Great Lakes Communication Corporation v. AT&T Corp

Filing 32

REPORT AND RECOMMENDATIONS recommend 17 Motion to Dismiss and for Summary Judgment filed by Great Lakes Communication Corporation be granted in part and denied in part (See Order Text). Objections to R&R due by 7/8/2014. Signed by Magistrate Judge Leonard T Strand on 6/24/2014. (des)

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF IOWA
WESTERN DIVISION
GREAT LAKES COMMUNICATION
CORPORATION,
Plaintiff,
vs.
AT&T CORP.,

No. C13-4117-DEO
REPORT AND
RECOMMENDATION

Defendant.
____________________
TABLE OF CONTENTS
I. 

INTRODUCTION........................................................................... 3 

II. 

PROCEDURAL HISTORY ............................................................... 3 

III. 

REGULATORY BACKGROUND ........................................................ 4 

IV. 

GLCC’S COMPLAINT .................................................................. 10 

V. 

AT&T’s COUNTERCLAIM ............................................................ 11 

VI. 

THE MOTION TO DISMISS .......................................................... 11 
A. 
Applicable Standards ............................................................. 12 
B. 
Analysis ............................................................................. 13 
1. 
Standing .................................................................... 13 
2. 
Counterclaim Count I ................................................... 15 
a. 
Overview ........................................................... 15 
b. 
Summary of the Arguments .................................... 16 
c. 
Discussion ......................................................... 18 
i. 
Has AT&T Alleged That No Fees Are Being
Paid? ....................................................... 18 
ii. 
Is The Allegation Plausible?........................... 19 
3. 
Counterclaim Count II .................................................. 22 
a. 
Overview ........................................................... 22 

4. 

Summary of the Arguments .................................... 23 
b. 
c. 
Discussion ......................................................... 24 
Counterclaim Count III ................................................. 28 
a. 
Overview ........................................................... 28 
b. 
Summary of the Arguments .................................... 28 
c. 
Discussion ......................................................... 29 

VII.  THE MOTION FOR SUMMARY JUDGMENT .................................... 33 
A. 
Applicable Standards ............................................................. 33 
B. 
Undisputed Facts ................................................................. 35 
C. 
Summary of the Arguments .................................................... 37 
D. 
Discussion .......................................................................... 38 
1. 
Is There a Genuine Issue of Material Fact as to Whether
AT&T is a Buyer Under the Tariff and, Therefore,
Subject to its Billing Dispute Requirements? ....................... 38 
2. 
If AT&T is a Buyer, is GLCC Entitled to Summary
Judgment Based on AT&T’s Failure To Comply With the
Tariff’s Billing Dispute Requirements? .............................. 40 
a. 
Notice Requirements ............................................ 41 
b. 
Payment Requirement ........................................... 44 
VIII.  CONCLUSION AND RECOMMENDATION ....................................... 46 

2

I.

INTRODUCTION

This case is before me on plaintiff’s motion (Doc. No. 17) to dismiss and for
summary judgment. Defendant has filed a resistance (Doc. No. 20) and plaintiff has
filed a reply (Doc. No. 24). The Honorable Donald E. O’Brien, Senior United States
District Judge, has referred the motion to me pursuant to 28 U.S.C. § 636(b) to
conduct any necessary hearings and to issue a report and recommendation. See Doc.
No. 27. I heard oral arguments on May 29, 2014. Attorneys Jeana Goosmann, David
Carter and Joseph Bowser appeared for plaintiff.

Attorneys Richard Lozier and

Michael Hunseder appeared for defendant. The motion is now fully submitted.
II.

PROCEDURAL HISTORY

Plaintiff Great Lakes Communication Corporation (GLCC) commenced this
action against defendant AT&T Corp. (AT&T) on December 18, 2013.

GLCC’s

complaint (Doc. No. 1) asserts various causes of action through which it seeks to
recover payments allegedly owed to it by AT&T. GLCC also seeks declaratory relief.
GLCC alleges that it is an Iowa corporation that operates as a local exchange
carrier (LEC), meaning it “provides interstate and intrastate exchange access service, as
well as local, long distance and enhanced services to residential and business
telecommunications customers.” Doc. No. 1 at ¶ 4. GLCC contends AT&T is a New
York corporation that operates as an interexchange carrier (IXC) and is a common
carrier subject to the provisions of the Communications Act, 47 U.S.C. § 151 et seq.
(the Act). Id. ¶¶ 5-6. GLCC alleges subject matter jurisdiction via both federalquestion and diversity jurisdiction pursuant to 28 U.S.C. §§ 1331 and 1332. Id. at ¶ 78. It further alleges supplemental jurisdiction over state law claims pursuant to 28
U.S.C. § 1367. Id. at ¶ 9.

3

On January 31, 2014, AT&T filed an answer and counterclaim (Doc. No. 11).
On March 3, 2014, GLCC filed its pending motion to dismiss and for summary
judgment.

GLCC seeks entry of an order (a) dismissing AT&T’s counterclaims

pursuant to Federal Rule of Civil Procedure 12(b)(6) and (b) holding AT&T liable to
GLCC as a matter of law pursuant to Federal Rule of Civil Procedure 56.
III.

REGULATORY BACKGROUND

Overview of intercarrier compensation. Telephone calls often involve multiple
service providers. When more than one provider is involved, arrangements must be
made for those providers to obtain compensation for their respective roles. The Federal
Communications Commission (FCC) oversees and governs this process with regard to
telecommunications services that cross state lines. Services that occur entirely within a
state are governed by that state’s applicable regulatory agency which, in Iowa, is the
Iowa Utilities Board (IUB).
Switched access service charges are one form of intercarrier compensation.
LECs, such as GLCC, offer switched access services that allow IXCs, such as AT&T,
to originate and terminate long distance calls to end users. Thus, for example, if a
caller in Iowa places a call to another state, the caller’s local phone company (a LEC)
accepts the call at a local switch that connects the caller to its network, carries the call
over its local network and eventually hands off the call at a switch to the caller’s
selected long distance company (an IXC).

The IXC then carries the call over its

national network to a location near the called party’s premises and hands it off at a
switch to the called party’s local telephone company (another LEC). That LEC then
routes the call over its local network to a switch that is directly connected to the called
party. The call is then connected to the called party.

4

In this example, the IXC would not be able to carry the long distance call (and,
thus, bill its long distance customer) without the assistance of the originating and
terminating LECs. For this reason, those LECs are permitted to assess originating and
terminating access charges on the IXC. The charges are typically established by tariffs,
filed by each LEC, or by express contracts between a LEC and an IXC. They may
include separate elements such as “transport” (carrying calls over wires, or “trunks”)
and “switching” (routing calls in various directions). Each element is ordinarily priced
and billed pursuant to FCC rules and the rates and requirements contained in the
applicable tariff or contract.
Under this system, the IXC has no control over the selection of the LEC at either
end of the call. The IXC’s long distance service customers make that choice. Once an
IXC’s customer chooses to take local service from a particular LEC, the IXC must rely
on the customer’s chosen LEC to originate calls to the long distance carriers’ network.
The same is true with respect to persons called by an IXC’s customers.

Those

customers choose their own LECs and the IXCs must obtain terminating access services
from those LECs when their customers make long distance calls to end users served by
those LECs. If an IXC cannot obtain originating and terminating access services from
certain LECs, then that IXC would not be able to serve customers who subscribe to the
local telephone services of those LECs.
Switched access service arrangements are often more complicated than suggested
by the example discussed above. For example, a small or rural LEC may not be
connected to each IXC’s network and, instead, must rely on an intermediate LEC to
exchange call traffic with an IXC. That is, a long distance call directed to a LEC’s
customer may be handed off by the IXC to a different LEC, which then transports the
call to the terminating LEC’s system. This means, in short, that there can be more than

5

three entities involved in carrying a single long distance call. Of course, the additional,
intermediary parties also expect compensation for the use of their facilities.
One alternative to basic switched access service is called Centralized Equal
Access (CEA). A CEA typically involves multiple LECs working together to build a
transport network that accepts long distance calls at a centralized location and then
carries them to the individual LECs. In Iowa, a CEA provider known as Iowa Network
Services (INS) operates a centralized switch in Des Moines and transports long distance
calls between that switch and certain LECs. INS charges an IXC a flat, per-minute rate
for each call that is so transported, regardless of the distance the call travels on the INS
network.
Another alternative, direct trunking, occurs when an LEC and IXC establish a
direct connection at a location where they share a large volume of traffic. When a LEC
and an IXC create a direct trunking relationship, calls are exchanged over that
connection at an agreed price. When large volumes of traffic are involved, this can be
the most cost-effective method of providing intercarrier services.
Regulation of LEC Switched Access Charges.

Incumbent local exchange

carriers (ILECs) are the traditional local telephone companies that existed prior to the
enactment of the Telecommunications Act of 1996. See, e.g., 47 U.S.C. § 251(h); 47
C.F.R. § 61.26(a)(2).
successors.

Basically, these were the “Baby Bell” companies, or their

In Iowa, the ILEC is CenturyLink (formerly known as Qwest).

The

switched access charges imposed on IXCs by ILECs are highly regulated by the FCC
based, at least in part, on each ILEC’s actual costs. See, e.g., In the Matter of Access
Charge Reform; Reform of Access Charges Imposed by Competitive Local Exchange
Carriers, 16 FCC Rcd. 9923 (2001) (the CLEC Access Charge Order), at ¶ 41.
Competing local exchange carriers (CLECs) are companies that provide local
telephone and telecommunications services but are not ILECs. These are companies
6

formed in the deregulation era to compete with the established ILECs. GLCC is a
CLEC. Before 2001, CLECs could file tariffs that unilaterally set the rates they would
charge IXCs for interstate switched access services.

