Ohio Bell Tel. Co., Inc. v. Global Naps Ohio, Inc.

• Decision Date: 31 March 2008
• Docket Number: No. 06-CV-549.,06-CV-549.
• Parties: The OHIO BELL TEL. CO., INC., Plaintiff, v. GLOBAL NAPS OHIO, INC., et al., Defendants.
• Court: U.S. District Court — Southern District of Ohio

540 F.Supp.2d 914

The OHIO BELL TEL. CO., INC., Plaintiff, v. GLOBAL NAPS OHIO, INC., et al., Defendants.

No. 06-CV-549.

United States District Court, S.D. Ohio, Eastern Division.

March 31, 2008.

COPYRIGHT MATERIAL OMITTED

Mark Stephen Stemm, Daniel R Conway, Porter Wright Morris & Arthur LLP, Columbus, OH, Christian F Binnig, Dennis G Friedman, Hans J Germann, J Tyson Covey, Theodore A Livingston, Jr., Mayer, Brown, Rowe & Maw, LLP, Chicago, IL, for Plaintiff.

Nelson Marlin Reid, Sarah Daggett Morrison, Sommer Lynn Sheely, Gerhardt A Gosnell, II, Bricker & Eckler, LLP, Chester Willcox & Saxbe LLP Attorneys and Counselors at Law, Columbus, OH, Eric Charles Osterberg, Joseph M Pastore, Benjamin Heyward Green, Joseph Peter Cervini, Dreier LLP, Stamford, CT, James R Scheltema, Jeffrey C Melick, Global Naps, Inc., Norwood, MA, for Defendants.

OPINION AND ORDER

ALGENON L. MARBLEY, District Judge.

I. INTRODUCTION

Plaintiff, The Ohio Bell Telephone Company, Inc. ("Ohio Bell"), filed a nine-count amended complaint against Defendants Global NAPs Ohio, Inc., Global NAPs, Inc., Global NAPs New Hampshire, Inc., Global NAPs Networks, Inc., Global NAPs Realty, Inc., and Ferrous Miner Holding, Ltd. (collectively, "Global"). Ohio Bell alleges that since at least February 2004, it has provided Global with certain telecommunications services and facilities, but that Global has refused to pay. The amended complaint therefore alleges violations of Ohio Bell's federal tariffs (counts I — III) and state tariffs (counts IV — V), breach of the parties' interconnection agreement ("ICA") (counts VI-VIII), and a claim for quantum meruit (count IX). Global has moved to dismiss the amended complaint pursuant to Federal Rules of Civil Procedure 12(b)(1) and 12(h)(3) for lack of subject matter jurisdiction. Global argues that because Ohio Bell did not first submit its breach-of-ICA claims to the Ohio Public Utility Commission ("PUCO"), this Court lacks jurisdiction to hear them. Global asserts this same jurisdictional defect as to Ohio Bell's federal-tariff claims, arguing that these are actually disguised breach-of-ICA claims. In the absence of a federal question properly before this Court, Global requests that the Court dismiss the action entirely.

For the reasons described below, the Court construes Global's motion as one brought under Rule 12(c) and GRANTS it as to Ohio Bell's breach-of-ICA claims, but DENIES the motion in all other respects. Ohio Bell may continue to litigate its federal and state-tariff claims and its common law claim in this Court.

II. BACKGROUND

A. The Telecommunications Act of 1996

The purpose of the Telecommunications Act of 1996, 47 U.S.C. §§ 251 et seq., is to promote competition in the telecommunications industry. Verizon Md., Inc. v. Pub. Serv. Comm'n of Md., 535 U.S. 635, 638, 122 S.Ct. 1753, 152 L.Ed.2d 871 (2002). Because entry into this market is often prohibitively expensive, the Act requires incumbent local exchange carriers ("ILECs"), such as Ohio Bell, to provide competing local exchange carriers ("CLECs") with access to their networks. 47 U.S.C. § 251(c)(2). According to the amended complaint, "[i]nterconnection between different carriers' networks allows the end-users of one carrier to make calls to and receive calls from the end-users of the interconnected carrier."

If a CLEC requests access to an ILEC's networks, the Act instructs the parties to enter into negotiations to establish an interconnection agreement (the aforementioned "ICA"). An ICA sets forth the terms, conditions, and pricing arrangements by which the communications traffic of the CLEC's customers will be transported over the ILEC's networks. 47 U.S.C. §§ 251(c)(2) & 252. Parties may establish an ICA through voluntary negotiation, mediation, or compulsory arbitration conducted by a state commission, such as PUCO. See id. at §§ 252(a) & (b). Once the parties have reached an agreement, the resulting ICA must be submitted to the state commission for approval. See id. at § 252(e). Generally speaking, a state commission may reject an ICA only if it finds that the agreement: (1) discriminates against a non-party telecommunications carrier; (2) is inconsistent with the public interest, convenience, and necessity; or (3) does not meet the requirements of § 251 or the regulations promulgated thereunder. See id. at 252(e)(2). Finally, "any party aggrieved by [a state commission] determination may bring an action in an appropriate [f]ederal district court to determine whether the agreement ... meets the requirements of §§ 251 and 252. Id. at § 252(e)(6).

