The opinion of the court was delivered by: WILLIAM H. WALLS, District Judge
Plaintiffs MCI Worldcom Network Services, Inc., MCI Worldcom
Communications, Inc., and UUNET Technologies, Inc., move to
dismiss defendant Graphnet's amended Counterclaim and strike
defendant's Third Party Complaint. Defendant cross-moves to
dismiss the Second Amended Complaint or in the alternative for
summary judgment. The Court heard oral arguments on these motions
on April 22, 2005.
FACTS AND PROCEDURAL BACKGROUND
The original plaintiff in this case, Worldcom, Inc., filed its
Complaint in 2000 against Graphnet. Defendant moved to dismiss
the Complaint and, on October 21, 2002, the Court issued an Order
granting defendant's motion. That Order was appealed and the
Third Circuit reversed the decision and remanded the case for
further proceedings. On December 23, 2003, defendant filed its
Answer with a Counterclaim against the original plaintiff,
Worldcom, Inc. On May 20, 2004, defendant filed an Order to Show
Cause seeking a temporary restraining order and a preliminary injunction to keep Worldcom, Inc. from stopping
service on certain telecommunication lines. At a hearing on July
8, 2004, the Court denied defendant's motion. Thereafter, the
parties entered into a Consent Order dated July 15, 2004,
requiring, among other things, that Worldcom, Inc. maintain
services on such lines for a certain period of time. The Consent
Order also allowed the parties to amend their pleadings. More
specifically, the July 15, 2004 Consent Order provided:
Worldcom may amend the Amended Complaint to add
additional claims and parties, including the proper
parties in interest, for all claims held by Worldcom
and its affiliates and successors against Graphnet,
and Graphnet consents to such amendment of the
Amended Complaint and will not object to such
amendment on the ground that the Amended Complaint is
untimely or prejudicial, except that Graphnet
reserves any and all defenses it may have to any new
claims or parties asserted in the Amended Complaint,
as amended, including the right to move to dismiss
and/or for summary judgment as to any claims advanced
in such amendment.
(July 15, 2004 Consent Order at p. 3.) A similar provision was
included for defendant to amend its pleading.
The Second Amended Complaint
On August 3, 2004, a Second Amended Complaint was filed. The
plaintiffs named in the Second Amended Complaint are MCI Worldcom
Network Services, Inc., MCI Worldcom Communications, Inc., and
UUNET Technologies, Inc., none of whom were the plaintiff in all
the previous filings. The Second Amended Complaint alleges: MCI,
Inc., ("MCI") formerly known as WorldCom, Inc. ("WorldCom") is
the direct or indirect parent holding company of Plaintiffs MCI
WorldCom Network, MCI WorldCom Communications and UUNET, the real
parties-in interest in this action. All of the plaintiffs provide
telecommunication services and UUNET also provides internet services. Graphnet provides
communications services and network products for customers on a
national and international basis.
The Second Amended Complaint begins with allegations concerning
plaintiffs' bankruptcy proceedings: While defendant's earlier
motion to dismiss was pending, on July 21, 2002, MCI and
plaintiffs filed voluntary petitions under Chapter 11 of the
United States Bankruptcy Code in the United States Bankruptcy
Court for the Southern District of New York. On October 21, 2003,
MCI and plaintiffs, together with other affiliates, filed their
Debtors' Modified Second Amended Joint Plan of the Bankruptcy
Court under Chapter 11 of the Bankruptcy Code, Dated October 21,
2003 with the Bankruptcy Court. After further modification, the
Bankruptcy Court confirmed the plan by Order dated October 31,
2003. After certain conditions were met or waived, the confirmed
plan became effective on April 20, 2004 ("Effective Date").
Section 10.01 of the confirmed plan provides that, upon the
Effective Date, all properties of the estates of the WorldCom
Debtors (as defined in the Confirmed Plan), including plaintiffs,
would vest in the reorganized WorldCom Debtors (including the
plaintiffs). According to the documents submitted by plaintiffs
in support of their motion, defendant was scheduled as a creditor
of MCI International, Inc., in the bankruptcy proceedings and for
that reason, a copy of the October 9, 2002 notice of the
commencement of the bankruptcy cases filed by the WorldCom
Debtors was sent to defendant. Similarly, a notice of the January
23, 2003 ("Bar Date") deadline for filing claims, dated November
12, 2002, was timely mailed to defendant at addresses in New
York, New York and Teaneck, New Jersey on December 2, 2002.
Publication notice of the Bar Date was also given. By Order dated
May 28, 2003 ("Confirmation Hearing Order"), the Bankruptcy Court set a hearing
("Confirmation Hearing") for the confirmation of the joint plan
of reorganization filed by the WorldCom Debtors and directed that
creditors be given notice of the Confirmation Hearing. Notice of
the initial and adjourned Confirmation Hearings was timely mailed
The Second Amended Complaint then alleges the facts underlying
plaintiffs' claims: On November 14, 1991, TRT/FTC Communications,
Inc. ("TRT/FTC") and defendant entered into an agreement (the
"Telex Agreement") to provide two-way telex transmissions between
their respective networks for telex traffic originating on each
other's networks. This contract initiated a relationship or
custom and practice between defendant and TRT/FTC (and TRT/FTC's
corporate successors-in-interest, as defined below) pursuant to
which they exchanged telex traffic between their respective
networks and, over time, expanded the services to include the
provision of "refile," "special transit," "indirect," or "least
cost routing" telex transmission services to destinations around
the world at varying rates and prices agreed to by the parties.
