United States District Court, District of New Jersey
December 10, 1999
YOUNG SOON OH AND BERNICE SCHATZ ON BEHALF OF THEMSELVES AND ALL OTHERS SIMILARLY SITUATED, PLAINTIFFS,
AT & T CORPORATION, DEFENDANT.
The opinion of the court was delivered by: Walls, District Judge.
This matter is before the court on the motion by defendant AT &
T for judgment on the pleadings to dismiss the complaint pursuant
to Fed.R.Civ.P. 12(c) for failure to state any claim for relief,
or alternatively, on the grounds that the Federal Communications
Commission ("FCC") has primary jurisdiction over the case. The
defendant's motion to dismiss Count VI of the complaint is
granted; the motion
to dismiss all other counts is denied. The court instead
transfers this action to the FCC for resolution of all matters
within its jurisdiction, and orders that all proceedings before
this court be placed in civil suspense until resolution by the
FCC or until otherwise ordered by this court.
The plaintiffs began this putative consumer class action
against AT & T in March 1999 by filing a complaint in the
Superior Court of New Jersey, Bergen County. Defendant removed
the case to this court. In August 1999, plaintiffs filed an
amended class action complaint ("Complaint"), which alleges that
defendant AT & T violates the tariffs that it is required to file
with the FCC pursuant to 47 U.S.C. § 203(a). Specifically, FCC
Tariffs 1 (May 14, 1998) and 27 (November 25, 1998) require AT &
T to provide "up to two requests for listings within the area
code dialed . . . on each call to Directory Assistance," for a
charge of $1.40 per call. See AT & T Br., Exh. A.
The plaintiffs purport not to challenge the provisions of these
tariffs, including the applicable rate. Instead, they charge that
AT & T, by means of manipulative and deceptive acts, prevents its
customers from availing themselves of the second request.
Complaint ¶ 2. Plaintiffs allege that in order to minimize time
and expense, AT & T operators and recordings respond to calls to
Area Code Directory Assistance with the questions, "What city,
please?" and "What listing, please?" The plaintiffs claim that
each of these questions "implies, and unfairly manipulates and
misleads the customer to believe, that the customer will have an
opportunity for a second information request after the customer
receives a response to his or her first request." Complaint ¶¶
16-17. However, they allege that AT & T provides no such
Plaintiffs also charge that AT & T refuses to provide a credit
allowance to its customers who are aware that they are entitled
to two requests, and who would in fact request two phone numbers
"if they had not been prevented from doing so by AT & T's
manipulative and misleading procedure." Complaint ¶ 21. They
assert that although AT & T provides a telephone number to call
to request credits, neither the automated message menu nor a
human operator provides an avenue for a customer to receive
credits in return for the practice described above.
Plaintiffs Oh and Schatz, who have used AT & T's Area Code
Directory Assistance, claim to have been denied their right to a
second listing. They style six causes of action for: (1) breach
of contract, purportedly based on AT & T's service contracts with
themselves and other class members; (2) the New Jersey Consumer
Fraud Act ("NJCFA"), N.J.S.A. 56:8-1 et seq.; (3) common law
fraud, based on AT & T's purported misrepresentations that the
plaintiffs were required to make one request at a time; (4)
negligent misrepresentation, due to AT & T's purported
representation that the plaintiffs would have the opportunity to
make a second request; (5) violation of § 201(b) of the Federal
Communications Act, 47 U.S.C. § 201(b); and (6) injunctive
relief. Plaintiffs seek declaratory relief, compensatory damages,
treble damages pursuant to the NJCFA, pre-judgment interest on
actual damages, an injunction to prevent AT & T from continuing
its challenged practices, and costs and attorneys' fees.
Defendant, in moving for judgment, requests that the court
dismiss the complaint for failure to state a claim for relief or
pursuant to the doctrine of primary jurisdiction.
1. Standard for Judgment on the Pleadings
Fed.R.Civ.P. 12(c) allows any party to move for judgment on the
pleadings "[a]fter the pleadings are closed but within such time
as not to delay the trial." While
the timing of a Rule 12(c) motion differs from a motion to
dismiss pursuant to Fed. R.Civ.P. 12(b), the court should apply
the same legal standards to both types of motions. Turbe v.
