Level 3 Communications, LLC et al v. Illinois Bell Telephone Company et al

Filing 110

MEMORANDUM AND ORDER: IT IS HEREBY ORDERED that plaintiffs motion for summary judgment [Doc. # 85 ] is granted in part and denied in part as to Counts I and II. IT IS FURTHER ORDERED that defendants motion for summary judgment [Doc. #[ 89 ] is granted in part and denied in part as to Counts I and II. IT IS FURTHER ORDERED that plaintiffs motion for summary judgment is granted and defendants motion for summary judgment is denied with respect to Counts I and II, except to the extent that Counts I and II are based on bills plaintiffs received pursuant to the Level 3 ICAs and the Broadwing Texas ICA more than twelve months after the decision in Talk America. IT IS FURTHER ORDERED that plaintiffs motion for summary judgment [Doc. #[8 5]] is granted as to Counts III and IV, denied as to Count V, and granted as to Counts I and II of defendants counterclaim. IT IS FURTHER ORDERED that defendants motion for summary judgment [Doc. # 89 ] is denied as to Counts III and IV, granted a s to Count V, and denied as to Counts I and II of defendants counterclaim. IT IS FURTHER ORDERED that plaintiffs request for oral argument is denied as moot. IT IS FURTHER ORDERED that the parties shall have until April 26, 2017, to submit a joint proposed schedule for Phase II. ( Joint Scheduling Plan due by 4/26/2017.) Signed by District Judge Carol E. Jackson on 4/10/17. (JAB)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MISSOURI
EASTERN DIVISION
LEVEL 3 COMMUNICATIONS, LLC, et al., )
)
Plaintiffs,
)
)
vs.
)
)
ILLINOIS BELL TELEPHONE
)
COMPANY, et al.,
)
)
Defendants.
)

Case No. 4:13-CV-1080 (CEJ)

MEMORANDUM AND ORDER
This matter is before the Court on the parties’ cross motions for summary
judgment on the Phase I issues related to liability.
I.

Background
Defendants

Illinois

Bell

Telephone

Company,

Indiana

Bell

Telephone

Company, Inc., Michigan Bell Telephone Company, Nevada Bell Telephone
Company, Ohio Bell Telephone Company, Pacific Bell Telephone Company,
Southwestern Bell Telephone Company and Wisconsin Bell, Inc. are incumbent local
telephone companies, or incumbent local exchange carriers (“ILECs”), located in
twelve

states.

Plaintiffs

Level

3

Communications,

LLC

and

Broadwing

Communications, LLC are competitive local exchange carriers (“CLECs”) offering
competing telecommunications services in the twelve states where defendants are
ILECs.

Because

ILECs

were

once

state-regulated

monopolies,

the

Telecommunications Act of 1966, 47 U.S.C. §§ 151, et seq. (hereinafter referred to
as the “Act”), was enacted in order to require ILECs to provide interconnection to
CLECs at cost-based rates. See 47 U.S.C. §§ 251(c)(2), 252(d). Interconnection is

the physical act of linking the network lines of two carriers so that CLEC customers
can send communications to ILEC customers. In order to ensure compliance with
the Act, the defendants entered into individual interconnection agreements (ICAs)
with both of the plaintiffs. Each ICA was reviewed and approved by a state public
utility commission.

See id. § 252(e) (“Any [ICA] adopted by negotiation or

arbitration shall be submitted for approval to the State commission. A State
commission to which an agreement is submitted shall approve or reject the
agreement, with written findings as to any deficiencies.”).
In late 2002, plaintiff Level 3 began negotiations with defendants for new
ICAs in 13 states. [Doc. #98, ¶ 23]. The parties were unable to agree upon all of
the terms of the new ICAs. [Doc. #98, ¶ 24].

Under the Act, when ILECs and

CLECs are unable to agree on the terms of an ICA, the matter is resolved through
arbitration proceedings governed by state commissions.

[Doc. #98, ¶ 25].

On

August 21, 2003, the FCC issued a ruling known as the Triennial Review Order
(“TRO”) discussing parties’ obligations under the Act. [Doc. #98, ¶ 19]. In mid2004, Level 3 filed petitions with 13 state commissions to arbitrate the disputed
terms of the ICAs. [Doc. #98, ¶ 26]. Among the many issues in dispute during the
arbitration proceedings between Level 3 and defendants was the extent of
defendants’ obligation to lease Level 3 entrance facilities used for interconnection.
[Doc. #98, ¶ 27].

On February 4, 2005, the FCC released the Triennial Review

Remand Order (“TRRO”) following D.C. Circuit review of the TRO. [Doc. #98, ¶ 2830].
On

February

10,

2005,

the

parties

executed

a

Memorandum

of

Understanding (“MOU”) agreeing to withdraw the arbitration proceedings and

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agreeing in concept to the terms of the new ICAs. [Doc. #98, ¶ 33]. Pursuant to
the MOU, Level 3 and defendants entered into the current ICAs on February 22,
2005, for the states of Arkansas, California, Illinois, Indiana, Kansas, Michigan,
Missouri, Nevada, Ohio, Oklahoma, Texas, and Wisconsin. [Doc. #98, ¶ 34]. The
Level 3 ICAs contain 73 pages of general terms and conditions and a series of
appendices which are common to all states at issue in this lawsuit. [Doc. #98, ¶
35].

The ICAs provide the terms on which defendants and Level 3 interconnect

with each other’s network so that customers on one network can call customers on
the other.

[Doc. #98, ¶ 37].

Prior to executing the MOU in February of 2005,

Level 3 and defendants entered into a “First Amendment Superseding Certain
Intercarrier

Compensation,

“Superseding Amendment”).

Interconnection

and

Trunking

Provisions”

(the

[Doc. #98, ¶ 54]. On January 3, 2007, Level 3

acquired plaintiff Broadwing and its subsidiaries. [Doc. #98, ¶ 178].

Unlike the

Level 3 ICAs, the general terms and conditions of which are substantially uniform
among the relevant states, the Broadwing ICAs are different from one state to
another. [Doc. #98, ¶ 180].
“Further

Amendment

The Broadwing ICAs are also subject to a multi-state

Superseding

Certain

Intervening

Law,

Compensation,

Interconnection and Trunking Provisions” (the “Further Amendment”) which
expressly governs and supersedes the Broadwing ICAs. [Doc. #98, ¶ 208].
Following the issuance of the TRRO, defendants developed and implemented
a large-scale project to convert prices it was charging for entrance facilities used for
local interconnection from lower cost-based rates to higher tariff rates. [Doc. #98,
¶ 66].

Defendants named its price conversion project the “EF2AC Project.” [Doc.

#98, ¶ 67].

EF2AC was an acronym used by defendants which meant Entrance

-3-

Facility to Access Charge.
defendants

monitored

interpretation.

