Sprint Commc'n Co. v. Native Am. Telecom LLC
| Decision Date | 31 May 2011 |
| Docket Number | CIV. 10-4110-KES |
| Parties | SPRINT COMMUNICATIONS COMPANY, L.P., Plaintiff, v. NATIVE AMERICAN TELECOM, LLC, and CROW CREEK SIOUX TRIBAL COURT, Defendants. |
| Court | U.S. District Court — District of South Dakota |
ORDER DENYING DEFENDANT NATIVE AMERICAN TELECOM'S
MOTION FOR A PRELIMINARY INJUNCTION
Defendant, Native American Telecom (NAT), moves for a preliminary injunction to enjoin plaintiff, Sprint Communications Company, from withholding interstate switched access charges that NAT has already billed or will bill to Sprint in the future. Sprint resists the motion. The motion is denied.
BACKGROUND
Viewed in the light most favorable to Sprint, the nonmoving party, the pertinent facts to this order are as follows:
Sprint provides nationwide long-distance telephone services and is known under the telecommunications regulatory framework as an interexchange carrier (IXC). Sprint delivers long-distance calls to local exchange carriers (LECs) for termination to end-users. Under the current regulatory framework established by the Federal Communication Commission (FCC), Sprint pays the LEC a terminating access charge based on the LEC's filed tariff.
In 1997, the Crow Creek Sioux Tribe established the Crow Creek Sioux Tribal Utility Authority (Tribal Utility Authority). In October of 2008, the Tribal Utility Authority authorized NAT, a tribally owned limited liability company organized under the laws of South Dakota, to provide telecommunications service on the Crow Creek Reservation subject to the tribe's laws. Pursuant to the 2008 approval order, NAT filed two access tariffs for telephone traffic on the reservation, one with the FCC for interstate traffic and one with the Tribal Utility Authority for intrastate traffic within the reservation. In September of 2009, NAT launched its system on the Crow Creek Reservation.
NAT is an LEC that also operates a free conference calling system with a conference call bridge located on the reservation. The party using NAT's services does not pay NAT for the conference call but rather is assessed normal charges by the party's telecommunications provider. NAT then bills the telecommunications provider an access fee as defined in its tariffs. NAT's conference calling system is at issue here.
After paying two of NAT's bills for charges connected to conference calls, Sprint ceased paying NAT's terminating access tariffs because Sprint believed that NAT was involved in a traffic-pumping scheme, otherwise known as access stimulation or regulatory arbitrage, to generate traffic from conference calls.
In March of 2010, NAT filed a complaint against Sprint with the Tribal Utility Authority seeking enforcement of its access tariffs. On March 29, 2010,the Tribal Utility Authority entered an ex parte order finding that Sprint's refusal to pay NAT's tariffs violated the "filed rate doctrine." In response, Sprint filed a complaint with the South Dakota Public Utilities Commission (SDPUC) to enjoin NAT's collection efforts with respect to interstate traffic. On July 12, 2010, NAT filed a complaint in the CCSTC to collect the unpaid access service tariffs. Sprint sought relief in this court to enjoin the CCSTC from deciding the collection action. The court granted Sprint's motion for a preliminary injunction enjoining the CCSTC.
NAT then filed a second interstate tariff with the FCC. Several IXCs, including Sprint, petitioned the FCC to reject or, in the alternative, suspend NAT's tariff pending an administrative investigation. The FCC declined to rule that the second tariff was so patently unlawful that it should be rejected, and the tariff became effective on November 30, 2010. Docket 67-6 at 1.
NAT moved for a preliminary injunction on its November 2010 tariff to require Sprint to pay NAT's bills during the pendency of this action. Sprint responded that NAT has not alleged a cause of action against Sprint and, thus, cannot seek a preliminary injunction. NAT moved to amend its counterclaim to assert claims of a breach of contract and collection action pursuant to its federal tariff, a breach of implied contract resulting from a violation of its federal tariff, and quantum meruit and unjust enrichment. NAT also seeks declaratory relief.Docket 86-1. The court granted NAT's motion to amend its counterclaim during the March 3, 2011, hearing.
Sprint has stated that it will seek leave from the FCC to amend its complaint to add provisions challenging the unlawfulness of NAT's November 2 01 0 tariff. After resolving various discovery disputes and reviewing two additional exhibits consisting of Thomas Reiman's deposition1 and NAT's CABs Summary,2 the preliminary injunction motion is ripe for review.
