Puerto Rico Telephone Co. v. Telecommunication Reg. Bd.
| Decision Date | 07 June 1999 |
| Docket Number | No. 98-2228,98-2228 |
| Citation | 189 F.3d 1 |
| Parties | (1st Cir. 1999) PUERTO RICO TELEPHONE COMPANY, Plaintiff, Appellant, v. TELECOMMUNICATIONS REGULATORY BOARD OF PUERTO RICO and CELLULAR COMMUNICATIONS OF PUERTO RICO, INC., Defendants, Appellees. . Heard |
| Court | U.S. Court of Appeals — First Circuit |
APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF PUERTO RICO
[Copyrighted Material Omitted]
[Copyrighted Material Omitted] Philip J. Mause, with whom Joaqun A. Marquez, Jeffrey J. Lopez, and Drinker Biddle & Reath LLP were on brief, for appellant.
Robert F. Reklaitis, with whom Veronica M. Ahern, Laurin H. Mills, Lydia P.A. Turnipseed, Nixon, Hargrave, Devans & Doyle LLP, Jose R. Gaztambide, and Gaztambide & Plaza were on brief, for appellee Telecommunications Regulatory Board of Puerto Rico.
William A. Davis, with whom Sara F. Seidman, Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, PC, and Francisco Silva were on brief, for appellee Cellular Communications of Puerto Rico, Inc.
Donald B. Verrilli, Jr., Jodie L. Kelley, Katherine A. Fallow, Jenner & Block, Thomas F. O'Neil III, Adam H. Charnes, and Mark B. Ehrlich on brief for amicus curiae MCI Worldcom, Inc.
Before Lynch, Circuit Judge, Noonan, Senior Circuit Judge,* and Lipez, Circuit Judge.
This appeal raises tricky questions of the limits on federal court jurisdiction under 47 U.S.C. § 252(e)(6), a provision of the Telecommunications Act of 1996, Pub. L. No. 104-104, 110 Stat. 56.
Two telecommunications companies (one primarily a landline local exchange carrier and one a cellular carrier) reached an interconnection agreement; the agreement in turn was approved by the Telecommunications Regulatory Board of Puerto Rico ("the Board") under the Act. A dispute arose over responsibility for certain charges and the landline company, Puerto Rico Telephone Company ("PRTC"), started charging its customers long-distance rates for calls to the cellular phone company's customers. The cellular company, Cellular Communications of Puerto Rico, Inc. ("CCPR"), struck back, filing a complaint with the Board. The Board found that PRTC had not violated the agreement but nonetheless had violated its obligations of prior notice to its customers under Puerto Rico law. The Board ordered PRTC to make refunds. Faced with the loss of an alleged several million dollars in revenue, PRTC sued in federal court, raising claims under the Act and under the Constitution.
Focusing closely on the particular facts, as alleged by PRTC, of the dispute between PRTC, CCPR, and the Board, we conclude that § 252(e)(6) does not provide the federal courts with jurisdiction over PRTC's claims. That is because the challenged Board order lacks a sufficient nexus with the parties' interconnection agreement to be a determination which is subject to review; also, the provision for federal judicial review does not authorize review of Board actions for compliance with Puerto Rico law. We further conclude that PRTC's takings and procedural due process causes of action fail to state a claim on which relief can be granted. We therefore affirm the dismissal of all claims, on different reasoning than that of the district court.1
PRTC's complaint and the attached exhibits state the following facts. CCPR makes use of PRTC's landline network to route and complete calls. When a landline PRTC customer places a call to a CCPR cellular customer, PRTC routes the call over its landline facilities to CCPR's switch, and CCPR then forwards the call to its final destination. At the times relevant to the complaint, the CCPR switch was in San Juan, and so calls from PRTC customers to CCPR customers originating outside San Juan were long-distance toll calls, regardless of the location in which the call was ultimately received.
For some time, CCPR paid PRTC a per-minute fee for delivering these long-distance calls, and PRTC did not bill its customers any long-distance charges. When the Telecommunications Act of 1996 was enacted, the parties worked out new arrangements. After engaging in extensive negotiations and an arbitration, PRTC and CCPR reached an "interconnection agreement," which provided in paragraph IV that PRTC customers would be charged the applicable long-distance rates unless CCPR chose to pay PRTC a fee for each call or chose to have PRTC charge its customers a flat rate of 35 cents for each call. The agreement was executed on September 2, 1997 and approved by the Board on September 11, 1997. The Board stated that the agreement was "consistent with section 252 of the Act, local law, and the rules of this Board," as well as "non-discriminatory and . . . consistent with the public interest, convenience and necessity."
