Opposition Brief — APCC Services, Inc. v. Sprint Communications Co., LP (No. 05-766)

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“7 | FEB 13 2006

No. 05-766 {

IN THE

Supreme Court of the United States

APCC SERVICES, INC.., ef al.,

Petitioners,

SPRINT COMMUNICATIONS COMPANY L.P.., ef ai..,

Respondents.

On Petition for a Writ of Certiorari to the

United States Court of Appeals

for the District of Columbia Circuit

RESPONDENTS’ BRIEF

IN OPPOSITION TO PETITION

MICHAEL C. SMALL DAVID P. MURRAY

Counsel of Record Counsel of Record

EDWARD P. LAZARUS RANDY J. BRANITSKY

AKIN GUMP STRAUSS WILLKIE FARR & GALI AGHER LLP

HAUER & FELD 1875 K Street, N.W.

2029 Century Park East Washington, D.C. 20006

Los Angeles, CA 90067 (202) 303-1000

(S10) 259-1 Counsel for Respondent Sprint

Counsel for Respondent Communications Company L.P.

AT&T Corp.

WILSON-EPES PRINTING CoO., INC. — (202) 789-0096 — WASHINGTON, D.C. 20001

QUESTIONS PRESENTED

1. Whether the Communications Act of 1934, as amended

by the Telecommunications Act of 1996 (collectively, the

“Telcom Act”), confers a private right of action for damages

for alleged violations of the FCC’s 1999 “dial-around”

payphone compensation plan (“1999 Order’).

2. Whether a subsequent order promulgated by the FCC in

2003, which determined that the 1999 Order was unworkable

and replaced it with a substantively new compensation plan,

retroactively can form the basis of a private right of action

under the Telcom Act for lawsuits that were filed prior to the

2003 Order and that allege violations only of the superseded

1999 Order.

3. Whether Petitioners have standing to sue under the

Telcom Act for alleged violations of the 1999 Order when the

payphone service providers (“PSPs”) that Petitioners purport

to represent assigned their claims to Petitioners solely for

collection purposes, any and all proceeds that Petitioners col-

lect must be passed back to the PSP-assignors, and Petitioners

have no financial interest in the outcome of the litigation.

(i)

RULE 29.6 DISCLOSURES

A. The shares of Respondent AT&T Corp. are 100 percent

owned by AT&T, Inc.

B. Respondent Sprint Communications Company L.P. is a

limited partnership and is indirectly wholly-owned by Sprint

Nextel Corporation. The partners of Sprint Communications

Company L.P. are: U.S. Telecom, Inc., which is the general

partner and wholly-owned subsidiary of Sprint Nextel Corpo-

ration; UCOM, Inc., which is a limited partner; Utelcom, Inc.,

which is a limited partner; and Sprint International Com-

munications Corporation, which is a limited partner. Sprint

Nextel Corporation is a holding company which offers shares

of stock to the public under the symbol “S”. Only Sprint

Nextel Corporation offers shares of stock on public markets.

No person or entity owns more than ten percent of Sprint

Nextel Corporation’s stock.

TABLE OF CONTENTS

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STATUTES AND REGULATIONG................cececeseeeees

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The Payphone Compensation Directive In

The FCC’s Payphone Compensation Orders.....

Relevant Case Procecdings.....ssccccrsessessrssverseseses

1. The Petitioners’ Assignments From PSPs...

The District Court Rulings ...........ccccesesseees

3. The D.C, Circuit’s Decision ......ccccsosessesesses

The Ninth Circuit’s Decision In Metrophones ..

REASONS FOR DENYING THE PETITION .............

THE “SPLIT” BETWEEN THE D.C. AND

NINTH CIRCUITS ON THE § 201(b) QUES-

TION DOES NOT MERIT THIS COURT'S

PRG WOE OF snevesenssinatninianibnidiviegsiinsiiidusabaniiiladiaiadatabiedies

A. The D.C. and Ninth Circuits Examined

Different FCC Orders And Compensation

Plans In Analyzing The § 201(b) Issue .......

1. The D.C. Circuit Examined The 1999

2. The Ninth Circuit Decision Examined

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TABLE OF CONTENTS—Continued

Page

B. The § 201(b) Question Can Be Readily

Addressed By The FCC In A Proper

Rulemaking And Without Intervention By

Se cicsihiuiisheuniiibalitietipaccesiaaildlansitedadaiaiins 20

C. The §201(b) Question -Has_ Limited

CRD cicricnsecisansivnineresinnmnatasitiniiinniaiin 22

ll. THE D.C. AND NINTH CIRCUITS AP-

PLIED SETTLED PRECEDENTS IN FIND-

ING NO PRIVATE RIGHT OF ACTION

UNDER § 276 TO ENFORCE THE FCC’S

PAYPHONE COMPENSATION PLAN .......... 22

Ill. WHETHER § 416(c) CONFERS A PRIVATE

RIGHT OF ACTION FOR PAYPHONE

COMPENSATION DISPUTES DOES NOT

MERIT THIS COURT’S REVIEW ....0000.0.0000... 25

IV. SERIOUS STANDING ISSUES MAKE THIS

CASE AN INAPPROPRIATE VEHICLE

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Sr NSP EET sniniesbihesentsniicsnenistcvinsiomenaesoneenaibeimanueniias 30

TABLE OF AUTHORITIES

CASES Page

Alexander v. Sandoval, 532 U.S. 275 (2000) ........ passim

Alltel Tenn., Inc. v. Tennessee Pub. Serv.

Comm'n, 913 F.2d 305 (6th Cir. 1990) ............. 27

Baltimore & Ohio Chicago Terminal R.R. Co. v.

Wisconsin Cent. Ltd., 154 F.3d 404 (7th Cir.

PED scicesesnneeniconcsidisiniebuninanaaasdkaeuinavaabisaliaptonts 21

Bowen v. Georgetown Univ. Hosp., 488 U.S. 204

CF SFEl Peiicsinietinniunninanstieescudiiesssmnanandiaiaiianaiateid 18, 19

Chevron U.S.A. Inc. v. Natural Res. Def. Coun-

CO, GOT Wide COT CEPT) cesevireeseeunnstorecnensinsbionss 2, 24

Greene v. Sprint Commc'ns Co., 340 F.3d 1047

(9th Cir. 2003), cert. denied, 541 U.S. 988

SUIT Dancnidlasadsucsbuinsbichesisussielaiadiinennsnaladiiaxeaadiauaal 8, 11, 24

Greene v. Sprint Commc'ns Co., 02-CV-3841,

slip op. (C.D. Cal. Suby 1, 2002)....ccscccssscesesceees 1]

Gross Common Carrier v. Baxter Healthcare

Corp., S¥ F.3d 703 (7tth Cir, 1995) ..cessovsvsscceveees 21

Hawaiian Tel. Co. v. Public Utils. Comm'n, 827

Fk Fe CRUE, FIT) eccevccvscvinsecsesccsvecsatoniess 27

Hunt v. Washington State Apple Adver. Comm'n,

EE Vis Se LETTS eetiinstivbinntatanintts 29

Louisiana Pub. Serv. Comm'n v. FCC, 476 U.S.

ET esas iinecnasaidcisnshbnctiiccauidibsiniecetineniiandiphies 27

Lujan v. Defenders of Wildlife, 504 U.S. 555

7) RRR ERE Rae act recreate sat Rr Mee OREO OW) Sore 29

Metrophones Telecomms., Inc. v. Global Cross-

ing Telecomms., Inc., 423 F.3d 1056 (9th Cir.),

petition for cert. filed, 74 U.S.L.W. 3352 (U.S.

POY, Sig AAD Ps Gt FD) seccnsccaremerincivnceserenes passim

Motor Vehicles Mfrs. of United States, Inc. vy.

State Farm Mut. Auto. Ins. Co., 463 U.S. 29

Dre Tillchinsbnissiacabesiaeeictiaedtadetinuipderididitined eieiaaniiinimonans 20

TABLE OF AUTHORITIES—Continued

Page

National Cable & Telecomms. Ass'n v. Brand X

Internet Servs., 125 S. Ct. 2688 (2005) ............. 18

New England Pub. Commce'ns Council, Inc. v.

FCC, 334 F.3d G9 (D.C. Cir, 2003) ..cccccsssseseosees 4

New England Tel. & Tel. Co. v. Public Utils.

Comm'n of Me., 742 F.2d 1 (1st Cir. 1984)...14, 26, 27

Smiley v. Citibank (S.D.), N.A., 517 U.S. 735

SE are iesicisitelaleiiiteniiocsbeiisinnineiiniiinasiltitieeninadiehdaipianti 17

Sprint Corp. v. FCC, 315 F.3d 369 (D.C. Cir.

Sai cuidciacciainenienintaiateintiintinntiiamninnnibinanss 8

Steel Co. v. Citizens for a Better Env’ t, 523 US.

Be eaititcencesedisnieininaniitelcinibinsanniscnmmiuisebeinien 27

United States v. Bessemer & Lake Erie R.R. Co.,

riya wp fit! ome & Ae, | Re Oenoee 21

United States v. Mead Corp., 533 U.S. 218

aT Piciniisiatcicenicdescieidilininieiiicetbddiahapaiimaiidabiapipenadasdeniiends 17

Vermont Agency of Natural Res. v. United States

ex rel. Stevens, 529 U.S. 765 (2000) ........ cece 29

AGENCY DECISIONS AND RULES

APCC. Servs., Inc. v. Network IP, LLC, 20

gd Ee se Rape eee eae 10

APCC Servs., Inc. v. TS Interactive, Inc., 19

F.C.C.R. 10,456 (2004) ............... snnisteianiilibiniaincie 10

Beil Atl.-Del., Inc. v. MCI Telecomms. Corp., \7

fo et | Re EEN 10

In re Implementation of the Pay Telephone

Reclassification and Compensation Provisions

of the Telecommunications Act of 1996, Notice

of Proposed Rulemaking, |i F.C.C.R. 6716

Vil

TABLE OF AUTHORITIES—Continued

In re Implementation of the Pay Telephone Re-

classification and Compensation Provisions of

the Telecommunications Act of 1996, Report &

Order, 11 F.C.C.R. 20,541 (1996)............cccsseee

In re Implementation of the Pay Telephone

Reclassification and Compensation Provi-

sions of the Telecommunications Aci of 1996,

Order on Reconsideration, 11 F.C.C.R. 21,233

Fare aivatecruiascieiasteiecesdDbianisteansisinedaiiassitipeiiceiatealiii

In re Implementation of the Pay Telephone

Reclassification and Compensation Provisions

of the Telecommunications Act of 1996, Third

Report & Order and Order on Recons. of

Second Report & Order, 14 F.C.C.R. 2545

ff Fi ei icisenihvinhisdaenvannedtocininatpiamenteninbinbaaveatsantitas 7

In re Implementation of the Pay Telephone

Reclassification and Compensation Provisions

of the Telecommunications Act of 1996,

Second Order on Reconsideration, 16 F.C.C.R.

