Source: http://supreme.nolo.com/us/524/214/case.html
Timestamp: 2019-04-23 00:06:50+00:00

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David W Carpenter argued the cause for petitioner.
With him on the briefs were Carter G. Phillips, Thomas W Merrill, Peter D. Keisler, and Marc E. Manly.
JUSTICE SCALIA delivered the opinion of the Court. Respondent Central Office Telephone, Inc. (COT), a reseller of long-distance communications services, sued petitioner AT&T, a provider of long-distance communications services, under state law for breach of contract and tortious interference with contract. Petitioner is regulated as a common carrier under the Communications Act of 1934, 48 Stat. 1064, as amended, 47 U. S. C. § 151 et seq. The issue before us is whether the federal filed-tariff requirements of the Communications Act pre-empt respondent's state-law claims.
Respondent purchases "bulk" long-distance servicesvolume-discounted services designed for large customersfrom long-distance providers, and resells them to smaller customers. Like many other resellers in the telecommunications industry, respondent does not own or operate facilities of its own; it is known as a "switchless reseller," which is the industry nomenclature for arbitrageur. Of course respondent passes along only a portion of the bulk-purchase discount to its aggregated customers, and retains the remaining discount as profit.
*Gary M. Epstein, Maureen E. Mahoney, Teresa D. Baer, Walter H.
Alford, William B. Barfield, M. Robert Sutherland, and Michael J. Zpevak filed a brief for the United States Telephone Association et al. as amici curiae urging reversal.
Henry D. Levine, Ellen G. Block, and James S. Blaszak filed a brief for the Ad Hoc Telecommunications Users Committee et al. as amici curiae.
observe certain substantive requirements imposed by that law. Section 203 of the Act requires that common carriers file "schedules" (also known as "tariffs") containing all their "charges" for interstate services and all "classifications, practices, and regulations affecting such charges." § 203(a). The Federal Communications Commission (FCC), which is the agency responsible for enforcing the Act, requires carriers to sell long-distance services to resellers such as respondent under the same rates, terms, and conditions as apply to other customers.
Prior to 1989, petitioner had developed a type of longdistance service known as Software Defined Network (SDN), designed to meet the needs of large companies with offices in multiple locations. SDN established a "virtual private network" that allowed employees in different locations to communicate easily. For example, an employee in Washington could call a co-worker in Denver simply by dialing a four-digit extension. SDN customers, in exchange for a commitment to purchase large volumes of long-distance communication time, received this service at a rate much below what it would otherwise cost.
rates for customers making large usage and duration commitments, and waiver of installation charges for customers making multiyear commitments (subject to penalties for early termination). Petitioner also added a new billing option. In addition to network billing, whereby petitioner prepares a single bill that applies the tariffed rate to all usage at all locations, petitioner started to offer multilocation billing (MLB), which allows the SDN volume discounts to be apportioned between an SDN customer and individual locations on its network, with the proportion being chosen by the customer. Under this option, petitioner sends bills directly to the customer's individual locations (which, in the case of resellers, means to the reseller's customers) but the customer (or reseller) remains responsible for all payments. The tariff provides, however, that petitioner is not responsible for the allocation of charges. See AT&T Tariff FCC No.1, § 6.2.4 (1986), App. to Brief for Petitioner 24a.
selected.'" Brief for Petitioner 14. Respondent accepted these terms in writing on October 30, 1989.
By February 1990, it had become apparent that the demand for SDN exceeded petitioner's expectations-largely because of the switchless resellers attracted to the service. Petitioner could not fill the volumes of switched-access orders as rapidly as dedicated access orders, or as quickly as petitioner's personnel had predicted. Accordingly, Ms. Kisor notified respondent that it would take up to 90 days to add new locations after the initial SDN was established. She suggested placing respondent's customers with another AT&T service, the Multilocation Calling Plan (MLCP), until they could be placed on SDN. Respondent agreed to this, and ordered MLCP. Again, respondent signed a letter confirming that MLCP "'is provided under the terms and conditions stated in AT&T's Tariff F. C. C. Nos. 1 and 2.'" Brief for Appellant in Nos. 94-36116, 94-36156 (CA9), p. 15.
Ms. Kisor informed respondent that its initial SDN network was functioning in April 1990. At that point, respondent elected to increase to a larger SDN volume commitment in order to qualify for a larger discount. In placing this order, respondent signed a form stating that the SDN service "'WILL BE GOVERNED BY THE RATES AND TERMS AND CONDITIONS IN THE APPROPRIATE AT&T TARIFFS.'" Brief for Petitioner 14-15. Respondent then began reselling SDN to its own customers and placing orders with petitioner that required petitioner to treat respondent's customers as if they were new locations on a corporate SDN.
ing. Although respondent continued to resell SDN, it was ultimately unable to meet its usage commitment for the first period in which it was applicable. In September 1992, respondent notified petitioner that it was terminating its SDN service effective September 30,1992, with 18 months remaining on its contract.
from April to October 1990, and to obtain the termination charges that respondent did not pay in 1992.
