Sprint Communications Company L.P. v. Maule et al

Filing 141

MEMORANDUM OPINION AND ORDER denying as moot 121 Motion to Stay; granting 124 Motion to Stay; denying 136 Motion to Strike. Signed by Chief Judge Karen E. Schreier on 2/22/2012. (KC)

UNITED STATES DISTRICT COURT
DISTRICT OF SOUTH DAKOTA
SOUTHERN DIVISION
SPRINT COMMUNICATIONS
COMPANY, L.P.,
Plaintiff,
vs.
NATIVE AMERICAN TELECOM, LLC,
and CROW CREEK SIOUX TRIBAL
COURT,
Defendants.

)
)
)
)
)
)
)
)
)
)
)
)

CIV. 10-4110-KES

MEMORANDUM OPINION
AND ORDER

Defendant, Native American Telecom, LLC (NAT), moves to stay this case
pending action by the Federal Communications Commission (FCC) on issues
relevant to this case. Docket 121. On November 28, 2011, the FCC issued a
final rule concerning the services and technology at issue in this case. Connect
America Fund; A National Broadband Plan for Our Future; Establishing Just and
Reasonable Rates for Local Exchange Carriers, 76 Fed. Reg. 73830, 2011 WL
5909863 (Nov. 29, 2011) (to be codified at 47 C.F.R. pts. 0, 1, 20, 36, 51, 54,
61, 64, and 69) (final rule). After the court ordered further briefing on what
impact, if any, the final rule has on this case, NAT represented to the court
that its motion can be denied and that the court can issue a ruling on the case.
Docket 128, 131.
Plaintiff, Sprint Communications Company, L.P., also moves to stay and
for a referral of certain issues to the FCC. Docket 124. Sprint does not believe

that the final rule has any impact on this case and, thus, urges the court to
determine the merits of the motions. Docket 129. Sprint also moves to strike or
in the alternative disregard certain affidavits and evidence submitted by NAT.
Docket 136.
NAT’s motion to stay is denied as moot, Sprint’s motion to stay is
granted, and the court will refer three issues to the FCC for resolution. Sprint’s
motion to strike is denied without prejudice.
BACKGROUND
I.

History of the Present Case1
Sprint provides nationwide long-distance telephone services and is

known under the telecommunications regulatory framework as an
interexchange carrier (IXC). Sprint delivers long-distance calls to a local
exchange carrier (LEC) for termination to end-users. Under the FCC’s current
regulatory framework, Sprint pays the LEC a terminating access charge based
on the LEC’s interstate access tariff, which is filed with the FCC.
NAT is an LEC. NAT’s interstate tariff number one, filed with the FCC,
became effective on September 15, 2009. NAT’s second interstate tariff became
effective on November 30, 2010, and canceled and replaced NAT’s tariff number

1

The facts in this case have been well developed through multiple docket
entries and two preliminary injunction hearings where testimony was
presented. See Dockets 62, 101, and 118 for a more detailed recitation of the
facts.
2

one. NAT revised its tariff number two, and the revisions became effective on
June 26, 2011.
NAT also operates a free conference calling system (used for conference
calling, chat-lines, and similar services) in connection with Free Conferencing
Corporation, which is owned by WideVoice. NAT has a conference call bridge
located on the Crow Creek Sioux Reservation in South Dakota. A party using
NAT’s services does not pay NAT for the conference call but rather is assessed
normal charges by the party’s telecommunications provider. NAT then bills the
telecommunications provider an access fee as defined in its interstate tariff.
NAT’s access charges billed to Sprint for conference calls are at issue here. NAT
provides the free conference calling services via Voice over Internet Protocol
(VoIP) technology. See Docket 14-1 at 4 (“Through the use of advanced antenna
and radio technology with OFDA/OFDMA (Orthogonal Frequency Division
Multiplexing), NAT delivers wireless IP (Internet Protocol) voice and data
communications.”).
After paying two of NAT’s bills for charges connected to conference calls,
Sprint ceased paying NAT’s terminating access tariffs because Sprint believed
that NAT was involved in a traffic-pumping scheme, otherwise known as access
stimulation, to generate traffic from free conference calls and chat services.
Sprint filed suit against NAT alleging a breach of the Federal
Communications Act (FCA) and a state-law unjust enrichment claim. Docket 1.

3

Sprint also sought declaratory and injunctive relief against the Crow Creek
Sioux Tribal Court and its-then Chief Judge, Theresa Maule. The court granted
a motion by Sprint to enjoin the Crow Creek Sioux Tribal Court from hearing
this matter. Docket 62. NAT then asserted counterclaims against Sprint
alleging a breach of contract and a collection action pursuant to its tariffs, a
breach of implied contract resulting from a violation of its tariffs, and a
quantum meruit/unjust enrichment claim. NAT also seeks declaratory relief.
Docket 99.
On January 12, 2011, NAT moved for a preliminary injunction to enjoin
Sprint from withholding any interstate switched access charges that NAT has
billed to Sprint since March 1, 2010, and to enjoin Sprint from withholding
access charges in the future. Docket 67. The court denied NAT’s preliminary
injunction motion. Docket 118.
II.

