San Juan Cable LLC v. Puerto Rico Telephone Co.

United States Court of Appeals
For the First Circuit

No. 09-1965

SAN JUAN CABLE LLC d/b/a ONELINK COMMUNICATIONS,

Plaintiff, Appellant,

v.

PUERTO RICO TELEPHONE COMPANY, INC.,

Defendant, Appellee.

APPEAL FROM THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF PUERTO RICO

[Hon. Gustavo A. Gelpí, U.S. District Judge]

Before

Howard, Selya and Thompson, Circuit Judges.

Thomas J. McCormack, with whom Dana Frix, Karl H. Buch,
Chadbourne & Parke, and Guillermo J. Ramos-Luiña were on brief, for
appellant.
Lynn R. Charytan, with whom Mark C. Flemming, Samir Jain, Anne
H. Sherwood, and Wilmer Cutler Pickering Hale and Dorr LLP were on
brief, for appellee.

July 15, 2010
 SELYA, Circuit Judge. This appeal presents two separate,

but related, issues of statutory construction. The first poses a

question that has not been answered at the federal appellate level:

does a cable operator have an implied private right of action to

enforce section 541(b)(1) of the Cable Communications Policy Act of

1984 (Cable Act), 47 U.S.C. § 541(b)(1), against a rival who has

violated that provision? The second issue requires us to revisit

a question that we have answered before: does a cable operator have

standing, under section 401(b) of the Communications Policy Act of

1984 (Communications Act), 47 U.S.C. § 401(b), to enforce

rulemaking orders promulgated by the Federal Communications

Commission (FCC) against a rival who has transgressed those orders?

The district court answered both of these queries in the

negative. On the first question, it held that section 541(b)(1) of

the Cable Act did not give rise to an implied private right of

action. See San Juan Cable LLC v. P.R. Tel. Co., 623 F. Supp. 2d

189, 196 (D.P.R. 2009). On the second question, it deemed itself

bound by circuit precedent and therefore ruled that the cable

operator lacked standing to enforce prohibitions contained in two

FCC rulemaking orders. Id. at 197. Accordingly, the court

dismissed the plaintiff's amended complaint.

We affirm the judgment below. As a matter of first

impression, we conclude that section 541(b)(1) of the Cable Act

does not give rise to an implied private right of action. Then,

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holding fast to circuit precedent, we reiterate that a private

cable operator lacks standing to enforce either of the two FCC

orders at issue here.

I. BACKGROUND

This appeal arrives on our doorstep following an order of

dismissal entered under Federal Rule of Civil Procedure 12(b)(6).

Consequently, we take the facts from the plaintiff's amended

complaint and draw all reasonable inferences therefrom in its

favor. SEC v. Tambone, 597 F.3d 436, 441-42 (1st Cir. 2010) (en

banc).

The plaintiff, San Juan Cable LLC, doing business as

OneLink Communications (we shall refer to it by that trade name),

is among three firms that provide cable television service in

Puerto Rico. Its would-be competitor, defendant Puerto Rico

Telephone Company, Inc. (PRTC), furnishes local telephone service

throughout the island. The underlying litigation has its genesis

in PRTC's decision to expand its service line to include cable

television.

Before a new entrant can offer cable service, the Cable

Act requires it to obtain a franchise from the relevant franchising

authority. 47 U.S.C. § 541(b)(1). In February of 2006, PRTC,

through an affiliate, filed an application for such a franchise

with the Telecommunications Regulatory Board of Puerto Rico (the

Board). Although that application was not granted, testimony

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during a hearing before the Board indicated that the construction

of PRTC's cable system was already underway. We assume, without

deciding, that the commencement of construction prior to the

procurement of a franchise violates section 541(b)(1) of the Cable

Act.

In December of 2008, PRTC filed both a second franchise

application and a request for special temporary authority (STA).