Government of Virgin Islands, 938 F.2d 427, 428 (3rd Cir. 1991).
On a motion to dismiss pursuant to Fed.R.Civ.P. 12(b)(6), the
court is required to accept as true all allegations in the
complaint, and all reasonable inferences that can be drawn
therefrom, and to view them in the light most favorable to the
non-moving party. See Oshiver v. Levin, Fishbein, Sedran &
Berman, 38 F.3d 1380, 1384 (3rd Cir. 1994). The question is
whether the claimant can prove any set of facts consistent with
his or her allegations that will entitle him or her to relief,
not whether that person will ultimately prevail. Hishon v. King
& Spalding, 467 U.S. 69, 73, 104 S.Ct. 2229, 81 L.Ed.2d 59
(1984). While a court will accept well-pleaded allegations as
true for the purposes of the motion, it will not accept
unsupported conclusions, unwarranted inferences, or sweeping
legal conclusions cast in the form of factual allegation. See
Miree v. DeKalb County, Ga., 433 U.S. 25, 27 n. 2, 97 S.Ct.
2490, 53 L.Ed.2d 557 (1977). Moreover, the claimant must set
forth sufficient information to outline the elements of his
claims or to permit inferences to be drawn that these elements
exist. See Fed.R.Civ.P. 8(a)(2); Conley v. Gibson,
355 U.S. 41, 45-46, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957). The Court may
consider the allegations of the complaint, as well as documents
attached to or specifically referenced in the complaint, and
matters of public record. See Pittsburgh v. West Penn Power
Co., 147 F.3d 256, 259 (3rd Cir. 1998); see also 5A Wright &
Miller, Federal Practice & Procedure § 1357 at 299 (2nd ed.
2. Whether the Filed Tariff Doctrine Bars State Law Claims
AT & T argues that the plaintiffs' state law claims must be
dismissed pursuant to the filed tariff doctrine.*fn1 The
defendant claims that as a "common carrier" it is required to
file schedules of charges with the FCC pursuant to
47 U.S.C. § 203(a); that such tariffs "exclusively govern the legal
relationship between AT & T and its subscribers," including
issues related to directory assistance calls; and that the
plaintiffs are wholly precluded under the filed tariff doctrine
from asserting state law claims concerning matters covered by the
tariffs. The plaintiffs object that this rule bars only state law
claims that purport to contradict or supplement the filed
schedules. They claim that, because they do not challenge the
tariff, but instead seek to enforce AT & T's obligations filed
with the FCC, their state law claims must be sustained.
Initially, the court notes that MFS International, Inc. v.
International Telcom, 50 F. Supp.2d 517 (E.D.Va. 1999), relied on
by plaintiffs, is inapposite. There, the court considered whether
a telecommunications provider and its customers could agree to a
shorter statute of limitations than that provided in the Federal
Communications Act, 47 U.S.C. § 151 et seq. ("FCA"). The court
observed that the counterclaims for breach of contract and
conversion might be subject to preemption or dismissal if they
were "revealed to be actions based on the . . . tariff
masquerading as state law claims," but did not reach the issue.
Id. at 520 n. 9.
Although certain principles of the filed tariff doctrine are
well settled, the jurisprudence regarding the continued existence
of state law claims in face of the FCA is complex. The Supreme
Court recently iterated the basic contours of the doctrine in
American Telephone and Telegraph v. Central Office Telephone,
524 U.S. 214, 118 S.Ct. 1956, 141 L.Ed.2d 222 (1998). There, a
buyer of long-distance services alleged that AT & T had failed to
deliver certain services promised in addition to those set forth
in the tariff, and brought state law claims for breach of
contract and tortious interference with contractual relations.
