**Before the**

**Federal Communications Commission**

**Washington, D.C. 20554**

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| In the Matter of                 | *  | File No. EB-02-MD-038        |
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| Ryder Communications, Inc.,      | ** |                              |
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| AT&T Corp.,                      | *  |                              |
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Defendant. **)**

**MEMORANDUM OPINION AND ORDER**

**Adopted: July 3, 2003 Released: July 7, 2003**

By the Commission:

# introduction

1.  In this Memorandum Opinion and Order, we deny a formal complaint[^1]
    that Ryder Communications, Inc. ("Ryder") filed against AT&T Corp.
    ("AT&T") pursuant to section 208 of the Communications Act of 1934,
    as amended ("Communications Act" or "Act").[^2] In particular, Ryder
    has failed to prove that AT&T's enforcement of the early service
    termination provision contained in the parties' contract tariff for
    900 transport service was unjust and unreasonable under section
    201(b) of the Act.[^3] This conclusion rests on the principle that
    where two parties, through valid contracts, have clearly allocated
    the risk of certain events, it is not unjust and unreasonable under
    section 201(b) for one party to hold the other party to this
    contractual allocation.

# background

## The Parties

2.  During its existence as a going concern, Ryder was a "service
    bureau" and a 900 pay-per-call provider of information services to
    marketers and media companies.[^4] AT&T is a national and
    international provider of telecommunications services, as well as a
    provider of transport services for 900 number calls.[^5] During the
    period covered by the Complaint, AT&T also provided, in addition to
    tariffed telecommunications services, certain non-tariffed services,
    including billing and collection services.[^6]

## The Parties' Business Relationship

3.  In 1992, AT&T began providing 900 transport service to Ryder for
    Ryder's 900 pay-per-call operations.[^7] From 1992 until 1997, AT&T
    provided this 900 transport service to Ryder pursuant to AT&T Tariff
    F.C.C. No. 1 ("Tariff No. 1").[^8]

4.  In January 1997, AT&T and Ryder entered into a contract, also
    referred to as a Custom Offer Agreement, under which AT&T agreed to
    provide 900 transport service to Ryder for a period of three years
    at discounted usage rates based on Ryder's volume of 900 calls.[^9]
    In exchange for these volume discounts, Ryder agreed to meet certain
    prescribed "Minimum Annual Revenue Commitments ("MARC")," regardless
    of whether it actually incurred sufficient volume to generate such
    revenue in usage charges.[^10] Specifically, Ryder agreed to a
    minimum commitment to AT&T of \$600,000 in 900 transport service
    usage charges per year for three years;[^11] Ryder also agreed with
    AT&T that, in the event Ryder discontinued service prior to the
    expiration of the three year term, AT&T could charge Ryder an early
    service termination fee in "an amount equal to 100% of the
    unsatisfied MARC for each year remaining in the Custom Offer
    Agreement term."[^12] Ryder further agreed with AT&T that the early
    service termination provision in the parties' contract would
    supercede the early service termination provision in Tariff No.
    1.[^13] In addition, the parties agreed to incorporate the
    limitation of liability provisions in Tariff No. 1,[^14] under which
    AT&T remained liable for damages caused by any willful misconduct in
    its provision of tariffed services.[^15]

5.  AT&T filed the parties' contract with the Commission as Contract
    Tariff No. 6831 ("CT 6831").[^16] CT 6831 became effective on April
    15, 1997.[^17]

6.  In addition to 900 transport service, AT&T also provided billing and
    collection services to Ryder pursuant to a billing services
    agreement executed by both parties, effective as of January 1995
    ("Billing Agreement").[^18] Under the Billing Agreement, AT&T agreed
    to obtain usage records for calls placed to the 900 numbers served
    by Ryder, to bill the calling party for such calls at the charges
    established by Ryder, to collect payment from the callers, and to
    remit to Ryder the net amount of such collections after deducting
    AT&T's rates for 900 transport service, any charges disputed by
    callers, federal, state, and local taxes, and AT&T's billing service
    fee.[^19] The parties did not file this Billing Agreement with the
    Commission as a contract tariff, because the Commission had
    mandatorily detariffed billing and collection services.[^20]

7.  The Billing Agreement stated explicitly that "charges for tariffed
    services will not be abated or refunded in the event of delay or
    failure of performance of this Agreement."[^21] In addition,
    regarding any harm to Ryder that might result from AT&T's inadequate
    performance of billing and collection services, the Billing
    Agreement expressly limited AT&T's potential liability to Ryder to
    "direct damages," excluding, *inter alia*, "incidental, indirect,
    special, or consequential damages...."[^22] Lastly, the Billing
    Agreement provided that it was governed by the laws of the State of
    New Jersey.[^23]

8.  Although the record in this proceeding does not indicate that Ryder
    experienced any problems with the 900 transport service it received
    from AT&T pursuant to CT 6831,[^24] Ryder did experience some
    problems (of disputed nature and magnitude) with the billing and
    collection services AT&T provided.[^25] After experiencing these
    billing and collection problems, Ryder terminated all of its
    employees and closed its 900 pay-per-call business on June 25,
    1997.[^26] On July 24, 1997, approximately three months after CT
    6831 became effective, Ryder formally notified AT&T that it was
    canceling all telecommunications services under CT 6831 and directed
    AT&T to disconnect all 900 telephone numbers assigned to it.[^27]

9.  As a result of Ryder's decision to cease purchasing
    telecommunications services from AT&T and close its business, Ryder
    failed to meet its MARC under CT 6831.[^28] Consequently, pursuant
    to the terms of the early service termination provision in CT 6831,
    AT&T notified Ryder, by letter dated November 3, 1997, of Ryder's
    liability to AT&T in the amount of approximately \$1.6 million in
    early service termination charges.[^29]

## The Federal District Court Proceeding

10. On May 12, 1999, Ryder filed a complaint against AT&T in state court
    in Florida alleging that AT&T had breached its obligations under the
    Billing Agreement.[^30] Ryder alleged that AT&T had failed to timely
    and accurately account for and remit to Ryder proceeds that AT&T had
    collected from Ryder's customers on Ryder's behalf under the Billing
    Agreement.[^31] Claiming that AT&T's breach of the Billing Agreement
    had depleted Ryder's revenue stream to the point that it was forced
    out of business, Ryder sought damages for its lost revenues, its
    company's value as a going concern, and other costs.[^32] Ryder's
    Court Complaint did not allege that AT&T had violated CT 6831 or
    that any provision of CT 6831, including the early service
    termination provision, violated the Communications Act.[^33]

11. After removing Ryder's complaint to the United States District Court
    for the Southern District of Florida ("District Court" or "Court"),
    AT&T filed an answer and counterclaims against Ryder.[^34] AT&T's
    counterclaims alleged, *inter alia*, that Ryder breached CT 6831 by
    terminating service before the end of the three-year term, failing
    to meet its MARC, and then refusing to pay early service termination
    charges; thus, AT&T further alleged that, pursuant to the early
    service termination provision in CT 6831, Ryder owed AT&T
    approximately \$1.6 million for unpaid tariff charges.[^35] In
    response, Ryder asserted that its obligations under CT 6831's early
    service termination provision should be excused, because it was
    AT&T's "negligence, gross negligence, and willful breach" of the
    Billing Agreement that caused Ryder to incur those obligations, and
    AT&T should not be permitted to benefit from its own wrongful
    action.[^36] Again, Ryder did not allege, either by way of
    counterclaim or affirmative defense, that AT&T had violated CT 6831
    or that any provision of CT 6831, including the early service
    termination provision, violated the Communications Act.[^37]

12. From the early stages of the District Court proceeding, Ryder took
    the position that it could recover consequential damages, including
    recoupment/cancellation of the early service termination charges due
    under CT 6831, as part of its damages for AT&T's alleged breach of
    the Billing Agreement.[^38] Ryder took this position despite the
    Billing Agreement's express exclusion of liability for consequential
    damages, and despite the Billing Agreement's clear statement that
    charges for tariffed services would not be abated or refunded in the
    event of a billing "delay or failure of performance."[^39]

13. In at least two separate rulings, the District Court squarely
    rejected Ryder's position, holding that Ryder could
    [not]{.underline} include as consequential damages arising from any
    breach by AT&T of the Billing Agreement the early service
    termination charges owed by Ryder under CT 6831.[^40] The District
    Court held, in other words, that AT&T could collect and retain early
    service termination charges from Ryder, notwithstanding a breach by
    AT&T of the Billing Agreement. In so ruling, the Court upheld the
    validity of the Billing Agreement's liability limitation provision
    under New Jersey law, because Ryder had failed to show that AT&T's
    breach of the Billing Agreement was willful and wanton. [^41] As a
    result, the District Court limited Ryder's potential recovery to
    "direct damages," meaning any funds that AT&T might have wrongfully
    withheld from Ryder.[^42]

