Davel Communications, Inc. v. Qwest Corp.

• Decision Date: 26 June 2006
• Docket Number: No. 04-35677.,04-35677.
• Citation: 460 F.3d 1075
• Parties: DAVEL COMMUNICATIONS, INC., a Delaware corporation; Access Anywhere LLC; Kristin Moelle; Automated Telecom Technology Inc., dba A-Tel Inc.; Central Telephone Company; Steve Peterman, dba Colorado Payphones; Communications Management Services LLC, Plaintiffs-Appellants, v. QWEST CORPORATION, a Colorado corporation, Defendant-Appellee.
• Court: U.S. Court of Appeals — Ninth Circuit

Page 1075

460 F.3d 1075

DAVEL COMMUNICATIONS, INC., a Delaware corporation; Access Anywhere LLC; Kristin Moelle; Automated Telecom Technology Inc., dba A-Tel Inc.; Central Telephone Company; Steve Peterman, dba Colorado Payphones; Communications Management Services LLC, Plaintiffs-Appellants, v. QWEST CORPORATION, a Colorado corporation, Defendant-Appellee.

No. 04-35677.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted December 8, 2005.

Filed June 26, 2006.

Amended August 17, 2006.

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Brooks E. Harlow and David Rice, Miller Nash LLP, Seattle, WA, for the plaintiffs-appellants.

Douglas P. Lobel and David A. Vogel, Arnold & Porter LLP, McLean, VA, for the defendant-appellee.

Appeal from the United States District Court for the Western District of Washington; Marsha J. Pechman, District Judge, Presiding. D.C. No. CV-03-03680-MJP.

Before RONALD M. GOULD and MARSHA S. BERZON, Circuit Judges, and WILLIAM W SCHWARZER,^* District Judge.

ORDER AND AMENDED OPINION

BERZON, Circuit Judge.

ORDER

The opinion filed June 26, 2006, and published at 451 F.3d 1037, is withdrawn and superseded by the opinion filed concurrently herewith. The opinion is amended as follows:

1. At slip op. 7048, first full paragraph, line 15, 451 F.3d at 1045-46, delete from the sentence beginning "That is to say . . ." through to the end of the paragraph.

2. At slip op. 7049, 451 F.3d at 1046, delete from the paragraph beginning "Here, the FCC . . ." through to the end of Part II of the opinion, and insert the following:

"In Reiter, the Supreme Court held that the claim that a carrier's rates were not `reasonable,' as required by Interstate Commerce Act, was not barred by the filed-rate doctrine." 507 U.S. at 266, 113 S.Ct. 1213. Davel's complaint arises under §§ 201 and 276 of the 1996 Act. Section 201 is nearly identical to the provision of the Interstate Commerce Act at issue in Reiter, requiring telecommunications rates to be just and reasonable. Section 276 adds the further command that a carrier may not set its payphone rates so as to discriminate in favor of or subsidize its own payphone services, and instructs the agency to implement regulations requiring rates to meet the new services test. As in Reiter, these requirements, as well as the provision conferring on Davel a right of action for their enforcement, are accorded by the regulating statute which imposed the tariff filing requirement and are therefore not precluded by the filed rate doctrine.

"There is a related reason that the filed rate doctrine is inapplicable to the claims in this case. In Transcon Lines, the Supreme Court, following Reiter, held that a regulating agency may require a `departure from a filed rate when necessary to enforce other specific and valid regulations adopted under the Act, regulations that are consistent with the filed rate system and compatible with its effective operation.' 513 U.S. at 147, 115 S.Ct. 689. Here, the FCC, in adopting the Waiver Order, expressly required a "departure from a filed rate" as to some non-compliant intrastate public access line tariffs. The Waiver Order extended the time for filing NST-compliant rates and provided that any existing non-compliant rates would remain on file in the interim. The Order further provided that once the NST-compliant rates became effective, carriers were to reimburse their customers for the difference between any newly compliant rates and any noncompliant rates on file after April 15, 1997. As the Order thus expressly provided that Qwest's customers might ultimately pay rates different from those on file during the waiver period for certain services obtained during that time,⁴ it is not consistent with a strict application of the filed-rate doctrine to a challenge under the Waiver Order to assertedly non-compliant rates on file after April 15, 1997. Consequently, the filed-rate doctrine does not stand as a bar to construing the reach of and then enforcing the Waiver Order's reimbursement requirement in a case such as this one. This is so even though the lawsuit, in effect, challenges the tariffs on file between 1997 and 2002 and, if successful, would result in Davel paying an amount for public access line services different from that provided in those tariffs.⁵

"Accordingly, we hold that Davel's claims in this case are not barred by the filed-rate doctrine.⁶"

3. At slip op. 7055, first full paragraph, line 12, 451 F.3d at 1049, change "consideration" to "argument".

4. At slip op. 7055, first full paragraph, lines 15-16, 451 F.3d at 1049, change "was not one contemplated" to "may not have been contemplated".

