Opinion
Case No. CV 03-8972GAF (CTx).
March 19, 2004
I. INTRODUCTION
On December 10, 2003, Plaintiff U.S. TelePacific Corp. ("Plaintiff"), initiated this action against Defendants Tel-America and TransTel ("Defendants") for: (1) violation of federally filed tariffs; (2) violation of § 201 of the Federal Communications Act of 1934; and (3) declaratory relief. Both Defendants now move to dismiss Plaintiff's complaint. Defendant Tel-America moves to dismiss pursuant to FED. R. CIV.P. 12(b)(1) on the basis that this Court lacks subject matter jurisdiction over this action or, in the alternative, that this matter be referred to the Federal Communications Commission ("FCC") as the body that enjoys "primary jurisdiction" over the matter. Defendant TransTel moves to dismiss pursuant to FED.R.CIV.P. 12(b)(6) and contends that because Plaintiff has failed to advance any allegations that TransTel committed any of the acts that Plaintiff insists give rise to liability for which relief is sought or to allege that TransTel is liable for the acts or omissions of Defendant Tel-America, Plaintiff fails to state a claim against TransTel.
The Court finds merit in Defendant's arguments. The Court concludes that no facts are alleged against TransTel that would subject it to liability for the acts of Tel-America, the entity that engaged in the alleged wrongful conduct described in the Complaint. Moreover, the Court will not permit an amendment because the Court also concludes that it lacks subject matter jurisdiction over this dispute because the issues raised in this lawsuit have already been presented in a complaint to the FCC, which, under 47 U.S.C. § 207, divests the District Court of jurisdiction. Accordingly, the Court GRANTS both motions. Furthermore, the Court concludes that the matter is capable of resolution without oral argument. Thus, the hearing set in this matter for March 22, 2004 is VACATED. FED. R. CIV. P. 78; Local Rule 7-15.
II. RELEVANT FACTUAL BACKGROUND
A. THE FACTUAL ALLEGATIONS
Plaintiff is a Competitive Local Exchange Carrier ("CLEC"), i.e. a local phone company. Defendant Tel-America is an Interexchange Carrier ("IXC"), i.e. a telecommunications carrier that provides service between local phone companies. (Opp. at 2). Since 1999, Tel-America has provided its interexchange services to customers in both California and Nevada, and in turn, Plaintiff has provided Tel-America with access services through its "switches" to transport the interexchange traffic to Tel-America's network. (Compl. ¶ 8). Plaintiff asserts that it is entitled to be compensated for this service in the form of access charges. (Id. ¶ 7). Indeed, whenever Plaintiff provides this service to Defendant Tel-America, it charges Tel-America for that service. (Id. ¶ 8). Defendant Tel-America's refusal to pay these access charges, the balance of which is now in excess of $600,000, is the basis of this lawsuit. (Id.).
In its Opposition to the Motion to Dismiss, Plaintiff now contends the amount has reached $720,000 and the charges contine to accrue at a rate of $15,000 per month. (Opp. at 3).
Although not discernable from the complaint, Defendant Tel-America contends — and Plaintiff admits in its Opposition to the motion to dismiss — that the charges imposed result at least in some part, and possibly significant part, from toll free calls originating from wireless cell phones. (Tel-America Mot. at 3; Opp. thereto at 3). Defendant contends, in essence, that Plaintiff artificially inserts itself in the call path between the carrier and the switch in order to impose additional access charges on Tel-America notwithstanding the fact that Plaintiff provides no actual access service nor adds value or functionality to the connection. (Mot. at 3). Because Defendant deems this to be a sham arrangement for Plaintiff to collect access charges to which it would otherwise not be entitled, it has declined to pay the invoices. (Id.).
Also noticeably absent from the complaint are any substantive allegations indicating how Defendant TransTel violated the law or injured Plaintiff. For example, there are no allegations that Defendant TransTel committed any of the acts that Plaintiff contends give rise to liability. Moreover, no where in the complaint is any allegation that TransTel is liable for the acts of Tel-America. TransTel's name appears only twice in the complaint; first in the description of parties, (Compl. ¶ 3), and second in the prayer for relief. (Id. at 7, In. 10).
B. PROCEDURAL HISTORY 1. The FCC Informal Complaint
On November 15, 2002, Plaintiff filed an informal complaint in this matter with the FCC. (Exh. A to Stoll Decl.). On January 17, 2003, Defendants responded to the informal complaint. (Exh. B to Stoll Decl.). On February 26, 2003, the FCC, upon review of the informal complaint and the response thereto, declined to take further action on the informal complaint but invited Plaintiff to file a formal complaint. (Exh. C to Stoll Decl.).
