World-Link, Inc. v. MeZUN.COM, Inc.

14 Misc. 3d 745
CourtNew York Supreme Court
DecidedDecember 22, 2006
StatusPublished
Cited by3 cases

This text of 14 Misc. 3d 745 (World-Link, Inc. v. MeZUN.COM, Inc.) is published on Counsel Stack Legal Research, covering New York Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
World-Link, Inc. v. MeZUN.COM, Inc., 14 Misc. 3d 745 (N.Y. Super. Ct. 2006).

Opinion

[746]*746OPINION OF THE COURT

Bernard J. Fried, J.

Plaintiff World-Link, Inc. moves for partial summary judgment (CPLR 3212) as to liability in connection with the provision of telecommunications services to defendant MeZUN.COM, Inc. (Mezun), based upon sections 201 and 202 of the federal Communications Act of 1934 (47 USC §§ 201, 202).

This motion raises the issue of the preemptive effect of these sections upon state law claims and defenses in light of recent amendments to the Communications Act, and the “detariffing” policy adopted by the Federal Communications Commission (FCC). This issue is one of first impression in the First Department, and there is a split of authority in the federal circuit courts.

World-Link is a telecommunications carrier, and it owns 100% of World-Link Telecom, Inc. (WLT), which provides telecommunications services to companies at wholesale charges.

Defendant Mezun is also a telecommunications carrier, focusing on a niche market comprising Turkish expatriates residing in the United States.

Mezun began its relationship with World-Link by acting as an agent for another entity wholly owned by World-Link, World-Link Solutions, Inc. (WLS), World-Link’s retail carrier. At this time, the parties developed a method of payment through a course of dealing, whereby World-Link established a merchant account in which it tracked the receipt of credit card payments made by WLS’s customers for services sold through Mezun. The credit card charges were directly deposited into this merchant account, and World-Link then paid Mezun a commission based upon its volume of sales.

Thereafter, World-Link alleges that it proposed that Mezun become a reseller of WLT’s services, and be charged wholesale rates. The parties entered into a carrier service agreement (agreement) in August of 2001 (exhibit A, annexed to affidavit of Paul Stamoulis at schedule C), and altered their payment arrangement accordingly.

According to World-Link, each month WLT issued Mezun an invoice that listed the credit card payments made by Mezun’s customers that were processed through WLT’s merchant account, in addition to indicating the wholesale charges incurred by Mezun for WLT’s services (affidavit of O. Deykina 1Í17). Allegedly, the parties agreed that, each month, the credit card is[747]*747suing banks of Mezun’s customers were to pay directly into WLT’s merchant account for the amounts charged by Mezun’s customers for its retail services, and WLT credited Mezun’s account with an amount equal to the payments received (id. 1Í1Í15-16). Because Mezun was charging its customers at retail prices while being billed at wholesale prices, the credit card payments made by Mezun’s customers were greater in amount than WLT’s payments, which resulted in a credit to Mezun’s account each month (id. 111118-19).

World-Link alleges that, beginning in November of 2001, and without advising World-Link, Mezun set up its own merchant account and began to directly receive its customers’ credit card payments (id. 1Í 21). Allegedly, due to a change in personnel in its accounting department, World-Link did not detect that WLT’s merchant account was not being credited for payments made by Mezun’s customers. Consequently, from November 16, 2001, when Mezun allegedly set up its own merchant account, until March 15, 2003, when the billing oversight was detected, World-Link continued to credit Mezun’s account for payments made by Mezun’s customers as if the payments were received by WLT and tracked to Mezun’s account. Mezun’s monthly invoices continued to show credits against WLT’s wholesale charges, while World-Link did not realize that WLT had not received any payments from Mezun for these services (id. KH 25-28).

Several days after World-Link discovered the billing error, it transmitted a letter to Mezun indicating that Mezun owed WLT $1,101,570.33 (exhibit K, annexed to affirmation of Michael Rowe, Esq.). A second letter followed, in which World-Link reiterated the outstanding balance. Additionally, World-Link demanded that Mezun begin sending weekly payments of $30,000 to pay off the balance due, and advised Mezun that WLT would start receiving payments from Mezun’s customers directly (exhibit C, annexed to affidavit of O. Deykina).

Mezun disputes many of World-Link’s allegations concerning the parties’ altered payment arrangement that followed the execution of the agreement. According to Mezun, when it became the wholeseller of WLT’s services, World-Link agreed to provide Mezun certain technology to allow Mezun’s customers to refill their calling cards on a real-time basis (affidavit of A. Hantal 1i 6). Mezun alleges that in order to facilitate this new arrangement, World-Link encouraged Mezun to create its own merchant [748]*748account to receive credit card payments directly from its customers (id. HH 7, 12).1

Mezun alleges that, due to technical problems arising out of the parties’ use of different technology to charge customers’ credit cards, it was unable to directly collect payments from its customers’ credit cards for some time, while World-Link continued to collect the payments from Mezun’s customers directly into WLT’s merchant account (id. 1110). Allegedly, after the establishment of its own merchant account, Mezun began collecting payments from customers who purchased services through Mezun’s Web site, but that World-Link still failed to provide Mezun with the necessary technology to enable customers to fill their calling cards on a real-time basis, and, consequently, World-Link continued to provide services to Mezun’s customers by refilling their calling cards or issuing new cards and collecting payments (id. 1110).

At the time that World-Link began sending Mezun invoices purportedly displaying the amount of income Mezun earned from its customers’ purchase of services, Mezun alleges that it repeatedly contacted World-Link to inquire about their accuracy (id. 1117). Representatives from World-Link assured Mezun that the invoices were accurate, and reflected the payments made by Mezun’s customers using World-Link’s system and other tax credits (id.). Mezun alleges that when the credit card payment systems of the two companies were eventually integrated, Mezun was finally able to directly refill its customers’ calling cards on a real-time basis without having to rely on World-Link’s system (id. 1119).

Mezun alleges that in August of 2002, it began receiving customer complaints regarding the quality of long distance telephone service, and consequently, began losing a tremendous amount of business. Subsequently, Mezun alleges that upon receiving notice in March of 2003 that it had an outstanding balance due to a billing error, World-Link began interfering with Mezun’s ability to wholesell services to its customers, by altering the system that allowed Mezun to receive payments from its customers for refilling their calling cards on a real-time basis. Accordingly, Mezun alleges that the payments for these [749]*749services went directly to WLT’s merchant account, and World-Link’s name began appearing on Mezun’s customers’ credit card statements, causing confusion and complaints amongst customers. Further, Mezun alleges that World-Link’s CEO sent a threatening letter to Mezun’s CEO, stating that if Mezun did not pay the outstanding balance, “your [Mezun’s] valuable Turkish American eyeballs will be swayed from Mezun and onto another portal.

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Related

In Re Universal Service Fund Telephone Billing
619 F.3d 1188 (Tenth Circuit, 2010)
Universal Service v. AT&T Corporation
619 F.3d 1188 (Tenth Circuit, 2010)
World-Link, Inc. v. Mezun.com, Inc.
43 A.D.3d 696 (Appellate Division of the Supreme Court of New York, 2007)

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Bluebook (online)
14 Misc. 3d 745, Counsel Stack Legal Research, https://law.counselstack.com/opinion/world-link-inc-v-mezuncom-inc-nysupct-2006.