Firstcom, Inc. v. Qwest Corporation ( 2009 )

United States Court of Appeals
FOR THE EIGHTH CIRCUIT
___________
No. 07-3548
___________
Firstcom, Inc., *
a Minnesota Corporation, *
*
Appellant, *
* Appeal from the United States
v. * District Court for the
* District of Minnesota.
Qwest Corporation, *
a Colorado Corporation, *
*
Appellee. *
___________
Submitted: June 9, 2008
Filed: February 9, 2009
___________
Before MURPHY, BYE, and SHEPHERD, Circuit Judges.
___________
SHEPHERD, Circuit Judge.
Firstcom, Inc. (“Firstcom”) appeals the district court’s1 order dismissing all of
its claims against Qwest Corporation (“Qwest”). We affirm.
1
The Honorable David S. Doty, United States District Judge for the District of
Minnesota, adopting the report and recommendation of the Honorable Susan Richard
Nelson, United States Magistrate Judge for the District of Minnesota.
I.
Firstcom and Qwest, both providers of telecommunications services, were
competitors within Minnesota. “The telecommunications industry is regulated by
Chapter 5 of the Federal Communications Act of 1934, as amended by the
Telecommunications Act of 1996, codified at 47 U.S.C. § 151 et seq.” (the “Act”).
TON Servs., Inc. v. Qwest Corp., 493 F.3d 1225, 1229 (10th Cir. 2007). Prior to the
amendments, “local telephone service was provided by companies holding
monopolies which were subject to regulation by local governments,” but, in enacting
the 1996 amendments, “Congress chose to encourage competition among telephone
service providers and to impose greater federal regulation.” Sw. Bell Tel., L.P. v. Mo.
Pub. Serv. Comm’n, 530 F.3d 676, 680 (8th Cir. 2008). In addition, the Minnesota
Telecommunications Act of 1996 (“MTA”), Minn. Stat. § 237.01 et seq., facilitates
“competitive entry into the local telephone market.” US West Commc’ns, Inc. v.
Minn. Pub. Util. Comm’n, 55 F. Supp.2d 968, 974 (D. Minn. 1999).
The Act categorizes telecommunications carriers and, depending on the
classification, imposes duties. Pursuant to the Act, Firstcom and Qwest are both local
exchange carriers (“LECs”), of which there are two types: (1) incumbent local
exchange carriers (“ILECs”), and (2) competitive local exchange carriers (“CLECs”).2
Qwest is an ILEC, and Firstcom is a CLEC. The Act requires that Qwest, as an ILEC,
“provide access to its network to [Firstcom, a CLEC] through interconnection
agreements,” and, in exchange, Qwest is “allowed to charge reasonable and
nondiscriminatory rates for this access.” Quick Commc’ns, Inc. v. Mich. Bell Tel.
Co., 515 F.3d 581, 583 (6th Cir. 2008); see 47 U.S.C. § 252(d). Pursuant to the Act,
interconnection agreements must “be submitted for approval to the State commission,”
2
ILECs are “existing telephone companies, which previously held monopolies,”
Sw. Bell Tel., L.P. v. Mo. Pub. Serv. Comm’n, 530 F.3d 676, 680 (8th Cir. 2008); see
47 U.S.C. § 251(h), whereas CLECs are “newcomers,” Sw. Bell Tel., L.P., 530 F.3d
at 680.
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47 U.S.C. § 252(e)(1), which, in Minnesota, is the Minnesota Public Utilities
Commission (“MPUC”), see Minn. Stat. § 237.02.
Firstcom and Qwest entered into interconnection agreements. Under those
agreements, Qwest sold telephone services to Firstcom. Firstcom did not remain
profitable and ceased its normal business operations in 2001. At that time, Al Jaffe
& Associates (“AJA”) purchased all or substantially all of Firstcom’s assets. In 2002,
Firstcom formally dissolved. AJA later assumed the Firstcom name.
