Opposition Brief — Contel Cellular Inc. v. Leaf River Valley Cellular Telephone Co.

No. 95-908

sa The

Supreme Court of the United States

October Term, 1995

€

CONTEL CELLULAR INC. AND CONTEL

CELLULAR OF ILLINOIS, INC.,

Petitioners,

LEAF RIVER VALLEY CELLULAR TELEPHONE CO.,

INC. AND CENTRAL CELLULAR TELEPHONES, LTD.,

Respondents.

o—-_-

On Petition For A Writ Of Certiorari

To The Illinois Appellate Court

*

RESPONDENTS’ BRIEF IN OPPOSITION

TO PETITION FOR WRIT OF CERTIORARI

e _

Davip F. GRAHAM CarRTER G. PHILLIPs*

KATHLEEN L. ROACH Srpcey & AUSTIN

STEVEN W. YOUNG 1722 Eye Street, NW

SipLey & AUSTIN Washington, DC 20006

One First National Plaza (202) 736-8000

Chicago, Illinois 60603

(312) 853-7000

Attorneys for Respondents

* Counsel of record

COCKLE LAW BRIEF PRINTING CO., (800) 225-6964

OR CALL COLLECT (402) 342-2831

QUESTIONS PRESENTED FOR REVIEW

1. ‘“hether this Court has jurissiction to review an

interlocutory order of a state appellate court where the

matter remains to be tried in the lower state court and no

relief has yet been granted, because some of the relief that

might be awarded after trial might implicate federal regu-

lations.

2. Whether an Illinois state court has the power to

adjudicate damage claims under Illinois law for breach of

a contract and breach of the fiduciary duty owed by the

general partner of an Illinois limited parinership, where

the claims pertain to a business that operates under FCC

licenses.

ii

LIST OF AFFILIATED CORPORATIONS

Pursuant to Supreme Court Rule 29.6, the following

is a list of the parent corporations and non-wholly owned

subsidiaries of each respondent:

Leaf River Valley Cellular Telephone Co., Inc. (“Leaf

River”): Leaf River Telephone Company owns 51% of the

stock of Leaf River Cellular. United States Cellular Invest-

ment Company of Rockford (“USCIC Rockford”) owns

49% of the stock of Leaf River Cellular. United States

Cellular Investment Company (“USCIC”) is the parent

corporation of USCIC Rockford. United States Cellular

Company (“USCC”), a publicly traded corporation, is the

parent corporation of USCIC. Telephone and Data Sys-

tems, a publicly traded corporation, owns approximately

80% of the shares of USCC. Leaf River has no non-wholly

owned subsidiaries.

Central Cellular Telephones, Ltd. (“Central Cellu-

lar”): Sharon Telephone Company owns 25.5% of the

stock of Central Cellular. Bergen Telephone Company

owns 25.5% of the stock of Central Cellular. USCIC Rock-

ford owns 49% of the stock of Central Cellular. Central

Cellular has no non-wholly owned subsidiaries.

