United States Court of Appeals
                              For the Eighth Circuit
                          ___________________________

                                  No. 15-2406
                          ___________________________

           Qwest Communications Corporation, a Delaware corporation

                   lllllllllllllllllllllThird Party Plaintiff - Appellant

                                            v.

               Free Conferencing Corporation, a Nevada corporation

                  lllllllllllllllllllllThird Party Defendant - Appellee
                                        ____________

                      Appeal from United States District Court
                    for the District of South Dakota - Sioux Falls
                                    ____________

                               Submitted: June 16, 2016
                               Filed: September 15, 2016
                                    ____________

Before MURPHY, BRIGHT, and SHEPHERD, Circuit Judges.
                           ____________

BRIGHT, Circuit Judge.

       Following a bench trial, the district court found third-party plaintiff-appellant
Qwest Communications Corporation (Qwest) failed to prove its claims for intentional
interference with a business relationship, unfair competition, and unjust enrichment
against third-party defendant-appellee Free Conferencing Corporation (FC).1 Qwest
appeals. We affirm the district court on the claims for intentional interference with
a business relationship and unfair competition. We reverse and remand on the claim
for unjust enrichment.

                                I. BACKGROUND

       Qwest is a long-distance telephone service provider, referred to as an
interexchange carrier (IXC). Sancom, Inc. (Sancom), the original named plaintiff, is
a local telephone service provider, referred to as a local exchange carrier (LEC), for
the Mitchell, South Dakota, area.

       When IXCs like Qwest transmit calls from one local area to a different local
area, they pay fees to the LEC in each local area in order to compensate the LEC for
delivering, or “terminating,” the call locally on the LEC’s infrastructure. These fees
are typically paid on a per-minute basis, so the longer the call the more the IXC must
pay the LEC.

       Federal laws and regulations govern the contractual relationship between the
IXC and the LEC. The Communications Act of 1934 requires the LEC to file with
the Federal Communications Commission (FCC) its proposed charges for the IXC,
and the FCC must approve this fee, called a tariff. 47 U.S.C. § 203(a). Unless
specified in this tariff, the LEC may not otherwise charge the IXC a fee for
terminating calls to local customers under its tariff rate. Id. at § 203(c). LECs may,
however, receive some compensation from IXCs for calls they deliver to non-
customers. Qwest Commc’ns Corp. v. Farmers & Merchants Mutual Telephone Co.,
24 F.C.C. Rcd. 14801, 14812 n.96 (2009) (hereinafter Farmers II).


      1
        The district court also entered judgment in favor of FC on Qwest’s claim for
civil conspiracy, which Qwest does not appeal.

                                         -2-
       The terms of Sancom’s tariff authorized it to charge IXCs, including Qwest,
more than three cents per minute for calls it delivered to an “end user,” which the
tariff defined as an individual or other entity “which subscribe[d] to the services”
Sancom offered. (Appellant’s Appendix pp. 532, 535, Sancom Tariff § 2.6 (defining
an “end user” as “any customer of an interstate or foreign telecommunications service
that is not a carrier” and a “customer” as an individual, company, or other entity
“which subscribes to the services offered under this tariff”)). Therefore, if Sancom
did not deliver a call to an individual or entity which subscribed to its services, it
could not charge IXCs under the terms of the tariff for terminating the call.

       In 2004, FC, a company that provides conference calling services to its
customers free of charge, hired Darin Rohead, operating as PowerHouse
Communications, to find LECs that would be interested in contracting with FC to
host its conference call bridges. Rohead identified Sancom and drafted a contract that
the parties later signed.

       Under the terms of the contract, Sancom agreed to host FC’s conference call
bridges on its premises in Mitchell, South Dakota. FC guaranteed its conference call
bridges would increase call traffic to Sancom’s service area by a minimum number
of minutes per month. In return, Sancom agreed to pay FC a “marketing fee” of 2.5
cents for each minute of call traffic that terminated at FC’s conference call bridges.

      Although unwritten in the contract, FC knew Sancom would charge the IXCs
under its tariff for each minute of call traffic it terminated at FC’s conference call
bridges. The contract was therefore designed to take advantage of the tariff system:
FC would increase the volume of call traffic IXCs delivered to Sancom’s service area;
Sancom would bill IXCs under its tariff for the increased traffic; and Sancom would
pay FC a per-minute “marketing fee,” effectively splitting the revenues from the
increased traffic. While FC knew this contract would take advantage of the tariff
system, the district court found FC President David Erickson credible when he

                                         -3-
testified that he did not know the arrangement was unlawful, he did not intend to
premise his business model on an unlawful source of revenue, and he would have
taken any steps necessary to comply with the law.

      FC’s call bridges heavily increased call traffic to Sancom’s service area. From
March to April 2005, Sancom terminated roughly 3.7 million minutes of FC traffic.
By the end of 2007, that number jumped to roughly 50 million minutes of FC traffic
per month. In 2007 and the first half of 2008, FC traffic accounted for 98% of
Sancom’s overall traffic. During this time period, Sancom terminated roughly 686
million minutes of FC traffic and only 14 million minutes of traffic for all other
customers. The FC traffic never interfered with Sancom’s service to the other
customers.

