Great Lakes Communication Corporation v. AT&T Corp

Filing 120

ORDER Accepting 32 REPORT AND RECOMMENDATIONS recommending Great Lakes' 17 MOTION to Dismiss is denied in part and granted in part. AT&T is directed to file an amended counterclaim curing its failure to plead sufficient facts no later than 20 days after entry of this Order. Great Lakes' 17 Motion for Summary Judgment is denied. See text of Order for details. Signed by Senior Judge Donald E OBrien on 3/3/15. (djs)

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF IOWA
WESTERN DIVISION

GREAT LAKES COMMUNICATION
CORPORATION,
Plaintiff,

No. 13-CV-4117-DEO

vs.

ORDER ON REPORT AND
RECOMMENDATION

AT&T CORPORATION,
Defendants.

1

____________________
Before the Court is a Report and Recommendation (“R&R”),
Docket No. 32, issued by United States Magistrate Judge
Leonard

T.

Strand,

concerning

the

Plaintiff

Great

Lakes

Communication Corporation’s [hereinafter GLCC or Great Lakes]
Motion

to

Dismiss

Counterclaim

and

Motion

for

Summary

Judgment, Docket No. 17.
On

June

recommending

24,
that

2014,
the

Judge

Strand

Plaintiff’s

issued

Motion

to

the

R&R

Dismiss

Counterclaim be granted in part and denied and part, and that
Plaintiff’s Motion for Summary Judgment be denied. Docket No.
1

AT&T filed a counter claim against Great Lakes
Communication Corporation. However, for purposes of clarity,
the Court will refer to Great Lakes Communication Corporation
as the Plaintiff and the AT&T as the Defendant.

32.

On

July

8,

Magistrate’s R&R.

2014,

AT&T

filed

Docket No. 33.

Objections

to

the

On that same date, the

Plaintiff also filed Objections to the Magistrate’s R&R.
Docket No. 34.

The Court will discuss the particulars of the

Magistrate’s R&R and the Objections below.
The Court held a hearing on the parties’ Objections on
August 20, 2014.

After listening to the parties’ arguments,

the Court took the matters under consideration and now enters
the following.
I.

BACKGROUND
Magistrate Strand sets out the relevant facts in this

matter, which this Court adopts and will not repeat here.
However this case is complex as it involves fees associated
with

telephone

calls.

Accordingly,

some

background

is

necessary.
Although in modern society telephone services are taken
for granted, telephone calls are both technically and legally
complicated.
issue.

Thankfully, this case only involves the later

Phone calls (and the companies that provide phone

services) are governed by a dense and overlapping regulatory
scheme.

The Federal Communications Commission (FCC) controls

2

national telephone regulations, while the Iowa Utilities Board
(IUB) regulates services exclusive to the State of Iowa.
parties

in

this

case

telephone service.

are

in

the

business

of

The

providing

The Plaintiff, Great Lakes, is a local

telephone service provider (referred to as an LEC) while the
Defendant,

AT&T,

provides

telephone

service

nationwide

(referred to as a long distance company or IXC).
Local telephone companies, such as the Plaintiff, are
just that, local.
specific

geographic

They provide telephone services to a
location,

such

as

Northwest

Iowa.

However, it goes without stating, that many phone calls placed
in one area are to parties far away, outside the province of
an LEC.

If a local caller wants to talk to someone far away,

the call is transferred from the LEC to a national carrier,
such

as

AT&T.

The

national

long

distance

company

then

deposits the call with an LEC in the locality of where the
original caller was calling. Thus, for example, a call placed
in Sioux City, Iowa, to Denver, Colorado, would involve three
companies:

an LEC in Sioux City where the call is placed, a

3

national IXC which carries the call across state lines, and a
final LEC in Denver, where the call ends.

2

The fees earned or payed in this type of arrangement by
the LECs and IXCs are referred to as switched access service
charges. To accomplish national (and international) telephone
service, and to ensure profit for the involved businesses,
local

and

national

telephone

companies

either

establish

tariffs or enter into contracts to establish the switched
access service charges.

