Petition for Writ of Certiorari — U. S. Telecom, Inc. v. Speakers of Sport, Inc.
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= Supreme Court, U.S,
87 2 86 | riLEe
No. AUG 17 1987
In q he JOSEPH “ — JR.
Supreme Court of the United States
(ctober Germ, 1987
U.S. TELECOM, INC. f/k/a U.S. TELEPHONE,
INC. AND U.S. TELEPHONE OF THE
MIDWEST, INC.,
Petitioner,
Vv.
SPEAKERS OF SPORT, INC., on its own behalf
and on behalf of all others similarly situated,
Respondent.
PETITION FOR WRIT OF CERTIORARI TO
THE APPELLATE COURT OF THE
FIRST DISTRICT OF THE
STATE OF ILLINOIS
PETITION FOR CERTIORARI
MICHAEL W. WARD
( Counsel of Record )
JOHN F. WARD, JR.
O’KEEFE, ASHENDEN, LYONS
& Warp
One First National Plaza
Suite 5100
Chicago, Illinois 60603
(312) 621-0400
. Attorneys for Petitioner.
Pandick Technologies, Inc., Chicago @ (312) 236-0200
i
QUESTIONS PRESENTED
Federal Pre-emption
Are state law claims regarding alleged acts or omis-
sions of telecommunications carriers in the provision of
interstate telecommunications services pre-empted by the
Communications Act of 1934?
Are state-law claims regarding alleged acts or omis-
sions of interstate telecommunications carriers pre-empted
by federal law where the Federal Communications Com-
mission has reviewed the same alleged acts and omis-
sions practices of which Respondent complains, found those
alleged acts and omissions to be specifically regulated by
Sections 203, 201(b) and 202(a) of the Communications Act
of 1934, and has held that the Petitioner has acted reason-
ably and lawfully?
Primary Jurisdiction
Are state courts required under the doctrine of pri-
mary jurisdiction to defer to the Federal Communications
Commission for initial determination of the reasonableness
of alleged acts and omissions of telecommunications carri-
ers in the provision of interstate telecommunications ser-
vices where the alleged acts and omissions are regulated
by the Communications Act of 1934?
ii
RULE 28.1 LIST
US Telecom, Inc.
U.S. Telephone, Inc.
U.S. Telephone of the Midwest, Inc.
US Telecom - Communications Services Company
United Telecommunications, Inc.
US Sprint Communications Company, a New York
General Partnership of US Telecom, Inc. and GTE
Sprint Communications Corporation (a wholly
-owned subsidiary of GTE Corporation).
ili
TABLE OF CONTENTS
Page
ol py eo De 4. sy 4) i
kk ce tens ses cee anes ii
MT IEE ove ecw eee iii
gg iv
eee 2
EE a a ee 2
CONSTITUTIONAL PROVISION AND STATUTES
EE re 2
Speenmeneee Qe Beem CAD... ww... eee eee 4
REASONS FOR GRANTING THE WRIT.......... 10
EFFECT ON EXISTING LITIGATION ON THE
IDENTICAL ISSUE AND DECISIONS THERE-
ES ne re ae ee ee 10
THE DECISIONS OF THE ILLINOIS COURTS
ARE AT ODDS WITH ALL FOUR EARLIER
DECISIONS OF THIS COURT ON SAME
THE RECENT REJECTION BY THE FCC
OF THE SAME ALLEGATIONS PRE-EMPTS
ea ae 19
AVOIDANCE OF PRIMARY JURISDICTION
REFERRABLE TO THE FCC IS LEGALLY
UNSUPPORTABLE
iv
Page
THE INSTANT CASE IS THE FLIP-SIDE OF
THE LOUISIANA PUBLIC SERVICE COM-
MISSION CASE IN THAT IT DEALS WITH
THE STATES’ INTERFERENCE WITH FCC
DECISIONS IN INTERSTATE COMMUNICA-
v
TABLE OF AUTHORITIES
Cases of Authority Page
Allis-Chalmers Corp. v. Lweck, 471 U.S. 202 (1985) .. 18
Benanti v. United States, 351 U.S. 96 (1957)........ 17
Booth v. American Telephone and Telegraph Com-
pany, 253 F.2d 57 (7th Cir. 1958)............... 20
Chicago & North Western Transportation Company v.
Kalo Brick & Tile Co., 450 U.S. 311 (1981).... 19, 21
Exchange Network Facilities for Interstate Access
(ENFIA), 71 F.C.C.2d 440 (1979).............. 13
Internationl Brotherhood of Electrical Workers, AF L-
CIO, et al. v. Hechler, 481 U.S. __., 107 S.Ct. __,
ee eee ee re eee 18
Ivy v. American Telephone and Telegraph Co., 391 F.
a ee he Ke ee eR SS 17
Louisiana Public Service Commission v. FCC, 476
io Aer = 23
MTS and WATS Market Structure, 48 Fed.Reg.
42,984 (1983), affirmed sub nom. National Associ-
ation of Regulatory Utility Commissioners v. FCC,
TOF Fe Se es I bs b's ee ee skien dus. 13
Nader v. Allegheny Airlines, Inc., 426 U.S. 290
CR ea eG 2 rh oo oe a ee oe ae 21-22
O’Brien v. Western Union Telegraph Co., 113 F.2d 539
Ce Ga Se ks oe Se SS ek ees ee eee 17
Phillips Petroleum Company v. Shutts, 472 U.S. 797
CR ae i eases ewe eee eee 23
Postal Telegraph-Cable Co. v. Warren-Godwin Co.,
251 U.S. 27 (1919)
vi
Page
Specialized Common Carrier Services, 29 F.C.C.2d
870 (1971), aff’d sub nom. Washington U.T. Com-
mission v. F.C.C., 513 F.2d 1142 (9th Cir. 1975),
cert. denied, 423 U.S. 836 (1975)............. 4,13
United States v. American Telephone and Telegraph
Company, 552 F. Supp. 131 (D.D.C. 1982), aff’d
sub nom. Maryland v. United States, 460 U.S. 1001
a er eed a aa ns £ Geo ow oO 6 od 0 4
United States Navigation Co. v. Cunard S.S. Co., 284
ois oC ee Sw ie nee eo carck ee 22
Western Union Telegraph Co. v. Boegli, 251 U.S. 315
I a Ae oc en a 0 650 bab hae o wore ek a 15
Western Union Telegraph Co. v. Esteve Bros. & Co.,
Se ED gs bk nV eke «0 bu eee a are 15, 16
Western Union Telegraph Co. v. Priester, 276 U.S.
aa og ee aig eat 6 ee 16
Related Cases
Belon v. GTE-Sprint Communications Corporation,
No. 83 CH 1059 (Cir. Ct. Cook Cty., Ml. 1983) .... 11
Bill Correctors, Ltd. v. United States Transmission
Systems, Inc. MCI Telecommunications Corp., All-
net Communications Services, Inc., Lexitel Corpo-
ration, GTE-Sprint Communications Corporation,
FCC Dkt. No. E-84-6, E-84-11, E-84-12, E-84-13,
E-84-18, Mimeo No. 703 (Released November 8,
vii
Certified Collateral Corp. v. MCI Telecommunica-
tions Corp., No. 84 C 388 (N.D. Ill. 1984), dismissed
sub nom., In re Long Distance Telecommunications
Litigation: Certified Collateral Corp., et al. v. Allnet
Communications Services, Inc., et al., 612 F.Supp.
892 (E.D.Mich. 1985), appeal pending (6th Cir.