       Today, it is well-settled that an LEC cannot bill an IXC under its tariff for calls
“terminated” at a conference call bridge when the conference calling company does
not pay a fee for the LEC’s services. But when FC and Sancom first entered into their
contract, this issue had not been litigated. The FCC first considered this issue in
2007. Qwest Commc’ns Corp. v. Farmers & Merchants Mutual Telephone Co., 22
F.C.C. Rcd. 17973 (2007) (hereinafter Farmers I).2 In Farmers I, the FCC held that
a conference call company could qualify as an “end user” under the terms of an
LEC’s tariff as long as it paid the LEC a subscription fee for its services, even if the
LEC, in turn, paid the conference call company a marketing fee that exceeded the
subscription fee. Id. at 17987-88. Therefore, even if the conference call company
received a net payment from the LEC, it could still qualify as an “end user,” and the
LEC could charge the IXC under its tariff for traffic that terminated at the conference
call bridge. Id. at 17988.



      2
        While Qwest was a party to Farmers I and Farmers II, these cases are unrelated
to the current case.

                                           -4-
        Following Farmers I, Qwest filed a motion to reconsider with the FCC, asking
it to revisit its holding in light of newly discovered evidence that the conference call
companies were not actually paying a subscription fee to the LECs. See Farmers II,
24 F.C.C. Rcd. at 14801. The FCC granted Qwest’s motion, and in November 2009
it held that an LEC could not charge an IXC under its tariff for calls delivered to a
conference call bridge when the conference call company did not pay a fee to
subscribe to the LEC’s services. Id. at 14812-13. The FCC, however, indicated in
a footnote that the LEC was not “precluded from receiving any compensation at all
for the services” it provided to the IXC. Id. at 14812 n.96.

                       II. PROCEDURAL BACKGROUND

       Prior to Farmers I, Qwest stopped paying Sancom access charges, and on
October 9, 2007, Sancom sued Qwest to recover the charges, advancing a handful of
different legal theories. Qwest filed counterclaims against Sancom and also claims
as a third-party plaintiff against FC for unfair competition, tortious interference with
contract, civil conspiracy, and unjust enrichment.

        After the FCC decided Farmers II, the district court referred three issues to the
FCC: (1) whether Sancom violated its tariff by charging Qwest for calls that
terminated at FC’s call bridges; (2) whether Sancom was entitled to some
compensation from Qwest for these calls even if it could not bill Qwest under its
tariff; and (3) if so, what rate Sancom could charge Qwest for those calls. The FCC
found FC was not an “end user” because it did not subscribe to Sancom’s services,
and therefore Sancom could not bill Qwest under its tariff for calls that terminated at
FC’s bridge. The FCC reserved ruling on the remaining two issues. Qwest
subsequently settled with Sancom on all claims for an undisclosed amount.

      In May 2014, Qwest and FC proceeded to trial before the district court.
Following the bench trial, the district court issued an order and entered judgment in

                                          -5-
favor of FC on all claims. Qwest filed a motion to vacate judgment, which the district
court denied on June 5, 2015. Qwest timely appealed.

                                 III. DISCUSSION

        Qwest appeals the district court’s judgment on its claims of intentional
interference with a business relationship, unfair competition (via FC’s inducement of
regulatory violations), and unjust enrichment. “In reviewing a judgment after a bench
trial, we review the district court’s factual findings and credibility determinations for
clear error, and its legal conclusions de novo.” Affordable Cmtys. of Mo. v. Fed.
Nat’l Mortgage Ass’n, 815 F.3d 1130, 1133 (8th Cir. 2016) (citing Fed. R. Civ. P.
52(a)(6)). “We will overturn a finding of fact only if it is not supported by substantial
evidence, it is based on an erroneous view of the law, or we are left with a definite
and firm conviction that an error has been made.” Id.

      A. Intentional Interference with a Business Relationship

       Qwest argues the district court erred when it entered judgment in favor of FC
on its claim for intentional interference with a business relationship. Under South
Dakota law,3 the plaintiff must prove five elements for a claim of intentional
interference with a business relationship: “(1) [T]he existence of a valid business
relationship or expectancy; (2) knowledge by the interferer of the relationship or
expectancy; (3) an intentional and unjustified act of interference on the part of the
interferer; (4) proof that the interference caused the harm sustained; and, (5) damages
to the party whose relationship or expectancy was disrupted.” Selle v. Tozser, 786




      3
        We apply South Dakota law to Qwest’s claims in tort and in equity, as both
parties agree. See Platte Valley Bank v. Tetra Fin. Grp., LLC, 682 F.3d 1078, 1082
(8th Cir. 2012).

                                          -6-
N.W.2d 748, 753 (S.D. 2010) (alteration in original). The parties dispute only the
third element: whether FC committed an intentional and improper act of interference.