3

For a long time, one major phone company controlled all
telephone service in the United States.

After a series of

anti-trust lawsuits, the “Ma Bell” telephone monopoly was
broken up.

In the wake of that break, the first local

exchange carriers (incumbent local exchange carriers or ILECs)
were formed.
Qwest).

In Iowa, the ILEC is Century Link (formally

Younger, local carriers, such as Great Lakes, are

2

As noted by Judge Strand, this example is the most
simple type of example. In reality, a telephone call may be
handed off multiple times to multiple phone companies.
3

As noted by Judge Strand, these are ‘typical’ types of
arrangements, but other types of arrangements exist, such as
centralized equal access (CEA) and direct trunking, both of
which are described in the Report and Recommendation. See
Docket No. 32, p. 4.
4

known as competing local exchange carriers (CLECs) because
they compete with the old, established phone carriers.
In 2001, the FCC issued In Re Access Charge Reform, 16
FCC Rcd. 9923, 9924 (2001) [hereinafter CLEC Access Charge
Order] and promulgated corresponding regulations. In general,
the FCC limited a CLEC’s tariffed switched access rate to the
rate charged by the ILEC that serves the same geographic area.
A

CLEC

could

agreements

impose

with

a

higher

individual

rate

IXCs.

only
In

by

negotiating

addition,

the

FCC

recognized that CLECs serving rural areas face unique cost
challenges

and,

therefore,

created

a

“rural

exemption.”

Instead of being limited to the access rates tariffed by the
ILEC, a CLEC meeting the FCC’s definition of a “rural CLEC”
could benchmark its interstate access rates to those tariffed
by the National Exchange Carrier Association (NECA).
The particular phone company practice at issue in this
case

is

referred

to

as

“access

stimulation.”

Access

stimulation occurs when an LEC partners with some business
that

generates

lots

of

phone

calls.

The

actual

equipment/hardware necessary to accommodate the business’ call
operation is installed at or near the LEC.

5

The result of this

type of arrangement is a sharp increase in call traffic coming
over the IXC’s to the LEC in question.

The LEC benefits from

this arrangement because the LEC can charge the IXC whatever
switched access service fee that was previously applicable for
the increased number of incoming calls. It is undisputed that
the Plaintiff, Great Lakes, engages in access stimulation.
Because access stimulation can cause a crippling spike in
the fees incurred by IXCs, the FCC has sought to limit and
regulate the practice.

To that end, the FCC issued In the

Matter of Connect Am. Fund A Nat'l Broadband Plan for Our
Future Establishing Just & Reasonable Rates for Local Exch.
Carriers

High-Cost

Universal

Serv.

Support

Developing

an

Unified Intercarrier Comp. Regime Fed.-State Joint Bd. on
Universal Serv. Lifeline & Link-Up Universal Serv. Reform -Mobility Fund, 26 FCC Rcd. 17663 (2011) [hereinafter the
Connect America Fund Order].

The Connect America Fund Order

defines access stimulation as when a revenue sharing agreement
exists between an LEC and a business and the LEC had a
three-to-one

interstate

terminating-to-originating

traffic

ratio in a calendar month, or has had a greater than 100
percent increase in interstate originating and/or terminating

6

switched access minutes of use in a month compared to the same
month in the preceding year.

The Connect America Fund Order

went on to say that an LEC engaged in access stimulation must
file a revised tariff in which it benchmarks its access rates
“to the rates of the price cap LEC with the lowest interstate
switched access rates in the state.
II.

4

STANDARD
Pursuant to statue, this Court’s standard of review for

a magistrate judge’s Report and Recommendation is as follows:
[a] judge of the court shall make a de novo
determination of those portions of the
report or specified proposed findings or
recommendations to which objection is made.
A judge of the court may accept, reject, or
modify, in whole or in part, the findings
or recommendations made by the magistrate
[judge].
28 U.S.C. § 636(b)(1).
Similarly, Federal Rule of Civil Procedure 72(b) provides
for review of a magistrate judge's Report and Recommendation
on

dispositive

motions

and

prisoner

petitions,

where

objections are made as follows:

4

A “price cap LEC” is an LEC that is subject to the
FCC’s price capping regulations.
Generally, these are the
dominant, incumbent LECs. See, e.g., 47 C.F.R. § 61.41.
7

[t]he district judge to whom the case is
assigned shall make a de novo determination
upon the record, or after additional
evidence, of any portion of the magistrate
judge's disposition to which specific
written
objection
has
been
made
in
accordance with this rule.
The district
judge may accept, reject, or modify the
recommendation decision, receive further
evidence, or recommit the matter to the
magistrate judge with instructions.
FED. R. CIV. P. 72(b).
Failure to object to the Report and Recommendation waives
the right to de novo review by the district court of any
portion of the Report and Recommendation as well as the right
to appeal from the findings of fact contained therein. United
States v. Wise, 588 F.3d 531, 537 n.5 (8th Cir. 2009).
III.

ISSUES
Before the Connect American Fund Order came down, Great

Lakes and AT&T entered a settlement agreement in regards to
access rates.

Great Lakes filed a new tariff after the

Connect America Fund Order came into effect, which Great Lakes
contends complies with that Order in regards to the access
stimulation issue.

However, AT&T stopped paying switched

access fees after the new tariff came into effect.

Great

Lakes alleges that AT&T has refused to pay approximately

8

$400,000 in interstate access fees due and owing under the
Agreement and a substantial amount of interstate access fees
billed pursuant to the Tariff.

See Docket No. 1.

Great Lakes

contends that the total unpaid balance owing from AT&T is over
$4 million.

Id.

In its complaint, Great Lakes asserts

claims for breach of contract, collection of amounts owed
pursuant to the Tariff, quantum meruit and unjust enrichment.
Great Lakes also seeks a declaratory judgment directing AT&T
to pay access charges in accordance with the Tariff in the
future.
AT&T filed an Answer denying Great Lakes’ claims and also
filed several counter claims alleging:

violation of federal

tariffs contrary to 47 U.S.C. §§ 201(b) and 203(c); improper
application of Qwest’s rates in violation of 47 U.S.C. § 201;
unjust

and

unreasonable

practices

and

unreasonable

discrimination in violation of 47 U.S.C. §§ 201(b) and 202(a)
with respect to Great Lakes’ transport arrangements; billing
for transport services not provided in violation of 47 U.S.C.
§ 201(b); declaratory relief.

Docket No. 11.

Great Lakes then filed a Motion to Dismiss AT&T’s counter
claims, Docket No. 17, and a Motion for Summary Judgment, also

9

Docket No. 17.

In the Motion for Summary Judgment, Great

Lakes argued that the Court should summarily find in favor of
Great Lakes and against AT&T on the liability issue because,
allegedly, AT&T failed to comply with contractual dispute
resolution procedures.

In the Motion to Dismiss, Great Lakes

argued that AT&T lacked standing to make any of its claims,
and

then

made

specific

arguments

about

why

each

of

Counterclaim I, II, and III should fail as a matter of law.
This Court referred those Motions to U.S. Magistrate Judge
Strand who issued the R&R presently at issue. Each party then
filed Objections to the Report and Recommendation.
In his Report and Recommendation, Judge Strand recommends
that this Court deny Great Lakes’ argument that AT&T lacks
standing.

Judge Strand further recommends that AT&T be

ordered to file an amended counterclaim that cures any alleged
standing issue.

Great Lakes did not mention the standing

issue in its Objection.

See Docket No. 34.

Regarding Counterclaim I, Judge Strand recommends that
the Motion to Dismiss be denied and Great Lakes did not
object.

10

Regarding

Counterclaims

recommends that Great Lakes’
and

that

Counterclaims

II

II

and

III,

Judge

Strand

Motion to Dismiss be granted,
and

III

be

dismissed

without

prejudice, pursuant to the primary jurisdiction doctrine.

In

its Objection, AT&T states, “AT&T does not object to referral
of these claims under the primary jurisdiction doctrine, [but]
the Court should stay those claims, rather than dismiss them.”
Docket No. 33, p. 2-3.
Regarding Great Lakes’ Motion for Summary Judgment, Judge
Strand recommends the Motion to be denied.