Justice Scalia commented that the century-old filed rate doctrine
developed under the Interstate Commerce Act applied equally to
the FCA, and explained:
[T]he rate of the carrier duly filed is the only
lawful charge. Deviation from it is not permitted
upon any pretext. Shippers and travelers are charged
with notice of it, and they as well as the carrier
must abide by it, unless it is found by the
Commission to be unreasonable. Ignorance or
misquotation of rates is not an excuse for paying or
charging either less or more than the rate filed.
(Quoting Louisville & N R Co v. Maxwell,
237 U.S. 94, 97, 35 S.Ct. 494, 59 L.Ed. 853 (1915)).
Id. 524 U.S. 214, 118 S.Ct. at 1962-63. The Court held that
because the claimant sought privileges other than those allowed
in the tariff, both of its state law claims were precluded. Id.
524 U.S. 214, 118 S.Ct. at 1964-66. Justice Scalia wrote that
this holding was made notwithstanding the saving clause of the
FCA, which dictates that "[n]othing in this chapter 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." 47 U.S.C. § 414. "Th[e saving] clause . . .
cannot in reason be construed as continuing in [customers] a
common law right, the continued existence of which would be
absolutely inconsistent with the provisions of the act. In other
words, the act cannot be held to destroy itself." (Citation
That opinion did not address the continued existence of state
law claims that purport to enforce a tariff. Likewise, Chief
Judge Posner in Cahnmann v. Sprint Corp., 133 F.3d 484 (7th
Cir. 1998), relied on by defendant, concluded that FCA
extinguishes the right to bring state law claims "when the effect
of the suit would be to challenge a tariff." Id. at 488
(emphasis added). However, he allowed that if a carrier violates
a tariff to the detriment of a customer, a claimant would be free
to proceed under federal law either by an administrative FCC
proceeding or by a suit for damages in federal district court.
Id. at 487; see also 47 U.S.C. § 206-209.
Here, plaintiffs claim, and defendant concedes, that AT & T is
required by its tariffs to answer up to two requests for
listings. Because the purpose of the present action is to
enforce AT & T's obligations under the tariffs, the Central
Office and Cahnmann cases do not guide this court. For the
reasons that follow, the court need not resolve the issue whether
such state law claims are barred by the filed tariff doctrine.
Cf. Marcus v. AT&T Corp., 138 F.3d 46 (2nd Cir. 1998) (finding
that state law claims concerning carrier's failure to disclose
billing policies were precluded by the filed rate doctrine to the
extent that they sought compensatory damages; dismissing claims
to the extent they sought injunctive relief on the basis that
customers were conclusively presumed to know all terms of a filed
3. Whether the Plaintiffs' State Law Claims "Arise Under"
The Third Circuit has considered whether state law claims by a
carrier to collect unpaid charges for telephone service should be
deemed to "arise under" federal common law or the FCA so that
federal question jurisdiction is appropriate. MCI
Telecommunications Corp. v. Teleconcepts, Inc., 71 F.3d 1086
1093-96 (3rd Cir. 1995) determined that a collections claim by
MCI was "based upon, and [drew] its life from," the tariff that
it had filed with the FCC. Judge McKee reasoned that because the
carrier's claim relied on the tariff, the cause of action should
no longer be considered a creature of state law. See also Marcus
v. AT&T Corp., 138 F.3d 46
, 55-56 (2nd Cir. 1998) (holding that
breach of warranty claim by customer of long-distance carrier
"necessarily arises from
AT & T's only contract between it and its customers — the tariff
filed with the FCC. . . . Because the tariff is filed with the
FCC pursuant to the FCA . . . the breach of warranty claim arises
under federal law.")
This court finds that reasoning persuasive and applicable here.
The sole source of the plaintiffs' state law claims is the set of
tariffs filed by AT & T with the FCC. Cf. Bauchelle v. AT & T
Corp., 989 F. Supp. 636 (D.N.J. 1997) (holding that although
collection claims "and similar claims which draw their life from
the tariff" were subject to uniform federal law, claims for
"remote subjects such as advertising or promotional activities"
were distinguishable from the Teleconcepts rule.) The
plaintiffs' claims of breach of contract, the NJCFA, fraud, and
negligent misrepresentation are grounded upon their rights found
in the tariff to obtain two listings with each Directory
Assistance call. The thrust of each claim is that AT & T has
failed to live up to its tariff obligations. In accordance with
Teleconcepts, the court holds that the plaintiffs' state law
claims arise under federal law.