[Doc. #98, ¶ 68].

proceedings

[Doc. #98, ¶ 74].

in

each

As a part of its EF2AC Project,
state

regarding

the

TRRO’s

As a part of its EF2AC Project, defendants

converted both DS1 and DS3 circuits to higher tariff rates. [Doc. #98, ¶ 78]. DS1s
and DS3s are different sizes of entrance facilities. [Doc. #98, ¶ 79].

From

December 2007 through February 2009 without amending the ICAs, defendants
converted the Level 3 and Broadwing circuits in Texas, Kansas, Oklahoma,
Michigan, Ohio, and Arkansas to higher tariff rates. [Doc. #98, ¶ 86].
As a part of the price conversion project in Texas, defendants changed the
circuit IDs for the converted circuits and removed the “JK” identifiers from the
circuit identification numbers.

The JK identifiers identified the circuits as local

interconnection circuits eligible for cost-based pricing. [Doc. #98, ¶ 97]. In May,
2008, when plaintiffs first received bills from defendants in which the JK identifiers
were removed and which reflected higher rates, plaintiffs contacted defendants
about the changes. [Doc. #98, ¶ 98]. Defendants responded to plaintiffs by email
dated May 16, 2008, with the following explanation:
As a result of the FCC’s Triennial Review Order and Triennial Review
Remand Order (2005), AT&T is no longer required to provide
entrance facilities at TELRIC rates. The EF2AC project will convert
the embedded base of Local Interconnection Entrance Facilities to
Switched Access tariffed services. Currently we have approval to
begin conversion in Texas, Oklahoma, Kansas, Arkansas, Ohio and
Connecticut. Conversion will begin immediately in Texas with the
other approved states to begin later in 1Q08.
[Doc. #98, ¶ 99].
Plaintiffs also filed three disputes with defendants challenging the removal of
the JK identifier and defendants’ price increase. [Doc. #98, ¶ 100]. Defendants

-4-

denied plaintiffs’ disputes and advised that the price increase was justified by the
TRRO, stating in its dispute denial remarks:
Denied - as a result of the FCC’s Triennial Review Order and
Triennial Review Remand Order (2005), ATT is no longer required to
provide entrance facilities at TELRIC rates. The EF2AC project
converted the embedded base of Local Interconnection Entrance
Facilities to Switched Access tariffed services. Credit for the local
interconnection entrance facilities was given on ban 710-550-5062320.
[Doc. #98, ¶ 101].
Level 3 also disputed AT&T’s charge of $246,328.31 in Michigan for AT&T’s
retroactive true-up.

[Doc. #98, ¶ 102].

Litigation over the interpretation of the

TRRO was ongoing in multiple jurisdictions, ultimately culminating in the Supreme
Court’s decision in Talk America, Inc. v. Michigan Bell Tel. Co., 564 U.S. 50, 63, 131
S. Ct. 2254, 2263, 180 L. Ed. 2d 96 (2011).
Plaintiffs bring this action seeking damages and declaratory relief for
defendants’ failure to provide essential telecommunications wires (called “entrance
facilities”) at cost-based rates (“TELRIC” rates).

[Doc. #46].

In the amended

complaint, plaintiffs claim that defendants breached the Level 3 ICAs (Count I), the
Broadwing ICAs (Count II), and violated the Telecom Act (Count III) by improperly
charging higher rates. Plaintiffs also seek a declaration that the Telecom Act, FCC
rulings, and the terms of the ICAs require the defendants to provide interconnection
at cost-based rates (Count IV). [Doc. #46]. Plaintiffs also assert a claim of unjust
enrichment based on the contention that defendants wrongfully billed them at rates
higher than cost-based rates (Count V). [Doc. #46].
The defendants assert various affirmative defenses in their answer. In a
counterclaim, defendants Southwestern Bell and Michigan Bell (collectively the

-5-

“AT&T ILECs”) claim that plaintiffs violated their federal access tariffs by failing to
pay the correct amounts for the transport facilities the defendants provided. The
AT&T ILECs seek an award of damages and a declaration that the plaintiffs are in
violation of the tariffs and are liable for the unpaid amounts.
II.

Legal Standard
Rule 56(a) of the Federal Rules of Civil Procedure provides that summary

judgment shall be entered if the moving party shows “that there is no genuine
dispute as to any material fact and the movant is entitled to a judgment as a
matter of law.” In ruling on a motion for summary judgment the court is required to
view the facts in the light most favorable to the non-moving party and must give
that party the benefit of all reasonable inferences to be drawn from the underlying
facts. AgriStor Leasing v. Farrow, 826 F.2d 732, 734 (8th Cir. 1987). The moving
party bears the burden of showing both the absence of a genuine issue of material
fact and its entitlement to judgment as a matter of law. Anderson v. Liberty Lobby,
Inc., 477 U.S. 242 (1986); Matsushita Electric Industrial Co. v. Zenith Radio Corp.,
475 U.S. 574, 586-87 (1986). Once the moving party has met its burden, the nonmoving party may not rest on the allegations of his pleadings but must set forth
specific facts, by affidavit or other evidence, showing that a genuine issue of
material fact exists. United of Omaha Life Ins. Co. v. Honea, 458 F.3d 788, 791
(8th Cir. 2006) (quoting Fed.R.Civ.P. 56(e)). Rule 56 “mandates the entry of
summary judgment, after adequate time for discovery and upon motion, against a
party who fails to make a showing sufficient to establish the existence of an
element essential to that party’s case, and on which that party will bear the burden
of proof at trial.” Celotex Corporation v. Catrett, 477 U.S. 317, 322 (1986).

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“Where parties file cross-motions for summary judgment, each summary
judgment motion must be evaluated independently to determine whether a genuine
issue of material fact exists and whether the movant is entitled to judgment as a
matter of law.” Progressive Cas. Ins. Co. v. Morton, 140 F. Supp. 3d 856, 860 (E.D.
Mo. 2015) (citations omitted). Because “the interpretation and construction of
insurance policies is a matter of law, . . . such cases are particularly amenable to
summary judgment.” Id. (quoting John Deere Ins. Co. v. Shamrock Indus., Inc.,
929 F.2d 413, 417 (8th Cir. 1991)).
III.

Discussion
The ICA is a private contract that implements duties imposed by the

Telecommunications Act of 1996.

The Court will therefore begin with a brief

discussion of the relevant provisions of the Act, the key agency decisions and
judicial interpretations, as well as the key provisions of the parties’ ICA before
turning to the motions for summary judgment.

The Act imposed a number of

duties on incumbent providers of local telephone service in order to facilitate
market entry by competitors. AT & T Corp. v. Iowa Utilities Bd., 525 U.S. 366, 371,
119 S.Ct. 721, 142 L.Ed.2d 835 (1999). The Act requires incumbent carriers to
share their physical networks with new market entrants, known as “competing
carriers,” to mitigate the prohibitive cost of building a new network.