Great Lakes

objects to this portion of the Report and Recommendation and
argues that the Motion for Summary Judgment should be granted.
The Court will address these issues below.
IV.

ANALYSIS
The Court has reviewed the Report and Recommendation,

along with the entire file, and pursuant to the relevant law,
conducted a de novo review of the record with no deference
given to the conclusions reached by the Magistrate.
A.

Motion to Dismiss Based on Standing

In their Motion to Dismiss, Great Lakes argues that AT&T
lacks standing.

Specifically, Great Lakes argues that under
11

47 U.S.C. § 207, only parties damaged by a common carrier can
bring suit, and AT&T, by its own admission, has not been
damaged because it has withheld payment since early 2012.
Neither side disputes that Section 207 requires damage, or
that, if AT&T has not payed during the relevant time, it has
not been damaged.

Rather, AT&T argues its pleadings admit

that it has paid some applicable charges to Great Lakes.
At the outset of his analysis, Judge Strand set out the
appropriate Motion to Dismiss standard based on Bell Atlantic
Corp. v. Twombly, 550 U.S. 544 (2007) and Ashcroft v. Iqbal,
556 U.S. 662, 677-78 (2009).
Strand

determined

there

Applying that standard, Judge

was

a

deficiency

in

AT&T’s

counterclaim, stating:
it is impossible to determine, solely from
the parties’ respective pleadings, which
charges were addressed by the April 2012
payment.
Thus,
pointing
to
GLCC’s
paragraph 35 does not cure AT&T’s failure
to allege that it has paid any disputed
charges (let alone AT&T’s affirmative
statement that it withheld payment “to the
extent” AT&T deems GLCC’s charges to be
unlawful). GLCC has correctly identified
a significant flaw in AT&T’s pleading.
Docket No. 32, p. 15.

However, Magistrate Strand did not

recommend dismissal, he recommended:

12

if AT&T is able to allege, in good faith,
that it has suffered injury in the form of
payment of unlawful charges, it should be
permitted to do so.
As such, I will
recommend that GLCC’s motion to dismiss the
counterclaim for lack of standing be denied
without prejudice and that AT&T be granted
leave to file an amended counterclaim to
cure its deficient pleading of facts
demonstrating injury.
Docket No. 32, p. 15.
As noted above, neither party addresses this issue in
their Objections.
persuaded

that

5

The Court has considered this issue and is

Judge

Strand’s

recommendation

should

be

adopted. Accordingly, Great Lakes’ Motion to Dismiss based on
standing will be dismissed without prejudice.

Within 20 days

of this Order, AT&T shall filed an amended counterclaim
addressing this issue.

If the amended counterclaim does not

sufficiently allege standing, then Great Lakes may file a
renewed Motion to Dismiss.
B.

Motion to Dismiss Counterclaim I

In Counterclaim I, AT&T alleges that Great Lakes has

5

Great Lakes, in its Response to AT&T's Objections,
does argue that AT&T cannot pursue substantive objections to
Judge Strand’s recommendation to dismiss Counterclaims II and
III until the standing issue is resolved. See Docket No. 45,
p. 2.
13

billed it for services that are not recoverable pursuant to
the Tariff.

Great Lakes argues, so long as its conference

call customers are paying a fee to Great Lakes for interstate
services, AT&T and other IXCs are required to pay Great Lakes’
tariffed rates for switched access service.
Regarding Counterclaim I, Judge Strand recommends that
the Motion to Dismiss be denied, stating that:
[b]ecause AT&T plausibly alleges that
GLCC’s customers are not paying fees, AT&T
is entitled to conduct discovery to explore
the accuracy of that allegation. If it is
true, then AT&T has almost certainly been
over billed since the Tariff took effect.
For this reason, I will recommend that
GLCC’s motion to dismiss be denied with
regard to Count I of AT&T’s counterclaim.
Docket No. 32, p. 22.

Great Lakes did not Object to this

portion of the Report and Recommendation.
Court has conducted a de novo review.

