Verizon Select Services, INC. v. Berkshire Telephone Corporation

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S. Martin Teel, Jr.

United States Bankruptcy Judge

UNITED STATES BANKRUPTCY COURT

FOR THE DISTRICT OF COLUMBIA

In re )

)

CORE COMMUNICATIONS INC., ) Case No. 17-00258

) (Chapter 11)

Debtor. )

eee )

)

MCI COMMUNICATIONS SERVICES, )

INC., et al., )

)

Plaintiffs, )

)

Vv. ) Adversary Proceeding

) No. 19-10003

BERKSHIRE TELEPHONE )

CORPORATION, et al., ) Not for publication in West’s

) Bankruptcy Reporter.

Defendants. )

MEMORANDUM DECISION AND ORDER

RE MOTION TO DISMISS AMENDED COUNTERCLAIMS

MCI Communications Services, Inc. and Verizon Select

Services Inc., the plaintiffs and counterclaim-defendants in this

adversary proceeding, have filed a motion to dismiss the amended

counterclaims of Core Communications, Inc. (“Core”), the

defendant and counterclaim-plaintiff in this adversary proceeding

and the debtor in the main bankruptcy case. The pertinent facts

regarding each of the two plaintiffs are the same, and I will

refer to them collectively as “Verizon” and treat them as though

they are a single entity.

In its Amended Counterclaims (Dkt. No. 38), Core, a local

exchange carrier (“LEC”) asserts counterclaims against Verizon,

an interexchange carrier (“IXC”), to collect amounts that it

billed for switched access services that Core allegedly provided

to Verizon under its filed tariffs. Counts I and II of the

Amended Counterclaims allege that Verizon breached the express

terms of Core’s federal (Count I) and state (Count II) tariffs by

failing to pay the tariffed rates that Core billed for those

services. Count III alleges a breach of contract arising from

Verizon’s alleged failure to pay for access services offered by

Core, which Verizon has accepted and continued to use. Count IV

alleges that Verizon breached implied contracts with Core by

failing to pay Core’s invoices, and Court V alleges that Verizon

was unjustly enriched by retaining the unpaid amounts. Finally,

Count VI seeks declaratory relief as to Verizon’s continuing

failure to make payments under any of the legal theories raised

in Counts I-V with respect to Verizon’s past conduct.

Verizon has moved to dismiss all of the Amended

Counterclaims. I will grant Verizon’s Motion to Dismiss as to

Counts III, IV, and V, and as to Count VI to the extent it seeks

declaratory relief as to ongoing injuries of a nature similar to

Counts III, IV, and V, but will deny the motion as to Counts I

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and II and as to Count VI to the extent it seeks declaratory

relief as to ongoing breaches of tariff claims.

I

LEGAL STANDARD

The Federal Rules of Civil Procedure require that a

plaintiff “give the defendant fair notice of what the plaintiff’s

claim is and the grounds on which it rests.” Bell Atl. Corp. v.

Twombly, 550 U.S. 544, 545 (2007) (quoting Conley v. Gibson, 355

U.S. 41, 47 (1957)). A complaint survives a motion to dismiss if

it contains enough factual allegations “to state a claim to

relief that is plausible on its face.” Id. at 570. The factual

allegations in a complaint “must be enough to raise a right to

relief above the speculative level.” Id. “A claim has facial

plausibility when the plaintiff pleads factual content that

allows the court to draw the reasonable inference that the

defendant is liable for the misconduct alleged.” Ashcroft v.

Iqbal, 556 U.S. 662, 678 (2009).

In addition, “[i]n addressing a motion to dismiss, the court

accepts the complaint’s factual allegations as true.” Browning

v. Clinton, 292 F.3d 235, 242 (D.C. Cir. 2002). However, the

court is not bound to accept an inference drawn by the plaintiff

if the inference is not supported by the facts in the complaint.

See Iqbal, 556 U.S. at 679 (“While legal conclusions can provide

the framework of a complaint, they must be supported by factual

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allegations.”). The court may consider “any documents either

attached to or incorporated in the complaint and matters of which

[the court] may take judicial notice.” In re Wube, Case No.

12-00577, 2013 WL 2109315, at *1 (Bankr. D.D.C. May 15, 2013)

(quoting Equal Emp’t Opportunity Comm’n v. St. Francis Xavier

Parochial Sch., 117 F.3d 621, 624 (D.C. Cir. 1997)).

