San Juan Cable LLC D/b/a Onelink Commc'ns v. P.R. Tel. Co. Inc

• Decision Date: 15 July 2010
• Docket Number: No. 09-1965.,09-1965.
• Citation: 612 F.3d 25
• Parties: SAN JUAN CABLE LLC d/b/a OneLink Communications, Plaintiff, Appellant,v.PUERTO RICO TELEPHONE COMPANY, INC., Defendant, Appellee.
• Court: U.S. Court of Appeals — First Circuit

612 F.3d 25

SAN JUAN CABLE LLC d/b/a OneLink Communications, Plaintiff, Appellant,v.PUERTO RICO TELEPHONE COMPANY, INC., Defendant, Appellee.

No. 09-1965.

United States Court of Appeals, First Circuit.

Heard June 8, 2010.

Decided July 15, 2010.

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Thomas J. McCormack, with whom Dana Frix, Karl H. Buch, Chadbourne & Parke, and Guillermo J. Ramos-Luiña were on brief, for appellant.

Lynn R. Charytan, with whom Mark C. Flemming, Samir Jain, Anne H. Sherwood, and Wilmer Cutler Pickering Hale and Dorr LLP were on brief, for appellee.

Before HOWARD, SELYA and THOMPSON, Circuit Judges.

SELYA, Circuit Judge.

This appeal presents two separate, but related, issues of statutory construction. The first poses a question that has not been answered at the federal appellate level: does a cable operator have an implied private right of action to enforce section 541(b)(1) of the Cable Communications Policy Act of 1984 (Cable Act), 47 U.S.C. § 541(b)(1), against a rival who has violated that provision? The second issue requires us to revisit a question that we have answered before: does a cable operator have standing, under section 401(b) of the Communications Policy Act of 1984 (Communications Act), 47 U.S.C. § 401(b), to enforce rulemaking orders promulgated by the Federal Communications Commission (FCC) against a rival who has transgressed those orders?

The district court answered both of these queries in the negative. On the first question, it held that section 541(b)(1) of the Cable Act did not give rise to an implied private right of action. See San Juan Cable LLC v. P.R. Tel. Co., 623 F.Supp.2d 189, 196 (D.P.R.2009). On the second question, it deemed itself bound by circuit precedent and therefore ruled that the cable operator lacked standing to enforce prohibitions contained in two FCC rulemaking orders. Id. at 197. Accordingly, the court dismissed the plaintiff's amended complaint.

We affirm the judgment below. As a matter of first impression, we conclude that section 541(b)(1) of the Cable Act does not give rise to an implied private right of action. Then, holding fast to circuit precedent, we reiterate that a private cable operator lacks standing to enforce either of the two FCC orders at issue here.

I. BACKGROUND

This appeal arrives on our doorstep following an order of dismissal entered under Federal Rule of Civil Procedure 12(b)(6). Consequently, we take the facts from the plaintiff's amended complaint and draw all reasonable inferences therefrom in its favor. SEC v. Tambone, 597 F.3d 436, 441-42 (1st Cir.2010) (en banc).

The plaintiff, San Juan Cable LLC, doing business as OneLink Communications (we shall refer to it by that trade name), is among three firms that provide cable television service in Puerto Rico. Its would-be competitor, defendant Puerto Rico Telephone Company, Inc. (PRTC), furnishes local telephone service throughout the island. The underlying litigation has its genesis in PRTC's decision to expand its service line to include cable television.

Before a new entrant can offer cable service, the Cable Act requires it to obtain a franchise from the relevant franchising authority. 47 U.S.C. § 541(b)(1). In February of 2006, PRTC, through an affiliate, filed an application for such a franchise with the Telecommunications Regulatory Board of Puerto Rico (the Board). Although that application was not granted, testimony during a hearing before the Board indicated that the construction of PRTC's cable system was already underway. We assume, without deciding, that the commencement of construction prior to the procurement of a franchise violates section 541(b)(1) of the Cable Act.

In December of 2008, PRTC filed both a second franchise application and a request for special temporary authority (STA). The STA request sought a green light for PRTC to continue to construct its cable system and to provide cable service to some of its employees as part of a beta test. The Board granted the STA, which allowed PRTC to undertake the specified activities in advance of obtaining a franchise.

Dismayed by this development, OneLink moved to intervene in the administrative proceedings and sought a stay of the STA. When the Board rebuffed these entreaties, OneLink petitioned for judicial review in the local courts. ¹

During this same time frame, OneLink opened a second front in its war against its would-be rival: it sued in the federal district court, seeking to enjoin PRTC from either constructing a cable system or providing cable service unless and until the Board awarded a franchise. The district court made a preliminary finding that PRTC had violated the Cable Act by prematurely beginning construction and testing activities see San Juan Cable LLC v. Telecomms. Reg'y Bd., 598 F.Supp.2d 233, 238 (D.P.R.2009), and threatened to issue a preliminary injunction. In a flurry of responsive filings, the Board represented that it would withdraw the STA approval, and PRTC represented that it would discontinue the challenged activities. On February 24, 2009, the district court dismissed the action as moot.

