Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-azd-2_09-cv-02623/USCOURTS-azd-2_09-cv-02623-0/pdf.json

Nature of Suit Code: 890
Nature of Suit: Other Statutory Actions
Cause of Action: 28:1331 Fed Question: Fed Communications Act of 1934

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IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF ARIZONA

North County Communications Corp., 

Plaintiff, 

vs.

Cricket Communications Inc., et al., 

Defendant. 

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No. CV09-2623-PHX-NVW

ORDER

Before the Court is the Motion to Dismiss of Sprint and Verizon Wireless (doc.

# 31) and Defendants T-Mobile USA, Inc., AT&T Mobility, LLC, AT&T Mobility II,

LLC, and Cricket Communications, Inc.’s (1) Joinder in Sprint and Verizon Wireless’

Motion to Dismiss Complaint and (2) Additional Motion to Dismiss Complaint (doc.

# 33). 

I. Legal Standard

On a motion to dismiss under Fed. R. Civ. P. 12(b)(6), all allegations of material

fact are assumed to be true and construed in the light most favorable to the nonmoving

party. Cousins v. Lockyer, 568 F.3d 1063, 1067 (9th Cir. 2009). To avoid dismissal, a

complaint must contain “only enough facts to state a claim for relief that is plausible on

its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). “A claim has facial

plausibility when the plaintiff pleads factual content that allows the court to draw the

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“MTA” means “Major Trading Area.” 47 C.F.R. § 24.202(a).

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reasonable inference that the defendant is liable for the misconduct alleged.” Ashcroft v.

Iqbal, __ U.S. __, 129 S. Ct. 1937, 1949 (2009). 

II. Facts Assumed True

Plaintiff North County Communications Corporation is a competitive local

exchange carrier that provides telecommunications services throughout Arizona pursuant

to the Telecommunications Act of 1996. It provides switched local exchange, exchange

access, and other telecommunications services to end users in Arizona.

Defendants Cricket Communications, Inc., AT&T Mobility, LLC, AT&T Mobility

II, LLC, Nextel Retail Stores, LLC, Sprint Spectrum L.P. dba Sprint Nextel, T-Mobile

USA, Inc., Verizon Wireless (VAW), LLC, and NTCH-CA, Inc., provide commercial

mobile radio service (“CMRS”) pursuant to 47 U.S.C. § 332 and the Telecommunications

Act of 1996. Defendants offer calling plans allowing intraMTA1

 calls to areas serviced

by Plaintiff. Defendants’ end users make intraMTA calls to Plaintiff’s end users. 

Plaintiff terminates calls sent to Plaintiff’s end users by Defendants’ end users and incurs

costs in doing so. Defendants send traffic to Plaintiff in the absence of an interconnection

agreement or a reciprocal compensation program. 

Plaintiff began sending monthly bills to the Defendants for traffic termination in

January, 2003. Consistent with Plaintiff’s termination tariff and the Federal

Communications Commission’s (“FCC’s”) traffic termination default rate, Plaintiff billed

Defendants $0.011 per minute, per call. Defendants have refused to pay these charges

billed pursuant to tariff and have continued sending traffic to the Plaintiff’s end users

without compensating Plaintiff for call set-up or minutes of use.

On October 16, 2009, Plaintiff filed a Complaint for Damages and Declaratory

Relief in the Maricopa County Superior Court, alleging five counts: 

(1) Enforcement of Tariff under 47 U.S.C. §§ 201, 206, and 207 for

compensation for traffic sent to its end-users that originates with CMRS

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In the Matter of Developing a Unified Intercarrier Comp. Regime, CC Docket No.

01-92, Declaratory Ruling and Report and Order, 20 F.C.C.R. 4855 (2005) (“T-Mobile

Decision”).

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providers pursuant to its tariff on file for the period beginning October 16,

2006, and preceding April 29, 2005; 

(2) Declaratory Relief under A.R.S. § 12-1831, et seq., including a

determination that Defendants are required to commit to compensate

Plaintiff at a rate to be determined by the appropriate regulatory body or

else refrain from sending any traffic to Plaintiff’s end-users; 

(3) Open Account to recover amounts owed for termination services furnished

by Plaintiff under contracts implied by Plaintiff’s obligation to terminate

calls, its tariff, the FCC’s T-Mobile Decision,

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 and the lack of an

interconnection agreement or a reciprocal agreement between Plaintiff and

any of the Defendants; 

(4) Quantum Meruit for the termination services Plaintiff is required to provide

but has not received compensation; and 

(5) Violation of Arizona Utilities Code for Defendants’ failure to pay Plaintiff’s

tariff rates for terminating Defendants’ traffic. 

