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LLC v. Illinois Bell Telephone Co.

United States District Court, E.D. Missouri, Eastern Division

September 26, 2019




         This matter comes before the Court on AT&T’s[1] motion for partial summary judgment on damages (Doc. No. 139), Plaintiffs’ motion for summary judgment on damages (Doc. No. 144), Plaintiffs’ motion to exclude AT&T’s Trunk Integrated Record Keeping System (“TIRKS”) spreadsheet and related testimony (Doc. No. 151), and Plaintiffs’ motion to exclude testimony and evidence regarding AT&T’s credit spreadsheet (Doc. No. 153). The motions have been fully briefed and are ready for disposition.

         I. Background

         The motions before the Court have been filed in Phase II – the damages phase – of this litigation. The Court’s previous orders detail the procedural history of Phase I and relevant rulings therein. Thus, the Court will only address facts relevant to the motions before it.

         Plaintiffs and AT&T entered into bilateral interconnection agreements (“ICAs”), under which AT&T provided interconnection[2] to Plaintiffs in accordance with the Telecommunications Act of 1966, 47 U.S.C. §§ 151, et. seq. (“the Act”), which governs the parties. It is undisputed that AT&T charged Plaintiffs higher tariff rates, rather than lower “cost-based” or “TELRIC”[3] rates, for local interconnection. In Phase I of this lawsuit, the Court held that AT&T violated the terms of the ICAs when it charged Plaintiffs for the use of entrance facilities[4] at this higher rate. Thus, the central issue in Phase II of the litigation and the motions before the Court is the amount of Plaintiffs’ damages and the methodology employed in calculating them.

         Plaintiffs’ damages calculation is based on the difference between the amount AT&T charged and the amount that Plaintiffs contend AT&T should have charged for the use of local circuits (hereinafter referred to as “damages circuits”). The calculation employed the following three steps: (1) identifying the local circuits leased from AT&T; (2) determining the percentage that each of those local circuits was used for local interconnection; and (3) calculating the difference between the amount AT&T charged and the amount AT&T should have charged for those circuits.

         Plaintiffs explain that they identified the damages circuits from Plaintiffs’ order forms submitted to AT&T. Plaintiffs ordered circuits that ranged in size, and each circuit included “trunks, ” which are the smallest circuits. Plaintiffs purchased “DS1” circuits, which include 24 trunks, and “DS3” circuits, which include 28 DS1s and 672 trunks.[5]

         Plaintiffs argue that because AT&T charges its customers based on how the customer orders the trunks riding on the DS1 and DS3 circuits, it was reasonable to use AT&T order forms to identify local circuits that should have been billed at the lower TELRIC rate. Plaintiffs then retained experts to review the order forms to confirm that the circuits were in fact being used for local interconnection.

         Next, Plaintiffs identified the percentage of each circuit carrying local versus non-local calls. That percentage was derived from “factor filings, ” which are “industry-standard reports that AT&T requires Level 3 to file with AT&T each quarter.” (Doc. No. 145 at 9). Plaintiffs maintain that factor filings show, for all the circuits leased from AT&T in each state, the percentage of telephone calls that are interstate, long-distance intrastate, and local. For DS3 circuits, Plaintiffs determined which DS1 circuits riding on the DS3 circuit carried local calls and then used the factor filings to calculate the percentage of those DS1 circuits that were used to carry local calls.[6]

         After determining the percentage of each circuit being used to carry local calls, Plaintiffs calculated the difference between the amount AT&T charged and the amount AT&T should have charged for those circuits under the terms of the ICAs. Plaintiffs’ expert then prepared four spreadsheets that reflect the results of his damages calculations and related information for Level 3 DS1 circuits, Level 3 DS3 circuits, Broadwing DS1 circuits, and Broadwing DS3 circuits. Plaintiffs include in their calculation circuits used to transmit 911 calls.

         AT&T states that it intends to use data pulled from TIRKS to demonstrate that Plaintiffs’ methodology is flawed. TIRKS is an online system used by AT&T’s trunk planners and engineers when they create, augment, and disconnect trunk groups in AT&T’s Time Division Multiplexing network-the network that includes the damages circuits. (Doc. No. 158 at 3). AT&T also intends to introduce evidence of “volume discount” credits totaling $2, 698, 555.68[7] that it argues should apply to reduce the amount of damages claimed by Plaintiffs.

