Sprint Commc'ns Co. v. Ntelos Tel. Inc.
| Decision Date | 06 August 2012 |
| Docket Number | Civil Action No. 5:11cv00082 |
| Court | U.S. District Court — Western District of Virginia |
| Parties | SPRINT COMMUNICATIONS COMPANY, L.P., Plaintiff, v. NTELOS TELEPHONE INC., Defendant. |
This matter is before the court on cross motions for summary judgment filed by plaintiff Sprint Communications Company, L.P., ("Sprint") and defendant Ntelos Telephone Inc. ("NTELOS") (Dkt. # 50 & 57), and NTELOS' motion to stay and refer the case to the Federal Communications Commission ("FCC") (Dkt. # 64). The parties have briefed the issues, and oral argument was held on March 2, 2012. For the reasons set forth below, the cross motions for summary judgment are DENIED and NTELOS' motion to stay and refer this matter to the FCC is GRANTED.
Since at least 2002, Sprint, a long distance telephone carrier,1 has used the local telephone services provided by NTELOS, a local exchange carrier ("LEC"), for long distance calls originating and terminating in the NTELOS service area in the Western District of Virginia. Sprint contends that it was overcharged for local telephone services provided by NTELOS andseeks a refund of more than $3.9 million for service between July 21, 2007 and October 31, 2009.
Telecommunications carriers, such as NTELOS, file tariffs which, upon FCC approval, govern their rate structure and establish procedures for ordering a carrier's service. See MCI Telecomm. Corp. v. Dominion Commc'n Corp., 984 F. Supp. 185, 187 (S.D.N.Y. 1997). Tariffs have been defined as "essentially offers to sell on specified terms, filed with the FCC and subject to modification or disapproval by it." Cahnmann v. Sprint Corp., 133 F.3d 484, 487 (7th Cir. 1998). On September 18, 2002, NTELOS concurred in the ICORE, Inc. Tariff F.C.C. No. 2 ("ICORE Tariff") filed with the FCC for the provision and billing of its services. Sprint alleges that from the time of NTELOS' concurrence in the ICORE Tariff until November 2009, NTELOS billed Sprint, and Sprint paid NTELOS, for local telephone services at a rate in excess of that authorized by the ICORE Tariff.2 For the purposes of this motion, Sprint concedes that from 2002 to October 31, 2009, it ordered, was billed and paid for local access services on a per minute per mile basis referred to as Tandem Switched Transport ("TST").3 Sprint now asserts that the ICORE Tariff precludes billing at TST rates and requires that it be charged a lower, flat rate for dedicated service referred to as Direct Trunked Transport ("DTT"). Sprint argues that the plain language of the ICORE Tariff and application of the filed rate doctrine4 require thecourt to grant its motion for summary judgment and award it damages. NTELOS counters that Sprint's claim is barred by NTELOS' 2003 Chapter 11 bankruptcy or, alternatively, should be stayed and referred to the FCC under the doctrine of primary jurisdiction. As to the merits of Sprint's claim, NTELOS contends that Sprint was billed and paid for the local telephone services it ordered, and that Sprint is obligated to pay for those services.
NTELOS moves for summary judgment, arguing any claim Sprint had related to NTELOS' billing practices following adoption of the ICORE Tariff was discharged in NTELOS' 2003 Chapter 11 bankruptcy proceeding. NTELOS asserts that Sprint's allegations in this case stem from NTELOS' failure to switch to DTT billing upon adoption of the tariff on September 18, 2002.5 According to NTELOS, this failure, which occurred prior to the filing of NTELOS' bankruptcy petition on March 4, 2003, gave rise to Sprint's claim, or right of payment, in bankruptcy. However, Sprint failed to assert any such claim in NTELOS' bankruptcy proceeding, despite having received written notice of the filing of the bankruptcy petition. Thus, NTELOS argues, any claim Sprint had was discharged by virtue of the confirmation of the Chapter 11 reorganization plan in August 2003 and Sprint's cause of action fails as a matter of law.6
For its part, Sprint argues that the relevant conduct is not NTELOS' adoption of the ICORE Tariff but rather NTELOS' repeated billing for local telephone services at a rate in excess of that authorized by the ICORE Tariff. Sprint views each bill containing an overcharge as a separate, actionable violation of the tariff, and therefore, a separate claim. In its Second Amended Complaint, Sprint asserts it is entitled to a refund for overpayments made from July 21, 2007 through October 31, 2009, well after NTELOS filed its bankruptcy petition and the reorganization plan was confirmed by the bankruptcy court. Sprint argues these post-bankruptcy claims survive, regardless of how similar they are to pre-bankruptcy claims that may have been discharged. To hold otherwise, Sprint asserts, would be to give NTELOS a license to continue to violate the law long after its bankruptcy proceedings concluded, which defies both legal precedent and common sense.
