Blitz Telecom Consulting, LLC v. Peerless Network, Inc.

CourtCourt of Appeals for the Eleventh Circuit
DecidedMarch 5, 2018
Docket16-11622
StatusUnpublished

This text of Blitz Telecom Consulting, LLC v. Peerless Network, Inc. (Blitz Telecom Consulting, LLC v. Peerless Network, Inc.) is published on Counsel Stack Legal Research, covering Court of Appeals for the Eleventh Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Blitz Telecom Consulting, LLC v. Peerless Network, Inc., (11th Cir. 2018).

Opinion

Case: 16-11622 Date Filed: 03/05/2018 Page: 1 of 21

[DO NOT PUBLISH]

IN THE UNITED STATES COURT OF APPEALS

FOR THE ELEVENTH CIRCUIT ________________________

No. 16-11622 ________________________

D.C. Docket No. 6:14-cv-00307-PGB-GJK

BLITZ TELECOM CONSULTING, LLC, a Florida Limited Liability Company,

Plaintiff - Counter Defendant - Appellee,

versus

PEERLESS NETWORK, INC., an Illinois Corporation,

Defendant - Counter Claimant - Appellant.

________________________

Appeal from the United States District Court for the Middle District of Florida ________________________

(March 5, 2018) Case: 16-11622 Date Filed: 03/05/2018 Page: 2 of 21

Before ROSENBAUM, JILL PRYOR, and RIPPLE, ∗ Circuit Judges.

PER CURIAM:

This appeal marks the latest chapter in a tumultuous business relationship

between Defendant-Appellant Peerless Network, Inc. (“Peerless”), and Plaintiff-

Appellee Blitz Telecom Consulting, LLC (“Blitz”). For the better part of four

years, Blitz and Peerless have litigated claims related to the non-payment of “co-

marketing” fees owed under a contract between the parties.

In this latest installment, after a trial in the district court, a federal jury found

in favor of Blitz on a claim that Peerless breached the contract by failing to remit

the co-marketing fee, and awarded Blitz over $2 million in compensatory damages.

Peerless now appeals that judgment, contending the district court committed legal

error on three separate occasions before and during the trial. After careful

consideration, we affirm the district court’s judgment in full.

I.

A.

Appellant Peerless is a telecommunications company whose subsidiaries

operate as “local exchange carriers.” Through its subsidiaries (collectively

∗ Honorable Kenneth F. Ripple, United States Circuit Judge for the Seventh Circuit, sitting by designation.

2 Case: 16-11622 Date Filed: 03/05/2018 Page: 3 of 21

“Peerless”), Peerless provides traditional land-line telephone service.1

Specifically, Peerless operates transmission networks that facilitate telephone calls

between end-users, or, in other words, a caller and a receiver.

Appellee Blitz is a buyer and seller of telephone numbers. Its business

involves purchasing telephone numbers from telecommunications carriers, like

Peerless, and reselling those numbers in bulk to companies who, in turn, provide

discount telephone service to end-use consumers. Some, but not all, of the

companies to which Blitz resells telephone numbers are prepaid calling-card

service providers.

On November 9, 2010, Blitz and Peerless entered into an “IP Control

Agreement” (the “Contract”). The Contract contemplated that Blitz would “place”

telecommunication traffic on Peerless’s networks, for which Peerless would be

compensated by other carriers. See Contract §§ 3.5, 7.4. In exchange, Peerless

agreed to pay Blitz a 30% commission each month.2 See Contract App. A § 1.1.

This commission, known as a “co-marketing fee,” is the basis for the parties’

present dispute.

1 Peerless also offers some wireless services. 2 The Contract states that co-marketing fees are “based on collected revenues on InterLata CABS (carrier access billing) charges for Interstate and Intrastate traffic terminating to or associated with the local telephone numbers” assigned to Blitz. Contract App. A § 1.1. “InterLATA” is a statutory term defined as “telecommunications between a point located in a local access and transport area and a point located outside such area.” 47 U.S.C. § 153 (26).

3 Case: 16-11622 Date Filed: 03/05/2018 Page: 4 of 21

By all accounts, both parties performed under the Contract throughout 2011

and early 2012. Blitz directed traffic onto Peerless networks, and Peerless

accounted for and paid Blitz the monthly co-marketing fee.

Then, in April 2012, Peerless notified Blitz by letter that it was invoking the

Contract’s “Change in Law” provision and would no longer remit the co-marketing

fee. In relevant part, the Change in Law provision provides that, in the event of

“any legislative, regulatory, judical [sic] or other legal action that materially affects

the ability of a Party to perform any material obligation,” Blitz or Peerless can, on

30 days’ written notice, “require that the affected provision(s) be renegotiated, or

that new terms and conditions be added to this Agreement.” Contract § 23.

The action Peerless relied on to invoke this provision was a March 9, 2012,

unpublished partial summary-judgment order issued by the United States District

Court for the Northern District of Texas. Peerless asserted that this order

constituted a change in telecommunications law that “materially affect[ed] the

ability of Peerless to perform in paying [the co-marketing fee] to [Blitz] for prepaid

calling card traffic.” The order, issued in a case captioned Southwestern Bell

Telephone Co. v. IDT Telecom, Inc., No. 3:09-cv-01268-P (N.D. Tex. Mar. 9,

2012), 2012 U.S. Dist. LEXIS 190775 (the “IDT Decision”), involved a dispute

between several local exchange carriers (not including Peerless) and a number of

prepaid calling-card providers. The carriers brought suit on claims that they were

4 Case: 16-11622 Date Filed: 03/05/2018 Page: 5 of 21

owed certain “access charge fees” by the prepaid calling-card companies who used

the carrier networks to transmit calls. Id., 2012 U.S. Dist. LEXIS 190775, at *2-

*7. The district court granted partial summary-judgment in favor of the carriers on

the issue of liability, ruling that the prepaid calling-card “traffic [was] subject to

access charges.”3 Id. at *18. According to Peerless, the IDT Decision changed

how much Peerless was compensated by third-party carriers on prepaid calling-

card traffic, thereby lowering Peerless’s collections from these carriers, and so

constituted a change in law entitling Peerless to cease paying Blitz co-marketing

fees. Blitz disagreed that the IDT Decision amounted to a change in law under the

Contract, and the instant litigation ensued.

Meanwhile, as these events were unfolding in late 2011 and early 2012,

Blitz was also exploring the possibility of selling its business. Though Peerless

initially expressed interest in acquiring Blitz, the parties never reached an

agreement for Peerless to do so. Blitz entertained other offers and eventually

entered a tentative purchase agreement with a third party. As it turned out,

Peerless and the third-party buyer were direct competitors.

Upon learning about the potential sale and eager to retain Blitz’s business,

Peerless approached Blitz with an alternative solution. Under the proposal, Blitz

would establish and obtain licensing for a separate entity that would operate as a

3 The case subsequently settled on the issue of damages. See Dollar Phone Access, Inc. v. AT & T Inc., No. 14-CV-3240-SLT-LB, 2015 WL 430286 at *3 (E.D.N.Y. Feb. 2, 2015). 5 Case: 16-11622 Date Filed: 03/05/2018 Page: 6 of 21

local exchange carrier like Peerless. Peerless and the new entity would then enter a

contractual relationship for certain telecommunication services, ostensibly to the

financial benefit of both.

Blitz alleges that it was in the midst of finalizing a purchase agreement with

the third party but was swayed by Peerless’s proposal and backed out. Blitz

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