Related Cases
This case is one of a number of cases pending in this court and in other

courts involving a dispute between an LEC and an IXC regarding access
charges associated with traffic delivered to free calling providers. In each of
these cases, an LEC claims that an IXC has wrongfully refused to pay
terminating access charges for services performed pursuant to the LEC’s
interstate tariffs and requests compensation under breach of contract, breach
of implied contract, and/or unjust enrichment theories. In each case, the IXC

4

claims that the services provided were not covered by the applicable tariff
because the LEC did not terminate the calls and the free calling providers were
not end users within the meaning of the tariffs. Many of the IXCs also claim
that the applicable LEC engaged in unlawful traffic pumping.
The following cases are pending in the District of South Dakota, some of
which have been stayed pending referral of specific issues to the FCC :
Northern Valley v. Qwest, Civ. 11-4052-KES
Northern Valley v. Sprint, Civ. 11-4053-KES
Northern Valley Communications L.L.C. v. Qwest
Communications Co., Civ. 09-1004-CBK

Stayed

Splitrock Properties, Inc. v. Sprint Communications Co.,
Civ. 09-4075-KES

Stayed

Northern Valley Communications, LLC v. Sprint
Communications Co., Civ. 08-1003-KES

Stayed

Splitrock Properties, Inc. v. Qwest Communications
Corp., No. 08-4172-KES

Stayed

Sancom, Inc. v. AT & T Corp., Civ. 08-4211-KES

Stayed

Northern Valley Communications, LLC v. MCI
Communications Services, Inc. d/b/a Verizon Business
Services, Civ. 07-1016-KES2

Stayed

Sancom, Inc. v. Sprint Communications Co., Civ.
07-4107-KES

Stayed

Sancom, Inc. v. Qwest Communications Co., Civ.
07-4147-KES.

Stayed

2

Northern Valley v. MCI, Civ. 07-1016 is consolidated with Sancom, Inc. v.
MCI Communications Services, Inc., d/b/a Verizon Business Services, Civ.
07-4106.

5

Moreover, the court is aware of similar cases pending in other
jurisdictions, many of which have been stayed pending referral of specific
issues to the FCC. See, e.g., Qwest Commc'ns Co. v. Tekstar Commc'ns, Inc., No.
10-490, 2010 WL 2772442 (D. Minn. July 12, 2010); Tekstar Commc'ns, Inc. v.
Sprint Commc'ns Co., No. 08-1130, 2009 WL 2155930 (D. Minn. July 14, 2009);
All. Am. Tel. Co. v. AT&T, Inc., No. 07-861, 2010 WL 7526933 (S.D.N.Y. Jan. 19,
2010); see also Bluegrass Tel. Co. v. Qwest Commc'ns Co., No. 4:09-CV-70-M,
2010 WL 1257727 (W.D. Ky. Mar. 26, 2010) (staying case pending resolution of
referrals in District of South Dakota, District of Minnesota, and Southern
District of New York cases). But see N. Cnty. Commc'ns Corp. v. Verizon Global
Networks, Inc., 685 F. Supp. 2d 1112, 1117 (S.D. Cal. 2010) (denying motion to
refer Verizon's counterclaims pursuant to primary jurisdiction doctrine).
III.

Relevant FCC History
The FCC not only has multiple similar actions pending before it but also

has taken various administrative actions concerning the services and
technology at issue in this case. The Farmers line of cases is particularly
pertinent to this action.
In Farmers, Farmers & Mutual Telephone Company, an LEC, and Qwest
Communications Corporation, an IXC, disputed whether Qwest had to pay
Farmers’ billed access charges for types of services similar to those at issue
here. Qwest Commc’ns Corp. v. Farmers & Merchants Mut. Tel. Co., 22 FCC Rcd.