CoreTel

Virginia, LLC v. Verizon Virginia, LLC, 752 F.3d 364, 367–68 (4th Cir. 2014).
§251(c)(2) of the Act promotes interconnection, the physical link between two
telecommunications networks that allows each carrier's customers to call the
other's. The FCC has interpreted §251(c)(2) to require, among other things, that an
incumbent carrier lease a competing carrier “entrance facilities” required for

-7-

interconnection at TELRIC rates. See Unbundled Access to Network Elements
[“Remand Order ”], 20 F.C.C. 2533, ¶ 140 (2005); Review of the Section 251
Unbundling Obligations of Incumbent Local Exch. Carriers [“Triennial Review Order
”], 18 F.C.C. 16978, ¶ 366 (2003); see also Talk America, 131 S.Ct. at 2261.
Therefore, while an incumbent carrier no longer has a general obligation to provide
entrance facilities at TELRIC rates under § 251(c)(3), it remains obligated to
provide entrance facilities at TELRIC rates when they are used for interconnection
under §251(c)(2). CoreTel Virginia, LLC v. Verizon Virginia, LLC, 752 F.3d 364, 368
(4th Cir. 2014) (citing Talk America, 131 S.Ct. at 2264–65; Remand Order, 20
F.C.C. 1533, ¶ 140; Triennial Review Order, 18 F.C.C. 16978, ¶¶ 365, 366).
The ICAs1 contain several provisions pertaining to the rights and obligations
of the parties.

Section 43.1 addresses the scope of the ICA:

This Agreement is intended to describe and enable specific
Interconnection and compensation arrangements between the
Parties. This Agreement is the arrangement under which the
Parties may purchase from each other the products and services
described in Section 251 of the Act and obtain approval of such
arrangement under Section 252 of the Act. Except as agreed
upon in writing, neither Party shall be required to provide the
other Party a function, facility, product, service or arrangement
described in the Act that is not expressly provided herein.
Nothing herein is intended to affect or abridge either Party’s
rights or obligations under Section 252(i) of the Act, nor is
anything herein intended to modify SBC-13STATE’s obligation to
provide services and facilities under the Act.
[Doc. #84-2, p. 75, §43.1].
Section 22.1 addresses the law governing the ICA:
Unless otherwise provided by Applicable Law, this Agreement
shall be governed by and construed in accordance with the Act,
the FCC Rules and Regulations interpreting the Act and other
applicable federal law. To the extent that federal law would apply
1

The Level 3 ICAs are identical in all relevant states.

-8-

state law in interpreting this Agreement, the domestic laws of the
state in which the Interconnection, Resale Services, Network
Elements, functions, facilities, products and services at issue are
furnished or sought shall apply, without regard to that state's
conflict of laws principles.
[Doc. #84-2, p. 61, §22.1].
Section 2.6.1 addresses the impact of a conflict in provisions:
In the event of a conflict between the provisions of this
Agreement and the Act, the provisions of the Act shall govern.
[Doc. #84-2, p. 9, §2.6.1].
The ICA also provides that the terms contained in the agreement and its
appendices constitute the entire agreement between the parties with respect to the
subject matter contained. [Doc. #84-2, JA-77]. Thus, also incorporated into the ICA
is the NIM (Network Interconnection Methods) Appendix. The NIM Appendix2 sets
forth the terms and conditions by which interconnection is provided from the ILEC
(defendants) and the CLEC (plaintiffs). Section 1.1 states in relevant part:
This Appendix describes the physical architecture for
Interconnection of the Parties’ facilities and equipment for the
transmission and routing of Telephone Exchange Service traffic
and Exchange Access traffic between the respective Customers of
the Parties pursuant to Section 251(c)(2) of the Act; provided,
however, Interconnection may not be used solely for purposes
not permitted under the Act.
[Doc. #84-2, p. 224, §1.1].
Also incorporated into the ICAs are the Superseding Amendment3 and the
Further Amendment4 which supersede, amend, and modify the applicable provisions
of the ICAs. [Doc. #84-2, p. 425, §1.1]; [Doc. #84-17, p. 402, §1.3]. Both the

2

The NIM Appendix is contained in the Level 3, Broadwing, and Level 3/ICG interconnection
agreements.
3
The Superseding Amendment in all twelve of the Level 3 ICAs at issue here are identical.
4
While each underlying Broadwing ICA is different, the Further Amendment is common to
all relevant Broadwing ICAs at issue here.

-9-

Superseding Amendment and the Further Amendment were entered into effective
January 1, 2005.

With respect to any conflicts between the Superseding

Amendment and the terms of any future ICAs, the parties agreed that “[a]ny
inconsistencies between the provisions of this First Amendment and other
provisions of the . . . future interconnection agreement(s) . . . will be governed by
the provisions of this First Amendment, unless this First Amendment is specifically
and expressly superseded by a future amendment between the Parties.” [Doc. #842, p. 425, §1.2]. The Further Amendment contains language similar to that in the
Superseding Amendment, and provides that “[a]ny inconsistencies between the
provisions of this Further Amendment and other provisions of the current ICAs or
future interconnection agreement(s) . . . will be governed by the provisions of this
Further Amendment, unless this Further Amendment is specifically and expressly
superseded by a future amendment between the Parties.” [Doc. #84-17, p. 403,
§1.4]. Both Level 3 and Broadwing entered into the ICAs at issue in this case after
the Superseding and Further Amendments were signed.
A. Breach of the Interconnection Agreements
Plaintiffs have alleged that defendants breached both the Level 3 and
Broadwing ICAs by refusing to provide interconnection through entrance facilities at
cost-based rates. Plaintiffs argue that the ICAs require defendants to provide Level
3 and Broadwing with entrance facilities used for interconnection at cost-based
rates.

Plaintiffs’ base their argument upon the Supreme Court’s decision in Talk

America, Inc. v. Michigan Bell Tel. Co., which found that the Act requires
defendants to provide entrance facilities used for local interconnection at cost-based
rates. 564 U.S. 50, 63, 131 S. Ct. 2254, 2263, 180 L. Ed. 2d 96 (2011).

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To state a claim for breach of contract under Missouri law, plaintiffs must
establish (1) the existence of a valid contract; (2) the rights of plaintiff and
obligations of defendant under the contract; (3) breach by defendant; and (4)
damages resulting from the breach.

Gillis v. Principia Corp., 832 F.3d 865, 871

(8th Cir. 2016) (citing Lucero v. Curators of Univ. of Mo., 400 S.W.3d 1, 5 (Mo. Ct.
App. 2013)). There is no dispute that the ICA is a valid contract as interconnection
agreements are “the Congressionally prescribed vehicle for implementing the
substantive rights and obligations set forth in the Act.” Michigan Bell Tel. Co. v.
Strand, 305 F.3d 580, 582 (6th Cir. 2002); see also Verizon Maryland, Inc. v. Glob.
NAPS, Inc., 377 F.3d 355, 364 (4th Cir. 2004) (holding interconnection agreements
are the vehicles chosen by Congress to implement the duties imposed in § 251).
The initial issue here is determining the parties’ rights and obligations under their
agreement, then determining whether either party breached those obligations.
According to the terms of the Level 3 ICAs, nothing contained therein is
intended to modify AT&T’s obligations to provide services and facilities under the
Telecom Act and, except as agreed upon in writing, neither party is required to
provide the other party a function or facility described in the Telecom Act that is not
expressly provided in the ICA.

