Carlin Communication, Inc. v. Southern Bell Tel. & Tel. Co.

• Decision Date: 23 October 1986
• Docket Number: No. 85-5956,85-5956
• Citation: 802 F.2d 1352
• Parties: CARLIN COMMUNICATION, INC., etc., et al., Plaintiff-Appellant, v. SOUTHERN BELL TELEPHONE AND TELEGRAPH COMPANY, etc., et al., Defendants-Appellees.
• Court: U.S. Court of Appeals — Eleventh Circuit

Page 1352

802 F.2d 1352

55 USLW 2244

CARLIN COMMUNICATION, INC., etc., et al., Plaintiff-Appellant, v. SOUTHERN BELL TELEPHONE AND TELEGRAPH COMPANY, etc., et al.,

Defendants-Appellees.

No. 85-5956.

United States Court of Appeals,

Eleventh Circuit.

Oct. 23, 1986.

Myles J. Tralins, Miami, Fla., Abelman, Frayne, Rezac & Schwab, Norman S. Beier, New York City, for plaintiff-appellant.

Phillip Newcomm, Shutts & Bowen, M. Therese Vento, Maxine M. Long, Miami, Fla., for Southern Bell.

David E. Smith, Florida Public Service Com'n, John Roger Howe, William S. Bilenky, Tallahassee, Fla., for Florida Public Service Com'n.

Appeal from the United States District Court for the Southern District of Florida.

Before FAY and JOHNSON, Circuit Judges, and HOFFMAN ^*, Senior District Judge.

CORRECTED OPINION

JOHNSON, Circuit Judge:

Appellant, Carlin Communication, Inc. ("Carlin"), appeals the grant of a motion for summary judgment in favor of appellees Southern Bell Telephone and Telegraph Company ("Southern Bell") and Florida Public Service Commission ("PSC"). We affirm.

I. BACKGROUND

Southern Bell filed an amendment to its Florida General Subscriber Service Tariff with the PSC on November 14, 1983, proposing to offer a new service in its North Dade County and Jacksonville exchanges known as Local Dial-It Service. Dial-It is an announcement service provided by local telephone companies that allows telephone customers to call a specified number and receive a prerecorded message supplied by a subscriber to the service. The telephone company bills the customer for the call at a rate set by the subscriber. The telephone company deducts flat rate and usage charges, and then forwards the rest of the collected billings to the subscriber. The FCC has classified Dial-It as an enhanced service that is not required to be made available on an equal access basis. Computer & Communications Industry Ass'n v. FCC, 693 F.2d 198, 205 (D.C.Cir.1982), cert. denied sub nom. Louisiana Public Service Comm'n v. FCC, 461 U.S. 938, 103 S.Ct. 2109, 77 L.Ed.2d 313 (1983).

Carlin is a New York corporation engaged in providing Dial-It messages throughout the United States. Among the types of messages provided by Carlin are sexually suggestive messages, which are commonly referred to as "Dial-a-Porn." Carlin recently has been involved in a number of lawsuits in various states in connection with attempts by telephone companies to discontinue Carlin's Dial-It service because of the content of Carlin's messages. One of these lawsuits involves appellee Southern Bell. Carlin Communication, Inc. v. Southern Bell Telephone and Telegraph Company, Civil No. C84-510 (N.D.Ga. March 21, 1984).

As originally filed, Southern Bell's proposed Dial-It tariff contained no restriction on message content, other than the requirement that the subscriber exclude "any matter, the dissemination of which is prohibited by law." At the beginning of the public hearing held with regard to the Dial-It proposal Mr. Varner, Southern Bell's District Manager for Rates and Tariffs, read a proposed amendment into the record that changed the message content provision from one excluding only illegal messages to one also excluding any message that "implicitly or explicitly invites, describes, simulates, excites, arouses, or otherwise refers to sexual conduct, or which contains sexual innuendo which arouses or attempts to arouse sexual desire." The purpose of this amendment was to divorce the standard for refusal to accept messages from the standard of legal obscenity. The Dial-It tariff, including the proposed amendment, was finally approved at a Commission agenda conference on July 3, 1984.

Carlin initially advised Southern Bell of its interest in obtaining Florida Dial-It service in January 1984. Carlin made formal application for Dial-It service on August 10, 1984. After review of the three transcripts Carlin proposed using on its Dial-It lines, Southern Bell notified Carlin that it would not be able to provide service for two of the transcripts because they did not conform to its tariff provision.

On October 5, 1984, Carlin filed a Section 1983 action, 42 U.S.C.A. Sec. 1983, against Southern Bell and the PSC alleging violation of the First and Fourteenth Amendments through prior restraint of free speech without constitutionally required procedural safeguards. Carlin sought (1) a declaratory judgment that the failure to activate Carlin's numbers was unconstitutional prior restraint of free speech and that Southern Bell's tariff was unconstitutional to the extent it permitted termination of service based solely on message content; (2) an injunction requiring Southern Bell to activate Carlin's Dial-It numbers and enjoining Southern Bell and the PSC from interfering with Carlin's Dial-It service because of message content without first complying with the procedural requirements for prior censorship; and (3) damages in excess of $1,000,000 from Southern Bell for failure to activate Carlin's Dial-It numbers.