6

17973 (2007), 2007 WL 2872754 (Farmers I). Initially, the FCC, in addressing
whether a free conferencing calling company is an end user for purposes of
Farmers’ tariff and, if not, whether Farmers can recover access charges from
Qwest, ruled in favor of Farmers. Id. at 17986-88. The FCC later granted
partial reconsideration based on Qwest’s assertions that Farmers engaged in
fraud and misrepresentations. Qwest Commc’ns Corp. v. Farmers & Merchants
Mut. Tel. Co., 23 FCC Rcd. 1615 (2008), 2008 WL 246393; see also Sancom, Inc.
v. AT&T Corp., 696 F. Supp. 2d 1030, 1034-35 (D.S.D. 2010) (discussing the
Farmers line of cases in detail).
In Qwest Communications Corporation v. Farmers & Merchants Mutual.
Telephone Company, 24 FCC Rcd. 14801, 14812-13 (2009), 2009 WL 4073944
(Farmers II), the FCC found that the conference calling companies did not
subscribe to the services offered under Farmers’ tariff. Because the conference
calling companies were neither “customers” nor “end users” within the
meaning of Farmers’ tariff, Farmers was not entitled to charge Qwest switched
access charges. Id. Thus, the FCC found that Farmers’ practice of charging
Qwest access charges for the traffic from the conference calling companies was
unjust and unreasonable in violation of 47 U.S.C. § 201(b). Id. at 14812-13.
The FCC, however, declined to rule that Farmers was “precluded from receiving
any compensation at all for the services it has provided to Qwest.” Id. at 14812
n.96 (citation omitted). The FCC declined Farmers’ petition for reconsideration
and rejected challenges to its authority to issue Farmers II. Qwest Commc’ns
7

Corp. v. Farmers & Merchants Mut. Tel. Co., 25 FCC Rcd. 3422 (2010), 2010 WL
972315 (Farmers III).
The Court of Appeals for the District of Columbia upheld the FCC’s
reasoning in Farmers II and Farmers III. Farmers & Merchants Mut. Tel. Co. v.
Fed. Commc’n Comm’n, ___ F.3d ___, No. 10-1093, 2011 WL 6848437 (D.C. Cir.
Dec. 30, 2011). In summarizing the FCC’s decision in Farmers II, the court
reasoned that “[t]he Commission found that in numerous respects, the
conference calling contracts did not establish a subscriber relationship under
Farmers’ tariff.” Id. at *3. For example, Farmers did not bill the conference
calling companies and the companies never paid access charges to Farmers,
Farmers did not expect to be paid, and the parties’ relationship was not
structured consistent with Farmers’ tariff. Id. at *3. The court also rejected
Farmers’ argument that the FCC ignored the plain terms of its tariff that
required Qwest to pay the tariffed rate regardless of whether the conference
calling companies were end users. Id. at *4 (reasoning that “the tariff itself
includes a diagram of switched access service that illustrate an end user as one
of the sub-elements of that service.”).
The court upheld the FCC’s determination that Farmers did not provide
Qwest with “switched access” pursuant to its tariff, and, thus, Farmers was
unjustly and unreasonably charging Qwest pursuant to § 201(b) and § 203(c).
Id. at *5 (citation omitted). Accordingly, the court upheld the FCC’s
determination that the filed rate doctrine did not apply:
8

Although it did not decide how traffic to the conference calling
companies should be classified, the Commission based its
conclusion, that in the absence of an end user such traffic did not
constitute switched access service under the tariff, on the
controlling plain text of Farmers’ tariff. The service was outside of
the tariff and, as such, the filed rate doctrine could not protect
Farmers from liability to Qwest.
Id. at *6 (internal citation omitted). The court continued to leave open the
question of whether and to what extent Farmers could recover compensation
from Qwest.
In February of 2011, the FCC released a “Notice of Proposed Rulemaking
and Further Notice of Proposed Rulemaking.” Connect America Fund; A National
Broadband Plan for Our Future; Establishing Just and Reasonable Rates for
Local Exchange Carriers, 26 FCC Rcd. 4554, 2011 WL 466775 (proposed Feb. 9,
2011). On November 29, 2011, the FCC released its final rule, which addresses
“access stimulation” and “traffic pumping.” The final rule sets out a two-part
test for determining whether an LEC is engaged in access simulation and, if so,
provides a compensation scheme. 76 Fed. Reg. at 73837. The FCC also created
a transitional framework for VoIP intercarrier compensation. Id. at 73833. But
the final rule does not state that it is retroactive, and the court will not assume
that it is retroactive. See, e.g., Bowen v. Georgetown Univ. Hosp., 488 U.S. 204,
208 (1988) (“Retroactivity is not favored in the law. . . . By the same principle, a
statutory grant of legislative rulemaking authority will not, as a general matter,
be understood to encompass the power to promulgate retroactive rules unless