       To determine when interference is improper, South Dakota courts weigh a
handful of non-exhaustive factors, referred to as the Gruhlke factors: “(a) [T]he
nature of the actor’s conduct, (b) the actor’s motive, (c) the interests of the other with
which the actor’s conduct interferes, (d) the interests sought to be advanced by the
actor, (e) the social interests in protecting the freedom of action of the actor and the
contractual interests of the other, (f) the proximity or remoteness of the actor’s
conduct to the interference, and (g) the relations between the parties.” Gruhlke v.
Sioux Empire Fed. Credit Union, 756 N.W.2d 399, 408 (S.D. 2008). Motivation of
personal gain generally is not enough to satisfy the improper interference
requirement. Id. at 408 n.13.

        The district court considered the Gruhlke factors and found Qwest did not meet
its burden to prove FC’s interference was improper. It highlighted that FC President
David Erickson credibly testified that he did not intend to cause Sancom to breach its
tariff; FC’s motivation to maximize its own profits was not improper; and FC’s
interests were not inconsistent with the societal interests in the tariff regulatory
system. Qwest Commc’ns Corp. v. Free Conferencing Corp., No. Civ. 07-4147, 2014
WL 5782543, at *10 (D.S.D. Nov. 6, 2014).

       Qwest argues the district court erred when it found FC’s interference was not
improper, because the FCC’s finding, on referral from the district court, that FC’s
business model was “intentionally designed to take advantage” of Sancom’s tariff
mandates a finding of impropriety. While this FCC finding relates to only some of
the Gruhlke factors, Qwest argues that under South Dakota law and the Restatement
(Second) of Torts, which South Dakota follows, it is unnecessary to weigh any other
factors where case law has developed a “more or less crystalized rule.” (App. Br. p.
44 (“The court erred because no further analysis was necessary once the district court

                                           -7-
found FC’s business was premised on interjecting itself into Sancom’s tariff billing
of Qwest, and thereby inducing a contract breach.”) (citing Restatement (Second) of
Torts § 767 cmt. j (1979))). The “more or less crystalized rule” that FC violated,
Qwest argues, is that a business model premised on inducing a party to breach its
contract is tortious interference per se.

       We have found no such per se rule under South Dakota law, let alone a rule so
ingrained in South Dakota case law that it can be characterized as “more or less
crystalized.” Rather, the South Dakota Supreme Court is clear: even when the
defendant induces the third party to breach its contract, the court must examine
whether the inducement is wrongful. See Lien v. Nw. Eng’g Co., 39 N.W.2d 483,
486 (S.D. 1949) (“When one has knowledge of the contract rights of another, his
wrongful inducement of a breach thereof is a willful destruction of the property of
another and cannot be justified on the theory that it enhances and advances the
business interests of the wrongdoer.”) (emphasis added). This inquiry turns on the
particular facts of each case. Gruhlke, 756 N.W.2d at 408.

       Under these circumstances, we agree with the district court that FC did not act
with an improper purpose when it contracted with Sancom, because FC was simply
attempting to take advantage of the uncertain regulatory scheme at the time. When
FC entered into its contract with Sancom in 2005, it was unsettled whether its
business model complied with the tariff system. FC had a legitimate argument that
it could be considered an “end user,” and thus Sancom could bill Qwest under its
tariff for calls delivered to FC’s call bridges, because FC “paid” for Sancom’s
services through a netting agreement: Sancom charged FC for subscribing to its
services; FC charged Sancom for technical support and marketing; and the net result
was that Sancom owed FC money. It was not until the FCC’s Farmers II decision in
2009 – after this lawsuit began – that it appeared that FC’s business model violated
Sancom’s tariff. Significantly, the district court found credible Erickson’s testimony



                                         -8-
that he did not know FC’s business model violated the tariff and that he intended to
comply with the tariff system.

       FC’s business model was not based on inducing Sancom to breach its tariff.
Instead, it was based on its reasonable, credible belief that it was taking advantage of
the tariff system within the terms of the law. Under these circumstances, FC was not
acting with an improper purpose, because it reasonably believed it was complying
with the law as it existed at the time it contracted with Sancom. See Briesemeister
v. Lehner, 720 N.W.2d 531, 543-44 (Wis. Ct. App. 2006) (noting defendant did not
act with improper motive when it relied on advice of attorney, even if the attorney’s
advice was incorrect), cited with approval in Selle, 786 N.W.2d at 753. FC’s
innocent motive distinguishes this case from other cases where the South Dakota
Supreme Court found the interferer acted with an improper purpose. See, e.g., St.
Onge Livestock Co., Ltd. v. Curtis, 650 N.W.2d 537, 542 (S.D. 2002) (finding issue
of material fact on impropriety of interference where party disregarded express advice
of counsel about legality of employment contract and recruited competitor’s
manager).

        Judge Murphy argues that the district court committed clear error when it held
that FC did not act with improper purpose, based largely on the district court’s
finding that Erickson was credible when he testified that he did not know FC’s
business model violated Sancom’s tariff and that he intended to comply with the law.
First, Judge Murphy argues this credibility finding was internally inconsistent with
the district court’s finding that FC’s business model was “specifically designed” to
take advantage of the tariff. Second, Judge Murphy argues Erickson’s intent was
irrelevant, because FC had actual knowledge it was interfering with Sancom’s
contract with Qwest.

