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Carroll Electric Cooperative Corp. v. Southwestern Bell Telephone Co. Inc.

United States District Court, W.D. Arkansas, Harrison Division

September 14, 2016

CARROLL ELECTRIC COOPERATIVE CORPORATION, PLAINTIFF
v.
SOUTHWESTERN BELL TELEPHONE COMPANY, INC. d/b/a AT&T; and JOHN DOES 1-22, DEFENDANTS

          MEMORANDUM OPINION AND ORDER

          TIMOTHY L BROOKS UNITED STATES DISTRICT JUDGE

         Currently before the Court is a Motion to Dismiss, Abstain, or in the Alternative, Stay (Doc. 23) filed by Defendant Southwestern Bell Telephone Company, Inc. d/b/a AT&T (“SWBT”).[1] The Motion has been fully briefed and is ripe for decision. For the reasons stated herein, the Motion is GRANTED IN PART and DENIED IN PART.

         I. BACKGROUND

         According to its Complaint, Carroll Electric Cooperative Corporation (“Carroll Electric”) is an entity originally organized in 1938 pursuant to the Rural Electrification Act. It is in the business of supplying electricity to the Northwest Arkansas and Southwest Missouri communities, and to that end it has established and maintained hundreds of miles of wood poles-colloquially known as telephone poles or utility poles. SWBT is one of the nation's largest telecommunications companies. On December 8, 1958, Carroll Electric and SWBT entered into a written agreement entitled “General Agreement Joint Use of Wood Poles” (the “JUA”). In relevant part, the JUA establishes terms and conditions related to the parties' abilities to attach electric and telephone lines, respectively, to each other's poles. Article XX of the JUA provides for possible termination of the agreement after 25 years, or “thereafter upon the giving of written notice to the other party not less than three years prior to the date of termination.” (Doc. 20-1, p. 9).

         On February 25, 2011, Carroll Electric gave written notice of termination to SWBT providing for the termination of the JUA effective March 1, 2014. (Doc. 20-2). The notice instructs SWBT to “make necessary arrangements to have all attachments removed from Carroll Electric Cooperative Corporation facilities prior to this date.” Id. Nonetheless, and for reasons that will become apparent in this Memorandum Opinion, SWBT's telephone lines remain attached to Carroll Electric's poles to this day.

         Carroll Electric filed a Complaint in the Circuit Court of Carroll County, Arkansas, and SWBT removed the suit to this Court on March 22, 2016. Carroll Electric filed a four-count Amended Complaint (Doc. 22) on June 20, 2016. Count I alleges that the continued presence of SWBT's attachments on Carroll Electric's poles constitutes a trespass. Count II asks the Court to grant Carroll Electric injunctive relief to remedy that alleged trespass. Count III argues that SWBT breached its contract with Carroll Electric by (a) installing facilities on Carroll Electric's poles in violation of the National Electrical Safety Code; (b) attaching to Carroll Electric's poles without its permission; (c) paying Carroll Electric an annual rental amount below the specifications of the JUA; and (d) failing to remove its facilities from Carroll Electric's poles after the termination of the JUA. Count IV seeks punitive damages for SWBT's conduct.

         SWBT filed an Answer (Doc. 25) to the Amended Complaint on July 7, 2016, generally denying the claims against it. It also filed the instant Motion to Dismiss, Abstain, or in the Alternative, Stay (Doc. 23) on June 16, 2016. The Motion argues that the Court lacks subject-matter jurisdiction because the Arkansas Public Services Commission (“APSC”) has primary and exclusive jurisdiction over Carroll Electric's claims. Alternatively, the Motion suggests that this Court should abstain from deciding this case under the Burford abstention doctrine. Again alternatively, the Motion asks the Court to stay these proceedings until the APSC's Amended Pole-Attachment Rules are adopted into law. Carroll Electric filed its Response (Doc. 26) on July 13, 2016, contending that this Court has subject-matter jurisdiction and that Burford abstention would be improper. SWBT then filed a Reply (Doc. 28) on July 18, 2016. Finally, on August 24, 2016, Carroll Electric submitted Supplemental Authority (Doc. 29) in the form of an August 19, 2016 Rehearing Order from the APSC, and a case out of the Court of Appeals of Texas, Fort Worth Division.

         II. DISCUSSION

         A. Establishing and Exercising Jurisdiction

         SWBT frames its Motion as one for dismissal due to lack of subject-matter jurisdiction, or in the alternative, abstention under the Burford doctrine. See Doc. 23, ¶ 6. The Court believes that SWBT's reference to subject-matter jurisdiction is a misnomer, as it cannot be seriously argued that this Court lacks subject-matter jurisdiction.

         “It is a verity that federal courts are courts of limited jurisdiction.” Ark. Blue Cross & Blue Shield v. Little Rock Cardiology Clinic, P.A., 551 F.3d 812, 816 (8th Cir. 2009). Specifically, federal courts' jurisdiction is limited to what is permitted by the Constitution and then conferred by Congress. In this case, the Court undoubtedly has subject-matter jurisdiction by virtue of Article III, Section 2, Clause 1 of the Constitution, and 28 U.S.C. §§ 1332 and 1441. Article III grants federal courts the power to hear controversies “between Citizens of different States.” In accordance with this constitutional grant of power, Congress conferred the district courts with original jurisdiction “of all civil actions, ” between citizens of different states, “where the matter in controversy exceeds the sum or value of $75, 000.” 28 U.S.C. § 1332(a)(1). Congress also authorized the district courts to hear “any civil action brought in a State court of which the district courts of the United States have original jurisdiction, ” once the action is properly removed by a defendant. 28 U.S.C. § 1441(a).