DISCUSSION
Federal Rule of Civil Procedure 65(a) authorizes a court to issue a preliminary injunction. "A preliminary injunction is an extraordinary remedy,and the burden of establishing the propriety of an injunction is on the movant." Watkins Inc. v. Lewis, 346 F.3d 841, 845 (8th Cir. 2003) (citing Calvin Klein Cosmetics Corp. v. Lenox Labs., Inc., 815 F.2d 500, 503 (8th Cir. 1987); Goff v. Harper, 60 F.3d 518, 520 (8th Cir. 1995)).
The moving party must make a familiar four-part showing before the court issues a preliminary injunction: (1) the threat of irreparable harm by the movant; (2) the balance between this harm and the injury that granting the injunction will inflict on the other parties; (3) the probability that the movant will succeed on the merits; and (4) the public interest. Dataphase Sys., Inc. v. C L Sys., Inc., 640 F.2d 109, 114 (8th Cir. 1981). A district court has wide latitude to issue a preliminary injunction, and the appellate court only reviews a preliminary injunction order for abuse of discretion. Chicago Stadium Corp. v. Scallen, 530 F.2d 204, 206 (8th Cir. 1976).
The two most critical Dataphase factors are the probability that the movant will succeed on the merits and whether the movant will suffer irreparable harm if the preliminary injunction is not granted. Scallen, 530 F.2d at 206. Probability of the success on the merits is a critical factor in determining whether a court should issue a preliminary injunction. Lankford v. Sherman, 451 F.3d 496, 507 (8th Cir. 2006).
S print has represented that it will amend its complaint with the FCC to continue challenging the validity of NAT's November 2010 tariff. Docket 72 at 2 (). The FCC has expertise in the federal communications realm and when a tariff's terms are disputed, the FCC should first interpret that tariff. See, e.g., Access Telecomm. v. Sw. Bell Tel. Co., 137 F.3d 605, 609 (8th Cir. 1998) . NAT and Sprint dispute the terms of NAT's November 2010 tariff and, given the highly technical nature of telecommunications tariffs, the FCC should first determine the validity of NAT's tariff in a final ruling.
Moreover, on February 9, 2011, the FCC released a Notice of Proposed Rulemaking and Further Notice of Proposed Rulemaking (NPRM). Docket 82-2, Fed. Commc'n Comm'n, Notice of Proposed Rulemaking & Further Notice of Proposed Rulemaking, Feb. 9, 201 1, available at http://www.fcc.gov/ Daily_Releases/Daily_Business/2011/db0209/FCC-11-13A1.pdf. In the NPRM, the FCC stated that it recognizes the need to address traffic pumping, change the current intercarrier compensation system to reduce current incentives to engagein regulatory arbitrage for profit, and reevaluate how companies should file tariffs on voice over internet protocol (VoIP) technology. NPRM, Docket 82-2 at 7, 38, 448-49, 494-508, 524-542. VoIP technology is one of the types of technology that NAT currently employs.
If the court ruled on the merits now, any ruling could conflict with the FCC action between Sprint and NAT and/or be contrary to the FCC's ultimate rules on tariffs for VoIP technology and free conferencing calling services. This court has stayed other telecommunications cases concerning tariffs for conference calling systems upon referral to the FCC and not decided the cases' merits. See, e.g., Splitrock Props., Inc. v. Quest Commc'ns Corp., No. 08-4172-KES, 2010 WL 2867126, at *13 (D.S.D. July 20, 2010) (); Sancom Inc. v. Sprint Commc'ns Co., No. 07-4107-KES, 2010 WL 936718 (D.S.D. Mar. 15, 2010) (same); Sancom, Inc. v. Quest Commc'ns Corp., No. 08-4172-KES, 2010 WL 960005 (D.S.D. Mar. 12, 2010) (same); Northern Valley Commc'ns, LLC v. Sprint Commc'ns Co., No. 08-1003-KES, 2010 WL 936723 (D.S.D. Mar. 15, 2010) (same); Sancom, Inc. v. AT&T Corp., 696 F. Supp. 2d 1030 (D.S.D. Mar. 11, 2 01 0) (same). There is no reason for the court to deviate from this past practice and determine the merits in this action while the above actions are awaiting determination from the FCC. Moreover, as stated below, because NAT is unable to show irreparable harm, any discussion on the merits is unnecessary.
Of the two most critical Dataphase factors, courts more heavily weigh the threat of irreparable harm factor: "[T]he movant's failure to sustain its burden of proving irreparable harm ends the inquiry 'and the denial of the injunctive request is warranted.' " Glenwood Bridge, Inc. v. City of Minneapolis, 940 F.2d 367, 371 (8th Cir. 1991) (quoting Gelco Corp. v. Coniston Partners, 811 F.2d 414, 4 20 (8th Cir. 1 987)). The key word in the irreparable harm factor is irreparable: "The possibility that...
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