Sancom, Inc. v. Qwest Communications Corp.

• Decision Date: 19 June 2009
• Docket Number: No. CIV. 07-4147-KES.,CIV. 07-4147-KES.
• Citation: 643 F.Supp.2d 1117
• Parties: SANCOM, INC., a South Dakota corporation, Plaintiff, v. QWEST COMMUNICATIONS CORPORATION, a Delaware corporation, Defendant and Counterclaimant, v. Sancom, Inc., a South Dakota corporation; and Free Conferencing Corporation, a Nevada corporation, Counterclaim Defendants.
• Court: U.S. District Court — District of South Dakota

643 F.Supp.2d 1117

SANCOM, INC., a South Dakota corporation, Plaintiff, v. QWEST COMMUNICATIONS CORPORATION, a Delaware corporation, Defendant and Counterclaimant, v. Sancom, Inc., a South Dakota corporation; and Free Conferencing Corporation, a Nevada corporation, Counterclaim Defendants.

No. CIV. 07-4147-KES.

United States District Court, D. South Dakota, Southern Division.

June 19, 2009.

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Chris A. Nipe, Larson & Nipe, Mitchell, SD, Jeffrey D. Larson, Woonsocket, SD, Michael B. Hazzard, Ross A. Buntrock, Stephanie A. Joyce, Arent Fox LLP, Washington, DC, for Plaintiff.

George Baker Thomson, Jr., Qwest Services Corporation, Denver, CO, Thomas John Welk, Christopher Wayne Madsen, Boyce Greenfield Pashby & Welk, Sioux Falls, SD, Charles W. Steese, Steese & Evans, P.C., Denver, CO, for Defendant and Counterclaimant.

Michael B. Hazzard, Cross A. Buntrock, Arent Fox LLP, Washington, DC, Ronald A. Parsons, Jr., Johnson, Heidepriem, Abdallah & Johnson, LLP, Sioux Falls, SD, for Counterclaim Defendants.

ORDER GRANTING IN PART AND DENYING IN PART DEFENDANT'S MOTION TO DISMISS AND STRIKE REQUESTS FOR DAMAGES

KAREN E. SCHREIER, Chief Judge.

Defendant, Qwest Communications Corporation (Qwest), moves to dismiss Counts III, IV, V, and VII of plaintiff's First Amended Complaint pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure¹ and to strike plaintiff's second through fifth requests for damages pursuant to Rule 12(f). Plaintiff, Sancom, Inc. (Sancom), opposes the motion.

FACTUAL BACKGROUND

Viewed in the light most favorable to Sancom, the nonmoving party, the facts are as follows: Sancom is a competitive local exchange carrier (CLEC) that provides telecommunications services to its customers and originating and terminating access services to interexchange (IXC) carriers.² Qwest is an IXC that utilizes the originating and terminating access services provided by Sancom. Because Sancom's access charges pertain to interstate and intrastate communications, Sancom filed tariffs with both the FCC and the South Dakota Public Utilities Commission (SDPUC), pursuant to federal and state regulations. Sancom bills Qwest for originating and terminating access services in accordance with the applicable rates set forth in Sancom's tariffs.

This lawsuit arises out of Qwest's identification of Sancom as an LEC that provides telecommunications services to a conference calling company and Qwest's subsequent refusal to pay Sancom for originating and terminating access services. Sancom entered into a contract with Free Conferencing Corporation (Free Conferencing), a conference calling business, under which Sancom provides tariffed services to Free Conferencing and allows it to collocate its conference call bridges at Sancom's central office in Mitchell, South Dakota.³ Sancom terminates calls made to the telephone numbers assigned to Free Conferencing and collects the applicable tariffed rates from Free Conferencing. Under Sancom's and Free Conferencing's agreement, Sancom pays Free Conferencing a marketing fee based on the amount of traffic generated by Free Conferencing's teleconferencing services. This traffic generates revenue to Sancom in the form of terminating access charges collected from IXCs like Qwest.

Sancom alleges that in 2007, Qwest conspired with one or more IXCs to identify small LECs that deliver traffic to conference calling companies. After identifying these LECs, Qwest began charging its customers more for calls that would be terminated by these LECs because Qwest was obligated to pay more than it budgeted to deliver calls. Qwest also refused to pay terminating access charges to the small LECs altogether. Thus, after identifying Sancom as a carrier that terminates calls to conference calling company customers, and beginning on March 1, 2007 Quest refused to pay Sancom any of its invoiced charges, including both charges associated with delivery to Free Conferencing and charges associated with delivery to non-conference calling company customers. The total unpaid charges amount to $526,671.60. Sancom alleges that Qwest knowingly refused to pay Sancom's invoices in order to destroy the business relationship between Sancom and Free Conferencing and to prevent Sancom from establishing relationships with similar companies. Sancom further alleges that Qwest intended to and knew that it was interfering with Sancom's relationship with Free Conferencing by refusing to pay. Finally, Sancom alleges that Qwest delivered traffic for termination to Sancom, knowing that it would not pay the associated terminating access charges.