     This argument rests on the flawed premise that FC knew it was acting
unlawfully. The FCC’s finding that FC designed its business model to take advantage

                                          -9-
of the tariff system does not compel the conclusion that FC knew it was acting
unlawfully. There is nothing unlawful about a company acting to take advantage of
a favorable regulatory scheme, which FC believed it was doing. While Sancom’s
billings to Qwest were later deemed “unlawful,” this conclusion was not apparent to
FC at the time it contracted with Sancom. FC thought its contract with Sancom fit
within Sancom’s tariff. In hindsight, FC was wrong. But at the time, it did not know
it was wrong.

       This difference is important, because tortious interference with a business
relationship is an intentional tort, and therefore a defendant must knowingly interfere
with the contract to be liable. Restatement (Second) of Torts § 766 cmt. j. (1979)
(noting that element of intent may be satisfied where actor “knows that the
interference is certain or substantially certain to occur as a result of his action”).
Indeed, in each case Judge Murphy cites the defendant knew its actions would
interfere with the plaintiff’s business relationship at the time it engaged in the
interference. See Lien, 39 N.W.2d at 489 (finding defendant had sufficient intent to
interfere with a business relationship where it mined a third party’s land even though
it had knowledge of plaintiff’s contractual rights to the rock on the land); ANR W.
Coal Dev. Co. v. Basin Elec. Power Co-op., 276 F.3d 957, 972-73 (8th Cir. 2002)
(finding actor acted with sufficient intent for claim of tortious interference where it
had knowledge that its accounting advice would undercut the defendant’s contractual
right to receive royalties). By contrast, FC did not know that its business model
would cause Sancom to breach its contract. It simply believed it was taking
advantage of the regulatory system. Therefore, FC did not act with an improper
motive.

      We affirm the district court’s judgment that Qwest failed to prove FC acted
with an improper purpose.




                                         -10-
      B.     Unfair Competition

      Qwest next argues the district court erred when it predicted South Dakota
would not recognize FC committed a tort of unfair competition when it induced
Sancom to breach its tariff. When a state’s highest court has not spoken on an issue,
a federal court must predict what the state court would do if it were called upon to
decide the issue. See Nw. Mut. Life Ins. Co. v. Weiher, 809 F.3d 394, 397 (8th Cir.
2015).

       Under South Dakota law, the tort of unfair competition itself does not have
specific elements, but rather it describes a general category of torts which courts
recognize to protect commercial interests. Setliff v. Akins, 616 N.W.2d 878, 887-88
(S.D. 2000). Therefore, to prove the defendant committed the tort of unfair
competition, the plaintiff must identify an underlying tortious act the defendant
committed. Id.

       To identify an underlying tortious act that FC committed, Qwest points to the
Restatement (Third) of Unfair Competition, which provides a remedy in tort for harm
that results from the “acts or practices of the actor determined to be actionable as an
unfair method of competition, taking into account the nature of the conduct and its
likely effect on both the person seeking relief and the public.” Restatement (Third)
of Unfair Competition § 1(a)(3) (1995). Qwest argues FC’s business model was
based on tortiously inducing regulatory violations, which falls under this section of
the Restatement as an act or practice that South Dakota would determine to be
actionable as an unfair method of competition.

       We disagree with Qwest that South Dakota would recognize a new tort under
these circumstances, because an essential component for a claim of unfair competition
under South Dakota law is lacking: direct competition. South Dakota recognizes the
tort of unfair competition when one company gains an upper hand on its competitor

                                         -11-
due to an unfair practice. In Raven Industries, Inc. v. Lee, for example, the South
Dakota Supreme Court found the defendant committed the tort of unfair competition
when it gained a “thirteen-year head start in manufacturing” after it took its
competitor’s trade secret. 783 N.W.2d 844, 851 (S.D. 2010). Likewise, in Setliff, the
court found a triable issue on whether an employee committed the tort of unfair
competition when he breached his duty of loyalty and began competing against his
former employer. 616 N.W.2d at 887-88. And cases from other jurisdictions on
which Qwest relies also involve unfair competition between direct competitors. See
ID Sec. Sys. Canada, Inc. v. Checkpoint Sys., Inc., 249 F. Supp. 2d 622, 688-89 (E.D.
Pa. 2003) (finding unfair competition where competitor tortiously interfered with
contract and gained advantage over direct competitor); N.M. Oncology &
Hematology Consultants, Ltd. v. Presbyterian Healthcare Servs., 54 F. Supp. 3d 1189,
1233-37 (D.N.M. 2014) (denying defendant’s motion to dismiss claim of unfair
competition where hospital used unfair means to drive competitor out of market).

       In this case, FC was not a direct competitor of Qwest and it did not use any
unfair methods to gain an advantage over Qwest. We therefore predict the South
Dakota Supreme Court would not recognize a tort of unfair competition under these
circumstances, and we find the district court properly rejected this new tort.

