United States District Court, N.D. Illinois, Eastern Division
MEMORANDUM OPINION AND ORDER
Honorable Thomas M. Durkin United States District Judge.
March 16, 2018, the Court entered a Memorandum Opinion and
Order granting in part plaintiff Peerless Network, Inc.'s
motion for partial summary judgment. R. 243. Peerless then
filed a motion for entry of final order and Rule 54(b)
judgment. R. 248. The parties conferred and agreed to most of
the damages Peerless sought in its motion. Before the Court
are the two remaining issues-(1) whether the statute of
limitations in 47 U.S.C. § 415(a) applies to bar some of
Peerless's charges; and (2) whether Peerless may recover
compound interest on the unpaid charges. The parties filed
supplemental briefs on the two issues. R. 260, 262. The
parties also filed a stipulation agreeing to the total amount
of damages owed to Peerless based on the Court's decision
on the two issues. R. 266. For the following reasons, the
Court enters final judgment in the amount of $48, 456,
Statute of Limitations
parties first dispute whether the statute of limitations in
47 U.S.C. § 415(a) of the Communications Act bars
portions of Peerless's tariff charges. Section 415(a)
imposes a statute of limitations on suits “by carriers
for recovery of their lawful charges” to two years.
There is no question that Peerless is a “carrier”
who seeks to recover its “lawful charges” under
its filed tariffs. See Espinal v. AFNI, Inc., 2018
WL 2733366, at *9-*10 (S.D.N.Y. June 7, 2018) (explaining
that “lawful charges” in Section 415 include
tariffed charges). Because Peerless filed this lawsuit on
September 23, 2014, Verizon argues that Peerless may not
recover any amounts for interstate traffic that were past due
as of September 23, 2012. In response, Peerless argues that
the parties' Standstill Agreement tolls the limitations
parties entered into the Standstill Agreement on September
18, 2013. That agreement provides that “[n]either Party
shall initiate any litigation, arbitration, regulatory
action, or other proceeding seeking resolution of the Verizon
Disputes or the Peerless Demands.” R. 250-17,
Standstill Agreement, § 2(f). The interpretation of a
contract is a question of law, determined by “the four
corners of the document, not to outside sources.”
Kass v Kass, 91 N.Y.2d 554, 566
(1998).“Where the document makes clear the
parties' over-all intention, courts examining isolated
provisions should then choose that construction which will
carry out the plain purpose and object of the
[agreement].” Id. at 567. But where the
“instrument was negotiated between sophisticated,
counseled business people negotiating at arm's length,
” courts are “reluctant to interpret an agreement
as impliedly stating something which the parties have
neglected to specifically include.” Vermont Teddy
Bear Co. v 538 Madison Realty Co., 1 N.Y.3d 470, 475
argues that the Standstill Agreement operates as a tolling
agreement because the parties' intent was to defer
litigation. R. 262 at 7 (citing R. 250-17 at 1 (“[T]he
Parties have determined that they wish to avoid litigation
for a period of time.”)). While the Court agrees that
the parties' general intent was to defer litigation, the
Standstill Agreement does not clearly toll the limitations
period. Indeed, it includes no mention of tolling.
Peerless's argument would require the Court to read a
non-existent tolling term into an unambiguous contract
between two sophisticated parties, which New York law
prohibits. See Vermont Teddy Bear, 1 N.Y.3d at 475.
Furthermore, implying a tolling agreement term would run
counter to the Agreement's merger clause that states:
“[t]his Agreement represents the entire agreement
between the Parties relating to the subject matter hereof and
supersedes any other oral or written agreements and
understandings relating thereto.” R. 250- 17 § 7.
The merger clause bars “any claim based on an alleged
intent that the parties failed to express in writing, ”
Ashwood Capital, Inc. v. OTG Mgmt., Inc., 948
N.Y.S.2d 292, 298 (N.Y.App.Div. 2012), such as an intent to
toll the statute of limitations here.
Court recognizes the hardship of its determination that the
Standstill Agreement does not toll the statutory limitations
period. But the Court finds it difficult to incorporate a
tolling provision when the represented parties did not
explicitly contract for one. While at first glance, the title
“Standstill Agreement” presumably freezes the
parties and all of their rights and obligations as of the
date of the agreement, the Court is required to look at the
actual language of such an agreement. If the Standstill
Agreement did nothing other than impliedly toll the statute
of limitations, this would be a more difficult decision. But
the Standstill Agreement is not worthless because of the lack
of a tolling agreement. Consideration was exchanged as part
of its execution and meaningful benefits accrued to Peerless,
even if one of them was not the tolling of claims.
See, e.g., R. 250-17 § 1 (amending the
tandem services agreement to include the “Wireless
Termination Amendment”); id. § 2(a)-(d).
is not inconceivable that the parties' agreement would
have contained different terms or considerations had a
tolling provision been included. In fact, Verizon suggests
that to be the case, pointing to Section 2(c) of the
Agreement, which states: “Peerless Settlement Credits
shall be applied first to the most recently disputed
amount, followed (if necessary) by the next most
recent disputes, and so forth until the oldest disputes
are resolved.” R. 250-17 § 2(c) (emphasis added).