Those rates could exceed the

FCC-approved ILEC rates, sometimes significantly. Thus, an IXC terminating a long
distance call with a CLEC may have incurred switched access charges far in excess of
the charges that would have resulted if the call terminated with an ILEC.
In 2001, the FCC issued the 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.1 Id.
at ¶¶ 51-52. A CLEC could impose a higher rate only by negotiating agreements with
individual IXCs. Id. at ¶ 87. In addition, the FCC recognized that CLECs serving
rural areas face unique cost challenges and, therefore, created a “rural exemption.” Id.
at ¶¶ 64-81. 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). Id. at ¶¶
80-81.
Access Stimulation.

Some LECs have engaged in a practice referred to as

“access stimulation.” Typically, this involves a business relationship between a LEC
and a provider of high call volume operations (chat lines, adult entertainment calls, free
conference calling, etc.). The necessary equipment is installed at or near the LEC’s
facility, with the incoming calls being received and terminated there.

Thus, to

terminate these calls, the LEC is not required to incur the expense necessary to deploy
and maintain lines and equipment over a broad geographic area, as it would in order to
serve residential and business customers.
1

The FCC implemented a three-year phase-in period in lieu of imposing a “flash-cut” that
would have immediately reduced a CLEC’s switched access charges to those charged by the
ILEC. Id. at ¶ 52.

7

This arrangement causes a substantial increase in the number of calls terminated
to the LEC, thus allowing the LEC to bill IXCs for switched access services associated
with the calls. The LEC and its business partner then share this access revenue. See,
e.g., In the Matter of Connect America Fund; A National Broadband Plan for Our
Future, 26 FCC Rcd. 17663, at ¶¶ 656-57 (2011) (the Connect America Fund Order).
The FCC has explained:
Access stimulation schemes work because when LECs enter trafficinflating revenue-sharing agreements, they are currently not required to
reduce their access rates to reflect their increased volume of minutes. The
combination of significant increases in switched access traffic with
unchanged access rates results in a jump in revenues and thus inflated
profits that almost uniformly make the LEC's interstate switched access
rates unjust and unreasonable under section 201(b) of the Act.
Id. at ¶ 657 [footnote omitted]. The FCC then described the impact of such practices
as follows:
662. The record confirms the need for prompt Commission action
to address the adverse effects of access stimulation and to help ensure that
interstate switched access rates remain just and reasonable, as required by
section 201(b) of the Act. Commenters agree that the interstate switched
access rates being charged by access stimulating LECs do not reflect the
volume of traffic associated with access stimulation. As a result, access
stimulating LECs realize significant revenue increases and thus inflated
profits that almost uniformly make their interstate switched access rates
unjust and unreasonable.
663. Access stimulation imposes undue costs on consumers,
inefficiently diverting capital away from more productive uses such as
broadband deployment. When access stimulation occurs in locations that
have higher than average access charges, which is the predominant case
today, the average per-minute cost of access and thus the average cost of
long-distance calling is increased. Because of the rate integration
requirements of section 254(g) of the Act, long-distance carriers are
prohibited from passing on the higher access costs directly to the
customers making the calls to access stimulating entities. Therefore, all
8

customers of these long-distance providers bear these costs, even though
many of them do not use the access stimulator's services, and, in essence,
ultimately support businesses designed to take advantage of today's abovecost intercarrier compensation rates.
Id. at ¶¶ 662-63.
To address access stimulation, the FCC determined that two conditions must
exist for a LEC to be deemed to be engaging in the practice:
The first condition is that the LEC has entered into an access revenue
sharing agreement, and we clarify what types of agreements qualify as
“revenue sharing.” The second condition is met where the LEC either has
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 switched access MOU [minutes
of use] in a month compared to the same month in the preceding year.
Id. at ¶ 667. The FCC then defined and clarified the meaning of the two conditions.
Id. at ¶¶ 668-78.
Next, the FCC addressed the consequences of meeting both “access stimulation”
conditions. Id. at ¶ 679. A CLEC engaging 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.”2 Id. The FCC noted, however,
that this remedy may not always be adequate:
Benchmarking to the lowest price cap LEC interstate switched access rate
in the state will reduce rate variance among states and will significantly
reduce the rates charged by competitive LECs engaging in access
stimulation, even if it does not entirely eliminate the potential for access
stimulation. However, should the traffic volumes of a competitive LEC
that meets the access stimulation definition substantially exceed the traffic
volumes of the price cap LEC to which it benchmarks, we may reevaluate
the appropriateness of the competitive LEC's rates and may evaluate
2

A “price cap LEC” is a 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.

9

whether any further reductions in rates is warranted. In addition, we
believe the reforms we adopt elsewhere in this Order will, over time,
further reduce intercarrier payments and the incentives for this type of
arbitrage.
Id. at ¶ 690 [emphasis added; footnote omitted].
IV.

GLCC’S COMPLAINT

GLCC does not deny that it engages in access stimulation. Instead, it alleges
that the Connect America Fund Order “specifically permitted LECs to engage in ‘access
stimulation.’” Doc. No. 1 at ¶ 24. GLCC further notes, and AT&T agrees, that
before the Connect America Fund Order was issued, the parties entered into a
Settlement Agreement and Release (Agreement) that addressed, among other things, the
access rates that AT&T would pay to GLCC. Id. ¶ 23; Doc. No. 11 at ¶ 23.
After the Connect America Fund Order was issued, GLCC filed a new tariff
that, it contends, complies with the order. That tariff (the Tariff) was filed January 11,
2012, and became effective January 26, 2012.

Doc. No. 1 at ¶¶ 1, 24.

GLCC

contends that its Agreement with AT&T expired in early 2012 and that, upon the
Agreement’s expiration, AT&T’s obligation to pay switched access fees to GLCC
became governed by the Tariff.
GLCC alleges that AT&T has refused to pay (a) approximately $400,000 in
interstate access fees due and owing under the Agreement and (b) a substantial amount
of interstate access fees billed pursuant to the Tariff. Id. Doc. No. 1 at ¶¶ 30, 35-36.
GLCC contends that the total unpaid balance owing from AT&T is over $4 million. Id.
at 37. In its complaint, GLCC asserts claims for breach of contract, collection of
amounts owed pursuant to the Tariff, quantum meruit and unjust enrichment. GLCC
also seeks a declaratory judgment directing AT&T to pay access charges in accordance
with the Tariff in the future.
10

V.

AT&T’S COUNTERCLAIM

AT&T denies liability, denies that GLCC is entitled to declaratory relief and
asserts various affirmative defenses. Doc. No. 11 at pp. 8-11. It has also filed a fivecount counterclaim prefaced by a lengthy overview of the relevant regulatory history.
Id. at 12-43. AT&T’s claims are:
Count I:

Violation of federal tariffs contrary to 47 U.S.C. §§ 201(b) and
203(c)

Count II:

Improper application of Qwest’s rates in violation of 47 U.S.C. §
201

Count III:

Unjust and unreasonable practices and unreasonable discrimination
in violation of 47 U.S.C. §§ 201(b) and 202(a) with respect to
GLCC’s transport arrangements

Count IV:

Billing for transport services not provided in violation of 47 U.S.C.
§ 201(b)

Count V:

Declaratory relief

Doc. No. 11 at pp. 35-43. I will describe these counts in more detail, as necessary, in
the course of analyzing the parties’ various arguments.
VI.

THE MOTION TO DISMISS

In its motion to dismiss, GLCC makes specific attacks on Counts I, II and III of
AT&T’s counterclaim. While GLCC does not address Counts IV or V individually,
GLCC makes an argument that AT&T lacks standing under the Act to assert any of its
claims. Thus, GLCC seeks dismissal of the entire counterclaim.

11

A.

Applicable Standards

The Federal Rules of Civil Procedure authorize a pre-answer motion to dismiss
for “failure to state a claim upon which relief can be granted.”
12(b)(6).

Fed. R. Civ. P.

The Supreme Court has provided the following guidance in considering

whether a pleading properly states a claim:
Under Federal Rule of Civil Procedure 8(a)(2), a pleading must contain a
“short and plain statement of the claim showing that the pleader is entitled
to relief.” As the Court held in [Bell Atlantic Corp. v. Twombly, 550
U.S. 544, 127 S. Ct. 1955, 167 L.Ed.2d 929 (2007)], the pleading
standard Rule 8 announces does not require “detailed factual allegations,”
but it demands more than an unadorned, the-defendant-unlawfullyharmed-me accusation. Id., at 555, 127 S. Ct. 1955 (citing Papasan v.
Allain, 478 U.S. 265, 286, 106 S. Ct. 2932, 92 L.Ed.2d 209 (1986)). A
pleading that offers “labels and conclusions” or “a formulaic recitation of
the elements of a cause of action will not do.” 550 U.S., at 555, 127 S.
Ct. 1955. Nor does a complaint suffice if it tenders “naked assertion[s]”
devoid of “further factual enhancement.” Id., at 557, 127 S. Ct. 1955.
To survive a motion to dismiss, a complaint must contain sufficient factual
matter, accepted as true, to “state a claim to relief that is plausible on its
face.” Id., at 570, 127 S. Ct. 1955. A claim has facial plausibility when
the plaintiff pleads factual content that allows the court to draw the
reasonable inference that the defendant is liable for the misconduct
alleged. Id., at 556, 127 S. Ct. 1955. The plausibility standard is not akin
to a “probability requirement,” but it asks for more than a sheer
possibility that a defendant has acted unlawfully. Ibid. Where a
complaint pleads facts that are “merely consistent with” a defendant's
liability, it “stops short of the line between possibility and plausibility of
‘entitlement to relief.’ ” Id., at 557, 127 S. Ct. 1955 (brackets omitted).
Ashcroft v. Iqbal, 556 U.S. 662, 677-78 (2009).
Courts assess “plausibility” by “‘draw[ing] on [their own] judicial experience
and common sense.’” Whitney v. Guys, Inc., 700 F.3d 1118, 1128 (8th Cir. 2012)
(quoting Iqbal, 556 U.S. at 679).