iii

TABLE OF CONTENTS

Page

RPUPMPE MUU PRONE 2 occ c cs vtcccccecccccceves i

LIST OF AFFILIATED CORPORATIONS............ ii

JURISDICTIONAL STATEMENT.................... 1

DRPRU UP EM OVO occ cc cccccvcccececcvccecencs 1

COUNTERSTATEMENT OF THE CASE............ 2

REASONS WHY THE PETITION SHOULD BE

A Ser ne ee eee 5

I. THIS COURT LACKS JURISDICTION TO HEAR

THE PETITION UNDER 28 U.S.C. § 1257

BECAUSE THE ORDER DENYING PETI-

TIONERS’ INTERLOCUTORY APPEAL WAS

NOT A FINAL JUDGMENT OR DECREE...... 6

Il. NO QUESTION EXISTS THAT THE COMMUNI-

CATIONS ACT EXPRESSLY PRESERVES STATE

COURT REMEDIES FOR THE INSTANT

CLAIMS FOR BREACH OF CONTRACT AND

eT ME cen pavc< stan vwenveencasees 11

A. CONTEL’S PATENTLY IRRELEVANT

AUTHORITIES RAISE NO QUESTION FOR

Nt i akin bd ov bw the So wn adie ob o6¥ee% 12

B. CONTEL RAISES NO QUESTION APPRO-

PRIATE FOR REVIEW BECAUSE THIS

COURT’S DECISIONS HAVE CONSIS-

TENTLY RECOGNIZED A STATE COURT’S

POWER TO ADJUDICATE STATE LAW

CLAIMS, EVEN WHERE THEY PERTAIN TO

AN FCC LICENSED BUSINESS, AND NO

ee MEE cc vu eeccccerstacsscesns 14

TABLE OF CONTENTS - Continued

Page

C. CONTEL RAISES NO QUESTION FOR

REVIEW BECAUSE THE FCC CONSIS-

TENTLY AGREES WITH THE INTERPRETA-

TION OF THE COMMUNICATIONS ACT

ADOPTED BY THE COURTS BELOW....... 16

CONCLUSION ...... 000 eer eeedA econ eesseneteuehers 18

eS—————EeEe

Vv

TABLE OF AUTHORITIES

Page

Cases

Bradley v. Richmond School Board, 416 U.S. 696

GN 6845 1enet hdd Catan ecb Vib cap ered a Sones 8

Construction Laborers v. Curry, 371 U.S. 542 (1963) .... 10

Cooperative Comm. v. AT&T Corp., 867 F. Supp.

Sane Mek SPU OPE ese cigecscccebluciee ew 16

Cox Broadcasting Corp. v. Cohn, 420 U.S. 469 (1975) ..9, 10

FCC v. Pottsville Broadcasting Co., 309 U.S. 134

oe ee ey PET oT rey hae ae oe aeeee 14

Flynt v. Ohio, 451 U.S. 619 (1981) ..............00.. 11

Houston v. Moore, 3 Wheat. 433 (1818)................ 7

In re Applications of Decatur Telecasting, Inc., 7 FCC

PN NE CHIN hs. ne viv ep eche edness ieee 17

In re Applications of KQED, Inc., 6 FCC Red. 598

Gee Eck senicwcesets Hastsers ied ae 17

In re Application of Rodney A. McDaniel, 4 FCC Rcd.

SIEM CPR: cdies kd wineede 1604) ele, 17

In re Application of Wind N’ Sea FM Limited Partner-

UD, F Was MU. Be Te ov hvoe ous kc cekaeess, 17

In the Matter of Applications of Centel Corp., 8 FCC

TOs. DE RENE aoa ecab ade kiccdaddane ester te. 16

Interstate Circuit, Inc. v. Dallas, 390 U.S. 676 (1968) ..... 1

KVHP TV Partners, Ltd. v. Channel 12 of Beaumont,

Inc., 874 F. Supp. 756 (E.D. Tex. 1995) ............ 16

Market Street Ry. v. Railroad Commission, 324 U.S.

Pa LOE on hese vedas ee rnney nel eekeealeseenee 7

vi

TABLE OF AUTHORITIES - Continued

Page

North Dakota Pharmacy Board v. Snyder's Stores, 414

US. 156 (1907S) .nccccccvevecavtcneesetedssceuaneewe 7

O'Dell v. Espinoza, 456 U.S. 430 (1982).............66. 7

Radio Station WOW uv. Johnson, 326 U.S. 120 (1945) . .passim

Regents of the University System of Georgia v. Carroll,

SOO U.S. TRG CROCE v vccvccccesacitssbenenncheverts 15

San Diego Gas & Elec. Co. v. City of San Diego, 450

We GES COPED ov cvcccccesvexcenunuauyumeeuuered 7,8

United Tel. Co. of Carolinas, Inc. v. FCC, 559 F.2d 720

CEPA GOR SIUT a oc vk ivesevuscoessuvacheeesieeeeee 15

STATUTES

ge 8 Be ee re ere ee 13

BIE ame BPP a AR oy 1, 6,7

OF UDR. © GA, 60 ve dhceNanwveueesueeieeieeeee passim

OTHER AUTHORITY

wupemn Comet Take 80. vic vcecccsuscvvessercistee 11

erento we,

RESPONDENTS’ BRIEF IN OPPOSITION

TO PETITION FOR WRIT OF CERTIORARI

Respondents Leaf River Valley Cellular Telephone

Company, Inc. (“Leaf River”) and Central Cellular Tele-

phones, Ltd. (“Central Cellular”) respectfully request that

this Court deny the Petition for Writ of Certiorari filed by

petitioners Contel Cellular Inc. and Contel Cellular of

Illinois, Inc. (collectively “Contel”) seeking review of the

decision of the Illinois Appellate Court.’

