Court Opinion

ID: 185438
Source: CourtListenerOpinion
Date Created: 2011-02-05 02:32:08+00
Date Added: 2024-06-11T09:13:25.696315
License: Public Domain

252 F.3d 462 (D.C. Cir. 2001)
Qwest Corporation, et al., Petitionersv.Federal Communications Commission and United States of America, RespondentsMetrocall, Inc., et al., Intervenors
No. 00-1376 and 00-1377
United States Court of Appeals  FOR THE DISTRICT OF COLUMBIA CIRCUIT
Argued May 9, 2001Decided June 15, 2001

On Petitions for Review of an Order of the Federal Communications Commission
Michael K. Kellogg argued the cause for petitioners.  With  him on the briefs were Aaron M. Panner, Michael E. Glover, Edward Shakin, Joseph Dibella, Dan L. Poole, Robert B.  McKenna, Jeffry A. Brueggeman, James D. Ellis, Roger K.  Toppins and Hope E. Thurrott.  Alfred G. Richter entered an  appearance.
Richard K. Welch, Counsel, Federal Communications Commission, argued the cause for respondents.  On the brief were  Jane E. Mago, Acting General Counsel at the time the brief  was filed, John E. Ingle, Deputy Associate General Counsel,  Laurel R. Bergold, Counsel, John M. Nannes, Deputy Assistant Attorney General, U.S. Department of Justice, Catherine  G. O'Sullivan and Nancy C. Garrison, Attorneys. Daniel M.  Armstrong, Associate General Counsel, Federal Communications Commission, entered an appearance.
Frederick M. Joyce, Christine McLaughlin, Ronald E.  Quirk, Jr., Marianne Roach Casserly, Jonathan J. Nadler  and Robert L. Hoggarth were on the brief for intervenors  Metrocall, Inc., Arch Wireless, Inc. and Personal Communications Industry Association.  Angela E. Giancarlo entered an  appearance.
Before:  Williams, Ginsburg and Rogers, Circuit Judges.
Opinion for the Court filed by Circuit Judge Williams.
Williams, Circuit Judge:

1
When a local caller dials the  number of a paging service customer, the caller's Local  Exchange Carrier ("LEC") sends the call to a paging terminal, operated by the paging service.  Once the terminal  validates the call and receives the "call-back" number or  message, it sends out a radio broadcast that sets off the  customer's pager.  Thus the call starts out on the LEC's  network but is handed off to the paging carrier, which  completes the call.  This case concerns the Federal Communications Commission's rule forbidding any LEC charge to  the paging company for carrying such calls, 47 CFR           51.703(b).

2
The Commission enforced this no-compensation rule  through adjudication of complaints brought by providers of one-way paging services, who contended that certain LECs  had violated          51.703(b).  The LECs object to use of this  procedure to resolve the dispute.  They contend that under  the Telecommunications Act of 1996, Pub. L. No. 104-104, 110  Stat. 56 (the "1996 Act"), such disputes can be resolved only  through state-managed negotiation and arbitration under 47  U.S.C. §§ 251(c)(1), 252.  But another court has already  resolved against these very LECs an underlying issue that is  vital to their claim.  In Iowa Utilities Bd. v. FCC, 120 F.3d  753 (8th Cir. 1997), aff'd in part and rev'd in part sub nom.,  AT & T Corp. v. Iowa Utilities Bd., 525 U.S. 366 (1999), the  Eighth Circuit rejected the LECs' claim that 47 CFR           51.703(b) was wholly ultra vires.  Rather, the court found  that, as applied to Commercial Mobile Radio Service  ("CMRS"), which includes paging, the regulation was validly  grounded in 47 U.S.C.          332, a provision adopted well before  the 1996 Act, in the 1982 amendments to the Communications  Act of 1934.  See Communications Amendments Act of 1982,  Pub. L. No. 97-259,          331, 96 Stat. 1087, 1096-97.  The  Eighth Circuit's decision meets the criteria for issue preclusion.  Petitioners are therefore bound by its holding that the  validity of 47 CFR § 51.703(b) (as applied to CMRS) is wholly  independent of the 1996 Act.  The LECs themselves do not  contend that a rule so grounded may be enforced solely  through the negotiation and arbitration procedures of the  1996 Act.  Accordingly we uphold the Commission's use of its  complaint procedure.  We also affirm the Commission's substantive interpretation of          51.703(b) as barring charges for  facilities used to deliver LEC-originated traffic.