EE EE Picunceiiisciconantiionticnsnnesinediavitiimeniinnetinte

In re Implementation of the Pay Telephone

Reclassification and Compensation Provi-

sions of the Telecommunications Act of 1996,

Further Notice of Proposed Rulemaking, 18

Fie decate: 6 EGE GUND cccerinntsninsicneninpninnennttiens

In re Implementation of the Pay Telephone

Reclassification and Compensation Provisions

of the Telecommunications Act of 1996, Report

& Order, 18 F.C.C.R. 19,975 (2003)...............4

Pleading Cycle Established For Comment On

Remand Issues In The Payphone Proceeding,

Public Notice, 13 F.C.C.R. 12,093 (1998) ........

Page

5, 6,9

7,8

8, 20

passim

7,17

Vill

TABLE OF AUTHORITIES—Continued

STATUTES

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COURT RULES

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CONGRESSIONAL MATERIAL

S. Conf. Rep. No. 104-230, 104th Cong.,

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OTHER AUTHORITIES

Page

son 21

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yews 22

14, 26, 27

Robert L. Stern et al., Supreme Court Practice

Ce OE, Fe evince siscainncineneneiaaniaaaiiemmnaa

Justice John Paul Stevens, Some Thoughts

Judicial Restraint, 66 Judicature 177 (Nov.

FEI) wienenseneressnebnenienbinlelieusnieiaiesueniiesdaaliaans

nee 20

6A Charles A. Wright ef al., Federal Practice

and Procedure § 1542 (1990).........cccccseceseeees

IN THE

Supreme Court of the Anited States

No. 05-766

APCC SERVICES, INC., ef al.,

Petitioners,

Vv.

SPRINT COMMUNICATIONS COMPANY L.P.., ef al.,

Respondents.

On Petition for a Writ of Certiorari to the

United States Court of Appeals

for the District of Columbia Circuit

RESPONDENTS’ BRIEF

IN OPPOSITION TO PETITION

Respondents AT&T Corp. (“AT&T”) and Sprint Com-

munications Company L.P. (“Sprint”) respectfully submit this

brief in opposition to the Petition of APCC Services, Inc., ef

al. (“Petitioners”) for a Writ of Certiorari to the United States

Court of Appeals for the District of Columbia Circuit.

STATUTES AND REGULATIONS

The relevant statutory provisions are set forth in the Peti-

tion at App. 152a-179a.

INTRODUCTION

The Petition seeks review of a D.C. Circuit decision hold-

ing that alleged violations of a payphone compensation plan

adopted by the FCC in 1999 are not privately enforceable in

federal court under §§ 276, 416(c), or 201(b) of the Telcom

Act. Petitioners wrongly claim that the D.C. Circuit erred in

its analysis of each of the three statutes, and that the court’s

analysis of § 201(b), in particular, creates an “irreconcil-

able” conflict with Metrophones Telecommunications, Inc. v.

Global Crossing Telecommunications, Inc.. 423 F.3d 1056

(9th Cir.), petition for cert. filed, 74 U.S.L.W. 3352 (U.S.

Nov. 25, 2005) (No. 05-705).

The Petition does not present any question requiring this

Court’s review and should be denied. The D.C. Circuit ap-

plied well established, properly stated rules of law and

reached the correct result on all counts. The D.C. and Ninth

Circuits are the only courts of appeals to address private

enforcement of the various payphone compensation plans

adopted by the FCC. Applying Alexander v. Sandoval, 532

U.S. 275 (2001), both courts found nothing in the text of §

276 that suggests Congress intended for these regulatory

plans to be privately enforceable in federal court. Both courts

also are in accord in ruling that § 416(c) cannot be read to

supply such a private remedy. With respect to the § 201(b)

question, the two courts considered different payphone

compensation plans established in different FCC Orders that

were issued several years apart. Petitioners brought suit here

for alleged violations of the 1999 Order; hence, the D.C.

Circuit focused its analysis on thai Order. It held that the

FCC had not rendered any interpretation of § 201(b) in the

1999 Order, much less an authoritative interpretation worthy

of deference under Chevron U.S.A., Inc. v. Natural Resources

Defense Council, 467 U.S. 837 (1984). By contrast, the PSPs

in Metrophones brought suit for alleged violations of the

2001 Order; in rendering its holding, the Ninth Circuit did not

review the 1999 Order but instead reviewed the FCC’s 2003

Order, which replaced the 2001 and 1999 Orders and adopted

a new payphone compensation plan. Thus, the Petition is

wrong in claiming that the two decisions pose a direct and

irreconcilable conflict. Because the D.C. and Ninth Circuits

were examining the § 201(b) question in the context of very

different FCC Orders, the so-called “split” between their

decisions is not a suitable one for review by this Court.

In addition to reaching the correct result, the D.C. Circuit’s

decision does not merit review for other reasons. By sug-

gesting that the D.C. Circuit should have made a primary

jurisdiction referral to the FCC, Petitioners virtually concede-

that intervention by this Court is unwarranted at this time. If

the FCC believes that a violation of its most recent payphone

compensation plan should be actionable in federal court

pursuant to § 201(b), the agency can and should justify that

interpretation in a properly noticed rulemaking based on an

adequate administrative record. Any such FCC determination

would be judicially reviewable in the ordinary course.

Moreover, § 201(b) does not expressly authorize the FCC

to promulgate retroactive rules. The 2003 Order, which

adopted a new payphone compensation plan, cannot be used

to supply a private right of action for alleged violations of the

1999 Order, which by the FCC’s own account imposed

different substantive obligations, was ambiguous in material

respects, and proved unworkable.

In any event, the § 201(b) question has limited importance.

Petitioners’ claims are based solely on alleged violations of

the compensation plan established in the 1999 Order. The

FCC abandoned that plan and adopted new compensation

plans in the 2001 and 2003 Orders. Because the limitations

period for payphone compensation claims is two years, any

new claims for alleged violations of the 1999 Order would be

time-barred. The issues presented by Petitioners, therefore,

are the last of their kind.

Finally, this case is not a proper vehicle for review of any

of the questions presented in the Petition because serious

issues exist concerning the standing of virtually all of the

Petitioners. This Court would need to resolve these issues, to

ensure that Article III standing requirements are satisfied,

before addressing the questions presented in the Petition.

COUNTERSTATEMENT OF THE CASE

A. The Payphone Compensation Directive In § 276 Of

The Telcom Act

Historically, the Bell Operating Companies (“BOCs’’) and

other similar local exchange carriers (“LECs”) were the

exclusive providers of payphone service (“PSPs’’). In the mid-

1980s, advances in computer technology began to enable

payphones to perform many of the control and supervision

functions of the BOCs’ networks, opening the door for new

entrants to offer competitive payphone service. New England

Pub. Commce'’ns Council, Inc. v. FCC, 334 F.3d 69, 71

(D.C. Cir. 2003).

Despite these advances, PSPs that were unaffiliated with a

BOC remained at a competitive disadvantage. Consumers

increasingly were using calling card platforms (subscriber

800 calls) and other means to “dial around” the PSP’s pre-

subscribed interexchange carrier (“IXC’’) and to place calls

from payphones without using coins. Independent PSPs thus

received no compensation for these calls. By contrast, BOCs

received some compensation for dial-around calls through the

intrastate and interstate access charges that [XCs, like Sprint

and AT&'‘I’, paid for use of the LECs’ networks. App. 2a; see

also In re Implementation of the Pay Telephone Reclassi-

fication and Compensation Provisions of the Telecommu-

nications Act of 1996 (“Payphone Docket’), Notice of

Proposed Rulemaking (“1996 NPRM”), 11 F.C.C.R. 6716,

6721 (4 7) (1996).

Congress addressed this issue (and others) in the Tele-

communications Act of 1996, which amended the Commu-

nications Act of 1934 with the express goal of “opening all

telecommunications markets to competition.” S. Conf. Rep.

No. 104-230, 104th Cong., 2d Sess. | (1996). Section 276 of

the Telcom Act, in particular, was enacted to promote

“competition among payphone service providers {and] the

widespread deployment of payphone services to the benefit of

the general public.” 47 U.S.C. §276(b)(1). The most

relevant mandate of § 276 directs the FCC to “establish a per

call compensation plan to ensure that all [PSPs] are fairly

compensated for cach and every completed intrastate and

interstate call using their payphone... .” /d. § 276(b)(1)(A).

B. The FCC’s Payphone Compensation Orders

Over the past decade, the FCC has issued a series of orders

attempting to implement the payphone compensation direc-

tive of § 276(b)(1)(A).' The FCC has considered various

regulatory approaches to compensate PSPs for dial-around

calls. Payphone Docket, Report & Order (“1996 Order’), 11

F.C.C.R. 20,541, 20,580-86 (44 77-87) (1996). One approach

would have required the calling party to deposit coins into the

' See Payphone Docket, NPRM, 11 F.C.C.R, 6716 (1996); Report &

Order, 11 F.C.C.R. 20,541 (1996); Order on Recons., 11 F.C.C.R. 21,233

(1996), aff'd in part and remanded in part sub nom. Illinois Pub.

Telecomms. Ass'n v. FCC, 117 F.3d 555 (D.C. Cir. 1997), clarified on

reh’g, 123 F.3d 693 (D.C. Cir. 1997); Second Report & Order, 13

F.C.C.R. 1778 (1997), aff'd in part and remanded in part sub nom. MCI

Telecomms. Corp. v. FCC, 143 F.3d 606 (D.C. Cir. 1998); Third Report &

Order and Order on Recons. of the Second Report & Order, 14 F.C.C.R.

