Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-azd-4_05-cv-00328/USCOURTS-azd-4_05-cv-00328-0/pdf.json

Nature of Suit Code: 190
Nature of Suit: Other Contract Actions
Cause of Action: 

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IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF ARIZONA

Autotel, 

Plaintiff, 

vs.

Citizens Utilities Rural Co., Inc.; et. al., 

Defendants. 

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No. CV 05-328-TUC-JMR (HCE)

REPORT & RECOMMENDATION

Plaintiff Autotel has filed the instant action against the following Defendants: Citizens

Utilities Rural Company, Inc., Citizens Telecommunications Company of the White

Mountains, and Navajo Communications Company, Inc., (hereinafter collectively referred

to as “the Citizens Defendants”); the Arizona Corporation Commission (hereinafter referred

to as “Defendant ACC”); Marc Spitzer, William A. Mundell, Jeff Hatch-Miller, Mike

Gleason, and Kristin K. Mayes (hereinafter collectively referred to as “Defendant

Commissioners”). Pending before the Court are: (1) the Citizens Defendants’ Motion to

Dismiss; and (2) Defendant ACC and Defendant Commissioners' Motion to Dismiss.

Additionally, the Citizen Defendants have joined the Motion to Dismiss filed on behalf of

Defendant ACC and Defendant Commissioners “[t]o the extent” that such Motion “bears on

any claim against” the Citizen Defendants. (The Citizens Defendants’ Motion to Dismiss,

p. 5 n.3) 

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Upon review of the briefs, the Court has determined that oral argument is not required

to resolve the pending motions. For the following reasons, the Magistrate Judge recommends

that the District Court grant both motions and dismiss this action for lack of subject matter

jurisdiction.

I. BACKGROUND

A. Introduction

Plaintiff, Autotel, filed the instant action alleging violations of the

Telecommunications Act of 1996, codified at 47 U.S.C. § 251, et seq. (hereinafter referred

to as “the TCA” or “ the Act”), and the Civil Rights Act, codified at 42 U.S.C. § 1983

(hereinafter referred to as “section 1983"). Plaintiff, a licensed Commercial Mobile Radio

Service provider, is a "telecommunications carrier" and a "requesting carrier" under the TCA.

(Complaint, p. 2) Plaintiff’s claims arise from its efforts to offer wireless telephone services

in Arizona in competition with the Citizens Defendants who already provide telephone and

other communications services in the area. (Complaint, p.2) As discussed infra at p.3, the

TCA requires incumbent local exchange carriers, such as the Citizens Defendants, and new

entrants into the market, such as Plaintiff, to enter into interconnection agreements regarding,

among other things, the sharing of existing networks.

Defendant ACC, which is comprised of the Defendant Commissioners, has regulatory

jurisdiction with respect to intrastate operations of telecommunications carriers. (Id. at p. 3)

Under the TCA, the Defendant ACC is a designated "State Commission" which has

jurisdiction to, inter alia, approve and enforce interconnection agreements between new

entrants and incumbent local exchange carriers. 

Plaintiff alleges that: (1) Defendant ACC violated the authority delegated to it under

sections 251 and 252 of the TCA (first cause of action); (2) the Citizens Defendants failed

to negotiate an interconnection agreement in good faith as required by sections 251(c) and

252 of the TCA (second cause of action); (3) Defendant ACC and Defendant Commissioners

violated Plaintiff’s constitutional right to due process and equal protection (third and fourth

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The Telecommunications Act delegates the responsibility for conducting arbitration

to “State Commissions.” The parties agree that Defendant ACC herein is a “State

Commission” as that term is defined by the Telecommunications Act.

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causes of action). Plaintiff’s third and fourth causes of action are filed pursuant to section

1983.

B. The Telecommunications Act of 1996

 The TCA is “designed to foster competition in local telephone markets. Toward that

end, the Act imposed various obligations on incumbent local-exchange carriers..., including

a duty to share their networks with competitors.” Verizon Maryland Inc. v. Public Serv.

Comm’n. of Maryland, 535 U.S. 635, 638 (2002) (citing 47 U.S.C. § 251(c)). Section 251

of the Telecommunications Act requires that incumbent carriers, such as the Citizens

Defendants, enter into interconnection agreements with new entrants into the market, such

as Plaintiff, regarding inter alia, network sharing, and applicable terms, conditions, and rates

of same. See 47 U.S.C. §§ 251.

Section 252 governs the negotiation, mediation, arbitration, and approval of

interconnection agreements between incumbent carriers and new entrants. In Arizona, if

negotiations fail, the parties must submit a petition for arbitration with the Defendant ACC,

which is comprised of Defendant Commissioners.1

 47 U.S.C. § 252(b)(1). The parties must

engage in good faith negotiation regarding the terms and conditions of the interconnection

agreements. 47 U.S.C.§§ 251(c)(1), 252(c)(5). Additionally, all agreements, whether arrived

at by negotiation or arbitration, are subject to review by Defendant ACC. 47 U.S.C. §

252(e)(1). If Defendant ACC does not take action on an arbitrated agreement within the

statutorily prescribed time period, the agreement is deemed approved. 47 U.S.C. §

252(e)(4). Further, if the ACC fails to perform its duties under the statute, the Federal

Communications Commission shall preempt the state agency’s jurisdiction and shall assume

the responsibilities of the state commission. 47 U.S.C. § 252(e)(5). Finally, section

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252(e)(6) provides for federal district court review of whether the approved interconnection

agreement "meets the requirements of section 251.” 47 U.S.C. §252(e)(6).

