Opinion
Civil No. JFM-00-2087.
September 5, 2001
MEMORANDUM
Frontier Communications Services Inc. and Global Crossing Telecommunications Inc., ("Frontier") provided telecommunications services to its customer, Homesafe Security Systems, Inc. ("Homesafe"). Frontier and Homesafe disputed the rates charged, and eventually Frontier terminated Homesafe's services and brought this suit seeking damages. Homesafe filed a counter claim alleging breach of contract and fraud.
Frontier has filed a renewed motion to dismiss and a motion for summary judgment. Homesafe has filed a motion for partial summary judgment. The central issue in all three motions is which terms apply to the parties' contract for telecommunications services. Since factual disputes exist, all three motions will be denied.
I.
In 1997, Frontier's sales representative, Ken Nightingale, negotiated with Homesafe for telecommunications services. Nightingale sent Homesafe a Dedicated Service Order, which listed a $10,000 monthly minimum usage level ("MMUL") and a three-year commitment. (Ex.# 1, Revised Opp. to Mot. to Dismiss.) These terms were listed underneath a box labeled "Frontier Clear Value," which was not checked. Because the box was not checked, Homesafe argues that the terms were not part of the Order. The Order did not mention a specific per-minute rate or calling plan. Homesafe alleges that it contacted Nightingale and stated that it had not agreed to the $10,000 MMUL or the three-year commitment. On May 14, 1997, Nightingale wrote a letter to Stuart Forchheimer of Homesafe confirming the Order. (Ex.# 2, Revised Opp. to Mot. to Dismiss.) The letter again included the $10,000 MMUL and the three-year commitment. Homesafe alleges that it again contacted Nightingale to clarify that the $10,000 MMUL and the three-year commitment were not part of the Order. According to Homesafe, Nightingale, in a discussion with Forchheimer, hand wrote amendments to the confirmation letter, including guaranteeing that there would be no MMUL and that Homesafe was only obligated for 180 days. Frontier provided service to Homesafe, but a billing dispute arose. Frontier terminated Homesafe's services, and this suit followed.
II. A.
Telecommunications carriers are required to file schedules with the Federal Communications Commission ("FCC"). See 47 U.S.C. § 203;American Telephone and Telegraph Co. v. Central Office Telephone, Inc., 524 U.S. 214, 216-17 (1998). These schedules, known as tariffs, contain all of the carrier's rates and practices affecting its rates. See Central Office, 524 U.S. at 217. The purpose behind requiring the filing of tariffs is to prevent unreasonable and discriminatory rates. See id. at 222-23. Carriers are prohibited from offering any services that are different from the tariffs. See id. at 223.
To effectuate the filing requirement, courts created the filed-rate doctrine. See id. at 223; Kansas City Southern R. Co. v. Carl, 227 U.S. 639, 653 (1913). Under the filed-rate doctrine, contracts that involve terms that are different from the tariffs are unenforceable. See Central Office, 524 U.S. at 222-23 (also barring related tort claims);Funeral Financial Services, LTD. v. NOS Communications, Inc., 17 F. Supp.2d 781, 782 (N.D.Ill. 1998) (state law contract claims are preempted). "Even if a carrier intentionally misrepresents its rate and a customer relies on the misrepresentation, the carrier cannot be held to the promised rate if it conflicts with the published rate." Central Office, 524 U.S. at 222. Although "strict" and "harsh," the filed-rate doctrine is necessary to enforce the rate filing requirement and prevent discrimination as between ratepayers. Id. at 223; Black Radio Network, Inc. v. Nynex Corp., 44 F. Supp.2d 565, 574-75 (S.D.N.Y. 1999) (noting that the filed rate doctrine also prevents courts from becoming involved in rate making and determining whether a rate is reasonable).
The parties acknowledge, and I have held, see Order, November 7, 2000, that under the filed-rate doctrine the terms for Frontier's services must come from a tariff filed with the Federal Communications Commission ("FCC"). See, e.g., Central Office, 524 U.S. at 222-23. Under the filed rate doctrine, both Frontier as carrier and Homesafe as customer can bring suit to enforce an applicable tariff. See Lipton v. MCI Worldcom, Inc., 135 F. Supp.2d 182, 188-89 (D.D.C. 2001) ("[A] claim that seeks to enforce the tariff may be brought in federal court."); Sandwich Chef of Texas, Inc. v. Reliance Nat'l Indem. Ins. Co., 111 F. Supp.2d 867, 874-75 (S.D.Tex. 2000); Black Radio Network, 44 F. Supp.2d at 574-75. The filed rate doctrine does not prevent these suits because neither party is seeking to benefit from a rate different than the tariff rates. Both parties are seeking to enforce the as-yet-undetermined applicable rate within the tariff. The tariff rates will remain uniform, preventing discrimination.See Black Radio Network, 44 F. Supp.2d at 574-75 (noting that enforcement of a tariff rate will not involve courts in the rate-making process). Therefore, the policy reason behind the filed rate doctrine, preventing discrimination among ratepayers, will be vindicated. See Sandwich Chef, 111 F. Supp.2d at 874-75; Black Radio Network, 44 F. Supp.2d at 574-75. The tariff in question is not a simple document with one obvious rate. Rather, as Homesafe describes, "it contains a myriad of rates and plans . . . ." (Homesafe's Opp. to Mot. Summ. J. at 4.) Some of the plans contain MMULs, including $10,000 minimums. (See Ex. A, Frontier's Mot. Summ. J.) Some of the plans provide for a three-year commitment. (See id.) Other plans allow for a one-year commitment and an MMUL as little as $750 a month. (See id.; McGhee Dep. at 53-55.) The tariff offers several per-minute rates, which vary in part based on the MMUL and the length of the commitment. While the parties agree that the applicable service plan must come from the tariff, their central dispute is over which plan from the tariff applies.
