Allnet Communication Service, Inc. v. National Exchange Carrier Ass'n, Inc., 90-5343

• Decision Date: 09 June 1992
• Docket Number: No. 90-5343,90-5343
• Citation: 296 U.S.App.D.C. 156,965 F.2d 1118
• Parties: ALLNET COMMUNICATION SERVICE, INC., Appellant v. NATIONAL EXCHANGE CARRIER ASSOCIATION, INC., a Delaware Corporation, Appellee.
• Court: U.S. Court of Appeals — District of Columbia Circuit

Page 1118

965 F.2d 1118

296 U.S.App.D.C. 156

ALLNET COMMUNICATION SERVICE, INC., Appellant v. NATIONAL EXCHANGE CARRIER ASSOCIATION, INC., a Delaware

Corporation, Appellee.

No. 90-5343.

United States Court of Appeals, District of Columbia Circuit.

Argued Feb. 19, 1992.

Decided June 9, 1992.

William Malone, Washington, D.C., with whom Roy L. Morris, Cambridge, Ohio, was on the brief, for appellant.

Timothy W. Bergin, with whom James P. Murphy, Kenneth A. Levy and Richard A. Ashoff, Washington, D.C., were on the brief, for appellee. Herbert E. Marks, also entered an appearance for appellee.

Before: WALD, WILLIAMS and D.H. GINSBURG, Circuit Judges.

Opinion for the Court filed by Circuit Judge STEPHEN F. WILLIAMS.

STEPHEN F. WILLIAMS, Circuit Judge:

Allnet Communication Services sued the National Exchange Carrier Association ("NECA"), seeking a declaratory judgment that it was not liable for certain access charges. The district court dismissed the suit, holding that it lacked subject matter jurisdiction and that Allnet had failed to state a claim for relief. 741 F.Supp. 983. We reject the district court's reasoning but affirm on the alternative ground that the Federal Communications Commission has primary jurisdiction over the dispute.

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NECA is a nonprofit, non-stock membership corporation that was formed pursuant to FCC orders following the break-up of AT & T to perform certain services on behalf of over 1200 local telephone companies (local exchange carriers or "LECs"). See generally 47 CFR §§ 69.601-69.612 (1991) (describing NECA and its functions). Specifically, NECA prepares and files joint tariffs on behalf of its members for access charges they collect from end-users and long-distance telephone companies--interexchange carriers such as plaintiff Allnet--for the use of wires and other equipment needed for making interstate long-distance calls.

The access charge includes funds collected for the Lifeline Assistance program and Universal Service Fund (hereafter simply the "Universal Service Fund"), programs to help low-income households pay for telephone service and to enable local telephone companies with high costs to provide affordable service. Cf. Market Structure (Phase I) Order, 93 FCC 2d 241, 281-82 (1983). NECA administers the Universal Service Fund, collecting the charges from interexchange carriers and distributing the revenues among the local exchange carriers. See 47 CFR §§ 69.116-69.117. Beginning April 1, 1989, the Universal Service Fund tariff was unbundled from the general access tariff in order to place the cost burden differently from that for access generally. See In the Matter of Amendment of Part 69 of the Commission's Rules Relating to the Assessment of Charges for the Universal Service Fund and Lifeline Assistance, 4 FCC Rcd. 6134, p 5 (1989).

This dispute concerns NECA's bill to Allnet for Universal Service Fund charges accrued during the four-month period starting April 1, 1989. When NECA attempted to collect the charges, Allnet refused to pay, and NECA eventually threatened to use its "self-help" remedy--notifying the LECs of Allnet's refusal to pay so that they would cut off Allnet's access to interexchange services. Allnet, in turn, filed a complaint in the district court for a declaration of non-liability, invoking the Declaratory Judgment Act, 28 U.S.C. § 2201, and asserting both diversity and federal question jurisdiction, 28 U.S.C. §§ 1331, 1332 & 1337. Allnet alleged that it was not liable for the charges because they had not been published as valid common carrier tariffs as required by § 203 of the Communications Act, 47 U.S.C. § 203.

Allnet also moved for an order temporarily restraining NECA from notifying its members of Allnet's non-payment. NECA agreed to refrain from such notice and moved to dismiss the declaratory suit, claiming that the district court lacked subject matter jurisdiction and, alternatively, that the FCC had primary jurisdiction. The district court dismissed, concluding that as § 203 prescribes tariffs only for "common carriers", and NECA is not itself a common carrier, it could not have violated § 203. Accordingly, the court said, Allnet had no federal cause of action. Allnet Communication Services, Inc. v. NECA, 741 F.Supp. 983, 984-85 (D.D.C.1990). The court expressed no opinion on primary jurisdiction.

Allnet filed this appeal. Since then, NECA has filed a petition with the Commission for a declaratory ruling on whether Allnet was liable to it for the disputed charges. Allnet moved to dismiss, but the Commission has yet to act on the motion or on NECA's petition.

