Facaros v. Qwest Corporation

Filing 54

ORDER: Denying Motion for a Protective Order 30 ; Granting Motion to Dismiss 28 . Signed on 6/7/2011 by U.S. District Judge Michael R. Hogan. (jw)

FILED 07. n. . - .\.. :4·:'!J·~DI"OD>-

IN'11· .j 4' L··oJ:J ".c.
....... _

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF OREGON

EUGENE DIVISION

NICKOLAS FACAROS,
Plaintiff,

Civil No. 10-6343-HO

o R DE R

v.
QWEST CORPORATION, a Colorado
Corporation,
Defendant.

Plaintiff Nickolas Facaros brings this action alleging violation
of the Racketeer Influenced and Corrupt Organizations Act (RICO), 18
U.S.C.

§§ 1961-1968,

violation of the Unlawful Trade Practices Act

(UTPA), deceit, and tortious breach of the duty of good faith and fair
dealing.

Plaintiff alleges that on three occasions he purchased,

through his agent,

defendant's services to move telephone lines to

facilitate moving houses
alleges

that

defendant

from one location to another.
billed

plaintiff

fraudulent

and

Plaintiff
unlawful

charges far exceeding actual billing rates for the work that was done
and has,

over the past ten years,

fraudulent and unlawful charges.

billed others similarly situated

Defendant moves to dismiss contending all claims are barred by
the tariff governing the rates and manner it may bill for relocation
of

its

aerial

cable

Alternatively,

facilities.

defendant moves,

pursuant to the primary jurisdiction doctrine, for dismissal in favor
of

jurisdiction

by

the

Oregon

Public

Utili ties

Commission.

In

addition, defendant seeks dismissal for £ailure to state a claim and
for failure to plead allegations of fraud with particularity.

A.

Filed Rate Doctrine
Defendant contends that a Qwest Tariff approved by the Oregon

Public Utilities Commission (OPUC)

governs the terms and conditions

for the relocation of the telephone lines at issue.

The pleadings are

not entirely clear on what the services provided by defendant actually
entailed.

The contracts at issue indicate that this process simply

required defendant to "raise and lower aerial cable facilities" for
the house moves.
(attached

to

RICO

See,

e. g.,

case

Special Construction Proposal,

Statement

(#27)

at

p.

2).

There

Ex.
is

C
no

indication from either party that defendant dismantled aerial cables,
and built new ones in their place or even dismantled cables from poles
and then reattached them.

A fair reading of the complaint is that

defendant simply pushed the cables up and then lowered them.
The purportedly applicable tariff provisions read as follows:
4.

4.1

CONSTRUCTION CHARGES AND OTHER SPECIAL CHARGES

GENERAL

B.

Terms and Conditions (Cont'd)
5.

2- ORDER

Relocation of Existing Outside Plant Facilities

a. In locations
the Company's outs
plant
is of aerial construction, if the Company is
requested to relocate its facili t
s
the cost of constructing the new and
old will be
by the customer or
s
requesting relocation. See C.2., following.
b.

In locations where

c. In locations where the Company's
outside plant is aeria=- construct
Company, at its own prerogative,
outside plant, the costs of construc~
borne solely by the Company.
C.

Rates

low are applicable
1. New Construction Charges shown
to work per
the Company that is associated
with providing a trench or aerial structure on a
customer IS
e property for
construction of new
drops.
USOC

• Company-provided trench on
private
rty
• All

e Company-provided

Charge

SYFER

$85.00

SYEEC

Estimated
Cost

2.
of the
3. Billing
a. Bills for construction charges are not to be
being bills
or
inte
service.

b. A

r a specific job will be provided to
customer or others
st
the
construct . The quote will
writing and
11
good for 30 days a
the issue date.

3 - ORDER

When accepted, the customer will be billed the
quoted price. A quote is not
same as an
approximate
gure which
be provided by the
Company's
rsonnel. An
figure is
intended only as an order of
tude and not as
a firm price.
Orig

s 4 and 5 of Sect

Motion To Dismiss
first

e

(#29)

move)

emphasis

as Ex.
to

(att

4 (attached t6 Memo in Support of
1)

and prior version

Reply

(#49)

as

Ex.

