Folden v. U.S.

• Decision Date: 16 August 2004
• Docket Number: No. 03-5124.,03-5124.
• Citation: 379 F.3d 1344
• Parties: Gene A. FOLDEN, Coastal Communications Associates, and Judith A. Longshore, Plaintiffs-Appellants, v. UNITED STATES, Defendant-Appellee.
• Court: U.S. Court of Appeals — Federal Circuit

379 F.3d 1344

Gene A. FOLDEN, Coastal Communications Associates, and Judith A. Longshore, Plaintiffs-Appellants, v. UNITED STATES, Defendant-Appellee.

No. 03-5124.

United States Court of Appeals, Federal Circuit.

August 16, 2004.

Appeal from the United States Court of Federal Claims, Marian Blank Horn, Senior Judge.

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Talbot D'Alemberte, of Tallahassee, FL, argued for plaintiffs-appellants. On the brief was Russell D. Lukas, Lukas, Nace, Gutierrez & Sachs, Chartered, of Washington, DC.

Patricia M. McCarthy, Assistant Director, Commercial Litigation Branch, Civil Division, United States Department of Justice, of Washington, DC, argued for defendant-appellee. With her on the brief were Peter D. Keisler, Assistant Attorney General; and David M. Cohen, Director. Of counsel on the brief were Susan L. Launer and Roberta L. Cook, Attorneys, Federal Communications Commission, of Washington, DC.

Before SCHALL, GAJARSA, and PROST, Circuit Judges.

SCHALL, Circuit Judge.

Gene A. Folden, Coastal Communications Associates ("Coastal"), and Judith A. Longshore (collectively, "plaintiffs") appeal the decision of the United States Court of Federal Claims (i) granting the United States' motion to dismiss for failure to state a claim upon which relief could be granted, and (ii) granting the United States' motion to dismiss for lack of subject-matter jurisdiction. Folden v. United States, 56 Fed.Cl. 43 (2003). On the first point, the court determined that plaintiffs failed to state a claim for breach of contract because they were unable to establish the existence of an implied-in-fact contract with the government arising from their filing of lottery applications for cellular communication licenses with the Federal Communications Commission (the "Commission"). Id. at 51-55. On the second point, the court determined that it lacked subject-matter jurisdiction over plaintiffs' claims because it concluded that decisions ancillary to the licensing power of the Commission fall within the exclusive jurisdiction of the United States Court of Appeals for the District of Columbia Circuit pursuant to 47 U.S.C. § 402(b). Id. at 55-60.

We agree with the Court of Federal Claims that plaintiffs' claims are covered by subsection 402(b), which places them within the exclusive jurisdiction of the D.C. Circuit. Accordingly, we affirm the court's dismissal for lack of subject-matter jurisdiction.

BACKGROUND

I.

We begin by setting forth the evolution of the regulatory regime by which the Commission issues telecommunications licenses, for it is essential to understanding plaintiffs' theory of recovery in the case. By statute, the Commission is charged with granting applications for licenses if it finds that "public interest, convenience, and necessity would be served by the granting thereof...." 47 U.S.C. § 309 (2000). To facilitate the allocation of cellular licenses, the Commission divided the United States into two geographic markets — metropolitan statistical areas (MSAs) and rural service areas (RSAs). Folden, 56 Fed.Cl. at 44. In each type of market, the Commission granted two competing licenses: one to a wireline operator, an established local telephone company, and the other ... to a nonwireline operator, any party other than an established local telephone company. Id. Plaintiffs are nonwireline operators in seven RSA markets. Id.

To award the first thirty MSA cellular licenses, the Commission employed comparative hearings.¹ See Certain Cellular Rural Service Area Applications, 14 F.C.C.R. 4619, 4619 (1999). In 1981, however, through an amendment to the Communications Act of 1934 (Communications Act), Congress authorized the Commission to allocate licenses by a system of random selection or lottery. See Omnibus Budget Reconciliation Act of 1981, Pub.L. No. 97-35, ch. 2, 1242, 95 Stat. 357, 736-37 (1981) (codified at 47 U.S.C. 309(i)). The House of Representatives conference report explained that [b]y the establishment of basic qualifications and the elimination of initial comparative hearings, the conferees intend that much of the present delay and expense can be eliminated with no adverse effect on the provision of services to the public. H.R. Conf. Rep. No. 97-208, at 897, reprinted in 1981 U.S.C.C.A.N. 1010, 1259. However, despite agreeing that a lottery would speed service to the public, the Commission declined to adopt a lottery process for allocating telecommunications licenses. Selection from Among Mutually Exclusive Competing Applications Using Random Selection or Lotteries Instead of Comparative Hearings, 89 F.C.C.2d 257, 258, 282-83 (1982) (explaining that although it was clear that Congress intended for the Commission to implement lotteries, various considerations led the Commission to conclude that "the public interest would best be served by declining to implement this statute").