TRT/FTC subsequently changed its name to IDB WorldCom Services,
Inc. ("IDB WorldCom"). In 1994, LDDS Communications, Inc.
("LDDS") acquired IDB Communications Group, Inc. ("IDB"), thereby
acquiring IDB WorldCom, which, at that time, was a subsidiary of
IDB. On June 30, 1999, IDB WorldCom was merged into MCI
Communications Corp. ("MCI Communications"), a subsidiary of MCI.
MCI Communications is not a party to this action. As part of that
merger, MCI Communications contributed the assets belonging to
IDB WorldCom, including IDB WorldCom's rights under the Telex
Agreement, to MCI WorldCom Network. Thus plaintiff MCI WorldCom Network is the successor-in interest
to TRT/FTC's rights and interests under the Telex Agreement.
From November 19, 1991, through and until 2000, TRT/FTC and/or
its corporate successors-in-interest, including MCI WorldCom
Network, provided telex transmission services to defendant under
the Telex Agreement. Certain of these services were provided to
defendant under two account numbers (the "Telex Accounts").
TRT/FTC and/or its successors-in-interest, including MCI WorldCom
Network, invoiced defendant on a monthly basis through and until
2000, during which time period settlement packages were sent to
defendant on a quarterly basis for the services provided pursuant
to the Telex Agreement. Plaintiffs allege that defendant has
failed to pay in full for the services plaintiffs provided it and
defendant is indebted to MCI WorldCom Network for no less than
$3,126,026.25 for the services provided.
Defendant entered into another agreement (the "Service
Agreement") with MCI WorldCom Communications, whereby MCI
WorldCom Communications agreed to provide defendant with
additional telecommunications services and equipment. Defendant
received various telecommunications services and related
equipment pursuant to the agreement. Those services were provided
under another account number (the "Service Accounts"). Plaintiffs
allege that defendant has failed to pay for the services and
equipment received pursuant to the Service Agreement and
defendant owes MCI WorldCom Communications at least $311,960.77.
Defendant also entered into various agreements (collectively,
"Wholesale Agreements") with MCI WorldCom Communications whereby
plaintiff agreed to provide defendant with international,
interstate and local telecommunications services and associated
equipment pursuant to applicable tariffs (as identified and defined in the
Wholesale Agreements) for resale to defendant's customers.
Included in the Wholesale Agreements is a WorldCom On-Net
Services Agreement, effective as of October 8, 2001, between MCI
WorldCom Communications and defendant. Under a separate agreement
(the "UUNET Agreement"), UUNET also agreed to provide defendant
with telecommunications services and associated equipment for
resale to defendant's customers. At least eight accounts (the
"Wholesale Accounts") were set up by plaintiffs to provide
services to defendant under these agreements. Plaintiffs allege
that defendant has failed to pay for the services it has received
under the Wholesale Accounts.
Beginning by at least August 2003, MCI WorldCom Communications,
on behalf of itself and UUNET, demanded payment from defendant of
the money owed on the Wholesale Accounts. Defendant responded by
claiming that certain amounts demanded were incorrect. Over the
course of the next nine months, MCI WorldCom Communications'
Dispute Resolution Group researched and analyzed defendant's
claims. Where appropriate, defendant received credit against its
overdue invoices. In all, MCI WorldCom Communications determined
that $4,923.38 (just over 1% of the amounts due) in credits were
due to defendant. While researching defendant's claims, MCI
WorldCom Communications demanded payment of additional amounts
due on the Wholesale Accounts. According to plaintiffs, allowing
for credits, defendant owes plaintiffs not less than $410,697.92
on the Wholesale Accounts, plus any additional amounts including,
but not limited to, any applicable early termination penalties.
This amount excludes additional charges of $86,632.52 which are the subject of two
disputes by defendant that are currently being analyzed by
Based on these allegations, plaintiffs allege that defendant
has breached the Telex, Service and Wholesale Agreements.
Plaintiffs also alleges claims for unjust enrichment based on
services provided to defendant pursuant to these agreements.
In sum, the Second Amended Complaint made two principal
amendments: First, plaintiffs added new parties, MCI WorldCom
Communications and UUNET Technologies, Inc., to bring claims for
amounts owed by defendant to plaintiffs under the Wholesale
Accounts (Counts V through VIII of the Second Amended Complaint).
The Wholesale Accounts included the accounts which were the
subject of defendant's May 2004 preliminary injunction motion.