3
* * *

4
The Commission promulgated          51.703(b) in its first major  order implementing the 1996 Act.  See Implementation of the  Local Competition Provisions in the Telecommunications  Act of 1996, 11 F.C.C.R. 15,499, 16,228 (1996) ("Local Competition Order").  The rule states:

5
A LEC may not assess charges on any other telecommunications carrier for local telecommunications traffic that originates on the LEC's network.

6
47 CFR          51.703(b);  see also Local Competition Order, 11  F.C.C.R. at 16,016 p 1042.  In resolving a broad challenge to  that order, the Eighth Circuit upheld          51.703(b) as applied  to CMRS providers, Iowa Utilities Bd., 120 F.3d at 800 n.21; the LECs did not petition for certiorari on that issue.

7
After the Eighth Circuit's decision the FCC's Common  Carrier Bureau ruled that          51.703(b)'s bar on LEC charges  for completion of LEC-originated calls also covered charges  for certain facilities used by LECs to provide such services. In response to a request for clarification from several LECs,  the then chief of the Common Carrier Bureau, A. Richard  Metzger, Jr., issued a letter saying that the LECs could not  charge paging service providers for the cost of "LEC transmission facilities that are used on a dedicated basis to deliver  to paging service providers local telecommunications traffic  that originates on the LEC's network."  Metzger Letter of  December 30, 1997, 13 F.C.C.R. 184, 184 (1997).  The LECs  filed applications for review of the letter;  three years later,  the Commission has yet to rule on the matter.

8
Shortly before and after the release of the Metzger letter,  one-way paging providers TSR Wireless, LLC and Metrocall,  Inc. filed a series of complaints with the Commission under 47  U.S.C.          208 (authorizing complaints "of anything done or  omitted to be done by any common carrier subject to this  chapter, in contravention of the provisions thereof").  The  complaints claimed (in the aggregate) that the four LECs  now petitioning for review had charged for facilities used to  deliver LEC-originated traffic, in violation, as the paging  companies saw it, of          51.703(b).  TSR Wireless also challenged Qwest's refusal to provide a "T-1 circuit" to handle  paging traffic between Yuma and Flagstaff, Arizona.  The  LECs argued that the Commission lacked jurisdiction to  adjudicate the complaints, on the theory that the carriers  could enforce the LECs' interconnection obligations only  through the 1996 Act's negotiation and arbitration provisions. See 47 U.S.C. §§ 251(c)(1), 252.

9
The Commission held that it had jurisdiction to resolve the  paging carriers' complaints.  Although relying primarily on a different interpretation of the 1996 Act from the LECs', it  also invoked 47 U.S.C.          332, the provision that had won the  day for the Commission in the Eighth Circuit.  TSR Wireless,  LLC v. US WEST Communications, Inc., 15 F.C.C.R. 11,166,  11,172, 11,172-73 n.42, 11,189-90 p p 13, 41-42 (2000) ("Order").  On the merits the Commission concluded that           51.703(b) prevented the LECs from imposing charges for  the facilities used to deliver LEC-originated traffic to the  paging carriers.  It also held (subject to a qualification) that  Qwest was required to meet TSR Wireless's request for a T-1  line between Yuma and Flagstaff, Arizona at its own expense. Id. at 11,189 p 40.

