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QWEST COMMUNICATIONS CORP. v. CITY OF BERKELEY

November 15, 2001

QWEST COMMUNICATIONS CORP., PLAINTIFF,
v.
THE CITY OF BERKELEY, ET AL., DEFENDANTS.



The opinion of the court was delivered by: Susan Illston, United States District Judge.

ORDER GRANTING DEFENDANTS' MOTION TO DISMISS PLAINTIFF'S SECOND CLAIM FOR RELIEF

On November 9, 2001, the Court heard argument on defendants' motion to dismiss plaintiffs second claim for relief Having carefully considered the arguments of the parties and the papers Submitted, the Court hereby GRANTS defendants' motion to dismiss for the reasons set forth below.

BACKGROUND

Plaintiff Qwest Communications Corporation ("Qwest") is a telephone company defined as a public utility under California Public Utilities Code § 216. First Amended Complaint ("FAC") ¶ 4. The California Public Utilities Commission ("PUC") has granted Qwest certificates of public convenience and necessity ("CPCN") to provide interexehange, or long distance, telecommunication services. Id. Qwest provides broadband Internet-based data, voice and image connectivity to businesses, consumers and other communications service providers. Id. at ¶ 28.

In December 1999, Qwest won a competitive bidding process and entered into a government contract to provide faster and expanded telecommunications capacity to the Lawrence Berkeley National Laboratory ("LBN Laboratory"). Id. at ¶ 30. LBN Laboratory is the technical administrator and central hub of a program operated by the United States Department of Energy ("DOE") known as the Energy Sciences Network ("ESNET"). Richeson Decl. ¶ 7. The ESNET is a high-speed communication network that allows Department of Energy researchers and collaborators throughout the nation access to a community of research facilities, resources and information. FAC at ¶¶ 3-5.

On December 22, 2000, Berkeley enacted Ordinance No. 6608-N.S. (codified at Berkeley Municipal Code §§ 16.10 et seq.) (the "Ordinance"), effective January 21, 2001. Id. at ¶ 46. On January 23, 2001, the City passed a Fee Schedule to accompany the Ordinance. Id. at ¶ 48. The City's new Ordinance created a comprehensive scheme intended "to more specifically regulate Teleconirnuni| cations carriers providing telecommunications services using public rights of ways and other public property." Ordinance § 16.10.0 10 (attached at FAC, Ex. B).

The Ordinance applied to all telecommunications carriers seeking to encroach upon Berkeley's public rights-of-way to provide telecommunication services. Ordinance § 16.10.030. All carriers were required first to obtain registration and pay related registration fees, which must be updated annually. Id. at § 16.10.040; aegnho Fee Schedule 2-3 (attached at FAC, Ex. C). All carriers were also required to obtain a Special Telecommunications Permit pursuant to § 16.10.050 of the Ordinance and pay additional fees. Sggaho Fee Schedule 3-4. Unless a carrier claimed exemption under § 16.10.070, and the City affirmatively determined that an exemption indeed applied, all carriers were subject to a franchise fee to provide telecommunications services using the City's public rights-of-way. See also, id. 5-7.

Qwest filed this lawsuit against the City of Berkeley on February 13, 2001, seeking primarily to invalidate the new Ordinance and Fee Schedule pursuant to the Supremacy Clause of the United States Constitution, U.S. Const. art. VI, cl. 2, and the "conflict with general laws" provision of the California Constitution. Cal. Const. art. XI, § 7. According to Qwest, Berkeley's Ordinance is preempted by the Federal Telecommunications Act of 1996 ("FTA"), 47 U.S.C. § 253 (a) and (c), the California Public Utilities Code §§ 7901 and 7901.1, and the California Government Code § 50030. Qwest also asserts a claim of intentional interference with contractual relationship.

On May 23, 2001, this Court enjoined Berkeley from enforcing the Telecommunications Carriers Ordinance, Berkeley Municipal Code § 16.10 et seq., and its accompanying Fee Schedule, pending resolution of this lawsuit. Qwest Communications Corp. v. City of Berkeley, 146 F. Supp.2d 1081 (N.D. Cal. 2001). Soon afterwards, Berkeley passed Resolution No. 61,102-N.S., adopting Ordinance No. 6630-N.S. and its accompanying Fee Schedule to regulate telecommunications companics "pcnding resolution of the legality of the City's current telecommunication ordinance." FAC, Ex. D. ("Interim Ordinance"). Qwest finds fault with a number of provisions of this Interim Ordinance and Fee Schedule, and maintains that, like its predecessor, it imposes an unlawful "third tier" of regulation that is prohibited by both the FTA and the California Public Utilities Code. See Pl.'s Opp'n 2: 23-25.

In its brief in opposition to the first motion to dismiss, Qwest indicated that it was not attempting to state a claim directly under section 253 of the FTA. Instead, Qwest explained that it was stating a claim under the Supremacy Clause, alleging that Berkeley's Ordinance was preempted by the FTA. Sine Pl's Opp'n to Mot. to Dismiss, 7:3-6. The Court denied defendants' motion to dismiss the federal preemption claim based in large part upon the Ninth Circuit's recent holding in City of Auburn v. Qwest Corporation, 260 F.3d 1160 (9th Cir. 2001), which clarified that the Supremacy Clause provides an independent basis for challenging local ordinances that purportedly violate the FTA. See Quest Communications Corp., 146 F. Supp.2d 1081. On August 7, 2001, Quest filed a First Amended Complaint asserting new challenges to the Interim Ordinance and Fee Schedule and adding new claims. Among them was the new second claim which attempts to state a claim directly under FTA §§ 253(a) and (c). Before the Court is Berkeley's motion to dismiss that second claim. Berkeley contends that there is no private right of action under §§ 253(a) or (c).*fn1

LEGAL STANDARD

Berkeley seeks dismissal of the second claim for relief under § 253 of the FTA pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure. Rule 12(b)(6) requires that a district court must

dismiss a complaint if it fails to state a claim upon which relief can be granted. The question presented by a motion to dismiss is not whether the plaintiff will prevail in the action, but whether the plaintiff is entitled to offer evidence in support of the claim. Scheuer v. Rhodes, 416 U.S. 232,236 (1974), overruled on other grounds by Davis v. Scherer, 468 U.S. 183,104 S.Ct. 3012 (1984).

In answering this question, the Court must assume that the plaintiffs allegations are true and must draw all reasonable inferences in the plaintiffs favor. Usher v. City of Los Angeles, 828 F.2d 556, 561 (9th Cir. 1987). Even if the face of the pleadings suggests that the chance of recovery is remote, the Court must allow the plaintiff to develop the case at this stage of the proceedings. United States v. City of Redwood City, 640 F.2d 963,966 (9th Cir. 1981).

If the Court dismisses the complaint, it must then decide whether to grant leave to amend. The Ninth Circuit has "repeatedly held that a district court should grant leave to amend even if no request to amend the pleading was made, unless it determines that the pleading could not possibly be cured by the allegation of other facts." Lopez v. Smith, 203 F.3d 1122,1130 (9th Cir. 2000) (citations and internal quotation marks omitted).

DISCUSSION

Qwest's second claim for relief attempts to state a claim directly under 47 U.S.C. § 253. Section provides as follows, in pertinent part:

(a) In general: No State or local statute or regulation, or other State or local legal requirement, may prohibit or have the effect of prohibiting the ability of any entity to provide any ...

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