In response, Congress passed a revised lottery statute, which imposed upon the Commission the mandatory requirement that lottery rules and procedures be adopted within 180 days. Communications Amendments Act of 1982, Pub.L. No. 97-259, § 115, 96 Stat. 1087, 1094-95 (1982) (codified at 47 U.S.C. § 309(i) as amended); H.R. Conf. Rep. 97-765, at 38, reprinted in 1982 U.S.C.C.A.N. 2261, 2282 ("1982 Conf. Rep."). Congress instructed that upon selecting a lottery winner, the Commission was to determine whether the winner was qualified pursuant to 47 U.S.C. §§ 308(b), 309(a) (2000).² 1982 Conf. Rep. at 39, reprinted in 1982 U.S.C.C.A.N. at 2283. If the initial winner was determined to be unqualified, the Commission was to conduct a subsequent lottery ... with the same applicant pool with each applicants selection probabilities recomputed as necessary.... Id.

In 1984, the Commission adopted rules for awarding cellular licenses by lottery. 47 C.F.R. 1.821-1.823, 22.33 (1984); see also Selection from Among Mutually Exclusive Competing Cellular Applications Using Random Selection or Lotteries Instead of Comparative Hearings, 98 F.C.C.2d 175, 175, app. B (1984) (explaining the amendments to the regulations providing for the use of lotteries for awarding cellular licenses). Pursuant to the regulations, the Commission was allowed to employ a random selection process, or lottery, to choose the "tentative selectee" from among mutually exclusive license applicants. 47 C.F.R. § 1.822(b). Once the tentative selectee was named, the lottery continued with each of the remaining applicants, with the Commission ranking them in the order in which they were selected as "alternative selectees." Id. The Commission would award the license to the tentative selectee only after determining that it was qualified. Id. If it were not, the Commission would name the next-ranked alternative selectee as the new tentative selectee and then evaluate its qualifications, repeating the process until the license was awarded. Id.

In 1988, the Commission amended the rules pertaining to lotteries. Under the amended regulations, after the tentative selectee was named, each remaining applicant was no longer to be randomly selected and ranked in order of selection. Rather, in accordance with the amended version of 47 C.F.R. § 1.823(a), the Chief of the Common Carrier Bureau and the Managing Director of the Commission were to determine, on a case-by-case basis, the number of remaining applicants to be selected, and thus ranked as alternative selectees, in each lottery. 47 C.F.R. § 1.823(a) (1989); Selection from Among Mutually Exclusive Competing Applications Using Random Selection or Lotteries in the Public Land Mobile and Domestic Cellular Radio Telecommunications Services, 4 F.C.C.R. 7294 (1988).

This was the state of the regulatory regime when plaintiffs filed their applications for cellular licenses in 1988.

II.

We now turn to the process by which plaintiffs applied for cellular licenses. On May 19, 1988, the Commission issued a list of the 428 RSAs for which lotteries would be held and identified the counties that comprised each RSA. Listing of Cellular Rural Service Areas With Component Parts, 53 Fed.Reg. 18,133 (Dep't Commerce May 10, 1988). Plaintiffs submitted applications to the Commission for cellular licenses in seven RSAs. Mr. Folden applied for a cellular license in the Florida 11-Monroe ("Fla.11") RSA on Nov. 4, 1988, and submitted a $200 filing fee. Folden, 56 Fed.Cl. at 45. Coastal submitted a $1400 filing fee with its applications for cellular licenses in the following seven RSAs: Fla. 11 (filed Nov. 4, 1988), North Dakota 3-Barnes ("N.D.3") (filed Sept. 9, 1988), Minnesota 11-Goodhue ("Minn.11") (filed Sept. 16, 1988), Texas 21-Chambers ("Tex.21") (filed Oct. 7, 1988), Arkansas 9-Polk ("Ark.9") (filed Oct. 28, 1988), Puerto Rico 5-Ceiba ("P.R.5") (filed Nov. 10 1988), and Pennsylvania 4-Bradford ("Pa.4") (filed Dec. 9, 1988). Id. Finally, Michael D. Longshore, the now deceased husband of Ms. Longshore, paid $800 in filing fees for his applications in the N.D. 3, Minn. 11, Tex. 21, and Pa. 4 RSAs. Id.

The Commission issued lottery notices naming plaintiffs among those whose applications had been accepted for filing and providing the date upon which each lottery would occur. The lottery notices explained that each application had been assigned a code number, and that one code number would be drawn for each RSA. Furthermore, each notice stated, "In the event that the application selected cannot be granted, another lottery will be held for that market and another application will be selected from the remaining applications."

Lotteries for the seven licenses were held on the following dates in 1989: April 13 (N.D.3), May 4 (Minn.11), June 14 (Tex.21), August 9 (Ark.9), August 23 (Fla.11), September 20 (P.R. 5), and November 8 (Pa.4). Am. Class Action Compl., ¶¶ 32-39. Only one applicant, the tentative selectee, was chosen in each lottery; none of the plaintiffs was chosen as a tentative selectee. Folden, 56 Fed.Cl. at 45. Competing applicants...