10
*  *  *

11
The parties' dispute over the propriety of CMRS providers  enforcing          51.703(b) via the Commission's          208 complaint  procedure entails two steps--steps that the Commission collapses into one in its somewhat confusing issue preclusion  argument.  The first step is to identify the source of the  Commission's authority to adopt          51.703(b) insofar as it  applies to CMRS.  (The LECs here do not challenge the  substantive validity of          51.703(b) as applied to CMRS.)  The  second step is to determine whether adversely affected parties may pursue relief for non-compliance only via the 1996  Act's negotiation and arbitration provisions, see 47 U.S.C.  §§ 251(c)(1), 252, or whether they may get relief via complaints to the Commission under 47 U.S.C.          208.

12
The link between the two is that if          51.703(b) (as applied  to CMRS) rests solely on the 1996 Act, the second question,  that of available remedy, is sharply contested.  But if           51.703(b) (as applied to CMRS) is validated by prior legislation, specifically 47 U.S.C.          332, then 47 U.S.C.          208 is  indisputably available.  Perhaps because the second step (the  proper channels of enforcement) is so easy on the second  hypothesis (47 U.S.C.          332), the Commission tends to overlook it.  By coincidence, the Eighth Circuit decision addressed the issues of both substantive power and remedy.

13
In the Eighth Circuit litigation the LECs challenged the  substantive validity of          51.703(b) and many other provisions  of the Local Competition Order.  That order in fact rested on  the 1996 Act, and for many contexts the court found the  regulations adopted invalid.  But insofar as          51.703(b) and  several kindred sections applied to CMRS, the court found  support in 47 U.S.C.          332:

14
Because Congress expressly amended section 2(b) to preclude state regulation of entry of and rates charged by Commercial Mobile Radio Service (CMRS) providers, see 47 U.S.C. §§ 152(b) (exempting the provisions of section 332), 332(c)(3)(A), and because section 332(c)(1)(B) gives the FCC the authority to order LECs to interconnect with CMRS carriers, we believe that the Commission has the authority to issue the rules of special concern to the CMRS providers, i.e., 47 C.F.R. §§ 51.701, 51.703, 51.709(b), 51.711(a)(1), 51.715(d), and 51.717, but only as these provisions apply to CMRS providers. Thus, rules 51.701, 51.703, 51.709(b), 51.711(a)(1), 51.715(d), and 51.717 remain in full force and effect with respect to the CMRS providers, and our order of vacation does not apply to them in the CMRS context.

15
Iowa Utilities Bd., 120 F.3d at 800 n.21 (emphasis added).1 In the Local Competition Order itself, interestingly, the  Commission had not invoked          332 in support of the regulation.  See 11 F.C.C.R. at 16,005-06 p p 1023, 1025.  Compare  SEC v. Chenery Corp., 332 U.S. 194, 196 (1947).

16
The LECs also raised the remedial issue presented here  (though in a much broader version), persuading the court that  the Commission could not use          208 complaint proceedings to  enforce the whole family of duties to which          51.703(b) (as it  applied generally) belonged.  On this they won.  Iowa Utilities Bd., 120 F.3d at 803-04.  But the victory was short-lived; the Supreme Court vacated the ruling as unripe.  AT&T  Corp. v. Iowa Utilities Bd., 525 U.S. at 386.

17
The Eighth Circuit's substantive ruling that          51.703(b)  was validly grounded in          332 seems on its face to meet the  criteria for issue preclusion.  Under that doctrine, judgment  in a prior suit can preclude relitigation of an issue actually  litigated and necessary to the outcome of the first action so  long as no unfairness results.  See Parklane Hosiery Co. v.  Shore, 439 U.S. 322, 326 n.5 (1979);  Milton S. Kronheim &  Co. v. District of Columbia, 91 F.3d 193, 197 (D.C. Cir. 1996); see also Southern Pac. R.R. Co. v. United States, 168 U.S. 1,  48-49 (1897).

