Bell Atlantic Corp. v. MFS Communications Co., Inc.

• Decision Date: 19 September 1995
• Docket Number: Civ. A. No. 95-67 MMS.
• Citation: 901 F. Supp. 835
• Parties: BELL ATLANTIC CORPORATION, a Delaware corporation, et al., Plaintiffs, v. MFS COMMUNICATIONS CO., INC., a Delaware corporation, et al., Defendants.
• Court: U.S. District Court — District of Delaware

901 F. Supp. 835

BELL ATLANTIC CORPORATION, a Delaware corporation, et al., Plaintiffs, v. MFS COMMUNICATIONS CO., INC., a Delaware corporation, et al., Defendants.

Civ. A. No. 95-67 MMS.

United States District Court, D. Delaware.

September 19, 1995.

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Thomas P. Preston, and William E. Manning, Duane, Morris & Heckscher, Wilmington, Delaware (Dan K. Webb, Jerome W. Pope, and Thomas R. Bearrows, Winston & Strawn, Chicago, Illinois; Mark L. Evans, Kellogg, Huber, Hansen, Todd & Evans, Washington, DC; James R. Young, John Thorne, and Robert H. Griffen, Bell Atlantic Corporation, Arlington, Virginia; Joshua W. Martin III, Bell Atlantic-Delaware, Inc., Wilmington, Delaware; of counsel), for plaintiffs.

Victor F. Battaglia, Sr., and Robert K. Beste, Jr., Biggs & Battaglia, Wilmington, Delaware (David J. Boise, and Jeffrey L. Friesen, Cravath, Swaine & Moore, New York City; Terrence J. Ferguson, MFS Communications Co., Inc., Omaha, Nebraska; Swidler & Berlin, Chtd., Washington, DC, of counsel), for defendants.

MURRAY M. SCHWARTZ, Senior District Judge.

Plaintiffs Bell Atlantic Corporation and its subsidiary businesses (collectively "Bell Atlantic") have brought this action against defendants MFS Communications Company, Incorporated, and its subsidiary businesses (collectively "MFS") pursuant to the Declaratory Judgment Act, 28 U.S.C. § 2201, and § 203(a) of the Communications Act, 47 U.S.C. § 201 et seq. See Docket Item ("D.I.") 33 (Amended Complaint). In Counts I and II, Bell Atlantic seeks a declaration that MFS cannot state a cause of action against Bell Atlantic based on allegations of anti-competitive conduct and that Bell Atlantic has violated neither state nor federal anti-trust laws; in Count III, Bell Atlantic seeks injunctive and monetary relief for defendants' alleged violations of 47 U.S.C. § 203(a). Defendants have moved pursuant to Federal Rule of Civil Procedure 12(b)(1) to dismiss all counts of plaintiffs' amended complaint for lack of subject matter jurisdiction. See D.I. 9.

The defendants' motion treats Counts I & II of plaintiffs' amended complaint jointly and raises three issues: i) whether the court has jurisdiction to hear these counts under 28 U.S.C. § 1331, the "federal question" statute; ii) if so, whether these counts are justiciable under Article III of the United States Constitution; and, iii) if so, whether the Court should use the discretion granted under the Declaratory Judgment Act, 28 U.S.C. § 2201, to nevertheless dismiss these counts. The motion raises two issues with respect to Count III: i) whether 47 U.S.C. § 207 prevents the Court from assuming subject matter jurisdiction; and, ii) if not, whether the Court should dismiss or transfer Count III under the doctrine of primary jurisdiction. The Court has limited power to determine whether subject matter jurisdiction exists to hear plaintiffs' complaint. Shannon v. Shannon, 965 F.2d 542, 545 (7th Cir.), cert. denied sub nom. Shannon v. United Serv. Auto. Ass'n, ___ U.S. ___, 113 S.Ct. 677, 121 L.Ed.2d 599 (1992). For the reasons that follow, the Court will dismiss Counts I and II as non-justiciable under Article III of the United States Constitution, as well as pursuant to the Court's discretionary authority to dismiss declaratory judgment actions under 28 U.S.C. § 2201. The Court will also dismiss Count III for lack of subject matter jurisdiction under 47 U.S.C. § 207.

I. BACKGROUND

Bell Atlantic and MFS compete in the provision of telephone access services for various government and business customers in Delaware, Maryland, New Jersey, Pennsylvania, Virginia, West Virginia, and the District of Columbia. D.I. 33 at ¶ 2. MFS provides telephone access services to its customers in part by purchasing access to Bell Atlantic's networks and connecting MFS's networks to Bell Atlantic's. Id. at ¶¶ 3, 38. Telephone access services connect customers to long distance carriers, other telephone customers, and to other telephone exchanges. Id. at ¶¶ 2, 38; D.I. 10 at 3.

