F I L E D
United States Court of Appeals
Tenth Circuit
July 27, 2007
PU BL ISH
Elisabeth A. Shumaker
UNITED STATES COURT O F APPEALS Clerk of Court
TENTH CIRCUIT
UNIO N TELEPHONE COM PANY, a
W yoming corporation,
Plaintiff - Appellant,
v.
No. 06-8012
QW EST CORPO RATION, a Colorado
corporation f/k/a U.S. W est
Communications, Inc.,
Defendant - Appellee.
Appeal from the United States District Court
for the District of W yoming
(D .C . No. 02-CV-209-W FD)
Bruce S. Asay, Associated Legal Group, LLC, Cheyenne, W yoming, for Plaintiff
- Appellant.
Steven J. Perfrement, Holme, Roberts, & Ow en LLP, Denver, Colorado (Roy E.
Hoffinger, M usgrave, & Theis, LLP, Denver, Colorado and Paul Hickey, Hickey
& Evans, LLP, Cheyenne, W yoming with him on the briefs), for D efendant -
Appellee.
Before L UC ER O, A ND ER SO N, and M cCO NNELL, Circuit Judges.
L UC ER O, Circuit Judge.
Union Telephone Company (“Union”) brought suit against Qwest
Corporation (“Qwest”) seeking compensation for telecommunication services
provided by Union to Qwest. The district court granted summary judgment in
favor of Qwest, and Union now appeals. Because Union has failed to present a
valid agreement or tariff that could serve as the basis for its claims for
compensation, we A FFIR M .
I
Union is a telecommunications company operating primarily in W yoming,
with some customers in Colorado and Utah. Its activities are subject to the
Telecommunications Act of 1996 (“1996 A ct”), 47 U.S.C. §§ 153, et seq., as a
telecommunications carrier, and, more specifically, an incumbent local exchange
carrier (“ILEC”). 1 As an ILEC, it provides wireline local and long distance
services 2 to approximately 7000 customers, 6300 of whom are located in
1
A telecommunications carrier is defined as any provider of
telecommunications services. 47 U.S.C. § 153(44). A local exchange carrier
(“LEC”) is a company that provides local telephone service in a particular
geographic area. An ILEC is a LEC that was operating in a particular area on the
date the 1996 Act took effect. § 251(h).
2
Long distance service can refer either to interstate or “interLATA”
service. InterLATA service is short-haul long distance service. Local Access and
Transport Areas (“LA TAs”) were established to define the territory within which
the new Regional Bell Operating Companies (“RBOCs”) could offer long distance
service following the 1982 settlement agreement divesting AT& T of its local
service companies. Colorado is divided into two LATAs, while W yoming and
U tah each comprise a single LA TA.
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W yoming. Union is also a wireless provider, servicing approximately 40,000
wireless subscribers, 30,000 of whom are located in W yoming.
Qwest is a wireline telecommunications carrier and an ILEC, providing
local and intraLA TA service 3 in 14 western states, including W yoming, Colorado,
and Utah. Importantly for this appeal, it also provides “transit” services to other
carriers in this region, meaning that other telecommunications companies may
send calls over Qwest’s network pursuant to agreements that must be approved by
the appropriate state public utilities commission (“PUC”). W hen a Qwest
customer places a call to a telephone user who subscribes to another LEC, such as
Union, Qwest routes the call to that LEC’s network for “termination,” or
completion. Some of the calls Qwest sends to Union are “originated,” or placed,
by Qwest customers, and some are originated by customers of other carriers and
transited over the Qwest network.
Because this case concerns both wireless and wireline telephone calls, a
brief summary of the regulatory framew ork is necessary. W ireless service has
been largely deregulated at the state level but remains subject to FCC regulation.
See 47 U.S.C. § 332(c). State PUCs regulate local and intrastate wireline traffic,
and the FCC sets the rules for interstate wireline traffic. Both wireless and
3
As an RBOC, Qwest was previously prohibited from providing
interLATA service. See 47 U.S.C. § 271(a). However, in 2002 the Federal
Communications Commission (“FCC”) authorized it to provide interLATA
service in Colorado, Utah, and W yoming through a separate affiliate. See Q west
Commc’n Int’l, Inc., 17 F.C.C.R. 26,303, 26,305 (2002).
