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									   Case 4:11-cv-04011-KES Document 1               Filed 01/20/11 Page 1 of 8 PageID #: 1


                            UNITED STATES DISTRICT COURT                               JAN 20 20U
                          FOR THE DISTRICT OF SOUTH DAKOTA
                                 SOUTHERN DIVISION                                    .~

SPRINT COMMUNICATIONS COMPANY                        )       CIVIL NO.   ll- Lj Ol}
L.P.,                                                )
                      Plaintiff,                     )
       v.                                            )                 COMPLAINT
SOUTH DAKOTA NETWORK, LLC,                           )
                      Defendant.                     )

       Sprint Communications Company L.P., ("Sprint"), as its Complaint against Defendant

South Dakota Network, LLC ("SON"), alleges as follows:


       1.      Sprint is the target of a "traffic pumping" scam intended to bilk Sprint for millions

of dollars of fraudulent and unlawful charges. The scheme is the product of local exchange

carriers ("LECs") attempting to game the telecommunications tariff system by artificially

stimulating traffic in rural areas where LECs are authorized (assuming the traffic is tariff

compliant) to charge the highest rates to an interexchange carrier ("IXC") like Sprint for

facilitating calls made over the IXC lines. SDN is part of moving interstate traffic over the

network, and charges its interstate access rates for such traffic. The charges are not authorized

by the governing tariff. SDN has billed Sprint for interstate charges arising out of the traffic

pumping scheme. Sprint has not agreed to these charges and SDN is not authorized to impose

these charges. Sprint is entitled to damages for unlawful charges that it has paid, and is entitled

to a court order confirming that it need not pay such charges going forward.
     Case 4:11-cv-04011-KES Document 1              Filed 01/20/11 Page 2 of 8 PageID #: 2


         2.      Sprint is a Delaware limited partnership with its principal place of business at

6200 Sprint Parkway, Overland Park, Kansas 66251, and is authorized to conduct business in the

State of South Dakota. None of Sprint's partners are citizens of South Dakota or have their

principal places of business in this state.

         3.      SDN is a South Dakota limited liability company with its principal place of

business at 2900 West 10th Street, Sioux Falls, South Dakota 57104.


         4.      This Court has jurisdiction over this case under 28 U.S.c. § 1331, because

Count I of the Complaint arises under the Communications Act of 1934,47 U.S.c. § 151 et seq.

and 47 U.S.C. § 207. This Court has supplemental jurisdiction over Sprint's state law claim

under 28 U.S.c. § 1367. Jurisdiction also exists under 28 U.S.C. § 1332, as Sprint and SDN are

citizens of different states and the amount in controversy exceeds $75,000.


         5.      Venue is proper in this district under 28 U.S.c. § 1391 (b) because SDN resides in

South Dakota and a substantial part of the events giving rise to Sprint's claims arose in South



         6.      Sprint provides wireline long-distance I telecommunications services to consumers

around the country.      Sprint provides these long-distance services by using its own facilities

where it can, and by interconnecting with other telecommunications carriers' phone lines as

necessary to complete calls. For example, in a typical situation (unlike in this case), a long-

I   A "long-distance" call occurs when a call is placed from one local calling area to another.


   Case 4:11-cv-04011-KES Document 1                Filed 01/20/11 Page 3 of 8 PageID #: 3

distance call may be made from a Sprint customer in Virginia to a called party, or "end user," in

South Dakota. Sprint generally owns the facilities over which the call travels between the local

calling area of the calling customer and the local calling area of the called customer (or it enters

into arrangements with other carriers to route the calls over their facilities). Sprint does not

generally own the local facilities inside the local calling area that reach to the called party, and so

must purchase access to those facilities to complete the call.

       7.      At times Sprint will utilize an intermediary carrier like SDN to connect to a

LEC's facilities to complete a call to an end-user customer.

       8.      When Sprint makes use of another carrier's local facilities to complete an

interstate call to an end-user customer it is using "switched access service," and in such cases

Sprint is both a provider of telecommunications services and a customer of the local carrier

whose lines are used.     The particular charge that Sprint pays for access to the called party

through the local carrier's network is known as a "terminating access" charge because the call

"terminates" with that party.