         The Court does not understand SWBT to be questioning whether these requirements for diversity jurisdiction have been met. It is uncontested that SWBT is not a citizen of Arkansas, Carroll Electric is a citizen of Arkansas, and more than $75, 000 is in controversy. Insofar as the Court is mistaken, and SWBT does intend to challenge the Court's subject-matter jurisdiction, its motion to that effect is denied. However, the Court believes SWBT's Motion is best understood as a request for this Court to decline to exercise its otherwise undisputed jurisdiction.

         Federal courts “have a strict duty to exercise the jurisdiction that is conferred upon them by Congress.” Quackenbush v. Allstate Ins. Co., 517 U.S. 706, 716 (1996). “This duty is not, however, absolute. . . . [F]ederal courts may decline to exercise their jurisdiction, in otherwise ‘exceptional circumstances, ' where denying a federal forum would clearly serve an important countervailing interest.” Id. (quotation omitted). One such circumstance is captured by the Burford abstention doctrine, named for the case in which it was first recognized by the Supreme Court. See Burford v. Sun Oil Co., 319 U.S. 315 (1943). Pursuant to Burford abstention:

Where timely and adequate state-court review is available, a federal court sitting in equity must decline to interfere with the proceedings or orders of state administrative agencies: (1) when there are difficult questions of state law bearing on policy problems of substantial public import whose importance transcends the result in the case then at bar; or (2) where the exercise of federal review of the question in a case and in similar cases would be disruptive of state efforts to establish a coherent policy with respect to a matter of substantial public concern.

New Orleans Pub. Serv., Inc. v. Council of City of New Orleans, 491 U.S. 350, 361 (1989) (quotations omitted). In simpler terms, “a federal court should abstain when the action before it involves matters of state law best left to the state alone.” Middle S. Energy, Inc. v. Ark. Pub. Serv. Comm'n, 772 F.2d 404, 417 (8th Cir. 1985). The doctrine applies only where the relief being sought is equitable or otherwise discretionary in nature; it does not allow federal courts to dismiss cases where the relief requested is non-discretionary damages. See Quackenbush, 517 U.S. at 728-31. “Burford might support a federal court's decision to postpone adjudication of a damages action, ” however, by entering a stay. Id. at 730 (second emphasis added).

         B. Arkansas' Statutory and Regulatory Scheme for Pole Attachments

         To decide whether dismissal or a stay might be appropriate under the Burford doctrine, the Court must first review Arkansas' statutory and regulatory scheme for pole attachments. In light of this scheme, it must then evaluate whether the case presents difficult questions of state law bearing on policy problems of public import, or whether the Court's adjudication would disrupt Arkansas' regulatory efforts. This analysis begins with determining the scope of the APSC's authority to resolve pole-attachment disputes.

         1. The APSC's Jurisdiction to Resolve Disputes Involving Pole Attachments

         When an appropriate party brings a complaint to the APSC, it has the authority “to conduct investigations and public hearings, to mandate monetary refunds and billing credits, or to order appropriate prospective relief as authorized or required by law, rule, regulation, or order.” Ark. Code Ann. § 23-3-119(d). The APSC's jurisdiction in such disputes “is primary and shall be exhausted before a court of law or equity may assume jurisdiction.” Id. However, the APSC “shall not have the authority to order payment of damages or to adjudicate disputes in which the right asserted is a private right found in the common law of contracts, torts, or property.” Id. Section 23-3-119(f) further clarifies:

(1) It is the specific intent of the General Assembly . . . to vest in the [APSC] the authority to adjudicate individual disputes between consumers and the public utilities which serve them when those disputes involve public rights which the commission is charged by law to administer.
(2) Public rights which the commission may adjudicate are those arising from the public utility statutes enacted by the General Assembly and the lawful rules, regulations, and orders entered by the commission in the execution of the statutes. The commission's jurisdiction to adjudicate public rights does not and cannot, however, extend to disputes in which the right asserted is a private right found in the common law of contracts, torts, or property.

Id. at (f)(1), (2).

         To appreciate the contours of the APSC's authority to resolve disputes in pole-attachment cases, two points must be made about the distinction between “public rights” and “private rights” set forth in Ark. Code Ann. § 23-3-119. The first is that the distinction is not dependent on the labels applied to the causes of action in a complaint. In at least four cases, the Arkansas Supreme Court has held that the APSC has primary jurisdiction over claims involving contract or tort causes of action. In Cullum v. Seagull Mid-South, Inc., 322 Ark. 190 (1995), a group of customers brought a class-action lawsuit against a natural gas company alleging the tort of fraud. Id. at 193. In determining whether the circuit court properly dismissed the case for lack of subject-matter jurisdiction, the Arkansas Supreme Court framed the question not in terms of how the cause of action was labelled, but instead based on “whether the tort action . . . encroache[d] on the exclusive authority of the [APSC] to fix rates.” Id. at 196. Finding that it did, the Cullum Court adopted the filed-rate doctrine-a doctrine not directly relevant to this motion-and affirmed the dismissal, thus holding that the APSC had primary jurisdiction over the dispute despite the tort cause of action. Id. at 197-98.

         Eleven years later in Austin v. Centerpoint Energy Arkla, 365 Ark. 138 (2005), the Arkansas Supreme Court held that a natural gas customer's “use of the phrases ‘replevin, ' ‘tort, ' and ‘civil rights, '” did not change the “reality” that her action was “a dispute over rates.” Id. at 146. Instead, “when a plaintiff's tort action is nothing more than a collateral attack on a utility's rate-making authority, the tort action impermissibly encroaches on the exclusive authority of the [APSC] to fix ...


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