Illinois Bell Telephone Co. v. GLOBAL NAPS ILLINOIS, INC.Illinois Bell Telephone Co. v. GLOBAL NAPS ILLINOIS, INC.
MEMORANDUM OPINION AND ORDER
This case involves a dispute between Illinois Bell Telephone Co. (“AT & T Illinois” or “AT & T”) and Global NAPs Illinois, Inc. (“Global”). AT & T and Global are parties to an interconnection agreement (“ICA”), which was formed pursuant to the Telecommunications Act of 1996 (“Telecom Act”),
codified
at
The ICC ruled in AT & T’s favor and ordered Global to pay the total amounts owed to AT & T. Global did not comply with that order, and two federal suits followed. First, AT & T brought the instant action, stating a single сlaim against Global under the Illinois Public Utilities Act (“PUA”),
codified at
Then, on May 22, 2009, Global filed a separate action pursuant to the Telecom Act, petitioning for review of the ICC’s order regarding Global’s breach of the ICA. Both cases were assigned to this Court. 2
On April 12, 2010, both parties moved for summary judgment on AT & T’s sole claim in this case. AT & T also moved for summary judgment on Global’s eounterclaim. Those motions are presently before the Court.
BACKGROUND
The following facts are taken from the parties’ statements of undisputed material facts submitted in accordance with Local Rule 56.1. 3 AT & T Illinois is an Illinois corporation and an incumbent local exchange carrier in Illinois. 4 PL 56.1(a)(3) ¶¶ 1, 2. Global is a Delaware corporation with its principal plаce of business in Massachusetts. Def. 56.1(a)(3) ¶ 1. At all times relevant to AT & T’s and Global’s claims, Global was a local exchange carrier, certified by the ICC to provide telecommunications-related services in Illinois. Id. ¶ 1.
In 2003, AT & T and Global entered into the ICA, setting forth the rates, terms, and conditions under which the parties would interconnect their networks and exchange telecommunications traffic. Pl. 56.1(a)(3) ¶ 3. The ICA was reviewed and approved by the ICC acсording to the terms of the Telecom Act. Id. ¶ 3.
On February 17, 2009, AT & T Illinois submitted a final invoice for $1,536,000.78. Id. ¶ 7. Global never paid AT & T Illinois any of the amounts the ICC ordered it to pay. Id. ¶ 9. As of March 31, 2010, Global has incurred аnother $815,579.48 in late payment charges. Id. ¶ 7.
On February 23, 2009, Global filed a motion for a stay of the February 11 Order; on March 11, 2009, that motion was denied. Id. ¶ 8. On March 16, 2009, Global filed an application for rehearing of the February 11 Order; that application was denied on March 25, 2009. Id. ¶ 8.
On April 9, 2009, AT & T filed this action under the PUA, claiming a right to enforce the ICC orders and to recover for injuries arising from Global’s failure to comply with those orders. Def. 56.1(a)(3) ¶ 3.
On November 2, 2009, Global filed the set-off сounterclaim in this action, asserting that AT & T owed Global for unpaid reciprocal compensation and “various offsets and credits.” Docket No. 30 ¶¶ 6-8. Global sent AT & T Illinois a series of invoices dated between November 1, 2004, and February 1, 2009, asserting that AT & T owed Global reciprocal compensation under the ICA. See PI. 56.1(a)(3) ¶¶ 11, 13, 15, 17, 16, 21, 23. The total amount invoiced between those dates was $63,560.92. Id. ¶ 25.
In response to Global’s invoices, AT & T sent a number of letters dated between February 10, 2005, and February 18, 2009.
See id.
¶¶12, 14, 16, 18, 20, 22, 24. In these letters, AT & T notified Global that AT & T disputed certain of the invoiced amounts based on discrepanciеs between AT & T’s internal usage records and the usage charged by Global.
Id.
More specifically, AT & T asserted that its internal usage records indicated that Global was billing AT & T for traffic that was not subject to intercarrier-compensation obligations under the ICA.
Id.
¶ 30. Although AT & T offered to make its internal usage records available to Global, Global never attempted to substantiate or reconcile the usage figures it had originally provided to AT & T.
Id.
¶ 31. Global responds that these internal records related only to traffic originating from carriers not subject to the ICA.
6
Def. 56.1(b)(3)(C) ¶ 49. Further, AT & T never offered to produce any documentation from third parties that would confirm the origin of the disputed traffic.
Id.
¶ 51. According to Global, the records indicated that the traffic was, in
In addition to withholding payment of the disputed charges, AT & T also withheld payment of other specified chаrges because Global was past due in its payments to AT & T. PL 56.1(a)(3) f 32. Of the forty letters AT & T sent to Global, only six of them did not expressly contain both of the aforementioned explanations for not paying Global’s invoices. Id. ¶ 34.
