MCI Telecommunications Corp. v. Teleconcepts, Inc. ( 1995 )

Opinions of the United
1995 Decisions States Court of Appeals
for the Third Circuit
12-8-1995
MCI Telecomm. Corp. v. Teleconcepts, Inc.
Precedential or Non-Precedential:
Docket 94-5426
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"MCI Telecomm. Corp. v. Teleconcepts, Inc." (1995). 1995 Decisions. Paper 303.
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UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
No. 94-5426
MCI TELECOMMUNICATIONS CORPORATION
v.
TELECONCEPTS, INCORPORATION,
Defendant/Third-Party Plaintiff-
Appellant
v.
BELL OF PENNSYLVANIA,
Third-Party Defendant-Appellee
TELECONCEPTS, INCORPORATION,
Appellant.
ON APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW JERSEY
(D.C. Civil No. 92-244)
Argued: March 1, 1995
Before: GREENBERG, NYGAARD and McKEE, Circuit Judges.
(Filed December 8, l995
CHARLES J. CASALE, JR. (Argued)
396 Whitehorse Avenue
Trenton, New Jersey 08610
Attorney for Defendant/Third
Party Plaintiff-Appellant
Teleconcepts, Inc.
KENNETH M. DENTI (Argued)
Duane, Morris & Heckscher
Sagemore Corporate Center
1
8000 Sagemore Drive, Suite
8303
Marlton, New Jersey 08053
Attorney for Plaintiff-
Appellee
MCI Telecommunications Corp.
LISA M. BELLINO (Argued)
Marks, O'Neill, Reilly &
O'Brien, P.C.
1234 Market Street, Suite 1910
Philadelphia, PA 19107
Attorney for Third-Party
Defendant-Appellee
Bell of Pennsylvania
OPINION OF THE COURT
McKEE, Circuit Judge
MCI Telecommunications ("MCI"), a long distance
telecommunications service provider, has sued Teleconcepts to
recover the cost of services MCI provided under MCI's Federal
Communications Commission tariff ("FCC tariff"). Teleconcepts
raised the untimely service of the complaint and the statute of
limitations as defenses, and also brought a third-party action
against Bell of Pennsylvania ("Bell"), Teleconcepts' local
telephone exchange carrier. Bell disclaimed liability under the
terms of its Pennsylvania Public Utility Commission Tariff ("PUC
Tariff"). The district court held that the action was not time-
barred and that "good cause" existed for the late service of the
complaint. The court also granted summary judgment to both MCI
2
and Bell holding that the FCC and PUC tariffs both placed the
responsibility for unauthorized telephone calls on Teleconcepts.
Because we find that MCI's action was partially barred by
the statute of limitations, and that the doctrine of primary
jurisdiction required the district court to transfer the third-
party complaint to the Pennsylvania Public Utility Commission, we
will reverse in part and remand for further proceedings.
I. FACTUAL BACKGROUND
Teleconcepts owns coin operated telephones - commonly
referred to as "pay phones" - that it places on the premises of
various businesses. MCI supplied long distance telephone service
to Teleconcepts from January 1988 through March 1990 under the
terms and conditions of the tariff MCI had filed with the Federal
Communications Commission. When Teleconcepts' pay phones are
used, Teleconcepts incurs a cost to Bell of Pennsylvania for the
use of Bell's telephone lines. The monthly bill for the line
charges also includes the customer's long distance charges for
the preceding month. Teleconcepts' November 1989 bills from MCI
for long distance calls included long distance service charges
for international telephone calls in excess of $7,000.
Teleconcepts was billed under six different account numbers,
which presumably represent six different Teleconcepts' pay
phones. The November charges exceeded prior months' long
distance charges to such an extent that Teleconcepts was certain
that a billing error had occurred, and so informed Bell. However,
since Bell was merely a conduit for billing long distance
3
charges, it responded by telling Teleconcepts to contact its long
distance carrier - MCI.
Teleconcepts contacted MCI and informed it of the numerous
long distance calls to the Dominican Republic and Puerto Rico
that Teleconcepts believed had not been made from any of its
phones and requested a credit. When MCI refused, Teleconcepts
told MCI that it would not pay for these long distance charges,
but MCI continued to provide long distance service. When
Teleconcepts received its December bills it discovered over
$13,000 in doubtful charges to Puerto Rico and the Dominican
Republic. Teleconcepts again refused to pay these charges.
On December 27, 1989, MCI notified Teleconcepts that its
long distance service was terminated. However, for some reason,
MCI failed to terminate long distance service until the following
March. In the interim, Teleconcepts continued to receive bills
containing exorbitant long distance charges, and Teleconcepts
continued to refuse to pay. Finally, MCI sued Teleconcepts to
recover the amount of unpaid charges for long distance services
MCI had provided to Teleconcepts through March 1990 - $47,565.84.
Eventually, Teleconcepts came to believe that the questioned
telephone calls had resulted from a fraudulent process known as
"hacking."0 This occurred when a person called an 800 number on
0
It is unclear exactly when Teleconcepts first learned that
it may have been a "hacking" victim. In an affidavit filed in
the district court, John Goida, president of Teleconcepts, states
he learned generally of the fraudulent "hacking" process during
an unrelated phone conversation with an employee in Bell's fraud
division, and he deduced that this is what happened to his pay
phones.
4
a pay phone and remained silent until the receiving party hung
up. A second dial tone would then be given to the 800 caller who
could then call anywhere he or she desired without placing any
additional coins in the telephone.
On January 15, 1992, MCI filed its initial summons and
complaint in an effort to collect the unpaid charges from
Teleconcepts. MCI attempted service through the Mercer County
Sheriff's Department, but its initial attempt was unsuccessful.
Service was eventually made on June 25, 1992. Teleconcepts
responded by filing a third-party complaint against Bell of
Pennsylvania in which it alleged that Bell was responsible for
the defect in the dial tone that allowed the illegal "hacking"
and that Bell should therefore indemnify Teleconcepts for any
liability it may have to MCI.0 Teleconcepts eventually moved to
dismiss the complaint because MCI had failed to effect service of
process within 120 days of filing of the complaint as required by
Federal Rule of Civil Procedure 4(j). In an order dated
September 15, 1992, the district court denied Teleconcepts'
motion to dismiss MCI's complaint finding that "good cause"
excused the late service.
Subsequently, the parties filed cross-motions for summary
judgment. Teleconcepts claimed that MCI's action was untimely
since it was not filed within the two year statute of limitations
contained in the Communications Act. Teleconcepts argued that
MCI's cause of action accrued either when it refused to pay the
0
It appears that the defect in the dial tone has since been
remedied.
5
November 1989 bills, or at the latest, on December 27, 1989, when
MCI gave notice that Teleconcepts' long distance services were
terminated. MCI countered by arguing that its action was timely
because Teleconcepts' services continued until March 1990 despite
the December 27, 1989 disconnect notice. MCI further argued that
under a 30 day payment provision of its federal tariff, final
payment of the bills would not become due until either April
1990, or January 27, 1990, at the earliest even accepting
Teleconcepts' position. Thus, MCI claimed the operative date for
commencing an action was either March or April of 1992, or at the
earliest, January 27, 1992.
The district court denied Teleconcepts' motion for summary
judgment in a memorandum opinion and order dated December 28,
1993. Additionally, the court held that MCI's federal tariff
placed responsibility for unauthorized calls on Teleconcepts, and
thus, granted MCI's cross-motion for summary judgment. The court
also granted MCI's request for attorney's fees and, in a separate
memorandum opinion and order dated February 25, 1994, determined
the reasonable amount of such fees to be $11,812.50. The court
also held that the PUC tariff placed responsibility for
unauthorized calls on payphone owners, and therefore granted
summary judgment in favor of Bell and against Teleconcepts in a
memorandum and order entered on June 20, 1994.
On appeal, Teleconcepts challenges the district court's
denial of its motion to dismiss for failure to timely serve the
complaint, the denial of its motion for summary judgment on the
6
statute of limitations defense, the grant of summary judgment in
favor of Bell, and the amount of the attorney's fee award.
II. DISCUSSION
A. Appellate Jurisdiction
We must first determine whether we have jurisdiction to
review the issues raised by Teleconcepts on appeal. The notice
of appeal reads as follows:
Teleconcepts, Inc., defendant-third party
plaintiff appeals to the United States Court
of Appeals for the Third Circuit from an
order of summary judgment disposing the
remaining claims of the District Court for
the District of New Jersey entered in this
case June 20, 1994, in favor of third party
defendant, Bell of Pennsylvania and December
28, 1993 in favor of plaintiff, MCI
Telecommunications, Inc.
App. at 1.
Federal Rule of Appellate Procedure 3(c) provides, in
pertinent part, that a notice of appeal "must designate the
judgment, order or part thereof appealed from . . . ." Fed. R.
App. P. 3(c). If a party does not satisfy the requirements of
Federal Rule of Appellate Procedure 3(c), then the appellate
court does not acquire jurisdiction over the undesignated issues.
United States v. Rivera Constr. Co., 863 F.2d 293, 298 (3d Cir.
1988). Even though the notice of appeal does not mention the
September 15, 1992 order (denying Teleconcepts' motion to
dismiss) or the district court's February 25, 1994 memorandum and
order (calculating MCI's award of reasonable attorney's fees),
Teleconcepts challenges both of these decisions in its brief to
this court. MCI argues that we did not acquire jurisdiction over
7
these issues since these orders are neither directly nor
indirectly referred to in the notice of appeal. Appellee's brief
at 6.
"Our jurisprudence liberally construes notices of appeals."
Drinkwater v. Union Carbide Corp., 904 F.2d 853, 858 (3d Cir.
