Communications Vending Corp. of Arizona, Inc. v. Federal Communications Commission

Notice: This opinion is subject to formal revision before publication in the
Federal Reporter or U.S.App.D.C. Reports. Users are requested to notify
the Clerk of any formal errors in order that corrections may be made
before the bound volumes go to press.
United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT
Argued February 20, 2004 Decided April 30, 2004
No. 02-1364
COMMUNICATIONS VENDING CORPORATION OF ARIZONA, INC., ET AL.,
PETITIONERS
v.
FEDERAL COMMUNICATIONS COMMISSION AND
UNITED STATES OF AMERICA,
RESPONDENTS
ABTEL COMMUNICATIONS, INC., ET AL.,
INTERVENORS
Consolidated with
03–1010, 03–1012
On Petitions for Review of an Order of the
Federal Communications Commission
Katherine J. Henry argued the cause for IPP petitioners.
With her on the briefs was Albert H. Kramer.
Bills of costs must be filed within 14 days after entry of judgment.
The court looks with disfavor upon motions to file bills of costs out
of time.
2
Aaron M. Panner argued the cause for LEC petitioners.
With him on the briefs were Michael E. Glover, Edward H.
Shakin, John M. Goodman, and Gary L. Phillips.
Michael J. Thompson was on the brief for intervenors
ABTEL Communications, Inc., et al. in support of PSP
petitioners.
Richard K. Welch, Counsel, Federal Communications Com-
mission, argued the cause for respondents. On the brief were
Robert H. Pate III, Assistant Attorney General; Robert B.
Nicholson and Robert J. Wiggers, Attorneys; John A. Rogo-
vin, General Counsel, Federal Communications Commission;
John E. Ingle, Deputy Associate General Counsel; and Lau-
rel R. Bergold, Counsel.
Albert H. Kramer argued the cause for IPP intervenors in
support of respondents. With him on the brief was Kath-
erine J. Henry.
Aaron M. Panner argued the cause for LEC intervenors in
support of respondents. With him on the brief were Michael
E. Glover, Edward Shakin, John M. Goodman, and Gary L.
Phillips.
Before: SENTELLE, RANDOLPH, and TATEL, Circuit Judges.
Opinion for the Court filed by Circuit Judge TATEL.
TATEL, Circuit Judge: In these consolidated cases, we
consider challenges to the Federal Communications Commis-
sion’s ruling that local telephone companies unreasonably
imposed certain end-user charges on independent payphone
providers from 1986 to 1997. One set of petitioners, local
telephone companies, argues that the Commission had no
basis for finding them liable. Another set of petitioners,
independent payphone providers, challenges the Commis-
sion’s application of the Communications Act’s statute of
limitations to limit their recovery to charges paid during the
two years prior to the filing of their complaints. Concluding
that both decisions are consistent with law and neither arbi-
3
trary nor capricious, we affirm the Commission in all re-
spects.
I.
This dispute between local telephone companies (known as
local exchange carriers or LECs) and independent payphone
providers (IPPs) has a long pedigree in this court. Two prior
opinions describe the background in detail. See Verizon Tel.
Cos. v. FCC, 269 F.3d 1098 (D.C. Cir. 2001); C.F. Communi-
cations Corp v. FCC, 128 F.3d 735 (D.C. Cir. 1997).
The history begins in 1983, when the Commission issued
access charge rules authorizing LECs to recover certain non-
traffic sensitive costs (such as the cost of installing phone
lines) through flat monthly charges called End User Common
Line (EUCL) charges. In re MTS and WATS Market
Structure, Third Report and Order, 93 F.C.C.2d 241, 242–43
(1983), modified on recons., 97 F.C.C.2d 682 (1983) (Access
Charge Recons.), modified on further recons., 97 F.C.C.2d 834(1984), aff’d in part and remanded in part sub nom. Nat’l
Ass’n of Regulatory Util. Comm’rs v. FCC, 737 F.2d 1095(D.C. Cir. 1984). Under those rules, LECs could assess
EUCL charges only on ‘‘end users,’’ defined by the Commis-
sion’s rules as ‘‘any customer of TTT telecommunications
service TTT [or] a person or entity that offers telecommunica-
tions services exclusively as a reseller TTT if all resale trans-
missions TTT originate on the premises of such reseller.’’ 47
C.F.R. § 69.2(m) (2003).
Of particular significance to the issue we face here, the
access charge rules applied differently to public and semi-
public payphone service. The Commission explained: ‘‘A pay
telephone is used to provide public telephone service when a
public need exists, such as at an airport lobby, at the option of
the telephone company and with the agreement of the owner
of the property on which the phone is placed.’’ Access
Charge Recons., 97 F.C.C.2d at 704 n.41 (emphasis added).
