# U ni te d S ta te s Co ur t of A pp ea ls

For the Eig hth Circu it

__ __ __ __ __ __ __ __ __ __ __ __ __ _

No. 1 5- 24 06

__ __ __ __ __ __ __ __ __ __ __ __ __ _

Qwest Co m

m un ic at io ns Co rp or at io n, a Del aware co rp or at io n

ll ll ll ll ll ll ll ll ll ll l Th ir d Pa rt y Pla in ti ff - App el la nt

v.

Free Co nf

eren ci ng Co rp or at io n, a Nev ad a co rp or at io n

ll ll ll ll ll ll ll ll ll ll l Th ir d Pa rt y Def en da nt - App el le e

__ __ __ __ __ __

App eal fro m

Uni te d S ta te s Di st ric t Co ur t

fo r th e Dis tri ct of S ou th Dako ta - Sio ux Fal ls

__ __ __ __ __ __

Su bm it te d: Ju ne 16 , 20 16

Fil ed : Se pt em

be r 15 , 20 16

__ __ __ __ __ __

Befo re MUR PHY, BRIGHT, an d S HEPHERD, Circ ui t J ud ge s.

__ __ __ __ __ __

BRIGHT, Ci rcu it Ju dg e.

Fo ll owi ng a be nc h tri al

, th e di st ric t co ur t fo un d th ird -p art y pl ai nt iff -ap pe ll an t

Qwest Co m

m unicat io ns Co rp or at io n (Qwes t) fai le d to pr ov e it s cl ai m s fo r in te nt io na l

in te rfer en ce wit h a bu si ne ss rel at io ns hi p, un fai r co m pe ti ti on

, an d un

jus t en ric hm en tag ai ns t th ird -p art y de fen da nt -ap pe ll ee Free Co nf eren ci ng Co rp or at io n (FC)

. Qwest 1

ap pe al s. W e aff

irm th e d is tri ct co ur t o n t he cla im s fo r in te nt io na l in te rfer en ce with

a bu si ne ss rel at io ns hi p an d un fai r co m pe ti ti on

. W e rev ers e an d rem an d on th e cl ai m

fo r un jus t en ric hm en t.

I. BACKG ROUND

Qwest is a lo ng -d is ta nc e te le ph on e se rv ic e pr ov id er, refe rre d t o as an

in te rex ch an ge carr ie r (IXC). San co m

, In c. (San co m ), th e or ig in al na m ed pl ai nt iff

, is

a lo cal te le ph on e se rv ic e pr ov id er, refe rred to as a lo cal ex ch an ge carr ie r (LEC), fo r

th e Mi tc he ll , Sou th Dako ta , area.

W he n IXCs li ke Qwest t r a n s mi t cal ls fro m on e lo cal area to a di ffer en t lo cal

area

, th ey pa y fees to th e LEC in each lo cal area in or de r to co m pe ns at e th e LEC fo r

de li ve rin g, or “ te rm in at in g,” th e cal l lo cal ly on th e LEC’ s in fras tru ct ur e. The se fees

are typic al ly pa id on a pe r-m in ut e ba si s, so th e lo ng er th e cal l th e m or e th e IXC m us t

pa y th e LEC.

Fed eral la ws and reg ul at io ns go ve rn th e co nt ract ua l re la ti on sh ip be twee n th e

IXC an d th e LEC. The Co m m un ic at io ns Act of 19 34 req ui res th e LEC t o fil e wit h

th e Fed eral Co m

m un ic at io ns Co m

m is si on (FCC ) it s pr op os ed ch arg es fo r th e IXC,

an d th e FCC m

us t ap pr ov e th is fee, cal le d a ta rif f. 47 U.S.C. § 20 3( a). Unl es s

sp eci fie d in th is ta rif

f, th e LEC m ay no t ot he rwis e ch arg e t h e IXC a fee fo r

te rm in at in g cal ls to lo cal cu st om ers un de r it s ta rif f rat e. Id

. at § 20 3( c). LECs m ay

,

ho wev er, rece iv e s o me c om pe ns at io n fro m IXCs fo r cal ls th ey de li ve r to no ncu st om ers

. Qwest Co m

m c’ns Co rp

. v. Farm ers & Mer ch an ts Mu tu al Tele ph on e Co

.,

24 F.C.C. Rcd . 14 80 1, 1 48 12 n.9 6 (2 00 9) (he rei na fte r Farm ers II).

The di st ric t co ur t al so en te red jud gm en t in fav or of FC on Qwest ’s cl ai m fo r 1

ci vi l co ns pi racy, w hi ch Qwest do es no t ap pe al

.

-2

-The te rm s of San co m ’s ta rif f au th or i z e d i t to ch arg e IXCs

, in cl ud in g Qwest

,

m or e th an th ree cen ts pe r m in ut e fo r cal ls it de li ve red to an “ en d us e r

, ” w h i ch th e

ta rif f de fin ed as an in di vi du al or ot he r en ti ty “ whi ch su bs cri be [d ] to th e se rv ic es ”

San co m of

fere d. (Ap pe ll an t’s App en di x pp

. 53 2, 53 5, San co m Tari ff § 2.6 (d efi ni ng

an “ en d us er” as “ an y cu st om er of an in te rs ta te or fo rei gn te le co m m un ic at io ns se rv ic e

th at is no t a carr ie r” an d a “ cu s t o mer” as an in di vi du al

, co m pa ny, or ot he r en ti ty

“ whi ch su bs cri be s t o t he ser vi ces off ered un de r th is ta rif

f”))

. Ther efo re, i f San co m

di d no t de li v e r a c a ll to an in di vi du al or en ti ty whi ch su bs cri be d to it s se rv ic es

, it

co ul d n ot ch arg e IXCs un de r th e te rm s o f th e ta rif f fo r te rm in at in g t he cal l.

In 20 04

, FC, a co m

pa ny th at pr ov id es c on fere nc e cal li ng se rv ic es to it s

cu st om ers free of c h a r g e

, hi red Dari n Ro he ad

, op erat in g as Po werHo us e

Co m m un ic at io ns

, to fin d LECs th at wou ld be i n t e r e s t e d in co nt ract in g wit h FC to

ho st it s co nf

eren ce cal l br id ge s. Ro he ad id en ti fie d San co m an d dr aft ed a co nt ract th at

th e p art ie s l at er s ig ne d.

Und er th e te rm s of th e co nt ract , S an co m ag reed to ho st FC’s co nf eren ce c a l l

br id ge s on it s pr em is es in Mi tc he ll

, So ut h Dak ot a. FC gu aran te ed it s co nf eren ce cal l

br id ge s wou ld in crea se cal l tra ffi c to San co m ’s s erv ic e area by a m i ni m um nu m be r

of m in ut es pe r m on th

. In ret ur n, San co m ag reed to pa y FC a “ m ark et in g fee” of 2.5

cen ts for each m in ut e o f cal l t raff ic th at ter m in at ed at F C’s co nf eren ce call bri dg es

.

Alt ho ug h un writ te n in th e co nt ract

, FC kn ew San co m wou ld ch arg e th e IXCs

u n d e r i t s ta rif

f fo r each m in ut e of cal l tra ffi c it te rm in at ed at FC’s co nf eren ce c a l l

br id ge s. The co nt ract was th eref or e de si gn ed to ta ke ad va nt ag e of th e ta rif f syste m :

FC wou ld in crea se th e vo lu m e of cal l tra ffi c IXCs de li ve red to San co m ’s se rv ic e area ;

San co m wou ld bi ll IXCs un de r it s ta rif f fo r th e in crea se d tra ffi c; an d San co m wou ld

pa y FC a pe r-m in ut e “ m ark et in g fee,” effe ct iv el y sp li tt in g th e rev en ue s fro m th e

in crea se d tra ffi c. W hi le FC k n e w t h i s co nt ract wou ld ta ke ad va nt ag e of th e ta rif f

syste m

, th e di st ric t co ur t fo un d FC Pres id en t Dav id Eric ks on cred ib le whe n he

-3

-te st ifi ed th at h e d i d no t kn ow th e arra ng em en t was un la wfu l, he di d no t in te nd to

p r e mi s e hi s bu si ne ss m od el on an un la wfu l so ur ce of rev en ue

, an d he wou ld ha v e

ta ke n a ny ste ps ne ces sa ry to co m pl y wit h t he law.

FC’s cal l br id ge s he av il y in crea se d cal l tra ffi c to San co m ’s se rv ic e area

. Fro m

Mar ch to Apr il 20 05

, San co m te rm in at ed ro ug hl y 3.7 m il li on m in ut es of FC traff ic

.

By th e en d of 20 07

, th at nu m be r jum pe d to ro ug hl y 50 m il li on m in ut es of FC tra ffi c

pe r m on th

. In 20 07 an d th e fir st ha lf of 20 08

, FC tra ffi c a c c o u n t ed fo r 98 % of

San co m’s o v eral l tra ffi c. Dur in g th is ti m e pe rio d, San co m te rm in at ed ro ug hl y 68 6

m il li on m in ut es of FC tra ffi c an d on ly 14 m il li on m in ut es of tra ffi c fo r al l ot he r

cu st om ers

. The FC tra ffi c ne ve r in te rfer ed wit h San co m ’s s e r v i c e to th e ot he r

cu st om ers

.

