UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA

____________________________________ ) SANDWICH ISLES ) COMMUNICATIONS, INC., et al., ) ) Plaintiffs, ) ) v. ) Civil Action No. 10-02341 (ABJ) ) NATIONAL EXCHANGE ) CARRIER ASSOCIATION, ) ) Defendant. ) ____________________________________)

MEMORANDUM OPINION Plaintiffs Sandwich Isles Communications (“SIC”), Gold Ivory LLC (“Gold Ivory”), Healii Heine, and Harry Johnston bring this action against the National Exchange Carrier Association (“NECA”) alleging clai ms for breach of contract, viol ations of the Equal Protection Clause of the U.S. Constitution, and tortious in terference with Gold Ivory’s prospective business opportunities. NECA moved to dismiss this action fo r lack of subject matter jurisdiction and for failure to state a claim upon which relief can be granted. Since there is a proceeding pending before the Federal Communications Commission (“FCC”) addressing the same matters, the Court will grant defendant’s motion and dismiss this case. I. Background Defendant NECA is a nonprofit corporation that was formed by the FCC following the breakup of AT&T to perform certain services on behalf of loca l telephone companies (local exchange carriers or “LECs”). Allnet Commc’n Svc., Inc. v. Nat’l Exch. Carrier Ass’n , 965 F.2d 1118, 1119 (D.C. Cir. 1992). See also 47 C.F.R. § 69.601 et seq .; Compl. ¶¶ 27–31. NECA2 administers the FCC’s “access charge” plan by creating revenue pools into which LEC members contribute their revenue, and by ma king distributions from those pools to reimburse members for their respective costs. Compl. ¶ 28. See also 47 C.F.R. § 69.601 et seq

. Plaintiff SIC was established to provide telephone and broadband service to native Hawaiian home sites located in the Hawaiian Home Lands (“HHL”). Compl. ¶ 1. In light of the unique geography of Hawaii, its distance from the mainland, and other factors, providing service to the HHL is particularly costly. Id. ¶ 32. To fulfill its mission, SI C contracted with NECA to participate in its revenue pools, including one know n as the Traffic Sens itive Pool (“Pool”). Id

. ¶¶ 2, 37, 48. The purpose of the Pool is to enable high-cost LECs to be reimbursed for their network expenses so they can provide telecommunications services to customers in more remote locations at affordable rates. Id. ¶ 2. SIC and approximately 800 other rural LECs submit their eligible construction and operational costs to the Pool, and NECA compensates them in accordance with FCC rules. To fund the Pool, SIC and the other rural LECs agree to charge an “access” tariff to other carriers deliv ering calls to their customers, and they turn those payments
over to NECA. Id. The dispute in this case arose when NECA refused to reimburse SIC for 100% of the lease expenses it incurred in utilizing the Paniol o cable network (“Paniolo”) – a submarine and terrestrial fiber optic cable c onnecting five Hawaiian Islands – t o connect its networks on those islands. Id. ¶ 3. On May 20, 2009, NECA advised SIC that in its view, the lease costs SIC paid for Paniola were not “used a nd useful” and they would be excluded from the June 16, 2009,3 access charge tariff. As a result, SIC could not recover those costs from the Pool. Id. ¶¶ 4, 61; Mot. to Dismiss, App. B. 1 On June 26, 2009, SIC initiated a proceeding before the Wireline Competition Bureau (“WCB”) of the FCC in which it sought a declarat ory ruling that the Paniola lease costs were “used and useful,” and that NECA was required to accept them in the Pool. Compl

. ¶75; Mot. to Dismiss, App. C at 1. On September 29, 2010, the WCB ruled that “some – but not all – of [the Paniola lease] costs are properly recoverable c onsistent with Commission rules and precedent.”
See Mot. to Dismiss, App. A, In re Sandwich Isles Communi cations, Inc. Petition for Declaratory Ruling , Declaratory Ruling, WC Docket No. 09-133, DA 10-1880, slip op. at 1 (Wir. Comp. Bur., rel. Sept. 29, 2010) (“Declaratory Ruling”). [W]e do not find 100 percent of [SIC]’ s lease expenses per se “used and useful” and appropriate for inclusio n in the NECA pool. Nor do we find NECA’s determination not to incl ude the lease costs in its pool unreasonable as a matter of that entity performing its role in the pooling process. Id. at 4. But the WCB noted that the FCC posse ssed the “flexibility itself to consider a variety of equitable factors beyond current and actual usage in evaluating the costs that are ‘used and useful’ and appropriate for inclusion in the revenue requirement.” Id. Based on that analysis and relevant Commission precedent, the FCC concluded that 50% of SIC’s lease expenses shoul d be included in the Pool. Id. Not satisfied with that result, SIC filed a petition for reconsideration of the FCC’s Declaratory Ruling with the WCB on October 29, 2010. Mot. to Dismiss, App. D (“Petition for Reconsideration” or “Petition” ). Among other arguments, SIC asserted in its Petition that instead of applying the “used and useful” doctrin e, NECA should have applied its Spare Fiber