2545 (1999), aff d sub nom. APCC v. FCC, 215 F.3d 51 (D.C. Cir. 2000);

Second Order on Recons., 16 F.C.C.R. 8098 (2001); Third Order on

Recons. and Order on Clarification, 16 F.C.C.R. 20,922 (2001), remanded

sub nom. Sprint Corp. v. FCC, 315 F.3d 369 (D.C. Cir. 2003); Fourth

Order on Recons. and Order on Remand, 17 F.C.C.R. 2020 (2002); Fifth

Order on Recons. and Order on Remand, 17 F.C.C.R. 2!,274 (2002), aff d

sub nom. AT&T v. FCC, 363 F.3d 504 (D.C. Cir. 2004); Report & Order,

18 F.C.C.R. 19,975 (2003); APCC Servs., Inc. v. Sprint Commce'ns Co.,

418 F.3d 1238 (D.C. Cir.) pet. for reh’g denied, No. 04-7034, 2005 U.S.

App. LEXIS 24402 (D.C. Cir. Nov. 10, 2005).

payphone before placing a call. 1996 NPRM, 11 F.C.C.R. at

6730 (4 27). Another approach would have charged the

called party a “set use” fee for the payphone cali, which

would have been billed and collected by IXCs on a monthly

basis (much like a collect call). /d. at 6729-30 (4 26). The

FCC concluded that either of these approaches would satisfy

§ 276(b)(1)(A)’s mandate, but ultimately the agency deter-

mined that it would be more administratively efficient to

adopt a “carrier-pays” approach, under which the IXC or

switch-based reseller (“SBR”) that “terminates” the payphone

call compensates the PSPs. 1996 Order, 11 F.C.C.R. at

20,586 (4 86); Payphone Docket, Order on Recons., 11

F.C.C.R. 21,233, 21,277 (¢ 92) (1996). The FCC found this

approach “preferable because it would result in less trans-

action costs because the toll-carrier could aggregate its pay-

ments to [PSPs, whereas] [u]nder a set use fee... these

payments would be spread among a vast number of payphone

callers through their individual telephone bills.” 1996 Order,

11 F.C.C.R. at 20,580 ( 77).

Petitioners wrongly claim that the FCC invoked § 201(b)

of the Telcom Act, which makes it unlawful for common

carriers to engage in “unjust or unreasonable” practices, as a

basis for the payphone compensation plan adopted in the

1996 Order. Pet. 7. In fact, throughout the Order, the FCC

consistently stated that it was implementing a compensation

plan for interstate and intrastate dial-around calls pursuant to

the express congressional directive in § 276. See, e.g., 1996

Order, 11 F.C.C.R. at 20,551-604 (49 20-126). Nowhere in

the 1996 Order did the agency assert that an alleged violation

of its compensation plan for such calls would be privately

enforceable under § 201(b). Indeed, the FCC only referred to

§ 201(b) (as well as § 4(i) of the Telcom Act) as a source

of authority to regulate dial-around international calls, which

§ 276—by its express terms—does not encompass. /d. at

20,569 (4 54).

In 1999, the FCC issued another order establishing the

compensation rate for the “carrier-pays” approach outlined in

its 1996 Order. Payphone Docket, Third Report & Order and

Order on Recons. of Second Report & Order (“1999 Order’’),

14 F.C.C.R. 2545, 2553-54 {4 18), 2597-98 (qq 115-116)

(1999). The public notice seeking comment on the proposed

1999 Order gave no indication that the agency was con-

sidering classifying violations of the payphone compensation

plan as “unjust or unreasonable” practices within the meaning

of § 201(b), redressable in federal court. Pleading Cycle

Established for Comment on Remand Issues in the Payphone

Proceeding, Public Notice, 13 F.C.C.R. 12,093 (1998). And

the 1999 Order itself contains only a single general reference

to § 201, along with a laundry-list of other statutes, in the

boilerplate “ordering clause” at the end of the Order. 1999

Order, 14 F.C.C.R. at 2648 (§ 232).

The 1999 Order had a short shelf-life. Early on, some

independent PSPs ‘complained to the FCC that the compen-

sation plan established in the 1999 Order was not working.

The PSPs primarily claimed that they were not receiving

compensation for certain dial-around calls handled by SBRs.

Responding to these complaints in 2001, the FCC concluded

that the 1999 Order “ha[d] not had the intended effect of

ensuring that PSPs receive compensation for each and every

completed, coinless payphone call.” Payphone Docket, Sec-

ond Order on Recons. (“2001 Order”), 16 F.C.C.R. 8098,

8103 (§ 10) (2001). To address these problems, the FCC

substantively modified its payphone compensation plan to

require the first IXC in the call path to compensate the PSP

for a completed dial-around call, even if the call was

ultimately terminated by a SBR. /d. (€ 11). The IXCs were

then assigned responsibility for seeking reimbursement from

the SBRs. /d. The FCC posited that this new plan should

“address the difficulty which PSPs face in obtaining compen-

sation for coinless calls placed from payphones which involve

a [SBR] in the call path,” and thus “remedy this failure in the

[original] compensation regime” established in the 1999

Order. /d. at 8098 (4 1), 8103 (4 10).

The 2001 Order was vacated by the D.C. Circuit, which

held that the FCC had promulgated the new compensation

plan without proper notice and comment, in violation of the

Administrative Procedure Act (“APA”). Sprint Corp. v.

FCC, 315 F.3d 369, 372, 377 (D.C. Cir. 2003). On remand,

the FCC issued a Further Notice of Proposed Rulemaking

seeking comment on whether the compensation plan adopted

in the 2001 Order or another compensation plan would better

satisfy the objectives of § 276. Payphone Docket, Fur-

ther Notice of Proposed Rulemaking (“2003 NPRM”), 18

F.C.C.R. 11,003, 11,005 (4 3) (2003). The 2003 NPRM did

not mention § 201(b) let alone indicate that the FCC was

considering making any finding that a violation of the com-

pensation plan would coiistitute an “unjust or unreasonable”

practice under the statute.

In August 2003, the Ninth Circuit held that Congress did

not intend for violations of the FCC’s payphone compen-

sation plan to be privately enforceable in federal court under

§ 276. Greene v. Sprint Commce'ns Co., 340 F.3d 1047 (9th

Cir. 2003), cert. denied, 541 U.S. 988 (2004). The Ninth

Circuit found that Congress intended for such compensation

disputes to be handled by the FCC as part “of a coherent

national communications policy.” /d. at 1053 (citations

omitted).

In October 2003, the FCC issued its third payphone

compensation plan. Payphone Docket, Report & Order

(“2003 Order”), 18 F.C.C.R. 19,975 (2003). The 2003 Order

“squarely” places responsibility for payphone compensation

on the carrier who terminates completed dial-around calls,

whether the carrier is an IXC or a SBR. /d. at 19,986 (§ 24).

The 2003 Order also imposes new call-tracking and reporting

obligations to reduce compensation disputes. In announcing

this newest plan, the FCC stated that it was “guided by [its]

practical expertise in overseeing the various compensation

regimes [the agency] implemented since the adoption of

section 276 in the 1996 Act.” Jd. at 19,987 (4 26). Because

the 2001 Order “did not optimally ensure fair compensation,

we are adopting new rules today to replace it.” /d. at 19,984

({ 20). The FCC also established a prospective effective date

for the 2003 Order, “[t]o provide carriers time to transition to

our new rules... .” Jd. at 20,004 (4 55).

In addition to adopting a new payphone compensation

plan, the FCC inserted a single reference to § 201(b) in the

2003 Order that was plainly a post hoc reaction to Greene.

The sentence asserts, without prior notice or any accompany-

ing rationale, that

failure to pay in accordance with the Commission’s

payphone rules, such as the rules expressly requiring

such payment that we adopt today, constitutes both a

violation of § 276 and an unjust and unreasonable

practice in violation of § 201(b) of the Act.

Id. at 19,990 ( 32).

In contrast to the episodic and cursory references to § 201

in the FCC’s various payphone orders, the agency has

established detailed administrative complaint procedures for

PSPs and IXCs to resolve payphone compensation disputes.

1996 Order, 11 F.C.C.R. at 20,569-73 (¥§ 55-61). The 1996

Order instructs PSPs to file complaints with the FCC; ex-

plains when particular claims are ripe for agency adjudication

(e.g., only after a required call “verification” process): pro-

vides “timeliness” defenses (i.e., for claims submitted more

than a year after a payment period); and establishes when the

federal limitations period for compensation claims com-

mences. /d. at 20,597-98 (§ 112-114). The FCC com-

mitted “aggressively [to] take action on such complaints.” /d.

at 20,598 (4 114). Numerous PSPs, including Petitioners,

have availed themselves of these administrative complaint

procedures in seeking alleged underpayments of payphone

compensation from IXCs and SBRs. See, e.g., APCC Servs.,

Inc. v. Network IP, LLC, 20 F.C.C.R. 2073 (2005); APCC

Servs., Inc. v. TS Interactive, Inc., 19 F.C.C.R. 10,456 (2004);

Bell Atl.-Del., Inc. v. MCI Telecomms. Corp., 17 F.C.C.R.

15,918 (2002).

C. Relevant Case Proceedings

1. The Petitioners’ Assignments From PSPs

Petitioners sued AT&T and Sprint in 1999 and 2001,

respectively, for alleged violations of the original payphone

compensation rules established in the 1999 Order. With one

exception (People’s Telephone Company, a plaintiff in the

litigation against AT&T), the Petitioners are “aggregators”—

“ telecommunications industry term for corporations that

contract with PSPs to handle billing and collection of dial-

around compensation. App. 3a. Petitioners sued as aggre-

gators under assignments in which the PSP “assigns, trans-

fers, and sets over to [the aggregator] for purposes of

collection all rights, title, and interest of the [PSP] in the

[PSP’s] claims, demands or causes of action for ‘Dial Around

Compensation.’”” App. 4a (emphasis added). Each assign-

ment appoints the aggregator as attorney-in-fact with power

to take all action necessary to collect dial-around compen-

sation, including the right to retain counsel, file lawsuits, and.

enter into settlements. App. 4a. Under the assignments, the

Aggregator-Petitioners must pass back to the PSPs any and

all amounts they collect. App. 4a, 9a. Nor do they have any

other financial interest in the outcome of the litigation: their

compensation is not tied to litigation success, but rather to

“the number of payphones and telephone lines operated by

their PSP clients.” App. 23a.

2. The District Court Rulings

On March 28, 2003, the district court dismissed the

Aggregator-Petitioners’ claims in the AT&T case for lack of

standing, holding that the assignments of the payphone

compensation claims were invalid. App. 94a-108a. On

reconsideration, the district court reversed itself and ruled that

the assignments vested the Aggregator-Petitioners with a

concrete interest in the litigation sufficient to establish Article

il] standing. App. 6la-78a.