The STA request sought a green light for PRTC to continue to

construct its cable system and to provide cable service to some of

its employees as part of a beta test. The Board granted the STA,

which allowed PRTC to undertake the specified activities in advance

of obtaining a franchise.

Dismayed by this development, OneLink moved to intervene

in the administrative proceedings and sought a stay of the STA.

When the Board rebuffed these entreaties, OneLink petitioned for

judicial review in the local courts.1

During this same time frame, OneLink opened a second

front in its war against its would-be rival: it sued in the federal

district court, seeking to enjoin PRTC from either constructing a

cable system or providing cable service unless and until the Board

awarded a franchise. The district court made a preliminary finding

1
There is no need to rehearse the details of the litigation
in the local courts. For present purposes, it suffices to note two
facts: the case remains open, and the Supreme Court of Puerto Rico
has stayed the administrative proceedings for the time being.

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that PRTC had violated the Cable Act by prematurely beginning

construction and testing activities, see San Juan Cable LLC v.

Telecomms. Reg'y Bd., 598 F. Supp. 2d 233, 238 (D.P.R. 2009), and

threatened to issue a preliminary injunction. In a flurry of

responsive filings, the Board represented that it would withdraw

the STA approval, and PRTC represented that it would discontinue

the challenged activities. On February 24, 2009, the district

court dismissed the action as moot.

OneLink alleges that, notwithstanding its

representations, PRTC took further pre-franchise steps toward

construction of its proposed cable system. As a counter-measure,

it brought the instant action, alleging that PRTC had transgressed

section 541(b)(1) of the Cable Act by constructing a cable system

over public rights-of-way and providing cable service without

having obtained a franchise.2 In an amended complaint, OneLink

added a claim that PRTC's actions violated two FCC orders. See In

re Implementation of Section 621 (a)(1) of the Cable Communications

Policy Act of 1984, 22 FCC Rcd. 5101, 5155 (Mar. 5, 2007) (2007

Order); In re Amendment of Part 94 of the Commission's Rules to

Permit Private Video Distrib. Sys. of Video Entm't Access to the 18

GHz Band, 6 FCC Rcd. 1270, 1272 (Feb. 28, 1991) (1991 Order).

2
OneLink initially moved for relief from the judgment in the
original action. See Fed. R. Civ. P. 60(b). It abandoned the
motion and, instead, brought a new action at the district court's
suggestion.

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 PRTC moved to dismiss the amended complaint.

Pertinently, it argued that (i) the Cable Act does not afford a

cable operator a private right of action to enforce section

541(b)(1) against a potential rival, and (ii) the Communications

Act does not confer standing on a private party to enforce either

the 2007 Order or the 1991 Order. This timely appeal followed.

II. ANALYSIS

We bifurcate our analysis of OneLink's claims, beginning

with its contention that an implied private right of action exists

under section 541(b)(1) of the Cable Act and ending with its

contention that it possesses standing to enforce the 2007 Order and

the 1991 Order against PRTC. Because both contentions turn on

abstract questions of law, the district court's answers to them

engender de novo review. Sterling Suffolk Racecourse Ltd. v.

Burrillville Racing Ass'n, 989 F.2d 1266, 1268 (1st Cir. 1993).

A. The Cable Act Claim.

Congress passed the Cable Act in order to fashion a

national policy that would "promote competition in cable

communications" and "assure that cable communications provide and

are encouraged to provide the widest possible diversity of

information sources and services to the public." 47 U.S.C. § 521.

The Act's franchising provisions are an integral part of this

national policy. In drafting those provisions, Congress sought to

formulate "franchise procedures and standards which encourage the

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growth and development of cable systems" and to "establish an

orderly process for franchise renewal which protects cable

operators against unfair denials of renewal." Id.

These provisions create a decentralized franchising

regime, in which local authorities award (or decline to award)

franchises for the provision of cable service in particular areas.