14. After a week long trial, the jury returned a verdict in favor of
    Ryder on its claim against AT&T alleging a breach of the Billing
    Agreement, and awarded Ryder \$984,795.38 in "direct damages," the
    amount that AT&T had wrongfully withheld.[^43] The jury also
    returned a verdict against AT&T on its counterclaim against Ryder
    for early service termination charges, finding that Ryder's failure
    to meet its MARC under CT 6831 should be excused because of AT&T's
    grossly negligent provision of 900 transport services under CT
    6831.[^44]

15. In a Post-Trial Order issued on January 31, 2001, the District Court
    upheld the jury's verdict in favor of Ryder on its claim against
    AT&T for breach of the Billing Agreement.[^45] The District Court
    overruled the jury's verdict denying AT&T's counterclaim, however,
    because "there was simply no evidence that there were any
    irregularities or problems with the 900 transport services provided
    by AT&T to Ryder" under CT 6831.[^46] The Court therefore granted as
    a matter of law AT&T's counterclaim for early service termination
    charges, finding that "it is uncontested that Ryder breached the
    Contract Tariff Agreement" by failing to meet its MARC.[^47]

## The Federal District Court's Referral

16. In its January 31, 2001 Post-Trial Order, upon finding in favor of
    AT&T on its counterclaim for early service termination charges, the
    Court did not simply award those charges to AT&T. Instead, the Court
    observed a significant difference between the charges that Ryder
    owed under CT 6831's early service termination provision and the
    charges that Ryder would have owed under Tariff No. 1's early
    service termination provision.[^48] This led the Court to ask
    "whether it is permissible to abrogate the Tariff No. 1's
    discontinuance clause in such a manner."[^49] The Court then stated
    that, "in the present case, it is conceivable that a nearly
    \$1,600,000.00 termination penalty, which is what application of the
    Tariff Agreement's \[CT 6831's\] discontinuance provision amounts
    to, may be considered an unreasonable and unenforceable tariff
    practice."[^50] Without further explanation, the Court concluded
    that, pursuant to the primary jurisdiction doctrine, it should refer
    to the Commission "the issue of the appropriate measure of damages
    for Ryder Communications, Inc.'s breach" of CT 6831.[^51]

## Ryder's Commission Complaint

17. On December 13, 2002, almost two years after the District Court's
    referral order, Ryder filed the instant Complaint against AT&T.[^52]
    The Complaint claims that AT&T's enforcement of CT 6831's early
    service termination provision violates the reasonableness standard
    of section 201(b) of the Act, because it was AT&T's own breaches of
    the Billing Agreement that caused Ryder to go out of business,
    which, in turn, caused Ryder to miss its MARC and incur early
    service termination charges under CT 6831.[^53] The Complaint also
    claims that, on its face, CT 6831's early service termination
    provision violates the reasonableness standard of section 201(b) of
    the Act, because the provision applies even when AT&T's own
    misconduct causes a customer to terminate service early and incur
    charges thereunder.[^54] For the reasons described below, we deny
    both claims.[^55]

# discussion

## CT 6831 Lawfully Superceded Tariff No. 1.

18. The District Court clearly directed the parties to present to the
    Commission the following issue: whether the parties lawfully could,
    by agreement, agree to be bound by the early service termination
    provision in CT 6831 rather than the early service termination
    provision in Tariff No. 1, given that the former triggers a
    significantly higher charge than the latter.[^56] The resolution of
    that issue is equally clear. As the parties correctly stipulate, it
    is a settled point of law that a contract tariff may lawfully take
    precedence over the provisions of a generally filed tariff.[^57] It
    is well established that, under the Communications Act, carriers are
    not limited to offering service subject to generic tariffs, but may
    also operate pursuant to individually negotiated contract tariffs
    that supercede the generic tariff on file for the same service.[^58]
    Since 1991, the Commission has specifically allowed AT&T to offer
    service pursuant to contract tariffs, like CT 6831, that contain
    minimum volume commitments by the customer for each service.[^59]
    Consequently, we conclude that the early service termination
    provision in CT 6831 lawfully superceded the early service
    termination provision of Tariff No. 1, even though the former
    triggers a higher charge than the latter. We note that the higher
    charge triggered by CT 6831's early service termination provision
    should not be viewed in isolation, but rather as a *quid pro quo*
    for CT 6831's lower usage charges (as compared to Tariff No. 1).
    [^60]

## CT 6831's Early Service Termination Provision Complies with the Reasonableness Standard of Section 201(b), Both As Applied and On Its Face.

19. The District Court did not state clearly what additional issues, [if
    any]{.underline}, it expected the parties to present to the
    Commission, other than the issue addressed in Part III(A) above. As
    a result, Commission staff spent considerable time with the parties,
    both before and after the instant Complaint was filed, discussing
    how properly to frame the issues presented, with all sides
    expressing varying viewpoints.[^61] We are not completely confident
    (nor is AT&T) that Ryder's Complaint comports with the intent of the
    District Court's referral order.[^62] Nevertheless, because the
    ultimate responsibility for presenting referred issues to the
    Commission lies with the parties (as the District Court
    recognized),[^63] and because we want to assist the District Court
    as much and as quickly as possible, we proceed below to consider the
    issues as framed by Ryder's Complaint.[^64]

### Enforcement of the Early Service Termination Provision in CT 6831 Is Not Unjust and Unreasonable in the Present Case.

20. Ryder argues that AT&T's breach of the Billing Agreement caused
    Ryder to go out of business, which, in turn, caused Ryder to miss
    its MARC and incur early service termination charges under CT
    6831.[^65] Ryder contends, therefore, that permitting AT&T to
    enforce CT 6831's early service termination provision would
    unreasonably allow AT&T to profit from its own misconduct.[^66]
    Ryder maintains, in other words, that we should preclude AT&T from
    collecting any damages (in the form of early service termination
    charges) for Ryder's admitted breach of CT 6831.[^67] For the
    following reasons, we disagree.[^68]

21. As Ryder itself repeatedly observes, the parties deliberately
    designed CT 6831 and the Billing Agreement to operate symbiotically
    and to define the parameters of the parties' business
    relationship.[^69] As part of that conscious design, the parties
    expressly allocated the risk that AT&T might breach the Billing
    Agreement and thereby harm Ryder: AT&T would have to pay Ryder
    "direct damages" arising from the breach, but Ryder would still have
    to pay AT&T any charges incurred under CT 6831, subject to Ryder's
    recoupment of those charges as consequential damages if AT&T's
    breach of the Billing Agreement constituted willful and wanton
    misconduct. Put differently, AT&T assumed the risk of paying direct
    damages, whereas Ryder assumed the risk of incurring consequential
    damages, unless AT&T's breach was willful and wanton.[^70]

22. In particular, the Billing Agreement plainly states that "charges
    for tariffed services will not be abated or refunded in the event of
    delay or failure of performance of this Agreement."[^71] Thus,
    according to the Billing Agreement, charges incurred by Ryder under
    CT 6831 remain due, even if AT&T breaches the Billing Agreement. The
    Billing Agreement also provides that, if AT&T breaches the Billing
    Agreement, AT&T will be liable to Ryder only for "direct damages,"
    and not "consequential damages," arising from the breach; however,
    the Billing Agreement specifies New Jersey law as governing, and New
    Jersey law (according to the District Court in this matter)
    precludes limitations on liability for willful and wanton
    misconduct.[^72] Consequently, in sum, the deal that the parties
    reached under the Billing Agreement is as follows: if AT&T breaches
    the Billing Agreement, Ryder still has to pay AT&T all charges
    incurred under CT 6831, but AT&T has to pay Ryder direct damages
    arising from the breach, and also has to pay any consequential
    damages arising from the breach, potentially including return of
    early service termination charges, if AT&T's breach was willful and
    wanton.

23. Ryder tried and failed to show in the court proceeding that AT&T's
    breach of the Billing Agreement constituted willful and wanton
    misconduct.[^73] Moreover, Ryder does not dispute here the
    interpretation of the Billing Agreement described above.[^74] In
    addition, the District Court found, and Ryder does not contest here,
    that Ryder breached CT 6831 by terminating service before the end of
    the three-year term, failing to meet its MARC, and then refusing to
    pay early service termination charges. Furthermore, a filed federal
    tariff is presumed lawful, and the filing carrier must enforce the
    tariff's terms.[^75] Given all of these circumstances, it is
    perfectly reasonable under section 201(b) for AT&T to seek the
    benefit of its bargain \-- payment by Ryder of the early service
    termination charges incurred under CT 6831.

