Communication Management Services, LLC v. Qwest Corp.

67 F. Supp. 3d 1159, 2014 U.S. Dist. LEXIS 172805, 2014 WL 7147661
CourtDistrict Court, D. Oregon
DecidedDecember 15, 2014
DocketNo. 3:14-cv-00249-BR
StatusPublished
Cited by4 cases

This text of 67 F. Supp. 3d 1159 (Communication Management Services, LLC v. Qwest Corp.) is published on Counsel Stack Legal Research, covering District Court, D. Oregon primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Communication Management Services, LLC v. Qwest Corp., 67 F. Supp. 3d 1159, 2014 U.S. Dist. LEXIS 172805, 2014 WL 7147661 (D. Or. 2014).

Opinion

OPINION AND ORDER

BROWN, District Judge.

This matter comes before the Court on Plaintiffs’ Motion (# 10) for Partial Summary Judgment and Defendant Qwest Corporation’s Motion (# 28) to Dismiss Plaintiffs First Amended Complaint. For the reasons that follow, the Court GRANTS Qwest’s Motion to Dismiss and DENIES as moot Plaintiffs’ Motion for Partial Summary Judgment.

BACKGROUND

I. General Background

Plaintiffs’ Amended Complaint (# 1-1) is based on a long-running dispute between Plaintiffs and Qwest over an administra[1163]*1163tive process that, inter alia, served to set payphone tariff rates in the State of Oregon. This matter represents the fifth time this and related disputes have come before this Court. See Nw. Pub. Commc’ns Council (NPCC) v. Qwest Corp., No. 3:09-cv-01351-BR (NPCC I); NPCC v. Oregon Pub. Util. Comm’n, No. 3:10-cv-00685-BR (NPCC II); NPCC ex rel State of Oregon v. Qwest Corp., No. 3:12-cv-00121-BR (NPCC III); Commc’n Mgmt. Servs. v. Harlow, No. 3:12-cv-01923-BR. The Court dismissed NPCC I, NPCC II, and NPCC III. Communications Management Services v. Harlow, No. 3:12-cv-01923-BR, is still pending before this Court.

In NPCC I the plaintiffs brought a variety of state-law and federal-law claims seeking relief similar to the relief sought by Plaintiffs in this matter. The Court concluded each of the plaintiffs’ federal-law claims in NPCC I was barred by the statute of limitations, and, based in part on the agreement of the parties, the Court declined to exercise supplemental jurisdiction over the state-law claims. NPCC I, No. 3:09-cv-01351-BR, 2010 WL 4260341, at *10 (D.Or. Oct. 25, 2010). On August 20, 2013, the Ninth Circuit affirmed this Court’s decision and found the plaintiffs were on notice of their refund-based claims when they filed the Refund Case in 2001 and again when Qwest filed lower rates in 2003. Nw. Pub. Commc’ns Council v. Qwest Corp., 538 Fed.Appx. 822, 823 (9th Cir.2013).

On January 14, 2014, Plaintiffs filed an action in Multnomah County Circuit Court in which they raised the state-law claims over which this Court declined to exercise supplemental jurisdiction in NPCC I. In spite of its previous assertion that this Court should not exercise supplemental jurisdiction over Plaintiffs’ state-law claims, Qwest removed this action to this Court asserting federal-question and diversity jurisdiction.

On February 28, 2014, Plaintiffs filed a Motion (# 7) to Remand. The Court denied Plaintiffs’ Motion and found the Court properly had federal-question jurisdiction over this case and supplemental jurisdiction over Plaintiffs’ state-law claims.

On March 12, 2014, before Defendant’s time to answer Plaintiffs’ Amended Complaint had expired, Plaintiffs filed a Motion (# 10) for Partial Summary Judgment seeking summary judgment on their Claims One, Two, Four, and Nine.

On March 19, 2014, Qwest filed a Motion (# 28) to Dismiss Plaintiffs’ First Amended Complaint. Qwest asserted the Court should dismiss each of Plaintiffs’ claims.

