Jurisdictional Statement — Cincinnati Bell Telephone Co. v. Public Utilities Commission
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8 4 -6 28 Office Supreme eourt, US,
FILED
No. OCT, 16 ive
ALEXANDER L. STEVAS,
in the Supreme Court of the United States
October Term, 1984
CINCINNATI BELL TELEPHONE COMPANY,
Appellant,
VS.
THE PUBLIC UTILITIES COMMISSION OF OHIO,
Appellee.
On APPEAL FROM
THE SUPREME CouRT OF OHIO
JURISDICTIONAL STATEMENT
DonaLtp McG. Rose
2500 Central Trust Center
201 East Fifth Street
Cincinnati, Ohio 45202
(513) 651-6800
Counsel of Record for Appellant
Cincinnati Bell Telephone
Company
Of Counsel:
WILLIAM D. BASKETT, III
Mark H. LONGENECKER, JR.
Davin C. Horn
Gary A. GARFIELD
Frost & JACOBS
2500 Central Trust Center
201 East Fifth Street
Cincinnati, Ohio 45202
(513) 651-6800
THE GATES LEGAL PUBLISHING CO., CLEVELAND, OHIO—TEL. (216) 621-5647
a
4
QUESTIONS PRESENTED
This appeal is from a decision of the Supreme Court
of Ohio in which an order of The Public Utilities Com-
mission of Ohio was upheld in the face of a conflicting or-
der of the Federal Communications Commission. The de-
cision of the Supreme Court of Ohio presents two questions
for this Court’s review:
1. Whether Article III, the Full Faith and Credit
Clause (Art. IV, § 1), and the Suprernacy Clause (Art. VI,
para. 2) of the Constitution of the United States, the full
faith and credit statute (28 U.S.C. § 1738) and general
principles cf federal common law require that the Su-
preme Court of Ohio give res judicata effect to a decision
of the United States Court of Appeals for the Fourth Cir-
cuit which involved the same parties and upheld the
validity and preemptive effect of the order of the Federal
Communications Commission.
2. Whether the Supreme Court of Ohio is required to
give effect to the order of the Federal Communications
Commission by reason of the Supremacy Clause (Article
VI, para. 2) of the Constitution of the United States and
28 U.S.C. section 2342(1) and 47 U.S.C. section 402(a)
which reserve to the United States Court of Appeals ex-
clusive jurisdiction to determine the validity of the order
of the Federal Communications Commission.
II
PARTIES BELOW
The parties below were Cincinnati Bell Telephone
Company, appellant, The Public Utilities Commission of
Ohio, appellee, and the Office of the Consumers’ Counsel,
intervenor-appellee. The Ohio Telephone Association filed
a brief as amicus curiae.
CORPORATE AFFILIATIONS
Cincinnati Bell Telephone Company is a wholly-owned
subsidiary of Cincinnati Bell Inc. American Telephone
and Telegraph Company owns 16.1 percent of the outstand-
ing common shares of Cincinnati Bell Inc.
Cincinnati Bell Enterprises Inc. is a wholly-owned sub-
sidiary of Cincinnati Bell Inc. Cincinnati Bell Supply Com-
pany, a wholly-owned subsidiary of Cincinnati Bell Enter-
prises Inc., is a 49 percent partner in a joint venture with
Anixter Bros., Inc. Cincinnati Beil Cellular Systems
Company, a wholly-owned subsidiary of Cincinnati Bell
Enterprises Inc., is a 46 percent partner in a joint venture
with American Information Technologies Corporation.
Cincinnati Bell Inc., American Telephone and Tele-
graph Company, Anixter Bros., Inc. and American Infor-
mation Technologies Corporation are publicly held cor-
porations.
III
TABLE OF CONTENTS
ELE TET I
a cieavonuendianinenvandlniioenntantes II
ecco la iaconenictiniensntient II
Neen ne a nis cccemppsianwvedioetacesenesedinminie III
eT DE pete tot V
cl actcsicen ciembstebeddavabiareciescvedinuss 1
Cee co cee Uncaeietenvisennduvannnnnmiones 1
A. The nature of the proceeding ...........................- 1
B. The judgment below and the notice of appeal 2
C. Jurisdiction is conferred by 28 U.S.C. section
I ca <caciageieabiditaoneeusersubitinessoniniines 3
Constitutional Provisions, Statutes ard Rules ................ 6
I I ac ceenduhenets snceseeeeedpowsnorseoeemmenrene: g
a cues oommtacwesesmubochcumene’ 9
B. Raising the questions 'velow .................22.......---- 14
The Questions Are Substantial 220000... eee 18
A. The Supreme Court of Ohio was required to
give res judicata effect to the judgment of
RI SI cacrirecsunceesomievoneonrenbanbenpiedvecte 19
B. The Supreme Court of Ohio was required to
give effect to the FCC’s Preemption Order .... 23
Neen nen censure sneieecsiduiunicbe nee 26
IV
Appendix (Printed under separate cover):
Opinion of the Supreme Court of Ohio (July 25,
RI assis cegerciacenescanmetorcpdetuedeesieiie centr hineiteerinsliniiiress Al
Entry on Rehearing of The Public Utilities Com-
mission of Ohio (“PUCO Order’) (March 9,
NN nee Ata RPS Rea alee ora “ServivorD Warr rrp A25
Opinion and Order of The Public Utilities Com-
mission of Ohio (“Initial Order”) (January 7,
SUE csseserieen A ecieniietnchindeitentcasieniaccisdiesinanina A36
Decision of the United States Court of Appeals for
the Fourth Circuit in Virginia State Corpora-
tion Commission v. FCC, et al., 737 F.2d 388
(4th Cir. 1984) (Motion for Rehearing En Banc
| SEN EES Es PPP LONE Seo wae Stine CVE eee A131
Memorandum Opinion and Order of the Federal
Communications Commission (“Preemption
Order’), 48 Fed. Reg. 2324 (January 18, 1983) ...A158
Judgment Entry of the Supreme Court of Ohio (July
Rs IN cate cnsestretieiesiciscaioonuntioenmceaepsesaaecsinondbceana A187
Notice of Appeal to the Supreme Court of the
United States (July 25, 1983) .........................-.. A188
Segments of Cincinnati Bell Telephone Company’s
Brief in the Supreme Court of Ohio (May 16,
DE iccwsirrsictntsicbhensseeeaaeslipssastaipiantnciiaeiantan papain A191
Segments of Cincinnati Bell Telephone Company’s
Reply Brief in the Supreme Court of Ohio (Sep-
Se i e Gcecits de qatenentscinticeren irene A200
Letter from Mark H. Longenecker, Jr. to James
Kelly, Clerk of the Supreme Court of Ohio ........ A204
TABLE OF AUTHORITIES
Cases
Atchison, Topeka & Santa Fe Railway Company v.
Public Utilities Commission of California, 346 U.S.