OneLink alleges that, notwithstanding its representations, PRTC took further pre-franchise steps toward construction of its proposed cable system. As a counter-measure, it brought the instant action, alleging that PRTC had transgressed section 541(b)(1) of the Cable Act by constructing a cable system over public rights-of-way and providing cable service without having obtained a franchise.² In an amended complaint, OneLink added a claim that PRTC's actions violated two FCC orders. See In re Implementation of Section 621(a)(1) of the Cable Communications Policy Act of 1984, 22 FCC Rcd. 5101, 5155 (Mar. 5, 2007) (2007 Order); In re Amendment of Part 94 of the Commission's Rules to Permit Private Video Distrib. Sys. of Video Entm't Access to the 18 GHz Band, 6 FCC Rcd. 1270, 1272 (Feb. 28, 1991) (1991 Order).

PRTC moved to dismiss the amended complaint. Pertinently, it argued that (i) the Cable Act does not afford a cable operator a private right of action to enforce section 541(b)(1) against a potential rival, and (ii) the Communications Act does not confer standing on a private party to enforce either the 2007 Order or the 1991 Order. This timely appeal followed.

II. ANALYSIS

We bifurcate our analysis of OneLink's claims, beginning with its contention that an implied private right of action exists under section 541(b)(1) of the Cable Act and ending with its contention that it possesses standing to enforce the 2007 Order and the 1991 Order against PRTC. Because both contentions turn on abstract questions of law, the district court's answers to them engender de novo review. Sterling Suffolk Racecourse Ltd. v. Burrillville Racing Ass'n, 989 F.2d 1266, 1268 (1st Cir.1993).

A. The Cable Act Claim.

Congress passed the Cable Act in order to fashion a national policy that would “promote competition in cable communications” and “assure that cable communications provide and are encouraged to provide the widest possible diversity of information sources and services to the public.” 47 U.S.C. § 521. The Act's franchising provisions are an integral part of this national policy. In drafting those provisions, Congress sought to formulate “franchise procedures and standards which encourage the growth and development of cable systems” and to “establish an orderly process for franchise renewal which protects cable operators against unfair denials of renewal.” Id.

These provisions create a decentralized franchising regime, in which local authorities award (or decline to award) franchises for the provision of cable service in particular areas. Id. § 541(a)(1). Once a cable operator receives a franchise, it enjoys the right to build a cable system over public rights-of-way and through compatible easements. Id. § 541(a)(2). It may then provide cable service in the franchised area. See id. § 541(b)(1). Without a franchise, the provision of cable service is forbidden. Id.

OneLink claims that PRTC jumped the gun by undertaking construction and testing activities without having obtained a franchise. In its view, these premature actions violated section 541(b)(1). As a threshold matter, its attempt to enforce that statute against PRTC hinges on whether the Cable Act grants it a private right of action for that purpose. It is to this question that we now turn.

OneLink concedes that the text of the statute does not confer an express private right of action. The question, then, reduces to whether a private right of action can be implied.

At the end of the day, this is a question of statutory interpretation. Transamerica Mortg. Advisors, Inc. (TAMA) v. Lewis, 444 U.S. 11, 15, 100 S.Ct. 242, 62 L.Ed.2d 146 (1979). Hence, the conventional tools of statutory construction serve as useful implements. See Thompson v. Thompson, 484 U.S. 174, 179, 108 S.Ct. 513, 98 L.Ed.2d 512 (1988).

Unlike other questions of statutory interpretation, however, the scales are tilted. The baseline rule is that a federal statute ordinarily should be read as written, in effect creating a presumption against importing, by implication, a private right of action. See Frazier v. Fairhaven Sch. Comm., 276 F.3d 52, 68 (1st Cir.2002); see also Alexander v. Sandoval, 532 U.S. 275, 287-88, 121 S.Ct. 1511, 149 L.Ed.2d 517 (2001). This de facto presumption has considerable bite; it “can be overcome only by compelling evidence of a contrary congressional intent.” Frazier, 276 F.3d at 68. “[T]he ultimate issue is whether Congress intended to create a private right of action.” California v. Sierra Club, 451 U.S. 287, 293, 101 S.Ct. 1775, 68 L.Ed.2d 101 (1981).

Against this backdrop, we look first to the text and structure of the Cable Act. See TAMA, 444 U.S. at 16, 100 S.Ct. 242; Frazier, 276 F.3d at 68. That perscrutation reveals a wealth of evidence that Congress did not intend to foster private enforcement of section 541(b)(1). The text of the Cable Act is replete with...