Contemporancously, a district court in California held, in an

action brought by PSPs, that Congress did not intend to create

a private right of action under § 276 for payphone com-

pensation disputes. Greene v. Sprint Commc’ ns, 02-3841, slip

op. (C.D. Cal. July 1, 2002). The district court in Greene held

that § 276 does not confer a private cause of action under

§ 207, because § 276 can be violated only by the FCC, not by

common carriers. The district court also held that the pay-

phone compensation plan promulgated by the FCC could not

serve as a basis for a private cause of action under § 207,

because § 207 only creates causes of action for violations of

the Telcom Act, not FCC regulations, /d. at 3-5.

In response to the district court’s decision in Greene,

Petitioners moved to amend their complaint in the Sprint case

to add alternative causes of action under §§ 201(b), 407,

and 416(c) of the Telcom Act. The district court granted

Petitioners leave to amend their complaint. App. 79a-80a.

Petitioners did not seek leave to amend their complaint in the

AT&T case.

Shortly thereafter, the Ninth Circuit in Greene affirmed the

district court’s determination that Congress did not intend to

create a private right of action for payphone compensation

disputes. Greene, 340 F.3d at 1053. Sprint sought dismissal

of Petitioners’ claims in this case based on the Ninth Circuit’s

ruling in Greene. App. 3ia-45a. AT&T moved for recon-

sideration of the district court’s ruling on the standing issue,

and also requested dismissal based on the Greene decision.

App. 46a-60a. The district court denied the motions in both

cases, but certified the private right of action and standing

questions for interlocutory appeal. App. 45a, 59a. The D.C.

Circuit accepted both questions and consolidated the two

cases for review. App. 146a-147a.

3. The D.C. Circuit’s Decision

By a 2-1 vote, the D.C. Circuit affirmed the district court’s

determination that the Aggregator-Petitioners had standing to

sue as assignees. App. 5a-I la. Judge Sentelle dissented from

this part of the decision. Because the assignments gave the

Aggregator-Petitioners the right to sue but not the right to

recovery, Judge Sentelle opined that the Aggregator-Peti-

tioners lacked a sufficient interest in the outcome to establish

Article III standing. App. 20a-25a. Judge Sentelle also found

that “associational” standing principles were inapplicable

because the Aggregator-Petitioners were not an association.

App. 25a.

The D.C. Circuit reversed the district court’s ruling on the

private right of action question. Concurring with the Ninth

Circuit’s decision in Greene, the D.C. Circuit held that “§ 276

does not create a right of action for a PSP (or its assignee) to

recover dial-around compensation from an [IXC.” App. 13a.

The D.C. Circuit observed that “{§ 276] is by its terms

addressed neither to the rights of PSPs nor to the obligations

of IXCs.” App. 13a. Like the statute considered by this

Court in Sandoval (§ 602 of Title VI of the Civil Rights Act,

42 U.S.C. § 2000-1), the D.C. Circuit noted that § 276

contains no “rights-creating” language that demonstrates a

congressional intent to create a private right of action. In-

deed, § 276 is “*yet a step further removed: It focuses... on

the agenc{y] that will do the regulating.’ Section 276 is

addressed only to ‘the Commission,’ which it directs to ‘take

all actions necessary . . . to ensure that all [PSPs] are fairly

compensated’ for the calls they originate.” App. 14a (quoting

Sandoval).

By a 2-1 vote, a different majority of the D.C. Circuit

further held that § 201(b) does not support a private right of

action for alleged violations of the 1999 Order. App. I4a-

17a. The D.C. Circuit observed that Petitioners’ arguments

(which the FCC supported as amicus) “would transform

§ 201(b) into a catchall! provision, converting any common

carrier’s violation of a Commission order or regulation into a

violation of the Act actionable in federal court. This result is

not plainly evident from the text of the Act, and nothing

suggests that Congress intended its words to have such a

sweeping effect.” App. ISa. The D.C. Circuit also empha-

sized that the 1999 Order contained just a single general

reference to § 201 in the boilerplate “ordering clause” at the

end of the order, along with a laundry list of other statutes.

App. 15a; see also 1999 Order, 14 F.C.C.R. at 2648 (4 232).

The FCC’s only discussion in the 1999 Order about enforce-

ment of the payphone rules contemplated “that [such] collec-

tion actions will be before the Commission (as indeed they

must be in any action by a carrier against a PSP for not

making a refund).” App. 16a (emphasis added).

In a post hoc attempt to rationalize some private right of

action, Petitioners and the FCC contended that the D.C. Circuit

should afford Chevron deference to the single refer-

ence to § 201(b) in the 2003 Order. Petitioners and the FCC

failed to explain how this bare, unsubstantiated assertion in the

2003 Order—which established a new payphone compensation

plan with only prospective effect—could provide retroactively

a private right of action for alleged violations of the twice-

superseded payphone compensation plan established in the

1999 Order. The D.C. Circuit did not address the 2003 Order.

it held that there was “no authoritative interpretation of

§ 201(b) in this case” to support a private right of action for

alleged violations of the 1999 Order. App. I6a. Chief Judge

Ginsburg dissented on the § 20I(b) issue. He would have

afforded Chevron deference to the single reference to § 201(b)

in the 2003 Order on the theory that it made “explicit” what

was “implicit” in the 1999 Order. App. 26a-30a.

Finally, the D.C. Circuit held that § 416(c) does not supply

a private right of action for payphone compensation disputes.

App. |17a-20a. Section 416(c) states that “[i}t shall be the

duty of every person ...to observe and comply with [every

order of the Commission] so long as the same shall remain in

effect.” 47 U.S.C. §416(c). The D.C. Circuit “agree[d]

entirely” with the analysis of then-Judge Breyer in New

England Telephone & Telegraph Co. v. Public Utilities Com-

mission of Maine, 742 F.2d 1, 4-9 (Ist Cir. 1984), that

§ 401(b) of the Communications Act is limited to adjudi-

catory orders. App. 20a. The D.C. Circuit likewise con-

cluded that the term “order,” as used in § 416(c), refers only

to adjudicatory and not to rulemaking decisions. App. 19a-

20a. The D.C. Circuit observed that any contrary interpre-

tation making § 416(c) generally applicable to FCC regula-

tions would “‘interfere seriously with the well established

principle that the ‘enforcement’ of the Communications Act

is entrusted primarily to’ the FCC ...rather than to the

district courts.” App. 19a (quoting New England Telephone,

742 F.2d at 5).

Petitioners sought rehearing and rehearing en banc, arguing

that the D.C. Circuit erred by failing to afford Chevron

deference to the FCC’s bare reference to § 201(b) in the 2003

Order. Alternatively (and for the first time), Petitioners asked

the D.C. Circuit to refer the § 201(b) question to the FCC

under the primary jurisdiction doctrine. Both petitions were

denied. App. 148a-149a; App. 150a-15 la.

D. The Ninth Circuit’s Decision In Metrophones

While the rehearing petitions were pending before the D.C.

Circuit, the Ninth Circuit decided Metrophones.” The PSPs

in Metrophones brought suit alleging violations of the pay-

phone compensation plan established in the 2001 Order.

~ Petitioners submitted Metrophones to the D.C. Circuit for considera-

tion in conjunction with their request for rehearing and rehearing en banc.

Compl. § 1, Metrophones Telecomms., Inc. v. Global Cross-

ing Telecomms., Inc., No. 03-0694 (W.D. Wash. Mar. 19,

2003). The Ninth Circuit reaffirmed its prior ruling in

Greene that Congress did not intend to make the FCC's

payphone compensation plan privately enforceable in federal

court under § 276. Metrophones, 423 F.3d at 1063-64. The

Ninth Circuit likewise held that § 416(c) does not provide a

private right of action for such disputes. /d. at 1071. Finally,

the Ninth Circuit ruled that the FCC’s reference to § 201(b) in

the 2003 Order, while admittedly brief, was worthy of

Chevron deference when “supplemented” by the agency’s

amicus brief in the case. /d. at 1066-67. Thus, even though

the PSPs in Metrophones had sued under the 2001 Order, the

Ninth Circuit viewed the 2003 Order as establishing retro-

actively a federal private right of action under § 201(b) for

payphone compensation claims.

REASONS FOR DENYING THE PETITION

I. THE “SPLIT” BETWEEN THE D.C. AND

NINTH CIRCUITS ON THE § 201(b) QUESTION

DOES NOT MERIT THIS COURT'S REVIEW.

The Petition first seeks review of an asserted “conflict”

between the D.C. and Ninth Circuits’ rulings on the § 201(b)

private right of action question. This supposed “conflict” is

overstated and, in al! events, does not warrant the Court’s

attention for several reasons.

A. The D.C. and Ninth Circuits Examined Dif-

ferent FCC Orders And Compensation Plans

In Analyzing The § 201(b) Issue.

Petitioners wrongly portray the D.C. and Ninth Circuit

decisions as creating an irreconcilable conflict on whether

§ 201(b) creates a private right of action for violations of the

FCC’s payphone compensation plan. In fact, the two courts

examined different payphone compensation plans in different

FCC Orders issued several years apart in reaching their

respective § 201 determinations.

1. The D.C. Circuit Examined The 1999 Order.

Petitioners brought suit against AT&T and Sprint for

alleged violations of the payphone compensation plan

adopted in the FCC’s 1999 Order. For this reason, the D.C.

Circuit properly focused on the 1999 Order in considering

whether the FCC had interpreted § 201(b) to encompass

alleged violations of that compensation plan.

The D.C. Circuit found nothing in the 1999 Order that

could possibly be deemed an authoritative interpretation of

§ 201(b) by the FCC, worthy of Chevron deference. The

1999 Order contains only a single general reference to § 201

along with a laundry list of other statutes cited at the end

of the Order. 1999 Order, 14 F.C.C.R. at 2648 (§ 232).

Because the 1999 Order barely mentioned § 201, and utterly

failed to interpret it, the D.C. Circuit properly concluded that

there was no basis to find that a violation of the compensation

plan established in the 1999 Order constituted an “unjust or

unreasonable” practice under subpart (b) of the statute. As

the D.C. Circuit explained:

the body of the FCC’s 1999 “Order” said not a word

about § 201(b). All we see is boilerplate in the ordering

clause, and in the clause identifying the authority for

Part 64 of the rules, citing a list of sections including

“201.° (This is in marked contrast to the treatment of

§ 276, which the Commission mentioned throughout as

the source of its authority.) It cannot be that the mere

citation of § 201 displays—in Sandoval’s words—an

intent that the regulation setting the compensation level

should be privately enforceable in court. Still less can it

be that the mere citation of § 201 ts entitled to Chevron

deference ....

App. |Sa-16a.

