Duke Energy Carolinas, LLC v. Frontier Communications of the Carolinas, LLC

Filing 41

ORDER granting 39 Motion to Strike the Supplemental Memorandum 37 ; granting in part and denying in part 23 Motion to Transfer and Motion to Stay. Signed by Magistrate Judge Dennis Howell on 08/06/2014. (thh)

IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF NORTH CAROLINA
BRYSON CITY DIVISION
2:13cv40
DUKE ENTERGY CAROLINAS, LLC, )
)
Plaintiff,
)
)
v.
)
)
FRONTEIR COMMUNICATIONS OF )
THE CAROLINAS, LLC,
)
)
Defendant.
)
____________________________________

ORDER

Pending before the Court is Defendant’s Motion to Transfer [# 23].
Defendant moves to transfer this case to the Eastern District of North Carolina or,
in the alternative, stay this case pending a determination by the Federal
Communications Commission as to the applicable pole attachment rate Plaintiff
may charge Defendant. Upon a review of the record, the parties’ briefs, and the
relevant legal authority, the Court GRANTS in part and DENIES in part the
motion [# 23].
I.

Background

Plaintiff Duke Energy Carolinas, LLC is an electric utility provider that
provides electricity for customers in North Carolina. (Pl.’s Am. Compl. ¶ 6.)
Plaintiff’s principal place of business is in Mecklenburg County, North Carolina.
-1-

(Id. ¶ 1.) As part of its business of providing electricity to consumers, Plaintiff
owns utility poles throughout North Carolina. (Id. ¶ 6.)
Defendant Frontier Communications of the Carolinas LLC is an incumbent
local exchange carrier (“ILEC”) that provides telephone and other services to
customers in North Carolina. (Id. ¶ 7.) Defendant is a Delaware corporation with
its principal place of business in Connecticut. (Id. ¶ 2.) As part of its business of
providing telephone services to customers, Defendant also owns utility poles. (Id.
¶ 7.)
In 1979, the two parties entered into an agreement (the “Joint Use
Agreement”) to allow each party to use the other party’s utility poles to distribute
their services to customers in Clay, Cherokee, Graham, Jackson, Macon, and
Swain counties in North Carolina. (Id. ¶¶ 9-11.) Pursuant to the terms of the Joint
Use Agreement, the party using the other party’s utility pole would pay an annual
rental fee, as set forth in the agreement, per pole occupied. (Id. ¶¶ 13-15.) The
rate for 2011 was $18.40. (Id. ¶ 15.)
On April 7, 2011, however, the FCC adopted an order revising its pole
attachment rules to limit telecommunication pole rental rates in certain
circumstances and establishing a formula for determining pole rental rates. See In
the Matter of Implementation of Section 224 of the Act, 26 F.C.C.R. 5240, 2011

-2-

WL 1341351 (Apr. 7, 2011). One of the purposes behind the FCC’s Order was to
eliminate the disparity between telecommunication and cable rates. Id. at 5244.
After the FCC issued its order, Defendant notified Plaintiff that it was
terminating the Joint Use Agreement effective August 8, 2012. (Id. ¶ 19.)
Plaintiff accepted Defendant’s notice of termination, and the Joint Use Agreement
was subsequently terminated. (Id. ¶ 20.) Despite the fact that the parties did not
enter into a new agreement, the parties continued utilizing each other’s utility
poles. (Id. ¶¶ 20-37.)
On November 15, 2012, Plaintiff sent Defendant a schedule of payment for
the 2012 pole rentals. (Id. ¶¶ 23-24.) Defendant then informed Plaintiff that it
was adjusting the pole rental rates set forth in Plaintiff’s schedule pursuant to the
telecommunications formula as set forth by the FCC. (Id. ¶ 25.) Defendant
forwarded payment of this reduced rate to Plaintiff. (Id. ¶ 30.)
Plaintiff then brought this action against Defendant in the Superior Court of
Macon County, North Carolina. The Complaint asserted a claim for breach of
contract and a claim for unjust enrichment arising from Defendant’s alleged breach
of the Joint Use Agreement.1 Plaintiff contends that it is owned an additional
$801,483.88 for pole rentals because Defendant was not entitled to adjust the pole
Plaintiff subsequently amended the Complaint to add a similar claim related to the 2013
pole rental fees. (Pl.’s Am. Compl. at ¶¶ 44-7.)
1

