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Before the
Federal Communications Commission
Washington, D.C. 20554
Premiere Network Services, )
Inc., )
)
Complainant, )
) File No. EB-02-MD-032
v. )
)
Southwestern Bell Telephone )
Co., )
Defendant. )
ORDER
Adopted: June 10, 2003 Released: June 11,
2003
By the Deputy Chief, Market Disputes Resolution Division,
Enforcement Bureau:
In this Order, we grant Complainant Premiere Network
Services, Inc.'s (``Premiere'') motion to dismiss without
prejudice the formal complaint it filed against Defendant
Southwestern Bell Telephone Co. (``SWBT'').1 We find that
granting Premiere's Motion, in the manner described herein,
will ensure the most efficient use of the parties' and the
Commission's resources without materially prejudicing SWBT.
I. BACKGROUND
Premiere filed a formal complaint against SWBT with the
Commission on May 24, 2002, 2 following the parties'
unsuccessful efforts over an approximately 30-month period
to resolve their dispute.3 Although Premiere's Complaint
includes numerous claims, the fundamental issue raised in
the complaint is whether SWBT violated the Act and/or
Commission rules by failing to route Premiere's ``555
numbers'' in the manner Premiere requested.4
On November 27, 2002, Premiere filed a motion to dismiss its
complaint without prejudice.5 Premiere contends that
``SWBT's representations before the Commission regarding the
issue of the availability of 555 service'' have damaged
``the integrity and accuracy of the record.''6 Premiere
argues that the record developed in this proceeding ``is so
flawed that the [Commission] will be unable to issue a
decision consistent with due process.''7 Premiere also
argues that granting its motion will conserve the parties'
and Commission resources.8 SWBT filed an opposition to
Premiere's motion on December 5, 2002.9 SWBT asserts that
the Commission should deny Premiere's request or dismiss the
complaint with prejudice.10 SWBT contends that granting
Premiere's Motion will prejudice SWBT, because it has
expended ``considerable resources'' defending against
Premiere's claims and it ``is entitled to a resolution of
this dispute.''11
II. DISCUSSION
The Commission has broad discretion to conduct complaint
proceedings ``in a manner that will best conduce to the
proper dispatch of business and to the ends of justice.''12
Although the Commission does not have a specific rule
relating to the dismissal of formal complaints, we agree
with SWBT that Rule 41(a)(2) of the Federal Rules of Civil
Procedure,13 although not controlling, is instructive.14
The purpose of Rule 41(a)(2) ``is primarily to prevent
voluntary dismissals which unfairly affect the other
side.''15 In determining whether to dismiss a complaint,
courts generally follow the traditional principle that
dismissal should be allowed unless the defendant will suffer
some plain legal prejudice other than the mere prospect of a
second lawsuit.16 The grant or denial of a motion to
dismiss under Rule 41(a)(2) is within the sound discretion
of the trial court, and its order is reviewable only for
abuse of that discretion.17
In this instance, we conclude, as explained below, that
dismissal without prejudice is appropriate, because
dismissal will conserve the parties' and the Commission's
resources and SWBT has failed to demonstrate any plain legal
prejudice arising from such dismissal.18
As an initial matter, we reject Premiere's contention that
the record in this proceeding is ``so flawed'' as to impede
the Commission's ability ``to issue a decision consistent
with due process.''19 Premiere points to alleged
discrepancies it found between certain factual information
detailed in SWBT's Amended Answer with information contained
in documents SWBT voluntarily produced in response to
Premiere's document requests. Premiere complains that SWBT
represented in its Amended Answer that it routed calls to
only two 555 numbers but documents attached to the Amended
Answer showed a third 555 number in use.20 This discrepancy
was identified promptly, Commission staff ordered SWBT to
take certain steps to correct the record, and SWBT
complied.21 Thus, Premiere's allegations concerning a
flawed record are meritless.22
Although we find Premiere's arguments concerning the record
to be unpersuasive, we are persuaded that granting the
Motion will conserve the parties' and Commission's
resources. As an initial matter, we note that Premiere has
expressed some optimism regarding the prospects of this
dispute being resolved in the context of other disputed
matters between the parties. 23 Further, even without a
settlement, Premiere may elect not to file a subsequent
complaint proceeding. Indeed, its unwillingness to pursue
its complaint at this stage of the proceeding suggests that
it is unlikely that Premiere will file a subsequent
complaint. Thus, the parties may very well entirely avoid
the time and expense associated with briefing this case and
challenging the Commission's ultimate decisions, and the
Commission may turn its attention to other matters.