1990). Thus, we have held that it is proper to exercise
appellate jurisdiction over orders not specified in the notice of
appeal if "``there is a connection between the specified and
unspecified order, the intention to appeal the unspecified order
is apparent and the opposing party is not prejudiced and has a
full opportunity to brief the issues.'" Lusardi v. Xerox Corp.,
975 F.2d 964, 972 (3d Cir. 1992) (quoting Williams v. Guzzardi,
875 F.2d 46, 49 (3d Cir. 1989)). These factors are present here.
We have repeatedly held that "``since . . . only a final
judgment or order is appealable, the appeal of a final judgment
draws into question all prior non-final orders and rulings.'"
Drinkwater, 904 F.2d at 858 (quoting Elfman Motors, Inc. v.
Chrysler Corp., 567 F.2d 1252, 1253 (3d Cir. 1977)). Teleconcepts
could not appeal the September 15, 1992 order denying its motion
to dismiss MCI's complaint until the district court filed the
December 28, 1993 order of summary judgment in favor of MCI.
Moreover, in disposing of the remaining issues, the December 28,
1993 memorandum opinion refers to the district court's September
15, 1992 order denying Teleconcepts' motion to dismiss. Thus,
the requisite connection is present.
Similarly, while the notice of appeal does not refer to the
February 25, 1994 memorandum and order calculating MCI's award of
8
reasonable attorney's fees, an adequate connection exists between
a specified order that designates the prevailing party for
purposes of attorney's fees and an unspecified order that
quantifies the attorney's fee award. See Bernardsville Bd. of
Educ. v. J.H., 42 F.2d 149, 156 n.10 (3d Cir. 1994). Since the
December 28, 1993 order specifically granted MCI's request for
attorney's fees and merely directed MCI to file an affidavit of
reasonable attorney's fees, there is an adequate connection
between these two orders.
Moreover, MCI is not prejudiced as it had an opportunity to
brief the disputed issues, and has done so. See id. at 156
n.10. Accordingly, we hold that we have jurisdiction to review
the September 15, 1992 order denying Teleconcepts' motion to
dismiss and the February 25, 1994 memorandum and order
calculating an award of attorney's fees.
B. Subject Matter Jurisdiction
Before addressing the substantive issues raised by
Teleconcepts we must determine if the district court had subject
matter jurisdiction over MCI's action against Teleconcepts in the
first place. While neither the district court nor Teleconcepts
ever raised this issue we have an obligation to do so sua sponte.
See Medlin v. Boeing Vertol Co., 620 F.2d 957, 960 (3d Cir.
1980); Carlsberg Resources Corp. v. Cambria Sav. & Loan Ass'n,
554 F.2d 1254, 1256 (3d Cir. 1977).
MCI's action is based upon Teleconcepts' failure to pay MCI
for long distance telephone service MCI provided under the terms
and conditions set forth in MCI's FCC Tariff. MCI alleges that
9
since it is required to collect the charges on the services
specified in the tariff under § 203 of the Communications Act of
1934, 47 U.S.C. § 203 (1982), subject matter jurisdiction exists
under 28 U.S.C. §§ 1331 and 1337, and the Communications Act of
1934, 47 U.S.C. §151, et seq. (1982).0
While this circuit has never addressed whether the
collection of unpaid charges for long distance telephone service
under an FCC tariff "arises under" federal law (28 U.S.C. § 1331)
or an act of Congress regulating commerce (28 U.S.C. § 1337) the
majority of courts of appeals that have addressed this issue have
answered in the affirmative. See Western Union Int'l, Inc. v.
Data Dev., Inc., 41 F.3d 1494 (11th Cir. 1995); MCI
Telecommunications Corp. v. Graham, 7 F.3d 477 (6th Cir. 1993);
MCI Telecommunications Corp. v. Garden State Inv. Corp., 981 F.2d
385 (8th Cir. 1992); Ivy Broadcasting Co., Inc. v. Am. Tel. &
Tel. Co., 391 F.2d 486 (2d Cir. 1968). But see MCI
Telecommunications Corp. v. Credit Builders of Am., Inc., 980
F.2d 1021 (5th Cir. 1993), vacated, U.S. , 113 S.Ct.
2925 (1993), prior opinion reinstated, 2 F.3d 103 (5th Cir.),
cert. denied, U.S. , 114 S.Ct. 472 (1993).
In Richman Bros. Records, Inc. v. U.S. Sprint Communications
Co., 953 F.2d 1431, 1438 (3d Cir. 1991), we held that the
0
28 U.S.C. § 1331 provides that "the district courts shall
have original jurisdiction of all civil actions arising under the
Constitution, laws, or treaties of the United States." 28 U.S.
C. § 1337(a) provides, in part, that "[t]he district courts shall
have original jurisdiction of any civil action of proceeding
arising under any Act of Congress regulating commerce or
protecting trade and against restraints and monopolies . . . ."
10
district court had jurisdiction over Sprint's action under a
tariff filed with the FCC pursuant to 28 U.S.C. § 1337(a).
However, we did not question jurisdiction because there was
diversity of citizenship and we would thus have had jurisdiction
even if federal question jurisdiction failed. See id. Given the
subsequent decisions of our sister circuits and the lack of
diversity here, we now undertake this analysis.
Those courts of appeals that have held that subject matter
jurisdiction exists under 28 U.S.C. §§ 1331 and/or 1337(a),
reason that a claim for unpaid long distance charges "arises
under" an act of Congress regulating commerce (the Communications
Act) because the claim relies on tariffs that must be filed with
the FCC.0 See Western Union, 41 F.3d at 1496; Graham, 7 F.3d at
479; Garden State Inv., 981 F.2d at 388; Ivy Broadcasting, 391
F.2d at 493-494. The lone appellate court to hold otherwise
reasons that the federal common law is appropriate in only a "few
and restricted" circumstances and doubts that collection of a
delinquent phone bill falls within these limited circumstances.
See Credit Builders, 980 F.2d at 1022-23.
This specific issue was first addressed in Ivy Broadcasting
Co., Inc. v. Am. Tel. & Tel., supra. There, the district court
sua sponte dismissed a suit against A.T. & T. that arose from
0 Although some courts that have addressed this issue
have relied upon § 1331 and others have relied upon § 1337, there
is no difference in these two bases of subject matter
jurisdiction for purposes of our present analysis. See Medlin,
620 F.2d at 962-963 ("The 'arising under' requirement of section
1337 has been interpreted to be the same as that found in 28
U.S.C. § 1331 . . . ."); Yancoskie v. Delaware River Port
Authority, 528 F.2d 722, 725 (3d Cir. 1975) (same).
11
problems that had occurred during a transmission over A.T. & T.'s
telephone wires. The court reasoned that claims for negligence
and breach of contract did not arise out of the Communications
Act but were founded on tort and contract law, and that the
counterclaim was merely an action for services rendered that also
lacked a federal jurisdictional basis. On appeal the United
States Court of Appeals for the Second Circuit noted that since
the complaint did not allege a specific violation of the
Communications Act, 47 U.S.C. § 207 did not confer jurisdiction.
Nevertheless, the court reasoned that the broad scheme of federal
regulation of communications carriers indicated a congressional
intent to occupy the field to the exclusion of state law. See
Ivy Broadcasting, 391 F.2d at 490.
It seems to us that the congressional
purpose can be achieved only if a uniform
federal law governs as to the standards of
service which the carrier must provide and as
to the extent of liability for failure to
comply with such standards.
Id. at 491.
The court concluded that since federal law controlled, the
suit "arose under" the laws of the United States as required by
28 U.S.C. § 1331.
The word 'laws' in § 1331 should be construed
to include laws created by federal judicial
decision as well as by congressional
legislation. The rational of the 1875 grant
of federal question jurisdiction -- to insure
the availability of a forum designed to
minimize the danger of hostility toward, and
specially suited to the vindication of,
federally created rights -- is as applicable
to judicially created rights as to rights
created by statute.
12
Id. at 492.
The court also held that 28 U.S.C. § 1337 provided
jurisdiction over the counterclaims.
The Communications Act of 1934 is an 'Act of
Congress regulating commerce' within the
meaning of [§ 1337.] Since we conclude that
the counterclaims arise under the
Communications Act insofar as they rely upon
tariffs which the Act requires to be filed
with the FCC, we hold that [§ 1337] gives the
district court jurisdiction over so much of
the counterclaims as relies upon such
tariffs.
Id. at 494 (footnote omitted) (citations omitted). The court's
analysis relied heavily upon an analogous inquiry of the Supreme
Court under the Commerce Act in Louisville & N. R. v. Rice, 247
U.S. 201, 202 (1918).
Several other courts have employed the reasoning of Ivy
Broadcasting to hold that federal district courts have subject
matter jurisdiction over actions for unpaid charges for services
provided under an FCC tariff. In MCI Telecommunications Corp. v.
Garden State Inv. Corp, supra, MCI sued to recover unpaid
telecommunications charges, and the district court dismissed the
complaint sua sponte because the complaint did not allege a
specific violation of the Communications Act. The court reasoned
that there was no need for uniform federal common law governing
claims to collect unpaid telecommunication service charges, and
that there was therefore no basis for the exercise of subject
matter jurisdiction.
13
The United States Court of Appeals for the Eighth Circuit
relied heavily upon Supreme Court decisions involving federal
jurisdiction under the Commerce Act to reverse. (i.e. Thurston
Motor Lines, Inc. v. Jordan K. Rand, Ltd., 460 U.S. 533 (1983)
(per curiam)).0 See Garden State Inv., 981 F.2d at 387-88. The
court reasoned that:
the district court failed to recognize that a
claim arises under federal law when a right
created by federal law is an essential
element of the plaintiff's action. The
district court stated MCI's claim brought
under an FCC tariff 'is simply a contract
action seeking to recover payment for
services rendered.' The district court's
characterization of MCI's claim overlooks the
fact that federal tariffs are the law, not
mere contracts. Although a user's refusal to
pay charges fixed by a tariff will often
arise in the context of a broken contract,
the carrier's claim for payment is
necessarily based on the filed tariff.
Id. at 387 (citations omitted).
