Court Opinion

ID: 6945071
Source: CourtListenerOpinion
Date Created: 2022-07-24 01:22:03.116407+00
Date Added: 2024-06-11T16:07:52.208073
License: Public Domain

BRUNETTI, Circuit Judge,
dissenting:
I dissent because I believe that the filed-rate doctrine preempts COT’s state-law claims. I would reverse the magistrate judge’s legal conclusion that the doctrine does not do so and mandate that the court dismiss COT’s preempted state-law claims.
The majority concludes that the filed-rate doctrine does not preempt COT’s claims because: (a) the ease involves the provisioning of services rather than rate-setting; or alternatively, (b) the services at issue were not covered by the tariff. Both proffered reasons misinterpret the filed-rate doctrine.
A. Both Rates and Corresponding Services Are Covered by the Filed-Rate Doctrine.
To avoid being an empty letter, the filed-rate doctrine must encompass both rates and the services corresponding to those rates. The opinion erroneously narrows the scope of the doctrine by stating that “[b]ecause this case does not involve rates or rate-setting, but rather involves the provisioning of services and billing under several contracts, the filed-rate doctrine does not apply.”
The Communications Act provides that “[e]very common carrier ... shall ... file with the Commission and print and keep open for public inspection schedules showing all charges ... and showing the classifications, practices, and regulations affecting such charges.” 47 U.S.C. § 203(a). The plain language of the statute mandates that tariffs include both rates and underlying services. Limiting the filed-rate doctrine to the rate-setting portion of the tariff undermines the goal which Congress expressed in section 203(a): the provision of rates and services in a nondiscriminatory manner.
In its most recent examination of this issue, the Supreme Court repeatedly stressed section 203(a)’s importance: “[t]he tariff-filing requirement is ... the heart of the common-carrier section of the Communications Act.” MCI v. AT&T, 512 U.S. 218, 229-30, 114 S.Ct. 2223, 2231, 129 L.Ed.2d 182 (1994). “[R]ate filing was Congress’s chosen means of preventing unreasonableness and discrimi*995nation in charges.... ” Id. “Rate filings are, in fact, the essential characteristic of a rate-regulated industry.” Id. at 231, 114 S.Ct. at 2232.
Although the majority’s interpretation would hold otherwise, rates have no meaning unless tied to corresponding services. Yet the majority argues that only the rate portions of the tariff are subject to preemption. Extending this analysis, carriers would be bound only to those rates and not to the corresponding services. If this were so, carriers could easily devise schemes to avoid the Communications Act’s fairness requirements. In truth, regulation of rates divorced from services amounts to no regulation at all. For the requirements of the Communications Act to possess any import, both the rates and corresponding services must be covered by the filed-rate doctrine.
An examination of the tariff at issue illustrates this point. AT&T’s tariff prescribes not only the rates for various types of services, but also AT&T’s rights and liabilities in each of the areas in which COT claims that AT&T breached its obligations. These include: provisioning orders, billing, providing calling cards, requiring deposits and providing the long distance service itself. See, e.g., AT&T Tariff F.C.C. No. 1, § 2.5.10 (provisioning), § 6.2.4 (billing), § 2.5.12.B (calling card), § 2.5.6 (deposits), § 6.2.5 (service support). The service specifics are clearly delineated in the tariff itself.
It is both counterintuitive and inconsistent with the traditional importance of the Communications Act to suppose that the filed-rate doctrine would encompass the rates in the tariff, but not the services contained in the same document. See MCI, 512 U.S. at 219-25, 114 S.Ct. at 2226-28 (detailing historical importance of Communications Act). To hold that anything less than all material aspects of the provided services are covered by the tariff eviscerates the “heart” of the Communications Act.