9

that power is conveyed by Congress in express terms.” (citations omitted)).
Thus, the final rule is inapplicable to the time period before the final rule
became effective.
DISCUSSION
“Primary jurisdiction ‘is a doctrine specifically applicable to claims
properly cognizable in court that contain some issue within the special
competence of an administrative agency. It requires the court to enable a
referral to the agency, staying further proceedings so as to give the parties
reasonable opportunity to seek an administrative ruling.’ ” United States v. Rice,
605 F.3d 473, 475 (8th Cir. 2010) (quoting Reiter v. Cooper, 507 U.S. 258, 268
(1993)). “The doctrine ‘is concerned with promoting proper relationships
between the courts and administrative agencies charged with particular
regulatory duties.’ ” Id. (quoting United States v. W. Pac. R.R. Co., 352 U.S. 59,
63 (1956)). “Primary jurisdiction ‘promotes uniformity, consistency, and the
optimal use of the agency's expertise and experience.’ ” Id. (quoting United
States v. Henderson, 416 F.3d 686, 691 (8th Cir. 2005)).
There is no fixed formula for deciding whether to apply the doctrine of
primary jurisdiction. Access Telecomms. v. Sw. Bell Tel. Co., 137 F.3d 605, 608
(8th Cir. 1998) (citing W. Pac., 352 U.S. at 64). Instead, the court considers
“whether the reasons for the doctrine are present and whether applying the
doctrine will aid the purposes for which the doctrine was created.” Id. (citing

10

United States v. McDonnell Douglas Corp., 751 F.2d 220, 224 (8th Cir. 1984)).
The Eighth Circuit has identified two main reasons and purposes for the
doctrine. Alpharma, Inc. v. Pennfield Oil Co., 411 F.3d 934, 938 (8th Cir. 2005)
(internal quotation omitted). First, and most common, “the use of agency
expertise in cases raising issues of fact not within the conventional experience
of judges or cases requiring the exercise of administrative discretion[.]” Id.
(internal quotation omitted). Second, the “promotion of consistency and
uniformity within the areas of regulation[.]” Id. (citation omitted); see also Rice,
605 F.3d at 475 (“Primary jurisdiction ‘promotes uniformity, consistency, and
the optimal use of the agency's expertise and experience.’ ” (quoting Henderson,
416 F.3d at 691)). “The doctrine of primary jurisdiction . . . should seldom be
invoked unless a factual question requires both expert considerations and
uniformity of resolution.” McDonnell Douglas, 751 F.2d at 224 (quotations
omitted). When the primary jurisdiction doctrine applies, the “district court has
discretion either to [stay the case and] retain jurisdiction or, if the parties
would not be unfairly disadvantaged, to dismiss the case without prejudice.”
Access Telecomms., 137 F.3d at 609 (internal quotation and citation omitted,
alteration in original).
Sprint urges the court to refer four issues to the FCC: (1) “Whether NAT’s
FCC Tariff No. 1 was lawful[;]” (2) “Whether NAT’s FCC Tariff No. 2, as revised
effective June 26, 2011, is lawful[;]” (3) “Whether NAT is entitled to collect

11

interstate switched access charges it has billed to Sprint pursuant to FCC
Tariff Nos. 1 and 2 for calls to numbers assigned to free conference calling
services, chat rooms providers and the like[;]” and (4) “Whether NAT is
unlawfully attempting to charge for switched access through the operation of
an unreasonable scheme.” Docket 125 at 12. Sprint further contends that it
expects the court, consistent with its other referral orders, will refer an
additional issue: “If the services provided by NAT do not qualify as switched
access services to Free Conferencing Corporation or other free calling providers,
determination of how the traffic should be classified, whether that traffic can
be tariffed and whether NAT is entitled to any compensation for the services
NAT provided, and if so what a reasonable rate would be for NAT’s services.”
Docket 125 at 12.
In prior orders, this court has generally referred three issues to the FCC:
(1) whether the LEC is entitled to collect interstate switched access charges it
has billed to the IXC for calls to numbers assigned to free calling providers;
(2) in the event the services provided by the LEC to the IXC do not qualify as
switched access service under the LEC's applicable interstate access tariff,
determination of the proper classification of these services, whether such
services are subject to federal tariffing requirements, and whether the LEC is
entitled to obtain compensation for these services; and (3) in the event that the
services provided by the LEC to the IXC do not qualify as switched access

12

service under the LEC's applicable interstate access tariff, but the LEC is
otherwise entitled to compensation for these services, determination of a
reasonable rate for these services. See, e.g., Sancom, 696 F. Supp. 2d at 1036.3
The court finds that the reasons for applying the primary jurisdiction doctrine
are present and that applying the doctrine will aid the purposes for which the
doctrine was created with respect to the three issues outlined by the court.
I.

Application of the Tariffs
All of Sprint’s proposed issues concentrate on whether NAT’s tariffs are

lawful and whether NAT can collect switched access fees involving calls to free
conference calling companies utilizing VoIP technology. As stated above, the
final rule, which sets out a two-part test for determining whether an LEC is
engaged in access stimulation and provides a transitional framework for
intercarrier compensation for a carrier using VoIP technology, does not appear
to be retroactive. Thus, if the court declines to refer this case to the FCC, the
court would need to interpret NAT’s tariffs’ terms and then determine if the