In 2004, twelve shareholders of the original Firstcom filed an action against
Qwest, alleging violations of the Act and the MTA as well as Minnesota common law
claims of negligence, promissory estoppel, and fraudulent misrepresentation. The
action related to “secret” interconnection agreements between Qwest and two CLECs,
Eschelon Telecom (“Eschelon”) and McLeod USA Telecommunications
(“McLeod”).3 Specifically, the plaintiffs alleged that Qwest provided Eschelon and
McLeod with voicemail services and a greater level of customer service relative to
billing, despite Qwest’s representations to Firstcom that this was not the case. The
plaintiffs further asserted that, as a result of Qwest’s wrongful conduct, the original
3
The “secret” interconnection agreements between Qwest and Eschelon and
McLeod were also the subject of a regulatory action filed on February 14, 2002, by
the Minnesota Department of Commerce. See Qwest Corp., No. P-421/C-02-197,
2007 WL 4976248, at *1 (Minn. Pub. Utils. Comm’n Dec. 26, 2007). Pursuant to
Minnesota statute section 237.462, the Minnesota Department of Commerce filed a
complaint against Qwest, alleging that it had violated provisions of the Act and the
MTA by failing to file twelve interconnection agreements it had with McLeod and
Eschelon. Id. Eventually, Qwest entered into a settlement agreement with ten
CLECs, in which Qwest agreed to pay a fine of $6,500,000 and “make compensatory
payments to any CLEC who was purchasing wholesale services from Qwest while the
unfiled agreements were in effect” to “be based on the most favorable discount terms
found in the unfiled agreements . . . .” Id. at *3. The Commission approved the
settlement agreement. Id. at *8. The record is silent as to whether Firstcom was
eligible for or sought such recovery.
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Firstcom was unable to continue its business. On September 18, 2006, the district
court granted Qwest’s motion for summary judgment as the shareholders lacked
standing because AJA had purchased the original Firstcom’s legal rights. See
Firstcom, Inc. v. Qwest Corp., No. 04-995, 2006 WL 2666301, at *5-6 (D. Minn.
Sept. 18, 2006). The shareholders did not appeal.
On November 21, 2006, AJA, under the name of Firstcom,4 brought this action
against Qwest asserting the same claims as the 2004 lawsuit and adding a claim of
negligence. Qwest moved to dismiss the action, and the district court granted the
motion. As to Firstcom’s federal claim, the district court found that the claim was
time-barred and that equitable tolling did not apply. The district court determined
that, even assuming the MTA granted a private cause of action, Firstcom could not
pursue it because the MTA expired three months before this action was filed. Finally,
the district court found that Firstcom’s alleged state law claims were preempted by the
Act. Firstcom brings this appeal.
II.
Firstcom contends that the district court erred because none of its claims were
properly dismissed. We review the district court’s grant of Qwest’s motion to dismiss
de novo. See Owen v. Gen. Motors Corp., 533 F.3d 913, 918 (8th Cir. 2008).
A.
Firstcom contends the district court improperly dismissed its federal claim
because: (1) the longer four-year limitations period in 28 U.S.C. § 1658(a), rather
than the two-year limitations period in section 415 of the Act, applies so that the claim
is timely; (2) even if section 415 applies, the claim is timely under the doctrine of
4
AJA will be referred to as “Firstcom” in the remainder of this opinion.
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equitable tolling. Firstcom asserts that the claim was tolled until September 2006,
when it first learned that it had a cause of action against Qwest via the district court’s
dismissal of the shareholders’ suit for lack of standing. Firstcom further asserts that
equitable tolling applies here because the interests that statutes of limitations seek to
protect have been afforded to Qwest as it received timely notice of the claim when it
was asserted in 2004 in the shareholders’ lawsuit.
We find unpersuasive Firstcom’s argument that the four-year limitations period
in 28 U.S.C. § 1658(a) applies to its claim under the Act. Section 1658(a) provides
that “[e]xcept as otherwise provided by law, a civil action arising under an Act of
Congress . . . may not be commenced later than 4 years after the cause of action
accrues.” 28 U.S.C. § 1658(a) (emphasis added). “Section 1658(a) is a ‘fallback’
provision that applies only where no specific statute of limitations governs the
particular claim at issue.” Am. Cellular Corp. & Dobson Cellular Sys., 22 F.C.C.R.
