The opinion of the court was delivered by: Karen E. Schreier Chief Judge
Plaintiffs filed this consolidated action against defendants, Onvoy, Inc. (Onvoy), Trans National Communications International, Inc. (TNCI), Global Crossing Telecommunications, Inc. (Global Crossing), and Sprint Communications Company Limited Partnership (Sprint), to recover access charges allegedly owed pursuant to plaintiffs' tariffs filed with the Federal Communications Commission (FCC) and the South Dakota Public Utilities Commission (SDPUC).*fn1 Global Crossing then filed a multi-count counterclaim against plaintiffs and a third-party complaint against Express Communications, Inc. (Express). Sprint also filed a third-party complaint against Express. Currently before the court are various motions for summary judgment. Defendants move for summary judgment on plaintiffs' claims, plaintiffs move for summary judgment on Global Crossing's counterclaims, and Express moves for summary judgment on Global Crossing's and Sprint's claims against Express. All of the motions are opposed.
The facts, as relevant to the pending motions,*fn2 are as follows: all of the plaintiffs, except South Dakota Network, LLC (SDN), are local exchange carriers (LECs) located in South Dakota that provide telecommunication services to their customers and originating and terminating access services to interexchange (IXC) carriers.*fn3 Because plaintiff-LECs' access charges pertain to interstate and intrastate communications, they filed tariffs with both the FCC and the SDPUC, pursuant to federal and state regulations.*fn4 Plaintiff-LECs, along with other South Dakota LECs that are not part of this action, formed SDN to provide a single point of connection for IXCs to gain access to all of the LECs that formed SDN. SDN operates a tandem switch and provides centralized equal access services, which allow IXCs to connect to the LECs' customers without connecting directly to each individual LEC across the state. The rates, terms, and conditions of SDN's centralized equal access services are governed by SDN's tariffs, which were filed with the FCC and SDPUC.*fn5
Generally, when an end user customer of one of plaintiff-LECs dials a long-distance call, the call is routed through the LEC's switch to SDN. SDN then completes a prescribed interexchange carrier (PIC) lookup to determine which IXC the end user has chosen as her long-distance provider. SDN then assigns the call the carrier identification code (CIC) associated with the end user's IXC and routes the call to the appropriate IXC.
Plaintiff-LECs, along with other South Dakota LECs that are not part of this action, later formed Express to enable plaintiff-LECs to provide long-distance services to their end users. Plaintiff-LECs generally offer long-distance service to their customers under their own names, rather than under the Express name. Express is an IXC that is certified by the SDPUC and provides interstate long-distance services pursuant to FCC authorization. But Express does not have any facilities of its own. As a result, Express must contract with a facility-based carrier to carry the long-distance traffic from SDN's switch to the end user receiving the call.
The traffic at issue in this case originated with plaintiff-LECs' end user customers who subscribed to Express's long-distance services (usually through the applicable LEC), was passed through the SDN switch, and was carried to the end user receiving the call. Several telecommunication companies were involved with carrying this traffic (hereinafter referred to as "the Express traffic") to end users. The issue of which company is responsible for paying the access fees associated with the Express traffic is at the heart of this litigation.
In September of 2004, Express entered into a contract with Onvoy under which Onvoy agreed to provide Express with "wholesale switchless long distance services, provisioned through Onvoy's network." Switchless Long Distance Services Addendum to Onvoy Wholesale Voice Master Service Agreement (Express-Onvoy Addendum), ¶ 1, Docket 178-6; see also Onvoy Wholesale Voice Master Service Agreement (Express-Onvoy Agreement), Docket 178-6; and First Amendment to Onvoy Wholesale Voice Master Service Agreement and Switchless Long Distance Services Addendum, Docket 178-6.*fn6
Express and Onvoy agreed that Onvoy would transport the Express traffic from Express's switch in Sioux Falls, South Dakota, to Onvoy's switch in Plymouth, Minnesota. Express-Onvoy Addendum, ¶ 7(d). Onvoy picked up the Express traffic at SDN's tandem in Sioux Falls. The Express traffic traveled from SDN's tandem to Onvoy's network with Express's CIC, as required by the Express-Onvoy agreement.