By contrast, ‘‘[a] pay telephone is used to provide semipublic
telephone service when there is a combination of general
public and specific customer need for the service, such as at a
4
gasoline station or pizza parlor.’’ Id. at 704 n.40 (emphasis
added). Because end users of public payphones are the
transient general public, rather than identifiable subscribers,
the Commission’s rules exempted public payphone service
from EUCL charges and instead allowed LECs to recover
public payphone costs from long distance carriers. See id. at
705, ¶ 58. Semi-public payphone service, however, was sub-
ject to EUCL charges because the LECs’ ‘‘fixed costs [could]
be recovered from an identifiable business end user through
flat charges.’’ Id. at 706, ¶ 60.
At the time the Commission issued its access charge rules,
all payphones were owned and operated by LECs. In 1984,
the Commission allowed IPPs to enter the market and com-
pete with LEC payphones. Because the access charge rules
were established at a time when only LECs provided pay-
phone service, the rules said nothing about how EUCL
charges would apply to IPP-owned payphones. Acting en-
tirely on their own, however, the LECs began assessing
EUCL charges on all IPP payphones, both public and semi-
public, as soon as IPPs entered the market. The IPPs
objected, and in 1989 their trade association filed a petition
with the Commission challenging the lawfulness of the
charges. Also in 1989, one IPP, C.F. Communications Corpo-
ration (CFC), filed a complaint with the Commission, arguing
that its payphones should be exempt from EUCL charges
because it was not an ‘‘end user’’ and because it provided
public payphone service.
Denying CFC’s complaint, the Commission ruled that the
LECs had properly assessed EUCL charges under the access
charge rules. CFC, the Commission explained, met the
regulatory definition of ‘‘end user’’ because it was a ‘‘reseller’’
whose resale transmissions ‘‘originate[d] on [its] premises.’’
In re C.F. Communications Corp. v. Century Tel. of Wisc.,
Inc., 10 F.C.C.R. 9775, 9778–79, ¶¶ 12–17 (1995) (quoting 47
C.F.R. § 69.2(m)) (internal quotation marks omitted). The
Commission also found that CFC’s payphones were not ‘‘pub-
lic telephones’’ but rather semi-public payphones subject to
EUCL charges. See id. at 9779–80, ¶¶ 20–21. Relying on
5
that order, the Commission denied complaints filed by several
other IPPs challenging the imposition of EUCL charges.
In C.F. Communications v. FCC, however, we reversed the
Commission’s CFC decision, concluding that the Commission
‘‘erred in determining that CFC was an ‘end user’ ’’ within the
meaning of its rules. 128 F.3d at 740. We found ‘‘the
Commission’s interpretation of the word ‘premises,’ ’’ a ‘‘real
property’’ term, to encompass IPP payphones, items of ‘‘per-
sonal property,’’ to be ‘‘so far removed from any established
definition of that word’’ that it was ‘‘plainly erroneous.’’ Id.
at 739. We also found the Commission’s decision ‘‘not rea-
soned’’ because by permitting EUCL charges on IPP-owned
but not LEC-owned public payphones even though both
provided indistinguishable telephone service, the Commission
‘‘improperly discriminated between similarly situated phone
services without a rational basis.’’ Id. at 740.
Following our lead, the Commission reversed itself on
remand, concluding that the LECs had imposed an unreason-
able charge in violation of agency regulations and 47 U.S.C.
§ 201(b) (2000), which requires that charges for communica-
tions services be ‘‘just and reasonable.’’ See In re C.F.
Communications Corp. v. Century Tel. of Wisc., Inc., 15
F.C.C.R. 8759, 8768, ¶ 24 (2000) (CFC Remand Order). Ac-
cording to the Commission, ‘‘CFC and the other IPPs [could
not] be considered ‘end users’ ’’ under the definition of that
term because they owned the payphones but not the ‘‘premis-
es’’ from which payphone calls were made. Id. The Com-
mission went on to state, however, that ‘‘irrespective of
whether CFC was an ‘end user,’ TTT the primary determina-
tion the Commission should have made was whether CFC’s
payphones were ‘public’ or ‘semi-public.’ ’’ Id. at 8768, ¶ 25.
Viewing the rules this way, the Commission concluded that
LECs had unreasonably imposed EUCL charges on IPP
public payphones. See id. at 8766, ¶ 20.