1 NECA did propose to provide SIC with $1.9 m illion per year. Decl aratory Ruling at 8, ¶18.4 C&WF Investment Cost Reporting Guidelines (“Spare Fiber Guidelines” or “SFG”) in determining whether SIC’s costs shouldhave been included in the Pool. Id. at i–iv, 1–12. Under those Guidelines, SIC argued, NECA would have been required to reimburse SIC in full. Id. at iii. While the Petition for Rehearing was still pending before the FCC, Compl. ¶ 81, SIC, along with plaintiffs Gold Ivory, Healii Heine, and Harry Johnston, brought suit in this Court. Gold Ivory is a corporate affiliate of SIC’s parent company. Compl. ¶ 124. In 2010, Gold Ivory allegedly filed two applications for $180 million in stimulus grants to develop a public safety broadband network in Hawaii that would have relied on the Paniolo network. Id . ¶¶ 125–26. Heine is a native Hawaiian and a customer of SIC, and Johnston is a native Hawaiian homesteader in the HHL who is not currently being served by SIC. Id . ¶ 12–13. 2 In the December 30, 2010 complaint, SIC suedNECA for breach of contract (Count I), for breach of the implied covenant of good faith a nd fair dealing (Count II), and for violating of the Equal Protection Clause of the Fourteenth Amendment by applying a different standard – the “used and useful” doctrine – to SIC than to other similarly situated rural LECs (Count III). See id. ¶¶ 82–108. SIC, Heine, and Johnston also claim that NECA violated the Equal Protection Clause because the application of the standard will result in a lack of telecommunications services for native Hawaiian customers in the HHL (Count IV). Id. ¶¶ 109–122. Finally, Gold Ivory sued NECA for tortious interference with prospective business advantage (Count V), alleging that its grant applications were unsuccessf ul because of concerns about the viability of SIC and its network that arose outof NECA’s non-payment decision. Id. ¶¶ 127–29.
2 According to defendant, plaintiffs Heine and Johnston are also employees of SIC, Defendant’s Memorandum in Support of Motion to Di smiss (“Def.’s Mem.”) at 6, and plaintiffs do not dispute that assertion.5 Plaintiffs seek compensatory damages of not less than $160 million for SIC and $180 million for Gold Ivory. Id . at 31. They also seek a judgment directing NECA to apply the Spare Fiber Guidelines and to include all of SIC’s Paniola lease costs in the Pool. Id. On December 30, 2010, NECA moved to dism iss the complaint under Fed. R. Civ. P. 12(b)(1) and 12(b)(6), arguing that this Court lack s subject matter jurisdiction or, alternatively, that the complaint fails to state a claim upon which relief can be granted. II. Legal Standard In evaluating a motion to dismiss, the Court must “treat the complaint’s factual allegations as true . . . and must grant plaintiff ‘the benefit of a ll inferences that can be derived from the facts alleged.’” Sparrow v. United Air Lines, Inc ., 216 F.3d 1111, 1113 (D.C. Cir. 2000), quoting Schuler v. United States , 617 F.2d 605, 608 (D.C. Cir. 1979) (citations omitted). Nevertheless, the Court need not accept inferences drawn by the plaintiff if those inferences are unsupported by facts alleged in the complaint, nor must the Court accept plaintiff’s legal conclusions. Browning v. Clinton, 292 F.3d 235, 242 (D.C. Cir. 2002). When considering a motion to dismiss for l ack of jurisdiction, the plaintiff bears the burden of establishing jurisdiction by a preponderance of the evidence. See Lujan v. Defenders of Wildlife , 504 U.S. 555, 561 (1992); Shekoyan v. Sibly Int’l Corp ., 217 F. Supp. 2d 59, 63 (D.D.C. 2002). Federal courts are courts of limited jurisdicti on and the law presumes that “a cause lies outside this limited jurisdiction.” Kokkonen v. Guardian Life Ins. Co. of Am ., 511 U.S. 375, 377 (1994); see also Gen. Motors Corp. v. EPA , 363 F.3d 442, 448 (D.C. Cir. 2004) (“As a court of limited jurisdiction, we begin, and end, withexamination of our ju risdiction.”). Because “subject-matter jurisdiction is ‘an Art[icle] III as we ll as a statutory requirement . . . no action of the parties can confer subject-matter jurisdiction upon a federal court.’” Akinseye v. District of6 Columbia , 339 F.3d 970, 971 (D.C. Cir. 2003), quoting Ins. Corp. of Irel and v. Compagnie des Bauxites de Guinee , 456 U.S. 694, 702 (1982). Moreover, unlike when deciding a motion to dismiss under Rule 12(b)(1), the court “is not limited to the allegations of the complaint . . . .” Hohri v. United States , 782 F.2d 227, 241 (D.C. Cir. 1986), vacated on other grounds , 482 U.S. 64 (1987). Rather, a court “may consider such materials outside the pleadings as it deem s appropriate to resolve the question whether it has jurisdiction to hear the case.” Scolaro v. D.C. Bd. of Elections & Ethics , 104 F. Supp. 2d 18, 22 (D.D.C. 2000). See, e.g. , Herbert v. Nat’l Acad. of Sciences , 974 F.2d 192, 197 (D.C. Cir. 1992); see also Jerome Stevens Pharms., Inc. v. FDA , 402 F.3d 1249, 1253 (D.C. Cir. 2005).

