Premiere Network Services v. Sbc Communications

• Decision Date: 16 February 2006
• Docket Number: No. 04-41574.,04-41574.
• Citation: 440 F.3d 683
• Parties: PREMIERE NETWORK SERVICES, INC., Plaintiff-Appellant, v. SBC COMMUNICATIONS, INC.; Southwestern Bell Texas Holdings, Inc.; SWBT Texas LLC; Southwestern Bell Telephone LP, formerly known as Southwestern Bell Telephone Company, Defendants-Appellees.
• Court: U.S. Court of Appeals — Fifth Circuit

Page 683

440 F.3d 683

PREMIERE NETWORK SERVICES, INC., Plaintiff-Appellant, v. SBC COMMUNICATIONS, INC.; Southwestern Bell Texas Holdings, Inc.; SWBT Texas LLC; Southwestern Bell Telephone LP, formerly known as Southwestern Bell Telephone Company, Defendants-Appellees.

No. 04-41574.

United States Court of Appeals, Fifth Circuit.

February 16, 2006.

George G. Brin (argued), Gerald Dale McFarlen, Brin & Brin, San Antonio, TX, for Plaintiff-Appellant.

Harry M. Reasoner (argued), George Allan Van Fleet, Gwendolyn Johnson Samora, Vinson & Elkins, Alison L. Smith, Haynes & Boone, Houston, TX, Javier Aguilar, Cynthia Faught Malone, SBC Communications, Inc., San Antonio, TX, for Defendants-Appellees.

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

Before JOLLY, BEAM,¹ and BARKSDALE, Circuit Judges.

BEAM, Circuit Judge:

This case involves a long-standing and procedurally complicated dispute between Premiere Network Services, Inc. (Premiere) and SBC Communications, Inc. and its affiliates (collectively SBC) over access to telephone services and facilities. The district court granted SBC's motion to dismiss and Premiere appeals. We affirm in part and reverse in part.

I. BACKGROUND

Under the regulatory regime of the Federal Telecommunications Act of 1996(FTA), Premiere is a competitive local exchange carrier (CLEC) in the Texas telecommunications market. SBC and its affiliated entities comprise an incumbent local exchange carrier (ILEC), controlling most of the cables, poles, and systems necessary to provide telephone exchange service to a particular area. Pursuant to the FTA, Premiere operates under an interconnection arrangement with SBC called a "T2A" agreement² that regulates the business relationship between the two companies.

This appeal grows out of a somewhat convoluted chain of litigation. In January 1999, Premiere filed a complaint against SBC with the Texas Public Utilities Commission (TPUC), alleging violations of the T2A, the FTA, state law, and orders of the TPUC. Premiere claimed that the violations stymied competition in the local telecommunications market. In November 1999, Premiere and SBC executed a Confidential Joint Settlement Agreement and Release (Settlement Agreement), and the parties jointly moved to dismiss Premiere's complaint with prejudice. In December 1999, the TPUC granted the motion.

In May 2002, Premiere filed a formal complaint against SBC with the Federal Communications Commission (FCC) alleging discriminatory and anti-competitive practices regarding access to "555" telephone numbers.³ In November 2002, Premiere filed a motion to dismiss the proceeding without prejudice, based on concerns that the record was flawed, and asserting that dismissal would conserve the parties' and FCC's resources. In June 2003, the FCC granted the motion, citing Premiere's optimism that the parties could resolve their dispute in some other way. The FCC noted that it does not have a specific rule for dismissing formal complaints, but found instructive Federal Rule of Civil Procedure (FRCP) 41(a)(2), which provides a court discretion to dismiss an action upon the plaintiff's request under terms and conditions set by the court. The FCC declined SBC's request that it treat Premiere's motion as a motion to dismiss with prejudice per FRCP 41(a)(1) since Premiere had previously filed a related complaint with the TPUC. The FCC dismissed the proceeding without prejudice. Citing FRCP 41(a)(2), the FCC added a condition to the dismissal requiring that if Premiere should file a complaint against SBC with the FCC within one year of the dismissal raising materially similar facts and legal issues, Premiere would provide SBC an exhibit comparing the new complaint with the current complaint, to aid SBC in preparing for the new case.

Then, in October 2003, Premiere filed the instant action against SBC in the United States District Court for the Southern District of Texas. Premiere asserted claims for (1) violations of sections 201, 202, 251(b), 251(c), and 251(e) of the FTA; (2) breach of fiduciary duty; (3) fraud under the T2A; (4) fraudulent inducement to enter an April 2001 settlement agreement;⁴ (5) breach of contract (the T2A); (6) fraudulent inducement to enter the November 1999 settlement agreement; (7) breach of contract (the November 1999 settlement agreement); (8) tortious interference with prospective contract; and (9) tortious interference with contract.

