First Round of Lawsuits Filed In Net Neutrality Case. Now What?

Yesterday, the U.S. Telecom Association (USTA), the trade association for incumbent telecoms like Verizon and AT&T, and a Texas WISP called Alamo Broadband, filed separate appeals from the FCC’s Order reclassifying broadband as Title II and applying net neutrality rules. (This Ars piece links to both Petitions). USTA filed in the D.C. Circuit, while Alamo filed in the 5th Circuit (which is generally considered one of the more hostile to the FCC).

 

I dig into this a bit, and try to explain what happens next, below . . .

What Was Magic About Yesterday?

As folks may recall from my previous post on procedure and scheduling, parties generally have 60 days from the date the agency action becomes “final” (more on that below) to file for judicial review. If parties file in different circuits, then whoever filed first wins. HOWEVER, to avoid confusion the statute says that any petitions filed within the first 10 days will be considered filed simultaneously.

 

Yesterday was 10 days after the Order was issued, so (under one interpretation of the FCC’s rules) it was the magic day for folks to file if they want a chance at their choice of circuit.

 

Didn’t You Say Last Time The Order Needed To Be Published In the Federal Register First?

No, I sorta glossed over this procedural wrinkle because the post was getting way too long. The Order is not “final” until it is published in the Federal Register, and — by its own terms — doesn’t actually go into effect until 60 days after publication in the Federal Register. Generally, Petitions for Review cannot be filed until an Order is “final,” which means not until Fed Reg.

 

But, as the USTA folks explain in their Petition, the FCC’s rules actually create something of a question on when the Order is final. The relevant rule is 47 C.F.R. 1.4(b). Rule 1.4(b)(1) explains that a rulemaking document is not final until notification in the federal register. However, Rule 1.4(b)(2) says an adjudication, which includes a declaratory ruling such as the declaratory ruling reversing the previous determination that broadband is a Title I information service and reclassifying it as a Title II telecommunications service, is final on release by the FCC.

 

So if Rule 1.4(b)(2) applies, then yesterday was the magic day. If Rule 1.4(b)(1) applies, then these appeals are too early and will be dismissed (since the court lacks jurisdiction over an appeal filed too soon) and the parties will come back and appeal again after publication in Fed Reg.

 

Which Rule Governs?

The FCC rules contain an explanatory note (which is as binding as any other part of the rules) explaining that if an adjudication and a rulemaking are issued together, then Rule 1.4(b)(2) applies. But that note states that it only applies with regard to adjudications made with reference to “specific parties” rather than being a rulemaking or declaratory ruling of general applicability. So the note does not seem applicable.

 

As USTA observes in its Petition, they actually think that this counts as a general rulemaking and that the Order is not final as to both its parts (the rules and the declaratory ruling) until published in Fed Reg. However, “out of an abundance of caution,” parties anxious for a particular venue have filed on what is the potentially earlier date to protect their rights. You can see USTelecom’s blog post on the subject here.

 

I’ll add that the nature of what kind of notice was due to the public changes significantly if this was an “adjudication with respect to specific parties,” so USTA actually wants this to be a rulemaking of general applicability. But it is fairly cheap insurance to file a precautionary Petition for Review in case someone raises a procedural argument later.

 

So How Does This Get Resolved?

Under 47 U.S.C. 2112, the cases automatically go to the Judicial Panel on Multidistrict Litigation which will then do a coin toss to award the case to either the DC Cir. or the 5th Cir., whereupon the  losing court transfers the case to the winning court. Parties can file interventions, and the FCC can file a motion to dismiss the filed petitions as untimely. The court with jurisdiction gets to decide whether the FCC is right and the parties jumped the gun — in which case the Petitions are dismissed and everyone goes back to the starting line to wait for Fed Reg publication — or the court decides the appeal was timely filed and the fun begins now.

Again, as I read the rules, I think this is untimely and the Petitions will be dismissed, but we’ll see. Last time around Verizon filed super early under a bizarre theory that the rulemaking was a “license modification” with exclusive jurisdiction in the D.C. Circuit. Instead of dismissing, the DC Circuit sat on it for months until actual fed reg publication, which rendered the question moot. So if it lands in the DC Cir because of the lottery, they may not decide the case.