18
The LECs' strongest response is that Iowa Utilities Bd.  did not really find that          332 was the statutory authority for           51.703(b).  The court's use of          332, they say, was only to  parry a claim that          51.703(b) and many associated regulations were invalid intrusions on state authority under          2(b)  of the Communications Act of 1934, 47 U.S.C.          152(b).  But  this cuts the Iowa Utilities Bd. decision too fine.  The LECs'  basic attack was that the 1996 Act failed to support           51.703(b) and the associated regulations.  The Eighth Circuit by and large agreed (though the Supreme Court did not). But having agreed on the general proposition, the Eighth  Circuit was convinced that an exception applied for CMRS, as  to which it plainly found an independent basis of support  outside the 1996 Act, in          332.

19
The petitioners did not seek certiorari as to the Eighth  Circuit's holding on          332--making it a final judgment with  preclusive effects.  The Supreme Court, discussing the preclusive effect of a judgment that the loser was entitled to  appeal to the Supreme Court, has held that the loser's failure  to do so left him as badly off as if he had appealed and lost. Angel v. Bullington, 330 U.S. 183, 189 (1947).  As a general  matter we cannot see that certiorari should be on a different  footing.  Of course the odds are against such relief;  most litigants will not have it granted even if they do seek it.  Yet  the judgments of intermediate federal appellate courts nonetheless have issue preclusive effect.  See Johnson Steel Street  Rail Co. v. William Wharton, Jr. & Co., 152 U.S. 252, 261  (1894).

20
The LECs go on to argue that theirs is a special case--they  "had no motivation to challenge section 51.703(b)" because  they reasonably thought the rule applied only to traffic (for  which they say they never charged);  the FCC only later  revealed its view that the rule embraced charges for facilities. See Petitioners' Br. at 38-39.  But this seems somewhat  disingenuous on two counts.  First, so far as appears they did  contest the rule in the Eighth Circuit.  Indeed, they evidently  did so in the specific context of CMRS (at least footnote 21  gives no hint that it sprang out of the blue, and the LECs  make no claim that it did).  Second, the Eighth Circuit  disposed of rehearing petitions in Iowa Utilities Bd. on  October 14, 1997, so that the 90-day period for filing a  petition for a writ of certiorari, see S. Ct. R. 13, only closed  well after the December 30, 1997 Metzger letter clearly put  the LECs on notice of the rule's application to facilities.  In  any event, and recognizing that litigants must be highly  selective in framing petitions for certiorari, we cannot see any  serious unfairness in giving preclusive effect to the judgment  of a sister circuit.

21
Petitioners also invoke the doctrine launched in Functional  Music, Inc. v. FCC, 274 F.2d 543 (D.C. Cir. 1958).  But that  doctrine has no bearing on issue preclusion, as it relates  simply to a party's right, once it has passed up a chance to  bring suit attacking a rule, to resist its later application. Public Citizen v. Nuclear Regulatory Commission, 901 F.2d  147, 153 n.3 (D.C. Cir. 1990);  Western Coal Traffic League v.  Interstate Commerce Commission, 735 F.2d 1408, 1411 (D.C.  Cir. 1984).

22
Petitioners' procedural victory, the Eighth Circuit's holding  that the Commission could not use complaint proceedings to  enforce the LECs' 47 U.S.C. §§ 251-252 obligations, is also of  no use to them.  Because of the Supreme Court's authoritative ruling that the issue was unripe, AT&T Corp. v. Iowa Utilities Bd., 525 U.S. at 386, the Commission cannot be  bound by its loss, and petitioners cannot (contrary to the  Commission's rather bizarre effort to deploy claim preclusion)  be bound by their failure to pose the procedural issue in the  CMRS context in the Eighth Circuit.  See Norfolk & Western  Ry. Co. v. United States, 768 F.2d 373, 377-78 (D.C. Cir.  1985).

23
Petitioners acknowledge that the Commission referred to           332 in the Order, but stress, in a footnote, that the references were tucked away in a diminutive footnote and in the  ordering clauses.  See Order, 15 F.C.C.R. at 11,172-73 n.42,  11,189-90 p p 41-42.  Petitioners' footnoted claim that under  McElroy Electronics Corp. v. FCC, 990 F.2d 1351 (D.C. Cir.  1993), a footnote will not suffice, is incorrect.  There we held  that an ambiguous footnote in a Commission order failed to  provide adequate notice, id. at 1361-62, but here the footnote,  though small, is not obscure.