ANALYSIS III. The Court Lacks Jurisdiction Defendants argue that in essence, plaintiffs are seeking review of an FCC order, and since the court of appeals has exclusive jurisdiction to review final orders of that agency, this Court lacks jurisdiction to hear the case. The Court agrees. A. The court of appeals has exclusive ju risdiction to review final FCC orders. As an initial matter, the Court notes th at the Hobbs Act, 28 U.S.C. § 2342(1), 3 and the Communications Act, 47 U.S.C. § 402(a), 4 only permit judicial review of “final orders.” The pendency of a petition for reconsideration rend ers the underlying agency action non-final. United Transportation Union v. ICC , 871 F.2d 1114, 1116 (D.C. Cir. 1989) (“We think it plain 3 28 U.S.C. § 2342 provides: “The court of appeal s (other than the United States Court of Appeals for the Federal Circuit) has exclusive jurisdiction to enjo in, set aside, suspend (in whole or in part), or to determine the validity of

– (1) all final orders of th e Federal Communications Commission made reviewable by section 402(a) of title 47.” 4 47 U.S.C. § 402(a) provides: “Any proceeding to enjoin, set aside, annul, or suspend any order of the Commission under this chapter (except those appealab le under subsecti on (b) of this section) shall be brought as provided by and in th e manner prescribed in chapter 158 of Title 28.”7 that a pending petition for rehearing must render th e underlying agency action non-final (and hence unreviewable) with re spect to the filing party.”); see also Int’l Telecard Ass’n v. FCC , 166 F.3d 387, 388 (D.C. Cir. 1999) (“Ongoing agency revi ew renders an order nonfinal for purposes of judicial review, and a peti tion for review of the order is incurably premature.”). Thus, “a petition for judicial review file d during the pendency of a requestfor agency reconsideration will be dismissed for lack of jurisdiction.” Wade v. FCC , 986 F.2d 1433, 1433 (D.C. Cir. 1993). Here, SIC has appealed the WCB Declaratory Ruli ng by filing the Petition for Reconsideration. The WCB has not ruled on that Petition, so there can be no dispute that th e FCC has not issued a final order for purposes of judicial review. Once the FCC does issue a final order, it is unde niable that the court of appeals will have exclusive jurisdiction to review it. FCC v. ITT World Commc’ns, Inc. , 466 U.S. 463, 468 (1984) (“Exclusive jurisdiction fo r review of final FCC orders, such as the FCC’s denial of respondents’ rulemaking petition, lies in the Court of Appeals.”); Media Access Project v. FCC , 883 F.2d 1063, 1066 (D.C. Cir. 1989) (“[T]here is no dispute that, under 28 U.S.C. § 2342(1), the court of appeals has exclusive jurisdiction over all ‘fi nal orders of the Federal Communications Commission made reviewable by section 402(a) of title 47.’”). 5
Plaintiffs contend that this case does not amount to an effort to obtain judici al review of the FCC’s Declaratory Ruling because the compla int raises different claims, it includes new

