Comtronics, Inc. v. Puerto Rico Tel. Co., 75-1321

• Decision Date: 31 March 1977
• Docket Number: No. 75-1321,75-1321
• Citation: 553 F.2d 701
• Parties: COMTRONICS, INC., Plaintiff, Appellant, v. PUERTO RICO TELEPHONE COMPANY et al., Defendants, Appellees.
• Court: U.S. Court of Appeals — First Circuit

Page 701

553 F.2d 701

COMTRONICS, INC., Plaintiff, Appellant, v. PUERTO RICO TELEPHONE COMPANY et al., Defendants, Appellees.

No. 75-1321.

United States Court of Appeals First Circuit.

March 31, 1977.

As Amended on Denial of Rehearing and Clarification May 18, 1977.

Sigfredo A. Irizarry, San Juan, P. R., for plaintiff, appellant.

Alberto Pico, San Juan, P. R., with whom, Brown, Newsom & Cordova, San Juan, P. R., was on brief, for defendants, appellees.

Before COFFIN, Chief Judge, McENTEE and CAMPBELL, Circuit Judges.

McENTEE, Circuit Judge.

This case arises from the same events as Puerto Rico Telephone Co. v. FCC, 553 F.2d 694 (1st Cir. 1977), in which we sustained a declaratory order of the Federal Communications Commission (FCC) holding that the Puerto Rico Telephone Company (PRTC) is bound by a tariff permitting the interconnection of subscriber-owned and supplied telephone equipment. The tariff in question, F.C.C. No. 263, provides in pertinent part:

" § 2.6.1 General Provision. Customer-provided terminal equipment may be used with the facilities furnished by the Telephone Company, for long distance message telecommunications service, as specified in 2.6.2 through 2.6.6 following."

Sections 2.6.2 through 2.6.6 describe the types of equipment which may be connected by subscribers and enumerate restrictions designed to prevent harm to telephone company equipment. Tariff No. 263 clearly authorizes interconnection of the equipment supplied by appellant Comtronics, Inc., viz. private branch exchange (PBX) facilities, switchboard equipment such as that used by hotels and large offices.

Appellee PRTC was privately owned in early 1974 at the time of its concurrence in Tariff No. 263. Several months later, pursuant to legislation enacted by the legislature of Puerto Rico, PRTC was purchased by the Commonwealth and thereafter it was run as a publicly owned utility. ¹ In mid-1974, according to Comtronics' allegations, PRTC, without amending the pertinent tariff, announced a policy of refusing to interconnect its equipment with customer-owned equipment such as that supplied by Comtronics. Appellant sued for damages and for declaratory and injunctive relief, alleging violations by PRTC of the Communications Act of 1934, 47 U.S.C. §§ 151 et seq. and of Comtronics' rights to due process and equal protection under the fourteenth amendment. The district court dismissed for lack of jurisdiction. ² 409 F.Supp. 800 (D.P.R.1975). We deferred ruling on Comtronics' appeal from that order so that we might consider this case in conjunction with our review of the FCC's order holding PRTC bound to Tariff No. 263.

I. The Communications Act Claim.

A common carrier such as AT&T which provides interstate telephone service is subject to all of the provisions of the Communications Act. However, the Act's application to a non-subsidiary "connecting" carrier, such as PRTC, which is "engaged in interstate or foreign communication solely through physical connection with the facilities of another carrier" is limited. Under47 U.S.C. § 152(b), "nothing in (the Act) shall be construed to apply or to give the Commission jurisdiction with respect to . . . any (connecting) carrier . . . except that sections 201-205 . . . shall . . . apply". Sections 201 through 205 provide, inter alia, that tariffs be "just and reasonable," § 201(b), and that connecting carriers publish and adhere to the tariffs in which they have concurred, § 203(a) & (b). Section 203(e) establishes penalties for violations of these duties, and § 205 vests the FCC with enforcement power and provides penalties for violations of FCC orders.

Sections 201 through 205 make no mention of a damages remedy. However, § 206 provides that "any common carrier" violating the Act shall be liable in damages to the person injured thereby. Furthermore, § 207 enables a person injured by such a common carrier to bring an action for damages in the district court. Finally, §§ 208-09 provide a procedure whereby the FCC may order payment of damages by an offending common carrier.

In the present case, the district court noted that the Act does not explicitly create a cause of action for damages caused by PRTC's alleged violation of § 203(b)'s requirement that it adhere to its tariff permitting interconnection of PBX equipment. See 409 F.Supp. at 817. The court also reasoned that no federal common law remedy should be implied because the interest asserted by Comtronics was not protected by the Communications Act:

"The Act does not impose any duty on PRTC with respect to plaintiff. It is only intended to establish the conditions upon which communications services of an interstate nature will be lawfully provided and thus only regulates the bilateral relationship between the carrier and its subscriber." Id.

