Brandenburg Tel. Co. v. Sprint Commc'ns Co.

658 F.Supp.3d 427

BRANDENBURG TELEPHONE COMPANY, Plaintiff, v. SPRINT COMMUNICATIONS CO., L.P., Defendants.

Civil Action No. 3:09-cv-109-CHB

United States District Court, W.D. Kentucky, Louisville Division

Signed February 28, 2023

Edward Tipton Depp, John E. Selent, Robert B. Herrick, Dinsmore & Shohl LLP, Louisville, KY, for Plaintiff.

Claire V. J. Joseph, Philip R. Schenkenberg, Taft Stettinius & Hollister LLP, Minneapolis, MN, Emily E. Mattingly, Matthew R. Lindblom, Stoll Keenon Ogden PLLC, Louisville, KY, Steven B. Loy, Stoll Keenon Ogden PLLC, Lexington, KY, for Defendants.

MEMORANDUM OPINION AND ORDER

CLARIA HORN BOOM, UNITED STATES DISTRICT COURT JUDGE

This matter is before the Court on the Motion for Summary Judgment filed by Plaintiff Brandenburg Telephone Company ("Brandenburg"), [R. 101], and the Motion for Partial Summary Judgment filed by Defendant Sprint Communications Company, L.P. ("Sprint"), [R. 102]. Sprint has also filed a Motion for Judicial Notice, [R. 100]. The parties have filed their respective response and reply briefs to the pending motions. See [R. 103; R. 104; R. 105; R. 106; R. 107; R. 108]. These motions are therefore fully briefed and ripe for review.

I. BACKGROUND

A. Introduction

Though the procedural posture and underlying state court proceedings in this case are painfully complicated and lengthy, the core dispute is relatively simple. Sprint claims Brandenburg overcharged it for connecting long distance calls placed by Sprint's customers. Specifically, Sprint claims that between 2002 and 2009, Brandenburg incorrectly characterized these calls as intrastate calls by using an outdated methodology for categorizing the calls' jurisdictional nature, and, consequently, applied the higher access charges under the state tariff that governed intrastate calls at the time. Sprint argues Brandenburg should have employed an updated methodology for determining the jurisdictional nature of the calls, which would have rendered the calls interstate and subject to the lower access charges under the federal tariff.

Sprint filed an Administrative Complaint with the Kentucky Public Service Commission ("PSC") in 2008 to sort it out. Shortly thereafter, Brandenburg sued in Meade Circuit Court, and Sprint removed the action to this Court based on diversity jurisdiction. Sprint told this Court that the dispute could and should be decided by the PSC and asked this Court to dismiss or stay this action. The Court stayed the case for a decade. The PSC ruled in Sprint's favor, finding the updated jurisdictional methodology applied, rendering the calls at issue not intrastate, but rather interstate and subject to the federal tariff's lower rates. On appeal, the state courts overturned that ruling in part, holding that it would be unlawful to retroactively change the methodology Brandenburg used to categorize the calls as intrastate. The effect of the state court ruling meant the 2002-2009 calls remained subject to the state tariff's higher rates for intrastate calls. The state proceedings finally concluded in 2020. Now, having lost in state court, Sprint returns to this Court and argues that the state court rulings are preempted by federal law, which compels this Court to designate the calls as interstate, subject to the lower tariff.

Brandenburg argues a scattershot of reasons why Sprint should not be allowed to argue federal preemption in this Court, after losing in state court—collateral estoppel, res judicata, judicial estoppel, statute of limitations, and that the Rooker-Feldman doctrine divests the Court of jurisdiction. As outlined below, some of these theories are near misses, but nonetheless misses. The Court agrees, however, that res judicata, judicial estoppel, and the statute of limitations land squarely to bar Sprint's preemption counterclaims and defenses.

Why judicial estoppel? Early on in this action, Sprint convinced this Court that the dispute, other than enforcing any damages award flowing from the PSC action, should be resolved through the PSC's administrative process because the "PSC has full authority to interpret Brandenburg's intrastate tariff and thereby resolve the issues that separate the parties." [R. 14, p. 3]. Accepting Sprint's position, this Court stayed the case for a decade while Sprint and Brandenburg litigated in the PSC and state court. After losing in state court, Sprint returns to this Court and now argues that federal preemption applies to compel this Court to overturn the state court outcome and find the calls are interstate, subject to the lower federal tariff. Sprint further argues that its federal preemption counterclaims ripened only after the state court action became final in 2020. But, as explained below, Sprint knew all along that determining the jurisdictional nature of the calls implicated both state and federal law. So why did Sprint insist on litigating before the PSC and state courts? To enjoy the more generous look-back period under state law and avoid the two-year federal statute of limitations. Indeed, at the time Sprint filed its PSC complaint in 2008, most of the disputed charges (dating back to 2002) would have been time-barred under the federal statute.

