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North County Communications Corp. v. California Catalog & Technology

February 10, 2010

NORTH COUNTY COMMUNICATIONS CORP., PLAINTIFF-APPELLANT,
v.
CALIFORNIA CATALOG & TECHNOLOGY, D/B/A CTT TELECOMMS (OCN 573B), DEFENDANT,
TGEC COMMUNICATIONS CO. LLC, CA (OCN 5969); UNITED STATES CELLULAR CORP-CALIFORNIA, (OCN 6261); GTE MOBILNET OF TAMPA, INC., (OCN 6339); ARCH WIRELESS HOLDINGS, INC., (OCN 6630); EL DORADO CELLULAR, D/B/A MOUNTAIN CELLULAR (OCN 6980); BROOKS FIBER PROPERTIES, INC., (OCN 7219); THE OTHER PHONE COMPANY, INC., (OCN 7452); CHARTER FIBERLINK CA-CCO LC, (OCN 776C); FIRSTWORLD SO. CA, (OCN 7839); A WIRELESS INC., D/B/A ADVANTAGE WIRELESS-CA (OCN 822A); MPOWER COMMUNICATIONS CORP-CA, (OCN 8322); CHOICE TELECOMM, LLC-CA (OCN 885B); TRANS NATIONAL COMMUNICATIONS INTL, INC.-CA (OCN 864C); COMMPARTNERS, LLC-CA (OCN 869C); ALLEGIANCE TELECOM, INC.-CA (OCN 8782; ONESTAR COMMUNICATIONS, LLC-MD (OCN 9992); INTEGRATED COMMUNICATIONS CONSULTANTS, INC.-CA (OCN 9397); NTCHCALIFORNIA, INC. (OCN 9607); TELEMEX INTERNATIONAL-CA (OCN 998B); BAY AREA CELLULAR TELEPHONE; PACIFIC CENTREX SERVICES, INC.-CA (OCN 3662); BULLSEYE TELECOM, INC.-CA (OCN 069A); COMM SOUTH COMPANIES, INC.-CA (OCN 4 00A); ARRIVAL COMMUNICATIONS, INC.-CA (4553); BLUE CASA COMMUNICATIONS LLC-CA (OCN 111B); COMCAST PHONE OF CALIFORNIA LLC-CA (OCN 7610); COMMUNICATIONS EXPRESS INC., D/B/A COM EXPRESS; ECI COMMS INC., D/B/A ITS NETWORK SERVICES-CA (OCN 3630); ERNEST COMMUNICATIONS, INC.-CA (OCN 4961); EXCEL TELECOMMUNICATIONS, INC.-CA (OCN 243A); EXPRESS TELEPHONE SERVICES, INC.-CA (OCN 093A); GLOBAL NAPS CALIFORNIA, INC.-CA (OCN 5300); IN TOUCH COMMUNICATIONS, INC.-CA (OCN 047B); LIGHTYEAR NETWORK SOLUTIONS, LLC-CA (OCN 5370); MCGRAW COMMUNICATIONS, INC. (OCN 5597); METROPOLITAN TELECOMMS CALIFORNIA, D/B/A METTEL-CA (OCN 180A); PNG TELECOMMS D/B/A POWERNET GLOBAL COMMS CA (OCN 240B); POINTE COMMUNICATIONS CORP-CA (OCN 2595); PREFERRED CARRIER SERVICES, INC., D/B/A PHONES FOR ALL (OCN 5428); TELEPHONE SERVICE INCORPORATED, D/B/A FRIENDLYLEC CA (OCN 2015); VCOM SOLUTIONS, INC.-CA (OCN 334B); WHOLESALE AIR-TIME, INC.-CA (OCN 199B); LEAP WIRELESS INTL, INC. D/B/A CRICKET COMM, INC. (OCN 0822); BLUE LICENSES HOLDING LLC, (OCN 6010); PACIFIC BELL MOBILE SERVICES, (OCN 6672), DEFENDANTS, AND CELLCO PARTNERSHIP, D/B/A VERIZON WIRELESS-CA (OCN 6006); CELLCO PARTNERSHIP, D/B/A VERIZON WIRELESS-NM (OCN 6573); T-MOBILE USA, INC., (OCN 6529); CAL-ONE CELLULAR LP, (OCN 6604); PHONECO, L.P.-CA, (OCN 542B); CINGULAR WIRELESS; CRICKET COMMUNICATIONS, INC., DEFENDANTS-APPELLEES.



Appeal from the United States District Court for the Southern District of California Larry A. Burns, District Judge, Presiding. D.C. No. CV-06-01542-LAB.

The opinion of the court was delivered by: Rawlinson, Circuit Judge

FOR PUBLICATION

OPINION

Argued and Submitted April 17, 2009 -- Pasadena, California

Before: Johnnie B. Rawlinson and N. Randy Smith, Circuit Judges, and Claudia Wilken,*fn1 District Judge.

OPINION

The dispute in this telecommunications case stems from Appellant North County Communication's (North County) contention that it has a private right of action to enforce various compensation arrangements pursuant to the Federal Communications Act. In its complaint, North County, a competitive local exchange carrier (CLEC), alleged that Appellees, as commercial mobile radio service (CMRS) providers, failed to properly compensate North County for terminating their calls on North County's network.

