Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca8-05-03551/USCOURTS-ca8-05-03551-0/pdf.json

Nature of Suit Code: 190
Nature of Suit: Other Contract Actions
Cause of Action: 

---

United States Court of Appeals

FOR THE EIGHTH CIRCUIT

___________

No. 05-3551

___________

Iowa Network Services, Inc., * 

* 

Appellant, * 

* Appeal from the United States

v. * District Court for the 

* Southern District of Iowa.

Qwest Corporation, * 

* 

Appellee. *

___________

Submitted: May 15, 2006

Filed: October 31, 2006

___________

Before BYE, HANSEN, and SMITH, Circuit Judges.

___________

SMITH, Circuit Judge.

Iowa Network Services, Inc. ("INS") brought this collection action against

Qwest Corporation ("Qwest"), alleging violations of its federal and state tariffs, as

well as unjust enrichment, for services provided in connecting wireless calls to rural

Iowa telephone companies. The district court granted Qwest's motion to dismiss. INS

appealed, and we reversed the district court's judgment and remanded for further

proceedings. Iowa Network Serv., Inc. v. Qwest Corp., 363 F.3d 683 (8th Cir. 2004)

("Qwest I"). On remand, Qwest filed a motion for summary judgment. As outlined in

Appellate Case: 05-3551 Page: 1 Date Filed: 10/31/2006 Entry ID: 2105133
1

The Honorable James E. Gritzner, United States District Judge for the Southern

District of Iowa.

-2-

its thorough opinion, the district court1

 granted Qwest's motion for summary judgment

on all claims and dismissed the case. INS now appeals from the district court's grant

of summary judgment to Qwest, arguing principally that the district court should have

applied the filed rate doctrine. We affirm.

I. Background

The background facts underlying this dispute are fully set forth in our prior

opinion, Qwest I, and the district court's summary judgment opinion, Iowa Network

Serv., Inc. v. Qwest Corp., 385 F. Supp. 2d 850 (S.D. Iowa 2005) ("Qwest II"). We

instructed the district court on remand "to decide for itself whether the traffic at issue

is subject to access charges pursuant to INS's tariffs." Qwest I, 363 F.3d at 695. 

Upon remand, the district court, in granting Qwest's motion for summary

judgment and dismissing INS's claims, made several important findings. First, with

respect to the Iowa Utilities Board ("IUB"), the district court determined that (1) the

IUB had jurisdiction to rule in the underlying action and was acting within its

authority in rendering its rulings; (2) the IUB's rulings are consistent with, and do not

violate, federal law; and (3) the IUB's orders must be upheld as a regulatory means of

resolving the dispute. 

Second, the district court found that (1) INS's amended federal tariff does not

apply to the traffic at issue, as it undermines the thrust of the Telecommunications Act

of 1996 ("the Act") and the authority of the IUB; (2) the Iowa tariff and the original

federal tariff are inapplicable under the terms of the Act and the IUB's rulings; and (3)

these determinations foreclose INS's self-help claims. 

Appellate Case: 05-3551 Page: 2 Date Filed: 10/31/2006 Entry ID: 2105133
-3-

Lastly, the district court held that (1) equitable remedies are not available to

INS; (2) a regulatory scheme is available to the parties as indicated by the IUB's

decisions, and the parties must adhere to this framework before equitable remedies

may be ripe for consideration; and (3) INS's unjust enrichment and implied

contract/quantum meruit claims fail on the current record because of assorted

substantive deficiencies.

INS appeals, seeking reversal of the district court's summary judgment ruling

and enforcement of INS's tariffs pursuant to the filed rate doctrine, as codified in state

and federal statutes.

II. Discussion

A. Standard of Review

We review de novo a district court decision granting a motion for

summary judgment, using the same standard as the district court and

construing the record in the light most favorable to [ ] the nonmoving

party. Summary judgment is appropriate only if the evidence establishes

that there exists no genuine issue of material fact and that the moving

party [ ] is entitled to judgment as a matter of law.

Johnson v. AT&T Corp., 422 F.3d 756, 760 (8th Cir. 2005) (internal citation omitted).

"Federal courts have the ultimate power to interpret provisions of the 1996 Act,

including whether § 251(b)(5)'s reciprocal compensation requirement applies to the

wireless traffic at issue here . . . ." Qwest I, 363 F.3d at 692; 47 U.S.C. § 252(e)(6).