3

The court has issued a number of almost-identical orders staying
similar cases pending referral to the FCC. See, e.g., Splitrock Props., Inc. v.
Sprint Commc’ns Co., No. Civ. 09-4075-KES, 2010 WL 1329634 (D.S.D.
Mar. 30, 2010); Splitrock Props., Inc. v. Qwest Commc’ns Corp., No. Civ. 084172-KES, 2010 WL 2867126 (D.S.D. July 20, 2010); Sancom, Inc. v. AT&T
Corp., 696 F. Supp. 2d 1030 (D.S.D. 2010); Sancom Inc. v. Sprint Commc’ns Co.,
No. Civ. 07-4107-KES, 2010 WL 936718 (D.S.D. Mar. 15, 2010); Sancom, Inc.
v. Qwest Commc’ns Corp., No. Civ. 07-4147, 2010 WL 960005 (D.S.D. Mar. 12,
2010). For simplicity, the court will refer to its previous orders with a single
citation to Sancom, Inc. v. AT&T Corp., 696 F. Supp. 2d 1030 (D.S.D. 2010).
13

court should enforce the tariffs when VoIP technology is used for the time
period before the final rule became effective.
An action to enforce a tariff is properly brought before a district court.
Access Telecomms., 137 F.3d at 609; see also United States v. Great N. Ry. Co.,
337 F.2d 243, 246 (8th Cir. 1964) (“Ordinarily, the construction of a tariff is a
matter of law for the Court, being no different than the construction of any
other written document.” (citation omitted)). But “ ‘where words in a tariff are
used in a peculiar or technical sense, and where extrinsic evidence is necessary
to determine their meaning or proper application,’ . . . the issue should first go
to the appropriate administrative agency.” Access Telecomms., 137 F.3d at 609
(quoting W. Pac., 352 U.S. at 66). “The reason is plainly set forth: such a
‘determination is reached ordinarily upon voluminous and conflicting evidence,
for the adequate appreciation of which acquaintance with many intricate facts
of [the regulated area] is indispensable, and such acquaintance is commonly to
be found only in a body of experts.’ ” W. Pac., 352 U.S. at 66 (quoting Great N.
Ry. Co. v. Merchants' Elevator Co., 259 U.S. 285, 291 (1922)).
If the interpretation of the tariff is straightforward, then courts do not
apply the primary jurisdiction doctrine. See, e.g., GCB Commc’ns, Inc. v. U.S.
S. Commc’ns, Inc., 650 F.3d 1257, 1264 (9th Cir. 2011) (reasoning that referral
was not appropriate because “the basic compensation concept, with all of its
complexity, is not before us. What is before us is the relatively easier task of

14

construing the language of the FCC orders.”); and Nat’l Commc’ns Ass’n v.
AT&T Co., 46 F.3d 220, 223 (2d Cir. 1995) (reasoning that application of the
primary jurisdiction was unnecessary because the case did “not present any
issues involving intricate interpretations or applications of tariffs that might
need the FCC's technical or policy expertise.”).
Contrastingly, if the case requires interpretation of technical terms or
specialized knowledge, then referral is appropriate under the primary
jurisdiction doctrine. See, e.g., Access Telecomms., 137 F.3d at 609 (reasoning
that referral was appropriate because the issue required the FCC to determine
the reasonableness of a telecommunications practice); see also Clark v. Time
Warner Cable, 523 F.3d 1110, 1115 (9th Cir. 2008) (reasoning that referral was
proper because Congress specifically delegated responsibility to the FCC to
define the type of services that were at issue in that case); Davel Commc’ns, Inc.
v. Qwest Corp., 460 F.3d 1075, 1089 (9th Cir. 2006) (reasoning that “the
interpretation of an agency order issued pursuant to the agency's
congressionally granted regulatory authority falls within the agency's primary
jurisdiction where the order reflects policy concerns or issues requiring
uniform resolution.” (citing Serv. Storage & Transfer Co. v. Virginia, 359 U.S.
171, 177 (1959); Rilling v. Burlington N. R.R. Co., 909 F.2d 399, 401 (9th Cir.
1990)); and In re StarNet, Inc., 355 F.3d 634, 639 (7th Cir. 2004) (“Instead of
trying to divine how the FCC would resolve the ambiguity . . . we think it best

