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North County Communications Corp. v. California Catalog & Technology

November 26, 2007


The opinion of the court was delivered by: Honorable Larry Alan Burns United States District Judge


[Dkt Nos. 138, 139, 144]

Plaintiff North County Communications Corp. ("NCC") represents it is a Competitive Local Exchange Carrier ("CLEC") providing telecommunications services throughout California pursuant to the Federal Communications Act of 1934 and the Telecommunications Act of 1996. Dkt No. 137 ¶ 1, Third Amended Complaint ("TAC"). NCC seeks declaratory relief, quantum meruit recovery, and enforcement of tariff compensation against approximately fifty named defendants it alleges are Commercial Mobile Radio Service ("CMRS") providers or CLECs under those same Acts. TAC ¶ 2. NCC contends it is entitled to recover its costs to deliver wireless telephone calls initiated by defendants' customers and placed to NCC's customers as traffic sent through NCC's system without any interconnection agreement or reciprocal compensation arrangement.

This matter is before the court on the Motion To Dismiss TAC for failure to state a claim filed by defendants Cal-One Cellular, L.P. and Cellco Partnership (collectively "Verizon Wireless"), joined by defendant Phoneco, L,P., and the Motion To Dismiss TAC for lack of subject matter jurisdiction and for failure to state a claim filed by defendants T-Mobile USA, Inc., Cingular Wireless, and Cricket Communications, Inc. (collectively "T-Mobile").*fn1 NCC filed an Opposition, and each set of moving parties filed a Reply. Pursuant to Civil Local Rule 7.1(d)(1), the court finds the issues presented appropriate for decision on the papers and without oral argument. For the reasons discussed below, the Motions are GRANTED.


A. Factual Background

As summarized in the Order dismissing NCC's FAC with leave to amend: "This case concerns the ability of LECs to obtain compensation from CMRS providers for indirectly routed calls in the absence of a negotiated agreement as contemplated by 47 C.F.R. § 20.11." Dkt No. 124, 2:13-25. NCC describes itself as a CLEC providing switched and non-switched local exchange, exchange access, and other telecommunications services to end users in California. TAC ¶ 3. As a CLEC common carrier, NCC has a duty "to interconnect directly or indirectly with the facilities and equipment of other telecommunications carriers. . . ." 47 U.S.C. § 251(a)(1); see 47 C.F.R. § 20.11(b)*fn2 (even without negotiated reciprocal compensation arrangements for the transport and termination of telecommunications, the rules require CMRS (wireless) providers be given the opportunity to interconnect with LECs like NCC). The named defendants are providers offering their customers calling plans into areas NCC services. NCC terminates calls from defendants' customers to its end users and incurs associated costs. TAC ¶¶ 4-7.

The NCC alleges it sent monthly bills to the defendants for its traffic termination costs beginning in January 2003 at rates consistent with its state termination tariff rates, but defendants have refused to pay the charges. NCC contends it must be permitted to recover its costs for the transport and termination of local telecommunication traffic originating from other parties' networks. TAC ¶¶ 9-12; see 47 C.F.R. § 20.11(b)(2) ("A commercial mobile radio service provider shall pay reasonable compensation to a local exchange carrier in connection with terminating traffic that originates on the facilities of the commercial mobile radio service provider"). NCC alleges defendants refuse to pay the billed charges, refuse to pay NCC reasonable reciprocal compensation, and have not entered interconnection agreements or reciprocal compensation arrangements for routing communications traffic through NCC's system. TAC ¶¶ 11-13, 16.

NCC pursues this action based on its interpretation of the February 24, 2005 decision in T-Mobile USA, Inc. Petition For Declaratory Ruling: Lawfulness of Incumbent Local Exchange Carrier Wireless Termination Tariffs, FCC Docket Nos. 01-92, 95-185, 96-98 ("T-Mobile Decision"), the April 29, 2005 effective date of amendments to 47 C.F.R. § 20.11 promulgated by the T-Mobile Decision, and NCC's contention it can and must turn to this court for relief from "the Defendants' unjust and unreasonable practices," in consideration of "the FCC"s unwillingness to entertain 'collection actions' such as this, the impropriety of Plaintiff blocking incoming calls from carriers who refuse to pay for services they have utilized, and the Defendants' continuing practice of sending traffic which places an undue burden on Plaintiff's system and refusing to pay for this traffic." TAC ¶ 25. However, as argued by the moving defendants, and as the Order dismissing the FAC indicates, the FCC's T-Mobile Decision "did not address whether or how ILECs could pursue claims for enforcement of tariffs in place before April 28, 2005, or even if ILECs could pursue such claims." Dkt No. 144, 6:16-18.