C. The Autotel-Citizens arbitration 

Plaintiff alleges that in May 2002, it commenced negotiations to enter an

interconnection agreement with the Citizens Defendants pursuant to the TCA. (Complaint,

p. 6) “Negotiations resolved some, but not all, of the outstanding issues between the parties

and on March 27, 2003, Autotel filed a Petition for Arbitration with Defendant ACC,

pursuant to section 252(b). In its petition, Autotel identified four issues for arbitration. In

its response, [the Citizens Defendants] asked the ACC to impose the Citizens [sic] generic

interconnection agreement and moved to dismiss the petition.” (Complaint, pp. 6-7) On June

7, 2004, the matter came on for hearing before the Commission Administrative Law Judge

Jane Rodda. (The Citizens Defendants’ Motion, Ex. A) On October 5, 2004, the Defendant

ACC issued its “Order and Opinion” resolving the disputes and requiring Plaintiff and the

Citizens Defendants to “prepare and sign an interconnection agreement incorporating the

terms of the Commission’s esolution [sic]” as discussed in the body of the Order and

Opinion. (Id. at p.17; see also Complaint, p.7) The ACC also ordered “that the signed

interconnection agreement shall be submitted to he [sic] Commission for its review within

thirty days of the date of this Decision.” (The Citizens Defendants’ Motion, Ex. A, p. 17)

The Decision was “effective immediately.” (Id.) Plaintiff characterizes the October 5, 2004

decision as “...ordering Citizens’ generic interconnection agreement with a new limit of

liability section.” (Complaint, p. 7) 

Plaintiff does not allege in its Complaint filed herein that it prepared, signed or

submitted an interconnection agreement for the ACC’s approval pursuant to the October

2004 Order.

“Pursuant to the Commission’s Opinion and Order, [the] Citizens [Defendants]

prepared the interconnection agreement incorporating the terms and conditions from the

Commission’s Order and forwarded the agreement to Autotel for signature on October 21,

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Plaintiff argues that Defendant ACC and Defendant Commissioners lack standing to

seek dismissal of its claim against the Citizens Defendants. Because, as discussed infra at

pp. 7-19, the Citizens Defendants’ Motion should be granted, the Court need not address

whether the other Defendants have standing to move for dismissal of that claim as well.

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2004. Autotel, however, refused to execute the agreement as modified by the Commission’s

Order.” (The Citizen Defendants Motion, p. 4) Consequently, on January 31, 2005, the

Citizens Defendants notified the Commission that “Autotel has declined to execute the

arbitrated interconnection agreement incorporating the resolutions from the Commission’s

October 5, 2004 Order. Moreover, Autotel has raised additional issues it would like to

address in the arbitrated agreement. Citizens has been unsuccessful in resolving these issues

with Autotel and consequently, hereby notifies the Commission that it appears unlikely that

Autotel will execute the arbitrated interconnection agreement as required by the

Commission’s Order.” (The Citizens Defendants’ Motion, Ex. C) On January 31, 2005, the

Citizens Defendants also submitted the arbitrated agreement executed by them but not

Plaintiff. (The Citizens Defendants’ Motion, p.4)

Plaintiff did not request that the Commission take any further action regarding the

impasse between the parties. Instead, on May 5, 2005, Plaintiff filed the instant law suit. As

of September 19, 2005, the ACC’s electronic docket reflected the status of the arbitration

proceeding as: “Compliance Due.” (The Citizen Defendants’ Motion, p. 4 & Ex. D)

D. Defendants' Motions to Dismiss

All Defendants seek dismissal of Plaintiff’s Complaint pursuant to Rule12(b)(1) of

the Federal Rules of Civil Procedure for lack of subject matter jurisdiction. According to

Defendants, the Court lacks jurisdiction over all claims alleged herein because: (1) Plaintiff

failed to raise before the ACC its claim that the Citizens Defendants failed to negotiate in

good faith;2

 and (2) the ACC has not issued a final determination regarding the

interconnection agreement as no such agreement has been submitted for approval. 

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The Citizens Defendants alternatively argue that Plaintiff’s second cause of action–the

only claim asserted against the Citizens Defendants–should be dismissed for failure to state

a claim pursuant to Rule 12(b)(6).

Defendant ACC and Defendant Commissioners alternatively argue that Plaintiffs third

and fourth causes of action should be dismissed because they are entitled to immunity and

because Plaintiff fails to state a claim.

II. STANDARD

 Pursuant to Rule 12(b)(1) of the Federal Rules of Civil Procedure, dismissal is

appropriate when the court lacks subject matter jurisdiction over a claim. Fed. R. Civ.

12(b)(1). Subject matter jurisdiction deals with the power of the court to hear the plaintiff’s

claims in the first place, and therefore imposes upon courts an affirmative obligation to

ensure that they are acting within the scope of their jurisdictional power. Because federal

courts are courts of limited jurisdiction, it is presumed that a cause lies outside the

jurisdiction of federal courts unless proven otherwise. Kokkonen v. Guardian Life Ins. Co.,

511 U.S. 375, 377 (1994). The plaintiff bears the burden of establishing that jurisdiction

exists. Tosco Corp. v. Communities for a Better Environment, 236 F.3d 495, 499 (9th Cir.

2001); Thornhill Publishing Co. v. General Telephone & Electronics Corp., 594 F.2d 730,

733 (9th Cir. 1979). 

"'A motion to dismiss for lack of subject matter jurisdiction may either attack the

allegations of the complaint or may’" attack the existence of subject matter jurisdiction as a

matter of fact. National Union Fire Insur. Co. v. ESI Ergonomic Solutions, LLC., 342

F.Supp.2d 853 (D. Ariz. 2004) (quoting Thornhill Publishing Co., 594 F.2d at 733). "When

a motion to dismiss attacks the allegations of the complaint as insufficient to confer subject

matter jurisdiction, all allegations of material fact are taken as true and construed in the light

most favorable to the nonmoving party." Id. (citing Federation of African Amer. Contractors

v. City of Oakland, 96 F.3d 1204, 1207 (9th Cir. 1996)). Where the jurisdictional issue is

separable from the merits of the case, the court may consider the evidence presented with

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Plaintiff's first cause of action alleges violations of the TCA by Defendant ACC.