CCPR never exercised either one of its options under paragraph IV of the agreement. In November 1997, PRTC began charging its customers long-distance charges for the relevant calls, retroactive to September 2, 1997. Customers complained. On November 25, 1997, CCPR filed a complaint with the Board seeking a cease and desist order prohibiting PRTC from imposing these charges. This matter was captioned "In the matter of Enforcement and Implementation of the Interconnection Agreement between [CCPR] and [PRTC]."
CCPR says that PRTC imposed these charges, and so angered customers who sought to call CCPR's customers, to hurt CCPR and did so out of self-interested and anti-competitive motivations. PRTC, which has an affiliate that provides cellular phone services in competition with CCPR, denies this.
The Board held hearings on CCPR's complaint on December 10 and 15, during which numerous witnesses testified. On December 22, 1997, the Hearing Examiner made a recommendation to the Board. The Examiner stated that paragraph IV of the agreement "gives PRTC the right to charge the toll charges at issue to its landline customers when they call a CCPR subscriber" and that under the circumstances of the case PRTC acted properly under the agreement. However, the Examiner also found that "[e]ven though PRTC has the right, in principle, under the Interconnection Agreement, to impose toll charges, it is also legally and morally obligated to provide adequate notice to its customers," who were not parties to the agreement but with whom PRTC had a separate contractual relationship, "before assessing said charges." The Examiner concluded that PRTC had imposed charges without notice in violation of Article 1210 of the Puerto Rico Civil Code, P.R. Laws Ann. tit. 31, § 3375, which establishes a duty to act in good faith while fulfilling contract obligations, and "thereby breach[ed] its fiduciary, contractual relationship with its customers which requires acting in good faith towards them." The Examiner stated that PRTC could prospectively assess toll charges "only after adequate and reasonable notification to its customers," and suggested that thirty days advance notice would be reasonable.
On December 24, 1997, the Board adopted this recommendation and issued an order requiring PRTC to cease collecting the charges and to credit or refund the charges it had already collected. As of that date, the issue of any future long-distance charges was already moot (as the Board recognized), because PRTC and CCPR had set up new switches allowing calls to be transferred from PRTC to CCPR at local offices outside San Juan. Consequently, this case involves only charges imposed by PRTC on its customers for calls made between September 2 and December 22, 1997.
PRTC filed its federal court complaint against the Board and CCPR on December 31, 1997. In addition to several state law claims, the complaint sets forth four federal causes of action. The first, styled "review of decision disapproving or revising interconnection agreement," alleges that "under 47 U.S.C. § 252(e)(6)" the district court has jurisdiction over decisions of the Board "reviewing interconnection agreements"; that the Board's decision "is tantamount to a review and rejection of an important term of the Agreement between PRTC and CCPR" that permits PRTC to impose the long-distance charges; and that the Board's decision violates both Puerto Rico law and the Act because it is inequitable and unreasonable, does not provide PRTC with compensation for the provision of services, and does not rely on a reason for rejection that the Act permits.
The second cause of action is captioned "enforcement of interconnection agreement." PRTC alleges that the defendants "have taken actions which make it impossible for PRTC to obtain benefits it is entitled to under the [a]greement," that the federal courts have jurisdiction "under 47 U.S.C. § 252(e)(6)" over an action to enforce an approved interconnection agreement, and that PRTC seeks such enforcement.
The third cause of action claims an unconstitutional taking. According to PRTC, "[b]y prohibiting PRTC from charging its customers -- or anyone else -- for providing a service and requiring PRTC to pay CCPR every time PRTC performs the service, the Board . . . has effected a taking of PRTC's property without just compensation."
The fourth cause of action alleges that the Board's action was "taken under color of the law of the Commonwealth of Puerto Rico without an adequate hearing or opportunity for a hearing" and "deprives PRTC of important property rights without due process of law."
After both defendants moved to dismiss pursuant to Rule 12(b)(1) and Rule 12(b)(6), the district court held that it lacked subject matter jurisdiction over the first two causes of action and that the third and fourth causes of action did not state claims on which relief could be granted. See Puerto Rico Tel. Co. v. Telecommunications Regulatory Bd. of Puerto Rico, 20 F. Supp. 2d 308, 312 (D.P.R. 1998). The court dismissed the action, implicitly declining supplemental jurisdiction over PRTC's state law claims.
The district court based its jurisdictional holding on 47 U.S.C. § 252(e)(6...
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