       9.      SDN operates as a monopoly in providing interstate centralized equal access to

various telecommunications companies in South Dakota. The interstate switched access services

identified in SDN's Tariff F.C.C. No. I are centralized equal access services provided in

conjunction with the provision of originating and terminating switched access services provided

by "Routing Exchange Carriers." For calls that do not constitute originating or terminating

switched access calls by Routing Exchange Carriers, no centralized equal access services are

provided by SDN and its TariffF.C.C. No. I does not apply.

        10.    Traffic pumping occurs when a LEC partners with a second company ("Call

Connection Company") that has established free or nearly free conference calling, chat-line, or


   Case 4:11-cv-04011-KES Document 1              Filed 01/20/11 Page 4 of 8 PageID #: 4

similar services that callers use to connect to other callers or recordings. The Call Connection

Company generates huge call volumes to numbers assigned to the LEC, the LEC unlawfully bills

those calls as if they are subject to access charges, interexchange carriers unwittingly pay those

bills, and the LEC and Call Connection Company share the profits. These schemes normally

occur in rural areas where LECs have high enough access rates to allow them to share profits

with the Call Connection Companies.

       11.     For many reasons, LECs do not provide switched access services to interexchange

carriers ("IXCs") for calls delivered to Call Connection Companies.

       12.     For example, the Iowa Utilities Board decided on September 21, 2009 in its

docket FCU 07-02 that intrastate switched access charges do not apply to calls delivered to Call

Connection Companies because 1) Call Connection Companies are not end users of local

exchange service, 2) such calls are not terminated to an end user's premises, and 3) such do not

terminate in the LEC's certificated local exchange area. The Iowa Utilities Board ordered LECs

to refund improperly billed intrastate switched access charges billed to IXCs, including Sprint.

       13.     Similarly, the Federal Communications Commission ("FCC") decided on

November 25, 2009, that Call Connection Companies served by an ILEC in Iowa were not end

users under the ILEC's tariff, and thus calls to those Call Connection Companies did not impose

access charge liability on the delivering interexchange carrier.        In the Matter of Qwest

Communications Corp. v. Farmers and Merchants Mutual Tel. Co., File No. EB-07-MD-001,

Second Order On Reconsideration (Nov. 25, 2009).

       14.     For reasons identified in the Iowa Board's order and the FCC's Farmers and

Merchants decision, and for other reasons, interstate calls delivered to Call Connection

Companies are not subject to switched access charges under the LECs' interstate switched access


   Case 4:11-cv-04011-KES Document 1               Filed 01/20/11 Page 5 of 8 PageID #: 5

tariffs. Sprint is presently involved in litigation with a number of such LECs in which it has

alleged that those LECs have wrongfully billed Sprint terminating switched access charges for

traffic delivered to Call Connection Companies. Those cases remain pending.

        15.    Because the calls to the Call Connection Companies are not subject to LECs'

interstate terminating switched access charges, SDN does not provide interstate centralized equal

access service under its Tariff F.C.C. No. 1 when it delivers such calls to LECs.

        16.    A number of LECs in South Dakota have been engaged in traffic pumping since

at least June of 2007. SDN knew or reasonably should have known these companies were

involved in traffic pumping. SDN has unlawfully billed Sprint centralized interstate switched

access charges for calls delivered to Call Connection Companies and Sprint paid those bills

through May 2009. On or about June 11,2009, Sprint submitted a dispute and request for refund

to SDN with respect to switched access charges assessed by SDN for calls to Call Connection

Companies. That dispute was for time periods between June 2007 and April 2009. SDN has

refused to issue a refund.

        17.    Beginning with SDN's bills dated May 2009 through current, Sprint has disputed

its obligation to pay SDN's interstate switched access charges for traffic delivered to Call

Connection Companies.

       18.     Under Section 203 of the Federal Communications Act, carriers subject to

tariffing requirements cannot charge customers for services not specified in their interstate

tariffs, and cannot charge rates other than those set out in those tariffs. See American Tel. & Tel.

Co. v. Central Office Tel., Inc., 524 U.S. 214, 222 (1998). Further, because carriers set the terms

of their tariffs unilaterally, it is well settled that any ambiguity in the terms of a tariff must be

strictly construed against the carrier that drafted it and in favor of customers. Because tariffs are


   Case 4:11-cv-04011-KES Document 1                 Filed 01/20/11 Page 6 of 8 PageID #: 6

construed narrowly, only services expressly set out in the tariff are "deemed" to be purchased.

