Ton Services, Inc. v. Qwest Corp.

F I L E D
United States Court of Appeals
Tenth Circuit
PUBLISH
July 23, 2007
UNITED STATES CO URT O F APPEALS Elisabeth A. Shumaker
Clerk of Court
TENTH CIRCUIT

TON SERVICES, INC., a Utah
corporation,

Plaintiff-Appellant,
v. No. 06-4052
QW EST CORPO RATION, a Colorado
corporation,

Defendant-Appellee.

A PPE AL FR OM T HE UNITED STATES DISTRICT COURT
FOR T HE DISTRICT OF UTAH
(D.C. NO . 1:04-CV-35-TS)

Floyd A. Jensen, Floyd Andrew Jensen PLLC, Salt Lake City, Utah, for Plaintiff-
Appellant.

David A. Vogel (Douglas P. Lobel with him on the brief), Cooley Godward LLP,
Reston, Virginia, for Defendant-Appellee.

Before L UC ER O and M U RPH Y, Circuit Judges, and R OBIN SO N, * District
Judge.

M U RPH Y, Circuit Judge.

*
The Honorable Julie A. Robinson, District Judge, United States District
Court of the District of Kansas, sitting by designation.
I. IN TR OD UC TIO N

The current action is one of a number of pending judicial and

administrative actions raising the question whether incumbent local exchange

carriers (“LECs”) generally, and the former Bell Operating Companies (“BOCs”)

in particular, are required to provide refunds to independent payphone service

providers (“PSPs”) for noncompliance with the anti-discrimination and anti-

subsidization requirements in 47 U.S.C. § 276(a) and Federal Communication

Commission (“FCC” or “Commission”) orders implementing § 276. 1

1
The Ninth Circuit recently addressed this issue in Davel Com munications,
Inc. v. Qwest Corp., 460 F.3d 1075 (9th Cir. 2006). The Davel court determined
the issue’s resolution turned on the Commission’s interpretation of a 1997 FCC
order [hereinafter “W aiver/Refund Order”]. Id. at 1089–90. The Davel court
invoked the primary jurisdiction doctrine and referred interpretation of the 1997
order to the FCC. Id. That action is now pending before the Commission. In re
Implementation of Pay Telephone Reclassification and Compensation Provisions
of the Telecommunications Act of 1996, Petition of Davel Communications, Inc.,
et. al for Declaratory Ruling, CC Docket No. 96-128 (filed Sept. 11, 2006)
(“Davel Petition”), available at http://svartifoss2.fcc.gov/prod/ecfs/retrieve.cgi?
native_or_pdf=pdf& id_document=6518461589.
The Davel Petition is just one of several related actions awaiting
Commission consideration under Common Carrier Bureau Docket Number 96-
128, entitled “In the M atter of the Implementation of Pay Telephone
Reclassification and Compensation Provisions of the Telecommunications Act of
1996.” See New England Public Communications Council, Inc., Filing of Letter
from Supreme Judicial Court of M assachusetts Regarding Implementation of the
Pay Telephone Compensation Provisions of the Telecommunications Act of 1996,
Notice, 21 F.C.C.R. 3519, 3519 & n.3 (2006) (stating that the New England
Public Communications Council requests resolution of public access line refund
availability per primary jurisdiction referral from the Supreme Judicial Court of
M assachusetts and explaining that the court’s request w ill be considered in
conjunction with four pending petitions for declaratory rulings from the Illinois
Public Telecommunications Association, the Southern Public Communication
(continued...)

-2-
 Plaintiff TO N Services, Inc. (“TO N”) is a Utah-based PSP w hich owns and

operates payphones in more than thirteen states. TON filed suit against Qwest

Corporation (“Qwest”) for violations of the Telecommunications Act of 1996

(“A ct”). 2 Qwest provides public access line (“PAL”) services to TON in Q west’s

role as an LEC. 3 Qwest also operates its own payphones in the same region as

TON, making TON both a customer of Qwest and one of its competitors.

1
(...continued)
Association, and the Independent Payphone Association for New York, all filed in
2004, and the Florida Public Telecommunications Association, filed in January
2006). The Illinois Public Telecommunications Association recently petitioned
the United States Supreme Court for certiorari on the issue of availability of
refunds for noncompliance with § 276, but the petition was denied. Ill. Pub.
Telecomms. Ass’n v. Illinois Commerce Comm’n, 127 S.Ct. 1254 (2007).
A more fact-intensive inquiry involving issues similar to those in the
instant case is also pending before the FCC. See Pleading Cycle Established for
M ichigan Pay Telephone Association Petition for Declaratory Ruling, Notice, 21
F.C.C.R. 6289, 2006 W L 1519441 (2006).
2
Qwest is a successor to the telecommunications company U.S. W est
Communications. See Qwest Corp. v. AT&T Corp., 479 F.3d 1206, 1208 (10th
Cir. 2007). U.S. W est Communications was one of the BOCs formed in the wake
of the breakup of AT& T in 1982. See 47 U.S.C. § 153(3), (4). As a successor to
U.S. W est, Qwest is thus subject to the regulations Congress imposed on BOCs in
its 1996 overhaul of telecommunications law and regulation. Id. § 153(4)(B).
Although some of the allegations of unlawfulness in TON’s complaint occurred
while Qwest was operating as U.S. W est, this opinion refers at all times to the
Defendant-Appellee as “Qwest” for ease of identification.
3
PA Ls connect payphones to the public switched telephone network and
enable payphone users to make local and long distance intrastate and interstate
telephone calls. The PAL tariffs at issue in this case involve those for intrastate
calls.
LECs “originate, transmit, and terminate telephone communications to
customers within a given geographic calling area.” Qwest Corp., 479 F.3d at
1208.

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 In the district court, TON alleged Qwest’s failure to file tariffs and

supporting cost data for the PA L services Qwest provided to TON, and the PAL

rates Qwest charged TON from April 1997 through April 2002, violated the anti-

discrimination and anti-subsidization provisions of 47 U.S.C. § 276(a). TON

further alleged Qwest’s actions violated not only § 276(a), but also § 201(b),

which declares unlawful a common carrier’s unreasonable and unjust practices,

and § 416(c), which creates an obligation to obey FCC orders. Qwest moved

under Rule 12(b)(6) to dismiss TON’s complaint and, pursuant to the doctrine of

primary jurisdiction, asked the district court to refer TON’s claims to state

regulatory agencies. The district court concluded that, absent an initial

administrative ruling that Qwest’s filed rates from 1997 to 2002 were unlaw ful,

the filed rate doctrine barred the relief TO N sought. The court invoked the

primary jurisdiction doctrine and dismissed TON’s complaint w ithout prejudice.

TON moved the court to reconsider or to alter or amend the judgment. It

specifically asked the court to stay its claims pending a primary jurisdiction

referral to the FCC rather than dismissing its complaint. The court denied TON’s

motion.

This court takes jurisdiction of TO N’s appeal pursuant to 28

U.S.C. § 1291. 4 W e conclude the district court misconstrued the nature of TON’s

4
The district court stated it was dismissing TON’s “complaint,” but the
record clearly indicates the court was dismissing TON’s entire action. The
(continued...)

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claims and that, although a primary jurisdiction referral is appropriate, the district

court’s dismissal of TON’s action was an abuse of the court’s discretion. This

court, therefore, vacates the district court’s dismissal of TO N’s complaint and

remands TON’s action to the district court for further proceedings consistent

with this opinion.

II. B AC KGR OU N D

A. Statutory and Regulatory Background

An understanding of the applicable federal statutes and regulations and

their background is required to properly assess TON’s claims and the district

court’s disposition of TO N’s action. 5

1. The 1996 Telecom munications Act and the FCC’s Payphone O rders

The telecommunications industry is regulated by Chapter 5 of the Federal

Communications Act of 1934, as amended by the Telecommunications Act of

1996, codified at 47 U.S.C. § 151 et seq. Prior to 1996, LECs, which owned

payphone lines used by all PSPs, routinely subsidized and discriminated in favor

of their own payphone services. See New Eng. Pub. Commc’ns Council, Inc. v.