1083, 1089 (2007); see N. Star Steel Co. v. Thomas, 515 U.S. 29, 34 n.* (1995)
(describing section 1658 as a “general, 4-year limitations period for any federal statute
[enacted after Dec. 1, 1990] without one of its own”); Campbell v. Amtrak, 163 F.
Supp. 2d 19, 22 (D.D.C. 2001) (characterizing section 1658 as the “federal default
statute of limitations”).
Section 415(b) of the Act mandates a two-year limitations period for “[a]ll
complaints against carriers for the recovery of damages . . . .” 47 U.S.C. § 415(b).
Because Firstcom’s claim for damages under the Act is specifically governed by the
limitations period set forth in section 415(b) of the Act, section 1658(a) has no
application here. See Am. Cellular Corp., 22 F.C.C.R. at 1088 (holding that section
415 provided a two-year limitation on “[a]ll complaints against carriers for the
recovery of damages” under the Act); see also AT & T Commc’ns of the Mountain
States, Inc. v. Qwest Corp., No. 2:06CV00783DS, 2007 WL 1342657, at *1 (D. Utah
May 4, 2007) (unpublished) (holding that a damages claim under the Act is subject
to two-year limitations period); AT & T Commc’n of the Midwest v. Qwest Corp.,
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No. 8:06CV625, 2007 WL 2743491, at **2-3 (D. Neb. Feb. 27, 2007) (unpublished)
(same). Thus, the two-year limitations period of section 415(b) governs Firstcom’s
federal claim. According to Firstcom’s complaint, Qwest’s alleged wrongful conduct
occurred no later than 2002, more than two years prior the filing of the complaint in
2006.
However, Firstcom also contends that its claim is rendered timely by the
doctrine of equitable tolling. We review de novo the district court’s determination
that equitable tolling is inapplicable to the statute of limitations here. See E.J.R.E. v.
United States, 453 F.3d 1094, 1098 (8th Cir. 2006). “The doctrine of equitable tolling
permits a plaintiff to sue after the statutory time period has expired if he has been
prevented from doing so due to inequitable circumstances.” Pecoraro v. Diocese of
Rapid City, 435 F.3d 870, 875 (8th Cir. 2006) (quotation omitted). “Because statutes
of limitations protect important interests of certainty, accuracy, and repose, equitable
tolling is an exception to the rule, and should therefore be used only in exceptional
circumstances.” Motley v. United States, 295 F.3d 820, 824 (8th Cir. 2002)
(quotation omitted); see Riddle v. Kemna, 523 F.3d 850, 857 (8th Cir. 2008)
(“Equitable tolling is an exceedingly narrow window of relief.” (quotation omitted));
Pecoraro, 435 F.3d at 875 (“Courts generally require strict compliance with a statute
of limitations and rarely invoke doctrines such as equitable tolling to alleviate a
plaintiff from a loss of his right to assert a claim.”).
Firstcom, as “[t]he party . . . claiming the benefit of an exception to the
operation of a statute of limitations[,] bears the burden of showing that [it] is entitled
to [equitable tolling].” Motley, 295 U.S. at 824. This generally involves “establishing
two elements: (1) that [it] has been pursuing [its] rights diligently, and (2) that some
extraordinary circumstance stood in [its] way.” Riddle, 523 F.3d at 857 (quoting
Walker v. Norris, 436 F.3d 1026, 1032 (8th Cir. 2006)). According to Firstcom’s
complaint, “[b]eginning in the fall and winter of 2002 representatives of Firstcom first
became aware of . . . improper, illegal, and anti-competitive conduct by Qwest in
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relation to its business dealings with CLECs generally, and Firstcom specifically.”
Compl. ¶ 23. In 2004, shareholders of the former Firstcom brought suit alleging the
same wrongdoing challenged here. Firstcom argues that equitable tolling applies
because it did not learn that it possessed legal rights which had been violated by
Qwest until September 2006, when the district court dismissed the shareholders’ suit
for lack of standing. However, Firstcom’s argument merely demonstrates that its
delay in bringing this action is attributable to its own actions. Firstcom was a party
to, and in possession of, the asset purchase agreement, and the fact that Firstcom did
not (for whatever reason) understand its rights under that agreement does not warrant
the application of equitable tolling. See Tucker v. Kingston, 538 F.3d 732, 735 (7th
Cir. 2008) (“[S]tanding alone, the lack of legal expertise is not a basis for invoking
equitable tolling.”). Further, it demonstrates that the circumstances that prevented
Firstcom from filing the Act claim were not “truly beyond the control of [Firstcom]
. . . .” See Pecoraro, 435 F.3d at 875 (quotation omitted). Accordingly, the doctrine
of equitable tolling does not apply. Because Firstcom’s federal claim was not timely
filed, it was properly dismissed.