RE Se ye en ee 11
Classic Motor Carriages v. GTE-Sprint Communica-
tions Corporation, No. 85-89-Civ (S.D. Fla. 1985)
RA roe re a re ee eee 11
Clothesrigger, Inc. v. GTE Corporation, No. 515519
(Superior Ct. San Diego Cty., Ca.) 191 Cal.
App.3d 605, 236 Cal.Rptr. 605 (4th Dist. 1987),
(review denied July 23, 1987)............ 9, 11, 23
Control Electronics, Inc., et al. v. Southern Pacific
Communications Company, et al., No. 83-1010
(E.D. Mich. 1984), May 7, 1984 appeal dismissed,
No. 84-1439 (6th Cir. October 30, 1984) ....... 5, 11
Discount Den, Inc. v. Allnet Communications Ser-
vices, Inc., No. 84 CH 1059 (Cir. Ct. Cook Cty., IIl.,
NS RFE OPE EE Ee Pe re 6, 11
Euromarket Designs, Inc., et al. v. Allnet Communi-
cations Services, Inc., No. 84-881, (D. Mass. 1984),
dismissed sub nom., In re Long Distance Telecom-
munications Litigation: Certified Collateral Corp.,
et al. v. Allnet Communications Services, Inc., et
al., 612 F.Supp. 892 (E.D. Mich. 1985), appeal
pending (6th Cir. No. 85-1684)................ 11
viii
Page
Euromarket Designs, Inc., et al. v. MCI Telecommu-
nications Corp., No. 84-880 (D. Mass. 1984), dis-
missed sub nom., In re Long Distance Telecommu-
nications Litigation: Certified Collateral Corp., et
al., v. Allnet Communications Services, Inc., et al.,
612 F.Supp. 892 (E.D. Mich. 1985), appeal
pending (6th Cir. No. 85-1684)................ 11
Feitler v. GTE-Sprint Communications Corporation,
No. CV-84-759 (M.D. Pa. 1984), dismissed sub
nom., In re Long Distance Telecommunications Lit-
igation: Certified Collateral Corp., et al. v. All-
net Communications Services, Inc., et al., 612
F.Supp. 892 (E.D. Mich. 1985), appeal pending
Gone Gs OS ED cde a cece wccenencccecs 11
Hochman, et al. v. GTE Corporation, et al.,
No. 83-4555 (D. N.J. 1983), dismissed sub nom..,
In re Long Distance Telecommunications Litigation:
Certified Collateral Corp., et al. v. Allnet Commu-
nications Services, Inc., et al., 612 F.Supp. 892
(E.D. Mich. 1985), appeal pending
oo I eee 5, 11
In re Certified Collateral Corp., et
al. v. Allnet Communications Services
Inc., et al., FCC Dkt. Nos. E-86-63,
E-86-64, E-86-65, E-86-66, E-86-67, E-86-68,
Pee GB ge passim
In re Long distance Telecommunications Litigation,
ERE ar Btn Pare Maree er Eee 5, 11
Page
In re Long Distance Telecommunications Litiga-
tion: Certified Collateral Corp., et al. v. All-
net Communications Services, Inc., et al., 612
F.Supp. 892 (E.D. Mich. 1985), appeal pend-
ing sub nom. In re Long Distance Telecom-
munications Litigation: Kaplan, et al. v. ITT-
US Transmission Systems, Inc. et al. (6th Cir.
a so Bo con 6 6 a0 nt 0 4 06 a ee 8's 5, 7,11
In re Long Distance Telecommunications Litigation:
Lazar v. MCI Telecommunications Corp., et al.,
598 F.Supp. 951 (E.D. Mich. 1984), dismissed
sub nom., In re Long Distance Telecommunica-
tions Litigation: Certified Collateral Corp., et al.
v. Allnet Communications Services, Inc., et al.,
612 F.Supp. 892 (E.D. Mich. 1985), appeal pending
(Bits Gir. FOO. GED «occ cc cc cweeawscn 7,11,17
In re Long Distance Telecommunications Litigation:
Lee, et al. v. Western Union Corporation, et al.,
639 F.Supp. 305 (E.D. Mich. 1986), appeal pending
(Oth Clr. Me. GE-1GGR) . 0 crc c ec ceesces 8, 11
In re Long Distance Telecommunications Litigation:
Sandler v. GTE Sprint Communications, Inc.,
622 F.Supp. 282 (E.D. Mich. 1985) .............. 11
In re Long Distance Telecommunications Litigation:
Solomon v. MCI Telecommunications Corp., et al.,
640 F.Supp. 997 (E.D. Mich. 1986) ..........-.. 11
In re Long Distance Telecommunications Litigation:
Solomon, et al. v. MCI Telecommunications Corp.,
et al., 647 F.Supp. 78 (E.D. Mich. 1986) ....... 8,11
Page
Kaplan v. ITT-U.S. Transmission Systems, Inc.,
589 F.Supp. 729 (E.D. N.Y. 1984), dismissed sub
nom., In re Long Distance Telecommunications Lit-
igation: Certified Collateral Corp., et al. v. Allnet
Communications Services, Inc., et al., 612 F.Supp.
892 (E.D. Mich. 1985), appeal pending (6th Cir.
ee NS 865669 eh ees ewe Oe 8 ae §, 11
Katz v. Allnet Communications Services, Inc.,
No. 87 CH 3728 (Cir. Ct. Cook Cty., [ll. 1987) .. 9,11
Kellerman v. MCI Telecommunications Corp.,
112 [l.2d 428, 493 N.E.2d 1045 (1986), cert.
denied, __ U.S. __, 107 S.Ct. 434
GE < 8K esi exc 6, 8, 11, 13, 14, 17, 18, 23
Lee, et al. v. Western Union Telegraph Co.,
No. C-84-1472 TEH (N.D. Cal. 1984), appeal
dismissed, No. 84-2383 (9th Cir. January 4,
Lee, et al. v. MCI Telecommunications Corp.,
No. C-84-1471 (N.D. Cal. 1984), appeal dismissed,
No. 84-2383 (9th Cir. January 4, 1985)........ 5, 11
Leventhal v. GTE Corporation, No. 84-CV-602 (N.D.
N.Y. 1984), dismissed sub nom., In re Long Dis-
tance Telecommunications Litigation: Certified Col-
lateral Corp., et al. v. Allnet Communications Ser-
vices, Inc., et al., 612 F.Supp. 892 (E.D. Mich. 1985),
appeal pending (6th Cir. No. 85-1684)........... 11
xi
Page
Locks v. U.S. Telephone of the Midwest, Inc.,
No. 84 C 1465 (N.D. Il. 1984), dismissed sub nom..,
In re Long Distance Telecommunications Litigation:
Certified Collateral Corp., et al. v. Allnet Communi-
cations Services, Inc., et al., 612 F.Supp. 892 (E.D.
Mich. 1985), appeal pending
oa) ee ere eee eee 4, 5, 11, 19, 22
Markowitz v. MCI Telecommunications Corp., No.
84-6149 (E.D. Pa. 1984), dismissed sub nom.,
In re Long Distance Telecommunications Lit-
igation: Certified Collateral Corp., et al. v.
Alinet Communications Services, Inc., et al.,
612 F.Supp. 892 (E.D. Mich. 1985), appeal pending
De iia ehh te ie ee eee 11
McIntosh Embossing, Inc. v. MCI Telecommunica-
tions Corp., No. 4-84 (D. Minn. 1984), dismissed
sub nom. , In re Long Distance Telecommunica-
tions Litigation: Certified Collateral Corp., et al. v.