-3-

rental rates downward from the rate set forth in the schedule. (Id. ¶ ¶ 29-31.)
Meanwhile, Defendant filed a complaint with the FCC challenging the pole
rental rates charged by Plaintiff. (Id. ¶ 26; Ex. A to Def.’s Memo in Support of
Mot. Transfer.) In addition, two similar actions involving unpaid pole rental fees
based on distinct joint use agreements covering other areas of North Carolina are
pending in the United States District Court for the Eastern District of North
Carolina. See Frontier Commc’ns of the Carolinas, LLC v. Duke Energy
Carolinas, LLC, No. 5:13cv00791 (E.D.N.C. filed Nov. 12, 2013); Duke Energy
Progress, Inc. v. Frontier Commc’ns of the Carolinas Inc., 5:13cv00617 (E.D.N.C.
removed Aug. 26, 2013.) Both cases in the Eastern District of North Carolina are
before United States District Judge Louise Wood Flanagan.
Defendant now moves to transfer this case to the Eastern District of North
Carolina. In the alternative, Defendant moves the Court to Stay this case pending a
determination by the FCC regarding the pole rental rate charged by Plaintiff to
Defendant. Finally, Plaintiff moves to strike a supplemental pleading filed by
Defendant.
II.

Analysis

A.

Motion to Strike

After Plaintiff filed its Amended Complaint, Defendant filed a Supplemental

-4-

Memorandum in further support of its Motion to Transfer. Subsequently, Plaintiff
moved to strike the Supplemental Memorandum or, in the alternative, requested
leave to file a response. Although this Court typically allows parties to file
supplemental memorandums to present the Court with relevant legal authority
decided after the briefing on a matter is closed, it does not generally allow the
parties to offer additional legal or factual argument in such memorandums. To the
extent that the Court desires additional briefing on an issue, it will enter an Order
directing the parties to further brief any issues that the Court feels were not
adequately addressed in the briefs. Here, no further briefing is needed by the
Court. Moreover, the Supplement Memorandum is largely a rehashing of
Defendant’s prior briefs, and is not properly before the Court. To the extent that
Defendant or Plaintiff wants to present additional legal authority or submit legal
pleadings filed in other proceedings after the briefing closes, the parties may
certainly do so without leave of Court. The Court, however, will not entertain any
legal discussion as to the relevance of said pleadings or legal authority unless the
Court first grants the party leave to file a supplemental brief. Accordingly, the
Court GRANTS the Motion to Strike [# 39] and STRIKES the Supplemental
Memorandum [# 37].2 In ruling on the Motion to Transfer, the Court has not

2

The Court notes that even had Plaintiff not moved to strike the supplemental pleading,
-5-

considered either the Supplemental Memorandum [# 37] or the proposed response
of Plaintiff [# 39-1].
B.

The Motion to Transfer

Defendant moves to transfer this case to the United States District Court for
the Eastern District of North Carolina. A district court may transfer any civil
action to another district or division in the interest of justice and for the
convenience of the parties and witnesses, provided that the action could have been
originally filed in that district or division or all the parties consent to the transfer.
28 U.S.C. § 1404(a). Section 1404 allows the Court to exercise its discretion in
ruling on a motion to transfer based on an individual, cases-by-case basis. Stewart
Org., Inc. v. Ricoh Corp., 487 U.S. 22, 29, 108 S. Ct. 2239, 2244 (1988); see also
Brock v. Entre Computer Ctrs., Inc., 933 F.2d 1253, 1257 (4th Cir. 1991). In
exercising their discretion in determining whether to transfer a case, courts in this
district consider, in addition to other factors that may be specific to the individual
case, eleven factors. See Jim Crockett Promotions, Inc. v. Action Media Grp., Inc.,
751 F. Supp. 93, 96 (W.D.N.C. 1990) (Potter, C.J.); Andritz Hydro Corp. v. PPL
Montana, LLC., No. 3:13-cv-412-RJC-DSC, 2014 WL 868750 (W.D.N.C. Mar. 5,
2014) (Conrad, J.). These eleven factors include:
the Court would have sua sponte struck the pleading from the record and would not have
considered it in ruling on the Motion to Transfer. Accordingly, the Court need not wait until the
response period has run to grant Plaintiff’s motion.
-6-

(1) plaintiff's initial choice of the forum; (2) the relative ease of
access to sources of proof; (3) availability of compulsory process for
attendance of unwilling, and the costs of obtaining attendance of
willing, witnesses; (4) possibility of view of premises, if view would
be appropriate to the action; (5) enforceability of a judgment if one is
obtained; (6) relative advantages and obstacles to a fair trial; (7) all
other practical problems that make a trial easy, expeditious, and
inexpensive; (8) administrative difficulties of court congestion; (9)
local interests in having localized controversies settled at home; (10)
the appropriateness in having the trial of a diversity case in a forum
that is at home with the state law that must govern the action; and (11)
avoidance of unnecessary problems with conflict of laws.

