Sprint Communications Co. L.P. v. Cat Communications International, Inc.

335 F.3d 235 (3d Cir. 2003)

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Nature of the Case

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Facts

P contends that its network received unauthorized long distance telephone calls from D's local service customers. The calls originated from several states, the largest number coming from New Jersey. None of these calls were paid for. P asked D to prevent its customers from gaining access to P's network and also to provide a billing mechanism or billing information to facilitate P's collection efforts. D did not respond. P sued in federal court alleging trespass, conversion, nuisance, unjust enrichment, civil conspiracy, common law fraud, and violation of the Federal Communications Act, 47 U.S.C. § 151 et seq. P requested preliminary injunctive relief. The District Court issued an order preliminarily restraining D 'from permitting [its] customers to access or place calls on . . . Sprint's . . . long distance network' and directing it to 'take such measures as are necessary to block all [its] customers' ' access. P was required to post a $250,000 bond 'for payment of such costs and damages as may be incurred or suffered by . . . CAT Communications if found to have been wrongfully enjoined.' D complied with the preliminary injunction by ordering blocks on its customers' access to P's network. Local Exchange Carriers charged fees to D in order to institute and maintain the blocks. One of them, Verizon, charged a non-recurring $10.55 fee to impose a block on each D customer and a $12.41 per line monthly charge to maintain the block. D began to accrue significant costs under the preliminary injunction. In November 2001, D sought to terminate the preliminary injunction and increase the amount of the injunction bond. D claimed that blocking charges stood at over $2.7 million and were projected to rise. In January 2002, both parties filed motions for summary judgment. The original Judge had by then retired, and a hearing on these motions was set for April 2002 before a new District Judge. The District Court granted summary judgment to D on P's nuisance, unjust enrichment, civil conspiracy, common law fraud, and Federal Communications Act claims but denied summary judgment on the trespass and conversion claims. The District Court denied P's motion for summary judgment on its trespass and conversion claims. It also dissolved the preliminary injunction and, at the same time, increased the injunction bond to $4.95 million. The increase in the bond amount was based on the 'accrued' blocking fees charged to D. P appealed the dissolution of the preliminary injunction and the simultaneous increase in the amount of the injunction bond.