Plaintiff's second cause of action alleges violations of the TCA by the Citizens Defendants.

4

Section 252(e)(6) is set out in pertinent part infra at p.9.

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respect to the jurisdictional issue, resolving factual disputes if necessary. Thornhill, 594 F.2d

at 733. "When the motion is a factual attack on subject matter jurisdiction, a defendant may

'rely on affidavits or any other evidence properly before the Court.'" National Union Fire

Insur. Co., 342 F.Supp.2d at 861 (citing St. Clair v. City of Chico, 880 F.2d 199, 201 (9th

Cir. 1989)). See also White v. Lee, 227 F.3d 1214, 1242 (9th Cir. 2000) (the court may also

consider matters of public record). In the instance of a factual challenge, no presumption of

truthfulness attaches to the plaintiff's allegations, and the existence of disputed material facts

will not preclude the court from evaluating the merits of jurisdictional claims. Thornhill, 594

F.2d at 733.

When a motion to dismiss is based on more than one ground, the court should

consider the Rule 12(b)(1) challenge first because the other grounds will become moot if the

court lacks subject matter jurisdiction. 5 Charles Alan Wright & Arthur R. Miller, Federal

Practice & Procedure, §1350 (2004 ed.)

III. DISCUSSION

A. Plaintiff's claims filed pursuant to the TCA

1. Argument

All Defendants argue that the Court lacks subject matter jurisdiction to consider

Plaintiff's claims that Defendants violated the TCA.3

 Defendants argue that the Court's sole

source of jurisdiction is section 252(e)(6)4

 of the TCA and under that section, jurisdiction

does not vest with the Court "until the Commission has approved or rejected an executed

interconnection agreement between the parties.” (Defendant ACC's Motion, p.4; see also

Citizens Defendants' Motion, pp. 5-9). According to Defendants, jurisdiction over Plaintiff’s

first and second causes of action is lacking because Plaintiff failed to raise before the ACC

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The statutes cited by Plaintiff are set out infra at p.15 nn.6 & 7.

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the issue regarding the Citizens Defendants’ alleged violation of the duty to negotiate in good

faith and because Plaintiff failed to submit an executed agreement for approval by the ACC.

Plaintiff argues that the Court need not consider whether jurisdiction exists under the

TCA, because the Court has jurisdiction: (1) over the first and second causes of action

pursuant to 28 U.S.C. § 1331; and (2) over the second cause of action pursuant to 47 U.S.C.

§§ 206, 207 of the 1934 Communications Act.5

 Plaintiff also asserts that it is not required

to exhaust administrative remedies under the TCA and, thus, no final determination from the

ACC is necessary for this Court to consider Plaintiff's claims under the TCA. 

It is undisputed that neither Plaintiff nor the Citizens Defendants submitted an

interconnection agreement executed by all such parties for approval or rejection by

Defendant ACC; Defendant ACC has not approved or rejected an interconnection agreement

in this matter; Plaintiff did not submit to the ACC its claims that the Citizens Defendants

violated the duty to negotiate in good faith imposed by section 251(c). 

2. Jurisdiction pursuant to 28 U.S.C. § 1331 is lacking

It is well-settled that "[f]ederal courts are courts of limited jurisdiction. They possess

only that power authorized by Constitution and statute." Kokkonen, 511 U.S. at 377. See

also Thunder Basin Coal, Co. v. Reich, 510 U.S. 200 (1994) (district court is prohibited from

exercising subject matter jurisdiction when it is determined that Congress intended to

preclude review). The issue herein is whether this Court's jurisdiction is governed solely by

the TCA as Defendants urge, or whether, as Plaintiff argues, the Court may exercise federal

question jurisdiction pursuant to 28 U.S.C. § 1331, which provides that "[t]he district courts

shall have original jurisdiction of all civil actions arising under the Constitution, laws, or

treaties of the United States." Resolution of this issue requires consideration of whether

Congress intended to delay judicial review of actions filed pursuant to the TCA until after

the state commission approved or rejected a final interconnection agreement.

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In cases that involve delayed judicial review of agency actions, such as the case

herein, the court “shall find that Congress has allocated initial review to an administrative

body where such intent is 'fairly discernible in the statutory scheme.'" Thunder Basin Coal,

Co., 501 U.S. at 207 (quoting Block v. Community Nutrition Institute, 467 U.S. 340, 351

(1984)). "Whether a statute is intended to preclude initial judicial review is determined from

the statute's language, structure, and purpose, it's legislative history,...and whether the claims

can be afforded meaningful review." Id. (citations omitted). The United States Supreme

Court has held that an act's "comprehensive enforcement structure, combined with the

legislative history's clear concern with channeling and streamlining the enforcement process

establishes a fairly discernible intent to preclude” initial judicial review. Id. at 216 (citation

omitted).

The express language of section 252(e) requires, in pertinent part that: 

(1) Any interconnection agreement adopted by negotiation or arbitration shall

be submitted for approval to the State commission. A State commission to

which an agreement is submitted shall approve or reject the agreement, with

written findings as to any deficiencies.

***

(6) ...In any case in which a State commission makes a determination under

this section, any party aggrieved by such determination may bring an action

in an appropriate Federal district court to determine whether the agreement or

statement meets the requirements of section 251 of this title and this section.

47 U.S.C. §§ 252(e)(1), (6) (emphasis added).

Courts considering the issue are in agreement that the state commission

“determination” referenced in section 252(e)(6) “means the decision or order of a state

commission approving or rejecting a final, executed interconnection agreement between the

parties." Global Naps, Inc. v. Bell Atlantic-New Jersey, 287 F.Supp.2d 532, 540 n.11 (D.N.J.