Allnet Communications Services, Inc., et al., 612
F.Supp. 892 (E.D. Mich. 1985), appeal pending (6th
el Bn IEG a-on8hns WG aba lee i ae! es 11
Olive v. Allnet Communications Services, Inc.,
No 84 C 1112 (N.D. Tl. 1984), dismissed sub nom.,
In re Long Distance Telecommunications Litigation:
Certified Collateral Corp., et al. v. Allnet Commu-
nications Services, Inc., et al., 612 F.Supp. 892
(E.D. Mich. 1985), appeal pending (6th Cir. No. 85-
Retail Recruiters of New York, Inc. v. MCI Telecom-
munications Corp., No. 83-CIV-8048 (S.D. N.Y.
1983), appeal dismissed, No. 84-7647 (2nd Cir.
te I a 55-3 Ga is acece eens ok 6 5, 11
xii
Page
Sandler v. GTE-Sprint Communications Corp., No.
85-124 (D. Ore. 1985), dismissed sub nom., In re
Long Distance Telecommunications Litigation: Lee,
et al. v. Western Union Corporation, et al., 639
F.Supp. 305 (E.D. Mich. 1986), appeal pending (6th
PR ee ee 11
Schulze v. GTE-Sprint Communications Corporation,
No. C85-4574 (N.D. Cal. 1985) ................ 11
Schuster, et al. v. GTE Sprint Communications
Corp., No. C-83-5374 TEH (N.D. Cal. 1984)
appeal dismissed, No. 84-2385 (9th Cir. January 9,
TREE RAR cai eh pena aot rat nee 5, 11
Speakers of Sport, Inc. v. U.S. Telephone, Inc., et al.,
149 Il. App.3d 898, 501 N.E.2d 318 (1st Dist. 1986)
appeal denied, 114 I].2d 558, 508 N.E.2d
Nok kk ia SE HOSA kd ens passim
U.S. Constitution and Statutes
United States Constitution, Article VI, Clause 2..... 19
Federal Communications Act of 1934:
a eee oe ee ud 4,13
rere 6, 8, 12, 21
Be SRD obicc esc eaesndn 6, 12, 21
ee ee kek eee ease u eu 21
rar 21, 22
sks ak be ns wee wale 21
es one kaa bo Rw we eee 21
ee ne cc acassnasbawnss 21
ta tae eee eee eee ees 21
Wr So ie kc cee eseesces 21
Sgt i eee eee ree eer 21
ee sa hb ha en de eee Re eS 21
xiii
Illinois Statutes
Illinois Consumer Fraud and Deceptive
Practices Act: Ill. Rev. Stat., 1986, Chapter 121 1/2,
Other Authorities
78 Cong. Rec. 10312-13 (Statement of Representative
a NN UD ok Ws ek awe ce) 17,
No.
In The
Supreme Court of the United States
@rtober Germ, 1987
U.S. TELECOM, INC. f/k/a U.S. TELEPHONE,
INC. AND U.S. TELEPHONE OF THE
MIDWEST, INC.,
Petitioner,
Vv.
SPEAKERS OF SPORT, INC., on its own behalf
and on behalf of all others similarly situated,
Respondent.
PETITION FOR WRIT OF CERTIORARI TO
THE APPELLATE COURT OF THE
FIRST DISTRICT OF THE
STATE OF ILLINOIS
PETITION FOR CERTIORARI
US Telecom, Inc., formerly known as U.S. Telephone,
Inc. and U.S. Telephone of the Midwest, Inc., hereby peti-
tions for a writ of certiorari to the Appellate Court of the
First District of the State of Illinois to review the Illinois
Appellate Court’s judgment in Speakers of Sport, Inc. v.
U.S. Telephone, Inc. and U.S. Telephone of the Midwest,
Inc., 149 Tll.App.3d 898, 501 N.E.2d 318, (1st Dist. 1986).
2
OPINIONS BELOW
The judgment of the Circuit Court of Cook County, Ili-
nois is unreported. The order and transcript of judgment
is reprinted as Appendix D to this petition. The opinion
of the Appellate Court of the First District of the State of
Illinois entitled Speakers of Sport, Inc. v. U.S. Telephone,
Inc., et al. is reported at 149 Ill.App.3d 898, 501 N.E.2d
318 (1st Dist. 1986), and is reprinted as Appendix A to this
petition. The order of the Illinois Supreme Court denying
leave to appeal is reported at 114 111.2d 558, 508 N.E.2d
736 (1987) and is reprinted as Appendix C to this petition.
The order of the Illinois Supreme Court denying leave to
file a motion for reconsideration of the denial of the peti-
tion for leave to appeal is unreported and is reprinted as
Appendix B to this petition.
JURISDICTION
The opinion and judgment of the Illinois Appellate
Court, First District, were issued on November 21, 1986.
‘(Appendix A, infra.) A timely petition for leave to appeal
was filed with the Illinois Supreme Court, said petition
being denied on April 15, 1987. (Appendix C, infra.) A
timely motion for leave to file a motion for reconsideration
of the denial of the petition for leave to appeal was filed
with the Illinois Supreme Court, said motion being denied
on May 19, 1987. (Appendix B, infra.) This Court has
jurisdiction pursuant to 28 U.S.C. Sec. 1257(3).
CONSTITUTIONAL PROVISION
AND STATUTES INVOLVED
The following federal constitutional provision and
statutes, all of which are set forth in Appendix J, are
involved in this case:
United States Constitution, Article VI, Clause 2;
Federal Communications Act of 1934, 47 U.S.C.
Sec. 151;
Federal Communications Act of 1934, 47 U.S.C.
Sec. 201(b);
Federal Communications Act of 1934, 47 U.S.C.
Sec. 202(a);
Federal Communications Act of 1934, 47 U.S.C.
Sec. 203(a-c);
Federal Communications Act of 1934, 47 U.S.C.
Sec. 205(a);
Federal Communications Act of 1934, 47 U.S.C.
Sec. 206;
Federal Communications Act of 1934, 47 U.S.C.
Sec. 207;
Federal Communications Act of 1934, 47 U.S.C.
Sec. 208;
Federal Communications Act of 1934, 47 U.S.C.
Sec. 209;
Federal Communications Act of 1934, 47 U.S.C.
Sec. 401(b);
Federal Communications Act of 1934, 47 U.S.C.
Sec. 402(a);
Federal Communications Act of 1934, 47 U.S.C.
Sec. 407;
United States Code, Title 28, Chapter 158, Sec. 2342.
The following Illinois statute, as set forth in Appendix J,
is involved in this case:
Illinois Consumer Fraud and Deceptive Practices Act,
Illinois Revised Statutes, 1986, Chapter 121 1/2,
Sec. 262.
4
STATEMENT OF THE CASE
Speakers of Sport, Inc. filed a purported class action on
behaif of all the customers of U.S. Telephone, Inc., and U.S.
Telephone of the Midwest, Inc., (collectively now known as
US Telecom, Inc. or simply US Tel) alleging that in the
provision of interstate telecommunications, US Tel charged
for unanswered calls in breach of the contract agreement
between US Tel and its customers and that the failure to
disclose these charging practices constituted a fraudulent
misrepresentation by omission which violated both the IIli-
nois Consumer Fraud and Deceptive Practices Act and the
Illinois Deceptive Trade Practice Act. Appendix H. Two
days later, the same complaint was filed in the United
States District Court for the Northern District of Illinois
sub nom. Locks v. U.S. Telephone of the Midwest, Inc.,
District Court No. 84 C 1465, alleging the same identical
charges adding only a fifth count alleging that the same
acts and omissions constituted a violation of the Federal
Communications Act of 1934, 47 U.S.C. Sec. 151 et seq.