4. Whether This Court Should Defer to the Federal Communications
Commission Pursuant to the Doctrine of Primary Jurisdiction
In addition to their purported state law causes of action, the
plaintiffs charge that AT & T's practices constitute an "unjust
and unreasonable practice" within the meaning of the FCA: "All
charges, practices, classifications, and regulations for and in
connection with [a] communication service, shall be just and
reasonable, and any such charge, practice, classification, or
regulation that is unjust or unreasonable is declared to be
unlawful." 47 U.S.C. § 201(b). The FCA creates a cause of action
on behalf of any person claiming to be damaged by a common
carrier. 47 U.S.C. § 207. Such an aggrieved person may choose to
file a complaint with the FCC pursuant to § 208, or to commence
an action in any federal district court, but may not pursue both
remedies. Id.; see also Richman Brothers Records, Inc. v. U.S.
Sprint Communications Co., 953 F.2d 1431
, 1435-46 (3rd Cir.
AT & T moves to dismiss this count, claiming that because it
complied with its duly filed tariff, and "[t]here is no
allegation that AT & T fails to provide two listings per
Directory Assistance call upon request," its actions are
presumptively reasonable. AT & T Br. at 13; see Maislin
Industries, U.S., Inc. v. Primary Steel, Inc., 497 U.S. 116,
128, 110 S.Ct. 2759, 111 L.Ed.2d 94 (1990). The defendant points
to the Complaint to demonstrate its compliance with the tariff:
in their claim for negligent misrepresentation, plaintiffs assert
that "[t]he fact that AT & T requires that both requests be made
at the outset of the call to Area Code Directory Assistance is a
material fact." Complaint ¶ 54. By this, defendant argues, the
plaintiffs admit that AT & T complies with its tariff because
they may request two listings, albeit at the beginning of a call.
AT & T Reply Br. at 5-6.
The plaintiffs protest that their entire complaint concerns AT
& T's failure to comply with its tariff obligations. In contrast
to the defendant's characterization, the plaintiffs claim that AT
& T's practice of prohibiting callers from making one request at
the beginning of a call, and a later request at the end of the
first listing, violates the applicable tariffs. They assert that
AT & T's defense that it has complied with the tariff is a "mere
factual denial of the well-pleaded allegations of the complaint."
The court agrees; the defendant's motion to dismiss the FCA claim
is denied on that basis.
However, the defendant presents a more compelling argument that
this court should decline to decide the issues raised here: AT &
T asserts that the court should defer to the FCC under the
doctrine of primary jurisdiction, explained by the Third Circuit:
The doctrine of primary jurisdiction has been
developed by courts in order to avoid conflict
between the courts and an administrative agency
arising from either the court's lack of expertise
with the subject matter of the agency's regulation or
from contradictory rulings by the agency and the
court. Under the doctrine, a court should refer a
matter to an administrative agency for resolution,
even if the matter is otherwise properly before the
court, if it appears that the matter involves
technical or policy considerations which are beyond
the court's ordinary competence and within the
agency's particular field of expertise.
MCI Communications Corp. v. American Tel. & Tel. Co.,
496 F.2d 214, 220 (3rd Cir. 1974). Teleconcepts cautioned that "[c]ourts
should not be too hasty in referring a matter to an agency, or to
develop a `dependence' on the agencies whenever a controversy
remotely involves some issue falling arguably within the domain
of the agency's `expertise.'" 71 F.3d at 1104. Yet, the Third
Circuit relies upon the Supreme Court decision in Nader v.
Allegheny Airlines, Inc., 426 U.S. 290, 96 S.Ct. 1978, 48
L.Ed.2d 643 (1976) that the doctrine is appropriate when an
action otherwise within a court's jurisdiction "raises a question
of the validity of a rate or practice included in a tariff filed
with an agency." Richman Bros. Records, Inc. v. U.S. Sprint
Communications Co., 953 F.2d 1431, 1435 n. 3 (3rd Cir. 1991).