The parties' dispute over which plan from the tariff applies stems from their disagreement over which terms they included in their original understanding. Kimberly McGhee, who is a collection placement specialist employed by Frontier, stated in her affidavit that the Order reflected the parties' intent to agree to a $10,000 MMUL and a three-year commitment. (McGhee Dep. Aff. at 2, Ex. B Frontier's Mot. Summ. J.) Therefore, she concludes that one of the plans in the tariff that reflects a $10,000 MMUL and a three-year commitment should apply. (Id.)
In contrast, Homesafe argues that it never intended to agree to a MMUL or a three-year commitment. It argues that Nightingale's hand-written notes on the May 14, 1997 confirmation letter reflect the parties' true intent. Therefore, it argues that the tariff that most closely resembles that understanding should apply. More specifically, it argues that a $10,000 MMUL and a three-year commitment should not apply.
The parties' disagreement over which terms accurately reflect their original understanding presents a material factual dispute. Factual questions exist as to whether the $10,000 MMUL and three-year commitment were part of the original Order and, if they were, whether Nightingale's hand-written notes constituted an amendment of that Order. This factual dispute precludes awarding summary judgment in favor of either party.
B.
Under the doctrine of primary jurisdiction, a district court with subject matter jurisdiction may refer a case to an administrative body if the case will likely require resolution of regulatory issues normally handled by the administrative body. See Lipton, 135 F. Supp.2d at 189-90; Himmelman v. MCI Communications Corp., 104 F. Supp.2d 1, 3-4 (D.D.C. 2000); BellSouth Telecomm., Inc. v. Kerrigan, 55 F. Supp.2d 1314, 1322 (N.D. Fl. 1999). In some instances, district courts have referred cases involving tariffs to the FCC pursuant to the primary jurisdiction doctrine. See, e.g., Himmelman, 104 F. Supp.2d at 3-4. Courts have traditionally considered four factors in determining whether to apply primary jurisdiction: (1) whether the question is within the conventional expertise of judges; (2) whether the question is within the agency's discretion or requires agency expertise; (3) whether there exists a substantial danger of inconsistent rulings; and (4) whether a prior application to the agency has been made.See Lipton, 135 F. Supp.2d at 190; Himmelman, 104 F. Supp.2d at 4. There is no indication that deciding this case would create a danger of inconsistent rulings or that a prior application had been made to the FCC.
Enforcing the applicable plan from the tariff is within the conventional expertise of judges. Lipton presented a billing dispute similar to the present case. In Lipton, the court, in order to enforce the appropriate rate "would have to determine which unidentified portions of the Tariff's thousands of pages and scores of rate plans' apply to and establish the rates that Plaintiff claims she requested over the telephone from MCI." 135 F. Supp.2d at 190. The court held that while it would have to read and understand the tariff, claims that a tariff have been violated are within the conventional expertise of judges. 135 F. Supp.2d at 190-91; see also Baltimore Ohio Chicago Terminal R.R. Co. v. Wisconsin Central Ltd., 154 F.3d 404, 411 (7th Cir. 1998) ("Most tariffs are a good deal less complex than patent licensing agreements, large-scale construction contracts, aircraft leases, executive employment contracts, long-term requirements contracts-and for that matter most insurance policies."). The present billing dispute is not particularly within the agency's discretion and does not require the exercise of agency expertise. See Lipton, 135 F. Supp.2d at 191. A determination of the reasonableness of a tariff rate or the discriminatory nature of a carrier's charges is "squarely at the heart of the FCC's mandate."Lipton, 135 F. Supp.2d at 191 (citing Ambassador v. United States, 325 U.S. 317, 324 (1945)); Himmelman, 104 F. Supp.2d at 4-7.
In Himmelman, the plaintiff alleged that MCI acted unreasonably in interpreting the terms of its tariff. 104 F. Supp.2d at 5-7. Specifically, the plaintiff alleged that MCI acted unreasonably by failing to inform directory assistance callers that they were entitled to two numbers, not just one, for the same fee. Id. Himmelman held that the FCC had primary jurisdiction because whether MCI's interpretation of its tariff was reasonable was squarely at the heart of the FCC's mandate.Id. In contrast, the present billing dispute, like the dispute inLipton, requires application of Frontier's tariff, not a determination of its reasonableness, and is therefore not a dispute that requires the FCC's expertise. The doctrine of primary jurisdiction does not require referring this case to the FCC because, like Lipton, this case is a billing dispute that involves enforcement of the applicable plan from a tariff and is well within the competency of a district court. 135 F. Supp.2d at 190-91; see also BellSouth, 55 F. Supp. 2d at 1322 ("The doctrine does not apply if the tariff's language is used in its ordinary sense, or if the questions is not intertwined with technical facts.").
ORDER
For the reasons stated in the accompanying memorandum, it is, this 5th day of September 2001 ORDERED:
1. That Frontier's renewed motion to dismiss is denied;
2. That Frontier's motion for summary judgment is denied; and
3. That Homesafe's motion for partial summary judgment is denied.