Tod ay

, it is well -s et tl ed th at an LEC can no t bi ll an IXC un de r it s ta rif f fo r cal ls

“ te rm in at ed ” at a co nf

eren ce cal l br id ge whe n th e co nf eren ce cal li ng co m

pa ny do es

no t pa y a fee fo r th e LEC’ s se rv ic es

. Bu t whe n FC an d San co m fir st en te red in to th ei r

co nt ract

, th is i s s u e ha d no t be en li ti ga te d. The FCC fir st co ns id ered th is is su e in

20 07 . Qwest Co m

m c’ns Co rp . v . F arm ers & Mer ch an ts Mu tu al Tele ph on e Co ., 2 2

F.C.C. Rc d. 1 79 73 (20 07 ) (h erei na fte r Farm ers I). In Farm ers I, th e FCC he ld th at 2

a co nf eren ce cal l co m

pa ny co ul d qu a l i f

y a s a n “ en d us er” un de r th e te rm s of an

LEC’ s ta rif

f as lo ng as it pa id th e LEC a su bs cri pt io n fee fo r it s se rv ic es

, ev en if th e

LEC, in tu rn

, pa id th e c o n f e r e n ce cal l co m

pa ny a m ark et in g fee th at ex ceed ed th e

su bs cri pt io n fee. Id

. at 17 98 7- 88

. The refo re, ev en if th e co nf eren ce cal l co m

pa ny

rece iv ed a ne t pa y m en t fro m th e LEC, it co ul d st il l qu al ify as an “ en d us er,” an d th e

LEC co ul d ch arg e th e IXC un de r it s ta rif f fo r tra ffi c th at te rm in at ed at th e co nf eren ce

cal l b rid ge . Id. at 17 98 8.

W hi le Qwest was a pa rty to Farm ers I an d Farm ers II, th es e cas es are un rel at ed 2

to th e cu rren t ca se

.

-4

-Fo ll owi ng Farm ers I, Qwest fil ed a m ot io n to reco ns id er wit h th e FCC, as ki ng

it to rev is it it s ho ld in g in li gh t of ne wly di sc ov ered ev id en ce th at th e co nf eren ce cal l

co m pa ni es were no t act ua ll y pa y in g a su bs cri pt io n fee to th e LECs. See Farm ers II,

24 F.C.C. Rcd

. at 14 80 1. The FCC gr an te d Qwest ’s m ot io n, an d in Nov em be r 20 09

it he ld th at an LEC co ul d no t ch arg e an I X C u n de r it s ta rif f fo r cal ls de li ve red to a

co nf eren ce cal l br id ge whe n th e co nf e r e n c e c a l l co m

pa ny di d no t pa y a fee to

su bs cri be to th e LEC’ s se rv ic es

. Id . a t 1 4 8 12 -1 3. The FCC, ho wev er, in di cat ed in

a fo ot no te th at th e LEC was n ot “ pr ecl ud ed fro m rece iv in g a ny co m

pe ns at io n at al l

fo r th e se rv ic es ” it pro vi de d t o t he IXC. Id . at 1 48 12 n.9 6.

II . PROCEDURAL BACKGROUND

Pri o r to Farm ers I, Qwest st op pe d pa y in g San co m acce ss ch arg es

, an d on

Octo be r 9, 20 07

, San co m su ed Qwest to reco ve r th e ch arg es

, ad va nc in g a ha nd fu l of

di ffer en t l eg al th eo rie s. Qwes t fi le d c ou nt ercl ai m s ag ai ns t Sa nc om an d als o clai m s

as a th ird -p art y pl ai nt iff ag ai ns t FC fo r un fai r co m pe ti ti on

, to rti ou s in te rfer en ce wit h

co nt ract , civ il co ns pi racy, and un jus t en ric hm en t.

Afte r th e FCC de ci de d Farm ers II, th e di st ric t co ur t refe rred th ree is su es to th e

F C C : ( 1 ) w he th er San co m vi ol at ed it s ta rif f by ch arg in g Qwest fo r cal ls th at

te rm in at ed at FC’s cal l br id ge s; (2 ) whe th er San co m was en ti tl ed to so m e

co m pe ns at io n fro m Qwest fo r th es e cal ls ev en if it co ul d no t bi ll Qwest un de r it s

ta rif f; an d (3 ) if so

, wha t rat e San co m co ul d ch arg e Qwest fo r th os e cal ls

. The FCC

fo un d FC was no t an “ en d us er” be cau se it di d no t su bs cri be t o S an co m ’s s erv ic es

,

an d th eref

or e San co m co ul d no t bi ll Qwest un de r it s ta rif f fo r cal ls th at te rm in at ed at

FC’s br id ge

. The FCC res erv ed ru li ng o n t h e r em ai ni ng two is su es

. Qwest

su bs eq ue nt ly sett le d wi th San co m on all cla im s fo r an un di sc lo se d a m ou nt

.

In May 20 14

, Qwest an d FC pr oc eed ed to tri al be fo re th e di st ric t c o ur t.

Fo ll owi ng th e be nc h tri al

, th e di st ric t co ur t is su ed an or de r an d en te red jud gm en t in

-5

-fav or of FC on al l cl ai m s. Qwest fil ed a m ot io n to va cat e jud gm en t, whi ch th e di st ric t

co ur t d en ie d o n J un e 5 , 20 15 . Qwest ti m el y ap pe al ed

.

II I. DI SCUSSI ON

Qwest ap pe al s th e di st ric t co ur t’s jud gm en t on it s cl ai m s of in te nt io na l

in te rfer en ce wit h a bu si ne ss rel at io ns hi p, un fai r co m pe ti ti on (v ia FC’s in du cem en t of

reg ul at or y vi ol at io ns ), an d un jus t en ric hm en t. “ In rev ie win g a jud gm en t aft er a be nc h

tri al

, we rev ie w th e di st ric t co ur t’s fact ua l fin di ng s an d cred ib il it y de te rm in at io ns fo r

cl ear erro r, an d it s le ga l co nc lu si on s de no vo .” Affo rd ab le C mt ys

. o f M o

. v. Fed

.

Nat’l Mo rtg ag e Ass ’n, 81 5 F

. 3 d 11 30

, 11 33 (8 th Ci r. 20 16 ) (ci ti ng Fed

. R. Ci v. P.

52 (a)( 6) ). “ W e wil l ov ert ur n a fin di ng of fact on ly if it is no t su pp or te d by su bs ta nt ia l

ev id en ce, it is ba se d on an erro ne ou s vi ew of th e l a w

, o r w e are le ft wit h a de fin it e

an d fi rm co nv ic ti on th at an erro r ha s b een m ad e.” Id

.

A. Inte nti on al Int erfe renc e w ith a Bu si nes s Rel at io ns hi p

Qwest arg ue s th e di st ric t co ur t erre d whe n it en te red jud gm en t in fav or of FC

on it s cl ai m fo r in te nt i o n a l i n te rfer en ce wit h a bu si ne ss rel at io ns hi p. Und er So ut h

Dak ot a la w, th e pl ai nt iff m us t pr ov e f

i v e e l e men ts fo r a cl ai m of in te nt io na l 3

in te rfer en ce wit h a bu si ne ss rel at io ns hi p: “ (1 ) [T]he ex is te nc e of a va li d bu si ne ss

rel at io ns hi p or ex pe ct an cy ; (2 ) kn owl ed ge by th e in te rfer er of th e r e l a t i o ns hi p or

ex pe ct an cy ; (3 ) an in te nt io na l an d un jus ti fie d act of in te rf

eren ce on th e pa rt of th e

in te rfer er; (4 ) pr oo f th at th e in te rfer en ce cau se d th e ha rm su st ai ne d; an d, (5 ) da m ag es

to th e pa rty wh os e rel a ti on sh ip or ex pe ct an cy was di sr up te d.” Sel le v. Toz se r, 78 6

W e ap pl y So ut h Dak ot a la w t o Qwest ’s c la im s in to rt an d in eq u i t y, a s b o t h 3

pa rti es ag ree. See Pl at te Vall ey Ban k v. Tetr a Fi n. Grp

., LLC, 68 2 F.3 d 10 78

, 10 82

(8 th Cir . 20 12 ).

-6

-N.W .2d 74 8, 75 3 (S.D. 20 10 ) (al te rat io n in or ig in al ). The pa rti e s d i s p u t e on ly th e

th ird el em en t: whe th er FC co m m it te d an in te nt io na l an d im pr op er act of in te rfer en ce.