Throughout the proceedings in District Court, petitioner argued that respondent's state-law contract and tort claims were pre-empted by the filed-tariff requirements of § 203 of the Act. The Magistrate Judge rejected this argument and instructed the jury to consider not only the written subscription agreements, but also any statements made or documents furnished before the parties signed the agreements "'if you find that the parties intended that those statements or written materials form part of their agreements.'" Brief for Petitioner 18. The Magistrate Judge also instructed the jury that it could not find for respondent on its contract claims unless it found that petitioner engaged in willful misconduct. He declined to instruct on punitive damages for the tortious-interference claim. The jury found for respondent on its state-law claims, rejected petitioner's counterclaim, and awarded respondent $13 million in lost profits. The Magistrate Judge reduced the judgment to $1.154 million, which represented the lost profits respondent claimed during the period before it canceled SDN on September 30, 1992; he found that there was no competent evidence for lost profits after that date. The Court of Appeals, over a dissent by Judge Brunetti, affirmed the judgment but reversed the Magistrate Judge's failure to instruct on punitive damages and remanded for a trial on that aspect of the case. 108 F.3d 981 (CA9 1997). We granted certiorari to determine whether the federal filed-rate requirements of § 203 pre-empt respondent's claims. 522 U. S. 1024 (1997).
"Under the Interstate Commerce Act, the rate of the carrier duly filed is the only lawful charge. Deviation from it is not permitted upon any pretext. Shippers and travelers are charged with notice of it, and they as well as the carrier must abide by it, unless it is found by the Commission to be unreasonable. Ignorance or misquotation of rates is not an excuse for paying or charging either less or more than the rate filed. This rule is undeniably strict and it obviously may work hardship in some cases, but it embodies the policy which has been adopted by Congress in the regulation of interstate commerce in order to prevent unjust discrimina ti on."
Thus, even if a carrier intentionally misrepresents its rate and a customer relies on the misrepresentation, the carrier cannot be held to the promised rate if it conflicts with the published tariff. Kansas City Southern R. Co. v. Carl, 227 U. S. 639, 653 (1913).
While the filed rate doctrine may seem harsh in some circumstances, see, e. g., Maislin Industries, U. S., Inc. v. Primary Steel, Inc., 497 U. S. 116, 130-131 (1990), its strict application is necessary to "prevent carriers from intentionally 'misquoting' rates to shippers as a means of offering them rebates or discounts," the very evil the filing requirement seeks to prevent. Id., at 127. Regardless of the carrier's motive-whether it seeks to benefit or harm a particular customer-the policy of nondiscriminatory rates is violated when similarly situated customers pay different rates for the same services. It is that antidiscriminatory policy which lies at "the heart of the common-carrier section of the Communications Act." MCI Telecommunications Corp. v. American Telephone & Telegraph Co., supra, at 229.
force any classifications, regulations, or practices affecting such charges" except those set forth in the tariff, § 203(c).
Unsurprisingly, the cases decided under the ICA make it clear that discriminatory "privileges" come in many guises, and are not limited to discounted rates. "[A] preference or rebate is the necessary result of every violation of [the analog to § 203(c) in the ICA] where the carrier renders or pays for a service not covered by the prescribed tariffs." United States v. Wabash R. Co., 321 U. S. 403, 412-413 (1944). In Chicago & Alton R. Co. v. Kirby, 225 U. S. 155 (1912), we rejected a shipper's breach-of-contract claim against a railroad for failure to ship a carload of race horses by a particularly fast train. We held that the contract was invalid as a matter of law because the carrier's tariffs "did not provide for an expedited service, nor for transportation by any particular train," and therefore the shipper received "an undue advantage ... that is not one open to others in the same situation." Id., at 163, 165. Similarly, in Davis v. Cornwell, 264 U. S. 560 (1924), we invalidated the carrier's agreement to provide the shipper with a number of railroad cars on a specified day; such a special advantage, we said, "is illegal, when not provided for in the tariff." Id., at 562. See also Kansas City Southern R. Co. v. Carl, supra, at 653; Wight v. United States, 167 U. S. 512, 517-518 (1897); 1. Lake, Discrimination by Railroads and Other Public Utilities 310-315 (1947).
viz., faster provisioning, the allocation of charges through multilocation billing, and various matters relating to deposits, calling cards, and service support, see 108 F. 3d, at 987988-all pertain to subjects that are specifically addressed by the filed tariff. See AT&T Tariff FCC No.1, § 2.5.10 (provisioning of orders); § 6.2.4 (allocation of charges); § 2.5.6 (deposits); § 2.5.12.B (calling cards); § 6.2.5 (service supports).
