Sprint Communications Company, L.P. v. FairPoint Communications, Inc.
Filing
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ORDER granting in part and denying in part 10 Motion to Dismiss. Count II is hereby DISMISSED and Count III (a), (c) & (d) is hereby DISMISSED; FURTHER ORDERED that the parties are referred to the Courts earlier order entered March 13, 2017 for the deadline for the parties to conduct an Initial Attorneys Conference. Signed by Senior Judge Graham Mullen on 7/7/2017. (eef)
IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF NORTH CAROLINA
CHARLOTTE DIVISION
CIVIL ACTION NO. 3:16-CV-00820-GCM
SPRINT COMMUNICATIONS
COMPANY, L.P.,
Plaintiff,
v.
FAIRPOINT COMMUNICATIONS, INC.,
Defendant.
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ORDER
THIS MATTER is before the Court upon the Defendants’ Motion to Dismiss (Doc. No.
10). The Plaintiff has filed a response in opposition and the Defendants have filed a reply. This
matter is now ripe for disposition.
I.
FACTUAL BACKGROUND
Sprint is a telephone company that contracts with telephone providers—like FairPoint
and Oxford—for transport to carry its customers’ calls into and out of the State of Maine.
Complaint ¶ 6 (“Compl.”). The relationship between Sprint and FairPoint is governed by a tariff
(the “Tariff”) filed with the Federal Communications Commission (“FCC”). Compl. ¶ 4.
The Tariff includes a switched and special access service called Facilities Management Service
(“FMS”). Under FMS FairPoint’s wholly-owned subsidiary, Northern New England Telephone
Operations LLC (“NNETO”), facilitates the transport of telecommunications traffic between two
locations—a Sprint-designated “primary premises” and a Sprint-designated “secondary
location.”1 Compl. ¶ 5. A primary premises is a location where a telephone channel/circuit is
1FairPoint
Communications, Inc.’s Motion to Dismiss is filed on FairPoint’s behalf, but states that FairPoint’s whollyowned subsidiary, Northern New England Telephone Operations (“NNETO”) filed the Tariff and owns the
either originated or terminated. A secondary location is the serving wire center from where FMS
mileage is determined. Id. FairPoint is responsible for transporting traffic between these two
locations, and may charge Sprint for the mileage between these two locations. Compl. ¶ 22.
Sprint’s traffic is carried by Sprint over its network to Sprint’s “point of presence,” or
“POP” in Portland, Maine. From there, Oxford provides for the transport of Sprint’s traffic from
Portland to an end office in Bangor, Maine, and then to Sprint’s designated primary premises,
which Sprint says is located at the “Oxford hub.” However, the main point of contention in this
case is that FairPoint argues that the actual designated primary premises location is the Bangor
office. Doc. No. 13 at 5. FairPoint provides transport for the phone call from the Oxford hub to
the end user receiving the phone call. Compl. ¶ 16.
Outgoing traffic is handed off in reverse. Compl. ¶ 17. Also, for some of the circuits at
issue in the Complaint, the primary premises and secondary location are at the same end office,
i.e., they are both located at the Oxford hub. Compl. ¶ 16.
Pursuant to a contract between Oxford and Sprint, Oxford bills Sprint for its transport
services between an end office in Bangor, Maine and Sprint’s primary premises. Compl. ¶ 18.
Sprint alleges that FairPoint has also been billing Sprint for transport services between Bangor
and the primary premises, even though FairPoint has not been providing these transport services
despite the fact that the Tariff only permits FairPoint to charge Sprint for transport services
between the primary premises and secondary location. FairPoint has refused to amend its billing
practices and has rejected Sprint’s submitted claims as to the disputed amounts. Compl. ¶ 32.
telecommunications facilities over which transport is provided on behalf of Sprint. FairPoint Mem. at n. 1. FairPoint
has not moved to dismiss based on any question of ownership or failure to name the correct party.
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II.