A court should consider four factors in deciding whether to
defer to an administrative agency: (1) whether the issues
presented are within the conventional expertise of judges; (2)
whether the questions lie peculiarly within the agency's
discretion or require the exercise of agency expertise; (3)
whether there exists a danger of inconsistent rulings; and (4)
whether a prior application has been made to the agency.
American Telphone & Telegraph, Co. v. People's Network, Inc.,
1993 WL 248165 (D.N.J. 1993). Presently, despite the plaintiffs'
objections that the resolution of their claims does not require
the expertise of the FCC, this court finds otherwise. Courts have
consistently found that claims which allege unreasonable
practices in violation of § 201(b) fall within the primary
jurisdiction of the FCC. See, e.g., Total Telecommunications
Services v. American Telephone and Telegraph Co., 919 F. Supp. 472,
480 (D.C.Cir. 1996); Ambassador, Inc. v. United States,
325 U.S. 317, 324, 65 S.Ct. 1151, 89 L.Ed. 1637 (1945); Richman
Bros. Records, 953 F.2d at 1435. The plaintiffs' state law
claims, now recast as federal claims, seek to enforce the same
rights as the FCA — their interests under AT & T's tariffs.
Resolution of all of the claims will evidently turn on
interpretation of AT & T's tariff obligations. The plaintiffs
cannot maintain a breach of contract action without reference to
the tariffs, admittedly the only contract term sought to be
enforced. Pl. Br. at 6. Likewise, their claims for fraud and
negligent misrepresentation turn on a finding that the plaintiffs
were entitled to make two requests at specified times during a
call; this question necessitates an interpretation of the rights
provided by the tariffs.
This court therefore concludes that referral of this case to
the FCC is the appropriate course of action. Our Circuit Court
has ruled that because of potential prejudice to the plaintiffs,
stay of an action pending an agency determination of liability is
a more appropriate course than outright dismissal. Laveson v.
Trans World Airlines, 471 F.2d 76, 83 (3rd Cir. 1972); MCI
Communications Corp. v. American Tel. & Tel. Co., 496 F.2d 214
at 224 (3rd Cir. 1974); see also American Telephone & Telegraph
Co. v. People's Network, Inc., 1993 WL 248165, at *15 (D.N.J.
March 31, 1993) ("Although some courts have held that the
doctrine of primary jurisdiction requires dismissal of the
lawsuit pending resolution by the FCC, . . . the majority of
courts have indicated that a stay of the Federal court action is
the more appropriate course of action."). Accordingly, this court
refers this matter to the FCC for a
determination of defendant's liability and all other matters
within its jurisdiction. The action will be placed in civil
suspense until the FCC issues its decision. Either party may
petition to reactive the case, if appropriate, after the FCC has
resolved the issues within its jurisdiction.
The defendant's motion to dismiss with prejudice Count VI of
the Complaint for injunctive relief is granted. The motion to
dismiss Counts I, II, III, IV, and V is denied. The court refers
the action to the Federal Communications Commission to determine
defendant's liability and all other matters within its
jurisdiction. Proceedings before this court are placed in civil
suspense pending further order.
This matter is before the court on the motion by defendant AT &
T for judgment on the pleadings to dismiss the Amended Class
Action Complaint pursuant to Fed. R.Civ.P. 12(c) for failure to
state any claim for relief, or alternatively, on the grounds that
the Federal Communications Commission ("FCC") has primary
jurisdiction over the case.
Upon consideration of the submissions of the parties, and for
good cause shown: It is on this day of December, 1999:
ORDERED that Count VI of the Complaint for injunctive relief be
dismissed with prejudice; and it is further
ORDERED that this action be referred to the Federal
Communications Commission for a determination of defendant's
liability and all other matters within its jurisdiction; and it
ORDERED that further proceedings before this court be placed in
civil suspense. Either party may petition to reactivate the
proceedings, if appropriate, after the FCC issues its decision.