4
(...continued)
court’s dismissal without prejudice is, therefore, a final, appealable order under
this court’s “practical approach.” See, e.g., M oya v. Schollenbarger, 465 F.3d
444, 449–51 (10th Cir. 2006) (quotation omitted).
5
The developments in federal telecommunications law relevant to this
appeal were recently summarized in Davel, a case involving claims nearly
identical to those here. See Davel Commc’ns, 460 F.3d at 1081–83.

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FCC, 334 F.3d 69, 71 (D .C. Cir. 2003). In 1996, in an effort to increase

competition in the payphone industry and ensure widespread access to payphones,

Congress prohibited BOCs from subsidizing their own payphone services w ith

revenues from their other operations and from discriminating in favor of their

own payphone services. See 47 U.S.C. § 276(b), (a). 6 Section 276(a) reflects

congressional intent to “replace a state-regulated monopoly system w ith a

federally facilitated, competitive market.” New Eng. Pub. Commc’ns Council,

334 F.3d at 77. In § 276(b)(1)(C), Congress directed the FCC to adopt

nonstructural safeguards to implement § 276(a) by preventing BOCs from cross-

subsidization of their payphone services. “In essence, a BOC must place its ow n

payphones on equal footing with those that PSPs operate, and it must not obtain a

profit from PSP payphones.” Nw. Pub. Commc’ns Council v. Pub. Util. Comm’n,

100 P.3d 776, 779 (Or. Ct. App. 2004) (W olheim, J., concurring). The

instrument the FCC chose to implement § 276(b)(1)(C) is the so-called “New

Services Test” (“NST”), which mandates that tariff rates should be based solely

on a carrier’s overhead costs. See 47 C.F.R. § 61.49(g)(2). 7

6
Section 276(a) states that, after the effective date of FCC rules
promulgated pursuant to § 276(b), “any Bell operating company that provides
payphone service— (1) shall not subsidize its payphone service directly or
indirectly from its telephone exchange service operations or its exchange access
operations; and (2) shall not prefer or discriminate in favor of its payphone
service.”
7
The regulation at 47 C.F.R. § 61.49(g)(2) states, “Each tariff filing
(continued...)

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 The FCC explained the process by which LECs should demonstrate NST

compliance in a series of orders known collectively as the “Payphone Orders,”

issued under Common Carrier Bureau Docket Number 96-128, entitled “In the

M atter of Implementation of Pay Telephone Reclassification and Compensation

Provisions of the Telecommunications Act of 1996.” See Davel Commc’ns, Inc.

v. Qwest Corp., 460 F.3d 1075, 1081 (9th Cir. 2006); New Eng. Pub. Commc’ns

Council, 334 F.3d at 71–72. A lthough the FCC’s initial order directed all PAL

tariffs to be filed with the FCC itself, 11 F.C.C.R. 20541, 20614–16 ¶¶ 146–48,

1996 W L 547458 (1996) (“Initial Payphone Order”), its Order on Reconsideration

directed LECs to file their intrastate payphone tariffs w ith state utility

comm issions. 11 F.C.C.R. 21233, 21307–08 ¶¶ 162–163, 1996 W L 658824

(1996) (“Order on Reconsideration”).

In the O rder on Reconsideration, the C ommission explained more

thoroughly the application of the NST. It indicated states should evaluate LECs’

7
(...continued)
submitted by a local exchange carrier . . . that introduces a new service or a
restructured unbundled basic service element (BSE) . . . must be accompanied by
cost data sufficient to establish that the new service or unbundled BSE will not
recover more than a reasonable portion of the carrier’s overhead costs.”
The FCC ultimately clarified that, in the context of PAL tariffs, the NST
requires a forward-looking, cost-based methodology that prohibits BOCs from
charging “more for payphone line service than is necessary to recover from PSPs
all monthly recurring direct and overhead costs incurred by BOCs in providing
payphone lines.” In re Wisconsin Public Service Com mission, Order Directing
Filings, 17 F.C.C.R. 2051, 2069 ¶ 60, 2002 W L 122570 (2002) (“New Services
Test O rder”).

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PA L tariffs to ensure they were “(1) cost-based; (2) consistent with the

requirements of Section 276 with regard, for example, to the removal of subsidies

from exchange and exchange access services; and (3) nondiscriminatory.” Id. at

21308 ¶ 163. All tariffs were required to be filed by January 15, 1997, and

effective by April 15, 1997. Id. The FCC clarified that the tariff filings w ere to

be accompanied by supporting cost data as provided for in 47 C.F.R. §

61.49(g)(2). See id. at 21308 ¶ 163 & n.492. The Commission further provided

that, where LECs had already filed intrastate tariffs for PA L rates and other

unbundled services, the states were permitted, “after considering the requirements

of this order, [to] conclude: 1) that existing tariffs are consistent with the [Initial

Payphone] report and order as revised herein; and 2) that in such case no further

filings are required.” Id. at 21308. 8 Finally, the Commission explicitly retained

jurisdiction over intrastate tariffs in the event a state was “unable” to review

intrastate tariffs for N ST compliance. Id. at 21308 ¶ 163.

In a separate section of the Order on Reconsideration, the FCC addressed

the special requirements an LEC must satisfy to recover costs for connecting calls

8
The Commission later determined the scope of the Order on
Reconsideration was too broad and that, by statute, it was only authorized to
require BOCs, rather than all LECs, to file NST-compliant PAL tariffs. See New
Services Test Order, 17 F.C.C.R. at 2060–61 ¶ 31. Because Qwest is a BOC, the
narrow ing of the filing requirements had no effect on Q west’s obligations.

-8-
from its payphones to long distance service providers. 9 Id. at 21293 ¶ 131. To

promote compliance with the requirements of paragraph 163, the Commission

ordered that an LEC which itself owns and operates payphones would not be

permitted to recover “per-call compensation” (also frequently referred to as “dial-

around compensation”) for allowing calls from its payphones to be connected to

long distance carriers until the LEC was able to certify it had completed

paragraph 163’s requirements for implementing the § 276 regulatory scheme. Id.

at 21293 ¶ 131. As part of its certification obligation, an LEC would have to

certify its tariff rates were NST compliant, i.e., that they “reflect[ed] the removal

of charges that recover the costs of payphones and any intrastate subsidies.” Id.

A further order issued by the Common Carrier Bureau of the FCC eleven days

prior to the April 15, 1997, effective date for N ST-compliant tariffs again

emphasized the link between NST compliance and an LEC’s qualification to

recover per-call compensation. See 12 F.C.C.R. 20997, 21011 ¶¶ 29–30, 1997

W L 159904 (1997) (“Bureau Waiver Order”) (emphasizing that BOCs must meet

the Order on Reconsideration’s state tariffing requirements before being eligible

to receive per-call payphone compensation).

9
All payphone providers are entitled to compensation from long distance
carriers for connecting payphone customers to the long distance carrier of the
customer’s choice. See 47 U.S.C. § 276(b)(1)(A); 47 C.F.R. § 64.1300.

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2. BOC Waiver Request and the FCC’s Waiver/Refund Order

On April 10, 1997, five days before NST-compliant intrastate PAL tariff

rates were to be effective, the coalition of Regional Bell Operating Companies

(“RBOC Coalition”) asked the FCC to delay the effective date for NST-compliant

intrastate tariffs for forty-five days. The RBOC Coalition’s letter stated the

BOCs had not previously understood the Payphone Orders to require that rates for

existing, previously tariffed intrastate payphone services had to comply with the

NST. The RBOC Coalition requested an extension until M ay 19, 1997, to file

new, NST-compliant tariffs in states where existing tariffs were not NST

compliant, but asked to be allowed to begin collecting per-call compensation as

scheduled on April 15. In exchange for the ability to receive per-call

compensation as scheduled, the BOCs volunteered to reimburse or credit PSPs in

states w here the new , NST-compliant rate w as lower than the prior tariff rate. In

a follow-up letter on April 11, 1997, the RBOC Coalition explained, “The waiver

will allow LECs . . . to gather the relevant cost information and either be prepared

to certify that the existing tariffs satisfy the costing standards of the “new

services” test or to file new or revised tariffs that do satisfy those standards.”