Before filing the formal complaint, Plaintiff requested that its formal complaint be accorded accelerated docket treatment. (Exh. D to Stoll Decl.). Defendants opposed this request on a number of grounds including that the FCC lacked jurisdiction over collection actions like Plaintiff's. (Exh. E to Stoll Decl.). On July 11, 2003, before the FCC had ruled on the accelerated docket request, Plaintiff sought an extension of time to file its formal complaint on the basis that it hoped to resolve this matter through settlement and because the matters raised in the informal complaint related to an FCC Notice of Proposed Rule Making ("NPRM") released in April of 2001. (Exh. F to Stoll Decl.).
On July 23, 2003, the FCC notified the parties, without explaining the grounds for its decision, that it concluded that this matter was not appropriate for inclusion in the accelerated docket, but assured Plaintiff that it retained the ability to file a formal complaint. (Exh. G to Stoll Decl.). Additionally, the FCC granted Plaintiff the requested extension of time to file a formal complaint, acknowledging the preference for private resolution of disputes and for allowing the resolution of the dispute to be informed by the Commission's consideration of the related matters raised by the NPRM. (Id.). As of yet, Plaintiff has not filed a formal complaint with the FCC.
2. The FCC's Notice of Proposed Rulemaking and the Related US LEC Matter
In April 2001, the FCC released a NPRM titled In Matter of Developing a Unified Intercarrier Compensation Regime, CC Docket No. 01-92 by which the FCC proposed implementing a unified structure for flows of payments among carriers taking into account new technologies, including cellular service providers. In the impending NPRM proceeding, the FCC is adjudicating a petition filed in September 2002 by US LEC Corp. seeking a declaratory ruling that CLEC's are entitled to impose and recover access charges from IXC's virtually identical to those at issue in this case. That action was consolidated with another similar T-Mobile petition. The FCC invited comment and both the Plaintiff and Defendants, as well as many others such as Worldcom and Qwest, have responded with submissions. (Exh. E, I, K, L, M to Stoll Decl.).
Plaintiff's comments regarding the NPRM have essentially equated the US LEC petition to its informal complaint. For example, in its first three submissions to the FCC, Plaintiff addressed Defendants' comments and attached its informal complaint. (Exh. K to Stoll Decl.). In a separate letter to the FCC, Plaintiff admitted that its informal complaint presented very similar issues as those being examined by the FCC in the NPRM. (Exh. F to Stoll Decl.). Furthermore, Plaintiff made its third submission on January 15, 2004 — just two months ago and one month after filing its complaint in this Court — again urging the FCC to allow it to collect these access charges. (Exh. M).
III. DISCUSSION
A. DEFENDANT TRANSTEL'S MOTION TO DISMISS
Defendant TransTel moves to dismiss Plaintiff's complaint for failure to state a claim against it pursuant to FED. R. CIV. P. 12(b)(6) because the complaint is devoid of allegations indicating how TransTel violated the law or injured Plaintiff. Case law supports TransTel's position. See Silicon Knights v. Crystal Dynamics, 983 F. Supp. 1303, 1308 (N.D. Cal. 1997) (holding that to assert claims against individual defendants, a complaint must contain allegations indicating how the defendant violated the law or injured plaintiff in order to survive a motion to dismiss); Wickstrom v. Ebert, 101 F.R.D. 26, 31 (E.D. Wis. 1984) (holding that it is a fundamental tenet of federal pleading practice that a party cannot expect to maintain an action against another simply by serving him with a complaint that includes no allegations against that individual). Moreover, Plaintiff concedes that the complaint fails to state a claim against TransTel by acknowledging its "oversight in the pleadings." (Opp. to Transtel Mot. at 2).
Plaintiff, however, now contends that since the filing of the original complaint it has learned that TransTel is the parent company of Defendant Tel-America and that because the two entities share the same board of directors, TransTel may be the alter ego of Tel-America. On that basis, Plaintiff seeks leave to amend to include alter ego allegations against TransTel in relation to the substantive charges alleged against Tel-America. As discussed infra, the Court is dismissing this action for lack of subject matter jurisdiction, and, accordingly, leave to amend is DENIED. B. DEFENDANT TEL-AMERICA'S MOTION TO DISMISS 1. This Court Lacks Subject Matter Jurisdiction Over this Dispute
The Court has serious doubts about the veracity of this representation. In letters to Defense Counsel written in 2002, Plaintiff refers to the offending entities as "TransTel's subsidiaries." It obviously knew the nature of TransTel's relationship with Defendant Tel-America and that it may be a proper defendant on a theory of alter ego long before the filing of the complaint. Accordingly, it is unlikely that the failure of the complaint to properly state a claim against TransTel is a mere "oversight."