15

to send this matter to the Commission under the doctrine of primary
jurisdiction.”).
The application of NAT’s switched access tariffs to the time period before
the final rule became effective requires the interpretation of words used in a
technical sense and consideration of extrinsic evidence relating to topics within
the FCC’s expertise. One of the most glaring areas in need of the FCC’s
expertise is NAT’s definition of “end user” in its tariffs. In Qwest
Communications Co. v. Northern Valley Communications, LLC, 26 FCC Rcd. 8332
(2011), 2011 WL 2258081 (Northern Valley I), the tariff of Northern Valley, a
CLEC, defined an “end user” as “any Customer of an Interstate or Foreign
Telecommunications Service that is not a carrier.” Id. at 8335. The tariff further
provided that “an End User need not purchase any service provided by
[Northern Valley.]” Id. The FCC found this portion of Northern Valley’s tariff
unlawful:
The Commission has determined that a CLEC may not impose
switched access charges pursuant to [a] tariff unless it is providing
interstate switched exchange access services to its own end users,
and that an entity to whom the CLEC offers free service is not an
end user. Thus, if Northern Valley wishes to charge IXCs for
terminating calls to entities that pay no fees, it must do so through
a negotiated contract.
Id. at 8338. The FCC ordered Northern Valley to file a new tariff within ten
days. Id. at 8341. The FCC found Northern Valley’s revised tariff unlawful.
Northern Valley Commc’ns LLC Revisions to FCC Tariff No. 3, 26 FCC Rcd. 9280

16

(2011), 2011 WL 2577786. The FCC denied Northern Valley’s petition for
reconsideration. Qwest Commc’ns Co. v. Northern Valley, 26 FCC Rcd. 14520
(2011), 2011 WL 4600858.
Before the FCC released its order in Northern Valley I, NAT’s tariff
number two contained some similar language defining an end user, including
that “[a]n End User need not purchase any service provided by the Company.”
Docket 67-3 at 9. NAT later revised its tariff number two and provided a new
definition of end user:
“End User” means any customer of an interstate or foreign
telecommunications service that is not a carrier, except that a
carrier (other than a telephone company) shall be deemed to be an
“end user” when such carrier uses a telecommunications service
for administrative purposes and a person or entity that offers
telecommunications services exclusively as a reseller shall be
deemed to be an “end user” if all resale transmissions offered by
such reseller originates or terminates on the premises of such
reseller.
Docket 127-1 at 9. Moreover, NAT’s revised tariff number two purports to
charge free conference calling companies a fee:
In connection with the FCC’s Universal Service Orders, the
Company will pay a percentage of its interstate retail revenues to
support the Universal Service Fund (USF). The Company will passthrough the USF assessment to its End Users by assessing a
charge applicable against all retail interstate and international
charges, including usage and non-usage charges. This surcharge is
in addition to standard usage charges and any applicable service
charges and surcharges associated with the Company’s service.
The Company’s Universal Service Fee factor will match the relevant
quarterly Universal Service Contribution Factor approved by the
FCC up to the nearest tenth of a percent.

17

Docket 127-1 at 49. As in Northern Valley I, the FCC will need to carefully parse
the terms used in NAT’s tariffs to determine whether the tariff applies to calls
to free conference calling companies. The interpretation of Buyer and End User
is a task within the FCC’s unique expertise. See, e.g., AT&T Corp. v. Y’Max
Commc’ns Corp., 226 FCC Rcd. 5742, 5747-48 (2011), 2011 WL 1361436
(interpreting “end user” when the LEC billed the IXC access charges for calls
made through a MagicJack device that allows a person to make a phone call
over the internet); Sancom, 696 F. Supp. 2d at 1038 (“The FCC is uniquely
qualified to compare the terms of an agreement between an LEC and a
conference calling company with the terms of a traditional agreement for the
provision of tariffed access services because of the FCC’s experience in the
field.”).
NAT’s tariffs contain other technical terms and apparent ambiguities that
should first be determined by the FCC. For example, NAT’s tariff number two
contains four different definitions of switched access services, see Docket 67-3
at 8, 10, 38 (providing various definitions for “switched access service”), which
need to be synthesized and require technical expertise. NAT’s revised tariff
number two deleted “volume end user” from its definitions but still references
“volume end user” in the tariff. See Docket 127-1 at §§ 3.1.7.4. and 7.2.2.

18

Additionally, NAT’s tariffs alter the statutory statute of limitations for raising
disputes.4
Moreover, NAT provides the free conference calling services via VoIP
technology. It is unclear how, if at all, an LEC is to be compensated when it
utilizes VoIP technology because courts have held that VoIP services are
exempt from access charges pursuant to 47 U.S.C. §§ 251(b)(5), 251(g). See,
e.g., PAETEC Commc’ns, Inc. v. CommPartners, LLC, No. 08-0397, 2010 WL
1767193, at *5 (D.D.C. Feb. 18, 2010) (“There cannot be a pre-Act obligation
relating to inter-carrier compensation for VoIP, because VoIP was not developed
until the 1996 Act was passed. . . . Because the access charge regime is
inapplicable to VoIP-originated tariff, and because a filed tariff cannot be
inconsistent with the statutory framework pursuant to which it is promulgated,
the filed-rate doctrine must yield in this case.”); cf. Sw. Bell Tel., L.P. v. Mo. Pub.
Serv. Comm’n, 461 F. Supp. 2d 1055, 1080 (E.D. Mo. 2006) (“Because IP-PSTN
is a new service developed after the Act, there is no pre-Act compensation
regime which could have governed it, and therefore § 251(g) is inapplicable.”).
In determining whether an LEC can recover switched access charges from an
IXC when the LEC uses a non-traditional method of service, the FCC has