      C.     Unjust Enrichment

        Finally, Qwest argues the district court erred when it found FC was not unjustly
enriched. Unjust enrichment is an equitable remedy, Dowling Family P’ship v.
Midland Farms, 865 N.W.2d 854, 860 (S.D. 2015), and we review a district court’s
decision to deny an equitable remedy for abuse of discretion. Olivares v. Brentwood
Indus., 822 F.3d 426, 429 (8th Cir. 2016). A district court abuses its discretion if it
fails to consider a relevant factor that should have been given significant weight, if
it considers an improper or irrelevant factor, or if it “commits a clear error of



                                         -12-
judgment in the course of weighing proper factors.” Aaron v. Target Corp., 357 F.3d
768, 774 (8th Cir. 2004).

      To establish a claim for unjust enrichment, the plaintiff must prove (1) it
conferred a benefit upon another; (2) the other accepted or acquiesced in that benefit;
and (3) it would be inequitable to allow the other to retain that benefit without paying.
Dowling Family P’ship, 865 N.W.2d at 862. “[T]he fact that a benefit is retained,
enjoyed, and profitably exploited by the recipient, all without compensation, does not
necessarily mean that the recipient has been unjustly enriched.” Restatement (Third)
of Restitution and Unjust Enrichment § 2 cmt. b (2011) (cited with approval in
Johnson v. Larson, 779 N.W.2d 412, 416 (S.D. 2010)). Rather, the beneficiary must
obtain the benefit “in a manner that the law regards as unjustified.” Id. “[T]he
relevant inquiry is whether the circumstances are such that equitably the beneficiary
should restore to the benefactor the benefit or its value.” Hofeldt v. Mehling, 658
N.W.2d 783, 788 (S.D. 2003).

       The district court found Qwest did not prove it was entitled to an equitable
remedy for unjust enrichment because it would not be inequitable to allow FC to
retain the benefit it received. Qwest Commc’ns Corp., 2014 WL 5782543, at *17.
The district court noted that FC did not gain any benefit illegally or inequitably – it
merely “took advantage of a loophole until the loophole closed.” Id. The district
court also noted that FC provided legitimate services in exchange for its payments
from Sancom. Id. Finally, the district court found it would not be equitable to allow
Qwest to recover money from FC when it already recovered money in its settlement
with Sancom. Id.

       At this stage, this ruling must be vacated. Here the district court relied on two
irrelevant factors. First, the district court incorrectly found FC’s conduct was “neither
illegal nor inequitable” because it was simply taking advantage of a loophole until the
loophole closed. Id. The phrase “loophole” implies that the Sancom-FC contract was

                                          -13-
legal prior to the FCC’s decision in Farmers II. But that is not the case. In Farmers
II, the FCC held that LECs violated the Communications Act by billing IXCs for calls
that terminated at conference call bridges when the conference calling company did
not subscribe to the LEC’s services. Farmers II, 24 F.C.C. Rcd. at 14813. This
decision was not merely prospective (that LECs could no longer bill IXCs for this
traffic) but retrospective as well (that LECs never could have billed IXCs for this
traffic). Since these billing practices were never legal, no loophole ever existed.

        As such, FC was not exploiting a loophole, but rather taking advantage of legal
uncertainty. In other words, while FC did not intend to cause Sancom to breach its
tariff, it did, in part, cause Sancom to breach its tariff. This distinction is crucial,
because unjust enrichment is appropriate where the beneficiary gains a benefit
inequitably, even if the beneficiary does not intend to deprive the benefactor of the
benefit. See Johnson, 779 N.W.2d at 417-18 (finding unjust enrichment appropriate
even where defendant was not a wrongdoer and had “no intent to deprive” the
plaintiff of his benefit). Thus, the fact that FC did not know it was inducing a tariff
violation is not a defense to Qwest’s claim for unjust enrichment. And even though
FC was not itself acting illegally, its conduct might be characterized as inequitable
because it retained a benefit based on Sancom’s tariff violation, which it partly
caused. By finding FC did not act illegally or inequitably because it took advantage
of a “loophole,” the district court may have relied on an improper factor for its denial
of relief.

      Second, the district court improperly considered Sancom’s settlement payments
to Qwest when it found FC was not unjustly enriched. South Dakota measures
damages for unjust enrichment based on the amount the beneficiary received unjustly,
not the amount the benefactor lost. See Johnson, 779 N.W.2d at 418 (“Unjust
enrichment . . . allows an award of restitution for the value of the benefit unjustly
received, rather than the value of the services provided.”). Since Sancom’s payments
to Qwest have no effect on the amount by which FC was enriched, this factor is

                                         -14-
legally irrelevant to Qwest’s claim for unjust enrichment.4 Rather, the focus should
have been the amount of money FC inequitably received, not the amount of money
Qwest has already recovered from Sancom. By denying Qwest’s claim for unjust
enrichment due, in part, to the amount of damages Sancom already paid Qwest, the
district court may have given undue weight to another legally irrelevant factor.