Chevron deference to the passing reference to § 201 in the

1999 Order is unwarranted for an additional reason. A

statutory interpretation reached through rulemaking con-

ducted in conformity with the APA _ notice-and-comment

requirement has the twin attributes of fairness to interested

parties and careful deliberation by the agency that justify

treating the interpretation as having the force of law, worthy

of Chevron deference. See United States v. Mead Corp., 533

U.S. 218, 227 (2001); Smiley v. Citibank (S.D.), N.A., 517

U.S. 735, 741 (1996). Here, the public notice that preceded

the 1999 Order sought comment on several enumerated

issues, including, for example, whether “other market-based

methodologies [besides carrier-pays] could be used to estab-

lish a per-call compensation rate for coinless calls.” Public

Notice, 13 F.C.C.R. at 12,094. It did not, however, mention

or seek comment on the issue of whether violations of the

payphone compensation plan should be classified as “unjust

or unreasonable” practices within the meaning of § 201(b).°

Recognizing these problems, Petitioners contend that the

D.C. Circuit should have afforded Chevron deference to the

FCC’s passing reference to § 201(b) in the 2003 Order, as a

basis for treating (retroactively) violations of the 1999 Order

as “unjust or unreasonable practices.” Pet. 16-19. This

contention fails on several grounds.

The 2003 Order is irrelevant because Petitioners did not

sue AT&T or Sprint for violations of the 2003 Order. More-

over, there is a presumption against retroactive rulemaking

that precludes Petitioners from basing their claims on the

2003 Order. “[A] statutory grant of legislative rulemaking

authority will not, as a general matter, be understood to

‘ In noting the absence of any Chevron-worthy interpretation of

§ 201(b), the D.C. Circuit also expressed concern about the “potential

consequences to judicial dockets” if the FCC were free to declare, without

prior notice or explanation, tha’ certain practices violated the siatute.

App. 16a.

encompass the power to promulgate retroactive rules unless

that power is conveyed by Congress in express terms.”

Bowen v. Georgetown Univ. Hosp., 488 U.S. 204, 208 (1988).

Congress did not expressly authorize the FCC to promulgate

retroactive rules under § 201(b). Thus, the 2003 Order,

which adopted a new compensation plan, cannot be used to

supply a private right of action for claims based on violations

of the original compensation plan adopted in the 1999 Order,

which—by the FCC’s own description—imposed different

substantive obligations on [IXCs and PSPs, was ambiguous

in material respects, and proved unworkable. 2003 Order,

18 F.C.C.R. at 19,983 (94 18-19). Indeed, the FCC itself

said that the 2003 Order had only prospective effect. /d. at

20,004 (4 55).

Petitioners are likewise mistaken in asserting that National

Cable & Telecommunications Association v. Brand X Internet

Services, 125 §. Ct. 2688 (2005), requires that Chevron

deference be afforded to the 2003 Order’s passing reference

to § 201(b). Apart from the fact that Petitioners sued AT&T

or Sprint for alleged violations of the 1999 Order, Brand X

only underscores the lack of any authoritative interpretation

of § 201(b) by the FCC. In contrast to the unexplained and

cursory citation to § 201(b) in the 2003 Order, which was not

presaged in the 2003 NPRM, the FCC order examined in

Brand X followed from a notice of proposed rulemaking that

announced the subject matter of the rulemaking and direction

of the agency. Further, the Brand X -order contained a

detailed analysis of the agency’s reasoning based on an

extensive administrative record. /d. at 2697-99, 2708-11.

Lastly, Petitioners improperly rely on arguments made by

the FCC in its amicus brief to the D.C. Circuit, asserting that

the agency's pronouncements about § 201(b) deserve defer-

ence under Chevron and Brand X. Pet. 18. This Court has

long held that such “post-hoc rationalizations for agency

forders].”” proffered in litigation, are never a Chevron sub-

stitute when the agency failed to justify the order when

issued. Bowen, 488 U.S. at 212 (internal quotations omitted).

Nothing in Brand X changed this basic principle of ad-

ministrative law.

2. The Ninth Circuit Examined The 2003 Order.

Unlike Petitioners, the PSPs in Metrophones brought suit

for alleged violations of the new compensation plan estab-

lished in the 2001 Order—and not for alleged violations of

the original compensation plan adopted in the 1999 Order.

Thus, in considering the § 201(b) question in Metrophones,

the Ninth Circuit did not examine the 1999 Order.

The Ninth Circuit posited that the FCC's passing reference

to § 201(b) in the 2003 Order, when “supplemented” by the

agency's amicus brief in the case, was entitled to Chevron

deference and sufficient to create a private right of action in

federal court for the PSPs. Metrophones, 423 F.3d at 1066-

67. The Ninth Circuit did not explain how the 2003 Order,

which the FCC itself said had only prospective effect, could

provide the basis for a § 201(b) claim arising solely from

alleged violations of the earlier (and substantively different)

payphone compensation plan adopted in the 2001 Order."

Ultimately, whether (as Petitioners contend) the Ninth

Circuit was right in its analysis of § 201(b) does not affect the

* The FCC’s citation to § 20i(b) in the 2003 Order is not a Chevron-

worthy interpretation, even assuming the order were otherwise relevant to

the actual claims asserted by the PSPs. The 2003 NPRM did not indicate

that the FCC was considering deeming violations of its forthcoming pay-

phone compensation plan an unjust or unreasonable practice for purposes

of § 201(b). See 2003 NPRM, 18 F.C.C.R. at 11,003-28 (99 1-71). The

statement was inserted without prior notice, one month after the Greene

decision rejecting a private right of action under § 276, and without any

administrative record, analysis, or supporting rationale. It was not the

product of the kind of reasoned deliberative process that warrants Chevron

deference. Accord Motor Vehicles Mfrs. of United States, Inc. v. State

Farm Mut. Auto, Ins. Co., 463 U.S. 29, 48-49 (1983).

proper disposition of the Petition. Because the D.C. and

Ninth Circuits were dealing with different payphone com-

pensation plans, established in different FCC Orders, their

§ 201(b) rulings do not present an irreconcilable conflict that

justifies this Court's review.”

B. The § 201(b) Question Can Be Readily Ad-

dressed By The FCC In A Proper Rulemaking

And Without Intervention By This Court.

As indicated, the 2003 Order was adopted to reduce, if not

eliminate, future payphone compensation disputes based on

the FCC's “practical expertise in overseeing the various

compensation regimes ... implemented” under § 276. 2003

Order, 18 F.C.C.R. at 19,987 (4 26). Should future disputes

arise under the 2003 Order, PSPs and others can pursue their

claims through the administrative complaint procedures

established by the FCC.

The D.C. Circuit was skeptical that a violation of the

FCC's payphone compensation plan could be properly char-

acterized as ari “unjust or unreasonable practice” within the

meaning of § 201(b). App. 15a. That said, if the FCC

believes that § 201(b) can be properly interpreted to encom-

pass alleged violations of the payphone compensation plan

established in the 2003 Order, the agency should justify its

position in a properly noticed rulemaking, based on an

adequate administrative record. Any such rulemaking by the

A district court in Utah recently certified the § 201(b) question

for interlocutory appeal to the Tenth Circuit. Filving J Inc. v. Sprint

Comme'ns Co. LP... No. 99-111 (D. Utah). Further consideration of the

§ 201(b) question by other circuit courts may help to clarify whether the

D.C. and Ninth Circuits’ analyses of the different FCC Orders present any

genuine or lasting confusion or tension over these issues. See Justice John

Paul Stevens, Some Thoughts on Judicial Restraint, 66 Judicature 177,

183 (Nov. 1982) (from the Court’s perspective, “experience with con-

flicting interpretations of federal rules [of law| may help illuminate an

issue before it ts finally resolved”).

FCC would also be judicially reviewable ir the ordinary

course. See 28 U.S.C. § 2341 et seg. There is thus no need

for this Court’s consideration of the issue at this time. See

Robert L. Stern et al., Supreme Court Practice 227 (8th ed.

2002) (“[A] conflict of decisions may safely be relied on as a

ground for certiorari only in instances where it is clear that

the conflict is one that can be effectively resolved only by

the prompt action of the Supreme Court alone.”) (quoting

Justice Harlan). =~

Petitioners virtually concede this point by asserting that the

D.C. Circuit should have referred the § 201(b) question to the

FCC under the primary jurisdiction doctrine instead of

remanding for dismissal. See Pet. 16-17, 20-22. Petitioners

wisely do not request a primary jurisdiction referral from this

Court. Having failed to seek such a referral from the D.C.

Circuit, and having successfully opposed referral in the

district court, Petitioners have waived any such right.° Peti-

tioners instead contend that the principles underlying the

primary jurisdiction doctrine demonstrate that the D.C, Cir-

cuit should have referred the § 201(b) issue to the FCC sua

sponte, rather than determining on its own that the general

reference to § 201 in the ordering clause of the 1999 Order

was not worthy of Chevron deference. Pet. 20-22. But this

argument is fatal to the Petition: By acknowledging that the

FCC can and should address the § 201(b) question based on a

proper administrative record, Petitioners only confirm that the

question does not warrant this Court’s immediate attention.

® See Baltimore & Ohio Chicago Terminal R.R. Co. v. Wisconsin Cent.

Lid, 154 F.3d 404, 411 (7th Cir. 1998) ("| T fhe doctrine of primary

jurisdiction is not, despite its name, jurisdictional. Instead, it presupposes

that the court .. . has jurisdiction over the case. It is therefore waivable”);

Gross Common Carrier v. Baxter Healthcare Corp., 51° F.3d 703, 706

(7th Cir. 1995) (same); United States v. Bessemer & Lake Erie RR. Co.,

717 F.2d 593, 599 (D.C. Cir. 1983) (same).

C. The § 201(b) Question Has Limited Importance.

Because this cuse only involves alleged violations of the

superseded 1999 Order, the § 201(b) question presented by

the Petition has limited importance. The Telcom Act contains

a two year statute of limitations for complaints against

carriers for the recovery of damages. See App. 125a (holding

that the two year statute of limitations set forth in § 415(b)

“applies equally to actions in district court”). The present

action and a few other cases pending in different jurisdictions

are the last of their kind; the window for payphone

compensation claims under the 1999 Order has closed. And

because the 2003 Order was adopted to help climinate the

types of compensation disputes and problems created by the

1999 Order, the prospect of additional litigation over the new

payphone compensation plan should be reduced. Thus, the

§ 201(b) issue raised in the Petition lacks sufficient

importance for this Court’s intervention.

Il. THE D.C. AND NINTH CIRCUITS APPLIED

SETTLED PRECEDENTS IN FINDING NO

PRIVATE RIGHT OF ACTION UNDER § 276

TO ENFORCE THE FCC’S PAYPHONE COM-

PENSATION PLAN.