SOR, DER CHD cerinccicencaneniniaaetaneas +
Crescent City Live-Stock Co. v. Butchers’ Union, 120
Weds WO CED sicccsetcteiciccecnscicenaaenee 20
Deposit Bank of Frankfort v. Board of Councilmen of
Frankfort, 191 U.S. 499 (1903) ........2......0.....cccccccs00- 19, 20
Des Moines Navigation & Railroad Company v. Iowa
Homestead Company, 123 1J.S. 552 (1887) ................ 15, 20
Dupasseur v. Rochereau, 88 U.S. (21 Wall.) 130
OUD seccsciercscecoveapananieddenemcndsnctuhetelinaneiauberniiee eae 19, 20, 21
East Ohio Gas Co. v. Cleveland, 106 Ohio St. 489,
BOD Fee Ge CRE, ctctirerctnccmaammnananaed 4
Efros v. Nationwide Corp., 12 Ohio St. 3d 191, 193, 465
DEBE SI, TOG COED eiccecctvckce cielo 20
Embry v. Palmer, 107 U.S. 3 (1883) .......................... 19, 20, 21
Ex Parte Williams, 277 U.S. 267 (1928) ....000000..- +
Federal Communications Commission v. ITT World
Communications, Inc., ........ co) 2 , we eS.
WE CEG vicsenssncensictnssectcntequsdcssneasmapanaiaamanamanans 23, 24
Gelston v. Hoyt, 16 U.S. (3 Wheat.) 246 (1818) ........ 20, 23
Goodson v. McDonough Power Equipment, Inc., 2 Ohio
St. 3d 193, 443 N.E.2d 978 (1983) 00000. 21
Jamison v. Texas, 318 U.S. 413, 417 (1943) 00. 4
John P. King Manufacturing Co. v. City Council of
Ammcete,, BET UTE. BD CUI) cxsvicneniecensccvcesceciscsitinetinnneaions 4
Lake Erie & Western Railroad Co. v. State Public
Utilities Commission, 249 U.S. 422 (1919) 000... 4
VI
Live Oak Water Users’ Association v. Railroad Com-
mission, 269 U.S. 354, 356 (1926) .......................----202-- +
Marine Engineers Beneficial Association v. Interlake
Steamship Company, 370 U.S. 173 (1962) -............... 25
M’Cormick v. Sullivant, 23 U.S. (10 Wheat.) 192 (1825) 20
Metcalf v. Watertown, 153 U.S. 671, 676-77 (1894) ...... 21
Mondou v. New York, New Haven & Hartford Railroad
Cg Bae We 3 CRED Fister cee a 25
Myers v. International Trust Company, 263 U.S. 64, 69
CID kccctstciccivsstinstihierdineatciiegemidine aad enaae 19, 20
Newark Natural Gas & Fuel Co. v. Newt ’k, 92 Ohio St.
393, 399, 111 N.E. 150, 151 (1915), aff’d, 242 USS.
SD CEI niieesiccessinnssintianssreiguaanasaadaaemmigaiuan Maibapiasie 4
Ohio Bell Telephone Company v. Public Utilities Com-
mission of Ohio, 301 U.S. 292 (1937) .....................- 4
Parklane Hosiery Company, Inc. v. Shore, 439 U.S. 322
CFD ancessensevnsarnctuiies nivinsitivenstelinnageei atic aniline 21
Port of Boston Marine Terminal Association v.
Rederiaktiebolaget Transatlantic, 400 U.S. 62 (1970)
oienannensincdcimnnnnieiaiiitssinosiitagainpiitadide cpidemmeaatmaimnd 23
Seaboard Air Line Railroad Company v. Daniel, 333
U.S. 118 (1948) -........... ae sssiaieaicegnipiaime: we
Southwestern Bell Telephone Company v. Arkansas
Public Service Commission, No. LRC 84-247 (E.D.
Ark. March 30, 1984), rev’d, 738 F.2d 901 (8th Cir.
1984), petition for cert. filed ..............0....21.-+-- 12, 17, 22, 23
Southwestern Bell Telephone Company v. Arkansas
Public Service Commission, 738 F.2d 901 (8th Cir.
1984), petition for cert. filed 00.2... 12-13, 23
Stoll v. Gottlieb, 305 U.S. 165, 167 (1938) ................ 19, 20, 21
Sultan Railway Timber Company v. Department of
Labor and Industries, 277 U.S. 135 (1928) —............. 4
VII
Tacoma v. Taxpayers of Tacoma, 357 U.S. 320 (1958) 23
Testa v. Katt, 330 U.S. TOG (1047) nance cccccecessvecesceee 25
Trautwein v. Sorgenfrei, 58 Ohio St. 2d 493, 391 N.E.2d
EID. shccnnssikunincannipintsnsnsiessbacrniniblisihlvssaicapsglaliimiladaaeas 21
Virginia-Carolina Chemical Company v. Kirven, 215
Ss Sig eT GI incccteccscissedaDacaenepssveeaeilsacanicdaaeseass 19, 20
Virginia State Corporation Commission v. Federal
Communications Commission, 737 F.2d 388 (4th
Cir. June 18, 1984) (Motion for Rehearing En Banc
CID avr renciccinicstairecesctintiipuscoioacaa nana 2,9, 10,13
West Side Belt Railroad Co. v. Pittsburgh Censtruc-
tion Company, 219 U.S. 92, 99 (1911) 000... 19, 20
Constitutional Provisions
Ve fe 2S Se ee LF eee 6, 21
We Se Oe OB icctdcctetmicdaeencncnne 7, 20, 21
is eS eee eee 7, 16, 21, 24
Statutes
2B UE IE BITE). iii es 3, 4, 5, 7, 26
RL = eee Le me 3, 4, 7, 26
Be Wi I I ekkietetcarstecicenetceane 8,21
28 US.C. section 2342(1) ...................... RO NOW 1, 8, 16, 23, 24
aT USC. weeties GOR) nonce 1-2, 8-9, 16, 23, 24
Ohio Revised Code section 4903.13, para. 1 _.................. 9,25
Other Authorities
18 C. WricHT, A. MILLER AND E. COOPER, FEDERAL PRAC-
TICE AND PROCEDURE: JURISDICTION § 1468 ............ 20, 21
Degnan, Federalized Res Judicata, 85 YALE L.J. 741
ERIE > einsabicx i cscaphetanaineehitaicaecialecigeaneihienmadiaiaaaiimmnieiealtenis 20
THE FEDERALIST No. 80 (A. Hamilton) (E. Scott ed.
EIEN... «sccccmneneithaoaatiab lenin momaaibcipedcitiadtncidiainsaateemaannaian 21
OPINIONS BELOW
The opinion of the Supreme Court of Ohie affirming
The Public Utilities Commission of Ohio’s Entry on Re-
hearing is reported at 12 Ohio St. 3d 280, 466 N.E.2d 848
(1984). A copy of this opinion appears in the appendix
at pages Al through A25.
The Entry on Rehearing of The Public Utilities Com-
mission of Ohio (the “PUCO Order”) in which it refused to
obey a Federal Communicaticns Commission order pre-
empting inconsistent state depreciation policies and rates
is unreported. A copy of the PUCO Order appears in
the appendix at pages A25 through A35.
The Opinion and Order of The Public Utilities Com-
mission of Ohio in which it acknowledged that it was
obliged to obey the Federal Communications Commission
Preemption Order is unreported. A copy of this order
appears in the appendix at pages A36 through A130.
This Opinion and Order was reversed by the PUCO Order,
supra.