In analogous circumstances, the United States Court of
Appeals for the Sixth Circuit reversed the district court's sua
sponte dismissal for lack of federal jurisdiction in MCI
Telecommunications Corp. v. Graham, supra. The court held that
MCI's ability to sue was based upon its FCC tariff, and therefore
was rooted in federal law. See Graham, 7 F.3d at 479-80. As in
Ivy Broadcasting, the court was persuaded by similarities between
the Communications Act and the Commerce Act and was guided by
0 In Thurston, the Court rejected the Ninth Circuit
Court of Appeals' argument that a carrier's action for payment of
transportation services was a "simple contract collection
action." Garden State Investment, supra, at 387 (citing
Thurston, 460 U.S. at 533)
14
Thurston, Rice and the analysis of the United States Court of
Appeals for the Second Circuit in Ivy Broadcasting. "[I]t would
be incongruous to impose a different jurisdictional rule under
the Communications Act than under the Commerce Act." Id. at 480.
See also Western Union, 41 F.3d at 1496-97 (subject matter
jurisdiction over a claim for unpaid telecommunications service
charges existed under 28 U.S.C. § 1331 and 28 U.S.C. § 1337).
Only MCI Telecommunications Corp. v. Credit Builders of Am.,
Inc., supra, reached a contrary result. There, a supplier of
telecommunications services appealed the district court's
determination that a suit to collect unpaid telecommunications
charges lacked a jurisdictional basis. On appeal, the plaintiff
argued that the district court had independent federal question
jurisdiction under 28 U.S.C. § 1331 and jurisdiction over matters
arising out of the Communications Act under 28 U.S.C. § 1337.
The United States Court of Appeals for the Fifth Circuit
began its analysis by noting that:
the Supreme Court has stated that a case
arises under federal law if 'it really and
substantially involves a dispute or
controversy respecting the validity,
construction, or effect of such a law, upon
the determination of which the result
depends.'
Credit Builders, 980 F.2d at 1022 (citations omitted).
The court was not persuaded by the reasoning of Ivy
Broadcasting. Instead, the court reasoned that:
[a]s the Supreme Court has emphasized, the
federal common law is appropriate in only a
'few and restricted' circumstances. Milwaukee
v. Illinois, 451 U.S. 304, 313, 101 S.Ct.
1784, 1790, 68 L.Ed.2d 114 (1981). In Texas
15
Industries, Inc. v. Radcliff Materials, Inc.,
451 U.S. 630, 641, 101 S.Ct. 2061, 2067, 68
L.Ed.2d 500 (1981), the Supreme Court went on
to state that 'absent some congressional
authorization to formulate substantive rules
of decision, federal common law exists only
in such narrow areas as those concerned with
the rights and obligations of the United
States, interstate and international disputes
implicating the conflicting rights of States
or our relations with foreign nations, and
admiralty cases.' We do not believe that this
case to collect a delinquent telephone bill
falls within these limited instances.
Id. at 1022-23. The court held that for these same reasons §1337
did not confer federal question jurisdiction, and that
plaintiff's action for breach of contract or quantum meruit was a
creature of state law.
We are not persuaded by the analysis in Credit Builders.
MCI's action is based upon, and draws its life from, the tariff
that MCI filed with the Federal Communications Commission. The
reasoning of Ivy Broadcasting, and the analogous cases decided
under the Commerce Act, see Thurston and Rice, supra, persuade us
that the district court did have subject matter jurisdiction over
MCI's action, and Teleconcepts' counterclaim. However, there are
other jurisdictional problems with that counterclaim which we
discuss in more detail below.
C. Late Service of the Complaint.
When the district court denied Teleconcepts' motion to
dismiss for failure to timely serve the complaint, Federal Rule
of Civil Procedure 4(j) read in pertinent part:
Summons: Time Limit for Service. If a
service of the summons and complaint is not
made upon a defendant within 120 days after
16
the filing of the complaint and the party on
whose behalf such service was required cannot
show good cause why such service was not made
within that period, the action shall be
dismissed as to that defendant without
prejudice upon the court's own initiative
with notice to such party or upon motion.
Fed. R. Civ. P. 4(j).0
The district court was thus required to dismiss MCI's action
if process was not served within 120 days of the filing of the
complaint unless MCI could show good cause for the delinquency.
See Petrucelli v. Bohringer & Ratzinger, 46 F.3d 1298, 1304 (3d
Cir. 1995).
MCI filed its initial summons and complaint on January 15,
1992. The papers were returned unserved by the Mercer County
Sheriff's Department marked "unable to locate, unknown at address
given" on February 25, 1992. MCI requested an alias summons on
or about March 12, 1992, after it discovered another address for
service. The alias summons was returned on an "unknown date" and
forwarded for service on or about May 29, 1992. Service of
process was eventually achieved at this alternate address on June
25, 1992, well over a month after the 120 days prescribed by Rule
4(j) had lapsed. MCI never made a request for an extension of
time.
The district court found that "good cause" excused the late
service, and denied Teleconcepts' motion to dismiss the
complaint. Our review of the district court's finding of "good
0 As of December 1, 1993, Rule 4(j) was amended and
redesignated Rule 4(m). We discuss the significance of this
amendment infra.
17
cause" is for an abuse of discretion. See Lovelace v. Acme
Markets, Inc., 820 F.2d 81, 83 (3d Cir.), cert. denied, 484 U.S.
965, 108 S.Ct. 455 (1987); Braxton v. United States, 817 F.2d
238, 242 (3d Cir. 1987).
The district court did not articulate the factor(s) it
believed constituted "good cause." The court initially orally
denied Teleconcepts' motion to dismiss during the following
exchange in a telephone conference:
THE COURT: All right. Now, the defendant
moved to dismiss the complaint pursuant to
Rule 4(j), which provides for dismissal
unless good cause be shown. I would like to
hear from the defendant before I rule.
MR. REILLY: Your Honor, after I received the
response from the plaintiff regarding my
client's address as 51 Everett Street in
Princeton, he informed me that that's been
his address. I understand that he may not
have been there at the time when the Sheriff
initially went out. The problem I have with
the argument is that they did serve him
eventually at another -- at his residence.
THE COURT: Yes.
MR. REILLY: And that was some four months
after the initial issuance of the summons and
complaint, which I still feel is an
inordinate amount of time --
THE COURT: Well, I've seen no prejudice. The
remedy if good cause were not shown would be
dismissal without prejudice and re-service.
Under the circumstances, I certainly find
good cause has been shown. Motion is denied.
The defendant will answer, move or otherwise
plead.
Subsequently, the district court memorialized this decision
in the written order of September 15, 1992. In that order, the
18
court stated merely that "good cause" had been shown and that the
motion to dismiss was denied for the reasons set forth on the
record.
Although the district court felt that Teleconcepts had not
been prejudiced by the late service, absence of prejudice alone
can never constitute good cause to excuse late service. See
United States v. Nuttall, 122 F.R.D. 163, 166-67 (D. Del. 1988)
(courts have considered three factors in determining the
existence of good cause: (1) reasonableness of plaintiff's
efforts to serve (2) prejudice to the defendant by lack of timely
service and (3) whether plaintiff moved for an enlargement of
time to serve). We have equated "good cause" with the concept of
"excusable neglect" of Federal Rule of Civil Procedure 6(b)(2),
which requires "a demonstration of good faith on the part of the
party seeking an enlargement and some reasonable basis for
noncompliance within the time specified in the rules." See
Petrucelli, 46 F.3d at 1312 (Becker, J., concurring in part and
dissenting in part).0 Thus, while the prejudice may tip the
0 Fed. R. Civ. P 6(b) provides in pertinent part:
Enlargement. When by these rules or by a
notice given thereunder or by order of court
an act is required or allowed to be done at
or within a specified time, the court for
cause shown may at any time in its discretion
(1) with or without motion or notice order
the period enlarged if request therefor is
made before the expiration of the period
originally prescribed or as extended by a
previous order, or (2) upon motion made after
the expiration of the specified period permit
the act to be dome where the failure to act
was the result of excusable neglect . . . .
19
"good cause" scale, the primary focus is on the plaintiff's
reasons for not complying with the time limit in the first place.
Such "justifications" are conspicuously absent in the district
court's oral decision and its subsequent written order. Moreover,
the briefs to this court are silent on this issue and the parties
have therefore not assisted in divining the "good cause" that the
district court found. In addition, our review of the entire
record has uncovered only one reference to the "good cause" which
the court may have felt supported late service. In MCI's brief
in opposition to Teleconcepts' motion to dismiss MCI states:
good cause is shown because service could
not be made at the address given as the
registered address for service of process at
the time the complaint was filed. It was
necessary to make additional attempts at
service by locating another address and
requesting an alias summons.
App. at 35.
Even if we were to speculate and conclude that this was the
basis for the district court's finding of "good cause," we would
have to conclude that it was an abuse of discretion.
The summons was returned unserved on February 28, 1992. MCI
learned of Teleconcepts' alternative address as early as March
12, 1992, and requested an alias summons on or about that same
date. Inexplicably, the summons was not forwarded for service
until on or about May 29, 1992, and not served at this alternate
address until June 25, 1992, well beyond the time limit
prescribed by Rule 4(j). MCI never moved for an extension of
time.
20
Nothing on this record explains why it took MCI over three
months after it learned of Teleconcepts' alternate address to
serve Teleconcepts. Moreover, the record does not explain why
MCI never filed a motion to enlarge the time to serve. See
Lovelace, 820 F.2d at 85 (alternative means of service and the
ability to extend the time indicate a lack of diligence and weigh
against a finding of good cause). Since we are presented with no
explanations as to what, if any, circumstances constitute
sufficient "good cause" to excuse MCI's apparent lack of
diligence, we hold that the district court abused its discretion
in finding that good cause existed to excuse the late service.
See Braxton, 817 F.2d at 242 (good cause does not exist when
there is an "unexplained delinquency on the part of the process
server and lack of oversight by counsel").
Reversal of a district court's finding that good cause
existed to excuse late service results in the dismissal of an
action, but such dismissal is without prejudice to the plaintiff.