+

JURISDICTIONAL STATEMENT

This Court lacks jurisdiction to hear the Petition

under 28 U.S.C. § 1257 because the order denying peti-

tioners’ interlocutory appeal was not a final judgment or

decree.

STATUTES INVOLVED

28 U.S.C. § 1257: State Courts; certiorari

(a) Final judgments or decrees rendered by

the highest court of a State in which a decision

could be had, may be reviewed by the Supreme

* Contel erroneously states that the Illinois Supreme

Court’s order should be reviewable under § 1257. (Pet. at 1.)

Because the Illinois Supreme Court merely declined to review

the decision of the Appellate Court, the decision of the

Appellate Court (if considered final) would be the one

reviewable by this Court. See Interstate Circuit, Inc. v. Dallas, 390

U.S. 676, 678 n.1 (1968).

Court by writ of certiorari where the validity of

a treaty or statute of the United States is drawn

in question or where the validity of a statute of

any State is drawn in question on the ground of

its being repugnant to the Constitution, treaties,

or laws of the United States, or where any title,

right, privilege, or immunity is specially set up

or claimed under the Constitution or the treaties

or statutes of, or any commission held or

authority exercised under, the United States.

47 U.S.C. § 414: Exclusiveness of chapter.

Nothing in this chapter contained shall in

any way abridge or alter the remedies now exist-

ing at common law or by statute, but the provi-

sions of this chapter are in addition to such

remedies.

COUNTERSTATEMENT OF THE CASE

An examination of the proceedings below reveals

that Contel’s petition improperly seeks review of a nonfi-

nal order. Contel filed a motion to dismiss the complaints

filed against it by Leaf River and Central Cellular in the

Illinois circuit court. On October 12, 1994, the circuit

court denied Contel’s motion to dismiss. On December

14, 1994, the circuit court denied Contel’s motion for a

finding that a question of law existed appropriate for

interlocutory appeal under III. S.Ct. Rule 308. Contel nev-

ertheless perfected an appeal under Ill. S.Ct. Rule 307, by

characterizing its motion to dismiss as also a motion for a

stay. On March 21, 1995, the Illinois Appellate Court

affirmed the order denying Contel’s motion to dismiss.

a ee

The court did not address what relief would be appropri-

ate upon a final judgment, but held only that no impedi-

ments existed to the trial court’s jurisdiction. (See Pet. at

A16.) On October 4, 1995, the Illinois Supreme Court

denied Contel’s Petition for Leave to Appeal the inter-

locutory order of the Appellate Court, remanding the

cases for trial on the merits. No final judgment or decree

has been entered in these cases by any lower court.

Rather, the cases have been proceeding in the circuit

court.

Moreover, the complexion of the cases - and of the

issues Contel seeks to have this Court review — has

already changed during the course of these further pro-

ceedings. For example, the complaints Contel attaches to

its Petition and refers to throughout were in fact mooted

by amended complaints filed on August 17, 1995 that

altered the prayers for relief, e.g., by dropping any

request for injunctive relief.

If this Court determines to examine the merits of

Contel’s petition, Contel’s statement of the case describes

most of the facts leading up to this litigation, but contains

some material deficiencies regarding the background of

the primary legal issue decided below — whether an Illi-

nois state court has the power to decide claims for breach

of a contract governed by Illinois law and for breach of

the fiduciary duties owed under Illinois law by the gen-

eral partner of an Illinois limited partnership.

Leaf River and Central Cellular filed these consoli-

dated actions seeking relief for a breach of contractual

and fiduciary obligations owed to them and the Rockford

ee

MSA Limited Partnership (the “Partnership”). The Part-

nership provides cellular telephone service in and around

Rockford, Illinois under an FCC license. Plaintiffs con-

tend that Contel, the general partner of the Partnership,

breached its obligations under the Partnership Agree-

ment and its fiduciary duties by misappropriating for

itself the opportunity to provide cellular service in Illi-

nois RSA 1, a cellular market adjoining Rockford. Accord-

ingly, Leaf River and Central Cellular seek money

damages for the value of the lost business opportunity

Contel misappropriated.