SWBT disputes the notion that resources will be saved by
granting Premiere's Motion and argues that we should either
deny Premiere's motion or dismiss the complaint with
prejudice. First, SWBT claims that its expenditure of
resources to date will have been wasted if we dismiss the
complaint without prejudice and leave SWBT exposed to the
expenses associated with any potential future litigation
brought by Premiere.24 Second, SWBT argues that, pursuant
to Rule 41(a)(1) of the Federal Rules of Civil Procedure,
Premiere's motion to dismiss should automatically be treated
as a motion to dismiss with prejudice.25 According to SWBT,
Premiere had voluntarily dismissed a prior proceeding before
the Texas PUC that SWBT asserts involved the same claims as
those in the instant complaint.26
We reject both of SWBT's arguments. As to the first
argument, although we acknowledge the possibility that
Premiere might file a subsequent action, we conclude that
this does not constitute the type of plain legal prejudice
that warrants a denial of Premiere's request.27 Courts
typically find that the mere prospect of having to defend a
second lawsuit is not a sufficient basis to dismiss a
complaint with prejudice.28 Further, we disagree that
SWBT's expenditure of resources to date would be wasted if
Premiere files a second lawsuit. If Premiere files a second
complaint, SWBT will have the benefit of its research into
the matters complained of in this proceeding, as well as a
clear understanding of Premiere's claims and legal analysis.
This should greatly minimize SWBT's costs in having to
defend against any future action. In addition, we expect
that SWBT will seek to rely on pleadings filed in this
proceeding in any subsequent proceeding, and we will
reasonably exercise our discretion in such a subsequent
proceeding to minimize the burdens on SWBT in responding to
the proceeding.29
Furthermore, to help ensure that any potential prejudice to
SWBT associated with having to defend a duplicative second
complaint is minimized, we exercise our discretion to impose
a condition on Premiere as part of our grant of Premiere's
Motion.30 If Premiere files, within one year of the date of
this Order, a formal complaint against SWBT at the
Commission that alleges the same or materially similar facts
and legal issues as raised in this proceeding, Premiere must
include an exhibit to that complaint that compares that
complaint with the complaint filed in this proceeding. Such
a requirement will help reduce the time and resources
required of SWBT to respond to a duplicative complaint.
We also reject SWBT's second ground for denial of Premiere's
Motion. SWBT argues that, pursuant to Rule 41(a)(1), we
should treat Premiere's Motion as a motion to dismiss with
prejudice because Premiere had filed and dismissed a related
complaint before the Texas Public Utilities Commission
(``Texas PUC'').31 SWBT has failed, however, to provide
sufficient information regarding the Texas PUC proceeding,
including the circumstances of that complaint's dismissal,32
and whether that proceeding actually involved the same
claims made in Premiere's FCC complaint. Thus, we deny
SWBT's request that we treat Premiere's Motion as a motion
to dismiss with prejudice.
For the foregoing reasons, we grant Premiere's Motion to
Dismiss its complaint without prejudice. We find that,
under the circumstances of this case, dismissing the
complaint without prejudice is appropriate and is in the
public interest, because it ensures the efficient use of the
Commission's formal complaint process, and may eliminate the
need for further litigation and expenditure of additional
time and resources of the parties and this Commission.33
III. ORDERING CLAUSES
Accordingly, IT IS ORDERED, pursuant to sections 4(i), 4(j),
and 208 of the Communications Act of 1934, as amended, 47
U.S.C. §§ 154(i), 154(j), and 208, and section 1.727 of the
Commission's rules, 47 C.F.R. § 1.727, and the authority
delegated in sections 0.111 and 0.311 of the Commission's
rules, 47 C.F.R. §§ 0.111, 0.311, that Complainant's Motion
to Dismiss the Proceeding Without Prejudice IS GRANTED.
IT IS FURTHER ORDERED, pursuant to sections 4(i), 4(j), and
208 of the Communications Act of 1934, as amended, 47 U.S.C.