5 The parties agree that plaintiffs were not re quired to seek redress before the FCC in the first instance. Therefore, NECA acknowledges that this Court would have had jurisdiction over a challenge to NECA’s actions if pl aintiffs had filed an action in th is court first. Transcript of Motions Hearing, July 20, 2011 (“Tr .”) at 3 (“You would have ha d the power had they filed it only here.”). But according to NECA, once plainti ffs initiated the FCC proceedings that are still pending, they triggered the Hobbs Act and Communi cations Act provisions th at locate exclusive jurisdiction in the court of appeals. Id. at 3–4.8 parties, and much of the relief sought cannot be obtained in the FCC proceeding. Opp. at 12–15. None of these arguments is persuasive. B. Plaintiffs’ complaint, in substance, seeks the same relief on the same issues as SIC’s Petition for Reconsideration. Plaintiffs seek compensatory damages and an order “directing NECA” to apply the Spare Fiber Guidelines and include 100 % of their lease costs in th e pool. Compl. at 31. But the particular NECA decision that prompted this lawsuit is no longer operative – it has been effectively superseded by th e Declaratory Ruling of the WC B. Plaintiffs acknowledge – indeed, they specifically allege – that NECA is required to follow the orders of the FCC. See id . ¶¶ 68 (“NECA is responsible for complying with . . . the orders and rules of the FCC . . . .”) and 101 (“NECA is obligated to implement the FCC’s ruleinterpretations . . . .”). Thus, while plaintiffs are asking this Court to order NECA to do one th ing, the FCC, in the WCB’s Declaratory Ruling, has already ordered it to do something else. That order is presently under review, and whether it is upheld or overturned, NECA will be bound to comply with the FCC’s ruling on reconsideration. See Pls.’ Opp. at 14 (“A final ruling in the FCC Proceeding that NECA had incorrectly applied the ‘used and useful’ doctrine to ex clude 44% of SIC’s Paniolo costs from the Pool would result in SIC’s reimbursement for those costs.”). And the FCC’s ruling will never be subject to review in this Court. Plaintiffs cannot bypass the juri sdictional statute by asserting that their complaint seeks a form of relief not available in the FCC proceedin g. The Supreme Court has held that “[l]itigants may not evade the [exclusive jurisdiction] provisi ons by requesting the District Court to enjoin action that is the outcome of the agency’s order.” ITT World Commc’ns, Inc. , 466 U.S. at 468. In that case, the Court found that, “[i]n substance, the complaint filed in th e District Court raised the same issues and sought to enforce the same restrictions upon agency conduct as did the9 petition for rulemaking that was denied by the FCC.” Id . The Court therefore held that plaintiffs must obtain judicial review through the court of appeals and not the district court. Id.
In Wilson v. A.H. Belo Corp. , 87 F.3d 393, 395 (9th Cir. 1996), the plaintiffs, like the plaintiffs here, brought state law claims including breach of contract and breach of the covenant of good faith and fair dealing. Citing ITT World Commc’ns, Inc. , 466 U.S. at 468, the court held that when the complaint filed in the district co urt “raise[s] the same issues and seek[s] the same relief in substance as the declaratory ruling” of th e FCC, the jurisdictional statutes require review in the courts of appeals. Id. at 399. The court dismissed all of the causes of action because they “would have required the district court to determin e the substantive validity of a final FCC order reviewable under 47 U.S.C. § 402(a),” which was the exclusive jurisdiction of the court of appeals. Id. at 400. Similarly, in CE Design, Ltd. v. Pris m Business Media, Inc ., 606 F.3d 443 (7th Cir. 2010), the court reviewed the substance of the co mplaint and determined that the plaintiff’s lawsuit was a veiled challenge to the validity of an FCC rule. The Seventh Circuit upheld the district court’s ruling that it lacked jurisdiction to consider the va lidity of the FCC rule. 606 F.3d at 448. The court found that when the defendan t raised the FCC rule as a defense to the plaintiff’s claim, “it inherently called upon the district court to enforce the FCC’s rule.” Id. “Because [the plaintiff] argued that the district court should ignore – or in other words, invalidate – the FCC’s [rule] for purposes of this suit, the Hobbs Act’s jurisdictional bar came into play.” Id. 6 See also United States v. Any and All Radio Station Transmission Equip ., 207 F.3d 458,