Also, courts “‘review the plausibility of the
12

plaintiff's claim as a whole, not the plausibility of each individual allegation.’” Id.
(quoting Zoltek Corp. v. Structural Polymer Grp., 592 F.3d 893, 896 n. 4 (8th Cir.
2010)). In determining plausibility, courts may “consider[ ] only the materials that are
‘necessarily embraced by the pleadings and exhibits attached to the complaint.’” Id.
(quoting Mattes v. ABC Plastics, Inc., 323 F.3d 695, 697 n. 4 (8th Cir. 2003)). Courts
may also consider “‘materials that are part of the public record or do not contradict the
complaint.’” Miller v. Redwood Toxicology Lab., Inc., 688 F.3d 928, 931 (8th Cir.
2012) (quoting Porous Media Corp. v. Pall Corp., 186 F.3d 1077, 1079 (8th Cir.
1999)).
Finally, while factual “plausibility” is typically the focus of a Rule 12(b)(6)
motion to dismiss, federal courts may dismiss a claim that lacks a cognizable legal
theory. See, e.g., Somers v. Apple, Inc., 729 F.3d 953, 959 (9th Cir. 2013); Ball v.
Famiglio, 726 F.3d 448, 469 (3d Cir. 2013); Commonwealth Prop. Advocates, L.L.C.
v. Mortg. Elec. Registration Sys., Inc., 680 F.3d 1194, 1202 (10th Cir. 2011); accord
Target Training Intern., Ltd. v. Lee, No. 13-cv-3057-MWB, ___ F. Supp. 2d ___,
2014 WL 842893, at *7 (N.D. Iowa Mar. 5, 2014).
B.

Analysis
1.

Standing

I will address GLCC’s standing argument first, as GLCC contends that it
impacts AT&T’s entire counterclaim. GLCC argues that AT&T has no standing to
assert claims under the Act because it has suffered no cognizable injury. Section 207 of
the Act authorizes actions only by parties “claiming to be damaged by any common
carrier.” 47 U.S.C. § 207. GLCC points out that AT&T admits, in its answer, that “it
has withheld payment of charges in [GLCC’s] bills to the extent that such charges are
unlawful.” Doc. No. 17-1 at 18 (quoting Doc. No. 11 at ¶¶ 1, 35). According to
13

GLCC, this means AT&T has suffered no damages and, therefore, has no standing to
assert its claims. Id. at 18-19 (citing Beattie v. CenturyTel, Inc., 511 F.3d 554, 565
(6th Cir. 2007) and Alliance Commc’ns Coop. v. Global Crossing Telecomms., Inc.,
663 F. Supp. 2d 807 (D.S.D. 2009)).
AT&T does not dispute GLCC’s legal theory. That is, it does not deny that it
must have actually paid some of the disputed charges in order to have standing under
the Act. Instead, AT&T states that the pleadings show it has, in fact, paid some of
those charges.

It notes that GLCC’s complaint includes an express allegation that

AT&T paid GLCC in April 2012 for certain services. Doc. No. 20 at 19 (citing Doc.
No. 1 at ¶ 35). It has also submitted a declaration indicting that it paid over $100,000
to GLCC for charges AT&T contends were improperly billed. As such, AT&T argues
that it has suffered the requisite injury and therefore has standing to pursue claims
under the Act.
Of course, for purposes of GLCC’s Rule 12 motion I cannot consider AT&T’s
supporting declaration. See, e.g., Whitney, 700 F.3d at 1128. Nor am I persuaded by
AT&T’s effort to contradict its own pleading by reference to GLCC’s complaint.
AT&T’s answer expressly states that “it has withheld payment of charges in [GLCC’s]
bills to the extent that such charges are unlawful.” Doc. No. 11 at 8, ¶ 35. AT&T
does not allege that it paid some unlawful charges, only that it withheld payment “to the
extent” that the charges “are unlawful.” In other words, according to AT&T’s own
pleading, when it deemed a charge to be “unlawful,” it refused to pay it.
GLCC’s complaint does not contain an allegation that AT&T has paid disputed
charges. In paragraph 35, GLCC simply alleges that AT&T has not paid GLCC for
access services “since its last payment in April 2012.” Doc. No. 1 at ¶ 35. GLCC
does not allege that AT&T’s payment in April 2012 constituted payment for charges

14

AT&T claims to be unlawful.3 Indeed, 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. The next
question is: What is the appropriate remedy? AT&T asks that it be given the chance to
amend its pleading, if necessary. See Doc. No. 20 at 19 n.34. During the hearing,
GLCC’s counsel acknowledged that it would be appropriate to give AT&T the
opportunity to cure the flaw, if possible, with an amended pleading. I agree that 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. Meanwhile, because AT&T’s failure
to plead injury appears to be a purely technical deficiency, which AT&T claims it can
easily resolve by way of amendment, I will address the remaining arguments raised by
GLCC’s motion to dismiss.
2.

Counterclaim Count I
a.

Overview

In Count I, AT&T alleges that GLCC has billed it for services that are not
recoverable pursuant to the Tariff. It first notes that federal law allows GLCC to bill it
3

Even if paragraph 35 could be deemed to include an allegation by GLCC that AT&T paid a
disputed charge, AT&T did not admit this portion of paragraph 35 in its answer. AT&T
admitted only that it withheld payment of GLCC’s charges “to the extent that such charges are
unlawful.” Doc. No. 11 at 8, ¶ 35.

15

only for those services described in its tariff. Doc. No. 11 at ¶ 43. It then delves into
the various terms and definitions contained in the Tariff alleging, among other things,
that GLCC can bill IXCs for switched access services to and from “End Users,”
meaning customers that purchase interstate or foreign telecommunications service for a
fee. Id. at ¶¶ 44-45, 72. AT&T asserts that if GLCC’s conference call customers “are
not paying a fee to [GLCC] for an ‘interstate or foreign telecommunications service,’”
then GLCC is not providing tariffed switched access service to AT&T and, therefore,
GLCC may not bill AT&T for that service.

Id. at ¶¶ 45, 72-73. AT&T further

alleges, based on information and belief, that the conference call customers “are not
paying a fee to [GLCC] for an interstate or foreign telecommunications service.” Id. at
¶ 47. Thus, AT&T contends that GLCC’s attempts to bill it pursuant to the Tariff
constitute an unjust and unreasonable practice. Id. at ¶¶ 74-75.
b.

Summary of the Arguments

In its motion to dismiss, GLCC construes Count I as presenting a theory that
GLCC can bill IXCs under the Tariff only to the extent GLCC provides tariffed
services to a customer. Doc. No. 17-1 at 6. That is, GLCC interprets Count I to
allege that GLCC can bill AT&T for switched access service only when GLCC’s
customers purchase interstate telecommunications service from GLCC pursuant to a
tariff.

GLCC then argues that the FCC has never required CLECs to tariff their

charges to their own customers. Id. at 6-7. Indeed, GLCC states that the FCC has
expressly elected not to regulate the relationship between CLECs and their customers.
According to GLCC, the FCC deems an “End User” to be “any paying customer” of a
CLEC. Id. at 7. Thus, GLCC argues, so long as its conference call customers are
paying a fee to GLCC for interstate services, AT&T and other IXCs are required to pay
GLCC’s tariffed rates for switched access service. Id. at 7-8. Finally, GLCC contends
16

that AT&T’s assertion on information and belief that no fee is being paid is insufficient,
as AT&T does not allege facts that make the assertion plausible. Id. at 8.
In its resistance, AT&T contends that Count I presents two independent,
alternative theories. Doc. No. 20 at 7-11. It first argues that Count I raises a purely
factual question as to whether GLCC’s conference call customers are paying any fees at
all – tariffed or otherwise – for GLCC’s services. Id. at 7-8. AT&T asserts that for
purposes of GLCC’s motion to dismiss, this allegation must be accepted as true. Id. at
7. And, according to AT&T, if the allegation is true, the conference call customers are
not End Users within the meaning of the Tariff and GLCC has no right to bill AT&T
for calls terminating to those customers. Id. at 7-8. AT&T contends that its “no fee”
allegation is plausible in light of GLCC’s documented business practices, referencing an
IUB finding in 2009 that GLCC’s conference calling customers were not End Users
because they did not pay for GLCC’s services. Id. at 8. AT&T further notes that
GLCC’s financial arrangements are not publicly-available, meaning AT&T cannot, at
this stage of the case, provide evidence or make more-specific allegations supporting its
“no fee” allegation. Id.
AT&T further argues, in the alternative, that even if conference call customers
are paying fees to GLCC, the services GLCC provides to those customers are not
described in the Tariff. Id. at 9-11. AT&T contends that since GLCC elected to file a
tariff for interstate telecommunications services, its End Users are only those customers
who purchase the services described in that tariff. Because the Tariff does not describe
any services GLCC provides to its own customers, AT&T argues that those customers
cannot be End Users. Thus, whether or not GLCC’s customers pay fees to GLCC,
AT&T argues that GLCC’s attempts to bill AT&T pursuant to the Tariff constitute
unjust and unreasonable practices.

17

In its reply, GLCC accuses AT&T of rewriting Count I. It argues that Count I
must stand or fall on AT&T’s legal contention that GLCC “is authorized to provide
interstate or foreign telecommunications only pursuant to its federal tariff.” Doc. No.
24 at 1 (quoting Doc. No. 11 at ¶ 47). It then reiterates its argument that it is entitled
to bill AT&T for switched access service pursuant to the Tariff so long as GLCC’s
customers are paying any fees, not just tariffed fees, for GLCC’s services. Id. at 2-3.
Finally, GLCC again contends that AT&T has failed to allege sufficient facts to support
its claim, on information and belief, that GLCC’s conference calling customers pay no
fees to GLCC. Id. at 3.
c.