See In re Theodore Allen Commc'ns, Inc. v. MCI Telecomms. Corp., 12               F.e.e.R.   6623,   ~   22


                                             COUNT I
                          Refund of Amounts Unlawfully Billed Pursuant
                                    to Interstate Access Tariff

          19.   Sprint restates and reallages its prior allegations.

          20.   Beginning in June 2007 SDN has billed Sprint pursuant to its Tariff F.e.e. No.1

for calls that are not subject to that tariff.

          21.    SDN has billed and collected substantial charges denominated as interstate

switched access service charges based on transiting interstate long-distance calls from Sprint to

entities that provide conference call, chat line, international call, and/or similar services that

enable callers to connect to each other.         SON's Tariff   F.e.e.   No. 1 does not provide for

collecting these charges; imposing such charges is thus a breach of the tariff.

          22.   The collection of charges for interstate services not set out in the SON's Tariff

F.e.e.    No.1 violates 47   u.s.e.   § 203. Sprint is authorized to bring suit for damages for this

conduct in this Court pursuant to 47     u.s.e. § 207.
          23.    Sprint is entitled to reasonable damages in the amount of the unauthorized access

charges paid to SDN under the SDN Tariff F.C.C. No. I, which amounts exceed $75,000, plus

reasonable costs and attorney's fees, pursuant to 47     u.s.e. §§ 206,207.   Sprint will establish the

amount of damages at trial.

          24.    Sprint is also entitled to an order enjoining SON from assessing charges on Sprint

when such charges are not expressly authorized by applicable tariffs. 28      u.s.e. §§ 2201,2202.
          25.   Sprint is further entitled to a declaratory judgment and declaration of rights

establishing that SDN has no right to charge or collect access charges based on transitin


   Case 4:11-cv-04011-KES Document 1                   Filed 01/20/11 Page 7 of 8 PageID #: 7

interstate long-distance calls from Sprint to entities that provide conference call, chat line,

international call, or similar services that enable callers to connect to each other. 28 U.S.C. §§


                                              COUNT TWO
                                           Unjust Enrichment

        26.	    Sprint restates and realleges its prior allegations.

        27.     In the alternative to Count One, SDN's Tariff F.C.C. No.1 does not govern its

authority (or lack thereof) to bill Sprint for receiving the interstate calls described above.

        28.     SDN, through its wrongful, improper, unjust, and unfair conduct has reaped

substantial and unconscionable profits from Sprint by charging Sprint for receiving these calls.

        29.     As such, Sprint has conferred a benefit on SDN, and SDN has received monies to

which it is not entitled.

        30.     In equity and good conscience, it would be unjust for SDN to enrich itself at the

expense of Sprint. SDN's unlawful conduct will continue unless the prayer for relief is granted.

        31.     Sprint has been damaged by SDN's actions and is entitled to damages in an

amount in excess of $75,000 to be detennined at trial, plus interest, attorneys' fees to the full

extent allowed by law, and costs, and all available declaratory and injunctive relief.

                                        PRAYER FOR RELIEF

        32.	    For the foregoing reasons, Sprint is entitled to judgment as follows:

                 (a)	       On Count One, for an award of money damages in an amount to be

                            proven at trial, plus attorneys' fees allowed by law and applicable


                 (b)	       On Count Two for an award of money damages in an amount to be

                            detennined at trial;

  Case 4:11-cv-04011-KES Document 1                     Filed 01/20/11 Page 8 of 8 PageID #: 8

              (c)           Awarding Sprint such other and further relief as the Court deems just and


               ~ c: t1...
Dated:   January~,    2011                        GUNDERSON, PALMER, NELSON &
                                                  ASHMORE, LLP

                                                   -=:-:::::::-      r
                                                  By                     ~
                                                     Talbot 1. Wiecz ek
                                                  Gunderson, Palm r, Nelson & Ashmore, LLP
                                                  440 Mount Rushmore Road, 4th Floor
                                                  P.O. Box 8045
                                                  Rapid City, SD 57701
                                                  Phone: 605.342.1078
                                                  Fax: 605-342-0480
                                                  Email: tjw@gpnalaw.com
                                                  Attorneys for Sprint Communications Company


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