PACIFIC LIGHTNET, INC., Petitioner/Plaintiff-Appellant/Cross-Appellee
TIME WARNER TELECOM, INC., and TIME WARNER TELECOM OF HAWAI'I L.P., Respondents/Defendants- Appellees/Cross-Appellants.
CERTIORARI TO THE INTERMEDIATE COURT OF APPEALS (ICA NOS. 28948 and 29105; CIVIL NOS. 05-1-0428 AND 03-1-2557)
RECKTENWALD, C.J., NAKAYAMA, ACOBA, McKENNA, AND POLLACK, JJ.
We hold that, first, the circuit court of the first circuit (the court) erred in invoking the primary jurisdiction doctrine to dismiss the instant case. Second, inasmuch as the filed-rate doctrine applies, the court erred in failing to instruct the jury that Petitioner/Plaintiff-Appellant/Cross-Appellee Wavecom Solutions Corporation, formerly known as Pacific Lightnet, Inc. (PLNI) could not recover for any claims involving charges not filed within 120 days of receipt of billing, in accordance with the Hawai'i Public Utilities Commission (PUC) and Federal Communications Commission (FCC) filed tariffs.
Accordingly, we affirm in part and vacate in part the February 21, 2013 judgment of the Intermediate Court of Appeals (ICA), filed pursuant to its January 25, 2013 Memorandum Opinion, vacate the court's October 23, 2007 order granting the Motion to Dismiss for Lack of Subject Matter Jurisdiction filed by Respondent/Defendants-Appellees/Cross-Appellants Time Warner Telecom, Inc. and Time Warner Telecom of Hawai'i L.P. (Time Warner) on September 4, 2007, and vacate in part the court's December 12, 2007 judgment.
The instant appeal involves a dispute between two telecommunications carriers. Time Warner is a telecommunications carrier that provides voice, internet and data services. As part of these services, Time Warner provides "call termination services, " which is the ability for customers of one carrier to make and complete calls to customers of Time Warner. The dispute in this case relates to call termination services that were allegedly provided by Time Warner.
The claims in this case consist of two separate billing disputes between the carriers over the call termination services. The two claims are called collectively, "Feature Group D claims." First, PLNI claims that Time Warner owes it a credit for certain past charges. Second, PLNI contests certain charges by Time Warner for services that it allegedly never received. The background facts relevant to these two claims follow.
A. GST's Sale to Time Warner
GST Telecommunication, Inc. (GST) was a telecommunications company that filed for Chapter 11 bankruptcy on May 17, 2000. In September 2000, Time Warner agreed to purchase certain assets of GST in bankruptcy, including GST's mainland telephone network. The acquisition was made pursuant to an asset purchase agreement between Time Warner and GST, dated September 11, 2000. According to Time Warner, the asset purchase agreement gave it "all Carrier Identification Codes (a.k.a. CICs)." CICs are used to identify telephone calls associated with a certain carrier.
Time Warner did not purchase all of GST's assets, but rather, GST retained for later sale the assets of GST Hawaii's operations, including all rights to what the asset purchase agreement called "Feature Group D" accounts. Time Warner maintains that although it acquired the Carrier Identification Codes from GST, GST recognized that it was still responsible to pay Time Warner the outstanding balance under certain CICs for services that GST customers had previously received.
B. GST's Sale to PLNI
In March 2001, TM Communications Hawai'i (TM) agreed to purchase, inter alia, the remainder of the GST assets in Hawai'i that were not previously sold to Time Warner. PLNI is a subsidiary of TM. The asset purchase agreement between GST and TM, dated March 9, 2001 stated that TM had purchased:
[A]ll of the [GST's] rights, title, and interests in and to the Business, including, without limitation, in and to all the assets, properties, rights, accounts receivable and Assumed Contracts of [GST] and claims of [GST] related to the Business . . . .