The Express-Onvoy agreement obligated Express to "operate as an IXC in compliance with State and Federal rules and regulations." Express-Onvoy Addendum, ¶ 6(c). Express was also obligated to send Onvoy access service requests as needed for service changes and to ensure that the CIC specified by Onvoy's underlying carrier was on all carrier access billing system records. Id. ¶ 6(a)-(b). For its part, in addition to transporting Express's traffic from SDN's switch in Sioux Falls to Onvoy's switch in Plymouth, Onvoy was obligated to set up and test Express's CIC code in its switch. Id. ¶ 7(a).
According to Mark Shlanta, CEO of SDN and Express, Express expected that the product it purchased from Onvoy was one where the underlying carriers of the Express traffic would be responsible for the payment of plaintiffs' originating and centralized equal access charges. Affidavit of Mark Shlanta, Docket 192-5 at 8-13, ¶ 3.
The parties dispute whether Express or Onvoy ordered SDN to direct the Express traffic to Onvoy. Defendants argue that Express directed SDN to route the traffic to Onvoy's trunk group that was established to accept the Express traffic, a fact that Shlanta agreed to during his deposition. Deposition of Mark Shlanta, Docket 192 at 198, lines 14-19. Plaintiffs assert that Onvoy, rather than Express, directed SDN to route the Express traffic to the Onvoy trunk group. Indeed, Shlanta stated by affidavit that Onvoy requested services from SDN in September 2004. Affidavit of Mark Shlanta, ¶ 4. Onvoy supplied to SDN twenty-two T-1s connecting Onvoy's switch in Plymouth to SDN's switch in Sioux Falls. Id. Thus, Shlanta stated, "SDN believes that the entity which ordered services from Plaintiffs was Onvoy. Onvoy did submit an order to SDN for the 22 T-1s and did actually receive services from the Plaintiffs." Id. ¶ 9. It is undisputed that Onvoy has no direct contractual relationship with plaintiff-LECs or SDN.
Onvoy entered into an agreement with TNCI, a reseller/biller of telecommunication services, in June of 2004. As a reseller of telecommunication services, TNCI purchases long-distance services in bulk from national telecommunication carriers like Global Crossing and Sprint. It then resells those services to customers like Onvoy at a price lower than the price for which the customer itself could buy the service directly from the carriers. TNCI does not own switching equipment or have its own network facilities, and did not own or maintain any facilities in South Dakota during the relevant times. TNCI also did not submit an access service order pursuant to plaintiff-LECs' or SDN's tariffs or interact directly with any of plaintiffs.
Under the Onvoy-TNCI agreement, TNCI agreed to provide telecommunication services to Onvoy, and Onvoy agreed to pay for these services.*fn7 Specifically, TNCI agreed to arrange for transport service and long- distance connectivity for calls originating at Onvoy's facilities in Minnesota. The Letter of Agency further provides,
TNCI's underlying carrier shall pay all access charges and centralized equal access charges for traffic carried under this contract, based upon the specific terms of the existing agreement between the underlying carrier and TNCI. This does include all originating and terminating access charges however it does not include recurring charge[s] for the dedicated access facilities that are being utilized by [Onvoy] to route traffic to TNCI's underlying carrier.
Attachment A: Terms and Conditions, ¶ 4.
As the Onvoy-TNCI agreement contemplates, in order to provide services to Onvoy, TNCI contracted with underlying carriers to carry Onvoy's traffic. TNCI's underlying carriers for the Express traffic at issue in this case were Global Crossing and Sprint.
