Crystal Clear Communications, Inc. v. Southwestern Bell Telephone Co.

F I L E D
United States Court of Appeals
Tenth Circuit
PUBLISH
July 19, 2005
UNITED STATES COURT OF APPEALS
PATRICK FISHER
Clerk
TENTH CIRCUIT

CRYSTAL CLEAR
COMMUNICATIONS, INC., an
Oklahoma corporation; KKW GOLD
EXCHANGE, INC., an Oklahoma
corporation; doing business as
Southwestern Payphones; ROUVEN
IROM, doing business as Sooner
Payphones; TELETRUST, INC., a
Texas corporation, No. 03-6219

Plaintiffs-Appellants,

v.

SOUTHWESTERN BELL
TELEPHONE COMPANY, a Missouri
corporation,

Defendant-Appellee.

Appeal from the United States District Court
for the Western District of Oklahoma
(D.C. No. 00-CV-1683-C)

Jon W. Laasch (J. David Jacobson, with him on the briefs), Jacobson & Laasch,
Edmond, Oklahoma, for Plaintiffs-Appellants.

Donald L. Flexner, Boies, Schiller & Flexner, LLP, New York, NY (David A.
Barrett, Boies, Schiller & Flexner, LLP, New York, NY, Scott E. Gant, Boies,
Schiller & Flexner, LLP, Washington, DC, with him on the brief), for Defendant-
Appellee.

Before BRISCOE, ANDERSON, and MURPHY, Circuit Judges.

MURPHY, Circuit Judge.

I. INTRODUCTION

Plaintiffs, several independent payphone providers doing business in

Oklahoma, filed suit against Southwestern Bell Telephone Company in United

States District Court for the Western District of Oklahoma, claiming that

Southwestern Bell engaged in anticompetitive conduct in violation of federal and

state antitrust laws. The district court concluded that primary jurisdiction for the

issues raised in plaintiffs’ complaint lies with the Federal Communications

Commission (“FCC”) and the Oklahoma Corporation Commission (“OCC”). The

court therefore ordered the case stayed pending decisions by those agencies.

Plaintiffs appeal from the court’s order. Because the district court’s decision to

stay the case was not a final or immediately appealable decision, this court has no

jurisdiction to hear plaintiffs’ appeal. Accordingly, the appeal is dismissed.

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II. BACKGROUND 1

Southwestern Bell is a local exchange carrier offering telephone services in

Oklahoma. Prior to 1996, it was also the sole provider of payphones in its

operating area. The Telecommunications Act of 1996, however, authorized

independent payphone providers to operate competing payphone businesses within

Southwestern Bell’s territory. Plaintiffs are independent payphone providers that

subsequently began operating in competition with Southwestern Bell.

Payphone providers typically enter into contracts with property owners in

order to obtain locations at which to install their payphones. To obtain service

for the phones, independent payphone providers then contract with local exchange

carriers such as Southwestern Bell. The Telecommunications Act regulates the

manner in which local exchange carriers interconnect with competing independent

payphone providers. See 47 U.S.C. § 276. In particular, the Act prohibits local

exchange carriers from discriminating against independent payphone providers in

the provision of telephone services. See id. § 276(a).

Plaintiffs claim that Southwestern Bell engaged in a variety of

anticompetitive conduct in an attempt to retain its payphone monopoly after

deregulation, in violation of the Sherman Act, 15 U.S.C. § 2, and the Oklahoma

1
For purposes of this appeal, this court will presume the factual allegations
in plaintiffs’ complaint to be true. The parties do not dispute any of the facts
relevant to this court’s resolution of the jurisdictional inquiry.

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Antitrust Reform Act, Okla. Stat. Ann. tit. 79, § 203. Among the allegations in

plaintiffs’ complaint are assertions that Southwestern Bell abused its control of

telephone access lines to discriminate against plaintiffs, and that it entered into

long-term restrictive contracts with property owners in an effort to lock up the

market and prevent competitors from gaining a foothold. As a result of these

anticompetitive actions, plaintiffs allege that Southwestern Bell was able to

unfairly retain its monopoly in the Oklahoma payphone market.