LEGAL STANDARD
Under Federal Rule of Civil Procedure 12(b)(6), a case may be dismissed for failure to
state a claim upon which relief can be granted. To survive a Rule 12(b)(6) motion to dismiss, the
court must determine whether the complaint “provide[s] enough facts to state a claim that is
plausible on its face.” Sarvis v. Alcorn, 826 F.3d 708, 718 (4th Cir. 2016) (quoting Robinson v.
Am. Honda Motor Co., 551 F.3d 218, 222 (4th Cir. 2009)). In order to reach facial plausibility,
the plaintiff must “plead factual content that allows the court to draw the reasonable inference
that the defendant is liable for the misconduct alleged.” Id. (quoting Ashcroft v. Iqbal, 556 U.S.
662, 678 (2009)).
III.
DISCUSSION
a. Tariff Requirements
The Complaint alleges that FairPoint is charging Sprint for the transport of
telecommunications traffic—transport that it does not provide—from locations other than what is
permitted by the Tariff. Compl. ¶¶ 6-7. The Tariff provides that FairPoint can only charge for
transport from a customer’s designated “primary premises” to the “secondary location.” Compl.
¶¶ 21-24. The Complaint alleges that for certain circuits, Sprint has designated the Oxford hub as
its primary premises and that these designated locations meet the requirements of FairPoint’s
Tariff. Compl. ¶¶ 16, 23, 25. However, Sprint alleges that rather than calculate transport mileage
charges from these primary premises, FairPoint has been calculating transport charges based on
FairPoint’s “end office” in Bangor, Maine. Compl. ¶ 24. Sprint alleges that this violates the
Tariff and therefore constitutes an unjust and unreasonable practice in violation of 47 U.S.C. §
201(b). See, e.g., Qwest Comm. Corp., Complainant, Second Order on Reconsideration, 24
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F.C.C. Rcd. 14801, 14813 (2009) (billing practice that did not comport with tariff requirements
found to be unjust and unreasonable in violation of Section 201(b)).
FairPoint argues the Court should dismiss all claims because Sprint failed to plead
sufficient facts to state the claim that the defendant violated the Tariff because (1) the Oxford
hub cannot be the designated primary premises under the Tariff requirements and (2) Sprint
never designated the Oxford hub as its primary premises on its Access Service Requests.
The Court will not say at this stage that as a matter of law the Tariff prohibits Sprint from
designating the Oxford hub as the primary premises. FairPoint argues that under the Tariff “the
primary premises must consist of Sprint facilities.” Doc. No. 10-1 at 10. However, FairPoint
does not cite for the Court any clear language from the Tariff that supports the proposition that
Sprint must own the designated primary premises. (“When a tariff is clear and unambiguous on
its face, no construction by the court is necessary, and the parties are bound by its terms.” D.S.
Swain Gas Co. v. Dixie Pipeline Co., No. 89-1796, 1990 U.S. App. LEXIS 27031, at *6 (4th Cir.
July 19, 1990) (citation omitted)).
The Complaint alleges that the Oxford hub, i.e., Sprint’s primary premises, qualifies as a
Type 1 premise, which can have either an “entrance facility” or “multiplexing node.” To be a
primary premises, the location requires a network interface, defined as “the interface point at a
customer’s designated primary premises where the connection is made between the FMS
network and the customer’s network.” Id. Sprint’s Complaint sufficiently alleges facts to
plausibly state that FairPoint violated the Tariff requirements and that the Oxford hub could be
designated as Sprint’s primary premises.
“The purpose of a Rule 12(b)(6) motion is to test the sufficiency of a complaint;” the
motion “does not resolve contests surrounding the facts, the merits of a claim, or the applicability
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of defenses.” Butler v. United States, 702 F.3d 749, 752 (4th Cir. 2012) (internal quotation marks
omitted). When deciding a Rule 12(b)(6) motion, the Court must accept all factual allegations in
the complaint as true. Tellabs, Inc. v. Makor Issues & Rights, Ltd, 551 U.S. 308, 322 (2007).
Sprint alleges in its Complaint that the Oxford hubs meet the primary premises requirements.