Datasouth Computer Corp. v. Three Dimensional Techs., Inc., 719 F. Supp. 446,
450-51 (W.D.N.C. 1989) (Potter, C.J.); see also Action Media, 751 F. Supp. at 96;
Duke Energy Fla., Inc. v. Westinghouse Elec. Co., No. 3:14-cv-00141-MOC-DSC,
2014 WL 2572960 (W.D.N.C. Jun. 9, 2014) (Cogburn, J.) “When weighing these
factors, the court must keep in mind that a party seeking transfer pursuant to
Section 1404(a) has the burden of persuasion and must show (1) more than a bare
balance of convenience in his favor and (2) that a transfer does more than merely
shift the inconvenience.” Datasouth, 719 F. Supp. at 451 (internal quotations and
citation omitted).
As a threshold mater, Plaintiff does not dispute that this case could have
originally been brought in the United States District Court for the Eastern District
of North Carolina. Rather, Plaintiff contends that Defendant has not met its burden

-7-

of demonstrating that the circumstances of this case warrant its transfer. In
considering the eleven enumerated factors, as well as taking the individual
circumstances of this case into consideration, the Court finds that the transfer of
this case is not warranted.
Generally, Courts give considerable weight to a plaintiff’s initial choice of
forum. Action Media, 751 F. Supp. at 96. “[A] plaintiff's choice of forum is
entitled to somewhat less weigh when the case is removed to federal court because
the plaintiff is no longer in his or her chosen forum, which was state court.” Sky
Techs. Partners, LLC v. Midwest Research Inst., 125 F. Supp. 2d 286, 292 (S.D.
Ohio 2000); see also Mayberry v. Nuclear Fuel Servs., Inc., No. 3:13-cv-499, 2013
WL 5560318, at *4 (E.D. Tenn. Oct. 7, 2013) (“[A] plaintiff's choice of forum is
entitled to less deference when the case has been removed to federal court because
the plaintiff's chosen forum was state court.”); Diversified Metal Distribs., LLC v.
AK Steel Corp., Civil Action No. 6-55-KKC, 2007 WL 403870, at *4 (E.D. Ky.
Feb. 1, 2007). Here, Plaintiff’s choice of forum was the Superior Court of Macon
County, not this Court. The Court, therefore, gives less weight to Plaintiff’s choice
of forum than if Plaintiff had initially brought this suit in this Court, but still finds
the fact that Plaintiff brought this suit in a state court within the jurisdiction of this
district warrants granting some weight to Plaintiff’s choice of forum.

-8-

The residence of the parties also weighs against transfer. Plaintiff’s
principal place of business is located in the Western District. Defendant is a
foreign company with its principal place of business in Connecticut. While
Plaintiff may have offices in the Eastern District, the fact that its principal place of
business is located in this district weighs against transferring this case because
most of the documents and witnesses in this case appear to be located in this
district. Moreover, the subject of the contract at issue – the utility poles – are
located in this district. In fact, there appears to be little in the way of evidence or
witnesses located in the Eastern District, and Defendant has not demonstrated that
the Eastern District would be more convenient to the witnesses than this district.3
The primary reason that Defendant moves to transfer this case is the
presence of two similar cases in the Eastern District. One of these cases involves a
breach of contract action brought by one of Plaintiff’s affiliate corporations against
Defendant based on joint use agreements for utility poles located in a different
regions of North Carolina. The other case involves a declaratory judgment action
brought by Defendant against Plaintiff that addresses other joint use agreements.
Although, the issue in all these disputes is the rate charged for using Plaintiff’s
utility poles, the joint use agreements at issue in all these disputes are distinct
3
Most of the eleven factors are either neutral or are not pertinent to this dispute.
Accordingly, the Court has only discussed those enumerated factors that are relevant to
determining whether transfer is warranted in this case.
-9-