24. Indeed, Ryder essentially concedes that CT 6831 and the Billing
    Agreement, as written, preclude its claims. Ryder argues, therefore,
    that we should effectively rewrite CT 6831 so Ryder can avoid the
    allegedly harsh results of the parties' deal.[^76] In making that
    argument, Ryder relies, in part, on the "Sierra-Mobile
    doctrine."[^77] Ryder's reliance is misplaced. Under the principles
    of the Sierra-Mobile doctrine, the Commission may effectively alter
    the terms of a contract tariff at the behest of one of the original
    negotiating parties, but only if there exists a compelling public
    interest in doing so, or convincing evidence of unfairness in the
    contract formation process.[^78] Moreover, "\[t\]he threshold for
    demonstrating sufficient harm to the public interest to warrant
    contract reformation under the Sierra-Mobile doctrine is much higher
    than the threshold for demonstrating unreasonable conduct under
    Sections 201(b) and 202(a) of the Act."[^79] This preserves the
    integrity of contracts, which is vital to the proper functioning of
    any commercial enterprise, including the communications market. In
    fact, the long-term health of the communications market depends on
    the certainty and stability that stems from the predictable
    performance and enforcement of contracts.[^80] Here, as explained
    below, Ryder shows neither a compelling public interest nor
    unfairness in the formation of CT 6831.

25. Ryder makes some general assertions that it lacked bargaining power
    in its negotiations with AT&T and thus had no choice but to accept
    the "boilerplate" aspects of CT 6831, including the early service
    termination provision.[^81] AT&T effectively rebuts these assertions
    with evidence that its negotiations with Ryder were "extensive, and
    included a healthy 'give and take' with respect to the terms and
    conditions of the agreements."[^82] AT&T also states convincingly
    that the early service termination provision was a *quid pro quo*
    for the reduced rates that Ryder had achieved through hard
    bargaining.[^83] Therefore, Ryder falls far short of demonstrating
    the kind of unfairness that might warrant reformation of CT
    6831.[^84]

26. Ryder maintains that reforming CT 6831's early service termination
    provision so as to vitiate Ryder's liability thereunder would serve
    a compelling public interest by preventing carriers from using
    boilerplate contract provisions to insulate themselves from the
    consequences of their own misconduct.[^85] Ryder overlooks several
    key facts: the Commission detariffed the services at issue here, and
    as far as the record shows, no other party opted into CT 6831 or has
    agreed in negotiations to a contract provision that would harm them
    in the manner claimed by Ryder here.[^86] Thus, Ryder's assertion
    that we need to protect others from suffering the same fate as Ryder
    rests on sheer speculation.

27. Moreover, and perhaps most importantly, Ryder's own description of
    the parties' business relationship reveals that Ryder could have
    foreseen, and thus sought to address differently in the agreements,
    the very circumstances that allegedly occurred here. In particular,
    Ryder emphasizes repeatedly the interrelationship between the
    parties' two agreements, and highlights the fact that its ability to
    meet its MARC under CT 6831 depended on the cash flow that it
    received from AT&T under the Billing Agreement.[^87] Thus, Ryder
    knew or should have known that a breach by AT&T of the Billing
    Agreement might cause a breach by Ryder of CT 6831. Yet the record
    contains no evidence that Ryder sought to allocate the risk of that
    occurrence in any manner other than what presently appears in the
    agreements: Ryder would remain liable for early service termination
    charges, while AT&T would be liable for direct damages if its breach
    was not willful and wanton, or direct [and]{.underline}
    consequential damages (including return/cancellation of any early
    service termination charges) if its breach was willful and wanton
    (and the Court has ruled that AT&T's breach was not willful and
    wanton).[^88]

28. Given these circumstances, revising CT 6831 so as to eliminate
    Ryder's responsibility to pay early service termination charges
    would serve only Ryder's private economic interest, not a public
    interest. In fact, revising CT 6831 in that manner would contravene
    the strong public interest in preserving the sanctity of contracts,
    especially because the MARC and its attendant termination charges
    were principal components of the exchange for reduced rates. As AT&T
    states aptly: "There is simply no justification for allowing a
    customer to negotiate for concessions on price, to sign a contract
    containing customized provisions that are the product of voluntary
    agreement, and then to run to the Commission to have the Commission
    reform a provision of the contract that was an integral part of the
    quid pro quo bargain but which subsequently produces hardship to the
    customer."[^89]

29. Buttressing our conclusion is Ryder's insistence that we need not,
    and probably should not, disturb any of the District Court's
    rulings.[^90] We agree with Ryder, but accepting the District
    Court's rulings as given almost compels denial of Ryder's claim, as
    Ryder has chosen to present it. Here again are the relevant Court
    rulings: (1) Ryder breached CT 6831 by terminating service before
    the three-year term had ended, missing its revenue commitments, and
    then refusing to pay early service termination charges; (2) AT&T
    provided transport service to Ryder in accordance with the
    requirements of CT 6831; and (3) although AT&T breached the Billing
    Agreement by wrongfully withholding certain funds, Ryder's damages
    are limited by the Agreement and New Jersey law to receipt of those
    funds, because AT&T's breach of the Agreement was not willful and
    wanton. Taken together, these rulings leave little room for Ryder to
    escape liability for the early service termination charges.

30. At bottom, all that Ryder actually proffers to support its claim is
    a simplistic notion of fairness: AT&T harmed Ryder first, so AT&T
    should not be allowed to recover anything from Ryder. What Ryder
    ignores is that Ryder expressly *agreed*, in exchange for reduced
    per-minute rates, to allow AT&T to recover early service termination
    charges in the very circumstances that allegedly occurred here.
    Thus, what would really be unfair would be to permit Ryder to shirk
    its contractual commitments and to deprive AT&T of the benefit of
    its bargain.

31. In sum, for the reasons stated above, AT&T's enforcement of CT
    6831's early service termination provision comports with the
    reasonableness requirement of section 201(b) of the Act.
    Consequently, we deny Count Two of Ryder's Complaint.

### The Early Service Termination Provision in CT 6831 Is Not Unjust and Unreasonable On Its Face. 

32. Ryder asserts that the early service termination provision in CT
    6831, on its face, violates the reasonableness requirement of
    section 201(b) of the Act, because the provision contains no express
    abrogation of its effect in the event that AT&T's misconduct causes
    the customer to terminate service early.[^91] For the following
    reasons, we disagree.

33. The Commission has consistently allowed carriers to include
    provisions in their tariffs that impose early termination charges on
    customers who discontinue service before the expiration of a
    long-term discount rate plan containing minimum volume
    commitments.[^92] Many of these provisions required individual
    customers, like Ryder, to pay charges similar, if not equivalent to,
    the charges that the customers would have paid had they continued
    service and fulfilled their minimum volume commitments.[^93] In
    approving these provisions, the Commission recognized implicitly
    that they were a valid *quid pro quo* for the rate reductions
    included in long-term plans.[^94] The Commission has acknowledged
    that, because carriers must make investments and other commitments
    associated with a particular customer's expected level of service
    for an expected period of time, carriers will incur costs if those
    expectations are not met, and carriers must be allowed a reasonable
    means to recover such costs. [^95] In other words, the Commission
    has allowed carriers to use early service termination provisions to
    allocate the risk of investments associated with long term service
    arrangements with their customers. Given this history of Commission
    approval of early service termination provisions similar to the one
    at issue here, and the reasonable goals that they generally serve,
    Ryder must provide convincing reasons why we should hold that CT
    6831 is unlawful on its face.

34. As stated above, Ryder claims that CT 6831's early service
    termination provision is facially unlawful because it does not
    include a way for a customer to avoid the payment of termination
    charges if AT&T somehow causes the customer to terminate service
    before the expiration of the contract period. Although Ryder
    accurately describes the provision, Ryder overlooks another part of
    CT 6831 that ameliorates Ryder's concern. In particular, CT 6831
    incorporates by reference certain aspects of Tariff No. 1, including
    a section stating that AT&T's "liability, if any, for its willful
    misconduct is not limited by this tariff."[^96] Consequently, under
    CT 6831, if AT&T were to engage in willful misconduct in its
    provision of transport service and thereby cause a customer to
    terminate service early and incur termination charges, the customer
    could seek to recover those charges as damages for AT&T's
    misconduct. Indeed, that is precisely what Ryder tried and failed to
    do in the court proceeding, and Ryder failed only because it
    provided no evidence of any misconduct by AT&T in the provision of
    transport service. Thus, contrary to Ryder's assertion, CT 6831
    does, in fact, provide a means for a customer ultimately to avoid
    paying early service termination charges if AT&T's misconduct causes
    the early termination.