B. Procedural History

Pursuant to §§ 251 and 252 of the Telecommunications Act, Ohio Bell and Global entered into negotiations to establish an ICA. They ultimately arbitrated certain unresolved issues before the PUCO and the PUCO subsequently approved the final agreement, which took effect in September 2002.

On June 30, 2006, Ohio Bell filed this lawsuit, alleging that Global has failed to pay for services — essentially the transportation and termination of various types of communications — rendered under the parties' ICA and Ohio Bell's state and federal tariffs. On December 19, 2006, Ohio Bell filed an amended complaint alleging the same claims, but adding affiliates of Global as defendants. Global answered the amended complaint on December 29, 2006, and now moves to dismiss Ohio Bell's claims for lack of subject matter jurisdiction.¹

III. STANDARD OF REVIEW

Federal courts are courts of limited subject matter jurisdiction. Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 377, 114 S.Ct. 1673, 128 L.Ed.2d 391 (1994). Federal Rule of Civil Procedure 12(h)(3) instructs that "[w]henever it appears by the suggestion of the parties or otherwise that the court lacks jurisdiction of the subject matter, the court shall dismiss the action. The party that invokes federal jurisdiction has the burden of establishing its existence." Moir v. Greater Cleveland Reg. Transit Auth., 895 F.2d 266, 269 (6th Cir.1990). A Rule 12(b)(1) motion to dismiss for lack of subject matter jurisdiction may attack the complaint on its face or may go beyond the complaint and challenge the factual existence of subject matter jurisdiction. Golden v. Gorno Bros., Inc., 410 F.3d 879, 881 (6th Cir. 2005).

IV. ANALYSIS

A. Ohio Bell's Breach-of-ICA Claims

The central question presented by Global's motion is this: Must Ohio Bell first litigate its breach-of-ICA claims before PUCO in order to seek review in this Court? The answer to this question depends on two things, including (1) whether the Telecommunications Act embodies an exhaustion-of-remedies requirement, and (2) if so, whether that requirement is a jurisdictional prerequisite to suit, or whether it is an affirmative defense that may be forfeited if not timely raised. Global points to the text of the Telecommunications Act as well as applicable case authority to support its position that Ohio Bell is required to seek a resolution from PUCO first, and that its failure to do so deprives this Court of jurisdiction. Ohio Bell disagrees, arguing that because the Court has subject matter jurisdiction over the federal-tariff claims, it may exercise supplemental jurisdiction over Ohio Bell's breach-of-ICA claims. In the alternative, Ohio Bell contends that even if the Act contains an exhaustion-of-remedies requirement, this requirement is not jurisdictional in nature, but is instead an affirmative defense that Global has waived.

1. Does the Act Require Administrative Exhaustion?

The exhaustion doctrine "serves the twin purposes of protecting administrative agency authority and promoting judicial efficiency." McCarthy v. Madigan, 503 U.S. 140, 145, 112 S.Ct. 1081, 117 L.Ed.2d 291 (1992). Where Congress has delegated certain responsibilities to an administrative agency, courts are obligated to refrain from stepping in until the agency has acted, especially "when the action under review involves exercise of the agency's discretionary power or ... app[lication] [of] its special expertise." Id. Deference to the agency's judgment, at least in the first instance, also conserves resources by possibly mooting the need for judicial intervention and, if not, by developing "a useful record for subsequent judicial consideration, especially in a complex or technical factual context." Id.

Congressional intent is the touchstone of the inquiry into whether a statute prescribes exhaustion of administrative remedies prior to filing suit. Id. at 144, 112 S.Ct. 1081. "Where Congress specifically mandates, exhaustion is required. But where Congress has not clearly required exhaustion, sound judicial discretion governs." Id.; Bangura v. Hansen, 434 F.3d 487, 494 (6th Cir.2006) (stating that whether the plaintiffs were required to exhaust their administrative remedies was a matter of judicial discretion because "no statute or administrative rule" required exhaustion).

Here, Global relies on § 252(e)(6) of the Act to support its argument that the Court lacks jurisdiction over Ohio Bell's breachof-ICA claims. That section provides, in relevant part:

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 and this section.

On its face, § 252(e)(6) does not "specifically mandate[]" exhaustion. McCarthy, 503 U.S. at 144, 112 S.Ct. 1081. Whether to construe the Act as prescribing an exhaustion requirement is therefore a matter for the Court's discretionary judgment. In this regard, the Court begins by analyzing the statutory text. As Global points out, § 252(e)(6) authorizes federal court actions challenging "determination[s]" of state commissions brought by "aggrieved" parties. Global contends that this language shows that Congress intended federal court interpretation...