JURISDICTION
A. The nature of the proceeding.
This dispute arises from the refusal of The Public
Utilities Commission of Ohio (the “PUCO”) to obey an
order (the “Preemption Order’) of the Federal Com-
munications Commission (“FCC”) which held that federal
law preempts the states froin prescribing a methcd of
calculating depreciation of telecommunications equipment
that is contrary to the method prescribed by the FCC. The
validity of the Preemption Ordcr was appealed to the
United States Court of Appeals for the Fourth Circuit, the
only court with jurisdiction to determine the validity of
that order as provided by 28 U.S.C. section 2342(1) and
47 U.S.C. section 402(a). The Fourth Circuit upheld the
as |
2
validity of the Preemption Order. Virginia State Cor-
poration Commission v. Federal Communications Commis-
sion, 737 F.2d 388 (4th Cir. 1984), (Motion for Rehearing
En Banc denied.)
Cincinnati Bell Telephone Company (“Cincinnati
Bell”) appealed to the Supreme Court of Ohio the validity
of the PUCO Order in which the PUCO refused to obey
the Preemption Order. Despite the prior judgment of the
Fourth Circuit and despite the fact that all parties in the
Ohio Supreme Court were also parties to the appeal in
the Fourth Circuit, the Ohio Supreme Court upheld the
PUCO Order. In so doing, the Ohio Supreme Court re-
fused to apply federal law—that is, the Preemption Order
and the statutory grant of exclusive jurisdiction in the
Court of Appeals to review FCC orders.
On July 25, 1984, the same day that the Ohio Supreme
Court issued its decision, Cincinnati Bell filed a notice
of appeal to this Court and moved the Ohio Supreme Court
for a stay of its judgment. The Ohio Supreme Court
ultimately denied that motion. On August 2, 1984, acting
on an application filed by Cincinnati Bell, Chief Justice
Warren E. Burger granted a stay of the judgment below
pending receipt of memoranda from the PUCO and the
Office of the Consumers’ Council (the “OCC”) opposing
the stay. On August 21, 1984, after receipt of such memo-
randa and a reply memorandum filed by Cincinnati Bell,
Chief Justice Burger issued an order narrowing the scc»e
of the stay to the depreciation issue, and continuing tle
stay pending final disposition of the appeal to this Court.
eR ORI
B. The judgment below and the notice of appeal.
The judgment of the Ohio Supreme Court affirming
the PUCO Order was entered on July 25, 1984. A copy of
3
the judgment is included in the appendix at page A187.
Cincinnati Bell filed a notice of appeal to this Court with
the Clerk of the Supreme Court of Ohio on July 25, 1984.
A copy of the notice of appeal is included in the appendix
at pages A188 through A190. In accordance with Rule
12 of this Court, the appeal is being docketed within 90
days from the date of entry of the judgment of the Su-
preme Court of Ohio.
C. Jurisdiction is conferred by 28 U.S.C. section
1257(1) and (2).
Cincinnati Bell invokes this Court’s jurisdiction under
28 U.S.C. section 1257(1) and (2). Section 1257 provides
for an appeal to this Court under certain circumstances
from the decision of the highest court of a state. The Ohio
Supreme Court is the highest court in the State of Ohio.
The Ohio Supreme Court upheld the PUCO Order
in the face of Cincinnati Bell’s argument that it is re-
pugnant to the Constitution and laws of the United States.
Subsection (2) of section 1257 provides for an appeal to this
Court when the validity of a “state statute” is questioned
as being repugnant to the Constitution, treaties or laws
of the United States and is upheld by the highest court
in the state. Cincinnati Bell appealed the PUCO Order to
the Ohio Supreme Court on the basis that it is repugnant
to the Supremacy Clause of the Constitution of the United
States, the Preemption Order and 47 U.S.C. section 220 of
the Communications Act of 1934. Thus the validity of the
PUCO order was questioned as being repugnant to federal
law. See the opinion of the Supreme Court of Ohio at page
A7 and portions of Cincinnati Bell’s briefs below included
in the appendix at pages A191-A203.
4
The PUCO Order is a “state statute” for purposes of
28 U.S.C. section 1257{2) from which an appeal to this
Court may be taken. Ohio Bell Telephone Company v.
Public Utilities Commission of Ohio, 301 U.S. 292 (1937).
In that case, the Court permitted an appeal under section
237 of the Judicial Code, a predecessor to 28 U.S.C. section
1257, from a ratemaking and refund order of the PUCO
that had been affirmed by the Ohio Supreme Court.
Further, on numerous other occasions this Court has
interpreted the term “state statute” as used in section
1257(2) to include administrative orders of a legislative
nature. See, e.g., Atchison, Topeka & Santa Fe Railway
Company v. Public Utilities Commission of California, 346
U.S. 346, 348 (1953); Jamison v. Texas, 318 U.S. 413, 417
(1943); John P. King Manufacturing Co. v. City Council of
Augusta, 277 U.S. 100 (1928); Ex Parte Williams, 277 U.S.
267 (1928); Sultan Railway Timber Company v. Depart-
ment of Labor and Industries, 277 U.S. 135 (1928); Live
Oak Water Users’ Association v. Railroad Commission, 269
U.S. 354, 356 (1926); Lake Erie & Western Railroad Co. v.
State Public Utilities Commission, 249 U.S. 422 (1919).
The Ohio Supreme Court long ago concluded that in Ohio
ratemaking is legislative in nature. Newark Natural Gas
& Fuel Co. v. Newark, 92 Ohio St. 393, 399, 111 N.E. 150,
151 (1915), aff’d, 242 U.S. 405 (1917). See also East Ohio
Gas Co. v. Cleveland, 106 Ohio St. 489, 140 N.E. 416
(1922). Accordingly, the PUCO Order below is a “state
statute” for purposes of section 1257(2) and that section
confers jurisdiction on this Court to hear Cincinnati Bell’s
appeal.
When the Ohio Supreme Court found the FCC’s Pre-
emption Order ultra vires it necessarily was holding it
to be invalid. Accordingly, jurisdiction is also conferred
on this Court by subsection (1) of section 1257 which
5)
provides for an appeal to this Court where the validity
of a “statute of the United States” is placed in question
and the highest court in the state decides against its
validity. The term “statute of the United States’ in-
cludes an administrative order of a legislative nature.
Seaboard Air Line Railroad Company v. Daniel, 333 US.
118 (1948). The Preemption Order is legislative in
nature.’ Cincinnati Bell appealed to the Ohio Supreme
Court on the basis that the PUCO Order had been pre-
empted by the Preemption Order. See the opinion
of the Supreme Court of Ohio at page A7 and portions of
Cincinnati Bell’s briefs below included in the appendix
at pages A191-A203. The PUCO and the OCC argued that
the FCC lacked authority to issue the Preemption Order and
that therefore the Preemption Order was void. The Ohio
Supreme Court agreed with the PUCO and OCC and
held that the Preemption Order was ultra vires. See pages
A7-A9. Because the validity of the Preemption Order was
placed directly in question and the Supreme Court of
Ohio ruled against its validity, an appeal is also proper
under section 1257(1).