Id. § 541(a)(1). Once a cable operator receives a franchise, it

enjoys the right to build a cable system over public rights-of-way

and through compatible easements. Id. § 541(a)(2). It may then

provide cable service in the franchised area. See id. § 541(b)(1).

Without a franchise, the provision of cable service is forbidden.

Id.

OneLink claims that PRTC jumped the gun by undertaking

construction and testing activities without having obtained a

franchise. In its view, these premature actions violated section

541(b)(1). As a threshold matter, its attempt to enforce that

statute against PRTC hinges on whether the Cable Act grants it a

private right of action for that purpose. It is to this question

that we now turn.

OneLink concedes that the text of the statute does not

confer an express private right of action. The question, then,

reduces to whether a private right of action can be implied.

At the end of the day, this is a question of statutory

interpretation. Transamerica Mortg. Advisors, Inc. (TAMA) v.

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Lewis, 444 U.S. 11, 15 (1979). Hence, the conventional tools of

statutory construction serve as useful implements. See Thompson v.

Thompson, 484 U.S. 174, 179 (1988).

Unlike other questions of statutory interpretation,

however, the scales are tilted. The baseline rule is that a

federal statute ordinarily should be read as written, in effect

creating a presumption against importing, by implication, a private

right of action. See Frazier v. Fairhaven Sch. Comm., 276 F.3d 52,

68 (1st Cir. 2002); see also Alexander v. Sandoval, 532 U.S. 275,

287-88 (2001). This de facto presumption has considerable bite; it

"can be overcome only by compelling evidence of a contrary

congressional intent." Frazier, 276 F.3d at 68. "[T]he ultimate

issue is whether Congress intended to create a private right of

action." California v. Sierra Club, 451 U.S. 287, 293 (1981).

Against this backdrop, we look first to the text and

structure of the Cable Act. See TAMA, 444 U.S. at 16; Frazier, 276

F.3d at 68. That perscrutation reveals a wealth of evidence that

Congress did not intend to foster private enforcement of section

541(b)(1). The text of the Cable Act is replete with express

private rights of action. See, e.g., 47 U.S.C. §§ 551(f)(1),

553(c)(1), 554(g). This circumstance reveals with conspicuous

clarity that Congress knew how to provide for a private right of

action when it deemed such a right appropriate. Given Congress's

persistent employment of express private rights of action in the

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Cable Act, it would be inconsistent to imply additional private

rights of action. The hoary maxim "expressio unius est exclusio

alterius" comes readily to mind.

We think it particularly noteworthy that Congress

provided an express private right of action in favor of cable

operators with respect to the enforcement of an adjacent provision

in the very same section of the Cable Act that OneLink seeks to

use. That provision explicitly permits a cable operator to sue a

franchising board for an "unreasonabl[e] refus[al] to award a[]

. . . franchise." Id. § 541(a)(1). Yet, Congress did not include

similar language in section 541(b)(1). The inclusion of an express

private right of action in a statutory provision and the exclusion

of similar language in a neighboring provision gives rise to an

inference that the exclusion was purposeful. See Nashoba Commc'ns,

Ltd. v. Town of Danvers, 893 F.2d 435, 440 (1st Cir. 1990).

An analysis of the types of private rights of action that

Congress expressly extended to cable operators strengthens this

inference. Under the Cable Act, cable operators are empowered to

sue franchising boards for denying a suitor's franchise

application, 47 U.S.C. § 541(a)(1), refusing to modify the

requirements of a suitor's franchise, id. § 545(b)(1), refusing to

renew a suitor's franchise, id. § 546(e)(1), and failing to follow

specified procedural rules with respect to a suitor's application,

id. A common denominator characterizes all of these private rights

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of action: each of them enables a cable operator (or prospective

cable operator) to enforce a provision of the Cable Act to preserve

and protect its ability to provide cable service.