To de te rm in e whe n in te rfer en ce is im pr op er, So ut h D a k o t a co ur ts weig h a

ha nd fu l of no n- ex ha us ti ve f a c t o r s

, r efer red to as th e Gru hl ke fact or s: “ (a) [T]he

na tu re of th e act or ’s co nd uc t, (b ) th e act or ’s m ot iv e, (c) th e in te res ts of th e ot he r wit h

whi ch th e act or ’s co nd uc t in te rfer es

, (d ) th e in te res ts so ug ht to be a d v an ced by th e

act or

, (e) th e so ci al in te res ts in pr ot ect in g th e free do m of act io n of the act or an d th e

co nt ract ua l in te res ts of th e ot he r, (f) th e pr ox im it y o r r e mo t e n es s of th e act or ’s

c o n d u ct to th e in te rfer en ce, an d (g ) th e rel at io ns be twee n th e pa rti es .” Gru h l k e v

.

Si ou x Em pi re Fed. Cred it Uni on

, 75 6 N.W .2d 39 9, 40 8 (S.D. 20 08 ). Mo ti va ti on of

pe rs on al g a in ge ne ral ly is no t en ou gh to sa ti sf y th e im

pr op er in te rfer en ce

req ui rem en t. Id . at 4 08 n.1 3.

The di st ric t co ur t co ns id ered th e Gru hl ke fact or s an d fo un d Qwest di d no t m eet

it s bu rd en to pr ov e FC’s in te rfer en ce was im pr op er. It hi gh li gh te d th at FC Pres id en t

Dav id Eric ks on cred ib ly te st ifi ed th at he di d no t in te nd to cau se San co m to br each it s

ta rif f ; FC’s m ot iv at io n to m ax im iz e it s own pr of it s was no t im

pr op er; an d FC’s

in te res ts were no t in co ns is te nt wit h th e so ci et al in te res ts in th e ta rif f reg ul at or y

syste m

. Qwest Co m

m c’ns Co rp

. v. Free Co nf

eren ci ng Co rp

., No. Ci v. 07 -4 14 7, 20 14

W L 57 82 54 3, at *1 0 (D.S.D. No v. 6 , 20 14 ).

Qwest arg ue s th e di st ric t co ur t erre d whe n it fo un d FC’s in te rfer en ce was no t

im pr op er, be ca u s e t h e FCC’s fin di ng

, on refe rral fro m th e di st ric t co ur t, th at FC’s

bu si ne ss m od el was “ in te nt io na ll y de si gn ed to ta ke ad v a nt ag e” of San co m ’s ta rif f

m an da te s a fin di ng of im pr op rie ty. W hi le th is FCC f in di ng rel at es to on ly s om e of

th e Gru hl ke fact or s, Qwest arg ue s th at un de r So ut h Dak ot a la w an d th e Res ta te m en t

(Sec on d) of Tort s, whi ch So ut h Dak ot a fo ll ows

, it is un ne ces sa ry to weig h an y ot he r

fact or s whe re cas e la w ha s de ve lo pe d a “ m or e or le ss crystal iz ed ru le .” (Ap p. Br. p.

44 (“ The co ur t erre d be cau se no fu rth er an al y si s was ne ces sa ry on ce th e di st ric t co ur t

-7

-fo un d FC’s bu si ne ss was pr em is ed on in te rject in g it se lf in to San co m ’s ta rif f bi ll in g

of Qwest

, an d th ereb y in du ci ng a co nt ract br each .”) (ci ti ng Res ta te m en t (Sec on d) of

Tort s § 76 7 cm t. j (1 97 9) )). The “ m or e or le ss crystal iz ed ru le ” th at FC v i ol at ed

,

Qwest arg ue s, is th at a bu si ne ss m od el pr e mi s e d on in du ci ng a pa rty to br each it s

co nt ract is to rti ou s i nt erfe ren ce p er s e.

W e ha ve fo un d no su ch pe r se ru le un de r So ut h Dak ot a la w, le t al on e a ru le so

in gr ai ne d in So ut h Dak ot a c a s e l a w t h a t it can be ch arac te riz ed as “ m or e or le ss

crystal iz ed .” Rat he r, th e S o u t h D ak ot a Su pr em e Co ur t is cl ear: ev en whe n th e

de fen da nt in du ces th e th ird pa rty to br each it s c o n t r a c t, th e co ur t m us t ex am in e

whe th er th e in du cem en t is wro ng fu l. See Lien v. Nw. Eng ’g Co

., 39 N.W .2d 48 3,

48 6 (S.D. 19 49 ) (“ W he n on e ha s k no wled ge of th e co nt ract rig ht s of an ot he r, hi s

wr on gf ul in du cem en t of a br each th ereo f is a w i l l f ul de st ru ct io n of th e pr op ert y of

an ot he r an d can no t be jus ti fie d on th e th eo ry th at it en h an ces an d ad va nc es th e

bu si ne ss in te res ts of th e wro ng do er.”) (em ph as is ad d e d )

. Thi s in qu iry t ur ns on th e

pa rti cu la r fac ts of e ach cas e. Gruh lk e, 75 6 N.W.2d a t 4 08

.

Und er th es e ci rcu m st an ces

, we ag ree wit h th e di st ric t co ur t th at FC di d no t act

wit h an im

pr op er pu rp os e whe n i t co nt ract ed wit h San co m

, be cau se FC was si m pl y

at te m pt in g t o t ak e ad va nt ag e o f th e u nc ert ai n re gu la to ry sch em e at th e ti m e. W he n

FC en te red in to it s co nt ract wit h San co m in 20 05

, i t w a s un se tt le d whe th er it s

bu si ne ss m od el co m

pl ie d wi th th e ta rif

f syste m . FC ha d a leg it im at e arg um en t th at

it co ul d be co ns id ered an “ en d u s e r

, ” a n d th us San co m co ul d bi ll Qwest un de r it s

ta rif f fo r cal ls de li ve red to F C ’s cal l br id ge s, be cau se FC “ pa id ” fo r San co m ’s

se rv ic es th ro ug h a ne tt in g ag ree men t : San co m ch arg ed FC fo r su bs cri bi ng to it s

se rv ic es ; FC ch arg ed San co m fo r te ch ni cal su pp or t an d m ark et in g; an d th e ne t res ul t

was th at San co m owe d FC m on ey

. It was no t un ti l th e FCC’s Farm ers II de ci si on in

20 09 – af te r th is laws ui t beg an – th at it ap pe ared th at FC’s bus in es s m od el vi ol at ed

San co m ’s ta rif

f. Si gn ifi can tl y

, th e di st ric t co ur t fo un d cred ib le Eric ks on ’s te st im on y

-8

-th at he di d no t kn ow FC’s bu si ne ss m od el vi ol at ed th e ta rif f an d th at he in te nd ed to

co m pl y wit h t he tar iff

syste m

.

FC’s bu si ne ss m od el was no t ba se d on in du ci ng S a n c o m t o br each it s ta rif f.

In st ead

, it was ba se d on it s reas on ab le

, cred ib le be li ef th at it was ta ki ng ad va nt ag e of

th e ta rif f syste m wit hi n th e te rm s of th e la w. Und er th es e ci rcu m st an ces

, FC was no t

act in g wit h an i mp r o pe r pu rp os e, be cau se it reas on ab ly be li ev ed it was co m pl y in g

wit h th e la w a s it ex is te d at th e ti m e it co nt ract ed wit h San co m

. See B r i e s e mei s te r

v. Leh ne r, 72 0 N.W .2d 53 1, 54 3- 44 (Wis. Ct

. App

. 20 06 ) (n ot in g def en da nt di d no t

act wit h im

pr op er m ot iv e whe n it rel ie d on ad vi ce of at to rn ey

, ev en if th e at to rn ey ’s

ad vi ce was in co rr e c t )

, ci te d wit h ap pr ov al in Sel le

, 78 6 N.W .2d at 75 3. FC’s

in no cen t m ot iv e di st in gu is he s t hi s cas e fro m ot he r cas es whe re th e So ut h Dak ot a

S u p r e me C ou rt fo un d th e in te rfer er act ed wit h an im pr op er pu rp os e. See, e.g

., St

. Ong e Liv es to ck Co

., Ltd

. v. Cu rti s, 65 0 N.W .2d 53 7, 54 2 (S.D. 20 02 ) (fi nd in g is su e

of m ate ri al fa ct on im

pr op rie ty of in te rfer en ce whe re pa rty di sr eg ard ed ex pr es s ad vi ce

of co un se l ab ou t le ga li ty of em pl oym en t co nt ract a n d recr ui te d co m pe ti to r’s

m an ag er).

Ju dg e Mu rp hy arg ue s th at th e di st ric t co ur t co m m it te d cl ear erro r whe n it he ld

t h a t F C di d no t act wit h im pr op er pu rp os e, ba se d la rg el y on th e di st ric t co ur t’s

fin di ng th at Eric ks on was cred ib le whe n he te st ifi e d t h a t he di d no t kn ow FC’s

bu si ne ss m od el vi ol at ed San co m ’s ta rif f an d th at he in te nd ed to co m pl y wit h th e la w.

Fi rs t, J ud ge Mu rp hy ar gu es th is cred ib il it y fin di ng was in te rn al ly inc on si st en t wi th

th e di st ric t co ur t’s fin di ng th at FC’s b us in es s m od el was “ sp eci fic al ly d es ig ne d” to

ta ke ad va nt ag e of th e ta rif f. Seco nd

, Ju dg e Mu rp hy ar g ue s Eric ks on ’s in te nt was

irr el ev an t, be cau se FC ha d act ua l kn o w l e dg e it was in te rfer in g wit h San co m ’s

co nt ract wit h Qwes t.