2003) (citing GTE North v. Glazer, 989 F.Supp. 922, 925 (N.D. Ohio, 1997); GTE North v.

McCarty, 978 F.Supp. 827, 834 (N.D.Ind. 1997); GTE Northwest v. Hamilton, 971 F.Supp.

1350, 1353-1354 (D. Or. 1997); GTE South v. Morrison, 957 F.Supp. 800, 804 (E.D. Va

1997)). The Ninth Circuit has also recognized that "[a]fter a state commission approves an

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arbitrated agreement, any 'aggrieved' party to the agreement may bring an action in district

court 'to determine whether the agreement...meets the requirements’ of the Act. See [47

U.S.C.] at section 252(e)(6). Once the terms are set, either by agreement or by arbitration,

and the state approves the agreement, it becomes a binding contract." Pacific Bell v. PacWest Telecomm, Inc., 325 F.3d 1114, 1120 (9th Cir. 2003) (reviewing state commission’s

general order that affected previously approved interconnection agreements). The fact the

TCA expressly limits federal court review to consideration of whether the interconnection

agreement complies with section 251 indicates Congress' clear intent that jurisdiction does

not vest with the court until after an interconnection agreement has been submitted by the

parties and the state commission has rendered a determination regarding such agreement.

The structure of the TCA also compels the conclusion that only federal court review

of a final interconnection agreement is permitted. The TCA sets forth a precise procedure,

including a specific time schedule, for the implementation of its terms. 47 U.S.C. §§ 252(a)-

(e). These "procedures...are clearly designed to preserve the authority of state

commissions...." AT&T Communications of Ohio, Inc. v. Ohio Bell. Tel. Co., 29 F.Supp.2d

855, 856 (S.D. Ohio 1998). The TCA provides that the parties may engage in voluntary

negotiations during the first 134 days. 47 U.S.C. §§ 252(a), (b). If voluntary negotiation

fails, the TCA requires the parties to turn to the state commission for assistance and the state

commission must either "participate...and mediate any differences" or, during the period from

the 135th to the 160th day, arbitrate the open issues. 47 U.S.C. §§252(a),(b). The arbitration

must be concluded by the state commission within nine months of the first request for an

interconnection agreement. 47 U.S.C. §252(b)(4)(c). The TCA requires the parties to

negotiate in good faith and to cooperate with the state commission in carrying out its function

as an arbitrator. 47 U.S.C. §§ 251(c)(1), 252(c)(5). The TCA also requires the parties to

submit any negotiated or arbitrated agreement to the state commission for approval. 47

U.S.C. § 252(e)(1). The TCA vests the state commission with authority to approve or reject

the agreement; requires the state commission to provide written findings as to any

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deficiencies; sets out specific grounds upon which the state commission may reject an

agreement; and specifies the time by which the state commission must act to approve or

reject the agreement. 47 U.S.C. §§252(e)(2),(4). The TCA then provides for judicial review

of the interconnection agreement when "any party aggrieved" by a state commission's

"determination" rendered "under this section" files such action. 47 U.S.C. § 252(e)(6). "The

approval or rejection of an interconnection agreement is the final step to its effectiveness,

unless one of the parties appeals to the federal judiciary. That implies that Congress wants

the parties to proceed through the entire statutory process before federal court intervention."

GTE North, 978 F.Supp. at 834.

The legislative history reflects that Congress intended to "channel[]...and

streamline[]...", Thunder Basin Coal Co., 510 U.S. at 216, the process to promote

competition in the telecommunications industry and enforcement of the TCA. The TCA

"was intended to increase competition in all telecommunications markets, including local

telephone exchange markets...With regard to local markets, Congress' goal was to replace 'the

long-standing regime of state-sanctioned monopolies' with a competitive market structure."

AT&T Communications Sys. v. Pacific Bell, 203 F.3d 1183, 1184 (9th Cir. 2000) (citations

omitted). The legislative history explains that the TCA will "provide for a pro-competitive,

deregulatory national policy framework designed to accelerate rapidly private sector

deployment of advanced telecommunications and information technologies and services to

all Americans by opening all telecommunications markets to competition...." H.R. Conf.

Rep. No. 104-458 at 113 (1996) reprinted in 1996 U.S.C.C.A.N. 10, 124. To this end,

section 251 "describes the various ways [incumbent local-exchange carriers] are required to

share their networks with competitors in order to promote market entry by [new

entrants]...and sets out detailed rules implementing the general duty of telecommunications

carriers to interconnect with each other's facilities and equipment." Global Naps, 287

F.Supp.2d at 535. Additionally, the Ninth Circuit has recognized that "[t]he strict timelines

contained in the [TCA] indicate Congress' desire to open up local exchange markets to

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competition without undue delay." AT&T Communications Sys., 203 F.3d at 1186. See also

GTE North, 989 F.Supp. at 924 ("...Congress' clear intent was to facilitate the opening of the

local telephone service markets as quickly as possible.") 

Further, the TCA's "structure and purpose would be thwarted if...[judicial] review

commenced before the completion of [the state commission's] proceedings." GTE South, 957

F.Supp. at 805 (judicial review prior to final agreement would frustrate the TCA’s structure

and purpose because the state commission "cannot finally rule on issues addressed by its

orders until it has seen how those issues function, both economically and pragmatically, in

the context of a complete interconnection agreement.") See, GTE Northwest, Inc. 971

F.Supp. at 1354 (recognizing that "the contracting parties may misunderstand the

[commission’s] Order and craft improper contractual provisions as a result" necessitating

further direction from the commission); GTE North, 978 F.Supp. at 835-836 (recognizing

"probability that new issues might arise between the time an arbitration order is issued and

the time an agreement is ruled upon, which would necessitate another round of review before

this court.");GTE Northwest, Inc. v. Nelson, 969 F.Supp. 654. 656 (W.D.Wash. 1997)

("Considering the [TCA] in its entirety, it is clear that Congress intended to defer court

review until an agreement has become final...Review of determinations that have not been

made part of a final agreement would only delay and complicate the tightly regulated process

established by the [TCA].") See also, AT&T Communications, 203 F.3d at 1185 (Ninth

Circuit indicated that the arbitrated interconnection agreement was modified subsequent to

arbitration where the parties submitted the arbitrated agreement for the commission's

approval and the commission "issued a decision approving the arbitrated agreement, with

certain modifications...")