      Thus, we reverse and remand to the district court for reconsideration of
whether FC was unjustly enriched. We leave the merits of Qwest’s claim for unjust
enrichment to the district court based on the full record.5

                                IV. CONCLUSION

       For the foregoing reasons, we conclude the district court properly entered its
rulings in favor of FC on Qwest’s claims for intentional interference with a business
relationship and unfair competition. However, the district court failed to consider all
important factors undergirding the unjust enrichment claim. We therefore vacate the
district court’s order on the claim for unjust enrichment and remand to the district
court for reconsideration of whether FC was unjustly enriched.

      It is so ordered.




      4
      We leave to the district court to decide whether Sancom’s payments to Qwest
may diminish Qwest’s recovery under any other legal theory.
      5
       Judge Shepherd argues FC cannot be said to have gained a benefit inequitably
without paying for its value, and therefore it is not liable to Qwest under a theory of
unjust enrichment. That matter goes to the merits, which we leave to the district
court.

                                         -15-
SHEPHERD, concurring in part and dissenting in part.

      I concur in the court’s decision to affirm the district court in denying Qwest’s
claims for intentional interference with a business relationship and unfair
competition. However, I would also affirm the district court’s denial of Qwest’s
unjust enrichment claim.

        “‘In reviewing a judgment after a bench trial, this court reviews the court’s
factual findings for clear error and its legal conclusions de novo.’” Tussey v. ABB,
Inc., 746 F.3d 327, 333 (8th Cir. 2014) (quoting Outdoor Cent. Inc. v.
GreatLodge.com, Inc., 688 F.3d 938, 941 (8th Cir. 2012)). The majority finds that
the district court erred in denying Qwest’s unjust enrichment claim against FC
because FC’s conduct was neither illegal or inequitable. The court finds that the
Sancom-FC contract was never legal because the FCC decision in Farmers II was
retrospective as well as prospective, i.e. that LEC’s could never bill IXCs for bridged
conference calls. This misses the point. It is undisputed that two separate and
distinct contractual relationships existed under the facts of this case. First, Qwest had
a contractual relationship with Sancom governed by federal laws and regulations.
Charges by Sancom to Qwest are set forth in a tariff which Sancom filed with the
FCC and the South Dakota Public Utilities Commission. Money was paid by Qwest
to Sancom based upon minutes of use attributable to qualifying “end users” under the
tariffs. Second, Sancom and FC entered into a contract under which Sancom agreed
to provide FC with a location for a conference call bridge and FC agreed to provide
a minimum number of minutes to the bridge in exchange for a marketing fee. Money
was paid by Sancom to FC as a per minute marketing fee for call traffic to FC’s
conference call bridge.

       FC was not a party to a contract between Sancom and Qwest and did not
participate in the billing relationship between those entities. Nor was FC a party to
the FCC proceedings. In Farmers II the FCC, based upon newly presented evidence,

                                          -16-
ruled that conference call customers were not end users or customers under the LEC’s
tariff and that IXCs such as Qwest were not liable for termination charges with
respect to that traffic. However, the FCC exercised no jurisdiction over FC and the
written decision does not criticize the motives of FC in entering into the contract with
Sancom much less invalidate the contract or opine that it is unenforceable. In this
action, the district court found that “FC had no obligations under any tariff because
it is not a carrier,” “FC was under no legal obligation to ensure that Sancom complied
with its tariff,” and, “significantly, that FC was not the actor who violated Sancom’s
tariffs, and therefore FC did not engage in conduct that was actionable under a federal
or state statute.” Indeed, the majority accurately concludes: “There is nothing
unlawful about a company acting to take advantage of a favorable regulatory
scheme . . . .” (Supra p. 10.)

       Not a party to an illegal agreement and having no legal obligation to ensure that
Sancom complied with its tariff, FC can not be said to have received a benefit “‘from
the plaintiff which would be inequitable to retain without paying for its value’” an
essential element of an unjust enrichment action. Apache Corp. v. MDU Res. Grp,
Inc., 603 N.W.2d 891, 895 (N.D. 1999) (quoting Zuger v. North Dakota Ins. Guar.
Ass’n, 494 N.W.2d 135, 138 (N.D. 1992)). The district court’s findings are amply
supported by the record and are consistent with the contracts between the parties and
the order of the FCC. The decision of the district court to decline this equitable
remedy was not an abuse of discretion. Entergy Arkansas, Inc. v. Nebraska, 358 F.3d
528, 554 (8th Cir. 2004) (“We review a decision not to impose a particular equitable
remedy for an abuse of discretion.”).

      I would affirm the district court’s judgment in favor of FC on Qwest’s unjust
enrichment claim.




                                         -17-
MURPHY, Circuit Judge, dissenting.