Regardless, the

The Court is persuaded

that Judge Strand’s recommendation be adopted, and Great
Lakes’ Motion to Dismiss Counterclaim I is denied.
C.

Motion to Dismiss Counterclaims II and III

In Counterclaim II, AT&T complains that Great Lakes’
interstate switched access rates, as reflected in the tariff,
are so high as to be unjust and unreasonable in violation of

14

47 U.S.C. § 201(b).

See Docket No. 11.

AT&T argued that

Great Lakes has adopted Qwest’s rates, as required by the
Connect America Fund Order, but that those rates are still
too high because Great Lakes’ cost structure is not comparable
to

Qwest’s.

AT&T

interstate

switched

intrastate

switched

argued

that

access
access

Great

far
thus,

Lakes’

exceed

according

for

charges

its

charges

for

to

AT&T,

the

tariffs are unjust and unreasonable.
In Counterclaim III, AT&T seeks relief from Great Lakes’
alleged refusal to negotiate a direct interconnection between
Great Lakes’ and AT&T’s facilities. AT&T contends that it has
a direct trunking arrangement with another LEC (Qwest) and has
attempted to negotiate such an arrangement with Great Lakes,
but Great Lakes has refused.
that

such

an

arrangement

See Docket No. 11.
would

dramatically

AT&T argues
reduce

its

transportation charges regarding GLCC’s traffic and that Great
Lakes has established a direct trunking relationship with at
least one other carrier.

According to AT&T, Great Lakes’

refusal to negotiate is an unjust and unreasonable practice,

15

in

violation

unreasonable

of

47

U.S.C.

discrimination

§
in

201(b),

and

violation

of

amounts
47

U.S.C.

to
§

202(a).
Judge Strand came to the same conclusion regarding both
Counterclaims II and III.

He concluded that both claims fall

within the primary jurisdiction of the FCC.
AT&T does not Object to that conclusion, and agrees that
the FCC should consider those issues.
2.

See Docket No. 33, p.

However, because the FCC has primary jurisdiction, Judge

Strand recommended that Counterclaims II and III be dismissed
without prejudice.

Specifically, Judge Strand stated:

[w]hen primary jurisdiction applies, a
federal court may either stay or dismiss a
claim in favor of the appropriate agency.
United States v. Henderson, 416 F.3d 686,
691 (8th Cir. 2005) (citing Jackson v.
Swift Eckrich, Inc., 53 F.3d 1452, 1456
(8th Cir. 1995)). Given AT&T’s concession
that any relief it might be entitled to
obtain pursuant to Count II would be purely
prospective, there is no need to delay the
other claims in this lawsuit while AT&T
litigates its “unreasonable rate” claim at
the FCC. Instead, I recommend that Count
II be dismissed without prejudice pursuant
to the primary jurisdiction doctrine.

16

Docket No. 32, p. 27-28.
AT&T

objects

Recommendation.

to

6

that

portion

of

the

Report

and

AT&T argues that this Court should stay

Counterclaims II and III pending FCC review.

In making that

argument, AT&T relies on TON Services v. Qwest Corp., 493 F.3d
1225, 1242-45 (10th Cir. 2007), a 10th Circuit case that
directs district courts to favor stays over dismissals in
these types of primary jurisdiction referral cases.
Docket No. 33, p. 2-5.

See

However, in their Response, Great

Lakes points out that the relevant 8th Circuit precedent,
cited by Judge Strand, states that, “[a]fter [a] District
Court determin[es] that primary jurisdiction rested with the
FCC... [a] district court ‘has discretion either to [stay the
case and] retain jurisdiction or, if the parties would not be
unfairly

disadvantaged,

prejudice.’”

to

dismiss

the

case

without

Access Telecommunications v. Sw. Bell Tel. Co.,

137 F.3d 605, 609 (8th Cir. 1998).

6

This Court is bound by the

Regarding Counterclaim III, Judge Strand stated,
“[t]here is no reason to put GLCC’s claims on hold while the
FCC considers the issues raised in Counts II and III. As with
Count II, I recommend that Count III be dismissed without
prejudice pursuant to the primary jurisdiction doctrine.”
Docket No. 32, p. 32.
17

8th

Circuit

precedent,

not

Accordingly,

dismissal

the

is

10th

Circuit

appropriate

in

precedent.
a

primary

jurisdiction case absent unfair disadvantages.
In this case, AT&T has failed to show that it would be
unfairly disadvantaged by dismissal.

