Verizon’s Tariff Liability Must Wait for FCC Ruling

February 21, 2019

By Bernie Pazanowski

Peerless Network has to wait until the Federal Communications Commission decides issues related to Verizon’s counterclaims before it can collect tariffs allegedly owed to it by Verizon, the Seventh Circuit said.

The tariff claim was so intertwined with the issues before the FCC, the district court erred by ruling for Peerless, the opinion by Judge Amy J. St. Eve said.

Peerless is a local exchange carrier that operates in limited geographic areas. Verizon is an interexchange carrier that transports calls across geographic areas. IXCs pay service charges to LECs to access their network.

Verizon had a contract with Peerless to pay fees for switching services that were lower than Peerless’s tariff rates filed with the government. When the relationship soured, Verizon stopped paying certain fees.

Peerless sued, claiming Verizon breached their agreement and federal and state tariffs. Verizon filed counterclaims, also asserting breach of tariffs.

Because Verizon’s counterclaims involved complicated issues of telecommunication law, the district court stayed them and referred the issues to the FCC. At the same time, it granted Peerless summary judgment on its breach of tariff claims, because Verizon was required to pay disputed charges before challenging them.

Peerless’s breach of tariff issues are the exact same issues before the FCC, the appeals court said. If the FCC decides the issues in Verizon’s favor, Peerless won’t be entitled to the fees, it said.

Regardless of how the FCC rules, the unsuccessful party could appeal the district court’s application of that ruling to the counterclaims, which will put the issues in this appeal back before the Seventh Circuit, the court said. This is the type of judicial inefficiency that made the partial summary judgment improper, it said.

Chief Judge Diane P. Wood and Judge Michael B. Brennan joined the opinion.

Kelley Drye & Warren LLP represented Peerless. Kellogg Hansen Todd Figel & Frederick PLLC represented Verizon.

The case is Peerless Network, Inc. v. MCI Commc’ns Servs., Inc., 2019 BL 55446, 7th Cir., No. 18-2747, 2/20/19.


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