The FCC approved the RBOC Coalition’s request for a waiver in an April

15, 1997, order. 12 F.C.C.R. 21370, 21379 ¶ 19, 1997 W L 180285 (1997)

(“W aiver/Refund Order”). In its W aiver/Refund Order, the Commission granted

LECs a “limited waiver” until M ay 19, 1997, to “enable[] LECs to file intrastate

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tariffs consistent with the ‘new services’ test of the federal guidelines detailed in

the Order on Reconsideration and the Bureau Waiver Order, including cost

support data.” Id. at 21370–71 ¶ 2 (footnote omitted). Under the W aiver/Refund

Order, an LEC would “remain eligible to receive [per-call] payphone

compensation on April 15, 1997” provided it was able to certify it had met all the

other prerequisites set out in paragraph 131 of the Order on Reconsideration. Id.

at 21371 ¶ 2. The Commission indicated, however, “A LEC who seeks to rely on

the waiver granted in the instant Order must reimburse its customers or provide

credit from April 15, 1997 in situations where the newly tariffed rates, when

effective, are lower than the existing tariffed rates.” Id. Finally, the Commission

specified, “The existing intrastate payphone service tariffs will continue in effect

until the intrastate tariffs filed pursuant to this Order become effective.” Id. at

21379 ¶ 19.

The Commission ordered the states to “act on the tariffs filed pursuant to

this Order within a reasonable period of time,” id. at 21379 ¶ 19 n.60, but was

silent as to whether the LECs, PSPs, or the Commission itself should take action

if the states failed to conduct the inquiry required by the Payphone Orders and

was similarly silent on a suggested process for regulators or PSPs to follow if

LECs failed to submit the required tariffs and supporting documentation.

-11-
3. Other FCC Orders

Several other FCC orders provide guidance about BOCs’ obligations in

complying with the FCC’s NST requirements. These orders make clear the

Commission’s intention that LEC s are to bear the burden of demonstrating NST

compliance to regulators and illuminate the difference between the per-call

compensation “certification” requirement and the burden of demonstrating actual

NST compliance.

As to the burden placed on LECs to demonstrate NST compliance, in 2000,

after the W isconsin Public Service Commission declined jurisdiction to consider

whether four W isconsin LECs’ tariffs were NST compliant, the FCC’s Common

Carrier Bureau invoked its own jurisdiction under § 276 to ensure the LECs’

compliance. See In re Wisconsin Public Service Com mission, 15 F.C.C.R. 9978,

9980 ¶ 5, 2000 W L 232182 (2000) (“Bureau Wisconsin Order”). The Common

Carrier Bureau required the LECs to submit “a copy of a tariff and supporting

information.” Id. at 9981 ¶ 7. Each LEC subject to the Bureau Wisconsin Order

was instructed to “submit complete cost studies with full documentation” for each

rate element. Id. The Order stated “[t]o satisfy the new services test, an

incumbent LEC filing payphone line rates must demonstrate that the proposed

rates do not recover more than the direct costs of the service plus a ‘just and

reasonable portion of the carrier’s overhead costs.’” Id. at 9981 ¶ 9 (quoting 47

C.F.R. § 61.49(f)(2)) (emphasis added). It further specified, “[i]n determining a

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just and reasonable portion of overhead costs to be attributed to services offered

to competitors, the LEC must justify the methodology used to determine such

overhead costs.” 10 Id. at 9982 ¶ 11 (emphasis added).

Upon reconsideration of the Bureau Wisconsin Order, the FCC determined

it could require NST compliance only of BOCs rather than all LECs. See In re

Wisconsin Public Service Com mission, Order Directing Filings, 17 F.C.C.R. 2051,

2060–61 ¶ 31 2002 W L 122570 (2002) (“New Services Test Order”). As to the

BOCs, however, the FCC endorsed the Common Carrier Bureau’s language

regarding the burden of demonstrating NST compliance. Id. at 2069 ¶ 58

(“Consistent with Commission precedent, the BOCs bear the burden of justifying

their overhead allocations for payphone services and demonstrating compliance

with our standards.”); see also Nw. Pub. Commc’ns Council, 100 P.3d at 781

(Wollheim, J., concurring) (stating that, under the N ST, BOCs “must

affirmatively justify their overhead allocations”). Unlike the Bureau W isconsin

Order, which explicitly applied only to the four W isconsin LECs named in the

10
Although the Bureau W isconsin Order applied only to the W isconsin
LECs specifically identified in the Order, 15 F.C.C.R. 9978, 9982 ¶ 13, 2000 W L
232182 (2000), the language is indicative of the Commission’s understanding of
how its regulations should be interpreted to ensure BOC compliance with 47
U.S.C. § 276(a).
Notably, U.S. W est Communications was a member of the coalition
requesting a stay of the Bureau W isconsin Order. See LEC Coalition Files
Petition for Stay and Application for Review, Public Notice, 15 F.C.C.R. 6238,
2000 W L 369637 (2000). Presumably, then, U.S. W est was familiar with the
supporting data the Commission expected LECs to provide to state commissions
in support of their intrastate tariff rates.

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Order, 15 F.C.C.R. at 9982 ¶ 13, the New Services Test O rder was intended to

apply to BOCs generally. New Services Test O rder, 17 F.C.C.R. at 2151 ¶ 2; see

also New Eng. Pub. Commc’ns Council, 334 F.3d at 75 (stating the New Services

Test Order “establishes a rule that affects payphone line rates in every state”).

A separate line of FCC adjudicatory orders distinguishes the relatively easy

process of LEC “certification” for the purposes of receiving per-call

compensation, referenced in the Order on Reconsideration, 11 F.C.C.R. at 21293

¶ 131, from the far more burdensome process of ensuring actual NST compliance,

mandated in the Order on Reconsideration’s paragraph 163. In In re Bell

Atlantic-Delaware v. Frontier Communications Services, Inc., M em. Op. and

Order, 17 Commc’ns Reg. 955, 1999 W L 754402 (1999), the FCC declared the

term “certification” meant that an LEC seeking per-call compensation from a long

distance carrier had only to “attest[] authoritatively” that it had met the

requirements set out in paragraph 131. Id. at ¶ 3. Certification, the Commission

said, did not require LECs to provide a data-based demonstration of compliance

to long distance carriers. Id. 11 The Commission explained, however, that “a

11
The Bell Atlantic-Delaware adjudication, In re Bell Atlantic-Delaware v.
Frontier Commc’ns Servs., Inc., M em. Op. and Order, 17 Commc’ns Reg. 955,
1999 W L 754402 (1999), merely reiterated the distinction made in the
W aiver/Refund Order, which had specified that certification only involved an
understanding between the LEC and the long distance carrier from which it
sought compensation and did not involve any certification to be filed with the
FCC, see 12 F.C.C.R. at 21380 ¶ 22, whereas NST-compliant intrastate tariffs had
to be approved by state regulators, see id. at 21379 ¶ 18, 21381 ¶ 23.

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LEC’s certification letter does not substitute for the LEC’s obligation to comply

with the requirements as set forth in the Payphone O rders.” Id. at ¶ 28. It

reiterated that “[d]etermination of the LEC’s compliance [with the Payphone

Orders] . . . is a function solely within the Commission’s and the state’s

jurisdiction,” id., thereby implicitly emphasizing the difference between per-call

compensation “certification” and the process of obtaining approval of NST-

compliant tariff rates. See also In re Am eritech Ill. v. M CI Telecomms. Corp.,

M em. Op. and Order, 1999 W L 1005080 at ¶ 19 (1999) (determining two letters

submitted by U.S. W est to long distance carrier M CI certifying U.S. W est’s

compliance with paragraph 163 of the Order on Reconsideration satisfied U.S.