II

FEDERAL AND STATE TARIFF CLAIMS (COUNTS I AND II)

In Counts I and II of the Amended Counterclaims, Core pleads

claims for breach of its federal and state tariffs. The elements

of a breach of tariff claim are: (1) that the LEC operated under

a filed tariff; (2) that the LEC provided services to a customer

under that tariff; and (3) that the LEC billed the customer for

services provided under its tariffs at rates listed in those same

tariffs. See Advamtel, LLC v. AT&T Corp., 118 F. Supp. 2d 680,

683-84 (E.D. Va. 2000). Verizon contends that Counts I and II

must be dismissed because:

Core seeks to recover charges for switched access

services allegedly provided under Core’s federal and

state tariffs, but fails to allege that it provided any

tariffed service to Verizon, and still less which

services, or at what rate. Core alleges only that it

provided “access services” and “switched access” to

Verizon, but those are not tariffed services that Core

actually could provide or for which Verizon could be

required to pay.

In its opposition to the Motion to Dismiss (Dkt. No. 41), Core

contends that because a “[c]omplaint need only contain a ‘short

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and plain statement of the claim showing that the pleader is

entitled to relief,’” Kingman Park Civic Ass’n v. Williams, 348

F.3d 1033, 1040 (D.C. Cir. 2003) (citing Fed. R. Civ. P. 8(a)),

the allegations in its Amended Counterclaims are sufficient to

survive a motion to dismiss. In response, Verizon maintains that

after Twombly and Iqbal, such a “short and plain statement” is no

longer sufficient.

It is correct that Twombly and Iqbal “are universally

recognized as having modified the basic pleading standard in all

federal civil cases,” American Fed’n of State, Cty. & Mun. Emps.

Local 2401 v. District of Columbia, 796 F. Supp. 2d 136, 139

(D.D.C. 2011), and that “whether a particular complaint

sufficiently alleges a clearly established violation of law

cannot be decided in isolation from the facts pleaded.” Iqbal,

556 U.S. at 673. However, Verizon goes too far. Shortly after

Twombly, the Supreme Court reiterated in Erickson v. Pardus, 551

U.S. 89, 93 (2007), that “[s]pecific facts are not necessary; the

statement need only give the defendant fair notice of what the

... claim is and the grounds upon which it rests.” (Ellipsis in

original) (quoting Twombly, 550 U.S. at 555). And after Iqbal,

several circuits, including the D.C. Circuit, have continued to

view Erickson as good law. See Atherton v. District of Columbia

Office of Mayor, 567 F.3d 672, 681 (D.C. Cir. 2009) (citing

Erickson); Mirkin v. XOOM Energy, LLC, 931 F.3d 173, 176-77 (2d

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Cir. 2019) (same); United States v. $579,475.00 in U.S. Currency,

917 F.3d 1047, 1049 (8th Cir. 2019) (same); Foster v. Principal

Life Ins. Co., 806 F.3d 967 (7th Cir. 2015) (same); Burnett v.

Mortgage Electronic Registration Systems, Inc., 706 F.3d 1231,

1235 (10th Cir. 2013) (same). Accordingly, taking the factual

allegations in the Amended Counterclaims as true, I conclude that

the factual allegations in Counts I and II are sufficient to

state a claim for relief. Core’s Amended Counterclaims allege:

(1) that Core provides access services, operating under filed

tariffs (¶¶ 21, 24-28); (2) that Core provided access services to

Verizon under those tariffs (¶¶ 29-30); and (3) that Core billed

Verizon for services provided under its tariffs at rates listed

in those same tariffs (¶¶ 39-41). While Core’s Exhibit C is only

a summary of the invoices it allegedly provided to Verizon, the

Amended Counterclaims (¶ 41) specifically aver that the invoices

in question “set forth the volume of call traffic underlying each

invoice calculation, along with all of the interstate and

intrastate rate elements that apply to those volumes for purposes

of calculating the final invoice amount.” These allegations

contain sufficent “factual content that allows the court to draw

the reasonable inference that the defendant is liable for the

misconduct alleged” as required by Twombly and Iqbal. Because

“courts are not licensed to impose heightened pleading

requirements in certain classes of cases simply to avoid the risk

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that unsubstantiated claims will burden the courts and opposing

parties,” $579,475.00 in U.S. Currency, 917 F.3d at 1049 (citing

Swierkiewicz v. Sorema N.A., 534 U.S. 506, 512, 514-15 (2002)),

Core’s Amended Counterclaims suffice to put Verizon on notice of

the counterclaims that Core advances. Dismissal of these counts

for failure to state a claim is therefore inappropriate.

