Cimarron Telephone Company Inc v. Southwestern Bell Telephone Company
Filing
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ORDER denying 12 Motion to Dismiss for Lack of Jurisdiction. This case is STAYED and Administratively Closed to permit the parties to seek a resolution of their dispute regarding the proper implementation from the Oklahoma Corporation Commission. Parties shall proceed promptly to seek a ruling from the Commission and file a written notice of the Commission's ruling when it is received. Signed by Honorable Timothy D. DeGiusti on 8/27/2012. (mb)
IN THE UNITED STATES DISTRICT COURT FOR THE
WESTERN DISTRICT OF OKLAHOMA
CIMARRON TELEPHONE COMPANY,
INC.,
Plaintiff,
vs.
SOUTHWESTERN BELL TELEPHONE
COMPANY d/b/a AT&T OKLAHOMA,
Defendants.
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Case No. CIV-11-884-D
ORDER
Before the Court is Defendant’s Motion to Dismiss for Lack of Subject Matter Jurisdiction
[Doc. No. 12], which is fully briefed and at issue. In addition, the Court has received the parties’
supplemental briefs regarding the doctrine of primary jurisdiction, as required by the Order of
August 7, 2012 [Doc. No. 15]. Upon consideration, the Court rules on the issues as follows.
Plaintiff Cimarron Telephone Company, Inc. seeks to recover money allegedly owed by
Defendant Southwestern Bell Telephone Company, d/b/a AT&T Oklahoma, under a memorandum
of understanding and an order of the Oklahoma Corporation Commission, Order No. 454045 (the
“Order”), issued in July, 2001. Invoking diversity jurisdiction under 28 U.S.C. § 1332, Plaintiff
seeks damages for breach of the alleged contract and violation of the Order, which established a
method by which Plaintiff and other Incumbent Local Exchange Carriers (“ILECs”) are paid for
telecommunications traffic carried by Defendant and terminated by Plaintiff, that is, delivered to
Plaintiff’s local customers in Oklahoma. Plaintiff also seeks a declaratory judgment that future
payments must be made in accordance with Plaintiff’s view of the Order.
Defendant has moved to dismiss for lack of subject matter jurisdiction pursuant to Fed. R.
Civ. P. 12(b)(1). Defendant does not contest the existence of diversity jurisdiction, but asserts that
the Oklahoma Corporation Commission “‘has exclusive jurisdiction to determine questions of
compliance and/or construction, adjustment, modification or suspension of its orders.’” See Def.’s
Motion [Doc. No. 12] at 4 (quoting Brumark Corp. v. Samson Res. Corp., 57 F.3d 941, 946 (10th
Cir. 1995)). Defendant also argues that the Commission is “uniquely qualified” and “uniquely
equipped” to determine the compliance issues raised by Plaintiff’s pleading. See id. at 3-4. Plaintiff
disagrees, arguing that its action is simply one to determine private rights and to obtain an award of
money damages, which are matters outside the Commission’s jurisdiction.
Viewing Defendant’s Motion as implicitly invoking the doctrine of primary jurisdiction, the
Court directed the parties to file simultaneous briefs addressing whether this doctrine should be
applied under the circumstances of this case. Predictably, because the doctrine authorizes a district
court to stay or dismiss an action pending a ruling by an administrative agency, Defendant argues
in favor of the doctrine while Plaintiff opposes it. Defendant requests a stay of this action pending
a resolution by the Commission of the issues presented; Plaintiff contends the doctrine is
inappropriate to these issues.
As stated in the August 7 Order, the purpose of the doctrine of primary jurisdiction is “‘to
allow an agency to pass on issues within its particular area of expertise before returning jurisdiction
to the federal district court for final resolution of the case.’” See TON Services, Inc. v. Qwest Corp.,
493 F.3d 1225, 1238 (10th Cir. 2007) (quoting Crystal Clear Commc’ns, Inc. v. Southwestern Bell
Tel. Co., 415 F.3d 1171, 1179 (10th Cir. 2005)). Within the Tenth Circuit, a district court may
properly invoke the doctrine of primary jurisdiction if “the issues of fact in the case: (1) are not
within the conventional experience of judges; (2) require the exercise of administrative discretion;
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or (3) require uniformity and consistency in the regulation of the business entrusted to the particular
agency.” See id. at 1239 (internal quotation omitted). The decision to invoke the doctrine is
discretionary, and should be made on a case-by-case basis after considering “whether ‘the reasons
for the existence of the doctrine are present and whether the purposes it serves (i.e., uniformity and
resort to administrative expertise) will be aided by its application in the particular litigation.’” See
id. (quoting United States v. W. Pac. R.R., 352 U.S. 59, 64 (1956)). Plaintiff notes in its brief that
the court of appeals has acknowledged other factors that may properly be considered in striking the
balance between deferring to an agency’s expertise and resolving a pending action expeditiously,
“‘including: how agency action will aid the litigation; whether the litigation involves conduct
requiring continuing supervision by the agency; whether the issues to be litigated are unique to
regulated industries; and whether proceedings already are pending before the agency.’” Mical
Communications, Inc. v. Sprint Telemedia, Inc., 1 F.3d 1031, 1038 (10th Cir. 1993) (internal
quotation omitted).