Thi s arg um en t res ts on th e fla wed pr em is e th at FC kn ew it was act in g

un la wfu ll y

. The FCC’s fin di ng th at FC de si gn ed it s bu si ne ss m od el to ta ke ad va nt ag e

-9

-of th e ta rif

f syste m do es no t co m

pe l th e co nc lu si on th at FC kn e w i t w as act in g

un la wfu ll y

. The re is no th in g un la wfu l ab ou t a co m pa ny act in g to ta ke ad va nt ag e of

a fav or ab le re g ul at or y sc he m e, whi ch FC be li ev ed it was do in g. W hi le San co m ’s

bi ll in gs to Qwest were la te r de em ed “ un la wfu l,” th is co nc lu si on was no t ap pa ren t to

FC at th e ti m e it co nt ract ed wit h San co m

. FC th ou gh t it s co nt ract wit h San co m fit

wit hi n San co m ’s ta rif

f. In hi nd si gh t, FC was wro ng

. Bu t at th e ti m e, it di d no t kn ow

it was wro ng

.

Thi s di ffer en ce is im

po rta nt

, be cau se to rti ou s in te rfer en ce wit h a bu si ne ss

rel at io ns hi p is an in te nt io na l to rt, an d th eref or e a de fen da nt m

us t kn ow in gl

y in te rfer e

wit h th e co nt ract to be li ab le

. Res ta te m en t (Sec on d) of Tort s § 76 6 cm t. j. (1 97 9)

(n ot in g th at el em en t of in te nt m ay be sa ti sf ie d whe re act or “ kn ows th at th e

in te rfer e n c e i s c e rta in or su bs ta nt ia ll y cert ai n to oc cu r as a res ul t of hi s act io n” ).

In de ed

, in each cas e Ju dg e Mu rp hy ci t e s t h e de fen da nt kn ew it s act io ns wou ld

in te rfer e wit h t h e p l a i nt iff ’s bu si ne ss rel at io ns hi p at th e ti m e it en ga ge d in th e

in te rfer en ce. See Lien

, 39 N.W .2d at 48 9 (fi nd in g de fen da nt ha d su ffi ci en t in te nt to

in te rfer e wit h a bu si ne ss rel at io ns hi p whe re it m in ed a th ird pa rty’ s la nd ev en th ou gh

it ha d kn owl ed ge of pl ai nt iff ’s c on tra ct ua l rig ht s to th e ro ck on t h e l a n d ); ANR W

.

Co al Dev

. Co

. v. Bas in Elec

. Po wer Co -o p., 2 7 6 F

. 3 d 95 7, 97 2- 73 (8 th Ci r. 20 02 )

(fi nd in g a ct or act ed wit h s uf fic ie nt in te nt for cla im

of t or ti ou s i nt erfe ren ce where it

ha d kn owl ed ge th at it s acco un ti ng ad vi ce wou ld un de rcu t th e de fen da nt ’s co nt ract ua l

rig ht to rece iv e ro y al ti es ). By co nt ras t, FC di d no t kn ow th at i t s bu si ne ss m od el

wou ld cau se San co m to br each it s co nt ract

. It si m pl y be l i e v e d i t was ta ki ng

ad va nt ag e of th e reg ul at or y s ys t e m

. The refo re, FC di d no t act wit h an im pr op er

m ot iv e.

W e affi rm th e di st ric t co ur t’s jud gm en t th at Qwest fai le d t o pr ov e FC act ed

wit h a n i m

pr op er p ur

po se

.

-1 0-B. Unfa ir Competit io n

Qwest ne xt arg ue s th e di st ric t co ur t erre d whe n it pr ed ic te d So ut h Dak ot a

wou ld no t reco gn iz e FC co m m it te d a to rt of un fai r co mp e ti ti on whe n it in du ced

San co m to br each it s ta rif f. W he n a st at e’s hi gh es t co ur t ha s no t sp ok en on an is su e,

a fed eral co ur t m

us t pr ed ic t wha t th e st at e co ur t wou ld do if it w e r e c a l l e d u p on to

de ci de th e is su e. See Nw. Mu t. Life In s. Co

. v. W ei he r, 80 9 F.3 d 39 4, 39 7 (8 th Ci r.

20 15 ).

U nd er So ut h Dak ot a la w, th e to rt of un fai r co m pe ti ti on it se lf do es no t ha ve

sp eci fic el em en ts

, bu t rat he r it d e s c r i b es a ge ne ral cat eg or y of to rts whi ch co ur ts

reco gn iz e to pr ot ect co m

m erci al in te res ts

. Set li ff v. Aki ns

, 61 6 N.W .2d 87 8, 88 7- 88

(S.D. 20 00 ). The re f

o r e

, t o pr ov e th e de fen da nt co m m it te d th e to rt of un fai r

co m pe ti ti on

, th e pl ai nt iff m

us t id en ti fy an un de rlyi n g t o r ti ou s act th e de fen da nt

co m m it te d. Id

.

To id en ti fy an un de rlyin g to rti ou s act th at FC co m m it te d, Qwest po in ts to th e

Res ta te m en t (Thi rd ) of Unf ai r Co m pe ti ti on

, whi ch pr ov id es a rem ed y in to rt fo r ha rm

th at res ul ts fro m th e “ act s or pr act ic es of th e act or de te rm in ed to be act io na bl e as an

u n f a i r m et ho d of co m

pe ti ti on , t ak in g in to acco un t th e na tu re of th e co nd uc t an d i t s

li ke ly effe ct on bo th th e pe rs on se ek in g reli ef and th e pu bl ic .” Res ta te m en t (Thi rd )

of Unf ai r Co m pe ti ti on § 1( a)(3 ) (1 99 5)

. Qwest arg u e s F C ’s bu si ne ss m od el was

ba se d o n to rti ou sl y in du ci ng reg ul at or y vi ol at io ns

, whi ch fal ls un de r th is sec ti on of

th e Res t a t e men t as an act or pr act ic e th at So ut h Dak ot a wou ld de te rm in e to be

act io na bl e as an un fai r m et ho d o f co m pe ti ti on

.

W e di sa gr ee wit h Qwest th at So ut h Dak ot a wou ld reco gn iz e a ne w to rt un de r

thes e ci rcu m st an ces

, be cau se an es se nt ia l co m po ne nt fo r a cl ai m of unf

ai r co m pe tit ion

un de r So ut h Dak ot a la w is la ck in g: di rect co m pe ti ti on

. So ut h Dak ot a reco gn iz es th e

to rt of un fai r co m

pe ti ti on whe n on e co m

pa ny ga in s an up pe r ha nd on it s co m pe ti to r

-1 1-du e to an un fai r pr act ic e. In Rav en In du st rie s, I n c

. v

. Lee, fo r ex am pl e, th e So ut h

Dak ot a Su pr em e Co ur t fo un d th e de fen da nt co m m it te d th e to rt of un fai r co m pe ti ti on

whe n it ga in ed a “ th irt een -y ear he ad st art in m an uf act ur in g” aft er it to ok it s

co m pe ti to r’s tra de se cret

. 78 3 N.W .2d 84 4, 85 1 (S.D. 20 10 ). Lik ewis e, in Set li ff, th e

co ur t fo un d a tri ab l e is su e on whe th er an em pl oyee co m

m it te d th e to rt of un fai r

co m pe t i t io n whe n he br each ed hi s du ty o f lo y al ty an d be ga n co m pe ti ng ag ai ns t hi s

f o r m er em pl oyer. 61 6 N.W .2d at 88 7- 88

. And cas es fro m ot he r juri sd ic ti on s o n

whi ch Qwest rel ie s al so in vo lv e un fai r co m pe ti ti on be twee n di rect co m pe ti to rs

. See

ID Sec. Sy s. Can ad a, In c. v. Ch eck po in t Sy s., In c., 24 9 F. Su pp

. 2d 62 2, 68 8- 89 (E.D.

Pa. 20 03 ) (fi n d i n g un fai r co m pe ti ti on whe re co m

pe ti to r to rti ou sl y in te rfer ed wit h

co nt ract a n d ga in ed ad va nt ag e ov er di rect co m pe ti to r); N.M. Onc ol og y &

H em at olo gy Co ns ul ta nt s, Ltd

. v. Pres byteri an Heal th care Serv s., 54 F. Su pp

. 3d 11 89,

12 33 -3 7 (D.N.M. 20 1 4 ) (d en y in g de fen da nt ’s m ot io n to di sm is s cl ai m of un fai r

co m pe ti ti on wher e h os pi ta l u se d u nf ai r m ean s t o d riv e co m

pe ti to r ou t o f m ark et ).

I n t h i s cas e, FC was no t a di rect co m pe ti to r of Qwest an d it di d no t us e an y

un fai r m et ho ds to g ai n an ad va nt ag e ov er Qwest

. W e th eref or e pr ed ic t th e So ut h

Dak ot a Su pr em e Co ur t wou ld no t reco gn iz e a to rt of un fai r co m pe ti ti on un de r th es e

ci rcu m st an ces , and we fin d t he di st ric t co ur t p ro pe rly rejecte d t hi s n ew to rt.