Accordingly, the party can refile the complaint and receive a new
120 day period to serve process. See Petrucelli, 46 F.3d at 1304
n.6.
However, as of December 1, 1993, Rule 4(j) was amended and
redesignated Rule 4(m). Rule 4(m) provides, in part, that:
If service of the summons and complaint is
not made upon a defendant within 120 days
after the filing of the complaint, the court,
upon motion, or on its own initiative after
notice to the plaintiff, shall dismiss the
action without prejudice as to that defendant
or direct that service be effectuated within
a specified time; provided that if the
plaintiff shows good cause for the failure,
21
the court shall extend the time for service
for an appropriate period.
Fed. R. Civ. P. 4(m).
We recently addressed the significance of this amendment in
Petrucelli v. Bohringer, supra. There, we read Rule 4(m) "to
require a court to extend time if good cause is shown and to
allow a court discretion to dismiss or extend time absent a
showing of good cause." Petrucelli, 46 F.3d at 1305. Here the
statute of limitations is in issue. In Petrucelli, we emphasized
that the expiration of the statute of limitations does not
require the court to extend the time for service, as the court
has discretion to dismiss the case even if the refiling of the
action is barred. See id. at 1306. We also noted that Rule 4(m)
should apply retroactively, to all matters pending at the time it
became effective "insofar as just and practicable." Id. at 1305(quoting The Order of the United States Supreme Court Adopting
and Amending the Federal Rules of Civil Procedure (April 22,
1993)). Here, such retroactive application is both just and
practicable as the district court has already made a
determination that there is some basis to excuse MCI's lack of
diligence. As a result, the district court would have discretion
to allow MCI's action to proceed upon remand under Rule 4(m) even
though we have determined that no "good cause" was shown under
Rule 4(j).
[A]s a result of the rule change which led to Rule
4(m), when entertaining a motion to extend time for
service, the district court must proceed in the
following manner. First, the district court should
22
determine whether good cause exists for an extension of
time. If good cause is present, the district court
must extend time for service and the inquiry is ended.
If, however, good cause does not exist, the court may
in its discretion decide whether to dismiss the case
without prejudice or extend time for service.
Id. at 1305. Moreover, the expiration of the statute of
limitations does not prohibit the district court from extending
the time for service. See id. at 1305-06.
The parties here apparently do not consider the substantive
changes to Rule 4(j) significant to our analysis as neither has
mentioned the amendment of Rule 4(j) or cited Petrucelli.
However, we find Petrucelli's interpretation of the amendment to
Rule 4(j) and its retroactive impact dispositive to the issues
before us.
Accordingly, even though we have determined that the
district court abused its discretion in inexplicably finding
"good cause" for MCI's lack of diligence, the retroactive effect
of Rule 4(m) means that the district court had the discretion to
allow this action to proceed even in the absence of "good cause."
We view the district court's decision to extend time as an
exercise of its discretion under that Rule, and therefore, we
affirm the district court's denial of Teleconcepts' motion to
dismiss.
D. Statute of Limitations
Teleconcepts argues that the district court improperly
denied its motion for summary judgment based upon the statute of
limitations. The Communications Act of 1934, provides that
"[a]ll actions at law by carriers for recovery of their lawful
23
charges, or any part thereof, shall be begun, within two years
from the time the cause of action accrues, and not thereafter."
47 U.S.C. § 415(a) (1982). The Act further states that a cause
of action "in respect of the transmission of a message shall, for
the purposes of this section, be deemed to accrue upon delivery .
. . thereof by the carrier and not thereafter." 47 U.S.C.
§415(e) (1982). However, as noted above, MCI's FCC tariff
provides that "MCI's bills are payable upon receipt. Amounts not
paid within 30 days after the date of the invoice will be
considered past due . . . ."
In the district court, Teleconcepts argued that payment was
due when it received the bills for long distance service in
November 1989, and MCI's cause of action accrued when these bills
went unpaid. Teleconcepts also argued that, even if the "past
due" standard were used, the cause of action accrued in December
1989; and that the latest possible accrual date was December 27,
1989, when MCI issued its letter terminating service. Since
MCI's action was filed more that two years from any of these
potential accrual dates, Teleconcepts concludes that the action
was untimely.
The district court rejected this position reasoning that
"[i]n an action involving collection of accounts receivable,
common sense dictates that in determining the tolling date of the
applicable statute of limitations, this court must look to the
date upon which payment was demanded and refused." MCI
Telecommunications Corp. v. Teleconcepts, Inc., No. 92-244, slip
op. at 5 (D.N.J. December 28, 1993). The court concluded that
24
MCI had until April 16, 1992 - two years after Teleconcepts
failed to remit payment of its final invoice of March 17, 1990 -
to initiate this action. Moreover, the court suggested that even
if it were to focus on the December 27, 1989 termination letter,
payment would not be due until January 26, 1990 (allowing for the
30 day period contained in the tariff). Since MCI filed the
complaint on January 15, 1992, the court concluded it was timely
and denied Teleconcepts' motion for summary judgment.
Our review of the district court's denial of Teleconcepts'
summary judgment motion is plenary. See Gulfstream II Assoc.,
Inc. v. Gulfstream Aerospace Corp., 995 F.2d 425, 429 (3d Cir.
1993); Schafer v. Bd. of Pub. Educ. of Sch. Dist. of Pittsburgh,
Pa., 903 F.2d 243, 246 (3d Cir. 1990). It is clear that our
analysis is controlled by 47 U.S.C. § 415(a). However, we must
determine when a cause of action "accrues" for purposes of that
statue.
In resolving this issue of first impression, Teleconcepts
urges us to be guided by the numerous decisions that have
construed the statute of limitations in the Commerce Act, see 49
U.S.C. § 16(3) (repealed 1978)0, on which § 415 was based. See
Pennsylvania R. Co. v. Carolina Portland Cement Co., 16 F.2d 760(4th Cir. 1927); South Omaha Terminal Ry. Co., Inc. v. Armour &
Co., Inc., 373 F. Supp. 641, (D. Neb. 1974); Baker v. Chamberlain
Mfg. Corp., 356 F. Supp. 1314, (N.D. Ill. 1973). In those cases
0
In 1978, after the cases relied upon by Teleconcepts had been
decided, 49 U.S.C. § 16(3) was repealed and replaced with 49
U.S.C. § 11706.
25
the courts ruled that a carrier's action to recover charges
accrues when delivery is made or tendered, irrespective of what
occurs subsequent to delivery. Teleconcepts reasons by analogy
that MCI's cause of action accrued when it transmitted the long
distance signals (i.e. "tendered delivery") in October 1989.
Appellant's brief at 24.
We do not find this argument persuasive. At the time the
cases Teleconcepts relies upon were decided the Commerce Act
provided that "[t]he cause of action in respect to a shipment of
property shall, for purposes of this section, be deemed to accrue
upon delivery or tender of delivery thereof by the carrier, and
not after." 49 U.S.C. §16(3)(e) (repealed 1978).0 However, the
Commerce Act is designed:
to fix one date on which all causes of
action, both those in favor of shipper and
those in favor of carrier, with respect to
any particular shipment, should be deemed to
have accrued, so that, in the application of
the section limiting time for suit, a
situation would not arise wherein claims in
favor of one party arising out of a
particular shipment would be barred and those
in favor of the other party not be barred.
Pennsylvania R. Co., 16 F.2d at 761.
Although the explanation of "accrues" in § 415(e) is similar
to that contained in the corresponding provision of the Commerce
Act, those two provisions rest upon totally different policy
considerations.
0 "Accrual" is now defined in 49 U.S.C. § 11706(g)
which states "[a] claim related to a shipment of property accrues
under this section on delivery or tender of delivery by the
carrier." 49 U.S.C. § 11706 (1982)
26
The [Commerce Act] is explicit that accrual under § 16(3)(e) is no
synonymous or mutually interchangeable with collectability or duen
of the debt and that the point of delivery overrides any conventio
notion of when an action judicially matures. . . . [C]ongress
anticipated the multitude of variations in the period of limitatio
that would result if conventional standards of triggering the peri
were used and promulgated 16(3)(a) and (e) in order to avoid such
variation by creating a uniform time of accrual irrespective of wh
the action could have generally been brought.
South Omaha Terminal Ry. Co., 373 F. Supp. at 644. Different consideration
the conflict is between a telecommunications company and its customer. It
nonsensical to conclude that a cause of action to collect charges for transm
telephone call accrues when a message is delivered. Such a rule would allow
sue a customer as soon as the carrier completes a telephone connection even
customer has not refused to pay, and even if the customer has given every in
it would pay upon receipt of an accurate bill. When a call is completed, th
typically not even billed for the service, and the customer has every right
it will not incur any liability so long as it pays the bill that is expected
future time.
However, where a customer seeks redress from a telecommunications carri
the improper transmission of a telecommunications signal, it is reasonable t
that the cause of action in favor of the customer does arise when the messag
or tendered. It is then that the customer reasonably should know of the all
See Central Scott Tel. Co. v. Teleconnect Long Distance Servs. & Sys. Co.,
1317, 1320-21 (S.D. Iowa 1993)0 (the court relied upon the FCC's declaration
only "concerns a carrier's liability to its customers for failure to transm
accordance with its common carrier obligations"). See also Anchorage Tel.
Alascom, Inc., 4 FCC Rcd. 2472 (1989) ("Section 415(e) is concerned with a
liability to its customer for failure to transmit a message . . ."); MCI
0 Citing Williams Telecommunications Group, Inc. v. The Chesapeake
Tel. Cos., 8 FCC Rcd. 1161, ¶ 16 n.35 (1993).
27
Telecommunications Corp. v. Pac. Bell Tel. Co., 5 F.C.C. Rcd. 3462 (1990) ("
is inapplicable to MCI's complaints. That Section concerns a carrier's liabi
customers . . .").
We agree that the limitations period contained in § 415(e) applies to
by the carrier's customer that allege a breach of a common carrier's obliga
to an action against the customer. Accordingly, here, the statute of limita
purposes of § 415(a) accrues with "discovery of the right or wrong or of th
which such knowledge is chargeable in law." Central Scott Tel. Co., 832 F.
