Katel Limited v. AT&T Corp., No. 09-1575 (2d Cir. 2010)

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09-1575-cv Katel Limited v. AT&T Corp. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT August Term, 2009 (Argued: February 4, 2010 Decided: May 27, 2010) Docket No. 09-1575-cv - - - - - - - - - - - - - - - - - - - -x KATEL LIMITED LIABILITY COMPANY, Plaintiff-Appellant, - v.AT&T CORPORATION, Defendant-Appellee. - - - - - - - - - - - - - - - - - - - -x Before: JACOBS, Chief Judge, POOLER and KATZMANN, Circuit Judges. KATEL Limited Liability Company appeals from a judgment 30 entered by the United States District Court for the Southern 31 District of New York (Holwell, J.), dismissing by summary 32 judgment its claims against AT&T Corporation, which allege 33 breach of contract and tortious interference with 34 contractual relations, and seek relief under the 35 International Telecommunications Regulations. We affirm. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 DAVID J. EDWARDS (Paul J. Yesawich, III, James P. Nonkes, on the brief), Harris Beach PLLC, Pittsford, New York, for Appellant. SUZANNE L. MONTGOMERY, AT&T Services, Inc., Bedminster, New Jersey; Henry Guy Burnett, Sarah E. O Connell (on the brief), Fulbright & Jaworski L.L.P., New York, New York, for Appellee. DENNIS JACOBS, Chief Judge: In 1993 or 1994 (the date is disputed), AT&T 18 Corporation ( AT&T ) entered into an International 19 Telecommunications Services Agreement ( Agreement ) with 20 KATEL Limited Liability Company ( KATEL ), an international 21 telecommunications carrier, to govern the exchange of phone 22 calls between AT&T in the United States and KATEL in 23 Kyrgyzstan. 24 would build the necessary infrastructure in Kyrgyzstan , and 25 AT&T would use that infrastructure for a fee. 26 began exchanging telecommunications traffic shortly 27 afterward. 28 telecommunications traffic to Kyrgyztelecom ( KT ), a 29 competitor of KATEL. 30 intermediary service to route its calls to Kyrgyzstan and The essence of the Agreement was that KATEL The parties In 1997, AT&T began sending its Soon thereafter, AT&T began using an 2 1 stopped paying KT; moreover, since it was no longer using 2 KATEL s services, it was not paying KATEL, either. 3 KATEL bought an assignment of rights from KT, and sued 4 AT&T in the United States District Court for the Southern 5 District of New York (Holwell, J.) on March 28, 2002, 6 claiming breach of contract, tortious interference with 7 contractual relations, and an entitlement to fees pursuant 8 to the International Telecommunications Regulations. 9 district court granted summary judgment to AT&T on all 10 11 The claims, and this appeal is taken from the judgment. We affirm. 12 13 I 14 The controversy turns on the interplay between two 15 paragraphs of the Agreement. Paragraph 7 provides, inter 16 alia, that as soon as KATEL and AT&T establish direct 17 circuits, the parties will begin routing traffic between the 18 Republic of Kyrgyzstan and the United States on these 19 circuits, using the [ indirect ] transit routes via Russia 20 and Turkey only when direct circuits are not capable of 3 1 carrying the offered traffic. 1 2 Non-Exclusive Privileges, provides that [n]othing in this 3 Agreement shall be deemed to restrict or prejudice the 4 rights of either party to enter into similar service 5 agreements with other parties. Paragraph 19, entitled 6 7 Transmission arrangements. In 1993 or 1994, AT&T and 8 KATEL entered into the Agreement and began sending 9 telecommunications traffic to one another. In early 1997, 10 AT&T contracted with KT to provide international 11 telecommunications services in Kyrgyzstan; at the same time, 12 AT&T stopped sending traffic to KATEL (and has sent none 13 since). 14 call termination services. 