B.
Firstcom also alleges that Qwest violated the MTA. Specifically, Firstcom
alleges that “Qwest willfully and intentionally violated Firstcom’s rights to receive the
same contractual terms as those provided by Qwest to Firstcom’s competitors as said
rights are guaranteed by the [MTA].” Compl. ¶ 39. Firstcom further contends that
section 237.462(11) of the MTA gives rise to a private cause of action, expressly and
impliedly.
Subdivision 11 of section 237.462, entitled “Private Remedies,” provided that:
“Nothing in this section affects the ability of a telephone company,
telecommunications provider, telecommunications carrier, or subscriber to bring a
private cause of action in court against a provider of local exchange telephone service
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based on conduct for which a penalty is imposed under this section.” Minn. Stat. §
237.462(11). However, subdivision 11 of section 237.462 expired, in its entirety, on
August 1, 2006, more than three months before Firstcom filed its complaint.
Therefore, under Minnesota law, subdivision 11 cannot provide the basis for
Firstcom’s cause of action. See Granville v. Minneapolis Pub. Schs., Special Sch.
Dist. No. 1, 732 N.W.2d 201, 207 (Minn. 2007) (providing that a statute had
permanently expired where “[t]he legislature allowed that section to expire and made
no provision for revival”); State ex rel. Bennett v. Brown, 12 N.W.2d 180, 181 (Minn.
1943) (stating that the repeal of a statute upon which a cause of action is based moots
the action).
Further, section 237.461 entitled “Enforcement” remains in effect. See Minn.
Stat. § 237.461. Section 237.461 provides for an “action to recover civil penalties,”
id. § 237.461(1); however, it specifically states that “[t]he civil penalties provided for
in [section 237.461] may be recovered by a civil action brought by the attorney
general in the name of the state. Amounts recovered under this section must be paid
into the state treasury,” id. § 237.461(4). The expiration of subdivision 11 of section
237.462 coupled with the continued vitality of section 237.461 demonstrates that
Firstcom cannot bring a private cause action against Qwest pursuant to the MTA.
Firstcom acknowledges the expiration of subdivision 11 but then argues that it
is irrelevant because it was in force at the time of both Qwest’s allegedly wrongful
conduct and the shareholders’ suit. However, Firstcom has offered no authority for
its position, and we find none. On the contrary, “expiration,” in the context of a
statute, means “coming to an end; esp[ecially], a formal termination on a closing
date,” Black’s Law Dictionary 619 (8th ed. 2004), similar to “repeal,” meaning
“abrogation of an existing law by legislative act,” id. at 1325. “It is well established
that when a statute is repealed or otherwise becomes inoperative no further
enforcement proceedings can take place unless ‘competent authority” has kept the
statute alive for that purpose.” United States v. Van Den Berg, 5 F.3d 439, 441 (9th
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Cir. 1993) (quoting Pipefitters Local Union No. 562 v. United States, 407 U.S. 385,
432 (1972)); see Simpson v. Miller, 93 F.R.D. 540, 544 n.6 (N.D. Ill. 1982) (“[W]hen
a statute is repealed, claims for declaratory and injunctive relief against continued
adherence to the statute are rendered moot.”). Firstcom has offered no “competent
authority” that “enforcement proceedings” pursuant to subdivision 11, such as
Firstcom’s MTA claim in this case, “can take place” after the expiration of
subdivision 11. See Van Den Berg, 5 F.3d at 441. Therefore, Firstcom’s MTA claim
fails and was properly dismissed.
C.
