Justices find state court suit out of order AT&T rate dispute was federal, court says

Supreme Court

June 16, 1998|By Lyle Denniston | Lyle Denniston,SUN NATIONAL STAFF

WASHINGTON -- The Supreme Court ruled, 7-1, yesterday that phone customers may not arrange to receive long-distance services and then sue the phone company for breach of contract for failing to honor the deal.

Under federal law, the only services that long-distance companies may provide are those they offer without discrimination to all their customers, the court said.

The ruling overturned a federal appeals court decision that AT&T Corp. could be sued under state law for entering into a deal for unique long-distance service to a telephone service packager -- a reseller -- and then failing to deliver.

Claims under state law against long-distance companies, the Supreme Court said, are barred by federal law.

When such a company posts a "tariff" with the Federal Communications Commission, listing what charges and services it will offer, that "tariff" defines its offerings to customers, the court said in an opinion written by Justice Antonin Scalia.

The tariff, Scalia added, controls not only what rates the company can charge its customers, but also what services it extends to them. The appeals court had said that only the rate spelled out in the tariff was binding.

Yesterday's decision scuttles a lawsuit based on Oregon state law by a long-distance service reseller, Central Office Telephone, against AT&T Corp.

Central Office repackages long-distance telephone services it buys from AT&T and offers it to Central's customers. AT&T entered into a deal to sell high-volume long-distance services linking a customer's various outlets.

AT&T failed to fulfill its part of the deal. Central Office sued, contending that AT&T not only breached its contract but also engaged in "slamming" -- trying to convert Central Office's customers into buying their long-distance service from AT&T.

Because the Supreme Court barred the lawsuit from going forward, Central Office was left with the less-promising option of complaining to the FCC or suing under federal law. Central Office tried to file a federal case, but it was too late with that filing.

Pub Date: 6/16/98

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