The NIM Appendix provides that the physical

architecture for interconnection of the parties’ facilities and equipment shall be
provided pursuant to § 251(c)(2) of the Act. Both the Broadwing5 and Level 3/ICG6

5

See Illinois Broadwing ICA at Doc. #84-17, p. 462, §15.2 ("AT&T is required to provide
access to facilities that CLEC requests to interconnect with AT&T's network ... in accordance
with the requirements of Section 251(c)(2) of the Act."); Broadwing Illinois ICA at Doc.
#84-17, p. 74, §3.12 ("Interconnection shall be ... on rates, terms and conditions consistent
with Section 251(c)(2)(D) of the Act."); Broadwing Illinois ICA at Doc. #84-17, p. 64, §
3.2.2 (providing Broadwing may request interconnection facilities as provided by Section
251(c)(2)); Broadwing California ICA at Doc. #84-16, p. 8, §3 (requiring both parties "act in
good faith and consistently with the intent of the Act"); Broadwing Michigan ICA at Doc.

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ICAs

contain

similar

language

imputing

the

same

obligation

to

provide

interconnection pursuant to §251(c)(2) of the Telecom Act as set forth in the Level
3 ICAs.
Section 251(c)(2)(d) of the Act requires an ILEC to provide for the facilities
and equipment of any requesting CLEC interconnection on rates, terms, and
conditions that are just, reasonable, and nondiscriminatory, in accordance with the
terms and conditions of the agreement and the requirements of § 251 and § 252.
47 U.S.C. §251(c)(2)(d).

Section 252 sets forth the pricing standards and

provides that the rate for the interconnection of facilities and equipment for
purposes of §251(c)(2) shall be cost-based. 47 U.S.C. §252(d)(2)(A). Thus, as the
Act obligates defendants to provide interconnection pursuant to §251(c)(2)(d),
§43.1

does

not

modify

or

abrogate

defendants’

obligation

to

provide

interconnection.

#84-18, p. 16, §3.1 (providing that each Party shall interconnect their networks "pursuant
to Section 251(c)(2) of the Act"); Broadwing Michigan ICA at Doc. #84-18, p. 92, §19.2
(requiring each party to comply with all applicable law and stating "[n]othing in this
Agreement shall be construed as requiring or permitting either Party to contravene any
mandatory requirement of Applicable Law"); Broadwing Texas ICA at General Terms Doc. #
84-19, p. 22, §8.1 ("Nothing in [the ICA] shall be construed as requiring or permitting
either Party to contravene any mandatory requirement of Applicable Law."); Broadwing
Texas ICA §40.0 at p.40 ("the Parties will act in good faith and consistently with the intent
of the Act."); §1.8 at p.9 (stating that AT&T is obligated to provide "Interconnection under
Section 251(c)(2) of the Act").
6

See ICG Ohio ICA at Doc. #84-15, p.72, §25.1 ("Nothing in this Agreement shall be
construed as requiring or permitting either Party to contravene any mandatory requirement
of Applicable Law."); ICG Ohio ICA at Doc. #84-15, p. 92, §2.6.1 ("In the event of a conflict
between the provisions of [the ICA] and the Act, the provisions of the Act shall govern.");
ICG Ohio NIM Appendix at Doc. #84-15, p. 230, § 1.1 (allowing ICG to obtain
interconnection "pursuant to Section 251(c)2) of the Act."); ICG Indiana ICA at Doc. #8414, p. 133, §19.2.2 ("Nothing in this Agreement shall be construed as requiring or
permitting either Party to contravene any mandatory requirement of Applicable Law."); ICG
Indiana ICA at Doc. #84-14, p. 11, §1.3(e) ("In the event of a conflict between the
provisions of [the ICA] and the Act, the provisions of the Act shall govern.").

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Defendants claim that the provision of entrance facilities was not “expressly
provided” for in the ICA. The ICAs define interconnection “as [d]efined in the Act.”
[Doc. #84, p. 91, § 21.1].

Talk America and the FCC have determined that

entrance facilities that are a part of ILECs networks for purposes of § 251(c)(2) fall
within the definition of interconnection under the Act. Talk America, 564 U.S. at 63
(“[e]ntrance facilities, at least when used for the mutual exchange of traffic, seem
to us to fall comfortably within the definition of interconnection.”).

Accordingly,

entrance facilities for the purpose of interconnection are expressly provided for in
the ICA.
Defendants further argue that their sole obligation under the Act is to provide
interconnection under the terms of the parties binding ICAs.
maintain

that

entrance

facilities

used

for

interconnection

The defendants
are

not

directly

attributable to the ICAs because the §251 duties are not directly enforceable
pursuant to § 252(a)(1). See 47 U.S.C. §§ 251(c)(1), 252(a)(1). Section 252(a)(1)
expressly provides that “an incumbent local exchange carrier may negotiate and
enter into a binding agreement with the requesting telecommunications carrier or
carriers without regard to the standards set forth in subsections (b) and (c) of §251
of this title.” 47 U.S.C. §252. Accordingly, the duties stated in §251 subsections
(b) and (c) only apply if they are incorporated into an ICA. CoreTel Virginia, LLC v.
Verizon Virginia, LLC, 752 F.3d 364, 368 (4th Cir. 2014)(citing 47 U.S.C.
§252(a)(1).
Defendants argue that §251(c) does not require an ILEC to do anything that
is not included in an ICAs, as the ICAs are the sole method which obliges the ILEC
to perform its §251 duties.

Defendants point to a number of decisions in which

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courts have stated that parties are governed by the ICA, rather than by the
provisions of the Act.

See e.g. Core Commc'ns, Inc. v. SBC Commc’ns, Inc., 18

F.C.C. Rcd. 7568, 7581–82 (2003) vacated on other grounds by SBC Commc’ns
Inc. v. FCC, 407 F.3d 1223 (D.C. Cir. 2005) (holding that parties to an ICA that
explicitly states that a service will not be provided, waived the right to request
different terms based on general §251 duties in order to circumvent the terms of
the ICA because the ICA is a binding agreement); see also Michigan Bell Tel. Co. v.
MCIMetro Access Transmission Servs., Inc., 323 F.3d 348, 359 (6th Cir. 2003)
(citing Law Offices of Curtis V. Trinko v. Bell Atlantic Corp., 305 F.3d 89, 102 (2nd
Cir.2002) (stating that the Act intended for ILECs to be governed by the
interconnection agreement rather than the general duties put forth in §251(b) and
(c) because once the ICA agreement is approved, the general §251 duties do not
control). Defendants are correct that §252(a)(1) explicitly provides that an ICA can
override the standards set forth in §251(c)(2).