W est’s certification obligations under paragraph 131 and the Bell Atlantic-

Delaware adjudication’s articulation of those obligations).

B. Factual Background

At the heart of TON’s complaint is the allegation that, from April 1997 to

April 2002, Qwest failed to file new intrastate PAL tariffs with state regulatory

comm issions and also failed to file cost data supporting the rates in its existing

tariffs as required by 47 C.F.R. § 61.49(g)(2) and the FCC’s Order on

Reconsideration and W aiver/Refund Order. TON alleges that once Qwest filed

new tariffs in April 2002, its new PAL rates were “substantially lower” than its

prior rates, giving rise to the inference that TO N’s prior rates were not NST

compliant and triggering Qwest’s duty to pay refunds under the terms of the

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W aiver/Refund Order. TON contends Qwest’s actions violated § 276(a), the

Act’s requirement that BOCs may not subsidize or discriminate in favor of their

own payphone services; § 201(b), the provision declaring unlawful any unjust or

unreasonable practice by a common carrier; and § 416(c), which declares it the

duty of all persons to comply with FCC orders. 12 Because it alleges Qwest failed

to act in accordance with provisions of the Act, TON claims it is entitled to bring

an action for damages in federal court. See 47 U.S.C. §§ 206 (damages) and 207

(election of forum either in FCC or federal court).

Qwest filed a motion to dismiss, claiming the filed rate doctrine, the

prohibition on retroactive ratemaking, the primary jurisdiction doctrine, and the

statute of limitations barred TON’s ability to proceed in federal court. Qwest’s

basic argument to the district court was that the regulatory agencies in each of the

states in which Qwest’s tariffs w ere to be filed were in the best position to

determine whether Qwest’s pre-2002 rates were “reasonable.” A

“reasonableness” review, Qwest alleged, is the only review to which TO N was

entitled because the filed rate doctrine precludes the payment of refunds on filed

tariffs unless such tariffs are declared to be unreasonable and unlawful. Qwest

urged the district court to resist adjudicating the “threshold issue in the law suit –

12
TON’s complaint also includes state common law unjust enrichment,
third-party beneficiary contract, and conversion claims based on the facts
underlying its federal claims, as w ell as a federal claim based on Qwest’s failure
to file fraud protection service tariffs and related cost studies with the FCC.
Neither party addresses these ancillary claims on appeal.

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whether Qwest’s tariffed rates were consistent with applicable regulations”

because, under the primary jurisdiction doctrine, that issue falls within the

“exclusive province” of administrative agencies.

TON, in response, contended it was not challenging the reasonableness of

Qw est’s rates, but was instead challenging Qw est’s unlawful failure to file NST-

compliant rates or supporting documentation and Qwest’s failure to pay refunds

under the Waiver/R efund O rder once it filed NST-compliant rates in 2002. TON

then provided several reasons for the inapplicability of the filed rate doctrine.

TON further argued referral to state agencies or the FCC was unnecessary

because it sought relief for Qwest’s failure to file required rates and cost data, an

issue which a federal court is equipped to adjudicate and which does not involve

agency expertise or policymaking discretion. TON also claimed the calculation of

damages would require no special expertise.

In the event of a primary jurisdiction referral, however, TON requested the

court stay rather than dismiss its case because of its concern that the statute of

limitations might bar refiling the case with the FCC and because dismissal would

deny TO N its right to a judicial forum as provided by § 207. Finally, TON

refuted Qwest’s allegations that the two-year statute of limitations pursuant to

§ 415(b) barred its claims by asserting it could not have discovered Qwest’s pre-

April 2002 rates were noncompliant until Q west filed its new rates in April 2002.

As to the relief due to TON under the W aiver/Refund Order, TON argued Qwest’s

-17-
reading of the Order, which would have restricted any claim to refunds to the

forty-five day period between April 15, 1997, and M ay 19, 1997, would be a

“strained reading” that is inconsistent with the purposes of § 276(a).

W hen ruling on Qwest’s motion to dismiss, the district court labeled the

parties’ “chief dispute” as whether “TO N’s complaint allege[d] improper conduct

by Qwest or whether TON is challenging the tariffed rates charged by Qwest from

1997 to 2002.” W ithout making a threshold determination as to whether Qwest’s

conduct was unlawful, the court accepted Q west’s characterization of TON’s

complaint and concluded TO N was essentially challenging the reasonableness and

lawfulness of Qwest’s tariffed rates. The district court stated that the question

“whether these rates and associated tariffs comply with the [FCC] regulations is a

question within the primary jurisdiction of state public service or regulatory

commissions or the Federal Communications Commission.” The district court

also concluded the filed rate (or “filed tariff”) doctrine barred the relief TON

sought. As a result of its conclusion regarding the agency’s primary jurisdiction,

the court dismissed TO N’s action without prejudice.

TON moved the court to reconsider dismissal of its complaint. It argued

that if referral to the FCC was required, the court should have stayed the federal

court litigation in order to preserve TO N’s right to elect a federal court forum

under § 207 and avoid a potential statute-of-limitations challenge by Qwest. It

also argued the court could simply stay the litigation pending the FCC’s

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resolution of similar claims already under Commission consideration. Qwest, in

response, contended that FCC orders directed payphone providers to challenge

PAL rates before state regulatory agencies and, therefore, any unfair prejudice to

TON based on the district court’s dismissal was of its own making.

The district court denied TON’s motion to reconsider, again stating its

decision to invoke the doctrine of primary jurisdiction and dismiss without

prejudice. It explained TO N could always seek judicial review of the FCC’s final

order should TON decide to pursue its administrative remedies before the

Commission. W ithout addressing TON’s argument regarding the statute of

limitations under § 415(b) or its election-of-forum argument under § 207, the

court concluded TON would not be unfairly disadvantaged by dismissal.

TON filed an appeal in this court, raising the same arguments it made to the

district court regarding the nature of its claims, the inapplicability of the filed rate

and primary jurisdiction doctrines, and the prejudice it will suffer from the

dismissal of its claims. TON also filed a motion to stay its appeal pending agency

action.

III. D ISC USSIO N

A. Standard of Review

This court reviews de novo the district court’s dismissal of a plaintiff’s

complaint on a Rule 12(b)(6) motion. Prior to the Supreme Court’s recent

decision in Bell Atlantic Corp. v. Twombly, 127 S.Ct. 1955, 1974 (2007), we

-19-
review ed the sufficiency of a complaint de novo and upheld dismissal only when

it appeared the plaintiff could prove no set of facts in support of the claims that

would entitle him to relief. Coosewoon v. M eridian Oil Co., 25 F.3d 920, 924

(10th Cir. 1994). In Bell Atlantic, the Supreme Court articulated a new

“plausibility” standard under which a complaint must include “enough facts to

state a claim to relief that is plausible on its face.” 127 S. Ct. at 194; see also

Alvarado v. KO B-TV, LLC, 2007 W L 2019752 at *3 (10th Cir. July 13, 2007)

(“W e look for plausibility in th[e] complaint.”). 13 Under either standard, all well-

pleaded factual allegations are accepted as true and construed in the light most

favorable to the plaintiff. Alvarado, 2007 W L 2019752 at *3. For the reasons

discussed below , TON satisfies its burden under either the older “no set of facts”

standard or the new “plausibility” standard. As a consequence, we need not

address here the potential distinctions betw een the tw o standards.

B. Filed Rate Doctrine

The federal filed rate doctrine, codified at 47 U.S.C. § 203, is a central

tenet of telecommunications law . 14 See M CI Telecomms. Corp. v. Am. Tel. & Tel.

13
In Erickson v. Pardus, 127 S. Ct. 2197, 2200 (2007), a case decided
shortly after Bell Atlantic, the Supreme Court indicated that, even under the new
“plausibility” regime, a complaint need not provide “specific facts” but need only
“give the defendant fair notice of what the . . . claim is and the grounds upon
which it rests.” (quotation omitted).
14
Each state in w hich TON operates payphones has a similar statutory
provision. See, e.g., Utah Code Ann. § 54-3-7. State filed rate doctrines are,
(continued...)