The LECs then petitioned for review, arguing that liability
was unfounded because they had acted in reliance on the
Commission’s prior ruling approving the charges. Observing
that the Commission’s decision was ‘‘under unceasing chal-
6
lenge before progressively higher legal authorities’’ until ulti-
mately being overturned in C.F. Communications, we upheld
the Commission. Verizon, 269 F.3d at 1110.
In the meantime, following C.F. Communications, IPPs
that had not participated in those proceedings filed some 3000
informal complaints with the Commission seeking damages
for the LECs’ imposition of EUCL charges from the time
IPPs entered the payphone market until 1997, when the
Commission revised its access charge rules to require ‘‘the
prospective application of EUCL charges to both independent
payphones and to LEC-owned payphones.’’ C.F. Communi-
cations, 128 F.3d at 738 (emphasis omitted). Thirteen of
those complaints, filed in late 1997 and early 1998, are the
subject of this case. In their complaints, the IPPs alleged
that the LECs’ imposition of EUCL charges violated section
201(b) because the IPPs were not end users, irrespective of
whether their payphones were public or semi-public. After
bifurcating the proceedings and deferring the calculation of
damages to a later phase, the Commission issued the liability
order now on review, granting the IPPs’ complaints in part.
See Communications Vending Corp. of Ariz. v. Citizens
Communications Co., 17 F.C.C.R. 24,201 (2002) (Order). For
reasons explained further in each section below, the Commis-
sion concluded that (1) because the IPPs were not end users
under Commission regulations, they were not subject to
EUCL charges for either their public or their semi-public
payphones, and (2) because the IPPs’ cause of action accrued
when they incurred EUCL charges, the Communications
Act’s statute of limitations barred them from recovering
charges paid more than two years before they filed their
complaints. See id. at 24,208, ¶ 15.
Both the LECs and the IPPs now challenge the Commis-
sion’s order. The LEC petitioners dispute the finding of
liability, while the IPP petitioners argue that the statute of
limitations does not limit their recovery. Each group of
petitioners has intervened on behalf of the Commission to
oppose the other group’s petition, and additional IPPs, whose
complaints before the Commission were stayed pending reso-
lution of this proceeding, see id. at 24,206, ¶ 11, have inter-
7
vened in support of the IPP petitioners. We address the
LECs’ arguments in part II and the IPPs’ in part III.
II.
The Commission found that ‘‘because [the IPPs] were not
‘end users’ within the meaning of [its regulations], they were
not within the scope of the EUCL rule, and charges levied
against them—regardless of whether the payphones were
public or semi-public—were unlawful.’’ Id. at 24,209, ¶ 19.
In so ruling, the Commission rejected the LECs’ argument
that because the IPPs were acting as agents of the owners of
the premises on which their payphones were located, EUCL
charges were reasonable. See id. at 24,211, ¶ 24. The Com-
mission explained that as to public payphones, whether the
IPPs were acting as agents was irrelevant because under the
access charge rules public premises owners were exempt
from EUCL charges. See id. at 24,211–12, ¶ 25. In any
event, as to both public and semi-public payphones, the
Commission concluded that the LECs ‘‘ha[d] established no
basis for imputing any liability of the premises owner’’ to the
IPPs. Id. at 24,212, ¶ 26. According to the Commission,
neither the written agreements nor the circumstances of the
payphone service arrangements detailed in the record sub-
jected the IPPs to the premises owners’ control. To the
contrary, the Commission found that the IPPs paid the
owners for the use of their space and, although the IPPs
needed authorization to install the payphones, they main-
tained the phones at their own discretion and in their own
interests.
In reviewing the LECs’ challenges to the Commission’s
order, we follow familiar principles of administrative law,
affirming the Commission’s conclusions of law unless they are
‘‘arbitrary, capricious, an abuse of discretion, or otherwise not
in accordance with law,’’ 5 U.S.C. § 706(2)(A) (2000), and
accepting its findings of fact so long as they are supported by
substantial evidence on the record as a whole, see, e.g., AT&T
Corp. v. FCC, 86 F.3d 242, 247 (D.C. Cir. 1996). We give
‘‘controlling weight’’ to the Commission’s interpretation of its
own regulations ‘‘unless it is plainly erroneous or inconsistent
8
with the regulation.’’ Capital Network Sys., Inc. v. FCC, 28
F.3d 201, 206 (D.C. Cir. 1994).
The LECs challenge the Commission’s liability determina-
tion on two grounds. First, they argue that the Commission
erred in holding that because IPPs were not end users they
were exempt from EUCL charges on their semi-public pay-
phones. During the period at issue the FCC regulation
establishing EUCL charges stated that ‘‘[a] charge TTT shall
be assessed upon end users that subscribe to local exchange
service TTT or semi-public coin telephone service.’’ 47 C.F.R.
