GTE Mobilnet v. Johnson

111 F.3d 469
CourtCourt of Appeals for the Sixth Circuit
DecidedApril 18, 1997
DocketNos. 95-4358, 95-4359 and 96-3025
StatusPublished
Cited by11 cases

This text of 111 F.3d 469 (GTE Mobilnet v. Johnson) is published on Counsel Stack Legal Research, covering Court of Appeals for the Sixth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
GTE Mobilnet v. Johnson, 111 F.3d 469 (6th Cir. 1997).

Opinion

JOHN R. GIBSON, Circuit Judge.

The Commissioners of the Public Utilities Commission of Ohio1 and Westside Cellular, Inc., which does business as Cellnet, appeal a preliminary injunction prohibiting the Commission from exercising jurisdiction over the aspects of Cellnet’s complaint alleging that GTE Mobilnet and the New Par Companies engaged in discriminatory and anti-competitive conduct. The injunction also prohibited the Commission from attempting, in any other way, to exercise control over the cellular rates charged by GTE Mobilnet and the New Par Companies. The district court ruled that 47 U.S.C. § 332(c)(3)(A) (1994) expressly preempted the Commission from considering Cellnet’s complaint because Cellnet sought relief requiring the Commission to regulate rates, but the district court allowed the Commission to retain jurisdiction over issues involving the bundling of services and products. The Commission and Cellnet argue that the district court erred both in concluding that federal law preempted their claims, and in failing to abstain from considering the issues before the Commission. GTE Mobil-net cross-appeals, arguing that the district court misunderstood the meaning of the term “bundling” and that Ohio law does not permit the Commission to regulate bundling. We affirm the district court’s decision with respect to the cross-appeal, and reverse in all other respects, concluding that under Younger v. Harris, 401 U.S. 37, 91 S.Ct. 746, 27 L.Ed.2d 669 (1971), the district court was required to abstain, and direct the district court to dissolve the injunction against the Commission in order to allow the Commission to resolve the preemption issue.

GTE Mobilnet2 and the New Par Companies 3 (“New Par”) operate cellular telephone networks and sell cellular telephone services. These cellular service providers are “telephone companies” and “public utilities” for purposes of applicable provisions of Ohio Utility Law, Ohio Revised Code Title 49. In addition, the cellular telephone service provided by GTE Mobilnet and New Par is a “commercial mobile service” under the Federal Communications Act, as amended in 1993 by the Omnibus Budget Reconciliation Act of 1993, which subjects these companies to treatment as “common carriers” and submits them to the jurisdiction of the Federal Communications Commission pursuant to 47 U.S.C. § 332(c)(1)(A). Cellnet is a wholesale customer of New Par and resells cellular telephone services to end-users, the customers who actually use the services.

Cellnet filed a complaint before the Ohio Commission against GTE Mobilnet and New Par4 alleging several violations of Ohio law and the Commission’s several orders concerning practices by cellular telephone service providers. The preemption arguments before us require a detailed discussion of Cellnet’s complaint.

In its complaint Cellnet alleged that GTE Mobilnet and New Par: (1) did not maintain separate wholesale and retail operations or accounting records, but instead kept interre[473]*473lated records;5 (2) refused to provide cellular service to Cellnet at the same rates, charges, and conditions under which each provided service to their retail functions, and instead charged Cellnet at a higher rate;6 (3) provided affiliated resellers, but not Cell-net, with a number of non-monetary benefits that substantially reduced the cost of service to the affiliated resellers, which was unfair and unreasonable to Cellnet;7 (4) cross-subsidized their retail operations, which they failed to keep separate from their wholesale operations, with profits generated by their wholesale functions, which enabled their retail operations to provide service to the public at lower than actual cost with the purpose of destroying competition;8 (5) offered retail rate plans which charged rates below those contained in their tariffs, and below the rates made available to Cellnet;9 (6) had entered into agreements concerning roaming10 among themselves that were discriminatory pricing schemes that disadvantaged Cellnet and resulted in a loss of revenue to it.11

Finally, Cellnet complained that these alleged actions had placed it at a disadvantage in the marketplace and had prevented it from competing in a number of markets served by GTE Mobilnet and New Par. Cellnet claimed that the discriminatory treatment had caused it to lose money, which slowed down its entrance into certain markets. Under GTE Mobilnet’s practice of charging Cellnet more than the amount charged to GTE Mobilnet’s and New Par’s affiliated resellers, Cellnet had suffered and continued to suffer severe economic damage.

Cellnet asked the Commission to find that GTE Mobilnet and New Par had violated Commission orders and Ohio law, and therefore order GTE Mobilnet and New Par: (1) to separate their wholesale and retail functions;. (2) to maintain separate accounting records for those operations; (3) to stop cross-subsidizing the retail operations with wholesale profits; (4) to provide service to Cellnet at the rates, terms, and conditions that they provide to their own affiliated retail functions; (5) to submit annual audits to verify their compliance; and (6) to compensate Cellnet for damages suffered by Cellnet as a result of these violations.

After filing the complaint, Cellnet attempted to obtain discovery from GTE Mobilnet and New Par. GTE Mobilnet and New Par, however, moved for dismissal, arguing that federal law preempted the Commission’s authority to hear the case. The Commission denied their motion to dismiss.

GTE Mobilnet and New Par filed this action for injunctive relief in federal district court, arguing that the relief Cellnet sought would require the Commission to regulate rates and, therefore, that 47 U.S.C. § 332(c)(3)(A) facially preempted Cellnet’s claims and thus preempted the Commission’s authority to hear the case.

The district court granted a preliminary injunction on the grounds that GTE Mobilnet and New Par had established a likelihood of success on the merits of the preemption claim and that the parties had also satisfied the other elements required for the grant of a preliminary injunction.

[474]*474The terms of 47 U.S.C. § 332(c)(3)(A) were central to the district court’s consideration of the preemption issue and also to ours.12 This section was passed in 1993, amending the Federal Communications Act to preempt state authority to “regulate the entry of or the rates charged” by commercial mobile services. The statute, however, allows states to continue “regulating the other terms and conditions” of commercial mobile services. Subsection (i) of the statute provides that states can petition the FCC for permission to re-regulate rates where market conditions fail to protect subscribers adequately from unjust or unreasonably discriminatory rates.

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111 F.3d 469, Counsel Stack Legal Research, https://law.counselstack.com/opinion/gte-mobilnet-v-johnson-ca6-1997.