Discussion
i.

Has AT&T Alleged That No Fees Are Being Paid?

GLCC contends, in its reply brief, that AT&T has attempted to rewrite Count I
to avoid dismissal. GLCC states: “The allegations in AT&T’s counterclaims make
clear that its assertion that ‘the conference calling companies are not paying a fee to
[GLCC] for an interstate or foreign telecommunications service’ is dependent upon its
legal conclusion that ‘[GLCC] is authorized to provide interstate or foreign
telecommunications services only pursuant to its federal tariff.’” Doc. No. 24 at 1.
While GLCC may construe Count I in this manner, I do not agree that this is the only
possible construction.
As AT&T notes, it has made the following, specific allegation:

“Upon

information and belief, the conference calling companies are not paying a fee to
[GLCC] for an interstate or foreign telecommunications service, and thus [GLCC] has
not provided switched access services to AT&T for calls to and from these companies.”
Doc. No. 11 at ¶ 47.

The “[u]pon information and belief” qualification strongly

suggests AT&T is making a factual allegation that no fees are being paid - period. If
18

AT&T intended to concede that some fees are being paid, and rely on the fact that they
are not tariffed fees, it would not have had to qualify the allegation. There is no
dispute that GLCC’s customers are not paying fees to GLCC pursuant to a tariff.
Indeed, AT&T avers – and GLCC agrees – that the Tariff describes no fees that GLCC
may charge to its own customers. If Count I is based solely on a theory that GLCC
receives no tariffed fees from its customers, there would be no need for AT&T to
allege, only on information and belief, that conference call customers are not paying
fees to GLCC.
Even after Twombly, pleadings are to be construed liberally. See Fed. R. Civ.
P. 8(a)(2); accord Erickson v. Pardus, 551 U.S. 89, 93-94 (2007) (“[Rule] 8(a)(2)
requires only ‘a short and plain statement of the claim showing that the pleader is
entitled to relief.’ Specific facts are not necessary; the statement need only ‘give the
defendant fair notice of what the ... claim is and the grounds upon which it rests.’”)
(quoting Twombly, 550 U.S. at 555). When viewed liberally, I find that AT&T’s
counterclaim does include a factual allegation that GLCC’s conference call customers
are not paying fees of any kind to GLCC.

This does not mean the allegation is

plausible (I will address that question next).

But the allegation is, at least, there.

AT&T is entitled to resist the motion to dismiss Count I by arguing that it has made a
plausible allegation that GLCC receives no fees from its conference call customers.
ii.

Is The Allegation Plausible?

GLCC argues that even if AT&T has actually alleged that no fees are paid, the
allegation is not plausible. GLCC notes that AT&T relies on a 2009 decision in which
the IUB found that GLCC’s conference call customers were not paying for GLCC’s
services. According to GLCC, this reliance does not give rise to a plausible allegation

19

because it asks the court to assume GLCC has not changed its business practices in the
aftermath of that IUB ruling. Doc. No. 24 at 2-3.
In reviewing the counterclaim as a whole, however, I note that AT&T’s “no fee”
allegation is supported by more than a five-year-old IUB ruling.

Throughout its

counterclaim, AT&T makes numerous allegations concerning GLCC’s business
practices, particularly with regard to access stimulation activities. See, e.g., Doc. No.
11 at ¶¶ 34-40.

AT&T contends the IUB has found GLCC to have engaged in

improper conduct, such as providing local access service in areas where GLCC was not
authorized to do so and presenting false information to the IUB (either knowingly or
due to managerial incompetence). Id. at ¶¶ 38-40. AT&T’s counterclaim incorporates
(and includes as an attachment) an IUB ruling issued March 30, 2012, which makes
numerous unflattering findings about GLCC, its practices and its management. See
Doc. No. 11-1.4

AT&T then alleges, on information and belief, that “conference

calling companies are not paying a fee to Great Lakes for an interstate or foreign
telecommunications service.” Doc. No. 11 at ¶ 47.
In deciding plausibility, courts must employ “judicial experience” and “common
sense.” Whitney, 700 F.3d at 1128. A claim has facial plausibility when the pleading
contains factual content that allows the court to draw the reasonable inference that the
defending party is liable for the misconduct alleged. Twombly, 550 U.S. at 556. In
light of GLCC’s operational track record, at least as it is portrayed by AT&T’s
allegations and the prior IUB’s rulings, I find AT&T’s “no fee” allegation to be clearly
plausible. GLCC has failed to collect fees from its conference call customers in the
4

Neither party argues that it is improper for me to consider this IUB ruling, or other rulings
referenced by the parties, for purposes of GLCC’s motion to dismiss. As noted above, in
deciding a Rule 12(b)(6) motion courts may consider materials attached to the pleadings and
materials that are part of the public record. Whitney, 700 F.3d at 1128; Miller, 688 F.3d at
931.

20

past, has made false statements about its business practices and, indeed, has been
criticized by the IUB for not changing its business practices even after being directed to
do so. For example, in its 2012 order the IUB found GLCC’s “claim to have been
offering service in the Lake Park exchange was false.” Doc. No. 11-1 at 12-13. The
IUB characterized various GLCC representations as “untrue,” “false” and “not
credible.” See, e.g. id. at 14, 20-21. The IUB also noted that GLCC had not changed
certain practices between 2009 and 2012 despite being directed to do so in the 2009
order. Id. at 23-24.
In short, in accepting AT&T’s factual allegations as true and in taking the IUB’s
prior findings at face value, it is not sheer speculation for AT&T to allege, on
information and belief, that GLCC still does not collect fees from its conference call
customers. Put another way, at this stage of the case AT&T has made sufficient factual
allegations to allow a reasonable inference that GLCC is acting in that manner. Of
course, whether or not this is actually true is an issue for another day. For purposes of
GLCC’s motion to dismiss, however, AT&T has plead sufficient facts to put at issue
whether GLCC’s customers paid fees to GLCC in connection with the switched access
service charges that GLCC has billed to AT&T.
If no fees were paid, then those customers are not End Users within the meaning
of the Tariff. The Tariff contains a definition of “End User” that states, inter alia:
“An End User must pay a fee to the Company for telecommunications services.” Doc.
No. 17-3 at 11. GLCC does not contend otherwise and, indeed, takes the position that
an “End User” is “any paying customer.” Doc. No. 17-1 at 7.
If GLCC’s conference call customers are not End Users, then AT&T is not a
Buyer, as the Tariff defines “Buyer” as an IXC “utilizing the Company’s Access
Service to complete a Call to or from End Users.” Doc. No. 17-3 at 10 [emphasis
added]. The Tariff further defines “Access Charge” as a charge “assessed to the Buyer
21

through which the Company is compensated for providing Access.” Id. Based on
these definitions, if GLCC’s conference call customers are not End Users, then AT&T
is not a Buyer with regard to calls terminated to those customers and any charges billed
to AT&T by GLCC would not be authorized by the Tariff.
Because 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 overbilled 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.
Denying GLCC’s motion to dismiss Count I for this reason renders it
unnecessary, at this time, to resolve AT&T’s alternative, legal argument that a
customer must pay tariffed fees in order to be an End User. If discovery reveals that
no fees are being paid, this issue will be moot. If fees of some kind are being paid, the
issue can be revisited at a later stage of the case.5
3.

Counterclaim Count II
a.

Overview

In Count II, AT&T complains that GLCC’s interstate switched access rates, as
reflected in the Tariff, are so high as to be unjust and unreasonable in violation of 47
U.S.C. § 201(b). Doc. No. 11 at ¶¶ 51-56, 78-83. AT&T notes that GLCC has
adopted Qwest’s rates, as required by the Connect America Fund Order, but alleges that
5

Whether GLCC’s conference call customers are paying fees to GLCC may not be a simple
“yes or no” question. During the hearing, there was some definitional discussion concerning
the concept of a “fee.” AT&T suggested, for example, that even the payment of some kind of
fee would not turn a GLCC customer into an End User if that fee is ultimately rebated to the
customer, through revenue sharing or otherwise. There is no need to take up this issue in the
abstract. The question of whether GLCC’s customers are paying fees such that they qualify as
End Users is best resolved after the factual record has been developed.

22

those rates are nonetheless too high because GLCC’s cost structure is not comparable to
Qwest’s. Id. at ¶¶ 52-54, 79-80. AT&T further alleges that GLCC’s charges for
interstate switched access far exceed its charges for intrastate switched access thus,
according to AT&T, demonstrating that the rates set forth in the Tariff are unjust and
unreasonable.
b.

Summary of the Arguments

In its motion to dismiss, GLCC contends that Count II must be dismissed
pursuant to the filed tariff doctrine (also sometimes referred to as the filed rate
doctrine). Doc. No. 17-1 at 9-10. GLCC asserts that AT&T is making an improper
collateral attack on a lawfully-filed tariff and contends that the FCC, not the federal
courts, must determine the reasonableness of its rates. Id. at 10-12.
In its resistance, AT&T argues that even if the filed tariff doctrine bars its claim
for damages, it is entitled to seek prospective relief from an allegedly-unlawful tariff.
Doc. No. 20 at 11-12.