Additionally, the issues that may arise during the process, including mediation,

arbitration, approval of the interconnection agreement, and consideration whether the parties

negotiated "in good faith in the presence, or with the assistance of the State commission,"

fall within the expertise of the state commission, given that the ACC “has regulatory

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jurisdiction with respect to intrastate operations of carriers" under the laws of Arizona. 47

U.S.C. §§ 153, 251(c)(1), 252(c)(5). See Thunder Basin Coal, Co., 510 U.S. at 214 (finding

that regulatory commission could provide meaningful review where the agency’s expertise

could be brought to bear on the issues presented). If the state commission “fails to act to

carry out its responsibilities under this section in any proceeding or other matter under” the

TCA, then the Federal Communications Commission shall “issue an order preempting the

State commission's jurisdiction of that proceeding or matter ...within 90 days after being

notified...of such failure, and shall assume the responsibility of the State commission under

this section with respect to the proceeding or matter and act for the State commission." 47

U.S.C. § 252(e)(5). Moreover, after an interconnection agreement is approved, the party

aggrieved by such determination can seek federal court review concerning whether the

agreement complies with the Act. 47 U.S.C. § 252(e)(6).

"Finally, other courts...have held the language of section 252(e)(6) to mean that

federal district courts do not have jurisdiction under the Act until a final agreement has been

submitted to and ruled upon by a state commission." GTE North, 978 F.Supp. at 836 (citing

numerous federal district court cases). See Global-Naps, 287 F.Supp.2d at 541 (same); GTE

Northwest, 969 F.Supp. 654 (same); Defendant's Motion, Ex. E & Ex. F (containing

decisions from district courts in Oregon and Utah holding same with regard to Plaintiff and

Plaintiff's affiliate). See also GTE North, Inc. v. Strand, 209 F.3d 909, 915 (6th Cir. 2000)

(although section 252(e)(6) did not apply to that action, the court stated that section 252(e)(6)

"prohibits federal review of interlocutory orders entered in the course of" TCA proceedings.)

Accordingly, the TCA's "administrative structure was intended to preclude district

court jurisdiction," Thunder Basin Coal, Co., 510 U.S. at 218, until a final interconnection

agreement has been submitted to and ruled on by a state commission in accordance with the

section 252. Plaintiff's argument that the Court nonetheless has jurisdiction pursuant to 28

U.S.C. § 1331 does not alter this conclusion because Plaintiff relies on inapposite authority

to support its position.

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Plaintiff relies upon a United States Supreme Court decision holding that the district

court had jurisdiction under section 1331 to review a state commission's determination

interpreting and enforcing "an interconnection agreement that the commission" had

previously approved. Verizon Maryland, Inc. v. Public Serv. Commission of Maryland, 535

U.S. 635, 641 (2002) Thus, according to Plaintiff, section 1331 confers jurisdiction "over

violations of the Telecommunications Act, outside of and independent from the jurisdiction

conferred by the Act regarding review of Commission determinations." (Plaintiff's Response

to the Citizens Defendants' Motion, p.6) However, the Verizon court pointed out that the

determination at issue involved "neither the approval nor disapproval" of an interconnection

agreement. Id. The Court did not address whether the district court would have jurisdiction

over claims arising during the negotiation process for interconnection agreements that were

not first presented to the commission. See Global-Naps, 287 F.Supp.2d 532 (decided after

Verizon and holding that claim that incumbent carrier failed to negotiate in good faith during

negotiation of interconnection agreement must first be presented to state commission before

federal court action may be filed); Contact Communications v. Qwest Corp. 246 F.Supp.2d

1184, 1189 (D.Wyo. 2003) (holding that “absent a prior determination of the issue by the

state [commission], no federal jurisdiction exists and distinguishing Verizon on the basis that

the Supreme Court “did not hold that federal district courts have jurisdiction to decide such

a question in the first instance prior to a consideration and decision by either a state

commission or the FCC.”) Nor did the Court address whether the district court would have

jurisdiction where no binding interconnection agreement had been submitted for the

commission's approval in the first place. Verizon does not support the proposition that

jurisdiction exists pursuant to 28 U.S.C. § 1331 on the facts of this case where no final

interconnection agreement has been approved or rejected.

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Section 206 provides:

In case any common carrier shall do, or cause or permit to be done, any act,

matter, or thing in this chapter prohibited or declared to be unlawful, or shall

omit to do any act, matter, or thing in this chapter required to be done, such

common carrier shall be liable to the person or persons injured thereby for the

full amount of damages sustained in consequence of any such violation of the

provisions of this chapter, together with a reasonable counsel or attorney's fee,

to be fixed by the court in every case of recovery, which attorney's fee shall be

taxed and collected as part of the costs in the case.

47 U.S.C. § 206.

7

Section 207 provides:

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 the damages for

which such common carrier may be liable under the provisions of this chapter,

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.