In addition to disputing whether CLEC's can obtain compensation from CMRS providers for indirectly routed calls in the absence of a negotiated agreement, the Motions assert a jurisdictional bar to this court's power to adjudicate the dispute, contending the TAC has not demonstrated federal subject matter jurisdiction. The court decides the Motions on the jurisdictional issue.

B. Procedural Background

As pertinent here, NCC's First Amended Complaint ("FAC") named approximately 82 defendants and presented three causes of action: an Enforcement of Tariff claim under the Communications Act of 1934, 47 U.S.C. §§ 206, 207; a Declaratory Relief claim under the Federal Declaratory Judgment Act, 28 U.S.C. § 2201(a); and a quantum meruit claim pursuant to the California Public Utilities Code § 737 and California common law. Chief Judge Irma E. Gonzalez, to whom this case was then assigned, entered a February 16, 2007 Order granting defendants' Motion To Dismiss First Amended Complaint for failure to state a claim and for failure to allege a cognizable legal theory in support of the court's exercise of jurisdiction, with leave to amend. Judge Gonzalez rejected NCC's argument the T-Mobile Decision established its right to pursue compensation by way of tariff, as well as its argument defendants' practice of refusing to pay compensation is an "unjust or unreasonable" practice made unlawful pursuant to 47 U.S.C. § 201(b) authorizing NCC to seek damages pursuant to 27 U.S.C. § 206. In opposition to dismissal, NCC had alternatively argued it could amend its complaint to state a claim under 47 U.S.C. § 251(b)(5). Although the court expressed reservations about NCC's ability to do so, the court granted NCC leave to amend, relying on its insistence its claims arise under federal law, in particular provisions of the Federal Communications Act and regulations as well as the Declaratory Judgment Act, even though the FAC had failed to allege a legally cognizable federal claim. Dkt No. 124 p. 12.

The undersigned District Judge received the reassignment of this case following Judge Gonzalez's recusal on March 7, 2007. NCC filed its Second Amended Complaint on March 19, 2007, continuing to name a host of entity defendants, a number of whom the docket reflected NCC previously had voluntarily dismissed. This court ordered NCC to "serve and file a superseding Third Amended Complaint to conform the parties and allegations to the claims and defendants plaintiff will actually be pursuing in the current posture of this litigation." Dkt No. 135. NCC filed its TAC on March 21, 2007, asserting the same three causes of action as in its First Amended Complaint, but in a different order. The named defendants continue to number in the dozens. The same two groups of defendants (i.e., the two Verizon Wireless defendants and the three T-Mobile defendants) who had successfully moved to dismiss the FAC move separately again to dismiss the TAC for failure to state a claim and for lack of federal subject matter jurisdiction.


A. Legal Standards

1. Rule 12(b)(1)

A federal court cannot reach the merits of any dispute until it confirms its own power to adjudicate the case. Steel Co. v. Citizens for a Better Environment, 523 U.S. 83, 93-95 (1998). An affirmative defense that the court lacks subject matter jurisdiction may be raised by a motion to dismiss. Rule 12(b)(1). A Rule 12(b)(1) Motion challenges the court's power to hear the case. Morongo Band of Mission Indians v. California State Bd. Of Equalization, 858 F.2d 1376, 1380-81 (9th Cir. 1988). A facial attack on subject matter jurisdiction relies on the allegations in the complaint, documents attached to the complaint, judicially noticed facts, and any undisputed facts evidenced in the record. If it appears from the face of the complaint federal jurisdiction is lacking, dismissal is proper on a Rule 12(b)(1) motion. See Warren v. Fox Family Worldwide, Inc., 328 F.3d 1136, 1139 (9th Cir. 2003). The plaintiff has the burden to demonstrate jurisdiction exists in order for a complaint to survive a 12(b)(1) challenge. Tosco Corp. v. Communities For A Better Environment, 236 F.3d 495, 499 (9th Cir. 2001) ("A plaintiff suing in federal court must show in his pleading, affirmatively and distinctly, the existence of whatever is essential to federal jurisdiction, and, if he does not do so, the court, on having the defect called to its attention or on discovering the same, must dismiss the case, ...

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