contracts and, barring action by the FCC, the courts will likely only be required to
interpret the express language of the various contracts.
Defendant contends that because each of these cases involve the central
issue of whether the litigation should be stayed under the doctrine of primary
jurisdiction, that this dispute is sufficiently related to the other two cases to warrant
transferring it to the Eastern District. This Court, however, is just as capable of
making this determination as the Eastern District, and the fact that all three cases
involve a similar legal issue is insufficient to warrant transferring this case. In
short, the Court finds that the breach of contract action before the Court is not
sufficiently related to the two cases pending in the Eastern District to warrant
further burdening the Eastern District with another breach of contract case,
especially in light of the fact that none of the enumerated factors considered by this
Court strongly warrant transferring this case. Accordingly, the Court finds that the
facts and circumstances of this case do not justify transferring the case, and
Defendant has failed to satisfy its burden of demonstrating that transfer of this case
to the Eastern District is warranted. The Court, therefore, DENIES the motion to
the extent it moves to transfer this case to the United States District Court for the
Eastern District of North Carolina.

-10-

B.

Motion to Stay

In the alternative, Defendant moves to stay this case. Specifically,
Defendant contends that the doctrine of primary jurisdiction should apply in this
case. As the United States Supreme Court has explained, 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. It requires the court to enable a “referral” to
the agency, staying further proceedings so as to give the parties
reasonable opportunity to seek an administrative ruling.
Reiter v. Cooper, 507 U.S. 258, 265, 113 S. Ct. 1993, 1218 (1993). “Generally
speaking, the doctrine is designed to coordinate administrative and judicial
decision-making by taking advantage of agency expertise and referring issues of
fact not within the conventional experience of judges or cases which require the
exercise of administrative discretion.” Environmental Tech. Council v. Sierra
Club, 98 F.3d 774, 789 (4th Cir. 1996); see also Union Elec. Co., v. Cable One,
Inc., No. 4:11-CV-299, 2011 WL 4478923 (E.D. Mo. Sep. 27, 2011) (discussing
the primary jurisdiction in the context of the FCC and its issuance of new
regulations regarding the reasonable rate for pole attachments in the
telecommunications industry). Once a court determines that the primary
jurisdiction doctrine applies and refers an issue to the appropriate entity, it may

-11-

either retain jurisdiction and stay the case or dismiss the case without prejudice if
none of the parties will be disadvantaged. Reiter, 507 U.S. at 265.
The Court, however, need not decide the issue of whether primary
jurisdiction is applicable to any issues in this case because referral of the issue of
whether the rates set by Plaintiff for 2012 and 2013 is already before the FCC.
Defendant filed a complaint with the FCC after Plaintiff brought this action in
which it contends that the rate charged by Plaintiff pursuant to the terms of the
Joint Use Agreement is unreasonable. Thus, these issues are already before the
FCC, and there is no need for the Court to refer them to the FCC.
As the United States Supreme Court has explained, “the power to stay
proceedings is incidental to the power inherent in every court to control the
disposition of the causes on its docket with economy of time and effort for itself,
for counsel, and for litigants.” Landis v. North American Co., 299 U.S. 248, 25455, 57 S. Ct. 163, 166 (1936). “The determination by a district judge in granting or
denying a motion to stay proceedings calls for an exercise of judgment to balance
the various factors relevant to the expeditious and comprehensive disposition of the
causes of action on the court's docket.” United States v. Georgia Pacific Corp.,
562 F.2d 294, 296 (4th Cir. 1977); see also Maryland v. Universal Elections, Inc.,
729 F.3d 370, 375 (4th Cir. 2013). Despite determining that the Court need not

-12-

determine the applicability of the primary jurisdiction doctrine to this dispute, the
Court does find that a stay of these proceedings is warranted. It would be a waste
of judicial resources for this Court to proceed with this case while Defendant’s
complaint is pending with the FCC. Accordingly, the Court exercises its discretion
and STAYS this case pending a ruling by the FCC on Defendant’s Complaint, a
resolution of the issue by the parties, or further Order of the Court. This stay will
not severely prejudice Plaintiff or its breach of contract claims and will ultimately
allow this Court to resolve this dispute without the cloud of the FCC complaint
hanging over this case.
III.

Conclusion

The Court GRANTS The Motion to Strike [# 39] and STRIKES the
Supplemental Memorandum [# 37]. The Court GRANTS in part and DENIES in
part the motion [# 23]. The Court DENIES the motion to the extent it seeks to
transfer this case. The Court GRANTS this motion to the extend it seeks a stay of
these proceedings. The Court STAYS these proceedings pending further Order of
the Court. Either party may move to lift the stay upon either a final determination
by the FCC on Defendant’s complaint or the parties reach an agreement to resolve
this dispute.
Signed: August 6, 2014

-13-