6 It is true that the parties in CE Design were expressly invoking an agency order, and plaintiffs here maintain they are seeking relief “on issues completely separate and distinct from the issues in the WCB Declaratory Ruling.” Pl s.’ Opp. at 22–23. But as will be discussed in more detail in this section of the opinion, thatargument does not withstand scrutiny, so the case cannot be distinguished on those grounds.10 463 (8th Cir. 2000) (“Whichever way it is done, to ask the district court to decide whether the regulations are valid violates” the Hobbs Act). Nor can plaintiffs evade jurisdictional requirements by invoking the Constitution or bringing an action under laws ot her than the Communications Act. “A plaintiff may not escape an exclusive avenue of judicial review through artful pleading.” American Bird Conservancy v.
FCC , 545 F.3d 1190, 1194 (9th Cir. 2008); see also Folden v. United States , 379 F.3d 1344 (Fed. Cir. 2004) (holding that in deciding whether the jurisdictional provision applies to a breach of contract claim, the court “must look to the true na ture of the plaintiffs’ cl aims, not how plaintiffs characterize it.”). In American Bird , the Ninth Circuit rejected the plaintiff’s characterization of its suit as a challenge to the agency’s compliance with federal environmenta l laws rather than to the agency’s ultimate order. 545 F.3d at 1193. In Any and All Radio Station Transmission Equipment , the court held that the fact that the district court challenges were based in part on constitutional grounds did not permit the plaintif f to evade FCC and appellate jurisdiction. 207 F.3d at 463. And in Wilson , the Ninth Circuit dismissed seve ral state law causes of action because they required the court to determine the substantive validity of a final FCC order. 87 F.3d at 400. So the question to be determined in ruling on the motion to dismiss is whether this case raises the same issues that are pending before the FCC and whether it calls into question the validity of an FCC order. While plaintiffs conten d that it does not, that position is so obviously belied by a comparison of the complaint and the Petition for Rehearing that it seems disingenuous. The complaint seeks a judgment direc ting NECA to include all of SIC’s Paniola lease costs in the Pool and dire cting it to apply the Spare Fiber G uidelines to SIC’s request to11 include its costs in the Pool. Compl. at 31. Th e Petition for Reconsider ation requests precisely the same relief: [The Spare Fiber Rule] clearly applies to spare Paniolo fiber and application of that rule clearly provides th at SIC is entitled to recover 100 percent of its spare fiber costs from the NECA Pool. As a resu lt, the Bureau must: (a) reconsider the cost recovery methodology adopted in th e [Declaratory Ruling]; and (b) award SIC 100 percent cost recovery. Petition for Reconsideration at 2. Plaintiffs claim that this case and the F CC proceeding are differe nt because the WCB Declaratory Ruling only concerned the application of the “used and useful” doctrine and did not address the superiority of the Spare Fiber Guidelines. See, e.g. , Pls.’ Opp. at 13–14 (“The Complaint’s allegations of unequa l treatment were not the subj ect of the FCC Proceeding, as evidenced by the fact that the WCB Declaratory Ruling makes no reference to the Spare Fiber Guidelines whatsoever.”). But that is because plaintiffs did not ask the FCC to apply those guidelines in its initial request for review of th e NECA decision, and they did not raise the issue of the applicability of a different set of guide lines until they petitioned for reconsideration. As plaintiffs acknowledged during the hearing on the motion to dismiss, the pending petition squarely raises the issues before this Court. 7 In both proceedings, plaintiffs argue that NECA was obliged to follow the Spare Fiber Guid elines, that it lacked any justification for treating SIC differently than other rural LECs, and that the FCC’s approach was inconsistent with previous FCC orders that deemed the cons truction of SIC’s network to be in the public

7 At oral argument, plaintiffs agreed that in the FCC petition, they complained that NECA had applied the wrong rules and th e Spare Fiber Guidelines should have been used instead, that NECA had not followed its own rules and treated SIC differently than it had treated others before, and that NECA’s actions were inconsiste nt with the FCC Study Area Waiver Rules that had supported the development of telecommunications infrastructure in Hawaii. See Tr. at 16– 17. And they conceded that same issues were raised in the complaint (Question: “Every single one of those things is in your complaint.” Answer: “Correct.”).12 interest and authorized SIC to participate in the NECA Pool. Compare Compl. ¶¶ 69–72, with Petition for Reconsideration at 2–8; compare Compl. ¶ 8, with Petition for Recons ideration at 12;

compare Compl. ¶¶ 21–24, with Petition for Reconsideration at 17–19. Before it filed this action, SIC availed itself of the right to seek F CC review of the NECA decision, and the WCB within the FCC has already ru led. So, if the Court were to hear this case now, it would have to review th e WCB Declaratory Ruling to decide whether it was appropriate for the agency to continue to apply the used and useful stan dard invoked by NECA as opposed to the Spare Fiber Guidelines. It would have to co mpare the WCB’s Declarat ory Ruling with other FCC orders and rules. That is exactly what the Petition for Reconsideration asks the FCC to do. In short, the gravamen of the complaint is plaintiffs’ disagreement with an agency decision that is not yet final. And once the FCC issues a final order, plaintiffs will have to take it up with the court of appeals. C. Plaintiffs’ damages claims do not give this Court jurisdiction. The fact that the complaint includes claims for damages does not change the character of the complaint or allow plaintiffs to bypass the administrative process. See Aguilar v. U.S. Immigration and Customs Enforcement , 510 F.3d 1, 17 (1st Cir. 2007) (“Courts also have rebuffed litigants’ attempts to bypass congressi onally mandated exhaustion requirements by demanding remedies that the administrative procedures cannot grant.”).
In Computer Consulting & Network Design, Inc. v. Universal Serv. Admin. Co. , 2008 WL 2435932, at *2 (W.D. Ky. June 12, 2008), the districtcourt was asked to review a decision by another non-profit corporation de signated by the FCC to admini ster one of its programs. USAC was authorized to manage the delivery of discount internet services to the schools. Id. at *1. The plaintiff, CCND, brought su it in the district court alleging that USAC sent false and13 defamatory letters to school dist ricts denying payment for its servic es, and that USAC interfered with its prospective contractual relations. Id. The court rejected the plaintiff’s argument th at it should keep the case because the administrative process could not addre ss tort claims for monetary damages. Id. at *6. It observed, “[w]hile this is true, administrative review does allow for a full and complete look at USAC’s conduct. Thereafter, an aggrieved part y may obtain judicial re view by a Court of Appeals.” Id. The court explained that if the court of appeals found that USAC acted according to proper FCC directives, the district court w ould be bound by that conclusion, and the plaintiff’s claims would not be viable. And if USAC’s co nduct was wrongful or illeg al, then the plaintiff would have a viable stat e law claim. But whether USAC acted with proper FCC directives is “a matter which is squarely within the realm of the F CC and the Courts of Appe als, not this Court.” Id. The case is instructive because both US AC and NECA are non-pr ofit entities with delegated authority from the FCC and “[a]ny person aggrieved” by them “may” seek review from the FCC. Id. at *4, quoting 47 C.F.R. § 54.719(c). 8 And as the court concluded in CCND , in this case a claim for damages will only remain if the FCC reverses itself or if the court of appeals finds its ruling to be invalid. On the other hand, if the FCC approves NECA’s action and its decision is affirmed by the court of appeals, no viable action for damages will survive. 9 Moreover, the court in CCND found that it did not have jurisd iction even though the plaintiff did