4

The FCA establishes a two-year statute of limitations for actions. 47
U.S.C. § 415(a). NAT’s revised tariff number two, however, imposes a 90-day
statute of limitations. See Docket 127-1 at § 3.1.7.1(a) (“All bills are presumed
accurate, and shall be binding on the Buyer unless written notice [of] a good
faith dispute is received by the Company within 90 days[.]”).
19

carefully reviewed the LEC’s tariffs and the technology at issue to reach a
resolution. See, e.g., AT&T Corp., 26 FCC Rcd. at 5752-55 (carefully parsing
the LEC’s interstate tariff to determine how the LEC should be compensated, if
at all, when it used a MagicJack device to transmit calls). Determining whether
NAT’s tariffed services using VoIP technology are the functional equivalent of
services provided by incumbent LECs and how NAT should be compensated, if
at all, for using VoIP technology, requires detailed knowledge of the types of
technology at issue and how that technology fits into the FCA, a task within the
FCC’s expertise.
Determining how, if at all, NAT should be compensated will likely require
a determination of what rate applies to access charges incurred with VoIP
technology, which is solely within the FCC’s expertise. See MCI Telecomms.
Corp. v. F.C.C., 627 F.2d 322, 334-36 (D.C. Cir. 1980) (discussing how the
FCC, not the court, has the ability to determine rates for interstate
telecommunications issues). NAT argues that, due to the final rule, the court
can decide this case on its merits. Docket 131 at 14. But, as stated above, the
final rule is likely not retroactive and, therefore, NAT’s tariffs will need to be
interpreted to determine whether NAT can charge Sprint access service
charges. And the FCC, not the court, is more qualified to consider the meaning
of different types of connections provided to different customers. Sancom, 696
F. Supp. 2d at 1038 (citing Access Telecomms., 137 F.3d at 609).

20

Overall, the reasons for the primary jurisdiction doctrine are present in
this case so that applying the doctrine will aid the purposes for which it was
created. The court has considered the added expense and delay that may result
from the primary jurisdiction referral, but it finds that the need for expert
consideration, uniformity, and consistency within this complicated, technical,
and dynamic field compels referral of specific issues to the FCC. Thus, as in
the other multiple cases that this court has referred, see, e.g., Sancom, 696 F.
Supp. 2d at 1043, the court will refer the interpretation of NAT’s tariffs to the
FCC.
Sprint’s first two proposed issues for referral, whether NAT’s tariffs are
lawful, are too broad. By combining all four of Sprint’s proposed issues and
referring back to the court’s previously-referred issues,5 the court believes the
following issue summarizes Sprint’s concerns, will assist the court in
determining the merits of this action after the FCC completes its analysis, and
maintains consistency between this action and the numerous other similar
actions pending before the court: Whether, under the facts of the present
dispute between NAT and Sprint, NAT is entitled to collect interstate switched
access charges it has billed to Sprint using VoIP technology pursuant to NAT’s

5

See, e.g., Sancom, 696 F. Supp. 2d at 1043 (referring the issue of
“[w]hether, under the facts of the present dispute between Sancom and AT&T,
Sancom is entitled to collect interstate switched access charges it has billed to
AT & T pursuant to Sancom’s interstate access tariff for calls to numbers
assigned to free calling providers.”).
21

interstate access tariff number one, interstate access tariff number two, or
revised interstate tariff number two for calls to numbers assigned to free calling
providers.
II.

Classification of Services
Sprint does not specifically request that the court refer the issue of how

NAT’s services are to be classified if they are not switched access services, but
anticipates that the court will refer a similar issue to the FCC in the event that
the FCC determines that NAT’s services are not switched access services. See
Docket 125 at 12. The court has referred similar issues to the FCC, see, e.g,
Sancom, 696 F. Supp. 2d at 1043 (referring a similar issue to the FCC), and
has referred issues pursuant to the primary jurisdiction doctrine absent a
request by a party.6
As noted by various courts, “[t]his area of telecommunication regulation
is in dynamic flux . . . [so] these issues . . . are ripe for determination and
clarification by the regulatory agency.” All. Am. Tel., 2010 WL 7526933, at *1;
see also Sancom, 696 F. Supp. 2d at 1043 (same); Bluegrass Tel., 2010 WL

6

“The primary jurisdiction doctrine should be applied when the reasons
for the doctrine are present even if the parties have not raised the issue.”
Splitrock Props., 2010 WL 2867126, at *4 (D.S.D. July 20, 2010). This is
because “the doctrine exists for the proper distribution of power between
judicial and administrative bodies and not for the convenience of the parties.”
Red Lake Band of Chippewa Indians v. Barlow, 846 F.2d 474, 476 (8th Cir.
1988).