Compl. ¶ 23. FairPoint argues that this is not the case. To rule in favor of FairPoint’s argument
would require the Court to not accept an allegation contained in Sprint’s Complaint as true and
resolve an argument surrounding the facts in FairPoint’s favor. At this stage, this Court will not
go beyond testing the sufficiency of Sprint’s Complaint.
Next, the Court turns to FairPoint’s allegation that Sprint never designated the Oxford
hub as its primary premises on its Access Service Requests. In the Complaint Sprint says that it
did designate the Oxford hub as its primary premises on its Access Service Requests. Compl. ¶
23. Again FairPoint’s argument raises a factual dispute regarding whether and how Sprint
designated its primary premises. Similar to the Court’s analysis of its previous argument, those
questions of fact are not properly raised or resolved on a motion to dismiss.
Additionally, FairPoint argues that if Sprint is allowed to designate the Oxford hub as the
primary premises, and thereby dictate the routing of its traffic, the entire purpose of the FMS
plan would be defeated. Doc. No. 10-1 at 14. However, Sprint does not attempt to control how
FairPoint routes the FMS traffic on the FairPoint network in this action, it is attempting to select
the Oxford hub as the primary premises from which traffic is routed. As Sprint states “[o]nce
those two points are selected by Sprint, FairPoint is free to route the traffic between the two
points on their network in any way they choose.” Doc. No. 13 at 7-8. Therefore, the Court finds
that FairPoint’s argument that the entire purpose of the FMS plan would be defeated by the
designation of the Oxford hub to be without merit.
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b. Specificity of Facts in the Complaint
Next, FairPoint argues that Sprint’s complaint does not allege sufficient specific facts to
state a claim under Rule 12(b)(6) because it relies only on naked assertions. FairPoint says that
Sprint cannot just assert it was improperly billed, it must identify each alleged incorrect charge
subject to this dispute.
Federal Rule of Civil Procedure 8 requires only “‘a short and plain statement of the claim
showing that the pleader is entitled to relief.’” Bell Atlantic Corp. v. Twombly, 550 U.S. 554, 555
(2007) (citations omitted). Indeed, the short and plain statement required under Rule 8(a)(2)
“need only ‘give the defendant fair notice of what the . . . claim is and the grounds upon which it
rests.’” Twombly, 550 U.S. at 555. “While a complaint attacked by a Rule 12(b)(6) motion to
dismiss does not need detailed factual allegations, a plaintiff’s obligation to provide the
‘grounds’ of his ‘entitle[ment] to relief’ requires more than labels and conclusions.” Id
“Ultimately, ‘[f]actual allegations must . . . raise a right to relief above the speculative level,’ and
the complaint must offer ‘enough fact to raise a reasonable expectation that discovery will reveal
evidence’ of the alleged activity.” US Airline Pilots Ass’n v. Awappa, LLC, 615 F.3d 312, 317
(4th Cir. 2010) (quoting Twombly, 550 U.S. at 555, 556).
The Court’s analysis looks to Sprint’s complaint to decide whether it contains “more than
an unadorned, the-defendant-unlawfully-harmed-me accusation.” Ashcroft v. Iqbal, 556 U.S.
662, 677 (2009). The Complaint identifies that the dispute concerns the appropriate charges for
facilities used to transport traffic over the telephone network located between FairPoint’s
Bangor, Maine end office and Sprint’s designated FMS primary premises. Compl. ¶ 15. It further
describes that Sprint’s traffic is transported by Oxford from Sprint’s point of presence to the
Bangor end office, and then from the Bangor end office to an Oxford hub. Id. ¶¶ 16, 17. It
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alleges that FairPoint was improperly billing Sprint for the transportation provided by Oxrford.
Id. ¶ 27-31. The Complaint alleges that “[a]s of October 31, 2016, the amount of overbilled FMS
transport charges from August 2013 through October 2016 is approximately $2 million.” Id. ¶
19.