B. Because the Services at Issue Were Not Covered by the Tariff, COT’s Claims Are Preempted.
The majority also concludes that the filed-rate doctrine does not preempt COT’s claims because the tariff did not cover the services at issue. Although they are correct in asserting that the services were not in .the tariff, it is precisely for this reason that COT’s claims are preempted. AT&T is simply barred from contracting for non-tariffed services. To analyze this transaction it is necessary to examine both the filed-rate doctrine and . the specific tariff at issue.
In its most general terms, a filed tariff controls the legal relationship between a long-distance carrier and its customers. See Maislin Indus. v. Primary Steel, Inc., 497 U.S. 116, 126, 110 S.Ct. 2759, 2765, 111 L.Ed.2d 94 (1990) (“This Court has long understood that the filed rate governs the legal relationship between shipper and carrier”). As the authorities cited by the majority acknowledge, AT&T is not allowed to provide services without filing a tariff setting the rate and all “classifications, practices, and regulations” corresponding to the rate. Furthermore, “[t]he rights as defined by the tariff cannot be varied or enlarged by either contract or tort of the carrier....” Id. (quoting Keogh v. Chicago & Northwestern Ry. Co., 260 U.S. 156, 163, 43 S.Ct. 47, 49-50, 67 L.Ed. 183 (1922)). If AT&T could simply contract for untariffed services, it would never have to file a tariff in the first place and the filed-rate doctrine would be rendered meaningless.
However, COT argues, and the majority agrees, that AT&T entered into an enforceable contract for services which were not covered by the tariff. This argument misreads the filed-rate doctrine, which expressly prohibits a carrier from contracting for services not covered by the published tariff.
Chicago & Alton R.R. v. Kirby, 225 U.S. 155, 32 S.Ct. 648, 56 L.Ed. 1033 (1912), a case the majority addresses in a footnote, illustrates the operation of the doctrine. (Majority Opinion, footnote number 9). In Kirby, a carrier contracted with a shipper to deliver cargo on a expedited basis. When the carrier failed to perform, the shipper sued for breach of contract. The Supreme Court held that the contract was invalid under the filed-rate doctrine because the carrier’s tariffs “did not provide for an expedited service, nor *996for transportation by any particular train” and gave “an advantage or preference not open to all and not provided for in the published tariffs.” Id. 163-66, 32 S.Ct. at 650. See also Davis v. Cornwell, 264 U.S. 560, 44 S.Ct. 410, 68 L.Ed. 848 (1924), Atchison, T. & S.F. Ry. v. Robinson, 233 U.S. 173, 34 S.Ct. 556, 58 L.Ed. 901 (1914).
The majority attempts to distinguish Kirby and its progeny by reasoning that COT is not seeking to obtain for the tariffed rate extra services not covered in the tariff, but is merely seeking the same services provided to AT&T’s other customers. This is incorrect. COT is seeking services that are not covered in the tariff at the tariffed rate.
The majority also argues that COT’s claims are not preempted because MLB, the option originally chosen by COT, was not covered by the tariff. Although the magistrate judge ruled that MLB was not a tar-iffed service, that decision is irrelevant to the result here. If the majority and the magistrate judge correctly identify MLB as a non-tariffed service, then Kirby dictates that AT&T was prohibited from entering into that agreement and it is now invalid. If, as AT&T claims, MLB was a tariffed service, then the filed-rate doctrine prohibits COT’s state law claims. In either ease, COT has no state-law claims against AT&T for MLB service.
The majority utilizes AT&T’s expert testimony to conclude that neither the billing procedures nor the provision of SDN services were covered by the tariff. Again, this is of no import. If those service were not covered by the tariff, the agreements were invalid and COT cannot now attempt to enforce them. If they were tariffed, they are preempted by the filed-rate doctrine.