35. Ryder complains that Tariff No. 1's liability limitation provision
    does not save CT 6831's early service termination provision, because
    it only gives a customer a potential cause of action for recovery of
    charges rather than an immediate immunity from paying the charges in
    the first place. What Ryder seems to be saying is that, in order to
    pass muster, CT 6831 must excuse payment of early service
    termination charges immediately upon a customer's mere assertions
    that AT&T has engaged in willful misconduct and that the misconduct
    has caused the customer to terminate service, before AT&T has the
    opportunity to dispute either assertion.[^97] We disagree. Given the
    investments that AT&T must make to accommodate a substantial
    long-term contract, we do not believe that the Act's reasonableness
    standard requires AT&T to allow the customer to make those
    unilateral determinations in the first instance. The reality is
    that, if the parties intractably disagree about whether AT&T engaged
    in willful misconduct and/or whether such misconduct caused the
    customer to terminate service early, litigation will ensue. Whether
    CT 6831 requires the customer to pay termination charges pending the
    outcome of such litigation is not a matter on which section 201(b)
    dictates an outcome either way.

36. Ryder further complains that Tariff No. 1's liability limitation
    provision does not save CT 6831's early service termination
    provision, because it fails to address a situation where AT&T's
    misconduct concerns something other than AT&T's provision of
    transport service, but still causes the customer to terminate
    service early.[^98] Tariffs filed with the Commission ordinarily do
    not address matters other than the provision of communications
    services offered therein.[^99] Consequently, CT 6831's failure to do
    so is certainly not facially unreasonable. In particular, CT 6831's
    failure to anticipate every conceivable situation where AT&T's
    conduct might cause Ryder harm is not unreasonable. This is
    especially true because, as described above, Ryder knew of the
    foreseeable risks and voluntarily agreed to allocate them as set
    forth in the parties' contracts. Moreover, we cannot prejudge that
    Ryder's remedies outside CT 6831 would be inadequate.

37. Ryder also contends that, for the same reason that the Commission
    prohibits carriers from using tariff provisions to insulate
    themselves from liability for willful misconduct,[^100] the
    Commission here should prohibit AT&T from using CT 6831 to profit
    from its willful misconduct.[^101] Ryder's analogy is flawed. As
    explained above, CT 6831 does, in fact, preclude AT&T from profiting
    from its willful misconduct with respect to the relevant service. If
    AT&T harms a customer via willful misconduct in the provision of
    transport services, CT 6831 allows the customer to seek the recovery
    of damages, including recoupment/cancellation of early service
    termination charges.

38. In sum, CT 6831's early service termination provision, read in
    context, comports with the reasonableness requirement of section
    201(b). Consequently, we deny Count One of Ryder's Complaint.

# ordering clauses

39. ACCORDINGLY, IT IS ORDERED, pursuant to sections 4(i), 4(j), 201(b),
    and 208 of the Communications Act of 1934, as amended, 47 U.S.C. §§
    154(i), 154(j), 201(b), 208, that the Complaint of Ryder
    Communications, Inc. IS DENIED.

    FEDERAL COMMUNICATIONS COMMISSION

    Marlene H. Dortch

    Secretary

[^1]: Formal Complaint of Ryder Communications, Inc., File No.
    EB-02-MD-038 (filed Dec. 13, 2002) ("Complaint").

[^2]: 47 U.S.C. § 208.

[^3]: 47 U.S.C. § 201(b).

[^4]: Second Revised Joint Statement, File No. EB-02-MD-038 (filed Mar.
    14, 2003) ("Joint Statement") at 2, ¶ 3; Complaint at 2, ¶ 2.
    According to AT&T, a service bureau acts as an intermediary between
    900 pay-per-call information providers and long distance telephone
    companies, such as AT&T, and provides the physical facilities
    through which an information provider operates its programs and
    connects to a long distance carrier. *See* Answer of AT&T Corp.,
    File No. EB-02-MD-038 (filed Feb. 3, 2003) ("Answer") at 29, n.5.

[^5]: Joint Statement at 2, ¶ 6.

[^6]: Joint Statement at 2-3, ¶ 8; Complaint at 5-6, ¶ 11; Answer at
    28-29, ¶¶ 52-53; Reply of Ryder Communications, Inc., File No.
    EB-02-MD-038 (filed Feb. 10, 2003) ("Reply") at 10-11, ¶ 14.

[^7]: Joint Statement at 3, ¶ 12. AT&T marketed the 900 transport
    service under the name "AT&T MultiQuest" service. *Id*. at 3, ¶ 13.

[^8]: Joint Statement at 3, ¶ 13; Answer, Ex. 28 (AT&T Tariff F.C.C. No.
    1).

[^9]: Joint Statement at 4, ¶¶ 15-16, 20; Answer at 31, ¶ 59, and at Ex.
    30 (Custom Offer Agreement (COA) No. CX003), Section 2, "COA Term;
    Renewal Options", Section 5, "Discounts" (indicating that specified
    monthly discounts ranged from at least 12.50% to 18.25% based on
    usage, and that additional discounts also applied)).

[^10]: Joint Statement at 4, ¶ 16, 20; Complaint at 5, ¶ 10; Answer at
    31, ¶¶ 59-60, and at Ex. 30 (COA No. CX003), Section 3, "Minimum
    Commitments/Charges;" Complaint, Ex. E-6 (CT 6831) at Section 3,
    "Minimum Commitments/Charges."

[^11]: Complaint, Ex. E-6 (CT 6831) at Section 3, "Minimum
    Commitments/Charges;" Answer at Ex. 30 (COA No. CX003) at Section 3,
    "Minimum Commitments/Charges."

[^12]: Answer at Ex. 30 (COA No. CX003) at 6(D), "Discontinuance";
    Complaint, Ex. E-6 (CT 6831) at Section 6(D), "Discontinuance"
    ("early service termination provision"); Joint Statement at 4-5, ¶
    21.

[^13]: Answer at Ex. 30 (COA No. CX003) at 6(D), "Discontinuance";
    Complaint, Ex. E-6 (CT 6831) at Section 6(D), "Discontinuance;"
    Joint Statement at 5, ¶ 22.

[^14]: Answer, Ex. 30 (COA No. CX003), Section 1, "Services Provided;"
    Complaint, Ex. E-6 (CT 6831), Section 1, "Services Provided."
    Section 1 of CT 6831 and COA No. CX003 state that Tariff No. 1 is
    "incorporated herein by reference." *Id.*

[^15]: Section 2.3.1.A of Tariff No. 1 states: "The Company's liability,
    if any, for its willful misconduct is not limited by this tariff."
    Answer, Ex. 28 (Tariff No. 1), Section 2.3.1.A.

[^16]: Pursuant to Commission rules in effect during the relevant
    period, AT&T was required to file a tariff summarizing the terms of
    the parties' contract. *Competition in the Interstate Interexchange
    Marketplace*, Report and Order, 6 FCC Rcd 5880, 5902-03, ¶ 121
    (1991) (subsequent history omitted) ("*Interexchange Competition
    Order*"); 47 C.F.R. § 61.55 (1991). The Commission later mandatorily
    detariffed interstate, domestic, interexchange services, including
    900 transport service, provided by AT&T and other nondominant
    interexchange carriers. *Policy and Rules Concerning the Interstate,
    Interexchange Marketplace, Implementation of Section 254(g) of the
    Communications Act of 1934*, Second Report and Order, 11 FCC Rcd
    20730 (1996), *recon*., 12 FCC Rcd 15014 (1997), *stay granted*,
    *MCI Telecommunications Corp. v. FCC*, No. 96-1459 (D.C. Cir. Feb.
    13, 1997); Order on Reconsideration, 12 FCC Rcd 15,014 (1997)
    ("*Domestic Detariffing Order on Reconsideration*"); Second Order on
    Reconsideration and Erratum, 14 FCC Rcd 6004 (1999) ("*Domestic
    Detariffing Second Order on Reconsideration*"); *stay lifted and
    aff\'d*, *MCI WorldCom v. FCC*, 209 F.3d 760 (D.C. Cir. April 28,
    2000), Memorandum Report and Order, 15 FCC Rcd 22321 (Com. Car. Bur.
    2000) ("*Domestic Transition Order*"); *Common Carrier Bureau
    Extends Transition Period for Detariffing Consumer Domestic Long
    Distance Services*, Public Notice, 16 FCC Rcd 2906 (Com. Car. Bur.
    2001); Joint Statement at 4, ¶ 18; Complaint, Ex. E-6 (CT 6831).