§§ 154(i), 154(j), and 208, and section 1.727 of the
Commission's rules, 47 C.F.R. § 1.727, and the authority
delegated in sections 0.111 and 0.311 of the Commission's
rules, 47 C.F.R. §§ 0.111, 0.311, that Complainant's
complaint is hereby dismissed without prejudice, and the
above-captioned complaint proceeding IS TERMINATED.
IT IS FURTHER ORDERED, pursuant to sections 4(i), 4(j), and
208 of the Communications Act of 1934, as amended, 47 U.S.C.
§§ 154(i), 154(j), and 208, and section 1.727 of the
Commission's rules, 47 C.F.R. § 1.727, and the authority
delegated in sections 0.111 and 0.311 of the Commission's
rules, 47 C.F.R. §§ 0.111, 0.311, that should Premiere
Network Services, Inc. file, within one year of the date of
this Order, a formal complaint against Southwestern Bell
Telephone Co. at the Commission that alleges the same or
materially similar facts and legal issues raised in this
proceeding, Premiere Network Services, Inc. must include an
exhibit to its new complaint that compares it to the
complaint filed in this proceeding.
FEDERAL COMMUNICATIONS COMMISSION
Radhika V. Karmarkar
Deputy Chief, Market Disputes
Resolution Division
Enforcement Bureau
_________________________
1 Complainant's Motion to Dismiss the Proceeding Without
Prejudice, File No. EB-02-MD-032 (filed Nov. 27, 2002)
(``Motion'').
2 See Complaint, File No. EB-02-MD-032 (filed May 24,
2002) (``Complaint'').
3 The parties generally agree on the procedural
background of this proceeding. See Complaint, ¶¶ 24-36,
46-47. See also Defendant's Opposition to Complainant's
Motion to Dismiss Without Prejudice, File No. EB-02-MD-032
(filed Dec. 5, 2002) at 2-3.
4 A ``555 number'' is a unique line number in the 555
NXX exchange. Implementation of the Local Competition
Provisions of the Telecommunications Act of 1996, Third
Order on Reconsideration of Second Report and Order and
Memorandum Opinion and Order, 14 FCC Rcd 17964, 17997, ¶ 46
(1999).
5 In addition to seeking dismissal without prejudice,
Premiere also requested that the briefing schedule
established in the case be extended one week to permit
``full consideration'' of its Motion. Motion at 5-6. Upon
receipt of Premiere's Motion, Commission staff revised the
briefing schedule to extend the deadline for the filing of
the parties' opening briefs by one week. Letter from
Anthony J. DeLaurentis, Attorney, Market Disputes
Resolution Division, FCC, to Brad E. Mutschelknaus, Counsel
for Premiere, and William A. Brown, Counsel for SWBT, File
No. EB-02-MD-032 (Nov. 27, 2002). After SWBT filed its
Opposition on December 5, 2002, the briefing schedule was
suspended pending our decision on Premiere's Motion.
Letter from Anthony J. DeLaurentis, Attorney, Market
Disputes Resolution Division, FCC, to Brad E.
Mutschelknaus, Counsel for Premiere, and William A. Brown,
Counsel for SWBT, File No. EB-02-MD-032 (Dec. 10, 2002).
6 Motion at 2.
7 Id. at 3.
8 Id. at 4 - 5.
9 Defendant's Opposition to Complainant's Motion to
Dismiss Without Prejudice, EB-02-MD-032 (filed Dec. 5,
2002) (``Opposition'').
10 Opposition at 1-2.
11 Id. at 2-3.
12 47 U.S.C. §§ 4(i), (j).
13 FED. R. CIV. P. 41(a)(2) (providing a court with
discretion to dismiss an action at the plaintiff's request
upon such terms and conditions as the court deems proper).
14 Opposition at 5.
15 Wright & Miller, Federal Practice & Procedure: Civil
2d § 2364 (citing cases).
16 Id. Courts generally consider a variety of factors,
but do not accord each factor the same weight. Id.
Rather, the concern that generally weighs most heavily
among many courts in making such determinations is whether
a dismissal will substantially prejudice the defendant.
Id.
17 Id.
18 In deciding Premiere's Motion, we considered the
parties' oral arguments as well as their written
submissions on the matter.
19 Motion at 3.
20 See Letter from Brad E. Mutschelknaus, Counsel for
Premiere, to William A. Brown, Counsel for SWBT, File No.