B. Enforcement of INS's Federal and State Tariffs

INS argues on appeal, inter alia, that the district court erred in failing to apply

the filed rate doctrine and allowing the IUB to displace the tariffs at issue. INS states

that telecommunications tariffs have the effect of law and conclusively establish the

terms under which a carrier must charge and the user must pay for

telecommunications services covered by the tariff. INS claims that it was error for the

Appellate Case: 05-3551 Page: 3 Date Filed: 10/31/2006 Entry ID: 2105133
-4-

district court to yield to the IUB ruling and refuse to enforce, and effectively

invalidate, INS's tariffs. Further, INS contends that the district court erred in finding

that INS's amended tariff was an effort to circumvent the negotiation/arbitration

process codified in 47 U.S.C. § 252. INS asserts that even though the

negotiation/arbitration process applies only to incumbent local exchange carriers

("ILECs"), and INS, Qwest, and the third-party wireless carriers cannot properly be

considered ILECs, the district court held that the IUB was authorized to impose the

negotiation/arbitration process on broader categories of carriers. INS states that this

holding was erroneous because (1) this court has already held that the district court

was not bound by the IUB's findings and (2) the IUB did not invoke any residual state

law authority to find that INS could be properly required to undertake the

negotiation/arbitration process. Next, INS states that the district court erred in relying

on the Federal Communications Commission's (FCC) reciprocal compensation rules

to support its refusal to enforce INS's tariffs. Lastly, INS asserts that, in the event this

court upholds the district court's decision to dismiss INS's claims regarding the

violation of its tariffs, this court should remand this case to allow INS to proceed on

its state law claims of unjust enrichment and implied contract. 

INS's tariffs purportedly require Qwest to compensate INS for all traffic,

regardless of origin, that Qwest transports to INS for completion over INS's access

service trunks, including intrastate traffic. In this appeal, INS asserts that the FCC has

exclusive jurisdiction over any claims regarding INS's federal tariff. In addition, INS

states that the district court misconstrued the FCC's reciprocal compensation rules as

barring enforcement of INS's state tariff. INS contends that the reciprocal

compensation rules do not apply here because INS and Qwest are intermediary

carriers. INS submits that reciprocal compensation rules more aptly apply to those

carriers that originate and terminate the telephone calls. Because intermediary carriers,

like Qwest and INS, by definition, neither originate nor terminate calls, they do not

fit into the "reciprocal" relationship contemplated in the Act and defined in the FCC's

rules. Consequently, INS submits that the FCC's rules permit an intermediary carrier

Appellate Case: 05-3551 Page: 4 Date Filed: 10/31/2006 Entry ID: 2105133
-5-

like INS to charge another intermediary carrier like Qwest, rather than the originating

carrier. 

INS urges that § 251 imposes on ILECs, but not other carriers, the duty to

negotiate an interconnection agreement in response to such a demand and to

participate in arbitration if negotiations fail. INS states that neither it nor Qwest are

ILECs for purposes of this case, meaning § 251 does not apply. Also, INS submits that

the proper procedure for seeking to invalidate its tariffs is to file a complaint with the

FCC because, under the filed rate doctrine, only the FCC can invalidate the tariff.

Absent such action, INS states that the tariff governs the charges until the day the FCC

requires changes or cancels the tariff. 

Qwest responds by stating that the 1996 Act intended for state commissions,

such as the IUB, to resolve open issues in telecommunications and that is exactly what

happened in this case. Qwest urges that the IUB acted within its authority, and its

decision does not violate federal law. As a result, the district court did not err in

granting summary judgment based upon the IUB's ruling. Qwest further states that the

filed rate doctrine, established by 47 U.S.C. § 203, is limited to "interstate and

foreign" traffic. Because the communications that are the subject of INS's complaint

are "intrastate," not "foreign or interstate," § 203 does not apply and hence the filed

rate doctrine does not apply. 

The district court found that the Act and the FCC's interpretive and

implementing decisions have eliminated access charges, or tariffs such as INS seeks

to impose, for local traffic. Thus, the district court held that the IUB's

determination—that Qwest need not pay access charges because access charges are

not available for "local" traffic—was consistent with federal law. Moreover, the

district court found that because the FCC's reciprocal compensation rules do not

directly address the intermediary carrier compensation to be paid, the IUB is

Appellate Case: 05-3551 Page: 5 Date Filed: 10/31/2006 Entry ID: 2105133
-6-

authorized to resolve the question, as long as its resolution does not violate federal

law. We agree.