III

EQUITABLE RELIEF (COUNTS III, IV, AND V)

Verizon’s Motion to Dismiss requests dismissal of Counts

III, IV, and V with prejudice, arguing that Core’s claims are

barred as a matter of law by the filed rate doctrine. See Am.

Tel. & Tel. Co. v. Cent. Office Tel., Inc., 524 U.S. 214, 222

(1998) (applying the filed rate doctrine to section 203 of the

Communications Act, 47 U.S.C.). “When the filed rate doctrine

applies, it generally precludes a regulated party from obtaining

any compensation under other principles of federal or state law

that is different than the filed rate.” CallerID4u, Inc. v. MCI

Commc’ns Servs., Inc., 880 F.3d 1048, 1053 (9th Cir. 2018)

(citing Keogh v. Chicago & N.W. Ry. Co., 260 U.S. 156, 163

(1922)). The FCC’s current permissive de-tariffing policy

provides two means by which a “competitive local exchange

carrier” (LECs other than certain incumbent LECs) can provide an

IXC with and charge for interstate access services: the filed

tariff or a privately negotiated contract. See All Am. Tel. Co.

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v. AT&T Corp., 328 F. Supp. 3d 342, 349 (S.D.N.Y. 2018). Verizon

thus argues that Count III, which merely attempts to construe

Verizon’s “acceptance” of its “offer” of services, which were

subject to existing tariff rates, as a contract, and Counts IV

and V, which seek equitable remedies, are preempted by the filed

rate doctrine.

In response to Verizon’s request to dismiss Counts III, IV,

and V, Core states that these counts “were alleged in the

alternative and in the event that Counts I or II were not

viable,” and that it does not oppose the dismissal of these

counts “provided that the dismissal of these Counts is without

prejudice.” The court may consider as conceded Verizon’s

arguments in support of dismissal, under Fed. R. Civ. P.

12(b)(6), of Counts III, IV, and V. See Texas v. United States,

798 F.3d 1108, 1110 (D.C. Cir. 2015); Jacobson v. Hofgard, 168 F.

Supp. 3d 187, 208 (D.D.C. 2016); Toms v. Office of the Architect

of the Capitol, 650 F. Supp. 2d 11, 18 (D.D.C. 2009). See also

Gates v. United States, 928 F. Supp. 2d 63, 69-70 (D.D.C. 2013)

(dismissing negligence claim with prejudice when the plaintiff’s

opposition did not address the arguments in the defendant’s

motion to dismiss). Dismissal of Counts III, IV, and V is thus

warranted.

Verizon requests that Counts III, IV, and V be dismissed

with prejudice. “A dismissal with prejudice is warranted only

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when a trial court determines that the allegation of other facts

consistent with the challenged pleading could not possibly cure

the deficiency.” Firestone v. Firestone, 76 F.3d 1205, 1209

(D.C. Cir. 1996) (internal quotation marks and citations

omitted). In its opposition to the Motion to Dismiss, Core

offered no rebuttal of Verizon’s argument that these claims fail

as a matter of law and provided no explanation as to how

amendment of these counts would make them viable.

In opposing Verizon’s request for dismissal with prejudice,

Core requests that the dismissal be without prejudice and that it

be granted leave to amend its Amended Counterclaims. Pursuant to

Fed. R. Civ. P. 15(a)(2), a court may grant leave to amend a

pleading and “should freely give leave when justice so requires.”

However, Core has not set forth reasons why justice requires that

it be allowed to amend Counts IV, V, and VI.

Under LBR 7015-1, incorporating DCt.LCvR 15.1, a motion for

leave to file an amended pleading must be accompanied by an

original of the proposed pleading as amended. If Core’s

opposition to the motion to dismiss is treated as a motion for

leave to amend, Core did not comply with that obligation. Core

implicitly has conceded that Counts IV, V, and VI, as currently

written, must be dismissed, and has not explained what amendments

it would make to cure the deficiencies in Counts IV, V, and VI

identified by Verizon if allowed to amend those counts, and why

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such amendments would not be a futile attempt to state valid

claims.1 A district court may deny a motion to amend ‘if the

proposed amendment fails to cure the deficiencies in the original

pleading, or could not survive a second motion to dismiss.’”

Arlin-Golf, LLC v. Village of Arlington Heights, 631 F.3d 818,

823 (7th Cir. 2011) (quoting Foster v. DeLuca, 545 F.3d 582, 584

(7th Cir. 2008). Accordingly, I will deny the request for leave

to amend Counts IV, V, and VI, and will dismiss those counts.