The D.C, and Ninth Circuits are the only circuit courts to

consider whether § 276 confers a private right of action for

disputes arising under the FCC’s payphone compensation

plan. Both courts applied properly stated principles from

Sandoval and Chevron in concluding that Congress did not

intend for § 276 to create such a remedy. Although Peti-

tioners may disagree with the outcome of the D.C. and Ninth

Circuits’ analyses, the question does not merit this Court's

review. “[C]ertiorari is rarely granted when the asserted error

consists of... the misapplication of a properly stated rule of

law.” Sup. Ct. R. 10.

Petitioners contend that “[uJnder the proper reading of

Sandoval and Chevron the distinction between the Act and

FCC regulations is a distinction that makes no difference.”

Pet, 25. They cite Sandoval for the proposition that “*[a]

Congress that intends the statute to be enforced through a

private cause of action intends the authoritative interpretation

of that statute to be so enforced as well.’” Pet. 26. Peti-

tioners then argue that, through its various payphone compen-

sation orders, the FCC has “authoritatively construe[d]” § 276

to impose payphone compensation duties on IXCs and that

this interpretation must be accorded Chevron deference. Pet.

26-27. Hence, under Petitioners’ theory, an alleged violation

of the FCC’s payphone compensation plan is equivalent to an

alleged violation of § 276 and redressable in federal court

through the §§ 206/207 private right of action.

The D.C. and Ninth Circuits properly applied Sandoval and

Chevron in rejecting this notion. Indeed, Sandoval refuted

the very argument Petitioners make here. Like Petitioners,

“the Government and respondents [in Sandoval] argue[d] that

the [agency] regu/ations contain rights-creating language and

so must be privately enforceable ....” Sandoval, 532 U.S. at

291 (emphasis in original). But as this Court observed, this

“argument skips an analytical step. Language in a regulation

may invoke a private right of action that Congress through

statutory text created, but it may not create a right that

Congress has not.” /d. (eraphasis added). Thus, Sandoval

makes clear that “[t}he jucht vat task is to interpret the statute

Congress has passed to determine whether it displays an

intent to create not just a private right but also a private

remedy. Statutory intent on this latter point is determinative.

Without it, a cause of action does not exist and courts may

not create one, no matter how desirable that might be as a

policy matter, or how compatible with the statute.” /d. at

286-87.

Applying these principles, the D.C. and Ninth Circuits

examined the text and structure of § 276 to ascertain con-

gressional intent and found no rights-creating language that

might confer a private remedy for PSPs against IXCs. As the

D.C. Circuit observed, “|nJothing in the statute requires the

[FCC] to designate the [XC as the party responsible for dial-

around payment.” App. 14a. The Ninth Circuit reached the

same conclusion, noting that § 276 “does not say ‘PSPs shall

be entitled to fair compensation,’ or ‘IXCs shall pay PSPs.’”

Greene, 340 F.3d at 1050. Section 276 is addressed solely to

the FCC and directs the agency to adopt a payphone

compensation plan. The statute does not suggest (let alone

require) that IXCs must compensate PSPs. Both courts

properly held, therefore, that the statute cannot be violated by

IXCs. And because the §§ 206/207 private right of action

only applies to common carricr violations of the Act, § 276

displays no intent by Congress to create a private remedy.

See App. 14a; Greene, 340 F.3d at 1050-51. That the FCC

ultimately chose, for administrative convenience, to assign

payment obligations to IXCs under its payphone compen-

sation plan cannot, in Sandoval’s words, “create a right that

Congress has not.” 532 U.S. at 291.

The D.C. and Ninth Circuits also properly declined to

afford Chevron deference to the FCC’s interpretation of § 276

in the 1999 Order. Chevron deference only applies when a

statute is ambiguous and the agency’s interpretation of it is

reasonable. Chevron, 467 U.S. at 843-44. The D.C. Circuit

acknowledged that the FCC “mentioned [§ 276] throughout

{the 1999 Order} as the source of its authority” to implement

a payphone compensation plan. App. ISa. But, as the D.C.

Circuit recognized, whether a statute is a source of authority

for regulatory action and whether the statute creates a private

right of action for violations of agency regulations are two

different matters. In light of Sandoval, the D.C. Circuit

correctly looked to the text and structure of the Act “to

determine whether [the statute] displays an intent to create

not just a private right but also a private remedy.” App. Ila,

13a-l4a (applying Sandoval, 532 U.S. at 286-87) (emphasis

added). Having determined that § 276 is unambiguously

directed to the FCC, and does not address the rights or

obligations of any private parties, the D.C. Circuit properly

declined to afford Chevron deference to the FCC’s view that

IXCs could violate the statute: “Because the IXCs are not

regulated by § 276, there is no way in which they could have

violated that provision.” App. |4a.

The Ninth Circuit in Metrophones similarly acknowledged

that the FCC had asserted, in its 2003 Order, that a failure to

pay compensation under its new plan would violate § 276.

Metrophones, 423 F.3d at 1064 1.4. The Ninth Circuit

refused to afford Chevron deference to this bare assertion and

affirmed its prior holding in Greene that Congress did not

intend to create a private remedy under the statute. /d.

In sum, both the D.C. and Ninth Circuits applied properly

stated rules of law in concluding that § 276 does not confer

a private right of action to enforce the FCC’s payphone

compensation plan. The rulings were correct and do not

warrant review by this Court.

Il. WHETHER § 416(c) CONFERS A’ PRIVATE

RIGHT OF ACTION FOR PAYPHONE COM-

PENSATION DISPUTES DOES NOT MERIT

THIS COURT’S REVIEW.

Section 416(c) of the Telcom Act requires all persons “to

observe and comply with [FCC] orders.” App. 179a. The

D.C. and Ninth Circuits both held that § 416(c) does not

confer a private right of action for alleged violations of the

FCC’s payphone compensation plans. App. | 7a-20a;

Metrophones, 423 F.3d at 1071. These rulings were correct

and do not merit this Court’s consideration.

In rejecting the arguments of Petitioners (and the FCC as

amicus) on this point, the D.C. Circuit adopted the reason-

ing of then-Judge Breyer, in New England Telephone, that

§ 416(c) applies “only to adjudicatory and not to rulemaking

decisions.” App. 18a-19a (citing 742 F.2d at 4-9). The D.C.

Circuit determined that a contrary interpretation of § 416(c)

would render § 201(b) superfluous: any failure to com-

ply with a regulation, not only unjust and unreasonable

practices, would be a violation of the Act and therefore

actionable under §§ 206 and 207. Such a construc-

tion simply cannot be. See Alaska Dep't of Envil.

Conservation v. EPA, 540 U.S. 461, 489 n.13 (2004) (“It

is... a cardinal principle of statutory construction that a

statute ought, upon the whole, be so construed that

...no clause, sentence, or word shal! be superfluous,

void, or insignificant.”).

App. 19a.

In Metrophones, the Ninth Circuit held that a carrier’s

obligation to compensate PSPs under the payphone compen-

sation plan is not enforceable as a violation of § 416(c),

regardless whether the provision applies to regulatory as well

as adjudicatory “orders.” Like the D.C. Circuit, the Ninth

Circuit reasoned that “to hold that §§ 206 and 207 encom-

pass all violations of § 416(c) would render superfluous the

requirement that an action under § 206 allege a violation of a

statute.” Metrophones, 423 F.3d at 1071 (emphasis in

original).

Petitioners assert that the decisions of the D.C. and Ninth

Circuits on the § 416 question “deepen” a circuit split over

whether regulatory and adjudicatory orders are “orders”

within the me:.ning of §§ 401(b) and 416(c), Pet. 22-24, and

will “generate confusion and inconsistency” among lower

courts facing the same question, Pet. 24. Petitioners’ asser-

tion is demonstrably overstated. This Court has tolerated the

circuit “split” on the § 416 issue for nearly twenty years.”

And tor good reason: As Petitioners are forced to acknowl-

edge, the issue has virtually no real-world consequences.

“{E]ven though it has been clearly established in six circuits

that rulemaking orders are ‘orders’ under the Act, very few

cases alleging violations of FCC rules have been filed in

those circuits.” Pet. 24 n.13 (emphasis added).

Because actions involving this narrow question are rare—

even in the circuits that consider rulemakings to be “orders”

—the D.C. and Ninth Circuits’ rulings will cause little, if any,

tension in the lower courts. Accordingly, the issue is un-

worthy of this Court’s attention.

IV. SERIOUS STANDING ISSUES MAKE THIS

CASE AN INAPPROPRIATE VEHICLE FOR

REVIEW.

Even if the questions presented by the Petition merited the

Court's attention, this case presents an unsuitable vehicle for

reviewing them because of the significant standing issues that

arise from the assignments under which Petitioners have

sued. As a threshold matter, the Court would have to resolve

the standing issues before it could turn to the questions

presented by the Petition. See Steel Co. v. Citizens for a

Better Env’ t, 523 U.S. 83, 88-91 (1998).

” In 1984, the First Circuit concluded that § 401(b) is limited to adju-

dicatory orders. New England Tel., 742 b.2c at 4-9. ‘This Court denied

certiorari. 476 U.S. 1174 (1986). In 1987, the Ninth Circuit reached a

contrary conclusion. Hawaiian Tel. Co. v. Public Utils. Comm'n, 827

F.2d 1264, 1270-72 (9th Cir. 1987). Despite this split, the Court denied

certiorari, 487 U.S, 1218 (1988). The Fourth, Fifth, Sixt’. Seventh and

Eighth Circuits decided the issue before 1990, siding with the Ninth

Circuit. See Alltel Tenn., Inc. v. Tennessee Pub. Serv. Comm'n, 913 F.2d

305, 308 (6th Cir. 1990) (citing circuit cases). The Fourth, Fifth, and

Eighth Circuit decisions were vacated by this Court, on other grounds, in

light of Louisiana Public Service Commission v. FCC, 476 U.S. 355

(1986). See Alltel, 913 F.2d at 308 (noting vacaturs).

The contractual arrangements between the Aggregator-

Petitioners and the PSPs feature assignments in which a PSP

“assigns, transfers, and sets over to [the aggregator] for

purposes of collection all rights, title, and interest of the

{PSP} in the [PSP’s] claims, demands or causes of action for

‘Dial Around Compensation.” App. 4a (emphasis added).

Under the assignments, the aggregators must pass back to the

PSPs any and all amounts they collect in litigation brought on

behalf of the PSPs or in settlement of the PSPs’ claims. App.