In its Objections, AT&T

admits that any disadvantage is speculative, at best, stating,
“a dismissal without prejudice of AT&T’s Count II and Count
III may ‘prejudice or unfairly disadvantage’ AT&T, either
because the election of remedies provision in Section 207 may
bar a later action at the FCC, or because some portion of
AT&T’s claim may be barred by the limitations period.” Docket
No. 33, p. 5 (emphasis added).

However, the risk of delay if

the issues are stayed is very real.

Accordingly, after

conducting a de novo review, the Court will adopt Judge
Strand’s recommendation that Counterclaims II and III be
dismissed

without

prejudice

pursuant

to

the

primary

jurisdiction doctrine.
D.

Motion for Summary Judgment

The
Judgment.

final

issue

is

Great

Lakes’

Motion

for

Summary

Judge Strand reviewed the Motion and recommends

that it be denied.

Great Lakes’ (strongly) objects to the

18

Magistrate’s determination and argues that the Motion for
Summary Judgment should be granted.
The Court has conducted a de novo review, and finds that
Magistrate

Strand

applied

the

correct

‘genuine

issue

of

material fact’ standard and correctly viewed the evidence in
the light most favorable to the non-moving party.
The Motion for Summary Judgment primarily concerns the
billing dispute provision of the switched access fee tariff
filed by Great Lakes on January 11, 2012, and “deemed lawful”
pursuant to 47 U.S.C. § 204(a)(3).

It is undisputed that

tariff included the following language:
[a]ll bills are presumed accurate, and
shall be binding on the Buyer unless
written notice of a good faith dispute is
received by the Company. For the purposes
of this Section, “notice of a good faith
dispute” is defined as written notice to
the Company’s contact (which is listed on
every page of this Tariff) within a
reasonable period of time after the
invoice
has
been
issued,
containing
sufficient documentation to investigate the
dispute, including the account number under
which the bill has been rendered, the date
of the bill, and the specific items on the
bill being disputed. A separate letter of
dispute must be submitted for each and
every individual bill that the Buyer wishes
to dispute.
Prior to or at the time of
submitting a good faith dispute, Buyer
shall tender payment for any undisputed
19

amounts, as well as payment for any
disputed charges relating to traffic in
which the Buyer transmitted an interstate
telecommunications
to
the
Company’s
network.
See Docket No. 32, p. 35.

On May 2, 2012, AT&T objected to

certain access fees billed to AT&T on April 1, 2012.

Great

Lakes responded that AT&T failed to comply with the billing
dispute procedures outlined above.

Great Lakes requested

prompt payment for the remainder of the invoiced changes.
AT&T contends it then paid Great Lakes’ invoice for March
2012, in the amount of $100,203.

Great Lakes acknowledges

that AT&T made a payment of $100,203 on April 2, 2012, but
does not agree it was for the March 2012 invoice.
It its Motion for Summary Judgment, Great Lakes argues,
in essence, that because AT&T failed to comply with the
dispute procedure contained in the tariff, it has ceded its
claims related to the billing dispute.

Great Lakes contends

AT&T did not provide proper written notice of a good faith
dispute and did not tender payment for the disputed charges.
Great

Lakes

argues

that

strict

compliance

with

tariff

provisions is required and, therefore, that AT&T has waived
the right to dispute Great Lakes’ invoices.

20

AT&T, of course, resisted the Motion for Summary Judgment
and argued that it was not a buyer as contemplated by the
tariff, and thus not bound by the tariff’s billing dispute
requirements.

Moreover, while AT&T agrees that it failed to

comply with the letter of the tariff’s notice requirements, it
contends that its email message of May 2, 2012, was sufficient
to

preserve

its

right

to

dispute

Great

Lakes’

charges.