Firstcom asserts that the district court erred in determining that its promissory
estoppel, fraudulent misrepresentation, and negligence claims were dependent on the
Act and thus preempted by federal law. Firstcom contends that these claims rest on
Minnesota law and that they are timely under the six-year limitation period for such
actions under Minnesota law. See Minn. Stat. § 541.05.1(1), (5)-(6). Firstcom also
claims that the filed rate doctrine is inapplicable as its claims do not challenge Qwest’s
rates.5
We determine whether Firstcom’s state common law claims are preempted by
the Act based on a reading of the complaint, i.e. ordinary preemption. See Stuart
Weitzman, LLC v. Microcomputer Res., Inc., 542 F.3d 859, 864 n.4 (11th Cir. 2008)
(“‘[O]rdinary preemption’ provid[es] a substantive defense to a state law action on the
5
The district court did not address this issue; however, the magistrate judge
relied on the filed rate doctrine as an alternative basis for recommending the dismissal
of Firstcom’s state law claims.
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basis of federal law.”).6 In order to make this determination, we first outline the
contours of sections 251 and 252.
Section 251 of the Act imposes duties on telecommunications carriers,
sometimes varying according to the specific type of carrier. Section 251 obligates:
(1) all telecommunications carriers (both Firstcom and Qwest) to “interconnect
directly or indirectly with facilities and equipment of other telecommunications
carriers,” 47 U.S.C. § 251(a)(1); (2) all local exchange carriers (both Firstcom and
Qwest) to resell telecommunications services without “unreasonable or discriminatory
conditions or limitations,” id. § 251(b)(1); (3) all ILECs (Qwest) to negotiate
interconnection agreements in good faith with CLECs (Firstcom), id. § 251(c)(1); and
(4) all ILECs (Qwest) to provide interconnection on rates, terms, and conditions that
are nondiscriminatory, id. § 251(c)(2)(D).
“[Section 252(a)(1)] allows the ILEC ‘to negotiate and enter into a binding
agreement with the new entrant to fulfill the duties imposed by §[] 251(b) and (c) . .
. .’” Qwest Corp. v. Pub. Utils. Comm’n of Colo., 479 F.3d 1184, 1188 (10th Cir.
2007) (quoting Verizon Md., Inc. v. Pub. Serv. Comm’n of Md., 535 U.S. 635, 638-39
(2002)). Once an interconnection agreement has been adopted, it must “be submitted
6
Ordinary preemption is distinct from complete preemption which “is a
jurisdictional doctrine,” New Orleans & Gulf Coast Ry. Co. v. Barrois, 533 F.3d 321,
331 (5th Cir. 2008) (citation and quotation omitted), that applies where “[t]he federal
preemptive power [is] complete . . . .” Stuart Weitzman, LLC v. Microcomputer Res.,
Inc., 542 F.3d 859, 864 n.4 (11th Cir. 2008). “The Supreme Court has found complete
preemption in only three classes of cases: Section 301 of the Labor Management
Relations Act of 1947 (LMRA), 29 U.S.C. § 185; the Employee Retirement Income
Security Act of 1975 (ERISA), 29 U.S.C. §§ 1001-1461; and the National Bank Act,
12 U.S.C. § 38.” Mikulski v. Centerior Energy Corp., 501 F.3d 555, 563-64 (6th Cir.
2007). It is well settled that the Telecommunications Act “does not completely
preempt state-law causes of action.” Premiere Network Servs., Inc. v. SBC
Commc’ns, Inc., 440 F.3d 683, 692 n.11 (5th Cir. 2006).
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for approval” to the state commission, 47 U.S.C. § 252(e)(1), here the MPUC, and the
MPUC must make all approved agreements available to the public, see id. § 252(h).
Pursuant to section 252(i), local exchange carriers (both Firstcom and Qwest) must
“make available any interconnection, service, or network element provided under an
agreement approved under this section to which it is a party to any other requesting
telecommunications carrier upon the same terms and conditions as those provided in
the agreement.” Id. § 252(i).