FairPoint argues that Sprint must identify the specific billing dates in order to provide the
grounds of Sprint’s entitlement to relief from an unjust and unreasonable practice in violation of
47 U.S.C. § 201. This Court disagrees that such specifics are necessary to give FairPoint notice
of the claim and grounds on which it rests. This Complaint contains sufficient facts to state a
claim for unjust and unreasonable practice in violation of 47 U.S.C. § 201 that is plausible on its
face. The specific facts FairPoint asks for are not necessary for Sprint’s complaint to meet the
12(b)(6) standard and therefore FairPoint’s motion to dismiss based on lack of sufficient detail is
denied.
c. Statute of Limitations
FairPoint also contends that any claims to overcharging made by Sprint should be
restricted by to the two-year statute of limitations period set forth in 47 U.S.C. § 415(c). A
motion to dismiss is usually not the appropriate stage at which to decide an affirmative defense,
like a statute of limitations defense. CSX Transp., Inc. v. Gilkson, 406 Fed.Appx. 723, 728 (4th
Cir. 2010) (“‘a motion to dismiss filed under Federal Rule of Procedure 12(b)(6) ... generally
cannot reach the merits of an affirmative defense, such as the defense that the plaintiff's claim is
time-barred’”)(citing Goodman v. Praxair, Inc., 494 F.3d 458, 464 (4th Cir. 2007). However, an
affirmative defense may be reached by a Rule 12(b)(6) motion to dismiss in the “rare”
circumstance where “‘all facts necessary to the affirmative defense clearly appear on the face of
the complaint.’” Id. (citing Goodman v. Praxair, Inc., 494 F.3d 458, 464 (4th Cir. 2007).
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So the Court must determine whether all facts necessary to conclude Sprint’s claims are
time-barred appear on the face of the Complaint. The statute on which FairPoint relies, 47 U.S.C.
§ 415(c), provides that actions for recovery of overcharges shall be filed within two years of
accrual. Section 415(g) defines “overcharges” as “charges for services in excess of those
applicable . . . .” 47 U.S.C. § 415(g). The Complaint alleges that FairPoint’s ongoing practice of
billing for transport services that were never ordered or rendered is unjust and unreasonable.
Compl. ¶¶ 30-31. Sprint argues that this is very different from a claim for overcharges and is
indeed a dispute about inapplicable charges. The Complaint does not contain all the facts
necessary on its face to decide this dispute and reach the merits of the statute of limitation
defense based on a theory of recovery of overcharges. The Court therefore will not decide at this
stage whether the statute of limitations in 47 U.S.C. § 415(c) applies to restrict Sprint’s
allegation.
d. Count II
FairPoint argues that Sprint’s state law claim for breach of contract, Count II, should be
dismissed because federal law, the federal claim for breach of the Tariff, preempts the state law
claim. The filed tariff “carries the force of federal law.” Bryan v. BellSouth Communs., 377 F.3d
424, 429 (4th Cir. 2004). Sprint agrees that federal law applies to the disputed charges governed
by the FCC Tariff and preempts the state law breach of contract claim. Doc. No. 13 at 15. But,
Sprint argues that it should be permitted to preserve its state law breach of contract claim “to the
extent that this Court finds that any portion of the disputed charges were billed under the
intrastate tariff and are not covered by the FCC Tariff.” Doc. No. 13 at 15. This intrastate tariff
was not included in the Complaint or in Count II. This claim appears not to have been alleged
until Sprint’s response memorandum. This Court will not preserve a claim both parties agree is
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preempted by federal law to the extent that a new claim could be made based on information yet
to be discovered. Therefore, the Court finds that Count II, the state law claim for breach of
contract, is preempted by federal law and is dismissed.
e. Count III
In Count III Sprint seeks a declaratory ruling that says
a. Sprint is not responsible for paying transport charges submitted for mileage that
FairPoint does not provide;
b. FairPoint may not refuse to transport telecommunications traffic between Sprint’s
designated primary premises and the secondary location because of Sprint’s refusal to
pay for transport FairPoint does not provide, and for which billing is not permitted under
FairPoint’s Tariff;
c. FairPoint is only permitted to charge Sprint for transport services between Sprint’s
designated primary premises and the secondary location; and
d. FairPoint must create a process that does not bill for transport charges for mileage that
FairPoint does not provide.