[^17]: Joint Statement at 4, ¶ 18; Complaint, Ex. E-6 (CT 6831). CT 6831
    and COA No. CX003 contain identical terms, with the only difference
    being that AT&T filed CT 6831 in standard tariff format in
    accordance with the Commission's requirements. *See* 47 C.F.R. §§
    61.54, 61.55 (1991). Although CT 6831 was available to any other
    customer "similarly situated" to Ryder (Complaint, Ex E-6 (CT 6831)
    at original page 4, "Availability"), no other party ordered service
    from AT&T under CT 6831. Supplement to Answer of AT&T Corp, File No.
    EB-02-MD-038 (filed Feb. 6, 2003) ("Supplemental Answer") at 24, ¶
    58.

[^18]: Joint Statement at 5, ¶ 24; Answer, Ex. 32 (Billing Services
    Agreement). AT&T refers to these billing services as "MultiQuest"
    premium billing services. *See* Answer at 11-12, ¶ 7.

[^19]: Joint Statement at 5, ¶ 27; Complaint at 5-6, ¶ 11; Answer at
    31-32, ¶ 61, and at Ex. 32 (Billing Services Agreement) at ¶¶ 1-3,
    "Billing Services," "Caller Inquiry and Adjustments,"
    "Charges/Remittance."

[^20]: *See Detariffing of Billing and Collection Services*, Report and
    Order, 102 F.C.C.2d 1150 (1986) (*"Billing Detariffing Order*");
    *AT&T 900 Dial-It Services and Third Party Billing and Collection
    Services*, Memorandum Opinion and Order, 4 FCC Rcd 3429 (1989)
    (*"900 Dial-It Order*").

[^21]: Answer, Ex. 32 (Billing Services Agreement) at ¶ 12, "Tariffed
    Services."

[^22]: Answer, Ex. 32 (Billing Services Agreement) at ¶ 14, "Limitations
    of Liability." The Billing Agreement states, in pertinent part, that
    "AT&T's entire liability \[to Ryder\] for any damages caused by
    AT&T's performance of billing services under this agreement
    regardless of the form of action, whether in contract, tort
    including negligence, or otherwise. . . shall be limited to direct
    damages which are proven in an amount not to exceed \$100,000. . . .
    AT&T shall not be liable for incidental, indirect, special, or
    consequential damages or for lost profits, savings or revenues of
    any kind, whether or not AT&T has been advised of the possibility of
    such damages." *Id.* Consequential damages are damages, loss, or
    injury that do not flow directly and immediately from the act of the
    party, but only from some of the consequences or results of such
    act. *See, e.g*., Black's Law Dictionary (Pocket ed. 1996).

[^23]: Joint Statement at 5, ¶ 29; Answer Ex. 32 (Billing Services
    Agreement) at ¶ 18G, "General."

[^24]: *See, e.g*., Complaint, Exhibit E-2 (Post-Trial Order, Case No.
    99-6688-CIV-HIGHSMITH, Jan. 31, 2001, U.S.D.C., Southern District of
    Florida) ("Post-Trial Order") at 8 (stating that "there was simply
    no evidence that there were any irregularities or problems with the
    phone services provided by AT&T to Ryder Communications, Inc.").

[^25]: *See, e.g.*, Complaint at 4, 6-7, 13, ¶¶ 8, 12, 24; Answer at
    12-13, 16, 23-24, ¶¶ 8, 12, 24; Complaint, Ex. E-2 (Post-Trial
    Order) at 4-5 (finding that AT&T breached the Billing Agreement).

[^26]: Joint Statement at 6, ¶ 35.

[^27]: Joint Statement at 7, ¶ 37.

[^28]: Joint Statement at 7, ¶ 38.

[^29]: Joint Statement at 7, ¶ 40; Answer, Ex. 36 (Letter from Robert S.
    Iacuone, AT&T, to David Ryder, Nov. 3, 1997). According to AT&T,
    AT&T also sent a final bill to Ryder in June 1998 showing that,
    after netting the termination charges against the amounts due Ryder
    from AT&T under the Billing Agreement, Ryder owed AT&T over \$1.4
    million. Answer at 35, ¶ 72.

[^30]: Joint Statement at 7, ¶ 41; Answer, Ex. 1 (Complaint, Ryder
    Communications, Inc. v. AT&T Corp., filed May 17, 1999, Broward
    County, Florida) ("Court Complaint") at 2-3, ¶¶ 11-16.

[^31]: Answer, Ex. 1 (Court Complaint) at 3, ¶¶ 12-16.

[^32]: Answer, Ex. 1 (Court Complaint) at 3, ¶¶ 12-16.

[^33]: Joint Statement at 8, ¶ 46.

[^34]: Joint Statement at 7, ¶ 43; Answer, Ex. 2 (Answer and
    Counterclaims of AT&T Corp., Ryder Communications, Inc. v. AT&T
    Corp., Case No. 99-6688-CIV-HIGHSMITH, filed June 14, 1999,
    U.S.D.C., Southern District of Florida) ("AT&T Court Answer and
    Counterclaims").

[^35]: Joint Statement at 8, ¶ 44; Answer, Ex. 2 (AT&T Court Answer and
    Counterclaims), at 9-10, ¶¶ 49-54.

[^36]: Joint Statement at 8, ¶ 46; Answer, Ex. 3 (Ryder Communications,
    Inc.'s Answer and Affirmative Defenses to AT&T's Counterclaim, Case
    No. 99-6688-CIV-HIGHSMITH, filed June 14, 1999, U.S.D.C., Southern
    District of Florida) ("Ryder Court Answer") at 2, ¶ 7.

[^37]: Joint Statement at 8, ¶ 46.

[^38]: *See, e.g*., Answer, Ex. 4 (Memorandum In Response to AT&T
    Memorandum Concerning Filed Tariff Doctrine, Case No.
    99-6688-CIV-HIGHSMITH, filed Sept. 3, 1999, U.S.D.C., Southern
    District of Florida) at 7 (stating that any termination charge owed
    by Ryder "would simply be further damage suffered by \[Ryder\].
    \[Ryder\] was prevented from using the minimum service by AT&T's
    breach of its billing contract with \[Ryder\]. Thus, whatever amount
    \[Ryder\] is deemed to owe AT&T for minimum services under the
    tariff, that amount is another element of the damages suffered by
    \[Ryder\] as a result of AT&T's breach of the billing and collection
    contract."); Answer, Ex. 7 (Plaintiffs' Memorandum In Response to
    AT&T's Motion For Partial Summary Judgment, Case No.
    99-6688-CIV-HIGHSMITH, filed Oct. 10, 2000, U.S.D.C., Southern
    District of Florida) ("Ryder Opposition to AT&T Partial Summary
    Judgment Motion") at 16 ("AT&T should . . . indemnify \[Ryder\] for
    all contract tariff penalties caused by \[Ryder's\] inability to
    continue as a business (\$1,800,000.00)"); Answer, Ex. 19
    (Plaintiffs' Notice of Filing of Proposed Jury Instructions, Case
    No. 99-6688-CIV-HIGHSMITH, filed Nov. 14, 2000, U.S.D.C., Southern
    District of Florida), Plaintiffs' Proposed Jury Instruction No. 2
    (stating that "direct special damages" to Ryder should include any
    contract penalties incurred by Ryder); *Id.*, Ex. 17 (Trial
    Transcript, Case No. 99-6688-CIV-HIGHSMITH, Dec. 21, 2000, U.S.D.C.,
    Southern District of Florida) ("Trial Transcript") at 178-180 (Court
    denying Ryder's request to instruct the jury that Ryder was entitled
    to recover early service termination charges as part of its
    damages).

[^39]: Answer, Ex. 32 (Billing Services Agreement) at ¶¶ 12, 14.

[^40]: In so ruling, the Court also held that, had Ryder shown that
    AT&T\'s breach of the Billing Agreement did, in fact, constitute
    willful and wanton misconduct, Ryder could have recouped or
    cancelled its early service termination charges as consequential
    damages arising from AT&T\'s breach. Answer, Ex. 5 (Order
    Determining Applicability of Filed Tariff Doctrine, Case No.
    99-6688-CIV-HIGHSMITH, Sept. 27, 1999, U.S.D.C., Southern District
    of Florida) at 5; Ex. 8 (Order Granting Defendant's Motion for
    Partial Summary Judgment, Case No. 99-6688-CIV-HIGHSMITH, Dec. 8,
    2000, U.S.D.C., Southern District of Florida) ("Partial Summary
    Judgment Order") at 4-5; Ex. 17 (Trial Transcript) at 178-180.