Global neither admits nor denies that AT & T sent the letters in question. Instead, Global admits only that AT & T claims to have sent the letters. Global then asserts that its representatives were unable to locate documentation to substantiate AT & T’s claims. Here is an example of one of Global’s respоnses:
Global admits that AT & T claims that, on February 10, 2005, AT & T notified Global that it disputed $1,958.19 of the invoiced amounts based on discrepancies between AT & T’s internal usage records and the usage charged by Global, and AT & T claims it indicated that it would withhold payment on the balance of $5,660.28 until Global became current on significant past due amounts allegedly owed to AT & T. Global states further that Global’s representatives were unable to locate documentation in Global’s records showing that AT & T had sent, or that Global had received, AT & T letters disputing reciprocal compensation charges.
Def. 56.1(b)(3)(B) ¶ 12.
Eаch of these responses by Global relies on the same paragraph of an affidavit filed by Global’s Director of Network Operations, Jeffrey Noack. That paragraph states as follows:
My review of Global’s records did not reveal that Global had copies of, or had in fact, received AT & T’s dispute letters. In all events, the parties, [sic] were never able to resolve this dispute. Moreover, I found no evidence in Global’s rеcords that AT & T requested informal or formal dispute resolution under the ICA after Global submitted its invoices for reciprocal compensation and declined to accept AT & T’s claims of contractual exemptions. To this day, AT & T has not denied that AT & T delivered the disputed traffic to Global and that Global terminated it. This left the matter as simply an unresolved billing dispute between the parties under the ICA.
Aff. of Jeffrey Noack ¶ 13.
Global’s responses do not raise a genuine issue of material fact as to whether AT & T sent the letters in question. Global simply asserts that one person conducted an unspecified search of unspecified records without finding the letters. Global does not describe its records-retention policies and does not explain when, where, or how Noack conducted his search. Nor does Global actually deny receiving the letters. Accordingly, Global is deemed to have admitted that AT & T sent each of the letters in question.
LEGAL STANDARD
Summary judgment is proper “if the pleadings, the discovery and disclosurе materials on file, and any affidavits show that there is no genuine issue as to any material fact and that the movant is entitled to judgment as a matter of law.”
In considering a motion for summary judgment, the court must view the evidence in the light most favorable to the nonmoving party and draw all reasonable inferences in the nonmoving party’s favor.
Abdullahi v. City of Madison,
ANALYSIS
AT & T’s PUA Claim
AT & T asserts that Global’s failure to comply with the ICC’s February 11 Order is actionable under the PUA, which makes civil damages available against a public utility when an act or omission by that utility causes injury to another:
In case any public utility ... shall omit to do аny act, matter or thing required to be done either by any provisions of this Act or any rule, regulation, order or decision of the Commission, issued under authority of this Act, the public utility shall be liable to the persons or corporations affected thereby for all loss, damages or injury caused thereby or resulting therefrom, and if the court shall find that the act or omission was willful, the court may in addition to the actual damages, award damages for the sake of example and by the way of punishment. An action to recover for such loss, damage or injury may be brought in the circuit court by any person or corporation.
Another provision in the PUA makes
Global makes two arguments as to why Global is entitled to summary judgment and AT & T is not: (1) the civil-damages provision in the PUA does not apply to a case where one telecommunications carrier is seeking to enforce an ICC decision against another based on a breach of an interconnection agreement; and (2) an action for money damages is premature in light of Global’s appeal of the ICC’s orders, which, at the time of AT & T’s motion, was presently pending before this Court.
Because Global has appealed that ICC ordеr, Global argues that summary judgment in this case is premature. However, the decision entered today in the parallel case referenced above (Illinois Bell I) affirms the ICC’s ruling and resolves that appeal in AT & T’s favor. See supra note 2. Thus, Global has no grounds for disputing the ICC’s decision that Global owes money to AT & T, no grounds for contesting the application of the PUA to the case at hand, and no evidence that raises a genuine issue of material fact as to the elements of AT & T’s claim against it. Accordingly, AT & T is entitled to summary judgment on its claim for damages under the PUA.
Global’s Counterclaim
AT & T also moves for summary judgment on Global’s counterclaim, which reads as follows:
During the period of time that Global and AT & T exchanged traffic, Global terminated traffic from AT & T customers to customers of Global. Pursuant to the parties’ interconnection agreement, AT & T was obligated to pay Global reciprocal compensation for the termination of that traffic. Despite being billed by Global for that reciprocal compensation, AT & T has not paid Global all of the amounts billed by Global.