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wireline calls may be either local or long distance. 4 Compensation for local calls
that originate and terminate with different carriers is determined by reciprocal
compensation agreements. Long distance calls, that is, calls crossing from one
calling area into another, incur a toll, and the originating carrier must compensate
the terminating carrier for terminating the call. 5 For w ireline services, this toll is
called a terminating access charge, and rates are based on filed tariffs.
Significantly, these tariffs apply only to long distance service. For toll calls
traveling between local calling areas within the same state, or intrastate traffic,
state PUCS must approve a LEC’s proposed tariff. By contrast, interstate long
distance service is subject to FCC regulation.
Union and Qwest share a contentious history, having litigated various
aspects of their relationship for over a decade. This litigation involves a
complaint filed by Union in 2000 with the W yoming Public Services Commission
against U.S. W est Communications, Inc. (“U .S. W est”), Qwest’s predecessor.
Union claimed that the interconnection technology U.S. W est used to send traffic
4
For wireless traffic, local calling areas are defined by the M ajor Trading
Areas (“M TAs”). Implementation of the Local Competition Provisions in the
Telecommunications Act of 1996, 11 F.C.C.R. 15,499, 16,014 (1996) (First
Report and Order) [hereinafter “Local Competition Order”]. Thus all intraM TA
calls are local calls. M ost of C olorado and W yoming are in the same M TA.
5
This principle is known as “calling party pays.” Interexchange carriers
such as AT& T or Sprint may also carry traffic from one LA TA to another. In that
case, the interexchange carrier is responsible for paying both the originating LEC
and the terminating LEC for the use of their networks.
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to Union’s network did not allow Union to identify and properly bill the
originating carrier. Union also claimed that U.S. W est refused to compensate it
for toll traffic sent to its network, despite the existence of allegedly applicable
Union tariffs, and on these claims requested an order from the Commission,
directing U.S. W est to pay terminating access charges for all toll traffic routed to
Union by U.S. W est, regardless of which carrier originated the call.
U.S. W est merged w ith Q west, and thereafter both U nion and Qwest
submitted pre-filed testimony and presented witnesses at an evidentiary hearing
before the Commission. M ost of the testimony related to the interconnection
technologies Qwest used to deliver toll traffic. How ever, the commissioners also
inquired into Union’s claim that Qwest was responsible for paying terminating
access fees for all Q west to Union traffic, regardless of where the call originated.
On January 24, 2001, the Commission issued an order dismissing the vast
majority of Union’s claims. It found that “Union [had] cited no authority that the
‘filed rate doctrine’ applies to this case” with respect to Qwest’s alleged duty to
pay termination fees at Union’s tariff rates.
Rather than seek reconsideration or judicial review of the Commission’s
decision, Union filed a complaint in federal court, asserting four claims against
Qwest: (1) breach of tariff, (2) breach of contract, (3) discrimination by a
common carrier, and (4) quantum meruit or unjust enrichment. These claims
relate to two main categories of calls: (1) wireless traffic originated by Qwest
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and transported or terminated by Union in W yoming, Colorado, and Utah, and (2)
wireline, intrastate, long distance traffic transiting Qwest’s network, originated by
a third party and sent through Qwest’s network for termination by Union in
W yoming, Colorado, and Utah. W ireless calls make up the bulk of the traffic at
issue. The district court granted Qwest’s motion for summary judgment,
dismissing all of Union’s claims except for the breach of tariff and contract
claims with respect to wireline traffic terminating in Colorado and Utah. 6
Union now appeals the district court’s grant of summary judgment.
II
W e review a district court’s grant of summary judgment de novo, “applying
the same legal standard used by the district court.” Harrison v. W ahatoyas,
L.L.C., 253 F.3d 552, 557 (10th Cir. 2001). Summary judgment is only
appropriate if the evidence shows that “there is no genuine issue as to any
material fact and that the moving party is entitled to a judgment as a matter of
law.” Fed. R. Civ. P. 56(c).