Contrary to Contel’s representations in its petition,

(see Pet. at 14, 15, 17), Leaf River and Central Cellular

have repeatedly and consistently explained that they do

not seek “ownership” or “control” of the FCC license that

Contel obtained for itself, nor do they seek a “transfer” of

the FCC license for Illinois RSA 1. (See App. Order, Pet. at

A15.) Plaintiffs have not requested specific performance

of Contel’s obligation to pursue the RSA 1 license on

behalf of the Partnership and its partners, but, as the

Appellate Court recognized, seek substitutional relief

instead, in the form of money damages:

Plaintiffs . . . have not asked the trial court to

transfer control of the license. They seek only

compensatory damages from defendants for

their offenses as general partners, specifically |

(1) seizing a partnership opportunity for them-

selves and (2) breach of the provision of the

partnership agreement which requires that if the

general partner applies for a license to serve

another service area, the application shall be on

behalf of the partnership.

(Id.) In fact, to make clear that they seek damages as

opposed to any ownership or control over the FCC

license, since the time of the Appellate Court’s decision

Leaf River and Central Cellu.ar amended their com-

plaints to eliminate the request for relief that sought to

require Contel to share all benefits from its interest in

Illinois RSA 1 - an important fact that Contel neglects to

mention. (See Pet. at 13.) Contel also fails to mention the

primary request for relief in both the original and

amended complaints, namely, “compensatory damages in

an amount to be determined at trial.” (Pet. at A28, A39.)

REASONS WHY THE PETITION SHOULD BE DENIED

Contel’s petition should be denied because no final

judgment or decree has been entered, concerning the

“transfer” or “ownership” of an FCC license or otherwise.

Indeed, Contel casts its entire argument hypothetically, in

order to discuss the federal questions that it believes

would arise “if the state court were to grant” certain

relief. (Pet. at 14) (emphasis supplied). Further, one of the

two forms of relief Contel believes would offend federal

law has already been removed from the case by virtue of

subsequent proceedings. Plaintiffs’ remaining requests

for relief have not yet been granted or denied, rendering

Contel’s petition premature.

Even if this Court were to consider the merits of

Contel’s petition, no reason to grant certiorari is pre-

sented. Contel claims that the Illinois Appellate Court

erred by relying on Section 414 of the Federal Communi-

cations Act and holding that these private disputes could

proceed in Illinois state court. Section 414 is clear, how-

ever, and has been consistently applied the way the Illi-

nois Appellate Court did were. The bulk of Contel’s

petition simply recites patently irrelevant FCC regula-

tions and asserts that their potential application to the

particular facts of this action should be deemed “impor-

tant.” By failing to cite any decisions by any court agree-

ing with its position, however, Contel has raised no

conflict of authority requiring review. Moreover, no ques-

tion of law exists that has not been settled by this Court,

nor has one been decided in a way that conflicts with the

decisions of this Court. Indeed, Contel simply attempts to

avoid this Court’s well-established precedent. Finally,

even the FCC, whose policy Contel claims needs protect-

ing, has consistently repudiated Contel’s position. In

short, this purely private dispute raises no questions of

general importance appropriate for review.

I. THIS COURT LACKS JURISDICTION TO HEAR

THE PETITION UNDER 28 U.S.C. § 1257 BECAUSE

THE ORDER DENYING PETITIONERS’ INTER-

LOCUTORY APPEAL WAS NOT A FINAL JUDG-

MENT OR DECREE.

This Court lacks jurisdiction to hear Contel’s petition

because no final judgment or decree has been entered in

these cases. Contel does not even address this threshold

issue in its petition, instead launching into arguments

which, by their contingent nature, demonstrate that no

review should take place at this time. The petition attacks

a lower state court’s interlocutory order affirming the

denial of Contel’s motion to dismiss. This Court’s review

of state court decisions is limited, however, to “[f]inal

judgments or decrees rendered by the highest court of a

State in which a decision could be had.” 28 U.S.C. § 1257.

Therefore, the general rule is that the state court judg-

ment “must... be final as an effective determination of

the litigation and not of merely interlocutory or inter-

mediate steps therein. It must be the final word of a final

court.” Market Street Ry. v. Railroad Commission, 324 U.S.

548, 551 (1945). If acts remain to be performed on remand

that are not merely ministerial, and that might them-

selves create a federal question, the judgment is normally

deemed nonfinal and nonreviewable. Houston v. Moore, 3

Wheat. 433, 434 (1818); San Diego Gas & Elec. Co. v. City of

San Diego, 450 U.S. 621, 632-33 (1981); O'Dell v. Espinoza,

456 U.S. 430 (1982). Here, the Appellate Court's interlocu-

tory order remanded these cases for trial in the circuit

court on the merits. Thus, under the literal terms of

§ 1257, such an order is not reviewable.