On December 17, 2009, Defendants removed the action to this Court alleging federal

question jurisdiction under 28 U.S.C. § 1331 because Count One arises under the Federal

Communications Act of 1934, Federal Telecommunications Act, and the rules of the

Federal Communications Commission and because Counts Two and Three seek to

enforce purported rights allegedly arising under federal law. Plaintiff concurred in the

removal.

Defendants Sprint and Verizon Wireless move to dismiss the Complaint as to all

periods on and after April 29, 2005. Defendants T-Mobile USA, Inc., AT&T Mobility,

LLC, AT&T Mobility II, LLC, and Cricket Communications move to dismiss the

Complaint in its entirety.

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III. Jurisdiction

Under 28 U.S.C. § 1441(a), “[a]ny civil action of which the district courts have

original jurisdiction founded on a claim or right arising under the Constitution, treaties or

laws of the United States,” which is brought in a state court, may be removed to the

federal district court. Under 28 U.S.C. § 1331, district courts have original jurisdiction

over causes of action created by federal law and state-law causes of action that

“necessarily raise a stated federal issue, actually disputed and substantial, which a federal

forum may entertain without disturbing any congressionally approved balance of federal

and state judicial responsibilities.” Grable & Sons Metal Prods., Inc. v. Darue Eng’g &

Mfg., 545 U.S. 308, 314, 125 S. Ct. 2363, 2368 (2005). 

“The existence of federal question jurisdiction is ordinarily determined from the

face of the complaint.” Sparta Surgical Corp. v. Nat’l Ass’n of Securities Dealers, Inc.,

159 F.3d 1209, 1211 (9th Cir. 1998). “Under 28 U.S.C. § 1441(a), an action must be fit

for federal adjudication when the removal petition is filed.” Id. If a federal question does

not appear on the face of the complaint, a defendant cannot remove a state-law claim

from state to federal court even if its defense is based entirely on federal law. Hunter v.

United Van Lines, 746 F.2d 635, 639 (9th Cir. 1984).

Counts One and Two, as pled at the time of removal, each necessarily raise a

stated federal issue, actually disputed and substantial. Count One (Enforcement of Tariff)

expressly states that it is brought under §§ 201, 206, and 207 of the Communications Act

of 1934. See 47 U.S.C. §§ 201, 206, 207. Count Two (Declaratory Relief) seeks a

judicial determination and declaration of Plaintiff’s rights based on FCC rules requiring

commercial radio service providers and local exchange carriers to compensate each other

for termination of traffic. The Court thus has original subject matter jurisdiction over

Counts One and Two.

Counts Three, Four, and Five do not necessarily raise a stated federal issue,

actually disputed and substantial. Counts Three (Open Account) and Four (Quantum

Meruit) seek common law remedies for damages arising from Defendants’ failure to

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compensate Plaintiff for services it provided to Defendants. Count Five alleges

Defendants have violated Arizona utilities statutes by failing to pay Plaintiff’s tariff rates

for terminating Defendants’ traffic. Although Defendants may raise federal defenses to

these claims, Counts Three, Four, and Five do not provide grounds for federal question

jurisdiction.

Whenever a cause of action within the jurisdiction conferred by 28 U.S.C. § 1331

is joined with one or more otherwise non-removable causes of action, the entire case may

be removed and all issues determined by the district court, or the district court may

remand all matters in which state law predominates. 28 U.S.C. § 1441(c). The district

court, in its discretion, may decline to exercise supplemental jurisdiction over a claim if it

has dismissed all claims over which it has original jurisdiction. 28 U.S.C. § 1367(c)(3). 

In some circumstances, remand of a removed case involving supplemental claims will

better accommodate the values of economy, convenience, fairness, and comity than will

dismissal of the case. Carnegie-Mellon Univ. v. Cohill, 484 U.S. 343, 351, 108 S. Ct.