* * *

There was, in fact, no want of subject matter jurisdiction in the conventional sense. Diversity jurisdiction under 28 U.S.C. § 1332 is not disputed--the parties were incorporated in different states and their principal places of business were in different states; the amount in controversy was over $900,000, well above the $50,000 minimum.

Further, the question of whether § 203 covers NECA is more complicated than the district court opinion suggests. Technically the court was correct that § 203 applies only to common carriers and that NECA is not one. But NECA was an entity specially created to collect charges on behalf of common carriers. Moreover, as shown below, the Commission appears to have assumed that NECA was subject to its tariff regulations. Unless that view violated the clear intent of Congress or was otherwise an unreasonable construction of § 203, we would defer to it. Chevron U.S.A. Inc. v. NRDC, 467 U.S. 837, 842-43, 104 S.Ct. 2778, 2781, 81 L.Ed.2d 694 (1984).

Nonetheless, we affirm the dismissal of the suit on the ground that the Commission has primary jurisdiction, i.e., that it is best suited to make the initial decision on the issues in dispute, even though the district court had subject matter jurisdiction. The primary jurisdiction doctrine rests both on a concern for uniform outcomes (which may be defeated if disparate courts resolve regulatory issues inconsistently), Texas & Pacific Ry. v. Abilene Cotton Oil Co., 204 U.S. 426, 441, 27 S.Ct. 350, 51 L.Ed. 553 (1907); see also Peter L. Strauss, One Hundred Fifty Cases Per Year: Some Implications of the Supreme Court's Limited Resources for Judicial Review of Agency Action, 87 Colum.L.Rev. 1093, 1121 (1987) (suggesting uniformity rationale for Chevron doctrine), and on the advantages of allowing an agency to apply its expert judgment, United States v. Western Pacific R.R., 352 U.S. 59, 64, 77 S.Ct. 161, 165, 1 L.Ed.2d 126 (1956). Expertise, of course, is not merely technical but extends to the policy judgments needed to implement an agency's mandate. See id. at 65, 77 S.Ct. at 166; Chevron, 467 U.S. at 864-66, 104 S.Ct. at 2792-93.

Given the concern for uniformity and expert judgment, it is hardly surprising that courts have frequently invoked primary jurisdiction in cases involving tariff interpretations--an issue closely related to the central issues here, compliance of a tariff with regulatory standards and the consequences of imperfect compliance. For example, in Western Pacific, three railroads sued the United States on the ground that certain shipments of napalm gel should have been charged at the tariff rate for "incendiary bombs" rather than the lower rate claimed by the government. The Court held that the case was within the primary jurisdiction of the Interstate Commerce Commission, since the construction of the tariff involved technical and transportation policy questions. See 352 U.S. at 65-70, 77 S.Ct. at 166-68.

Similarly, judicial resolution of Allnet's claims here would preempt the Commission from implementing what amount to policy decisions about the Universal Service Fund programs and technical questions on the adequacy of filed tariffs. The crux of Allnet's claim is that NECA's bills for the disputed charges were based on defective tariffs, so that the filed rate doctrine precludes liability. Cf. Maislin Industries v. Primary Steel, Inc., 497 U.S. 116, 110 S.Ct. 2759, 111 L.Ed.2d 94 (1990). Indeed, Allnet cites a letter the Commission staff sent to NECA, noting apparent non-compliance with FCC rules, specifically the NECA tariffs' failure to include provisions to implement collection, such as by informing LECs of nonpayment. Letter from John Cimko, FCC Common Carrier Bureau (June 14, 1989), Joint Appendix ("J.A.") at 1. An attachment to the letter provided sample corrective tariff language, which also included phrases explaining that NECA was collecting Universal Service Fund charges "on behalf of" the LECs. J.A. at 4-5. In response to the letter, NECA filed tariff amendments that went into effect August 1, 1989.

Allnet contends that as the FCC staff letter directed NECA to revise its tariff and add new language, there is no remaining issue on which the Commission need be heard. Reply Brief at 12-14. But the staff letter's identification of technical errors in the tariffs, and its suggestion of remedial language, are far from a Commission determination of the errors' seriousness or, more importantly, their consequence. In no way does it establish that these errors relieved the interexchange carriers of liability for the charges or that NECA could not collect them through self-help if necessary. In fact, in a July 21, 1989 order the Commission implied that NECA's Universal Service Fund tariff was "in effect" at that date, i.e., before the staff-inspired amendments took effect. See In the Matter of Amendment of Part 69, 4 FCC Rcd. at 6134, p 2. But the order does not address the staff letter's implications that the tariffs were not in compliance, so there is some possibility that the Commission might ultimately find a violation that justified disallowing collection.

The Commission is clearly in a better position than we are to resolve any potential conflict between the staff letter and the July 21 order, to determine the consequences of any violation of its...