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3. Jurisdiction pursuant to sections 206 and 207 of the 1934 Communications Act is

 lacking

Plaintiff also argues that its claim that the Citizens Defendants failed to negotiate in

good faith is "quite different from the first claim for relief. It does not ask this court to

review a decision by the ACC. Rather it asks this court to enforce an independent provision

of the Telecommunications Act." (Plaintiff’s Response to the Citizens Defendants’ Motion,

p.13) Plaintiff contends that the Court has jurisdiction over the claim pursuant to 47 U.S.C.

§§ 2066

 and 2077 of the TCA which together "provide rights of action for violations of the

Communications Act of 1934. Section 206 creates a cause of action and section 207 grants

jurisdiction to federal district courts over such actions." Global-Naps, 287 F.Supp.2d at 542

n.14. Specifically, sections 206 and 207 were enacted to provide a cause of action for

consumers who were injured by errors in delivery of telegraphs and similar acts or omissions.

Id. at 544. Sections 206 and 207 have been invoked successfully by parties who were not

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subject to the negotiation and approval process set out at sections 251 and 252 of the TCA.

See Id. (citations omitted) 

"In contrast, the [TCA] of 1996 created a comprehensive statutory scheme designed

to promote competition in the telecommunications industry by expediting the formation of

interconnection agreements between" incumbent local-exchange carriers and new entrants

into the market. Id. The duty to negotiate interconnection agreements in good faith is

imposed by the same statutory scheme that vests the state commission with authority in the

first instance over the negotiation, arbitration and approval of interconnection agreements.

Nothing in the TCA evidences Congress' intent to create an exception from section 252(e)(6)

for a violation of the duty to negotiate in good faith. The Citizens Defendants aptly point

out that "[t]he fact that Congress enacted a specific jurisdictional limit on federal district

courts in Section 252(e)(6) and as part of the same section in which it grants state

commissions initial authority over the negotiation, arbitration, and approval of

interconnection agreements strongly evidences an intent that district court jurisdiction be

limited to that set forth in section 252(e)(6)." (The Citizens Defendants' Reply, p. 11; see also

the Citizens Defendants' Ex. D, p.18) 

Permitting a party to file a federal court action alleging violations of the TCA pursuant

to sections 206 and 207, "would jeopardize section 252's system of review and statutory

scheme intended to make state commissions the initial decisionmakers regarding

interconnection agreements." Global-Naps, 287 F.Supp.2d at 545. This is especially so where

the gravamen of the instant Plaintiff’s claims arise from the process regarding the formation

of an interconnection agreement given that all aspects of this negotiation and arbitration,

including the duty to act in good faith during this process, “are squarely within the scope of

matters committed to state regulators.” Id. at 541."Although sections 251 and 252 may be

considered part of the 'entire' Communications Act, it is clear that these sections were

intended to address issues addressing the negotiation, approval, and enforcement of

interconnection agreements. As part of the scheme, section 252(e)(6) governs jurisdiction

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where disputes over the negotiation, approval, and enforcement of interconnection

agreements are concerned, and Congress intended that such disputes be addressed by state

commissions in the first instance." Id. at 545 (citation and footnote omitted). 

In light of the analysis under Thunder Basin Coal, Co., set at supra. at pp. 8-14, and

the "distinct role sections 206 and 207 have vis-a-vis section 252(e)(6)," the Court herein

concludes that sections 206 and 207 do not confer district courts with jurisdiction over

violations of the TCA. Global Naps, 287 F.Supp.2d at 544-545 (concluding that "sections

206 and 207 do not vest district courts with jurisdiction" over claim brought pursuant to the

TCA that defendant violated the TCA's duty to negotiate in good faith). See also Intermedia

Communications., Inc. v. Bellsouth Telecommunications., Inc., 173 F.Supp.2d 1282 (M.D.

Fla. 2000) (sections 206 and 207 do not confer jurisdiction over plaintiff's claims alleging

violations of the TCA including duty to negotiate in good faith).

4. Jurisdiction under section 256(e)(6) of the TCA is lacking

Plaintiff must establish that jurisdiction herein exists under section 252(e)(6). On

October 5, 2004, the ACC ordered Plaintiff and the Citizens Defendants to "prepare and sign

an interconnection agreement incorporating the terms of the Commission's [r]esolutions" and

to submit same to the ACC. (Defendant's Motion, Ex. A, p.17) It is clear on the instant

record that Plaintiff did not sign an interconnection agreement. Plaintiff and the Citizens

Defendants did not submit an executed interconnection agreement as ordered by the ACC

for the ACC's approval or rejection. Thus, the ACC has not issued a "determination" as

contemplated under section 252(e)(6). 

Notwithstanding the fact that Plaintiff has failed to comply with the ACC's order to

submit a signed interconnection agreement, Plaintiff argues that it is not required "to take any

further steps than those it has taken. Autotel arbitrated its disputes with Citizens, and the

ACC came out with an order." (Plaintiff's Response to the Citizens Defendants' Motion, p.8)

According to Plaintiff, requiring it to take any further administrative action would result in

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a request for a rehearing and such exhaustion is not required under the TCA. (Id. at pp. 9-11

(citing AT&T Communications Sys. v. Pacific Bell, 203 F.3d 1183 (9th Cir. 2000)). 

The TCA specifically requires that "[a]ny interconnection agreement adopted

by...arbitration shall be submitted for approval to the State commission." 47 U.S.C. §

252(e)(1). It is clear on the instant record that Plaintiff did not enter into such an agreement

as evidenced by Plaintiff's failure to comply with the ACC's order requiring the parties to

"prepare”, “sign" and “submit” the interconnection agreement for the ACC’s review.

Obviously, the document submitted by the Citizens Defendants could not be considered an

agreement among the parties as Plaintiff's refusal to sign the document clearly indicated that

there was no agreement at all. "Section 252(e)(6)'s explicit language clearly...says that

federal district courts should determine 'whether the agreement'... does or does not comply

with the Act. It does not say that courts should determine 'whether agreements or orders

regarding agreements' are in compliance with the Act." GTE North, 978 F. Supp. at 834.