1. The Preemption Order consisted of two parts: consid-
eration of a petition filed by American Telephone and Telegraph
(“AT&T”) and of a petition for declaratory judgment filed by
General Telephone Company of Ohio (“GTE’’). Cincinnati Bell
maintains and argued below that the portion of the Preemption
Order pertaining to AT&T’s petition was legislative in nature but
that the portion of the Preemption Order pertaining to GTE’s
petition was adjudicative in nature. The PUCO and OCC argued
below that the entire Preemption Order was legislative in nature.
The Ohio Supreme Court specifically held that the Preemption
Order “was legislative, as opposed to adjudicative, in nature.”
See page A7.
CONSTITUTIONAL PROVISIONS,
STATUTES AND RULES
Constitutional Provisions
U.S. Cons. art. III, §§ 1 and 2, para. 1:
ARTICLE III
Section 1. The judicial Power of the United
States, shall be vested in one supreme Court, and
in such inferior Courts as the Congress may from
time to time ordain and establish. The Judges, both
of the supreme and inferior Courts, shall hold their
Offices during good Behaviour, and shall, at stated
Times, receive for their Services, a Compensation,
which shall not be diminished during their Con-
tinuance in Office.
Section 2. The judicial Power shall extend to all
Cases, in Law and Equity, arising under this Con-
stitution, the Laws of the United States, and Treaties
made, or which shall be made, under their Authority;
—to all Cases affecting Ambassadors, other public
Ministers and Consuls;—to all Cases of admiralty and
maritime Jurisdiction;—to Controversies to which the
United States shall be a Party;—to Controversies be-
tween two or more States;—between a State and Citi-
zens of another State;—between Citizens of different
States;—between Citizens of the same State claiming
Lands under Grants of different States, and between
a State, or the Citizens thereof, and foreign States,
Citizens or Subjects.
7
U.S. Cons. art. IV, § 1:
ARTICLE IV
Section 1. Full Faith and Credit shall be given
in each State to the public Acts, Records, and judicial
Proceedings of every other State. And the Congress
may by general Laws prescribe the Manner in which
such Acts, Records and Proceedings shall be proved,
and the Effect thereof.
U.S. Cons. art. VI, para. 2:
ARTICLE VI
a « oa * e
This Constitution, and the Laws of the United
States which shall be made in Pursuance thereof; and
all Treaties made, or which shall be made, under the
Authority of the United States, shall be the supreme
Law of the Land, and the Judges in every State shall
be bound thereby, any Thing in the Constitution or
Laws of any State to the Contrary notwithstanding.
Statutes
28 U.S.C. section 1257( 1) and (2):
Final judgments or decrees rendered by the high-
est court of a State in which a decision could be had,
may be reviewed by the Supreme Court as follows:
(1) By appeal, where is drawn in question the
validity of a treaty or statute of the United States
and the decision is against its validity.
(2) By appeal, where is drawn in question the
validity of a statute of any state on the ground of its
being repugnant to the Constitution, treaties or laws
of the United States, and the decision is in favor of its
validity.
28 U.S.C. section 1738:
The Acts of the legislature of any State, Territory,
or Possession of the United States, or ccpies thereof,
shall be authenticated by affixing the seal of such
State, Territory or Possession thereto.
The records and judicial proceedings of any court
of any such State, Territory or Possession, or copies
thereof, shall be proved or admitted in other courts
within the United States and its Territories and Pos-
sessions by the attestation of the clerk and seal of the
court annexed, if a seal exists, together with a cer-
tificate of a judge of the court that the said attesta-
tion is in proper form.
Such Acts, records and judicial proceedings or
copies thereof, so authenticated, shall have the same
full faith and credit in every court within the United
States and its Territories and Possessions as they have
by law or usage in the courts of such State, Territory
or Possession from which they are taken. June 25,
1948, c. 646, 62 Stat. 947.
28 U.S.C. section 2342 (1):
The court of appeals has exclusive jurisdiction to
enjoin, set aside, suspend (in whole or in part), or to
determine the validity of—
(1) all final orders of the Federal Communi-
cations Commission made reviewable by section
402 (a) of title 47.
47 U.S.C. section 402(a):
(a) Procedure
Any proceeding to enjoin, set aside, annul, or
suspend any order of the Commission under this chap-
9
ter (except those appealable under subsection (b) of
this section) shall be brought as provided by and in
the manner prescribed in chapter 158 of Title 28.
Ohio Revised Code section 4903.13, para. 1:
A final order made by the public utilities com-
mission shall be reversed, vacated, or modified by the
supreme court on appeal, if, upon consideration of the
record, such court is of the opinion that such order
was unlawful or unreasonable.
STATT MENT OF THE CASE
A. The facts.
On March 1, 1982, Cincinnati Bell filed a rate case,
Case No. 81-1338-TP-AIR, with the PUCO seeking authority
to adjust its rates and charges for Ohio customers. In its
application Cincinnati Bell determined its depreciation ex-
penses utilizing the “remaining life” and “equal life group”
depreciation accrual rates that had been prescribed by the
FCC for Cincinnati Bell. See pages A74-A75.
Subsequently, by Memorandum Opinion and Order
adopted December 22, 1982, the Preemption Order, the FCC
helc that the states were preempted from prescribing
depreciation rates different from those prescribed by the
FCC for telecommunications equipment subject concur-
rently to both state and federal jurisdiction.* The Pre-
emption Order appears in the appendix at pages A158
through A186. The PUCO, the OCC and Cincinnati Bell
2. As a practical matter, most telecommunications equip-
ment is used in both intrastate and interstate communications.
Virginia State Corporation Commission v. Federal Communica-
tions Commission, 737 F.2d at 390, included in the appendix at
page A139.
10
(joining with American Telephone and Telegraph Com-
pany and the other Bell System Companies) participated in
these proceedings. The finding of the FCC was based on
its conclusion that section 220 of the Communications Act
preempts the states with respect to equipment subject
concurrently to both federal and state jurisdiction and, in
the alternative, that it was exercising its legislative au-
thority to mandate such preemption in order to avoid
frustration of federal policies.
The Preemption Order was appealed to the United
States Court of Appeais for the Fourth Circuit by the
Virginia State Corporation Commission. That case is cap-
tioned Virginia State Corporation Commission v. Federal
Communications Commission, 737 F.2d 388 (4th Cir. 1984)
(Motion for Rehearing En Banc denied). All parties
before this Court (Cincinnati Bell, the PUCO and the
OCC) intervened and became parties in the Fourth Cir-
cuit appeal of the Preemption Order. The Virginia State
Corporation Commission, along with the PUCO, the OCC
and the other intervening state regulatory agencies, argued
that the FCC lacked authority to preempt the states from
prescribing different depreciation rates and that, therefore,
the Preemption Order was not a valid order. See page
A137. On June 18, 1984, the Fourth Circuit issued a de-
cision in which it upheld the validity of the Preemption
Order. The court specifically concluded that preemption
by the FCC was a valid exercise of legislative authority.
The Fourth Circuit’s decision appears in the appendix at
pages A131 through A157.