§ 69.104(a) (1996). Thus, as the Commission explained,
‘‘[u]nder the plain language of the rule’’ only end users were
subject to EUCL charges. Order, 17 F.C.C.R. at 24,209–10,
¶ 20. As mentioned above, section 69.2(m) defined ‘‘end user’’
as:
[A]ny customer of an interstate or foreign telecom-
munications service that is not a carrier except that
a carrier other than a telephone company shall be
deemed to be an ‘end user’ when such carrier uses a
telecommunications service for administrative pur-
poses and a person or entity that offers telecommu-
nications services exclusively as a reseller shall be
deemed to be an ‘end user’ if all resale transmis-
sions offered by such reseller originate on the prem-
ises of such reseller.
47 C.F.R. § 69.2(m) (emphasis added). Expressly following
C.F. Communications’s reasoning, which it had adopted in
the CFC Remand Order, the Commission again found that
the IPPs here, like CFC, were not end users under that
definition because, although they were resellers of telecom-
munications services, they did not own the premises from
which the payphone transmissions originated. See Order, 17
F.C.C.R. at 24,210–11, ¶¶ 21–22.
We see nothing unreasonable in the Commission’s analysis.
Indeed, largely ignoring the regulations’ language and the
well-established precedent on which the Commission relied,
the LECs essentially contend that the Commission got it
right in the CFC Remand Order, which concluded that LECs
9
were liable only for EUCL charges assessed on IPP public
payphones. Citing C.F. Communications, they argue first
that the Commission erred by applying section 69.2(m)’s
definition of end user to the assessment of EUCL charges on
IPP payphones, claiming it was ‘‘adopted in a different con-
text.’’ LEC Pet’rs’ Br. at 19. In C.F. Communications,
however, we did not find the end-user definition inapplicable
to the IPP payphone context, but rather remanded the case
so that the Commission could correct its erroneous interpre-
tation of section 69.2(m)’s definition with respect to IPP
payphones. Indeed, throughout the history of these proceed-
ings, the petitioners, the Commission, and this court have
looked to that end-user definition to evaluate the assessment
of EUCL charges on IPPs, and the LECs offer no reason
why it was unreasonable for the Commission to continue to do
so here.
The LECs next charge that the Commission inadequately
explained its change in position from the CFC Remand Order.
We disagree. Recognizing that making LEC liability turn on
IPP end-user status deviated from its prior decision, the
Commission provided a ‘‘thorough review of the relevant rules
and precedents’’ before ‘‘conclud[ing] that [its] prior focus on
the public/semi-public distinction, rather than the threshold
end user determination, was incorrect.’’ Order, 17 F.C.C.R.
at 24,212, ¶ 22. The Commission explained that because of its
focus on that distinction, it had previously determined that
IPPs were not end users but that it had never before
addressed the IPPs’ argument about the consequences of that
determination in view of the fact that section 64.104 made
clear that EUCL charges could be assessed on end users
only. See id. at 24,212, ¶ 23 (explaining that ‘‘a charge that
may be levied only on ‘end users’ may [not] be assessed upon
entities that explicitly have been found not to be end
‘users’ ’’). This is more than sufficient to provide the ‘‘rea-
soned explanation’’ we require of an agency that changes its
position. See Amax Land Co. v. Quarterman, 181 F.3d 1356,
1365 (D.C. Cir. 1999).
The LECs’ other arguments on this score rest on a mis-
reading of the Commission’s order. They claim that by
10
holding that a premises owner ‘‘that ordered semi-public
payphone service from [a LEC] was liable for the EUCL
charge’’ while a premises owner ordering the same service
from an IPP ‘‘enjoyed an access charge exemption,’’ the
Commission ignored the access charge policy of ‘‘recovery of
costs from an identifiable subscriber’’ and ‘‘create[d] precisely
the type of unreasonable discrimination that prompted this
court to grant the petition for review in C.F. Communica-
tions.’’ LEC Pet’rs’ Br. at 16–17. But as the Commission
points out, its order ‘‘states only that the IPPs were not
subject to the EUCL charges,’’ and does not consider ‘‘wheth-
er the identifiable end users (i.e., premises owners) of IPP-
owned semi public payphones TTT would have been liable for
EUCL charges.’’ Resp’ts’ Br. at 32 (emphasis omitted).
Thus, the Commission’s determination that IPPs were not
end users with respect to their semi-public payphones does
not run counter to the access charge rules that authorized
LECs to collect EUCL charges from identifiable subscribers
who qualified as end users of IPPs’ semi-public payphones.