III
Union’s breach of tariff and contract claims arise with respect to a number
of distinct types of traffic. W e consider first its wireless traffic claims, which
consist of: intraM TA calls; interM TA, intrastate calls; and interM TA, interstate
6
Union later moved to dismiss those remaining claims without prejudice,
and the district court granted its motion.
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calls. W e then consider wireline calls, which on appeal are comprised solely of
calls terminated in W yoming.
A
Pursuant to the 1996 Act, all LECs have a duty to “establish reciprocal
compensation arrangements for the transport and termination of
telecommunications.” 47 U.S.C. § 251(b)(5). Compensation for terminating
intraM TA, or local, wireless calls is determined by rates in these interconnection
agreements and not by access charges contained in filed tariffs. Local
Competition Order, 11 F.C.C.R. at 16014. As the Local Competition Order makes
clear, these federal regulations bar Union from applying tariff-based access
charges to intraM TA wireless traffic. Despite this fact, Union argues that it may
apply its state tariffs to intraM TA wireless traffic based on a 2005 FCC decision,
Developing a Unified Intercarrier Compensation Regime, 20 F.C.C.R. 4855
(2005). In that decision, the FCC addressed traffic sent from a commercial
mobile radio services (“CM RS”) provider to an ILEC. See id. at 4862. In the
present case, acting as an ILEC, Qwest routes calls to Union for wireless
termination. In other words, this case considers ILEC to CM RS traffic, the
opposite of the situation in D eveloping. This distinction is important, because
until Developing an ILEC could not compel a CM RS provider to negotiate a
reciprocal compensation agreement. See id. at 4863 n.54. Thus, tariffs were the
only compensation mechanism for an ILEC terminating calls from an
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uncooperative CM RS provider. Given that Union is now empow ered to compel
Qwest to negotiate an interconnection agreement under 47 U.S.C. § 252, it can
neither avail itself of Developing’s stop-gap tariff allowance, because its state
tariffs are inapplicable to this type of traffic, nor demand, absent a negotiated
agreement, compensation for intraM TA traffic under a theory of breach of
contract.
M ost traffic at issue in the case before us is intraM TA, but we also consider
a small amount of interM TA traffic. Union has duly filed tariffs in W yoming,
Colorado, and Utah, listing its wireline terminating access charges, which it
contends should apply to wireless traffic as well. Qwest argues that Union has
failed to show either that the filed tariffs apply to wireless traffic or that Union
has properly filed rates for w ireless services.
Under the filed rate doctrine, “the rate of the carrier duly filed is the only
law ful charge, and deviation from it is not permitted.” Q west Corp. v. A T& T
Corp., 479 F.3d 1206, 1210 (10th Cir. 2007) (quotation and alteration omitted).
Duly filed rates bind both carriers and customers with the force of law. Atchison,
Topeka & Santa Fe Ry. Co. v. Bouziden, 307 F.2d 230, 234 (10th Cir. 1962).
Rights and liabilities defined by the tariff “cannot be varied or enlarged by either
contract or tort of the carrier.” Am. Tel. & Tel. Co. v. Cent. Office Tel., Inc., 524
U.S. 214, 227 (1998).
-8-
As previously noted, these parties share a long and litigious history,
consequently, it is not entirely surprising that this issue has already been litigated.
In U.S. W est Communications, Inc. v. W yoming Public Services Commission, the
W yoming Supreme Court held that “Union’s cellular operations are distinct and
separate from its landline operations.” 907 P.2d 343, 348 (W yo. 1995). Under
W yoming state law, “Union is required to file rates for its cellular operations.”
Id. Because Union failed to file such rates, the court held that “Union is . . .
precluded from receiving terminating access charges for cellular calls until such
tariffs are properly filed.” Id. Union admits that it did not file separate tariffs for
wireless services in W yoming, thus it lacks an applicable tariff for terminating
wireless traffic under W yoming state law.