(applicable to
1)

(underline

).

De

argues that in accordahce with

, it is obliged

to charge the estimated cost of relocating the telephone wires
re

to

this act

intiff's

se moves.

Defendant further argues that

is an attempt to vary the terms of

is barred by the filed rate

above tariff and

rine.

r ORS § 759.205,
No telecommunications utility shall cha
, collect
or receive a greater or less compensation for any service
per rmed by it
the state, or
any service in
connection therewith,
is specifi
printed rate
schedules as may at the time be in
or. demand,
lect or rece
rate not specif
such schedule.
rates named
are the law
rates until they are
changed as provi
this chapter.
Under ORS

§

759.260,

(1 )
Except
provided
as
in
telecommunications utility or any
shall, directly or indirectly, by
demand, collect or receive from
less compensat
for any se
rendered by it than:

a) That prescribed in the
tariffs
force or es
b) It cha
any other
4.

ORDER

ORS
759.265,
no
or officer
f
device,
son a greater or
rendered or to be

ic schedules or
isned; or

demands, collects or receives from
rson for a like
contemporaneous

Sf

service
under
substantially
similar
circumstances. A difference in rates or charges
based
upon
a
difference
in
classification
pursuant to ORS 759.210 shall not constitute a
violation of this paragraph.
(2) Any telecommunications utility violating this section
is guilty of unjust discrimination.
"Thus,

rates that have been approved and are in force may be

adjusted only.pursuant to the process described in the statutes."
Pacific Northwest Bell Telephone Co. v. Eachus, 135 Or. App.
(1995).

41,

49

The filed-rate doctrine, therefore, bars an action that seeks

to vary the

terms

of an applicable

tariff.

Adamson v.

Communications, Inc., 190 Or. App. 215, 222 (2003).

Wor ldCom

But the doctrine

only bars an action that seeks such variance and merely because a
tariff exists does not mean a claim is barred.

Accordingly,

the effect of a tariff on a particular claim depends on the
nature of the claim and the specific terms of the tariff.
If the claim is one that implicates the provisions of a
tariff" then the tariff controls according to its terms,
which may either limit relief available or bar a claim
entirely. But if the claim is unrelated to the tariff, then
the claim is not limited or barred.
Id. l

lThere is
some question whether the
filed-rate doctrine applies
in Oregon.
See Drver v. "Portland General Elec.
Co.,
341 Or.
262,
270,
n.
10
(2006)
(No
Oregon
court
has
expressly
decided
whether
Oregon
accepts
the
filed-rate
doctrine
or
the
corollary
rule
against
retroactive
ratemaking) .
However,
the
statutes
at
issue
demonstrate
the
necessity
of
the
doctrine
and
no
Oregon
court
appears
to
have.
declined
to
resort
to
the
doctrine
where
applicable.
See,
e.g.,
Utility
Reform
Project
v.
Oregon
Public
Utility
Com'n,
215
Or.
App.
360,
375,
n.
11
(To
be
clear,
the
Dreyer
court
did
not
reject
the
possibility
that
dregon
law
incorporates some form of the filed-rate doctrine or a rule against
retroactive
ratemaking).
In
any
event,
the
tariff
in
question
is
not applicable as will be discussed.
5 - ORDER

The

filed-rate

interpreting the

doctrine

provisions

not

preclude

courts

tariff.

Brown v.

MCI

does

of a

Network Service, Inc., 277 F.3d 1166, 1171-72
The court must analyze the tariff as

from

WorldCom

(9th Cir. 2002)

it would interpret any

statute under the principles of statutory construction. 2

The f:i,.rst

step in interpreting a statute is an examination of the text and its
context. PGE v. Bureau of Labor and Industries, 317 Or. 606,
(1993)

~10-11,

It is not required that an ambiguity in the text of a statute

exist as a necessary predicate to the second step-consideration of
pertinent
174.020.

legislative

history

that

a

party may

proffer.