Indeed, given that LECs paid no EUCL charges on their own
semi-public payphones, but rather imposed them on premises
owners receiving their semi-public payphone service, the
Commission’s order treats competing IPPs in precisely the
same way. Therefore, unlike in C.F. Communications, the
Commission’s revised interpretation of its rules does not treat
similar payphone services differently. It was the LECs who
chose to assess EUCL charges on their IPP competitors
rather than on those premises owners who may have qualified
as identifiable end users. Thus, any disparate treatment of
semi-public payphone services stems from the LECs’ actions,
not from the Commission’s ruling.
For their second line of attack, the LECs contend that even
if end-user status is determinative, they properly assessed
EUCL charges on both public and semi-public payphone
service because the IPPs were serving as agents of the
premises owners who, according to the LECs, were end users
subject to EUCL charges under the Commission’s regula-
tions, i.e., premises owners were ‘‘customer[s] of TTT telecom-
munications service,’’ 47 C.F.R. § 69.2(m), that ‘‘subscribe[d]
11
to local exchange telephone service.’’ 47 C.F.R. § 69.104(a).
Like the Commission, however, we fail to see how the exis-
tence of any such agency relationship could matter for public
payphone service. The Commission’s determination that the
LECs ‘‘cannot use an agency theory to avoid liability for
EUCL charges assessed on public payphones,’’ Order, 17
F.C.C.R. at 24,211, ¶ 25 (emphasis omitted), follows directly
from its regulations and controlling precedent. As the Com-
mission explained, its access charge rules, C.F. Communica-
tions, and the CFC Remand Order all clearly established that
‘‘ ‘end users’ of public payphones are exempt from the EUCL
charges,’’ id.—an exemption that applies with equal force to
IPP- and LEC-owned payphones. Under those rules and
precedents, premises owners having IPPs’ public payphones
were not subject to EUCL charges because the owners were
not ‘‘end users’’ who ‘‘subscribe[d]’’ to local telephone service.
For public payphones, the transient general public, not the
public premises owner, was the end-user, and although IPPs
providing public payphones may have subscribed to local
exchange service, public premises owners did not. In other
words, as the Commission reasonably concluded, because ‘‘the
premises owners [of IPPs’ public payphones] would not have
been subject to EUCL charges,’’ whether IPPs were agents
of the public premises owners is irrelevant. Id.The agency issue may well have relevance with respect to
semi-public payphone service, which was subject to EUCL
charges, but the Commission found that the LECs had ‘‘es-
tablished no basis for imputing any liability of the premises
owner’’ to the IPPs. Id. at 24,212, ¶ 26. Challenging that
finding, the LECs contend that the Commission ignored
record evidence showing that the IPPs acted—or at least led
the LECs to believe they were acting—as the premises
owners’ agents in ordering local telephone service. We dis-
agree. Reviewing the written agreements between the IPPs
and the premises owners, the parties’ roles under those
agreements, and other record evidence, the Commission
found that the IPPs were acting as licensees of the premises
owners, not as agents allegedly liable for EUCL charges.
Although recognizing that the IPPs needed the premises
12
owners’ consent before ordering service, the Commission
determined that this did not establish an agency relationship
given that, in each case, the IPPs compensated the premises
owners for that authorization and had sole discretion over the
number of lines to install. See id. at 24,212–13, ¶¶ 28–29.
Thus, the Commission found that the IPPs were acting in
their own interests free from the premises owners’ control.
The LECs insist that the agency relationship is ‘‘particular-
ly clear in the case of semi-public payphones,’’ where the
‘‘premises owner itself has a ‘specific TTT need’ for the
payphone’’ and the IPP orders ‘‘service on the premises
owner’s behalf so that the premises owner would have con-
tinuing access to semi-public payphone service.’’ LEC Pet’rs’
Br. at 24–25. It is true that the Commission’s rules suggest
that the relationship between IPPs and premises owners
would likely have differed in the semi-public context:
Semi-public payphones tend to be payphones placed
in locations, at the request of the premises owner,
that do not generate significant amounts of traffic.
The [company] providing the semi-public payphone
typically receives the coin revenues from the pay-
phone, as well as a monthly fee discounted from the
rate for a business line.
