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Sprint Communs. Co. L.P. v. Crow Creek Sioux Tribal Court

United States District Court, D. South Dakota, Southern Division

August 7, 2015

SPRINT COMMUNICATIONS COMPANY L.P., Plaintiff,
v.
CROW CREEK SIOUX TRIBAL COURT, NATIVE AMERICAN TELECOM, LLC., and B. J. JONES, in his official capacity as special judge of Tribal Court; Defendants

Page 906

          For Sprint Communications Company L.P., Plaintiff, Counter Defendant: Philip R. Schenkenberg, Scott G. Knudson, PRO HAC VICE, Briggs & Morgan, P.A., Minneapolis, MN; Tommy Drake Tobin, Winner, SD.

         For Native American Telecom, LLC., Defendant, Counter Claimant: Scott R. Swier, LEAD ATTORNEY, Swier Law Office, Prof. LLC, Avon, SD; Stephen Wald, LEAD ATTORNEY, PRO HAC VICE, Partridge Snow & Hahn LLP, Boston, MA.

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          ORDER GRANTING IN PART AND DENYING IN PART SPRINT'S MOTION FOR SUMMARY JUDGMENT AND GRANTING IN PART AND DENYING IN PART NAT'S MOTION FOR SUMMARY JUDGMENT

         KAREN E. SCHREIER, UNITED STATES DISTRICT JUDGE.

         Pending are cross-motions for summary judgment. Plaintiff, Sprint Communications Company, L.P., seeks summary judgment on Counts I and IV of defendant Native American Telecom, LLC's (NAT) amended counterclaim. NAT seeks summary judgment on all of Sprint's claims, as well as summary judgment on Counts I and IV of its amended counterclaim. For the following reasons, the court grants in part and denies in part Sprint's motion and grants in part and denies in part NAT's motion.

         BACKGROUND

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          The pertinent, undisputed facts are as follows:[1]

         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.

         In October 2008, the Crow Creek Sioux Tribal authority authorized NAT to provide telecommunications service on the Crow Creek Reservation subject to the tribe's laws. Pursuant to the 2008 approval order, NAT began to operate as an LEC. NAT filed its first interstate tariff with the FCC, which 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 one. NAT revised its tariff number two, which revision became effective on June 26, 2011. NAT's third interstate tariff was filed with the FCC in August 2011, and became effective on August 23, 2011.

         NAT also operates a free conference calling system (used for conference calling, chat-lines, and similar services) in connection with Free Conferencing Corporation (Free Conferencing). A party using NAT's services does not pay NAT for the conference call, but rather is assessed 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, which were billed to Sprint for conference calls, are at issue here.

         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. On August 16, 2010, Sprint filed suit against NAT alleging a breach of the Federal Communications Act (FCA) and a state-law unjust enrichment claim. Docket 1.

         On March 8, 2011, NAT amended its answer and 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 sought declaratory relief. Docket 99.

         On November 29, 2011, the FCC released its Connect America Fund final rule, which addresses access stimulation and traffic pumping. See Connect America Fund; A National Broadband Plan for Our Future; Establishing Just and Reasonable Rates for Local Exchange Carriers; High-Cost Universal Service Support, 76 Fed.Reg. 73830 (Nov. 29, 2011). The FCC also created a transitional framework for VoIP intercarrier compensation. Id. at ¶ 19. On December 27, 2011, this court issued an order directing the parties to discuss what effect, if any, the FCC's Connect America Fund final rule had on the issues presented in this case. Docket 128. Then, on February 22, 2012, this court issued an order discussing the final rule and determined that it did not apply retroactively. Docket 141 at 9-11 (" Thus, the final rule is inapplicable to the time period before the final rule became

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effective." ). As part of the same order, this court granted Sprint's then-pending motion to stay this proceeding and referred three issues to the FCC for resolution. Id. at 25. This court also directed the parties to issue periodic updates describing the status of the FCC proceeding. This court received these updates over the next two years, which showed that the status of the FCC referral remained unchanged since November 2012. Compare Docket 154 with Docket 163. Because of the limited progress on the FCC referral, a telephonic status conference was held on July 23, 2014. See Docket 164.