However, I will not make that dismissal a final and

appealable order under Fed. R. Civ. P. 54(b): that would

potentially result in unwarranted piecemeal appeals. Under Rule

54(b), as a non-final order, the order dismissing Counts IV, V,

and VI “does not end the action as to any of the claims or

parties and may be revised at any time before the entry of a

judgment adjudicating all the claims and all the parties’ rights

and liabilities.” In other words, the dismissal will become a

dismissal with prejudice once, and only once, all claims are

1 That stands in contrast to how Core responded, in part VI

of its memorandum in support of its opposition to Verizon’s

motion to dismiss, to the request for dismissal of Counts I and

II with prejudice. Core had already argued that the Amended

Counterclaims’ Exhibit C was intended to be a summary of the

invoices for which payment is due, and that it was not required

to append all of the invoices to its pleading. If the court

concluded that Exhibit C did not provide sufficient detail, an

amendment to provide further adequate detail regarding Counts I

and II would obviously not be futile. Core thus noted as to

Counts I and II that Verizon does not “contend (because it

cannot) that Core’s further amendment of its Counterclaims would

be futile, in bad faith, or prejudicial to Verizon[.]”

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adjudicated in this adversary proceeding. It is not necessary to

recite at this juncture, as requested by Verizon, that the

dismissal is with prejudice. Theoretically, Core might file a

motion in which it shows (based on, for example, a change in the

law or facts not yet disclosed) that justice requires that it be

allowed to amend Counts IV, V, and VI.

IV

DECLARATORY RELIEF (COUNT VI)

Finally, Count VI seeks declaratory relief pursuant to the

Declaratory Judgment Act, 28 U.S.C. §§ 2201 and 2202, with

respect to Verizon’s “refusal to pay the charges under Core’s

Tariffs for the use of Core’s access services.” Verizon argues

that Count VI must dismissed for three reasons: (1) the court

lacks jurisdiction if the court dismisses Count I (the only claim

based on federal law); (2) Count VI is duplicative of other

counts and must be dismissed on the same bases as those counts or

is superfluous with respect to those counts that are not

dismissed; and (3) Court VI seeks a remedy only for past acts,

but “the Declaratory Judgment Act does not authorize remedies for

past injuries alone.” Hodgkins v. Holder, 677 F. Supp. 2d 202,

203 (D.D.C. 2010). In its opposition to the Motion to Dismiss,

Core concedes that declaratory relief is unavailable as to

ongoing injuries premised on claims that the court dismisses.

The Declaratory Judgment Act provides in § 2201(a) that in

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“a case of actual controversy within its jurisdiction,” any court

of the United States “may declare the rights and other legal

relations of any interested party seeking such a declaration,

whether or not further relief is or could be sought.” The

District Court has subject matter jurisdiction over this

adversary proceeding pursuant to 28 U.S.C. § 1334(b) regardless

of whether the claims asserted arise under federal or state law,

and thus has authority under § 2201(a) to grant a declaratory

judgment as both the federal and state law claims.2 In turn,

that jurisdiction is exercised by this court as a unit of the

District Court under 28 U.S.C. § 151 by way of referral under 28

2 Section 2201(a) specifically addresses the issue of

declaratory judgments in “a proceeding under section 505 or 1146

of title 11,” thus evidencing that the District Court has subject

matter jurisdiction to grant declaratory judgment relief in

proceedings such as this under other provisions of title 11

brought to enhance the estate. “The corollary to the

specification [in the] Declaratory Judgment Act of two title 11

provisions is that other Bankruptcy Code issues are within the

ambit of the Declaratory Judgment Act. See 12 JAMES WM. MOORE ET

AL., MOORE’S FEDERAL PRACTICE § 57.25[1][b] (2018).” Dragnea v.

Dragnea (In re Dragnea), 609 B.R. 239, 257 (Bankr. E.D. Cal.

2019) (footnote omitted).

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U.S.C. § 157.3 Whatever surviving counts Count VI relates to,

the court has subject matter jurisdiction over Count VI.

I am not dismissing Counts I and II, and the court retains

jurisdiction as to Count VI to the extent it is premised on

Counts I and II. However, the court agrees with Verizon that

Count VI must be dismissed to the extent that Core seeks

declaratory relief thereunder on bases set forth in Counts III,

IV, and V.