[^41]: Joint Statement at 9, ¶¶ 51-53; Answer at 37-40, 92-95, ¶¶ 76-81,
    181-87, and at Ex. 8 (Partial Summary Judgment Order) ("Partial
    Summary Judgment Order") at 4-5. The Court found that, although
    AT&T's billing errors may have amounted to negligent or grossly
    negligent performance of its duties under the Billing Agreement,
    they did not rise to the level of specific intent required by the
    "willful and wanton" standard to set aside the limitation of
    liability provision under New Jersey law. The Court stated that "it
    is uncontested that Defendant took prompt remedial action when Ryder
    brought the accounting errors to the attention \[of AT&T\]." Answer,
    Ex. 8 (Partial Summary Judgment Order) at 4. *See* Answer at 46-47,
    96-97, ¶¶ 95-97, 190-91 (*citing* Answer, Ex. 17 (Trial Transcript)
    at 180. *See also* Answer at 53-54, 111, ¶¶ 110, 218, and at
    corrected Ex. 27 (Order, Case No. 99-6688-CIV-HIGHSMITH, Mar. 27,
    2001, U.S.D.C., Southern District of Florida) (denying Ryder's
    request for prejudgment interest on its damage award, because AT&T,
    "in good faith, continued to withhold the monies owed to Plaintiff
    Ryder Communications, Inc. once it became evident that they were
    owed due to (a) Plaintiff Ryder's breach of the parties' tariff
    agreement and (b) the tariff agreement's liquidated damages
    provision.").

[^42]: Answer, Ex. 8 (Partial Summary Judgment Order) at 5 (stating that
    "the limitation of liability provision contained in the Billing
    Agreement\] must be given effect."); *Id.*, Ex. 20 (Court's
    Instructions to the Jury, Case No. 99-6688-CIV-HIGHSMITH, Jan. 31,
    2001, U.S.D.C., Southern District of Florida) at 12; Joint Statement
    at 10, ¶ 60.

[^43]: Answer, Ex. 23 (Final Judgment, Case No. 99-6688-CIV-HIGHSMITH,
    Jan. 31, 2001, U.S.D.C., Southern District of Florida) at 1;
    Complaint, Ex. E-2 (Post-Trial Order) at 5; Answer at 45, 48, ¶¶ 93,
    99. The jury was not asked to make any finding, and did not make any
    finding, as to whether any breach of the Billing Agreement by AT&T
    was the proximate cause of Ryder's decision to close its business.
    *See* Joint Statement at 11, ¶ 63; Answer at 18, 48-49, ¶¶ 14, 99.

[^44]: Complaint, Ex. E-2 (Post-Trial Order) at 7-8. As far as we can
    tell from the record, Ryder did not assert this alleged excuse until
    shortly before trial. *See* Answer, Ex. 9 (Order, Case No.
    99-6688-CIV-HIGHSMITH, Dec. 18, 2000, U.S.D.C., Southern District of
    Florida) at 2 (stating that gross negligence in the provision of
    transport service could be an affirmative defense to AT&T's
    counterclaim); Joint Statement at 9, ¶ 54.

[^45]: Complaint, Ex. E-2 (Post-Trial Order) at 4-5.

[^46]: Complaint, Ex. E-2 (Post-Trial Order) at 8. *See* Joint Statement
    at 11, ¶ 68; Complaint, Ex. E-2 (Post-Trial Order) at 7-8.

[^47]: Complaint, Ex. E-2 (Post-Trial Order) at 8.

[^48]: Complaint, Ex. E-2 (Post-Trial Order) at 8-10. According to the
    Court, under CT 6831, AT&T sought damages equivalent to Ryder's MARC
    for the three year life of the contract tariff while under the early
    service termination provision in Tariff No. 1, Ryder would be
    responsible for one month's charges from the date that AT&T received
    Ryder's letter of July 24, 1997 terminating service. *Id*. at 9. The
    parties dispute whether the Court correctly assessed the difference
    between the amounts due under the early service termination
    provisions in CT 6831 and in Tariff No. 1. *See* Answer at 51, n.62;
    Reply Brief of Ryder Communications Regarding the Application of Res
    Judicata, Inc., File No. EB-02-MD-038 (filed Mar. 26, 2003) at
    13-16. For purposes of this proceeding, we will assume that the
    Court's calculation of the early service termination charges is
    correct.

[^49]: Complaint, Ex. E-2 (Post-Trial Order) at 10.

[^50]: Complaint, Ex. E-2 (Post-Trial Order) at 10.

[^51]: Complaint, Ex. E-2 (Post-Trial Order) at 11. *See id*. ("...AT&T
    is granted judgment as a matter of law with respect to liability on
    its counterclaim against Ryder Communications, Inc. This case,
    however, is referred to the F.C.C. for determination of the
    appropriate measure of damages on AT&T's counterclaim."); Answer,
    Ex. 24 (Partial Judgment, Case No. 99-6688-CIV-HIGHSMITH, Jan. 31,
    2001, U.S.D.C., Southern District of Florida) ("Partial Judgment
    Order") at 1("Pursuant to the doctrine of primary jurisdiction and
    this Court's post-trial order, damages for Ryder Communication,
    Inc.'s breach shall be determined by the Federal Communications
    Commission").

[^52]: The parties first discussed the District Court's referral order
    with Commission staff in late 2001, but those discussions ended, and
    neither party contacted Commission staff again until a procedurally
    insufficient version of the Complaint was filed on November 26,
    2002.

[^53]: Complaint at 17, ¶¶ 36-39 (Count II), and at Ex. D (Legal
    Analysis) at 10, ¶¶ 26-27. *See* Reply at 32-37, ¶¶ 64-75.

[^54]: Complaint at 17, ¶ 33-35 (Count I), and at Ex. D (Legal Analysis)
    at 2-5, ¶¶ 5-12. *See* Reply at 37-42, ¶¶ 76-86.

[^55]: Ryder's Complaint contained a third claim alleging that
    enforcement of the early service termination penalty was an unlawful
    tariff practice under section 201(b) of the Act. Complaint at 18, ¶¶
    40-43. The parties later stipulated that the third claim is
    withdrawn. Joint Statement at 27, ¶154.

[^56]: Complaint, Ex. E-2 (Post-Trial Order) at 9-10.

[^57]: Joint Statement at 27, ¶ 152.

[^58]: *See, e.g.*, *Interexchange Competition Order*, 6 FCC Rcd at
    5897, 5899, 5902-03, ¶¶ 91, 103-04, 121, 126 (*citing MCI Telecom.
    Corp. v. FCC*, 917 F.2d 30, 37-38 (D.C. Cir. 1990) (*MCI v. FCC*)(
    holding that contract tariffs do not violate the Communications
    Act).

[^59]: *Interexchange Competition Order*, 6 FCC Rcd at 5902, ¶ 121.

[^60]: *See* Answer at 72-74, ¶ 142-43, 146.

[^61]: To avoid this kind of inefficiency in the future, we strongly
    recommend that parties in a court proceeding who receive a primary
    jurisdiction referral order that does not clearly define the
    matter(s) to be brought to the Commission seek clarification from
    the court before initiating Commission processes.

[^62]: Our skepticism stems, in part, from the fact that, were we to
    grant one or both of Ryder's claims, as presently framed, AT&T's
    damages would likely diminish to zero, which would seem to
    contradict the Court's own rulings that Ryder could not recoup its
    early service termination payments as consequential damages for
    AT&T's breach of the Billing Agreement. Thus, we suspect that,
    [if]{.underline} the Court expected the parties to present any
    question other than the one addressed in Part III(A) above (and that
    is a big "if"), the Court may have meant the question of whether a
    \$1.6 million charge is unreasonable in amount, either in absolute
    terms or in relation to the discounts afforded to Ryder or the
    timing of Ryder's discontinuance within the three-year service
    period. *See* Answer at 2. Ryder declined to present that question
    in its Complaint, however.

[^63]: Complaint, Ex. E-2 (Post-Trial Order) at 11, n.9.

[^64]: We note that this is not a situation where a party makes certain
    representations to the court, and then, upon referral, makes
    contrary representations to the Commission. *Compare* *Haxtun
    Telephone Company v. AT&T Corp*., Memorandum Opinion and Order, 15
    FCC Rcd 14895, 14898-902, ¶¶ 11-20 (Enf. Bur. 2000), *aff'd*, Order
    on Review, 15 FCC Rcd 25260 (2000).