In re Implementation of the Pay Tel. Reclassification &
Compensation Provisions of the Telecomms. Act of 1996, 11
F.C.C.R. 20,541, 20,680 n.912 (1996) (citation omitted). Even
if such a relationship were sufficient to establish agency,
however, the LECs point to nothing in the record demon-
strating that any of the IPP petitioners actually had such a
relationship with premises owners. Although we understand
that the Commission deferred the question of whether the
IPPs’ payphones were public or semi-public to the damages
phase, see Order, 17 F.C.C.R. at 24,211 n.73, we think the
Commission correctly put the burden of proving an agency
relationship on the LECs, for it was they who asserted
agency as a defense in the liability phase, see id. at 24,212,
¶ 27; see also Karl Rove & Co. v. Thornburgh, 39 F.3d 1273,
1296 (5th Cir. 1994); 12 Williston on Contracts § 35:2 (4th
13
ed. 2003) (‘‘As a general rule, the party asserting the agency
relationship has the burden of proving both the existence of
the relationship and the authority of the agent.’’). On this
record, the Commission correctly concluded that the LECs
failed to carry that burden because they had offered insuffi-
cient evidence of an agency relationship between the IPPs
and the premises owners that could have supported their
claim of imputed liability. Moreover, nothing in the record
supports the LECs’ argument that the IPPs somehow misled
them; indeed, given that the LECs were themselves involved
in similar transactions, we find it difficult to accept the notion
that they could have been confused about the nature of the
IPP-premises owner relationship.
III.
This brings us to the IPPs’ challenge to the Commission’s
application of the statute of limitations to limit their recovery
of damages. Section 415 of the Communications Act pro-
vides: ‘‘All complaints against carriers for the recovery of
damages not based on overcharges shall be filed with the
Commission within two years from the time the cause of
action accrues, and not afterTTTT’’ 47 U.S.C. § 415(b) (2000).
Citing judicial and Commission precedent, the Commission
explained that a cause of action under section 415 accrues on
the date of injury, or if the injury is not readily discoverable,
at the time the complainant should have discovered it. Order,
17 F.C.C.R. at 24,222, ¶ 51. Based on the IPPs’ representa-
tion that they were aware of the charges when assessed,
believed them to be unlawful, and knew that other IPPs had
challenged them, the Commission held that the injury oc-
curred and the cause of action accrued when the IPPs ‘‘re-
ceived their first bill containing the EUCL assessment.’’ Id.
at 24,223, ¶ 51. The Commission rejected the IPPs’ theory
that their cause of action did not accrue until the unlawful-
ness of the charges was clearly established. See id. at 24,223,
¶ 52. The Commission also declined to toll the statute of
limitations, finding that the IPPs had failed to act with due
diligence. See id. at 24,226–27, ¶¶ 58–63. Applying the two-
year limitation period, the Commission concluded that the
14
IPPs could recover damages for only the two-year period
preceding the filing of their complaints. See id. at 24,227,
¶ 64.
We review the Commission’s interpretation of section 415
in accordance with the familiar principles of Chevron USA
Inc. v. Natural Resources Defense Council, 467 U.S. 837(1984). See Cellco P’ship v. FCC, 357 F.3d 88, 94 (D.C. Cir.
2004). Because Congress did not define the term ‘‘accrues,’’
we must determine whether the agency’s interpretation is
‘‘based on a permissible construction of the statute.’’ Chev-
ron, 467 U.S. at 843. In construing section 415, the Commis-
sion relied on its long held view that ‘‘a cause of action
accrues at the time the carrier does the unlawful act.’’ In re
MCI Telecomms. Corp. v. US West Communications, Inc., 15
F.C.C.R. 9328, 9330, ¶ 5 (2000). Thus, ‘‘[i]n cases involving
allegations that a carrier has failed to charge a just and
reasonable rate TTT , the general rule is that the two-year
limitations period begins to run when the customer receives a
bill from the carrier assessing the disputed rate.’’ Id.The IPPs insist that ‘‘[e]xisting law does not support the
Commission’s accrual ruling’’ because ‘‘a cause of action
cannot accrue when the controlling law does not recognize
its validity.’’ IPP Pet’rs’ Br. at 13, 15. In making this ar-
gument, however, they point to nothing in section 415’s
language or legislative history either to support their inter-
pretation or to suggest that the Commission’s reading is
unreasonable. Instead, the IPPs rely on a line of cases
unrelated to section 415 that originates with the Fifth Cir-
cuit’s decision in United States v. One 1961 Red Chevrolet
Impala Sedan, 457 F.2d 1353 (5th Cir. 1972). In that
case, a taxpayer sued to recover property forfeited as a
result of gambling and tax violations. Rejecting the argu-
ment that the claim was barred by the six-year statute of
limitations, the Fifth Circuit held that the taxpayer’s cause
of action did not accrue until the date of an intervening
Supreme Court ruling, which established a new defense to
such forfeiture proceedings and expressly endorsed the ret-
roactive application of that new rule. In delaying the ac-
crual of the taxpayer’s cause of action, the Fifth Circuit
15
explained that the taxpayer had ‘‘no reasonable probability
of successfully prosecuting his claim against the govern-
ment prior to the enunciation of the new TTT rule.’’ Id. at
1358. Applying Red Chevrolet to the circumstances here,
the IPPs argue that they had no cause of action until our
1997 decision in C.F. Communications because, until then,
they had no reasonable probability of success.