4a, 9a, 23a-24a. Nor do they have any other financial interest

in the outcome of the litigation: their compensation is not

tied to litigation success, but rather, to “the number of

payphones and telephone lines operated by their PSP clients.”

App. 23a.

By a 2-1 vote, the D.C. Circuit held that the Aggregator-

Petitioners had a sufficient “personal stake” in the litigation

to give them Article III standing, even though the assign-

ments obligate them to pass back all amounts recovered to the

PSPs. App. 10a. In reaching that conclusion, the majority

sought “guidance” from Federal Rule of Civil Procedure

17(a), which governs real parties in interest. App. 9a. Ac-

cording to the majority, “[w]hat the aggregators have

promised to do with any recovery is irrelevant to their stand-

ing—as it would be to their status as real parties in interest.”

App. 10a.

The majority erred in conflating the Rule 17(a) real party

in interest inquiry with the Article III standing inquiry.

Although both Rule 17 and Article III require litigants to

demonstrate legal injury, “several other elements of the

standing doctrine are clearly unrelated to... Rule 17(a), and

plaintiff must be both the real party in interest and have

standing.” 6A Charles A. Wright et al., Federal Practice and

Procedure § 1542, at 330 (1990). As Judge Sentelle observed

in his dissent from the standing ruling, the majority glossed

over the glaring Article III standing problems created by the

assignments requiring complete pass-through of any recovery

from the aggregators to the PSPs. App. 23a-24a. At bottom,

those assignments deprive nearly every one of the Petitioners

of any concrete, personal stake in these lawsuits that is

necessary for a litigant to have Article III standing. See Lujan

v. Defenders of Wildlife, 504 U.S. 555, 573 (1992)." Judge

Sentelle also pointed out (App. 25a) that the Aggregator-

Petitioners do not satisfy this Court's Article IIL “associa-

tional standing” requirements that would enable them to sue

under the assignments on behalf of the PSPs whom they

purport to represent. //unt v. Washington State Apple Adver.

Comm'n, 432 U.S. 333, 343 (1977).

In the end, the standing issues flowing from the assign-

ments are thorny. They furnish an important, additional

ground for denying the Petition.

* As Judge Sentelle remarked in his dissent on the standing question

(App. 23a), that the aggregators keep nothing they recover distinguishes

this case from the assignment in Vermont Agency of Natural Resources \

United States ex rel. Stevefs, 529 U.S. 765 (2000), under which 4 qui tam

relator was paid a “bounty” for any recoveries on behalf of the

government. /d. at 772-73.

CONCLUSION

The Petition for a Writ of Certiorari should be denied.

MICHAEL C. SMALI

Counsel of Record

EDWARD P. LAZARUS

AKIN GUMP STRAUSS

HAVER & FELD

2029 Century Park East

Los Angeles, CA 90067

(310) 229-1000

Counsel for Respondent

AT&T Corp

Respectfully submitted,

DAVID P. MURRAY

Counsel of Record

RANDY J. BRANITSKY

WILLKIE FARR & GALLAGHER LL

1875 K Street, N.W.

Washington, D.C. 20006

(202) 303-1000

Counsel for Respondent Sprint

Communications Company L.P.

(3) We

No. 05-766 MAR 1 ~ 2006

U PS.

In the Supreme Court of the Hnited States

APCC SERVICES, INC., ET AL.,

Petitioners,

SPRINT COMMUNICATIONS COMPANY L.P., ET AL.,

Respondents.

On Petition for a Writ of Certiorari

to the United States Court of Appeals

for the District of Columbia Circuit

REPLY BRIEF FOR PETITIONERS

MICHAEL W. WARD ROY T. ENGLERT, JR. *

Michael W. Ward, P.C. DONALD J. RUSSELL

1608 Barclay Boulevard DAMON W. TAAFFE

Buffalo Grove, IL 60089 Robbins, Russell, Englert,

(847) 243-3100 Orseck & Untereiner LLP

1801 K Street, N.W.

Suite 411

Washington, D.C. 20006

(202) 775-4500

*Counsel of Record

BREE TRIAS» AIRE eI E AAEE A ONERE, AC RCRE E RO R SOS SCN EY TE ARNIS EP AOE OTT EES ACEI AUB,

TABLE OF CONTENTS

EEE PURSE EULIUREBUEID 5 cc cccsccceseresesccenes ii

I. There Is An Irreconcilable Conflict Between The D.C.

Circuit’s Decision In This Case And The Ninth

Circuit’s Decision In Metrophones ................ |

Il. The Court Should Correct Erroneous Interpretations

Of Alexander v. Sandoval By The Ninth And D.C.

es cca se cecenvesiteceveses 5

III. The Court Should Resolve The Circuit Split Con-

cerning The Meaning Of “Order” In The Communica-

wee vevererevesevvecs 7

IV. It Is Clear That Petitioners Have Standing To Suc .... 8

V. This Case Should Be Accepted for Plenary Review and

Consolidated With Metrophones ................. 9

ee Se vie yesccecreseseeees 10

TABLE OF AUTHORITIES

Page(s)

Cases:

Alexander v. Sandoval, 532 U.S. 275 (2001) .. 1,5,6,7, 10

AT&T Corp. v. FCC, 317 F.3d 227 (D.C. Cir. 2003) ..... 4

Bowen v. Georgetown University Hosp..,

ee Gh re a os a eee ee an Paces heer 4

Chevron U.S.A., Inc. v. Natural Resources Defense

Council, Inc. 467 U.S. 837 (1984) ............ 4,5,6

Columbia Broadcasting System, Inc. v.

United States, 316 U.S. 407 (1942) ............... 8

Global Crossing Telecommunications, Inc. v.

Metrophones Telecommunications, Inc., No. 05-705 .. |

Greene v. Sprint Communications,

340 F.3d 1047 (2003), cert. denied,

ee PP ee eee er ere Te 5

In re Long Distance Telecommunications Litigation,

O50 F236 GET (Gt Cie: TBP)... 5. oe ccc cc cecee 4

MCI Telecommunications Corp. v. AT&T,

Te A, OD Cos bodes pba oe en ee wee e oes 3-4

MCI Telecommunications Corp. v. FCC,

op eG” gi i ae A, Rn raat 4

MCI Telecommunications Corp. v. FCC,

917 F.2d 30 (D.C. Cir. 1990) .............0cccee. 3

iil

TABLE OF AUTHORITIES—Continued

Page(s)

Metrophones Telecommunications, Inc. v.

Global Telecommunications, Inc.,

423 F.3d 1056 (9th Cir. 2005),

cert. granted, No. 05-705 (Feb. 21, 2006)........... 8

Pacific Tel. & Tel. Co. v. MCI Telecommunications Corp.,

og ew Selig. yh a. |) ER eee 4

Reiter v. Cooper, 507 U.S. 258 (1993) ................ 3

Spiller v. Atchison, Topeka & Santa Fe Ry.,

er A EE Fawr enka er ie seen veers Otek 9

Tits ¥. Wallick, 306 U.S. 282 (1999) 2.6 cece ccc ccess 9

Vermont Agency of Natural Resources v. United States

ex rel. Stevens, 529 U.S. 765 (2000)............... )

Statutory Provisions:

RE I oe ews 1, 2, 3,4

Ube BUM ks Ais 1, 2, 5,6

SPE Ue So ee oh cs 2.5

Oia. fe. eee 1, 5,6, 10

ee ae ey) er ree 2

OE BO 8 oe oe i ere 8

ia a ek dooce 8

TABLE OF AUTHORITIES—Continued

Page(s)

Miscellaneous:

Implementation of the Pay Telephone Reclassiciation

and Compensation Provisions of the Telecommunications

Act of 1996, Third Report and Order,

14 F.C.C.R. 2545 (1999) (1999 Order). ........ ; a

Implementation of the Pay Telephone Reclassiciation

and Compensation Provisions of the Telecommunications

Act of 1996, Second Order on Reconsideration,

16 F.C.C.R. 8098 (2001) (2001 Order)........... p ae

Implementation of the Pay Telephone Reclassification

and Compensation Provision of the Telecommunications

Act of 1996, Report and Order, 18 F.C.C.R. 19,975

ee ge) ee err ey Sy ee res ere ee 2,4

REPLY BRIEF FOR PETITIONERS

This Court has granted certiorari in Global Crossing Tele-

communications, Inc. v. Metrophones Telecommunications,

Inc., No. 05-705, to decide whether payphone service providers

(PSPs) may invoke the right of action created by 47 U.S.C.

§§ 206-207 to assert claims that common carriers have engaged

in an “unjust and unreasonable” practice, in violation of 47

U.S.C. § 201(b), when those carriers fail to pay compensation

to PSPs in accordance with FCC regulations. This case squarely

presents the same question. In Metrophones, the Ninth Circuit

held that PSPs have a nght of action grounded on a violation of

Section 201(b); in this case, the D.C. Circuit majority reached

the opposite conclusion.

This case (unlike Metrophones) presents two other closely

related issues that also merit review: (1) an acknowledged

conflict between (on one side) the First and D.C. Circuits, both

of which have held that the term “‘order” in the Communications

Act refers only to adjudicatory orders, and (on the other) the

Fourth, Fifth, Sixth, Seventh, Eighth, and Ninth Circuits, which

have held that the term also encompasses certain rulemaking

orders; and (2) whether Alexander v. Sandoval, 532 U.S. 275

(2000), precludes plaintiffs from invoking the express nght of

action in Sections 206-207 to allege violations of 47 U.S.C.

§ 276 merely because Congress, in Section 276, chose to dele-

gate to the FCC the details of complying with the congressional

ultimatum that PSPs be “fairly compensated for each and every

completed intrastate and interstate call.” -

Respondents argue that none of these issues warrants review

by this Court. They are wrong.

Il. There Is An Irreconcilable Conflict Between The D.C.

Circuit’s Decision In This Case And The Ninth Circuit’s

Decision In Metrophones

Respondents do not dispute that (1) Congress expressly

required that PSPs be compensated for “each and every com-

pleted intrastate and interstate call” and delegated authority to

the FCC to take “all actions necessary” to “ensure” that PSPs re-

ceive compensation, 47 U.S.C. § 276(b)(1 (A); (2) Congress ex-

pressly “declared to be unlawful” common carrier practices that

are “unjust or unreasonable,” 47 U.S.C. § 201(b); (3) Congress

expressly created a right of action to sue in federal court or to

complain to the FCC to recover damages suffered in conse-

quence of any practice by a common carrier that is “declared to

be unlawful,” 47 U.S.C. §§ 206-208; (4) the FCC expressly

determined that “[a] failure to pay compensation in accordance

with the Commission’s payphone rules * * * constitutes * * * an

unjust or unreasonable practice in violation of section 201(b) of

the Act,” 2003 Order § 32. Those undisputed propositions nro-

vide ample support for petitioners’ (and the Ninth Circuit’s and

the FCC’s) position that a carrier’s refusal to pay the required

compensation violates Section 201(b), and that PSPs may

recover unpaid compensation through suits in federal court

pursuant to the right of action created by Sections 206-207.