On January 7, 1983, in compliance with the FCC’s
Preemption Order, the PUCO issued an Opinion and Order
(the “Initial Order”: in Cincinnati Bell’s rate case re-
ferred to above, Case No. 81-1338-TP-AIR, wherein the
“remaining life’ and “equal life group” depreciation ac-
crual rates prescribed for Cincinnati Bell by the FCC were
11
adopted by the PUCO. The PUCO expressly recognized
that it was compelled by principles of federal preemption
to adopt these depreciation methods. The Initial Order
appears in the appendix at pages A36 through A130.’
On February 7, 1983, the OCC filed an Application
for Rehearing with the PUCO. The PUCO granted in part
the OCC’s Application for Rehearing by entering an Entry
on Rehearing, dated March 9, 1983. Reversing its prior
decision in the Initial Order, the PUCO concluded in the
Entry on Rehearing (the “PUCO Order’’) that it was not
bound to follow the FCC’s Preemption Order and ordered
Cincinnati Beil to calculate its depreciation expenses util-
izing the “whole-life” method of calculating depreciation,
a different depreciation accrual method from that ordered
by the FCC. The PUCO also ordered Cincinnati Bell to
utilize different rates under the “equal life group” depre-
ciation method from the rates prescribed by the FCC for
Cincinnati Bell. The effect of the PUCO Order was to
place Cincinnati Bell in the position of being subject to
two binding, yet conflicting, orders respecting the method-
ology and rates it is required to use in depreciating the
same equipment—one from the FCC and one from the
PUCO. The PUCO Order appears in the appendix at
pages A25 through A35.
On March 9, 1983, Cincinnati Bell filed its appeal to
the Ohio Supreme Court. Shortly thereafter, the Ohio
Supreme Court granted a motion by Cincinnati Bell for
a stay of the PUCO Order pending that appeal. On
appeal, Cincinnati Bell argued (1) that the PUCO Order
was contrary to federal law in that it prescribed deprecia-
tion rates which had been preempted by the FCC’s Pre-
3. The Initial Order addresses numerous issues besides the
depreciation issue which are not before the Court on appeal.
The depreciation issue is discussed at pages A74-A75.
12
emption Order and by section 220 of the Communications
Act of 1934, (2) that the Ohio Supreme Court did not
have jurisdiction to review the validity of the Preemption
Order and (3) that the Ohio Supreme Court was bound to
give effect to the Preemption Order unless and until it
was reversed on appeal by the Court of Appeals of the
United States.
On July 25, 1984, one month after the Fourth Circuit
issued its decision upholding the Preemption Order, the
Ohio Supreme Court entered a judgment affirming the
PUCO Order. The opinion of the Ohio Supreme Court
appears in the appendix at pages Al-A25.* In re-
sponse to Cincinnati Bell’s argument that the Ohio Su-
preme Court was bound to give effect to the Preemption
Order by reason of its lack of jurisdiction to review that
order, the court held it was exercising jurisdiction to
review the PUCO Order, not the Preemption Order. The
sole authority cited by the Ohio Supreme Court in sup-
port of this limited view of its jurisdiction was South-
western Bell Telephone Company v. Arkansas Public Ser-
vice Commission, No. LRC 84-247 (E.D. Ark. March 30,
1984), rev’d, 738 F.2d 901 (8th Cir. 1984), petition for cert.
filed. The Ohio Supreme Court then proceeded to quote
at length the district court’s finding in Southwestern Bell
that the Preemption Order was ultra vires. The Ohio
Supreme Court concluded by stating its agreement with
the district court’s analysis and finding the PUCO Order
to be lawful. See pages A7-A9.
However, the Ohio Supreme Court failed to acknowl-
edge that the district court decision in Southwestern Beil
had been reversed by the Eighth Circuit. See South-
western Bell Telephone Company v. Arkansas Public Ser-
4. Again, this opinion addresses numerous issues other than
depreciation. The depreciation issue, the only issue appealed to
this Court, is discussed at pages A2-A9 and A20-A23,
13
vice Commission, 738 F.2d 901 (8th Cir. 1984), petition
for cert. filed. The court also ignored the res judicata®
effect of the Fourth Circuit’s prior decision upholding
the Preemption Order in Virginia State Corporation Com-
mission v. Federal Communications Commission, 737 F.2d
388 (4th Cir. 1984). Indeed, the majority per curiam
opinion did not even cite or acknowledge the Fourth Cir-
cuit decision. To summarize, the Ohio Supreme Court sim-
ply refused to apply federal decisions, federal statutes and
a federal administrative order.
In a concurring opinion, Chief Justice Celebrezze
of the Ohio Supreme Court did acknowledge that the
Fourth Circuit had upheld the Preemption Order in
Virginia State Corporation Commission. He stated that
a majority of the Ohio Supreme Court would not acknowl-
edge federal preemption of matters traditionally subject
to state regulation absent specific congressional intent or
a judicial declaration binding on the Ohio Supreme Court.
See page A20. Thus, although acknowledging that the
Fourth Circuit already had decided the very issue of pre-
emption that the Ohio Supreme Court was now deciding, a
majority of the Ohio Supreme Court concluded that the
Fourth Circuit’s decision was not entitled to res judicata
effect. He also stated that the Ohio Supreme Court did
not have jurisdiction to enforce the Preemption Order and,
that, therefore, the PUCO Order would be enforced be-
cause it conformed to Ohio law. See page A21.
Justice William B. Brown dissented, arguing that the
majority’s “callous disregard” of the decision released by
the Fourth circuit, to which the parties in this action
were parties, was ill-advised. Justice Holmes concurred in
this dissent. See pages A21-A23.
5. The term res judicata is used throughout this Statement
to include collateral estoppel.
14
The Ohio Supreme Court’s decision complicated Cin-
cinnati Bell’s already precarious position. Cincinnati Bell
was not only subject to ccnflicting state and federal ad-
ministrative orders, it now also became subject to con-
flicting state and federal court orders—those of the Ohio
Supreme Court and the Court of Appeals for the Fourth
Circuit. Accordingly, Cincinnati Bell immediately filed
a notice of appeal to this Court. A copy of the Notice of
Appeal to the Supreme Court of the United States appears
in the appendix at pages A188-A190.
B. Raising the questions below.
This appeal presents two questions for the Court’s re-
view. These questions are as follows: (1) Whether the
Ohio Supreme Court was required to give res judicata
effect to the decision of the Fourth Circuit upholding the
validity and preemptive effect of the FCC’s Preemption
Order, and (2) whether the Ohio Supreme Court was re-
quired to give effect directly to the Preemption Order.
Both questions were raised and argued below.
The first question, involving res judicata, was raised
in the Ohio Supreme Court in Cincinnati Bell’s brief on
the merits, see pages A191-A199, and in its reply brief,
see pages A200-A203. This question was initially raised
with respect to the res judicata effects of the Preemption
Order itself as an administrative decision. Specifically,
Cincinnati Bell’s first proposition of law in its brief on the
merits stated:
When the issue of federal preemption of state pre-
scribed depreciation rates has been decided adversely
to the PUCO in an administrative proceeding to which
the PUCO was a party, the PUCO is bound by prin-
ciples of res judicata to give effect to that admin-
istrative decision.
a |
15
See page Al95. The argument and authority advanced by
Cincinnati Bell in support of that proposition are set forth
in the appendix at pages A195-A199.