Upon review of the parties’ supplemental briefs, the Court finds that the underlying premise
of the August 7 Order is not disputed. This case involves a dispute within the telecommunications
industry in Oklahoma, which operates under the jurisdiction of the Commission by mandate of the
Oklahoma Constitution, Okla. Const. art. 9, § 18, and by statute, Okla. Stat. tit. 17, §§ 131-140.6,
and subject to regulations duly enacted by the Commission. See Okla. Admin. Code §§ 165:55-1-1
to 165:55-1-16. Specifically, the case arises from the parties’ implementation of the Commission’s
Order involving at least thirty ILECs1 that decided billing arrangements for telecommunications
traffic between access providers and allocated the cost of traffic originating from unidentified third
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The Order identifies thirty ILECs affected by the Order, as shown by an attached list of companies,
but Defendant states in argument in its brief that the number has increased to “at least 39 different ILECs,
including Plaintiff.” See Def.’s Suppl. Br. [Doc. No. 17] at 4.
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party sources. The Order itself shows that the matter at issue is subject to regulation by the
Commission. Neither party raises any concern about the availability of the Commission as a forum
to resolve their dispute, although Plaintiff emphasizes that the Commission lacks authority to award
damages, as prayed for in the Complaint. This legal fact was assumed, but not stated, in the
August 7 Order. Plaintiff states no basis to conclude, however, that an award of damages (if one is
ultimately determined to be appropriate) would be inadequate to compensate Plaintiff for its
monetary loss, including any delay damages.
Plaintiff does disagree with the Court’s view, as stated in the August 7 Order, that the central
issue in the case is the proper interpretation and application of the Order. Plaintiff views the Order
as clear and unambiguous, and Defendant’s violation of the Order to be equally clear. Plaintiff
argues that the Court is fully capable of making this determination, and an opinion to that effect
from the Commission is unnecessary. According to Plaintiff, Defendant followed the billing
procedure required by the Order from 2001 through 2007, and then unilaterally changed its billing
and payment systems without authorization from the Commission. Now, rather than paying for third
party carriers’ traffic and receiving a credit from ILECs in the next billing cycle, Plaintiff asserts that
Defendant is impermissibly determining its own credits and making deductions from payments to
account for third party traffic based on its billing records and an “equivalency paper report” or
“EPR.” See Pl.’s Resp. Br. [Doc. No. 13] at 7, ¶ 15.
Notably, Defendant in its various briefs does not disagree with many of Plaintiff’s factual
allegations but, instead, identifies the real issue to be the sufficiency of the EPR. Defendant denies
Plaintiff’s assertion that Defendant is impermissibly avoiding the cost of unidentified traffic, and
argues that Plaintiff has simply failed to access information that is readily available from
Defendant’s records and reports “and to implement proper billing systems to comply with the
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Order.” See Def.’s Reply Br. [Doc. No. 14] at 1-2. Similarly, Plaintiff in its initial brief seems to
identify the crux of the dispute as an alleged underpayment due to unidentified third party traffic.
See Pl.’s Resp. Br. [Doc. No. 13] at 7-8, ¶¶ 15-16 (explaining the “net effect” of Defendant’s current
system results in an underpayment for unidentified traffic, and stating: “It is this difference that
Cimarron seeks to recover in this lawsuit.”). Plaintiff identifies its alleged damages as the amount
by which it has been underpaid as a result of Defendant’s billing system. See id. at 8, ¶ 17.
In light of Plaintiff’s allegations and the parties’ arguments, the Court respectfully disagrees
with Plaintiff’s view of this case as a “mere matter of reading the [Order] and deciding what it says”
and a matter involving no factual determinations within the expertise of the Commission. See Pl.’s
Suppl. Br. [Doc. No. 16] at 4. The adjudication of Plaintiff’s claim will involve a determination of
whether an underpayment has occurred. As argued by Defendant, this determination will require
rulings on the sufficiency of Defendant’s record-keeping system to identify particular traffic, and
to the extent unidentified third party traffic exists, it will require a careful analysis of voluminous
records and reports to determine the amount of any underpayment to Plaintiff. While the
Commission cannot award this amount (if any) as damages, the Commission – and more accurately,
its staff and administrative law judges – may be instrumental in providing the detailed factual
analysis and findings that this Court is ill-equipped to perform in the context of a civil action for
damages. As explained in Plaintiff’s initial brief, the Order was the result of a lengthy proceeding
before the Commission that culminated in an agreed resolution among numerous parties, only two
of which are present in this lawsuit. Plaintiff’s request for a declaration of rights may result in
inconsistent rulings from this Court and the Commission in any administrative proceeding to enforce
the Order, or to modify the Order if warranted by technological advances or changes in the
telecommunications industry during the past eleven years since it was approved.
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In short, the Court finds that the purposes served by the doctrine of primary jurisdiction –
uniformity and resort to agency expertise – warrant the application of the doctrine under the
circumstances. Accordingly, the Court will enter a stay of this proceeding and require that Plaintiff
first obtain a determination from the Commission whether Defendant’s alleged violation of the
Order has resulted in an underpayment to Plaintiff of amounts that Defendant was required to pay
under the terms of the Order.
IT IS THEREFORE ORDERED that Defendant’s Motion to Dismiss for Lack of Subject
Matter Jurisdiction [Doc. No. 12] is DENIED, but the case will be stayed and administratively
closed to permit the parties to seek a resolution of their dispute regarding the proper implementation
of the Order No. 454045 from the Oklahoma Corporation Commission. The parties shall proceed
promptly to seek a ruling from the Commission regarding Defendant’s alleged violation of the
Order, and they shall promptly file a written notice of the Commission’s ruling when it is received.
IT IS SO ORDERED this 27th day of August, 2012.
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