24
*  *  *

25
The Commission makes no claim that Iowa Utilities Bd.  bars petitioners' attack on its conclusion that          51.703(b)  prohibits charges for facilities as well as traffic.  We review  the Commission's reading of its regulation under highly deferential standards, and would reverse only a clear misinterpretation.  See, e.g., National Medical Enterprises, Inc. v.  Shalala, 43 F.3d 691, 697 (D.C. Cir. 1995).

26
Petitioners argue that the Commission's inclusive reading  is unreasonable and "contrary to the plain language of the  FCC's regulation."  See Petitioners' Br. at 43.  We see no  barrier in the plain language.  As to reasonableness, the  Commission's explanation seems compelling;  its interpretation prevents LECs from "re-designating the 'traffic' charges  as 'facilities' charges."  Order, 15 F.C.C.R. at 11,181 p 25. The opposite reading would create an apparently artificial  distinction, giving LECs an incentive to game the system by  providing dedicated facilities at the paging providers' expense  in cases where they could conveniently carry the traffic at  their own expense.

27
Petitioners suggest that 47 CFR          51.709(b) contradicts  the Commission's ruling.  That section provides:

28
The rate of a carrier providing transmission facilities dedicated to the transmission of traffic between two carriers' networks shall recover only the costs of the proportion of that trunk capacity used by an interconnecting carrier to send traffic that will terminate on the providing carrier's network.  Such proportions may be measured during peak periods.

29
That the regulation mentions facilities, while          51.703(b) does  not, is surely not enough to establish the principle that when  the Commission wants to target charges for facilities, it must  do so explicitly.  Moreover, as we do not understand the  LECs to claim that the traffic in question "terminate[s] on  the providing carrier's network," we do not see how the  regulation assists them.  The Commission reads          51.709(b)  as entirely congruent with          51.703(b), confirming the ban on  charges, whether labeled as for traffic or for facilities, for  LEC-originated local calls.  See Order, 15 F.C.C.R. at  11,181-82 p 26.  The present case does not call on us to pass  on the Commission's reading of          51.709(b), but we can say  that the provision does not seem to pose the contradiction  claimed by petitioners.

30
Finally, the petitioners say they reasonably fear that the  paging carriers will use the Commission's interpretation to  demand unnecessary and expensive facilities.  But they have  not by any means established that such "gold-plating" is  likely.  There are three uses of facilities--so far as appears  not uncommon--for which the paging carriers themselves  must pay:  (1) for "transiting traffic"--"traffic that originates  from a carrier other than the interconnecting LEC but  nonetheless is carried over the LEC network to the paging  carrier's network," Order, 15 F.C.C.R. at 11,177 n.70;  (2) for  connecting parts of a paging carrier's own network, such as  those linking a paging terminal with its antennas, id.;  and (3)  for delivering traffic that originates or terminates outside the  Major Trading Area (essentially the local calling area), id. at  11,184 n.102.  As a result of these three facility uses, paging  services that insisted on gold-plating would run up their own costs.  Further, the Commission observes that LECs can ask  the Commission for a waiver of          51.703.  Commission Br. at  45 n.92.  The suggestion seems to reflect a view that paging  carriers' efforts at gold-plating would be unreasonable, and  thus that the Commission would afford relief on a proper  record.  We cannot assume the contrary.  In the absence of  gold-plating, the Commission's order simply requires the  LECs to look to their own customers to recoup the needed  costs of their facilities.

The LECs' petitions are

31
Denied.

Notes:

1
  Section 332(c)(1)(B) provides:  "Upon reasonable request of  any person providing commercial mobile service, the Commission  shall order a common carrier to establish physical connections with  such service pursuant to the provisions of section 201 of this title. Except to the extent that the Commission is required to respond to  such a request, this subparagraph shall not be construed as a  limitation or expansion of the Commission's authority to order  interconnection pursuant to this chapter."