While the filed-rate doctrine may create harsh consequences in some instances, the Supreme Court has consistently adhered to it because of the overarching policy of the Act, namely, prevention of discrimination. See Maislin, 497 U.S. at 128, 110 S.Ct. at 2766-67. Accordingly, a court is required to ignore allegations of fraud or other inequitable conduct in determining whether to apply the doctrine. “Rather, the focus for determining whether the filed rate doctrine applies is the impact the court’s decision will have on agency procedures and rate determinations.” H.J. Inc. v. Northwestern Bell Tel. Co., 954 F.2d 485, 489 (8th Cir.), cert. denied, 504 U.S. 957, 112 S.Ct. 2306, 119 L.Ed.2d 228 (1992). An examination of the filed tariff at issue, AT&T Tariff F.C.C. No. 1, proves instructive for this purpose.
Initially, the tariff sets forth the provisioning standards for establishing and confirming a due date when an order for SDN service is placed. In addition, AT&T must “make every reasonable effort to assure” that it is delivered on time, but if there is a delay in excess of 45 days, “the Customer may cancel the order without penalty or payment or nonrecurring-charges.” (§ 2.5.10.B). Under the tariff, the customer is responsible for payment of bills, except for the Location Account Billing Option, to which COT did not subscribe. For that option, AT&T “is not responsible for the way the Customer may allocate usage or charges among multiple Users.” (§ 6.2.4).
For calling cards, the tariff provides that “[e]alls charged to a Local Exchange Company Calling Card or an AT&T Card will ... be included on the LDMTS bill for the Main Billed Account with which the card is associated.” (§ 2.5.12.B). The tariff also delineates deposit provisions for customers who have a “proven history of late payments ... or whose financial responsibility is not a matter of record.” It requires those customers to “make a deposit to be held as a guarantee for the payment of charges.” (§ 2.5.6.A).
The tariff’s service provision states that “Custom Network Services are fully supported by the Company through engineering, installation and maintenance efforts. The Company will assure that each service functions properly within its specified transmission and switching parameters.” (§ 6.2.5). “When installation of a component is required it will be installed subject to the availability of installation personnel and equipment.” (§ 6.2.5.B).
As these excerpts illustrate, the tariff is an exhaustive document, covering numerous types of service and contingencies between AT&T and its customers. The above-cited *997sections are material to COT’s claims concerning delay and provisioning and its claims should have been addressed by looking to the tariffs provisions in the context of the Communications Act.
AT&T adopts this position, arguing that the filed-rate doctrine preempts COT’s claims because COT is seeking to enforce a contract for services not provided for in the tariff. COT is therefore impermissibly seeking “an advantage or preference not open to all and not provided for in the published tariffs.” Kirby, 225 U.S. at 166, 32 S.Ct. at 650.
As noted earlier, COT counters that the filed-rate doctrine does not apply because COT was not demanding better service for the tariffed rate. Instead, COT argues that “while COT paid the same rates as AT&T’s favored corporate customers, COT was given inferior SDN service and denied SDN features that were provided to AT&T’s favored customers.” However, if this truly were COT’s claim, its remedy was to bring a suit for discrimination under 47 U.S.C. §§ 202, 206, and 207.1
COT also argued that “it is elementary” that the filed-rate doctrine does not apply to untariffed services, or in other words, that common-law applies to fill in gaps left in tariffs. The majority accepts this contention. However, none of the three cases cited by COT support this “elementary” proposition. MCI v. Credit Builders of Am., Inc., 980 F.2d 1021, 1022-23 (5th Cir.), vacated, 508 U.S. 957, 113 S.Ct. 2925, 124 L.Ed.2d 676, reinstated, 2 F.3d 103, cert. denied, 510 U.S. 978, 114 S.Ct. 472, 126 L.Ed.2d 424 (1993), holds only that a carrier’s suit to collect unpaid tariffed charges does not “arise under” federal law within the meaning of 28 U.S.C. §§ 1331 and 1337. This holding is irrelevant to this case.2 Security Servs. Inc. v. K Mart Carp., 511 U.S. 431, 443-45, 114 S.Ct. 1702, 1710, 128 L.Ed.2d 433 (1994), held only that a carrier cannot base a rate collection action on a tariff that is void. This is also inapplicable here.