       Free Conferencing and Sancom created a scheme by which Free Conferencing
generated telephone traffic on Qwest's network, and Sancom then billed Qwest under
its FCC approved tariff, and Free Conferencing received part of Sancom's proceeds.
On referral the FCC found that Sancom was not entitled to bill Qwest because the
Free Conferencing/Sancom arrangement violated federal law. The district court
found that Free Conferencing's contract with Sancom was "intentionally designed"
to take advantage of Qwest's FCC tariff. The majority nonetheless concludes that
Free Conferencing is not liable to Qwest for interfering with the tariff because of its
own "innocent motive." That conclusion is contrary to South Dakota law, and its
premise conflicts with the facts as found by the FCC. Because Qwest is entitled to
recover from Free Conferencing on its claims for tortious interference and unjust
enrichment, I respectfully dissent.

                                           I.

       In South Dakota, the elements of tortious interference with a business
relationship are:

      1. The existence of a valid business relationship or expectancy;
      2. knowledge by the interferer of the relationship or expectancy;
      3. an intentional and unjustified act of interference on the part of the interferer;
      4. proof that the interference caused the harm sustained; and,
      5. damages to the party whose relationship or expectancy was disrupted.

Selle v. Tozser, 786 N.W.2d 748, 753 (S.D. 2010). Based on the record here the
district court found that the tariff "controlled the relationship" between Sancom and
Qwest, that Free Conferencing had knowledge of that relationship, and that it had
knowledge of Sancom's obligations under the tariff. The question is whether Free



                                          -18-
Conferencing committed an "intentional and unjustified act of interference" with that
relationship.

        The findings and conclusions made by the FCC in this case should be given
significant weight. See United States v. Great N. Ry. Co., 337 F.2d 243, 248 (8th Cir.
1964); MCI Telecomms. Corp. v. Teleconcepts, Inc., 71 F.3d 1086, 1103 (3d Cir.
1995); see also Access Telecomms. v. Sw. Bell Tel. Co., 137 F.3d 605, 608 (8th Cir.
1998) (courts apply the doctrine of primary jurisdiction "to obtain the benefit of an
agency's expertise and experience"). The FCC found that Sancom "was not entitled
to charge Qwest . . . under the Tariff" for Free Conferencing traffic and concluded
that its charges to Qwest were unlawful. In re Qwest Commc'ns Co. v. Sancom, Inc.
(Sancom), 28 F.C.C.R. 1982, 1994 (2013). The district court found that Free
Conferencing's agent Darin Rohead drafted a contract which depended on Sancom
violating its tariff obligations with Qwest and making illegal billings to Qwest. This
interfered with Qwest's rights under the tariff.

       Free Conferencing's actions were intentional. The FCC found that the contract
between Free Conferencing and Sancom, which Rohead drafted, appeared to be
"purposefully structured" to avoid the tariff, Sancom, 28 F.C.C.R. at 1993, and the
district court found that the contract was "intentionally" and "specifically designed
to take advantage of the tariff relationship."

       Free Conferencing also had no justification for inducing violations of federal
law. Free Conferencing knew about the tariff and knew that the consequence of its
contract was that Sancom would bill Qwest in a way that violated that tariff. The
district court specifically found that Free Conferencing "knew that [its] profit would
come at the expense of" Qwest because the latter was "bound to pay a high tariff rate"
to Sancom and Free Conferencing's business was "intentionally designed to take
advantage of that arrangement." These facts are sufficient to make out a claim for
unjustified interference under South Dakota law. "When one has knowledge of the

                                        -19-
contract rights of another, his wrongful inducement of a breach thereof is a willful
destruction of the property." Lien v. Nw. Eng'g Co., 39 N.W.2d 483, 486 (S.D.
1949).

       The majority concludes that Free Conferencing "did not act with an improper
purpose," relying heavily on the testimony of its president, David Erickson claiming
that he had intended to act lawfully. Although we give significant deference to a trial
court's credibility determinations, we may find clear error when a witness story is "so
internally inconsistent or implausible on its face that a reasonable factfinder would
not credit it," or when a court's finding is internally inconsistent with its other
findings. Wilson v. Lambert, 789 F.2d 656, 658 (8th Cir. 1986) (quoting Anderson
v. City of Bessemer City, 470 U.S. 564, 575 (1985)). The district court's finding that
Free Conferencing did not intend to violate the law was flawed for both reasons.

        Erickson's testimony directly conflicts with the FCC's finding that the contract
was purposefully structured to avoid the tariff relationship. See Sancom, 28 F.C.C.R.
at 1993. The FCC examined the contract and found that it "bear[s] no indications that
[it] pertain[s] in any way to the services offered under the Tariff" and that it contains
provisions which are different from and "inconsistent with" the tariff. The district
court found that Free Conferencing "knew about the tariff, its rates, and the
obligations of the parties bound by the tariffs." It strains credulity to believe that Free
Conferencing intended to act lawfully when it entered into a contract under which it
profited from Sancom's unlawful billings to Qwest. Moreover, Erickson's testimony,
that he "did not have any motivation to operate his business outside the tariffs" and
took steps to comply with the tariff, conflicts with the district court's own finding that
the contract was "specifically designed" to take advantage of the tariff. The district
court's finding that Free Conferencing had no improper motivation is clearly
erroneous because it is internally inconsistent with the court's other findings and
contradicts the FCC's factual findings.