It contends that it has the option of challenging the

reasonableness of the Tariff in federal court or at the FCC, but not both. Id. at 12. It
further argues that while the federal courts may not be in a position to establish new,
reasonable rates, those courts are empowered to strike down unreasonable tariffs.
According to AT&T, such an outcome would require GLCC to file a new tariff, the
reasonableness of which could then be litigated at the FCC. Id. at 12-13. Finally,
AT&T notes that the court could refer Count II to the FCC under the primary
jurisdiction doctrine as opposed to dismissing it outright.
In reply, GLCC disputes AT&T’s contention that federal courts may review the
reasonableness of tariffs filed with the FCC. Doc. No. 24 at 4. GLCC contends that
only the FCC itself may investigate and prescribe prospective changes to a carrier’s
tariff. Id.
23

c.

Discussion

As plead by AT&T, Count II demands damages, interest and other forms of
relief based on AT&T’s claim that the rates set forth in the Tariff are unjust and
unreasonable.

See Doc. No. 11 at ¶¶ 82-83.

In response to GLCC’s motion to

dismiss, AT&T now admits that it is entitled, at most, to prospective relief in the form
of an order that would, in effect, strike the Tariff. Doc. No. 20 at 12-13. AT&T no
longer contends that it would be entitled to damages for the period of time between the
tariff’s effective date and the date of the order it requests.
AT&T’s rather sharp retreat illustrates that Count II was ill-conceived and
poorly drafted. The filed tariff doctrine prevents a court from awarding any form of
relief that would have the effect of imposing rates other than those reflected in a dulyfiled tariff. See, e.g., Firstcom, Inc. v. Qwest Corp., 555 F.3d 669, 680-81 (8th Cir.
2009) (rejecting fraud and promissory estoppel claims brought by customer seeking to
enforce an allegedly-promised discount). In Firstcom, the court explained the doctrine
as follows:
The filed rate doctrine “forbids a regulated entity [from charging] rates
for its services other than those properly filed with the appropriate federal
regulatory authority.” The filed rate doctrine prohibits a party from
recovering damages measured by comparing the filed rate and the rate that
might have been approved absent the conduct in issue.
Id. at 679 (quoting H.J. Inc. v. Nw. Bell Tel. Co., 954 F.2d 485, 488 (8th Cir.), cert.
denied, 504 U.S. 957 (1992)). Yet Count II plainly asks the court to (a) decide that the
rates reflected in the Tariff are too high, (b) determine a just and reasonable rate and
(c) award damages to AT&T to the extent that any charges it may have paid pursuant to
the Tariff exceed the court-established, just and reasonable charges. Doc. No. 11 at ¶¶
77-83. As plead, Count II plainly violates the filed tariff doctrine. To the extent Count
II seeks any form of relief for any period of time during which the Tariff is lawfully in
24

effect, it must be dismissed. Not stayed, referred to the FCC or otherwise kept on
some form of judicial life support, but simply dismissed. The filed tariff doctrine
compels that result. See Crumley v. Time Warner Cable, Inc., 556 F.3d 879, 881-82
(8th Cir. 2009) (affirming dismissal of customer’s claims against a cable television
provider).
As for prospective relief, AT&T is correct that the filed tariff doctrine does not
preclude all legal challenges to a tariff. The FCC has stated:
[T]he Filed Rate Doctrine does not insulate tariffs from legal challenge.
As we have previously stated, “it is well established that the rates and
practices carriers seek to shelter pursuant to the Filed Rate Doctrine are
always subject to an inquiry into their reasonableness.” Where, as here,
the Commission determines that a tariff violates [47 U.S.C. §] 201(b), the
Filed Rate Doctrine is no defense.
In re Bell Atlantic-Delaware, Inc., 15 FCC Rcd. 20665, ¶ 20 (2000) [footnotes
omitted]. The question remains, however, whether this court is the correct forum for
AT&T’s challenge. AT&T notes that the federal district courts have subject matter
jurisdiction over claims that challenge practices as allegedly being unjust or
unreasonable. Doc. No. 20 at 12 (citing 47 U.S.C. §§ 206-208). GLCC does not
argue otherwise.

However, AT&T’s challenge to the rates set forth in the Tariff

invokes the primary jurisdiction doctrine, which “is concerned with promoting proper
relationships between the courts and administrative agencies charged with particular
regulatory duties.” United States v. Western Pac. R.R. Co., 352 U.S. 59, 63 (1956).
The Eighth Circuit Court of Appeals has explained:
Primary jurisdiction is a common-law doctrine that is utilized to
coordinate judicial and administrative decision making. See Red Lake
Band of Chippewa Indians v. Barlow, 846 F.2d 474, 476 (8th Cir. 1988).
The doctrine allows a district court to refer a matter to the appropriate
administrative agency for a ruling in the first instance, even when the
matter is initially cognizable by the district court. See Iowa Beef
Processors, Inc. v. Illinois Cent. Gulf R.R. Co., 685 F.2d 255, 259 (8th
25

Cir. 1982). There exists no fixed formula for determining whether to
apply the doctrine of primary jurisdiction. See United States v. Western
Pac. R.R. Co., 352 U.S. 59, 64, 77 S.Ct. 161, 165, 1 L.Ed.2d 126
(1956). Rather, in each case we consider whether the reasons for the
doctrine are present and whether applying the doctrine will aid the
purposes for which the doctrine was created. See United States v.
McDonnell Douglas Corp., 751 F.2d 220, 224 (8th Cir. 1984). We are
always reluctant, however, to invoke the doctrine because added expense
and undue delay may result. See id.
One reason courts apply the doctrine of primary jurisdiction is to obtain
the benefit of an agency's expertise and experience. The principle is
firmly established that “in cases raising issues of fact not within the
conventional experience of judges or cases requiring the exercise of
administrative discretion, agencies created by Congress for regulating the
subject matter should not be passed over.” Far East Conference v. United
States, 342 U.S. 570, 574, 72 S.Ct. 492, 494, 96 L.Ed. 576 (1952). In
fact, agency expertise is the most common reason for applying the
doctrine. See Barlow, 846 F.2d at 476. Another reason is to promote
uniformity and consistency within the particular field of regulation. See
Nader v. Allegheny Airlines, Inc., 426 U.S. 290, 303–04, 96 S.Ct. 1978,
1986–87, 48 L.Ed.2d 643 (1976).
Access Telecomms. v. Sw. Bell Tel. Co., 137 F.3d 605, 608 (8th Cir. 1998).
AT&T’s claim for prospective relief in Count II presents a textbook scenario for
invoking primary jurisdiction. The FCC issued the Connect America Fund Order after
undertaking an extensive investigative process:
There has been enormous interest in and public participation in our datadriven reform process. We have received over 2,700 comments, reply
comments, and ex parte filings totaling over 26,000 pages, including
hundreds of financial filings from telephone companies of all sizes,
including numerous small carriers that operate in the most rural parts of
the nation. We have held over 400 meetings with a broad cross-section of
industry and consumer advocates. We held three open, public workshops,
and engaged with other federal, state, Tribal, and local officials
throughout the process.
26

See Connect America Fund Order at ¶ 12 [footnote omitted]. As discussed earlier, one
outcome of that lengthy process was a determination by the FCC that the switched
access rates of access-stimulating CLECs should be benchmarked “to the rates of the
price cap LEC with the lowest interstate switched access rates in the state.” Id. at ¶
679. Moreover, the FCC reserved the right to demand even lower rates under certain
circumstances:
[S]hould the traffic volumes of a competitive LEC that meets the access
stimulation definition substantially exceed the traffic volumes of the price
cap LEC to which it benchmarks, we may reevaluate the appropriateness
of the competitive LEC's rates and may evaluate whether any further
reductions in rates is warranted.
Id. at ¶ 690.
Here, there is no dispute that GLCC complied with the Order’s “benchmark”
requirement by filing the Tariff. AT&T claims, however, that GLCC’s rates are still
too high and that the FCC-created exception should apply. That is, the exception in
which the FCC indicated that “we may reevaluate” a CLEC’s rates and “evaluate
whether any further reductions in rates is warranted.” Id. [emphasis added]. Having
enacted a benchmarking framework subject to an exception when an access-stimulating
CLEC’s volumes “substantially exceed” those of the benchmarked LEC, the FCC is
clearly the correct entity to determine when that exception may apply. Moreover, when
the exception does apply, the FCC – as opposed to a federal district court – is in the
best position to determine the appropriate rate reduction.
In short, the interests of agency expertise, consistency and uniformity compel a
finding that the FCC has primary jurisdiction over AT&T’s claim that GLCC’s
switched access rates, while benchmarked as required by the Connect America Fund
Order, are nonetheless unreasonable under the circumstances.

When primary

jurisdiction applies, a federal court may either stay or dismiss a claim in favor of the
27

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.
4.

Counterclaim Count III
a.

Overview

In Count III, AT&T seeks relief from GLCC’s alleged refusal to negotiate a
direct interconnection between GLCC’s 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 GLCC, but GLCC has refused. Doc. No. 11 at ¶¶
57, 88-89. AT&T further contends (a) that such an arrangement would dramatically
reduce its transportation charges regarding GLCC’s traffic and (b) that GLCC has
established a direct trunking relationship with at least one other (unnamed) carrier. Id.
at ¶¶ 60, 62, 86-89. According to AT&T, GLCC’s refusal to negotiate is an unjust and
unreasonable practice, in violation of 47 U.S.C. § 201(b), and amounts to unreasonable
discrimination in violation of 47 U.S.C. § 202(a).
b.

