A.S.I. Worldwide Communications Corp. v. Worldcom

Decision Date21 July 2000
Docket NumberNo. CIV. 98-154-B.,CIV. 98-154-B.
Citation115 F.Supp.2d 201
CourtU.S. District Court — District of New Hampshire

Jack B. Middleton, McLane Graf Raulerson & Middleton, Manchester, NH, for Plaintiff.

Michael G. Bongiorno, Hale & Dorr, Boston, MA, for Defendant.


BARBADORO, Chief Judge.

A.S.I. Worldwide Communications Corp. is a reseller of long-distance telephone services. A.S.I. entered into a contract to purchase long-distance services from a predecessor of WorldCom, Inc., a telecommunications carrier whose activities are regulated by the Federal Communications Act ("FCA"), 47 U.S.C. § 151 et seq. A.S.I. filed this action seeking damages based on a variety of state law claims after the parties' business relationship broke down. WorldCom argues in a motion for judgment on the pleadings that A.S.I.'s claims are preempted by the FCA. Alternatively, it contends that A.S.I.'s claims are barred by the filed rate doctrine.


A.S.I. entered into an agreement with WilTel, Inc. in March 1994, under which WilTel promised to provide A.S.I. with its "WilPlus III" long-distance telephone service for a period of three years.1 In specifying the rates, terms, and conditions of that service, the agreement incorporated by reference the applicable tariff(s) filed by WilTel with the FCC. Under the agreement, A.S.I. promised to generate a minimum of $100,000 in monthly long-distance call volume and furnish WilTel with certain letters of credit. WilTel, in return, promised to provide A.S.I. with a 40% discount on the WilPlus III three-year base rates set in its tariff.2 WilTel also promised that it would charge A.S.I. an even more favorable rate if A.S.I. delivered more than $200,000 in monthly call volume.

WilTel and A.S.I. entered into an "addendum" to the service agreement in May 1995, in which (1) A.S.I. agreed to generate a minimum of $350,000 in monthly long-distance call volume or to pay that amount as a minimum monthly charge if it failed to achieve that volume, (2) A.S.I. agreed to furnish WilTel with certain cash security deposits and/or letters of credit, (3) WilTel agreed to provide A.S.I. with a 40% discount on the WilPlus III three-year base rates set in the applicable tariff, and (4) WilTel promised to provide A.S.I. with an annual credit equivalent in value to one month of free long-distance usage.3

In or about 1995, WorldCom (or more specifically, its predecessor-in-interest) acquired WilTel and assumed WilTel's obligations under the agreement with A.S.I.4 A.S.I. alleges that WorldCom has breached that agreement and violated the filed tariff by engaging in a variety of wrongful practices.

Many of A.S.I.'s allegations relate to WorldCom's billing practices. For example, A.S.I. claims that WorldCom engaged in double-billing by charging A.S.I. and its customers for the same calls and charging A.S.I. twice for other calls. A.S.I. also contends that WorldCom erroneously billed A.S.I. for services provided to "phantom customers" and/or other resellers not related to A.S.I. A.S.I. further contends that WorldCom's billing statements contained unexplained charges and that WorldCom failed to credit A.S.I.'s account for payments made. A.S.I. asserts that WorldCom wrongfully billed A.S.I. for taxes not attributable to A.S.I. and erroneously characterized calls originating from Canada and the Carribean as international calls, in violation of the terms of the filed tariff.

A.S.I. maintains that when it alerted WorldCom to these erroneous charges and refused to pay them, WorldCom responded by imposing finance charges and other fees on A.S.I. A.S.I. also alleges that WorldCom seized its security deposit and demanded that it post a bond to cover the unpaid charges. According to A.S.I., WorldCom threatened to prevent A.S.I. from switching to another provider, to stop providing service to A.S.I., and to take over A.S.I.'s accounts.

A.S.I. also claims that WorldCom effectively refused to deliver the credit referred to in the parties' agreement. According to A.S.I., it was entitled to an annual credit equivalent to the value of one month of free service if its customers generated more than $200,000 per month in call volume. A.S.I. asserts that it met this condition and that WorldCom provided the credit in May 1995, but that WorldCom immediately increased its charges to A.S.I. to offset the value of the credit. According to A.S.I., this rate increase violated both the parties' agreement and the tariff filed with the FCC.

In addition to the allegations regarding billing practices, A.S.I. alleges that WorldCom engaged in "slamming," an industry term that refers to the unauthorized switching of customers from one reseller's account to the account of another reseller. According to A.S.I., WorldCom both misappropriated A.S.I. customers by "slamming" them from A.S.I.'s account to the accounts of other resellers (including WorldCom itself), and "slammed" non-A.S.I. customers onto A.S.I.'s account. A.S.I. asserts that the former practice caused it to lose customers, while the latter exposed it to legal action from customers of other resellers who had not chosen to deal with A.S.I.