Global Crossing is a nationwide long-distance carrier that has its own end-user customers and also provides wholesale services to other long-distance carriers. Unrelated to the traffic at issue in this case, Global Crossing acquired Feature Group D services and facilities from plaintiff-LECs and centralized equal access services from SDN pursuant to plaintiff-LECs' and SDN's filed tariffs. That is, Global Crossing purchased terminating access services from plaintiff-LECs and SDN in order to complete calls from Global Crossing's subscribers to end users located in the territories served by plaintiff-LECs.
Global Crossing also purchased originating access services in order to provide retail long-distance services to Global Crossing's own customers located in those territories. These terminating and originating access charges are not at issue in this case. Further, none of the Express traffic at issue in this case traversed the Feature Group D facilities ordered by Global Crossing to facilitate the above-described traffic. Global Crossing was not a party to the Express-Onvoy agreement or the Onvoy-TNCI agreement.
Global Crossing carried the Express traffic pursuant to an arrangement with TNCI. When TNCI contracted with Onvoy to provide telecommunication services with respect to the Express traffic in June 2004, TNCI had an existing contract with Global Crossing under which TNCI resold Global Crossing's long-distance telecommunication services. TNCI asserts that it contacted Global Crossing to have Global Crossing set up access at Onvoy's facilities in Minnesota so that Global Crossing could carry traffic from Onvoy's facilities to the called destination. TNCI asserts that its only role in establishing the connection between Onvoy's facilities and Global Crossing's facilities was to pass the necessary information from Onvoy to Global Crossing so that the companies could cross-connect at a common facility in Minneapolis, Minnesota. Thus, TNCI asserts, once the cross-connection was set up, Onvoy passed traffic directly from its network to Global Crossing's network. Plaintiffs assert that TNCI ordered, leased, and exercised control over the facilities required to connect Onvoy and Global Crossing, and that Onvoy's trunks were connected to TNCI. It is undisputed that Global Crossing did not bill TNCI for arranging the cross-connect and that TNCI did not bill Onvoy for the same. Global Crossing carried the Express traffic to end users in November and December 2004.
Sprint is also a nation-wide long-distance carrier. Like Global Crossing, Sprint ordered Feature Group D facilities from plaintiffs. The traffic that traversed these facilities and the associated access charges are not at issue in this case. Also like Global Crossing, Sprint was not a party to the Express-Onvoy or Onvoy-TNCI agreements.
Sprint also came to carry the Express traffic through an arrangement with TNCI. TNCI asserts that after contracting with Onvoy to provide telecommunication services with respect to the Express traffic, TNCI arranged for Sprint to set up a DS-3 access line to carry traffic from Onvoy's facilities in Minnesota to the called destination via Sprint's network. TNCI asserts that its only role in this connection was providing Onvoy's information to Sprint so that Sprint could connect to Onvoy's facilities via the DS-3 loop. Sprint then connected the DS-3 loop to an assigned circuit facility owned by Onvoy in Minnesota. Thus, TNCI asserts, Onvoy passed traffic directly from its facilities in Minnesota onto Sprint's network. Plaintiffs assert that TNCI ordered the DS-3 loop required to connect Onvoy and Sprint and that Onvoy's trunks were connected to TNCI. It is undisputed that Sprint charged TNCI for the DS-3 loop, but TNCI did not pass this charge onto Onvoy. Sprint carried the Express traffic to end users from December 2004 through May 2005.
Plaintiff-LECs and SDN sent Global Crossing bills for originating access and centralized equal access services for November and December 2004. Plaintiffs assert that they were instructed by Express, which was instructed by Onvoy, to bill Global Crossing for the originating access services associated with the Express traffic. Plaintiffs' bills also contained originating and terminating access charges for traffic that traversed the Feature Group D facilities that Global Crossing ordered from plaintiffs, but did not indicate which originating access charges were associated with this traffic and which were associated with the Express traffic. Because plaintiffs' November and December 2004 bills were significantly higher than the bills Global Crossing had previously received, Global Crossing inquired about the source of the charges. Plaintiffs, through Shlanta, informed Global Crossing that the charges at issue arose from the Express traffic. Global Crossing has disputed all of the charges on plaintiffs' invoices.