The Act provides: “Nothing in [chapter 5 of title 47] . . . shall in any way
abridge or alter the remedies now existing at common law or by statute, but the
provisions of this chapter are in addition to such remedies.” 47 U.S.C. § 414(emphasis added). Therefore, section 414 “merely preserves existing state-law
remedies” and does not create state law remedies for breaches of duties imposed by
the Act. Premiere Network Servs., Inc. v. SBC Commc’ns, Inc., 440 F.3d 683, 692
n.12 (5th Cir. 2006) (emphasis added); see MCI Telecomms. Corp. v. Garden State
Inv. Corp., 981 F.2d 385, 387 (8th Cir. 1992) (“Section 414 preserves causes of action
for breaches of duties that are not created under the Communications Act.” (emphasis
added)); Comtronics, Inc. v. Puerto Rico Tel. Co., 553 F.2d 701, 708 n.6 (1st Cir.
1977) (“The ‘existing’ remedies Congress had in mind under [section] 414 would
scarcely be remedies so closely dependent upon the Act itself; rather, we read
[section] 414 as preserving causes of action for breaches of duties distinguishable
from those created under the Act . . . .”). Accordingly, if Firstcom’s purported state
law claims, in actuality, seek recovery for Qwest’s alleged breach of duties imposed
by sections 251 and 252 of the Act, then Firstcom’s recourse was to bring claims
pursuant to the Act, not Minnesota common law. See 47 U.S.C. § 414; Premiere, 440
F.3d at 692 n.12; MCI Telecomms., 981 F.2d at 387; Comtronics, 553 F.2d at 708 n.6.
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With respect to Firstcom’s negligence claim, Firstcom alleges that:
Qwest owed Firstcom a duty of care to abide by applicable Federal and
state telecommunications laws, to refrain form [sic] discriminating
against Firstcom relative to other CLECs, and to refrain from acting in
[a] wrongful and deceitful manner which placed Firstcom in a position
of competitive disadvantage relative to Qwest and other CLECs. []
Based upon the facts identified herein, and with deliberate disregard for
the rights of Plaintiff, on numerous occasions Qwest negligently
breached its duty of care to Firstcom.
Compl. ¶¶ 53-54. Because Firstcom’s negligence claim is seeking recovery for breach
of a duty imposed by the Act, the claim is preempted. See 47 U.S.C. § 414; Premiere,
440 F.3d at 692 n.12; MCI Telecomm’ns Corp., 981 F.2d at 387; Comtronics, 553
F.2d at 708 n.6.
In terms of promissory estoppel, Firstcom alleges that:
Qwest assured Firstcom that Firstcom’s competitors would not, and did
not, receive preferential contract terms relative to the interconnection
agreements between the parties . . . . [] By such promises Qwest
intended, and should have reasonably expected, to induce Firstcom to
rely upon those promises. Firstcom reasonably relied to its detriment
upon the promises of Qwest by expending funds in an effort to further
its business interests and by adopting business and marketing strategies
consistent with Firstcom’s belief that . . . it accurately and fully
understood the prices paid for services by competitors . . . and . . . no
CLEC possessed a competitive advantage pursuant to preferred
contractual terms with Qwest.
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Compl. ¶¶ 42-44.7 Had Qwest remained silent, the behavior complained of could
amount only to a violation of the Act; however, Qwest’s alleged conduct here, if true,
amounts to a violation of Minnesota common law, regardless of the Act. Thus, the
promissory estoppel claim is not preempted by the Act.
With regard to Firstcom’s fraud claim, Firstcom alleges that:
[O]n numerous occasions Qwest willfully and intentionally made
fraudulent misrepresentations of material fact to Firstcom . . . that
Firstcom’s competitors did not and would not receive preferential
contractual terms relative to the interconnection agreements the parties
entered into. At the time of said fraudulent misrepresentations, . . .
Qwest knew that various competitors had received and would receive
preferential interconnection contract terms from Qwest which were not
made available to Firstcom . . . and which placed Firstcom at a
competitive disadvantage. These preferential terms related to, among
other things, substantial secret discounts . . . , support services . . . , and
the availability of voicemail service, DSL and other services . . . . []
Qwest knew at the time it communicated its fraudulent
misrepresentations to Firstcom that said communications were false and
that Firstcom’s competitors were, in fact, provided preferential
interconnection contract terms . . . . [] Qwest intended its
misrepresentations to induce Firstcom to cease its demands for UNE-P,
DSL, other services and better pricing terms, to enter into a UNE-P
contract with Qwest . . . . Such misrepresentations did induce such
action by Firstcom until it was forced from business.
