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At&T Corp. v. Syniverse Technologies, Inc.

United States District Court, S.D. New York

September 8, 2014

AT&T CORP., Plaintiff,
v.
SYNIVERSE TECHNOLOGIES, INC., Defendant.

MEMORANDUM AND ORDER

NAOMI REICE BUCHWALD, District Judge.

I. Introduction

On March 12, 2012, plaintiff AT&T Corp. ("AT&T") brought this action against defendant Syniverse Technologies, Inc. ("Syniverse") asserting claims for breach of contract, unjust enrichment, and quantum meruit. Specifically, AT&T seeks to collect $1, 445, 761.44 in charges allegedly owed under a contract with Syniverse, plus monthly service and other charges in the amount of $92, 489.36. Presently before the Court is Syniverse's motion for summary judgment. Oral argument was held on the motion on August 21, 2014.[1] For the reasons set forth below, we deny the motion for summary judgment.

II. Background[2]

The following facts are undisputed except where otherwise noted.

A. The Master Carrier Agreement

In 2002, Syniverse and AT&T entered into a contract known as the Master Carrier Agreement ("MCA") pursuant to which AT&T agreed to provide telecommunications services to Syniverse. Def. R. 56.1 ¶ 1. The MCA did not identify the particular services that AT&T would provide to Syniverse, but instead expressed the parties' understanding that, as the need for services arose, they would enter into attachments to the MCA that would describe the services being ordered. Id . ¶ 4. AT&T and Syniverse entered into two attachments that are relevant to the current litigation: the first was executed in October 2007 (the "2007 Attachment"), and the second was executed in February 2009 (the "2009 Attachment"). Both were drafted by AT&T and incorporated into the MCA. Def. R. 56.1 ¶¶ 7, 8, 14.

B. The 2007 Attachment

The 2007 Attachment required Syniverse to order a certain volume of AT&T data services on an annual basis - what the Attachment referred to as a minimum annual revenue commitment, or "MARC" - for each year in a four-year period, with the first year running from May 2006 through April 2007 (before the Attachment was even executed), and the fourth year (the "Disputed Period") running from May 2009 through April 2010. Def. R. 56.1 ¶ 9. The MARC was $4, 700, 000 for the first year and $3, 545, 000 for the next three years.[3] Sivin Decl. Ex. 6 ¶ 3.A.1. MARC-eligible charges "consist[ed] of the net Monthly Recurring Charges, after the application of any discounts or credits, for Private Line Services, APLS OC-48 IOC Service, Local Channel Services, International Satellite Services, and AT&T Domestic Frame Relay Service provided under this Attachment, " as well as other services not at issue in this case. Id . ¶ 3.A.2. If Syniverse missed the MARC in any given year, the Attachment required Syniverse to pay the shortfall to AT&T. Id . ¶ 3.

A central issue in this case is which services were in fact MARC-eligible under the terms of the 2007 Attachment. Although the parties agree that "Local Channel Services" counted towards the MARC, they disagree on what that term encompassed. Syniverse contends that it included "switched access" and "special access" services on which Syniverse spent approximately $2.3 million during the Disputed Period.[4] Def. Br. at 8. These services were related to the local channel (a circuit which connects AT&T customers to a facility known as a point of presence), and therefore could be described as local channel services. Syniverse's interpretation is bolstered by: (1) the testimony of Jeff Gorbach, an AT&T employee who stated that switched access and special access services could, broadly speaking, be considered local channel services (Sivin Decl. Ex. 12 at 89); (2) the testimony of Kim Reid, an AT&T employee who stated that special access services could be MARC-eligible, and that at least one of the services listed in the 2007 Attachment was in fact a type of special access service (Sivin Decl. Ex. 1 at 84, 110-12); (3) the fact that Syniverse's 2006 spend on special access services was used to help set the MARC (Gilmore Aff. ¶ 11; Johnson Decl. Ex. C at 183, 222-23); and (4) the fact that for the first three years of the 2007 Attachment, AT&T had credited special access services - though not switched access services - against the MARC, and had determined that the MARC had been met (Gilmore Aff. ¶ 11; Johnson Decl. Ex. C at 132, 143).[5]

AT&T, on the other hand, argues that the term "Local Channel Services" had a more specific meaning because it was modified by the phrase "provided under this Attachment." Sivin Decl. Ex. 6 ¶ (3)(A)(2). Indeed, two witnesses testified that a service could be a local channel service yet not MARC-eligible under the 2007 Attachment. Sivin Decl. Ex. 1 at 189, Ex. 12 at 89. AT&T points to several pieces of evidence that support its position that switched access and special access services were not "Local Channel Services... provided under [the 2007] Attachment."

First, AT&T notes that switched access and special access services were purchased by Syniverse directly through affiliated Local Exchange Carriers ("LECs") - rather than through AT&T - pursuant to tariffs not provided under the 2007 Attachment and via separate ordering systems that predated AT&T's affiliation with the LECs. Pl. R. 56.1 ¶ 22-24; Johnson Decl. Ex. C at 71, 101. Notably, the 2007 Attachment had its own unique Master Customer Number ("MCN") under which services could be ordered and billed. Switched access and special access services were not ordered or billed under this MCN because Syniverse purchased them directly through the AT&T-affiliated LECs. Pl. Opp. at 15, 17-18; Tr. 20, 49-50.

Jerry Gilmore, the Sales Director of AT&T who helped negotiate the 2007 Attachment, testified that the term "Local Channel Services" referred only to those services provided by AT&T - not LECs - for the purpose of connecting a customer to a long distance network, and that switched access and special access services did not meet this definition. Johnson Decl. Ex. C at 71-72, 90, 103-04, 123. Kim Reid, another AT&T employee, supported this testimony in part, stating that switched access services were not provided under the 2007 Attachment. Sivin Decl. Ex. 1 at 112, 114-15.

Second, the switched access and special access services Syniverse purchased were not specifically identified in the 2007 Attachment. Pl. Opp. at 14. Paragraphs 4.A.11 and 4.A.12 of the Attachment listed customized pricing for a number of services that were labeled "Local Channel Services." Although these services were not an exhaustive list of "Local Channel Services" - a point which AT&T conceded at oral argument (Tr. 59-60) even though it took the opposite position in its briefing papers (Pl. Opp. at ...


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