Southwestern Bell moved in the district court for a judgment on the

pleadings, or in the alternative a stay pending referral of certain issues to the FCC

and OCC. Southwestern Bell argued that the subject matter of the complaint was

pervasively regulated by FCC rules promulgated under the authority of the

Telecommunications Act and that the FCC had procedures in place to provide

relief for the issues raised in the complaint. It further argued that the OCC had

primary jurisdiction over the issue of restrictive long-term contracts. The district

court agreed with Southwestern Bell that “Plaintiffs and Defendant operate in a

field that has been extensively regulated at both the federal and state levels,” and

therefore that the doctrine of primary jurisdiction required the case to be “stayed

pending resolution of Plaintiffs’ claims by the [FCC] and/or the [OCC], as may be

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appropriate.” 2 The court ordered the proceeding “administratively close[d]” and

required that any party wishing to proceed following final disposition by the

administrative agencies must move to reopen the matter with thirty days of that

final disposition.

Recognizing that resolution of plaintiffs’ claims before the FCC “may

involve a lengthy process,” the district court certified its order for immediate

appeal pursuant to 28 U.S.C. § 1292(b), which authorizes this court to permit an

appeal from an interlocutory order certified under that section as long as

application is made by the appealing party within ten days after entry of the order.

See 28 U.S.C. § 1292(b). Rather than petitioning this court for review within ten

days as required by § 1292(b), however, plaintiffs filed a notice of appeal in the

In Williams Pipe Line Co. v. Empire Gas Corp., this court explained the
2

concept of primary jurisdiction:

The doctrine of primary jurisdiction is concerned with promoting
proper relationships between the courts and administrative agencies
charged with particular regulatory duties. In essence, the doctrine
represents a determination that administrative agencies are better
equipped than the courts to handle particular questions, and that
referral of appropriate questions to an agency ensures desirable
uniformity of results.

76 F.3d 1491, 1496 (10th Cir. 1996) (quotation, citation, and alteration omitted).
When a district court applies the doctrine, “the judicial process is suspended
pending referral of such issues to the administrative body for its views.” United
States v. W. Pac. R.R. Co., 352 U.S. 59, 64 (1956).

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district court twenty days after entry of the district court’s order. This court

tolled briefing and ordered the parties to submit memoranda on the question

whether the district court had entered a final or immediately appealable decision.

After receiving memoranda from both parties, briefing on the merits was ordered

to resume.

III. DISCUSSION

Plaintiffs argue on appeal that the district court abused its discretion in

staying the case pending submission of their claims to the FCC and OCC. Before

reaching that question, however, this court must first satisfy itself that it has

jurisdiction to hear the appeal.

Although the district court certified its stay order for immediate appeal

pursuant to 28 U.S.C. § 1292(b), plaintiffs did not comply with the requirements

for an interlocutory appeal under that section. This court may permit an appeal of

an order certified under § 1292(b) only if an application for permission to appeal

is filed with the clerk of this court within ten days after entry of the order. 28

U.S.C. § 1292(b); Fed. R. App. P. 5(a)(1); Hellerstein v. Mr. Steak, Inc., 531 F.2d

470, 471 (10th Cir. 1976). Instead of petitioning this court as required by

§ 1292(b), plaintiffs filed a notice of appeal in the district court. Because

plaintiffs failed to comply with the jurisdictional requirements of § 1292(b), this

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court lacks jurisdiction to hear an appeal under that section. Hellerstein, 531 F.2d

at 471-72.

Plaintiffs nevertheless argue two alternative bases for jurisdiction. First,

they contend that the district court’s stay order was a final decision over which

this court has jurisdiction pursuant to 28 U.S.C. § 1291. Second, they argue that

the district court’s order was an appealable collateral order under the Supreme

Court’s decision in Cohen v. Beneficial Industrial Loan Corp., 337 U.S. 541

(1949).