5. At slip op. 7055, last paragraph, line 2, 451 F.3d at 1049, change "the initial expectation" to "any initial expectation".

With these amendments, Qwest Corporation's petition for panel rehearing and motion for judicial notice are denied. No further petitions for rehearing or rehearing en banc will be entertained. See 9th Cir. G.O. 5.3(a).

OPINION

The Federal Telecommunications Act of 1996 ("1996 Act") largely deregulated the telecommunications industry. At the same time, the 1996 Act continued to regulate certain segments of the industry so as to increase competition overall. For example, to promote more competitive market conditions, the 1996 Act required incumbent local exchange carriers, including appellee Qwest Corp., to provide access to their telephone lines and services essentially at their cost of providing the service.

In 1996 and 1997, the Federal Communications Commission ("FCC") issued a series of orders setting standards for rates and services offered by local carriers to payphone service providers. This case concerns claims by Davel Communications, Inc. and other payphone service providers ("Davel") that, under the FCC's 1996 and 1997 orders, Qwest owes reimbursements for periods in which it failed to file tariffs implementing the new standards or filed tariffs not compliant with the 1996 Act and its implementing regulations. The district court held the reimbursement claims barred by the filed-tariff doctrine and dismissed them without prejudice. In addition, the court dismissed on statute of limitations grounds Davel's claims that Qwest overcharged it for fraud protection services during the time Qwest failed to file required fraud protection tariffs with the FCC.

As a threshold matter, Qwest contends that the district court lacked jurisdiction under the primary jurisdiction doctrine over Davel's claims and that we therefore lack jurisdiction to hear this appeal. That is not so. The primary jurisdiction doctrine is "a doctrine specifically applicable to claims properly cognizable in court that contain some issue within the special competence of an administrative agency." Reiter v. Cooper, 507 U.S. 258, 268, 113 S.Ct. 1213, 122 L.Ed.2d 604 (1993) (emphasis added). In other words, "[p]rimary jurisdiction is not a doctrine that implicates the subject matter jurisdiction of the federal courts." Syntek Semi-conductor Co. v. Microchip Tech. Inc., 307 F.3d 775, 780 (9th Cir.2002). Consequently, even where the doctrine requires an issue to be referred to an administrative agency, it "does not deprive the court of jurisdiction." Reiter, 507 U.S. at 268, 113 S.Ct. 1213.

We therefore have jurisdiction of this appeal from the final judgment of the district court pursuant to 28 U.S.C. § 1291, and address Qwest's primary jurisdiction doctrine contention on its merits in due course rather than as a threshold jurisdictional issue. Cf. Steel Co. v. Citizens for a Better Env't, 523 U.S. 83, 93-94, 118 S.Ct. 1003, 140 L.Ed.2d 210 (jurisdictional objections must be addressed before proceeding to merits issues). After considering the parties' contentions, we vacate the district court's order of dismissal and remand for further proceedings.

I. Background

Davel and the other appellants are payphone service providers that purchase telecommunications services from Qwest in eleven of the fourteen states in which Qwest operates. Because Qwest operates its own payphones, Davel is both a competitor and a customer of Qwest. The services Qwest provides its payphone service provider customers include public access lines, local usage to enable Davel to connect its payphones to the telephone network for placing calls, and fraud protection.

Chapter 5 of the Federal Communications Act of 1934 as amended by the 1996 Act regulates the telecommunications industry. 47 U.S.C. § 151 et seq.¹ As a general matter, the Federal Communications Act requires common carriers subject to its provisions to charge only just and reasonable rates, id. § 201, and to file their rates for their services with the FCC or, in some cases, with state agencies. Id. § 203. As part of the 1996 Act's general focus on improving the competitiveness of markets for telecommunications services, § 276 substantially modified the regulatory regime governing the payphone industry by providing, in general terms, that dominant carriers may not subsidize their payphone services from their other telecommunications operations and may not "prefer or discriminate in favor of [their] payphone service[s]" in the rates they charge to competitors. Id. § 276(a). The 1996 Act directs the FCC to issue regulations implementing these provisions, specifying in some detail the mandatory contents of the regulations. Id. § 276(b).

Pursuant to this directive, the FCC adopted regulations requiring local exchange carriers such as Qwest to set payphone service rates and "unbundled features" rates, including rates for fraud protection, according to the FCC's "new services test" (sometimes "NST"). The new services test requires that rates for those telecommunications services to which it applies be based on the actual cost of providing the service, plus a reasonable amount of the service provider's overhead costs. The FCC's regulations required local exchange carriers to develop rates...