C. Unjus t Enr ic hment

Fi na ll y

, Qwest arg ue s th e di st ric t co ur t erre d whe n it fo un d FC was no t un jus tl y

en ric he d

. Unju st en ric hm en t is an eq ui ta bl e rem ed y

, Dowl in g Fam il y P’sh ip v.

Mi dl an d F arm s, 8 65 N.W .2d 85 4, 8 60 (S.D. 20 15 ), an d we rev ie w a di st ric t co ur t’s

de ci si on to de ny an eq ui ta bl e rem ed y fo r ab us e of di sc ret io n. Oli va res v. Bren two od

In du s., 822 F.3 d 42 6, 42 9 (8t h Cir. 20 16 ). A di st ric t co ur t ab us es it s di sc ret io n if it

fai ls to co ns id er a rel ev an t fact or th at sh ou ld ha ve be en gi ve n s ig ni fic an t wei gh t, if

it co ns id ers an im

pr op er o r irr el ev an t fact or

, or if it “ co m m it s a cl ear erro r of

-1 2-jud gm en t in th e co ur se of weig hi ng pr op er fact or s.” Aaro n v. Targ et Co rp

., 35 7 F.3 d

76 8, 7 74 (8t h C ir. 2 00 4)

.

To es ta bl is h a cl ai m fo r un jus t en ric hm en t, th e pl ai nt iff m us t pr ov e (1 ) it

co nf erre d a be ne fit up on an ot he r; (2 ) th e ot he r acce pt ed or acq ui es ced in th at be ne fit ;

an d (3 ) it wou ld be in eq ui ta bl e to al lo w th e ot he r to ret ai n th at be ne fit wit ho ut pa y in g.

Dowl in g Fam il y P’sh ip

, 86 5 N.W .2d at 86 2

. “ [T]he fact th at a be ne fit is ret ai ne d,

en joy ed

, an d pr of

it ab ly ex pl oi te d by th e reci pi en t, al l wit ho ut co m pe ns at io n, do es no t

ne ces sa ril y m ean th at th e reci pi en t ha s be en un jus tl y en ric he d.” Res ta te m en t (Thi rd )

of Res ti tu ti on an d Unju st Enri ch m en t § 2 c mt

. b (2 01 1) (ci te d wit h ap pr ov al in

Jo hn so n v. Lars on

, 77 9 N.W .2d 41 2, 41 6 (S.D. 20 10 )). Rat he r, th e be ne fic ia ry m us t

ob ta in th e be ne fit “ in a m an ne r th at th e la w reg ard s as un jus ti fie d.” Id

. “[T ]he

rel ev an t in qu iry is whe th er th e ci rcu m st an ces are su ch th at eq ui ta bl y th e be ne fic ia ry

sh ou l d res to re to th e be ne fact or th e be ne fit or it s va lu e.” Hof el dt v. Meh li ng

, 65 8

N.W .2d 78 3, 7 88 (S.D. 20 03 ).

The di st ric t co ur t f

o u n d Q w e s t di d no t pr ov e it was en ti tl ed to an eq ui ta bl e

rem ed y fo r un

jus t en ric hm en t be cau se it wou ld no t be in eq ui ta bl e to al lo w FC to

ret ai n th e be ne fit it rece iv ed

. Qwest Co m mc’ ns Co rp

., 20 14 W L 57 82 54 3, at *1 7.

The di st ric t cou rt no te d th at FC d id no t g ai n a ny ben efi t i ll eg al ly or in eq ui ta bl y – it

mer e l y “too k ad va nt ag e of a lo op ho le un ti l th e lo op ho le cl os ed .” Id

. The di st ric t

co ur t al so no te d th at FC pr ov id ed le gi ti m at e se rv ic es in ex ch an g e fo r it s pa y m en ts

fro m San co m

. Id

. Fi na ll y

, th e di st ric t co ur t fo un d it wou ld no t be eq ui ta bl e to al lo w

Qwest to reco ve r m on ey fro m FC whe n it al read y reco ve red m on ey in it s se tt le m en t

wit h S an co m . Id.

At th is st ag e, th is ru li ng m us t be va cat ed

. Here th e di st ric t co ur t rel ie d on two

irr el ev an t fact or s. Fi rs t, th e di st ric t co ur t in co rrec tl y fo un d FC’s co nd uc t w as “ ne it he r

il le ga l no r in eq ui ta bl e” be cau se it was si m pl y ta ki ng ad va nt ag e of a lo op ho le un ti l th e

lo op ho le cl os ed

. Id

. The ph ras e “ lo op ho le ” im pl ie s th at th e San co m -FC co nt ract was

-1 3-le ga l pr io r to th e FCC’s dec is io n in Farm ers II. Bu t th at is no t th e cas e. In Farm ers

II, th e FCC he ld th at LECs vi ol at ed th e Co m m un ic at io ns Act by bi ll in g IXCs fo r cal ls

th at te rm in at ed at co nf

eren ce cal l br id ge s whe n th e co nf eren ce cal li ng co m

pa ny di d

no t su bs cri be to th e LEC’ s se rv ic es

. Farm ers II, 24 F.C.C. Rcd

. a t 14 81 3. Thi s

de ci si on was no t m erel y pr os pe ct iv e (th at LECs co u l d n o l o n ge r bi ll IXCs fo r th is

tra ffi c ) b u t r e tro sp ect iv e as well (th at LECs ne ve r co ul d ha ve bi ll ed IXCs fo r th is

tra ffi c). Si nc e th es e b il li ng pra ct ic es were n ev er l eg al , no lo op ho le ev er ex is te d.

As su ch

, FC was no t ex pl oi ti ng a lo op ho le

, bu t rat he r ta ki ng ad va nt ag e of le ga l

un cert ai nt y

. In ot he r wor ds , whi le FC d id no t i nt en d t o c au se San co m to br each it s

t ari ff, it di d, in pa rt, cau se San co m to br each it s ta rif f. Thi s di st in ct io n is cr u c i a l

,

be cau se un

jus t en ric hm en t is ap pr op ria te whe re th e be ne fic ia ry ga in s a b e ne fit

in eq ui ta bl y , e ve n if th e be ne fic ia ry do es no t i nt en d to de pr iv e th e be ne fact or of th e

be ne fit

. See Jo hn so n, 77 9 N.W .2d at 41 7- 18 (fi nd in g un jus t en ric hm en t ap pr op ria te

ev en whe re de fen da nt was no t a w r on gd oe r an d ha d “ no in te nt to de pr iv e” th e

pl ai nt iff of hi s ben efi t). Thu s, the fact th at FC did no t kn ow it was ind uc in g a ta rif f

vi ol at io n is no t a de fen se to Qwest ’s cl ai m fo r un jus t en ric hm en t. And ev en th ou gh

FC was no t it se lf act in g il le ga ll y , i ts co nd uc t m ig h t b e c h a ract eri zed as in eq ui ta bl e

be cau se it ret a i n e d a be ne fit ba se d on San co m ’s ta rif f vi ol at io n, whi ch it pa rtl y

cau se d. By fin di ng FC di d no t act il le ga ll y or in eq ui ta bl y be cau se it to ok ad va nt ag e

of a “ lo op ho le ,” th e di st ric t co ur t m ay ha ve rel ie d on an im pr op er fact or fo r it s de ni al

of rel ie f.

Seco nd

, the dis tr ic t co ur

t im pr ope rl y co nsi de re d Sa

nc om ’s se tt le m en t pa y m en ts

to Qwest whe n i t f

ou nd FC was no t un

jus tl y en ric he d. So ut h Dak ot a m eas ur es

da m ag es fo r un

jus t en ric hm en t ba se d on the am oun t th e be ne fic ia ry rece iv ed un jus tl y

,

no t th e am ou nt th e be ne fact or lo st

. See Jo hn so n, 77 9 N.W. 2 d a t 41 8 (“ Unju st

en ric hm en t

. . . al lo ws an award of res ti tu ti on fo r th e va lu e o f t h e b e n e fit un jus tl y

rece iv ed

, rat he r th an th e va lu e of th e se rv ic es pr ov id ed .”). Si nc e San co m ’s pa y m en ts

to Qwest ha ve no effe ct on th e am ou nt by whi ch FC was en ric he d, th is fact or is

-1 4-le ga ll y irr el ev an t to Qwest ’s cl ai m fo r un jus t en ric hm en t. Rat he r, th e fo cu s sh ou ld 4

ha ve be en th e am ou nt of m on ey FC in eq ui ta bl y rece iv ed , n ot th e am ou nt of m on ey

Qwest ha s al read y reco ve red fro m Sa n c o m. By de nyin g Qwest ’s cl ai m fo r un jus t

en ric hm en t d ue , in pa rt, to th e am ou nt of d am ag es San co m alr ead y pa id Qwest , th e

di st ric t co ur t m ay

ha ve gi ve n u nd ue weig ht to an ot he r le ga ll y irr el ev an t fa ct or

.