A.S.I. has brought a seven-count complaint claiming that WorldCom breached the parties' contract (Count I), breached the covenant of good faith and fair dealing implied in that agreement (Count II), tortiously interfered with A.S.I.'s contractual relations with its customers (Count III), converted A.S.I.'s property (Count IV), unjustly enriched itself at A.S.I.'s expense (Count V), defrauded A.S.I. (Count VI), and engaged in unfair and deceptive trade practices in violation of N.H.Rev.Stat. Ann. chapter 358-A (Count VII). A.S.I. requests damages as a remedy for WorldCom's alleged violations, including treble damages, costs, and attorney's fees for WorldCom's allegedly willful violation of N.H.Rev.Stat. Ann. chapter 358-A.


WorldCom moves for judgment on the pleadings pursuant to Federal Rule of Civil Procedure 12(c). The standard for reviewing such a motion is essentially the same as the standard for reviewing a Rule 12(b)(6) motion to dismiss for failure to state a claim. See Cooper v. Thomson Newspapers, Inc., 6 F.Supp.2d 109, 112 (D.N.H.1998) (citing Republic Steel Corp. v. Pennsylvania Eng'g Corp., 785 F.2d 174, 182 (7th Cir.1986)). Accordingly, I "must accept all of the nonmoving party's well-pleaded factual averments as true and draw all reasonable inferences in [that party's] favor." Feliciano v. Rhode Island, 160 F.3d 780, 788 (1st Cir.1998) (citing Rivera-Gomez v. de Castro, 843 F.2d 631, 635 (1st Cir.1988)). "Judgment on the pleadings under Rule 12(c) may not be entered unless it appears beyond a doubt that the nonmoving party can prove no set of facts in support of [its] claim which would entitle [it] to relief." Id. (citing Rivera-Gomez, 843 F.2d at 635; Santiago de Castro v. Morales Medina, 943 F.2d 129, 130 (1st Cir.1991)).


WorldCom offers two arguments to support its motion for judgment on the pleadings.5 It first argues that A.S.I.'s claims are preempted by the FCA. Next, it asserts that all of A.S.I.'s claims except its tortious interference and conversion claims are barred by the filed rate doctrine (sometimes called the "filed tariff doctrine"), as embodied in § 203 of the FCA. I address each argument in turn.

A. Preemption

Congress's preemption power flows from the Supremacy Clause of the United States Constitution, see U.S. Const. art. VI, cl. 2, which "invalidates state laws that `interfere with, or are contrary to,' federal law."6 Hillsborough County, Florida v. Automated Med. Labs., Inc., 471 U.S. 707, 712, 105 S.Ct. 2371, 85 L.Ed.2d 714 (1985) (quoting Gibbons v. Ogden, 22 U.S. (9 Wheat.) 1, 211, 6 L.Ed. 23 (1824)); see also Louisiana Pub. Serv. Comm'n v. Federal Communications Comm'n, 476 U.S. 355, 368, 106 S.Ct. 1890, 90 L.Ed.2d 369 (1986); Philip Morris Inc. v. Harshbarger, 122 F.3d 58, 67 (1st Cir.1997). The crucial question in any preemption analysis is whether Congress intended to supersede state law. See Gade v. National Solid Wastes Management Ass'n, 505 U.S. 88, 96, 112 S.Ct. 2374, 120 L.Ed.2d 73 (1992); Louisiana Pub. Serv. Comm'n, 476 U.S. at 369, 106 S.Ct. 1890. "To discern Congress' intent [a court must] examine the explicit statutory language and the structure and purpose of the statute." Gade, 505 U.S. at 96, 112 S.Ct. 2374 (quoting Ingersoll-Rand Co. v. McClendon, 498 U.S. 133, 138, 111 S.Ct. 478, 112 L.Ed.2d 474 (1990)) (internal quotation marks omitted). A court performing preemption analysis "start[s] with the assumption that the historic police powers of the States [are] not to be superseded by ... Federal Act unless that [is] the clear and manifest purpose of Congress." Cipollone v. Liggett Group, Inc., 505 U.S. 504, 516, 112 S.Ct. 2608, 120 L.Ed.2d 407 (1992) (quoting Rice v. Santa Fe Elevator Corp., 331 U.S. 218, 230, 67 S.Ct. 1146, 91 L.Ed. 1447 (1947)) (internal quotation marks omitted); see also Greenwood Trust Co. v. Massachusetts, 971 F.2d 818, 823 (1st Cir.1992). The First Circuit has noted that "[c]ourts must tread cautiously in this arena because the authority to displace a sovereign state's law is `an extraordinary power ... that [a court] must assume Congress does not exercise lightly.'" Greenwood Trust, 971 F.2d at 823 (quoting Gregory v. Ashcroft, 501 U.S. 452, 460, 111 S.Ct. 2395, 115 L.Ed.2d 410 (1991)).

The Supreme Court has identified three main types of preemption: express preemption, field preemption, and conflict preemption. While these categories are analytically useful, they are not "rigidly distinct," English v. General Elec. Co., 496 U.S. 72, 79 n. 5, 110 S.Ct. 2270, 110 L.Ed.2d 65 (1990); see also Philip Morris, 122 F.3d at 68 n. 18, and none "provides an infallible constitutional test or an exclusive constitutional yardstick." Hines v. Davidowitz, 312 U.S. 52, 67, 61 S.Ct. 399, 85 L.Ed. 581 (1941). At...

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