The district court stayed judgment with respect to wireless calls terminated
in Colorado and Utah in order to give Union an opportunity to present evidence
that these states regulate wireless traffic. 7 W hen Union failed to produce such
evidence, the district court dismissed claims relating to those calls. Because
Union does not present this court with either state law or regulation supporting its
tariff claims in Colorado or Utah, we apply federal law to its remaining interM TA
claims.
7
In 1995, W yoming passed a statute deregulating most aspects of w ireless
telecommunication in the state, W yo. Stat. § 37-15-104(a)(vi), and the district
court surmised that Colorado and Utah may have taken similar action.
-9-
Pursuant to the C ommunications Act of 1934 (“Communications Act”),
carriers may form interconnection agreements to provide telecommunications
services and set reasonable rates for such services. 47 U.S.C. § 201. Absent
agreement, wireless providers may petition the FCC for an order requiring
interconnection with another carrier; the carrier must then establish just and
reasonable charges. § 332(c)(1)(B) (incorporating by reference § 201). Union
does not allege that it has an agreement with Qwest governing interM TA traffic,
nor has it petitioned the FCC for an order requiring compliance with § 201.
Because Union relies solely on state tariffs to support its claims, it has no basis
for its breach of tariff or contract claims under federal law. Thus, we conclude
that the district court properly granted summary judgment to Qwest on Union’s
breach of tariff and contract claims.
B
In 2001, the W yoming Public Services Commission dismissed a number of
Union’s claims against Qwest, including a claim for compensation for all wireline
toll traffic transited or originated by Qwest. Based on that decision, the district
court held that Union’s breach of contract and breach of tariff claims with respect
to intrastate wireline traffic in W yoming were barred by collateral estoppel.
Under W yoming law, the doctrine of collateral estoppel applies to “final
adjudicative determinations which have been rendered by administrative
tribunals.” Kahrs v. Bd. of Trs. for Platte County Sch. Dist. No. 1, 901 P.2d 404,
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406 (W yo. 1995). Courts must consider four factors in determining whether
collateral estoppel bars relitigation of an issue:
(1) whether the issue decided in the prior adjudication was identical with
the issue presented in the present action; (2) whether the prior adjudication
resulted in a judgment on the merits; (3) whether the party against whom
collateral estoppel is asserted was a party or in privity with a party to the
prior adjudication; and (4) whether the party against whom collateral
estoppel is asserted had a full and fair opportunity to litigate the issue in
the prior proceeding.
Id. Union argues that the first tw o factors have not been satisfied.
First, Union contends that the issues in the present case and in the case
before the Commission are distinct. According to Union, its complaint before the
Commission dealt with Union’s attempts to properly identify the Qwest traffic
terminated on its network, and did not address Qwest’s obligation to pay for that
traffic. Although much of the Commission complaint is devoted to identifying
traffic, Union also argued that in the absence of proper identification, Qwest was
responsible for paying access charges for all traffic coming from its network. 8
This claim for compensation was based on Qwest’s obligations under U nion’s
tariff filed with the Commission. James W oody, a member of Union’s board of
directors and its management team, reiterated this argument when he was
questioned directly about it by the Commission. W oody later testified before the
8
As stated in its claim for relief, Union requested that the Commission
order Qwest to “be responsible for the payment of terminating access charges for
all toll traffic routed by [Qwest] to [Union] on [Qwest] toll trunks, regardless of
the originating carrier.”
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district court that the breach of tariff and contract claims in the aforementioned
complaint and the present claims are the same. In its order, the Commission
found that Union failed to establish that the filed rate doctrine applied to its claim
for compensation. Based on our careful review of the record and the
Commission’s order, we conclude that the tariff issues in the present case are
identical to those raised and decided in the prior adjudication.
