Dreamscape Design, Inc. v. Affinity Network, Inc.

414 F.3d 665, 2005 U.S. App. LEXIS 13309, 2005 WL 1560330
CourtCourt of Appeals for the Seventh Circuit
DecidedJuly 5, 2005
Docket04-3035
StatusPublished
Cited by18 cases

This text of 414 F.3d 665 (Dreamscape Design, Inc. v. Affinity Network, Inc.) is published on Counsel Stack Legal Research, covering Court of Appeals for the Seventh Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Dreamscape Design, Inc. v. Affinity Network, Inc., 414 F.3d 665, 2005 U.S. App. LEXIS 13309, 2005 WL 1560330 (7th Cir. 2005).

Opinion

KANNE, Circuit Judge.

Dreamscape Design, Inc., sued Affinity Network, Inc., alleging state law claims of fraud and breach of contract relating to the cost of long-distance telephone services provided by Affinity. The district court concluded that federal law preempted Dreamscape’s claims and dismissed the complaint. We affirm.

I. Background

In September 2002, Dreamscape filed a class action complaint in Illinois state court, alleging that Affinity violated the Illinois Consumer Fraud Act (“ICFA”) by making misrepresentations about its rates for long-distance telephone service. Dreamscape claimed that Affinity fraudulently advertised, certain per-minute rates when, in fact, the rates charged were based upon a wholly different method of calculation. Specifically, Dreamscape alleges that Affinity advertised long-distance rates of 5 cents per minute for in-state service and 8.9 cents per minute for calls from Illinois to elsewhere in the continental United States. Yet when Affinity invoiced Dreamscape for services, it billed by “TCU” 1 instead of by the minute. According to Dreamscape, Affinity’s use of TCU-based charges resulted in substan *667 tially higher long-distance telephone rates than suggested by the advertisements. Dreamscape attached to its complaint invoice examples of TCU-based billing that resulted in charges equal to more than twice what the perminute charges would have been. Dreamscape’s complaint sought award of monetary damages in the amount suffered by the class, punitive damages, and injunctive relief.

In November 2002, Affinity removed the case to ■ federal court. Affinity argued that, as an interexchange telephone communications carrier, it was subject to regulation by the Federal Communications Commission (“FCC”) — -specifically the so-called “filed tariff’ 2 (or filed rate) doctrine — pursuant to the Federal Communications Act of 1934 (the “FCA”), as amended, 47 U.S.C. § 203. Thus, Affinity contended, Dreamscape’s claims challenged Affinity’s rates, the terms of which were set forth in its federally mandated tariff filed with the FCC, so Dreamscape’s claims were necessarily preempted by federal law.

On March 17, 2003, the district court agreed with Affinity and denied Dream-scape’s motion to remand, concluding that the bulk of the claims advanced in Dream-scape’s class action complaint were indeed related to Affinity’s rates for long-distance service, thus calling for federal preemption under the filed rate doctrine. The court also granted Affinity’s motion to compel arbitration in accordance with a clause in Affinity’s tariff mandating arbitration of disputes.

The arbitrator rendered a decision on April 12, 2004, concluding that Affinity’s federally filed tariff overrode state law resolution of Dreamscape’s claims. The arbitrator found that there was therefore “no remedy for the Plaintiff for any fraudulent misrepresentations made by the Defendant as alleged” and dismissed Dream-scape’s claims. But, because of a recent series' of FCC orders calling for “detariff-ing” (cancellation of the requirement to file such tariffs with the FCC) by July 31, 2001; and because it was unclear whether Dreamscape’s complaint alleged acts taking place after detariffing, Dreamscape was granted leave to amend its complaint to clarify the issue. 3

On April 23, 2004, Dreamscape filed an amended class action complaint, in which it renewed its earlier ICFA claim regarding rates charged prior to the detariffing deadline of August 1, 2001. Significantly, Dreamscape also added a claim alleging that it and other putative class members used and were invoiced for Affinity’s services after detariffing. Dreamscape purported to be advancing “only state law claims, which claims aré based on conduct of the defendant occurring after ... July 31, 2001, and accordingly there is no applicable tariff that ... could possibly preempt the claims under federal law[,] *668 and no other federal law question is raised ...Dreamscape also added a claim for breach of contract, alleging that a contract was formed between Affinity and Dream-scape (and other putative class members) upon acceptance of Affinity’s services, and Affinity breached the contract by charging rates in excess of the agreed rates “subsequent to July 31, 2001.” Dreamscape in its amended complaint again sought monetary damages, punitive damages, and in-junctive relief.

Affinity filed a motion to dismiss the amended complaint, arguing that Dream-scape’s claims remained preempted by. federal law. For its part, Dreamscape again filed a motion to remand the case to state court. On July 12, 2004, the district court entered an order granting Affinity’s motion to dismiss and denying Dreamscape’s motion to remand as moot. The court concluded that, pursuant to this court’s opinion in Boomer v. AT & T Corp., 309 F.3d 404 (7th Cir.2002), federal law governs the rates, terms, and conditions of long-distance service contracts, and state law cannot operate to invalidate these contracts, even after detariffing. The court found that Dreamscape’s amended complaint challenged Affinity’s rates for its long-distance service, and therefore, consistent with Boomer, the court concluded that the new claims were likewise preempted by federal law. Accordingly, the court dismissed with prejudice Dream-scape’s amended complaint.

On appeal, Dreamscape challenges the district court’s dismissal of its amended complaint based on its interpretation of Boomer. In the alternative, Dreamscape urges that we reconsider our preemption holding in Boomer in light of conflicting Ninth Circuit precedent.

II. Discussion

We review de novo the district court’s order dismissing Dreamscape’s claims. See Veazey v. Communications & Cable of Chi., Inc., 194 F.3d 850, 853 (7th Cir.1999). Before proceeding to the merits, however, we will briefly recap the aforementioned filed tariff doctrine and related caselaw.

As we indicated earlier, prior to August 1, 2001, the FCA required long-distance telecommunications carriers to set forth the rates and other terms and conditions of their service in tariffs to be filed with the FCC. 47 U.S.C. § 203(a); 47 C.F.R. § 61.1. This regulatory scheme be-gat the filed tariff doctrine, 4 under which carriers are required to charge rates and otherwise abide by the terms set forth in the filed tariffs. AT & T v. Cent. Office Tel., Inc., 524 U.S. 214, 221-23, 118 S.Ct.

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Bluebook (online)
414 F.3d 665, 2005 U.S. App. LEXIS 13309, 2005 WL 1560330, Counsel Stack Legal Research, https://law.counselstack.com/opinion/dreamscape-design-inc-v-affinity-network-inc-ca7-2005.