However, that is distinguishable

from this situation where the ICA specifically incorporates the requirements and
obligations of the Act, as this agreement does by providing that interconnection
facilities and equipment are to be provided pursuant to §251(c)(2). Because the
responsibilities and obligations to provide interconnection pursuant to §251(c)(2)
have been incorporated into the ICAs, the ICAs require defendants to meet those
obligations which include providing interconnection at cost-based rates.
Defendants also argue that entrance facilities are only specifically addressed
in the Lawful Unbundled Network Elements (“UNE”) Appendix to the ICAs which
states that entrance facilities have been “declassified” and are no longer available
as unbundled network elements.

[Doc. #84-19, p. 91, § 1.2.1].

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However, this

reference to entrance facilities refers to entrance facilities that were previously
unbundled pursuant to §251(c)(3). Defendants argue that the UNE Appendix
language is directly applicable and expressly addresses their obligation to provide §
251(c)(2)

interconnection.

However,

this

is

incorrect—the

UNE

Appendix

specifically addresses unbundled network elements pursuant to §251(c)(3), not
§251(c)(2). For example, §1.2.4 of the UNE Appendix provides that the TRRO does
not eliminate CLECs’ right to obtain interconnection facilities the ILECs are required
to provide for §251(c)(2) interconnection. [Doc. #84-19, p. 91, §1.2.4]. § 1.2.4 of
the UNE Appendix goes on to say that the interconnection facilities referred to in
this Section are those cross-connect facilities necessary to interconnect CLEC’s
network facilities with an ILEC and are not the physical circuits that link the CLEC
switch to an ILEC switch. Id.
Defendants also suggest that the Level 3 Superseding Amendment and the
Broadwing Further Amendment override the NIM Appendix and other language
incorporating the duties of §251(c)(2).

However, the text of both Amendments

does not support defendants’ argument that the NIM Appendix is overridden
relative to §251(c)(2). [Doc. #84-2, pp. 428-29, §4.6]. The Amendments as cited
by defendants provide for dedicated Special Access facilities, yet the defendants do
not explain how those facilities pertain to entrance facilities provided under
§251(c)(2) or how this subsection overrides the NIM Appendix. Furthermore, both
Amendments only override portions of the ICA that are in conflict with the
Amendments, but not the ICA itself.

Here, there is no conflict between either

Amendment and the NIM Appendix as the Amendments do not purport to disturb
the NIM Appendix nor abrogate the obligations of the defendants under §251(c)(2).

- 15 -

Defendants point toward §4 of the Superseding Amendment which addresses
“Network Architecture Requirements,” to argue that nothing in the Superseding
Amendment requires defendants to provide entrance facilities at TELRIC-based
rates for interconnection. [Doc. #84-2, pp. 428-31, §4]. However, this provision
does

not

override

the

NIM

Appendix

in

plaintiffs’

contracts

that

require

interconnection pursuant to §251(c)(2), nor does the provision purport to override
the actual section in the agreement that provides for the parties obligations under
§251(c)(2).
rates

to

Moreover, the defendants increased the pricing from TELRIC-based

tariff-based

rates

two

years

after

the

Superseding

and

Further

Amendments were executed, further weakening their claim that the amendments
provide for different rights and obligations as included in the Act and the ICA.
Defendants also argue that plaintiffs improperly used the “mend the hold”
doctrine to evade the terms of the ICA.

This argument stems from plaintiffs’

argument that defendants improperly shifted justifications in raising prices from
cost-based rates for entrance facilities towards higher tariff prices.

Defendants

instead state that plaintiffs improperly used outside rationales in their attempts to
avoid paying tariff rates, as defendant insists they are entitled to under the ICA. As
the court has already determined, under § 251(c)(2), defendants must provide
entrance facilities used for interconnection in exchange for cost-based rates. Here,
the contract provides all the evidence necessary to determine the rights and
obligations of the parties.
Plaintiffs also argue that the change of law provision in the ICA should be
immediately incorporated into the ICA.

The ICAs specifically provide that the

parties reserved their rights related to the TRO and TRRO if any action affected the

- 16 -

rights or obligations of either party addressed by the ICA, and that the affected
provisions of the ICA shall be “immediately, invalidated, modified, or stayed”
consistent with the action of the court upon the written request of either party.
While the TRO and TRRO impacted the rights and obligations of both parties in a
number of fashions, neither order impacted the rights and obligations of either
party pursuant to §251(c)(2), instead re-affirming that the orders did not impact
the parties rights and obligations under §251(c)(2).

Because the rights and

obligations of either party with respect to §251(c)(2) were not impacted, the
change of law provision is not relevant to this discussion.
Defendants argue that plaintiffs are not entitled to cost-based rates for
facilities not used solely for interconnection.

Plaintiffs argue that if an entrance

facility is used for both interconnection and non-interconnection purposes,
defendants are required to charge cost-based rates on the portion of the entrance
facility used for local interconnection, and may charge higher rates only on any
remaining portion of the entrance facility which is not used for interconnection. In
Talk America, the Supreme Court noted that prior to the issuance of the TRRO,
“entrance

facilities

leased

under

§251(c)(2)

[could]

be

used

only

for

interconnection.” 564 U.S. 50, 64, 131 S. Ct. 2254, 2264, 180 L. Ed. 2d 96 (2011).
The TRRO further provides that CLECs will have access to these facilities at costbased rates to the extent that they require them to interconnect with the
incumbent LEC's network. In the Matter of Unbundled Access to Network Elements,
20 F.C.C. Rcd. 2533, 2611 (2005). Defendant argues that “to the extent” means if
the CLECs use entrance facilities solely for interconnection then they must charge
cost-based rates but only if that is the sole use of the entrance facilities, whereas

- 17 -

plaintiffs argue that the phrase means that CLECs are entitled to cost-based rates
on any portion of entrance facilities used for interconnection.

However, the

definition of “to the extent” is immaterial here because the ICAs provide that
interconnection facilities are not required to be used solely for interconnection. The
NIM Appendix states that plaintiffs can obtain facilities “pursuant to § 251(c)(2) of
the Act; provided, however, [i]nterconnection may not be used solely for purposes
not permitted under the Act.” [Doc. #84-2, p. 224, § 1.1]. This phrase expressly
allows plaintiffs to use the facilities for more than one purpose, as long as one of
the purposes is interconnection.

Furthermore, as defendants pointed out,

§252(a)(1) explicitly states that “an incumbent local exchange carrier may
negotiate

and

enter

into

a

binding

agreement

with

the

requesting

telecommunications carrier or carriers without regard to the standards set forth in
subsections (b) and (c) of §251 of this title.” 47 U.S.C. §252.

Thus, while

defendant is not required to charge TELRIC rates for the portion of an entrance
facility used for non-interconnection purposes, they are required under the ICAs to
charge TELRIC rates to the extent that the entrance facility is used for
interconnection.
Defendants also seek a ruling determining what constitutes an entrance
facility

eligible

for

cost-based

pricing.