Competition in this emerging market is fierce; Bell Atlantic and MFS have battled for market share not only in front of customers, but also in the media, the courts, and before the FCC. See, e.g., D.I. 11, Exh. B (Bell Atlantic Complaint before the FCC, No. E-93-017, filed Nov. 17, 1992); Doug Abrams, Rival Says Area Bell Is a "Bully", Wash. Times. at B9 (Feb. 16, 1995); Michael Dresser, FCC Is Asked to Open Local Phone Networks, Balt. Sun. at 9C (March 8, 1995); D.I. 11, Exh. D (Leslie Cauley, Bell Atlantic Seeks Court Blessing in Bid To Quiet Critic MFS, Wall St. J., Feb. 9, 1995 at B6); D.I. 27 at B-78 (Comments Of MFS Communications Company, Inc. On Bell Atlantic's Request For An Expedited Waiver As It Relates To Out-Of-Region InterLATA Services). In this war of words to maintain and grow their respective spheres of business, MFS has made several public statements that Bell Atlantic believes are direct accusations of anti-competitive conduct within the purview of § 2 of the Sherman Act. For example, Bell Atlantic cites a letter from MFS's President and CEO, Royce Holland, addressed to Delano E. Lewis, President and CEO of a Bell Atlantic subsidiary Chesapeake & Potomac Telephone Company ("C & P"). In this letter, Mr. Holland describes connective access sold by C & P to MFS as an "essential facility," discusses what MFS perceived as the "anti-competitive nature" of C & P's pricing, and concludes that "C & P's most recently proposed spectacular increase in rates is tantamount to denying ICC use of the facilities, and lends credence to the increasingly inescapable conclusion that C & P is refusing to deal on reasonable terms and conditions with a competitor." See D.I. 27 at B-1, B-3. Bell Atlantic also cites other examples of what it considers to be MFS's accusations of anti-competitive conduct, including an ex parte submission by MFS to the FCC that discusses local exchange access pricing by the seven regional Bell operating companies and GTE, id. at B-5; a letter from Royce Holland to the FCC that requests sanctions against Bell Atlantic, id. at B-70; and comments submitted by MFS on a Bell Atlantic request for an out-of-region InterLATA services waiver, id. at B-78.

Bell Atlantic believes that these and other statements are prefatory to a private anti-trust enforcement action by MFS, thereby placing Bell Atlantic in a position of great uncertainty as to whether its actions comport with the mandates of federal and state anti-trust laws. MFS responds that it has never threatened or proposed an antitrust action against Bell Atlantic and that Bell Atlantic has not pointed to, and cannot point to, any such evidence. D.I. 10 at 4 (citing Bell Atlantic's Amended Complaint (D.I. 33) at ¶¶ 50, 56).

II. ANALYSIS

The Declaratory Judgment Act, 28 U.S.C. § 2201(a), provides statutory authority for the federal courts to make prospective declarations regarding "the rights and other legal relations of any interested party seeking such declaration."¹ The Act "does not attempt to change the essential requisites for the exercise of judicial power," Public Serv. Comm'n v. Wycoff Co., 344 U.S. 237, 242, 73 S.Ct. 236, 239, 97 L.Ed. 291 (1952) (quoting Ashwander v. Tennessee Valley Auth., 297 U.S. 288, 325, 56 S.Ct. 466, 473, 80 L.Ed. 688 (1936)), and, therefore, a court must possess both statutory authority and constitutional power in order to have jurisdiction to hear a declaratory plaintiff's complaint, Skelly Oil Co. v. Phillips Petroleum Co., 339 U.S. 667, 671, 70 S.Ct. 876, 878, 94 L.Ed. 1194 (1950). Declaratory plaintiffs consequently face the same jurisdictional hurdles as plaintiffs that bring more traditional causes of action.

A. Statutory Authority — 28 U.S.C. § 1331

Bell Atlantic alleges that the Court has statutory power to hear its action pursuant to 28 U.S.C. § 1331. D.I. 33 at ¶ 34. Section 1331 gives the Court authority to hear "all civil actions arising under the Constitution, laws, or treaties of the United States," provided the face of the complaint demonstrates that the plaintiff relies on federal law to gain her desired relief, Franchise Tax Bd. v. Construction Laborers Vacation Trust, 463 U.S. 1, 10 n. 9, 103 S.Ct. 2841, 2846 n. 9, 77 L.Ed.2d 420 (1983). When a party brings an action under the Declaratory Judgment Act, the complaint will arise under federal law for purposes of § 1331 if the declaratory action's correlative coercive suit, i.e. the coercive suit that the declaratory defendant could have filed, would present a federal claim as part of its well-pleaded complaint. See, e.g., id. at 16 n. 14, 103 S.Ct. at 2849 n. 14.

Bell Atlantic's complaint seeks a declaration that Bell Atlantic does not violate "federal or state antitrust law." D.I. 33 at ¶¶ 1, 50 (Count I Prayer for Relief), 56 (Count II Prayer for Relief). Solely citing the Third Circuit Court of Appeals decision in La Chemise Lacoste v. Alligator Co., 506 F.2d 339 (3d Cir.1974), cert. denied, 421 U.S. 937, 95 S.Ct. 1666, 44 L.Ed.2d 94 (1975), MFS asserts that the Court does not have statutory authority to hear a complaint styled in this manner because to have original federal jurisdiction, a declaratory action cannot assert alternative state and federal causes of action. See D.I. 10 at 20 ("The law in the Third Circuit is unambiguous. When the `anticipated lawsuit' in a federal Declaratory Judgment action might be based on either federal or state law, the character of the threatened action is not necessarily federal, and therefore no federal question jurisdiction exists."); see generally id. at 18-21; D.I. 31 at 12-14.

In La Chemise Lacoste, the plaintiff brought a declaratory judgment action in the Delaware Court of Chancery, stating in its complaint that:

defendant has heretofore wrongfully threatened, and continues to threaten, to interfere with plaintiff's said sale of toiletries identified by said crocodile emblem in Delaware, and

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