Icom Holding, Inc. v. MCI Worldcom, Inc.

Citations: 238 F.3d 219; 2001 U.S. App. LEXIS 809; 2001 WL 46675Docket: 00-7660

Court: Court of Appeals for the Second Circuit; January 21, 2001; Federal Appellate Court

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ICOM Holding, Inc. (plaintiff-appellant) filed an appeal against MCI Worldcom, Inc. (defendant-appellee) after the United States District Court for the Eastern District of New York dismissed its breach of contract claim. The district court ruled that ICOM's state-law claims regarding MCI's failure to install high-speed telecommunications circuits were preempted by the federal Communications Act and barred by the filed-rate doctrine. 

The contractual agreement between ICOM and MCI, established through correspondence from August to October 1998, involved MCI providing telecommunications services, including the installation of six DS3 circuits, for which ICOM paid installation and ongoing operation fees. Despite fulfilling its contractual obligations, ICOM alleged MCI did not complete the installation by the promised date of November 20, 1998, leading to financial losses due to ICOM's inability to meet third-party contracts reliant on MCI's services.

ICOM originally filed the lawsuit in June 1999 in New York State Supreme Court, which was later removed to federal court by MCI. The dismissal was upheld on appeal, with the court affirming the lower court's findings that federal law preempted ICOM's claims. The appeal's review standard involved accepting the complaint's allegations as true and determining if there were any facts that could potentially support the claims for relief.

Federal law mandates that common carriers of communication services file tariffs with the FCC, detailing all charges and applicable regulations (47 U.S.C. 203(a)). Carriers cannot offer services or enforce practices outside these filed tariffs (47 U.S.C. 203(c)), ensuring uniform rates for all service purchasers (MCI Telecomms. Corp. v. American Tel. Tel. Co., 512 U.S. 218, 229-30). The Supreme Court established the filed-rate doctrine, stating that only the filed rate is lawful and deviations are prohibited (American Tel. Tel. Co. v. Central Office Tel. Inc., 524 U.S. 214, 222). Tariffs bind both carriers and customers as law, and rights defined in tariffs cannot be altered by contracts or torts (Central Office, 524 U.S. at 227). Any state-law claims that attempt to enforce terms differing from filed rates are preempted by federal law (Cahnmann v. Sprint Corp., 133 F.3d 484, 489).

In this case, the defendant argues that the filed-rate doctrine prohibits the plaintiff’s claims because they relate to a filed tariff and would modify its terms. MFS Tariff No. 2, filed with the FCC, governs the contract in question and outlines the parties' rights and obligations, including that the defendant is not liable for delays in service commencement and limits liability for damages to specified allowances. The defendant asserts the plaintiff's state-law claims would improperly enforce a contract provision guaranteeing an installation completion date and impose liability beyond the tariff's limits, thus asserting these claims are preempted by the filed-rate doctrine.

The court agrees with the defendant and the district court's conclusion that the Supreme Court's decision in Central Office mandates the dismissal of the plaintiff's claims. In Central Office, the Supreme Court established that the filed-rate doctrine prohibits state-law claims related not only to telecommunications service pricing but also to non-price aspects like service provisioning and billing. The plaintiff's arguments that their claims were unrelated to rates were dismissed, as rates are intrinsically linked to the services provided. The court emphasizes that allowing the plaintiff's breach of contract claims would grant them privileges not available to other customers under MCI's filed tariff, directly contradicting the tariff's provisions. 

The plaintiff's distinction that the contract pertains solely to equipment installation rather than services is rejected, as the contract explicitly involves the provision of telecommunications services, including installation. Furthermore, the court finds that the plaintiff's claims conflict with the filed tariff, rendering them inconsistent with the remedies preserved under the Savings Clause of the Communications Act. Consequently, the judgment of the district court is affirmed, and the court does not need to address whether a "service" constitutes any non-price term under a contract governed by a filed tariff.