15 representatives from AT&T, KATEL, and KT met at AT&T s New But soon thereafter AT&T stopped paying KT for its On October 11, 1999, 1 Traffic passes directly when it originates in the United States on AT&T s infrastructure and terminates in Kyrgyzstan on KATEL s infrastructure. AT&T, as the originating carrier, would then pay an agreed-upon fee to KATEL as the terminating carrier. Traffic passes indirectly when AT&T originates a call in the United States and sends it to a third-party carrier, which then sends it along to KATEL. AT&T would pay a fee to KATEL, and AT&T and KATEL would each pay half of the fee owed to the third-party carrier. 4 1 Jersey headquarters. 2 KATEL or KT or both, but the parties could not resolve the 3 muddle, and KATEL initiated this litigation. 4 AT&T conceded that it owed money to In the meantime, AT&T continued sending direct and 5 indirect traffic to KT until May 2002, at which point it 6 adopted a different method of routing calls into Kyrgyzstan: 7 refile. 8 carrier (AT&T) sends the traffic to a third-party carrier, 9 and pays it; the third-party carrier then sends the traffic Under a refile arrangement, the originating 10 into the terminating country and pays the terminating 11 carrier. 12 rational way for an international telecommunications 13 provider to structure its business dealings with other 14 carriers. 15 19806, 19811-12 (Aug. 18, 1997)). 16 calls to the third party and does not deliver the calls to 17 Kyrgyzstan directly or indirectly. 18 19 20 its hands of business in Kyrgyzstan. 21 Southern District of New York. 22 a necessary party, KATEL unsuccessfully invited KT to join 23 the litigation. (The FCC has recognized refile as an economically See In re Int l Settlement Rates, 12 F.C.C.R. Litigation. Thus AT&T delivers the In short, AT&T washed On March 28, 2002, KATEL sued AT&T in the Recognizing that KT might be To forestall any possible Rule 12(b)(7) 5 1 motion, KATEL bought an assignment of KT s rights against 2 AT&T (through May 2002). 3 Russian Language Assignment, and (on the same day) an 4 English Language Assignment that was intended to replicate 5 the Russian Language Assignment and that could be used by 6 KATEL to defeat a Rule 12(b)(7) motion. 7 KATEL and KT executed a six-page On September 4, 2003, KT intervened in the KATEL-AT&T 8 lawsuit and moved to compel arbitration against KATEL 9 pursuant to the terms of the Russian Language Assignment.2 10 (KATEL contends that KT s intervention was inspired by 11 AT&T.) 12 by which it would deposit with the district court the sum of 13 $1,120,199.04, the amount that all parties agreed was owed 14 to KATEL and/or KT for the period 1997 through May 2002. 15 The court granted AT&T s motion; the parties stipulated that 16 this was the amount owed; and the KATEL-KT litigation was 17 stayed pending the outcome of their arbitration, which was 18 to determine how the interpleaded funds would be divided 19 between them. 20 was entitled to the full amount, and on October 31, 2006, AT&T then moved to file an interpleader counterclaim The arbitrator ultimately ruled that KATEL 2 KT also brought other claims against KATEL and AT&T. Those claims are not relevant to the issues presented in this appeal. 6 1 the district court ordered that the funds be disbursed to 2 KATEL. 3 Meanwhile, in the KATEL-AT&T litigation, the parties 4 had filed cross-motions for summary judgment. At oral 5 argument on February 9, 2006, KATEL argued that: (1) AT&T 6 breached the Agreement by failing to adhere to Paragraph 7 s 7 requirement that it use KATEL s infrastructure to send calls 8 to Kyrgyzstan; (2) AT&T tortiously interfered with KATEL s 9 business relations with KT; and (3) AT&T owed reimbursement 10 to KATEL for traffic sent by AT&T to Kyrgyzstan--even for 11 periods when AT&T did not use KATEL s equipment or services 12 --by virtue of the International Telecommunications 13 Regulations ( ITRs ). 