Appendix I.
These claims arose from a technical problem common
to all non-AT&T interstate carriers resulting from the FCC
decision to open interstate telecommunications to compe-
tition (Specialized Common Carrier Services, 29 F.C.C.2d
870 (1971), aff’d sub nom. Washington U.T. Commission v.
F.C.C., 513 F.2d 1142 (9th Cir. 1975), cert. denied, 423 U.S.
836 (1975)) and the federal court’s ordered divestiture of
AT&T. United States v. American Telephone and Telegraph
Company, 552 F. Supp. 131 (D.D.C. 1982), aff’d sub nom.
Maryland v. United States, 460 U.S. 1001 (1983) (Consent
Decree). The local exchanges could not provide the non-
AT&T companies with a feature known as answer super-
vision which informed the carriers as to when an inter-
state call was answered. The Consent Decree required
the local exchanges to correct this technical deficiency by
September 1, 1986. The FCC was regulating the problem
during the transition.
5
A plethora of these class action suits were filed
throughout the country alleging the same conduct against
the various interstate telecommunications carriers which
had initiated interstate telecommunications competition
with AT&T. The Judicial Panel For Multidistrict Litiga-
tion (JPML) determined that these suits evolved from a
common question of fact and ordered that all suits filed in
the Federal District Courts be transferred for pretrial pur-
poses to the Eastern District of Michigan in order to pro-
mote judicial economy and to avoid inconsistent rulings.
In re Long Distance Telecommunications Litigation, MDL
No. 598 (Appendix G)’. The Locks complaint was included
1 Prior to transfer, five Federal District Courts had dismissed
a total of six such complaints finding that state common law
and state statutory causes of action were 1) pre-empted by fed-
eral law (Kaplan v. ITT-U.S. Transmission Systems, Inc., 589
F. Supp. 729 (E.D.N.Y. 1984); Schuster, et al. v. GTE Sprint
Communications Corp., No. C 83-5374 TEH (N.D. Cal. 1984),
appeal dismissed, No. 84-2385 (9th Cir. January 9, 1985); Lee,
et al. v. Western Union Telegraph Co., No. C 84-1472 TEH (N.D.
Cal. 1984), appeal dismissed, No. 84-2383 (9th Cir. January 9,
1985); Lee, et al. v. MCI Telecommunications Corp., No. C 84-
1471 TEH (N.D. Cal. 1984), appeal dismissed, No. 84-2383 (9th
Cir. January 9, 1985)), and/or 2) that primary jurisdiction over
the claims rested in the FCC (Control Electronics, Inc., et al. v.
Southern Pacific Communications Co., et al., No. 83-1010 (E.D.
Mich. 1984), appeal dismissed, No. 84-1439 (6th Cir. October 30,
1984); Hochman, et al. v. GTE Corporation, et al., No. 83-4555
(D.N.J. 1983); Retail Recruiters of New York, Inc. v. MCI Teleco-
mmunications Corp., No. 83 Civ. 8048 (S.D.N.Y. 1983), appeal
dismissed, No. 84-7647 (2d Cir. October 31, 1984); Schuster,
supra; Lee, et al. v. Western Union, supra; Lee, et al. v. MCI,
supra.)
Kaplan retained jurisdiction over federal common law claims,
but these were dismissed after transfer by the JPML. In re
Long Distance Telecommunications Litigation: Certified Collat-
eral Corp., et al. v. Allnet Communications Services, Inc., et al.,
612 F. Supp. 892 (E.D.Mich. i385) appeal pending sub nom. In
re Long Distance Telecommunications Litigation: Kaplan, et al.
v. ITT-U.S. Transmission Systems, Inc., et al., (6th Cir. No. 85-
1684).
in that transfer order.
US Tel moved to dismiss the instant Illinois state
complaint on the alternative grounds that 1) the alleged
state common law and statutory causes of action were pre-
empted by the Federal Communications Act of 1934, 2)
that the primary jurisdiction over the reasonableness of
the acts and omissions alleged rested before the Federal
Communications Commission, and 3) that Illinois statutes
permit discretionary dismissal of a cause of action where
the same cause is pending between the same parties else-
where. The Illinois trial court granted the motion to dis-
miss for each of the three reasons stated and Speakers of
Sport, Inc. appealed.
A similar purported class action complaint filed in Ili-
nois on behalf of customers of Allnet Communications Ser-
vices, Inc. had been dismissed by the Illinois trial court
without appeal. Discount Den, Inc. v. Allnet Communica-
tions Services, Inc., No. 84 CH 1059 (Cir. Ct. Cook Cty., II.
1984). In another such action against MCI Telecommunic-
ations Corp., the trial court denied a motion to dismiss on
the same three grounds alleged by US Tel and MCI took
an interlocutory appeal. Kellerman v. MCI Telecommuni-
cations Corp., Nos. 82 CH 11065, 83 CH 6485, 83 CH 9919
(Cir. Ct. Cook Cty., TIl.).
Meanwhile, five Formal Complaints were filed before
the FCC challenging these charges and the disclosure prac-
tices of the carriers. Bill Correctors, Ltd. v. United States
Transmission Systems, Inc., et al., FCC Dkt. Nos. E-84-6,
E-84-11, E-84-12, E-84-13, E-84-18. The FCC recognized
this to be an industry-wide problem. It held: 1) that the
alleged charges were governed by the carriers’ tariffs and
Section 203 of the Communications Act; 2) that any billing
errors were beyond the control of the carriers which had
taken reasonable steps to eliminate the same; 3) that the
carriers had instituted refund procedures for the billing
errors; 4) that disclosure in the tariffs of the potential
7
errors was not necessary; and 5) that Sections 201(b) and
202(a) of the Communications Act governed the carriers
non-tariff disclosures which the FCC reviewed to deter-
mine the reasonableness of disclosures to customers noti-
fying them of potential billing errors and the procedures
for refund. Bill Correctors, Ltd. v. United States Transmis-
sion Systems, Inc. et al., FCC Mimeo No. 703 (Released
November 8, 1984).
In the multidistrict litigation, the District Court
denied a motion to remand one of the complaints which
was couched only in terms of state common law and statu-
tory law holding that the claims were governed by the
Communications Act. Jn re Long Distance Telecommunica-
tions Litigation: Lazar v. MCI Telecommunications Corp.,
598 F. Supp. 951 (E.D. Mich. 1984). All of the purported
class action Plaintiffs filed an amended consolidated com-
plaint withdrawing all state grounds, alleging that the
challenged billing and disclosure practices were violations
of the Communications Act, of federal common law, and
of the Racketeer Influenced and Corrupt Practices Act. 18
U.S.C. Sec. 1962. On the joint motion to dismiss filed by the
carriers, including US Tel, the Federal District Court dis-
missed the amended consolidated complaint on the grounds
that primary jurisdiction over the Federal Communica-
tions Act claims rested before the FCC, that the Commu-
nications Act specifically regulated the acts and omissions
alleged in the complaints and therefor there was no pur-
pose for the creation of federal common law, and that the
plaintiffs failed to state a cause of action under RICO. Jn
re Long Distance Litigation: Certified Collateral Corp., et
al. v. Allnet Communications Services Inc., et al., 612 F.