         The parties stated that they had been engaged in litigation before the South Dakota Public Utilities Commission (SDPUC). Docket 169 at 5. In that litigation, NAT was granted a certificate of authority by the SDPUC to provide certain telecommunications services in South Dakota. Based on the results of the SDPUC litigation and the lack of action by the FCC during the period of the stay, the parties discussed whether some of the disputes in this case remained viable. Id. at 8-10. The court proposed entering an order that would lift the stay, withdraw the issues that had been referred to the FCC, and establish deadlines for the parties to amend the complaint, counterclaims, and to file any motions to dismiss. Id. at 12. The court also stated that it would rule on any motions to dismiss based on a statute of limitations defense and that a new referral of issues to the FCC could then be discussed. Id. With the parties in agreement, a formal order was issued that same day. See Docket 168.

         Sprint did not amend its complaint. NAT amended its counterclaim on September 9, 2014, and added a number of allegations that arose during the period of the stay and FCC referral. Docket 172. A number of procedural motions have since been filed by the parties. Relevant to the present discussion are the parties' cross-motions for summary judgment. Docket 211, Docket 223.

         LEGAL STANDARD

         Summary judgment on all or part of a claim is appropriate when the movant " shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(a); see also In re Craig, 144 F.3d 593, 595 (8th Cir. 1998). The moving party can meet its burden by presenting evidence that there is no dispute of material fact or that the nonmoving party has not presented evidence to support an element of its case on which it bears the ultimate burden of proof. Celotex Corp. v. Catrett, 477 U.S. 317, 322-23, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). Once the moving party has met this burden, " [t]he nonmoving party may not 'rest on mere allegations or denials, but must demonstrate on the record the existence of specific facts which create a genuine issue for trial.'" Mosley v. City of Northwoods, Mo., 415 F.3d 908, 910 (8th Cir. 2005) (quoting Krenik v. Cnty. of Le Sueur, 47 F.3d 953, 957 (8th Cir. 1995)). " Further, 'the mere existence of some alleged factual dispute between the parties is not sufficient by itself to deny summary judgment. . . . Instead, the dispute must be outcome determinative under prevailing law.'" Id. (quoting Get Away Club, Inc. v. Coleman, 969 F.2d 664, 666 (8th Cir. 1992)). The facts, and inferences drawn from those facts, are " viewed in the light most favorable to the party opposing the motion" for summary judgment. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986) (quoting United States v. Diebold, Inc., 369 U.S. 654, 655, 82 S.Ct. 993, 8 L.Ed.2d 176 (1962)).

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         DISCUSSION

         I. Sprint's Motion for Partial Summary Judgment

         Sprint seeks summary judgment on Counts I and IV of NAT's amended counterclaim. Count I of NAT's amended counterclaim seeks to enforce each of NAT's interstate tariffs and to recover the amounts NAT billed to Sprint pursuant to those tariffs. Docket 172 at 17. Count IV seeks declaratory relief regarding Sprint's obligations pursuant to NAT's tariffs. Id. at 18-19. Alternatively, Sprint argues that NAT's cross-motion for summary judgment on Counts I and IV of its amended counterclaim should be denied.

         A. Whether Sprint Can Move for Summary Judgment?

         NAT asserts that Sprint cannot move for partial summary judgment because Sprint has not amended its complaint to include the grounds upon which Sprint's motion is founded.[2] Sprint is seeking partial summary judgment as a defendant on Counts I and IV of NAT's amended counterclaim. In its answer to NAT's counterclaim, Sprint denied that NAT's tariffs were enforceable and pleaded several affirmative defenses on point. Sprint's answer was sufficient to raise the grounds it now pursues, and Sprint was not required to first amend its complaint before seeking partial summary judgment on Counts I and IV of NAT's amended counterclaim.

         B. Whether NAT Was Authorized to Provide Telecommunications Services on the Crow Creek Reservation Prior to June 12, 2014?

         It is undisputed that the Crow Creek Sioux Tribal Utility Authority granted NAT a certificate of authority to provide telecommunications services on the Crow Creek Reservation in October 2008. Docket 212 at ¶ 2; Docket 220 at ¶ 2. That certificate purported to allow NAT to operate as a CLEC on the Reservation. Docket 14-4 at 1 n.1. It is also undisputed that NAT filed an application with the SDPUC in October 2011 to provide intrastate access services in South Dakota that originate or terminate off the Reservation. Docket 212 at ¶ 11; Docket 240 at ¶ 11. Further, it is undisputed that the SDPUC did not grant NAT a certificate of authority until June 12, 2014. Docket 220 at ¶ 23; Docket 240 at ¶ 23. Sprint contends that the SDPUC--and not the Tribal Utility Authority--was the only regulatory body that could grant NAT the authority to act as a CLEC whether on the Reservation or not. Until it received that authority from the SDPUC, Sprint argues that NAT could not enforce any of its interstate tariffs.