-20-
Co., 512 U.S. 218, 229–30 (1994). The doctrine generally requires that providers

of services in regulated industries, such as the communications and shipping

industries, adhere to tariffs approved by and filed with the regulatory agency

overseeing the industry. See Ark. La. Gas Co. v. Hall, 453 U.S. 571, 577 (1981);

Davel Commc’ns, 460 F.3d at 1084. In the telecommunications context, the

doctrine provides that “once a carrier’s tariff is approved by the FCC [or an

appropriate state agency], the terms of the federal tariff are considered to be the

law and therefore conclusively and exclusively enumerate the rights and liabilities

as between the carrier and the customer.” Davel Commc’ns, 460 F.3d at 1084

(quotations omitted). In order to prevent price discrimination and preserve

agencies’ exclusive role in ratemaking, courts have no power to adjudicate claims

which would “invalidate, alter, or add to the terms of the filed tariff.” Davel

Commc’ns, 460 F.3d at 1084 (quotation omitted); see Hill v. BellSouth

Telecomms., Inc., 364 F.3d 1308, 1316 (11th Cir. 2004) (discussing the rationale

for the doctrine).

As the Davel court explained, however, “[T]he filed-rate doctrine does not

bar a suit to enforce a command of the very regulatory statute giving rise to the

tariff-filing requirement, even where the effect of enforcement [i.e., the remedy

TON seeks under 47 U.S.C. § 206] would be to change the filed tariff.” Id. at

14
(...continued)
however, preempted by 47 U.S.C. § 276(c).

-21-
1085. In the context of the Interstate Commerce Act, the statute upon which the

comm on carrier provisions of the 1934 Communications Act were modeled and

from which the filed rate doctrine in the telecommunications context derives, see

Am. Tel. & Tel. Co. v. Cent. Office Tel., Inc., 524 U.S. 214, 222 (1998), the

failure to file a required tariff has been held to defeat the application of the filed

rate doctrine. See Rushton v. Am. Pac. Wood Prods., Inc. (In re Am ericana

Expressways, Inc.), 133 F.3d 752, 757–58 (10th Cir. 1997) (failure to file new

tariffs or adopt existing tariffs foreclosed bankruptcy trustee’s undercharge suit

against a shipper (citing M acLeod, Trustee for BGR Transp. Inc. v. ICC, 54 F.3d

888, 890 (D.C. Cir. 1995))). Qwest provides no compelling reason why the

failure to file required tariffs or cost support data should not apply with equal

force here.

In this case, TON alleges and provides a factual basis for its allegations

that (1) Q west failed to timely file tariffs and supporting cost data w ith state

regulators, (2) such failures precluded regulators from determining Qwest’s NST

compliance, and (3) under the W aiver/Refund Order, TON was entitled to refunds

once NST-compliant rates were filed. Because “[c]arriers must comply with the

comprehensive scheme provided by the statute and regulations promulgated under

it[,]” the failure to comply “may justify departure from the filed rate.” ICC v.

Transcon Lines, 513 U.S. 138, 147 (1995). At this stage of the litigation, where

the procedural posture of the case requires all allegations in the complaint to be

-22-
construed in TON’s favor and this court’s reading of TO N’s complaint

demonstrates that TON’s central challenge involves Qwest’s procedural

compliance with FCC orders and regulations rather than a challenge to the

reasonableness of Qwest’s rates, the filed rate doctrine cannot categorically

preclude TON’s claims. 15 Accord Davel Commc’ns, 460 F.3d at 1085. The

district court’s conclusion to the contrary, and its reliance on AT&T v. Central

Office Telephone, an inapposite case involving state law contract and tort claims,

was erroneous.

M oreover, TON’s complaint alleges the W aiver/Refund Order put Qwest on

notice that it might owe PSPs a refund on its previously filed rates and asserts

that Qwest was part of the coalition which initially proposed the refund. 16

15
Until it is determined (1) w hether Q west’s procedural noncompliance with
the NST gives rise to a violation of 47 U.S.C. §§ 201(b), 276(a), or 416(c), and
(2) w hether Qwest’s tariffed rates complied substantively with the NST, it is
impossible to determine whether the filed rate doctrine bars TON’s claims. Only
if both of these issues are resolved against TON would the filed rate doctrine
likely preclude TON’s ability to proceed in federal court.
16
Although the filed rate doctrine ordinarily precludes a claim or the
assertion of a defense where a supplier and customer agree to a rate different than
the filed tariff rate, see, e.g., Reiter v. Cooper, 507 U.S. 258, 266 (1993), it is not
clear that result would apply here. In this case, the RBOC Coalition explicitly
promised the FCC that, notwithstanding the filed rate doctrine, the BOCs w ould
“voluntarily undertake” to provide a “retroactive rate adjustment” in the event
their NST-compliant rates were lower than their prior rates in exchange for
permission to delay the effective date for NST-compliant tariffs. In the usual
case, the doctrine is intended to avoid discriminatory pricing in relation to
particular customers. M aislin Indus., U.S., Inc. v. Primary Steel, Inc., 497 U.S.
116, 127–28 (1990). In this case, however, the change in rates would have
(continued...)

-23-
See W aiver/Refund Order, 12 F.C.C.R. at 21375–76 ¶¶ 13–14 (discussing April

10 RBOC Coalition letter to the FCC requesting a waiver); id. at 21379–80 ¶¶

19–20 (specifying that an LECs’ reliance on the waiver required it to provide

refunds for the difference between its NST-compliant rates and its prior rates).

Although it is often said the doctrine is to be strictly adhered to, see, e.g., M aislin

Indus., U.S., Inc. v. Primary Steel, Inc., 497 U.S. 116, 127 (1990), this court has

previously held that once a party has notice about a possible future rate change,

the doctrine may be inapplicable. See Nw. Pipeline Corp. v. FERC, 61 F.3d 1479,

1490–91 (10th Cir. 1995) (“The filed rate doctrine simply does not extend to

cases in which buyers are on adequate notice that resolution of some specific

issue may cause a later adjustment to the rate being collected at the time of

service. Certainly, this same reasoning is especially applicable w here, as here, it

is the [supplier] pipeline . . . who is put on notice that its requested rate increase

may be subject to refund.” (quotation and citations omitted)).

Finally, as the Davel court concluded, the W aiver/Refund Order

contemplated a future “departure from a filed rate” in the form of refunds once a

BOC filed NST-compliant PAL tariffs. Davel Commc’ns, 460 F.3d 1085–86

(relying on ICC v. Transcon Lines, 513 U.S. at 147). The FCC justified the

16
(...continued)
applied to all PSP customers and would have effected the congressional command
in § 276(a) that PA L tariff rates not include subsidies or result in price
discrimination.

-24-
departure as a means of furthering the Commission’s overall policies in

implementing § 276(a). See Order on Reconsideration, 12 F.C.C.R. at 21381

¶ 23. Transcon Lines specifically approves of a regulatory agency’s decision to

“require[] departure from the filed rate w hen necessary to enforce other specific

and valid regulations adopted under the Act” and emphasizes that “the [agency]

can require that filed rates be suspended or set aside in various circumstances.”

513 U.S. at 147. Although Transcon Lines involved an ICC proceeding against a

particular shipper, the same logic applies to a more general order promulgated by

the FCC. This is especially so where the FCC was attempting to carry out, as

quickly as practicable, congressional intent to promote competition in the

telecommunications industry by ensuring both the absence of subsidies for BOCs

and fair compensation for all LECs. See 47 U.S.C. § 276(a) and (b)(1)(C).

Accordingly, as the W aiver/Refund Order expressly anticipated that PSPs might

be entitled to pay PA L rates lower than those on file during the waiver period, an

application of the filed rate doctrine would be contrary to the purposes behind the

congressionally-sanctioned regulatory scheme. See Davel Commc’ns, 460 F.3d at

1086.