Finally, US Wats, Inc. v. AT&T, No. Civ.A 93-1038, 1994 WL 116009 (E.D.Pa. Apr.5, 1994), comes closest to supporting COT’s proposition. There, the district court rejected AT&T’s argument that the filed-rate doctrine preempted the plaintiffs breach of contract claim for refusing to transfer end users from one SDN to another because such a claim “will neither result in rate discrimination nor embroil the court in a dispute over the reasonableness of AT&T’s charges in contravention of the FCC’s ratemaking authority.” Id. at *5.3 Under US Wats, COT’s claims are viable only if they would not result in rate discrimination.4
In footnote number 9, the majority cites Kirby, Davis and Atchison to refute AT&T’s argument that “the filed-rate doctrine precludes a carrier from entering into ‘side-deals’ which give preference to certain customers and are not defined in the filed-rates.” However, these cases all dealt with service provisions that were not specified in *998the tariff. It was precisely because the service provisions were not included in the tariff that the Supreme Court held that they were not enforceable as a matter of contract law.
COT also argues that the “savings clause” of 47 U.S.C. § 414 preserves its state-law claims. That section states: “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.” Initially, it is important to note that the Interstate Commerce Act contained an identical savings clause at the time of the Supreme Court’s decision in Kirby. See 49 U.S.C. § 22.
In Texas & Pac. Ry. v. Abilene Cotton Oil Co., 204 U.S. 426, 27 S.Ct. 350, 51 L.Ed. 553 (1907), the plaintiff brought a eommon7law state action arguing that a shipper’s published rates were unreasonable and discriminatory. Id. at 430, 27 S.Ct. at 351. The Court held the action to be preempted despite the savings clause. Id. at 446, 27 S.Ct. at 357-58. As later described in Nader v. Allegheny Airlines, 426 U.S. 290, 298-99, 96 S.Ct. 1978, 1984-85, 48 L.Ed.2d 643 (1976), the Abilene Cotton Court “found that the continuance of private damages actions attacking the reasonableness of rates subject to the regulation of the Interstate Commerce Commission would destroy the purpose of the Interstate Commerce Act, which was to eliminate discrimination by requiring uniform rates.”
In Nader, the plaintiff brought a common-law action against an airline seeking damages sustained as a result of its overbooking practices. 426 U.S. at 292-93, 96 S.Ct. at 1981-82. The Court, distinguishing Abilene Cotton, concluded that the action was not preempted because the Court was not being called upon to make a determination of the reasonableness of a rate or practice that could be contrary to the regulatory agency’s decision. Id. at 299, 96 S.Ct. at 1984-85. Any impact on rates, reasoned the Court, “would be merely incidental.” Id. at 300, 96 S.Ct. at 1985.
In Cooperative Communications, Inc. v. AT&T, 867 F.Supp. 1511 (D.Utah 1994), an aggregator brought suit against AT&T. The district court held that the savings clause “preserves causes of action for breaches of duties distinguishable from those created under the Act.” Id. at 1516. In other words, “state-law remedies which do not interfere with the Federal government’s authority over interstate telephone charges or services, and which do not otherwise conflict with an express provision of the Act, are preserved by section 414.” Id. (quoting Kellerman v. MCI, 112 Ill.2d 428, 98 Ill.Dec. 24, 493 N.E.2d 1045, 1051, cert. denied, 479 U.S. 949, 107 S.Ct. 434, 93 L.Ed.2d 384 (1986)). The plaintiff alleged that AT&T attempted to drive it out of business by making intentional misrepresentations to the plaintiff’s clients, by misappropriating plaintiff’s confidential client billing information, and by attempting to destroy plaintiff’s customer base. Id. at 1514. The court held the claims based on these allegations were not preempted. Id. at 1516.