Defendant Tel-America argues that because Plaintiff first filed an informal administrative complaint with the FCC, it cannot pursue its claim in federal court because under 47 U.S.C. § 207, Plaintiff's election of forum in the FCC deprives this Court of subject matter jurisdiction over the dispute.
Section 207 of the Federal Communications Act of 1934 provides that:
Any person claiming to be damaged by any common carrier subject to the provisions of this chapter may either make complaint to the Commission as hereinafter provided for, or may bring suit for the recovery of damages for which such common carrier may be liable . . . in any district court of the United States of competent jurisdiction; but such person shall not have the right to pursue both such remedies. 47 U.S.C. § 207. Section 208 of the Act describes the procedures by which a complaint may be filed and investigated and the regulations implemented by section 208 provide that a complaint to the Commission may be informal or formal. 47 C.F.R. § 1.711. Section 207 draws no distinction between formal or informal complaint proceedings.
As of yet, the Ninth Circuit has not ruled on the issue, but the other circuits that have addressed the issue have held that the statute bars jurisdiction in the federal courts once an administrative complaint — formal or informal — has been initiated in the FCC. See Digitel, Inc. v. MCI Worldcom, Inc., 239 F.3d 187, 191 (2d Cir. 2001); Mexiport, Inc. v. Frontier Communications Servs., Inc., 253 F.3d 573, 575 (11th Cir. 2001); Stiles v. GTE Southwest Inc., 128 F.3d 904, 907 (5th Cir. 1997); Bell Atl. Corp. v. MFS Communications Co., 901 F. Supp. 835, 853 (D. Del. 1995).
In Stiles v. GTE Southwest Inc., the plaintiff filed an informal complaint with the FCC. Stiles, 128 F.3d at 905. The FCC declined to take further action but instructed plaintiff that she was entitled to file a formal complaint. Id. Instead, the plaintiff filed an action in the district court. Id. The court reasoned that the language of the statute was unambiguous, that section 207 makes no distinction between informal and formal complaints, and that the fact that both proceedings are available does not alter the clear language of the statute. Id. at 907. Accordingly, the court ruled that the district court lacked subject matter jurisdiction over the complaint because section 207 precludes a complainant from filing suit in federal court once the FCC administrative complaint process has been initiated by the filing of either a formal or informal complaint. Id.
Similarly, in Mexiport, Inc. v. Frontier Communications Services, Inc., after the plaintiff filed an informal complaint with the FCC, the FCC notified the plaintiff that the complaint could not be resolved through that process and invited the filing of a formal complaint. Mexiport, 253 F.3d at 574. The plaintiff abandoned its FCC case, choosing instead, albeit three years later, to pursue the litigation in federal court. Id. In defending against the defendant's motion to dismiss, the plaintiff argued that, had it filed a formal complaint, it would be precluded from bringing an action in federal court, but that because the informal complaint process lacks due process safeguards it does not carry the force and effect of the formal complaint proceeding, and therefore, does not bar suit in district court. Id. at 575. The court rejected this argument and, adopting the reasoning of the Fifth Circuit in Stiles, refused to read a distinction between the informal and formal complaint process into the statute, and ruled that the district court lacked subject matter jurisdiction over the plaintiff's action. Id.
Similarly, federal courts have been held to lack subject matter jurisdiction over counterclaims that have already been raised in proceedings before the FCC. See Cincinnati Bell Tel. Co. v. Allnet Communications Serv., Inc., 17 F.3d 921, 924 (6th Cir. 1994); Frontier Communications of Mt. Pulaski, Inc. v. ATT Corp., 957 F. Supp. 170, 174-75 (C.D. Ill. 1997).
The instant action was filed December 10, 2003, more than one year after Plaintiff filed its virtually identical informal complaint with the FCC seeking the same relief sought in this Court. Like the plaintiffs in Stiles and its progeny, Plaintiff has yet to file a formal complaint with the FCC. Nonetheless, the foregoing case law teaches that Plaintiff, by first filing its complaint with the FCC, irrevocably selected that forum and divested this Court of subject matter jurisdiction over this action.
To support its argument that this Court has jurisdiction over the case, Plaintiff directs the Court's attention to three FCC rulings and a district court ruling from this District. Plaintiff's reliance on these authorities is misguided. They are not only distinguishable, but undermine Plaintiff's position and further buttress Defendants' argument. The cited FCC rulings permitted the parties to continue in cases brought before the FCC that had been originally filed in district court because the district court had dismissed the actions without prejudice. See In re Long Distance/USA Inc., 2 F.C.C.R. 408 (1992); In re Mocatta Metals Corp., 47 F.C.C.2d 485 (1974); In re Mocatta Metals Corp., 44 F.C.C.2d 605 (1973). Similarly, Judge Wilson, in Comsat Corp. v. News Corp. Ltd., CV 96-7528 SVW (CTx), an action pending in this District, permitted the action to continue in district court because the FCC action was dismissed without prejudice. A dismissal without prejudice renders the previous action as though it had not been filed. Humphrey v. U.S., 272 F.2d 411, 412 (9th Cir. 1959). Plaintiff has not obtained such a dismissal without prejudice from the FCC. In light of this authority, this Court cannot entertain Plaintiff's suit as it lacks subject matter jurisdiction over the action.