MCI's tariff tells us when that occurred. Under that tariff, "MCI's bills a
upon receipt," however, "[a]mounts not paid within 30 days after the date o
will be considered past due . . . ." We must give these words their ordinar
See Strite v. McGinnes, 330 F.2d 234, 239 (3d Cir.), cert. denied, 379 U.S.
(the words employed are given "their plain and ordinary meaning, except wher
in which they are used renders then a different denotation, or where legal o
words are used and it is clear from their use that the legal or technical me
intended."). Teleconcepts' obligations became past due 30 days after the d
particular invoice. It is therefore only then that MCI's cause of action un
accrued, and it is at that point that the two year clock started ticking.
Moreover, Teleconcepts' duty (both under the tariff and as reflected b
billing practice) is akin to an obligation to make installment payments. "I
installment contract, a new cause of action arises from the date each paymen
Board of Trustees of the Dist. No. 15 Machinists' Pension Fund v. Kahle Eng
F.3d 852, 857 (3d Cir. 1994) (citing 4 A. Corbin, Corbin on Contracts § 951
"[T]he statute of limitations runs against each installment from the time it
that is, from the time when an action might be brought to recover it." Id.
(quoting 51 Am.Jur.2d: Limitations of Actions § 133). See also Metromedia
Mountain Assoc., 655 A.2d 1379, 1380-81 (N.J. 1995) (contract between lessee
28
whereby lessor was to reimburse lessee for lessee's use of an independent c
treated like an installment contract and thus a new cause of action subject
limitations period accrued for each month that lessor failed to reimburse th
Kiamichi Electric Cooperative v. Underwood, 842 P.2d 358, 359-60 (Okla. Ct.
(electric cooperative's contract to provide electricity was akin to installm
and thus each monthly installment due constituted a new cause of action with
statute of limitations).
The period fixed by a statute of limitations begins to run from th
'accrual of the cause of action.' Since 'cause of action' is so
uncertain and variable a concept, serious injustice may be done un
the court uses judicial discretion in applying such a statute in
case of 'partial' breaches of a single contract. No doubt there i
much authority for the statement that where separate actions would
for a series of breaches, the statute operates against each one
separately as of the time when each one could have been brought,
that this rule is not affected by the fact that after two or more
breaches have occurred the plaintiff must join them all in one cau
of action. Of course, if an action for a first instalment is barr
by the statute, it can not be properly included in an action for l
installments that are not yet barred.
Corbin, supra, § 951, at 823-24.
Here, MCI first accrued a cause of action on December 8, 1989 -- 30 da
date of the November 8, 1989 long distance bills. Additional causes of act
days after the date of each of MCI's subsequent bills. MCI could have insti
recover payment on any one bill, or brought an action as they did to recover
all of them. However, for MCI's action to have been timely as to all of the
have been filed within two years of the date on which a cause of action accr
partial breach. See Kahle Engineering Corp., 43 F.3d at 861 (action barred
unpaid installments which came due prior to six year statute of limitations
Metromedia, 655 A.2d at 1381; Corbin, supra, § 951, at 823-24.
Thus, MCI's action is untimely as to the amounts owed in the bills date
1989, November 15, 1989, and December 8, 1989. MCI's cause of action for t
29
accrued on December 8, 1989, December 15, 1989 and January 8, 1990, respecti
the complaint was not filed until January 15, 1992, recovery for those bills
the two year statute of limitations of § 415(a).
However, MCI's action is timely as to all subsequent bills. Accordingly
maintain its suit for amounts owing on the bills dated December 15, 1989;0 J
1990; January 9, 1990; February 8, 1990; March 8, 1990; and March 17, 1990.
Accordingly, we reverse the judgment of the district court and remand f
to deduct from its judgment the amount of the bills dated November 8, 1989,
1989, and December 8, 1989 and to recalculate the award of prejudgment inte
accordingly.
E. Attorney's Fees
Teleconcepts challenges the award of attorney's fees arguing that hours
MCI's counsel were "clearly excessive," since there was no discovery and mos
merely involved the preparation of pleadings. See Appellant's brief at 32-
The district court must exercise its informed discretion in awarding at
See Pawlak v. Greenawalt, 713 F.2d 972, 977 (3d Cir. 1983), cert. denied, 46
(1984). Thus, our standard of review is a narrow one. "We can find an abuse
if no reasonable [person] would adopt the district court's view. If reasona
could differ as to the propriety of the action taken by the trial court, the
said that the trial court abused its discretion." Silberman v. Bogle, 683 F
Cir. 1982) (citation omitted).
The district court was familiar with the efforts of counsel, and conduc
review of the time that counsel spent working on this case. The court foun
"actual hours claimed were in fact reasonably expended by counsel." MCI
Telecommunications Corp. v. Teleconcepts, Inc., No. 92-244, slip op. at 3 (
0
Suit was instituted two years to the day from the date the cause of a
on this bill.
30
25, 1994). Teleconcepts does not specify how the district court abused its
its review, and we do not think that any such abuse of discretion occurred.
we affirm the award of attorney's fees. However, in view of our ruling on th
limitations, the district court should, upon remand, make whatever review of
fees it feels warranted and adjust the prior award of fees if the court feel
reduction or adjustment is now appropriate. We do not, however, take any po
whether the court should make any such adjustment.
F. Third-Party claim
Finally, Teleconcepts argues that the district court erred in granting
judgment in favor of third-party defendant, Bell. Our review of this grant
judgment is plenary. See Gulfstream II, 995 F.2d at 429.
Teleconcepts maintains it is entitled to be indemnified for any liabili
MCI because Bell allowed the fraudulent "hacking" to occur by furnishing a d
tone. Teleconcepts' third-party complaint does not allege the basis for th
court's subject matter jurisdiction, nor does the district court state the b
jurisdiction. However, since there was no independent basis for subject mat
jurisdiction over that claim, we believe that the district court exercised s
jurisdiction based on the FCC tariff. See 28 U.S.C. § 1367 (Supp. 1993).0
Congress codified the judicially created doctrines of pendent and ancil
jurisdiction under the name "Supplemental Jurisdiction" at 28 U.S.C. § 1367.
embodies the jurisdictional standard established in United Mine Workers of A
Gibbs, 383 U.S. 715 (1966). See Lyon v. Whisman, 45 F.3d 758, 760 (3d Cir.
Sinclair v. Soniform, Inc., 935 F.2d 599, 603 (3d Cir. 1991). Accordingly,
requirements must be satisfied before a federal court may exercise supplemen
jurisdiction. "The federal claim must have substance sufficient to confer s
0
Diversity jurisdiction is clearly inapplicable since the amount in co
not exceed $50,000. See 28 U.S.C. §1332 (1988).
31
jurisdiction on the court." Gibbs, 383 U.S. at 725. The state and federal
derive from a common nucleus of operative facts, and the claims must be such
would ordinarily be expected to be tried in one judicial proceeding. See i
F.3d at 760.
We believe that the third party complaint satisfies the prerequisites
28 U.S.C. §§ 1331, and 1337 confer subject matter jurisdiction over MCI's cl
action and Teleconcepts' third-party action both arise out of the fraudulent
activity which purportedly resulted in exorbitant long distance charges. Mo
and prudent use of judicial resources dictate that these claims be tried in
proceeding. Accordingly, the third-party action meets the test for suppleme
jurisdiction.
However, our inquiry does not end there. Bell argues that the tariff
the Pennsylvania Public Utilities Commission ("P.U.C.") places responsibilit
unauthorized calls upon Teleconcepts. That tariff provides in pertinent par
COCOT0. . . [s]ervice subscriber is considered as the Customer of Record and
responsible for all rates and charges associated with the service, . . . ."
the third-party complaint therefore turns upon the interpretation and applic
PUC tariff. We must therefore determine if the doctrine of primary jurisdic
Primary jurisdiction ``applies where a claim is originally cognizab
in the courts, and comes into play whenever enforcement of the cla
requires resolution of issues which, under a regulatory scheme, h
been placed within the special competence of an administrative bod
In contrast, when the legislature provides an agency with 'exclusi
primary jurisdiction,' it preempts the courts' original jurisdicti
over the subject matter.
Greate Bay Hotel & Casino v. Tose, 34 F.3d 1227, 1230 n.5. (3d Cir. 1994) (
omitted). If a legislature has vested an administrative agency with exclusi
0
"COCOT" is an acronym for "Customer-Owned Coin-Operated Telephones
parties agree that Teleconcepts is a COCOT within the meaning of that term i
tariff.
32
jurisdiction, that agency is the only forum in which complaints within that
may be brought. Id. at 1230. Even though the parties have not raised the
exclusive primary jurisdiction, we must determine if the third-party compla
heard by the PUC in the first instance.0 We are mindful of the fact that th
primary jurisdiction:
is not simply a polite gesture of deference to the agency seeking
advisory opinion wherein the court is free to ignore the agency's
determination. Rather, once the court properly refers a matter or
specific issue to the agency, that agency's determination is bindi
upon the court and the parties (subject, of course, to appellate
review through normal channels), and is not subject to collateral
attack in the pending court proceeding.
Elkin v. Bell Tel. Co. of Pa., 420 A.2d 371, 376 (Pa. 1980) (footnotes omitt
1. The Statutory Framework of the PUC.
"The PUC has long been recognized as the appropriate forum for the adju
issues involving the reasonableness, adequacy and sufficiency of public util
Behrend v. Bell Telephone, 243 A.2d 346, 347 (Pa. 1968).