Cooperative Communications is distinguishable because it did not involve a relationship between AT&T and its customer and did not implicate AT&T’s duties under § 203. Because COT’s claims seek better (or different) service than is published in AT&T’s tariff, the savings clause does not save COT’s claims.' As in Kirby, the plaintiffs claims interfere with the purpose of the Act because they seek treatment that is- different from the published tariff.
COT also argues that even if the filed-rate doctrine applies, its state-law claims remain viable because it was required to prove, in accordance with the tariff, that AT&T engaged in “willful misconduct.” The tariff provides that the “Company’s liability, if any, for its willful misconduct is not limited by this tariff.” (§ 2.3.I.A.) AT&T argues that COT’s claims are nevertheless preempted because the “willful conduct” consisted of willfully failing “to implement the very alleged side deals that are illegal and that would have given COT illegal preferences over other similarly-situated customers (i.e. resellers).”
AT&T’s argument is supported by Supreme Court precedent. In Louisville & Nashville R. Co. v. Maxwell, 237 U.S. 94, 35 S.Ct. 494, 59 L.Ed. 853 (1915), the Court held *999that a passenger who purchased a train ticket at a rate misquoted by the ticket agent did not have a defense against the subsequent collection of the higher tariff rate by the railroad. As described by the Court in Maislin, the Maxwell Court’s approach “was deemed necessary to prevent carriers from intentionally ‘misquoting’ rates to shippers as a means of offering them rebates or discounts.” 497 U.S. at 127, 110 S.Ct. at 2766.
That AT&T willfully broke its “agreements” with COT should not alter the Kirby preemption analysis. If it could, the Kirby approach to the filed-rate doctrine would be rendered a nullity. That the tariff did not limit AT&T’s liability for “willful misconduct” does not mean that COT should not still have to pursue damages for such misconduct through §§ 202, 206 and 207 of the Act.
C. Conclusion
The outcome that I advocate may appear inequitable. I share the majority’s concerns about AT&T’s conduct in its dealing with COT. However, the Supreme Court has consistently ruled that the filed-rate doctrine’s precepts outweigh any equitable issues. We may question the wisdom of the filed-rate doctrine, but it is the law of the land. See MCI, 512 U.S. at 234, 114 S.Ct. at 2233. (“[0]ur estimations ... of desirable policy cannot alter the meaning of the Federal Communications Act of 1934.”)
I dissent because the majority^ decision is a significant one. The result will allow COT to conduct another trial, where it will present evidence about how badly AT&T treated it and in which the only determination for the jury will be the amount of punitive damages to award to COT. Although this would be the correct disposition if COT’s claims were not preempted, I believe that the filed-rate doctrine bars those claims. Therefore, I dissent.

. On October 22, 1993, eight months after the discovery cut-off and long after the two-year statute of limitations had run (see 47 U.S.C. § 415), COT sought leave to filed a second amended complaint to add a claim that AT&T had engaged in discrimination against resellers in violation of § 202. The magistrate denied COT leave to file this amended complaint and COT does not appeal from this ruling.

. In any event, Ninth Circuit case-law holds the contrary position. Sea-Land Serv. Inc. v. Murrey & Son’s Co., 824 F.2d 740, 744 (9th Cir.1987).

. In addition, it is arguable that US Wats was incorrectly decided because the plaintiff in that case should have properly brought a claim for discrimination under § 202(a) or unreasonable practices under § 201 rather than a claim for breach of contract.

.The two claims that went to trial-breach of contract and tortious interference with COT’s contracts with its customers-both dealt with AT&T’s alleged failure to provide SDN service in accordance with its “contract” with COT. This contract consisted of the tariff plus any oral or written statements not inconsistent with the tariff. Among other claims, COT alleged that AT&T breached the contract by failing to allocate properly the discounts between COT and its customers under Multilocation Billing, and by failing to provide SDN and MLCP services that were "functional” for COT. These claims either allege that AT&T failed to provide service according to the tariff, or are seeking to obtain services according to procedures that are not. provided for in the tariff. Either way, COT’s claims are preempted.