614, 619-20 (1988). 

For reasons explained below, the Court will:

(1) dismiss Counts One and Two for failure to state a claim upon which relief

can be granted, 

(2) apply the doctrine of primary jurisdiction to dismiss Counts One and Two

without prejudice,

(3) decline to exercise supplemental jurisdiction over Counts Three, Four, and

Five, and 

(4) remand Counts Three, Four, and Five to the Maricopa County Superior

Court.

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IV. Statutory and Regulatory Background

A. Interstate Communications Practices Found by the FCC to Be “Unjust

or Unreasonable” Are “Unlawful” Under § 201(b).

Federal law imposes a duty on “every common carrier engaged in interstate or

foreign communication by wire or radio to furnish such communication service upon

reasonable request” and, “in accordance with orders of the [FCC], to establish physical

connections with other carriers, to establish through routes and charges applicable thereto

and the divisions of such charges, and to establish and provide facilities and regulations

for operating such through routes.” 47 U.S.C. § 201(a). “All charges, practices,

classifications, and regulations for and in connection with such communication service,

shall be just and reasonable, and any such charge, practice, classification, or regulation

that is unjust or unreasonable is declared to be unlawful.” 47 U.S.C. § 201(b). 

In § 201(b), Congress did not define which practices are “just and reasonable” and

which are “unjust or unreasonable,” but instead delegated to the FCC authority to apply

§ 201(b) through regulations and orders with the force of law. Global Crossing

Telecomm., Inc. v. Metrophones Telecomm., Inc., 550 U.S. 45, 58, 127 S. Ct. 1513, 1522

(2007). The FCC has implemented § 201(b) through the issuance of rules and

regulations, most obviously when the rules approve or prescribe for the future rates that

exclusively are “reasonable” or expressly prohibit certain carrier practices as unjust or

unreasonable under § 201(b). Id. at 53, 127 S. Ct. at 1519. Section § 201(b) has long

been thought to also prohibit rates that diverge from FCC prescriptions and rates or

practices that unreasonably fail to conform to an FCC regulation. Id. at 59, 127 S. Ct.

1522. The FCC also may implement § 201(b) by finding that the failure to follow an

FCC determination made under a different statutory provision is unjust or unreasonable

under § 201(b). Id. at 60, 127 S. Ct. at 1523. Although not every violation of FCC

regulations is an unjust and unreasonable practice, where there is an explicit statutory

scheme, and compensation to certain participants is necessary to implementation of that

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“[T]he term ‘non-access traffic’ refers to traffic not subject to the interstate or

intrastate access charge regimes, including traffic subject to section 251(b)(5) of the Act and

[Internet service provider]-bound traffic.” T-Mobile Decision, ¶ 1 n.6.

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scheme, the FCC has authority to find that failure to comply with compensation

requirements is an unreasonable practice. Id. at 56, 127 S. Ct. 1521. 

B. FCC Rules Require Mutual Compensation Between Local Exchange

Carriers and Commercial Mobile Radio Service Providers for

Termination Services.

Each telecommunications carrier has the duty “to interconnect directly or

indirectly with the facilities and equipment of other telecommunications carriers.” 47

U.S.C. § 251(a)(1). Each local exchange carrier has the duty “to establish reciprocal

compensation arrangements for the transport and termination of telecommunications.” 47

U.S.C. § 251(b)(5). 

Before April 29, 2005, FCC rules did not prohibit incumbent local exchange

carriers from filing state termination tariffs, and commercial mobile radio service

providers were obligated to accept the terms of applicable state tariffs. T-Mobile

Decision, ¶ 9. In February 2005, the FCC amended its rules to make clear its preference

for contractual arrangements for mutual compensation over imposing tariffs that

commercial mobile radio service providers must accept. Id. Effective April 29, 2005,

FCC rules prohibit local exchange carriers from imposing compensation obligations for

non-access3

 commercial mobile radio service traffic pursuant to tariff. Id. 

