Payphone Company Seems to Score Points in High Court Oral Arguments
Supreme Court justices seemed receptive Tues. to arguments by operator Metrophone that it should be allowed sue a carrier to recover unpaid payphone charges. The court was hearing oral arguments in a case also involving Global Crossing. Legal experts said the case could have much broader implications, especially if the high court agrees with Global Crossing and significantly restricts private enforcement of the Communications Act.
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Under FCC regulations, payphone companies are entitled to reimbursement each time one of their phones is used with a prepaid or other calling card. The rate applicable in this case was 24 cents a call. The fee can’t be collected from callers but it is owed by the company issuing the card. A 2003 FCC order determined that payphone companies are entitled to sue carriers that won’t pay, under Sec. 201(b) of the Communications Act. The FCC said failure to pay was an “unjust and unreasonable practice” prohibited by the section. The 9th U.S. Appeals Court, San Francisco, earlier sided with Metrophone that the case had been properly brought in federal court.
Jeffrey Fisher, attorney for Global Crossing, argued that though the Communications Act specifically permits companies to go to court to enforce the act itself the law doesn’t provide that remedy for enforcement of FCC regulations. Nothing in previous court cases should lead the court to give the FCC deference in deciding whether failure to comply with a specific regulation is an unjust and unreasonable practice as covered by Sec. 201(b), Fisher said.
“Both the text and structure of the Communications Act dictate that the Act limits private causes of action to those seeking damages for statutory violations,” Global Crossing said in a brief to the court. “Private plaintiffs may not seek redress in federal court for violations merely of regulations promulgated to carry out statutory objectives. The FCC, in fact, already has established detailed procedures that allow payphone service providers to seek administrative resolutions of disputes just like this one… There can be little doubt that this integrated system of enforcement mechanisms protects the integrity of the FCC s regulations; there is no need for a direct private cause of action.”
In its brief and oral argument, Metrophone argued that Global Crossing is misinterpreting the Communications Act. “Permeating Global Crossing’s brief is the suggestion that it is not plausible that Congress intended, in Section 201(b) alone, to create a private right of action for violation of the FCC’s payphone compensation rules,” the company said. “But Congress -- through unambiguous statutory text -- has declared that all unjust or unreasonable practices by common carriers violate the Act, and that there is a private right of action for any violations of the Act by common carriers.”
Justice Stephen Breyer seemed particularly skeptical of Global Crossing’s arguments. “So far, I have heard nothing to suggest that this wouldn’t be an unjust practice under 201(b),” he said. Breyer also suggested to Fisher: “You're asking us to 2nd guess whether [the FCC’s] view of unreasonable is reasonable.” Justice David Souter said Global Crossing is asking for a “free ride” from payphone companies. “Why can’t they [the FCC] pass a regulation that says ‘don’t gouge payphone companies,'” he said. “Somebody ought to owe. Somebody has to pay.” Justice John Stevens suggested that Global Crossing’s position would make the payphone charges would be difficult to collect. “In your view did the regulation create a legally enforceable obligation? Where may that obligation be enforced?” Stevens asked. “Is the obligation enforceable in state court?”
But Justice Antonin Scalia said rejecting Global Crossing’s arguments would mean that language in the Communications Act limiting its enforceability in court would be a “farce.” “Every FCC regulation can be enforced by private action,” he said: “All of these regulations can be sued upon in federal court, along with all the diverse rulings that that will produce.”
In an analysis, James Speta of Northwestern U. School of Law and Joseph Kearney of Marquette U. Law School said the case could produce a decision with broad implications. “If the court were to adopt Global Crossing’s broadest argument, this could lead to a significant decrease in private enforcement of the Communications Act, whether by federal lawsuits or through administrative complaints,” the law professors said. “The FCC’s rules would then, in all likelihood be enforceable only by the FCC, which would mean either a significant increase in FCC enforcement activities or unremedied violations.”