[^65]: Complaint at 6-7, 9-13, 17, ¶¶ 12-13, 16-24, 36-39, and at Ex. D
    (Legal Analysis) at 1-2, 5-6, 9-10, ¶¶ 12-13, 23-24, 26-27; Reply at
    10-15, ¶¶ 14-22.

[^66]: Complaint at 11-12, 14-16, ¶¶ 20, 27, 31, and at Ex. D (Legal
    Analysis) at 1, 3, 5-6, 9 ¶¶ 1, 8, 11-13, 24, 26-27; Reply at 27,
    32-37, ¶¶ 53, 64-75.

[^67]: Complaint at 11-12, 16-17, ¶ 20-22, 31, 36-39; Ex. D (Legal
    Analysis) at 2-5, ¶¶ 5-12; Reply at 32-37, ¶¶ 64-75.

[^68]: We note at the outset that, because Ryder did not assert a claim
    for relief alleging the unlawfulness of CT 6831's early service
    termination provision (either facially or as applied) in its Court
    Complaint, AT&T raises here compelling affirmative defenses of
    statute of limitations and claim preclusion (*i.e.*, *res
    judicata*). Answer at 27, 54-67, ¶¶ 49, 112-32; AT&T Res Judicata
    Brief at 1-12. Moreover, neither the jury nor the Court found that
    AT&T's breach of the Billing Agreement proximately caused Ryder to
    go out of business, Joint Statement at 11, ¶ 63, Answer at 107-08,
    115, ¶¶ 211, 225, and Ryder presents little probative evidence of
    such causation here. Complaint at 7, 11, ¶¶ 13, 20, and at Ex. H
    (Ryder Affidavit) at 4-7, ¶¶ 25-34; Reply at 14-15, ¶ 22; *contra*
    Answer at 21, 107-08, ¶¶ 20, 211. Because our conclusions against
    Ryder rest on other grounds, however, we need not and do not reach
    these issues.

[^69]: Complaint at 3-5, 9, ¶¶ 7, 9, 16; Reply at 9, ¶ 11 ("The issues
    raised in this proceeding involve two specific interrelated and
    interdependent agreements, which were presented to Ryder as a
    package deal. . . . These agreements were symbiotic and worked in
    concert to support the single business relationship between the
    parties...."); Reply at 11-12, ¶ 16 ( noting "the interrelatedness
    of the parties' agreements"); Joint Statement at 13-14, 15 ¶¶ 83-84,
    91 (Complainant's separate statement of disputed facts).

[^70]: Answer at 7, 76-77, 101, ¶¶ 151, 199.

[^71]: Answer, Ex. 32 (Billing Services Agreement) at ¶ 12, "Tariffed
    Services."

[^72]: Answer, Ex. 32 (Billing Services Agreement) at ¶ 18(G),
    "General;" Answer, Ex. 8 (Partial Summary Judgment Order) at 3-5.

[^73]: Answer, Ex. 8 (Partial Summary Judgment Order) at 4-5.

[^74]: Indeed, at one point in its pleadings, Ryder appears to concede
    that it cannot use AT&T's breach of the Billing Agreement to avoid
    liability for the early service termination charge. Reply Brief of
    Ryder Communications, Inc. Regarding the Application of Res
    Judicata, File No. EB-02-MD-038 (filed Mar. 26, 2003) ("Res Judicata
    Reply Brief"), at 2 ("Ryder does not contend that 'it should be
    allowed to use AT&T's breach of the BSA (billing service agreement)
    to avoid liability for the termination charges due under the
    discontinuance provision of CT 6831.' Rather, Ryder asserts ...that
    AT&T's actions -- as a whole -- were so harmful and derelict that to
    permit a carrier to recover a termination penalty under these
    circumstances would be unjust and unreasonable, in contravention to
    the Act and Commission orders..."). We fail to see, on this record,
    how Ryder's referral to AT&T's actions "as a whole" could refer to
    anything other than AT&T's breach of the Billing Agreement. In fact,
    Ryder summarizes its entire case by requesting that the Commission
    find that "AT&T, through its failure to fulfill its obligations and
    sustained erroneous billing, acted unreasonably in its creation of
    the very situation from which it now hopes to profit." Complaint at
    12, ¶ 20.

[^75]: *See, e.*g., *American Telephone and Telegraph v. Central Office
    Telephone*, 524 U.S. at 221-27.

[^76]: *See, e.g*., Reply at 32, ¶ 65 ("The Commission should reject the
    argument AT&T has offered; that simply because the law recognizes
    the existence of a discontinuance provision, that it should be free
    to impose it without condition or consideration of its own
    actions."). *See also* Reply at 4, 36-37, ¶¶ 74-75; Ryder Res
    Judicata Brief at 2 (both stating generally that the Commission need
    not disturb the findings of the Court, but must still find that the
    harm inflicted by AT&T makes enforcement of the early service
    termination provision unreasonable).

[^77]: Reply at 25-32, ¶¶ 46-63 (*citing Federal Power Commission v.
    Sierra Pacific Power Co*., 350 U.S. 348 (1956); *United Gas Pipeline
    Co. v. Mobile Gas Service Corp*., 350 U.S. 332 (1956); *IDB Mobile
    Communications, Inc. v. COMSAT Corp*., Memorandum Opinion and Order,
    16 FCC Rcd 11,474 (2001) ("*IDB v. COMSAT*")).

[^78]: *See, e.g.*, *IDB v. COMSAT*, 16 FCC Rcd at 11480-81, ¶¶ 14-15
    (and cases cited therein). We reference the principles of the
    Sierra-Mobile doctrine because the Commission has never squarely
    held that the doctrine applies to contract tariffs between a carrier
    and a non-carrier, as opposed to a contract or contract tariff
    between a carrier and another carrier. Nevertheless, as the parties
    each assert (Answer at 102-07, ¶¶ 201-10; Reply at 25-32, ¶¶ 46-63),
    we see no reason why the principles underlying the doctrine should
    not have similar, if not equal, applicability in both contexts. *See
    Global Access Limited v. AT&T Corp.*, 978 F. Supp. 1068 (S.D. Fla.
    1997) (holding that the Sierra-Mobile doctrine applies to contract
    tariffs between carriers and non-carriers). Thus, without actually
    holding that the Sierra-Mobile doctrine governs, we examine the
    facts here in light of Sierra-Mobile principles, as both parties
    urge us to do. Answer at 103-07, ¶¶ 203-210; Reply at 26-29, ¶¶
    50-56. *Cf. Echostar Communications Corporation v. Fox/Liberty
    Networks LLC*, Memorandum Opinion and Order, 13 FCC Rcd 21841,
    21849, ¶ 20 (Cab. Serv. Bur. 1998) (finding, independent of the
    Sierra-Mobile doctrine, that public policy requires minimal
    regulatory interference with private contracts entered into by
    consenting parties); *Petition of WorldCom, Inc. Pursuant to Section
    252(e)(5) of the Communications Act for Preemption of the
    Jurisdiction of the Virginia State Corporation Commission Regarding
    Interconnection Disputes with Verizon Virginia Inc., and For
    Expedited Arbitration, et al.,* Memorandum Opinion and Order**,** 17
    FCC Rcd 27039, 27206, ¶ 348 (Com. Car. Bur. 2002) (declining to
    invalidate the early service termination provisions contained in
    Verizon's special access tariffs, and noting that AT&T had
    voluntarily purchased special access services pursuant to Verizon's
    filed tariff and took advantage of discount pricing plans that
    offered lowered rates in return for a longer commitment).

[^79]: *IDB v. COMSAT*, 16 FCC Rcd at 11480, ¶ 15 (and cases cited
    therein).

[^80]: *See, e.g.*, *IDB* *v. COMSAT*, 16 FCC Rcd at 11480-81, ¶ 16 (and
    cases cited therein).

[^81]: Complaint at Ex. H (Affidavit of David Ryder) ("Ryder Affidavit")
    at 3, ¶¶ 19-20; Reply at 12, 28, ¶¶ 17, 54, Joint Statement at 15,
    ¶¶ 92, 95 (Complainant's Disputed Facts).

[^82]: Answer at 105-06, ¶ 206, and at Ex. 40 (Decl. of Laurie B. Brown,
    File No. EB-02- MD-038, filed Feb. 3, 2003) ("AT&T Brown Decl.") at
    1-2.