While the IPP’s theory is certainly interesting, Red Chevro-
let arose under a different statute entirely—the Tucker Act—
and therefore has nothing to do with the question before us:
whether the FCC’s interpretation of section 415 is reasonable.
Not only do we see nothing in the statute that suggests
otherwise, but the FCC’s view is consistent with prevailing
caselaw. To determine when a cause of action accrues under
section 415, this circuit, as well as every other circuit to have
addressed the issue, has applied the ‘‘discovery of injury’’
rule—the general accrual rule for remedial civil actions. See
MCI Telecomms. Corp. v. FCC, 59 F.3d 1407, 1417 (D.C. Cir.
1995); see also MCI Telecomms. Corp. v. Teleconcepts, 71
F.3d 1086, 1100 (3d Cir. 1995); Pavlak v. Church, 727 F.2d
1425, 1428 (9th Cir. 1984). Under that rule, a cause of action
accrues either when a readily discoverable injury occurs or, if
an injury is not readily discoverable, when the plaintiff should
have discovered it. MCI Telecomms. Corp., 59 F.3d at 1417.
In other contexts, moreover, we have rejected Red Chevro-
let’s reasoning and the IPPs’ argument that a cause of action
does not accrue until uncertain law becomes settled. In
Atchinson, Topeka & Santa Fe Ry. Co. v. ICC, 851 F.2d 1432(D.C. Cir. 1988), we reversed an Interstate Commerce Com-
mission ruling that a shipper’s cause of action seeking refunds
of unlawfully paid delivery fees did not accrue at the time of
the delivery (as required by the statute at issue), but rather
years later when the ICC resolved unsettled law about such
refund claims. Calling the ICC’s action ‘‘as extraordinary as
it was unwarranted,’’ we rejected that agency’s delayed accru-
al approach in favor of traditional equitable tolling analysis.
Id. at 1437; see also Aluminum Co. of Am. v. United States,
867 F.2d 1448, 1453 (D.C. Cir. 1989) (rejecting the argument
16
that a cause of action did not accrue until our precedent
resolved the question of available remedies).
Given the foregoing, we have no doubt that the Commis-
sion’s construction of section 415 is permissible. Moreover,
because the IPPs concede that they were aware of the EUCL
charges and believed them to be unlawful when they were
assessed, the Commission reasonably found that their cause
of action accrued under section 415 when the LECs billed
them for the EUCL charges.
Nothing in Hartford Life Insurance Co. v. Title Guarantee
Co., 520 F.2d 1170 (D.C. Cir. 1975), requires a different
result. There, we held that the three-year statute of limita-
tions on contract claims did not bar Hartford Life, the
assignee of a promissory note, from bringing suit against the
assignor twelve years after the assignment. The delay oc-
curred because Hartford Life had spent many years suing the
trustee of the debtor who defaulted on the note—litigation
that ended when this court decided that the note was unlaw-
ful and unenforceable against the debtor’s trustee. Because
Hartford Life’s cause of action against the assignor ‘‘depend-
ed upon a prior adjudication of the rights of the trustee’’ and
because it had chosen to pursue its ‘‘substantial legal claim’’
against the trustee rather than suing the assignor immediate-
ly, we declined to hold that the ‘‘cause of action arose prior to
our decision’’ about the note’s validity. Id. at 1173–74. Al-
though in Hartford Life we cited Red Chevrolet for the basic
proposition that the ‘‘right to sue did not accrue until the
plaintiff had a cause of action,’’ id. at 1173, our prior ruling
that the note was invalid was not mere precedent for Hart-
ford Life’s suit against the assignor; instead it established for
the first time a predicate fact of injury central to that action.
In contrast, although our decision in C.F. Communications
clarified uncertain precedent, it changed no facts relating to
the IPPs’ injuries. Moreover, unlike Hartford Life, which
had diligently pursued its claim (albeit against the wrong
party), the IPPs took no action even though they believed
that the LECs were unlawfully assessing EUCL charges.