Thu s, we rev ers e an d rem an d to t h e di st ric t co ur t fo r reco ns id erat io n of

whe th er FC was un

jus tl y en ric he d. W e le av e th e m eri ts of Qwest ’s cl ai m fo r un jus t

en ric hm en t t o t he di st ric t co ur t b as ed on th e fu ll reco rd

. 5

IV. CONCLUSI ON

Fo r th e fo reg oi ng reas on s, we co nc lu de th e d is tri ct co ur t pr op erl y en te red it s

ru li ng s in fav or of FC on Qwest ’s cl ai m s fo r in te nt io na l in te rfer en ce wit h a bu si ne ss

rel at io ns hi p an d un fai r co m pe ti ti on

. Howev er, th e di st ric t co ur t fai le d to co ns id er al l

im po rta nt fact or s un de rg ird in g th e un jus t en ric hm en t cl ai m

. W e th eref or e va cat e th e

di st ric t co ur t’s o r d e r o n th e cl ai m fo r un jus t en ric hm en t an d rem an d to th e di st ric t

co ur t fo r rec on si de rat io n o f whe th er FC was u nju st ly enri ch ed

.

It i s s o o rd ered

.

W e le av e to th e di st ric t co ur t to de ci de whe th er San co m ’s pa y m en ts to Qwest 4

m ay di m in is h Qwes t’s re co ve ry un de r an y

ot he r le ga l t he or y

.

Ju dg e Sh ep he rd arg ue s FC can no t be sa id to ha ve ga in ed a be ne fit in eq ui ta bl y 5

wit ho ut pa y in g fo r it s va lu e, an d th eref or e it is no t li ab le to Qwest un de r a th eo ry of

un jus t en ric hm en t. Tha t m at te r go es to th e m eri t s

, whi ch we le av e to th e di st ric t

co ur t.

-1 5-SHEPHERD, con cu rri ng in pa rt a nd di ss en ti ng in pa rt.

I co nc ur in th e co ur t’s de ci si on to affi rm th e di st ric t co ur t in de nyin g Qwest ’s

cl ai m s fo r in te nt io na l i n te rfer en ce wit h a bu si ne ss rel at io ns hi p an d un fai r

co m pe ti ti on

. Howev er, I wou ld al so affi rm th e di s t r ic t co ur t’s de ni al of Qwest ’s

un jus t en ric hm en t cl ai m

.

“ ‘In rev ie win g a jud gm en t aft er a be nc h tri a l

, th is co ur t rev ie ws th e co ur t’s

fact ua l fin di ng s fo r cl ear erro r an d it s le ga l co nc lu si on s de no vo .’ ” Tus se y v. ABB,

In c., 74 6 F.3 d 32 7, 33 3 (8 th Ci r. 20 14 ) (q uo ti ng O u t d o or Cen t. In c. v.

Great Lod ge .co m , I nc ., 6 88 F.3 d 93 8, 94 1 (8 th Ci r. 20 12 )). The m ajor i t y f i n d s th at

th e di st ric t co ur t erre d in de nyin g Qwest ’s un jus t en ric hm en t cl ai m ag a i ns t FC

be cau se FC’s co nd uc t was ne it he r il le ga l o r in eq ui ta bl e. The co ur t fin ds th at th e

San co m -FC co nt ract was ne ve r le ga l be cau se th e FCC de ci si on in Farm e r s I I was

ret ro sp ect iv e as well as pr os pe ct iv e, i.e. th at LEC’ s co ul d ne ve r bi ll IXCs fo r br id ge d

co nf eren ce cal ls

. Thi s m is se s th e po in t. It is un di sp ut ed th at two s e p a r a t e an d

di st in ct co nt ract ua l rel at io ns hi ps ex is te d un de r th e fact s of th is cas e. Fi rs t, Qwest ha d

a co nt ract ua l rel at io ns hi p wit h San co m go ve rn ed by fed era l l a ws an d reg ul at io ns

.

Ch arg es by San co m to Qwest are se t fo rth in a ta rif f whi ch San co m fi l e d w i t h th e

FCC an d th e So ut h Dak ot a Pu bl ic Uti li ti es Co m m is si on

. Mo ne y was pa id by Qwest

to San co m ba se d up on m in ut es of us e at tri bu ta bl e to qu al ifyin g “ en d us ers ” un de r th e

ta rif fs

. Seco nd

, San co m an d FC en te red in to a co nt ract un de r whi ch San co m ag reed

to pr ov id e FC wit h a lo cat io n fo r a co nf eren ce cal l br id ge an d FC ag reed to pr ov id e

a m in im um nu m be r of m in ut es to th e br id ge in ex ch an ge fo r a m ark et in g fee. Mo ne y

was pa id by San co m to FC as a pe r m in ut e mar k e t i n g fee fo r cal l tra ffi c to FC’s

co nf eren ce ca ll bri dg e.

F C w a s no t a pa rty to a co nt ract be twee n San co m an d Qwest an d d i d n o t

pa rti ci pa te in th e b il li ng rel at io ns hi p b et ween th os e en ti ti es

. Nor was FC a pa rty to

th e FCC pr oc eed in gs

. In Farm ers II th e FCC, ba se d up on ne wly pr es en te d ev id en ce,

-1 6-ru le d th at co nf eren ce cal l cu st om ers were no t en d us ers or cu st om ers un de r th e LEC’ s

ta rif f an d th at IXCs su ch as Qwest were no t li ab le fo r te rm in at io n ch arg es wit h

res pe ct to th at tra ffi c. Howev er, the FCC exe rci se d no juri sd ic ti on ov er FC an d th e

writ te n de ci si on do es no t cri ti ci ze th e m ot iv es of FC in en te rin g in to th e co nt ract wit h

San co m m

uc h le ss in va li da te th e co nt ract or op in e th at it is u n e n f o rcea bl e. In th is

act io n, th e di st ric t co ur t fo un d t ha t “ FC had no ob li ga ti on s un de r an y ta rif f be cau se

it is no t a carr ie r,” “ FC was un de r no le ga l ob li ga ti on to en su re th at San co m co m pl ie d

wit h it s ta rif

f,” an d, “ si gn ifi can tl y

, th at FC was no t th e act or who vi ol at ed San co m ’s

ta rif fs

, an d th eref

or e FC di d no t en ga ge in co nd uc t th at was act io na bl e un de r a fed eral

or st at e st at ut e.” In de ed

, th e m ajor it y accu rat e ly co nc lu de s: “ The re is no th in g

un la wfu l ab ou t a co mp a n y a ct in g to ta ke ad va nt ag e of a fav or ab le reg ul at or y

sc he m e . . . .” (Sup ra p . 10 .)

Not a pa rty to an il le ga l ag reem en t an d ha vi ng no le ga l ob li ga ti on to en su re th at

San co m co m

pl ie d wit h it s ta rif

f, FC can no t be sa id to ha ve rece iv ed a be ne fit “ ‘from

th e pl ai nt iff whi ch wou ld be in eq ui ta bl e to ret ai n wit ho ut pa y in g fo r it s va lu e’” an

es se nt ia l el em en t o f an un jus t en ric hm en t act io n. Apa ch e Co rp . v . MDU Res . Grp,

In c., 60 3 N.W .2d 89 1, 89 5 (N.D

. 19 99 ) (q uo ti ng Zug er v. Nor th Dak ot a In s. Gua r.

Ass ’n, 49 4 N.W.2 d 13 5, 13 8 (N.D. 19 92 )). The di st ric t co ur t’s fin di ng s are am pl y

su pp or te d by th e reco rd an d are co ns is te nt wit h th e co nt ract s be twee n th e pa rti es an d

t h e o r d e r of th e FCC. The de ci si on of th e di st ric t co ur t to de cl in e th is eq ui ta bl e

rem ed y was no t an ab us e of di sc ret io n. Ent erg y Ark an sa s, In c. v. Neb ras ka

, 35 8 F.3 d

52 8, 55 4 (8 th Ci r. 20 04 ) (“ W e rev ie w a de ci si on no t to im po se a pa rti cu la r eq ui ta bl e

rem ed y for an ab us e o f di sc ret io n.” ).

I wou ld affi rm th e di st ric t cou rt’s ju dg m en t i n fav or of FC on Qwest ’s un jus t

en ric hm en t cl ai m

.

-1 7-MURP HY, Circ ui t J ud ge , di ss en ti ng

.

Free Co nf

eren ci ng an d San co m crea te d a sc he m e by whi ch Free Co nf eren ci ng

ge ne rat ed te le ph on e tra ffi c on Qwest 's ne two rk

, an d San co m th en bi ll ed Qwest un de r

it s FCC ap pr ov ed ta rif

f, an d Free Co nf

eren ci ng rece iv ed pa rt of San co m 's pr oc eed s.

