Northern Valley Communications, L.L.C. v. Qwest Communications Company, LLC

Filing 89

ORDER denying 56 Motion for Leave to file counterclaims; denying 62 Motion for Protective Order; granting 67 Motion to Stay discovery; granting 74 Motion for Leave to file a supplement; denying 77 Motion for Leave to file untimely response. Plaintiff and defendant to submit briefs on or before March 1, 2012, whether case should be stayed and referred to the FCC. Signed by Chief Judge Karen E. Schreier on 2/16/2012. (KC)

UNITED STATES DISTRICT COURT
DISTRICT OF SOUTH DAKOTA
SOUTHERN DIVISION
NORTHERN VALLEY
COMMUNICATIONS, LLC,
Plaintiff,
vs.
QWEST COMMUNICATIONS
COMPANY, LLC,
Defendant.

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CIV. 11-4052-KES

ORDER

Plaintiff, Northern Valley Communications, LLC, brought suit against
defendant, Qwest Communications Company, LLC, alleging that Qwest failed to
pay Northern Valley’s access charges for completing calls to free conferencing
calling services. There are a number of motions pending before the court. Qwest
moves to file counterclaims. Docket 56. Qwest also moves for a protective order
for discovery. Docket 62. Northern Valley moves for leave to file an untimely
response to Qwest’s motion for a protective order. Docket 77. Northern Valley
also moves to stay discovery. Docket 67.
DISCUSSION
According to the complaint, Northern Valley is a telecommunications
provider located in Aberdeen, South Dakota. Under the telecommunications
parlance, Northern Valley is known as a competitive local exchange carrier

(CLEC), also known as a local exchange carrier (LEC). Qwest is known as an
interexchange carrier (IXC) and provides long-distance services.
Generally, an IXC utilizes its own telephone lines to carry a call across a
state or across the country. But an IXC does not own the telephone lines
located within the local exchange. Instead, a CLEC imposes upon an IXC an
access charge to originate (an “originating” switched access charge) or
terminate (a “terminating” switched access charge) a long-distance phone call
on a line located within the local exchange. The access charge for interstate
long-distance calls is determined by a tariff filed by the CLEC with the Federal
Communications Commission (FCC), and the charge for intrastate longdistance calls is determined by a tariff filed with the South Dakota Public
Utilities Commission.
Northern Valley filed its tariff number two with the FCC on November 15,
2004, which became effective on November 16, 2004. Pursuant to tariff number
two, Northern Valley billed Qwest for access charges when Qwest customers
utilized free conference calling services that used Northern Valley’s equipment.
Northern Valley charged Qwest its typical rural access charge for the free
conference calls. Since May 1, 2007, Qwest has refused to pay Northern
Valley’s invoices. Northern Valley brought suit against Qwest to recover charges
pursuant to its tariff number two. This suit was assigned to Judge Charles B.
Kornmann. See Northern Valley Commc’ns, LLC v. Qwest Commc’ns Corp., Civ.

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09-1004-CBK. Judge Kornmann stayed the case and referred some issues to
the FCC. Id. at Docket 159.
On July 8, 2010, Northern Valley filed tariff number three with the FCC,
which became effective on July 23, 2010, and remained effective until June 7,
2011. On December 29, 2010, Northern Valley filed transmittal number four
with the FCC, which modified tariff number three.
Northern Valley has been charging Qwest for services under tariff
number three since July 23, 2010. Qwest has not paid any of Northern Valley’s
invoices billed under tariff number three. As of April 18, 2011, when Northern
Valley filed this action, Northern Valley asserted that Qwest owes it $230,000.
Additional charges continue to accrue daily.
I.

Motion to File Counterclaims
Qwest moves to file counterclaims (Docket 56), which Northern Valley

resists. Qwest’s proposed counterclaims allege a violation of the Federal
Communications Act, specifically 47 U.S.C. §§ 201(b), 203, a state-law illegal
discrimination claim, and claims of unlawful cross-subsidies under 47 U.S.C.
§§ 254(K), 201, 206, 207. Docket 56-1.
Rule 12 defenses are generally disposed of before the party files a
responsive pleading. Fed. R. Civ. P. 12(b) (“A motion asserting any of these
defenses must be made before pleading if a responsive pleading is allowed.”).
Instead of filing an answer, Qwest moved to dismiss some of Northern Valley’s
claims under Rule 12(b)(6) and to strike other claims under Rule 12(f), which
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the court granted. Docket 88. Qwest has not filed an answer to Northern
Valley’s complaint. Instead, Qwest moves to file its counterclaims before it
submits an answer to assist the parties in briefing the pending summary
judgment motions. Docket 56. Northern Valley responds that Qwest cannot file
counterclaims separately from its answer.
Federal Rule of Civil Procedure 7(a) exhaustively lists allowable pleadings
and “counterclaim” is not listed. “Federal Rule 7(a) purports to enumerate all of
the pleadings permitted in federal practice. In doing so the rule, which applies
exclusively to the pleadings, sharply limits the nature and number of pleadings
available under the federal rules.” 5 Charles Alan Wright and Arthur R. Miller,
Federal Practice and Procedure § 1183 (3d ed.). Because a counterclaim is not a
stand alone pleading, it must be stated within a pleading. See Fed. R. Civ. P.
13(b) (“A pleading may state as a counterclaim against an opposing party any
claim that is not compulsory.”). Courts have refused to allow a party to assert
counterclaims that are not stated in a pleading. See, e.g., Microsoft Corp. v. Ion
Tech. Corp., 484 F. Supp. 2d 955, 965 (D. Minn. 2007) (“Counterclaims . . .
must appear in a pleading, and a separate document that contains
counterclaims is not a permissible pleading.” (citations omitted)); Columbia Gas
Transmission LLC v. Crawford, 267 F.R.D. 227, 228 (N.D. Ohio 2010) (“[A]
counterclaim is not a ‘pleading’ but rather a claim asserted within a
‘pleading’—like an answer” (citations omitted)); Bernstein v. IDT Corp., 582 F.
Supp. 1079, 1089 (D. Del. 1984) (dismissing counterclaims that were filed in a
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separate document instead of a pleading); cf. In re Cessna Distrib. Antitrust
Litig., 532 F.2d 64, 67 (8th Cir. 1976) (reasoning that “[a]ppellants could assert
the cross-claim only in their answer.”).
Qwest did not assert its counterclaims in a pleading but rather in a
motion. Because the federal rules do not permit this practice, Qwest’s motion to
file counterclaims is denied.
II.