ORS

§

A party is free to proffer legislative history to the court,

and the court will consult it after examining the text and context
where that legislative history appears useful to the court's analysis.
Finally, if the legislature's intent remains unclear after examining
text,

context,

general maxims

and
of

legislative

history,

the

statutory construction to

remaining uncertainty.

court
aid

may

resort

in resolving the

PGE,317 Or. at 612.

20efendant
argues
that
plaintiff
is
precluded
from
asserting
that the tariff does not apply because,
in his RICO case statement,
he
conceded
that
"Qwest' s
rates
charged
for
the
'routing'
service
for
relocating
houses
are
limited
by
the
following' Tariff'
filed
wi th
the
PUc.... "
and
cited
section
4
noted
above.
RICO
Case
Statement
(#27)
at p.
7.
Plaintiff now contends that he only meant
that the tariff is limited "if the tariff is applicable."
Despite
the
poor
pleading by plaintiff's
counsel,
it
appears
a
permissible
reading of
the
RICO
case
statement
is
that
Qwest
is
furthering
a
fraudulent
scheme
through
improper
application
of
the
tariff.
The
sentence
proceeding
the
apparent
concession,
reads,
"Qwest
is
continuing
this
scheme
on
an
ongoing
basis."
Prior
to
that
statement,
plaintiff
asserts
overcharges
based
on
the
advance
payment
procedure
and
contends
that
an
invoice
post-work
with
actual costs must be provided.
This is contrary to the tariff and,
thus,
plaintiff cannot be said to have conceded the tariff applies.
In any event,
it
is the court's mission to interpret
the law and
determine its applicability.
6 - ORDER

to

The tariff itself does not define "construction" or "relocation."
The parties

offer no· history with

context results in ambiguity.

respect

to the

tariff

and the

The Tariff refers to "Construction and

Other Special Charges," and refers to relocation "and replace [ment]
wi th the

same type of construction."

The purportedly applicable

section continues with "the cost of constructing the new and removing
the old facilities will be borne by the
relocation construction."

others requesting the

Finally, the alleged rate is the "estimated

cost of the relocation of existing facilities."
section

at

issue

is

only

referenced by

the

Because the rate

preceding mention

of

"constructing the new and removing the old," the requirement of using
the estimated cost only comes into play when there is "construction"
involved.
Defendant's apparent preferred interpretation of simply moving
the wire up and down is not reasonable in this context. 3

Defendant

fails to offer a reasonable definition of construction in context and,
in essence,

offers

no definition at

all

and simply sidesteps the

issue.
Plaintiff contends that "construction" commonly means "the act
of putting parts together to form a complete and integrated object,
citing Webster's Third New International Dictionary of the English

3Defendant
is
a
bit
evasive
and argues
that
"there
is
nothing
in
this
provision
that
requires
the
'relocation
construction'
resul t
in
the
lines
and
wires
being
permanently
moved
to
a
new
location,
as
Facaros
suggests."
However,
the
argument
fails
to
address
what
defendant
actually
did,
which
appears
to
be
simply
moving
wires
up
(could
be
interpreted
as
relocation)
and
down.
Arguably,
the
tariff
could apply
to
construction
in
the
exact
same
location,
but
the
problem
here
is
that
no
"construction"
occurred.
7 -

ORDER

Language at 489 (2002).
that"
new,

Moreover, the Oregon Supreme Court has stated

its common use 'construction' means the creation of something
rather

than

the

repair

or

imorovement

existing."

of

153 Or.

Accordingly, a reasonable
be

relocation

something
528,

Indeed,

the

construct

language

res,

at

at a minimum,

issue

specifically

the new and removing the old
sis added)

"

541 (1936).

ation of the tariff at issue would
removal of the old

acement with new y built lines or even po

lines

already

states

s or drops.
"the

cost

of

ties will be borne'
defendant merely

Here, it appears

the 1

s and put the same lines back in the same place on

poles.