Plaintiff also argues that because Defendants argued that the FCC lacked jurisdiction to hear the matter, they are judicially estopped from raising their jurisdictional argument in this tribunal. The doctrine of judicial estoppel can only be invoked if the original tribunal relied on the party's prior inconsistent statement and adopted that position. Interstate Fire Cas. Co. v. Underwriters at Lloyd's London, 139 F.3d 1234, 1239 (9th Cir. 1998); Masayesva v. Hale, 118 F.3d 1371, 1382 (9th Cir. 1997). Neither the FCC response to the informal complaint nor the denial of accelerated docket treatment indicated that the FCC's determination rested on any specific ground. In fact, the denial of the accelerated docket treatment specifically stated that: "Nothing in this letter should be construed as a ruling on any jurisdictional defense that Tel-America may raise in response to any formal complaint that TelePacific may file." (Exh. G to Stoll Decl.). Moreover, both written orders invited Plaintiff's filing of a formal complaint.
Finally, Plaintiff argues that the FCC lacks jurisdiction over this dispute because a bulk of the charges disputed by Defendants are not toll free interstate calls originated by cellular carriers' end users. (Opp. at 3). This assertion is in conflict with all other documents in the administrative record. (Exh. A to Stoll Decl. Informal Complaint) (stating that "the preponderance of the traffic delivered to Tel-America, and for which it has never paid TelePacific access charges is 8YY traffic."); (Exh. O to Veregge Decl. Plaintiff's Response to NPRM) (estimating that about 82% of the disputed access charges involved 8YY cellular traffic) (Exh. N to Veregge Decl. TelePacific Letter) (stating that "all calls in dispute were made by TelePacific Toll Free Access customers who are cellular carriers.").
To contradict these prior statements, Plaintiff only offers the Cleata Declaration, stating only that "Tel-America did have calls traversing TelePacific's network for which access charges would rightfully be incurred." Absent from the declaration is any breakdown of which calls fall into which category and the amount of charges attributed to each. The Court can only conclude from Plaintiff's prior representations and the vague Cleata declaration that those charges are insubstantial if not negligible.
If the FCC finds that it lacks jurisdiction over some of Plaintiff's claims, and if the FCC dismisses those claims without prejudice, only then may Plaintiff bring an action in this Court for relief.
2. The FCC Enjoys Primary Jurisdiction Over this Dispute
Primary jurisdiction "requires the court to enable a `referral' to the agency . . . so as to give the parties reasonable opportunity to seek an administrative ruling." Reiter v. Cooper, 507 U.S. 258, 268 (1993). Such a referral permits the court to retain jurisdiction or to dismiss the case without prejudice. Id. at 268-68. Primary jurisdiction is properly invoked where an administrative agency has jurisdiction to adjudicate the type of claim cognizable and made in a federal lawsuit and when a case presents a far-reaching question that requires expertise or uniformity in administration, e.g. the resolution of an issue of first impression, or of a particularly complicated issue that Congress has committed to a regulatory agency and that is not within the conventional experience of judges, but rather involves technical or policy considerations within the agency's particular field of expertise. See Brown v. MCI Worldcom Network Serv., Inc., 277 F.3d 1166, 1172 (9th Cir. 2002) (citations omitted).
Defendants insists that there is no sound reason for this Court to hear this case, if at all, until after the FCC adjudicates the identical issues pending before the agency in the NPRM proceeding. Plaintiff argues that primary jurisdiction is not properly invoked here because this case is a simple tariff enforcement action. (Opp. at 10-14). The Court disagrees. In light of the pending NPRM, Plaintiff's and Defendants' continued submission of comments to lobby the FCC in the NPRM, and the highly technical nature of the dispute, this Court determines that the FCC enjoys primary jurisdiction over this dispute. Accordingly, the Court DISMISSES Plaintiff's complaint WITHOUT PREJUDICE and refers the matter to the FCC.
IV. CONCLUSION
Because this Court lacks subject matter jurisdiction and the FCC enjoys primary jurisdiction over the action, Plaintiff's complaint is DISMISSED WITHOUT PREJUDICE.
IT IS SO ORDERED.