Krutchen v. Zayo Bandwidth Northeast, LLC

591 F. Supp. 2d 1002, 28 I.E.R. Cas. (BNA) 1106, 2008 U.S. Dist. LEXIS 98505, 2008 WL 5142375
CourtDistrict Court, D. Minnesota
DecidedDecember 5, 2008
DocketCivil 08-4737 (DWF/FLN)
StatusPublished
Cited by11 cases

This text of 591 F. Supp. 2d 1002 (Krutchen v. Zayo Bandwidth Northeast, LLC) is published on Counsel Stack Legal Research, covering District Court, D. Minnesota primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Krutchen v. Zayo Bandwidth Northeast, LLC, 591 F. Supp. 2d 1002, 28 I.E.R. Cas. (BNA) 1106, 2008 U.S. Dist. LEXIS 98505, 2008 WL 5142375 (mnd 2008).

Opinion

MEMORANDUM OPINION AND ORDER

DONOVAN W. FRANK, District Judge.

INTRODUCTION

This matter is before the Court on a Motion to Dismiss and Transfer brought by Defendants Zayo Bandwidth Northeast, LLC (“Zayo Bandwidth”), Onvoy, Inc. (“Onvoy”), and Zayo Group Inc. (“Zayo Group,” and together “Defendants”). Plaintiff James C. Krutchen (“Krutchen”) opposes the motion. For the reasons set forth below, the Court grants in part and denies in part the Defendants’ motion.

BACKGROUND

Krutchen is an engineer who works in the telecommunications field. In July 1998, Krutchen began working in Minnesota for MEANS Telecom, which became Onvoy in April 1999. While Krutchen was employed by Onvoy in Minnesota, he became aware of a scheme by which Onvoy routed telephone traffic for MCI Communications Corporation (“MCI”) to avoid the payment of access charges. 1 The project was called “Canadian Gateway.” (Doc. No. 6 ¶ 14.)

First, Onvoy routed the calls to a Canadian carrier. The Canadian carrier then routed the traffic to Bell Canada, which was connected by a fixed-rate, unmetered line to the network operated by AT & T. AT & T brought this telephone traffic back into the United States, bearing the cost of transport and paying the access charges for terminating the calls through local telephone companies.

The purpose of this scheme was to deceive AT & T into handling MCI-originated long distance traffic and for AT & T to pay the terminating access charges for MCI’s calls. In furtherance of this scheme, Onvoy altered the telephone traffic’s identifying information to erase any indication that the calls originated with MCI. Krutchen believed and confirmed that this scheme originated with MCI. 2

Onvoy also engaged in a similar scheme to divert through Canada long distance telephone traffic originating from sixty rural Minnesota telephone companies. 3 On-voy acted as the long distance carrier for these companies, delivering the traffic to a Canadian carrier that handed the traffic off to AT & T. Onvoy altered identifying information for this traffic so that AT & T would perceive it to have originated in Canada.

Krutchen was concerned that these projects were not lawful and he voiced his concerns about these projects to Onvoy’s upper management. In October 2002, Krutchen informed Onvoy’s Chief Operating Officer Fritz Hendricks (“Hendricks”) about the Canadian Gateway project while giving him a tour of Onvoy’s Minneapolis facilities. Krutchen alleges that he specifi *1008 cally told Hendricks that MCI was cheating AT & T. In January 2003, Krutehen notified Paul Mahoney, General Counsel of Onvoy, that he was concerned about this scheme. Krutehen was particularly concerned because, at that time, MCI was the sole long distance services provider for the federal government. Krutehen believed that MCI and Onvoy’s scheme may have been replicated in other countries and that U.S. domestic telephone traffic, including law enforcement, government and national defense traffic, was susceptible to foreign surveillance. Krutehen alleges that he related his concerns quietly because he was the sole income earner for his family and was worried that he would be terminated from his employment. As far as Krutehen is aware, Onvoy did not respond to his concerns.

Krutehen was laid off from Onvoy in January 2003 in connection with downsizing. In March 2003, Krutehen relayed his concerns to the Federal Bureau of Investigation (“FBI”), but the FBI did not respond to his report. In May 2003, Krutehen approached William Barr (“Barr”), then General Counsel of Verizon and formerly Attorney General of the United States, and conveyed information regarding the Project Invader and Canadian Gateway schemes. Barr provided information to the proper authorities resulting in three significant events. First, the United States Attorney’s Office for the Southern District of New York opened a criminal investigation and 'grand jury proceeding into the conduct of Onvoy and MCI in May 2003, in connection with which Krutehen provided information to federal law enforcement officers, complied with subpoenas, and provided a sworn statement to the grand jury. Second, the United States’ General Services Administration determined that MCI violated federal regulations by engaging in these schemes and barred MCI from bidding on federal contracts. Third, AT & T sued MCI and Onvoy in September 2003, alleging that Onvoy and MCI engaged in illegal conduct and including claims of fraud and racketeering. The suit was settled in February 2004; MCI paid AT & T $120 million and Onvoy made a payment to AT & T in an undisclosed amount.

Krutehen alleges that when Onvoy learned of his cooperation with authorities, it held a press conference to denounce him. Onvoy claimed that it was a “victim of corporate terrorism.” (Id. ¶ 22.) Krutehen contends that Onvoy also falsely claimed that Krutehen had poor performance reviews and failed to meet expectations, 4 worked to establish a competitor while on Onvoy’s payroll, and engaged an attorney to assist him in becoming a shareholder of Onvoy. Krutehen further alleges that Hendricks attended this press conference and denied that Onvoy had altered identifying information for telephone traffic or otherwise defrauded AT & T.

In August 2003, Krutehen was hired by PPL Telecom and he and his family relocated to Pennsylvania. During his employment with PPL Telecom, Krutehen received annual performance reviews stating that he exceeded expectations. He also received performance awards in 2005 and 2007 and a merit based raise in 2007.

In early 2007, Krutehen learned that PPL Telecom was to be sold. Krutehen was told that he was critical to the success of the transition, and PPL Telecom agreed in writing to provide him with severance benefits of nine months of separation pay if he continued working for PPL Telecom and was fired without cause by PPL Tele- *1009 com or was not offered a position with PPL Telecom’s successor. In May 2007, Communication Infrastructure Investments, LLC (“CII”) announced it would purchase PPL Telecom. 5

As a result of this transaction, PPL Telecom began operating under the Zayo Bandwidth name and Zayo Bandwidth became the operating company and wholly-owned subsidiary of CII. Krutchen’s employment with PPL Telecom was terminated on August 24, 2007, and on August 25, 2007 he became an employee of Zayo Bandwidth. Zayo Bandwidth’s offer of employment to Krutchen included its agreement to provide Krutchen with severance benefits equivalent to those he had been offered by PPL Telecom if he was terminated involuntarily, other than for cause, within twelve months after the sale closed. 6

Two days before the CII purchase of PPL Telecom and its transition to Zayo Bandwidth, Zayo Bandwidth announced it intended to purchase Onvoy.

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591 F. Supp. 2d 1002, 28 I.E.R. Cas. (BNA) 1106, 2008 U.S. Dist. LEXIS 98505, 2008 WL 5142375, Counsel Stack Legal Research, https://law.counselstack.com/opinion/krutchen-v-zayo-bandwidth-northeast-llc-mnd-2008.