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CAL-TEX PROTECTIVE COATINGS, INC. Plaintiff, vs. AT T CORP., Defendant.

ORDER GRANTING DEFENDANT'S MOTION FOR SUMMARY JUDGMENT IN PART, DENYING DEFENDANT'S MOTION FOR SUMMARY JUDGMENT IN PART, AND DENYING PLAINTIFF'S MOTION FOR HEARING

EDWARD C. PRADO, UNITED STATES DISTRICT JUDGE.

On this date the Court considered the Defendant's motion for summary judgment, the Plaintiffs request for a hearing, and the Plaintiffs response to the Defendant's motion for summary judgment in the above-styled and numbered cause. After careful consideration, the court will grant the Defendant's motion for summary judgment, in part, deny the Defendant's motion for summary judgment, in part, and deny Plaintiffs request for a hearing.

INTRODUCTION

The Plaintiff, Cal-Tex Protective Coatings, Inc., and the Defendant, AT T, entered into a contract in December 1997 for AT T to provide Cal-Tex long-distance telephone service. Prior to entering into the contract with AT T, Cal-Tex accepted proposals from several other long-distance service providers. According to Cal-Tex, AT T requested and received copies of those proposals. AT T told Cal-Tex that AT T needed to submit the other proposals Cal-Tex had received to the Federal Communications Commission (FCC) as justification for AT T to charge Cal-Tex lower rates. As a result of its negotiations with AT T, Cal-Tex rejected the proposals that it received from AT T's competitors, believing that AT T would charge Cal-Tex rates comparable to those proposals. After AT T failed to lower its rates, Cal-Tex sued for reformation of its contract with AT T. However, Cal-Tex later amended its petition to drop the request for reformation and to allege fraudulent inducement to contract, negligent misrepresentation, and interference with prospective advantage. In its motion for summary judgment, AT T asserts that the filed-rate doctrine preempts all of Cal-Tex's state-law tort claims and that Cal-Tex' s interference with prospective advantage claim fails under Texas law.

STANDARD OF REVIEW

In the usual case, the party who seeks summary judgment must show by affidavit or other evidentiary materials that there is no genuine dispute as to any fact material to resolution of the motion. See Celotex Corp. v. Catrett, 477 U.S. 317, 325 (1986); Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250 n. 4 (1986); Lavespere v. Niagra Machine Tool Works, Inc., 910 F.2d 167, 178 (5th Cir. 1990); Fontenot v. Upjohn Co., 780 F.2d 1190, 1194 (5th Cir. 1986). To satisfy this burden, the movant must either submit evidentiary documents that negate the existence of some material element of the nonmoving party's claim or defense or, if the crucial issue is one for which the nonmoving party will bear the burden of proof at trial, merely point out that the evidentiary documents in the record contain insufficient proof concerning an essential element of the nonmoving party's claim or defense. See Celotex Corp., 477 U.S. at 325; Lavespere, 910 F.2d at 178.

Once the moving party has carried that burden, the burden shifts to the nonmoving party to show that summary judgment is not appropriate. See Fields, 922 F.2d at 1187. The nonmoving party cannot discharge this burden by referring to the mere allegations or denials of the nonmoving party's pleadings; rather, that party must, either by submitting opposing evidentiary documents or by referring to evidentiary documents already in the record, set out specific facts showing that a genuine issue exists. See Celotex, 477 U.S. at 324; Fields, 922 F.2d at 1187. In order for a court to find there are no genuine material factual issues, the court must be satisfied that no reasonable trier of fact could have found for the nonmoving party or, in other words, that the evidence favoring the nonmoving party is insufficient to enable a reasonable jury to return a verdict for the nonmovant. See Liberty Lobby, 477 U.S. at 249-50; FED. R. Civ. P. 56(e).

Where the party opposing the motion for summary judgment will have the burden of proof on an essential element of his case at trial and does not, after adequate time for discovery, make a showing sufficient to establish the existence of that element, summary judgment may be entered against him. Celotex, 477 U.S. at 322-24; Fontenot, 780 F.2d at 1194-95.

DISCUSSION

The Filed-Rate Doctrine is not a Global Shield Against All State Law Claims

AT T argues that the filed-rate doctrine preempts Cal-Tex's state-law tort claims. Although the filed-rate doctrine does prevent many state-law tort and breach of contract claims, this court does not view the filed-rate doctrine as an all-encompassing shield against all litigation arising from long-distance carriers' business practices.

The filed-rate doctrine has its foundations in the Interstate Commerce Act (ICA). One of the underlying purposes of the ICA was to prevent unreasonable and discriminatory charges against particular classes of consumers. Provisions of the Communications Act were modeled after provisions of the ICA and shared its goal of preventing unreasonable and discriminatory charges for communications service. MCI Telecommunications Corp. v. American Telephone Telegraph Co., 114 S.Ct. 2223, 2230-31 (1994). Section 203(a) of the Communications Act requires all long-distance carriers to file schedules with the FCC detailing all charges and "showing all classifications, practices, and regulations affecting such charges." 47 U.S.C. § 203(a). Section 203(c) makes it illegal for a long-distance carrier to deviate from the schedules filed in accordance with § 203(a). The filed-rate doctrine, as applicable to long-distance carriers, is a combination of § 203(c) and § 203(a). The filed-rate doctrine establishes that the "rate the carrier duly filed is the only lawful charge." AT T v. Central Office Telephone. Inc., 118 S.Ct. 1956, 1962 (1998) (quoting Louisville Nashville R. Co. v. Maxwell, 35 S.Ct. 494, 495 (1915)). The harsh consequence of the filed-rate doctrine is that no matter what rates a long-distance carrier quotes a potential customer, the rate filed by the long-distance carrier with the FCC in accordance with § 203(a) is the rate that the customer must be charged. The filed-rate doctrine is strictly applied to insure that particular customers do not receive preferential rates that could provide them with an unfair economic advantage over their competitors or other customers. The result is that even if a long-distance provider "intentionally misrepresents its rates and a customer relies on the misrepresentation, the carrier cannot be held to the promised rate if it conflicts with the published tariff." AT T, 118 S.Ct. at 1963.

