Opinion ID: 169513
Heading Depth: 3
Heading Rank: 2

Heading: District Court's Primary Jurisdiction Ruling

Text: This court applies an abuse of discretion standard to the district court's decisions to invoke the primary jurisdiction doctrine and to either stay or dismiss the action without prejudice. S. Utah Wilderness Alliance v. BLM, 425 F.3d 735, 750 (10th Cir.2005). The district court in this case properly invoked the doctrine of primary jurisdiction, but did so without evaluation of the issues to be referred, the purposes to be served by referral, or a clear statement that the FCC is the appropriate agency to consider the referred issues. The district court's invocation of the primary jurisdiction doctrine was apparently based on its mischaracterization of TON's claims. Although the court initially recognized that TON intended its complaint to be read to allege the illegality of Qwest's conduct, it ultimately concluded TON's claims were fundamentally about the reasonableness and lawfulness of Qwest's intrastate PAL tariff rates. By interpreting TON's claims in this manner, the court conflated TON's allegations concerning Qwest's procedural failure to file required tariffs and cost studies with allegations concerning the substantive unreasonableness of Qwest's rates. The court never considered whether Qwest's procedural noncompliance might have affected state regulators' ability to assess Qwest's substantive compliance with § 276(a) and the FCC's regulations implementing that statutory provision. In ruling on Qwest's motions to dismiss and for referral, the court simply stated Reiter stands for the proposition that the question whether Qwest's filed tariffs complied with the NST is within the primary jurisdiction of state public service or regulatory commissions or the Federal Communications Commission and that TON's relief might follow from FCC proceedings in other, related matters. The court further stated dismissal would allow TON to determine how best to pursue an administrative decision that will resolve whether Qwest owes TON a refund without specifying whether it was referring the case to the FCC or to state regulatory agencies. The court confused the exhaustion doctrine with the concept of primary jurisdiction when it stated it would not interfere with the appropriate state and federal agencies by allowing [TON] to make an end-run around the established administrative remedies. See Brown v. MCI WorldCom Network Servs., Inc., 277 F.3d 1166, 1173 (9th Cir.2002) (The [Communications Act] does not require that a plaintiff exhaust his administrative remedies before proceeding to federal court. . . . In providing a federal court forum under the [Act], Congress made it clear that it did not intend to require that suits . . . first be decided by the FCC.). Furthermore, the court nowhere addressed the impact of §§ 206 and 207 in providing TON a private right of action in federal court, nor did it articulate how TON's rights under these provisions might be accommodated notwithstanding a primary jurisdiction referral. Cf. Allnet Commc'ns Servs., Inc. v. Nat'l Exch. Carrier Ass'n, 965 F.2d 1118, 1122 (D.C.Cir. 1992). Finally, when ruling on TON's motion to reconsider its dismissal of TON's complaint, the district court failed to recognize the potential prejudice TON might suffer from dismissal. Although this court affirms the district court's general determination that a primary jurisdiction referral is appropriate in this case, the district court erred by misidentifying the issues to be referred and failing to clearly direct its primary jurisdiction referral to the FCC. Furthermore, because TON may be prejudiced by dismissal rather than a stay of its action pending primary jurisdiction referral, the district court abused its discretion in dismissing TON's claims, albeit without prejudice. This court therefore vacates the district court's order of dismissal and remands to the district court with instructions to stay TON's claims.
Because FCC orders are central to defining BOCs' obligations under the Communications Act, the FCC is the appropriate body for primary jurisdiction referral. As set out below, the three Crystal Clear Communications factors, 415 F.3d at 1179, lead this court to identify the following three issues as meriting district court consideration for primary jurisdiction referral to the Commission: (1) whether a violation of FCC orders gives rise to statutory liability; (2) whether the PAL rates Qwest charged during the period of its procedural noncompliance with FCC orders were substantively compliant with the NST; and, (3) if not, how damages should be calculated. Notwithstanding the number of related actions currently pending before the FCC, the district court should consider immediate referral to ensure the issues dispositive to TON's claims receive full agency consideration. [17] Factual questions outside the scope of the issues referred to the Commission should be retained and decided, when appropriate, by the district court. See Marshall, 874 F.2d at 1377 (The district court is not required to defer factual issues to an agency under the doctrine of primary jurisdiction if those factual issues are of the sort that the court routinely considers.). As detailed above in Part II.A.3, many of the FCC's orders specify LECs bear the burden of demonstrating or justifying their tariff rates to state regulators and are responsible for ensuring their rates are NST compliant. [18] See, e.g., New Services Test Order, 17 F.C.C.R. at 2069 ¶ 158; Bureau Wisconsin Order, 15 F.C.C.R. at 9881, 9882 ¶¶ 9, 11; Waiver/Refund Order, 12 F.C.C.R. at 21379 ¶ 18. The threshold issue in this litigation, therefore, is whether Qwest's admitted failure