Not what you're
looking for? Try an advanced search.
Buy This Entire Record For
AMERICAN TEL. AND TEL. v. INTREND ROPES
October 3, 1996
AMERICAN TELEPHONE AND TELEGRAPH COMPANY, A NEW YORK CORPORATION, PLAINTIFF,
INTREND ROPES & TWINES, INC., AN ILLINOIS CORPORATION F/D/B/A INTREND TECHNOLOGIES, INC., AND AAMSTRAND ROPES & TWINE, INC., AN ILLINOIS CORPORATION, DEFENDANTS AND THIRD-PARTY PLAINTIFFS, V. ILLINOIS BELL TELEPHONE COMPANY, AN ILLINOIS CORPORATION, THIRD-PARTY DEFENDANT.
The opinion of the court was delivered by: McDADE, District Judge.
Before the Court is Plaintiff's Motion to Reconsider or
Alternatively to Certify Judge Harold A. Baker's Order [Doc. #
64] for Interlocutory Appeal. [Doc. # 75-76]. For the reasons
set forth below, this Court GRANTS Plaintiff's Motion.
On November 29, 1993, Plaintiff, the American Telephone and
Telegraph Company ("AT & T"), filed suit against Defendants,
Intrend Ropes & Twines Inc., f/d/b/a Intrend Technologies, Inc.
("Intrend"), and Aamstrand Ropes & Twines, Inc. ("Aamstrand"),
for the collection of Long Distance Telecommunications Service
("LDMTS") and Wide Area Telecommunication Service ("WATS")
charges that they allegedly incurred.
On September 13, 1995, AT & T filed a motion for summary
judgment against Defendants Intrend and Aamstrand jointly, or
Defendant Intrend individually on the basis that no material
question of fact existed as to whether Defendants were liable
for the WATS and LDMTS charges. [Doc. # 32]. On November 8,
1995, Intrend and Aamstrand filed their response to AT & T's
motion. [Doc. # 42]. On March 20, 1996, Magistrate Judge
Bernthal issued a Report and Recommendation ("R & R") in which
he granted AT & T's motion for summary judgment in its entirety
as to Defendant Intrend and denied the motion as to Defendant
Aamstrand. [Doc. # 59]. On April 2, 1996, Intrend and Aamstrand
filed their objections to Magistrate Judge Bernthal's report
and recommendation. [Doc. # 60]. On June 25, 1996, District
Judge Harold A. Baker rejected the report and recommendation
and denied AT & T's motion for summary judgment. [Doc. # 64].
Consequently, on July 8, 1996, Plaintiff AT & T filed a
motion to disqualify Judge Baker because of a potential
conflict of interest and to vacate his Order denying summary
judgment. (See Doc. # 65 citing ABA Judicial Canons of Ethics
and Judiciary & Judicial Procedure 28 U.S.C. § 455 et seq.).
Judge Baker subsequently recused himself on July 12, 1996, and
the case was reassigned to this Court by Chief Judge Michael M.
Mihm on July 16, 1996. Accordingly, Plaintiff AT & T renewed
its motion to vacate Judge Baker's Order denying Plaintiff's
Summary Judgment Motion. [Doc. # 69, 7/30/96]. However, on
August 8, 1996, this Court denied AT & T's renewed motion
because "Plaintiff AT & T failed to allege actual prejudice or
impropriety by [Judge] Baker." [Doc. # 72 at p. 3]. Finally, on
September 12, 1996, AT & T filed a Motion for Reconsideration
of Judge Baker's Order denying Plaintiff's Motion for Summary
Judgment or Alternatively for an Order to Certify the Issue for
Interlocutory Appeal. [Doc. # 75-76]. Finally, on September 30,
1996, Defendants Intrend and Aamstrand filed Defendant and
Third Party Plaintiffs' Response and Objection to Motion of
Plaintiff AT & T for Reconsideration. [Doc. # 79].
The following facts, as set out in Magistrate Judge
Bernthal's Report and Recommendation,
are undisputed.*fn1 Defendant Intrend, formerly doing business
as Intrend Technologies, Inc., and Defendant Aamstrand are
Illinois corporations with their principal place of business
located in Manteno, Illinois. Plaintiff AT & T is a common
carrier engaged in the provision of interstate and foreign
telecommunications services, and during the time at issue in
its Complaint, provided Long Distance Telecommunications
Service ("LDMTS") and Wide Area Telecommunications Service
("WATS") to Defendant Intrend pursuant to the terms and
conditions of tariffs on file with the FCC.