As stated in Qwest I, "there are two types of charges which one carrier can

extract from another for the provision of telecommunication services." 363 F.3d at

686. For local telephone service, "[u]nder the 1996 Act, the amount an ILEC can

charge for allowing a competitor to use its infrastructure to deliver a local call is to be

determined by an interconnection agreement negotiated . . . between the ILEC and the

interconnecting carrier that has been approved by the state commission." Id. (citing

47 U.S.C. § 251(c)(1)). The access fee, or carrier's tariff, is charged "by common

carriers for use in carrying long-distance communications via their infrastructure, or

toll services." Id. (citing 47 U.S.C. §§ 201, 202) (emphasis added). 

Because this case concerns intraMTA [major trading area] traffic, which

originates and terminates within the local calling area for cell phone users, we agree

with the district court that this case involves local traffic, or intrastate telephone calls,

and the manner of calculating the charges for connecting those calls between

interconnecting carriers or transferring carriers. The IUB and the district court, guided

by the orders and regulations of the FCC, determined that because the traffic at issue

here is local, or intrastate, access fees or tariffs do not apply. When dealing with this

type of traffic, the district court and IUB determined that reciprocal compensation

agreements control and that the parties should negotiate or arbitrate—not unilaterally

file tariffs. 

The FCC differentiates between transport and termination of local traffic and

access service for long-distance telecommunications.

Transport and termination of local traffic for purposes of reciprocal

compensation are governed by sections 251(b)(5) and 252(d)(2), while

access charges for interstate long-distance traffic are governed by

sections 201 and 202 of the Act. . . . We conclude that section 251(b)(5)

Appellate Case: 05-3551 Page: 6 Date Filed: 10/31/2006 Entry ID: 2105133
-7-

reciprocal compensation obligations should apply only to traffic that

originates and terminates within a local area. 

In the Matter of Implementation of the Local Competition Provisions in the

Telecommunications Act of 1996, 11 FCC Rcd. 15499, ¶¶ 1033–34, 1996 WL 452885

(1996). Moreover, the FCC has ruled that 

traffic to or from a CMRS [commercial mobile radio service] network

that originates and terminates within the same MTA is subject to

transport and termination rates under section 251(b)(5), rather than

interstate and intrastate access charges. We conclude that section

251(b)(5) obligations apply to all LECs [local exchange carriers] in the

same state-defined local exchange service areas . . .

Id. at ¶¶ 1036–37. Lastly, the FCC has stated that

[a]lthough section 252(b)(5) does not explicitly state to whom the LEC's

obligation runs, we find that LECs have a duty to establish reciprocal

compensation arrangements with respect to local traffic originated by or

terminating to any telecommunications carriers . . . LECs' reciprocal

compensation obligations under section 251(b)(5) apply to all local

traffic transmitted between LECs and CMRS providers.

Id. at ¶ 1041.

In this case, the calls originate and terminate within the same local MTA;

therefore, they are considered to be "local" calls. According to the FCC's ruling,

because these calls are "local," they are to be governed by reciprocal compensation

arrangements. The rulings of the district court and the IUB are consistent with this

ruling; thus, they do not violate federal law. As a result, the district court did not err

in granting Qwest's motion for summary judgment.

Appellate Case: 05-3551 Page: 7 Date Filed: 10/31/2006 Entry ID: 2105133
-8-

The IUB found that the tariffs at issue in this case did not apply to the type of

traffic involved in this dispute, namely local traffic. Consequently, neither the district

court nor the IUB followed the filed rate doctrine. "Under [the filed rate] doctrine,

once a carrier's tariff is approved by the FCC, the terms of the federal tariff are

considered to be 'the law' and to therefore 'conclusively and exclusively enumerate the

rights and liabilities' as between the carrier and the customer." Evanns v. AT&T Corp.,

229 F.3d 837, 840 (9th Cir. 2000). INS repeatedly argues that the actions of the

district court and the IUB nullify its federal tariffs. We disagree with INS's

characterization. The IUB did not invalidate INS's tariffs; it simply stated that the

charges as set out in INS's tariffs do not apply to the type of traffic at issue in this

case. This determination does not mean that the tariff does not apply to interstate or

foreign traffic. The tariff is still enforceable for traffic as specified in 47 U.S.C. §§

202, 203. Because the traffic in this case is "local," and therefore covered by 47

U.S.C. §§ 251, 252, INS's tariff is not applicable. 