At best, defendant can only offer a reasonable interpretation

of construction in the context (e.g.,

truction of the

and reconstruction of the same lines).4

same

Nonetheless, replacement

comp

tely new lines or

les is also areas

y, the maxim of contra proferentum

Acco

the language at issue and submit
OPUC. S

e interpretation.
ies because de
for approval to the

See Verizon Northwest, Inc. v. Main Street Develooment, Inc.,

693 F.

may
the

st

.2d 1265, 1274 (D.Or. 2010)

oral
argumen t,
defense
counsel
have involved "putt
slack in the
case,
it
demonstrates
only
repair
lines.

that
the
process
lines."
Even if this were
or
improvement
of

5Plaintiff
also
offers
an
of
relocation
as
more than temporary moveme::1t,
but
context,
such
an
interpretation
may
nbt
be
reasQnable
the
tariff
es
relocation
from
aerial
to
well
as
as
relocation
with
"the
same
construction"
removing
tte
old
and
wiLh new.
But the court need not decide that relocation
permanent
removal,
as
it
can
"new
on
the
lack
of
construction" alone.
8

ORDER

[A]lthough it is unclear
r Verizon's tariff should be
cohsidered merely a contract, Oregon courts have appli
rules of contract
ation to tariffs
st.
See, e. a.
River R. R. ,
471,
Oregon contract ·law,
contract provision is ambi
on its face, the court
. to examine the
provision "in the
r context of the [contract] as a
whole. If-and only if
guity persists, [
court]
construe[s] the [contract] against the dra
Franklin Corp. v. State ex· rel. OeD' t . of Transp., 207
Or. App. 183, 195 n. 8, 140 P.3d 1136 (2006).
I

If

Accordingly, . the

motion

to

dismiss

based

on

t

fi

rate

doctrine is denied.

Invocation of
when a court

of primary juri s

ion is, appropriate

an administrative

s

r

than a

court of law, initially should determine the outcome of a dispute or
one or more issues
statutory autho
Or.

185,

192

ty.

(1997)

agency's areas of

A . court confronted

agency

ordinarily

can

make.

ems wi thin an

th

the advantage of whatever
Therefore,

ked when it appears that a

of one or more
resolving

Boise Cascade CorD. v. Board of Forestry, 325

ialization should

contributions

that agency's

that dispute that fall

the

doctrine

ousagency disposition

issues before the court will assist the court

case

fore it.

Id.

"There
s no fixed formula
ermining whether an
agency
s
jurisdiction over a
spute or an issue
raised in a dispute. In making
erminations, courts
cons
several factors, inc
the extent to which
the a
's specialized exper tise makes it a preferable
forum
resolving the issue, (2)
need for uniform
reso
ion of the issu~, and (3)
potential that
9 - ORDER

is

judicial resolution
impact on the
responsibilities."
Id.

(Quoting

issue will have an adverse
formance of its regulatory

of t
's

Kenneth Culp

s

and

Richard

Administrative Law Treatise § 14.1, 272
If
the

e.g.,

expertise,

if

the

entire

act

The doct

Pierce;

Jr.

II,

I

(3d ed. 1994).

sposition of the case depends on

doctrine is

dispute,

J.

be

dispute

smissed.

involves

the

agency's

Id. at 193.

jurisdiction is committed to the sound

of pr

discretion of the court where the integrity of a regulatory scheme
dictates

resort

to

the

agency

scheme.

w~=-ch

•

(9th Cir.

1987)

n cons

ring the issue,

administers

828 F.2d 1356, 1362

I

the court should we

such factors as the need to resolve an issue that has been
the legislature wi
having

t~e

aced by

jurisdiction of an administrative body

atory authority pursuant to a statute that subjects an

industry to a
uniformity

s

regulatory scheme requiring

rtise or

stration. Id. at 1362.

Defendant

sts the court to dismiss this action

r

OPUC's jurisdiction if application of the tariff is in
defendant's
if pIa

for estimating under the ta

and thus the method for est
ff

cannot be in question and pIa

of
if

stion, or

However, as noted

applicability of the tariff is not in doubt.

not

10 - ORDER

ff is in

iff really seeks amendment to the tariff.

above,

t

the

tariff is

i

iff cannot be

sunder
seeking

amendment to the tariff.