FCC rules require that a local exchange carrier must provide the type of

interconnection reasonably requested by a mobile service licensee or carrier unless it is

not technically feasible or economically reasonable. 47 C.F.R. § 20.11(a). Further, FCC

rules require that local exchange carriers and commercial mobile radio service providers

“comply with principles of mutual compensation”:

(1) A local exchange carrier shall pay reasonable compensation to a

commercial mobile radio service provider in connection with terminating

traffic that originates on facilities of the local exchange carrier.

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(2) A commercial mobile radio service provider shall pay reasonable

compensation to a local exchange carrier in connection with terminating

traffic that originates on the facilities of the commercial mobile radio

service providers.

47 C.F.R. § 20.11(b). 

C. Section 207 Provides a Private Cause of Action for an Act or Omission

that Is Unlawful Under § 201(b).

Private rights of action must be created by Congress. Greene v. Sprint Commn’c

Co., 340 F.3d 1047, 1050 (9th Cir. 2003). Although § 251 does not itself create a private

right of action for failure to establish reciprocal compensation arrangements or to pay

compensation as required by 47 C.F.R. § 20.11(b), it may be found under 47 U.S.C.

§ 207.

Under 47 U.S.C. § 206, if a common carrier commits an act prohibited or declared

to be unlawful, or fails to do an act required to be done, the common carrier shall be liable

to those injured by the act or omission. Under 47 U.S.C. § 207, any person claiming to be

damaged pursuant to § 206 may either file a complaint with the FCC or bring suit for

recovery of such damages in any United States district court of competent jurisdiction. 

Thus, § 207 provides a private cause of action for alleged violation of § 201(b) as

lawfully implemented by an FCC regulation. Global Crossing, 550 U.S. at 55, 127 S. Ct.

at 1520. 

However, § 207 does not provide a private cause of action without an FCC

determination the alleged act or omission is unjust or unreasonable or prohibited by

§ 201(b). North County Communications Corp. v. California Catalog & Technology, 594

F.3d 1149, 1158, 1160 (9th Cir. 2010) (“California Catalog”). “[I]t is within the

Commission’s purview to determine whether a particular practice constitutes a violation

for which there is a private right to compensation,” and the FCC’s determination “is

integral to claims involving § 201(b).” Id. at 1158. In California Catalog, the Ninth

Circuit held that claims similar to those here “are fatally flawed because the Commission

has not determined that the [commercial mobile radio service] providers’ lack of

compensation to the [local exchange carriers] violates § 201(b)” and, without an

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independent right to compensation, §§ 206 and 207 do not provide a means for seeking

relief. Id. at 1156. To date, the FCC has not made any findings that commercial mobile

radio service providers’ failure to compensate local exchange carriers constitutes an

unreasonable practice in violation of § 201(b). Id. at 1160 (filed Feb. 10, 2010).

V. Counts One and Two Will Be Dismissed Without Prejudice.

A. Count One: Enforcement of Tariff

Count One is brought under 47 U.S.C. §§ 201, 206, and 207. It alleges that

Plaintiff is entitled to compensation pursuant to its tariff on file for traffic sent to its end

users that originates with commercial mobile radio service providers for “the period

beginning 3 years before the filing of this complaint and continuing up to and including

April 28, 2005.” Plaintiff acknowledges that it may not impose tariff obligations on

commercial mobile radio service providers for services provided after April 28, 2005. 

Because “3 years before the filing of this complaint” is October 16, 2006, which is after

April 28, 2005, Count One alleges damages incurred during a period that does not exist. 

Further, Plaintiff concedes that, under California Catalog, it cannot state a claim under

§ 201(b) without a prior FCC determination that failure to pay reciprocal compensation is

an unjust or unreasonable practice and therefore unlawful under § 201(b).

Therefore, Count One will be dismissed for failure to state a claim upon which

relief can be granted.