Supp. 892 (E.D. Mich. 1985), appeal pending sub nom. In
re Long Distance Telecommunications Litigation: Kaplan,
et al. v. ITT-US Transmission Systems, Inc., et al., (6th
Cir. No. 85-1684). Subsequent complaints for alleging the
same acts and omissions of the interstate telecommunica-
tions carriers continue to be filed and have been sent by
8
the JPML to the District Court for the Eastern District
of Michigan. The District Court has dismissed those com-
plaints on the same grounds.’
The Illinois Appellate Court and the [linois Supreme
Court affirmed the denial of MCI’s motion to dismiss. Hold-
ing that there was a lack of authority regarding the pre-
emptive effect of the Communications Act, the [linois
Supreme Court declined to follow the above cited federal
court decisions or the FCC Bill Correctors, Ltd. decision on
similar complaints.
. . . (N)o Federal statute or regulation has been
brought to our attention which would expressly
prohibit these actions. Therefore, we find that
Congress did not intend to occupy the field of inter-
state telephone service to the extent of barring
these State-law claims for fraud, breach of con-
tract and deceptive practices, and hold that plain-
tiffs’ actions are not preempted.
Kellerman v. MCI, 112 Tll.2d 428, 444 (1986). Keller-
man rejected the applicability of primary jurisdiction hold-
ing there was no need for FCC specialized or technical
expertise, and further noted:
The issue of whether defendant’s failure to disclose
certain charges is ‘unjust or unreasonable’ under
Section 201(b) of the Communications Act has no
relevance as to whether defendant’s failure to dis-
close those charges constituted fraud, a breach of
contract, or a violation of Illinois statutes.
Kellerman, supra, 112 [11.2d 428, 448 (1986). This
Court denied MCIs petition for certiorari on the inter-
locutory appeal. MCI Telecommunications Corp. v. Keller-
2 In re Long Distance Telecommunications Litigation: Lee, et al.
v. Western Union Telegraph Co., et al., 639 F. Supp. 305 (E.D.
Mich. 1986) appeal pending (6th Cir. No. 86-1599); In re Long
Distance Telecommunications Litigation: Solomon, et al. v. MCI
Telecommunications Corp., et al., 647 F. Supp. 78 (E.D. Mich.
1986).
9
man, __. U.S. __, 107 8.Ct. 434 (1986).
US Tel cited the related federal court decisions and the
FCC’s Bill Correctors, Ltd. decision to the Illinois Appellate
Court on appeal. The Appellate Court held that Kellerman
was controlling and reversed the judgment of dismissal.
US Tel’s Petition for Leave to Appeal to the Ilinois
Supreme Court was denied on April 15, 1987. The day
prior, the FCC dismissed the Formal Complaint filed in
Locks against US Tel finding that the reasonableness of
the carrier’s charges and charging practices are no longer
an open question. The FCC further reviewed US Tel’s dis-
closures regarding the potential billing errors and refund
procedures also finding them to be reasonable and lawful.
In re Certified Collateral Corp., et al. v. Allnet Communica-
tions Services, Inc., et al., FCC Dkt. No. E-86-66 (Released:
April 14, 1987). US Tel filed a motion for leave to file
a motion for reconsideration before the Illinois Supreme
Court based upon the FCC’s decision of Locks. This motion
was denied on May 19, 1987.
The Illinois trial court has certified a nationwide class
of MCI’s customers in Kellerman. In a related case based
on state law claims, the California state court has certified
a statewide class of customers of GTE Sprint Communica-
tions Corporation in Clothesrigger, Inc. v. GTE Corpora-
tion, No. 515519 (Superior Ct. San Diego Cty., Cal.), with
directions from the California Appellate Court to consider
certification of a nationwide class. 191 Cal.App.3d 605, 236
Cal.Rptr. 605 (4th Dist. 1987) (review denied July 23, 1987).
Another related class action complaint alleging state-law
grounds has been filed in the Illinois state court, Katz v.
Allnet Communications Services, Inc., 87 CH 3728 (Cir. Ct.
Cook Cty., Ill., 1987)
ee
10
REASONS FOR GRANTING THE WRIT
This case raises in issue a vital point of federal law
which this Court has not revisited in the 53 years since the
passage of the Communications Act of 1934: the authority
of state courts to entertain state common law and state
statutory causes of action against interstate telecommu-
nications carriers regarding charges and practices specifi-
cally regulated by the Federal Communications Commi-
sion pursuant to federal statute.
Prior to the Communications Act, this Court addressed
this issue four times under the Act of 1910, which amended
the Interstate Commerce Act to include all interstate com-
munications, and universally held that state courts may
not regulate through state-law claims the acts or omissions
of carriers in the provision of interstate communications
where those acts and omissions are regulated pursuant to
the federal statute.
Despite 1) this Court’s own holdings, 2) the decisions of
five United States District Courts dismissing twenty-four
similar complaints on the grounds of federal pre-emption
and primary jurisdiction, and 3) decisions by the FCC on
eleven related complaints holding the same charging and
disclosure practices to be reasonable and lawful, the IIli-
nois courts have decided that, in the absence of any ruling
by this Court since the passage of the Communications Act
in 1934, that they are authorized to independently deter-
mine the issue on behalf of all customers of the interstate
carriers nationwide.
EFFECT ON EXISTING LITIGATION
ON THE IDENTICAL ISSUE
AND DECISIONS THEREON
The failure of the Court to reverse the Illinois courts
will nullify the efforts of the federal courts in twenty-four
related cases and eleven related FCC complaints, all of
which have found that the same alleged acts or omissions
of carriers in the provision of interstate communications
11
are regulated pursuant to the federal statute.
This case is of major importance in a telecommuni-
cations industry going through the throes of transition
from monopoly to competitive interstate telecommunica-
tions. Thirty-one class action suits have been filed to date
on this same contested matter.® Five different Federal Dis-
trict Courts have wrestled with the very claims in the
instant case and have decided either 1) that federal law
preempts state causes of action or 2) that primary jurisdic-
tion requires referral of the instant matter to the FCC for
the exercise of its administrative discretion. See Petition,
p. 5, n. 1.
Given the increasing number of purported class action
complaints being filed, the Judicial Panel for Multidis-
trict Litigation (JPML) decided that the necessities of judi-
cial economy and consistency of ruling required that all
of these related cases in the federal courts be transferred
to the Eastern District of Michigan. Jn re Long Distance
Telecommunications Litigation, MDL No. 598, Transfer
Order, Appendix G. Consistent with the prior rulings, the
District Court decided that state common law and statu-
tory claims are pre-empted by federal law and that the
matters alleged herein are governed by the Communica-
tions Act of 1934 (Jn re Long Distance Telecommunications
Litigation: Lazar v. MCI Telecommunications Corp., 598
F. Supp. 951 (E.D. Mich. 1984)) and require deferral to the
FCC for the exercise of its administrative discretion under
the doctrine of primary jurisdiction. /n re Long Distance
Telecommunications Litigation: Certified Collateral Corp.,
et al. v. Allnet Communications Services, Inc., et al., 612 F.
Supp. 892 (E.D. Mich. 1985), appeal pending sub nom. In
re Long Distance Telecommunications Litigation: Kaplan,
et al. v. ITT-US Transmission Systems, Inc., et al. (6th
3 All cases are listed in Table of Authorities under subheading
“Related Cases”, pp. vi-xii.
12
Cir. No. 85-1684).