Finally, AT&T argues that the FCC has previously declared a
tariff’s advance-payment requirement to be unreasonable and,
therefore, that AT&T was not required to issue payment to
Great Lakes as a condition of disputing Great Lakes’ charges.
In its first argument, AT&T alleges that it was Great
Lakes who breached the tariff by billing AT&T for services not
contemplated by the tariff.

Under the terms of the tariff,

Great Lakes can only provide “Switched Access Services” to a
Buyer, which is an IXC that uses Great Lakes’ services to
complete calls to and from end users. Importantly, the tariff
states that to qualify as an end users, the would be end user
must pay a fee to the Company for telecommunications service.
AT&T’s argument is that because Great Lakes’ end users do not

21

pay a fee to Great Lakes, Great Lakes is itself violating the
tariff.
In his Report and Recommendation, Judge Strand analyses
this argument and notes that in its statement of facts, Great
Lakes fails to allege that end users pay it a fee.

Great

Lakes seemingly concedes this point and rather contends that
it submitted an affidavit that declares end users are required
to pay Great Lakes a fee.

Considering that situation, Judge

Strand found that:
[s]imply stating that GLCC “requires” its
end users to pay a fee does not establish,
as a matter of law, that such a fee was
actually paid with regard to the specific
services for which GLCC seeks to recover
payment from AT&T.
The conclusory,
one-sentence statement in Mr. Nelson’s
affidavit
does
not
come
close
to
establishing that there is no genuine
dispute of material fact concerning AT&T’s
status as a Buyer. Even if Mr. Nelson’s
affidavit satisfied GLCC’s initial burden
as the summary judgment movant, I further
find – for reasons discussed earlier – that
AT&T has shown that there are grounds
supporting a genuine dispute of GLCC’s
allegation.
AT&T points to prior IUB
rulings containing findings (a) that GLCC
did not collect fees from its end-user
customers (as of 2009), (b) that GLCC did
not change certain business practices
between 2009 and 2012 despite being
directed to do so in 2009 and (c) that GLCC
made
various
false
or
incorrect
22

representations to the IUB... It is quite
possible, as GLCC claims, that GLCC has
changed its practices and has collected
fees from all of its customers since the
Tariff took effect.
However, the record
does not reflect that this is true as a
matter of law. AT&T is entitled to conduct
discovery to determine whether it is
actually a Buyer, as defined by the Tariff,
with regard to the services at issue. If
AT&T is not a Buyer, then the Tariff does
not apply.
As such, I recommend that
GLCC’s motion for summary judgment be
denied on this basis.
Docket No. 32, p. 39-40.
In its Objection to Judge Strand’s conclusion, Great
Lakes argues that:
GLCC... challenges the Report’s conclusion
that summary judgment should be denied
because GLCC must first prove that AT&T is
a “Buyer” as defined by GLCC’s tariff in
order to establish that AT&T is obligated
to pay the disputed charges and file a good
faith notice of dispute. This conclusion
turns the dispute-resolution provision on
its head--it wrongly shifts the burden from
AT&T to lodge a good faith dispute if it
disagrees
with
GLCC’s
invoices
for
terminating traffic onto GLCC to disprove
any allegations made by AT&T in order to
receive
payment
for
the
terminating
services it indisputably provides.
Docket No. 34, p. 5.

Great Lakes goes onto argue that based

on the 8th Circuit Court of Appeals’ decisions related to
tariff interpretation, this Court is bound to interpret the
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tariff in the manner advocated by Great Lakes.

Great Lakes

concludes that:
[i]n sum, the Report adopts a construction
of GLCC’s dispute-resolution provision that
is inconsistent with the plain intent of
the provision and that hinders, rather than
enforces, the purpose for which the tariff
was filed.
In these circumstances, the
conclusions reached in the Report should
not be adopted. Rather, the Court should
conclude that AT&T was required to pay GLCC
the tariffed rate when it indisputably sent
its interstate interexchange traffic to
GLCC’s network if it wanted to preserve its
dispute.
Docket No. 34, p. 11.
AT&T resists Great Lakes’ Objection and argues that Judge
Strand correctly concluded that there is a genuine issue of
material fact as to whether AT&T is a buyer.