The only remaining question is whether Count VI properly

alleges “ongoing and repeated” injuries which are consequently

not duplicative of the past injuries alleged in Counts I and II.

Verizon highlights Core’s use of the present perfect tense in

¶ 109 (“Core has lawfully charged MCI and Verizon . . .”) and

¶ 110 (“MCI and Verizon have violated . . .”) and argues that

Core alleges only past failures to pay, which are not a basis for

relief under the Declaratory Judgment Act. I reject this

argument:

3 The District Court is a court of the United States.

Although the bankruptcy court is not listed in 28 U.S.C. § 451 as

a court of the United States, it exercises the jurisdiction of

the District Court. See In re Schaefer Salt Recovery, Inc., 542

F.3d 90, 105 (3d Cir. 2008) (the bankruptcy court “is a unit of

the district court, which is a ‘court of the United States,’ and

thus the bankruptcy court comes within the scope of § 451.”);

Beneficial Trust Deeds v. Franklin (In re Franklin), 802 F.2d

324, 326 (9th Cir. 1986) (cases falling within district court's

jurisdiction under § 1334(b) are delegated to the bankruptcy

court which thus has jurisdiction over any declaratory judgment

request coming within § 1334(b)); In re McGuirl, No. 90-00141,

2001 WL 1798478, at *1 (Bankr. D.D.C. Nov. 30, 2001) (same).

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The present perfect tense—“has been”—“denotes an act,

state, or condition that is now completed or continues up

to the present.” Chicago Manual of Style § 5.132 (17th

ed. 2017); see also Bryan A. Garner, Modern American

Usage 802–03 (3d ed. 2009); McManus v. McManus Fin.

Consultants, Inc., No. 10-cv-0281, 2010 WL 4290866, at *3

(D.Nev. Oct. 20, 2010) (“The perfect tense in the English

language indicates a completed action, regardless of the

continuing vitality of the action. For example, ‘I have

been to London’ says nothing of whether I am still in

London today.”).

Colon v. Ashby, 314 F. Supp. 3d 116, 121 (D.D.C. 2018).

Moreover, other paragraphs of the Amended Counterclaims “render[]

this question purely academic,” U.S. v. Louisiana, Civil Action

No. 11-470-JJB, 2011 WL 6012992, at *2 (M.D.La. Dec. 1, 2011),

because the Amended Counterclaims allege “[a] present,

actionable, and justiciable controversy” and “ongoing and

repeated practices” (¶¶ 104 and 105). Specifically, ¶ 111 of the

Amended Counterclaims explicitly seeks a declaratory judgment

that Verizon is “obligated to make timely payment of all of these

charges, which includes all the charges for access services Core

rendered to MCI and Verizon along with late payment changes, as

they become due” (emphasis added). It is therefore inappropriate

to interpret the present perfect tense in ¶¶ 109-110 as limited

to past injuries. In seeking a declaratory judgment regarding

ongoing and repeated practices, Count VI is not duplicative of

the claims to recover damages in Counts I and II. Accordingly,

the court will not dismiss Count VI insofar as it seeks

declaratory relief with respect to Verizon’s alleged ongoing

14

failure to pay charges arising from Core’s filed tariffs as

asserted in Counts I and II.

V

CONCLUSION

For the foregoing reasons, I will grant the Motion to

Dismiss as to Counts III, IV, and V, and as to Count VI to the

extent that Core seeks declaratory relief in Count VI on bases

set forth in Counts III, IV, and V. These dismissals are without

leave to amend at this juncture. I will deny the Motion to

Dismiss as to Counts I and II, and as to Count VI (to the extent

that Core seeks declaratory relief as to ongoing injuries arising

from Verizon’s alleged failure to pay charges under Core’s filed

tariffs). It is thus

ORDERED that Verizon’s Motion to Dismiss Amended

Counterclaims (Dkt. No. 40) is granted in part as follows. It is

further

ORDERED that Counts III, IV, and V of the Amended

Counterclaims are dismissed; and that Count VI is dismissed as to

any request for declaratory relief other than for injuries

arising from Verizon’s alleged breach of Core’s tariffs. It is

further

ORDERED that the Motion to Dismiss Amended Counterclaims to

dismiss is otherwise DENIED.

[Signed and dated above.]

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Copies to: All counsel of record; e-recipients.

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R:\Common\TeelSM\KLP\Core 19-10003\MCI v. Berkshire (In re Core Communications, Inc.) Order re MTD Counterclaims v6.wpd