During the period of time that Global and AT & T exchanged traffic, AT & T determined that Global was entitled to various credits and offsеts to AT & T’s charges. Despite requests by Global for these credits and offsets to be reflected in AT & T invoices to Global, AT & T failed to do so.
Any amounts owed to Global because of AT & T’s failure to pay reciprocal compensation and to provide promised credits should be set off against the amount found to be owed by Global to AT & T under its complaint.
Docket No. 30 ¶¶ 6-8.
AT & T first argues that Global’s counterclaim is “grossly underpleaded.” See Docket No. 46 at 11. Specifically, AT & T notes that Global did not allege what services were provided to AT & T, what amounts were due, or when those amounts were due. Notwithstanding that argument, however, AT & T identifies over forty invoices submitted by Global and not paid by AT & T. Each of these invoices asserts a right to reciprocal compensation and plainly forms the basis of Global’s counterclaim. Thus, AT & T had adequate notice of Global’s claim that it was entitled to payment on invoices Global had previously submitted to AT & T.
Moreover, briefs on a motion for summary judgment are not the place for AT & T to argue that Global has failed to state a claim for relief,
see
However, in response to AT & T’s argument regarding the sufficiency of the counterclaim, Global also argues that genuine issues of material fact exist regarding invoices Global allegedly submitted for $541,295.70 worth of “trunking facility charges.” Def. 56.1(b)(3)(C) ¶54. Presumably, Global is attempting tо argue that these charges constitute the “various credits and offsets” to which Global asserts it is entitled in its counterclaim. This same argument, however, was squarely rejected by the ICC in its February 11 Order. PL Resp. to Def. 56.1(b)(3)(C) ¶53. As explained above, that order has now been affirmed such that no issue of material fact remains; AT & T does not owe Global any money for “trunking facility charges.”
AT & T next argues that Global’s claim is time barred to the extent it relies on invoices submittеd prior to November 2, 2007 (two years before Global first asserted its set-off counterclaim). The ICA imposes a two-year limitations period on all claims arising from the ICA:
[N]o claim may be brought for any dispute arising from this Agreement more than twenty-four (24) months from the date the occurrence which gives rise to the dispute is discovered or reasonably should have been discovered with the exercise of due care and attention.
ICA § 10.1. 8
“It is well established thаt parties to a contract may agree upon a shortened contractual limitations period to replace a statute of limitations,”
Medrano v. Prod. Eng’g Co.,
As AT & T notes, however, that definition is for “Claim” with a capital “C.” The ICA provides that “Capitalized Terms used in this Agreement shall have the respective meanings specified below, in Section 1.x of each appendix attached hereto, and/or as defined elsewhere in this agreement.” ICA § 1. As it appears in section 10.1 (the section providing the period of limitations), “claim” is not capitalized. Thus, the contractual definition dоes not apply. 9 Therefore, argues AT & T, “claim,” as used in section 10.1, should be understood to mean “cause of action.”
Adopting that definition, AT & T argues that the ICA bars the filing of a lawsuit for any claim that is over two years old. Global, on the other hand, argues that the ICA merely requires that the aggrieved party provide notice of a threatened claim to the other party within two years of the time the occurrence giving rise to the dispute was discovered or should have been discоvered.
Although Global expends substantial effort to assert that bringing a “claim” is something short of filing a claim in a lawsuit, Global does not identify what acts would provide contractually sufficient no
However, AT & T’s suggested interpretation also cannot be correct, for it is undermined by ICA provisions discussed elsewhere in its briefs. For example, the ICA provides that “Dispute Resolution shall commence upon one Party’s receipt of written notice of a controversy or claim arising out of or relating to this Agreement or its breach. No party may pursue any claim unless such written notice has first been given to the other Party.” ICA § 10.3.1 (emphasis added). Furthermore, under a heading of “Formal Dispute Resolution,” the ICA provides, “Claims will be subject to elective arbitration pursuant to Section 10.7 if, and only if, the claim is not settled through informal Dispute Resolution and both Parties agree to arbitration. If both Parties do not agree to arbitration, then either Party may proceed with any remedy available to it pursuant to law, equity or agency mechanism.” ICA § 10.6.3 (emphasis added). Thus, a party can proceed with legal remedies (e.g., by filing a lawsuit) only after a claim is first brought forward for informal dispute resolution. Therefore, initiating a lawsuit cannot be synonymous with bringing a “claim” for purposes of the ICA. Because dispute resolution is required for all claims, the ICA must be interpreted as providing a two-year limitation on the time for initiating dispute-resolution procedures, not the time for bringing a lawsuit if the claim cannot be resolved by other means. The relevant question is, thus, whether Global initiated contractual dispute-resolution procedures within two years of the occurrence giving rise to its claims.