In May of 1989, Intrend moved to its present location in
Manteno, Illinois, and contracted with a telecommunications
consulting company called "Nitec" to advise, design, purchase,
and install a telecommunications system in the Intrend's new
facility. Nitec subsequently purchased and installed for
Intrend four AT & T Spirit 6-Button telephones, three COBOT
Receptionist Auto Attendant units, and additionally moved and
reinstalled the AT & T Spirit 1224 Key Telephone System, which
included a Spirit control unit and expansion module that
Intrend had used at its old location to its new Manteno
This equipment, which essentially constituted the internal
telecommunications system of Intrend, was subsequently
connected to Intrend's incoming "800" WATS and outgoing LDMTS
AT & T lines in late May of 1989 through Centrex lines or
trunks provided by the Third-Party Defendant in this case,
Illinois Bell (hereafter "Ameritech"), when Intrend contracted
for or subscribed to Ameritech's Centrex Switching Service.
Although the lines or trunks themselves were physically located
on Defendant Intrend's premises, the switching or connection of
calls from AT & T's outside lines to Intrend's internal phone
system, and vice-versa, was performed through a combination of
those lines or trunks located in Intrend's building and Centrex
switching equipment located at Ameritech's Central Office.
Intrend's telecommunications system performed without
incident until November of 1991, when Intrend found itself the
victim of toll fraud. During the months of November and
December of 1991, unknown third-parties discovered that they
could phone into Intrend's facility per its "800" WATS lines,
and then somehow manipulate Intrend's telecommunications system
to obtain access to its outside AT & T long distance or LDMTS
lines. These unknown "hackers" subsequently placed over
$72,248.82 in long distance calls over Intrend's LDMTS lines
and incurred over $16,273.73 worth of "800" WATS charges in
accessing Intrend's long-distance lines, for a grand total of
An employee of AT & T subsequently contacted Intrend in
December of , to alert Intrend to the unusual activity
occurring on its "800" WATS and LDMTS lines. Although initially
assured by AT & T employees that it would not be held liable
for the unauthorized "800" WATS and LDMTS calls, Intrend was
informed by AT & T in January of 1992 that it was Intrend's
responsibility to secure its telecommunications system in order
to prevent any unauthorized use of its AT & T lines. Intrend
consequently immediately retained Telecommunications
Specialist-Consultant Nina Wingard to investigate and stop the
toll fraud problem, and additionally hired Telecommunications
consultant Verlin Brown to confirm Ms. Wingard's findings.
AT & T continued to bill Intrend for the prior unauthorized
"800" WATS and LDMTS calls, but Intrend refused to pay these
charges. AT & T subsequently brought suit against Intrend and
Aamstrand on November 29, 1993, alleging that either Intrend
individually or both Defendants jointly were liable for the
unauthorized LDMTS and "800" WATS charges pursuant respectively
to AT & T's Tariff Nos. 1 and 2 on file with the FCC.
On September 13, 1995, AT & T filed their motion for summary
Judgment against Intrend and Aamstrand. [Doc. # 32]. On March
20, 1996, Magistrate Judge Bernthal issued his Report and
Recommendation in which he granted AT & T's motion as to
Intrend and denied the motion as to Aamstrand. [Doc. # 59].
Magistrate Judge Bernthal denied AT & T's motion as to
Aamstrand because he found that a question of fact existed as
to whether Aamstrand ever contracted with AT & T for "800" WATS
and LDMTS services. (R & R at p. 8). However, Magistrate Judge
Bernthal granted AT & T's motion as to Intrend because he found
that Intrend was liable as a matter of law to AT & T pursuant
to AT & T's Tariff No. 2 for unauthorized "800" WATS charges
and that Intrend was also liable as a matter of law for the
unauthorized LDMTS charges since no material question of fact
existed as to whether the unauthorized LDMTS charges
"originated" at Intrend's number pursuant to AT & T's Tariff
No. 1. Id.
On June 25, 1996, District Judge Baker rejected the Report
and Recommendation and denied AT & T's motion for summary
judgment. [Doc. # 64]. Judge Baker denied AT & T's motion for
summary judgment as to Aamstrand because he too found that
there was a question of material fact as to whether Aamstrand
contracted with AT & T for the WATS and LDMTS services. [Doc.