Based on the determination that TON’s claims are not, at their core, a

challenge to the reasonableness of Qwest’s rates, and in light of the analysis

above, the filed rate doctrine does not bar TON’s ability to proceed in federal

court at this stage of the litigation.

-25-
C. Primary Jurisdiction

1. Primary Jurisdiction Doctrine

Even where a court has subject matter jurisdiction over a claim, courts have

discretion to refer an issue or issues to an administrative agency. M arshall v. El

Paso Natural Gas Co., 874 F.2d 1373, 1376 (10th Cir. 1989). The doctrine of

primary jurisdiction is “specifically applicable to claims properly cognizable in

court that contain some issue within the special competence of an administrative

agency.” Reiter v. Cooper, 507 U.S. 258, 268 (1993).

The purpose of the doctrine is to “allow agencies to render opinions on

issues underlying and related to the cause of action.” Crystal Clear Com mc’ns,

Inc. v. Sw. Bell Tel. Co., 415 F.3d 1171, 1179 (10th Cir. 2005). It is “designed to

allow an agency to pass on issues within its particular area of expertise before

returning jurisdiction to the federal district court for final resolution of the case.”

Id. at 1176; see also Williams Pipe Line Co. v. Empire Gas Corp., 76 F.3d 1491,

1496 (10th Cir. 1996) (“[C]ourts apply primary jurisdiction to cases involving

technical and intricate questions of fact and policy that Congress has assigned to a

specific agency.”). The doctrine of primary jurisdiction is distinct from the

concept of exhaustion, which prevents a federal court from exercising jurisdiction

over a claim until all administrative remedies have been pursued. See United

States v. W. Pac. R.R. Co., 352 U.S. 59, 63–64 (1956); M ountain States Natural

Gas Corp. v. Petroleum Corp. of Tex., 693 F.2d 1015, 1019 (10th Cir. 1982).

-26-
 In this circuit, a district court’s decision to invoke the primary jurisdiction

doctrine “require[s] 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 the particular agency.” Crystal Clear

Commc’ns, 415 F.3d at 1179. Additionally, when the regulatory agency has

actions pending before it which may influence the instant litigation, invocation of

the doctrine may be appropriate. See Mical Commc’ns, Inc. v. Sprint Telemedia,

Inc., 1 F.3d 1031, 1037–38 (10th Cir. 1993). There is, however, no “fixed

formula . . . for applying the doctrine.” W. Pac. R.R. Co., 352 U.S. at 64. Courts

should consider case-by-case whether “the reasons for the existence of the

doctrine are present and whether the purposes it serves [i.e., uniformity and resort

to administrative expertise] will be aided by its application in the particular

litigation.” Id.

W hen the primary jurisdiction doctrine is invoked, “the judicial process is

suspended pending referral of such issues to the administrative body for its

views.” Id. Referral does not automatically divest the court of jurisdiction.

Reiter, 507 U.S. at 268. The district court may retain jurisdiction over the

proceedings by staying the plaintiff’s claims pending agency action or, if neither

party will be unfairly disadvantaged, dismissing the case without prejudice. Id. at

268–69; see also Crystal Clear Commc’ns, 415 F.3d at 1174, 1176 (explaining

-27-
district court administratively closed case but would allow it reopened upon a

party’s motion, indicating the court’s “contemplat[ion of] continued litigation

after completion of administrative proceedings”).

2. District Court’s Primary Jurisdiction Ruling

This court applies an abuse of discretion standard to the district court’s

decisions to invoke the primary jurisdiction doctrine and to either stay or dismiss

the action without prejudice. S. Utah Wilderness Alliance v. BLM , 425 F.3d 735,

750 (10th Cir. 2005). The district court in this case properly invoked the doctrine

of primary jurisdiction, but did so without evaluation of the issues to be referred,

the purposes to be served by referral, or a clear statement that the FCC is the

appropriate agency to consider the referred issues.

The district court’s invocation of the primary jurisdiction doctrine was

apparently based on its mischaracterization of TON’s claims. Although the court

initially recognized that TON intended its complaint to be read to allege the

illegality of Q west’s conduct, it ultimately concluded TON’s claims were

fundam entally about the reasonableness and lawfulness of Qwest’s intrastate PA L

tariff rates. By interpreting TON’s claims in this manner, the court conflated

TON’s allegations concerning Qwest’s procedural failure to file required tariffs

and cost studies with allegations concerning the substantive unreasonableness of

Qwest’s rates. The court never considered whether Qwest’s procedural

noncompliance might have affected state regulators’ ability to assess Qwest’s

-28-
substantive compliance with § 276(a) and the FCC’s regulations implementing

that statutory provision.

In ruling on Qwest’s motions to dismiss and for referral, the court simply

stated Reiter stands for the proposition that the question whether Qwest’s filed

tariffs complied with the NST is w ithin the primary jurisdiction of “state public

service or regulatory commissions or the Federal Communications Commission”

and that TON’s relief might follow from FCC proceedings in other, related

matters. The court further stated dismissal would “allow TON to determine how

best to pursue an administrative decision that will resolve whether Qwest owes

TON a refund” without specifying whether it was referring the case to the FCC or

to state regulatory agencies. The court confused the exhaustion doctrine with the

concept of primary jurisdiction when it stated it would not “interfere with the

appropriate state and federal agencies by allowing [TO N] to make an end-run

around the established administrative remedies.” See Brown v. M CI Worldcom

Network Servs., Inc., 277 F.3d 1166, 1173 (9th Cir. 2002) (“The

[Communications Act] does not require that a plaintiff exhaust his administrative

remedies before proceeding to federal court . . . . In providing a federal court

forum under the [Act], Congress made it clear that it did not intend to require that

suits . . . first be decided by the FCC.” ). Furthermore, the court nowhere

addressed the impact of §§ 206 and 207 in providing TON a private right of

action in federal court, nor did it articulate how TON’s rights under these

-29-
provisions might be accommodated notwithstanding a primary jurisdiction

referral. Cf. Allnet Commc’ns Servs., Inc. v. Nat’l Exch. Carrier Ass’n, 965 F.2d

1118, 1122 (D.C. Cir. 1992). Finally, when ruling on TON’s motion to reconsider

its dismissal of TO N’s complaint, the district court failed to recognize the

potential prejudice TON might suffer from dismissal.

Although this court affirms the district court’s general determination that a

primary jurisdiction referral is appropriate in this case, the district court erred by

misidentifying the issues to be referred and failing to clearly direct its primary

jurisdiction referral to the FCC. Furthermore, because TO N may be prejudiced by

dismissal rather than a stay of its action pending primary jurisdiction referral, the

district court abused its discretion in dismissing TON’s claims, albeit without

prejudice. This court therefore vacates the district court’s order of dismissal and

remands to the district court with instructions to stay TON’s claims.

a. Application of the Primary Jurisdiction Doctrine

Because FCC orders are central to defining BOCs’ obligations under the

Communications Act, the FCC is the appropriate body for primary jurisdiction

referral. As set out below, the three Crystal Clear Communications factors, 415

F.3d at 1179, lead this court to identify the following three issues as meriting

district court consideration for primary jurisdiction referral to the Commission:

(1) whether a violation of FCC orders gives rise to statutory liability; (2) whether

the PAL rates Qwest charged during the period of its procedural noncompliance

-30-
with FCC orders were substantively compliant with the NST; and, (3) if not, how

damages should be calculated. Notwithstanding the number of related actions

currently pending before the FCC, the district court should consider immediate

referral to ensure the issues dispositive to TON’s claims receive full agency

consideration. 17 Factual questions outside the scope of the issues referred to the

Commission should be retained and decided, when appropriate, by the district

court. See M arshall, 874 F.2d at 1377 (“The district court is not required to defer

factual issues to an agency under the doctrine of primary jurisdiction if those

factual issues are of the sort that the court routinely considers.”).

