2. Motion to Dismiss
On July 26, 2001, the California ISP Association (CISPA, or "Complainant") filed a complaint against Pacific and ASI. The complaint alleges unlawful discrimination by Pacific and ASI in the provision of digital subscriber line (DSL) transport services in California. CISPA alleges that this conduct violates the Public Utilities Code and Commission orders.
On October 22, 2001, Defendants jointly filed a motion to dismiss the complaint on jurisdictional and mootness grounds. They allege that the Commission does not have jurisdiction over the DSL Transport services at the heart of the complaint because those services are interstate services within the jurisdiction of the Federal Communications Commission (FCC). They rely on FCC orders purportedly finding DSL Transport service to be jurisdictionally interstate and properly tariffed at the federal level.1 Although the FCC found DSL services can have intrastate components which are properly tariffed at the state level (Id., para. 27), Defendants contend that because CISPA's complaint focuses on DSL Transport used by internet service providers (ISPs) to connect to the Internet rather than a Local Area Network (LAN), the service is a matter of exclusive federal jurisdiction. In addition, Defendants maintain that the complaint should be dismissed as moot given ASI's filing of an interstate tariff with the FCC for DSL Transport Service in California. Defendants explain that ASI initially provided DSL Transport Service to ISPs in California pursuant to a written agreement (the "DSL Transport Contract"), but that ASI no longer requires ISPs to execute the DSL Transport Contract. Defendants conclude that those parts of the complaint concerned with implementation of the contract are now moot in light of the FCC tariff.
In response to the motion, CISPA disagrees with the notion that the Commission does not have jurisdiction to hear the complaint and that ASI's FCC tariff moots the complaint.
First, CISPA responds that the filing of a tariff with the FCC for DSL Transport service does not make ASI immune from state jurisdiction, particularly for conduct prior to the tariff filing or conduct outside the scope of the tariff.2 In particular, CISPA alleges that conduct such as preferential treatment of SBC-affiliated ISPs, discrimination against independent (or non-SBC affiliated) ISPs, improper sharing of customer information, and a host of service quality concerns all merit consideration by the Commission and fall outside the scope of the federal tariff. CISPA asks the Commission to enjoin allegedly illegal and anticompetitive marketing and sales practices, which it argues are outside the scope of the FCC tariff. CISPA contends that these actions either lead to Defendants stealing customers from independent ISPs, or unlawfully retaining, or "clenching," them with affiliated ISPs through misleading information.
Second, CISPA disputes Defendants' interpretation of the FCC's 1998 GTE Order. CISPA asserts that the Commission and the FCC have "concurrent jurisdiction" over the service. According to CISPA, in order to displace state regulation, congressional intent must be "clear and manifest." See Jones v. Rath Packing, 430 U.S. 519, 525 (1977). Similarly, federal preemption of state telecommunications regulation "must be clear and occurs only in limited circumstances." See Communications Systems International v. the California Public Utilities Commission, 196 F.3d 1011, 1017 (9th Cir. 1999). CISPA claims that the FCC's requirement that carriers file a federal tariff for DSL service does not translate into a complete preemption of state authority over DSL services. CISPA asserts that federal courts have rejected the "end-to-end analysis" used by the FCC to suggest that communications between ISPs and their customers are interstate. Therefore, Defendants cannot rely on this analysis to effect a "clear and manifest" preemption of Commission authority.
Moreover, CISPA contends that Congress left substantial regulatory authority to the states in the Telecommunications Act of 1996 (the Act) so long as state regulations do not conflict with the Act. Complainant cites MCI Telecommunications Corp. v. U.S. West Communications, 204 F.3d 1262, 1265 (9th Cir. 2001) as holding that while the FCC is charged with promulgating regulations to implement the Telecommunications Act, "the Act reserves to states the ability to impose additional requirements that are consistent with the Act and `further competition.'" CISPA notes that Section 253(b) of the Act does not affect the ability of the state to impose requirements to protect public safety and welfare, and safeguard the rights of consumers. 47 U.S.C. Section 253(b). CISPA finds support for this contention in Communications Telesytems wherein the court upheld the Commission's authority under 253(b) to suspend a company for "slamming." 196 F.3d at 1017. Given that the gravamen of the complaint concerns sales and marketing practices, alleged anticompetitive conduct, and service quality, CISPA contends that the Commission is well within its authority to entertain these consumer rights issues.