14 In an oral decision, the district court ruled for AT&T 15 on all claims. As to breach of contract, the court 16 concluded that Paragraph 19 makes the Agreement a non- 17 exclusive contract that allows AT&T to use other means to 18 route traffic into Kyrgyzstan; that absent any such 19 obligation to send a specific amount of traffic through 20 Katel, AT&T did not breach the Agreement when it stopped 21 using KATEL s circuits; and that Paragraph 7 concerns how 22 traffic will be routed--not whether AT&T is required to 7 1 2 offer any traffic to KATEL. As to tortious interference, the district court ruled 3 that the declaration of KATEL principal Ross Jacoby (on 4 which KATEL wholly relied) offered no more than conclusory 5 allegations that AT&T had sought to drive a wedge between 6 KATEL and KT. 7 reasonable basis to believe that KT rather than KATEL was 8 authorized to do business in Kyrgyzstan, and to act upon 9 that belief. 10 11 12 Separately, the court held that AT&T had a As to the ITRs, the court held that they confer no private right of action. At a status hearing two weeks after this summary 13 judgment ruling, the district court ordered KATEL to submit 14 in writing the nature of any remaining claims it had against 15 AT&T. 16 concerned payment it believed AT&T owed for the period 17 January 1, 2000 through April 30, 2001. 18 additional discovery, AT&T moved for summary judgment, which 19 the district court granted on the ground that KATEL offered 20 no evidence that AT&T owed anything other than the sum it 21 had already lodged with the court. 22 district court denied a motion by KATEL to reopen discovery KATEL responded that its only remaining claim 8 After some In addition, the 1 for the purpose of disclosing Jacoby as an expert witness on 2 the custom and practice of the international 3 telecommunications industry. 4 5 This appeal. KATEL raises five arguments on appeal: 6 (1) AT&T breached the Agreement by not using KATEL s 7 services to terminate calls in Kyrgyzstan; (2) even if AT&T 8 was not in breach, industry custom and practice required 9 AT&T to pay KATEL for calls terminating in Kyrgyzstan; (3) 10 KATEL presented sufficient evidence on its tortious 11 interference claim; (4) the ITRs provide a private right of 12 action; and (5) the district court abused its discretion in 13 denying KATEL s motion to reopen discovery for the purpose 14 of disclosing Jacoby as an expert witness. 15 Analyzing the arguments seriatim, we affirm. 16 17 II 18 KATEL contends that AT&T breached the Agreement by 19 sending telecommunications traffic to Kyrgyzstan by means 20 other than the AT&T-KATEL link referenced in Paragraph 7 of 21 the Agreement. 22 Our interpretation of the Agreement is governed by New 9 1 York law. See Konikoff v. Prudential Ins. Co. of Am., 234 2 F.3d 92, 98 (2d Cir. 2000). 3 the intent of the parties governs. 4 Indus., Inc., 171 F.3d 733, 737 (2d Cir. 1999) (quoting Am. 5 Express Bank Ltd. v. Uniroyal, Inc., 562 N.Y.S.2d 613, 614 6 (1st Dep t 1990)). 7 plain meaning of the language employed in the agreements, 8 rather than from extrinsic evidence. 9 737 (quoting Tigue v. Commercial Life Ins. Co., 631 N.Y.S.2d Under New York contract law, Crane Co. v. Coltec [W]e ascertain this intent from the Crane, 171 F.3d at 10 974, 975 (4th Dep t 1995)). 11 meaning and effect to all of its provisions. 12 562 N.Y.S.2d at 614; see also Gonzalez v. Norrito, 682 13 N.Y.S.2d 100, 101 (2d Dep t 1998). 14 parties can be determined from the face of the agreement, 15 interpretation is a matter of law and the case is ripe for 16 summary judgment. 17 In so doing, we must give full Am. Express, Where the intent of the Am. Express, 562 N.Y.S.2d at 614. The Agreement provides the terms and conditions that 18 govern business dealings between AT&T and KATEL. 19 provisions that bear on the present dispute, one gives broad 20 rights that the other (in part) takes away, so that they 21 must be read together: Paragraph 7 provides that the traffic 22 will be routed on the AT&T-KATEL direct circuits (and may be 10 Of the two 1 routed indirectly via Russia or Turkey only when direct 2 circuits are not capable of carrying the offered traffic ); 3 but Paragraph 19 says that either party [may] enter into 4 similar service agreements with other parties. 5 Paragraph 7 can grant no right that requires exclusive 6 dealing. 7 parties to do business with one another at all: It is not a 8 requirements contract, and it imposes no minimum volume. 