Second, Union claims that the Commission’s order was not a judgment on
the merits. Union contends that the Commission dismissed its claims without
prejudice. It also argues that the Commission’s decision could not have resulted
in a judgment on the merits of the compensation claim because the Commission
lacked authority to enter a monetary judgment for Union. Final decisions by
administrative agencies like the W yoming Public Services Commission can be
judgments on the merits for the purposes of collateral estoppel. Id. at 406. A
judgment that a party has failed to carry their burden of proof may preclude that
party, under the doctrine of collateral estoppel, from attempting to prove the same
issue in a later adjudication. Yates v. United States, 354 U.S. 298, 335-36 (1957)
(reversed on other grounds). Collateral estoppel bars relitigation of issues
previously decided; for preclusion of claims, the appropriate doctrine is res
judicata. Pokorny v. Salas, 81 P.3d 171, 175 (W yo. 2003). The Commission
issued an order ruling directly on three service-related issues and dismissing the
remaining claims. As to Union’s claim for compensation, the Commission held
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that U nion failed to meet its burden of proof that the filed rate doctrine applied.
It reached this conclusion after a review of all the evidence and a hearing, and
nothing in the Commission’s order indicates that it dismissed the claims without
prejudice. W hether the Commission could have awarded monetary damages is
im material to our determination of what issues it decided. Consequently, we
conclude that the prior adjudication resulted in a judgment on the merits.
Because Union does not contest the remaining two factors, we hold that
collateral estoppel bars Union’s breach of contract and tariff claims.
IV
In addition, Union advances a discrimination claim. Under the
Communications Act and corresponding state statutes, telecommunications
carriers may not unreasonably discriminate in their practices, classifications, or
“services for or in connection with like communication services.” 47 U.S.C.
§ 202(a); see also W yo. Stat. § 37-15-404(a). Courts apply a three-step analysis
to claims for discrimination under § 202(a). Panatronic USA v. AT& T Corp., 287
F.3d 840, 844 (9th Cir. 2002) (summarizing holdings of the Second and D.C.
Circuits). First, the plaintiff must prove that the services are “like.” Id. Second,
the plaintiff must show that the services are provided under different terms and
conditions. Id. If the plaintiff satisfies the first two requirements, the burden
shifts to the defendant to justify the difference as reasonable. Id.
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Union claims that Qwest unlawfully discriminates against it by using
different methods to calculate its payment obligations to Union than it does w ith
other LECs. This claim is unusual, in that Union, a provider of terminating
services, is complaining that Qwest, a customer, discriminates against it.
However, the duties of a common carrier like Qwest under the Communications
Act do not necessarily benefit only customers, they may privilege suppliers as
well. See Global Crossing Telecomms., Inc. v. M etrophones Telecomms., Inc.,
127 S. Ct. 1513, 1524-25 (2007) (discussing § 201 of the Communications Act).
For the purposes of this appeal, we assume, without deciding, that a plaintiff may
bring a discrimination claim against a customer.
The “like” services in question are Qwest’s payments for terminating calls
originated or transported by Qwest to a LEC. Relying on the testimony of Q west
experts, Union asserts that Qwest participates in “residual billing” and a
“clearinghouse method” of billing with carriers in certain other states. W hen
utilizing residual billing, the terminating carrier bills originating carriers for all
identified traffic transported from Qwest’s network, and bills Qwest for any
remaining unidentified traffic. According to Q west’s expert, only some carriers
in M innesota, Iowa, and North Dakota have attempted to use residual billing, and
since 2000, Qwest has refused to participate in this method. Only in North
Dakota does a LEC use residual billing, pursuant to a settlement agreement
between it and Qwest. Under the clearinghouse method, all the carriers in the
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state send a list of the interLATA toll calls they have originated or terminated to a
central database. By searching this database, the central service can determine
which carrier routed a call to a terminating LEC and assign proper terminating
access charges. This method requires all carriers in a state to participate, and
according to Qwest, it is only used in New M exico, Oregon, and W ashington.
