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UNITED STATES DISTRICT COURT JAN 20 20U
FOR THE DISTRICT OF SOUTH DAKOTA
SOUTHERN DIVISION .~
SPRINT COMMUNICATIONS COMPANY ) CIVIL NO. ll- Lj Ol}
v. ) COMPLAINT
SOUTH DAKOTA NETWORK, LLC, )
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.
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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.
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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
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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
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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
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
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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
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
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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. §§
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;
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(c) Awarding Sprint such other and further relief as the Court deems just and
~ c: t1...
Dated: January~, 2011 GUNDERSON, PALMER, NELSON &
Talbot 1. Wiecz ek
Gunderson, Palm r, Nelson & Ashmore, LLP
440 Mount Rushmore Road, 4th Floor
P.O. Box 8045
Rapid City, SD 57701
Attorneys for Sprint Communications Company