For the reasons set forth below, the Court finds that Sprint's preemption arguments are barred by the doctrine of res judicata because those very claims could have been decided in the state proceeding. Further, the equitable doctrine of judicial estoppel prevents Sprint from changing positions now and arguing that federal preemption requires this Court to reach a different outcome. Lastly, even if res judicata and judicial estoppel were inapplicable, Sprint failed to bring its federal preemption counterclaims until 2020, and such claims are time-barred by the same federal limitations period Sprint attempted to side-step by litigating through the PSC.

B. Federal and State Tariffs Affecting Sprint and Brandenburg

Sprint is an Interexchange Carrier ("IXC") that carries interexchange (or long-distance)¹ telephone traffic for Sprint PCS and Nextel, two Commercial Mobile Radio Service ("CMRS") providers.² See, e.g., Sprint Communications Co., L.P. v. Brandenburg Telephone Co., Nos. 2017-CA-534-MR, 2017-CA-555-MR, 2019 WL 4565546, *2 (Ky. App. Sept. 20, 2019) (hereafter "Brandenburg II"). When customers of these CMRS providers place a wireless call, those calls are carried over Sprint's long-distance network. Id. However, "[c]alls made by Sprint's customers to customers of other service providers must be 'handed off' to another carrier before reaching their final destination or termination point—the called party." Id. Sprint therefore relies on local carriers, known as "local exchange carriers" or "LECs," to deliver its long-distance calls to their final recipient.

Brandenburg is one such LEC. More specifically, Brandenburg is a rural LEC that terminates wireless long-distance calls that include CMRS-originated traffic—like the calls carried over Sprint's long-distance network. Id. Thus, when Sprint sends a call to Brandenburg's area, Brandenburg "receives" it and connects the call to its intended local recipient. Id.

Sprint pays Brandenburg certain "switched access charges" for these services, in accordance with the applicable state and federal tariffs. Id. Whether the state or federal tariff applies depends on whether the call is intrastate—meaning it originates and terminates in the same state—or interstate, meaning the call originates in one state but is terminated in another. Id. Purely intrastate services are billed through the Kentucky PSC in the Duo County Telephone Cooperative Corp., Inc. PSC KY Tariff No. 2A ("the Duo County tariff"). Id. However, the rates, terms, and conditions of Brandenburg's interstate services are defined by the Federal Communications Commission ("FCC") in the National Exchange Carrier Association Tariff No. 5 ("the NECA tariff"). Id. For the time period relevant to this case, the NECA tariff access charges for connecting interstate calls were cheaper than the Duo County tariff's rates for connecting intrastate calls. Id.

To determine which tariff applies, Brandenburg must first ascertain whether the incoming call is an interstate or intrastate one. Id. In other words, it must determine the "jurisdictional character" of the call. See Global Crossing Telecommunications, Inc. v. Southwestern Bell Telephone, L.C., No. 4:04-CV-00319-ERW, 2006 WL 8458971, at *1 (E.D. Mo. Sept. 12, 2006) ("Whether a call is interstate or intrastate is referred to as its jurisdictional character."). During the relevant time periods, the Duo County tariff provided the following guidance on determining the jurisdictional character of a call:

For Switched Access Service, the Telephone Company cannot in all cases determine the jurisdictional nature of customer traffic and its related access minutes. In such cases the customer may be called upon to provide a projected estimate of its traffic, split between the interstate and intrastate jurisdictions.

[R. 100-1, p. 161]. The tariff then provides regulations that "govern such estimates, their reporting by the customer and cases whether the Telephone Company will develop jurisdictional percentages." Id. Relevant to this case, those regulations state,

When originating call details are insufficient to determine the jurisdiction for the call, the customer shall supply the projected interstate percentage or authorize the Telephone Company to use the Telephone Company developed percentage. This percentage shall be used by the Telephone Company as the projected interstate percentage for originating and terminating access minutes.

Id. at 166; see also [R. 92-2, p. 6 (quoting Duo County tariff, Section 2.3.11(C))]. In other words, when the originating call details do not provide enough information to determine the call's jurisdiction, the carrier should use the projected interstate usage, or PIU method, to determine whether calls were interstate or...