Motion to Stay Discovery
Northern Valley moves to stay discovery until the court resolves the

pending motions for summary judgment in order to save the parties’ resources.
Docket 66. Qwest argues that a stay of discovery is inappropriate and also
moves for leave to file a supplement to its response. Docket 74. For good cause
shown, Qwest’s motion for leave to file a supplement to its response is granted.
The court has reviewed and considered Qwest’s supplement.
Rule 26 provides that discovery is immediately available after the parties’
initial discovery conference unless the court, upon a motion, determines
otherwise. Fed. R. Civ. P. 26(d). Pursuant to Rule 26(c), “the court has
discretion to stay discovery on other issues until the critical issue has been
decided.” 8A Charles Alan Wright, Arthur R. Miller, and Richard L. Marcus,
Federal Practice and Procedure § 2040 (3d ed.). Courts have utilized various
standards in determining whether to stay discovery, including (1) whether there
is a strong showing that a claim is unmeritorious; (2) the breadth of discovery
and burden of responding to it; and (3) the risk of unfair prejudice to the party
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opposing the stay. Id. at § 2037 n.18 (citing Chesney v. Valley Stream Union
Free Sch. Dist., 236 F.R.D. 113, 116 (E.D.N.Y. 2006)). Courts also consider the
complexity of the action and the stage of litigation. Chesney, 236 F.R.D. at 116.
A stay of discovery is within the district court’s discretion and is reviewed by
the appellate court for an abuse of that discretion. Steinbuch v. Cutler, 518 F.3d
580, 588 (8th Cir. 2008) (citing Lakin v. Prudential Sec., Inc., 348 F.3d 704, 713
(8th Cir. 2003)); see also Maune v. Int’l Bhd. of Elec. Workers, 83 F.3d 959, 963
(8th Cir. 1996) (upholding the district court’s granting of a party’s request to
stay discovery).
There are currently two summary judgment motion that are pending.
Dockets 23, 37. Qwest argues “that it needs discovery from Northern Valley to
present evidence in opposition to summary judgment.” Docket 73 at 14. But, as
stated below, the court is ordering the parties to brief whether this entire action
should be stayed pending resolution of specific issues by the FCC. Staying
discovery until the court resolves the issue of whether this case should be
referred to the FCC conserves resources and does not prejudice either party. If
the court ultimately does not stay the action pending referral to the FCC, Qwest
can move to lift the stay of discovery. Thus, Northern Valley’s motion to stay
discovery is granted.
Also pending is Qwest’s motion for a protective order and Northern
Valley’s motion to submit an untimely response to the motion for a protective
order. Docket 62, 77. Because the court has stayed discovery, these motions
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are denied without prejudice. If the motions become relevant after the court has
resolved the issue of whether this case should be stayed and referred, the
parties may resubmit their motions.
III.

Further Briefing
In several similar cases, the court has ordered, pursuant to the doctrine

of primary jurisdiction, that the action be stayed and for the referral of three
issues to the FCC for resolution. See, e.g., Splitrock Props., Inc. v. Sprint
Commc’ns Co., 09-4075-KES (Docket 43). Although neither party raised this
issue, before addressing the pending motions for summary judgment, the court
would like both parties to address whether this case should be stayed and
referred to the FCC. Accordingly, it is
ORDERED that defendant’s motion to file counterclaims (Docket 56) is
denied.
IT IS FURTHER ORDERED that defendant’s motion for leave to file a
supplement to its response to plaintiff’s motion to stay discovery (Docket 74) is
granted.
IT IS FURTHER ORDERED that plaintiff’s motion to stay discovery
(Docket 67) is granted.
IT IS FURTHER ORDERED that defendant’s motion for a protective order
(Docket 62) and plaintiff’s motion to file an untimely response to the protective
order (Docket 77) are denied without prejudice.

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IT IS FURTHER ORDERED that on or before March 1, 2012, plaintiff and
defendant will submit a brief on whether this case should be stayed and
referred to the FCC.
Dated February 16, 2012.
BY THE COURT:

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

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