According to AT & T, Global never initiated the appropriate dispute-resolution procedures. As explained above, the ICA requires that any claims first proceed through contractual dispute resolution before they can be litigated in court:
The Parties desire to resolve disputes arising out of this Agreement without litigation. Acсordingly, the Parties agree to use the following Dispute Resolution procedures with respect to any controversy or claim arising out of or relating to this Agreement or its breach.
ICA § 10.2.
The contractual dispute-resolution procedure begins with written notice of a controversy or claim arising out of or relating to the ICA or its breach. ICA § 10.3.1. For billing disputes, the first stage of dispute resolution is referral to the appropriate service center. ICA § 10.4. The ICA requires the parties to attempt to resolve billing disputes within thirty to ninety days but also states that “resolution may take longer depending on the complexity of the dispute.” ICA § 10.4.4. If a dispute could not be resolved within thirty days, Global had an obligation to notify AT & T of the status of the dispute and the expected resolution date. ICA § 10.4.4. If AT & T were unable to obtain a satisfactory resolution through Global’s service center, AT & T had a right to notify Global in writing that AT & T wished to invoke informal dispute resolution. See ICA § 10.4.5.
Although it is Global who now raises the disputе regarding the bills it submitted to AT & T, it was AT & T who initiated the dispute by submitting dispute letters in response to Global’s invoices. It is apparent that the dispute was not resolved through Global’s service center and that AT & T did not invoke informal dispute resolution.
See
PI. 56.1(a)(3) ¶ 41. Instead, AT & T simply refused to pay the
But that would mean that the service-center procedures do not apply to Global’s claim. It cannot be interpreted to mean that none of the dispute-resolution procedures apply. Indeed, the ICA clearly provides that its dispute-resolution procedures apply “with resрect to any controversy or claim arising out of or relating to [the ICA] or its breach,” ICA § 10.2.1 (emphasis added), and that no claim may be pursued without providing written notice to the other party, ICA § 10.3.1. The ICA also provides that formal dispute resolution (which would include filing a claim in court) may only be invoked “[i]f the Parties are unable to resolve the dispute through the informal procedure described in Section 10.5.” ICA § 10.6.1.
Informal dispute resolution can be initiated by written nоtice as provided by section 10.4.5 (if it is preceded by an unsuccessful billing dispute) or as provided by section 10.3 (if it is not a claim that must first proceed through a service center). It is undisputed that Global filed a counterclaim that arose from the ICA without providing written notice and without attempting to resolve its dispute through informal dispute resolution as provided in the ICA. Therefore, Global failed to comply with the contractual prerequisites to filing a formal claim in federal court. Thus, Global is contractually barred from pursuing that claim until it has exhausted its contractual dispute-resolution obligations; and AT & T is entitled to summary judgment.
CONCLUSION
For the reasons explained above, Global’s Motion for Summary Judgment is denied. AT & T’s Motion for Summary Judgment on its PUA claim and AT & T’s Cross-Motion for Summary Judgment on Global’s counterclaim are granted.
Notes
. AT & T initially presented its breach-of-ICA claims to this Court in a complaint filed on June 23, 2006; but the Court held that the Telecom Act requires that such claims first be presеnted to the ICC.
See Ill. Bell Tel. Co. v. Global NAPs Ill., Inc.,
06-cv-3431, slip op.,
. The ICC’s order was affirmed in another memorandum opinion and order issued today.
See Illinois Bell Tel. Co. v. Global NAPs, Inc.,
No. 09-cv-3113,
. Local
.“Incumbent local exchange carriers” are carriers that were providing local phone service when the Telecom Act was passed. They are comprised mostly of the "Regional Bell Operating Companies” or “Baby Bells” that were created as a result of a consent decree settling the United States’ antitrust suit against AT & T in the early 1980s.
. "DS3s” are high-capacity circuits used to deliver traffic between the parties' networks.
. AT & T responds to this factual assertion with a general denial that is unsupported by any evidence and by asserting that a stack of billing records and correspondence "speaks for itself."
See
PL Resp. to Def. 56.1(b)(3)(C) ¶ 49. AT & T provides similar responses to other statements of fact. These failures to properly deny Global's factual assertions result in those facts' being deemed admitted for purposes of summary judgment.
See Smith,
. “Telecommunications service,” as defined by Illinois law, "includes access and interconnection arrangements and services.”
. A copy of the ICA was attached as Exhibit 2 to the Declaration of Hans J. Germann in support of AT & T's Motion for Summary Judgment.
. Notably, “Claim” is capitalized elsewhere in the ICA. See, e.g., ICA § 13.4 (providing release of liability "against any Loss or Claim”).