Cincinnati Bell also emphasized in both briefs that
the Fourth Circuit review proceeding was pending and
that the PUCO, OCC and Cincinnati Bell were parties to
that proceeding. In its reply brief Cincinnati Bell vointed
to the Fourth Circuit case and stated that the decision
cf the Fourth Circuit would be binding on the parties in
the Ohio Supreme Court. See page A203. Further, on
June 19, 1984, the day after the Fourth Circuit rendered
its decision, Cincinnati Bell sent a copy of that decision
to the Ohio Supreme Court and argued that it was “dis-
positive of the depreciation issues pending before the
[Ohio] Supreme Court.” See pages A204-A205.
The per curiam opinion of the Ohio Supreme Court
did not mention the Fourth Circuit decision nor did it ex-
plain why that decision was not being given res judicata
effect.” The majority said only that the Preemption Or-
der itself was not to be given res judicata effect because
it was legislative and not adjudicative. See pages A6-A7.
However, Chief Justice Celebrezze’s concurring opinion
specifically discussed the Fourth Circuit decision stating
that a majority of the court would not uphold the Pre-
emption Order absent specific congressional intent or a
decision of a court with authority to bind the Ohio Su-
preme Court. See page A20. It must be inferred that
a majority of the Ohio Supreme Court did not consider
the Fourth Circuit decision to be binding even though
it involved the same issue and all parties to the Ohio Su-
6. This Court has held that the lower court’s failure to rule
on an issue before it does not preclude this Court from addressing
that issue. Des Moines Navigation & Railroad Company v. Iowa
Homestead Company, 123 U.S. 552, 555-56 (1887).
16
preme Court appeal were parties to the Fourth Circuit
proceeding.
The second question presented for review by this
Court is whether, regardless of res judicata principles, the
Ohio Supreme Court is required tc give effect to the
FCC’s Preemption Order by reason of the Supremacy
Clause (Article VI, para. 2) of the Constitution of the
United States and 28 U.S.C. section 2342(1) and 47 U.S.C.
section 402 (a).
That the Ohio Supreme Court must give effect to
the order of the FCC was unequivocally raised below.
Cincinnati Bell stated in its brief on the merits that:
Even absent principles of res judicata, the Court must
find, under well established judicial standards for de-
terming the issue of federal preemption, that the FCC
has preempted the PUCO’s authority to prescribe
depreciation rates inconsistent with those prescribed
by the FCC. It has long been an established principle
of constitutional law that the Supremacy Clause (Ar-
ticle VI, clause 2) of the Constitution of the United
States mandates that federal law preempts state law
where there is a conflict between the two.
See page A199.
Cincinnati Bell also argued below that:
. neither the PUCO nor this Court has the juris-
diction to review the FCC Preemption Order and pass
upon its merits. The United States Courts of Apveals
have exclusive jurisdiction under the Communications
Act and the Administrative Orders Review Act to re-
view final orders of the FCC. Compare 47 U.S.C.
§ 40Z(a) with 28 U.S.C. § 2342; City of Peoria v. Gen-
eral Electric Cablevision Corp. (7th Cir. 1982), 690
F.2d 116. Thus, unless and until the FCC Preemption
Order is overruled by the United States Court of Ap-
bide tus mew ies.
17
peals for the Fourth Circuit, it still is a final and bind-
ing order not subject to collateral attack by the PUCO
or the OCC, either in the PUCO Rehearing Order or
in this Ccurt.... It follows that this Court should
find that the PUCO erred to the prejudice of Cincinnati
Bell in the PUCO Rehearing Order when it failed to
give effect to the FCC Preemption Order and that the
PUCO Rehearing Order thus is unlawful insofar as it
purports to prescribe depreciation accrual rates for
Cincinnati Bell which differ from those prescribed by
the FCC.
See pages A198-A199.
The Ohio Supreme Court’s response to this argument
was two-fold. First, the Ohio Supreme Court quoted
with approval the district court’s conclusion in South-
western Bell that the Preemption Order was ultra
vires. See pages A7-A9. Thus, the Ohio Supreme Court
refused to give effect to the Preemption Order for this
reason. Second, although inconsistently, the Ohio Su-
preme Court acknowledged that it lacked jurisdiction to
determine the validity of the Preemption Order. The
court specifically said it was reviewing the PUCO Order,
not the FCC order, and it then proceeded to find the
PUCO Order “reasonable and lawful’ in the face of
the conflicting Preemption Order. See page A7. Thus,
the court simply refused to give effect to the Preemption
Order. This position was articulated by Chief Justice
Celebrezze in his concurring opinion. He stated that the
Ohio Supreme Court does not have jurisdiction to give ef-
fect to the Preemption Order and that, because the PUCO
Order is in conformity with Ohio law, it is valid. See
page A21.
Thus, both questions presented for this Court’s review
were raised below and rejected by the Ohio Supreme
Court.
18
THE QUESTIONS ARE SUBSTANTIAL
This appeal presents substantial federal questions.
The first question in its most basic form is whether a state
court must give res judicata effect to the judgment of
the United States Court of Appeals involving the same
parties and issue. It is not an exaggeration to say that
this question involves principles fundamental to our system
of federalism as outlined in the Constitution.
The second question is, in its simplest form, whether a
state court is required to give effect to an FCC order by
reason of the Supremacy Clause. Congress vested the
Court of Appeals with exclusive jurisdiction to review
FCC orders; accordingly, state courts are deprived of
jurisdiction to review the validity of FCC orders. There-
fore, must not the states give effect to a final FCC order
unless and until the order is reversed by the Court of
Appeals? This question addresses the viability of the
scheme of exclusive review established by Congress. More
importantly, the Ohio Supreme Court’s open refusal to
give effect to the FCC’s Preemption Order, that is, to
apply federal law, attacks head-on the continued vitality
of federal supremacy.
While these questions are substantial and have funda-
mental implications, prior decisions of this Court demon-
strate that the Ohio Supreme Court committed gross error
in ruling upon them against Cincinnati Bell. Accord-
ingly, Cincinnati Bell respectfully submits that it is
appropriate for the Court summarily to reverse the
decision of the Ohio Supreme Court. Plenary con-
sideration of this appeal is essential only if the Court is
inclined to review the continued validity of numerous de-
cisions of this Court and the well-established principles
discussed below. If the Court is not so inclined, prior de-
19
cisions of this Court permit summary reversal. If the
Court, however, is inclined to review the decisions and
principles discussed below, Cincinnati Bell urges the Court
to order briefing on the merits and oral argument for the
reason that the questions presented involve long standing
principles governing the relationship between the state
and federal governments and the authority of the federal
judiciary—principles which are fundamental to our Con-
stitution and system of federalism.
A. The Supreme Court of Ohio was required to
give res judicata effect to the judgment of
the Fourth Circuit.