to file new tariffs or cost data supporting its existing tariffs, which violated 47 C.F.R. § 61.49(g)(2), the Order on Reconsideration, and portions of the Waiver/Refund Order, gives rise to liability under each of §§ 201(b), 276(a), and 416(c). [19] If Qwest's failure to meet its burden is interpreted to constitute a violation of the Communications Act, TON is entitled to have its claim adjudicated by a federal court under § 207 and may be entitled to damages under § 206. See 47 U.S.C. § 206 (providing for damages arising from a common carrier's failure to do any act, matter, or thing in this chapter required to be done); Global Crossing Telecomms., Inc. v. Metrophones Telecomms., Inc., ___ U.S. ___, 127 S.Ct. 1513, 1520, 167 L.Ed.2d 422 (2007) (holding § 207 gives payphone providers a private right of action for violation of § 201(b) as lawfully implemented by a 2003 FCC regulatory order addressing per-call compensation). In light of the Supreme Court's guidance in Global Crossing Telecommunications that not every violation of FCC regulations constitutes a statutory violation, 127 S.Ct. at 1521, and that courts should apply Chevron deference to the Commission's views on whether a violation of its regulations gives rise to statutory liability, id. at 1520-23, the district court should consider whether the FCC is in the best position to determine in the first instance if its regulatory orders contemplate that failures to comply procedurally with its regulations amount to violations of §§ 201(b), 276(a), or 416(c). A desire for uniformity in interpretation of the comprehensive regulatory scheme suggests this issue is appropriate for agency resolution. See Crystal Clear Commc'ns, 415 F.3d at 1179. The district court should also consider whether agency expertise is necessary to evaluate Qwest's substantive compliance with the NST. If Qwest's procedural noncompliance gives rise to statutory liability, a substantive-compliance analysis will be necessary in order to determine whether TON may seek refunds or other damages in federal court for Qwest's violation of FCC orders. Even if a procedural violation of FCC orders does not give rise to statutory liability, a substantive evaluation of Qwest's NST compliance would nevertheless be necessary to assist the court in determining whether Qwest directly violated § 276(a)'s anti-subsidization and anti-discrimination commands. Because of the complexities of tariffing and the number of states in which Qwest was required to file NST-compliant tariffs, the district court should consider whether agency expertise is necessary for the resolution of this issue. If so, the FCC, perhaps with assistance from state regulators using the conference procedure set forth in 47 U.S.C. § 410(b), could determine whether Qwest's April 1997 to April 2002 tariff rates in each jurisdiction were cost-based and consistent with all aspects of § 276(a), including § 276's anti-discrimination and anti-subsidization requirements. See Order on Reconsideration, 11 F.C.C.R. at 21308 ¶ 163. If Qwest's rates did not comply substantively with the requirements of the NST by failing to be cost-based, containing subsidies, or discriminating in favor of Qwest, TON is entitled to seek damages under § 206 for Qwest's violations of § 276(a). [20] The FCC, again perhaps with the assistance of state agencies, is likely to be in the best position to calculate the difference between Qwest's pre-April 2002 noncompliant rates and rates that would have been NST compliant. This calculation would assist the court in considering TON's claim for damages and, if appropriate, awarding such damages.
Dismissal of an action pending primary jurisdiction referral is appropriate when the parties will not be prejudiced or unfairly disadvantaged. Reiter, 507 U.S. at 268-269, 113 S.Ct. 1213; United States v. Mich. Nat. Corp., 419 U.S. 1, 5, 95 S.Ct. 10, 42 L.Ed.2d 1 (1974) (per curiam) (Dismissal rather than a stay has been approved where there is assurance that no party is prejudiced thereby.); Far East Conference v. United States, 342 U.S. 570, 577, 72 S.Ct. 492, 96 L.Ed. 576 (1952) (determining dismissal was appropriate where case involved only questions within the scope of agency jurisdiction, judicial review of an agency order would be available, and similar suit could be easily initiated later). Where, for example, the relief sought is an injunction or declaratory judgment, dismissal may be appropriate. See, e.g., Far East Conference, 342 U.S. at 577, 72 S.Ct. 492. Where damages are sought and the relevant statute of limitations might preclude relief, however, a stay is likely to be preferable. See Carnation Co. v. Pac. West-bound Conference, 383 U.S. 213, 223, 86 S.Ct. 781, 15 L.Ed.2d 709 (1966) (distinguishing treble-damages relief sought by instant plaintiff with injunctive relief sought by Far East Conference plaintiffs and explaining a treble-damage action for past conduct cannot be easily reinstituted at a later time and may face a statute-of limitations bar). Additionally, where further judicial proceedings are contemplated, the court should ordinarily retain jurisdiction by staying the proceedings. Davel Commc'ns, 460 F.3d at 1091; accord Crystal Clear Commc'ns, 415 F.3d at 1178 n. 6 (stating a stay is usual course of action in antitrust cases). Finally, where pending FCC actions may affect the outcome of a plaintiff's federal court litigation, this court has previously assumed a stay is appropriate. Mical Commc'ns, 1 F.3d at 1040 (raising primary jurisdiction sua sponte and ordering district court to stay case pending issuance of FCC ruling); see also Davel Commc'ns, Inc. v. Qwest Corp ., No. C03-3680P, slip op. at 6 (W.D.Wash. Jan. 29, 