Accordingly, the motion to dismiss based on

primary jurisdiction is denied.

C.

Failure to State a Claim
Plaintiff alleges that defendant violated 18U.S.C.

(b)

by engaging in mail

and wire· fraud,

receiving

§

1961(a) and

income

from a

pattern of racketeering activity and investing it in its operations.
Defendant contends that plaintiff fails to allege a plausible claim
supported by mail fraud.
To plead a claim for mail or Wlre fraud, plaintiff must allege
that defendant

(1)

used or caused the use of the mail or wires in

interstate commerce;

(2)

in furtherance of a scheme to defraud;

with the intent to defraud. 18 U.S.C.

§§

1341, 1343.

(3)

Plaintiff simply

concludes that he has adequately alleged a scheme to defraud because
he

contends

that

defendant

misrepresented

the

estimates

as

representing the actual cost of moving defendant's lines and that such
scheme was furthered by sending billing statements through the mail
(or through electronic wires via facsimile)
However, the special construction proposals attached to the RICO
case

statement

do

not,

proposals

described

payment."

Further,

customers

only,

11 -

ORDER

the

Qwest

to

work

to

support

be

done

the
and

allegation.
required

the proposals also state that

completion of work."
commence prior

and cannot,

will

submit

an

invoice

The

"advance

"for government
of

charges

upon

The proposals clearly state that no work shall

receipt

of

advance

payment

and nothing

in the

proposals indicates

the req'

payment

and no reasonable set of facts
advance

sented actual costs

could lead to the conclusion that

for proposed work repre

Plaintiff

s actual costs.

does plead that
in the se
house move, plaintiff in
Qwest on the
Friday
fore the S
move that
charges were too
high;
st dis
mainta
that data was
r~y
st under
entered into a
r program; p intiff paid
t; and
st promised a re
,which
s never been

Amended Compla
However,
de

at '1I 21
this

does

(#22).

not

lead

misrepresented the

cost.

Moreover,

the

agreement.
plaintiff

reasonable

all

proposals

a

promised

refund

Ex.

by

t

leave to
No

part

(ostensibly

to

demonstrate

tions conta

a

in the

erms or conditions are

ded that all amendments must be
s'

whi

sal

author zed representatives.

(#27).

The

writing a.nd
Cons

ly I

would be futile.
logical

support a conc

of
sion that

the

mailings

calculated prior to

and

could further

scheme as the documents, on their face,

12- ORDER

second

a

const

3 to RICO cases statement

B,

agreement further

execution, . they

conditions,

ire agreement and no other

applicable.

upon

costs) contained an integration clause

ch the written terms and

constituted t

the

that

as an actual

stated that,

In addi tior:.,

s

rence

ired advance

misrepresentation as to a

s

a

with the attached terms

shall,"

in

to

1

r

facsimiles
alleged

e that t

work and must be paid pre-work.

could
lent

costs are.
If there is

a fraudulent scheme to represent estimated costs as actual costs--then
the documents

actually negate that

scheme,

not

further

cannot support a RICO case based on mail or wire fraud.
v.

Catholic Health System of Long Island;

Such

it.

~,Wolman

2010 WL 5491182 at *

6

(December 30, 2010 E.D.N.Y.):
Plaintiffs' RICO claims fail on. numerous grounds. But,
chiefly,
Plaintiffs
fail
to
allege
any pattern of
racketeering activity. See DeFalco v. Bernas, 244 F.3d 286,
305 (2d Cir. 2001). Plaintiffs attempt to meet this
requirement by alleging mail fraud. But, to be actionable,
a purportedly false or deceptive mailing must further the
alleged fraudulent scheme. See United States v. Maze, 414
U . S . 3 9 5 , 4 0 3 , 9 4 S . Ct. 6 4 5 , 3 8 L. Ed. 2 d 60 3 ( 1 97 4). An d
here, Plaintiffs allegations that the pay stubs furthered
the supposed scheme are not j list implausible, they are
illogic~l.
Plaintiffs contend that the pay stubs "misled
Plaintiffs and Class Members about the amount of wages to
which they were entitled, the number of hours which they
had worked,
and whether defendants had included all
compensable work time." (SAC ~ 100.) But Plaintiffs do not
allege that they suffer from anterograde amnesia, or
otherwise lack the capacity to retain short-term memories.
So they should have recalled how much they actually worked
in a given work week. Thus, to the extent that the mailed
pay stubs differed from Plaintiffs' recollection, that
difference did not "conceal" the fraudulent scheme. Quite
the opposite: it should have placed Plaintiffs on notice
that Defendants were not fully paying them for their work.
Plaintiff presents authority for the proposition that a RICO
claim