On re f e r r al th e FCC fo un d th at San co m was no t en ti tl ed to bi ll Qwest be cau se th e

F r ee Co nf

eren ci ng /S an co m arra ng em en t vi ol at ed fed eral la w. The di st ric t c o u r t

fo un d th at Free Co nf

eren ci n g ' s c o nt ract wit h San co m was "i nt en ti on al ly d es ig ne d"

to ta k e ad va nt ag e of Qwest 's FCC ta rif f. The m ajor it y no ne th el es s co nc lu de s th at

Free Co nf

eren ci ng is no t li ab le to Qwest fo r in te rfer in g wit h th e ta rif f be cau se of it s

own "i nn oc en t m ot iv e." Tha t co nc lu si on is co nt rary to So ut h D a k o ta la w, an d it s

pr em is e co nf

li ct s wit h th e fact s as f

ou nd by t he FCC. Bec au se Qwest is en ti tl ed to

reco ve r fro m Free Co nf

eren ci ng on it s cl a i ms fo r to rti ou s in te rfer en ce an d un jus t

en ric hm en t, I re sp ect fu ll y di ss en t.

I.

In So ut h Dak ot a, t h e e l e m en ts of to rti ou s in te rfer en ce wit h a bu si ne ss

rel at io ns hi p a re:

1. Th e ex is te nc e o f a v al id bu si ne ss rel at io ns hi p o r ex pe ct an cy ;

2. k no wled ge by the in te rfer er o f th e rel at io ns hi p o r ex pe ct an cy ;

3. an in te nt io na l an d un

jus ti fie d act of in te rfer en ce on th e pa rt of th e in te rfer er;

4. p ro of th at th e in te rfer en ce ca us ed th e h arm su st ai ne d; an d,

5. d am ag es to th e p art y

who se rel at io ns hi p o r ex pe ct an cy was d is ru pt ed

.

Sel le v. Toz se r, 78 6 N.W .2d 74 8, 75 3 (S.D. 20 10 ). Bas ed on th e reco rd he re th e

di st ric t co ur t fo un d th at th e ta rif f "co nt ro ll ed th e rel at io ns hi p" be twee n San co m an d

Qwest

, th at Fre e C o n f

e r en ci ng ha d kn owl ed ge of th at rel at io ns hi p, an d th at it ha d

kn owl ed ge of San co m 's ob l i g a t i o n s un de r th e ta rif f. The qu es ti on is whe th er Free

-1 8-Co nf

eren ci ng co m

m it te d an "i nt en ti on al an d un jus ti fie d act of in te rfer en ce" wit h th at

rel at io ns hi p.

The fin di ng s an d co nc lu si on s m ad e by th e FCC in th is cas e sh ou ld be gi v e n

si gn ifi can t weig ht

. See Uni te d St at es v. Great N. Ry

. Co

., 33 7 F.2 d 24 3, 24 8 (8 th Ci r.

19 64 ); MCI Tele co m

m s. Co rp

. v. Tele co nc ep ts

, In c., 71 F.3 d 1 0 86

, 11 03 (3 d Ci r.

19 95 ); se e al so Acces s Tele co m m s. v. Sw. Bel l Tel. Co

., 13 7 F.3 d 60 5, 60 8 (8 th Ci r.

19 98 ) (co ur ts ap pl y th e do ct rin e of pr im ary juri sd ic ti on "t o ob ta in th e be ne fit of an

ag en cy 's ex pe rti se an d ex pe rie nc e")

. The FCC fo un d th at San co m "was no t en ti tl ed

to ch arg e Qwest

. . . un de r th e Tari ff" fo r Free Co nf eren ci ng tra ffi c an d co nc lu de d

th at it s ch arg es to Qwest were un la wfu l. In re Qwest Co m m c'n s Co

. v. San co m

, In c.

( S a nc om ), 28 F.C.C.R. 19 82

, 19 94 (2 01 3)

. The di st ric t co ur t fo un d th at Fre e

Co nf eren ci ng 's ag en t Dari n Ro he ad dr aft ed a co nt rac t w h i ch de pe nd ed on San co m

vi ol at in g it s ta rif

f ob li ga ti on s wit h Qwest an d m ak in g il le ga l bi ll in gs to Qwest

. Thi s

in te rfer ed wit h Qwes t's rig ht s u nd er t he tar iff

.

Free Co nf eren ci ng 's act io ns were in te nt io na l. The FCC fo un d th at th e co nt ract

be twee n Free Co nf

eren ci ng an d San co m

, whi ch Ro he ad dr aft ed

, ap pe ared to b e

"p ur po se fu ll y st ru ct ur ed " to av oi d th e ta rif f, San co m

, 28 F.C.C.R. at 19 9 3

, an d th e

di st ric t co ur t fo un d th at th e co nt ract was "i nt en ti on a l l y" an d "s pe ci fic al ly d es ig ne d

to tak e ad va nt ag e o f th e ta rif f rel at io ns hi p."

Free Co nf

eren ci ng al so ha d no jus ti fic at io n fo r in du ci ng vi ol at io ns of fed eral

la w. Free Co nf

eren ci ng kn ew ab ou t t he ta rif f an d kn ew th at th e co ns eq ue nc e o f it s

co n t r a c t was th at San co m wou ld bi ll Qwest in a way th at vi ol at ed th at ta rif f. The

di st ric t co ur t sp eci fic al ly fo un d th at Free Co nf eren ci ng "k ne w th at [it s] pr of it wou ld

co m e at th e ex pe ns e of

" Qwest be cau se th e la tt er was "b ou nd to pa y a hi gh ta rif f rat e"

t o S an co m an d Free Co nf eren ci ng 's bu si ne ss was "i nt en ti on al ly de si gn ed to ta k e

ad va nt ag e of th at arra ng em en t." The se f a c t s are su ffi ci en t to m ak e ou t a cl ai m fo r

un jus ti fie d i nt erfe ren ce u nd er So ut h Dak ot a la w. "When on e ha s k no wled ge of t he

-1 9-co nt ract rig ht s of an ot he r, hi s wro ng fu l in du cem en t o f a b r e a ch th ereo f is a wil lfu l

d e s t r uc ti on of th e pr op ert y ." Lien v. Nw. Eng 'g Co

., 39 N.W .2d 48 3, 48 6 (S.D

.

19 49 ).

The m ajor it y co nc lu de s th at Free Co nf eren ci ng "d id no t act wit h an im pr op er

pu rp os e," rel y in g he av il y on th e te st im on y of it s pr es id en t, Dav id Eric ks on cl ai m in g

th at he ha d in te nd ed to act la wfu ll y

. Alt ho ug h we gi ve si gn ifi can t de fere nc e to a tri al

co ur t's cred ib il it y de te rm in at io ns

, we m ay fin d cl ear erro r whe n a wit ne ss st or y is "s o

in te rn al ly i nc on si st en t or im pl au si bl e on i t s face th at a reas on ab le fact fin de r wou ld

no t cred it it ," or whe n a c o u r t's fin di ng is in te rn al ly in co ns is te nt wit h it s ot he r

fin di ng s. W il so n v. Lam

be rt, 78 9 F.2 d 65 6, 65 8 (8t h Cir. 19 86 ) (q uo ti ng And ers on

v. Ci ty of Bes se m er Ci ty, 47 0 U.S. 56 4, 57 5 (1 98 5) ). The di st ric t co ur t's fin di ng th at

Free Co nf

eren ci ng di d n ot in te nd to vi ol at e th e la w was fl awed for bo th reas on s.

Eric ks on 's te st im on y di rect ly co nf li ct s wit h th e FCC' s fin di ng th at th e co nt ract

was pu rp os efu ll y st ru ct ur ed to av oi d th e ta rif f rel at io ns hi p. See San co m

, 28 F.C.C.R.

at 19 93

. The FCC ex am in ed th e co nt ract an d fo un d th at it "b ear[ s] no in di cat io ns th at

[it ] pe rta in [s ] in an y way to th e se rv ic es of fere d un de r th e Tari ff" an d th at it co nt ai ns

pr ov is io ns whi ch are di ffer en t fro m an d "i nc on si st en t w i t h " th e ta rif f. The di st ric t

co ur t fo un d th at Free Co nf eren ci ng "k ne w ab ou t th e ta rif f, it s rat es

, an d th e

ob li ga ti on s of th e pa rti es bo un d by th e ta rif fs ." It st rai ns cred ul it y to be li ev e th at Free

Co nf eren ci ng in te nd ed to act la wfu ll y whe n it en te red in to a co nt ract un de r whi ch it

pr of it ed fro m San co m 's un la wfu l bi ll in gs to Qwest

. Mo reo ve r, Eric ks on 's te st im on y

,

th at he "d id no t h av e an y m ot iv at io n to op erat e hi s b us in es s o ut si de th e ta rif fs " an d

to ok st ep s to co m

pl y wit h th e ta rif

f, co nf li ct s wit h th e di st ric t co ur t's own fin di ng th at

th e co nt ract was "s pe ci fic al ly de si gn ed " to tak e ad va nt ag e of th e ta rif f. The di st ric t

co ur t's fin di ng th at Free Co nf eren ci ng ha d no im

pr op er mo ti va ti on is cl earl y

erro ne ou s be cau se it is in te rn al ly i n co ns is te nt wit h th e co ur t's ot he r fin di ng s an d

co nt rad ic ts th e FCC 's fa ct ua l fi nd in gs

.