Complaint ¶¶ 47-50.8 Firstcom’s fraud claim is not premised merely on a violation
of the Act. Rather, it asserts that Qwest made affirmative misrepesentations aside
7
“The competitors of Firstcom that received the benefit of preferential . . .
terms, including voicemail services, customer services, and greater price discounts,
included McLeod and Eschelon.” Appellant’s Br. 12.
8
Unbundled Network Element” is also known as “UNE-P.”
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from failing to comply with the Act. Assuming that the Act did not exist, Qwest
would not be permitted to engage in the fraudulent conduct alleged here. Thus, the
wrong alleged by Firstcom was not created by the Act. Furthermore, the Second
Circuit determined that the Act “does not manifest a clear Congressional intent to
preempt state law actions prohibiting . . . common law fraud . . . .” Marcus v. AT&T
Corp., 138 F.3d 46, 54 (2d Cir.1998); see 47 U.S.C. § 414. Accordingly, Firstcom’s
fraud claim was not preempted by the Act.
However, another potential bar to Firstcom’s promissory estoppel and fraud
claims must be considered: the filed rate doctrine.
The filed rate doctrine “forbids a regulated entity [from charging] rates
for its services other than those properly filed with the appropriate
federal regulatory authority.” The filed rate doctrine prohibits a party
from recovering damages measured by comparing the filed rate and the
rate that might have been approved absent the conduct in issue.
H.J. Inc. v. Nw. Bell Tel. Co., 954 F.2d 485, 488 (8th Cir. 1992) (quoting Ark. La.
Gas Co. v. Hall, 453 U.S. 571, 577 (1981)). Rather than tariffs filed with the FCC,
the filed rates at issue here are contained in the interconnection agreements executed
by Firstcom and Qwest and approved by the MPUC. See 47 U.S.C. § 252(e)(1)
(providing that state commissions are the regulatory bodies with and by which
interconnection agreements must be filed and approved); Verizon Del., Inc. v. Covad
Commc’ns Co., 377 F.3d 1081, 1089 (9th Cir. 2004) (“The tariffs that are filed are not
filed federally but with state agencies.”). We have determined that the filed rate
doctrine applies to rates filed with state agencies. See H.J. Inc., 954 F.2d at 494; see
also Wegoland Ltd. v. NYNEX Corp., 27 F.3d 17, 20 (2d Cir. 1994) (“[C]ourts have
uniformly held, and we agree, that the rationales underlying the filed rate doctrine
apply equally strongly to regulation by state agencies.”).
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The filed rate doctrine applies “even if a carrier intentionally misrepresents its
rate and a customer relies on the misrepresentation . . . .” AT&T Co. v. Cent. Office
Tel., Inc., 524 U.S. 214, 222 (1998); see AT&T Corp. V. JMC Telecom, LLC, 470
F.3d 525, 534 n.13 (3d Cir. 2006) (“In so much as this is a claim for fraud, the
allegation is also barred by the filed rate doctrine.”); Dreamscape Design, Inc. v.
Affinity Network, Inc., 414 F.3d 665, 669 (7th Cir. 2005) (“Under the filed tariff
doctrine, courts may not award relief (whether in the form of damages or restitution)
that would have the effect of imposing any rate other than that reflected in the filed
tariff. This is so even if a carrier intentionally misrepresents its rate and a customer
relies on the misrepresentation.” (citation omitted)); Wegoland, 27 F.3d at 22(“[B]ecause a fraud exception to the filed rate doctrine is both contrary to guiding
Supreme Court precedent and important regulatory policies, we hold that there is no
fraud exception to the filed rate doctrine that would save this suit from dismissal.”).
Although the Ninth Circuit recently held that the filed rate doctrine did not preclude
a fraud claim provided that the damages could be proved without attacking the filed
rate, see In re NOS Commc’ns, MDL No. 1357, 495 F.3d 1052, 1060 (9th Cir. 2007),
we are persuaded by the statement of an earlier Ninth Circuit panel that:
It is tempting to believe that, in Congress’s new perspective [embodied
in the 1996 amendments to the Act introducing a competitive regime for
local telecommunications services] a suit for fraud of the kind before us
should be allowed to proceed. The Supreme Court has declared that an
exception for affirmative fraud has never been rejected by that court.