[^83]: Answer at 72-74, 105-07, ¶¶ 142-43, 146, 206, 209, and at Ex. 40
    (AT&T Brown Decl.) at 1-2. *See also* Joint Statement at 4, ¶ 20
    ("CT 6831 provided that [in exchange for]{.underline} receiving
    volume discounts from AT&T, Ryder committed to take MultiQuest 900
    service from AT&T for a period of three years, and to pay AT&T at
    least a Minimum Annual Revenue Commitment of \$600,000 for each year
    of the term.") (emphasis added).

[^84]: In fact, at least two federal courts of appeals have expressed
    skepticism about the relevance of uneven bargaining power in
    Sierra-Mobile analysis. *IDB v. COMSAT*, 16 FCC Rcd at 11486, n.70
    (and cases cited therein).

[^85]: Reply at 27-29, 31-32, ¶¶ 53-56, 62-63.

[^86]: Answer at 99-100, ¶¶ 195-96; Supplemental Answer at 24, ¶ 58.

[^87]: Complaint at 3-5, 9 ¶¶ 7, 9, 16; Reply at 9, ¶ 11 ("The issues
    raised in this proceeding involve two specific interrelated and
    interdependent agreements, which were presented to Ryder as a
    package deal. . . . These agreements were symbiotic and worked in
    concert to support the single business relationship between the
    parties..."); Reply at 11-12, ¶ 16 ("As evidenced by the
    interrelatedness of the parties' agreements, Ryder Communications
    was dependent on AT&T's performance of its contractual obligations
    in order to conduct its business. Ryder's ability to offer 900
    number service to customers, pay for the communications transport,
    and receive monies for those services, was dependent upon AT&T
    fulfilling all of its contractual obligations."); Joint Statement at
    13-14, 15 ¶¶ 83-84, 91 (Complainant's separate statement of disputed
    facts).

[^88]: Although the parties usually refer to a single billing agreement,
    they both acknowledge (as did the Court) that they actually entered
    into a series of agreements pertaining to billing matters. Reply at
    9, 12, n.42-43; Answer at 107, n.127; Joint Statement at 6, ¶¶
    31-32; Complaint, Ex. E-2 (Post-Trial Order) at 2, n.1. Thus, Ryder
    had numerous opportunities over the years to seek a different
    allocation of the risk of a breach by AT&T.

[^89]: Answer at 106, ¶ 208.

[^90]: Reply at 4 ("...neither the Court nor Ryder have asked the
    Commission to engage in any review, or to make any determinations
    with regard to issues that have already been decided by the Court,
    or that are subject to appeal, such as the jury instructions or
    application of New Jersey's 'willful and wanton' standard."). *See*
    Reply at 36-37, ¶¶ 74-75.

[^91]: Complaint at 17, ¶¶33-35, and at Ex. D (Legal Analysis) at 3-5,
    ¶¶ 8-12; Reply at 37-42, ¶¶ 76-86.

[^92]: *See, e.g*., *Southwestern Bell Telephone Company Tariff F.C.C.
    No. 68, Tr. No. 1921*, Order, 5 FCC Rcd 2523 (Com. Car. Bur. 1990)
    ("*SWB Tr. No. 1921 Order*"); *Southwestern Bell Telephone Company
    Tariff F.C.C. No. 68, Tr. No. 1963*, Order, 5 FCC Rcd 3790 (Com.
    Car. Bur. 1990) ("*SWB Tr. No. 1963 Order*") (both allowing five
    year service contract containing early service termination provision
    that required the customer to pay charges as if minimum volume
    commitment would be met, minus Southwestern Bell's interstate
    special access authorized rate of return at the time of the
    termination); *AT&T Communications Revisions to Tariff F.C.C. No.
    1*, *Tr. No. 2422*, Order, 5 FCC Rcd 5988 (Com. Car. Bur. 1990)
    ("*AT&T Tr. No. 2422 Order*") (allowing long term service plans that
    required customers who discontinued service prior to the end of the
    plan to pay shortfall charges for the remainder of the term, and
    also required repayment of the discounted amounts customers paid for
    years in which they actually purchased service); *AT&T
    Communications Tariff F.C.C. Nos. 2 and 14, Tr. Nos. 4974, 5149, and
    5383*, Order, 8 FCC Rcd 4543 (Com Car. Bur. 1993 ("*AT&T Tr. No.
    4974 Order"*) (allowing 800 service term plans containing early
    service termination provisions that required customers who
    discontinued service prior to the end of the plan to pay charges
    based on a percentage of the remaining, unfulfilled commitments).
    *See also* *Telecom International America, Ltd. v. AT&T Corp.*, 67
    F. Supp.2d 189, 219-221 (S.D.N.Y. 1999), *aff'd in part, rev'd in
    part on other grounds*, 280 F.3d 175, 189-90, 193 (2^nd^ Cir. 2001)
    (upholding the validity of a shortfall provision that obligated the
    customer to pay termination charges if it failed to purchase a
    minimum amount of communications services during the three year term
    of the contract tariff).

[^93]: *See, e.g*., *SWB Tr. No. 1921 Order*, 5 FCC Rcd at 2523, ¶ 1;
    *SWB Tr. No. 1963 Order*, 5 FCC Rcd at 3790, ¶ 1; *AT&T Tr. No. 2422
    Order,* 5 FCC Rcd at 5988, ¶ 2 ; *AT&T Tr. No. 4974 Order*, 8 FCC
    Rcd at 4543, n.4-5. *See also* *Telecom International v. AT&T
    Corp.*, 67 F. Supp.2d at 219-221. Ryder has emphasized that its
    complaint does not dispute the actual amount of the termination
    charges required under the early service termination provision in CT
    6831. Reply at 33, ¶ 67.

[^94]: *See, e.g*., *Interexchange Competition Order*, 6 FCC Rcd at
    5902, ¶ 121; *SWB Tr. No. 1921 Order*, 5 FCC Rcd at 2523, ¶ 1; *SWB
    Tr. No. 1963 Order*, 5 FCC Rcd at 3790, ¶ 1; *AT&T Tr. No. 2422
    Order,* 5 FCC Rcd at 5988, ¶ 2 ; *AT&T Tr. No. 4974 Order*, 8 FCC
    Rcd at 4543, n. 4-5. *See also* *Telecom International v. AT&T
    Corp.*, 67 F. Supp.2d at 219-221.

[^95]: *See generally 800 Presubscription Rules for 800 Providers and
    Responsible Organizations*, Order, 8 FCC Rcd 7315, 7317, ¶ 18 (Com.
    Car. Bur. 1993).

[^96]: Complaint, Ex. E-6 (CT 6831) at Section 1, "Services Provided;"
    Answer, Ex. 28 (Tariff No. 1) at Section 2.3.1**,** "Liability."
    Ryder does not dispute that CT 6831 incorporates this section of
    Tariff No. 1.

[^97]: *See* Complaint, Ex. D (Legal Analysis) at 5, ¶ 12; Reply at 40,
    ¶ 83.

[^98]: Complaint at 14-16; ¶¶ 25-30, and at Ex. D (Legal Analysis) at
    7-10, ¶¶ 19-27; Reply at 37-42, ¶¶ 77-86.

[^99]: *See generally* 47 U.S.C. § 203.

[^100]: Complaint, Ex. D (Legal Analysis) at 4-5, ¶¶ 9-10 (*citing Local
    Exchange Carrier Line Information Database*, CC Docket No. 92-24,
    Order, 8 FCC Rcd 7130, 7134-35, ¶¶ 27 (1993) (allowing local
    exchange carriers to maintain general limitation of liability
    provisions that do not shield them from liability for willful
    misconduct or gross negligence for incorrect calling card
    validations); *Annual 1985 Access Tariff Filings*, Memorandum
    Opinion and Order, 2 FCC Rcd 1416, 1423-24, ¶¶ 66-72 (1987)
    (requiring local exchange carriers to apply their general liability
    provisions holding them responsible for willful misconduct or gross
    negligence for presubscription errors, and declining to require them
    to modify their general liability provisions to ensure that they do
    not disclaim liability for ordinary negligence for assigning an end
    user to the wrong interexchange carrier); *UNIMAT, Inc. v. MCI
    Telecom. Corp.*, Order, 14 FCC Rcd 7829, 7835, ¶ 14 (Com. Car. Bur.
    1999) (noting that an otherwise reasonable limitation of liability
    clause that addresses the carrier's liability for mis-dialed
    toll-free calls will not shield the carrier from liability under the
    reasonableness standard of the Act in the case of willful misconduct
    or gross negligence by its employees or agents)). *See* Reply at
    39-40, ¶ 82.

[^101]: Complaint, Ex. D (Legal Analysis) at 4-5, ¶¶ 9-11; Reply at
    39-40, ¶ 82.