-2 0-Reg ard le ss

, Eric ks on 's su bjec ti ve v i ew ab ou t th e pr op rie ty of hi s co m pa ny's

act io n s is no t rel ev an t to th e le ga l an al y si s in th is cas e. Und er th e Res ta te m en t

ap pr oa ch to to rti ou s in te rfer en ce whi ch So ut h Dako ta fo ll ows

, "ev en if an act or ha s

a le gi ti m at e m ot iv e or pu rp os e fo r it s ac t i on s, if th e act or ha s kn owl ed ge of th e

co ns eq ue nc es of it s act s, th en it m ay be li ab le fo r to rti ou s in te rfer en ce wit h co nt ract ."

ANR W

. Co a l D e v

. Co

. v. Bas in Elec

. Po wer Co -o p., 27 6 F.3 d 95 7, 97 2 (8 th Ci r.

20 02 ) (an al y zi ng Nor th Dak ot a la w an d se ct io n 76 6 of th e Res ta te m en t (Sec on d) of

Tort s) ; s ee Gru hl ke v. Si ou x Em pi re Fe d. Cr ed it Uni on , Inc ., 75 6 N.W .2d 39 9, 40 6

(S.D. 20 08 ) (n ot in g th at So ut h Dak ot a fo ll ows se ct io n 76 6)

. In So ut h Dak ot a, whe n

th e de fen da nt "h as kn owl ed ge of th e c o n t r act rig ht s of an ot he r, hi s wro ng fu l

in du cem en t of a br each th ereo f is a wil lfu l de st ru ct io n of th e pr op ert y of an ot he r an d

can no t be jus ti fie d on th e th eo ry th at it en ha nc es an d ad va nc es th e bu si ne ss in te res ts

of th e wro ng do er." Lien , 3 9 N.W .2d at 48 6 ( q u o t in g So ren so n v. Ch ev ro le t Mo to r

Co

., 21 4 N.W

. 75 4, 75 6 (Mi nn

. 19 27 )). The m ajor it y ci te s no So ut h Dak ot a cas e fo r

th e pr op os it io n th at an "i nn oc en t m ot iv e" pr ov id es a d e f e n s e to a cl ai m of to rti ou s

in te rfer en ce if th e de fen da nt ha d act ua l kn owl ed ge th at it was in te r f e r i ng wit h a

co nt ract

. See id

. (d efen da nt li ab le "ev en th ou gh he pr om ot ed hi s le gi ti m at e

in te res ts "). Bec a u s e Free Co nf eren ci ng ha d "t he req ui si te kn owl ed ge of th e

in ev it ab le effe ct " of it s own co nt ract wit h S a n c o m, it is li ab le to Qwest

. ANR W

.

Co al Dev. Co ., 27 6 F .3d at 9 72

.

Free Co nf eren ci ng an d San co m were no t "s im pl y at te m pt in g to ta ke ad va nt ag e

of th e un cert ai n reg ul at or y sc he m e at th e ti m e" as th e m ajor it y cl ai m s. Rat he r, th ei r

co nt ract in vo lv ed de li be rat e av oi danc e of fed eral la w. Free Co nf eren ci ng kn ew ab ou t

th e ob li ga ti on s of th e ta rif f whe n it crea te d a sc he m e by whi ch San co m wou ld pa y it

fo r ge ne rat in g cal ls whi ch San co m wou ld ch arg e to Qwest ev en th ou gh th e cal ls were

no t co ve red by th e ta rif

f. The FCC fo un d th at "u nd er th e ag reem en t, San co m wou ld

pa y Free Co nf

e r e n c i n g a pe r-m in ut e fee whe n [Qwes t] pa id San co m 's rel at ed

swi tc he d acce ss bi ll s." San co m

, 28 F.C.C.R. at 19 84

. In ot he r wor ds

, if San co m ha d

no t br each ed it s ta rif

f an d bi ll e d Q wes t, Free Co nf eren ci ng wou ld no t ha ve go tt en

-2 1-pa id

. Thi s fact ua l reco rd sh ows th at

, co nt rary to th e m ajor it y 's co nc lu si on

, th e Free

Co nf eren ci ng bu si ne ss m od el was in fact "b as ed on in du ci ng S a n c o m to br each it s

ta rif f."

The co nt ract Free Co nf

eren ci ng dr aft ed was pr em is ed on a bu si ne ss m od el th at

was un la wfu l at th e ti m e. The m ajor it y 's "l eg al un cert ai nt y " rat io na le is be li ed by it s

own an al y si s of th e ap pl ic ab le la w at th e ti m e th e co nt ract was dr aft ed

. The m ajor it y

co rrec tl y st at es th at th e FCC' s Farm ers II d e c i s io n was "n ot m erel y pr os pe ct iv e

. . .

bu t ret ro sp ect iv e as well

, " a n d t h a t un de r th e la w as de te rm in ed by Farm ers II

"[S an co m ] ne ve r co ul d ha ve bi ll ed [Qwes t] fo r th is tra ffi c" be cau se San co m 's bi ll in g

pr act ic es "wer e n ev er l eg al ." Cre at in g a bu si ne ss m od el whi ch vi ol at es fed eral la w

is no t "ta ki ng ad va nt ag e of le ga l un cert ai nt y " if th e go ve rn m en t has no t yet fil ed an

en fo rcem en t ac ti on ag ai ns t a n ov el sch em e. It i s s im pl y un la wfu l.

II.

I ag ree th at th e di st ric t co ur t ab us ed it s di sc ret io n by gr an ti ng jud gm en t to Free

Co nf eren ci ng on Qwest 's un

jus t en ric hm en t cl ai m

. The ba si s fo r Free Co nf eren ci ng 's

pr of it s un de r it s co nt ract wit h San co m was Qwest 's ta rif f pa y m en ts to San co m

. Free

Co nf eren ci ng was aware of th os e pa y m en ts be cau se th e di st ric t co ur t fo un d it ha d

dr aft ed th e co nt ract

, kn ew ab ou t th e ta rif f, an d th at th e co nt ract was de si gn ed to ta ke

ad va nt ag e of th e ta rif

f. Fo r Free Co nf

eren ci ng to ret ai n i t s s h a r e of Qwest 's ta rif f

pa y m en ts wou ld no t be eq ui ta bl e be cau se th at m on ey was ob ta in ed as pa rt of a wil fu l,

un la wfu l b us in es s p ract ic e.

The di st ric t co ur t rel ie d on th e fact th at Free Co nf eren ci ng pr ov id ed a se rv ic e

to it s own cu st om ers

, an d th at so m e of it s cu st om ers were al so Qwest c u s t o mer s

.

Wh et he r or no t Free Co nf eren ci ng pr ov id ed it s own cu st om ers te le co nf eren ci n g

se rv ic es is irr el ev an t, be cau se it was pr ov id in g th os e se rv ic es so th at it an d San co m

co ul d m ak e m on ey fro m Qwest

. The fac t t ha t so m e Free Co nf eren ci ng cu st om ers

-2 2-us ed Qwest 's lo ng di st an ce se rv ic es is al so irr el ev an t, be cau s e S a n c om was no t

en ti tl ed to bi ll Qwest for

an y of t he cal ls go in g t o Free Co nf eren ci ng . Qwest ne ve r

rece iv ed an y be ne fit fro m Free Co nf eren ci ng 's act io ns (wh ic h in fact co st it m il li on s

of do ll ars ). Qwest is en ti tl ed to da m ag es on it s u nju st en ric hm en t cl ai m

.

III.

Bec au se Qwest 's cl ai m s fo r to rti ou s in te rfer en ce an d un jus t en ric h men t can

pr ov id e it wit h ad eq ua te rem ed ie s, th e di st ric t co ur t c o r r e c t l y co nc lu de d th at th e

So ut h Dak ot a Su pr em e Co ur t wou ld no t li ke ly reco gn iz e th e ne w to rt of in du ci ng

reg ul at or y vi ol at io ns un de r th e ci rcu m st an ces of th is cas e. See Garre tt v. Ban kWest

,

In c., 45 9 N.W .2d 83 3, 84 2– 43 (S.D. 19 90 ). The m ajor it y su gg es ts So ut h Dak ot a

co ur ts wou ld ne ve r reco gn iz e th is to rt th e o r y, b ut it s co nc lu si on is ba se d on th e

erro ne ou s pr em is e th at Free Co nf eren ci ng "d id no t us e an y un fai r m et ho ds to ga in an

ad va nt ag e ov er Qwest ." On th is reco rd it is cl ear th at Free Co nf eren ci ng 's pu rp os efu l

ab us e o f th e ta rif

f syste m was u nf ai r to Qwest

.

IV.

Qwest is en ti tl ed to reco ve r on it s cl ai m s fo r to rti ou s in te rfer en ce an d un jus t

en ric hm en t

. I t he refo re res pe ct fu ll y di ss en t an d wou ld rev ers e an d rem an d fo r a

cal cu la ti on of Qwes t's da m ag es on th es e cl ai m s.

__ __ __ __ __ __ __ __ __ __ __ __ __ __ __

-2 3-