Defendants

determination is a Phase II damages question.

acknowledge

such

a

Specifically, defendants contend

that plaintiffs would not be entitled to TELRIC pricing on facilities used in whole or
in part for (1) delivering plaintiffs own long distance traffic to defendant, (2)
indirectly exchanging traffic between plaintiffs’ own end users and third party
carriers using defendant’s facility as an intermediary, or (3) delivering 911 traffic to

- 18 -

defendants.

The parties agreed and the Court ordered that this portion of the

litigation would be limited to Phase I liability issues, not Phase II damage issues.
Accordingly, the Court finds that it would be inappropriate to make any Phase II
damage determination without discovery occurring first. The Court finds that the
ICA provides that interconnection shall be provided pursuant to §251(c)(2), and
that nothing in the ICA modifies defendants obligation to provide interconnection at
TELRIC rates. Accordingly, to the extent plaintiffs’ claims are not barred by
defendants’ affirmative defenses, plaintiffs’ motion for summary judgment on Count
I and II will be granted and defendants’ motion will be denied.
B. Count III - Violations of the Telecom Act
Plaintiffs argue that that defendants’ refusal to provide interconnection to
plaintiffs at TELRIC rates by means of entrance facilities in excess of cost-based
rates violates §§ 251(c)(2) and 252(d)(1) of the Telecom Act. As the Act requires
the creation of an ICA and the ICA in this case incorporates the requirement of
§251(c)(2), defendants were required to provide TELRIC rates for entrance facilities
used for interconnection pursuant §251(c)(2). See Core Commc'ns, Inc. v. Verizon
Maryland

Inc.,

18

F.C.C.

Rcd.

7962,

7972

(2003)

(finding

that

the

Telecommunications Act requires parties to not only enter into interconnection
agreements, but also to comply with their terms; thus violating the interconnection
agreement constitutes a violation of the Act). Defendants have not presented any
arguments that they have not violated the Act if the Court finds that they are in
violation of the ICA by failing to provide entrance facilities for interconnection at
TELRIC rates. As defendants’ have not been providing entrance facilities used for
interconnection under TELRIC rates, but rather higher tariff based rates, defendants

- 19 -

are in violation of their obligations under the ICA and thus the Act. Defendants’
motion for summary judgment on Count III will be denied and plaintiffs’ motion for
summary judgment on Count III will be granted.
C. Count IV - Declaratory Judgment
Plaintiffs also seek a declaration regarding that defendants are obligated to
provide plaintiffs with entrance facilities at TELRIC rates. Plaintiffs seek an order
declaring that defendant must (1) charge TELRIC rates on all entrance facilities
used for local interconnection; (2) allow plaintiffs to order new entrance facilities
under the ICAs at TELRIC rates; and (3) charge TELRIC rates for all or any portion
of entrance facilities used for interconnection.

Plaintiffs argue that a declaratory

judgment is necessary because defendants refuse to charge cost-based rates for
any circuits. Defendants have stated that whether a declaratory judgment is proper
depends upon whether defendants are obligated to provide plaintiffs with entrance
facilities at TELRIC-based rates. The Court has determined that the ICAs require
that

cost-based

rates

be

charged

for

the

use

of

entrance

facilities

for

interconnection. Accordingly, defendants’ motion for summary judgment on Count
IV is will be denied and plaintiffs’ motion for summary judgment on Count IV will be
granted.
D. Count V - Unjust Enrichment
In the alternative to their breach of contract claims, plaintiffs argue that
defendants have been unjustly enriched by increasing prices from cost-based rates
to higher tariff rates, preventing plaintiffs from ordering entrance facilities at costbased rates, and refusing to charge cost-based rates for local interconnection
entrance facilities. Plaintiffs argue that pursuant to Talk America, defendants were

- 20 -

always required to charge cost-based rates.

“A claim for unjust enrichment has

three elements: a benefit conferred by a plaintiff on a defendant; the defendant's
appreciation of the fact of the benefit; and the acceptance and retention of the
benefit by the defendant in circumstances that would render that retention
inequitable.” Topchian v. JPMorgan Chase Bank, N.A., 760 F.3d 843, 854 (8th Cir.
2014) (quoting Hertz Corp. v. RAKS Hospitality, Inc., 196 S.W.3d 536, 543
(Mo.Ct.App.2006)). There can be no unjust enrichment claim, however, where an
express contract exists. Topchian v. JPMorgan Chase Bank, N.A., 760 F.3d 843, 854
(8th

Cir.

2014)

(citing

Howard

v.

Turnbull,

316

S.W.3d

431,

436

(Mo.Ct.App.2010)).
The crux of plaintiffs’ claim is breach of contract. As there is no dispute that
an express contract exists, there can be no unjust enrichment claim. Because the
Court has found that plaintiffs can recover under the ICA, plaintiffs are precluded
from simultaneously recovering for unjust enrichment. Owen v. Gen. Motors Corp.,
No. 06-4067 CV CNKL, 2006 WL 2808632, at *2 (W.D. Mo. Sept. 28, 2006) (citing
Banner Iron Works, Inc. v. Amax Zinc Co., 621 F.2d 883, 889 (8th Cir.1980)
(finding of a valid contract precludes recovery on a quantum meruit theory under
Missouri law) and Krupnick & Associates, Inc. v. Hellmich, 378 S.W.2d 562, 569570 (Mo.1964) (holding that an express contract would preclude the existence of
the contract necessary to form the basis for recovery in quantum meruit)).
Accordingly, defendants are entitled to judgment as a matter of law on plaintiffs’
unjust enrichment claim.
E. Affirmative Defenses
1.

Failure to State a Claim

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As their first affirmative defense, defendants assert that the amended
complaint fails to state a claim upon which relief may be granted arguing that
plaintiffs have not stated any claim regarding the ICG7/Indiana Bell ICA.

The

amended complaint states: “Defendants Pacific Bell Telephone Company, Ohio Bell
Telephone Company, and Southwestern Bell Telephone Company also entered into
ICAs with ICG under which Defendants must provide ICG with entrance facilities
used for interconnection at cost-based rates.” [Doc. #46, ¶ 61]. Defendants note
that plaintiffs did not specifically allege the Indiana Bell ICA in the amended
complaint and argue that the Indiana Bell ICA is not at issue in this matter.
In their Rule 36 requests for admission, defendants sought plaintiffs’
admission that the ICG Indiana ICA was one of the ICAs referenced in plaintiffs’
amended complaint. Plaintiffs complied and admitted that the ICG Indiana ICA was
one of the ICAs referenced.

[Doc. 90-2, ¶ 19].

Plaintiffs’ argue their Rule 36

admission that they intended the claim to include the Indiana Bell Company
established that the ICG/Indiana Bell ICA was at issue. Rule 36 provides that “[a]
matter admitted under this rule is conclusively established unless the court, on
motion, permits the admission to be withdrawn or amended.” Fed. R. Civ. P. 36(b).
The advisory committee notes to Rule 36 provide that “admissions [made in
response to Rule 36 requests] function very much as pleadings do.” Fed. R. Civ. P.
36 (advisory committee notes).

