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Line Systems, Inc v. Sprint Nextel

July 24, 2012

LINE SYSTEMS, INC
v.
SPRINT NEXTEL
CORPORATION



The opinion of the court was delivered by: O'neill, J.

MEMORANDUM

Whenever a Sprint cellular telephone customer calls a Line Systems customer's telephone number, Line Systems provides a service by completing the call. Line Systems has charged Sprint for completing Sprint-originated calls but Sprint hasn't paid. Line Systems now sues to recover payments and Sprint moves to dismiss for failure to state a claim. For the following reasons I will grant in part and deny in part Sprint's motion.

BACKGROUND

Line Systems alleges the following facts. Line Systems is a competitive local exchange carrier that operates in Pennsylvania, Delaware, Maryland, New Jersey and New York. Compl. ¶ 5. Sprint is a commercial mobile radio service provider, or in everyday parlance, a provider of cellular telephone service. Id. ¶ 6. Sprint offers service across the United States, which the Federal Communications Commission has divided into fifty-one "Major Trading Areas." Id.

¶ 13. In the territory where Line Systems operates, most states have more than one MTA within their borders. Id. Calls from Sprint customers to Line Systems customers fall into one of three categories: those that begin and end within the same MTA ("intraMTA"), those that begin and end in the same state but different MTAs ("intrastate interMTA") and those that begin and end in different states and different MTAs ("interstate interMTA"). Id. ¶ 14.

The law requires Line Systems to "terminate," or complete, calls to its customers and Line Systems has terminated more than 26 million minutes of calls originating from Sprint customers since January 2007. Id. ¶¶ 1, 11. Plaintiff incurs costs for providing termination services and it has billed Sprint access charges for calls by defendant's customers. Id. ¶¶ 1, 12. Sprint, however, refuses to pay. Id. ¶ 1. In the present suit Line Systems seeks payment only for Sprint's interMTA calls. Id. ¶ 15. Line System charges for interMTA calls pursuant to tariffs that it has filed at the FCC (for interstate interMTA calls) and at state public utility commissions (for intrastate interMTA calls). Id. As of August 31, 2011, Sprint was past due on $240,558.88 in access charges for interMTA calls. Id. ¶ 24. That amount increases as Line Systems continues to terminate calls from Sprint customers. Id.

Line Systems asserts claims for breach of federal and state tariffs, violations of the Telecommunications Act of 1996, unjust enrichment and account stated.

STANDARD OF REVIEW

Federal Rule of Civil Procedure 12(b)(6) permits a court to dismiss all or part of an action for "failure to state a claim upon which relief can be granted." Fed. R. Civ. P. 12(b)(6). Typically, "a complaint attacked by a Rule 12(b)(6) motion to dismiss does not need detailed factual allegations," though plaintiff's obligation to state the grounds of entitlement to relief "requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). "Factual allegations must be enough to raise a right to relief above the speculative level on the assumption that all of the allegations in the complaint are true (even if doubtful in fact)." Id. (citations omitted). The complaint must state "'enough facts to raise a reasonable expectation that discovery will reveal evidence of' the necessary element." Wilkerson v. New Media Tech. Charter Sch. Inc., 522 F.3d 315, 321 (3d Cir. 2008), quoting Twombly, 550 U.S. at 556. The Court of Appeals has made clear that after Ashcroft v. Iqbal, 556 U.S. 662, (2009), "conclusory or 'bare-bones' allegations will no longer survive a motion to dismiss: 'threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice.' To prevent dismissal, all civil complaints must now set out 'sufficient factual matter' to show that the claim is facially plausible." Fowler v. UPMC Shadyside, 578 F.3d 203, 210 (3d Cir. 2009), quoting Iqbal, 556 U.S. at 678. The Court also set forth a two part-analysis for reviewing motions to dismiss in light of Twombly and Iqbal: "First, the factual and legal elements of a claim should be separated. The District Court must accept all of the complaint's well-pleaded facts as true, but may disregard any legal conclusions. Second, a District Court must then determine whether the facts alleged in the complaint are sufficient to show that the plaintiff has a 'plausible claim for relief.'" Id. at 210-11, quoting Iqbal, 556 U.S. at 679. The Court explained, "a complaint must do more than allege the plaintiff's entitlement to relief. A complaint has to 'show' such an entitlement with its facts." Id., citing Phillips v. Cnty. of Allegheny, 515 F.3d 224, 234-35 (3d Cir. 2008). "Where the well-pleaded facts do not permit the court to infer more than the mere possibility of misconduct, the complaint has alleged--but it has not 'show[n]'--'that the pleader is entitled to relief.'" Iqbal, 556 U.S. at 679.

DISCUSSION

I. Breach of Tariff Claims

According to Sprint, the Complaint fails to state a claim for breach of tariff because the

Telecommunications Act of 1996 prohibits the tariff-based access charges for which Line Systems demands payment. According to Line Systems, the Act requires tariff-based charges. The resolution of Sprint's motion to dismiss the breach of tariff claims therefore hinges on my interpretation of the Act.

Two provisions of the Act are especially pertinent. The first requires local exchange carriers, such as Line Systems, to "to establish reciprocal compensation arrangements for the transport and termination of telecommunications." 47 U.S.C. ยง 251(b)(5). The parties agree that they have not reached a "reciprocal compensation arrangement." Rather, Line Systems' charges are based on its tariffs. Whether Line Systems may collect payments from Sprint pursuant to tariffs depends on the second key provision of ...


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