A. 28 U.S.C. § 1291

Section 1291 grants this court jurisdiction over “appeals from all final

decisions of the district courts of the United States.” 28 U.S.C. § 1291. A

decision of the district court is considered final under this section when it “ends

the litigation on the merits and leaves nothing for the court to do but execute the

judgment.” Gray v. Baker, 399 F.3d 1241, 1244 (10th Cir. 2005) (quotation

omitted).

In Moses H. Cone Memorial Hospital v. Mercury Construction Corp., the

Supreme Court noted that a district court’s decision to stay litigation “is not

ordinarily a final decision for purposes of § 1291.” 460 U.S. 1, 10 n.11 (1983).

The Court also recognized an exception to this general rule, however, for cases in

which the stay order operates to put a party “effectively out of court.” Id. at 10.

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The plaintiff in Moses H. Cone brought suit under the United States Arbitration

Act to compel arbitration of a contract dispute. Id. at 7. The district court stayed

proceedings pending resolution of a prior state-court action in which the

defendants in the federal action sought a declaratory judgment that the plaintiff

had no right to arbitration. Id. Because the arbitrability of the contract was the

only substantive issue in the federal proceeding, the Supreme Court noted that

resolution of the state-court suit would render the federal proceeding res judicata

and would therefore effectively end litigation in federal court. Id. at 10. For this

reason, the Court concluded that the stay order amounted to a dismissal of the

case. Id.

As the Supreme Court recognized in Moses H. Cone, most stay orders do

not operate to put the plaintiff effectively out of federal court. Id. at 10 n.11. If a

stay merely delays litigation and does not effectively terminate proceedings, it is

not considered a final decision. See, e.g., United States v. Section 17 Township

23 N., Range 22 E. of the IBM, Del. County, Okla., 40 F.3d 320, 322 (10th Cir.

1994) (holding that a stay order that merely postponed consideration of a civil

forfeiture action pending adjudication of related state criminal charges did not

constitute a final order); Pioneer Props., Inc. v. Martin, 776 F.2d 888, 890-91

(10th Cir. 1985) (holding that a stay pending arbitration was not a final order

because the plaintiff could return to federal court following the arbitrator’s

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decision). In In re Kozeny, for example, a two-judge panel of this court examined

a decision of the District of Colorado staying proceedings pending resolution of a

related lawsuit in London, England. 236 F.3d 615, 617 (10th Cir. 2000). 3 The

panel noted that even though the English court would resolve a central issue in

the case, the parties could eventually return to Colorado to litigate the remaining

issues and causes of action. Id. at 619. Because “termination of the London case

[would] not necessarily end the litigation in Colorado,” the panel concluded that

the decision of the district court was not final. Id.

Like the order at issue in Kozeny, the stay order in this case contemplates

an eventual return to federal court. The order requires plaintiffs to “first pursue

their claims” in the FCC and OCC, and then to “pursue any remaining Sherman

Act claims upon their return to this Court.” (emphasis added). This course of

action is consistent with the general purposes of the primary jurisdiction doctrine,

which is designed to allow an agency to pass on issues within its particular area

of expertise before returning jurisdiction to federal district court for final

3
Although both parties rely on In re Kozeny, 236 F.3d 615 (10th Cir. 2000),
in support of their respective arguments, they fail to note that the decision was
rendered by a two-judge motions panel and its precedential value is therefore
questionable. Cf. Homans v. City of Albuquerque, 366 F.3d 900, 904-05 (10th
Cir. 2004) (holding that the decision of a motions panel is not binding for
purposes of law of the case). Regardless of the precedential value of Kozeny,
however, this court finds its reasoning persuasive on the question whether the stay
order was final under § 1291.

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resolution of the case. See United States v. Phila. Nat’l Bank, 374 U.S. 321, 353

(1963) (noting that under the doctrine of primary jurisdiction, “[c]ourt jurisdiction

is not [] ousted, but only postponed”). Although the district court ordered the

proceeding “administratively close[d],” it is clear from the context of the order

that the court contemplated continued litigation after completion of the

administrative proceedings. See Corion Corp. v. Chen, 964 F.2d 55, 56-57 (1st

Cir. 1992) (holding that a district court’s order that a proceeding be

administratively closed pending arbitration was not equivalent to a final judgment

of dismissal); Quinn v. CGR, 828 F.2d 1463, 1465 (10th Cir. 1987) (concluding

that a district court’s order stating that the case is “ordered closed, to be reopened

upon a showing of good cause” was not a final decision because it contemplated

further proceedings in district court following arbitration).