The Federal Rules also provide that “[p]leadings

must be construed so as to do justice. Fed. R. Civ. P. 8(e).

While, the Indiana Bell

ICA is not included in the complaint, the plaintiffs answered in response that it was
included; both parties appeared to accept that it was included and the language of

7

ICG is a predecessor of Level 3.

- 22 -

the Indiana Bell ICA is identical to that in the ICAs at issue here. The Indiana Bell
ICA is clearly relevant to the instant matter as it is identical to the other Level 3
ICAs and the same contractual issues have arisen between plaintiffs and defendants
with respect to the Indiana Bell ICA. Accordingly, the plaintiffs are entitled to
summary judgment on defendants’ affirmative defense of failure to state a claim.
2.

Statute of Limitations

Defendants argue that plaintiffs’ claims are time-barred. The Eighth Circuit
has held that plaintiffs’ claims are subject to the two-year statute of limitations, 47
U.S.C. § 415(b), which provides: “[a]ll complaints against carriers for the recovery
of damages not based on overcharges shall be filed with the Commission within two
years from the time the cause of action accrues, and not after, subject to
subsection (d) of this section.” See Firstcom, Inc. v. Qwest Corp., 555 F.3d 669,
675 (8th Cir. 2009)(citing 47 U.S.C. § 415(b)). The parties agreed in the ICAs that
"neither Party waives, but instead expressly reserves, all of its rights, remedies and
arguments with respect to…the TRO and TRRO. [Doc. #84-2, pp. 59-61, § 21.1].
Plaintiffs argue that the ICAs’ reservation of rights and remedies preserved their
claim against defendant until the Supreme Court resolved the disputed TRRO issues
in Talk America on June 9, 2011. A right is a well-founded or acknowledged claim;
a remedy is the means employed to enforce a right or redress an injury. Lewis v.
Lewis & Clark Marine, Inc., 531 U.S. 438, 445, 121 S. Ct. 993, 999, 148 L. Ed. 2d
931 (2001). Thus, the parties expressly agreed to retain their abilities to enforce
their claims stemming from the TRRO.

The parties do not dispute that litigation

arose almost immediately after the issuance of the TRRO, culminating in the
Supreme Court’s decision in Talk America. Beginning in 2008, plaintiffs began to

- 23 -

dispute the tariff-based rates and filed this lawsuit within two years of Talk America
decision. The plaintiffs’ reservation of rights in the ICA tolled their claim until the
Supreme Court resolved the dispute in Talk America and thereby clarified the
parties’ obligations.
Defendants also argue that plaintiffs’ claims are barred by the terms of the
parties’ ICAs, which establish the procedures and time limits for submitting
disputes. Plaintiffs’ ICAs provide that no claims shall be brought for disputes arising
under the ICA more than twenty-four months from the date of the occurrence
which gives rise to the dispute. [Doc. #84-2, p. 39, § 10.6.1]. The Level 3 ICAs,
as well as the Broadwing Texas ICA also provide that “[n]o claims, under this
Agreement or its Appendices, shall be brought for disputed amounts more than
twelve (12) months from the date of the occurrence which gives rise to the
dispute.” [Doc. #84-2, p. 38, § 10.1; Doc. #84-19, p. 27, § 11.8.1].

The

Broadwing Texas ICA further provides that: “Notwithstanding anything contained in
this Agreement to the contrary, a Party shall be entitled to dispute only those
charges which appeared on a bill date dated within the twelve (12) months
immediately preceding the date on which the Billing Party receives notice of such
dispute.” [Doc. #84-19, p. 27, § 11.8.1]. The occurrence which gave rise to the
dispute was the Supreme Court’s decision in Talk America per the reservation of
rights and remedies embedded in the parties’ ICAs.

By the terms of the ICAs,

plaintiffs were therefore required to present their billing disputes within twelve
months of the decision in Talk America.

Accordingly, plaintiffs’ Level 3 and

Broadwing Texas ICA claims are barred to the extent they are based on bills
plaintiffs received more than twelve months after the Talk America decision.

- 24 -

Defendants note that plaintiffs provided written notice as to about $2 million
billed by Southwestern Bell and Michigan Bell in Texas, Kansas, and Michigan.
Defendants state that even if additional disputes would have been denied, plaintiffs
were obligated to submit each and every dispute to preserve their right to bring suit
later on.

Defendants further argue that by failing to comply with the contracts’

disputes procedures, plaintiffs waived any right to seek refunds for all amounts they
chose not to dispute and that plaintiffs’ claims are barred to the extent plaintiffs
failed to submit written disputes in accordance with the parties’ interconnection
agreements despite the parties’ reservation of rights in the ICA.

For example,

defendants cite the Broadwing California ICA which provides that “[n]o Party may
pursue any claim related to billing unless…written notice [describing the dispute]
has first been given to the other Party.” [Doc. #84-16, p. 358, § 13.1]. The record
shows that plaintiffs notified defendants of their billing disputes implicating all of
plaintiffs’ entrance facilities.

Defendants responded that they would “be denying

the disputes related to this issue and would expect that Level 3 not resubmit them”
and that the ICAs do not provide for TELRIC pricing “making any disputes filed
invalid.” [Doc. #86-49]. Because it would have been futile for plaintiffs to dispute
each and every bill, they should not be penalized for failing to do so. See Ohio v.
Roberts, 448 U.S. 56, 74, 100 S.Ct. 2531, 65 L.Ed.2d 597 (1980), abrogated on
other grounds by Crawford v. Washington, 541 U.S. 36, 124 S.Ct. 1354, 158
L.Ed.2d 177 (2004).

Accordingly, summary judgment on defendants’ affirmative

defense that the claims in Counts I and II are barred by the interconnection
agreement will be granted in part and denied in part.
3.

Unclean Hands

- 25 -

Defendants have further asserted plaintiffs’ claims should be barred based on
the doctrine of unclean hands. The doctrine of “unclean hands” requires a showing
that the plaintiff “has acted wrongfully with respect to the subject of the suit,” thus
precluding it from obtaining an equitable remedy. Philadelphia Indem. Ins. Co. v.
Greater KC Linc, Inc., 2016 WL 3129290, at *2 (W.D. Mo. June 2, 2016) (citing
Sangamon Assocs., Ltd. v. Carpenter 1985 Family P'ship, Ltd., 165 S.W.3d 141,
145

(Mo.

2005)).

The

availability

of

an

unclean

hands

defense

requires

consideration of “all of the facts and circumstances of a particular case.” Id.
Defendants have failed to show that plaintiffs have acted wrongfully with respect to
the subject of the suit.
In support of their unclean hands defense, defendants state that plaintiffs
ignored defendants’ requests to identify contract provisions supporting their
position and that plaintiffs failed to dispute paying tariffed rates.

