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CITIBANK, N.A. v. GRAPHIC SCANNING CORP.

October 25, 1978

CITIBANK, N.A., Plaintiff, against GRAPHIC SCANNING CORP. and GRAPHNET SYSTEMS, INC., Defendants.


The opinion of the court was delivered by: DUFFY

Plaintiff, Citibank N. A. (hereinafter referred to as "Citibank"), brings this action against Graphic Scanning Corp. (hereinafter referred to as "GSC") and Graphnet Systems, Inc. (hereinafter referred to as "Graphnet") pursuant to § 207 of the Communications Act, 47 U.S.C. § 207. Jurisdiction is founded upon 28 U.S.C. § 1331 as well as upon the principles of pendent jurisdiction.

Defendant GSC is a corporation which provides specialized data and message processing services such as indexing, storage and retrieval.

Defendant Graphnet, a subsidiary of GSC, is a communications common carrier authorized and regulated by the Federal Communications Commission providing message delivery services.

 Plaintiff's first claim charges that both GSC and Graphnet, while rendering their respective communication related services to Citibank, violated numerous provisions of Title II of the Communications Act as well as section 64.702 of the Federal Communication Commission's (hereinafter referred to as "FCC"), Regulations promulgated thereunder. More particularly plaintiff charges that:

 
(a) in violation of Section 64.702(c)(1) of the FCC Regulations, Graphnet and Graphic Scanning have not maintained separate accounts or utilized separate personnel, facilities and equipment;
 
(b) in violation of Section 64.702(d) of the FCC Regulations, Graphnet has made available to Graphic Scanning computer capacity which Graphnet uses for the provision of its common carrier services;
 
(c) in violation of Section 64.702(c)(2) of the FCC Regulations, Graphnet has not filed with the FCC notification of the existence and terms of oral or written contracts, agreements or arrangements between it and Graphic Scanning;
 
(d) in violation of Section 64.702(f) of the FCC Regulations, Graphnet has not filed with the FCC a complete description of its communications offering for the implementation of Graphic Scanning's service and a supporting statement demonstrating that Graphic Scanning offers a hybrid data processing service;
 
(e) in violation of Section 64.702(c)(3) of the FCC Regulations, Graphnet and Graphic Scanning have engaged in promotional activities on behalf of one another;
 
(f) in violation of Title II of the Act and Section 64.702 of the FCC Regulations, Graphic Scanning has provided to Citibank message-switching services or hybrid communications services and not data processing services, although it is not authorized to act as a common carrier; in the alternative, Graphnet has exceeded its operating authorization and acted in nonconformity with its tariff by virtue of Graphic Scanning's communications or hybrid communications services to Citibank; and
 
(g) in violation of Sections 201(b), 202 and 203 of the Act, Graphnet has not charged Citibank in accordance with its published tariff rates.

 Plaintiff's second claim charges that both GSC and Graphnet threatened to terminate all services rendered to Citibank unless Citibank entered into a written agreement with GSC. An agreement was subsequently executed by Citibank and GSC on December 10, 1978. Plaintiff alleges that the contract was executed under duress and thereby void as a matter of law.

 Plaintiff contends that as a result of the alleged violations of the Communications Act and the duress exerted in relation to the agreement of December 10th, they are entitled to recover all monies paid to GSC pursuant to the agreement.

 Defendants have moved, pursuant to Rules 12(b) and 56 of the Federal Rules of Civil Procedure, to dismiss the complaint on the ground that it fails to state a claim upon which relief can be granted or, in ...


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