Likewise, plaintiff-LECs and SDN billed Sprint for originating access and centralized equal access services for December 2004 through May 2005. Plaintiffs' bills did not differentiate between the originating access charges associated with the traffic that traversed the Feature Group D facilities and the charges associated with the Express traffic. Plaintiffs were instructed by Onvoy to bill Sprint for the Express traffic. Sprint believed that plaintiff-LECs had billed Sprint for more minutes than Sprint measured, so Sprint paid plaintiff-LECs for the minutes Sprint believed were properly accounted for and disputed the balance of the minutes. Sprint discussed the billing dispute with representatives of several plaintiffs in March and April 2005, and informed Shlanta that the charges associated with the Express traffic should not be billed to Sprint.
Neither plaintiff-LECs nor SDN sent invoices to Onvoy or TNCI for the unpaid originating access and centralized equal access charges.
Onvoy stopped routing the Express traffic on May 5, 2005. Plaintiffs assert that SDN, acting at Onvoy's direction, ceased routing this traffic to Onvoy because Onvoy was unable to ensure that plaintiffs could expect payment of all their access charges. Defendants assert that it was Express that stopped routing the traffic to Onvoy.
Plaintiff-LECs and SDN filed suit against Onvoy, TNCI, Global Crossing, and Sprint, seeking to recover amounts owed for originating and centralized equal access charges under plaintiffs' tariffs. Plaintiffs also brought a claim of unjust enrichment against Global Crossing, which was subsequently dismissed by this court, and Sprint, which is still pending. Plaintiffs' suit was met with a flurry of counterclaims, third-party complaints, and cross-claims. As is relevant to this order, Global Crossing filed a multi-count counterclaim against plaintiff-LECs and SDN, alleging violations of §§ 201(b), 202(a), and 203(c) of the Communications Act, violation of the FCC's Truth-in-Billing regulations, violations of SDCL 49-31-12.2(3) and 49-31-11, and deceit.*fn8 Global Crossing also filed a third-party complaint against Express, alleging quantum meruit/unjust enrichment and deceit. Likewise, Sprint brought a third-party complaint for indemnification against Express. Pending before the court are Onvoy's, TNCI's, Global Crossing's, and Sprint's motions for summary judgment on plaintiffs' claims, plaintiffs' motion for summary judgment on Global Crossing's counterclaims, and Express's motion for summary judgment on the third-party claims brought by Global Crossing and Sprint.
Rule 56(c) of the Federal Rules of Civil Procedure provides that summary judgment "should be rendered if the pleadings, the discovery and disclosure materials on file, and any affidavits show that there is no genuine issue as to any material fact and that the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(c). Only disputes over facts that might affect the outcome of the case under the governing substantive law will properly preclude summary judgment. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed. 2d 202 (1986). Summary judgment is not appropriate if a dispute about a material fact is genuine, that is, if the evidence is such that a reasonable jury could return a verdict for the nonmoving party. Id.
The moving party bears the burden of bringing forward sufficient evidence to establish that there are no genuine issues of material fact and that the movant is entitled to judgment as a matter of law. Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed. 2d 265 (1986). The nonmoving party is entitled to the benefit of all reasonable inferences to be drawn from the underlying facts in the record. Vette Co. v. Aetna Cas. & Sur. Co., 612 F.2d 1076, 1077 (8th Cir. 1980). The nonmoving party may not, however, merely rest upon allegations or denials in its pleadings, but must set forth specific facts by affidavits or otherwise showing that a genuine issue exists. Forrest v. Kraft Foods, Inc., 285 F.3d 688, 691 (8th Cir. 2002).
