Autotel v. Nev. Bell Tel. Co.

• Decision Date: 04 September 2012
• Docket Number: No. 10–15663.,10–15663.
• Citation: 697 F.3d 846
• Court: U.S. Court of Appeals — Ninth Circuit
• Parties: AUTOTEL, a Nevada corporation, Plaintiff–Appellant, v. NEVADA BELL TELEPHONE COMPANY, d/b/a AT & T of Nevada, FKA SBC, Defendant–Appellee.

697 F.3d 846

2012 Daily Journal D.A.R. 12,458

56 Communications Reg. (P&F) 1174

AUTOTEL, a Nevada corporation, Plaintiff–Appellant,

v.NEVADA BELL TELEPHONE COMPANY, d/b/a AT & T of Nevada, FKA SBC, Defendant–Appellee.

No. 10–15663.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted Aug. 29, 2011.

Filed Sept. 4, 2012.

Marianne Dugan, Eugene, OR, for the plaintiff-appellant.

Roger A. Moffitt, AT & T Nevada, Reno, NV; Dennis G. Friedman (argued) and James C. Schroeder, Mayer Brown LLP, Chicago, IL, for the defendant-appellee.

Appeal from the United States District Court for the District of Nevada, Edward C. Reed, Senior District Judge, Presiding. D.C. No. 2:07–cv–01423–ECR–GWF.

Before: RAYMOND C. FISHER and JOHNNIE B. RAWLINSON, Circuit Judges, and OTIS D. WRIGHT, II, District Judge.^*

OPINION

FISHER, Circuit Judge:

This case arises out of a dispute between two telecommunications carriers. Plaintiff–Appellant Autotel is a Commercial Mobile Radio Service (CMRS) provider wishing to provide wireless service in and around Pahrump, Nevada. It seeks digital interconnection with the facilities and equipment of Defendant–Appellee Nevada Bell Telephone Co. (AT & T Nevada), the incumbent local exchange carrier (LEC) in the area. After the parties' efforts to negotiate an interconnection agreement failed, Autotel brought suit in federal court, alleging that AT & T Nevada violated the Telecommunications Act of 1996 by (1) refusing to negotiate in good faith; and (2) failing to provide digital interconnection with symmetrical pricing on an interim basis during negotiations, as required by Federal Communications Commission (FCC) regulations.

The district court dismissed Autotel's first cause of action and granted summary judgment to AT & T Nevada on Autotel's second cause of action. Autotel appealed. We have jurisdiction pursuant to 28 U.S.C. § 1291, and we affirm.

We hold that the district court properly dismissed Autotel's good faith claim because Autotel did not exhaust its administrative remedies under our circuit's prudential exhaustion requirement. Instead, Autotel appeals from the state public utilities commission's summary dismissal of its complaint as procedurally deficient without addressing its merits. With respect to Autotel's second cause of action, we hold that the interim arrangement and symmetrical pricing requirements described in 47 C.F.R. §§ 51.715 and 20.11(e) apply only when the competing carrier does not have an existing interconnection arrangement with the incumbent LEC that provides for the transport and termination of telecommunications traffic. Because Autotel had such an arrangement with AT & T Nevada at all relevant times, AT & T Nevada had no obligation to provide Autotel an interim arrangement with symmetrical rates.

We remand, however, to permit the district court to consider what, if any, relief is available to Autotel under 47 C.F.R. § 51.717.

Background

The Telecommunications Act of 1996 (“the 1996 Act”), Pub. L. No. 104–104, 110 Stat. 56 (1996), “introduced a competitive regime for local telecommunications services[,]” W. Radio Servs. Co. v. Qwest Corp. ( Western Radio I ), 530 F.3d 1186, 1190 (9th Cir.2008). Before its passage, a single company within each local area typically provided local telephone service pursuant to a state-sanctioned monopoly. See Verizon California, Inc. v. Peevey, 462 F.3d 1142, 1146 (9th Cir.2006). To encourage competition, the 1996 Act imposed on incumbent LECs, such as AT & T Nevada, the duty to provide interconnection to competing telecommunications carriers, such as Autotel. See47 U.S.C. § 251(c)(2). Interconnection is the “physical act of linking one network to another through facilities and equipment.” W. Radio Servs. Co. v. Qwest Corp. ( Western Radio II ), 678 F.3d 970, 986 (9th Cir.2012) (emphasis, citations and internal quotations marks omitted). It “allows customers of one LEC to call the customers of another, with the calling party's LEC (the ‘originating’ carrier) transporting the call to the connection point, where the called party's LEC (the ‘terminating’ carrier) takes over and transports the call to its end point.” Verizon California, 462 F.3d at 1146.