The finality requirement of § 1257 serves several

important policies: “(1) it avoids piecemeal review by

federal courts of state court decisions; (2) it avoids giving

advisory opinions in cases where there may be no real

‘case’ or ‘controversy’ in the sense of Art. III; (3) it limits

federal review of state court determinations of federal

constitutional issues to leave at a minimum federal intru-

sion in state affairs.” North Dakota Pharmacy Board v.

Snyder's Stores, 414 U.S. 156, 159 (1973). Granting Contel’s

petition would offend all of these principles. First, Contel

seeks piecemeal review of an interlocutory order denying

its motion to dismiss complaints - which have since

already been amended. Any ensuing final disposition by

the trial court will likely beget further appeals by one or

both sides, which may in turn present reviewable federal

issues.

More problematic, however, is that Contel’s petition

seeks an advisory opinion on the relevance and applica-

tion of FCC regulations to forms of relief that have not

yet been ordered, including one request for relief — the

injunction to share benefits — that has already been elimi-

nated from the case as a result of plaintiffs’ amendment

of their complaints. In fact, Contel prefaces its entire

argument on a contingency, “if the state court were to

grant the requested relief.” (Pet. at 14) (emphasis sup-

plied). Although Contel claims that if the trial court were

to grant the injunction which plaintiffs no longer seek or

an accounting, such an order would violate federal law

(Pet. at 13, 17, 22), nowhere does Contel show how grant-

ing the primary claim for compensatory damages would

implicate federal law. Since no court has determined

which, if any, form of relief ought to be awarded against

Contel, the petition is hopelessly premature. See San Diego

Gas & Elec. Co., 450 U.S. at 633 (declining review where

no final decision on the propriety of all possible

remedies). Finally, Contel’s petition would also cause fed-

eral intrusion in the State of Illinois’ affairs, by interrupt-

ing the state court’s adjudication of claims for breaches of

Illinois laws. See Radio Station WOW uv. Johnson, 326 U.S.

120, 124 (1945) (the finality prerequisite “derives added

force when the jurisdiction of this Court is invoked to

upset the decision of a State court”).

Although this Court may apply a “pragmatic” inter-

pretation of the finality requirement in exceptional cir-

cumstances where a case is not literally concluded, see

Bradley v. Richmond School Board, 416 U.S. 696, 722-23 n.28

(1974), none of those circumstances exists here. In Cox

Broadcasting Corp. v. Cohn, 420 U.S. 469 (1975), this Court

delineated four narrow categories where review of state

decisions prior to final disposition of a case may be

appropriate. The first category is “where for one reason

or another the federal issue is conclusive or the outcome

of proceedings preordained.” Id. at 479. This exception

does not apply here because neither the outcome of a trial

on the merits, nor the proper form of relief to be granted,

was decided or preordained by the interlocutory order.

The second exception to the finality rule concerns

situations “in which the federal issue, finally decided by

the highest court in the State, will survive and require

decision regardless of the outcome of future state-court

proceedings.” Id. at 480. The Court gave as an example

Radio Station WOW, Inc., where review was granted to an

order of the Nebraska Supreme Court finding fraud and

directing the transfer of the properties of a federally

licensed radio station. By contrast, the instant interlocu-

tory order did not adjudicate the merits of the claims or

direct a transfer of a licensed facility. Contel simply

claims that such a transfer order, if one were to be issued,

would cause a “collision” with federal law. (Pet. at 17,

19.) Given that Leaf River and Central Cellular do not

even seek any transfer, however, Contel’s inchoate fear of

a collision does not warrant this Court’s immediate inter-

vention.

The third exception to the finality requirement may

occur “where the federal claim has been finally decided,

with further proceedings on the merits in the state courts

to come, but in which later review of the federal issue

cannot be had, whatever the ultimate outcome of the

10

case.” Id. at 481. This category applies to cases where, if

the petitioner were to lose on the merits, “governing state

law would not permit him again to present his federal

claims for review.” Id. Such an exception again is inap-

posite because upon a final judgment and grant of any

relief, Contel would have an opportunity to raise on

appeal any appropriate federal defense to such an award.