         II. Arguments of the Parties

         Plaintiffs filed a motion for summary judgment on damages, arguing that they produced a detailed and reasonable calculation of their damages consistent with AT&T’s practices and guidelines, as well as industry standards, and that AT&T has not materially refuted Plaintiffs’ damages or shown that a genuine issue of material fact exists as to how damages were calculated and the amount thereof.

         AT&T filed a response in opposition to Plaintiffs’ motion for summary judgment, as well as a separate motion for partial summary judgment, advancing the following arguments. AT&T contends that Plaintiffs have not proven that they actually paid the alleged overcharges. Further, AT&T contends that Plaintiffs’ methodology for calculating damages is flawed because: (1) Plaintiffs cannot show the extent to which a particular circuit was used for local interconnection; (2) a reasonable jury could find that Plaintiffs have not adequately explained their use of factor filings or could find that factor filings overstate the proportion of local traffic; (3) a jury could find that Plaintiffs’ damages are overstated; (4) Plaintiffs did not apply TELRIC rates correctly; and (5) Plaintiffs’ motion improperly asks the Court to draw inferences in Plaintiffs’ favor.

         AT&T also maintains that Plaintiffs’ damages calculation fails to account for the credits Plaintiffs received as a result of the alleged overcharges, and that Plaintiffs are not entitled to most of the prejudgment interest claimed because their damages are not readily ascertainable. Lastly, AT&T argues that Plaintiffs are not entitled to damages for 911 circuits, which are not used for interconnection.

         Plaintiffs reply that AT&T failed to offer any evidence to dispute Plaintiff’s damages or offer an alternative damages calculation and that their damages are not overstated. With regard to AT&T’s credit argument, Plaintiffs maintain that AT&T failed to timely assert the credit offset as an affirmative defense or counterclaim and that the credits pertain to an agreement entirely separate from the ICAs at issue in this litigation. Further, Plaintiffs assert that 911 circuits are used to carry local calls, and thus should have been charged at TELRIC rates. Lastly, Plaintiffs maintain that state law supports their claim for prejudgment interest.

         Plaintiffs also seek to exclude certain evidence and expert testimony. First, Plaintiffs seek the exclusion of AT&T’s TIRKS spreadsheet. According to Plaintiffs, the TIRKS spreadsheet contains a highly technical analysis of the damages circuits, thus necessitating an expert; however AT&T has not disclosed any expert witnesses or expert opinions concerning the TIRKS spreadsheet, its contents, its significance, or its connection with whether certain circuits were used to carry local calls. Thus, Plaintiffs argue that the TIRKS spreadsheet improperly requires the jury to speculate and form its own conclusions from looking at the document. Plaintiffs also argue that the TIRKS spreadsheet is a snapshot in time and does not show how the circuits were used during the relevant timeframe. Lastly, Plaintiffs argue that the TIRKS spreadsheet is not relevant or reliable because it only analyzes 10% of the circuits at issue and apportions damages to circuits that Plaintiffs had not included in their calculation.

         AT&T responds that Plaintiffs are improperly invoking Daubert standards to exclude a document which contains no expert opinions. AT&T states it intends to use the TIRKS spreadsheet to demonstrate that Plaintiffs’ damages analysis is flawed, which does not require expert opinion testimony at trial. AT&T further argues the TIRKS spreadsheet merely compiles AT&T’s business records. Lastly, AT&T argues the spreadsheet is probative because Plaintiffs’ damages claim encompasses the time when the spreadsheet data was pulled. AT&T also maintains that the spreadsheet is relevant and reliable, and that its inclusion of only 10% of the circuits at issue does not make the data contained therein unreliable.

         Plaintiffs also seek to exclude AT&T’s credit spreadsheet, arguing that the credits issued by AT&T during the period at issue are not relevant to Plaintiffs’ damages calculations since AT&T never required Plaintiffs to pay back any credits. Further, Plaintiffs argue that AT&T failed to assert any affirmative defense or counterclaim related to the issue of credits, and thus, AT&T’s arguments are untimely. Lastly, Plaintiffs challenge AT&T’s methodology in creating the spreadsheets as unreliable ...

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