The Third Circuit in Richman Brothers Records, Inc. v. U.S. Sprint

Communications Co., facing a similar set of facts, held that a district court’s

order staying proceedings and transferring certain issues to the FCC did not

constitute a final decision under § 1291. 953 F.2d 1431, 1446 (3d Cir. 1991). In

explaining its rationale, the Richman Brothers court distinguished cases where

federal courts abstain in deference to a state administrative body and thereby

completely relinquish federal jurisdiction. Id. at 1442. In cases of deference to

state agencies, appeal from the decision of the agency would be to the state court

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systems, and the case would be res judicata upon return to the federal court. Id.

In contrast, referral of a discrete issue to a federal agency under the doctrine of

primary jurisdiction leaves open the possibility of an eventual return to federal

court. Id. at 1444.

Like the order in Richman Brothers, the district court order in this case

referred issues to a federal agency without permanently relinquishing jurisdiction

over the cause of action. 4 Plaintiffs attempt to distinguish Richman Brothers on

the ground that the district court’s order in this case referred all plaintiffs’

“claims,” as opposed to merely discrete issues, to the FCC and OCC. Plaintiffs

reason that the district court’s decision was therefore a complete relinquishment

of jurisdiction over the case. This view gains some support in the Ninth Circuit’s

decision in United States v. General Dynamics Corp., 828 F.2d 1356 (9th Cir.

1987). The court in General Dynamics held that the referral by a district court of

a criminal case to a federal agency under the doctrine of primary jurisdiction

constituted a final judgment for purposes of § 1291. Id. at 1362. The court noted

4
Plaintiffs contend that the district court’s order was final at least as to
those issues referred to the OCC, because referring those issues to a state agency
constituted a relinquishment of federal jurisdiction. Even if plaintiffs are correct
that the order is final as to these issues, however, the case as a whole must be
final before an appeal can be taken to this court. See Dodge v. Cotter Corp., 328
F.3d 1212, 1221 (10th Cir. 2003) (“To be final, a decision must reflect the
termination of all matters as to all parties and causes of action.” (quotation
omitted)).

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that the issues referred to the agency were identical to those in the criminal case

and therefore “a decision adverse to the government in the collateral proceedings .

. . would [have] require[d] dismissal of the government’s criminal prosecution.”

Id. 5

Although the district court’s order does state that plaintiffs must submit

their “claims” to the FCC and OCC, viewing the order in context makes it clear

that the court actually intended to refer only particular issues to those agencies.

In the district court, the only issues that Southwestern Bell asserted fell within the

primary jurisdiction of the FCC were: (1) discriminatory delay or denial of access

line service requests, (2) facilitation of dial-around compensation, (3) misuse of

customer information, and (4) use of unreasonable demarcation points. The only

issue that Southwestern Bell asserted fell into the primary jurisdiction of the OCC

was the issue of restrictive long-term contracts with property owners. Both

As the court in Richman Brothers noted, a plaintiff in this situation is not
5

necessarily out of federal court because the plaintiff can appeal the agency
decision to one of the federal courts of appeals. Richman Bros. Records, Inc. v.
U.S. Sprint Communications Co., 953 F.2d 1431, 1443 (3d Cir. 1991). The court
in General Dynamics nevertheless found the finality requirement of § 1291
satisfied when “exclusive authority to review the agency’s determination [was]
granted to a court other than the referring district court.” United States v. Gen.
Dynamics Corp., 828 F.2d 1356, 1360 (9th Cir. 1987). Because the district
court’s order in this case refers only a subset of plaintiffs’ claims to the
administrative agencies, this court need not decide whether it would agree with
the Ninth Circuit that a complete referral of all material issues in a case to a
federal agency effectively puts a party out of court within the meaning of Moses
H. Cone.