8 See 47 C.F.R. § 1.115 (“Any person aggrieved by any action taken pursuant to delegated authority may file an applica tion requesting review of th at action by the Commission.”) 9 When the Court asked plaintiffs’ counsel at the hearing on the motion how it could even deal with the plaintiffs’ claims for damage s unless and until the FCC had determined that NECA’s refusal to pay SIC’s costs was wr ong, he replied, “that’s a fair point.” Tr. 15.14 not have a pending proceeding before the FCC. 10 Here, the case for dismissal is even stronger since SIC elected to seek relief before th e FCC in a proceeding governed by the Hobbs and Communications Acts. The fact th at that proceeding is not yet fi nal only solidifies the Court’s view that it lacks jurisd iction to hear the case. D. The presence of other parties in this dispute does not confer jurisdiction. Neither the involvement of plai ntiffs other than SIC, nor th e absence of the FCC as a defendant, gives this Court jurisdiction. Courts ha ve held that whether the plaintiffs challenge the agency directly or indirectly, the jurisdictional bar exists. In CE Design , the plaintiff sued a private party whose “defense . . . inherently called upon the distri ct court to enforce the FCC’s rule.” 606 F.3d at 448. The court held that the f act the plaintiff’s “challenge to the FCC’s [] defense arises in a dispute between private parties makes no difference – the Hobbs Act’s jurisdictional limitations are ‘equally applicable whether [a party] wants to challenge the rule directly . . . or indire ctly, by suing someone who can be expect ed to set up the ru le as a defense in the suit.’”. Id. , quoting City of Peoria v. Ge n. Elec. Cablevision Corp ., 690 F.2d 116, 120 (7th Cir. 1982). See also ITC-DeltaCom Commc’ns, Inc. v. BellSouth Tel ecommunications, Inc. , 193 Fed. App’x 413, 416 (6th Cir. 2006) (When plaintiff argued it was not reques ting relief from the conduct of the FCC, but rather the conduct of BellSouth, the court found, “[t] his argument is also