The Ninth Circuit agreed that all of respondent's claims except those relating to provisioning and billing would be pre-empted if the filed rate doctrine applied. 108 F. 3d, at 990. But even provisioning and billing are, in the relevant sense, "covered" by the tariff. For example, whereas respondent asks to enforce a guarantee that orders would be provisioned within 30 to 90 days, the tariff leaves it up to petitioner to "establis[h] and confir[m]" a due date for provisioning, requires that petitioner merely make "every reasonable effort" to meet that due date, and if it fails gives the customer no recourse except to "cancel the order without penalty or payment of nonrecurring charges." § 2.5.10(B). Faster, guaranteed provisioning of orders for the same rate is certainly a privilege within the meaning of 47 U. S. C. § 203(c) and the filed rate doctrine. Cf. Chicago & Alton R. Co. v. Kirby, supra, at 163 (refusing to enforce promise for faster, guaranteed service not included in the tariff). As for billing, whereas respondent claims that, pursuant to the MLB option, petitioner promised to allocate usage and charges accurately among respondent's customers, the tariff provides that petitioner "will not allocate ... usage or charges" among the locations on the customer's network and "is not responsible for the way that the Customer may allocate usage or charges." AT&T Tariff FCC No.1, § 6.2.4. Any assurance by petitioner that it would allocate usage and charges and take responsibility for the task would have been in flat contradiction of the tariff. See Chesapeake & Ohio R. Co. v. Westinghouse, Church, Kerr & Co., 270 U. S. 260, 266 (1926).
The Ninth Circuit distinguished respondent's claims from those in our filed-rate cases involving special services in one other respect: according to respondent, the "special services" that it sought were provided by petitioner, without charge, to other customers, 108 F. 3d, at 989, n. 9. Even if that were so, the claim for these services would still be pre-empted under the filed rate doctrine. To the extent respondent is asserting discriminatory treatment, its remedy is to bring suit under § 202 of the Communications Act.1 To the extent petitioner is claiming that its own claims for special services are not really special because other companies get the same preferences, "that would only tend to show that the practice was unlawful [with regard to] the others as well." United States v. Wabash R. Co., supra, at 413. Because respondent asks for privileges not included in the tariff, its state-law claims are barred in either case.
1 Eight months after the close of discovery (and well after the 2-year statute of limitations in the Communications Act, § 415), respondent sought leave to file a second amended complaint to add a § 202 claim. The Magistrate Judge denied the request. Respondent did not appeal that ruling.
36156 (CA9), p. 33. Respondent can no more obtain unlawful preferences under the cloak of a tort claim than it can by contract. "The rights as defined by the tariff cannot be varied or enlarged by either contract or tort of the carrier." Keogh v. Chicago & Northwestern R. Co., 260 U. S. 156, 163 (1922); see also Maislin, 497 U. S., at 126.
for our review ("Whether ... the Ninth Circuit improperly allowed statelaw contract and tort claims based on a common carrier's failure to honor an alleged side agreement to give its customer better service than called for by the carrier's tariff") nor was raised by respondent as an alternative ground in support of the judgment. Nor has respondent ever suggested the need for a remand, even though the petition for certiorari sought not merely reversal, but summary reversal. In its brief on the merits, respondent argued that the intentional tort claim was not pre-empted because AT&T's willful breach of its contractual commitments was not protected by the filed rate doctrine. There was no hint of an argument that, even if that willful breach could not form the basis for an action, other alleged intentional acts sufficed to support the judgment below. At no point has respondent disputed the Magistrate Judge's finding that the tort claim is derivative of the contract claim, or the Ninth Circuit's description of its tort claim as based on the fact that "because COT had promised certain benefits of SDN to its customers, and because AT&T provided competing services, any violation of AT&T's contractual duties constituted tortious interference with COT's relationship with its customers." 108 F.3d 981, 988 (1997). Contrary to the dissent's assertion, we have no obligation to search the record for the existence of a nonjurisdictional point not presented, and to consider a disposition (remand instead of reversal) not suggested by either side.
right, the continued existence of which would be absolutely inconsistent with the provisions of the act. In other words, the act cannot be held to destroy itself." Texas & Pacific R. Co. v. Abilene Cotton Oil Co., 204 U. S. 426, 446 (1907).
Because respondent's state-law claims are barred by the filed rate doctrine, we reverse the judgment of the Ninth Circuit.
against AT&T amount to no more than an intentional refusal to provide services to respondent in an amount or manner contrary to the filed tariff.