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parties agree that these issues make up only a subset of plaintiffs’ claims, and the

district court’s order specifies that plaintiffs may pursue their remaining federal

antitrust claims following agency action. Furthermore, given that the FCC lacks

jurisdiction to decide plaintiffs’ Sherman Act claims, the only possible purpose of

the district court’s order was to gain the assistance of the FCC in interpreting

those regulations falling within its statutory authority. See United States v. Radio

Corp. of Am., 358 U.S. 334, 343-44 (1959). Viewing the order as a whole and in

context, it is therefore apparent that the district court did not intend to transfer the

entirety of the action to the agencies. See Richman Bros., 953 F.2d 1431, 1438-

40 (construing a district court’s order “transfer[ring] the action” to the FCC as

transferring only a discrete issue). 6

The district court’s order staying the case pending submission of certain

issues to the FCC and OCC therefore does not constitute a final decision as that

term is used in § 1291, and this court accordingly lacks jurisdiction under that

section.

6
This interpretation of the district court’s order is also consistent with the
usual course of action in primary jurisdiction cases, in which courts refer
particular issues to agencies but reserve final authority on the ultimate issue of
antitrust liability. See, e.g., Ricci v. Chi. Mercantile Exch., 409 U.S. 289, 305-06
(1973).

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 B. Collateral Order Doctrine

In Cohen v. Beneficial Industrial Loan Corp., the Supreme Court

recognized that interlocutory review of non-final decisions is warranted for a

“small class [of cases] which finally determine claims of right separable from,

and collateral to, rights asserted in the action, too important to be denied review

and too independent of the cause itself to require that appellate consideration be

deferred until the whole case is adjudicated.” 337 U.S. at 546. Plaintiffs contend

that, even if the decision of the district court is not final under § 1291, this court

has jurisdiction under Cohen’s collateral order exception.

“To establish jurisdiction under the collateral order doctrine, defendants

must establish that the district court’s order (1) conclusively determined the

disputed question, (2) resolved an important issue completely separate from the

merits of the case, and (3) is effectively unreviewable on appeal from a final

judgment.” Gray, 399 F.3d at 1245. These requirements are “stringent and apply

to only certain classes of cases.” Section 17 Township, 40 F.3d at 322. Because

this court determines that the district court’s order in this case did not resolve an

issue that was completely separate from the merits, it need not reach the other two

prongs of the collateral order test. Magic Circle Energy 1981–A Drilling

Program v. Lindsey (In re Magic Circle Energy Corp.), 889 F.2d 950, 954 (10th

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Cir. 1989) (noting that this court need not address all prongs of the test if any one

is not satisfied).

Under Cohen, appeals are not permitted, “even from fully consummated

decisions, where they are but steps toward final judgment.” Cohen, 337 U.S. at

546. The district court in Cohen denied the motion of the defendant in a diversity

action to require the plaintiff to post a bond covering the defendant’s reasonable

expenses incurred in defending the action, as required by New Jersey law. Id. at

543-45. The Supreme Court found jurisdiction for an appeal because the order

was merely collateral to the plaintiff’s cause of action. Id. at 546-47. The Court

emphasized that the issue of security was completely unrelated to the subject

matter of the litigation and therefore that the “order of the District Court did not

make any step toward final disposition of the merits of the case and will not be

merged in final judgment.” Id.

In contrast, the Court in Coopers & Lybrand v. Livesay held that a district

court’s denial of class certification was not an immediately appealable order

under Cohen, in part because the decision was too “enmeshed in the factual and

legal issues comprising the plaintiff’s cause of action.” 437 U.S. 463, 469 (1978)

(quotation omitted). The Court noted that several issues relevant to the district

court’s decision whether to certify a class pursuant to Federal Rule of Civil

Procedure 23, including the typicality of the claims, the adequacy of the

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representative, and the presence of common questions of law or fact, were closely

related to the merits of plaintiffs’ claims. Id. at 469 n.12. Similarly, the Court in

Van Cauwenberghe v. Biard held that a district court’s denial of a motion to

dismiss on grounds of forum non conveniens was not completely separate from the

merits. 486 U.S. 517, 527 (1988). The Court concluded that the district court’s

consideration of the motion required it to “scrutinize the substance of the dispute

between the parties.” Id. at 528. Because “the issues that arise in forum non

conveniens determinations [] substantially overlap[ped] factual and legal issues of

the underlying dispute,” the Court held the collateral order doctrine inapplicable.