II. Regulatory Background

Unless otherwise noted, the facts are taken from Plaintiffs’ Amended Complaint and accepted as true for purposes of the Motions presently before the Court.

Plaintiffs are payphone-service providers (PSPs) who purchased public-access lines (PAL), related telephone-exchange services, “CustomNet” fraud-protection services, and exchange-access services from Qwest. In 1995 Qwest, a regulated monopoly, was required to begin the process of setting new rates for its payphone services with the Oregon Public Utilities Commission (PUC). The PUC determines and sets “just and reasonable” rates for the payphone services that Plaintiffs purchase from Qwest. At the point that this •process began, Qwest’s previous rates were permitted to stay in place. They were, however, designated as interim and subject to refund if the new rates were lower than the previous rates. .

In 1996 while the PUC was in the process of resetting Qwest’s payphone-service rates, Congress amended the Federal [1164]*1164Communications Act (FCA) of 1934. See Telecommunications Act of 1996, Pub.L. No. 104-104, 110 Stat. 56 (1996). As part of these amendments Congress provided all rates must be compliant with a “new services test” (NST) beginning April 15, 1997. The PUC is responsible for determining whether rates are NST-compliant. Accordingly, in April 1996 the PUC initiated a rate case that was bifurcated into two phases: (1) a “revenue-requirement phase” in which the PUC would determine the revenue necessary for Qwest to generate a reasonable rate of return and (2) a “rate-design phase” in which the PUC would establish rates sufficient to permit Qwest to meet its revenue requirements.

On its own motion on April 4, 1997, the Federal Communications Commission (FCC) issued an order providing a 45-day waiver period during which Qwest and similarly-situated providers (RBOCs) were to submit all information necessary to calculate NST-compliant rates.

On April 10, 1997, Qwest and the other RBOCs submitted a “Waiver Request Letter” to the FCC seeking (1) a 45-day period to review previously-filed intrastate payphone rates and to file new rates; (2) to collect as of April 15, 2007, payments that were contingent on NST compliance; and (3) to continue collecting such payments even if the PUC did not complete its review of the previously-filed rates within the period provided by the FCC. To assure the FCC and payphone-service providers that this requested relief would not have a discriminatory effect, Qwest and the. RBOCs offered in their Waiver Request Letter to refund to any PSP the difference between the interim rates and any lower NST-compliant rate that the PUC ultimately set. The FCC issued an order (the Waiver Order) on April 15, 1997, granting the relief requested in the Waiver Request Letter, and, based on the assurances of Qwest and the other RBOCs in the Waiver Request Letter, the PSPs did not object or appeal.

The “revenue-requirement phase” of the Rate Case terminated on May 19, 1997, when the PUC found Qwest was required to refund $102 million to the PSPs because the interim rates were higher than Qwest’s revenue requirement. That same day Qwest issued new rates for payphone services that it certified were NST-compliant. Qwest maintained these rates were NST-compliant until December 1999 when it proposed new rates as part of the “rate-design phase” of the Rate Case. At this time Qwest asserted its 1999 PAL rates were NST-compliant and its CustomNet rates did not need to comply with NST.

On September 9, 1999, Qwest and the staff at the PUC entered into a stipulation to settle Qwest’s pending appeals of the revenue-requirement phase of the Rate Case, and Qwest and the PUC staff agreed to reduce the refund rate. The PUC staff, however, does not have the authority to bind the PUC. By orders (collectively referred to as the Settlement Order) dated April 14, 2000, the PUC modified the stipulation, which Qwest subsequently accepted. In the Settlement Order Qwest agreed to pay the ordered refunds before any appeal of the final rates. In addition, Qwest agreed to pay additional refunds if the final rates were lowered as the result of an appeal.

The PUC adopted Qwest’s proposed rates on September 14, 2001, over Plaintiffs’ objections.

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67 F. Supp. 3d 1159, 2014 U.S. Dist. LEXIS 172805, 2014 WL 7147661, Counsel Stack Legal Research, https://law.counselstack.com/opinion/communication-management-services-llc-v-qwest-corp-ord-2014.