The breadth of the filed-rate doctrine is not, however, all-encompassing. Concurring in the judgment of AT T v. Central Office Telephone, Inc., Chief Justice Rehnquist stated that "[i]n order for the filed-rate doctrine to serve its purpose . . . it need pre-empt only those suits that seek to alter the terms and conditions provided for in the tariff." AT T, 118 S.Ct. at 1966; see also Chicago Allon R. Co. v. Kirby, 32 S.Ct. 648, 650 (1912). According to Chief Justice Rehnquist:

The tariff does not govern, however, the entirety of the relationship between the common carrier and its customers. For example, it does not affect whatever duties state law might impose on petitioner to refrain from intentionally interfering with respondent's relationships with its customers by means other than failing to honor unenforceable side agreements, or to refrain from engaging in slander or libel, or to satisfy other contractual obligations. The filed-rate doctrine's purpose is to ensure that the filed rates are the exclusive source of the terms and conditions by which the common carrier provides to its customers the services covered by the tariff. It does not serve as a shield against all actions based in state law.
AT T, 118 S.Ct. at 1966-67. The court finds this reasoning applicable to the case before it and therefore does not agree with AT T's contention that the filed-rate doctrine preempts all claims relating to their interactions with Cal-Tex.

Cal-Tex's claims do not require the court to alter the rates that Cal-Tex is charged by AT T. Cal-Tex claims that AT T fraudulently induced Cal-Tex to contract, AT T negligently misrepresented facts during contract negotiations, and ATT interfered with Cal-Tex's prospective advantage. In seeking to establish damages for each of these claims, Cal-Tex has not asked the court to modify the rates filed with the FCC by AT T in accordance with § 203(a). The claims relate to AT T's conduct prior to entering into contract with Cal-Tex, and damages, if proven, would be equal to the money that Cal-Tex would have saved if it had contracted with another long-distance carrier instead of AT T. Thus, the filed-rate doctrine does not preempt Cal-Tex's claims against AT T because Cal-Tex is not asking the court to deviate from the rates AT T filed with the FCC to determine the appropriate damages.

Of course, Cal-Tex will be required to prove that AT T is liable in tort, by showing duty, breach, injury, and proximate cause.

Interference With Prospective Advantage

AT T also argues that Cal-Tex's claim for interference with prospective advantage fails under Texas law. The court agrees.

There are four elements to a cause of action for interference with prospective advantage: (1) a reasonable probability that a contract would have been made but for interference by the defendant; (2) a willful and intentional act of interference by the defendant; (3) that the act of interference made by the defendant must have been the proximate cause of the plaintiffs damage; and (4) actual damage. Weakly v. East, 900 S.W.2d 755, 758 (Tex.Civ.App.-Corpus Christi 1995, writ denied). There is also an implied requirement that a defendant must have intentionally or maliciously induced a third party not to enter into a contract with the plaintiff. In other words, the defendant's intentional conduct must have been directed at a third party, not the plaintiff. The imposition of this requirement is necessary for the cause of action to make sense in the commercial applications in which it is typically applied. Otherwise, plaintiffs would be permitted to sue any party they contracted with and claim damages based on the possibility that they would have been in a better position if they had contracted with a third party. The court has been unable to locate a Texas case where a claim of interference has rested on the defendant's interfering only with the plaintiff. The requirement that the defendant have prevented a third party from entering a contract or conducting business with the plaintiff has been widely and explicitly recognized by courts in other jurisdictions. See e.g. L M Enterprises, Inc. v. BEI Sensors Sys. Co., 45 F. Supp. 879, 887 (D. Kan. 1999); Dial Temporary Help Serv., Inc. v. Shock, 946 F. Supp. 847, 855 (D.Or. 1996); Schmitz v. Smentowski, 755 P.2d 726, 736 (N.M. 1990). Cal-Tex's claim for interference with prospective business advantage is insufficient to overcome AT T's motion for summary judgment because Cal-Tex failed to provide any evidence that AT T prevented a third party from contracting with Cal-Tex by directing conduct at that third party. Therefore, the court will grant AT T's motion for summary judgment with respect to Cal-Tex's claim for interference with prospective agreement.

Attorney's Fees

The court elects not to consider whether Cal-Tex is entitled to recover attorney's fees at this time.

Cal-Tex's Request for Hearing

The court denies Cal-Tex's request for hearing on AT T's motion for summary judgment.

CONCLUSION

ACCORDINGLY, it is ORDERED that the Defendant's motion for summary judgment is GRANTED in part, such that the claim for interference with prospective business advantage is dismissed, the Defendant's motion for summary judgment is DENIED in part, such that the claims for fraudulent inducement and misrepresentation will remain in the case, and the Plaintiffs' request for a hearing is DENIED. The motion, insofar as it addresses attorneys' fees is DENIED, subject to reurging.

SIGNED AND ENTERED this 9th day of August, 1999.

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CAL-TEX PROTECTIVE COATINGS, INC. v. AT T, (W.D.Tex. 1999)
(Aug 9, 1999)