I write separately to note that this finding is necessary to the conclusion that respondent's state-law tort claim may not proceed. As the majority correctly states, the filed rate doctrine exists to protect the "antidiscriminatory policy which lies at 'the heart of the common-carrier section of the Communications Act.'" Ante, at 223. Central to that antidiscriminatory policy is the notion that all purchasers of services covered by the tariff will pay the same rate. The filed rate doctrine furthers this policy by disallowing suits brought to enforce agreements to provide services on terms different from those listed in the tariff. This ensures that the tariff governs the terms by which the common carrier provides those services to its customers.
tage in that it is not one open to all others in the same situation." Id., at 165.
"The legal rights of shipper as against carrier in respect to a rate are measured by the published tariff. Unless and until suspended or set aside, this rate is made, for all purposes, the legal rate, as between carrier and shipper. The rights as defined by the tariff cannot be varied or enlarged by either contract or tort of the carrier." Ibid. (emphasis added).
In this case respondent's contract claim seeks to enforce side arrangements that it made with petitioner. Respondent contends that petitioner promised to provide it with services on terms different from those listed in the tariff. As the above cases make clear, the filed rate doctrine bars such a claim. Respondent's tort claim is entirely derivative of its contractual claim, and the Court is therefore correct in concluding that the doctrine also bars the tort claim.
actions based in state law. It is with this understanding that I join the Court's opinion.
Everyone agrees that respondent's tortious interference claim would be barred by the filed rate doctrine if it is "wholly derivative of the contract claim for additional and better services." Ante, at 226 (majority opinion); ante, at 228 (REHNQUIST, C. J., concurring). Moreover, it is true that when the Magistrate Judge ruled that respondent's case would not support a punitive damages award as a matter of state law, he characterized the tort claim as "stem[ming] from the alleged failure of AT&T to comply with its contractual relationship." Tr. 2207. In my opinion, however, the jury's verdict on respondent's tort claim is supported by evidence that went well beyond, and differed in nature from, the contract claim.
If petitioner, in an effort to appropriate respondent's customers, had included with each bill sent to a customer a statement expressly characterizing respondent as an unethical, profit-hungry middleman, I would think it clear that the filed rate doctrine would not constitute a defense to such tortious conduct. The evidence in the record indicates that a similar result was obtained by mailing bills to the customers that disclosed the markup that respondent obtained on their calls.
"COT asserts that AT&T intentionally interfered with its business relations and expectations of future business relations with its customers, the end users of its SD N service. In order to prevail on this claim, COT must prove by a preponderance of the evidence, one, that COT had business relations with the probability of future economic benefit. Two, that AT&T was aware of the relationships and expectation of future benefits. Three, that AT&T intentionally interfered with COT's business relations. Four, that AT&T interfered for an improper motive or by using improper means. And, five, that COT suffered economic injury as a result of the interference." App. 71.
It may be the fact that the billing disclosures and slamming were the consequence of negligence rather than a deliberate plan to take over a network of customers that respondent had developed, but the jury concluded otherwise. It found that petitioner acted intentionally and willfully in interfering with respondent's business relations. See ibid.2 That finding is doubly significant.
1 "[D]espite repeated requests by COT to AT&T, AT&T failed to rectify incidents of unauthorized changes made in the designated carriers ('slamming') of COT's customers." App. 28.
2 The jury's $13 million damages award, reduced by the Magistrate Judge to $1.154 million, did not differentiate between the contract and tort claims.
First, as the Court acknowledges, ante, at 228, the jury's finding precludes a defense based on the provisions of the tariff that purport to limit petitioner's liability. Second, and of greater importance, it determines that the most egregious tortious conduct was not merely derivative of the contract violations. Enforcement of respondent's state-law right to be free from tortious interference with business relations does not somehow award respondent an unlawful preference that should have been specified in the tariff (presumably in return for an added fee or higher rate); it instead gives effect to a generally applicable right that petitioner is required, by state law, to respect in dealing with all others, customers and noncustomers alike. Thus, at least some of the tortious interference occurred independently of the customer-carrier relationship and would have been actionable even if respondent had never entered into a contract with AT&T.
saving clause 3 means anything, it preserves state-law remedies against carriers on facts such as these.
3"Nothing in this chapter contained shall in any way abridge or alter the remedies now existing at common law or by statute, but the provisions of this chapter are in addition to such remedies." 47 U. S. C. § 414.
4 Beyond the billing disclosures and slamming, respondent asserts that AT&T also misappropriated customer information from respondent's confidential data base. Brief for Respondent 4. That basis for a tort remedy, if supported by sufficient evidence, would also appear not to be pre-empted by the filed rate doctrine.
simply rely on AT&T's bald assertion, supported only by a statement of the Magistrate taken out of context, that the tort claim is "wholly derivative"; we have an obligation either to study the record or at least to remand and allow the lower courts to consider the proper application of the legal rule to the facts of this case.

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