Summary of the Arguments

In its motion to dismiss, GLCC argues (a) AT&T has no private right of action
to bring this claim, under either Section 201(b) or Section 202(a), and (b) AT&T has
not plead sufficient facts to support a claim under Section 202(a). Doc. No. 17-1 at 13-

28

18. GLCC further argues that CLECs have no legal duty to directly connect their
networks to those of other carriers. Id. at 13-14.
In its resistance, AT&T argues that it does, in fact, have the right to bring suit to
seek relief from practices that violate Section 201(b) or Section 202(a) and, further, that
it has properly plead such a claim. Doc. No. 20 at 13-14. AT&T cites to cases and
FCC rulings in support of its contention that a common carrier may challenge
allegedly-unreasonable practices in federal court. Id. at 14-16. AT&T further contends
that it has plead facts sufficient to state a claim for unlawful discrimination under
Section 202(a). Id. at 17-18. In the alternative, AT&T suggests that this court may
refer Count III to the FCC for its consideration under the primary jurisdiction doctrine.
Id. at 15-16.
In reply, GLCC again notes that it has no duty to enter into a direct connection
arrangement with AT&T and contends that this court is not the proper forum for
AT&T’s complaint. GLCC argues that Count III should be dismissed without prejudice
and that AT&T should then, if it so chooses, present the issue to the FCC.
c.

Discussion

As previously noted, AT&T brings Count III pursuant to Sections 201(b) and
202(a) of the Act. Section 201(b) declares that it is unlawful for any common carrier to
engage in any “unjust or unreasonable” practice. 47 U.S.C. § 201(b). Section 202(a)
forbids “any unjust or unreasonable discrimination in charges, practices, classifications,
regulations, facilities, or services.” 47 U.S.C. § 202(a). AT&T claims that GLCC’s
alleged refusal to establish a direct connection violates both statutes.
After careful review of the parties’ arguments, I conclude that Count III, like
Count II, should be referred to the FCC pursuant to the primary jurisdiction doctrine.
In reaching this conclusion, I adopt the reasoning – but not the ultimate conclusion – of
29

the Ninth Circuit Court of Appeals in North Cnty. Commc’ns Corp. v. California
Catalog & Tech., 594 F.3d 1149 (9th Cir. 2010). In that case, a CLEC filed suit under
Section 201(b) to enforce various compensation arrangements with a commercial
mobile radio service (CMRS) provider. Id. at 1151-52. In considering whether the
plaintiff had a private right of action to enforce Section 201(b), the Ninth Circuit Court
of Appeals stated that while Section 201(b) is broadly-worded, “a more reasonable
interpretation is that it is within the [FCC]'s purview to determine whether a particular
practice constitutes a violation for which there is a private right to compensation.” Id.
at 1158. The court explained:
North County essentially requests that the federal courts fill in the
analytical gap stemming from the absence of a [FCC] determination
regarding § 201(b). This we decline to do. The district court properly
dismissed North County's declaratory judgment claim premised on §
201(b), because entry of a declaratory judgment “would ... put
interpretation of a finely-tuned regulatory scheme squarely in the hands of
private parties and some 700 federal district judges, instead of in the
hands of the [FCC].”
Id. (quoting Greene v. Sprint Commc'ns Co., 340 F.3d 1047, 1053 (9th Cir. 2003),
which, in turn, quoted Conboy v. AT & T Corp., 241 F.3d 242, 253 (2d Cir. 2001)).
The court then noted that the FCC “has not determined that the CMRS providers' lack
of payment to CLECs . . . violates § 201(b).” Id. at 1158. For that reason, the court
affirmed the district court’s dismissal of the CLEC’s claim, holding that a private party
has no right of action under the Act to seek relief from an allegedly unjust or
unreasonable practice unless the FCC has already found that practice to be unjust or
unreasonable. Id. at 1160-61.
In reaching this holding, the Ninth Circuit found support in Global Crossing
Telecomms. v. Metrophones Telecomms., 550 U.S. 45 (2007).

There, a payphone

service provider (PSP) sued an IXC to recover compensation required by FCC
30

regulations. Id. at 47. The FCC had already declared that an IXC’s refusal to pay the
required compensation was an unjust or unreasonable practice in violation of Section
201(b). Id. In light of this regulatory determination by the FCC, the Global Crossing
majority held that the PSP had a private right of action, pursuant to Section 207, to sue
for damages resulting from that unjust or unreasonable practice. Id. at 54-55.
The North County court stated: “In contrast to the facts in Global Crossing, the
[FCC] has not made any findings that CMRS providers' failure to compensate CLECs
constitutes an unreasonable practice in violation of § 201(b).”

594 F.3d at 1160.

While that is clearly true, the Global Crossing court did not go so far as to hold that a
private cause of action to enforce Section 201(b) can never arise in the absence of a
prior FCC determination that the challenged practice is unjust or unreasonable. As
AT&T notes, the FCC itself does not appear to take this position. See Doc. No. 20 at
15-16 (citing AT&T Corp. v. All American Tel. Co., 28 FCC Rcd. 3477, ¶ 29 & n.127
(2013), and AT&T Corp. v. Alpine Commc’ns, 27 FCC Rcd. 11511, ¶ 41 (2012),
recon. denied, 27 FCC Rcd. 16606 (2012)).6

Nor is there binding Eighth Circuit

Court of Appeals authority, or significant nonbinding authority from other jurisdictions,
akin to North County.7
In short, it is at least arguable that the North County court went too far in
holding that there can never be a private right of action to challenge a practice under
Section 201(b) unless the FCC has already declared the practice to be unjust or
6

In Alpine, the FCC found that AT&T’s claim had been “properly brought” in federal court
before being referred under the primary jurisdiction doctrine. 27 FCC Rcd. 11511, at ¶ 41.

7

The Third Circuit Court of Appeals has cited North County favorably. See Hoffman v.
Rashid, 388 F. App’x 121, 123 (3d Cir. 2010) (per curiam); see also Havens v. Mobex
Network Servs., LLC, Civ. No. 11-993 (KSH), 2012 WL 3600291, at *7 (D.N.J. Aug. 20,
2012) (citing North County favorably but noting that it represents a “particularly stringent
view”).

31

unreasonable. I need not reach that issue, however, because – for the same policy
reasons expressed in North County – I conclude that Count III should be referred to the
FCC under the primary jurisdiction doctrine.

AT&T argues that it is unjust or

unreasonable for GLCC to refuse to establish a direct connection, either because (a) the
volume of traffic generated by GLCC’s access-stimulation practices renders GLCC’s
decision unjust or unreasonable (the Section 201(b) theory) or (b) GLCC has allegedly
established a direct connection with another IXC (the Section 202(a) theory).
Congress, however, has elected to require only that telecommunications carriers
establish direct or indirect connections with each other. See 47 U.S.C. § 251(a).8

If

there are to be circumstances under which a direct connection is the only just and
reasonable option, those circumstances should be determined by the FCC, not by the
various federal courts.
As with Count II, the interests of agency expertise, consistency and uniformity
compel a finding that the FCC has primary jurisdiction over AT&T’s claim that
GLCC’s alleged refusal to establish a direct connection is unjust or unreasonable. And,
as with Count II, I find that there is no reason to stay or delay this case pending the
FCC’s consideration of that claim. GLCC commenced this action to collect billed
amounts allegedly owed by AT&T. While Counts I and IV of AT&T’s counterclaim
raise issues that could directly impact GLCC’s right to payment of its invoices, Counts
II and III do not. There 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.

8

“Each telecommunications carrier has the duty — (1) to interconnect directly or indirectly
with the facilities and equipment of other telecommunications carriers . . . .” 47 U.S.C. §
251(a)(1) [emphasis added].

32

VII. THE MOTION FOR SUMMARY JUDGMENT
GLCC seeks entry of summary judgment in its favor on the issue of AT&T’s
liability, arguing that AT&T no longer has the right to dispute invoices issued by
GLCC because AT&T failed to comply with dispute resolution provisions set forth in
the Tariff.
A.

Applicable Standards

Any party may move for summary judgment regarding all or any part of the
claims asserted in a case. Fed. R. Civ. P. 56(a). Summary judgment is appropriate
when “the pleadings, depositions, answers to interrogatories, and admissions on file,
together with affidavits, if any, show that there is no genuine issue of material fact and
that the moving party is entitled to a judgment as a matter of law.” Celotex Corp. v.
Catrett, 477 U.S. 317, 322 (1986). A material fact is one that “‘might affect the
outcome of the suit under the governing law.’” Anderson v. Liberty Lobby, Inc., 477
U.S. 242, 248 (1986).

Thus, “the substantive law will identify which facts are

material.” Id. Facts that are “critical” under the substantive law are material, while
facts that are “irrelevant or unnecessary” are not. Id.
“An issue of material fact is genuine if it has a real basis in the record,”
Hartnagel v. Norman, 953 F.2d 394, 395 (8th Cir. 1992) (citing Matsushita Elec.
Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586-87 (1986)), or when “‘a
reasonable jury could return a verdict for the nonmoving party’ on the question,”
Woods v. DaimlerChrysler Corp., 409 F.3d 984, 990 (8th Cir. 2005) (quoting
Anderson, 477 U.S. at 248). Evidence that only provides “some metaphysical doubt as
to the material facts,” Matsushita, 475 U.S. at 586, or evidence that is “merely
colorable” or “not significantly probative,” Anderson, 477 U.S. at 249-50, does not
make an issue of material fact genuine.
33

As such, a genuine issue of material fact requires “sufficient evidence supporting
the claimed factual dispute” so as to “require a jury or judge to resolve the parties'
differing versions of the truth at trial.” Anderson, 477 U.S. at 248-49 (citation and
internal quotation marks omitted). The party moving for entry of summary judgment
bears “the initial responsibility of informing the court of the basis for its motion and
identifying those portions of the record which show a lack of a genuine issue.”
Hartnagel, 953 F.2d at 395 (citing Celotex, 477 U.S. at 323). Once the moving party
has met this burden, the nonmoving party must go beyond the pleadings and by
depositions, affidavits, or otherwise, designate specific facts showing that there is a
genuine issue for trial. Mosley v. City of Northwoods, 415 F.3d 908, 910 (8th Cir.
2005). The nonmovant must show an alleged issue of fact is genuine and material as it
relates to the substantive law. If a party fails to make a sufficient showing of an
essential element of a claim or defense with respect to which that party has the burden
of proof, then the opposing party is entitled to judgment as a matter of law. Celotex,
477 U.S. at 322.
In determining if a genuine issue of material fact is present, I must view the
evidence in the light most favorable to the nonmoving party. Matsushita, 475 U.S. at
587-88.

