Bowers v. Windstream Kentucky East, LLC, 3:09-cv-00440

Background

This Western District of Kentucky case involves Dana Bowers and Sunrise Children’s Services, Inc. suing Windstream Kentucky East and West for allegedly charging a Kentucky Gross Receipts Surcharge (GRS) without proper federal tariff authorization.
plaintiffs seek final class certification under Rule 23(b)(3); Windstream moves to oppose or narrow the class and to reconsider prior rulings.
The case centers on intrastate and interstate telecommunications rates, with the Kentucky PSC regulating intrastate tariffs and the FCC regulating interstate tariffs.
Windstream began adding the GRS in 2007 to recover the 1.3% gross revenue tax (GRT) and also imposes a Subscriber Line Charge (SLC) to fund interstate access, which is federally tariffed.
The court previously held the GRS must be contained in federal tariffs for charges tied to federally tariffed services like the SLC, applying 47 U.S.C. § 203(c) and the Filed Rate Doctrine, though later narrowing its scope.
The court now addresses whether the SLC is a federally tariffed interstate service, whether deregulation narrows the doctrine, and whether the proposed class satisfies Rule 23.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether GRS on the SLC must be federally tariffed	Bowers/Sunrise contend SLC is federally tariffed, so GRS must be tariffed too.	Windstream argues SLC is not a tariffed interstate service; GRS on SLC should not require federal tariffing.	SLC is a federally-tariffed interstate service; GRS on SLC requires federal tariffing.
Whether the Filed Rate Doctrine is broadly inapplicable due to deregulation	Deregulation undermines broad application of the Filed Rate Doctrine to all interstate charges.	Deregulation does not warrant a broad exemption; each service must be analyzed independently.	Deregulation does not broadly exempt SLC; analysis limited to the challenged claims, pending further facts.
Whether the proposed class satisfies Rule 23(a) adequately	Class includes hundreds of thousands of intrastate customers and some wholesale interstate customers with common issues.	Wholesale and retail claims may involve different facts and defenses; commonality and adequacy are at issue.	The Proposed Class satisfies typicality, commonality, and adequacy, though with careful consideration of differences between subgroups.
Whether the Proposed Class satisfies Rule 23(b)(3) predominance	Common questions surrounding GRS, SLC, and tariffing dominate the case and justify class treatment.	Differences between retail and wholesale customers may impede a uniform class-wide resolution.	Predominance is satisfied; the class is certified, with potential future refinements to address subgroup issues.

Key Cases Cited

Nat’l Ass’n of Regulatory Util. Comm’rs v. FCC, 737 F.2d 1095 (D.C. Cir. 1984) (interstate vs. intrastate service separation and federal regulation implications)
Smith v. Ill. Bell Tel. Co., 282 U.S. 133 (1930) (local vs. federal cost allocation and jurisdictional considerations)
Irwin Wallace v. AT&T Commc’ns of the S. States, Inc., 6 FCC Rcd. 1618 (1991) (FCC held certain taxes pass-through charges tied to interstate services must be tariffed)
Pfeil v. Sprint Nextel Corp., 284 F. App’x 640 (11th Cir. 2008) (deregulatory context and application to Filed Rate Doctrine in appellate setting)
Beattie v. CenturyTel, Inc., 511 F.3d 554 (6th Cir. 2007) (typicality and adequacy framework for Rule 23)
Sprague v. Gen. Motors Corp., 133 F.3d 388 (6th Cir. 1998) (commonality and class action prerequisites guidance)
In re Am. Med. Sys., Inc., 75 F.3d 1069 (6th Cir. 1996) (class certification and adequacy considerations)
Turnage v. Norfolk S. Corp., 307 F. App’x 918 (6th Cir. 2009) (numerosity under Rule 23(a)(1) considerations)
Stout v. J.D. Byrider, 228 F.3d 701 (6th Cir. 2000) (counsel qualifications and class representation suitability)
In re Countrywide Financial Corp. Customer Data Sec. Breach Litig., No. 3:08-MD-1953 (N.D. Cal. 2009) (noting district-level analysis; cited for Rule 23 standards)