Compl. ¶ 52(a), (b), (c), & (d). FairPoint argues that this Court may not properly exercise
jurisdiction over the declaratory judgment action. For a federal court to exercise jurisdiction in a
declaratory judgement proceeding, three elements must be met:
(1) the complaint alleges an actual controversy between the parties of sufficient
immediacy and reality to warrant issuance of a declaratory judgment; (2) the court
possesses an independent basis for jurisdiction over the parties (e.g., federal
question or diversity jurisdiction); and (3) the court does not abuse its discretion
in its exercise of jurisdiction.
Volvo Const. Equipment N.A., Inc. v. CLM Equipment Co., 386 F.3d 581, 592 (4th Cir. 2004)
(internal quotation marks omitted). The first and the third jurisdictional prerequisites are
contested by FairPoint. The second jurisdictional prong, that the court must possess an
independent basis for jurisdiction over the parties, was satisfied in the Complaint, where Sprint
established jurisdiction through both a federal cause of action and diversity of the parties. Compl.
¶ 11-13. This was not contested by FairPoint.
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As for the first jurisdictional prong, “[a] case meets the actual controversy requirement
only if it presents a controversy that qualifies as an actual controversy under Article III of the
Constitution.” Volvo, 386 F.3d at 592. On the other hand, a controversy is not present where the
defendant has not taken preliminary actions against the plaintiff nor made any indication that it
plans to take future legal action against the plaintiff. Jones v. Sears Roebuck and Co., 301
Fed.Appx. 276, 282 (4th Cir. 2008) (citing Volvo, 386 F.3d at 592 n.12).
The parties have mostly separated their discussions of the declaratory relief claim into a
discussion of the merits of sections (a), (c) & (d) and the merits of section (b). The Court
believes this is a logical separation and will analyze Count III in the same manor.
The Court first considers sections (a), (c) & (d). In this case, the defendant has filed a
counterclaim in its answer to plaintiff’s complaint. FairPoint Answer at 18. FairPoint brought the
following claims against Sprint in its counterclaim: Counts I and II allege violation of the Tariff
through a failure to pay; Count II alleges a violation of 47 U.S.C. § 201 because of unjust and
unreasonable practice; Count IV alleges a violation of the Tariff through a failure to pay for
circuits provided to Sprint under the FMS Plan; and in Count V FairPoint asks for declaratory
relief that says that charges under the FMS Plan are valid and must be paid by Sprint.
This counterclaim clearly creates an actual controversy for the declaratory relief
requested by Sprint in (a), (c) & (d). There is an actual controversy about the Tariff and where
FairPoint has the right to charge for the transportation of traffic.
Now the Court turns to the third jurisdictional prerequisite, whether the Court should use
its discretion to decline to entertain the declaratory judgment action for (a), (c) & (d). But, this
may only be done with good reason. Volvo, 386 F.3d at 594. “[A] district court is obliged to rule
on the merits of a declaratory judgment action when declaratory relief ‘will serve a useful
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purpose in clarifying and settling the legal relations in issue,’ and ‘will terminate and afford
relief from the uncertainty, insecurity, and controversy giving rise to the proceeding.’” Id.
(quoting Aetna Cas. & Sur. Co. v. Quarles, 92 F.2d 325, 325 (4th Cir. 1937)).
Many courts have previously recognized that a declaratory judgment does not serve a
useful purpose where that purpose is only to resolve an already-existing breach of contract claim.
Metra Industries, Inc. v. Rivanna Water & Sewer Authority, 2014 WL 652253 at *2 (W.D.Va.
Feb. 19, 2014); see also Miami Yacht Charters, LLC v. Nat'l Union Fire Ins. Co. of Pittsburgh,
2012 U.S. Dist. LEXIS 57041, at *2, 2012 WL 10100125 (S.D.Fla.2012) (noting that “[a] court
must dismiss a claim for declaratory judgment if it is duplicative of a claim for breach of contract
and, in effect, seeks adjudication on the merits of the breach of contract claim”); Narvaez v.