Further, I must give the nonmoving party the benefit of all reasonable

inferences that can be drawn from the facts. Id. However, “because we view the facts
in the light most favorable to the nonmoving party, we do not weigh the evidence or
attempt to determine the credibility of the witnesses.” Kammueller v. Loomis, Fargo &
Co., 383 F.3d 779, 784 (8th Cir. 2004). Instead, “the court's function is to determine
whether a dispute about a material fact is genuine.” Quick v. Donaldson Co., Inc., 90
F.3d 1372, 1376-77 (8th Cir. 1996).

34

B.

Undisputed Facts

Except as otherwise noted, the following facts are undisputed for purposes of
GLCC’s motion for summary judgment on liability:
The Tariff. The Tariff was filed with the FCC on January 11, 2012, and
became effective January 26, 2012, pursuant to 47 U.S.C. § 204(a)(3). It includes the
following billing dispute provision:
3.1.7 Billing Disputes
3.1.7.1

General

(a)

All 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.

(b)

Prior to or at the time of submitting a good
faith dispute, Buyer shall tender payment for
any undisputed 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.

Doc. No. 17-3 at 43.
35

The Communication. On May 2, 2012, Candie Nelson received the following
email from an AT&T representative:
Dear Ms. Nelson:
This letter is intended to formally notify Great Lakes
Communication Corp. that AT&T Corp. disputes the
validity of the switched access invoice billed by Great Lakes
to AT&T Corp. on April 1, 2012 and will withhold the full
amount invoiced. AT&T Corp. disputes the invoice and
withholds payment for the following reasons:
1)

Great Lakes has billed AT&T Corp. for terminating
access services to Spencer, Iowa but is not
certificated to provide local exchange service in that
exchange.

2)

Great Lakes invoiced charges are based on a distance
of 133 miles when mileage should be no more than 1
mile.

3)

Great Lakes has billed for 2 tandem switched
terminations when Great Lakes should bill only 1
termination.

4)

Great Lakes included a $408,222.49 back-bill on the
invoice for which it has not provided an explanation.

AT&T Corp. will continue to withhold payment on future
invoices until these concerns are addressed appropriately.
Please contact me at 816-995-4528 if you would like to
discuss these issues.
Doc. No. 17-3 at 65. Ms. Nelson forwarded the email to Josh Nelson, the Company
contact listed on the Tariff, within the hour. Id. Mr. Nelson responded to AT&T by
email on May 4, 2012, stating that the dispute notice was defective because it failed to
comply with the requirements of 3.1.7.1(a) and (b) of the Tariff. Doc No. 17-3 at 6736

68. Nelson denied AT&T’s claims in items 1 through 3, but acknowledged there had
been a billing error regarding item 4 and credited the account.

GLCC requested

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

GLCC

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.
C.

Summary of the Arguments

GLCC argues it is entitled to partial summary judgment on liability because
AT&T failed to comply with the Tariff’s billing dispute requirements. Specifically, it
contends AT&T did not provide proper written notice of a good faith dispute and did
not tender payment for the disputed charges. GLCC argues that strict compliance with
Tariff provisions is required and, therefore, that AT&T has waived the right to dispute
GLCC’s invoices.
AT&T reiterates its arguments concerning Count I of its counterclaim to contend
that it is not a Buyer, as defined by the Tariff, and therefore is not subject to the
Tariff’s billing dispute requirements. Moreover, while AT&T agrees that it has not
strictly complied with the Tariff’s notice requirements, it contends that its email
message of May 2, 2012, was sufficient to preserve its right to dispute GLCC’s
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 GLCC as a condition of disputing GLCC’s charges.

37

D.

Discussion
1.

Is There a Genuine Issue of Material Fact as to Whether
AT&T is a Buyer Under the Tariff and, Therefore,
Subject to its Billing Dispute Requirements?

As discussed in Section VI(B)(2), supra, AT&T has stated a plausible claim in
Count I that GLCC has breached the Tariff by billing AT&T for services not described
in the Tariff. GLCC can only provide “Switched Access Services”9 to a Buyer, which
is an IXC that uses GLCC’s services to complete calls to and from End Users. An
“End User” is:
[A]ny
Customer
of
an
Interstate
or
Foreign
Telecommunications Service that is not a carrier, except that
a carrier other than a telephone company shall be deemed to
be an “End User” when such carrier uses a
Telecommunications service for administrative purposes and
a person or entity that offers Telecommunications services
exclusively as a reseller shall be deemed to be an “End
User” if all resale transmissions offered by such reseller
originate on the premises of such reseller. An End User
must pay a fee to the Company for telecommunications
service. Other carriers including IXCs, are not considered
to be End Users under the terms of this Tariff, unless the
Company consents to such classification in writing.
Doc. No. 17-3 at 11 [emphasis added]. AT&T alleges GLCC has breached its Tariff
because its End Users do not pay a fee to GLCC. If that is the case, AT&T is not a
Buyer.
As the moving party, GLCC bears the initial burden of showing there are no
genuine issues concerning any facts GLCC must establish to recover, including the fact
that AT&T is a Buyer pursuant to the Tariff. Hartnagel, 953 F.2d at 395. To meet
this burden, a movant must file a statement of undisputed facts “setting forth each
9

Switched Access Service is defined as “Access to the Network of the Company for the
purpose of receiving or delivering Calls.” Doc. No. 17-3 at 12.

38

material fact as to which the moving party contends there is no genuine issue to be
tried.” Local Rule 56(a)(3). GLCC’s statement of undisputed facts does not allege that
AT&T is a Buyer, nor does it allege that GLCC’s customers paid fees to GLCC
regarding the services for which GLCC has billed AT&T. See Doc. No. 17-2. Thus,
GLCC’s statement does not demonstrate that GLCC is entitled to judgment as a matter
of law.
GLCC did, however, submit an affidavit from Mr. Nelson that includes the
following sentence:

“GLCC requires each of its end users to pay a fee for

telecommunications service.” Doc. No. 17-3 at ¶ 6. GLCC has submitted no other
evidence supporting this carefully-worded comment.

Simply 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 representations to the IUB.

See Qwest

Commc’ns v. Superior Tel. Coop., Docket No. FCU-07-2, 2009 WL 3052208, (Iowa
U.B. Sept. 21, 2009), recon granted in part, 2009 WL 4571832 (Iowa U.B. Dec. 3,
2009), further recon denied, 2011 WL 459685 (Iowa U.B. Feb. 4, 2011), aff’d,
Farmers & Merchants Mut. Tel. Co. of Wayland v. Iowa Utilities Bd., 829 N.W.2d 190
39

(Iowa Ct. App. 2013); In re Great Lakes Commc’ns, Docket No. SPU-2011-0004,
2012 WL 1132952, at *14 (Iowa U. B. Mar. 30, 2012).10 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. While this recommendation, if adopted,
would resolve GLCC’s motion for summary judgment, because this is a Report and
Recommendation I will address the remaining issues raised by that motion.

2.

If AT&T is a Buyer, is GLCC Entitled to Summary
Judgment Based on AT&T’s Failure To Comply With the
Tariff’s Billing Dispute Requirements?

As a common carrier, GLCC is required to file a tariff, “showing all charges
. . . and showing the classifications, practices, and regulations affecting such charges.”
47 U.S.C. § 203. A tariff can become substantively lawful in two ways – it can be
declared lawful in a hearing before the FCC or it can be “deemed lawful” through the
streamlined manner pursuant to 47 U.S.C. § 204(a)(3). Virgin Islands Tel. Corp. v.
FCC, 444 F.3d 666, 669 (D.C. Cir. 2006). Under the filed rate doctrine, once a tariff
obtains lawful status through one of the two means described above, it is considered to
be “the law” and therefore “‘conclusively and exclusively enumerate[s] the rights and
10

Just as a court may take judicial notice of public record materials in considering a motion to
dismiss pursuant to Rule 12(b)(6), so too may a court consider those materials in considering a
motion for summary judgment. See, e.g., Amerind Risk Mgmt. Corp. v. Malaterre, 633 F.3d
680, 685 n.6 (8th Cir. 2011).

40

liabilities’ as between the carrier and the customer.” Sancom, Inc. v. Qwest Commc’ns
Corp., 643 F. Supp. 2d 1117, 1124 (D.S.D. 2009) (quoting Iowa Network Servs., Inc.
v. Qwest Corp., 466 F.3d 1091, 1097 (8th Cir. 2006)). “‘The terms of a tariff should
be given their ordinary meaning, and strained or unnatural constructions are not
permitted.’” Iowa Network Servs., Inc. v. Qwest Corp., 385 F. Supp. 2d 850, 895
(S.D. Iowa 2005) (quoting BellSouth Telecomms., Inc. v. Kerrigan, 55 F. Supp. 2d
1314, 1324 (N.D. Fla. 1999)).
Here, GLCC argues that because the Tariff obtained “deemed lawful” status on
January 26, 2012, AT&T was bound to comply with all of its provisions after that date,
including its dispute resolution provisions. GLCC contends that AT&T has waived the
right to dispute charges billed by GLCC under the Tariff because AT&T violated the
Tariff’s notice and payment requirements. As such, GLCC contends that it is entitled
to summary judgment on the issue of AT&T’s liability for those billed charges.

a.