Under the Bankruptcy Code, the confirmation of a reorganization plan discharges the debtor from any debt arising before the date of confirmation. 11 U.S.C. § 1141(d)(1)(A). A "debt" is defined as a "liability on a claim," 11 U.S.C. § 101(12), and a "claim" is defined as a "right to payment, whether or not such right is reduced to judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed, legal, equitable, secured or unsecured. . . ." 11 U.S.C. § 101(5)(A). Congress intended this definition to be " Grady v. A.H. Robins Co.. Inc., 839 F.2d 198, 200 (4th Cir.) (), cert, denied, 109 S. Ct. 201 (1988).
In Grady, the Fourth Circuit addressed the issue of when a claim arises for purposes of bankruptcy. Grady filed a tort action on October 15, 1985, alleging she was injured by an interuterine contraceptive device, the Dalkon Shield, manufactured and marketed by defendant. Id. at 199. Defendant had filed for Chapter 11 bankruptcy a few months earlier, on August 21, 1985. Grady asked the court to find that her claim did not arise prior to the filing of the bankruptcy petition and was therefore not subject to the automatic stay. Id.; see 11 U.S.C. § 362(a)(1). Relying on the relevant state law, Grady argued that her cause of action did not accrue until she was injured, and because she was injured after the petition was filed, the automatic stay provision in § 362 did not bar her suit from prosecution. She relied on Matter of M. Frenville Co., Inc., 744 F.2d 332 (3d Cir. 1984), in which the Third Circuit held that a right to payment must exist prior to the filing of a bankruptcy petition in order for a claim to exist and that courts must look to state law to determine when such a right to payment arises. Grady, 839 F.2d at 200.
The Fourth Circuit rejected plaintiff's argument and the Third Circuit's holding in Frenville.7 839 F.2d at 201-02. The court held that "the bankruptcy Code is superimposed upon the law of the State," and courts should look to the Bankruptcy Code, rather than state law, todetermine when a claim arises. Id. at 202. With respect to the definition of "claim" in the Bankruptcy Code, the court found that Congress contemplated "the broadest possible relief," intending "that all legal obligations of the debtor, no matter how remote or contingent, will be able to be dealt with in bankruptcy." Id. The Fourth Circuit went on to hold:
We do not believe that there must be a right to the immediate payment of money in the case of a tort or allied breach of warranty or like claim, as present here, when the acts constituting the tort or breach of warranty have occurred prior to the filing of the petition, to constitute a claim under § 362(a)(1). . . . Congress has created a contingent right to payment as it has the power to create a contingent tort or like claim within the protection of § 362(a)(1). We are of opinion that it has done so.
Id. at 203. Thus, the court found that Grady's claim arose at the time the Dalkon Shield was inserted, which occurred prior to the filing of the bankruptcy petition, and that Grady's claim was therefore subject to the automatic stay. The analysis used by the Fourth Circuit in Grady to determine when a bankruptcy claim arises is known as the "conduct test."
Although the Grady court expressly limited its holding to the context of the automatic stay,8 the Fourth Circuit applied the same reasoning and holding in Holcombe v. U.S. Airways, Inc., 369 F. App'x 424, cert, denied, 131 S. Ct. 343 (2010), a case brought under the Americans with Disabilities Act, in which the court considered whether plaintiff's discrimination claim had been discharged in bankruptcy. In Holcombe, plaintiff alleged that she was denied accommodations for her medical condition beginning January 2002, and she filed grievances as a result in February and March 2002. Id. at 426. On August 11, 2002, U.S. Airways and its affiliates filed for relief under Chapter 11 of the Bankruptcy Code. Id. at 427. A reorganizationplan was confirmed on March 18, 2003. Holcombe filed suit in September 2003. One year later, U.S. Airways filed a second petition for bankruptcy relief under Chapter 11. Although Holcombe did not file a proof of claim in the first bankruptcy case, she did file a proof of claim in the second case. U.S. Airways objected to the claim and moved for summary judgment. The bankruptcy court granted the motion, finding plaintiff's claim was barred by the discharge in the first bankruptcy case. The district court affirmed. Id.
On appeal, the Fourth Circuit held that Holcombe had a claim as of ...
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