Verizon argues it “specifically negotiated for this
provision so that its payments would apply to the newest
invoices, allowing Verizon to clear away the older disputes
as they fell outside the two-year limitations window.”
R. 260 at 8. The Court was not privy to those negotiations
and absent an ambiguous agreement, cannot read a tolling
provision into the Standstill Agreement now, despite the
hardship it may cause Peerless.
event, the Court finds that the limitations period in Section
415(a) could not be tolled even if the parties had an
explicit tolling agreement. In Midstate Horticultural
Co., Inc. v. Pennsylvania Railroad Co., 320 U.S. 356
(1943), the Supreme Court considered whether a time
limitation in the Interstate Commerce Act for recovery of
charges could be waived by an express agreement made before
the end of the statutory period. Id. at 357. The
Court first considered Congress's intent in promulgating
the Commerce Act, explaining that the purpose of the Commerce
Act was to impose a comprehensive scheme of regulation and to
“secur[e] the general public interest in adequate,
nondiscriminatory transportation at reasonable rates.”
Id. at 361. The Court further explained that the Act
required “rigid adherence to the statutory scheme and
standards” even in “matters concerning which
variation in accordance with the exigencies of particular
circumstances might be permissible, if only the parties'
private interests or equities were involved.”
Id. The Court recognized the hardship of its ruling,
but concluded that the action was time-barred despite the
parties' agreement to extend the time period.
Id. at 367.
Court, like other courts to have dealt with the issue, reads
Midstate not to create a generally applicable rule
against tolling through private agreements, but rather as a
directive to consider the legislative intent and policy
purposes behind each statute under consideration. See
FDIC v. Williams, 60 F.Supp.3d 1209, 1214 & n. 7 (D.
Utah 2014) (concluding that statute setting applicable
statute of limitations was worded differently and had a
different objective and policy than the Commerce Act, and
distinguishing Midstate based on its discussion
regarding congressional intent); In re Lehman Bros. Sec.
& ERISA Litig., 2012 WL 6584524, at *2 (S.D.N.Y.
Dec. 18, 2012) (estopping defendant from asserting time bar
it had voluntarily tolled by agreement, and finding
Midstate inapplicable because its policy concerns of
uniformity and equality of treatment were not implicated).
the Communications Act has both a similar purpose to and uses
similar language as the Commerce Act in Midstate.
Like the Commerce Act's purpose to “secure the
general public interest in adequate, nondiscriminatory
transportation at reasonable rates, ” the
Communications Act seeks to “regulat[e] interstate and
foreign commerce in communication by wire and radio so as to
make available . . . to all the people of the United States,
without discrimination . . . [a] communication service with
adequate facilities at reasonable charges.” 47 U.S.C.
§ 151. The limitations provisions of Section 415 also
mimics the Commerce Act. The limitations provision at issue
in Midstate read: “[a]ll actions at law by
carriers subject to this Act for recovery of their charges,
or any part thereof, shall be begun within three years from
the time the cause of action accrues, and not after.”
320 U.S. at 357. The provision here is nearly identical:
“[a]ll actions at law by carriers for recovery of their
lawful charges, or any part thereof, shall be begun within
two years from the time the cause of action accrues, and not
after.” 47 U.S.C. § 415(a).
Court recognizes that courts have not ruled consistently on
the issue. See, e.g., Level 3 Commc'ns, LLC v.
Illinois Bell Tel. Co., 2017 WL 3128987, at *3 (E.D. Mo.
July 24, 2017) (private agreement could toll limitations
period of 47 U.S.C. § 415); Cent. Scott Tel. Co. v.
Teleconnect Long Distance Servs. & Sys. Co., 832
F.Supp. 1317, 1321 (S.D. Iowa 1993) (same); cf. In the
Matter of Am. Cellular Corp. & Dobson Cellular Sys.,
Inc., Complainants, 22 F.C.C. Rcd. 1083, 1093 (2007)
(“[A] private agreement to toll the limitations period,
without more, simply does not meet these narrow grounds for
tolling.”) (listing cases). But the similarities
between the Commerce Act provision in Midstate and
the Communications Act here-coupled with the general
agreement that the limitations period in Section 415 should
be construed strictly (see Commc'ns Vending Corp. of
Arizona v. F.C.C., 365 F.3d 1064, 1075 (D.C. Cir.
2004))-convinces the Court the limitations period in the
Communications Act could not be tolled even if the parties
had agreed to do so.
does the Court believe the limitations period should be
equitably tolled. Equitable tolling of a statutory
limitations period is allowed “only in extraordinary
and carefully circumscribed instances.” Id. It
is extended “only sparingly . . . in situations where
the claimant has actively pursued his judicial remedies by
filing a defective pleading during the statutory period, or
where the complainant has been induced or tricked by his
adversary's misconduct into allowing the filing deadline
to pass.” Id. (citing Irwin v. Dep't
of Veterans Affairs, 498 U.S. 89, 96 (1990)). This is
not an extraordinary situation warranting equitable tolling.
At bottom, Peerless was represented by counsel, chose to
enter into the Standstill Agreement that did not include a