Still, . . . such an exception has never been recognized. If a breach of
this size is to be made in a filed tariff it is within the province of the
Supreme Court to make it.
Verizon, 377 F.3d at 1089 (citation omitted) (citing Ark. La. Gas Co., 453 U.S. at 583
n.13). As the Supreme Court has not done so, and instead has reaffirmed the filed rate
doctrine in the post-1996 amendments context, see Cent. Office, 524 U.S. at 227(“[t]he rights as defined by the tariff cannot be varied or enlarged by either contract
or tort”), we are bound to follow it. See Goldwasser v. Ameritech Corp., 222 F.3d
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390, 402 (7th Cir. 2000); see also Verizon, 377 F.3d at 1089 (“Congress and the FCC
have left [interconnection agreements] to be ruled by tariffs.”).
Firstcom’s promissory estoppel and fraud claims are premised on the assertion
that Qwest should have provided voicemail service, a greater level of customer
service, and a great price discount to Firstcom. The filed rate doctrine prohibits a
regulated entity from charging any rate other than that filed with the relevant
regulatory authority, here the MPUC. See Ark. La. Gas, 453 U.S. at 577; H.J. Inc.,
954 F.2d at 488; see also Verizon, 377 F.3d at 1087 (“[A]ll of the published cases
addressing the filed rate doctrine hold unequivocally that no one may bring a judicial
proceeding to enforce any rate other than the rate established by the filed tariff.”
(quotation omitted)); Fax Telecomms. Inc. v. AT&T, 138 F.3d 479, 482 (2d Cir.
1998) (“Carriers are prohibited from providing communications services except
pursuant to a filed tariff, and may not charge, demand, collect or receive a rate other
than the rate listed in the applicable tariff.”). Thus, to the extent Firstcom seeks
recovery for a price discount it was allegedly entitled to, its claims are barred by the
filed rate doctrine.
The doctrine similarly bars Firstcom’s claims insofar as they allege that Qwest
should have provided additional telecommunications services not covered by the
interconnection agreements. The Supreme Court has held that state contract and tort
claims seeking services contrary to a filed tariff are barred by the filed rate doctrine.
See Cent. Office, 524 U.S. at 222; see also JMC Telecom, 470 F.3d at 532 (“Here,
JMC is claiming poor customer service in areas, such as customer support, that are not
spelled out in the tariff. As such, JMC’s claims of poor service are barred by the filed
rate doctrine.”); Brown v. MCI WorldCom Network Servs., Inc., 277 F.3d 1166, 1170
(9th Cir. 2002) (“In addition to barring suits challenging filed rates and suits seeking
to enforce rates that differ from the [common carrier’s] filed rates, the filed-rate
doctrine also bars suits challenging services, billing, or other practices when such
challenges, if successful, would have the effect of changing the filed tariff.”). The
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services that Firstcom claims it was entitled to were not covered by the parties’
interconnection agreements, and, for this reason, recovery is precluded by the filed
rate doctrine. This is true, even to the extent that Firstcom’s promissory estoppel and
fraud claims seek monetary damages because such an award would, in effect, vary the
rates established by the interconnection agreements executed by the parties and filed
with the MPUC. See Hill v. Bellsouth Telecomms., Inc., 364 F.3d 1308, 1315-16
(11th Cir. 2004); see also Marcus, 138 F.3d at 60-62 (2d Cir.1998) (holding that fraud
or misrepresentation claims are barred by the filed rate doctrine because, when
monetary damages are requested, such claims have the effect of challenging the filed
rate). Therefore, the claims are barred by the filed rate doctrine.
In sum, the district court properly dismissed Firstcom’s three state law claims
against Qwest at summary judgment, though we disagree with the district court’s
reasoning to some extent. Firstcom’s negligence claim is preempted by the Act, and
Firstcom’s promissory estoppel and fraud claims are barred by the filed rate doctrine.
IV.
We affirm the judgment of the district court.
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