.47 per minute between New York City and the Dominican Republic. See Am. Ans. ¶ 27. This offer undercut the Sprint rate by $.02 per minute. Id. In early 1993, Dominican enrolled in the MCI Vision Value Insurance Plan Plus program pursuant to the terms and conditions set forth in MCI Tariff F.C.C. No. 1. (the "Tariff"). See Am. Compl. ¶ 10.

Pursuant to FCC requirements, telecommunications carriers must draft a tariff which, upon FCC approval, will govern their rate structure. MCI Tariff F.C.C. No. 1, section C, paragraph 10, includes a Competitive Response Promotion ("CRP") clause which provides:

In order to acquire or retain customers, MCI will match certain offers made by other interexchange carriers where the customer can demonstrate to MCI's satisfaction that it intends to accept such offer as an inducement to subscribe to or remain subscribed to such other interexchange carrier's services.

Am. Ans. ¶ 44. Section B, paragraph 17 contains a similar competitive exception, entitled "Specialized Customer Arrangements" ("SCA"). SCA's are "individual negotiated contract[s] ... tailored to meet the customer's needs." Id.

In or about late May, 1993, Dominican received its first bill from MCI and discovered that MCI was charging $.62 per minute for calls between New York City and the Dominican Republic. See Am. Ans. ¶ 30. Dominican contacted MCI in an effort to resolve this billing discrepancy. Id. ¶ 31. MCI informed Dominican that one of the discounts offered by Quintana was inapplicable under the Tariff, and consequently, it was unable to offer the $.47 per minute rate. Id.

On June 11, 1993, Dominican's President, Eleno Ramos, met with Quintana, Timothy Preston, an MCI Sales Manager, and Roger Zepka, an MCI Senior Branch Manager. See Am. Ans. ¶ 33. At this meeting, MCI presented Dominican with a written agreement for execution, wherein MCI proposed that it would continue providing service to Dominican for the remainder of the contract term at the Tariff rate of $.62 per minute, but would then subsidize that rate with various free goods and discounts. Id. ¶¶ 34, 35. MCI allegedly threatened immediate termination of Dominican's service should Dominican fail to sign the new contract. Id. ¶ 35. Because establishing new service would have taken several months, Dominican claims that it had no viable alternative but to concede to MCI's terms and execute the agreement. Id. ¶¶ 32, 35. MCI also allegedly insisted on several oral modifications to the new contract, to which Dominican agreed in order to avoid having its service terminated. Id. ¶ 38. Thereafter, Dominican made several more payments to MCI. Id.

In or about August or September, 1993, San Juan/St. Thomas, a Caribbean telecommunications carrier, offered to provide Dominican with phone service from New York City to the Dominican Republic at a rate of $.37 per minute, and American Telephone and Telegraph Co. ("AT & T") offered to provide service at a rate of $.35 per minute. See Am. Ans. ¶¶ 39, 40. Dominican allegedly presented both offers to MCI, and asked that they match those offers, but MCI refused. Id. Thereafter, Dominican contracted for service with AT & T. Id. ¶¶ 39-41. In or about December, 1993, AT & T refused to continue providing service to Dominican at the $.35 per minute rate. Id. ¶ 42.

On March 14, 1994, MCI filed the instant action pursuant to 28 U.S.C. §§ 1331 and 1337 and the Communications Act of 1934, 47 U.S.C. § 151 et seq., seeking damages for breach of tariff and breach of contract, together with attorney's fees and costs.

On June 3, 1994, Dominican counterclaimed seeking damages for breach of the contract, willful misconduct,¹ fraud, tortious interference with its subsequent contract with AT & T, unjust enrichment, and violations of the Communications Act and New York General Business Law § 349, as well as recision of the contract based on misrepresentation and mutual mistake. Dominican subsequently voluntarily dismissed with prejudice its claim of tortious interference with the AT & T contract. See Order, dated December 8, 1994.

On August 5, 1994, MCI moved to dismiss Dominican's counterclaims pursuant to Federal Rule of Civil Procedure 12, arguing that (1) Dominican's claims are barred by the filed tariff doctrine; (2) Dominican's state-law claims are preempted by the Communications Act; and (3) Dominican's breach of tariff and willful misconduct claims fail to state a cause of action.

On September 13, 1994, Dominican cross-moved to refer issues involving the construction and application of the CRP clause to the FCC and to stay all other court proceedings herein pending the FCC's declaration of the parties' rights and liabilities. Dominican argues that (1) under the doctrine of primary jurisdiction the FCC must interpret the Tariff; (2) MCI's practice of selectively meeting competitive offers is an unreasonable practice requiring FCC scrutiny and sanctions; (3) and the CRP clause obligates MCI to match or better competitive offers.

At Oral Argument, Dominican represented that it no longer seeks enforcement of the $.47 per minute contract rate, but maintains its claim for recision of the contract, fraud, and/or enforcement of the Tariff rate under the CRP clause, which Dominican claims required MCI to match the rates offered by AT & T and San Juan/St. Thomas.

DISCUSSION

Pursuant to Federal Rule of Civil Procedure 12, pleadings are not subject to dismissal unless it appears to a certainty that a party cannot possibly be entitled to relief under any set of facts which could be proven in support of a claim. See Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 101-02, 2 L.Ed.2d 80 (1957); Harsco Corp. v. Segui, 91 F.3d 337, 341 (2d Cir.1996).

Under the "filed tariff doctrine," a duly filed tariff exclusively defines the rates a carrier may charge for its services, and deviation from the tariff is not permitted. See Maislin Industries, U.S. v. Primary Steel, Inc., 497 U.S. 116, 117, 110 S.Ct. 2759, 2761, 111 L.Ed.2d 94 (1990); Arkansas Louisiana Gas Co. v. Hall, 453 U.S. 571, 577, 101 S.Ct. 2925, 2930, 69 L.Ed.2d 856 (1981); Armour Packing Co. v. United States, 209 U.S. 56, 81, 28 S.Ct. 428, 435, 52 L.Ed. 681 (1908). The rationale underlying the doctrine is that tariffs are public documents, and therefore a customer may be charged with knowledge of the filed tariff rate. See Maislin, 497 U.S. at 127, 110 S.Ct. at 2766; Marco Supply Co. v. AT & T Communications, 875 F.2d 434 (4th Cir.1989). Accordingly, once a tariff has been filed and the rates therein deemed reasonable by the governing agency, a defendant may not assert equitable defenses to collection of the tariff. See Maislin, 497 U.S. at 117, 126-27, 110 S.Ct. at 2761, 2765-66 (prohibiting equitable defenses to the collection of a filed tariff under the...