         Describing the original Communications Act of 1934, the Supreme Court observed,

[W]hile the Act would seem to divide the world of domestic telephone service neatly into two hemispheres-one comprised of interstate service, over which the FCC would have plenary authority, and the other made up of intrastate service, over which the States would retain exclusive jurisdiction-in practice, the realities of technology and economics belie such a clean parceling of responsibility.

La. Pub. Serv. Comm'n v. F.C.C., 476 U.S. 355, 360, 106 S.Ct. 1890, 90 L.Ed.2d 369 (1986). Although " the world of domestic telephone service" described by the Court

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was " fundamentally restructured" by the Telecommunications Act of 1996, AT& T Corp. v. Iowa Utils. Bd., 525 U.S. 366, 371, 119 S.Ct. 721, 142 L.Ed.2d 834 (1999), the Court's observation of separate domains remains relevant today. And while the issue before the Court involved only two spheres occupied by the federal and state governments, the question before this court is whether Indian tribes occupy a third.

         The Supreme Court has recognized " the Federal Government's longstanding policy of encouraging tribal self-government." Iowa Mut. Ins. Co. v. LaPlante, 480 U.S. 9, 14, 107 S.Ct. 971, 94 L.Ed.2d 10 (1987). " This policy reflects the fact that Indian tribes retain 'attributes of sovereignty over both their members and their territory.'" Id. (quoting United States v. Mazurie, 419 U.S. 544, 557, 95 S.Ct. 710, 42 L.Ed.2d 706 (1975)). For years, the FCC has also acknowledged that Native American tribes have a role in ensuring that " all Americans, in all regions of the United States, have the opportunity to access telecommunications and information services." In the Matter of Statement of Policy on Establishing A Government-to-Government Relationship with Indian Tribes, 16 FCC Rcd. 4078 at *1 (F.C.C. 2000). In an Indian Telecom Initiatives booklet, the FCC stated that it " is committed to facilitating increased access to telecommunications in Indian Country." Docket 46-4 at 1. The Commission listed the benefits of increased telecommunications services on tribal lands, including access to education and employment opportunities, public safety services, and government programs. See Docket 46-4. The agency has also pledged its support for securing those services on tribal lands: " In a series of steps undertaken since 1998, the FCC, in consultation with tribal leaders and other government agency officials, has sought to address concerns about barriers to telecommunications service deployment and subscribership in Indian Country. Concerns addressed include geographic isolation, lack of information, and economic obstacles." Docket 46-5 at 9.

         The FCC has further acknowledged that Indian tribes are sovereign and that it would " endeavor to work with Indian Tribes on a government-to-government basis consistent with the principles of Tribal self-government to ensure . . . that Indian Tribes have adequate access to communications services." Statement of Policy, 16 FCC Rcd. 4078 at *2. " The FCC recognizes the rights of tribal governments to set their own communications priorities and goals for the welfare of their membership." Docket 46-5 at 3. Thus, the FCC has not only expressed a need to include Indian tribes in the world of domestic telecommunications, but has also recognized that the sovereignty possessed by Indian tribes makes them an active participant.

         The FCC has found that Tribes possess the authority to regulate telecommunications services on tribal land. See In the Matter of Western Wireless Corporation, 16 FCC Rcd. 18145 (F.C.C. 2001). In Western Wireless, a carrier sought to deploy a wireless service to members of the Oglala Sioux Tribe on the Pine Ridge Reservation in South Dakota. Id. at ¶ 6. The question before the FCC involved a determination of which body--the Tribe, the State, or the FCC--had regulatory authority over Western Wireless's services. The FCC noted that the " case presents the issue of the extent of tribal authority over a non-tribally owned carrier that intends to serve both tribal members and others on the reservation." Id. at ¶ 13. Under those facts, the FCC ultimately found that both the state and the Tribe had regulatory authority over certain aspects of Western Wireless's services.

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Id. at ¶ 23. Tribes are not, as Sprint contends, wholly excluded from regulating the provision of telecommunications on tribal land.