In numerous cases, this Court has been confronted
with the question of whether and to what extent state
courts must give res judicata effect to the judgments of
federal courts. The Court has consistently stated that this
question raises a federal question subject to review by the
Court. See, e.g., Stoll v. Gottlieb, 305 U.S. 165, 167 (1938);
Myers v. International Trust Company, 263 U.S. 64, 69
(1923); West Side Belt Railroad Co. v. Pittsburgh Con-
struction Company, 219 U.S. 92, 99 (1911); Virginia-Caro-
lina Chemical Company v. Kirven, 215 U.S. 252, 257
(1909); Deposit Bank of Frankfort v. Board of Councilmen
of F'rankfort, 191 U.S. 499, 514-15 (1903); Embry v. Palmer,
107 U.S. 3, 8-9 (1883); Dupasseur v. Rochereau, 88 U.S.
(21 Wall.) 130, 131 (1875). Here, the federal question
takes on added importance because of the direct conflict
between the Ohio Supreme Court and the Fourth Circuit
on the validity of the FCC’s Preemption Order, an issue of
central importance to the structure of the telecommunica-
tions industry.
In these cases, as well as cthers, the Court has re-
peatedly held that state courts must give res judicata ef-
20
fect to decisions of federal courts. See, eg., Stoll v.
Gottlieb, 305 U.S. 165 (1938); Myers v. International Trust
Company, 263 U.S. 64, 69 (1923); West Side Belt Railroad
Co. v. Pittsburgh Construction Company, 219 U.S. 92
(1911); Virginia-Carolina Chemical Company v. Kirven,
215 U.S. 252 (1909); Deposit Bank of Frankfort v. Board
of Councilmen of Frankfort, 191 U.S. 499 (1903); Des
Moines Navigation & Railroad Company v. Iowa Home-
stead Company, 123 U.S. 552 (1887); Crescent City Live-
Stock Co. v. Butchers’ Union, 120 U.S. 141 (1887); Embry
v. Palmer, 107 U.S. 3 (1883); Dupasseur v. Rochereau, 88
U.S. (21 Wall.) 130 (1875); M’Cormick v. Sullivant, 23
U.S. (10 Wheat.) 192 (1825); Gelston v. Hoyt, 16 U.S. (3
Wheat.) 246 (1818). See generally Degnan, Federalized
Res Judicata, 85 YALE L.J. 741 (1976); 18 C. Wricut, A.
MILLER AND E. Cooper, FEDERAL PRACTICE AND PROCEDURE:
JURISDICTION § 1468, at 648-49. Indeed, on the same day
that the Ohio Supreme Court issued its decision in the
case at bar, it decided Efros v. Nationwide Corp., 12 Ohio
St. 3d 191, 193, 465 N.E.2d 1309, 1311 (1984), in which
it also acknowledged this proposition; the court said
“TBloth the federal and state courts may proceed con-
currently with the litigation, at least until judgment is
obtained in one of them which may be raised as res judicata
as to the other.”
Although the principle that state courts must give
res judicata effect to decisions of federal courts is firmly
established, it is clear that no provision of the Constitu-
tion or federal law explicitly so states.’ The Court has,
7. The full faith and credit clause makes no mention of
the states giving due effect to the judicial proceedings of the
federal government. U.S. Cons. art. IV, § 1. This omission may
well have been due to the compromise by the Framers leaving
it for Congress to create inferior federal courts. 18 C. WRIGHT,
A. MILLER AND E. COOPER, FEDERAL PRACTICE AND PROCEDURE:
JURISDICTION § 1468, at 649.
21
therefore, indicated that this principle of preclusion has
its roots in a number of places, including the full faith
and credit statute, Embry v. Palmer, 107 U.S. at 9-10, the
inherent judicial power of the United States under Article
III, Dupasseur v. Rochereau, 88 U.S. at 131, and the fed-
eral common law doctrine of res judicata, Stoll v. Gottlieb,
305 U.S. at 171. This principle is also dictated by the
concept of federalism, supremacy, and the full faith and
credit clause. See generally Metcalf v. Watertown, 153
U.S. 671, 676-77 (1894); 18 C. Wricur, A. MILLER ANp E.
CoopPEeR, FEDERAL PRACTICE AND PROCEDURE: JURISDICTION
§ 1468, at 649-50. Regardless of which provision of the
Constitution or federal law mandates preclusion, it is
manifestly clear as the Court has held throughout this
country’s history that preclusion is mandated. Id; see
generally THE FEDERALIST No. 80 (A. Hamilton) (E. Scott
ed. 1894).
The application of the above principles to this case
is not affected by the issue of whether Ohio or federal
res judicata law applies. Applying either law, the de-
cision of the Fourth Circuit upholding the Preemption
Order is binding on the Ohio Supreme Court. Ohio
has maintained traditional res judicata requirements:
“[A] point of law or a fact which was actually and di-
rectly in issue in the former action, and was there passed
upon and determined by a court of competent jurisdic-
tion, may not be drawn in question in a subsequent action
between the same parties or their privies.” Trautwein v.
Sorgenfrei, 58 Ohio St. 2d 493, 391 N.E.2d 326 (1979); see
also Goodson v. McDonough Power Equipment, Inc., 2
Ohio St. 3d 193, 443 N.E.2d 978 (1983). Federal res
judicata law differs from Ohio law only in that the mutu-
ality requirement has been relaxed in some circumstances.
See Parklane Hosiery Company, Inc. v. Shore, 439 U.S.
322 (1979).
22
Here, the traditional res judicata requirements
are satisfied. The validity of the Preemption Order
was “actually and directly in issue” in the Fourth Circuit.
The Fourth Circuit determined the Preemption Order and
its preemptive effect on the PUCO to be valid and to
bar the state ratemaking agencies, including the PUCO,
from prescribing depreciation rates which are inconsistent
with those prescribed by the FCC. Cincinnati Bell ap-
pealed to the Ohio Supreme Court specifically on the basis
that the PUCO Order was contrary to the Preemption
Order in that it prescribed rates which were inconsistent
with those prescribed by the FCC. By way of defense,
both the PUCO and the OCC argued that the Preemption
Order was invalid and, therefore, not binding on the
PUCO. Accordingly, any decision in favor of the validity
of the PUCO Order necessarily included a finding that the
Preemption Order was invalid. In fact, this is exactly what
the Ohio Supreme Court did when it stated its agreement
with the district court’s finding in Southwestern Bell that
the Preemption Order was “ultra vires.” Thus, the same
issue that was before the Ohio Supreme Court had pre-
viously been determined by the Fourth Circuit. Likewise,
all parties in the Ohio Supreme Court (Cincinnati Bell,
the PUCO and the OCC) were also parties to the proceed-
ings in the Fourth Circuit.
Therefore, principles of res judicata coupled with the
Constitution and laws of the United States, as well as
numerous decisions of this Court, required that the Ohio
Supreme Court give effect to the Fourth Circuit judgment
upholding the Preemption Order. The Ohio Supreme
Court’s failure to give res judicata effect to the Fourth
Circuit judgment was in error.
23
B. The Supreme Court of Ohio was required to
give effect to the FCC’s Preemption Order.
Recently, this Court held in Federal Communications
Commission v. ITT World Communications, Inc., ........ US.
paper , 104 S. Ct. 1936 (1984), that the United States Court
of Appeals has exclusive jurisdiction under 28 U.S.C. sec-
tion 2342(1) and 47 U.S.C. section 402(a) to review final
FCC orders. In that case the Court ruled that a federal dis-
trict court does not have jurisdiction to entertain a suit to
enjoin FCC action as ultra vires. In the case at bar, the
Ohio Supreme Court decided that it had jurisdiction to
determine whether the FCC’s Preemption Order was ultra
vires. The court explicitly agreed with the district court’s
decision in Southwestern Bell Telephone Company v.