We agree with the district court that the Act cannot be read as explicitly creating a damages remedy against a connecting carrier such as PRTC. Section 152(b) subjects PRTC to §§ 201-05 alone; the damages liability created by § 206 and the damages remedy authorized by §§ 207 and 209, therefore, do not apply to PRTC. But see Ward v. Northern Ohio Telephone Co., 300 F.2d 816, 820 (6th Cir.), cert. denied, 371 U.S. 820, 83 S.Ct. 37, 9 L.Ed.2d 61 (1962).

We also conclude that no judicially created damages remedy is available to Comtronics to compensate for the harm caused by PRTC's alleged violation of the Communications Act. However, we reach this result for reasons which differ from those expressed by the district court. We disagree with the district court's implicit conclusion that Comtronics is not within the class protected by § 203(b)'s requirement that a carrier adhere to its tariffs until amendments are adopted in conformity with the procedural requirements of the Act. ³ Undoubtedly, the dominant purpose of the liberalized interconnection policy embodied in the tariff which PRTC allegedly abrogated was to benefit consumers of telephone services. See, e. g., Puerto Rico Telephone Co. v. FCC, supra at n. 10; Hush-a-Phone Corp. v. United States, 99 U.S.App.D.C. 190, 238 F.2d 266, 269 (1956); Carterfone, 13 F.C.C.2d 420, 424, reconsideration denied, 14 F.C.C.2d 571 (1968). However, consumers' rights to obtain cheaper and more efficient interconnection equipment cannot be vindicated unless suppliers, acting in reliance on the tariff, undertake the cost of providing such equipment. ⁴ Cf. Barrows v. Jackson, 346 U.S. 249, 73 S.Ct. 1031, 97 L.Ed. 1586 (1953); FCC v. Sanders Bros. Radio Station, 309 U.S. 470, 477, 60 S.Ct. 693, 84 L.Ed. 869 (1940). Indeed, a supplier's need for the assurance which a tariff provides is demonstrably more immediate and of greater weight than a consumer's. Given the identity of interests between a supplier and consumer and the supplier's greater reliance on tariff guarantees, we think that Comtronics is within the class of intended beneficiaries protected by § 203(b).

Our conclusion that no judicially created damages remedy is available is impelled by what we perceive as a clear legislative intent to preclude such a remedy. We agree with our dissenting brother that it is unfortunate that economic harm flowing from PRTC's asserted violation of the Act should go unremedied. We also agree that the enforcement scheme of the Communications Act vis a vis connecting carriers might be seriously flawed by the absence of a damages remedy. Cf. Piper v. Chris-Craft Industries, Inc., --- U.S. ----, ----, 97 S.Ct. 926, 51 L.Ed.2d 124 (1977); J. I. Case Co. v. Borak, 377 U.S. 426, 433, 84 S.Ct. 1555, 12 L.Ed.2d 423 (1964). However, it is not for us to expand the remedial scheme established by Congress unless expansion would be "consistent with the evident legislative intent". National Railroad Passenger Corp. v. National Ass'n of Railroad Passengers, 414 U.S. 453, 458, 94 S.Ct. 690, 693, 38 L.Ed.2d 646 (1974). "(I)n situations in which it is clear that federal law has granted a class of persons certain rights, it is not necessary to show an intention to create a private cause of action, although an explicit purpose to deny such cause of action would be controlling." Cort v. Ash, 422 U.S. 66, 82, 95 S.Ct. 2080, 2090, 45 L.Ed.2d 26 (1975). Turning to the statute before us and its legislative history, we perceive such "an explicit purpose to deny (a) cause of action".

Section 206 provides:

"In case any common carrier shall do, or cause or permit to be done, any act, matter, or thing in this chapter prohibited or declared to be unlawful . . . such common carrier shall be liable to the person or persons injured thereby for the full amount of damages sustained . . .."

Section 153(h), in turn, defines a "common carrier" as "any person engaged as a common carrier for hire, in interstate or foreign communication by wire or radio . . . except where reference is made to common carriers not subject to this chapter".

By its literal terms, therefore, § 206 reaches PRTC as well as such pre-eminent common carriers as AT&T and ITT. However, as noted above, § 152(b) provides that "nothing in this chapter shall be construed to apply . . . to . . . any (non-subsidiary) carrier engaged in interstate or foreign communication solely through physical connection with the facilities of another carrier . . . except that sections 201-205 of this title shall . . . apply . . .." Thus, a "connecting" carrier such as PRTC is explicitly removed from the class of carriers against which damages liability is created. The necessary implication is that Congress chose to shield "connecting" carriers from damages liability. This reading of the language of the statute is, we think, borne out by the legislative history of the Communications Act of 1934.

As originally reported by the Senate Commerce Committee, the Communications Act provided no specific exemption for "connecting" carriers from any of the Act's provisions. Rather, in the words of the committee chairman, "we have tried . . . throughout the bill...