C. Customer Investigation Forms and Dispute Submissions Filed with Time Warner
On September 18, 2001, PLNI and/or its predecessor GST Hawai'i filed a "Customer Investigation Form" with Time Warner requesting that Time Warner investigate and resolve PLNI's claim for disputed invoice amounts relating to "Feature Group D" services. The Customer Investigation Form listed the "Disputed Amount[s]" as $30, 760.16, "All Invoices $200, 000[, ]" and "All Invoices[.]" D. Assignment by TM to PLNI
TM assigned its rights in the asset purchase agreement with GST to PLNI in October 2001. According to Time Warner, under PLNI's assumed asset purchase agreement, PLNI was informed of Time Warner's purchase of GST assets, as well as which assets were covered by PLNI's purchase. Time Warner states that Section 1.2 of the asset purchase agreement "provided that [PLNI] was not acquiring any assets that had been conveyed to [Time Warner], " and that this meant that "excluded from PLNI's purchase were 'all Carrier Identification Codes' that Time Warner had acquired." Time Warner asserts that, pursuant to the plain language of PLNI's assumed asset purchase agreement, PLNI did not acquire CICs 5756, 5478 or any other Carrier Identification Codes. E. Time Warner's Alleged Resolution of Dispute with GST
On June 1, 2002, according to Time Warner, Time Warner and GST resolved the billing dispute over pre-October 2001 call termination services received. Time Warner states that, "[b]ased on proper certification from GST, [Time Warner] credited GST's account $327, 714.03 for end user taxes that should not have been charged, and GST paid the remaining balance due and owing." Time Warner notes that "as [Time Warner] was still providing transition services for GST under the asset purchase agreement between Time Warner and GST, including housing certain GST divisions [such as] GST's billing services, the notice of the $327, 714.03 credit was sent to GST, via Time Warner's street address."
According to Time Warner, on August 7, 2002, any dispute regarding who owned certain Carrier Identification Codes was resolved by GST when it assigned CIC 5478 to PLNI via Time Warner's Consent and Agreement to Assign Service. Time Warner asserts that CIC 5756, as well as all other Carrier
Identification Codes remained with Time Warner pursuant to the terms of the original asset purchase agreement executed between GST and Time Warner.
II. Circuit Court Proceedings
A. Pre-Trial Proceedings
On December 30, 2003, PLNI filed a complaint and motion for preliminary injunction in the court against Time Warner, alleging, inter alia, that:
34. On September 18, 2001, [PLNI] filed a dispute on defendants' customer-investigation form for erroneous billings and payments concerning Feature Group D services that defendants never provided to either [PLNI] or GST. As of December 4, 2003, defendants indicated they were still processing this claim, which, according to [PLNI's] calculation, will result in a $230, 760.16 credit in [PLNI's] favor. . . . .
41. [Time Warner] ha[s] wrongfully mis-billed [PLNI] for services defendants never provided, and are liable to [PLNI] for damages in an amount that exceeds $200, 000, but which amount will be more precisely proved at trial.
PLNI additionally asked for "money damages based on [Time Warner's] wrongful actions in . . . © mis-billing [PLNI] for Feature Group D services [Time Warner] never provided."
On June 22, 2005, PLNI filed with Time Warner the first of another series of Billing Dispute Submissions relating to disputed invoices. Specifically, PLNI claimed that it was billed on several account numbers for Feature Group D services that it did not receive.
On November 13, 2006, PLNI filed its pretrial statement stating, inter alia, that Time Warner "misbilled [PLNI] for other telecommunications services" and that Time Warner was "liable to [PLNI] for damages in an amount that exceeds $200, 000." March 20, 2007, at the court's direction, both parties filed motions for summary judgment regarding some of the claims in PLNI's complaint. This did not include the Feature Group D claims. The court entered summary judgment in favor of Time Warner.
According to Time Warner, the parties' action then focused on the remaining claims, which at this point Time Warner believed did not include the Feature Group D claims.
On July 16, 2007, Time Warner filed a motion seeking, among other things, dismissal of the Feature Group D claims on the basis that they had been resolved. On July 27, 2007, PLNI filed its opposition, alleging that the Feature Group D claims had not been "satisfactorily resolved." On August 15, 2007, the court issued an order denying Time Warner's motion in part, and allowing PLNI to proceed with its Feature Group D claims.
On August 20, 2007, PLNI submitted to Time Warner a proposed Short Impartial Statement of the Case, which provided, in relevant part that:
[PLNI] asserts claims against [Time Warner] for billing [PLNI] approximately $138, 000 to date for a
telecommunications switching service called Feature Group D, which [Time Warner] purported to supply to [PLNI], but which [PLNI] has not received from [Time Warner]. [Time Warner] denies having improperly billed [PLNI].
Based on the court's rulings up to this point, PLNI asserted that the only remaining dispute for trial was the Feature Group D claim. On August 27, 2007, Time Warner filed its motion in limine, seeking to exclude evidence regarding elements of the Feature Group D dispute that had not been asserted in the December 30, 2003 complaint and of which [Time Warner] alleged it had not been given adequate notice (Motion in Limine).