         Similarly, the SDPUC acknowledged the difficult question of which body had regulatory authority over NAT and the services it provided. Docket 211-5 at 9 (SDPUC Opinion) (noting " [s]ome of the lack of clarity is likely due to the questions regarding jurisdiction of the Commission over NAT" and that NAT requested " whatever authority that this Commission determined it needed." ). In fact, the SDPUC did not believe it had sole regulatory authority. Id. at 16 (" The Commission finds it has the necessary jurisdiction to grant a certificate of authority to NAT . . . . However, the Commission finds that it does not have primary regulatory authority over the provision of service by NAT to members on the reservation as NAT is a telecommunications company operating on the Crow Creek Reservation as a limited liability company formed under the Crow Creek Sioux Tribe." ). The Commission, however, did not make additional conclusions about the extent of the Tribe's authority over services provided on the Reservation. Id. But the Commission did respond to Sprint's argument that NAT was operating illegally in the state because it did not have a certificate of authority, and concluded that " NAT's operation without a [state] certificate of authority does not bar it from receiving a [state] certificate of authority." Id. at 13.

         The Crow Creek Sioux Tribal Utility Authority expressly granted NAT, a majority tribally-owned entity, permission to provide local telecommunications services on the Crow Creek Reservation. That permission included the authority to act as a CLEC on the Reservation. In light of the observations made by the FCC, the FCC's Western Wireless decision, the federal government's long-standing recognition of encouraging tribal self-government, and the SDPUC's response to Sprint's argument that NAT was operating illegally, the court finds that the Tribe possessed its own authority to confer such permission upon NAT. The fact that NAT also sought and obtained permission to provide similar services outside the Reservation from the SDPUC in no way divested the Tribe of the regulatory authority it enjoyed on the Reservation. Cf. Western Wireless, 16 FCC Rcd. 18145 at ¶ 23. Consequently, the court finds that NAT had sufficient authority to provide local telecommunications services on the Reservation prior to receiving the state's permission to provide those services off the Reservation.

         C. Whether NAT's Interstate Tariffs Number 1 and Number 2 are Unenforceable?

         Prior to this court's February 22, 2012, order, the FCC had issued several opinions involving litigation between IXCs and LECs that were similar to the parties' disputes here. See In the Matter of Qwest Commc'ns Corp. v. Farmers & Merchs. Mut. Tele. Co., 22 FCC Rcd. 17973 (F.C.C. 2007) ( Farmers I ); In the Matter of Qwest Commc'ns Corp. v. Farmers & Merchs. Mut. Tele. Co., 24 FCC Rcd. 14801 (F.C.C. 2009) ( Farmers II ); In the Matter of Qwest Commc'ns Corp. v. Farmers & Merchs. Mut. Tele. Co., 25 FCC Rcd. 3422 (F.C.C. 2010) ( Farmers III ); AT& T Corp. v. YMax Commc'ns Corp., 26 FCC Rcd. 5742 (F.C.C. 2011); In the Matter of All American Telephone Co., et al. v. AT& T Corp., 26 FCC Rcd. 723 (F.C.C. 2011) ( All American I ); In the Matter of Qwest Commc'ns Co., LLC. v. Northern Valley Commc'ns, LLC, 26 FCC Rcd. 8332

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(F.C.C. 2011) ( Northern Valley I ); In the Matter of Sprint Commc'ns Co., L.P. v. Northern Valley Commc'ns Co., LLC., 26 FCC Rcd. 10780 (F.C.C. 2011)[3] ( Northern Valley II ). Additionally, the Farmers line of cases had been appealed to and affirmed by the D.C. Circuit Court of Appeals. Farmers & Merchs. Mut. Tele. Co. v. FCC, 668 F.3d 714, 399 U.S. App.D.C. 169 (D.C. Cir. 2011). Since the time of the February 2012 order, several other opinions from the Commission have been issued discussing similar disputes. See In the Matter of AT& T Corp. v. All American Tele. Co., 28 FCC Rcd. 3477 (F.C.C. 2013) ( All American II )[4]; In the Matter of Qwest Commc'ns Co., LLC v. Sancom, Inc., 28 FCC Rcd. 1982 (F.C.C. 2013).[5] The D.C. Circuit Court of Appeals has also affirmed the Northern Valley line of cases. Northern Valley Commc'ns, LLC v. FCC, 717 F.3d 1017, 405 U.S. App.D.C. 223 (D.C. Cir. 2013).

         With the exception of All American I and Northern Valley II (which involved the same tariff at issue in Northern Valley I ), the court's February 22, 2012, order discussed and analyzed each of the then-contemporary FCC decisions. See Docket 141. Sprint suggests the subsequent decisions from the FCC and D.C. Circuit enable this court to determine for itself whether NAT properly billed Sprint for access services pursuant to its tariffs.

         1. Summary of ...


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