North County challenges the district court's dismissal of its declaratory judgment claims for lack of subject matter jurisdiction. Specifically, the district court held that North County had no private right of action to enforce the compensation arrangements in federal court. On appeal, North County asserts that 47 U.S.C. §§ 251(b)(5), 201(b), 206 and 207, and the implementing Federal Communications Commission (Commission or FCC) regulation, 47 C.F.R. § 20.11, provide the requisite private right of action. We disagree, and affirm the district court's judgment.

I. BACKGROUND

A. Statutory and Regulatory Background

Prior to enactment of the 1996 Telecommunications Act, the Commission established rules governing connections between Local Exchange Carriers (LECs) and CMRS providers. These rules required "mutual compensation for the exchange of traffic between LECs and CMRS providers." In The Matter of Developing a Unified Intercarrier Compensation Regime (T-Mobile Decision), 20 F.C.C.R. 4855, 4856, ¶ 2 (2005) (footnote reference omitted). "In particular, the rules required the originating carrier, whether LEC or CMRS provider, to pay reasonable compensation to the terminating carrier in connection with traffic that terminates on the latter's network facilities." Id. at 4856, ¶ 2 (footnote reference omitted).

The Commission eventually determined that 47 U.S.C. § 251(b)(5) "obligates LECs to establish reciprocal compensation arrangements for the exchange of intraMTA [Major Trading Area] traffic between LECs and CMRS providers."

Id. at 4856, ¶ 3 (footnote reference omitted). For traffic originating and terminating within the same MTA, reciprocal compensation obligations under § 251(b)(5), rather than interstate or intrastate access charges, applied. See id. at 4856-57, ¶ 3 (footnote references omitted).

"Although section 251(b)(5) and the Commission's reciprocal compensation rules reference an arrangement between LECs and other telecommunications carriers, including CMRS providers, they do not explicitly address the type of arrangement necessary to trigger the payment of reciprocal compensation or the applicable compensation regime, if any, when carriers exchange traffic without making prior arrangements with each other." Id. at 4857, ¶ 4 (footnote reference and internal quotation marks omitted). This lack of guidance generated a legion of disputes among the carriers, see id. at 4858, ¶ 6, and prompted clarification from the Commission.

As the existing rules did not expressly preclude the filing of tariffs to set compensation, the Commission clarified that the reciprocal compensation rules did not, at that time, prohibit incumbent LECs from filing state termination tariffs, which CMRS providers were obligated to accept. See id. at 4860, ¶ 9. "Because the existing compensation rules [were] silent as to the type of arrangement necessary to trigger payment obligations, [the Commission found] that it would not have been unlawful for incumbent LECs to assess transport and termination charges based upon a state tariff." Id. at 4860, ¶ 10 (footnote reference omitted). However, the Commission also "amend[ed] [its] rules to make clear [its] preference for contractual arrangements by prohibiting LECs from imposing compensation obligations for non-access CMRS traffic pursuant to tariff." Id. at ¶ 9 (footnote reference omitted).*fn2

Upon the effective date of the Commission's amendments, any "existing wireless termination tariffs [would] no longer apply." Id. at 4863, ¶ 14.

B. The District Court's Dismissal of North County's Third Amended Complaint

According to its third amended complaint, North County "is a CLEC that provides switched and non-switched local exchange, exchange access, and other telecommunication services to end users in California." North County alleged that the defendant-appellees "are CMRS and CLEC providers that offer calling plans allowing calls to areas serviced by [North County]."

North County asserts that it "incurs costs in terminating calls sent to [its] end users by the Defendants' end users." North County alleged that defendant-appellees "knowingly send traffic to [North County] in the absence of an interconnection agreement or a reciprocal compensation agreement*fn3 for [North County] to terminate to its end users customers. As a common carrier, [North County] is obligated to terminate calls received from other carriers to [North County's] end users."

North County alleged that it "began sending monthly bills to the Defendants for traffic termination in January, 2003," and that it "billed the Defendants $0.004 per minute and $0.007 per call set-up, before increasing its rate to the prevailing market rate of $0.011 per minute." According to North County, the defendants refused to pay the bills or enter into a compensation arrangement.

Relying on the T-Mobile Decision, North County contended that "it is proper for a LEC, like [North County], to be compensated for traffic sent to its end-users that originates with CMRS providers pursuant to its tariff on file." North County acknowledged that the Commission "limited the scope of this finding to time periods preceding April 29, 2005, the effective date of the amendments to 47 C.F.R. section 20.11 promulgated by the T-Mobile Decision." According to North County, "CMRS providers still remained obligated to comply with the principles of mutual compensation and to pay reasonable compensation to the LEC for the termination of traffic that originates with the CMRS provider."

In its first cause of action, North County sought declaratory judgment, alleging that "it is entitled to be compensated for the termination of traffic which the Defendants sent and continue to send to [North County's] end users . . ." North County recognized that "while determining the precise rate of compensation for termination of traffic, including call set-up and minutes of use, under these circumstances may be a matter beyond the expertise of this court and within the expertise of the appropriate regulatory body, the FCC has also ...


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