The final exception to finality under Cox Broadcasting

Corp. is “where the federal issue has been finally decided

in the state courts with further proceedings pending in

which the party seeking review here might prevail on the

merits on nonfederal grounds, thus rendering unnecess-

ary review of the federal issue by this Court, and where

reversal of the state court on the federal issue would be

preclusive of any further litigation on the relevant cause

of action” and where “a refusal immediately to review the

state-court decision might seriously erode federal policy.”

Id. at 482-3. To define this narrow category, the Court

cited Construction Laborers v. Curry, 371 U.S. 542 (1963),

which reviewed the grant of a temporary injunction

enjoining a union from picketing even though the

National Labor Relations Board had exclusive jurisdiction

over the claim. Jurisdiction in Curry also rested on the

ground that the union had no defense to a permanent

injunction other than its federal one that had already

been decided. 371 U.S. at 542. By contrast, no relief has

been granted in these cases, and Contel’s arguments

merely address a portion of the relief that might be

awarded. Further, no important federal interests will be

eroded by permitting the Illinois state court to determine

the state law claims for breach of contract and fiduciary

duty and to determine what relief, if any, is permissible

|

11

and appropriate. See Flynt v. Ohio, 451 U.S. 619, 622

(declining review where delay until a final judgment

would not seriously erode federal policy). Rather, the

important federal interest here is to avoid creating any

false “conflict between the courts of two different govern-

ments,” an interest which is most effectively promoted by

denying Contel’s premature petition for review of an

interlocutory state court order. Radio Station WOW, 326

U.S. at 124.

Il. NO QUESTION EXISTS THAT THE COMMUNI-

CATIONS ACT EXPRESSLY PRESERVES STATE

COURT REMEDIES FOR THE INSTANT CLAIMS

FOR BREACH OF CONTRACT AND FIDUCIARY

DUTY.

Contel’s apparent basis for requesting review of the

lower state court decision is that the Illinois Appellate

Court relied too “heavily” on Section 414 of the Commu-

nications Act in holding that these disputes should pro-

ceed in the state trial court. (Pet. at 14.)2 Contel has failed,

however, to raise any question, let alone one deserving of

certiorari, about the language of § 414 of the Communica-

tions Act in relation to these garden-variety breach of

contract and fiduciary duty actions. The express language

2 This type of argument, that a misapplication of law

occurred, is in itself a weak basis for seeking review. See S.Ct. R.

10 (“A petition for a writ of certiorari is rarely granted when the

asserted error consists of . . . the misapplication of a properly

stated rule of law.”)

12

of the Communications Act provides the best reason that

Contel’s claim of preemption is unfounded:

Nothing in this Act contained shall in any way

abridge or alter the remedies now existing at

common law or by statute, but the provisions of

this Act are in addition to such remedies.

47 U.S.C. § 414. Thus, Contel’s claim that “the relief

requested” by Leaf River and Central Cellular has some-

how been preempted flies in the face of Congress’s

express preservation of common law and statutory

remedies, of which compensatory damages is the most

obvious example.

A. CONTEL’S PATENTLY IRRELEVANT

AUTHORITIES RAISE NO QUESTION FOR |

REVIEW. |

Glossing over the express savings provision of Sec-

tion 414, Contel cites a series of FCC regulations and

decisions that are not only prematurely raised, (see Sec-

tion I, supra), but also irrelevant. Contel argues that Leaf

River and Central Cellular seek to share “control over” or

“ownership in” the Illinois RSA 1 FCC license. (Pet. at 14,

15.) From this presumption, Contel argues that because

such a result would violate FCC regulations under the

particular facts of these cases, the claims against Contel

must be preempted. In order to make this argument,

however, Contel persists in an intentional misunder-

standing of plaintiffs’ original complaints and ignores

plaintiffs’ amended complaints. Plaintiffs do not request

transfer of, an ownership interest in, or control over,

Contel’s FCC license. Rather, as plaintiffs have repeatedly 7

Ne RE I NNT

13

explained to defendants, as they expressly advised the

courts below, as the Appellate Court recognized (see p. 4

supra), and as plaintiffs have made explicit by amending

their complaints, plaintiffs seek only money damages for

Contel’s breaches of common law contract and fiduciary

obligations, in an amount equal to the value of the inter-

est which Contel obtained by breaching its duties with

regard to the business opportunity in Illinois RSA 1. The

series of statutes and regulations cited by Contel never

were intended to address such a purely private dispute,

and have never been so applied.