2007) (unpublished) (concluding, upon remand from the Ninth Circuit, the possibility of further judicial proceedings following FCC resolution of threshold issue warranted a stay). In this case, TON alleges two potential bases for prejudice. First, because § 415(b) creates a two-year statute of limitations for damage actions before the FCC, TON contends it may be precluded from refiling its complaint before the Commission. TON asserts the statute of limitations began to run in April 2002 when Qwest filed its NST-compliant rates. Accord Davel Commc'ns, 460 F.3d at 1091-93 (observing that, under Davel's interpretation of the Waiver/Refund Order, Davel's right to reimbursement came into existence only upon Qwest's filing of NST-compliant rates and, therefore, its cause of action only began to accrue when Qwest failed to pay the reimbursements). TON's limitations period, therefore, would have expired in April 2004. Second, TON alleges that § 207, which functions as an election-of-forum provision, gave it the right to file suit either in federal district court or before the FCC, but not in both fora. It contends its decision to file in federal court may foreclose it from seeking subsequent relief before the Commission. Qwest fails to respond directly to TON's assertions. Instead, Qwest contends: 1) the decrease in its rates was caused by the FCC's revisions to the NST in the 2002 New Services Test Order and, therefore, there is no evidence that its pre-2002 rates were unreasonable or discriminatory; 2) TON's interpretation of the Waiver/Refund Order is misguided and does not entitle TON to refunds or damages; and 3) any claim that Qwest's rates became unlawful on April 15, 1997, or May 19, 1997, when Qwest failed to file new tariffs or cost studies, would have been time-barred after April or May 1999 and, therefore, are already precluded by the statute of limitations. [21] As to whether TON will be prejudiced by dismissal, Qwest says only that TON should have filed its claims with the state commissions charged with determining NST compliance rather than filing in federal court and, thus, any resulting prejudice is of TON's own making. It also claims that because the FCC is currently considering the same issues in several existing proceedings, TON may well get the relief it seeks without further judicial action. Because dismissal might result in a § 415(b) statute-of-limitations bar to TON's claims under the Waiver/Refund Order and because § 207's election-of-forum provision might prevent TON from seeking agency relief, the district court abused its discretion in dismissing, rather than staying, TON's suit. Qwest expressly declined to waive a statute-of-limitations defense before the district court and again before this court. Although it seems logical that the statute of limitations in § 415(b) would be tolled during the pendency of TON's federal court litigation, neither party has called the court's attention to any such tolling provision or related case law, nor has the court located any on its own. To the contrary, other courts have suggested the limitations period would not be tolled. Cf. Brown, 277 F.3d at 1173 (stating district court should stay claim during primary jurisdiction referral because statute of limitations under § 415 had run); Davel Commc'ns, No. C03-3680P, slip op. at 6 (recognizing risk that statute of limitations may run pending FCC's interpretation of Waiver/Refund Order). Because it appears TON may be unfairly disadvantaged by dismissal, this court concludes the district court abused its discretion by dismissing TON's complaint. Additionally, TON asserts that § 207 entitles it to proceed in federal court, that the district court's ruling essentially denied it a federal forum, and that there is a risk, under the plain language of § 207, that it will be precluded from refiling its dismissed complaint before the Commission. Courts have consistently recognized § 207 as an election-of-remedies provision such that once an election is made by either filing a complaint with the FCC or filing a complaint in federal court, a party may not thereafter file a complaint on the same issues in the alternative forum, regardless of the status of the complaint. Premiere Network Servs., Inc. v. SBC Commc'ns, Inc., 440 F.3d 683, 688 (5th Cir.2006) (citing cases). Contrary to Qwest's assertion that TON should have known it was required to file its claims before the state commissions rather than in federal court, § 207 has clearly been construed not to require exhaustion of administrative remedies. See, e.g., Brown, 277 F.3d at 1173; APCC Servs., Inc. v. Worldcom, Inc., 305 F.Supp.2d 1, 10-11 (D.D.C.2001). Even if, as Qwest asserts, the Commission did instruct parties to challenge an LEC's compliance with the FCC's filing requirements before state regulators, Qwest does not explain how this direction divests the court of jurisdiction under § 207 or bars TON from taking advantage of the choice Congress provided to it under § 207. Because Qwest has engaged only in unsupported argument to the contrary, we conclude that TON's arguments regarding the nature of § 207 provide an additional reason for staying TON's claims. Finally, contrary to the statement in its brief that TON may well get the relief it seeks, Qwest conceded to the district court that predicting whether TON would benefit from a positive resolution of the FCC's pending matters was like trying to look into a crystal ball. Qwest admitted the FCC could issue very limited orders in the matters currently pending before it which might not entitle TON to relief. Furthermore, at oral argument before this court, Qwest conceded that, although it believed dismissal was appropriate, it did not strongly oppose a stay.