B. Count Two: Declaratory Relief

Count Two seeks declaratory relief under the Arizona Uniform Declaratory

Judgments Act, A.R.S. § 12-1831, et seq., regarding Plaintiff’s entitlement to

compensation for the termination of calls to Plaintiff’s end users that originate on

Defendants’ networks. Count Two alleges:

In addition, while determining the precise rate of compensation for

termination of traffic, including call set-up and minutes of use, under these

circumstances may be a matter beyond the expertise of this court and with

the expertise of the appropriate regulatory body, the FCC has also indicated

that “collection actions” do not state a cause of action under [] its rules. As

a result, an actual controversy exists between the parties; and, it is in the

interests of judicial economy for this court to determine (1) the number of

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calls and the number of minutes originating on the Defendants’ networks

and terminated on the Plaintiff’s network from April 29, 2005 up through

the time of trial, (2) that the Plaintiff is entitled to receive mutual

compensation for the termination of calls to Plaintiff’s end-users which

originate on the Defendants’ networks, and (3) that the Defendants are

required to commit to compensate Plaintiff at a rate to be determined by the

appropriate regulatory body, or else refrain from sending any traffic to

Plaintiff’s end-users and refrain from taxing Plaintiff’s limited resources.

Plaintiff concedes that California Catalog precludes declaratory relief without a prior

FCC determination that failure to pay reciprocal compensation violates § 201(b). 

C. Dismissal Without Prejudice Under the Doctrine of Primary

Jurisdiction

The doctrine of primary jurisdiction does not implicate subject matter jurisdiction

of the federal courts. Syntek Semiconductor Co., Ltd. v. Microchip Technology Inc., 307

F.3d 775, 780 (9th Cir. 2002). “[I]t is a prudential doctrine under which the courts may,

under appropriate circumstances, determine that the initial decisionmaking responsibility

should be performed by the relevant agency rather than the courts.” Id. It is not

equivalent to the requirement of exhaustion of administrative remedies and “is committed

to the sound discretion of the court when protection of the integrity of a regulatory

scheme dictates preliminary resort to the agency which administers the scheme.” Id. at

780-81. When a district court determines that primary jurisdiction applies, the court

normally should dismiss the case without prejudice so that the parties may pursue their

administrative remedies. Id. at 782. If dismissal would unfairly disadvantage the parties,

the court may stay proceedings pending an administrative ruling. Id.; see also Clark v.

Time Warner Cable, 523 F.3d 1110, 1114-15 (9th Cir. 2008).

Although the present case is similar to California Catalog, there are important

differences between the actions. California Catalog was originally filed in federal district

court; it was not removed from the state court. In North County Communications Corp. v.

California Catalog & Technology, No. CV06-1542-LAB (S.D. Cal.), the operative

complaint pled three causes of action:

(1) Declaratory Judgment, including a determination that Defendants are

required to commit to compensate Plaintiff at a rate to be determined by the

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appropriate regulatory body or else refrain from sending any traffic to

Plaintiff’s end-users; 

(2) Quantum Meruit for the termination services Plaintiff is required to provide

but has not received compensation; and

(3) Enforcement of Tariff.

The Ninth Circuit concluded that “the district court properly dismissed North County’s

declaratory judgment claims, as North County cannot demonstrate a right to

compensation under any statute or regulation that is enforceable pursuant to a federal

private right of action.” California Catalog, 594 F.3d at 1161. The Ninth Circuit then

reasoned that because the district court dismissed the federal claims for jurisdictional

reasons, it also lacked jurisdiction over Plaintiff’s state-law claims. Id. at 1162. 

Applying the primary jurisdiction doctrine sua sponte, the Ninth Circuit disagreed with

the district court’s dismissal with prejudice and concluded Plaintiff’s claims should have

been dismissed without prejudice to allow filing of the federal claim in the proper forum. 

The Ninth Circuit, therefore, vacated the judgment and remanded to the district court for

dismissal without prejudice. Id.

Although the declaratory judgment claims here are similar to those in California

Catalog, the “Enforcement of Tariff” claims in the two actions differ significantly. In

California Catalog, the Third Amended Complaint’s “Enforcement of Tariff” claim did

not on its face necessarily raise a stated federal issue as does the “Enforcement of Tariff”

claim in this case. Therefore, here the Court has original jurisdiction over Count One

(Enforcement of Tariff) as well as Count Two, and it may exercise removal jurisdiction

over the remaining claims. Further, in California Catalog, the district court dismissed the

federal claim under Fed. R. Civ. P. 12(b)(1) for jurisdictional reasons. Here, the federal

claims will be dismissed under Fed. R. Civ. P. 12(b)(6) for failure to state a claim upon

which relief can be granted, and the Court has discretion to exercise supplemental

jurisdiction over the remaining state-law claims. Giving consideration to the primary

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jurisdiction doctrine, Counts One and Two will be dismissed without prejudice to permit

the parties to pursue administrative remedies.