Second, plaintiffs substituted MCI WorldCom Network for WorldCom,
Inc. as the real party in interest for claims relating to the
Telex Agreement, the subject of the original complaint (Counts I
and II). Plaintiffs also substituted MCI WorldCom Communications
for WorldCom, Inc. as the plaintiff for claims relating to the
Service Agreement that was also the subject of the original
complaint (Counts III and IV).
The Amended Counterclaim and Third Party Complaint
Defendant filed an Answer to the Second Amended Complaint as
well as a Counterclaim and Third Party Complaint against
plaintiffs and third party defendants MCI International, Inc.,
MCI Communications, Inc., and MCI, Inc. All of the claims are
against all of the plaintiffs and the third party defendants. The
First Count alleges that the charges plaintiffs seek to recover
under the agreements referenced in the Second Amended Complaint
violate the Telecommunications Act and reference charges and rates never filed with the Federal
Communications Commission ("FCC") in violation of the Telecom
Act. Defendant seeks declaratory relief that the agreements are
invalid and wants them rescinded. The Second Count alleges that
plaintiffs violated the Telecom Act by acting unjustly and
unreasonably and/or discriminating against defendant by charging
and seeking to collect unfiled rates and charges not due. The
Third Count alleges that defendant and plaintiffs entered into
the Telex Agreement and an agreement for plaintiffs to provide
defendant with the use of certain telecommunication lines (the
"Lines Agreement").*fn1 Defendant says that on February 29,
2000, the parties entered into a Settlement Agreement to settle
and resolve all telex traffic between the parties. Defendant
alleges that plaintiffs breached the Telex and Wholesale
Agreements by charging defendant more than what was owed, by
refusing to apply credits, and by severing services. Defendant
also alleges that plaintiffs breached the Settlement Agreement by
instituting this lawsuit. Defendant wants specific performance of
the Settlement Agreement. The Fourth Count alleges that
plaintiffs breached the implied covenant of good faith and fair
dealing with respect to the Telex, Wholesale and Settlement
Agreements. The Fifth Count alleges that plaintiffs made
fraudulent misrepresentations to defendant regarding the rates
they would charge defendant, their intention to settle billing
errors and telex traffic issues, and that it would discontinue
this litigation for amounts owed under the Settlement Agreement.
The Sixth Count states a claim for negligent misrepresentation. The Seventh Count states a claim for
intentional tortious interference with defendant's customer
agreements by bringing this lawsuit and severing services for
certain telecommunication lines. The Eighth Count alleges a claim
for intentional tortious interference with defendant's
prospective economic advantage. The Ninth and final count states
a claim for unjust enrichment.
Standard for a Rule 12(b)(6) Motion to Dismiss
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. Pinker v. Roche Holdings Ltd., 292 F.3d 361,
374 n. 7 (3d Cir. 2002). 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 (1984).
While a court will accept well-pled 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 (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 (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 Sentinel Trust Co. v.
Universal Bonding Ins. Co., 316 F.3d 213, 216 (3d Cir. 2003);
see also 5B WRIGHT & MILLER, FEDERALPRACTICE & PROCEDURE §
1357 (3d ed. 1998).
"A `document integral to or explicitly relied on in the
complaint' may be considered `without converting the motion [to
dismiss] into one for summary judgment.'" Mele v. Federal
Reserve Bank of N.Y., 359 F.3d 251, 255 n. 5 (3d Cir. 2004)
(citing In re Burlington Coat Factory Sec. Litig.,
114 F.3d 1410, 1426 (3d Cir. 1997)). "Plaintiffs cannot prevent a court
from looking at the texts of the documents on which its claim is
based by failing to attach or explicitly cite them." Id.
Standard for Summary Judgment
Summary judgment is appropriate where the moving party
establishes that "there is no genuine issue as to any material
fact and that [it] is entitled to a judgment as a matter of law."
Fed.R.Civ.P. 56(c). A factual dispute between the parties will
not defeat a motion for summary judgment unless it is both
genuine and material. Anderson v. Liberty Lobby, Inc.,
477 U.S. 242, 247-48 (1986). A factual dispute is genuine if a reasonable
jury could return a verdict for the non-movant and it is material
if, under the substantive law, it would affect the outcome of the
suit. See id. at 248. The moving party must show that if the
evidentiary material of record were reduced to admissible
evidence in court, it would be insufficient to permit the
non-moving party to carry its burden of proof. Celotex v.
Catrett, 477 U.S. 317, 318 (1986).
Once the moving party has carried its burden under Rule 56,
"its opponent must do more than simply show that there is some
metaphysical doubt as to the material facts in question."
Matsushita Elec. Indus. Co. v. Zenith Radio Corp.,
475 U.S. 574, 586 (1986). The opposing party must set forth specific facts showing a genuine issue for trial
and may not rest upon the mere allegations or denials of its
pleadings. Shields v. Zuccarini, 254 F.3d 476, 481 (3d Cir.
2001). At the summary judgment stage the court's function is not
to weigh the evidence and determine the truth of the matter, but
rather to determine whether there is a genuine issue for trial.
See Anderson, 477 U.S. ...