Notice Requirements

As noted above, the Tariff imposes numerous requirements concerning the form
and substance of any notice concerning a disputed charge.

The notice must be

submitted to a particular person, must be sent “within a reasonable period of time after
the invoice has been issued,” and must contain “sufficient documentation to investigate
the dispute.” Doc. No. 17-3 at 43. Moreover, “a separate letter of dispute must be
submitted for each and every individual bill that the Buyer wishes to dispute.” Id.
There is no dispute that AT&T did not strictly comply with these requirements. It sent
a single email to someone other than the specified person at GLCC, referenced only
one invoice and, instead of sending a new notice after each subsequent invoice, simply
stated that it would dispute all future invoices until the issues raised in its notice were

41

resolved.

Id. at 65.

The question is whether these deficiencies compel entry of

judgment in GLCC’s favor as a matter of law.
GLCC points out that courts have strictly construed tariff notice provisions. See
Powers Law Offices, P.C. v. Cable & Wireless USA, Inc., 326 F. Supp. 2d 190, 193
(D. Mass. 2004) (citing cases and noting that unless plaintiffs complied with notice
provision they “are deemed to admit the accuracy of the entire contents of the bills at
issue and are foreclosed from any opportunity to challenge the accuracy of those
bills.”). Thus, according to GLCC, the lack of strict compliance constitutes a waiver
of AT&T’s right to dispute GLCC’s invoices.
While AT&T denies that the Tariff applies to GLCC’s charges, it further argues
that under the circumstances present here, its email message substantially complied with
the Tariff’s notice requirements. It also argues that GLCC has not been damaged by
any noncompliance.
On this issue, AT&T has the better argument. None of the cases cited by GLCC
address the current situation, in which written notice was undoubtedly provided and
expressly stated that the issues raised in that notice apply prospectively to future
invoices.

Instead, those cases involved the complete lack of any written notice

concerning the matters in dispute within the period of time specified by tariff. See
Powers Law Offices, 326 F. Supp. 2d at 193-94 (dismissing claims for which no notice
was provided within the tariff’s 45-day notice period); MCI Telecomm. Corp. v. Best
Tel. Co., 898 F. Supp. 868, 874–75 (S.D. Fla. 1994) (no notice provided); MCI
Telecomm. Corp. v. Ameri–Tel, Inc., 852 F. Supp. 659, 666 n.5 (N.D. Ill. 1994)
(phone call is not sufficient when written notice is required); MCI Telecomm. Corp. v.
Premium Mktg. Sys., No. 91 C 4048, 1992 WL 6693, at *2 (N.D. Ill. Jan. 15, 1992)
(no notice provided). GLCC cites no case addressing the issue of whether a written

42

notice that is actually given, and that expressly states that the issues raised in the notice
apply prospectively to future invoices, is sufficient to preserve those issues.
Moreover, as AT&T points out, the cases GLCC relies on do not address the
fact that Congress has created a two-year statute of limitations for the recovery of
overcharges. Doc. No. 20 at 20 (citing 47 U.S.C. § 41511). While a tariff generally
has the force of law, it cannot override contrary or conflicting federal statutes. See,
e.g., Bowers v. Windstream Ky. East, LLC, 709 F. Supp. 2d 526, 539-40 (W.D. Ky.
2010). The Tariff cannot require AT&T to take some kind of action within a shorter
period of time than that provided by Section 415.
I conclude that AT&T’s failure to strictly comply with the Tariff’s notice
requirements does not entitle GLCC to judgment as a matter of law. AT&T’s email
message of May 2, 2012, expressly referenced GLCC’s invoice dated April 1, 2012,
explained the grounds for disputing the invoice and advised GLCC that AT&T would
continue to withhold payment on future invoices until the concerns set forth in AT&T’s
message were resolved. While AT&T sent the message to a GLCC employee other
than the one specified in the Tariff, it is undisputed that the message was forwarded to
the correct individual almost immediately.

Viewing the record most favorably to

AT&T, I conclude that these actions satisfied the legitimate purpose of the notice
11

Providing, in relevant part, as follows:
For recovery of overcharges action at law shall be begun or complaint filed with
the Commission against carriers within two years from the time the cause of
action accrues, and not after, subject to subsection (d) of this section, except
that if claim for the overcharge has been presented in writing to the carrier
within the two-year period of limitation said period shall be extended to include
two years from the time notice in writing is given by the carrier to the claimant
of disallowance of the claim, or any part or parts thereof, specified in the
notice.

47 U.S.C. § 415(c).

43

requirements by advising GLCC of the dispute and giving it the opportunity to
investigate and resolve that dispute. I therefore recommend that GLCC’s motion for
summary judgment be denied for this reason, as well.
b.

Payment Requirement

The Tariff requires Buyers to pay all charges as a condition of disputing them.
See Doc. No. 17-3 at 43 (“Prior to or at the time of submitting a good faith dispute,
Buyer shall tender payment for any undisputed 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.”).

Here, there is no dispute that

AT&T failed to comply with this requirement with regard to most, if not all, of the
charges at issue. The question, then, is whether this failure compels entry of judgment
in GLCC’s favor as a matter of law.
GLCC argues that AT&T’s failure to pay constitutes a waiver of AT&T’s right
to dispute those charges. GLCC again relies on the “deemed lawful” language of 47
U.S.C. § 204(a)(3) to argue that AT&T must comply with all terms and conditions of
the Tariff, unless and until it is declared unlawful by either the FCC or the court. As
noted above, it is undisputed that the Tariff obtained “deemed lawful” status on January
26, 2012. Accordingly, GLCC asserts that as long as it provided the services AT&T
was billed for, AT&T is required to pay.12
AT&T responds that while the Tariff may be “deemed lawful,” GLCC 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
12

GLCC also relies on the CLEC Access Charge Order, in which the FCC stated in its
overview of the structure of the access service market that “The Act and our rules require
IXCs to pay the published rate for tariffed CLEC access services, absent an agreement to the
contrary or a finding by the Commission that the rate is unreasonable.” 16 FCC Rcd. 9923, ¶
28 (2001).

44

have to provide payment as a condition of disputing the charges under these
circumstances. See AT&T Corp. v. YMax Commc’ns, 26 FCC Rcd. 5742, ¶ 12 (2011)
(“a carrier may lawfully assess tariffed charges only for those services specifically
described in its applicable tariff.”). According to AT&T, GLCC’s attempt – via its
Tariff – to compel a contrary result is unreasonable and, therefore, unenforceable.
AT&T relies in large part on 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) (Northern Valley). In that case, the FCC found that a nearly identical billing
dispute provision was unreasonable. That provision required all disputed charges to be
paid “in full prior to or at the time of submitting a good faith dispute.” 26 FCC Rcd.
10780, ¶ 14 (2011).
GLCC attempts to distinguish Northern Valley and, indeed, claims that it drafted
the Tariff’s billing dispute provisions to comply with that case. Doc. No. 17-2 at ¶ 5.
GLCC argues that the FCC’s disapproval of the advance payment requirement applies
only when “no services are provided at all.” Doc. No. 17-1 at 22 n.10. In making that
argument, however, GLCC selectively quotes from an example provided by the FCC.
The entire sentence is as follows: “As written, this provision requires everyone to
whom Northern Valley sends an access bill to pay that bill, no matter what the
circumstances (including, for example, if no services were provided at all), in order to
dispute a charge.” 26 FCC Rcd. 10780, ¶ 14 (2011). The FCC did not state that an
advance payment requirement is unreasonable only when no services were provided in
connection with the disputed invoice.
Here, AT&T contends GLCC has invoiced it for charges that are contrary to the
Tariff. Based on Northern Valley, I find that the Tariff’s purported requirement of
prepayment as a condition of disputing those charges is unreasonable.

45

As such, I

recommend that GLCC’s motion for summary judgment be denied for this reason, as
well.
VIII. CONCLUSION AND RECOMMENDATION
For the reasons set forth herein, I RESPECTFULLY RECOMMEND that
GLCC’s motion (Doc. No. 17) be granted in part and denied in part, as follows:
1.

With regard to GLCC’s argument that AT&T lacks standing to assert any

of its counterclaims, I recommend that GLCC’s motion be denied without prejudice
and that, if this recommendation is adopted, AT&T be directed to file an amended
counterclaim to cure its failure to plead sufficient facts demonstrating actual injury no
later than twenty (20) days after entry of the order so adopting this recommendation.
GLCC would then be free to file a renewed motion to dismiss, based on its standing
argument, if AT&T’s amended pleading does not resolve the deficiency.
2.

With regard to GLCC’s argument that Count I of AT&T’s counterclaim

must be dismissed, I recommend that GLCC’s motion be denied.
3.

With regard to GLCC’s argument that Count II of AT&T’s counterclaim

must be dismissed, I recommend that GLCC’s motion be granted, and Count II
dismissed without prejudice, pursuant to the primary jurisdiction doctrine.
4.

With regard to GLCC’s argument that Count III of AT&T’s counterclaim

must be dismissed, I recommend that GLCC’s motion be granted, and Count III
dismissed without prejudice, pursuant to the primary jurisdiction doctrine.
5.

With regard to GLCC’s motion for summary judgment on the issue of

AT&T’s liability to GLCC, I recommend that the motion be denied.
Objections to this Report and Recommendation in accordance with 28 U.S.C.
' 636(b)(1) and Fed. R. Civ. P. 72(b) must be filed within fourteen (14) days of the
service of a copy of this Report and Recommendation. Objections must specify the
46

parts of the Report and Recommendation to which objections are made, as well as the
parts of the record forming the basis for the objections. See Fed. R. Civ. P. 72.
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).

IT IS SO ORDERED.
DATED this 24th day of June, 2014.

________________________________
LEONARD T. STRAND
UNITED STATES MAGISTRATE JUDGE

47