In the absence of a clear mandate from the FCC or Congress stating how

charges for this type of traffic should be determined, or what type of arrangement

between carriers should exist, the Act has left it to the state commissions to make the

decision, as long as it does not violate federal law and until the FCC rules otherwise.

The goal of preserving a role for the state regulatory commissions is

reflected in a number of provisions in the [1996 Act]. Congress expressly

left with the states the power to enforce 'any regulation, order, or policy

of a State commission that . . . establishes access and interconnection

obligations of local exchange carriers; . . . is consistent with the

requirements of this section; and . . . does not substantially prevent

implementation of the requirements of this section and the purposes of

this part.'

Appellate Case: 05-3551 Page: 8 Date Filed: 10/31/2006 Entry ID: 2105133
-9-

Global Naps, Inc. v. Mass. Dep't of Telecomm. & Energy, 427 F.3d 34, 46–47 (1st Cir.

2005) (quoting 47 U.S.C. § 251(d)(3)). As the IUB acted within its power under

statute, we find no error.

Next, we examine the district court's finding that reciprocal compensation

applies to arrangements between INS and Qwest. In Illinois Bell Telephone Co. v.

WorldCom Tech, Inc., 179 F.3d 566 (7th Cir. 1999), the court held that just because

"the Act does not require reciprocal compensation for calls to ISPs [Internet service

providers] is not to say that it prohibits it. The Act simply sets out the obligations of

all local exchange carriers to provide for reciprocal compensation . . . ." Id. at 573

(emphasis in original). The court found that "[t]he ICC's conclusion—that reciprocal

compensation should apply to traffic Ameritech bills as local traffic—does not violate

the Act or the FCC's interpretation of the Act." Id. We reach the same conclusion in

this case. The fact that reciprocal compensation is only explicitly provided for with

respect to ILECs does not mean that the Act prohibits reciprocal compensation

arrangements for LECs. In fact, the FCC stated that "LECs have a duty to establish

reciprocal compensation arrangement with respect to local traffic originated by or

terminating to any telecommunications carriers." Local Competition Provisions, 11

FCC Rcd. 15499 at ¶ 1041. Therefore, because there is no prohibition from Congress

or the FCC, we hold that the IUB was within its jurisdiction to rule as it did.

Lastly, we note the FCC's stated desire to move away from tariffs and toward

negotiation and arbitration in order to facilitate market competition. See In the Matter

of Developing a Unified Intercarrier Compensation Regime T-Mobile et al., 20 FCC

Rcd. 4855, 2005 WL 433200 (2005) (holding that the FCC is amending its rules to

make clear its preference for contractual arrangements by prohibiting LECs from

imposing compensation obligations for non-access CMRS traffic pursuant to tariff.);

MCI WorldCom, Inc. v. Fed. Comm. Comm'n, 209 F.3d 760 (D.C. Cir. 2000) (stating

that the Commissioner tentatively concluded that tariffing was no longer necessary).

"The Commission has long been concerned that the necessity of filing tariffs hinders

Appellate Case: 05-3551 Page: 9 Date Filed: 10/31/2006 Entry ID: 2105133
-10-

competitive responsiveness . . . [and] the filed-rate doctrine has been used by the

carriers as a shield to avoid individual contract negotiations with large and small

users, thereby reducing competition among carriers." MCI WorldCom, 209 F.3d at

764. Moreover, as pointed out by the FCC, "no provision of the Communications Act

except §203(a) requires tariffing, and no provision gives a carrier a positive right to

file a tariff, so if it forbears from applying § 203(a) the Commission's staff is not

obliged to accept filings."

C. Implied Contract and Unjust Enrichment

INS appeals the district court's dismissal of its state law claims of unjust

enrichment and implied contract (quantum meruit). However, INS concedes that it

cannot prevail on these claims if they are covered by an express contract, either in the

form of a tariff or a reciprocal compensation agreement. Because we have already

concluded that the IUB acted within its authority in directing INS and Qwest to

negotiate within the reciprocal compensation regime, the regulatory process

contemplates that an express contract will ultimately result, and for this reason the

district court did not err in dismissing INS's state law claims of unjust enrichment and

implied contract.

III. Conclusion

For these reasons, we affirm the district court's grant of summary judgment,

based upon the IUB's determinations, because its rulings are not contrary to federal

law. 

______________________________

Appellate Case: 05-3551 Page: 10 Date Filed: 10/31/2006 Entry ID: 2105133