Arkansas Public Service Commission, No. LRC 84-247 (E.D.
Ark, March 30, 1984), rev’d, 738 F.2d 901 (8th Cir. 1984),
petition for cert. filed, which had held the Preemption
Order to be ultra vires. See pages A7-A9. This exercise
of jurisdiction by the Ohio Supreme Court was gross error.
See Federal Communications Commission v. ITT World
Communications, Ine., ........ US. ........, 104 S. Ct. 1936
(1984); Port of Boston Marine Terminal Association v.
Rederiaktiebolaget Transatlantic, 400 U.S. 62 (1970); Ta-
coma v. Taxpayers of Tacoma, 357 U.S. 320 (1958); Gelston
v. Hoyt, 16 U.S. (3 Wheat.) 246, 313 (1818). Indeed, this
exercise of jurisdiction by the Ohio Supreme Court is in
direct conflict with Southwestern Bell Telephone Company
v. Arkansas Public Service Commission, 738 F.2d 901 (8th
Cir. 1984), petition for cert. filed.
24
The Ohio Supreme Court also concluded that it simply
was not obliged to give effect to the Preemption Order.
It responded to the argument that it iacked jurisdiction
under 28 U.S.C. section 2342(1) and 47 U.S.C. section
402(a) by saying that it was reviewing the PUCO Order,
not the Preemption Order. See page A7. The court then
went on to conclude that the PUCO Order was reasonable
and lawful. See page A9. The OF‘o Supreme Court’s
decision to ignore altogether the binding effect of the
Preemption Order was summarized in the concurring opin-
ion of Chief Justice Celebrezze:
The unanswered question is whether the FCC rule
will be enforced against the states so as to preempt
the states’ power to fix depreciation allowances in
telecommunications cases. This court is without juris-
diction to make that essential determination and, ac-
cordingly, the majority’s decision is based upon the
fact that the commission’s order is in conformity with
Ohio’s rate-making statutes.
See page A21. This position raises a fundamental ques-
tion that was not before the Court in ITT World Com-
munications. That is, must a state court give effect to an.
order of the FCC unless and until that order is invalidated
by a court having jurisdiction to do so?
Contrary to the opinion expressed by the Ohio Su-
preme Court, fundamental and essential principles of su-
premacy dictate that the Ohio Supreme Court was required
to give effect to the Preemption Order. U.S. Cons, art.
VI, para. 2. This Court has held in a different context
that state courts are bound to give effect to rulings of a
federal agency where they do not have jurisdiction to re-
25
view rulings of that agency. See Marine Engineers Bene-
ficial Association v. Interlake Steamship Company, 370
U.S. 173 (1962). Moreover, the Supremacy Clause requires
that state courts enforce and apply federal law. See, e.g.,
Testa v. Katt, 330 U.S. 386 (1947); Mondou v. New York,
New Haven & Hartford Railroad Co., 223 U.S. 1 (1912).
Yet in this case, the Ohio Supreme Court disregarded the
federal law that it was obliged to enforce.
The Ohio Supreme Court had jurisdiction under
Ohio Revised Code section 4903.13 to determine whether
the PUCO Order was “unlawful.” The question presented
by this issue is whether the Supremacy Clause making
federal law the supreme Law of the Land and its dec-
laration that “the Judges in every State shall be bound
thereby” required the Ohio Supreme Court to enforce the
Preemption Order. The answer to this question must be
“yes” if the concept of supremacy is to have meaning.
Therefore, the Ohio Supreme Court committed gross error
in failing to give effect to the Preemption Order, permitting
this Court summarily to reverse the decision below. At
the very least, the Ohio Supreme Court’s open refusal to
apply federal law, and the underlying implications of this
refusal, mandate that this Court review by plenary consid-
eration the question of whether state courts are required
to give effect to an FCC order unless and until that order
is held invalid by a court of competent jurisdiction. Here,
only the United States Court of Appeals has jurisdiction
to determine the validity of an FCC order.
26
CONCLUSION
This case reveals a “callous disregard” of federal law
by the State of Ohio.
The Public Utilities Commission of Ohio violated the
Federal Communications Commission’s Preemption Order
by ordering Cincinnati Bell to utilize a different deprecia-
tion methodology than that prescribed for Cincinnati Bell
by the FCC. The validity of the Preemption Order was
questioned by the PUCO in an appeal which was pending in
the United States Court of Appeals for the Fourth Circuit.
However, the PUCO did not seek a stay of the Preemption
Order from that court. Instead, it simply continued in its
violation of the order.
Cincinnati Beli then sought relief from the PUCO
Order by appealing to the Ohio Supreme Court. While
that appeal was pending the Court of Appeals for the
Fourth Circuit exercised its exclusive jurisdiction, up-
holding the validity of the Preemptior. Order. The PUCO
not only continued to violate the Preemption Order, it then
proceeded to disregard the Fourth Circuit decision. The
Ohio Supreme Court, in turn, disregarded the Fourth Cir-
cuit decision and rendered its decision upholding the
PUCO’s violation of the Preemption Order. Cincinnati
Bell then filed this appeal as its last resort to obtain pro-
tection from the PUCO’s violation of federal law.
The Supreme Court of the United States has juris-
diction to review the questions presented by this appeal
under 28 U.S.C. section 1257(1) and (2). Moreover, this
appeal raises substantial federal questions. These ques-
tions include whether state courts must give res judicata
effect to federal judgments and whether state courts must
give effect to an FCC order unless and until that order
oa .
27
is invalidated by a court of competent jurisdiction. Four
factors significantly increase the importance of these ques-
tions: (1) the direct conflict between the Ohio Supreme
Court and the United States Court of Appeals for the
Fourth Circuit; (2) the direct conflict between the Ohio
Supreme Court and the United States Court of Appeals
for the Eighth Circuit; (3) the importance of the issues
in this case to the telecommunications industry; and (4)
the precarious position in which Cincinnati Bell is placed
becaus» it is subject to conflicting PUCO and FCC orders
as well as conflicting state court and federal court orders.
Because prior decisions of this Court demonstrate
that the Ohio Supreme Court committed gross error,
Cincinnati Bell respectfully requests that the Court sum-
marily reverse the decision below. If, however, the Court
is inclined to review the case law and principles discussed
above, then, because of the gravity of the issues in this
case, plenary consideration of this appeal is essential.
In this circumstance, Cincinnati Bell urges the Court to
note probable jurisdiction and set the case for briefing
and argument on the merits.
Respectfully submitted,
DonaLp McG. Rose
2500 Central Trust Center
201 East Fifth Street
Cincinnati, Ohio 45202
(513) 651-6800
Counsel of Record for Appellant
Cincinnati Bell Telephone
Company
28
Of Counsel:
WILL1AM D. BaskeETT, III
MarkK H. LONGENECKER, JR.
Davin C. Horn
Gary A. GARFIELD
Frost & JACOBS
2500 Central Trust Center
201 East Fifth Street
Cincinnati, Ohio 45202
(513) 651-6800
a "+f 7
im : On i
: ia af ;
Lie ee a
This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.