Thus, Contel’s citation of 47 C.F.R. § 22.942 (Pet. at

15), which prohibits a party from holding an “ownership

interest” in both licenses for one cellular market, is irrele-

vant because respondents seek no such interest. Likewise,

Contel’s citation of Section 310 of the Communications

Act (Pet. at 17), which requires an application to the FCC

before “transfers of control” of an FCC license, is equally

beside the point because plaintiffs seek no such transfer.

Finally, Contel’s citation of Section 332 of the Communi-

cations Act (Pet. at 18-19), pertaining to “entry regula-

tion,” remains a non sequitur. As the Illinois Appellate

Court recognized, by no stretch of language, or imagina-

tion, do Leaf River and Central Cellular seek for the state

of Illinois “to regulate the entry of or the rates charged by

any commercial mobile service.” (Pet. at A16-17). At bot-

tom, Contel simply presents no decision by any court, or

by the FCC, applying these regulations and provisions to

a common law claim, to a request for money damages, or

to any question of federal preemption.

14

B. CONTEL RAISES NO QUESTION APPROPRI-

ATE FOR REVIEW BECAUSE THIS COURT’S

DECISIONS HAVE CONSISTENTLY RECOG-

NIZED A STATE COURT’S POWER TO ADJU-

DICATE STATE LAW CLAIMS, EVEN WHERE

THEY PERTAIN TO AN FCC LICENSED BUSI-

NESS, AND NO CONFLICT EXISTS.

Contel fails to present any conflict between lower

court decisions or those of this Court warranting cer-

tiorari. This Court recognized the respective spheres of

jurisdiction of the FCC and state courts in Radio Station

WOW v. Johnson, 326 U.S. 120 (1945). In that decision, the |

plaintiff sued in state court to have a lease and assign- |

ment of an FCC license set aside for fraud. 326 U.S. at

121. The Nebraska Supreme Court ordered that the lease

and license be set aside, and ordered an accounting of the

station’s revenue by the lessee. Id. at 122. This Court

permitted the accounting to proceed in the state court,

and further held “[w]Je have no doubt of the power of the

Nebraska court to adjudicate, and conclusively, the claim

of fraud in the transfer of the station ... and upon

finding fraud to direct a reconveyance of the lease to the

[plaintiff].” Id. at 131. The Court explained, “[t]he ‘public

interest’ with which the Commission is charged is that

involved in granting licenses. Safeguarding of that inter-

est can hardly imply that the interest of the States in |

enforcing their own laws against fraud have been nulli-

fied insofar as licensed facilities may be the instruments

of fraud.” Id. See also FCC v. Pottsville Broadcasting Co., 309

U.S. 134, 138 (1939) (“The Communications Act is not

designed primarily as a new code for the adjustment of

conflicting private rights through adjudication”). To the

a

een,

15

same effect, in Regents of the University System of Georgia v.

Carroll, 338 U.S. 586 (1950), this Court determined that a

state court had the power to award damages for breach of

contract even where performance under the contract

would have violated FCC policy. The Court stated, “[w]e

do not read the Communications Act to give authority to

the Commission to determine the validity of contracts

between licensees and others.” Id. at 602. Similarly, the

defense of legal impossibility was summarily disposed as

“a matter of state law.” Id. at 594. These decisions firmly

support the exercise of jurisdiction by an Illinois court in

enforcing Illinois laws against breach of contract and

breach of fiduciary duty. Contel fails to mention Radio

Station WOW or Regents until the penultimate page of its

petition, and then only to waffle between: (a) weakly

distinguishing them as involving a radio station instead

of a rural cellular telephone license, and (b) suggesting

that they are somehow wrong for “today’s environment.”

(Pet. at 23.) Neither assertion merits this Court’s review.

Further, the Communications Act has also been con-

sistently construed by the lower courts the way the Illi-

nois courts did here — as preserving private, independent

state law claims among licensees for the courts, not for

the FCC. See, e.g., United Tel. Co. of Carolinas, Inc. v. FCC,

559 F.2d 720, 723 (D.C. Cir. 1977) (affirming an FCC

decision not to adjudicate a dispute among joint ven-

turers, “the Communications Act . . . should not be

turned into a mechanism whereby participants in a joint

communications project can force the Federal Communi-

cations Commission to arbitrate contractual disputes over

the division of residual revenues from their joint venture.