D. Leave to Amend Counts One and Two Will Not Be Granted.

Leave to amend should be freely given “when justice so requires.” Fed. R. Civ. P.

15(a)(2). But, “[f]utility of amendment can, by itself, justify the denial of a motion for

leave to amend.” Bonin v. Calderon, 59 F.3d 815, 845 (9th Cir. 1995). Amendment of

Counts One and Two would be futile because the FCC has not made the predicate

determinations required for Plaintiff to state a claim upon which relief can be granted. 

VI. Counts Three, Four, and Five Will Be Remanded to State Court.

A district court has “the power to hear claims that would not be independently

removable even after the basis for removal jurisdiction is dropped from the proceedings.” 

Harrell v. 20th Century Ins. Co., 934 F.2d 203, 205 (9th Cir. 1991). “It is generally within

a district court’s discretion either to retain jurisdiction to adjudicate the pendant state

claims or to remand them to state court.” Id. In Harrell, the Ninth Circuit recognized

that “it is generally preferable for a district court to remand remaining pendent claims to

state court,” but concluded in that case the district court’s retention of jurisdiction over

the state-law claims was within its discretion. Id.

“[I]n the usual case in which all federal-law claims are eliminated before trial, the

balance of factors to be considered under the pendent jurisdiction doctrine—judicial

economy, convenience, fairness, and comity—will point toward declining to exercise

jurisdiction over the remaining state-law claims.” Carnegie-Mellon Univ. v. Cohill, 484

U.S. 343, 350 n.7, 108 S. Ct. 614, 619 n.7 (1988). The lawsuit here is “the usual case” in

which all federal-law claims are eliminated early in the litigation, and the principles of

judicial economy, convenience, fairness, and comity are not promoted by federal

retention of the state-law claims. Further, if federal-law issues are raised as defenses, the

state courts are competent to decide them. See, e.g., Sullivan v. First Affiliated Securities,

Inc., 813 F.2d 1368, 1372 n.5 (9th Cir. 1987). Therefore, in its discretion under 28 U.S.C.

§ 1367(c)(3), the Court will decline to exercise supplemental jurisdiction over Counts

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Three, Four, and Five because it has dismissed all claims over which it had original

jurisdiction. 

A district court may relinquish jurisdiction over remaining supplemental claims

either by dismissing the case without prejudice or by remanding it to the state court. 

Carnegie-Mellon, 484 U.S. at 351, 108 S. Ct. at 619-20. The district court has discretion

to remand to state court, rather than dismiss, supplemental claims upon a determination

that remand best serves the principles of economy, convenience, fairness, and comity. Id.

at 357, 108 S. Ct. at 623. Here, remand avoids the delay, cost, inconvenience, and

potential unfairness that may be imposed on Plaintiff by requiring it to file and serve its

claims again in state court following dismissal without prejudice. 

Therefore, the Court will decline to exercise supplemental jurisdiction over Counts

Three, Four, and Five and will remand them to the state court.

IT IS THEREFORE ORDERED that the Motion to Dismiss of Sprint and Verizon

Wireless (doc. # 31) and Defendants T-Mobile USA, Inc., AT&T Mobility, LLC, AT&T

Mobility II, LLC, and Cricket Communications, Inc.’s (1) Joinder in Sprint and Verizon

Wireless’ Motion to Dismiss Complaint and (2) Additional Motion to Dismiss Complaint

(doc. # 33) are granted as to Counts One and Two of Plaintiff’s Complaint and denied as

to Counts Three, Four, and Five of Plaintiff’s Complaint.

IT IS FURTHER ORDERED that the Clerk enter judgment dismissing Counts

One and Two of Plaintiff’s Complaint without prejudice pursuant to Fed. R. Civ. P.

12(b)(6) for failure to state a claim upon which relief can be granted.

IT IS FURTHER ORDERED that Counts Three, Four, and Five of Plaintiff’s

Complaint be remanded to the Maricopa County Superior Court.

The Clerk is directed to terminate this case.

DATED this 15th day of June, 2010.

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