22

1257727, at *2 (same); see also Allnet Commc’n Serv., Inc. v. Nat’l Exchange
Carrier Ass’n, 965 F.2d 1118, 1121 (D.C. Cir. 1992) (reasoning that the FCC is
in the better position to resolve conflicting policies in the telecommunications
arena). The area is even more in flux after the FCC announced its final rule but
did not provide analysis on how, if at all, a CLEC should be compensated for
the services at issue here for the time period before the final rule became
effective. Because the FCC’s input on the tariff application, classification of
services, the use of VoIP technology, and reasonable rate issues may inform the
court’s analysis of this case going forward, the court will refer the following
issue to the FCC: If the services provided by NAT do not qualify as switched
access services to Free Conferencing Corporation or other free calling providers,
determination of how the traffic should be classified, whether that traffic can
be tariffed and whether NAT is entitled to any compensation for the services
NAT provided, and if so, what a reasonable rate would be for NAT’s services.
Moreover, because the FCC, not the court, determines the rate for
telecommunication services, the FCC should determine what rate applies to
services provided by NAT if the services are not switched access services. Thus,
as in other cases, the court will refer an issue about rate making to the FCC: In
the event that the services provided by NAT to Sprint do not qualify as switched
access services under NAT’s applicable interstate access tariff, but NAT is
otherwise entitled to compensation for these services, determination of a

23

reasonable rate for these services. See, e.g., Sancom, 696 F. Supp. 2d at 1043
(referring a similar issue to the FCC).
III.

Motion to Strike
Sprint moves to strike certain evidence submitted by NAT, including

Carey Roesel’s affidavit (Docket 131-1), Scott Swier’s affidavit (Docket 131-2),
and Exhibits 1 and 2 (Dockets 131-3, 131-4), or in the alternative disregard
this information in resolving the pending motions. Because the court resolved
the motion to stay and refer solely on the legal issues presented, the affidavits
and accompanying exhibits are irrelevant to the resolution of the pending
motions. Thus, Sprint’s motion to strike is denied without prejudice. If the
affidavits become relevant after the FCC has made its final determination on
referral, Sprint may again move to strike the affidavits and accompanying
exhibits.
CONCLUSION
While NAT originally moved to stay this action pending action by the
FCC, NAT urges the court to deny its motion to stay because NAT believes that
the final rule is clear and the court can determine the merits of the case. NAT’s
motion to stay is denied as moot. Sprint moves to stay and refer specific issues
to the FCC. Sprint’s motion to stay and refer is granted. Sprint also moves to
strike or in the alternative disregard certain affidavits and accompanying
evidence submitted by NAT. Because that evidence is unnecessary for the court

24

to determine the motion to stay, Sprint’s motion to strike is denied without
prejudice. Accordingly, it is
ORDERED that defendant’s motion to stay (Docket 121) is denied as
moot.
IT IS FURTHER ORDERED that plaintiff’s motion to stay and refer
(Docket 124) is granted.
IT IS FURTHER ORDERED that plaintiff’s motion to strike (Docket 136)
is denied without prejudice.
IT IS FURTHER ORDERED that this matter is referred to the FCC for
resolution, to the extent the FCC’s jurisdiction permits, of the following issues:
(1)

Whether, under the facts of the present dispute between NAT
and Sprint, NAT is entitled to collect interstate switched
access charges it has billed to Sprint using VoIP technology
pursuant to NAT’s interstate access tariff number one,
interstate access tariff number two, or revised interstate
tariff number two for calls to numbers assigned to free
calling providers.

(2)

If the services provided by NAT do not qualify as switched
access services to Free Conferencing Corporation or other
free calling providers, determination of how the traffic should
be classified, whether that traffic can be tariffed and whether
NAT is entitled to any compensation for the services NAT
provided, and if so, what a reasonable rate would be for
NAT’s services.

(3)

In the event that the services provided by NAT to Sprint do
not qualify as switched access services under NAT’s
applicable interstate access tariff, but NAT is otherwise
entitled to compensation for these services, determination of
a reasonable rate for these services.

25

IT IS FURTHER ORDERED that Sprint will contact the Market Disputes
Resolution Division of the FCC to obtain guidance regarding the appropriate
method for bringing this matter before the FCC. Sprint will initiate proceedings
as recommended by the Market Disputes Resolution Division within 30 days of
the date of this order. Sprint is directed to furnish the FCC with a copy of this
order as part of its submission.
IT IS FURTHER ORDERED that the parties will submit a joint report to
the court every three months describing the status of the proceeding before the
FCC, the first of which will be filed no later than three months from the date of
this order.
Dated February 22, 2012.
BY THE COURT:

/s/ Karen E. Schreier
KAREN E. SCHREIER
CHIEF JUDGE

26