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FRONTIER COMMUNICATIONS OF MT. PULASKI v. AT&T CORPORATION

March 28, 1997

FRONTIER COMMUNICATIONS OF MT. PULASKI, INC., FRONTIER COMMUNICATIONS — SCHUYLER, INC., FRONTIER COMMUNICATIONS — MIDLAND, INC., PLAINTIFFS,
v.
AT&T CORPORATION, DEFENDANT.



The opinion of the court was delivered by: Richard Mills, District Judge:

  OPINION

Choices always have consequences.

The choice of forum is no different.

Here, the choice of forum determines whether or not the defendant has a viable defense to this collection action.

I. FACTS

This cause is before the Court on the Plaintiffs' Motions for Partial Summary Judgment and Defendant's Motion to Refer this Case to the Federal Communications Commission Under the Doctrine of Primary Jurisdiction.

This case is the product of consolidating three similar actions. Two of the actions were filed in state court, by Frontier Communications of Mt. Pulaski, Inc., (Frontier Mt. Pulaski) and Frontier Communications — Schuyler, Inc. (Frontier Schuyler) respectively, and removed to this Court by AT&T Corp. (AT&T). Frontier Communications — Midland, Inc. (Frontier Midland) filed the third action in this Court.

Frontier provides local exchange service within Logan, Schuyler, and Champaign Counties in Illinois. When Frontier's customers place long distance telephone calls using AT&T's long distance service, Frontier bills AT&T for originating access service. Likewise, when an AT&T long distance customer places a telephone call to someone served by Frontier, Frontier bills AT&T for terminating access service.

The rates Frontier may charge AT&T for LEC service are governed by tariffs that Rochester Telephone Corp., Frontier's predecessor, filed with the FCC and the Illinois Commerce Commission. Frontier charges AT&T by the minute for terminating and originating access service. Frontier has billed AT&T at the rates stated in the tariffs. AT&T does not dispute that the rates Frontier charges are contained in properly filed tariffs and that Frontier's invoices accurately reflect the number of minutes of service Frontier has provided to AT&T. Since about October 1996, however, AT&T has refused to pay certain portions of Frontier's invoices. Currently, the total AT&T has withheld exceeds $1 million.

The only dispute in this case concerns Frontier's relationships with some of its customers. AT&T alleges that Frontier pays kickbacks to some phone customers to induce them to set up businesses within the areas Frontier serves. Specifically, AT&T claims that Frontier has agreed to provide these customers a portion of the revenue Frontier earns from AT&T and other long distance providers from terminating access service. AT&T claims that Frontier's practice of providing kickbacks violates Frontier's duties under the Communications Act of 1934 to provide nondiscriminatory service at fair and reasonable rates.

To vindicate its claim, AT&T filed a complaint with the FCC on July 6, 1996. The FCC Complaint names Frontier Mt. Pulaski, Frontier Schuyler, and Frontier and contains three causes of action: (1) that Frontier's arrangements with some of its customers violate the principle that common carriers may only act as objective conduits for communications; (2) that Frontier's practice of providing kickbacks to certain customers violates 47 U.S.C. § 201 (b) because the practice is unjust and unreasonable; and (3) that Frontier's alleged practice discriminates against other Frontier customers in violation of Section 202(a) of the Communications Act. In the FCC Complaint, AT&T seeks damages in the amount of all charges AT&T paid for terminating access service for calls to the customers allegedly receiving kickbacks.

This consolidated case is a collection action brought by Frontier against AT&T to collect unpaid local access charges. In this case, AT&T has asserted several "Affirmative Defenses": (1) that the Complaint fails to state a claim upon which relief can be granted (AT&T does not press this defense in opposition to Frontier's motions for summary judgment); (2) that the FCC has primary jurisdiction over these claims; (3) that Frontier's claims are barred because the alleged kickbacks give Frontier a direct interest in the delivery of calls to certain end users thus, depriving Frontier of common carrier status under 47 U.S.C. § 153 (h); (4) that Frontier's practices are "unjust and unreasonable" under 47 U.S.C. § 201 (b); (5) that Frontier's practices amount to "unreasonable discrimination" under 47 U.S.C. § 202 (a); and (6) that this action is barred by 47 U.S.C. § 228 (e)(2).*fn1

Although the FCC Complaint and this case differ in some respects, AT&T notes in its memorandum in support of its motion to refer that "there is already pending at the FCC a case between precisely these same two parties involving precisely the same access charges that plaintiffs seek from AT&T here." That is certainly true, ...


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