EB-02-MD-032 (filed Aug. 23, 2002) (``Mutschelknaus Aug.
23rd Letter'') at 3-4; Motion at 2.
21 Commission staff ordered SWBT to correct all incorrect
factual statements in its Amended Answer, explain how it
previously failed to identify all of its 555 numbers, and
identify steps it had taken to ensure that the new
submissions Commission staff ordered were complete. Letter
from Anthony J. DeLaurentis, Attorney, Market Disputes
Resolution Division, FCC, to Brad E. Mutschelknaus, Counsel
for Premiere, and William A. Brown, Counsel for SWBT, File
No. EB-02-MD-032 (Sept. 9, 2002) (``MDRD Sept. 9th
Letter''). In addition, the staff ordered SWBT ``to submit
an affidavit under penalty of perjury executed by the
appropriate authorized officer of the corporation,
verifying the truth and accuracy of the information in
SWBT's second amended answer,'' and stating that there were
``no errors or omissions in its amended answer or other
pleadings in this case.'' Id. SWBT complied with this
request on September 20, 2002, and stated that, based on a
thorough review of its records, it had found one more 555
number in use than the numbers previously identified by
SWBT or found by Premiere. See Second Amended Answer, File
No. EB-02-MD-032 (filed Sept. 20, 2002); see also Affidavit
of James C. Smith and Wayne D. Masters, File No. EB-02-MD-
032 (filed Sept. 20, 2002); and Letter from William A.
Brown, Counsel for SWBT, to Anthony J. DeLaurentis,
Attorney, Market Disputes Resolution Division, FCC, File
No. EB-02-MD-032 (filed Sept. 20, 2002) at 1. Premiere was
permitted to file a supplemental reply and seek additional
discovery addressing any new factual or legal issues raised
in SWBT's Second Amended Answer. See MDRD Sept. 9th Letter
Ruling at 2.
22 Also, we note that at no point during the procedural
events that followed SWBT's correction of the record did
Premiere suggest that the record was somehow tainted beyond
repair. Then, one week before the opening briefs were due,
Premiere filed its Motion.
23 In arguments made during a telephone call on November
21, 2002, Premiere's counsel advised Commission staff and
counsel for SWBT that his client had had discussions with
SWBT business representatives on other disputed matters,
and believed that a resolution of this case could be
reached in the context of resolving other issues unrelated
to Premiere's formal complaint.
24 Opposition at 2.
25 Opposition at 5. SWBT maintains that Premiere's
Motion should be considered a voluntary dismissal with
prejudice under Rule 41(a)(1) of the Federal Rules of Civil
Procedure, because Premiere's prior withdrawal of a Texas
PUC proceeding which involved the same claims would operate
under Rule 41(a)(1) ``as an adjudication upon the merits
when filed by a plaintiff who has once dismissed in any
court of the United States . . . an action based on or
including the same claim.'' Id. at 5-6.
26 Id. at 6.
27 Opposition at 2.
28 See note 16 supra. Courts have considered other
prejudice arguments in granting motions to dismiss (e.g.,
dismissal will prejudice the non-movant, because its
ability to defend itself in a subsequent action will be
hindered by the loss of evidence, unavailability of
witnesses or loss of legal defenses). SWBT, however, makes
no such claims here.
29 We would also expect SWBT to argue in any subsequent
complaint proceeding that the statute of limitations
severely limits, if not precludes, any attempt by Premiere
to recover damages. Although we take no position on future
damage claims in this Order, we note that such an argument
would merit serious consideration.
30 See FED. R. CIV. P. 41(a)(2) (providing that courts,
in dismissing complaints under this rule, may impose
conditions on the movant as a means of being equitable to
the defendant).
31 As stated above, we find that the Federal Rules of
Civil Procedure are instructive on issues such as this, but
not controlling.
32 For example, we note that the arbitrators in the Texas
PUC proceeding issued an order that instructed the parties
to comply with the special request provisions of their
interconnection agreement before pursuing the requested
relief. Complaint, Exhibit 15 at VI.
33 Although Premiere suggests in its Motion that, rather
than dismiss its complaint, we convert it into an informal
complaint, it provides no explanation for why such a
conversion is preferable to a dismissal, and we therefore
decline to do so.