This Court

agrees. After a de novo review, the Court concludes that AT&T
has alleged a genuine issue of material fact on this issue.
Put another way, there is not enough evidence in the record to
find, as a matter of law, that AT&T is bound by the billing
dispute provision of the tariff.

There are simply too many

lingering questions regarding Great Lakes’ relationship with
end users.

Accordingly, Great Lakes’ Motion for Summary

Judgment must be denied.

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Judge Strand’s Report and Recommendation goes on to
discuss two alternate rationales for denying the Motion for
Summary Judgment.
dispute

First, Judge Strand analyzed the billing

provision

substantially

of

the

complied

with

tariff
the

and

found

provision,

that

and

that

AT&T
the

opposite conclusion, that AT&T failed to comply and thus
waived the right to sue, would be fundamentally unreasonable
and contrary to the two year statute of limitations for over
charge cases. In its Objection, Great Lakes argues that Judge
Strand does not have the authority to invalidate a ‘deemed
lawful’

tariff

provision,

such

as

the

billing

dispute

provision.
Similarly, Judge Strand analyzed the payment requirement
of the billing dispute provision, and found it unreasonable.
That section provides that for a buyer to dispute charges, it
must first pay the charges.

AT&T argues that Great Lakes has

breached the tariff by billing for services contrary to its
terms, resulting in charges that are unjust and unreasonable
under 47 U.S.C. § 201(b).

AT&T contends it does not have to

provide payment as a condition of disputing the charges under
these circumstances.

Great Lakes objects to Judge Strand’s

25

finding, again, arguing that it is beyond the scope of this
dispute for a Federal District Court to invalidate a deemed
lawful tariff provision.

Great Lakes argues that, “a ‘deemed

lawful’ tariff provision cannot be retroactively invalidated,
but rather must be enforced until declared unreasonable by the
FCC on a prospective basis, reflects the choice that Congress
made

in

adopting

204(a)(3)

when

telecommunications industry in 1996.”

deregulating

the

Docket No. 34, p. 13.

In making their arguments, both parties rely on the Sprint
Commc’ns L.P. v. Northern Valley Commc’ns, LLC, 26 FCC Rcd.
10780, ¶ 14 (2011), aff’d, 717 F.3d 1017 (D.C. Cir. 2013).
AT&T argues the Northern Valley case shows a similar prepayment

bill

dispute

provision

that

has

been

found

unreasonable, while Great Lakes argues that its pre-payment
provision was written to avoid being found unreasonable in
light of the Northern Valley decision.

7

Because the Court is convinced that a genuine issue of
material fact exists related to the question of whether AT&T

7

In fact, Great Lakes dedicates an entire section of
its Objection to discussing the Northern Valley case, and how
Great Lakes’ counsel was involved in both that case and its
subsequent history. See Docket No. 34, p. 14-19.
26

is

a

buyer

under

the

disputed

tariff

provisions,

it

is

premature to determine whether this Court has the authority to
find the billing dispute provision unreasonable. Accordingly,
the Court need not make any further findings on these issues
at this time.
V.

CONCLUSION
The Magistrate’s Report and Recommendation is accepted as

set out above.

Accordingly, Great Lakes’ Motion to Dismiss,

Docket No. 17, is DENIED in part, and GRANTED in part.
Regarding standing, AT&T is directed to file an amended
counterclaim curing its failure to plead sufficient facts no
later than twenty (20) days after entry of this Order.

Great

Lakes’ Motion to Dismiss AT&T's Counterclaim I is DENIED.
Great Lakes’ Motion to Dismiss AT&T’s Counterclaims II and III
is GRANTED, both without prejudice.

Finally, Great Lakes’

Motion for Summary Judgment, also Docket No. 17 is DENIED.
IT IS SO ORDERED this 3rd day of March, 2015.

__________________________________
Donald E. O’Brien, Senior Judge
United States District Court
Northern District of Iowa

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