Sancom filed suit against Qwest, alleging breach of contract, breach of implied contract resulting from violation of tariffs, unjust enrichment, tortious interference with business relations, violation of § 37-24 of the South Dakota Deceptive Trade Practices and Consumer Protection Act, violation of § 201(b) of the Communications Act, and civil conspiracy. Sancom seeks money damages in the amount of $526,671.60 plus applicable interest, fees, and penalties, as well as damages in an amount to be proven at trial resulting from Qwest's alleged unlawful interference with Sancom's business relationship with Free Conferencing, Qwest's alleged violation of the Deceptive Trade Practices and Consumer Protection Act, Qwest's alleged violation of § 201(b) of the Communications Act, and Qwest's alleged civil conspiracy with other IXCs. Qwest moves to dismiss Sancom's unjust enrichment, tortious interference, Deceptive Trade Practices and Consumer Protection Act, and civil conspiracy claims. Qwest also moves to strike several of Sancom's requests for damages.

DISCUSSION

I. Motion to Dismiss

A. Standard

In considering a motion to dismiss, the court assumes all facts alleged in the complaint are true, construes the complaint liberally in the light most favorable to the plaintiff, and should dismiss only if "it appears beyond a doubt that the plaintiff can prove no set of facts which would entitle the plaintiff to relief." Coleman v. Watt, 40 F.3d 255, 258 (8th Cir.1994). "The issue is not whether a claimant will ultimately prevail but whether the claimant is entitled to offer evidence to support the claims. Indeed it may appear on the face of the pleadings that a recovery is very remote and unlikely but that is not the test." Scheuer v. Rhodes, 416 U.S. 232, 236, 94 S.Ct. 1683, 40 L.Ed.2d 90 (1974), overruled on other grounds by Davis v. Scherer, 468 U.S. 183, 191, 104 S.Ct. 3012, 82 L.Ed.2d 139 (1984).

B. Discussion

1. Filed Rate Doctrine

Qwest argues that Sancom's claims of unjust enrichment, violation of the Deceptive Trade Practices and Consumer Protection Act, tortious interference with business relations, and civil conspiracy are barred by the filed rate doctrine. "The filed rate doctrine, also known as the filed tariff doctrine, is derived from the tariff-filing requirements of the [Communications Act]." Marcus v. AT & T Corp., 138 F.3d 46, 58 (2d Cir.1998). Section 203(a) of the Communications Act requires telecommunications carriers to file a tariff with the FCC "showing all charges" and "showing the classifications, practices, and regulations affecting such charges." 47 U.S.C. § 203(a). Telecommunications carriers cannot "charge, demand, collect, or receive a greater or less or different compensation" for services subject to tariffs. 47 U.S.C. § 203(c).

"`Under [the filed rate] doctrine, once a carrier's tariff is approved by the FCC, the terms of the federal tariff are considered to be `the law' and to therefore `conclusively and exclusively enumerate the rights and liabilities' as between the carrier and the customer.'" Iowa Network Servs., Inc. v. Qwest Corp., 466 F.3d 1091, 1097 (8th Cir.2006) (quoting Evanns v. AT & T Corp., 229 F.3d 837, 840 (9th Cir.2000)) (alteration in original). The filed rate doctrine prohibits courts from granting relief that would have the effect of changing the rate charged for services rendered pursuant to a valid tariff. See Firstcom, Inc. v. Qwest Corp., 555 F.3d 669, 681 (8th Cir.2009). The filed rate doctrine is equally applicable to rates filed with state regulatory agencies. Id. at 679.

Sancom argues that the tariff-filing requirements in the Communications Act do not apply to CLECs like Sancom. See Sancom's Brief in Opposition to Qwest's Motion to Dismiss and to Strike Requests for Damages, Docket 66, at 10-11 (citing In re Hyperion Telecomms., Inc., 12 F.C.C.R. 8596 (1997)). The court need not address this issue because Sancom alleges that it has filed tariffs with the FCC and SDPUC and that these tariffs cover the originating and terminating access services in question here. Once a tariff has been approved by the relevant regulatory commission, the terms of the tariff govern the relationship between the carrier and the customer. Iowa Network Servs., 466 F.3d at 1097. See also Advamtel, LLC v. AT & T Corp., 118 F.Supp.2d 680, 688 n. 24 (E.D.Va.2000) ("Plaintiffs' reliance on FCC discussions of permissive detariffing as permitting off-tariff contracts fails . . . . Permissive detariffing permits carriers to file tariffs and thus be bound by the rate established therein or, alternatively, to negotiate separate agreements in lieu of, or rather than, filing tariffs.") (citing Hyperion, 12 F.C.C.R. 8596, at ¶ 27); Freedom Ring Communs., LLC v. AT & T Corp., 229 F.Supp.2d 67, 70 (D.N.H.2002) ("[Plaintiff] also argues that the filed rate doctrine has been `fundamentally changed' by recent FCC rulings, which apparently allow certain communications carriers to enter negotiated agreements with other carriers in lieu of filing tariffs. Regardless of whether the application of the filed rate doctrine is altered in such circumstances, an issue which I need not discuss here, [plaintiff] simply does not allege that a non-tariff based, negotiated agreement exists in this case. ...