Folden v. United States

56 Fed. Cl. 43, 2003 U.S. Claims LEXIS 64, 2003 WL 1848647
CourtUnited States Court of Federal Claims
DecidedMarch 28, 2003
DocketNo. 01-456C
StatusPublished
Cited by9 cases

This text of 56 Fed. Cl. 43 (Folden v. United States) is published on Counsel Stack Legal Research, covering United States Court of Federal Claims primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Folden v. United States, 56 Fed. Cl. 43, 2003 U.S. Claims LEXIS 64, 2003 WL 1848647 (uscfc 2003).

Opinion

OPINION

HORN, Judge.

Plaintiffs, Gene A. Folden, Coastal Communications Associates and Judith A. Long-shore, have filed a complaint against the United States, based on actions taken by the Federal Communications Commission (FCC). Plaintiffs allege that the FCC breached implied-in-fact contracts with the plaintiffs to award seven cellular licenses by lottery, and also violated the Takings Clause of the Fifth Amendment to the Constitution by abrogating plaintiffs’ contract rights without compensation. Plaintiffs together seek an aggregate amount of $144,088,000.00, divided on the basis of the fair market value of the individual licenses, as well as interest and attorneys’ fees. The defendant filed a motion to dismiss for lack of jurisdiction, or, in the alternative, for failure to state a claim upon which relief can be granted.

FINDINGS OF FACT

According to the complaint, for the purposes of issuing cellular licenses, the FCC divided the United States into two types of geographic markets, metropolitan statistical areas and rural service areas (RSAs). In each market, the FCC granted two competing licenses, one to a “wireline” operator, an established local telephone company, and the other license to a “non-wireline” operator, any party other than an established local telephone company. This case involves the awarding of cellular licenses in seven RSA markets to non-wireline operators.

Pursuant to the Communications Amendments Act of 1982, the FCC was authorized to employ a random selection process to select licenses for certain communications services it regulated. See 47 U.S.C. § 309(i) (1982). In 1984, the FCC adopted rules to grant cellular licenses by random selection, [45]*45or lottery. 47 C.F.R. §§ 1.821, 22.33 et seq. (1984); see also In re Amendment of the Commission’s Rules to Allow the Selection from Among Mutually Exclusive Competing Cellular Applications Using Random Selection or Lotteries Instead of Comparative Hearings, 98 F.C.C.2d 175, 175, 1984 WL 251081 (1984). According to the rules in place in 1988, the year the events in this case commenced, an applicant that was selected through the lottery process was deemed a “tentative selectee.” 47 C.F.R. § 1.823(a) (1988). Selection in the lottery did not necessarily ensure the grant of a license. Before awarding the license, the FCC reviewed the tentative selectee’s application to ensure qualification under the agency’s cellular application rules. 47 C.F.R. §§ 1.822(a), I. 823(a) (1988).

In 1988, each of the plaintiffs submitted applications to the FCC for cellular licenses in certain RSAs, along with a $200.00 filing fee. Gene A. Folden applied for a cellular license in the Florida 11-Monroe (Fla.ll) RSA and submitted a $200.00 filing fee. Coastal Communications Associates (Coastal) applied for cellular licenses in the following seven RSAs: North Dakota 3 — Barnes (N.D.3); Minnesota 11 — Goodhue (Minn.ll); Texas 21 — Chambers (Tex.21); Arkansas 9— Polk (Ark.9); Puerto Rico 5 — Ceiba (P.R. 5); Pennsylvania 4 — Bradford (Pa.4); and Fla. II. Coastal paid $1,400.00 in application filing fees. Finally, Michael D. Longshore, the now deceased husband of plaintiff Judith A. Longshore, applied for licenses in the following four RSAs: N.D. 3; Minn. 11; Tex. 21; and Pa. 4. Mr. Longshore paid $800.00 in application filing fees.

The cellular license lotteries were held in 1989. Tentative selectees, none of whom were the plaintiffs, were chosen for the seven RSA markets at issue. Subsequently, however, these initial, tentative selectees were disqualified for a variety of reasons, including findings of ineligibility to be licensees. Therefore, the licenses were not awarded to any of the original seven tentative selectees, and their applications were ultimately dismissed.

The procedure to be followed upon disqualification of a tentative selectee was modified in 1988. Before May, 1988, the rule in effect stated that after the selection of a tentative selectee, alternates were selected from the remaining applicant pool:

The random selection shall pick a tentative selectee and then repeat the random selection process with the remaining applicants, so that, in the event that the tentative selectee’s application is denied, the other applicants will be ranked in order as alternative selectees____ If the tentative selectee is disqualified, or its application designated for hearing, the Commission will allow Petitions to Deny against the next-ranked tentative selectee.

47 C.F.R. § 1.823(a)-(b)(2) (1988). This rule was modified, effective May 18, 1988, to give the Common Carrier Bureau Chief and its Managing Director the authority to determine the number of alternates to be selected, if any, on a case-by-ease basis. See 47 C.F.R. § 1.823(a) (1989); see also Amendment of Section of Part 1 of the Commission’s Rules as They Apply to Applications to be Included in Public Land Mobile and Cellular Lotteries, 53 Fed.Reg. 52,425 (Dec. 28, 1988). The modified, May 18, 1988, rule stated in pertinent part:

The designated Lottery Official shall select the winning applicant from among mutually exclusive applicants. The Lottery Official may select in rank order a number of additional applicants. The number of additional applicants selected will be determined by the Chief of the Common Carrier Bureau and the Managing Director.... If the tentative selectee is disqualified, or its application designated for hearing, the Commission will allow Petitions to Deny against the next-ranked tentative selectee.

47 C.F.R. § 1.823(a)-(b)(2) (1989).

In the present case, only one applicant, the tentative selectee, was chosen from each of the seven lotteries at issue; no alternates were chosen. None of the plaintiffs were tentative selectees. When the FCC announced the scheduling of the initial lotteries, the FCC issued lottery notices, which indicated that re-lotteries would be held if the tentative selectees were disqualified. The re-lotteries were to be held among the applications on file, excluding the dismissed appli[46]*46cations. The notices read: “In the event that the application selected cannot be granted, another lottery will be held for that market and another application will be selected from the remaining applications.” On April 8, 1992, the FCC held re-lotteries, including a re-lottery for one of the seven licenses at issue, the Tex. 21 license. In re Cellular Rural Serv. Area Applications in Mkt. Nos. 599A and 672A DA 99-1426, 1999 WL 511242 (July 21, 1999). The tentative selec-tee in the Tex. 21 re-lottery was Alee Cellular Communications (Alee). Petitions to deny the license were filed against Alee’s application. Therefore, Alee’s application was considered “pending.” Alee was subsequently disqualified as an applicant.1

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Bluebook (online)
56 Fed. Cl. 43, 2003 U.S. Claims LEXIS 64, 2003 WL 1848647, Counsel Stack Legal Research, https://law.counselstack.com/opinion/folden-v-united-states-uscfc-2003.