 

What About A Stay?

Interestingly, no one asked for a stay, and no one has asked the FCC for a stay (which, as I explained last time, they could do now and which is usually considered the first step in getting a stay from the court). Not really sure this means anything, as parties may just be waiting to see in which court this lands before filing a stay request (since it is a waste of time and makes things procedurally complicated to request a stay from one court and it goes to another court). But so far no stay request has been filed.

 

It’s also interesting to note that the USTA blog explaining the Petition goes out of its way to say how much the members of USTA love net neutrality, don’t plan to discriminate against traffic, and are really only upset with the Title II classification. USTA may be making a strategic decision on behalf of its clients to avoid pissing off their customers by appearing opposed to network neutrality generally.

 

Doesn’t This Automatically Go To The DC Circuit Because of the Verizon Case?

28 U.S.C. 2112(a)(5) allows the court that wins the lottery (more formally referred to as “the court in which the record is filed”) to transfer the consolidated Petitions to another court “for the convenience of the parties in the interests of justice.” There is a strong presumption that if a case is part of a set of related cases, or is an agency decision on remand from a previous court decision, then the court that wins the lottery ought to send the case back to the court that has already exercised jurisdiction over the matter. That way, the law stays constant and parties can’t get out of an adverse decision by form shopping. OTOH, there is also a strong presumption that parties ought to get their choice of venue and that the procedures set out in accordance with 47 USC 2112 should be respected. And, in any case, it is entirely discretionary to the court that won the lottery whether to keep the case or transfer it.

 

Furthermore, it doesn’t happen automatically. Parties have to actively petition the court to transfer the case. So, if the 5th Circuit wins the lottery, we may or may not see motions by parties to get the case transferred to the D.C. Circuit. These may or may not be filed with motions to dismiss the case as filed too early.

 

Why Would Folks Want This In The D.C. Circuit Or The 5th Circuit? What’s the Argument For D.C. Cir. Jurisdiction?

The argument favoring a transfer back to the D.C. Circuit is that this case is basically a remand of the earlier case on the net neutrality rules, Verizon v. FCC The D.C. Circuit opinion styles itself as a remand, despite the fact that they did not actually remand anything for the FCC to decide (having vacated some rules and affirmed others). That’s not determinative, but there is a strong argument that this is round 2 of the previous case at the D.C. Circuit and therefore ought to go back to the D.C. Circuit.

 

OTOH, the reclassification, which both USTA and Alamo identify as the primary focus of their appeal, is new. So it can be argued this is really a new case and the 5th Circuit should not transfer to the DC Circuit (assuming it lands in the 5th Circuit).

 

If this lands in the 5th Circuit, parties can relitigate the question of whether Section 706 is an independent source of authority or not. The D.C. Circuit already decided this question in the affirmative, so if we are in the D.C. Circuit we stay with Section 706 as an independent source of authority. Oddly, that may seem like good news to the telcos and cable cos, who prefer that to Title II classification. Additionally, if the 5th Cir. decides Section 706 doesn’t give the FCC authority, it creates a circuit split and makes a review by the Supreme Court much more likely. So USTA and other parties may actually prefer the D.C. Circuit. But if Alamo wants to eliminate all FCC authority, including Section 706, it needs to land in the 5th Circuit.

 

Both the D.C. Circuit and the 5th Circuit are generally considered conservative circuits hostile to regulation generally and the FCC specifically. We will not pause to ponder, here, what that says about our supposedly neutral court system at the moment. However, the FCC asserted that it was following the “invitation” laid out by the D.C. Circuit to reconsider its classification decision, and that is not an unreasonable reading of the Verizon decision. So it is plausible that, as between the D.C. Circuit and the 5th Cir., the FCC may prefer to be in the 5th Cir.

 

Anything Else?

It is entirely possible that other parties wishing to defend the rules might have been planning to file Petitions in other circuits generally considered more likely to defer to the FCC (e.g., 9th cir) using the date most of us assumed was the correct start date — Fed Reg publication. We will see if this comes up in the motions to dismiss the current Petitions as untimely.

 

Stay tuned . . .

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