9 Paragraph 7 fixes a preference for direct transmission of Thus To begin with, nothing in Paragraph 7 requires the 10 telecommunications that go from AT&T and terminate with 11 KATEL, but (particularly in light of Paragraph 19) that does 12 not bar AT&T from sending calls toward Kyrgyzstan other than 13 via KATEL. 14 concluded, paragraph 7 describes only how the 15 telecommunications services covered by the Agreement will be 16 provided and does not concern whether telecommunications 17 services so provided are covered by the Agreement. 18 Rather, as the district court correctly KATEL argues that, under Paragraph 7, its direct 19 circuits are the primary means for sending AT&T-originated 20 calls into Kyrgyzstan, and AT&T may route traffic indirectly 21 only if these direct circuits fail. 22 does not use the word primary. 11 The Agreement itself But, more fundamentally, 1 such an understanding cannot be squared with the right of 2 the parties (under Paragraph 19) to enter into similar 3 service agreements with other parties. 4 service agreements could not compatibly require two 5 Kyrgyzstani companies to provide primary termination 6 services to the same place.3 7 Agreement therefore leads to an illogical result, and we 8 decline to endorse it. 9 Allianz Underwriters Ins. Co., 749 N.Y.S.2d 488, 495 (1st Two similar KATEL s interpretation of the Cf. Long Island Lighting Co. v. 10 Dep t 2002) (avoiding a contractual interpretation that 11 would lead to an illogical result); PNC Capital Recovery v. 12 Mech. Parking Sys, Inc., 726 N.Y.S.2d 394, 397 (1st Dep t 13 2001) (same). 14 Accordingly, we agree with the district court that the 15 Agreement imposed no obligation on AT&T to send traffic to 16 KATEL. 17 to send traffic to Kyrgyzstan by other carriers and other 18 means. It follows that AT&T was not in breach by electing 19 20 3 See The Random House Dictionary of the English Language 1142 (Unabridged ed. 1971) (defining primary as first or highest in rank or importance ). 12 III 1 2 KATEL next argues that, even if AT&T is not liable for 3 breach of contract, AT&T must nonetheless pay KATEL for all 4 AT&T-originated calls that terminated in Krygyzstan. 5 On April 26, 2006, AT&T, KATEL, and KT entered into a 6 stipulation (which took the form of a court order) providing 7 that, for the period January 1997 through May 2002, AT&T 8 owed $1,120,199.04 for termination services in Kyrgyzstan. 9 AT&T lodged that sum with the district court, to be 10 distributed according to the result of the ensuing KATEL-KT 11 arbitration (which KATEL won in full). 12 was in doubt, the sum was rendered certain by the 13 stipulation. 14 But though the payee [A] stipulation is generally binding on parties that 15 have legal capacity to negotiate, do in fact freely 16 negotiate their agreement and either reduce their 17 stipulation to a properly subscribed writing or enter the 18 stipulation orally on the record in open court. 19 Feinman, 99 N.Y.2d 295, 302 (N.Y. 2002); see also Calvin 20 Klein Ltd. v. Trylon Trucking Corp., 892 F.2d 191, 194 (2d 21 Cir. 1989). 22 stipulation absent a showing of good cause such as fraud, McCoy v. [C]ourts should not disturb a valid 13 1 collusion, mistake or duress[,] or unless the agreement is 2 unconscionable or contrary to public policy[,] or unless it 3 suggests an ambiguity indicating that the words did not 4 fully and accurately represent the parties agreement. 5 McCoy, 99 N.Y.2d at 302 (internal citations omitted). 6 has offered no reason why it should not be bound by its 7 stipulation. 8 KATEL has no entitlement to additional fees from AT&T. 9 KATEL Accordingly, we hold that through May 2002, Nor is KATEL owed money for events that occurred after 10 May 2002. 11 calls directly or indirectly to any carrier in Kyrgyzstan; 12 instead, it exclusively used the refile method of traffic 13 termination. 14 a third-party carrier, and that third-party carrier was in 15 turn responsible for paying KATEL, KT, or any other 16 Kyrgyzstani carrier. 17 KATEL (or KT). 