Wilshire Credit Corp., 757 F.Supp.2d 621, 636 (N.D.Tex.2010) (dismissing as “redundant” a
declaratory judgment claim that was asserted in addition to a claim for of breach of contract);
Camofi Master LDC v. Coll. P'ship, Inc., 452 F.Supp.2d 462, 480 (S.D.N.Y.2006) (emphasizing
that the declaration sought would “already be addressed in the breach of contract claim” and,
thus, that “a declaratory judgment would not further clarify legal relations among the parties”).
Here, the same conduct is in dispute for Sprint’s claims for declaratory judgement in (a),
(c), & (d) and for breach of the Tariff. Sprint alleges in Count I that “FairPoint improperly billed
Sprint for FMS transport charges from its Tariff on file with the FCC” and that FairPoint is not
allowed “to assess charges for transport services that it does not provide.” Compl. ¶ 41-42. As
Sprint stated in its memorandum, in (a), (c) & (d) Sprint seeks a declaratory judgement that
“FairPoint cannot charge Sprint in a manner inconsistent with FairPoint’s Tariff, i.e., it may only
charge for the transport of traffic between Sprint’s designated primary premises and the
secondary location.” Doc. No. 13 at 14. These sections of the declaratory judgement seek the
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resolution of issues which must be resolved in the course of litigating Sprint’s other claims.
Thus, the declaratory relief sought in section (a), (c), & (d) is dismissed because it is duplicative
and will not “serve a useful purpose in clarifying and settling the legal relations in issue.” Volvo,
386 F.3d at 594.
Next, the Court turns to the declaratory relief sought in section (b). The counterclaim
does not create an actual controversy for the declaratory relief requested by Sprint in (b).
However, FairPoint sent a letter to Sprint stating that it intended “‘terminate service on the
circuits for which Sprint is withholding payment.’” Doc. No. 13 at 14. Defendants threatened to
stop transporting Sprint’s telecommunications traffic in this letter. FairPoint argues that this
threat should not create an actual controversy because FairPoint did not actually terminate the
service. However the Court finds that the proposed standard of an actual controversy only
existing when FairPoint actually cuts off the service to be unaligned with previous precedent. In
Jones the Fourth Circuit faced a dispute over whether a threatened injury rose to the level of a
case or controversy and found that it did not because “none of the Defendants has threatened to
invoke the arbitration provision.” 301 Fed.Appx. at 282. Here the threat has been made. The
defendant has taken a preliminary action against the plaintiff through this threatening letter. See
id. Thus, the first element for jurisdiction over a declaratory judgment is met by section (b) as the
complaint does allege “an actual controversy between the parties of sufficient immediacy and
reality to warrant issuance of a declaratory judgment.” Volvo, 386 F.3d at 592.
Finally, the Court finds it would not be an abuse of discretion to exercise its jurisdiction
over section (b). Defendant does not present any arguments that this is not the case. A ruling on
the merits of section (b) will serve a useful purpose as it will resolve the uncertainty regarding
the actions the parties may take in resolving such a billing dispute. This is particularly useful in a
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case such as this one where the parties will continue to have a contractual relationship. See Tapia
v. United States Bank, N.A., 718 F. Supp. 2d 689, 695 (E.D. Va. 2010) (stating that declaratory
judgements “are designed to declare rights so that parties can conform their conduct to avoid
future litigation.”).
IV.
Conclusion
For the foregoing reasons the Court finds that the Defendants’ Motion to Dismiss (Doc.
No. 10) be GRANTED IN PART AND DENIED IN PART. Count II is hereby DISMISSED
and Count III (a), (c) & (d) is hereby DISMISSED.
The parties are referred to the Court’s earlier order entered March 13, 2017 for the
deadline for the parties to conduct an Initial Attorney’s Conference.
SO ORDERED.
Signed: July 7, 2017
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