CISPA provides two further examples to contradict Defendants' claim that state regulation is preempted. First, CISPA notes that the FCC's 1999 "Line Sharing" order expressly invited state regulation of DSL Transport,3 and that the Commission subsequently approved a DSL line sharing arrangement. (D.00-09-074.) Second, CISPA documented one occasion where the FCC's Consumer Information Bureau directed a written complaint regarding DSL service to this Commission for action.4
Finally, CISPA maintains that the savings clause of Section 414 of the Act allows states to enforce their own laws as to activities involving interstate communications, so long as the state regulation does not seek to modify the terms of the relevant federal tariff.5 CISPA contends that federal courts have made clear that the filing of a federal tariff does not foreclose state law claims based on misrepresentations and improper use or disclosure of customer information, as Complainants contend here. See In re Long Distance Telecommunications Litig., 831 F.2d 627 (6th Cir. 1987); Crump v. Worldcom, Inc., 128 F.Supp.2d 549 (W.D. Tenn. 2001); A.S.I. Worldwide Communications Corp. v. Worldcom, Inc., 115 F.Supp.2d 201 (N.H. 2000).
In reply to CISPA's assertions, Defendants reiterate their argument that the Commission does not have jurisdiction over interstate services such as DSL Transport and that the notion of "concurrent" jurisdiction is faulty. Defendants cite Ivy Broadcasting Co. v. American Tel & Tel. Co., 391 F.2d 486 (2nd Cir. 1968) and McDermott v. Western Union Tel. Co., 746 F.Supp. 1016 (S.D. Cal. 1990) to support the assertion that states are precluded from exercising jurisdiction over interstate services. Defendants also note the Commission's own statements in Re McCaw Cellular Communications, Inc., 49 CPUC 2d 449, 451 (May 19, 1993) that it does not regulate interstate services. Defendants contend that where the FCC has declared a service "interstate," it has only allowed a state commission to regulate with explicit permission. Defendants also claim that none of the cases relied upon by Complainants, which involve reciprocal compensation and whether calls to ISPs are interstate or local, alter the FCC's finding that DSL transport, which is a digital rather than a dial-up service, is jurisdictionally interstate. Further, Defendants attempt to distinguish CISPA's legal citations to cases that support the idea of "concurrent jurisdiction."
1 See In the Matter of GTE Telephone Operating Cos., CC Docket No. 98-79, Memorandum Opinion and Order ("GTE Order"), FCC 98-292 (rel. October 30, 1998), para. 16, and In the Matter of Bell Atlantic Telephone Cos., et al., CC Docket No. 98-103, Memorandum Opinion and Order, FCC 98-317 (rel. November 30, 1998).
2 ASI acknowledged at a prehearing conference on 12/6/01 that it has asked the FCC to treat it as a non-dominant carrier, which would result in federal detariffing of ASI's DSL Transport services. (Transcript PHC-2 (Tr.) at 55-56.)
3 In the Matters of Deployment of Wireline Services Offering Advanced Telecommunications Capability and Implementation of the Local Competition Provisions of the Telecommunications Act of 1996, CC Docket No. 98-147; CC Docket No. 96-98, FCC 99-355, (rel. December 9, 1999), para. 159.
4 See CISPA's Supplement to PHC Statement, 12/4/01, Exhibit A.
5 Section 414 states: Nothing in this Act contained shall in any way abridge or alter the remedies now existing at common law or by statute, but the provisions of this Act are in addition to such remedies. (47 U.S.C. 414)