As detailed above in Part II.A.3, many of the FCC’s orders specify LECs

bear the burden of demonstrating or justifying their tariff rates to state regulators

and are responsible for ensuring their rates are NST compliant. 18 See, e.g., New

17
Some of the most relevant actions currently pending before the
Commission were filed many years ago. See, e.g., In re Implementation of the
Pay Telephone Reclassification and Compensation Provisions of the
Telecommunications Act of 1996, Illinois Public Telecommunications Association
Petition for a Declaratory Ruling Regarding the Remedies Available for
Violations of the Commission’s Payphone O rders (filed July 30, 2004), available
at http://svartifoss2.fcc.gov/prod/ecfs/retrieve.cgi?native_or_pdf=pdf& id_
document=6516286237. Although the Commission, pursuant to 47 U.S.C. §
208(b)(1), is obligated to issue an order concluding an investigation into actions
or omissions that contravene the Communications Act within five months of the
filing of a complaint, the Commission’s docket involving the implementation of
the Act’s payphone provisions clearly indicates the FCC is not complying with
the statutory timetable.
18
Contrary to Qwest’s assertion that its “certification” to M CI for the
purposes of receiving per-call compensation satisfied this burden, the FCC’s
(continued...)

-31-
Services Test Order, 17 F.C.C.R. at 2069 ¶ 158; Bureau Wisconsin Order, 15

F.C.C.R. at 9881, 9882 ¶¶ 9,11; W aiver/Refund Order, 12 F.C.C.R. at 21379 ¶ 18.

The threshold issue in this litigation, therefore, is whether Qwest’s admitted

failure to file new tariffs or cost data supporting its existing tariffs, which

violated 47 C.F.R. § 61.49(g)(2), the Order on Reconsideration, and portions of

the W aiver/Refund Order, gives rise to liability under each of §§ 201(b), 276(a),

and 416(c). 19 If Qwest’s failure to meet its burden is interpreted to constitute a

18
(...continued)
orders make clear that BOCs bear a much higher burden to demonstrate actual
NST compliance under paragraph 163 of the Order on Reconsideration than they
do to “certify” compliance under paragraph 131. See In re Bell Atlantic-
Delaware, 17 Commc’ns Reg. at ¶¶ 3, 28; com pare Order on Reconsideration, 11
F.C.C.R. at 21294 ¶ 131, with id. at 21308 ¶ 163. “Certification” merely requires
the LEC seeking compensation to “attest authoritatively” to the long distance
carrier from which it seeks per-call compensation that it has complied with the
prerequisites enumerated in paragraph 131 of the Order on Reconsideration. In re
Bell Atlantic-Delaware, 17 Commc’ns Reg. at ¶¶ 3, 6; see also In re Am eritech
Ill. v. M CI Telecomms. Corp., M em. Op. and Order, 1999 W L 1005080 at ¶ 19–20
(1999). Actual compliance, in contrast, requires the submission of cost data to
regulators and the receipt of state regulators’ approval that tariff rates comply
with the NST. See, e.g., 47 C.F.R. § 61.49(g)(2); Order on Reconsideration, 11
F.C.C.R. at 21308 ¶ 163.
19
TON contends it may assert its claims under 47 U.S.C. §§ 201(b), 276(a),
and 416(c). Qwest provides no argument to the contrary. As a consequence, this
court assumes, without deciding, that for the purposes of this appeal, a private
right of action exists under each of these statutes in accordance with the facts
asserted by TON. See Burks v. Lasker, 441 U.S. 471, 475–76 & n.5 (1979) (“The
question whether a cause of action exists is not a question of jurisdiction, and
therefore may be assumed without being decided.”); M andy R. ex rel M r. & M rs.
R. v. Owens, 464 F.3d 1139, 1143 (10th Cir. 2006) (applying the Burks principle
to private right of action to enforce M edicaid provisions); see also Steel Co. v.
Citizens for a Better Env’t, 523 U .S. 83, 89–90 (1998) (holding that as long as a
(continued...)

-32-
violation of the Communications A ct, TON is entitled to have its claim

adjudicated by a federal court under § 207 and may be entitled to damages under

§ 206. See 47 U.S.C. § 206 (providing for damages arising from a common

carrier’s failure to do “any act, matter, or thing in this chapter required to be

done”); Global Crossing Telecomms., Inc. v. M etrophones Telecomms., Inc., 127

S. Ct. 1513, 1520 (2007) (holding § 207 gives payphone providers a private right

of action for violation of § 201(b) as lawfully implemented by a 2003 FCC

regulatory order addressing per-call compensation). In light of the Supreme

Court’s guidance in Global Crossing Telecom munications that not “every

violation of FCC regulations” constitutes a statutory violation, 127 S. Ct. at 1521,

and that courts should apply Chevron deference to the Commission’s views on

whether a violation of its regulations gives rise to statutory liability, id. at

1520–23, the district court should consider whether the FCC is in the best

position to determine in the first instance if its regulatory orders contemplate that

failures to comply procedurally with its regulations amount to violations of

§§ 201(b), 276(a), or 416(c). A desire for uniformity in interpretation of the

comprehensive regulatory scheme suggests this issue is appropriate for agency

resolution. See Crystal Clear Commc’ns, 415 F.3d at 1179.

19
(...continued)
stated claim is not “frivolous or immaterial,” the absence of a valid cause of
action does not implicate subject matter jurisdiction). The Davel court made the
same assumption regarding the availability of a private right of action in that
case. Davel Commc’ns, 460 F.3d at 1085 n.3.

-33-
 The district court should also consider whether agency expertise is

necessary to evaluate Qwest’s substantive compliance w ith the NST. If Qwest’s

procedural noncompliance gives rise to statutory liability, a substantive-

compliance analysis will be necessary in order to determine whether TON may

seek refunds or other damages in federal court for Qwest’s violation of FCC

orders. Even if a procedural violation of FCC orders does not give rise to

statutory liability, a substantive evaluation of Qwest’s NST compliance would

nevertheless be necessary to assist the court in determining w hether Qwest

directly violated § 276(a)’s anti-subsidization and anti-discrimination commands.

Because of the complexities of tariffing and the number of states in w hich Qwest

was required to file NST-compliant tariffs, the district court should consider

whether agency expertise is necessary for the resolution of this issue. If so, the

FCC, perhaps with assistance from state regulators using the conference

procedure set forth in 47 U.S.C. § 410(b), could determine whether Qwest’s April

1997 to April 2002 tariff rates in each jurisdiction were cost-based and consistent

with all aspects of § 276(a), including § 276’s anti-discrimination and anti-

subsidization requirements. See Order on Reconsideration, 11 F.C.C.R. at 21308

¶ 163.

If Qwest’s rates did not comply substantively with the requirements of the

NST by failing to be cost-based, containing subsidies, or discriminating in favor

of Qwest, TON is entitled to seek damages under § 206 for Qwest’s violations of

-34-
§ 276(a). 20 The FCC, again perhaps w ith the assistance of state agencies, is likely

to be in the best position to calculate the difference between Qwest’s pre-April

2002 noncompliant rates and rates that would have been NST compliant. This

calculation would assist the court in considering TON’s claim for damages and, if

appropriate, awarding such damages.

b. Stay of TON’s Claims

Dismissal of an action pending primary jurisdiction referral is appropriate

when the parties will not be prejudiced or “unfairly disadvantaged.” Reiter, 507

U.S. at 268–269; United States v. M ich. Nat. Corp., 419 U.S. 1, 5 (1974) (per

curiam) (“Dismissal rather than a stay has been approved where there is assurance

that no party is prejudiced thereby.”); Far East Conference v. United States, 342

U.S. 570, 577 (1952) (determining dismissal was appropriate where case involved

only questions within the scope of agency jurisdiction, judicial review of an

agency order w ould be available, and similar suit could be easily initiated later).

W here, for example, the relief sought is an injunction or declaratory judgment,

dismissal may be appropriate. See, e.g., Far East Conference, 342 U.S. at 577.

W here damages are sought and the relevant statute of limitations might

preclude relief, however, a stay is likely to be preferable. See Carnation Co. v.