17
Finally, the Commission reasonably rejected the IPPs’
assertion that it would have been futile to pursue their claims
when the injury occurred. As the Commission noted, other
IPPs had continuously challenged its approval of EUCL
charges, and ‘‘pending legal challenges to that [approval]
made the legality of the [LECs’] behavior uncertain.’’ Order,
17 F.C.C.R. at 24,224, ¶ 53. Although the IPPs contend that
they had ‘‘no reasonable probability’’ of successfully challeng-
ing the Commission, their probability was exactly the same as
those IPPs that did so and succeeded. As the Second Circuit
has explained:
The only sure way to determine whether a suit can
be maintained is to try it. The application of the
statute of limitations cannot be made to depend upon
the constantly shifting state of the law, and a suitor
cannot toll or suspend the running of the statute by
relying upon the uncertainties of controlling law. It
is incumbent upon him to test his right and remedy
in the available forums. These suits were not com-
menced until through the labor of others the way
was made clear.
Fiesel v. Bd. of Educ., 675 F.2d 522, 524–25 (2d Cir. 1982)
(quoting Versluis v. Town of Haskell, 154 F.2d 935, 943 (10th
Cir. 1946)) (internal quotation marks omitted).
Alternatively, the IPPs argue that even if their claims
accrued when the LECs assessed the EUCL charges, the
Commission erred in declining to toll the statute of limita-
tions. While recognizing that section 415 may be equitably
tolled, the Commission has construed that provision strictly,
even when doing so produces hardship. See In re Valenti v.
AT&T Co., 12 F.C.C.R. 2611, 2621–22, ¶ 24 (1997). We too
have set a high hurdle for equitable tolling, allowing a statute
to be tolled ‘‘only in extraordinary and carefully circum-
scribed instances.’’ Smith-Haynie v. District of Columbia,
155 F.3d 575, 580 (D.C. Cir. 1998) (internal quotation marks
omitted). As the Supreme Court has explained:
Federal courts have typically extended equitable
relief only sparingly. We have allowed equitable
18
tolling in situations where the claimant has actively
pursued his judicial remedies by filing a defective
pleading during the statutory period, or where the
complainant has been induced or tricked by his
adversary’s misconduct into allowing the filing dead-
line to pass.
Irwin v. Dep’t of Veterans Affairs, 498 U.S. 89, 96 (1990)
(footnote omitted). Meant to ‘‘ensure[ ] that the plaintiff is
not, by dint of circumstances beyond his control, deprived of a
reasonable time in which to file suit,’’ Chung v. DOJ, 333 F.3d
273, 279 (D.C. Cir. 2003) (internal quotation marks omitted),
equitable tolling is unwarranted where a litigant has ‘‘failed to
exercise due diligence in preserving his legal rights,’’ Irwin,
498 U.S. at 96; see also Smith–Haynie, 155 F.3d at 580. In
light of this stringent test, we have little difficulty sustaining
the Commission’s refusal to toll the statute of limitations,
particularly given our highly deferential standard of review.
See Sprint Communications Co. v. FCC, 76 F.3d 1221, 1226
(D.C. Cir. 1996) (explaining that we reverse a Commission
ruling that a claim is time barred ‘‘only if the agency’s
decision is not supported by substantial evidence or the
agency has made a clear error in judgment’’).
According to the Commission, the IPPs ‘‘did not act with
anything approaching due diligence.’’ Order, 17 F.C.C.R. at
24,226, ¶ 59. As the Commission explained, even though
some IPPs filed complaints early on, they failed to pursue
them. Insisting they did act diligently, the IPPs point out
that their industry trade association filed a petition in 1989
challenging the EUCL charges on their behalf. See supra at
4. But that petition sought only a declaratory ruling that the
LECs’ imposition of EUCL charges was unlawful, so it could
neither have tolled the statute nor otherwise excused the
IPPs’ failure to pursue complaints for damages, especially
when other IPPs did so and thereby preserved their claims in
full.
We have reviewed the IPPs’ remaining equitable tolling
arguments and found them to be without merit. While it is
certainly true that the Commission’s decision ‘‘allows the
LECs to keep money that TTT they collected unlawfully,’’ IPP
19
Pet’rs’ Br. at 29, that is both the nature of a statute of
limitations and the consequence of the IPPs’ failure to file
and pursue their complaints in a timely manner.
IV.
Weary of this long and drawn-out dispute, counsel for the
Commission asked at oral argument that we affirm the Com-
mission and put it ‘‘out of [its] misery.’’ We are pleased to
oblige. As General Douglas MacArthur proclaimed from the
deck of the U.S.S. Missouri, ‘‘[t]hese proceedings are now
closed.’’
So ordered.