The purpose of the Act is to protect the public interest

16

rather than to provide a forum for the settlement of

private disputes”); KVHP TV Partners, Ltd. v. Channel 12 of

Beaumont, Inc., 874 F. Supp. 756, 762 (E.D. Tex. 1995)

(section 414 “expressly preserves state causes of action

for breaches of duties that are not created by the Commu-

nications Act”). Thus, by literally applying Section 414,

the Illinois Appellate Court broke no new ground.

C. CONTEL RAISES NO QUESTION FOR

REVIEW BECAUSE THE FCC CONSISTENTLY

AGREES WITH THE INTERPRETATION OF

THE COMMUNICATIONS ACT ADOPTED BY

THE COURTS BELOW.

Notably, Contel also fails to present any true conflict

between the lower court order and decisions of the FCC,

citing no FCC decisions that purport to adjudicate claims

such as the ones made here. In fact, an examination of

FCC decisional law reveals that the FCC refuses to

become involved in private matters such as this, instead

referring them back to the courts — even where questions

arise regarding control of cellular licenses. See, e.g., In the

3 Contel errs in suggesting that OBRA’s amendment to the

Communications Act somehow trumps the savings clause of

section 414, which Congress left untouched. (Pet. at 18-19.) The

lower court properly refused to infer that such oblique language

on “entry regulation” evinces a legislative intent to override the

express savings clause preserved in the Act. (Pet. at A16-17.) See

also Cooperative Comm. v. AT&T Corp., 867 F. Supp. 1511, 1516 (D.

Utah 1994) (post-OBRA, holding that “inclusion of the [section

414] savings clause clearly indicates Congress’ intent that

independent state law causes of action , such as interference

with contract or unfair competition, not be subsumed by the

Act, but remain as separate causes of action”).

17

Matter of Applications of Centel Corp., 8 FCC Red. 1829,

1831 (1993) (refusing to consider a claim that transfer of

control of a cellular license would violate the parties’

partnership agreements, “[t]he Commission has repeat-

edly stated that it is not the proper forum for the resolu-

tion of private contractual disputes, noting that these

matters are appropriately left to the courts or to other

fora that have the jurisdiction to resolve them”); In re

Applications of Decatur Telecasting, Inc., 7 FCC Red. 8622,

8624 (1992) (same); In re Application of Rodney A.

McDaniel, 4 FCC Red. 1736 (1989) (“any harm which

[petitioner] might suffer from the transaction can be satis-

fied by money damages pursuant to local judicial deter-

mination. Thus, our action does not in any way prejudice any

remedy to which a court may ultimately determine MC is

entitled”) (emphasis supplied, citations omitted); In re

Applications of Wind N’ Sea FM Limited Partnership, 7 FCC

Red. 2293, 2294 n.5 (1992) (“[t]he Commission has long

held that it has neither the authority nor the machinery to

adjudicate alleged claims arising out of private contrac-

tual agreements”); In re Applications of KQED, Inc., 6 FCC

Red. 625, 626 (1991) (same). Finally, consistent with this

policy it is worth noting here that the FCC has never held

that the mere award of compensatory damages consti-

tutes an ownership interest or control over an FCC

license.*

* Moreover, even if, arguendo, the relief ultimately awarded

in this litigation does involve matters touching on an interest of

the FCC, the court could at that time simply fashion an

appropriate remedy. See Radio Station WOW, 326 U.S. at 132

(“State power is amply respected if it is qualified merely to the

extent of requiring it to withhold execution of that portion of its

18

Thus, not even the FCC agrees with Contei’s position

that the claims in this case should not be adjudicated by

the Illinois courts, but would refuse to resolve this pri-

vate dispute concerning the interpretation of a contract or

fiduciary duties or to award damages for the breach of

such duties. In sum, the overwhelming weight of author-

ity, all of which Conte] fails to address in its petition,

agrees that these actions belong where they are now:

awaiting trial on the merits in Illinois state court.

+

CONCLUSION

The petition for a writ of certiorari should be denied.

Respectfully Submitted,

Davip F. GRAHAM Carter G. PHILurs*

KATHLEEN L. ROACH Srptey & AUSTIN

SteveN W. YOUNG 1722 Eye Street, NW

Siptey & AUSTIN Washington, DC 20006

One First National Plaza (202) 736-8000

Chicago, Illinois 60603

(312) 853-7000

Attorneys for Respondents

* Counsel of record

decree requiring retransfer of the physical properties until steps

are ordered to be taken, with all deliberate speed, to enable the

Commission to deal with new applications in connection with

the station”).