The district court noted that either section 252(e)(6) or section 207 could provide the court with jurisdiction under the FTA, but that Premiere did not specify under which section it brought its claims. The court estimated that since Premiere and SBC were parties to an interconnection agreement, the source of federal jurisdiction for the suit was likely section 252(e)(6), but the court analyzed the claims under both sections.

Under section 252(e)(6), the district court found that all of Premiere's federal claims were subsumed within the T2A. The court dismissed Premiere's federal claims without prejudice, apparently for lack of subject matter jurisdiction, finding that section 252(e)(6) contemplates exhaustion of administrative remedies for disputes over interconnection agreements before a state public utilities commission, which exhaustion had not yet occurred.⁵ The court also dismissed what it termed Premiere's "state law" claims without prejudice, declining to exercise supplemental jurisdiction over them, and noting that there was no diversity jurisdiction since both parties are citizens of Texas.

Under section 207, the district court stated it would dismiss Premiere's claims on two bases. First, it said that those claims (the court did not differentiate between state or federal) with a nexus to the "555" number dispute would have to be dismissed, apparently for lack of subject matter jurisdiction, because of Premiere's earlier filing of that dispute with the FCC. The court said that those claims with such a nexus were: (1) violations of section 251(e)(1) of the FTA; (2) fraudulent inducement to enter the November 1999 settlement agreement; (3) breach of contract (the November 1999 settlement agreement); (4) tortious interference with prospective contract; and (5) tortious interference with contract. The court did not agree with Premiere that the FCC's dismissal without prejudice of those claims allowed Premiere to litigate them in federal court. Second, the court stated that if it had jurisdiction under section 207 over Premiere's remaining claims, it would defer to the primary jurisdiction of the TPUC for those claims.

Premiere appeals the dismissal of its "555" number-related claims under section 207.⁶

II. DISCUSSION

We review de novo a district court's dismissal based on lack of subject matter jurisdiction. Stiles v. GTE Southwest, Inc., 128 F.3d 904, 906 (5th Cir.1997).

A. Effect of Filing With FCC on Application of Section 207

Premiere first argues that section 207 does not bar its "555" number-related claims from federal court. The statutory provision at issue in this appeal, 47 U.S.C. § 207, provides that

[a]ny person claiming to be damaged by any common carrier subject to the provisions of this chapter may either make complaint to the Commission as hereinafter provided for, or may bring suit for the recovery of the damages for which such common carrier may be liable under the provisions of this chapter, in any district court of the United States of competent jurisdiction; but such person shall not have the right to pursue both such remedies.

47 U.S.C. § 207. The district court pointed to our decision in Stiles in deciding that since Premiere had earlier filed a formal complaint with the FCC regarding the "555" dispute, it could not later bring claims related to that same dispute into federal district court. In Stiles, appellant had filed an informal complaint with the FCC against GTE Southwest. Appellant later sued GTE Southwest in federal court, seeking damages under the FTA. The central issue in that case was whether section 207 barred the filing of claims in federal court that had already been brought to the FCC through an informal, as opposed to formal, complaint. The Stiles court held that section 207 draws no distinction between formal and informal proceedings. In interpreting the statute, the court determined that the language of section 207 "is unambiguous: A complainant can file a complaint either with the FCC or in federal district court, but not in both." 128 F.3d at 907. The court concluded that "§ 207 precludes a complainant from filing suit in federal court once she has initiated the administrative complaint process with the FCC either by filing a formal or informal complaint." Id. (emphasis added).

Premiere asserts that the holdings in Stiles and other similar cases, some of which rely on Stiles, are bounded by their factual context: the litigants in those cases brought a federal claim either while their complaint with the FCC was pending, or after the FCC had issued a final determination. Premiere asserts that those cases bar simultaneous actions, or actions in federal court following a final disposition by the FCC, but that neither situation applies in this case. See id. at 905-06 (noting that the defendant-appellee GTE sought to attach a copy of the plaintiff-appellant's informal complaint and FCC final determination letter to its motion to dismiss); Mexiport, Inc. v. Frontier Commc'ns Servs., Inc., 253 F.3d 573 (11th Cir.2001) (holding that appellant could not file in federal court after having filed informal complaint with FCC, in case where FCC had completed informal complaint process); Digitel, Inc. v. MCI Worldcom, Inc., 239 F.3d 187, 190 (2d Cir.2001) (concluding that "a party that has filed an informal complaint [with the FCC] may not also sue in district court," in case where district court had dismissed appellant's case in part because FCC was proceeding with...