Id. at 529.

The situation in this case is more similar to Coopers & Lybrand and Van

Cauwenberghe than to Cohen. The entire purpose of the primary jurisdiction

doctrine is to allow agencies to render opinions on issues underlying and related

to the cause of action. See United States v. W. Pac. R.R. Co., 352 U.S. 59, 63-64

(1956). Moreover, in order to determine whether the doctrine of primary

jurisdiction was implicated in this case, the district court was required to give

preliminary consideration to plaintiffs’ claims to determine the extent to which

they fell under the jurisdiction of the FCC and OCC. See Delta Traffic Serv., Inc.

v. Occidental Chem. Corp., 846 F.2d 911, 914 (3d Cir. 1988) (“Only after [the

district court] had ascertained the nature of the claim and related defenses could it

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know whether it needed to request the expert and specialized knowledge of the

[agency] as a preliminary step in the resolution of this matter.” (quotation

omitted)). In particular, the district court’s decision whether to invoke primary

jurisdiction required it to consider whether the issues of fact in the case: (1) are

not within the conventional experience of judges; (2) require the exercise of

administrative discretion; or (3) require uniformity and consistency in the

regulation of the business entrusted to a particular agency. See Marshall v. El

Paso Natural Gas Co., 874 F.2d 1373, 1377 (10th Cir. 1989). These issues are all

highly dependent on the specific allegations in plaintiffs’ complaint and required

the district court to examine factual and legal issues underlying the dispute. The

parties’ briefs on appeal, filled with detailed factual and legal arguments

regarding plaintiffs’ claims, further underscore the impropriety of reviewing the

district court’s stay order prior to final judgment.

Because the issues involved in a determination of primary jurisdiction are

“inextricably bound up” with a determination of the merits, the Third Circuit in

Richman Brothers held that an order staying proceedings and referring certain

issues to the FCC was not an immediately appealable collateral order. 953 F.2d at

1447. Other courts, in examining the denial of motions to stay proceedings and

refer issues to an administrative agency, have come to the same conclusion. See

Delta Traffic Serv., Inc., 846 F.2d at 914 (holding that the question of referral to

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a federal agency “was not separate from the merits of the action, but involved

considerations that were enmeshed in the factual and legal issues comprising the

plaintiffs’ cause of action.” (quotation and alteration omitted)); see also Feldspar

Trucking Co. v. Greater Atlanta Shippers Ass’n, 849 F.2d 1389, 1392 (11th Cir.

1988); Thill Sec. Corp. v. N.Y. Stock Exch., 469 F.2d 14, 16 (7th Cir. 1972). This

court is persuaded by the reasoning of these courts and holds that the district

court’s order staying the case pending submission of plaintiffs’ claims to federal

and state agencies is not an immediately appealable collateral order. 7 A district

court’s determination of whether to invoke the primary jurisdiction doctrine is not

sufficiently separable from the cause of action to qualify for interlocutory review.

Accordingly, this court lacks jurisdiction to review the stay order in this case.

V. CONCLUSION

Because the district court’s stay order was neither a final decision nor an

appealable collateral order, this court DISMISSES the appeal for lack of

jurisdiction.

7
With little analysis, the Fifth Circuit in Litton Systems, Inc. v.
Southwestern Bell Telephone Co. held that a district court’s referral under the
doctrine of primary jurisdiction to several state agencies was an immediately
appealable order. 539 F.2d 418, 427 (5th Cir. 1976). In light of the convincing
reasoning in Richman Brothers and the other cases to consider the question, this
court is unpersuaded by Litton Systems and declines to apply it in this case.

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