18 At that time, AT&T stopped sending international Under refile, AT&T s payment obligation was to AT&T had no payment obligation to KATEL suggests that industry custom and practice 19 entitle it to payment. Under New York law, evidence of 20 custom or practice may be admissible only if the agreement 21 is found to be ambiguous. 22 Relations Bd., 648 N.Y.S.2d 779, 785 (3d Dep t 1996); see Milonas v. Pub. Employment 14 1 also W. Union Tel. Co. v. Am. Commc ns Ass n, C.I.O., 299 2 N.Y. 177, 184 (1949); Polyfusion Elecs., Inc. v. AirSep 3 Corp., 816 N.Y.S.2d 783, 785 (4th Dep t 2006). 4 such evidence should not be admitted to create an ambiguity 5 in an otherwise clear and unambiguous agreement. 6 648 N.Y.S.2d at 785. 7 there is no occasion to consider evidence of custom or 8 practice. Moreover, Milonas, Because the Agreement is unambiguous, 9 IV 10 11 KATEL contends that AT&T tortiously interfered with its 12 (KATEL s) business relationship with KT. New York law 13 governs our analysis. 14 order to prevail on a cause of action for tortious 15 interference with contractual relations, a plaintiff must 16 establish the existence of a valid contract between 17 plaintiff and a third party, the defendant s intentional and 18 unjustified procurement of the third party s breach of the 19 contract, the actual breach of the contract[,] and the 20 resulting damages. 21 Chrysler-Plymouth, Inc., 796 N.Y.S.2d 804, 805 (4th Dep t 22 2005). See Konikoff, 234 F.3d at 98. In Jim Ball Chrysler LLC v. Marong 15 1 In the district court and again on appeal, KATEL relies 2 principally on paragraph 39 of Jacoby s declaration to 3 substantiate its claim for tortious interference. 4 paragraph states in full: That 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 [T]hroughout the entire history of [the Agreement,] and at least since 1995, AT&T has taken every opportunity to drive a wedge between KATEL and [KT]. By negotiating behind KATEL s back with [KT]--a KATEL Joint Venture participant --AT&T has seriously damaged KATEL s relationship with [KT]. Indeed, KATEL s shareholders, including the Ministry, were forced to vote [KT] out of the joint venture in 1998. By poisoning this relationship with [KT], AT&T created a hostile atmosphere in which KATEL must now conduct business in the Kyrgyz Republic. It has also created tensions between KATEL and [KT]. This relationship is critical to KATEL s well being, as the parties[ ] networks are interfaced. KATEL s subscribers must have access to [KT] s subscribers and vice versa. AT&T s actions have also, on more than one occasion, prompted [KT] either to deprive KATEL of access to its equipment, or to extract payments from KATEL of AT&T s debt (which only resulted in a further dispute with [KT] over the scope of the guarantee in the form of the assignment that has also been the subject of litigation before this Court). In sum, AT&T[ s] actions in dealing with [KT] have resulted in [KT], KATEL s substantial Kyrgyz participant, severing all partnership ties with KATEL. As the district court concluded, this evidence is too 34 conclusory to withstand summary judgment. 35 that points to any instance, manner, or method of 36 interference; nor is there a reference to a document, 16 There is nothing 1 conversation, or communication that would allow an inference 2 of tortious interference. 3 judgment does not show the existence of a genuine issue of 4 fact to be tried merely by making assertions that are 5 conclusory. . . . 6 Salvino, Inc., 542 F.3d 290, 310 (2d Cir. 2008). A party opposing summary Major League Baseball Props., Inc. v. 7 V 8 9 KATEL argues that the International Telecommunications 10 Regulations ( ITRs ) afford it a private right of action 11 against AT&T. 12 Court. 13 This is a matter of first impression for this The ITRs have treaty status and were promulgated by the 14 International Telecommunications Union (the Union ). S. 15 Treaty Doc. 102-13 (Melbourne 1988). 16 P.L.C. v. FCC, 166 F.3d 1224, 1230 (D.C. Cir. 1999). 17 Union is a specialized United Nations agency responsible for 18 international telecommunications issues. 