(emphasis in original) (distinguishing between the final agreement and interim agreements

or orders regarding agreements)

Plaintiff also failed to argue before the ACC that the Citizens Defendants allegedly

violated their duty to negotiate in good faith. The duty to negotiate in good faith is part of

the statutory process over which the TCA grants initial authority to the state regulators.

Review of Plaintiff’s claim may impact the arbitration and approval processes and may also

involve simultaneous examination of the terms of the proposed interconnection

agreement–all of which are matters committed to the state commission in the first instance.

Thus, under the instant facts, Plaintiff’s claim against the Citizens Defendants is more

appropriately raised before the ACC in the first instance.

Plaintiff's reliance on AT&T Communications for the premise that no further action

was required on its behalf subsequent to the ACC's October 2004 order is unpersuasive. In

AT&T, "as required by the [TCA], the parties submitted the arbitrated agreement to the [state

commission] for approval." AT&T Communications, 203 F.3d at 1185. After the state

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commission approved the agreement with certain modifications, AT&T filed suit in district

court pursuant to section 252(e)(6). The issue in that case involved whether a state statute

requiring parties to petition for rehearing with the commission before filing suit applied to

federal court actions filed under the TCA. The Ninth Circuit held that the state exhaustion

statute did not apply. Unlike AT&T Communications, the instant case does not involve the

interaction of a state exhaustion statute and the TCA. Instead, the instant Plaintiff has failed

to meet the express provisions of the TCA requiring presentation of the issues first to the

state commission and submission of an interconnection agreement for approval. Without

such action, the ACC cannot issue its determination as contemplated under section 252(e)(6).

On the facts herein, where no executed interconnection agreement has been submitted

for the state commission's approval and where Plaintiff has failed to raise the issue regarding

good faith negotiations with the state commission, jurisdiction pursuant to section 252(e)(6)

over Plaintiff's first and second causes of action is lacking. See Global-Naps, 287 F.Supp.2d

at 540 (holding that plaintiff must first present issue regarding good faith negotiations to the

state commission and that "under section 252(e)(6), a federal court only has subject matter

jurisdiction under the 1996 Act once a State commission makes a determination"); See also

Citizens Defendants' Ex. E and F (containing district court decisions reaching same

conclusion regarding Plaintiff and Plaintiff's affiliate on similar facts) and the Citizens

Defendants' September 18, 2005 Notice of Supplemental Authority (citing April 14, 2006

order granting motion to dismiss good faith negotiation claim in Autotel v. Qwest, CV-327-

TUC-JCG (D.Ariz. filed May 5, 2005)) Because the Court lacks subject matter jurisdiction,

Defendants' other grounds for dismissal of Plaintiff's TCA claims need not be addressed.

B. Plaintiff's claims filed pursuant to section 1983 against Defendant ACC and

 Defendant Commissioners

Defendant ACC and the Defendant Commissioners argue that Plaintiff's section 1983

claims are subject to dismissal for lack of jurisdiction because section 252 of the TCA

"establishes a comprehensive enforcement scheme and private judicial remedy which are

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intended to address any claims that a state commission's approval of an interconnection

agreement fails to comply with sections 251 and 252." (Defendant ACC and Commissioner's

Defendants' Motion, p.9) Defendants also argue that such claims should be dismissed

because Defendants are immune from suit; because the claims are barred by the Eleventh

Amendment; and because Plaintiff has not suffered a deprivation of a federally protected

right.

Section 1983 imposes liability on anyone who, under the color of state law, deprives

a person "of any rights, privileges, or immunities secured by the Constitution and laws." 42

U.S.C. § 1983. It is well-settled that Plaintiff may avail itself of the remedy provided under

section 1983 only if Congress has not foreclosed private enforcement of such rights, either

expressly in the statute itself "or impliedly, by creating a comprehensive enforcement scheme

that is incompatible with individual enforcement under section 1983." Blessing v. Freestone,

520 U.S. 329, 341 (1997). To seek redress through section 1983, "the plaintiff must

demonstrate that the federal statute creates an individually enforceable right in the class of

beneficiaries to which he belongs." City of Rancho Palos Verdes v. Abrams, 544 U.S. 113,

120 (2005). Further, such a showing creates "'only a rebuttable presumption that the right

is enforceable under section 1983.'" Id. (quoting Blessing, 520 U.S. at 341). The defendant

may defeat this presumption by showing that Congress did not intend that remedy for a

newly created right. Id. "[E]vidence of such congressional intent may be found directly in

the statute creating the right or inferred by the statute's creation of a 'comprehensive

enforcement scheme that is incompatible with individual enforcement under section 1983.'"

Id. (quoting Blessing, 520 U.S. at 341). 

Defendant ACC and the Defendant Commissioners assert that because section 252

creates a comprehensive enforcement scheme for telecommunications companies attempting

to interconnect with other carriers under the TCA, the TCA's provisions indicate that

Congress intended to foreclose separate actions under section 1983. (Defendant ACC and

Defendants Commissioners' Motion, pp.8-9)

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The Supreme Court has held that section 1983 could not be used to enforce 47 U.S.C.

§ 332(c)(7)(B)(v), a section of the Telecommunications Act of 1996 that is not at issue here

but which Defendant ACC and Defendant Commissioners contend is similar to section 252.

Abrams, 544 U.S. 113. Section 332(c)(7) imposes specific limitations on the traditional

authority of state and local governments to regulate the location, construction, and

modification of facilities for wireless communications. Id. at 115. The statute also provides

in relevant part that persons adversely affected by any final action or failure to act by a state

or local government, may within 30 days after the failure to act, commence an action in any

court of competent jurisdiction. Id. at 116 (citing 47 U.S.C. § 332(c)(7)(B)(v)) 

The Abrams court recognized that "in all of the cases in which we have held that

section 1983 is available for violation of a federal statute, we have emphasized that the

statute at issue...did not provide a private judicial remedy (or, in most of the cases, even a

private administrative remedy) for the rights violated." Id. at 121 (emphasis in original).