Carlin was denied a preliminary injunction, and that decision was upheld on appeal by this Court. Carlin Communication, Inc. v. Southern Bell Telephone and Telegraph Company, 755 F.2d 174 (11th Cir.1985). The district court bifurcated the proceedings to consider the issue of state action first. Southern Bell and the PSC filed motions for summary judgment on this issue July 8 and 9, 1985. Sapphire Communications of Florida, Inc., a Carlin affiliate, was added by stipulation as a necessary party on July 10, 1985. The district court granted appellees' motions for summary judgment on October 5, 1985, and this appeal followed.

II. DISCUSSION

A. Subject Matter Jurisdiction

As a threshold consideration, we must determine if the district court lacked subject matter jurisdiction over this dispute under the Johnson Act, 28 U.S.C.A. Sec. 1342. The Johnson Act provides that:

The district courts shall not enjoin, suspend or restrain the operation of, or compliance with, any order affecting rates chargeable by a public utility and made by a State administrative agency or a rate-making body of a State political subdivision, where:

(1) Jurisdiction is based solely on diversity of citizenship or repugnance of the order to the Federal Constitution; and,

(2) The order does not interfere with interstate commerce; and,

(3) The order has been made after reasonable notice and hearing; and,

(4) A plain, speedy and efficient remedy may be had in the courts of such State.

Although the Johnson Act explicitly applies only to injunctive relief, it has been judicially extended to bar declaratory judgment and damage actions as well. Tennyson v. Gas Service Co., 506 F.2d 1135, 1139 (10th Cir.1974).

We find that the Johnson Act did not prevent the district court's exercise of jurisdiction in this case. Although the Johnson Act has been broadly construed to prohibit federal court actions that indirectly as well as directly affect rate orders, e.g., Tennyson, 506 F.2d at 1139; DeKalb County v. Southern Bell Telephone and Telegraph Co., 358 F.Supp. 498, 504 (N.D.Ga.1972), aff'd, 478 F.2d 700 (5th Cir.1973), the Act does not apply when the action is not in any manner a challenge to the rates charged by the regulated industry. E.g., Alabama Public Service Comm'n v. Southern Railway Co., 341 U.S. 341, 350, 71 S.Ct. 762, 768, 95 L.Ed. 1002 (1951) (Johnson Act not applicable to challenge to order refusing to allow discontinuance of train service); Cody v. Union Electric Co., 545 F.2d 610, 611-12 (8th Cir.1976) (Johnson Act not applicable to challenge to discriminatory credit policies regarding security deposits, when security deposits not considered part of rate structure); Island Airlines, Inc. v. C.A.B., 352 F.2d 735, 744 (9th Cir.1965) (Johnson Act not applicable when challenge was to airline's right to fly particular route, not the rates it charged).

Carlin is not challenging the Dial-It rate structure approved by the PSC: its challenge is directed exclusively toward the tariff provision allowing termination of service based solely on message content. The relief Carlin seeks, if granted, would not in any way affect the rates established by the PSC for Southern Bell's services. Therefore, Carlin's challenge is outside the scope of the Johnson Act, which has as its purpose prevention of federal court interference with the states' control over their public utility rates. See Tennyson, 506 F.2d at 1137.

B. Grant of Summary Judgment

1. Standard of Review

The appellate court's review of the grant of a summary judgment motion is plenary, and is conducted utilizing the same legal standards as those used in the district court. Mercantile Bank & Trust v. Fidelity & Deposit Co., 750 F.2d 838, 841 (11th Cir.1985). Summary judgment is appropriate if the moving party establishes that there is no genuine issue as to any material fact and he is entitled to a judgment as a matter of law. Id.; Fed.R.Civ.P. 56(c). Even when the parties agree on the basic facts, summary judgment is inappropriate if reasonable minds might differ on the inferences to be drawn from those facts. Warrior Tombigbee Transportation Co. v. M/V Nan Fung, 695 F.2d 1294, 1296 (11th Cir.1983).

In determining whether the moving party has met his burden, the evidence and inferences drawn from the evidence are viewed in the light most favorable to the nonmoving party, and all reasonable doubts are resolved in his favor. Mercantile Bank, 750 F.2d at 841. Further, the court may not weigh conflicting evidence to resolve disputed factual issues; if a genuine dispute is found, summary judgment must be denied. Warrior, 695 F.2d at 1299. Similarly, in deciding whether an inference is reasonable, the court does not compare that inference to others that might be drawn from the facts, but rather must "cull the universe of possible inferences from the facts established by weighing each against the abstract standard of reasonableness, casting aside those which...