19 FAQs, available at http://www.itu.int/ITUTELECOM/faq.html. 20 There are currently 191 member states, including the United 21 States and Kyrgyzstan. 22 States ). See Cable & Wireless The See ITU TELECOM Id. (follow hyperlink 191 Member 17 1 The United States and Kyrgyzstan both adopted the ITRs. 2 See International Telecommunications Regulations (ITRs), 3 available at http://www.itu.int/ITU-T/itr/ (follow hyperlink 4 Status of ratification of ITRs ). 5 general principles which relate to the provision and 6 operation of international telecommunication services 7 offered to the public as well as to the underlying 8 international telecommunication transport means used to 9 provide such services. 10 11 The ITRs establish See Int l Telecomms. Regulations, Art. 1, § 1.1(a). There is a presumption that treaties do not create 12 privately enforceable rights in the absence of express 13 language to the contrary. 14 201 (2d Cir. 2008) (internal quotation marks omitted); see 15 also id. at 202 n.25 (citing cases from other circuits); id. 16 at 201-02 ( Our precedents recognize a presumption against 17 inferring individual rights from treaties. ). 18 that is party to a treaty wishes to create a private right 19 of action, we would ordinarily expect expression of these 20 obligations to be unambiguous. 21 treaties are self-executing . . . the background presumption 22 is that international agreements, even those directly Mora v. New York, 524 F.3d 183, 18 Id. at 202. If a State Even when 1 benefiting private persons, generally do not create 2 private rights or provide for a private cause of action in 3 domestic courts. 4 552 U.S. 491, 506 n.3 (2008)). 5 Id. at 200 (quoting Medellin v. Texas, No wording in the ITRs creates a private right of 6 action, and KATEL cites none. Instead, KATEL argues that, 7 because the treaty is binding on the United States (as a 8 member state and signatory to the ITRs), it provides KATEL a 9 private right of action ipso facto. However, membership in 10 the Union is limited to sovereign entities (not private 11 corporations such as KATEL). 12 Furthermore, the Union s Constitution provides for the 13 Settlement of Disputes only by Member States, not by 14 private entities in those member states. 15 Whether a Member State has rights under the treaty, or is 16 bound by it, says nothing about whether a private party in 17 that Member State has a private right of action. 18 Medellin, 552 U.S. at 506 n.3. See Union Const., Art. 2. Id. at Art. 56. See 19 20 VI 21 KATEL moved to reopen discovery for the purpose of 22 designating Jacoby as an expert witness who would testify 19 1 that industry custom and practice required AT&T to pay a fee 2 to KATEL for calls terminating in Kyrgyzstan, regardless of 3 whether AT&T had any contractual obligation to make those 4 payments. 5 review is for abuse of discretion. 6 Ltd. P ships Litig., 154 F.3d 56, 58 (2d Cir. 1998). The district court denied the motion, and our See In re Merrill Lynch 7 In the district court, KATEL argued that discovery 8 should be reopened because expert disclosure in connection 9 with Mr. Jacoby s proposed testimony [had] not [previously] 10 appear[ed] necessary. 11 KATEL s Motion to Reopen Discovery at 4. 12 however, KATEL abandons that argument and raises for the 13 first time the argument that its failure to designate Jacoby 14 was a result of having to attend to the KATEL-KT 15 arbitration, which lasted years and which was allegedly 16 provoked as part of AT&T s scheme to disrupt the business 17 relations between the two Kyrgyzstani phone companies. 18 See Memorandum of Law in Support of On appeal, An argument raised for the first time on appeal is 19 typically forfeited. See In re Nortel Networks Corp. Sec. 20 Litig., 539 F.3d 129, 132 (2d Cir. 2008). 21 is prudential, not jurisdictional, and we may consider a 22 forfeited argument if there is a risk that manifest 20 True, this rule 1 injustice would otherwise result. 2 is no such risk here. Id. at 133. But there 3 CONCLUSION 4 5 6 For the foregoing reasons, we affirm the judgment of the district court. 21

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