Based on this testimony, the district court held that Union had met its
burden with respect to the first two steps of the discrimination analysis, but had
failed to show that the discrimination was unreasonable. Although the district
court incorrectly placed the burden on Union to show unreasonableness, based on
our independent review of the record, we conclude that any differences in billing
practices are reasonable. See United States v. Sandoval, 29 F.3d 537, 542 n.6
(10th Cir. 1994) (“W e are free to affirm a district court decision on any grounds
for which there is a record sufficient to permit conclusions of law, even grounds
not relied upon by the district court.”). The evidence shows that several carriers
have attempted to residually bill Qwest, and for several years, Qwest has rebuffed
these efforts. Only one carrier continues to residually bill Qwest, and there only
because the method is mandated by a settlement agreement. For the
clearinghouse method, all local carriers in a state must agree to participate in such
a program, and Qwest cannot implement this method without their cooperation.
Nothing in the record indicates that carriers in W yoming, Colorado, or Utah,
including Union, have shown interest in instituting a clearinghouse billing system.
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Thus Q west’s failure to use this method with Union can be explained by its
unavailability in those states. Because Qwest has sustained its burden and no
genuine issue of material fact remains with respect to the discrimination claim,
summary judgment was properly granted to Qwest.
V
Finally, Union argues that in the absence of an applicable contract or tariff,
it is entitled to termination fees under the equitable theory of unjust enrichment.
Qwest’s position is that federal law preempts this equitable claim. Section 251 of
the 1996 Act requires LECs to establish reciprocal compensation agreements
through private negotiation. 47 U.S.C. § 251(b)(5). Should parties fail to reach
an agreement, § 252 allows a party to seek state intervention or compel
arbitration. 47 U.S.C. § 252. Qwest argues that by creating these procedures in
the 1996 Act, Congress clearly intended parties to negotiate rather than seek
equitable remedies in court. Because Union refused to seek a reciprocal
compensation agreement, Qwest contends, it cannot now seek compensation in
equity.
Under W yoming law , unjust enrichment, or quantum meruit, is an equitable
doctrine that “implies a contract so that one party may recover damages from
another.” Bowles v. Sunrise H ome Ctr., 847 P.2d 1002, 1004 (W yo. 1993). In
order to establish this claim, Union must prove that: (1) valuable services w ere
rendered to Qwest; (2) these services w ere accepted, used, and enjoyed by Qwest;
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(3) under circumstances w hich reasonably notified Qwest that Union expected to
be paid; and (4) without such payment, Qwest w ould be unjustly enriched. Eisele
v. Rice, 948 P.2d 1360, 1364 (Wyo. 1997). How ever, “an action for unjust
enrichment will not lie where it would frustrate law or public policy, either
directly or indirectly.” Bowles, 847 P.2d at 1004. Colorado and Utah apply
similar standards to claims of unjust enrichment. See, e.g., Salzman v. Bachrach,
996 P.2d 1263, 1265-66 (Colo. 2000); Desert M iriah, Inc. v. B & L Auto, Inc., 12
P.3d 580, 582 (Utah 2000).
The district court held that Union had “very ably stated a claim for unjust
enrichment.” Although it did not specifically address the issue of preemption, the
district court went on to conclude that an equitable remedy was unavailable given
that Union had failed to comply with applicable statutory and regulatory
requirements.
W e not only agree that Union has shown facts that might support each
element of the unjust enrichment claim, but also agree that equitable relief is not
appropriate under the circumstances. Because federal law requires parties such as
Qwest and Union to set rates through interconnection agreements, 47 U.S.C.
§ 252, allowing Union to recover damages under a theory of unjust enrichment or
quantum meruit would frustrate the federal regulatory mechanism. Union cites
W orldCom, Inc. v. Graphnet, Inc., 343 F.3d 651, 657 (3d Cir. 2003), for the
proposition that a party may seek compensation under a theory of unjust
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enrichment or quantum meruit, even if it did not comply with statutory
requirements. On considering that case, it does not appear to us that W orldCom
is apt, given that those parties had actually negotiated and executed a contract as
required by the Communications Act, and had merely neglected to file it with the
FC C. Id. at 654-55. A ddressing the issues and facts in the case before us, we
hold that it is inappropriate to imply a contract in equity considering that under
federal law Union had an obligation to contract directly with Qwest but chose not
to do so.
VI
The judgment of the district court is AFFIRM ED. All pending motions are
DENIED.
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