In turn, the FCC has decided no less than eleven
such complaints on two different occasions. In review-
ing the initial five complaints under the title Bill Correc-
tors, Ltd. v. United States Transmission Systems, Inc., et
al., FCC Mimeo No. 703 (Released November 8, 1984),
the FCC stated that despite the deficiencies in the com-
plaints, they raised industry-wide problems as to substan-
tive practices which fell within the Commission’s exper-
tise and demanded an expeditious determination. The
claims that interstate carriers were charging for uncom-
pleted calls was directly regulated by the tariffs on file in
Section 203 of the Communications Act. The Commission
held that although interstate customers may occasionally
be erroneously billed for uncompleted calls, these errors
arise out of a technological problem known as the lack
of answer supervision, that the carriers take specific mea-
sures to avoid such erroneous billings, and that the carri-
ers do not charge for unanswered calls when notified of the
error. Responding to the claim that the carriers have omit-
ted to disclose this potential for billing errors, the Com-
mission decided, under the discretion vested in it under
Section 203 of the Communications Act, that the carriers
need not make such disclosures in the filed tariffs. How-
ever, the FCC ruled that Sections 201(b) and 202(a) did
require that the carriers reasonably disclose to their cus-
tomers the potential for billing errors and the availability
and procedure for obtaining refunds.
In a subsequent decision on the six complaints referred
by the District Court, the FCC held that the charging prac-
tices of interstate carriers regarding the alleged uncom-
pleted calls are no longer an open question. The FCC
specifically reviewed the disclosure practices of US Tel,
informing its customers of this potential billing error and
refund rights and procedures, finding these disclosures to
be reasonable and lawful as required by Section 201(b) of
13
the Communications Act. Jn re Certified Collateral Corp.,
et al. v. Allnet Communications Services, Inc., et al., FCC
Dkt. No. E-86-066 (Released: April 14, 1987).
Although the Illinois Appellate Court was presented
with the FCC’s decision in Bill Correctors, Ltd., supra, no
attempt was made to reconcile or distinguish the agency’s
determination. The Illinois court noted only that proceed-
ing on the state-law claims would not present an obsta-
cle to the accomplishment of Federal policy. Speakers of
Sport, Inc. v. U.S. Telephone, Inc., et al., 149 Tll.App.3d
898, 501 N.E.2d 318, 321 (1st Dist. 1986) appeal denied 114
Tli.2d 558, 501 N.E.2d 736 (1987), citing Kellerman, et al.
v. MCI Telecommunications Corp., 112 T1l.2d 428, 443-44,
493 N.E.2d 1045 (1986), cert. denied, _. U.S. __ , 107 S.Ct.
434 (1986).
The challenged problems caused by the lack of answer
supervision arise directly from the FCC’s determination
to establish the competitive provision of interstate com-
munications to fulfill its congressional mandate of ensur-
ing nation-wide service at reasonable rates. Specialized
Common Carrier Services, 29 F.C.C.2d 870 (1971) aff’d
sub nom. Washington U.T. Commission v. F.C.C., 513
F.2d 1142 (9th Cir. 1975) cert. denied 423 U.S. 836 (1975);
47 U.S.C. § 151. Since then, the FCC has continuously
addressed the problems arising from the lack of answer
supervision as one of the telephone system’s technological
deficiencies in the transition from monopoly to competitive
interstate services. Exchange Network Facilities for Inter-
state Access (ENFIA), 71 F.C.C.2d 440, 454 (1979); MTS
and WATS Market Structure, 48 Fed.Reg. 42,984, 43,001-
02 (1983), aff’d sub nom. National Association of Regula-
tory Utility Commissioners v. F.C.C., 737 F.2d 1095 (D.C.
Cir. 1984). In further review of this problem, the FCC has
now addressed the precise customer problems raised in the
instant case: erroneous billings and disclosure of potential
billing errors and of refund rights and procedures. Bill
14
Correctors, Lid., supra; In re Certified Collateral Corp.,
supra. Despite the FCC’s determination of these issues,
the Illinois courts have ignored these rulings and proceed
to make an independent review of Petitioner under the
irreconcilable notion that compliance with the FCC’s dis-
closures could be fraudulent and that charging pursuant to
the tariff could be in breach of contract.
Only the granting of certiorari to the instant petition
can prevent the Illinois courts from circumventing and
undermining all of the decisions of the federal courts and
the FCC since these complaints were initiated in 1983.
No other state complaint is on appellate review and avail-
able by certiorari to this Court. Nor will any other federal
decision alter the course of the [llinois courts which have
expressly stated in their opinions that any federal deter-
mination of the reasonableness of the carriers’ practices
are irrelevent to the state-law claims alleged. Speakers of
Sport, Inc. v. U.S. Telephone, Inc., et al., 149 ll.App.3d
898, 501 N.E.2d 318, 322 (1st Dist. 1986) appeal denied
114 M11.2d 558, 501 N.E.2d 736 (1987); See also Kellerman,
et al. v. MCI Telecommunications Corp., 112 I111.2d 428, 493
N.E.2d 1045, 1054 (1986), cert. denied, __._U.S.__, 107
S.Ct. 434 (1986). Failure to grant certicrari would permit
all of the federal complaints to be refiled as nationwide
class actions in the State of Illinois under state law theo-
ries raising the identical challenges rejected by the federal
courts and the FCC, circumventing and nullifying the uni-
form federal decisions on thirty-five similar complaints.
THE DECISIONS OF THE ILLINOIS COURTS
ARE AT ODDS WITH ALL FOUR EARLIER
DECISIONS OF THIS COURT ON SAME ISSUE
Since Congress first occupied the field of interstate
communications through the passage of the Act of 1910
amending the Act to Regulate Commerce, the United
States Supreme Court has four times addressed the issue of
the states’ attempts to decide on grounds of state statutory
15
or common law the duties of carriers of interstate commu-
nications subject to federal regulation.
In Postal Telegraph-Cable Co. v. Warren-Godwin Co.,
251 U.S. 27 (1919), the Mississippi Supreme Court decision
that the federal act did not preempt state common law con-
tract actions by a customer against the interstate carrier
was reversed. This Court said that to permit state common
law contract actions would wholly destroy the mandated
requirements of equality and national uniformity of rates
by subjecting the same to diverse and possibly conflicting
state laws. 251 U.S. at 30. The assertion of Congress to
bring interstate transmissions under federal control occu-
pied the whole field to the exclusion of state action. 251
US. at 31.
In Western Union Telegraph Co. v. Boegli, 251 U.S.
315 (1920), the Indiana Supreme Court applied an Indiana
statute for the negligent failure to deliver an interstate
telegraph message. This Court reversed, holding that the
clear purpose of Congress in assuming federal control over
this area was to establish a uniform national rule leaving
no room for the states to exercise their power to regulate.
251 US. at 316.
Further clarification of the relationship between the
customer and the carrier in interstate transmissions came
from Mr. Justice Brandeis in Western Union Telegraph Co.
v. Esteve Bros. & Co., 256 U.S. 566 (1921). Esteve Bros.
sued for a loss sustained due to Western Union’s negligent
international transmission of its message. In response to
Western Union’s assertion of its limitation of liability in
its tariff on file with the Interstate Commerce Commission,
Esteve Bros. replied that it neither knew of nor consented
to such limitations and that Western Union omitted to dis-
close same. Based on a theory of common law contract,
Esteve Bros. argued that it was not subject to such condi-
tion. Mr. Justice Brandeis noted the totality of the change
affecting common law liability resulting from the federal
16
act:
The Act of 1910 introduced a new principle
into the legal relations of the telegraph companies
with their patrons which dominated and modified
the principles previously governing them. Before
the Act the companies had a common-law liabil-
ity from which they might or might not extricate
themselves according to views of policy prevailing
in the several states. Thereafter, for all messages
sent in interstate or foreign commerce, the out-
standing consideration became that of uniformity
and equality of rates. Uniformity demanded that
the rate represent the whole duty and the whole
liability of the company. It could not be varied by
agreement; still less could it be varied by lack of
agreement. The rate became, not as before a mat-
ter of contract by which a legal liability could be
modified, but a matter of law by which a uniform
liability was imposed. Assent to the terms of the
rate was rendered immaterial, because when the
rate is used, dissent is without effect... .