predicated

on

mail

asserted misrepresentation.
553

U.S.

because

639
no

(2008).

reasonable

fraud

need

not

allege

reliance

on

the

Bridge v. Phoenix Bond and Indemnity Co.,

However,
person

plaintiff's
could

have

RICO

relied

claim fails
on

the

not

alleged

misrepresentation that estimated costs equal actual costs, but because
no plausible set of facts could demonstrate that the mailings and/or
facsimiles could further the fraudulent scheme to represent inflated

13 - ORDER

estimates as actual costs.

p

iff really alleges in this case

is a voidable contract based on
in contract law.
price

for

a

s

Genera ly,

given

se

determine is areas

or some other theory grounded

ies to a contract
ess

ce
le value.

of

what

to

ca~

the

mar

a

But where one party ho

posi tion in the contractual relationship allowing it to
other party to agree to
and the price terms
However,

a

vo

ice terms, the contract may be

s

tituted with actual va

11

e

contract

under

these

le

p

circumstances

s

not

support a RICO cause of act
Defendant also asserts that
a RICO claim
agent.

e he

Although RICO

injured

sed defendant's se

utilized

6

lacks standing to assert
an

ces t

res direct injury, plaintiff is

even

principal.

pl~intiff

an

agent

because

he

rectly
was

less, the RICO claims fail as noted above .

. Addi tionally,
injury

for

aintiff has failed to properly al
his

Hydroelectric, L.P. v.
(9th Cir. 1992)

18

U.S.C.

§

1962(a)

claim.

Pacific Gas and Elec. Co.,

See

Nugget

981 F.2d 429,

437

s

r a violation of

section 19

(a) must allege facts tending to show

he or she was

injured by

use or investment of racketeer

De
all

he

fails

to al

cannot be discerned from the

least
14 - ORDER

income).

s also contend that plaintiff fails to state a claim for

c

Although

(a plaintiff seeking civil

stment

wi

. particularity.
when, how, where,

iff could amend to demonstrate this fact.

or even who made

all

equal actual costs,

s

amendment.

de

But, as not

by

fraudulent statement that the estimates
ciencies could conceivably be cured by

above, the mail fraud claim cannot be cured

se no reasonable set of facts could be all

demonstrate

li

to

and facsimiles furthered such scheme.

In

s to retain jurisdiction over the remai

ng

state law cla
When federal cIa
st

wi

are dismissed before trial ,

ct court! s

discretion to dismiss
383 O.S.

938 F.2d 986,
court·

not

would j usti

retain

apparent
ct

att

726

993-94

Cir.

jurisdiction.

1991)

j

cial

See Schneider, 938 F.2d at 994;
Cir. 1981).

654 F.2d 529, 536 (
economies would be

over this case.

See Schneider,

Nor is

served by reta

938 F.2d at 994.

1 case should not demand anymore of

Defendant also seeks to stay discovery
to dismiss.

s

ORDER

s court's time.

re

Given that the court has resolved

ss, the motion to stay is denied as moot.

15

(1966);

use of RICO to try to transform a minor cont
o a

mot

state cIa

sted its judicial energies to such an extent t

~~~~==~~~~~~~~,

juri

715,

it is wholly

ion of the
motion to

CONCLUSION

For

a

reasons

ive
's·

de
act

the

order

st

motion

to

stated

above,

defendant's

discovery
ss

(#28)

is dismissed.

DATED this

16 - ORDER

y of June,

2011.

(#30)
is

motion

for
and

is
ed

and

this