The PUC has the power to 'prescribe as to service and facilities .
just and reasonable standards. . . to be furnished, imposed, obser
and followed by any or all public utilities . . .' and upon findi
. . 'that the service or facilities of any public utility are
unreasonable, unsafe, inadequate, insufficient . . . ' the PUC 'sh
determine and prescribe, by regulation or order, the reasonable, s
adequate, sufficient, service or facilities to be observed, furni
enforced or employed . . . '
Elkin v. Bell Telephone, 420 A.2d 371, 374 (Pa. 1980), see 66 P.S. §§ 1182,
(repealed and replaced by 66 Pa. C.S. §§ 1504, 1505 (1978). The Pennsylvani
Utility Law requires public utilities to file tariffs with the PUC. See 66
§ 1302 (Purdon 1979 & Supp. 1995). These tariffs are binding and dispositiv
0
Following oral argument we asked the parties to file supplemental bri
issue.
33
rights and liabilities between the customer and the public utility. See 66
§1303 (Purdon 1979). The PUC has enforcement power over its tariffs and re
matters that pertain to those tariffs are considered to be within the partic
of the PUC. See 66 Pa. C.S.A. § 501, et. seq. (Purdon 1979).
Accordingly, "[t]he PUC has long been recognized as the appropriate for
adjudication of issues involving the reasonableness, adequacy and sufficienc
utility services." Elkin, 420 A.2d at 374. At oral argument, Teleconcepts
it was challenging the reasonableness, adequacy and sufficiency of Bell's t
service, and Bell admitted this point in its supplemental brief to this cour
Supp. Brief at 1-2, 7. Thus, it is not disputed that the subject matter of
party complaint is within the jurisdiction of the PUC, and that agency is t
forum to resolve the issues raised by that complaint. That determination, ho
necessary to our analysis, is not sufficient to end our inquiry. Our inquir
focus upon whether resolution of Teleconcepts' claim against Bell requires t
competence of the PUC.
Courts should not be too hasty in referring a matter to an agency,
to develop a 'dependence' on the agencies whenever a controversy
remotely involves some issue falling arguably within the domain o
agency's 'expertise.' 'Expertise' is no talisman dissolving a cour
jurisdiction. Accommodation of the judicial and administrative
functions does not mean abdication of judicial responsibility. . .
Therefore, where the subject matter is within an agency's
jurisdiction and where it is a complex matter requiring special
competence, with which the judge or jury would not or could not be
familiar, the proper procedure is for the court to refer the matte
the appropriate agency. . . . Where, on the other hand, the matter
not one peculiarly within the agency's area of expertise, but is o
which the courts or jury are equally well-suited to determine, the
court must not abdicate its responsibility.
Elkin, 420 A.2d at 377.
2. The Need for the PUC's Expertise.
34
As noted above, issues that implicate a utility's tariff are deemed to
special expertise of the PUC. In addition we are guided by Elkin, and DeFra
Western Pa. Water Co., 453 A.2d 595, 596 (Pa. 1982). In Elkin, the court hel
allegations that Bell negligently failed to furnish the customer "reasonable
efficient service" with respect to three wide-area telephone service ("WATS"
deliberately refused to furnish plaintiff with adequate directory assistanc
service, and negligently failed to furnish written telephone numbers for pro
customers of plaintiff fell within the PUC's area of expertise. Elkin, 420
377.
By contrast, in DeFrancesco the court held that the allegation that fir
plaintiff's property because the city water company negligently failed to ma
water pressure did not fall within the PUC's expertise and thus its primary
The court reasoned:
The controversy now before us . . . is not one in which the genera
reasonableness, adequacy or sufficiency of a public utility's serv
is drawn into question. Resolution of appellant's claims depended
upon no rule or regulation predicated on the peculiar expertise o
PUC, no agency policy, no question of service or facilities owed t
general public, and no particular standard of safety or convenienc
articulated by the PUC. . . .Rather, . . . . [r]esolving the
essential question of whether the utility failed to perform its
mandated duties requires no recondite knowledge or experience and
falls within the scope of the ordinary business of our courts.
DeFrancesco, 453 A.2d at 597.
Courts have routinely looked to Elkin and DeFrancesco to determine if
controversy implicated the special competence of the PUC. See Optimum Imag
Phila. Elec. Co., 600 A.2d 553, 556-57 (Pa. Super. Ct. 1991) (allegations th
violated by the substandard and defective supply of electrical power brought
within the primary jurisdiction of the PUC); Ostrov v. I.F.T., Inc., 586 A.2
(Pa. Super. Ct. 1991) (action did not come within the primary jurisdiction o
35
plaintiff did not contend that medical examination provision of self-insura
violated the PUC's rules or regulations governing self-insurance motor carr
other PUC rule or regulation for self insurance) Schriner v. Pa. Power & L
A.2d 1128, 1130-31 (Pa. Super. Ct. 1985) (citing DeFrancesco the court held
of "stray voltage" depends upon "no rule or regulation predicated upon the p
expertise of the PUC . . ." and thus was not within the primary jurisdiction
Morrow v. Bell Tel. Co. of Pa., 479 A.2d 548, 551-52 (Pa. Super. Ct. 1984)
challenge to public utility's rates relating to toll charges and its service
regarding deposits held to be within the primary jurisdiction of the PUC).
Here, the dispute centers around Bell's performance under its tariff a
technical deficiencies that my have existed in the dial tone generated by it
That complaint may rise or fall on the issue of the manner in which Bell com
obligation under its tariff to provide "reasonable, . . . efficient" service
that can best determine Bell's compliance with that tariff is the PUC. In ad
Teleconcepts' allegation of deficient service transcends the present controv
least potentially, calls into question the adequacy of Bell's service to the
public as Teleconcepts claims that the second dial tone was neither unique t
nor COCOT owners. We must therefore be sensitive to the need for uniformity
consistency in agency policy, which further suggests that the PUC decide the
Teleconcepts' claim initially. See Elkin, 420 A.2d at 377; Ostrov, 586 A.2d
("matters involving the general reasonableness or adequacy of a utility's se
public are within the primary jurisdiction of the [PUC].").
3. The Effect of the Relief Sought
Nevertheless, despite the need for the PUC to determine liability on Te
third-party claim, the PUC is not empowered to award damages, and Teleconce
damages in the nature of indemnification. See Elkin, 420 A.2d at 374 ("the P
authority to award damages"). However, the Pennsylvania Supreme Court has a
36
bifurcated procedure where, as here, a plaintiff sues a public utility base
latter's purported failure to provide adequate, reasonable or sufficient ser
seeks damages as a remedy. See Elkin, 420 A.2d at 375-76; Ostrov, 586 A.2d
this bifurcated procedure, the issue of liability is transferred to, and ini
by, the PUC. If necessary, the appropriate trial court thereafter determine
See Elkin, 420 A.2d at 377; DeFrancesco, 453 A.2d at 596 n.3.
Accordingly, "the doctrine of primary jurisdiction applies where the ad
agency cannot provide a means of complete redress to the complaining party a
dispute involves issues that are clearly better resolved in the first instan
administrative agency charged with regulating the subject matter of the dis
586 A.2d at 413. The doctrine requires a court to transfer an issue that in
administrative expertise to the administrative agency charged with exercisin
discretion. Richman Bros., 953 F.2d at 1435 n.3. "Essentially, the doctrin
workable relationship between the courts and administrative agencies wherein
appropriate circumstances, the courts can have the benefit of the agency's v
within the agency's competence." Elkin, 420 A.2d at 376.
In Optimum Image, supra, the plaintiff sued the Philadelphia Electric
("PECO") alleging that the utility "wrongfully, negligently, carelessly and
reasonable cause delivered, over an extended period of time, unreasonably de
electrical power" to plaintiff's business premises. The trial court transfe
determination of liability to the PUC. The Pennsylvania Superior Court affi
[Plaintiff alleges that] the electrical power supplied by PECO
exceeded the ten percent variation allowed by PECO's tariff filed
the PUC. In addition, [plaintiff] . . . alleges that the power wi
which it was supplied was substandard and outside the regulatory
requirements and that the problem it experienced was not investiga
with the proper equipment.
. . . .
In response, PECO contends that it at all times provided electrica
power in compliance with its tariff filed with the PUC and otherwi
furnished and maintained adequate, efficient, safe and reasonable
services and facilities to [plaintiff].
37
Id. at 556-57. The controversy between Teleconcepts and Bell is analogous.
that the doctrine of primary jurisdiction required the district court to uti
bifurcated procedure established for resolving questions of liability where
sought in a matter involving the special expertise of the PUC. Thus, althou
district court had jurisdiction over the third-party claim, the court erred
the question of liability. That claim must be transferred to the PUC for s
determination. If the PUC concludes that Teleconcepts is entitled to indemni
Bell, the district court may then make an appropriate award to Teleconcepts.
Image,, 600 A.2d at 557.
We are aware that language in some decisions of the United States Supr
our sister Courts of Appeals seems to suggest a contrary result here. For ex
Reiter v. Cooper, 113 S. Ct. 1213 (1993) the Court stated:
Referral of the issue to the administrative agency does not depri
the court of jurisdiction; it has discretion to either retain
jurisdiction or, if the parties would not be unfairly disadvantage
to dismiss the case without prejudice.
113 S. Ct. at 1219. See also, U.S. v. Philadelphia National Bank, 83 S. Ct.
(comparing primary jurisdiction to a prudential doctrine of abstention and n
primary jurisdiction merely postpones and does not preclude the exercise of
by a federal court), Northwest Airlines, Inc. v. County of Kent, Mich., 114
(1994) (failure to brief primary jurisdiction resulted in waiving considerat
doctrine), Gross v. Baxter Healthcare Corp., 51 F.3d 703, 706 (7th Cir. 195
found the parties had waived any consideration of primary jurisdiction and
this respect, primary jurisdiction is quite different from subject matter
jurisdiction[]"), and U.S. v. Henri, 828 F.2d 526, 527 (9th Cir. 1987) ("th
primary jurisdiction, despite what the term may imply, does not speak of th
jurisdictional power of the federal courts[]"). However, none of these case
38
the issue of the authority of a federal court to adjudicate a matter that a
legislature had placed within the exclusive domain of a state administrative
Accordingly, our analysis here is consistent with the results reached in suc
U.S. v. Western Pacific Railroad, 77 S. Ct. 161, 165 (1956). There, the cour
[t]he doctrine of primary jurisdiction thus does 'more than prescr
the mere procedural timetable of the law suit. It is a doctrine
allocating the law making power over certain aspects' of commercia
relations. 'It transfers from court to agency the power to determ
some of the incidents of such relations.
