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Free Conferencing Corp., A Nevada Corporation v. Sancom

April 19, 2011

FREE CONFERENCING CORP., A NEVADA CORPORATION, PLAINTIFF,
v.
SANCOM, INC., A SOUTH DAKOTA CORPORATION, D/B/A MITCHELL TELECOM;
VERIZON'S SANTEL COMMUNICATIONS COOPERATIVE, INC., A SOUTH DAKOTA CORPORATION; AND
MCI COMMUNICATIONS SERVICES, INC., D/B/A VERIZON BUSINESS SERVICES, A DELAWARE CORPORATION, DEFENDANTS.



The opinion of the court was delivered by: Karen E. Schreier Chief Judge

ORDER GRANTING DEFENDANT MOTION TO DISMISS

Plaintiff, Free Conferencing Corp. (Free Conferencing), asserts breach of contract and unjust enrichment claims against defendants Sancom, Inc. (Sancom) and Santel Communications Cooperative, Inc. (Santel). Free Conferencing also asserts a tortIous interference with business relations claim and violations of the Federal Communications Act (FCA), 47 U.S.C. §§ 201(b)(1), 202(a), against defendant MCI Communications Services, Inc. d/b/a Verizon (Verizon). Verizon moves to dismiss Free Conferencing's claims. Free Conferencing resists the motion. The motion is granted.

BACKGROUND

In the light most favorable to Free Conferencing, the nonmoving party, the pertinent facts to this order are as follows: Free Conferencing provides free conference call services. When consumers use Free Conferencing's services, they pay the charges normally assessed by their telephone carrier for a long-distance call, and they are not charged an additional fee for the conferencing services.

Free Conferencing provides its conference call services through relationships with local exchange carriers (LECs). Sancom is an LEC and a subsidiary of Santel. In March of 2005, Free Conferencing entered into a Wholesale Local Services Agreement (Agreement) with Sancom. Free Conferencing provided a teleconference bridge and a PC server to Sancom in its Mitchell office. Under the Agreement, Free Conferencing agreed to provide at least 2,000,000 minutes of customer service usage in existing business to Sancom. Sancom agreed to pay Free Conferencing a marketing fee of $0.02 per minute based on revenue collected on minutes used per month.

Sancom also provides originating and terminating access services to long-distance or interexchange carriers (IXCs). If an IXC does not own or lease the telephone lines connected to the end-users' telephones, the IXC must pay an LEC to use the LEC's lines. The LEC publishes an interstate tariff, also known as an access charge, that the IXC pays for each call that uses the LEC's lines. Under the FCA, the Federal Communications Commission has the authority to regulate these interstate tariffs. Verizon is an IXC and uses Sancom's lines to terminate calls to end-users.

Verizon provides competing conference call services. Verizon billed its long-distance customers for long-distance calls that went through Free Conferencing's conference call bridge located in Sancom's Mitchell office, but maintains that these calls are not subject to Sancom's terminated access charges. By refusing to pay Sancom's tariff charges, Verizon affected Sancom's ability to pay Free Conferencing's marketing fees as provided in the Agreement. As a result, Sancom has refused to pay Free Conferencing's invoices. In November of 2009, Free Conferencing notified Sancom that it breached the Agreement. Sancom still refused to pay Free Conferencing's invoices. Sancom and Santel are indebted to Free Conferencing for over $10 million.

STANDARD OF REVIEW

A motion to dismiss under Federal Rule of Civil Procedure 12(b)(6) challenges the legal sufficiency of the complaint. Neitzke v. Williams, 490 U.S. 319, 326-27 (1989) ("[I]f as a matter of law 'it is clear that no relief could be granted under any set of facts that could be proved consistent with the allegations' . . . a claim must be dismissed" (quoting Hishon v. King & Spalding, 467 U.S. 69, 73 (1984))); see also Carton v. Gen. Motor Acceptance Corp., 611 F.3d 451, 454 (8th Cir. 2010) (same). To survive a motion to dismiss, the complaint must include "enough facts to state a claim to relief that is plausible on its face." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). To meet the plausibility standard, the complaint must contain "factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Ashcroft v. Iqbal, 129 S. Ct. 1937, 1949 (2009).

Under Rule 12(b)(6), the facts alleged in the complaint must be considered true and all inferences must be viewed in favor of the nonmoving party. Strand v. Diversified Collection Serv., Inc., 380 F.3d 316, 317 (8th Cir. 2004) (citing Stone Motor Co. v. Gen. Motors Corp., 293 F.3d 456, 465 (8th Cir. 2002)). Twombly and Iqbal have not changed the "fundamental tenet of Rule 12(b)(6) practice" that "inferences are to be drawn in favor of the non-moving party." Braden v. Wal-Mart Stores, Inc., 588 F.3d 585, 595 (8th Cir. 2009) (citations omitted).

The court must liberally construe the complaint in the light most favorable to the plaintiff. Eckert v. Titan Tire Corp., 514 F.3d 801, 806 (8th Cir. 2008). A court must also accept the facts alleged as true, even if they are doubtful. Twombly, 550 U.S. at 555. Thus, a well-pleaded complaint may proceed even if it appears that recovery is remote or unlikely. Id.; Young v. City of St. Charles, Mo., 244 F.3d 623, 627 (8th Cir. 2001).

DISCUSSION

Verizon asserts two arguments in support of its motion to dismiss. First, Verizon argues that Free Conferencing's claims are duplicative of the claims raised in Northern Valley Communications, LLC v. MCI Communications Services, Inc., No. CIV. 07-1016 (D.S.D.), an on-going action in this court. Second, Verizon contends that Free Conferencing cannot show causation on its claims.

Regarding the duplicative action argument, "[t]he Supreme Court has noted a 'virtually unflagging obligation' on the part of federal courts to exercise their jurisdiction." Mo. ex rel. Nixon v. Prudential Health Care Plan, Inc., 259 F.3d 949, 953 (8th Cir. 2001) (quoting Colo. River Water Conservation Dist. v. United States, 424 U.S. 800, 817 (1976)). But there exists "a prudential limitation on the exercise of federal jurisdiction." Id. at 954. Namely, "[p]laintiffs may not pursue multiple ...


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