The 1996 Act adopted several substantive requirements relating to the quality and nature of the interconnection. For example, an incumbent LEC must provide interconnection “at any technically feasible point within [its] network” that is “at least equal in quality to that provided by the local exchange carrier to itself.” 47 U.S.C. § 251(c)(2)(B), (C). In addition, interconnecting carriers must “establish reciprocal compensation arrangements for the transport and termination of telecommunications.” 47 U.S.C. § 251(b)(5). “Under a reciprocal compensation arrangement, the originating LEC must compensate the terminating LEC for delivering its customer's call to the end point.” Verizon California, 462 F.3d at 1146.¹

If a carrier requests interconnection, both parties have a “duty to negotiate in good faith ... the particular terms and conditions of” an interconnection agreement. 47 U.S.C. § 251(c)(1). The 1996 Act sets forth a procedural framework for these negotiations. An incumbent LEC and a requesting carrier may negotiate a voluntary agreement, and either party may ask a state public utilities commission (PUC) to “mediate any differences arising in the course of the negotiation.” 47 U.S.C. § 252(a). If the parties fail to reach a complete agreement through voluntary negotiations or mediation, either party may petition the state PUC to resolve the open issues through compulsory arbitration. See47 U.S.C. § 252(b).

Autotel first interconnected with AT & T Nevada's network in 1994 through five analog loops connecting to the AT & T Nevada switch in Pahrump, Nevada. AT & T Nevada charged Autotel a flat monthly fee pursuant to AT & T Nevada's standard retail tariff for such lines.

In August 1996, Autotel requested digital interconnection with AT & T Nevada's network pursuant to §§ 251 and 252 of the 1996 Act. Voluntary negotiations were unsuccessful, and in August 2002, Autotel filed a petition with the Public Utilities Commission of Nevada (PUCN) seeking arbitration of an interconnection agreement. After nearly two years, the PUCN dismissed Autotel's petition. It found that Autotel had failed to comply with the PUCN's discovery procedures and orders, and thus had violated its duty to negotiate in good faith. See47 U.S.C. § 252(b)(5).

In March 2005, the FCC promulgated new rules prohibiting LECs from charging CMRS providers tariff-based rates for transport and termination of local traffic. SeeIntercarrier Compensation, 70 Fed. Reg. 16,141 (Mar. 30, 2005); 47 C.F.R. § 20.11(d) (2005). The FCC explained that as of April 29, 2005, the effective date of the new rules, “any existing wireless termination tariffs shall no longer apply” and “[a]fter that date, in the absence of a request for an interconnection agreement, no compensation will be owed for termination of [local] traffic.” Intercarrier Compensation, 70 Fed. Reg. at 16,141. The new rule authorized incumbent LECs to initiate negotiation of interconnection agreements under the 1996 Act, see47 C.F.R. § 20.11(e), and in November 2005, AT & T Nevada took advantage of this provision and requested an interconnection agreement with Autotel, presumably in an effort to secure a new compensation arrangement. The parties still could not agree. Autotel alleges that AT & T Nevada refused to provide Autotel with the same digital interconnection that it used in its own network unless Autotel accepted AT & T Nevada's standard terms and conditions, which were unacceptable to Autotel.

On August 8, 2006, Richard Oberdorfer, Autotel's president and sole shareholder, filed a complaint with the PUCN on behalf of Autotel alleging that AT & T Nevada refused to negotiate in good faith, and asking the PUCN to order AT & T Nevada to provide digital interconnection on Autotel's terms. The PUCN rejected the complaint without prejudice for failure to comply with the Commission's procedural requirements for telecommunications complaints. It did not address the merits. Oberdorfer refiled the complaint a few days later. The PUCN again summarily rejected the complaint as procedurally deficient. Rather than correct and refile the complaint with the PUCN, Autotel filed suit in federal district court under 47 U.S.C. § 207.²

Autotel asserted three claims before the district court. Only two remain on appeal. We consider each claim in turn.

Discussion

I. Standard of Review

We review de novo the district court's order granting a motion to dismiss under Rule 12(b)(6). See Western Radio II, 678 F.3d at 975–76. We “ ‘generally consider only allegations contained in the pleadings, exhibits attached to the complaint, and matters properly subject to judicial notice.’ ” Id. at 976 (quoting Manzarek v. St. Paul Fire & Marine Ins. Co., 519 F.3d 1025, 1030–31 (9th Cir.2008)). We accept as true all well-pleaded factual allegations and construe them in the light most favorable to the plaintiff. See id.

We likewise review de novo a district court's grant of summary judgment. Verizon California, 462 F.3d at 1150. “We must determine, viewing the evidence in the light most favorable to ... the non-moving party, whether there are any genuine issues of material fact and whether the district court correctly applied the substantive law.” Olsen v. Idaho State Bd. of Med., 363 F.3d 916, 922 (9th Cir.2004).

II. Failure to Negotiate in Good Faith

Autotel claims that AT & T Nevada violated 47 U.S.C. §§ 251(c) and 252(a) by failing to negotiate in good faith “to provide interconnection that comports with the [1996 Act].” We hold that the district court properly dismissed this claim because Autotel did not exhaust its administrative remedies.

In Western Radio I, 530 F.3d at 1196, we held that “prudential concerns require that [the plaintiff] present its good faith claim to the PUC before...