However, the

record clearly shows that plaintiffs did dispute paying tariffed rates for entrance
facilities used for §251(c)(2) interconnection.

The Court has also found that the

contract provisions in the ICAs support plaintiffs’ position.

Defendants further

argue that plaintiffs are attempting to use Talk America to collect a windfall in
refunds of charges they agreed to pay.

However, the Court has found that

plaintiffs’ interpretation of Talk America is correct. Accordingly, the Court finds that
defendants affirmative defense of unclean hands lacks merit. Furthermore, under
Missouri law, the “unclean hands” doctrine does not bar a claim for money
damages. Union Elec. Co. v. Sw. Bell Tel. L.P., 378 F.3d 781, 788 (8th Cir. 2004)
(citing Marvin E. Nieberg Real Estate Co. v. Taylor–Morley–Simon, Inc., 867 S.W.2d
618, 626 (Mo.Ct.App.1993)).

In this vein, Missouri courts have found that a

- 26 -

defendant may not raise the equitable defense of unclean hands when a plaintiff is
seeking the legal remedy of an amount allegedly owed in a breach of contract
dispute. Howard v. Fid. Nat. Title Ins. Co., 2015 WL 5021768, at *9 (E.D. Mo. Aug.
24, 2015) (rejecting an unclean hands affirmative defense noting that equitable
defenses are only available when equitable remedies are sought).

Thus, even if

defendants were able to demonstrate plaintiffs had unclean hands, defendants’
application of doctrine of unclean hands would still fail because the issue at hands
stems from a breach of contract.
For these reasons, the plaintiffs are entitled to summary judgment on
defendants’ affirmative defense of unclean hands.
4.

Estoppel and Voluntary Payment Doctrine

Defendants also assert estoppel and the voluntary payment doctrine as
affirmative defenses.

Under Missouri law, the elements of estoppel are (1) an

admission, statement or act inconsistent with the claim afterwards asserted and
sued upon, (2) action by the other party on the faith of such admission, statement
or act, and (3) injury to such other party, resulting from allowing the first party to
contradict or repudiate the admission, statement, or act.

Gannon Int'l, Ltd. v.

Lexington Ins. Co., No. 4:07-CV-31 CAS, 2008 WL 3244027, at *4 (E.D. Mo. Aug.
6, 2008).

Plaintiffs argue that they did not make any statements or take any

actions inconsistent with the claims they have presented in this action. Defendants
argue that many of plaintiffs’ circuits were never converted from cost-based pricing
to tariffed rates, but were billed at tariff rates all along, fully consistent with the
parties’ contracts.

Defendants argue that plaintiffs paid the tariff rates for years

without complaints, yet suddenly objected after the Supreme Court’s ruling in Talk

- 27 -

America.

However, defendants fail to explain how those arguments meet the

elements of estoppel as stated above, and fail to present an explicit argument
specific to estoppel. Furthermore, the record shows that plaintiffs did dispute the
tariff rates for entrance facilities used for interconnection under §251(c)(2), and
defendants have failed to produce evidence that plaintiffs made an admission,
statement, or act inconsistent with the claims asserted and sued upon. Plaintiffs’
statements and actions are consistent with the claims asserted and sued upon.
They are entitled to summary judgment on the estoppel affirmative defense.
The voluntary payment doctrine is based on waiver and estoppel in which
money, voluntarily paid to another under a claim of right to the payment and with
knowledge of the facts by the person making the payment, is not recoverable on
the ground that the claim was illegal or that there was no liability to pay in the first
instance.

The doctrine applies even when the payor wrongly believes that the

demand for payment was legal. Edwards v. City of Ellisville, 426 S.W.3d 644, 666
(Mo. Ct. App. 2013). The doctrine is also based on waiver and consent but is not
applicable to all situations. Eisel v. Midwest BankCentre, 230 S.W.3d 335, 339 (Mo.
2007).
Here, there is no evidence of waiver or consent, and there are sufficient facts
in the record showing that plaintiffs did not waive or consent to paying tariff-based
rates.

Plaintiffs submitted numerous complaints and withheld payments in three

states. Furthermore, the facts of the payments were at issue prior to the decision
in Talk America because the parties disagreed as to whether the TRRO permitted
defendants

to

charge

tariff-based

interconnection under § 251(c)(2).

rates

for

entrance

facilities

used

for

Furthermore, the parties expressly reserved

- 28 -

their rights related to the TRRO through the ICAs. Until Talk America was decided,
the factual basis for the payments was in dispute, thus neither party had full
knowledge of the factual basis by which the payments were made.

Accordingly,

plaintiffs are entitled to judgment as a matter of law on the affirmative defense
based on the voluntary payment doctrine.
F. Defendant’s Motion for Summary Judgment
Defendants have asserted two counterclaims seeking to recover the disputed
tariff charges that Level 3 and Broadwing refused to pay for facilities provided in
Kansas, Texas, and Michigan. Defendants’ claims are premised upon the contention
that §251(c)(2) does not require TELRIC rates for entrance facilities used for
interconnection or, in the alternative, that §251(c)(2) does not require cost-based
rates when entrance facilities are not solely used for interconnection. As discussed
above, plaintiffs were entitled to TELRIC rates to the extent the entrance facilities
were used for interconnection pursuant to §251(c)(2), thus plaintiffs were not
required to pay the disputed tariffed charges under the agreement.

Accordingly,

defendant’s motion for summary judgment on Count I and Count II of the
counterclaims will be denied and plaintiff’s motion for summary judgment on Count
I and Count II of the counterclaims will be granted.
Accordingly,

*

*

*

*

*

IT IS HEREBY ORDERED that plaintiffs’ motion for summary judgment
[Doc. #85] is granted in part and denied in part as to Counts I and II.
IT IS FURTHER ORDERED that defendants’ motion for summary judgment
[Doc. #89] is granted in part and denied in part as to Counts I and II.

- 29 -

IT IS FURTHER ORDERED that plaintiffs’ motion for summary judgment is
granted and defendants’ motion for summary judgment is denied with respect to
Counts I and II, except to the extent that Counts I and II are based on bills
plaintiffs received pursuant to the Level 3 ICAs and the Broadwing Texas ICA more
than twelve months after the decision in Talk America.
IT IS FURTHER ORDERED that plaintiffs’ motion for summary judgment
[Doc. #85] is granted as to Counts III and IV, denied as to Count V, and granted
as to Counts I and II of defendant’s counterclaim.
IT IS FURTHER ORDERED that defendants’ motion for summary judgment
[Doc. #89] is denied as to Counts III and IV, granted as to Count V, and denied
as to Counts I and II of defendant’s counterclaim.
IT IS FURTHER ORDERED that plaintiffs’ request for oral argument is
denied as moot.
IT IS FURTHER ORDERED that the parties shall have until April 26, 2017,
to submit a joint proposed schedule for Phase II.

CAROL E. JACKSON
UNITED STATES DISTRICT JUDGE
Dated this 10th day of April, 2017.

- 30 -