Respondents have now invented a new rationale for the D.C.

Circuit’s decision, suggesting that the conflict between the D.C.

and Ninth Circuits can be reconciled because the D.C. Circuit

examined claims arising under the FCC’s 1999 payphone

compensation order, while the Ninth Circuit examined claims

arising under the 2001 Order. Br. in Opp. 15-16. That argu-

ment fails for two reasons.

First, there is nothing in the Ninth Circuit's Metrophones

decision that suggests the decision turned on whether the claims

arose under the 2001 Order or the 1999 Order, and there is

nothing in the D.C. Circuit’s decision suggesting that this

distinction mattered. Indeed, there is nothing in respondents’

own arguments to suggest that this factual distinction should

matter. Respondents argue that the FCC’s determination in

2003 that a violation of its payphone orders is an unjust and

unreasonable practice cannot properly be applied to violations

of the 1999 Order or the 2001 Order, because such application

would constitute a “retroactive” rule. Br. in Opp. 17-18. If that

argument had any validity (as we show below, it does not) it

would not reconcile the circuit conflict; it would merely indicate

that the Ninth Circuit (rather thar, the D.C. Circuit) erred.

Second, respondents’ retroactivity theory is, in any event,

squarely inconsistent with decisions of this Court and many

courts of appeals. Thus, even if that theory could explain the

D.C. Circuit’s decision, it would merely demonstrate that the

decision conflicts in other respects with settled law.

Reiter v. Cooper, 507 U.S. 258 (1993), explains why.

There, the Court reinstated a claim under the Interstate Com-

merce Act' for recovery of “unreasonable” charges, even though

the claim was asserted before the agency had made any deter-

mination about the reasonableness of the charges, and even

though such an agency determination was a prerequisite for

plaintiff's recovery. The Court did not “discern within the ICA

an intent that * * * ICC determination of the reasonable-rate

issue must be obtained before filing the civil action.” 507 U.S.

at 269-270. If an agency properly can make a determination of

unreasonableness after a suit is filed, as Reiter holds, then a

fortiori it may make such a determination after the conduct that

gave rise to the suit.

That principle is a necessary predicate for many decisions

in cases alleging violations of Section 201(b) of the Communi-

cations Act, in which plaintiffs asserted claims that a practice or

rate was unreasonable, even though the FCC had not yet made

such a determination when the suit was filed. See, e.g., AT&T

: “The Communications Act, of course, was based upon the [[nterstate }

Cfommerce] A[ct] and must be read in conjunction with it.” MCI Telecom-

munications Corp. v. FCC, 917 F.2d 30, 38 (D.C. Cir. 1990), cited with ap-

proval in MCI Telecommunicanons Corp v. AT&T, 512 U.S. 218, 229-230

(1994).

Corp. v. FCC, 317 F.3d 227 (D.C. Cir. 2003); MCI Telecom-

munications Corp. v. FCC, 59 F.3d 1407 (D.C. Cir. 1995); In re

Long Distance Telecommunications Litigation, 831 F.2d 627

(6th Cir. 1987); Pacific Tel. & Tel. Co. v. MCI Telecom-

munications Corp., 649 F.2d 1315 (9th Cir. 1981).

The only authority that respondents cite in support of their

retroactivity theory is Bowen v. Georgetown University Hosp.,

488 U.S. 204 (1988), but that case involved a retroactive ad-

justment to the compensation owed for services rendered before

the adjustment. There is no such retroactivity in this case or in

Metrophones. Petitioners seek only compensation that !s owed

under the 1999 Order for calls that were made after the 1999

Order established respondents’ legal obligation to pay compen-

sation. They do not seek retroactive application of the compen-

sation obligations imposed by the 1999 Order or by any other

order. Moreover, the statute that was violated here, Section

201(b), was enacted in 1934, long before respondents engaged

in the unjust or unreasonable practice that gave nse to this case.

As we explained in our petition (at 16), the D.C. Circuit

should have asked (as the Ninth Circuit asked) whether the

violation of the payphone compensation orders is an unjust or

unreasonable practice, and, under Chevron, it should have de-

ferred to the FCC’s answer (in its 2003 Order and in its amicus

brief) to that question.’ Instead, the D.C. Circuit asked whether

On the merits, respondents make the insubstantial — and misleading -

argument that deference 1s unwarranied because the FCC provided no notice

and opportunity fu comment before tt reached its determination that a failure

to comply with the payphone compensation orders is an unjust or unreason-

able practice violating Section 201(b). Br. in Opp. 17. Respondents’ argu-

ment is misleading because they focus on the notice preceding the 1999

Order to the exclusion of the notice preceding the 2003 Order. And respon-

dents’ argument is insubstantial because, as we showed in the petition (at 8-

9), the 2003 rulemaking expressly placed in issue the question of what reme-

dies exist for violations of the payphone compensation orders. AT&T itself

the FCC has declared the practice to be unjust and unreason-

able, provided an answer to that question that is indisputably

wrong, and dismissed the case on that basis.

il. The Court Should Correct Erroneous Interpretations Of

Alexander v. Sandoval By The Ninth And D.C. Circuits

Respondents rely on Alexander v. Sandoval, 532 U.S. 275

(2000), to assert that — notwithstanding the FCC’s Chevron-

deference-worthy conclusion to the contrary — petitioners cannot

invoke the express nght of action created in Sections 206-207

by alleging a violation of Section 276. They argue that even if

two courts of appeals (the D.C. Circuit in this case and the Ninth

Circuit in Greene v. Sprint Communications Co., 340 F.3d 1047

(9th Cir. 2003)) have misconstrued Sandoval, this Court should

not clarify the meaning of that decision. Br. in Opp. 22.

In Sandoval, the plaintiffs asserted that the implied nght of

action to sue for violations of Section 601 of Title VI, which

prohibits only intentional discrimination, should be expanded to

encompass violations of regulations (promulgated under Section

602) prohibiting conduct that was not addressed by Section 601,

i.e., practices that have a disparate impact. Sandoval held there

is no implied right of action to sue for violations of such

disparate-impact regulations. “[T]he disparate-impact regula-

tions do not simply apply § 601 — since they indeed forbid con-

duct that § 601 permits — and therefore [it is] clear that the

private right of action to enforce § 601 does not include a

private nght to enforce these regulations.” 532 U.S. at 286.

Because the regulations are not an “authoritative interpretation”

emphasized in response the existence of remedies under Sections 206-208,

the very remedies AT&T (and Sprint) now claim do not exist. Furthermore.

as far back as 1999 both AT&T and Sprint touted the existence of such reme-

dies ina D.C. Circuit brief. See Pet. 7. Other than thei incorrect “retroactiv-

ity” argument, respondents are noticeably silent about the inconsistency be-

tween their thei current position and positions they took in 1999 and 2003

of Section 601, a failure to comply with those regulations “that

is not also a failure to comply with Section 601 is not action-

able” under the right of action for violations of Section 601. /d.

at 284. A private nght of action would have been available if

but only if Section 602 (like Section 601) conferred such a right

of action. /d. at 286.

Here, Sections 206-207 provide the necessary express cause

of action, and there is no dispute that the FCC’s payphone com-

pensation orders “apply” Section 276 and constitute an “authori-

tative interpretation” of that statutory provision. The FCC did

precisely what Congress required: it devised a plan to “ensure”

compensation for “each and every” completed payphone call.

The statute contains “nghts-creating language” (Sandoval, 532

U.S. at 288) in the only sense that matters: Congress conferred

on PSPs a right to compensation because any failure by the FCC

to “ensure” compensation would violate Congress’s express

command. The court of appeals failed to recognize PSPs’ nghts

only because Congress did not require compensation to be paid

by respondents, but instead delegated to the FCC the responsi-

__ bility of deciding which parties should pay compensation. Pet.

App. 14a (“Nothing in the statute requires the Commission to

designate the LXC as the party responsible for dial-around

payment.”).

Two circuits have now misinterpreted Sandoval. That

decision, properly read, requires courts to ask whether Congress

intended to create private nights. Here, Sandoval has been mis-

construed as a limitation on Congress’s authority to delegate to

a regulatory agency the responsibility for devising detailed rules

to ensure protection of the nghts that Congress unequivocally

meant to create. That misinterpretation of Sandoval seriously

undermines Chevron principles and ignores the cautionary

language in Sandoval that specifically sought to avoid such a

result. Sandoval emphasized that, when an agency exercises

authority delegated by Congress to construe and implement a

statutory directive, “it is meaningless to talk about a separate

cause of action to enforce the regulations apart from the statute.

A Congress that intends the statute to be enforced through a

private cause of action intends the authoritative interpretation of

the statute to be so enforced as well.” /d. at 285.

The transformation of Sandoval into a broad limitation on

Congress’s ability to delegate authority to devise detailed rules

necessary to implement congressional policy threatens serious

mischief. There is no reason to defer correction of this mis-

interpretation until other circuits commit the same error, or until

a circuit split is created because another court of appeals cor-

rectly interprets Sandoval.

Il. The Court Should Resolve The Circuit Split

Concerning The Meaning Of “Order” In The

Communications Act

Respondents concede, as the D.C. Circuit acknowledged in

this case (Pet. App. 18a-19a), that the courts of appeals have

adopted inconsistent interpretations of the term “order” as it is

used in critical provisions of the Communications Act. Br. in

Opp. 27. The First and D.C. Circuits have construed the term

to encompass only adjudicatory orders; the Fourth, Fifth, Sixth,

Seventh, Eighth, and Ninth Circuits have held that the term may

also encompass rulemaking orders. Respondents do not even

try to reconcile these conflicting decisions. They only argue

that the circuit conflict is “unworthy of this Court’s attention”

(ibid.) — even though the questi . 'nvolves statutory provisions

that are central to the enforn *»znt of FCC orders — because

cases presenting this issue at ‘rare’ (ibid.) — even though re-

spondents themselves refer to eight cases (not including Metro-

phones) involving this precise issue that have been decided by

courts of appeals (id. at 27 n.7). Those cases demonstrate that

this issue arises on a recurring basis in cases presenting

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.