Pac. Westbound Conference, 383 U.S. 213, 223 (1966) (distinguishing treble-

20
If it is determined that failure to comply with FCC regulatory orders gives
rise to statutory liability under §§ 201(b) and 416(c), TON could also seek
recovery in its federal court action for violation of those provisions.

-35-
damages relief sought by instant plaintiff with injunctive relief sought by Far

East Conference plaintiffs and explaining “a treble-damage action for past

conduct cannot be easily reinstituted at a later time” and may face a statute-of

limitations bar). Additionally, where further judicial proceedings are

contemplated, the court should ordinarily retain jurisdiction by staying the

proceedings. Davel Commc’ns, 460 F.3d at 1091; accord Crystal Clear

Commc’ns, 415 F.3d at 1178 n.6 (stating a stay is usual course of action in

antitrust cases). Finally, where pending FCC actions may affect the outcome of a

plaintiff’s federal court litigation, this court has previously assumed a stay is

appropriate. M ical Commc’ns, 1 F.3d at 1040 (raising primary jurisdiction sua

sponte and ordering district court to stay case pending issuance of FCC ruling);

see also Davel Com mc’ns, Inc. v. Qwest Corp., No. C03-3680P, slip op. at 6

(W .D. W ash. Jan. 29, 2007) (unpublished) (concluding, upon remand from the

Ninth Circuit, the possibility of further judicial proceedings following FCC

resolution of threshold issue warranted a stay).

In this case, TON alleges two potential bases for prejudice. First, because

§ 415(b) creates a two-year statute of limitations for damage actions before the

FCC, TON contends it may be precluded from refiling its complaint before the

Commission. TON asserts the statute of limitations began to run in April 2002

when Qwest filed its NST-compliant rates. Accord Davel Commc’ns, 460 F.3d at

1091–93 (observing that, under Davel’s interpretation of the W aiver/Refund

-36-
Order, Davel’s right to reimbursement came into existence only upon Qwest’s

filing of NST-compliant rates and, therefore, its cause of action only began to

accrue when Qwest failed to pay the reimbursements). TON’s limitations period,

therefore, would have expired in April 2004. Second, TON alleges that § 207,

which functions as an election-of-forum provision, gave it the right to file suit

either in federal district court or before the FCC, but not in both fora. It contends

its decision to file in federal court may foreclose it from seeking subsequent relief

before the Commission.

Qwest fails to respond directly to TON’s assertions. Instead, Qwest

contends: 1) the decrease in its rates was caused by the FCC’s revisions to the

NST in the 2002 New Services Test Order and, therefore, there is no evidence

that its pre-2002 rates were unreasonable or discriminatory; 2) TON’s

interpretation of the Waiver/R efund Order is misguided and does not entitle TO N

to refunds or damages; and 3) any claim that Qwest’s rates became unlawful on

April 15, 1997, or M ay 19, 1997, when Qwest failed to file new tariffs or cost

studies, would have been time-barred after April or M ay 1999 and, therefore, are

already precluded by the statute of limitations. 21 As to whether TON will be

21
Although Qwest may be correct in asserting the statute of limitations w ill
limit TON’s recovery, it is incorrect in asserting the statute of limitations w ill
necessarily be a complete bar to recovery. TON’s ability to recover for the entire
April 1997 to April 2002 period based on a failure-to-file theory could be limited
by the “discovery of injury” rule applied by other circuits. See Com mc’ns
Vending Corp. of Ariz., Inc. v. FCC, 365 F.3d 1064, 1073–1074 (D.C. Cir. 2004)
(continued...)

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prejudiced by dismissal, Qwest says only that TON should have filed its claims

with the state commissions charged with determining NST compliance rather than

filing in federal court and, thus, any resulting prejudice is of TON’s own making.

It also claims that because the FCC is currently considering the same issues in

several existing proceedings, TON “may well” get the relief it seeks without

further judicial action.

Because dismissal might result in a § 415(b) statute-of-limitations bar to

TON’s claims under the W aiver/Refund Order and because § 207’s election-of-

forum provision might prevent TON from seeking agency relief, the district court

abused its discretion in dismissing, rather than staying, TON’s suit.

Qwest expressly declined to waive a statute-of-limitations defense before

the district court and again before this court. Although it seems logical that the

statute of limitations in § 415(b) w ould be tolled during the pendency of TON’s

federal court litigation, neither party has called the court’s attention to any such

21
(...continued)
(stating the “discovery of injury” rule has been applied to § 415(b) by the FCC
and the D.C., Third, and Ninth Circuits, where “a cause of action accrues either
when a readily discoverable injury occurs or, if an injury is not readily
discoverable, when the plaintiff should have discovered it”). In Davel, the Ninth
Circuit concluded Qwest’s failure to file federal fraud protection rates with the
FCC beginning in 1997 put Davel on inquiry notice that Qwest failed to comply
with the Payphone Orders. Davel Commc’ns, 460 F.3d at 1092. The Davel court
determined Davel could only recover reimbursement on its fraud protection
claims for the amounts paid under noncompliant tariffs w ithin two years prior to
Davel’s filing of its federal court complaint. Id. at 1092–93. The same principle
may limit the period of TO N’s right to recovery on some of its claims here.

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tolling provision or related case law, nor has the court located any on its own. To

the contrary, other courts have suggested the limitations period would not be

tolled. Cf. Brown, 277 F.3d at 1173 (stating district court should stay claim

during primary jurisdiction referral because statute of limitations under § 415 had

run); Davel Commc’ns, No. C03-3680P, slip op. at 6 (recognizing risk that statute

of limitations may run pending FCC’s interpretation of W aiver/Refund Order).

Because it appears TON may be unfairly disadvantaged by dismissal, this court

concludes the district court abused its discretion by dismissing TON’s complaint.

Additionally, TON asserts that § 207 entitles it to proceed in federal court,

that the district court’s ruling essentially denied it a federal forum, and that there

is a risk, under the plain language of § 207, that it will be precluded from refiling

its dismissed complaint before the Commission. Courts have consistently

recognized § 207 as an “election-of-remedies provision” such that “once an

election is made by either filing a complaint with the FCC or filing a complaint in

federal court, a party may not thereafter file a complaint on the same issues in the

alternative forum, regardless of the status of the complaint.” Premiere Network

Servs., Inc. v. SBC Commc’ns, Inc., 440 F.3d 683, 688 (5th Cir. 2006) (citing

cases). Contrary to Qwest’s assertion that TON should have known it was

required to file its claims before the state commissions rather than in federal

court, § 207 has clearly been construed not to require exhaustion of administrative

remedies. See, e.g., Brown, 277 F.3d at 1173; APCC Servs., Inc. v. Worldcom,

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Inc., 305 F. Supp.2d 1, 10–11 (D.D.C. 2001). Even if, as Qwest asserts, the

Commission did instruct parties to challenge an LEC’s compliance with the

FCC’s filing requirements before state regulators, Qwest does not explain how

this direction divests the court of jurisdiction under § 207 or bars TON from

taking advantage of the choice Congress provided to it under § 207. Because

Qwest has engaged only in unsupported argument to the contrary, we conclude

that TON’s arguments regarding the nature of § 207 provide an additional reason

for staying TON’s claims.

Finally, contrary to the statement in its brief that TON “may well” get the

relief it seeks, Q w est conceded to the district court that predicting whether TO N

would benefit from a positive resolution of the FCC’s pending matters was like

“trying to look into a crystal ball.” Q west admitted the FCC could issue very

limited orders in the matters currently pending before it which might not entitle

TON to relief. Furthermore, at oral argument before this court, Qwest conceded

that, although it believed dismissal was appropriate, it did not strongly oppose a

stay.

IV . C ON CLU SIO N

For the reasons set forth above, the district court’s dismissal of TON’s

complaint is VACATED. This matter is REM AND ED to the district court for

further proceedings not inconsistent with this opinion, including the issuance of a

stay during the pendency of any proceedings referred to the FCC.

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