* * *
. . . The rule does not rest on upon the fiction
of constructive notice. It flows from the require-
ment of equality and uniformity of rates laid down
in (section) 3 of the Act to Regulate Commerce.
Since any deviation from the lawful rate would
involve either an undue preference or an unjust
discrimination, a rate lawfully established must
apply equally to all, whether there is knowledge
of it or not. ...
Esteve Bros. & Co., supra, 256 U.S. at 571-573.
In this Court’s final pronouncement on this issue, the
Alabama Supreme Court’s decision that a state common
law theory of gross negligence was not pre-empted by fed-
eral law was reversed with this Court again emphasizing
that the common law liability and contractural restrictions
subject to state laws have been superceded by federal leg-
islation. Western Union Telegraph Co. v. Priester, 276 U.S.
252 (1928).
17
Federal regulation of interstate communications was
restructured in 1934 by removing control of this area from
the Interstate Commerce Commission and establishing the
Federal Communications Commission to deal solely with
the concerns of interstate communications. See Benanti v.
United States, 355 U.S. 96, 104, n. 14. This reorganization
was done without changing the substantive federal law on
interstate communications. See 78 Cong. Rec. 10312-13
(Statement of Representative Rayburn, June 2, 1934).
In the fifty-three years since the passage of the
Communications Act of 1934, this Court has not again
addressed the issue of the states’ attempts to uphold state
common law and statutory causes of action against carriers
of interstate communications in the face of federal regula-
tion of the same. The Federal Circuit Court of Appeals
have upheld the principles of federal pre-emption estab-
lished by this Court. O’Brien v. Western Union Telegraph
Co., 113 F.2d 539 (1st Cir. 1940); Ivy v. American Tele-
phone and Telegraph Co., 391 F.2d 486 (2nd Cir. 1968).
Consistently, the United States District Courts have fol-
lowed these opinions and the fundamental principle estab-
lished by this Court sixty-eight years ago. These federal
courts have recognized that these same state-law claims
are regulated by the Communications Act of 1934 and sub-
ject to the jurisdiction of the FCC. In re Long Distance
Telecommunications Litigation: Lazar v. MCI Telecommu-
nications Corp., supra, 598 F. Supp. 951 (E.D. Mich. 1984);
In re Long Distance Telecommunications Litigation: Certi-
fied Collateral Corp., et al. v. Allnet Communications Ser-
vices, Inc., et al., supra, 612 F.Supp. 892 (E.D. Mich. 1985).
See also Petition, p. 5,n. 1. The FCC itself has specifically
found that these complaints are within its expertise and
raise industry-wide concerns regarding charging practices
and disclosure practices of interstate carriers. Bill Correc-
tors, Ltd., supra, FCC Mimeo 703; Jn re Certified Collateral
Corp., supra, Appendix E.
18
Illinois courts have attempted to ignore or distinguish
these related and contrary federal decisions by stating that
the issue of whether defendant’s failure to disclose cer-
tain charges is “unjust or unreasonable” under Section
201(b) of the Communications Act has no relevence as to
whether defendant’s failure to disclose those charges con-
stituted fraud, a breach of contract, or a violation of IIli-
nois’ statutes.” Speakers of Sport, Inc., supra, 501 N.E.2d
at 322 (1986), citing Kellerman, supra, 112 Il1.2d 428, 448-
49 (1986). The Dlinois courts have sought to avoid the
consistent rulings of federal pre-emption by the labeling
placed on the causes of action in terms of state common
law and state statutory law.
Just last term, this Court specifically rejected the the-
ory that pre-emption of matters subject to federal law may
be avoided by the mere relabeling of those matters in terms
of state common law or statutory law. IBEW v. Hechler,
481 U.S.__, 107 S.Ct.___., 95 L.Ed.2d 791 (1987).
In Hechler, the United States Court of Appeals for the
Eleventh Circuit attempted to distinguish a pre-emption
ruling by this Court in Allis-Chalmers Corp. v. Lueck,
471 U.S. 202 (1985) that the legal consequences intended
to flow from breaches of a collective bargaining agree-
ment must be resolved by reference to uniform federal
law. Attempting to distinguish the complaint before it, the
Eleventh Circuit held that although the employee was gov-
erned by the collective bargaining agreement, the employ-
ee’s claim was essentially one of common law negligence
alleging a duty of care under tort law. This Court reversed
the Eleventh Circuit noting that:
(t)he need for federal uniformity in the interpre-
tation of contract terms therefore mandates that
here, as in Allis-Chalmers, respondent is pre-
cluded from evading the pre-emptive force of Sec-
tion 301 by casting her claim as a state-law tort
action. 95 L.Ed.2d at 803.
The Illinois Appellate Court attempts to do what this
19
Court refused to permit in Hechler. A complaint identical
to the instant proceedings was filed in Locks in the fed-
eral courts. See Appendix I. That complaint made its way
through the federal system to the FCC which dismissed
the complaint after reviewing the practices of the Peti-
tioner, finding that the Petitioner’s alleged acts and omis-
sions were governed by the Communications Act and were
reasonable and lawful. In re Certified Collateral, supra,
Appendix E. Nevertheless, the Illinois courts attempt to
relitigate that complaint solely because of the state-law
labels attached by the respondent. Certiorari must be
granted to enforce this Court’s rulings that state-law labels
may not circumvent the pre-emptive effect of uniform fed-
eral law.
THE RECENT REJECTION BY THE FCC
OF THE SAME ALLEGATIONS
PRE-EMPTS STATE-LAW CLAIMS
During the pendency of these proceedings, the iden-
tical allegations against US Tel to the instant case were
rejected by the FCC. In re Certified Collateral Corp., et al.
v. Allnet Communications Services, Inc., et al., FCC Dkt.
No. E-86-66 (Released: April 14, 1987). This decision was
presented to the Illinois Supreme Court in the form of a
motion for leave to file a motion for reconsideration of the
denial of the petition for leave to appeal. The motion was
denied. Appendix B. Nevertheless, the FCC has specifi-
cally reviewed and rejected the class allegations regarding
US Tel’s charging practices and regarding US Tel’s disclo-
sures to its customers, the alleged class, finding them to be
reasonable and lawful. Given this determination, the IIli-
nois courts are pre-empted from attempting to usurp the
function that Congress has assigned to the federal regula-
tory body. United States Constitution, Article VI, Clause
2; See Chicago & North Western Transportation Co. v. Kalo
Brick & Tile Co., 450 U.S. 311 (1981).
In Kalo Brick, this Court rejected the Iowa Appellate
|
20
Court’s attempt to distinguish state-law claims as creat-
ing separate duties from the federal act. Noting that “the
court’s comcern is necessarily with the nature of the activ-
ities which the states have sought to regulate, rather than
the method of regulation adopted ...,” (450 U.S. at 317-
18) this Court ruled that states may not entertain state-
law claims in an attempt to regulate through the threat of
damages, conduct which has been approved by the federal
agency. 450 U.S. at 325-6. Rejecting the argument that
the savings clause permits state actions, the Court held
that:
“ ‘no court has jurisdiction’ of a suit such as
respondent’s until the Commission ‘has declared
the practice to be. . . unjust.’ (citation omitted)
And the Commission, in the exercise of its discre-
tion, has done precisely the opposite; it has decided
that the (carrier’s action) was proper .