I. Defendants' Motions for Summary Judgment on Plaintiffs' Claims
A. Recovery of Access Charges under Plaintiffs' Tariffs
Plaintiffs seek to recover originating access charges*fn9 from Onvoy, TNCI, Global Crossing, and Sprint pursuant to plaintiffs' tariffs filed with the FCC and SDPUC. Under section 203(a) of the Communications Act, plaintiffs are required to file tariffs with the FCC "showing all charges" and "showing the classifications, practices, and regulations affecting such charges." 47 U.S.C. § 203(a). These tariffs have the effect of law. See American Tel. & Tel. Co. v. Central Office Telephone, Inc., 524 U.S. 214, 221-22, 118 S.Ct. 1956, 141 L.Ed. 2d 222 (1998) ("Section 203(c) makes it unlawful for a carrier to 'extend to any person any privileges or facilities in such communication, or employ or enforce any classifications, regulations, or practices affecting such charges, except as specified in such schedule.' " (quoting 47 U.S.C. § 203(c)). Under the so-called filed rate doctrine, "once a carrier's tariff is approved by the FCC, the terms of the federal tariff are considered to be 'the law' and to therefore 'conclusively and exclusively enumerate the rights and liabilities' as between the carrier and the customer.' " Iowa Network Servs., Inc. v. Qwest Corp., 466 F.3d 1091, 1097 (8th Cir. 2006) (quoting Evanns v. AT & T Corp., 229 F.3d 837, 840 (9th Cir. 2000)) (alteration in original). This doctrine is equally applicable to rates filed with state regulatory agencies. Firstcom, Inc. v. Qwest Corp., 555 F.3d 669, 679 (8th Cir. 2009).
Plaintiffs allege that each defendant is liable for originating access charges associated with the Express traffic. To recover for amounts charged pursuant to their tariffs, "plaintiffs must demonstrate (1) that they operated under a federally filed tariff and (2) that they provided services to the customer pursuant to that tariff." Advamtel LLC v. AT & T Corp., 118 F. Supp. 2d 680, 683 (E.D. Va. 2000) (Advamtel I). There is no dispute that plaintiffs operated under valid tariffs. The parties dispute, however, whether each defendant was a customer that received services pursuant to plaintiffs' tariffs.
The court begins by looking at the terms of the applicable tariffs. See American Tel. & Tel. Co. v. City of New York, 83 F.3d 549, 552 (2d Cir. 1996) (City of New York) (setting out terms of relevant tariff in determining whether defendant was customer of plaintiff and therefore obligated to pay charges under the tariff). The applicable tariffs apply to plaintiffs' "customers." The NECA Tariff states that it applies to services "provided to customers" and contains "Access Ordering regulations and charges that are applicable when these services are ordered or modified by the customer." NECA Tariff, § 1.1 (emphasis added); see also LECA Tariff, § 1.1 (containing identical language). Likewise, the SDN South Dakota Tariff "contains regulations, rates, and charges applicable to the provision of switched Access Service and other regulated services . . . provided by [SDN] to customers." SDN South Dakota Tariff, § 1.1. The court does not have before it section 1.1 of the SDN F.C.C. Tariff, but the parties agree that this tariff applies to SDN's customers as well.
Each tariff contains a definition of "customer." The NECA Tariff and SDN F.C.C. Tariff define "customer" as "any individual, partnership, association, joint-stock company, trust, corporation, or governmental entity or other entity which subscribes to the services offered under this tariff, including both Interexchange Carriers (ICs) and End Users." NECA Tariff, § 2.6; SDN F.C.C. Tariff, § 2.6. The LECA Tariff provides a nearly identical definition of "customer." LECA Tariff, § 2.6 ("The term 'Customer(s)' denotes any individual, partnership, association, joint-stock company, trust, corporation, or governmental entity or other entity which subscribes to the services offered under this tariff, including Interexchange Carriers (Ics)."). The court does not have before it the SDN South Dakota Tariff's definition of customer, but the parties agree that a customer under this tariff is an individual or entity that subscribes to the services offered therein.