# 64 at p. 2 ¶ 4]. Judge Baker also denied AT & T's motion as
to Intrend because he found that a material question of fact
existed as to whether the fraudulent calls "originated" at
Intrend's number. Specifically, Judge Baker stated:
Does Ameritech's failure to restrict the
trunk-to-trunk access feature and the fact that
Intrend did not contract with Ameritech for the
feature that allowed the fraud remove Intrend's
responsibility under the tariff if the calls did
not "originate" with Intrend? Unlike the facts of
AT & T v. Jiffy Lube Int'l Inc. [813 F. Supp. 1164
(D.Md. 1993)], and AT & T v. New York City Human
Resources Admin. [833 F. Supp. 962, (S.D.N Y
1993)], [citations omitted], Ameritech provided
Intrend with the Centrex system that permitted
parties to call from outside the switching
equipment on one trunk and be transferred to
another trunk. This allowed outside parties to dial
long distance numbers and have the calls charged to
Intrend's number, all without Intrend's knowledge
or permission. Taking into consideration the
submissions by the parties at this point in the
proceedings, these calls cannot be considered
[Doc. # 64 at p. 2]. As a result of Judge Baker's ruling, AT &
T filed the motion presently before the Court in which
Plaintiff AT & T asks this Court to reconsider Judge Baker's
Order denying AT & T's motion for summary judgment. [Docs. #
"Motions for reconsideration serve a limited function: to
correct manifest errors of law or fact or to present newly
discovered evidence." Caisse Nationale De Credit Agricole v.
CBI Industries, Inc., 90 F.3d 1264, 1269 (7th Cir. 1996)
(quoting Keene Corp. v. Int'l Fidelity Ins. Co., 561 F. Supp. 656,
665 (N.D.Ill. 1982) aff'd, 736 F.2d 388 (7th Cir. 1984)).
"Such motions cannot in any case be employed as a vehicle to
introduce new evidence that could have been adduced during the
pendency of the summary judgment motion." Id. (quoting Keene
Corp., 561 F. Supp. at 665). Disposition of a motion for
reconsideration is left to the discretion of the district
court, and its ruling will not be reversed absent an abuse of
that discretion. Id. at 1270 (citing Billups v. Methodist
Hosp., 922 F.2d 1300, 1305 (7th Cir. 1991)).
The summary judgment decision presently under reconsideration
by this Court, became the-law-of-the-case when Judge Baker
issued his Order on June 25, 1996, and generally such an order
should be followed in all subsequent rulings. However, in a
case where a federal judge is substituted or recuses himself
during litigation, the second judge may alter the previous
rulings of the first judge where the presiding judge finds that
the law-of-the-case is erroneous. Diaz v. Indian Head, Inc.,
686 F.2d 558, 562-63 (7th Cir. 1982) (citing 1B Moore's Federal
Practice P 0.404(1) at 407 (1982)).*fn2 "[W]hile a district
judge should carefully consider the propriety of re-examining a
prior ruling of another district judge in the same case, when
good reasons for doing so appear (such as controlling law or
clear error), the `law of the case' doctrine must yield to
rational decisionmaking." Peterson v. Lindner, 765 F.2d 698,
704 (7th Cir. 1985).
In Bowles v. Wilke, the Seventh Circuit held that "the only
restraint upon a second judge in passing upon [an]
interlocutory issue decided by another judge in the same case
is one of comity only, which in no way infringes upon the power
of the second judge to act." Bowles v. Wilke, 175 F.2d 35, 37
(7th Cir.) cert. denied, 338 U.S. 861, 70 S.Ct. 104, 94 L.Ed.
528 (1949). The Seventh Circuit has gone on to state that ". .
. we cannot be expected to reverse a correct decision by one
district judge simply because we find it is contrary to a prior
ruling by another judge in the same case, i.e., contrary to the
law of the case." Champaign-Urbana News Agency, Inc. v. J.L.
Cummins News Co. Inc., 632 F.2d 680, 683 (7th Cir. 1980)
(quoting Parmelee Transportation Co. v. Keeshin, 292 F.2d 794,
797 (7th Cir. 1961)).
Accordingly, when the law-of-the-case is wrong, the district
court judge should take steps to correct those errors rather
than await reversal by the Court of Appeals. Id. To modify the
law-of-the-case is primarily a matter of "good sense"
particularly when the modification is done early in the
proceedings and when such a modification will serve to correct
legal errors and accelerate the resolution of a dispute. Id.
(citing Uniformed Sanitation Men Association Inc. v.
Commissioner of Sanitation of City of New York, 426 F.2d 619,
628 (2d Cir. 1970)), motion denied, 403 U.S. 917, 91 S.Ct.
2223, 29 L.Ed.2d 693 (1971), cert. denied, 406 U.S. 961, 92
S.Ct. 2055, 32 L.Ed.2d 349 (1972).*fn3
For the reasons set out below, this Court finds that Judge
Baker's Order denying AT & T's motion for summary judgment as
to Intrend was clearly erroneous. As a result, this Court will
modify the law-of-the-case to appropriately reflect the
governing law as to a customer's liability to a
telecommunications carrier in the event of toll fraud. However,
since Magistrate Judge Bernthal [Doc. # 59 at p. 9-10],
District Judge Baker [Doc. # 64 at p. 1-2], and this Court
agree in the finding that a material question of fact remains
as to whether Defendant Aamstrand contracted with AT & T for
WATS and LDMTS services, AT & T's motion for summary ...