450 U.S. at 330,
As in the instant case, the Commission in Kalo Brick
did not rule until after the initiation of the state law-
suit. Nevertheless, the Court held that the state courts
are bound by that determination. The Illinois courts seek
to avoid the federal regulatory decision, as did the Iowa
Appellate Court, and circumvent the authority vested by
Congress in the FCC. Although prohibited by this Court’s
decisions, this usurpation can be prevented only by the
granting of the instant petition.
AVOIDANCE OF PRIMARY JURISDICTION
REFERRAL TO THE FCC
IS LEGALLY UNSUPPORTABLE
The doctrine of primary jurisdiction requires courts
to defer to administrative bodies questions involving the
reasonableness of an interstate communications carrier’s
practices before any court proceeding. Booth v. American
Telephone and Telegraph Company, 253 F.2d 57 (7th Cir.
1958). No court has juridiction of a suit until the Commia-
21
sion has declared the practice to be unjust. See Chicago
& North Western Transportation Company v. Kalo Brick
& Tile Company, 450 U.S. 311, 330 (1981). Despite the
repeated application of the doctrine by the Federal District
Courts in identical actions, the Dlinois Appellate Court,
relying upon Nader v. Allegheny Airlines, Inc., 426 US.
290 (1976), refuses to defer to the federal agency vested by
Congress with the administrative discretion in this matter.
Although Nader involved a claim of fraudulent omis-
sion, this Court did not hold in that case that no federal
agency has authority over disclosures. It held that under
the Federal Aviation Act no purpose would be served by
deferring that respondent’s claim to the Civil Aeronautics
Board. This Court found that Congress only vested the
CAB with jurisdiction over the public interest and with
authority to enter cease and desist orders. Congress did not
vest the CAB with authority to entertain a private claim,
nor to grant a private remedy. Individual consumers could
not even initiate proceedings. 426 U.S. at 301-02.
In total contrast to the Federal Aviation Act, the
Communications Act specifically governs Respondent’s pri-
vate challenges to the Petitioner’s charges (47 U.S.C. Sec.
203) and disclosures (47 U.S.C. Secs. 201(b), 202(a)) as
expressly found by the FCC. Bill Correctors, Ltd. v. United
States Transmission Systems, Inc., et al., FCC Mimeo
No. 703 (Released: November 8, 1984); Jn re Certified
Collateral Corp., et al. v. Allnet Communications Services,
Inc., et al., FCC Dkt. Nos. E-86-63 through 68, 2 F.C.C.
Red. 2171 (Released: April 14, 1987). Unlike the Fed-
eral Aviation Act, Congress provided for the FCC to enter-
tain private complaints, (47 U.S.C. Secs. 207, 208), for the
award of damages (47 U.S.C. Secs. 206, 209), for enforce-
ment of its orders, (47 U.S.C. Sec. 401(b)), and for appel-
late review of ita decisions. 47 U.S.C. Secs. 402(a), 407; 28
U.S.C. Sec, 2342. Furthermore, the FCC is vested with the
administrative discretion to prescribe the conduct of the
I eee nnenenenbineieiiiaaananl
22
Petitioner. 47 U.S.C. Sec. 205(a).
In Bill Correctors, Lid. and In re Certified Collateral
Corp., the FCC has already reviewed eleven private com-
plaints concerning the same allegations as the instant case,
including its companion case of Locks v. U.S. Telephone of
the Midwest, Inc., decided sub nom. In re Certified Collat-
eral Corp., FCC No. E-86-66.
Nader expressly noted that given the above statutory
provisions, this Court has required deferral to the federal
agency, citing United States Navigation Co. v. Cunard S.S.
Co., 284 U.S. 474 (1932). Nader, 426 U.S. at 301. United
States Navigation Co. rested upon this Court’s interpreta-
tions of the Interstate Commerce Act which then was the
act regulating interstate communications. The above pro-
visions were transferred withcut substantive change from
that Act to the Communications Act creating the FCC. 78
Cong. Rec. 10312-13 (Statement of Representative Ray-
burn, June 2, 1934), This Court noted in Nader that
these provisions indicated Congressional intent to vest
both restrictive and permissive authority in the federal
agency with complete power over the private complaint.
Even if the allegations may appear bad on their face, given
the technical and commercial context of all attending cir-
cumstances the agency may approve or allow the practices
with modification. However, the uniformity which is the
purpose of the Act could not be obtained without resort
to the Commission. United States Navigation, 284 U.S. at
482.
Although the District Courts have followed this dis-
tinction and found United States Navigation Co. control-
ling (In re Long Distance Telecommunications Litigation:
Certified Collateral Corp., et al. v. Allnet Communication
Services, Inc., et al., supra, 612 F. Supp. 892 (E.D. Mich.
1985)), the Illinois Appellate Court has failed to recognize
it and threatens to undermine all of the District Courts’
and FCC decisions unless this petition is granted.
23
THE INSTANT CASE IS THE FLIP-SIDE
OF THE LOUISIANA PUBLIC SERVICE COMMISSION
CASE IN THAT IT DEALS WITH THE STATES’
INTERFERENCE WITH FCC DECISIONS IN
INTERSTATE COMMUNICATIONS
In the recent decision of Louisiana Public Service Com-
mission v. the FCC, 476 U.S. __ , 106 S.Ct. 1890 (1986) this
Court recognized that there are numerous policy considera-
tions in the restructuring of the telecommunications indus-
try but held that the Communications Act nevertheless
restricted the FCC from interfering in matters of intrastate
communications. This case represents the opposite situa-
tion in that the policy considerations relevant in these mat-
ters concern the states’ interference with the FCC decisions
in interstate communications.
In light of this Court’s decision in Phillips Petroleum
Company v. Shutts, 472 U.S, 797 (1985), the Illinois court
has certified Kellerman, supra, as a national class and wil!
be entertaining nationwide policy determinations regard-
ing interstate communications. Although it was the Con-
gressional intent to vest this authority in the FCC, a single
expert body which would determine, on a uniform national
basis, the regulation of interstate communications, the
effect of the Illinois courts’ decisions in these proceedings
has transferred that authority from the FCC to a trial court
in the Circuit Court of Cook County, Illinois. Given the
California state court proceedings in Clothesrigger, Inc. v.
GTE Corporation, supra, it is readily forseeable that dif-
ferent nationwide standards will be set by different state
courts for different interstate carriers or even for different
sub-classes of customers of the same carriers. This would
destroy the Congressional purpose of nationwide equality
and uniformity in interstate communications established
seventy-six years ago. It is crucially important for this
Court to grant the instant petition for writ of certiorari to
reaffirm the fundamental principles of federal regulation
over interstate communications,
a ...__euan"»_—_
24
CONCLUSION
For all of the foregoing reasons, US Telecom, Inc., f/k/a
U.S. Telephone, Inc. and U.S. Telephone of the Midwest,
Inc., respectfully requests this Court to grant the petition
for writ of certiorari.
Respectfully submitted:
MICHAEL W. WarD
( Counsel of Record )
JOHN F. WARD, JR.
O’KEEFE, ASHENDEN, LYONS
& WarpD
One First National Plaza
Suite 5100
Chicago, Illinois 60603
(312) 621-0400
Attorneys for Petitioner.
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.