Here, however, OneLink envisions a private right of

action of a very different ilk — one which, if validated, will

enable it to enforce a provision of the Cable Act against another

cable operator in order to prevent that operator from providing

cable service. Such an outward-looking private right of action is

incongruous when viewed in conjunction with the inward-looking

private rights of action expressly granted in the Cable Act. It

is, therefore, highly unlikely that Congress intended to allow a

cable operator to enforce section 541(b)(1) against a competitor

(actual or aspiring).

To cinch matters, implication of a private right of

action would be at odds with the paramount goals of the Cable Act.

In crafting this legislation, Congress sought to promote

competition in the cable industry and ensure the widest possible

diversity of cable offerings. See id. § 521; see also Rollins

Cablevue, Inc. v. Saienni Enters., 633 F. Supp. 1315, 1318 (D. Del.

1986). At the center of this statutory scheme, the local

franchising board stands as a watchful sentinel guarding the

portals of entry into the cable market. To ensure that would-be

cable operators are not unfairly deprived of an opportunity to

enter the marketplace, Congress created express private rights of

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action aimed at allowing an applicant or franchise-holder to

challenge a variety of board decisions that directly affect its own

right to provide cable service. See, e.g., 47 U.S.C. §§ 541(a)(1),

545(b)(1), 546(e)(1). Relatedly, Congress strove to promote

diversity by prohibiting any award of exclusive cable franchises.

Id. § 541(a)(1). Given the architecture of this scheme, we can

think of no reason why Congress would have wanted to afford

incumbent cable operators the ability to thwart potential

competition from new market entrants by pursuing private rights of

action.

OneLink makes two counter-arguments. In the first

instance, it places heavy reliance on cases holding that a cable

operator enjoys a private right of action to enforce the provisions

of section 541(a)(2). See, e.g., Media Gen. Cable of Fairfax, Inc.

v. Sequoyah Condo. Council, 991 F.2d 1169, 1171-72 (4th Cir. 1993);

Centel Cable T.V. Co. of Fla. v. Admiral's Cove Assocs., 835 F.2d

1359, 1364 (11th Cir. 1988). This reliance is mislaid.

Section 541(a)(2) extends to franchise-holding cable

operators the right to construct cable systems over public rights-

of-way and through compatible easements. In each of the cases

cited by OneLink, the court concluded that a cable operator could

sue a third party (a landowner or developer) who impeded access to

a compatible easement and thereby obstructed the construction of

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the plaintiff's own cable system. See Media Gen., 991 F.2d at

1171; Centel, 835 F.2d at 1360-61, 1364.

These decisions are inapposite. They involve a statutory

provision that grants to a cable operator a specific right

necessary to ensure the construction of its own cable system.

The statutory provision at issue here is of a different

character. It contains no analogous grant of a special right but,

rather, prohibits any and all persons from operating a cable system

without a franchise. The difference between a rights-granting

statute and a purely prohibitory statute is significant in

determining the existence vel non of an implied private right of

action. See Gonzaga Univ. v. Doe, 536 U.S. 273, 283-84 (2002)

(explaining that implied private right of action can only exist

where Congress intended to create both a private right and a

private remedy in a statute); Bonano v. E. Carib. Airline Corp.,

365 F.3d 81, 84 (1st Cir. 2004) (same).

This is not the only distinction. To the extent that the

Cable Act allows private enforcement, it does so in service of a

cable operator's (or would-be cable operator's) own franchise. The

cases cited by OneLink illustrate this point. See Media Gen., 991

F.2d at 1170; Centel, 835 F.2d at 1360. Here, however, there is no

allegation that PRTC's actions have in any way interfered with

OneLink's use of its own cable system. OneLink's interest here is

not in providing service but, rather, in heading off competition.