Thus, under plaintiffs' tariffs, a customer is an entity that "subscribes" to the services offered under the tariff. Here, the services offered under plaintiffs' tariffs are switched access services, which will be defined in greater detail below. An individual or entity may subscribe to these services by following the ordering provisions contained in plaintiffs' tariffs. See, e.g., NECA Tariff, § 5.1 ("This section sets forth the regulations and order related charges for services set forth in other sections of this tariff."). For example, under the SDN F.C.C. Tariff, customers may order access services by submitting an Access Order. SDN F.C.C. Tariff, § 5.1. "An Access Order is an order to provide the customer with Access Service, access related services, or to provide changes to existing services." Id. Further, "Access Service may be ordered from SDN. A customer may order any number of services of the same type . . . between the customer's point of termination at SDN's central access tandem and a Routing Exchange Carrier's point of interconnection." Id. § 5.1.1; see also NECA Tariff, § 5.1 (stating that customers may obtain services under the tariff by submitting an Access Order).
It is undisputed that none of defendants subscribed to plaintiffs' switched access services by submitting an Access Order as prescribed in the tariffs.*fn10 But courts have recognized that a person can "order" services provided under a tariff "in one of two ways: (1) by affirmatively ordering . . . or (2) by constructively ordering" the service. City of New York, 83 F.3d at 553. Thus, even if an entity does not order services under the procedure set forth in the applicable tariff, it may be deemed to have ordered those services if the requirements of the constructive ordering doctrine are satisfied. AT&T Commc'ns of the Midwest, Inc. v. Iowa Utils. Bd., 687 N.W.2d 554, 561 (Iowa 2004) ("[T]he 'constructive order[ing]' doctrine applies to those situations in which the services are not ordered in the manner prescribed by the tariff.").*fn11
The constructive ordering doctrine originated in the F.C.C.'s decision in United Artists Payphone Corp. v. New York Telephone Co., 1993 WL 757204, 8 F.C.C.R. 5563, (1993). There, the F.C.C. reasoned that a company may be deemed to have "constructively 'ordered' " services under a tariff if it "failed to take steps to control unauthorized [calls]." Id. ¶ 13. In United Artists, the F.C.C. found that the defendant company "took reasonable steps to secure . . . against fraudulent calling and . . . therefore did not constructively order the services used to make the calls at issue." Id. ¶ 15. The constructive ordering doctrine announced in United Artists has been applied in several cases to find an entity potentially liable for charges under a tariff even when it did not order services as proscribed in the tariff. See City of New York, 83 F.3d at 554-55 (finding material issue of fact regarding whether defendant took reasonable steps to prevent unauthorized calls); AT & T Corp. v. Cmty. Health Group, 931 F. Supp. 719, 723 (S.D. Cal. 1995) (Community Health Group) (finding that defendant was customer under constructive ordering doctrine).
Under the constructive ordering doctrine as applied in United Artists and its progeny, a party receiving services is deemed to have ordered the services "when the receiver of services (1) is interconnected in such a manner that it can expect to receive access services; (2) fails to take reasonable steps to prevent the receipt of services; and (3) does in fact receive such services." Advamtel I, 118 F. Supp. 2d at 685; see also AT&T Commc'ns of the Midwest, Inc., 687 N.W.2d at 561.
Under this test, for a party to be deemed to have constructively ordered services, it must have actually received the services offered under the applicable tariff. Plaintiffs' tariffs contain descriptions of the services offered therein. The NECA Tariff and LECA Tariff describe switched access service as follows:
Switched Access Service, which is available to customers for their use in furnishing their services to end users, provides a two-point communications path between a customer designated premises and an end user's premises. It provides for the use of common terminating, switching, and trunking facilities and for the use of common subscriber plant of the Telephone Company. Switched Access Service provides for the ability to originate calls from an end user's premises to a customer designated premises, and to terminate ...