On August 30, 2007, Time Warner filed an Answer to [PLNI']s original complaint (Answer). This answer asserted a number of affirmative defenses, including that "[PLNI's] claims are barred by the filed tariff doctrine."
The court denied Time Warner's Motion in Limine on August 31, 2007, which, Time Warner points out, was the last business day before the start of trial.
Also on August 31, 2007, PLNI filed a Motion to Strike Time Warner's Answer (Motion to Strike). PLNI's memorandum in support of its Motion to Strike stated that Time Warner had, "[w]ithout first moving for leave of the [c]ourt, " filed its answer "three years and eight months after [PLNI] filed its complaint and two business days before the start of trial . . . ."
On September 4, 2007, Time Warner submitted a motion to dismiss for lack of subject matter jurisdiction on the basis that the only remaining issues in the case, the Feature Group D claims, were of a technical nature requiring the expertise of the PUC. B. Jury Trial
A jury trial commenced the same day. On September 11, 2007, over Time Warner's objection, the jury was provided with a special verdict form addressing contract issues. Time Warner points out that the court refused to give the jury instructions on the law of tariffs, which it claims govern Feature Group D issues.
The record indicates that the jurors were given, inter alia, the following instruction:
Instruction No. 13: Telecommunications Rules - Tariff Compliance 
Telecommunications carriers are required to file tariffs with the Federal Communications Commission and the Hawai'i Public Utilities Commission. These filed tariffs govern the telecommunications carriers' services, rates, and charges. Telecommunications carriers and their customers are required to comply with these tariffs. [Handwritten as follows] The tariffs are both contracts and the law.
The tariffs were introduced into evidence as Trial Exhibit D-2 and D-3.
The jury returned a verdict in favor of PLNI in the amount of $327, 714.03 in damages resulting from the credit that was allegedly owed to PLNI. With respect to the overcharge claim, the jury found that there was a breach of contract, awarded $1.00 nominal damages for breach of contract, and determined that PLNI's outstanding bills owed to Time Warner for Feature Group D services should be reduced by $118, 109.58. The jury special verdict form stated as follows:
Question No. 1. Did Plaintiff Pacific Lightnet, Inc. prove breach of contract by Defendants regarding the billing dispute submitted on September 18, 2001?
Yes ___X____ No ________
If you answered Question No. 1 "Yes", then go on to answer Question No. 2, if you answered Question No. 1 "No", go on to Question 3.
Question No. 2. What are the damages for this breach of contract?
$ 327, 714.03
Go on to Question No. 3.
Question No. 3. Did Plaintiff Pacific Lightnet, Inc. prove breach of contract by Defendants regarding Feature Group D billings for any period from October 11, 2001, through the present?
Yes ___X____ No ________
If you answered Question No. 3 "Yes", then go on to answer Question No. 4. If you answered Question No. 3 "No", do not answer any further questions. Please have the Foreperson sign the Special Verdict Form and call the Bailiff.
Question No. 4. What are the damages for this breach of contract?
If you awarded more than $1 in Question No. 4, sign the Special Verdict Form and call the Baliff. If you awarded $1, go on to Question No. 5.
Question No. 5. If you awarded $1 in Question No. 4, state whether Plaintiff Pacific Lightnet, Inc. proved that the pending bills should be reduced and, if so, in what amount.
No ________ Yes ___X____
$ 118, 109.58
Please have the Foreperson sign the Special Verdict Form and Call the Baliff.
DATED: Honolulu, Hawai'i, 9/13/07. C. Post-Trial Proceedings
On September 20, 2007, the court heard Time Warner's motion to dismiss for lack of subject matter jurisdiction that had been submitted prior to trial, on September 4, 2007. At the September 20, 2007 hearing, the court stated near the conclusion of the hearing that it would grant the motion and stay the effect of the verdict:
So what I'll say is in granting the motion on the basis of primary jurisdiction, I'm staying the effect of the verdict we're going to get this up because we're not going to wait around. That would be ridiculous so that you could take it up as part of the judgment. That's my -- I don't think -- even if I'm wrong as to how the mechanics of the judgment should look, they'll tell me that too. But I just want it not to be a matter that languishes here for no good reason and then have to do a 54(b) cert on the summary judgment and send that up. That would be extremely inefficient, don't you agree? I mean, I'm assuming you're going to appeal the summary judgment?
The court granted the motion to dismiss for lack of subject matter jurisdiction on October 23, 2007. The jury verdict was ...