However, the Court made clear that "[t]he ordinary inference that the remedy provided in the

statute is exclusive can surely be overcome by textual indication, express or implicit, that the

remedy is to complement, rather than supplant, section 1983." Id. at 122. The Court found

nothing in the section 332 to rebut the inference that a section 1983 action was precluded.

Id. The Court pointed out that the statute "adds no remedies to those available under section

1983, and limits relief in ways that section 1983 does not." Id. The Court cited: (1) the

statute’s limits on judicial review of zoning decisions by requiring that such actions be

commenced within thirty days after the governmental entity had taken final action and

requiring that the court decide the matter on an expedited basis; (2) the fact that remedies

under the statute for compensatory damages may be different from those available under

section 1983; and (3) and the statute does not include attorney's fees and costs. Id. See also

id. at 128 (Breyer, J. concurring) (Section 1983 suits...differ considerably from ordinary

review of agency action. The former involve plenary judicial evaluation of asserted rights

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deprivations; the latter involves deferential consideration of matters within an agency's

expertise.")

Like the telecommunications statute at issue in Abrams, sections 251 and 252 provide

a comprehensive remedial scheme to ensure the rapid de-monopolizaition of the

telecommunications industry by promoting a streamlined and expedient process for the

negotiation, mediation, arbitration, and approval of interconnection agreements. See

discussion supra at p.10 (discussing in detail the TCA’s provisions and timelines). While

nothing in section 1983 requires a plaintiff to submit to an administrative process consisting

of negotiation, and/or arbitration, and final agency approval before filing suit, the TCA

requires that the parties first participate in such process before a state commission with

expertise in such telecommunications matters prior to seeking district court review. Id. 

The court's review of the state commission proceedings is not plenary. The court may

only consider whether the interconnection agreement satisfies the TCA. The court's scope

of review is confined to the administrative record and the court must afford the proper

deference to the administrative determination. See U.S. West Communications, Inc. v

Jennings, 304 F.3d 950, 958 (9th Cir. 2002) (federal courts "consider de novo whether the

agreements comply with the Act and its implementing regulations and we consider all other

issues under an arbitrary and capricious standard...The ACC's findings of fact are reviewed

for substantial evidence.") Pacific Bell, 325 F.3d at 1131 ("Most courts have interpreted the

arbitrary and capricious standard to grant broad deference to agency decisions....Thus, to

prevail...[plaintiff] must show that [the commission's] order was not supported by substantial

evidence..., or that the Commission made a clear error of judgment.");MCI

Telecommunications, Corp. v. GTE Northwest, Inc., 41 F.Supp.2d 1157, 1161 (D.Or. 1999)

("there is general agreement that review under section 252(e)(6) is confined to the

administrative record.") 

Permitting a plaintiff to allege a violation of the TCA pursuant to section 1983 would,

without question, distort the comprehensive scheme of review that Congress sought to

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8

Although Congress subsequently amended the statute at issue in Smith and Maher

to, in effect, legislatively overrule the holding in those cases with regard to the specific

statute, the Smith court’s section 1983 preclusion analysis remains valid. See Blessing, 520

U.S. at 347; Abrams, 544 U.S. at 113; Bruneau v. South Kortright Central School Dist., 163

F.3d 749, 757-759 & n. 1 (6th Cir. 1998). 

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achieve with the TCA’s enactment. See Abrams, 544 U.S. at 120 (“The crucial consideration

is what Congress intended.”) By crafting the comprehensive statutory review and remedial

procedures contained in the TCA, Congress has manifested its intent that these procedures

are exclusive. See Id. Moreover, where as here, the plaintiff’s constitutional claims “equate

violations of statutorily established procedural rights with violations of the Constitution,”

such claims lack “the independent constitutional basis necessary for a valid cause of action

under section 1983.” Doe v. Maher, 795 F.2d 787, 790 (9th Cir. 1986) (due process claim

precluded). See also Smith v. Robinson, 468 U.S. 992 (1984) (equal protection claim

precluded).8

 Accordingly, section 252 of the TCA precludes a section 1983 action.

Plaintiff’s third and fourth causes of action should be dismissed.

III. RECOMMENDATION

For the foregoing reasons, the TCA is the exclusive avenue through which Plaintiff

may pursue its claims in federal court. Because the Court lacks subject matter jurisdiction

under the TCA, the Magistrate Judge recommends that the District Court: 

(1) grant the Citizens Defendants’ Motion to Dismiss (Doc. No. 23) Plaintiff’s

second cause of action for lack of subject matter jurisdiction;

(2) grant Defendant ACC and Defendant Commissioners’ Motion to Dismiss

(Doc. No. 27) and dismiss the remainder of Plaintiff’s Complaint for lack of

subject matter jurisdiction.

Pursuant to 28 U.S.C. §636(B), any party may serve and file written objections within

ten days after being served with a copy of this Report and Recommendation. If objections

are filed, the parties should use the following case number: CV 05-328-TUC-JMR.

Case 4:05-cv-00328-JMR Document 35 Filed 09/26/06 Page 23 of 24
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If objections are not timely filed, then the parties' right to de novo review by the

District Court may be deemed waived. See United States v. Reyna-Tapia, 328 F.3d 1114,

1121 (9th Cir.) (en banc), cert. denied, 540 U.S. 900 (2003).

The Clerk of Court is directed to send a copy of this Report and Recommendation to

the parties and/or their counsel.

DATED this 26th day of September, 2006.

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