10 The court held that the regulations provi ding for administrative review, while using permissive language (“may”), were mandatory a nd that the plaintiff must first exhaust their remedies through the FCC. 2008 WL 2435932, at *6. Th e court found that the plaintiff’s claims “all hinge upon the allegation that USAC’s conduc t in administering the E-Rate Program was ‘improper, wrongful, and reckless.’” Id . Because USAC contended th at the FCC issued orders to USAC approving and requiring the conduct aboutwhich the plaintiff complained, the court found that to address the plaintiff’ s claims it would “be necessary to determine the propriety of the actions taken by USAC in the administration of the program.” Id. The court held that USAC and the FCC should be given the opportunity to pass on the issu es underlying the plaintiff’s claims prior to judicial revi ew. Because the plaintiff had not exhausted its administrative remedies, the court dismissed the complaint.15 without merit because no matter how Plaintiff atte mpts to fashion the argument, the gist of its complaint is that it is seeking to divest the FCC of jurisdiction to rule on BellSouth’s petition, which this Court has already held cannot be done .”). Thus, it makes no difference that plaintiffs brought suit against NECA inst ead of the FCC; the operative decision by which NECA must abide is the WCB’s Declaratory Ruling, which approved both NECA’s use of the “used and useful” standard and its deci sion not to include 100% of the lease costs in the Pool. The fact that Gold Ivory and employees of SIC joined SIC as plaintiffs in the suit does not confer jurisdiction on this Court either. Like SIC’s claims, both the individual plaintiffs’ claims and Gold Ivory’s tortious interferen ce claim are entirely dependent on a finding of whether the FCC’s utilization of the “used and useful” methodology was improper – which is the very question pending reconsideration. Since the claims brought by all of the plaintiffs essentially call upon the Court to ignore or set as ide an agency ruling it is not authorized to review at all, and to do that before the ruling is even final, this Court lacks jurisdiction to hear the entire case. See City of Peoria , 690 F.2d at 120 (holding that th e district court does not have jurisdiction when plaintiffs seek relief that “is in effect an action to set aside the [FCC] rule”). Plaintiffs argue that this Cour t should not dismiss an action in favor of an administrative proceeding “when doing so would e ffectively ‘foreclose all meaningful judicial review’” of their claims. Pls.’ Opp. at 21, quoting Aguilar , 510 F.3d at 12. But there will be meaningful judicial review of the claims. The court of appeals will review a deci sion made by the FCC if either party to that proceeding chooses to appeal. And if there are viable claims to be brought once the FCC and the court of appeals have ruled, th ere will be no bar to bringing them then.16 IV. The Court Would Dismiss this Case Und er Primary Jurisdiction Even if it Had Jurisdiction Even if the Court did have jurisdiction and it was permitted to hear the case, the Court would decline to do so and dismiss the case because the FCC has primary jurisdiction. A. The primary jurisdiction doctrine would apply to this case. The primary jurisdiction doctrine is invoked when a court has jurisd iction but the case will require resolution of issues that Congress ha s placed in the hands of regulating agencies. Himmelman v. MCI Commc’ns Corp. , 104 F. Supp. 2d 1, 3 (D.D.C. 2000). The doctrine “rests both on a concern for uniform outcomes (which may be defeated if disp arate courts resolve regulatory issues inconsistently), and on the advant ages of allowing an agency to apply its expert judgment.” Allnet , 965 F.2d at 1120 (internal citations omitte d). Courts in this district have applied four factors to determine whether to appl y the primary jurisdiction doctrine: (1) whether the question at issue is within the conventional experience of judges; (2) whether the question lies peculiarly within the agency’s discretion or requires the exercise of agency expertise; (3) whether there exists a danger of inconsistent ru lings; and (4) whether a pr ior application to the agency has been made. Himmelman , 104 F. Supp. 2d at 4. See also United States v. Philip
Morris USA Inc. , --- F. Supp. 2d ---, 2011 WL 2144571, *8 (D.D.C. 2011). All of the factors strongly favor applying th e primary jurisdiction doctrine in this case. The first two factors recognize that courts shoulddefer to a specialized agency in cases that require administrative expertise and raise “issues of fact not within the conventional experience of judges.” Himmelman , 104 F. Supp. 2d at 4, quoting Far East Conference v. United States , 342 U.S. 570, 574 (1952). “The courts have not hesi tated, in appropriate cases, to defer to the expertise of administrative agencies such as the FCC.” Id. (collecting cases); see also Allnet , 96517 F.2d at 1120 (“[C]ourts have frequently invoked primary jurisdiction in cases involving tariff interpretations.”). Here, whether NECA and the FCC should have applied the Spare Fiber Guidelines as opposed to the the “used and useful” doctrine wh en considering the Paniola lease costs is a question best left to the FCC, the agency th at promulgated those guidelines and delegated authority to NECA to apply them. See Allnet , 965 F.2d at 1123 (“Allnet’s core claim is that NECA’s tariff violates the Commission’s regulations, a matter squarely within its expertise.”). Plaintiffs have pointed out that the Spare Fiber Guidelines we re created by NECA, are based upon FCC rules, and are not available in public database or susceptibl e to public research. Petition for Reconsideraton at iii. They argue th at the WCB’s ruling was inconsistent with other FCC orders, so it is clear from plaintiffs’ own contentions that th e case presents matters better resolved by the FCC in the first instance. Moreover , the determination of what percentage of the lease costs to include in the pool will implicate the FCC’s tec hnical expertise and its policy judgments. See Total Telecommunications Servs., Inc. v. AT&T , 919 F. Supp. 472, 478 (D.D.C. 1996) (“The powers granted to the FCC are a re flection of Congress’ intention that one governmental entity be vested with the respons ibility of developing, coordinating and enforcing a uniform telecommunications policy.”). Looking at the third and fourth factors related to pr imary jurisdiction, application to the agency has already been made, and there would be a significant risk of inconsistent rulings if this Court were to exercise jurisdiction over the case now. The NECA decision at the heart of the complaint has been rendered moot by the WCB Declaratory Ruling. Plaintiffs are asking this Court to order relief that was denied in th e Declaratory Ruling, on the basis of the very arguments that are currently before the FCC. So if this Court were to rule, there is a substantial18 risk that its decision will c onflict with the FCC decision on reconsideration, or with a decision by the court of appeals if the final agency order is ultimately appealed. Thus, an evaluation of all four factors militates in favor of a findi ng that the FCC has primary jurisdiction. B. The Court would dismiss, rather than stay, the action. The primary jurisdiction doctrine allows a distri ct court to dismiss, or stay, an action over which it has subject-matter jurisdiction. Himmelman , 104 F. Supp. 2d at 7. The Court’s discretion to dismiss is appropr iately exercised only where “the parties would not be unfairly disadvantaged . . . .” Id. at 8, quoting Reiter v. Cooper, 507 U.S. 258, 268 (1993). Plaintiffs argue that the FCC proceeding “will not resolve th e claims at issue in this action, or encompass the vast majority of damages Gold Ivory and SIC seek in this action.” Pls.’ Opp. at 31. They argue, then, that if the Court applies the primary juri sdiction doctrine, it should stay, and not dismiss, their claims.
In Total Telecommunications , 919 F. Supp. at 484, the c ourt applied the primary jurisdiction doctrine and dismissed several co mmon law claims, including claims for breach of contract intentional interference. The court found that those claims “are fundamentally premised on the central claims; and are thus incidental in nature.” Id. at 483. Similarly here, all of the claims are fundamentally premised on the same central claim about wh ether the Spare Fiber Guidelines applied to the Paniola lease costs and the damages claims are incidental to the FCC’s allegedly wrongful decision. 11