                                           -20-
       Regardless, Erickson's subjective view about the propriety of his company's
actions is not relevant to the legal analysis in this case. Under the Restatement
approach to tortious interference which South Dakota follows, "even if an actor has
a legitimate motive or purpose for its actions, if the actor has knowledge of the
consequences of its acts, then it may be liable for tortious interference with contract."
ANR W. Coal Dev. Co. v. Basin Elec. Power Co-op., 276 F.3d 957, 972 (8th Cir.
2002) (analyzing North Dakota law and section 766 of the Restatement (Second) of
Torts); see Gruhlke v. Sioux Empire Fed. Credit Union, Inc., 756 N.W.2d 399, 406
(S.D. 2008) (noting that South Dakota follows section 766). In South Dakota, when
the defendant "has knowledge of the contract rights of another, his wrongful
inducement of a breach thereof is a willful destruction of the property of another and
cannot be justified on the theory that it enhances and advances the business interests
of the wrongdoer." Lien, 39 N.W.2d at 486 (quoting Sorenson v. Chevrolet Motor
Co., 214 N.W. 754, 756 (Minn. 1927)). The majority cites no South Dakota case for
the proposition that an "innocent motive" provides a defense to a claim of tortious
interference if the defendant had actual knowledge that it was interfering with a
contract. See id. (defendant liable "even though he promoted his legitimate
interests"). Because Free Conferencing had "the requisite knowledge of the
inevitable effect" of its own contract with Sancom, it is liable to Qwest. ANR W.
Coal Dev. Co., 276 F.3d at 972.

       Free Conferencing and Sancom were not "simply attempting to take advantage
of the uncertain regulatory scheme at the time" as the majority claims. Rather, their
contract involved deliberate avoidance of federal law. Free Conferencing knew about
the obligations of the tariff when it created a scheme by which Sancom would pay it
for generating calls which Sancom would charge to Qwest even though the calls were
not covered by the tariff. The FCC found that "under the agreement, Sancom would
pay Free Conferencing a per-minute fee when [Qwest] paid Sancom's related
switched access bills." Sancom, 28 F.C.C.R. at 1984. In other words, if Sancom had
not breached its tariff and billed Qwest, Free Conferencing would not have gotten

                                          -21-
paid. This factual record shows that, contrary to the majority's conclusion, the Free
Conferencing business model was in fact "based on inducing Sancom to breach its
tariff."

       The contract Free Conferencing drafted was premised on a business model that
was unlawful at the time. The majority's "legal uncertainty" rationale is belied by its
own analysis of the applicable law at the time the contract was drafted. The majority
correctly states that the FCC's Farmers II decision was "not merely prospective . . .
but retrospective as well," and that under the law as determined by Farmers II
"[Sancom] never could have billed [Qwest] for this traffic" because Sancom's billing
practices "were never legal." Creating a business model which violates federal law
is not "taking advantage of legal uncertainty" if the government has not yet filed an
enforcement action against a novel scheme. It is simply unlawful.

                                           II.

       I agree that the district court abused its discretion by granting judgment to Free
Conferencing on Qwest's unjust enrichment claim. The basis for Free Conferencing's
profits under its contract with Sancom was Qwest's tariff payments to Sancom. Free
Conferencing was aware of those payments because the district court found it had
drafted the contract, knew about the tariff, and that the contract was designed to take
advantage of the tariff. For Free Conferencing to retain its share of Qwest's tariff
payments would not be equitable because that money was obtained as part of a wilful,
unlawful business practice.

       The district court relied on the fact that Free Conferencing provided a service
to its own customers, and that some of its customers were also Qwest customers.
Whether or not Free Conferencing provided its own customers teleconferencing
services is irrelevant, because it was providing those services so that it and Sancom
could make money from Qwest. The fact that some Free Conferencing customers

                                          -22-
used Qwest's long distance services is also irrelevant, because Sancom was not
entitled to bill Qwest for any of the calls going to Free Conferencing. Qwest never
received any benefit from Free Conferencing's actions (which in fact cost it millions
of dollars). Qwest is entitled to damages on its unjust enrichment claim.

                                        III.

       Because Qwest's claims for tortious interference and unjust enrichment can
provide it with adequate remedies, the district court correctly concluded that the
South Dakota Supreme Court would not likely recognize the new tort of inducing
regulatory violations under the circumstances of this case. See Garrett v. BankWest,
Inc., 459 N.W.2d 833, 842–43 (S.D. 1990). The majority suggests South Dakota
courts would never recognize this tort theory, but its conclusion is based on the
erroneous premise that Free Conferencing "did not use any unfair methods to gain an
advantage over Qwest." On this record it is clear that Free Conferencing's purposeful
abuse of the tariff system was unfair to Qwest.

                                        IV.

      Qwest is entitled to recover on its claims for tortious interference and unjust
enrichment. I therefore respectfully dissent and would reverse and remand for a
calculation of Qwest's damages on these claims.
                       ______________________________




                                        -23-