77 S. Ct. at 166 (emphasis added). See also, Slocum v. Delaware, L. & W. R.
577 (1950), and Pennsylvania Railroad Co. v. Day, 79 S. Ct. 1322 (1959), an
Hotel and Casino, supra.The Commonwealth of Pennsylvania has committed the issues raised by Te
claim against Bell to the exclusive jurisdiction of the Pennsylvania Public
Commission and a federal court can not amend state law by exercising supplem
jurisdiction. Indeed, a contrary holding would mean that the federal courts
to decide matters of state law that courts in the affected state lack author
resolve. Since the Supreme Court of Pennsylvania has held that "the Public U
Commission has been vested by the legislature with exclusive original jurisd
of the issues which this suit requires us to resolve, Behrend v. Bell Tele
A.2d 346, 347 (1968), we must remand to the district court for appropriate p
Accordingly, we will reverse the district court's grant of summary jud
of Bell and remand so that the district court can transfer the third-party
PUC for a determination of liability. The district court retains jurisdicti
matter pending the liability determination by the PUC.0
0
We realize that after the district court disposes of the allocatio
distance charges between MCI and Teleconcepts in accordance with this opinio
will be left with only the third-party claim founded on state law. It is f
court to decide whether to retain supplemental jurisdiction at that point, o
the third-party claim pursuant to 28 U.S.C. § 1367(c)(3).
39
III.
For the reasons stated above, we will affirm in part and reverse in par
judgments of the district court, and remand this case to the district court
proceedings consistent with this opinion.
MCI Telecommunications Corp. v. Teleconcepts, Inc., No. 94-5426.
NYGAARD, Circuit Judge, concurring in part and concurring in the judgment.
I join the majority's opinion.0 I write separately, however, beca
40
the majority's holding with respect to primary jurisdiction is incorrect an
unnecessarily limit the jurisdiction of the federal courts. Although I agre
majority's decision to apply primary jurisdiction analysis, I do not agree w
in which it conflates that doctrine with the district court's constitutional
subject matter jurisdiction to hear Teleconcepts' third-party claim.
I.
The majority, recognizing that neither party below raised the issu
nevertheless concludes that "we must . . . determine if the doctrine of pri
jurisdiction applies." Majority typescript at 34 (emphasis added); see id.relies for this proposition on Greate Bay Hotel & Casino v. Tose, 34 F.3d 11994), in which we remarked that "when the legislature provides an agency wi
primary jurisdiction,' it preempts the courts' original jurisdiction over th
matter." Id. at 1230 n.5. That opinion also stated that we heard the appe
are obliged to examine the subject matter jurisdiction of the district court
1230 n.4. Essentially, the majority treats dicta from Greate Bay as a hold
state legislature or court, by virtue of conferring "exclusive" primary juri
state administrative agency, divests an Article III federal court of its su
jurisdiction. That treatment cannot withstand rigorous analysis, and, to th
majority adopts it,0 I believe it errs.
A.
The majority recognizes that "language in some decisions . . . see
a contrary result here." Majority typescript at 42. Indeed, a whole host of
for the proposition that primary jurisdiction (exclusive or otherwise) has n
with subject matter jurisdiction. See Reiter v. Cooper, 507 U.S. 258, ____,
1213, 1220 (1993) ("Referral of the issue to the administrative agency does
41
the court of jurisdiction; it has discretion to either retain jurisdiction o
parties would not be unfairly disadvantaged, to dismiss the case without pre
General American Tank Car Corp. v. El Dorado Terminal Co., 308 U.S. 422, 432
325, 331 (1940) (district court had personal and subject matter jurisdiction
have stayed its hand pending determination of certain issues by the Intersta
Commission); accord Northwest Airlines, Inc. v. County of Kent, Mich., 114
n.10 (1994) (primary jurisdiction, unlike subject matter jurisdiction, is wa
Common Carrier, Inc. v. Baxter Healthcare Corp., 51 F.3d 703, 706 (7th Cir.
United States v. Henri, 828 F.2d 526, 528 (9th Cir. 1987) (per curiam) (prim
jurisdiction, despite the name, does not go to the jurisdictional power of t
courts) (citing United States v. Bessemer & L.E. R.R., 717 F.2d 593, 599 (D
1983)); Oasis Pet. Corp. v. United States Dep't of Energy, 718 F.2d 1558, 15
Emer. Ct. App. 1983) (citing United States v. Philadelphia Nat'l Bank, 374
Ct. 1715 (1963)).
The majority acknowledges most of the above cases, but attempts t
them on the rationale that none of those cases "addressed the issue of the a
federal court to adjudicate a matter that a state legislature had placed wit
exclusive domain of a state administrative agency." Majority typescript at
distinction, that a state legislature's or court's actions may divest the fe
of subject matter jurisdiction where the same action by Congress would not,
by the cases the majority cites.
In the first case relied on by the majority, United States v. Wes
Co., 352 U.S. 59, 77 S. Ct. 161 (1956), railroads sued the government in th
Claims to recover differences between the tariff rates they had been paid an
they believed were required on shipments of napalm bombs. The issue was whe
42
tariff for gasoline in drums or the higher tariff for incendiary bombs appli
shipments. Neither party raised the issue of primary jurisdiction in the lo
the Supreme Court, on its own motion, considered the question of whether exc
jurisdiction was vested in the Interstate Commerce Commission. Notably, the
Court gave for considering the issue sua sponte was comity, not subject matt
jurisdiction:
Before this Court neither side has questioned the validity of the
lower court's views [regarding primary jurisdiction]. Nevertheless
because we regard the maintenance of a proper relationship between
courts and the Commission in matters affecting transportation pol
to be of continuing public concern, we have been constrained to
inquire into this aspect of the decision.
Id. at 63, 77 S. Ct. at 165. Its doctrinal discussion of primary jurisdict
likewise not cast in jurisdictional terms:
The doctrine of primary jurisdiction, like the rule requirin
exhaustion of administrative remedies, is concerned with promoting
proper relationships between the courts and administrative agencie
charged with particular regulatory duties. "Exhaustion" applies wh
a claim is cognizable in the first instance by an administrative
agency alone; judicial interference is withheld until the
administrative process has run its course. "Primary jurisdiction,"
the other hand, applies where a claim is originally cognizable in
courts, and comes into play whenever enforcement of the claim requ
the resolution of issues which, under a regulatory scheme, have be
placed within the special competence of an administrative body; in
such a case the judicial process is suspended pending referral of
issues to the administrative body for its views.
Id. at 63-64, 77 S. Ct. at 165 (citing General American Tank Car, 308 U.S a
Ct. at 331).0 I therefore conclude that when the Western Pacific Court spok
transferring "the power" to determine the parties' relations from the court
see majority typescript at 43, it was speaking of a jurisprudential deferen
on administrative rulemaking authority, not subject matter jurisdiction.
B.
43
Article III of the Constitution defines the outer limits of a fede
court's subject matter jurisdiction. By statute, Congress may choose to gran
short of those limits, for example, by requiring complete rather than minim
or by imposing jurisdictional amounts in diversity cases. Determining subje
jurisdiction is not a particularly complex task; as the Supreme Court has st
Constitution must have given to the court the capacity to take it, and an a
must have supplied it. . . ." Finley v. United States, 490 U.S. 545, 548, 1
2006 (1989) (quoting The Mayor v. Cooper, 6 Wall. 247, 252 (1868)). Thus, i
wishes to confer exclusive jurisdiction on a federal administrative agency
district courts of that jurisdiction, it would be within its constitutional
so, although it has not done so in the cases discussed above.
Under the Supremacy Clause, Congress may likewise confer exclusiv
jurisdiction on a federal court0 or administrative agency and divest the sta
what would otherwise be within their subject matter jurisdiction. This unre
principle explains the "exclusive" primary jurisdiction of the National Rail
Board found by the Supreme Court in two of the cases the majority relies upo
Pennsylvania R.R. Co. v. Day, 360 U.S. 548, 552, 79 S. Ct. 1322, 1325 (1959
Delaware, L. & W. R.R. Co., 339 U.S. 239, 244, 70 S. Ct. 577, 580 (1950).
A state legislature may also limit the jurisdiction of its own sta
enacting a statute vesting exclusive primary jurisdiction in a state board o
subject of course to the confines of state law and the due process requirem
Fourteenth Amendment. See Greate Bay, 34 F.3d at 1230 & n.5 (dictum); Behre
Tel. Co., 431 Pa. 63, 243 A.2d 346, 347-48 (1968). Thus, I have no quarrel
majority's conclusion that a Pennsylvania state court would have no power to
claim.
44
C.
It does not follow, however, that a state may by statutory or deci
restrict the subject matter jurisdiction of the federal courts. It is axio
because its subject matter jurisdiction can be conferred or withdrawn only
federal court must look only to federal, not state, law to determine that ju
non, even when the substantive right at issue is a creature of the state.
Jacoby, 646 F.2d 415, 419 (9th Cir. 1981); Markham v. City of Newport News,
713-16 (4th Cir. 1961). That a state simply has no power to divest a feder
congressionally conferred subject matter jurisdiction, has been settled law
century. See, e.g., Waterman v. Canal-Louisiana Bank & Trust Co., 215 U.S.