11 Plaintiffs rely on American Ass’n of Cruise Pa ssengers v. Cunard Line, Ltd ., 31 F.3d 1184 (D.C. Cir. 1994) to argue that the doctrine is inapplicable, but the opinion is distinguishable. AACP was an antitrust case, in which a trav el agency sued several cruise lines and trade associations. There were claims related to certain routes (between the U.S. and foreign ports) that should have been brought before th e Federal Maritime Commission, the agency that regulated common carriers. But the complaint also raised claims related to purely foreign routes, where the lines were not acting as common carrier s, and therefore the agency had no authority.19 In Allnet , a carrier sued NECA, seeki ng a declaratory j udgment that it was not liable for particular charges. 965 F.2d at 1119. The district court had subject matte r jurisdiction because the carrier brought its case there in the first instance. Id. at 1119–20. The D.C. Circuit held that the primary jurisdiction doctrine applied because there was a potential conflict between an FCC staff letter and an FCC order as to whethe r the access tariffs in question were valid. Id. at 1120. But it decided not to hold the court case in ab eyance; it noted that th e parties would not be prejudiced by a dismissal because the carrier ha d agreed to waive its statute of limitations defense to any future claims brought by NECA . Id. at 1123. Here, NECA has agreed to waive any statute of limitations defenses to plaintiffs ’ claims if they are dismissed now under the doctrine of primary jurisdiction. Reply at 22. This means that if the FCC proceeding is ultimately resolved in a manner that would give th e plaintiffs a viable cause of action, they will not have been prejudiced by a dismissal. Therefor e, even if the Court di d have jurisdiction over

The court held that the district court should not have dismissed the non-common carrier claims because the primary jurisdiction doctrine was inapplicable to them, and that it was required to exercise its jurisdiction. By contrast, here, all of the claims implicate the FCC’s primary jurisdiction. See Total Telecomms. Svcs. , Inc. v. AT&T , 919 F. Supp. 472, 484 n.17 (D.D.C. 1996) (differentiating Cruise Passengers on the same grounds). Plaintiffs also rely on APCC Services, Inc. v. Worldcom, Inc ., 305 F. Supp. 2d 1 (D.D.C. 2001). In that case, pay phone serv ice providers sought compensa tion from three phone carriers for calls made from pay phones – but charged to the carriers – over a several year period. Plaintiffs sued under a statute that specifically permits suits to be brought in court or before the FCC: 47 U.S.C. § 206 gives rise to a cause of action for damage s and attorneys’ fees against common carriers subject to the FCC. The court found that the actions did not involve the resolution of issues within the special compet ence of the FCC; among other factors, the court would not need to determine a rate at issue, and the FCC orders were sufficiently clear. Id. That reasoning does not apply in this case, where th e interpretation and application of multiple FCC doctrines and orders is at issue.20 any of plaintiffs’ claims, it would dismiss thos e claims in deference to the FCC’s primary jurisdiction. 12
V. Conclusion For the reasons described above, and after thorough consideration of the motion, the opposition, and the entire record in this case, the Court will grant defendant NECA’s motion to dismiss the complaint for lack of jurisdiction. Even if this Court did have jurisdiction over any of plaintiffs’ claims, the Court would dismiss those claims under the doctrine of primary jurisdiction. Accordingly, the Cour t will dismiss this action without prejudice to the bringing of future claims, should they be viable, after the FCC proceedings, and any appeals, are final. A separate order will issue.

AMY BERMAN JACKSON United States District Judge DATE: July 29, 2011

12 Plaintiffs also argue that they will be pr ejudiced by dismissal or a stay of this case because they will be forced into bankruptcy if they do not obtain relief within six to twelve months. Pls.’ Opp. at 23. But they offer no s upport for their contention that the FCC process could drag on indefinitely. Moreover, the FCC ha s already weighed these issues in depth, issued the Declaratory Ruling on September 29, 2010, and has had the Petition for Reconsideration pending since October 29, 2010. So it is not obvious that this Court would reach the merits first.