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 OneLink's second counter-argument is that implication of

a private right of action is compelled under the four-factor test

delineated in Cort v. Ash, 422 U.S. 66 (1975). Under that

formulation, courts are directed to consult the following factors:

Is the plaintiff a member of the class for
whose "especial benefit" the statute was
passed? Is there any cogent indication of
legislative intent to create or deny the
remedy sought? Would recognition of the
remedy be "consistent with the underlying
purposes" of the statutory scheme? Would it
be inappropriate to infer a federal remedy
because "the cause of action [is] one
traditionally relegated to state law . . . "?

Royal Bus. Group v. Realist, Inc., 933 F.2d 1056, 1060 (1st Cir.

1991) (quoting and paraphrasing Cort, 422 U.S. at 78).

Our previous discussion forecloses this argument. The

four Cort factors are not entitled to equal weight. See TAMA, 444

U.S. at 23. The second factor — congressional intent — is a

potential trump card. The proponent of an implied private right of

action cannot prevail under the four-factor Cort test in the face

of a showing that Congress probably did not intend to create such

a right. See Sandoval, 532 U.S. at 286-87 (explaining that without

a showing of congressional intent to create a private remedy, "a

cause of action does not exist and courts may not create one, no

matter how desirable that might be as a policy matter, or how

compatible with the statute"); TAMA, 444 U.S. at 23-24 (noting

that, in determining the existence of an implied private right of

action, the central inquiry is whether Congress intended to create

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one); Buck v. Am. Airlines, Inc., 476 F.3d 29, 33 n.4 (1st Cir.

2007) (similar). Here, there is no evidence of congressional

intent to provide an implied private right of action — and there is

ample evidence to the contrary. Thus, pausing to analyze the

first, third, and fourth Cort factors would be an empty exercise.

That ends this aspect of the matter. We conclude,

without serious question, that section 541(b)(1) of the Cable Act

does not carry with it an implied private right of action in favor

of an incumbent cable operator against a would-be rival.

B. The Communications Act Claim.

OneLink has another shot in its sling. It asserts that

PRTC violated two FCC orders and that it (OneLink) may enforce these

orders. It premises its assertion of standing on the Communications

Act, 47 U.S.C. §§ 151-615b. Specifically, it relies on section

401(b), which provides in pertinent part that "[i]f any person fails

or neglects to obey any order of the [FCC] . . . any party injured

thereby . . . may apply to the appropriate district court of the

United States for the enforcement of such order." 47 U.S.C.

§ 401(b).

OneLink's assertion of standing runs headlong into circuit

precedent. We have held that section 401(b) may be used by

aggrieved parties to enforce FCC orders that emanate from the

Commission's adjudicatory process. See New Engl. Tel. & Tel. Co.

v. PUC of Me., 742 F.2d 1, 4-5 (1st Cir. 1984) (Breyer, J.). We

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also have held, however, that section 401(b) may not be used by an

aggrieved party to enforce FCC orders promulgated through the

Commission's rulemaking process.3 See id. OneLink does not dispute

that both the 2007 Order and the 1991 Order are rulemaking orders

rather than adjudicatory orders. Thus, under the dichotomy

established in New England Telephone, OneLink lacks standing to

enforce those orders.

In an effort to parry this thrust, OneLink counters that

New England Telephone was wrongly decided and invites us to overrule

it. We decline the invitation.

The "law of the circuit" rule is a subset of stare

decisis. It is one of the building blocks on which the federal

judicial system rests. Under the rule, newly constituted panels in

a multi-panel circuit court are bound by prior panel decisions that

are closely on point. See, e.g., United States v. Rodríguez-Vélez,

597 F.3d 32, 46 (1st Cir. 2010); United States v. Wogan, 938 F.2d

1446, 1449 (1st Cir. 1991).

Although this rule is not "immutable," Carpenters Local

Union No. 26 v. U.S. Fid. & Guar. Co., 215 F.3d 136, 142 (1st Cir.