S. Ct. 10, 12 (1909); Land Title & Trust Co. v. Asphalt Co., 127 F. 1, 19 (
(dictum). Modern caselaw continues in full accord with the early cases. S
Brown, Inc., 807 F.2d 783, 784 (9th Cir. 1987); Dominion Nat'l Bank v. Olse
108, 116 n.2 (6th Cir. 1985); Beach v. Owens-Corning Fiberglas Corp., 728 F
(7th Cir.), cert. denied, 469 U.S. 825, 105 S. Ct. 104 (1984); Mullen v. Ac
Co., 705 F.2d 971, 975 (8th Cir.) (citing cases), cert. denied, 464 U.S. 827101 (1983); Begay v. Kerr-McGee Corp., 682 F.2d 1311, 1315 (9th Cir. 1982) (
Duchek, 646 F.2d at 419 & n.4 (citing cases, quoting Railway Co. v. Whitton
U.S. (13 Wall.) 270, 286 (1871)); Greyhound Lines, Inc. v. Lexington State
Co., 604 F.2d 1151, 1154-55 (8th Cir. 1979); Markham, 292 F.2d at 713-16; I
Seafood (USA) Inc., 743 F. Supp. 281, 285-86 (D. Del. 1990) (Roth, J.) ("a s
that creates a remedy or type of proceeding cannot narrow the jurisdiction o
courts") (quoting Land Title & Trust, 127 F. at 19-20); Codos v. National Di
Corp., 711 F. Supp. 75, 77-78 (E.D.N.Y. 1989); Kanouse v. Westwood Obstetri
Gynecological Assocs., 505 F. Supp. 129, 129 (D.N.J. 1981) (Brotman, J.).
45
Moreover, this inviolability of federal subject matter jurisdictio
when the substantive right at issue is created solely by state law and is en
before a state administrative agency. See Webb, 807 F.2d at 784 (exclusive
state workers' compensation fund); Beach, 728 F.2d 407 (subject matter juri
even though state law purports to vest exclusive jurisdiction in Industrial
Board); Begay, 682 F.2d at 1315-17 (workers' compensation system); Liberty M
v. K.A.T., Inc., 855 F. Supp. 980, 984-85 (N.D. Ind. 1994) (failure to exha
administrative remedies); Jones v. National Union Fire Ins. Co., 664 F. Sup
(N.D. Ind. 1987) (Industrial Disputes Board).
Recent opinions of this court have been somewhat less rigorous and
their analysis of subject matter jurisdiction than the caselaw set forth abo
nevertheless in basic accord with it. In Edelson v. Soricelli, 610 F.2d 1311979), the issue was "whether a federal court may entertain a Pennsylvania m
malpractice claim under the diversity statute, 28 U.S.C. § 1332, before the
initially taken recourse to the state Arbitration Panels for Health Care. .
132. Such recourse was "a condition precedent to entry into the state judic
Id. at 134. In the two cases consolidated on appeal, "the district courts
although claimants made the necessary averments for subject matter jurisdic
federal courts, exercise of diversity jurisdiction would be improper until
arbitrated under the state arbitration procedure." Id. at 133 (emphasis add
omitted). We affirmed, notwithstanding the ruling of one of the district co
Pennsylvania arbitration panel had exclusive primary jurisdiction. Id.
In the later case of Hamilton v. Roth, 624 F.2d 1204 (3d Cir. 1980
prisoner sued prison doctors for cruel and unusual punishment under the Eig
As a pendent claim under the doctrine of United Mine Workers v. Gibbs, 383
46
Ct. 1130 (1966), he also brought a claim for malpractice, but without submit
Pennsylvania malpractice arbitration panel. Id. at 1205-06. In the conclud
of our opinion, we did state that "the district court was without subject ma
jurisdiction to hear Hamilton's related medical malpractice claim." 624 F.2
This statement was not a part of the holding, but was at most an unguarded c
words, because earlier in the opinion we stated:
There is no question that we have power under Gibbs to consider th
claim. But Gibbs also requires that the federal court determine
pendent claims in accordance with the applicable state law. Here,
applicable state law requires that a malpractice claim be submitte
arbitration before being considered in court. Thus, while a feder
court has the power under the Gibbs test of pendent jurisdiction
hear a malpractice claim, it may exercise this power only after th
claim has been submitted to arbitration. We have so held first in
Edelson and now here.
Id. at 1210 n.6.
Taken together in the light of the abundant caselaw reviewed above
Hamilton teach that, while the district court had subject matter jurisdicti
Teleconcepts third-party claim, it should have refrained from exercising it
decision in the proceedings before the PUC. See Cheyney State College Facu
Hufstedler, 703 F.2d 732, 736 (3d Cir. 1983) (likening primary jurisdiction
(quoting Philadelphia Nat'l Bank, 374 U.S. at 353, 83 S. Ct. at 1736). This
because the exclusive primary jurisdiction of the PUC deprived the district
subject matter jurisdiction conferred on it by the Constitution and Congress
the PUC's exclusive primary jurisdiction is part of the substantive law of P
law which we are bound to apply under the Erie doctrine.0 See Edelson, 610
Many courts have followed this approach, refraining from exercisin
pending completion of appropriate administrative proceedings. In Webb, for
court opined that, rather than dismiss for lack of subject matter jurisdicti
47
[i]t is more accurate to characterize the reason for the dismissal
the complaint as the court's belief that the complaint, as a matte
law, did not state a claim upon which relief could be granted beca
the exclusive remedy provision of [the state workers' compensation
statute] barred a common law negligence claim."
807 F.2d at 784-85. Likewise, in Beach, the court opined:
Despite our ruling that the district court had jurisdiction
entertain this suit, we affirm the entry of summary judgment beca
Indiana has eliminated the cause of action asserted by the plainti
The Indiana law vesting exclusive jurisdiction over disputes betwe
employees and their employers in the disputes board operates to c
state court doors to the plaintiffs. The state's denial of a judic
remedy in this case is a denial of the substantive right asserted
the plaintiffs. An employee or his representatives or kin may mak
claim other than before the Industrial Disputes Board. Accordingl
the state courts have no jurisdiction over the plaintiffs' claims,
the plaintiffs therefore have no claim to press in this federal
action, which depends entirely upon state law.
728 F.2d at 409 (citing Woods v. Interstate Realty Co., 337 U.S. 535, 538,
1237 (1949); Begay, 682 F.2d at 1316-19). Accord Begay, 682 F.2d at 1316-1
dismissed for failure to state any claim upon which the state court could gr
Markham, 292 F.2d at 717-18 ("Erie doctrine does not extend to matters of j
Erie held not to require nonexercise of jurisdiction under circumstances of
664 F. Supp. at 447 (case dismissed for failure to state a claim when relief
obtained only from state industrial board); Kanouse, 505 F. Supp. at 132 (de
exercise of jurisdiction pending completion of medical malpractice panel rev
D.
That brings me to the scope of the holding of Greate Bay, because
holds as the majority believes it does, our Internal Operating Procedure 9.1
follow it, regardless of whether I consider it jurisprudentially sound. In t
casino sued a gambler to enforce a settlement agreement concerning his gamin
gambler counterclaimed, alleging that the casino allowed him to gamble altho
48
was intoxicated. On the counterclaim, the jury found for the casino, and th
filed a motion for a new trial, which was denied. He then appealed that rul
casino cross-appealed, arguing that the district court did not have jurisdi
exclusive jurisdiction to order restitution was vested with the Casino Cont
and that, therefore, "the district court should not have exercised jurisdic
counterclaim." 34 F.3d at 1230 (emphases added).
We affirmed the denial of the new trial. Id. at 1235-37. The Gr
stated in a footnote that it was "obliged to examine the subject matter juri
the district court," id. at 1230 n.4, and it engaged in a detailed analysis
primary jurisdiction, holding that jurisdiction was not exclusive. Id. at 1
that determination, the panel did not need to, and indeed did not, engage in
of the effect that a finding of exclusive primary jurisdiction would have o
court's power to grant restitution or even to hear the case. Once the court
that the Commission did not have exclusive primary jurisdiction, it determin
motion for new trial was properly denied by the district court.
I therefore conclude that footnote 4 of Greate Bay, which speaks
district court's subject matter jurisdiction, is dictum and should not be fo
To the extent the majority relies on it for its holding, it places more wei
Bay than it will bear, placing Greate Bay in conflict with our opinions in
Hamilton, and the Supreme Court's opinion in Reiter and the cases discussed
E.
In sum, I conclude that, although the district court has subject
jurisdiction over Teleconcepts' third-party claim, the exclusive primary ju
the PUC is part of the substantive law of Pennsylvania. Accordingly, to the
49
Pennsylvania state court is unable to grant relief at this time, an Erie-bo
court likewise may not ordinarily grant it.
II.
A.
I use "ordinarily" to refer to the posture in which this type of c
comes before a district court--the situation in which one or more of the par
the issue of exclusive primary jurisdiction as a bar to relief in the federa
such a case, the court should abstain from exercising its jurisdiction pendi
of proceedings before the administrative agency. This case, however, is dif
exclusive primary jurisdiction was not litigated in the district court.
If exclusive primary jurisdiction did divest the district court's
jurisdiction, the majority would be undeniably correct in reaching the issue
for the first time on appeal. As I have already shown, subject matter juris
implicated; thus, we would not normally reach the issue at this stage of the
B.
In primary jurisdiction cases, however, we have discretion to con
own motion whether that doctrine applies. See Northwest Airlines, 114 S. C
Western Pacific, 352 U.S. at 63, 77 S. Ct. at 165. In Western Pacific, the
reached that issue because of the public concern over the proper relationshi
courts and the ICC. 352 U.S. at 63, 77 S. Ct. at 165. There, the courts' i
of public tariffs had the potential to differ significantly from those of th
charged with their regulation, with the potential of causing uncertainty and
harm to either shippers or railroads. On the other hand, in Northwest Airli
which the Court did not consider the doctrine of primary jurisdiction, at is
rates a county airport authority charged airlines.
50
This case, like Western Pacific, involves public tariffs, which ap
in favor of the majority's decision to examine the primary jurisdiction issu
Discretion, of course, is exactly that--a choice of decisions, not a rule o
should not be inferred that every case involving a tariff requires the same
this case, however, I agree with the majority's decision to reach the issue
primary jurisdiction (though not with its jurisdictional rationale).0
2 I therefore concur in part, and concur in the judgment.
51