3
There is a fundamental distinction between adjudicatory
orders and orders promulgated through the rulemaking process.
Adjudication is party-specific and "is concerned with the
determination of past and present rights and liabilities." Bowen
v. Georgetown Univ. Hosp., 488 U.S. 204, 219 (1988) (quoting with
approval 1947 Attorney General's Manual on the Administrative
Procedure Act 13-14). In contrast, rulemaking is not party-
specific but, rather, tends to focus on policy considerations and
results in orders that are, by definition, orders of future effect.

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2000), the exceptions are extremely narrow and their incidence is

hen's-teeth-rare. Such exceptions come into play only when the

holding of the prior panel is "contradicted by controlling

authority, subsequently announced (say, a decision of the authoring

court en banc, a Supreme Court opinion directly on point, or a

legislative overruling)," United States v. Rodríguez, 527 F.3d 221,

225 (1st Cir. 2008), or in the "rare instances in which authority

that postdates the original decision, although not directly

controlling, nevertheless offers a sound reason for believing that

the former panel, in light of fresh developments, would change its

collective mind," Williams v. Ashland Eng'g Co., 45 F.3d 588, 592

(1st Cir. 1995).

OneLink proffers a trilogy of Supreme Court decisions to

support its plaint that New England Telephone should be relegated

to the scrap heap. None of these decisions affords a principled

basis for overruling New England Telephone.

We can discard two of the decisions without ceremony; they

predate New England Telephone, see Ambassador, Inc. v. United

States, 325 U.S. 317, 321-22, 326 (1945), CBS v. United States, 316

U.S. 407, 416-19 (1942), and thus give no traction to OneLink's

plaint.4 A previously decided case — at least a previously decided

4
Indeed, Judge (now Justice) Breyer cited and persuasively
distinguished both of these cases. See New Engl. Tel. & Tel., 742
F.2d at 7-8, 10.

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case not overlooked by the original panel — cannot trigger an

exception to the law of the circuit rule.

The third Supreme Court opinion embraced by OneLink is

more recent. In that case, however, the Court did not discuss what

sort of orders are enforceable by a private party under section

401(b). Rather, the decision deals with the scope of a private

right of action carved out of a different section of the

Communications Act. See Global Crossing Telecomms., Inc. v.

Metrophones Telecomms., Inc., 550 U.S. 45, 52-54 (2007) (discussing

47 U.S.C. § 207).5 Global Crossing is simply not on point.

OneLink's argument against the stare decisis effect of New

England Telephone has another dimension. It commends to our

attention some lower court decisions that decline to follow New

England Telephone. See, e.g., Alltel Tenn., Inc. v. Tenn. Pub.

Serv. Comm'n, 913 F.2d 305, 308 (6th Cir. 1990); Hawaiian Tel. Co.

v. PUC of Haw., 827 F.2d 1264, 1270-72 (9th Cir. 1987). Under the

law of the circuit rule, however, mere disagreement by a coequal

court with a panel decision will not divest that opinion of its

customary stare decisis effect within the circuit. See Williams,

5
Section 207 provides in pertinent part:

Any person claiming to be damaged by any common carrier
subject to the provisions of [the Communications Act] .
. . may bring suit for the recovery of the damages for
which such common carrier may be liable . . . in any
district court of the United States of competent
jurisdiction; . . . .

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45 F.3d at 592. That principle has especial force when the

reasoning that underpins the conflicting decision or decisions was

considered and expressly rejected in the challenged panel decision.

That is the situation here. See New Engl. Tel. & Tel., 742 F.2d at

4-7.

The law of the circuit rule promotes important virtues,

including humility, stability, and predictability of outcomes within

a judicial circuit. There is no sufficient reason to disregard it

here. Consequently, we are bound by our earlier decision in New

England Telephone. We therefore hold that OneLink lacks standing

to enforce either of the two FCC rulemaking orders at issue here.

III. CONCLUSION

We need go no further. For the reasons elucidated above,

the district court did not err in dismissing the plaintiff's amended

complaint.

Affirmed.

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