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SkyTel notes: Telesaurus VPC LLC (now called Verde Systems LLC) is a constituent of the "SkyTel" group--Skybridge Spectrum

Foundation and supporting telecommunications LLCs-- that pursue public interest wireless in the US and scientific, educational, and charitable activity in support of public interest wireless. This includes approporate legal action in courts and before the Federal Communications Commission. The below is one such action.

No. 10-1248

In the Supreme Court of the United States


Telesaurus VPC, LLC v. Randy Power, Patricia A. Power and Radiolink Corporation On Petition for a Writ of Certiorari to the United States Court of Appeals for the Ninth Circuit REPLY TO OPPOSITION TO PETITION FOR A WRIT OF CERTIORARI Tamir Damari (Counsel of Record) Patrick Richard Nossaman, LLP 50 California Street, 34th Floor San Francisco, CA 94111 (415) 438-7278 tdamari@nossaman.com Counsel for Petitioner

2 INTRODUCTION 1 The opposition filed by Respondents Randy Power and Radiolink Corporation (Respondents) is noteworthy not for what it says but for what it omits and tacitly concedes. Respondents effectively concede that there is an enduring and deep split among the circuits on the preemptive scope of 47 U.S.C. Petitioner does not endeavor here to litigate the disputed facts of this case since these disputed facts are not material to the question of whether Certiorari should be accepted on the basis of a Circuit split. Suffice it to say, however, that Petitioner does not concur with the recitation of facts proffered by Respondents. By way of a single example, Respondents maintain in Paragraph 2 of their Statement of Facts (page 4 of the Response) that There is no evidence that Randy Power knew that the . . . VPC Frequencies had been awarded to Warren Havens. This recitation ignores the allegation in Petitioners First Amended Complaint, that shortly before Respondent Radiolink had applied for the frequencies at issue, it participated in a public auction in which it competed against Petitioners principal Warren C. Havens (Havens) to obtain the same spectrum, and lost the bidding competition in that auction (App. 49-50). By virtue of this auction, Respondents were obviously aware of the frequencies awarded to Havens in that auction. Thus, at a minimum, there are issues of fact as to the wrongfulness of Respondents state of mind.
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3 332(c)(3)(A), and argue that review should be denied on the (incorrect) ground that Petitioner would lose under any of the varying Circuit formulations. As we show in Part A below, Respondents are wrong, and, at least in the Eighth, Fourth and Sixth Circuits, Petitioners claims would not be preempted. This demonstrates the need for this Court to grant certiorari and end the ongoing confusion as to 332s meaning. Respondents also oppose review on the ground that their view and the Ninth Circuits view of preemption is correct. Nevertheless, even if Respondents were correct on that score, that would hardly be reason to allow the ongoing circuit split to fester. But Respondents are not correct, underscoring the need to grant the petition and reverse the Ninth Circuits misunderstanding of 332(c)(3)(A)s preemptive reach. Finally, as briefly discussed in Section B. below, the doctrine of Chevron deference which is relied upon by Respondents in their Response, is completely inapplicable to this case. ARGUMENT A. Respondent Does Not Dispute The Split In Authority Identified in the Petition This case turns on turns on the meaning of 47 U.S.C. 332(c)(3)(A), which provides that no State . . .shall have any authority to regulate the entry of or the rates charged by any commercial mobile service. As discussed in the Petition, litigation over the scope of this preemption provision has resulted in different

4 and contradictory rulings by federal and state courts across the country, a split which has deepened as more and more courts have addressed the 332 preemption issue in the wake of the rapidly 2 expanding wireless industry. The Petition (at 9-14) identified a three-way division of between the Seventh Circuit (complete preemption), the Third, Ninth and D.C. Circuits (implied or conflict preemption) and the Eighth, Fourth and Sixth Circuits (express preemption) as to the scope of preemption. On the specific issue of the scope of market entry preemption, the Third Circuit in Farina v. Nokia, 625 F.3d 97, 120 n.24 (3rd Cir. 2010) recently acknowledged that Section 332 does not define what constitutes a regulation of entry, and it appears that the FCC has not clearly defined the term either . . . 332(c)(3)(A) is ambiguous.3 As discussed in the Petition, since 2000, the Third, Fourth, Seventh, and Ninth Circuits, state courts of last resort in Ohio, Washington and the District of Columbia, and numerous intermediate state appellate courts, have attempted to develop a consistent formulation of the scope of 332 preemption, to no avail. As discussed below, the First Circuit is the most recent Circuit to be faced with this issue.
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Farina went on to hold that [e]ntry must be read in a somewhat limited fashion in order to give

5 Respondents do not contest the circuit split and appear to concede that the plain language of 332(c) does not shed light on the scope of 332 market entry preemption. See, e.g., Response at 15 (The 1993 amendment speaks only briefly and indirectly about the meaning of rate regulation and not at all about market entry.) Nevertheless, Respondents argue that the circuit split is irrelevant because Petitioners state-law claims would be preempted in any circuit. Respondents are mistaken. Respondents argument is based on a single premise: that the FCCs issuance of a telecommunications license to Respondents affords them a perpetual de facto immunity and bars Petitioner from asserting any state-law claims arising out of the issuance of this license. In Respondents view, this de facto immunity applies even where (as here) the license is effectively deemed void ab initio by the issuing agency. Respondents do not cite a single judicial or administrative authority that supports their expansive view of market entry preemption, and, for several reasons, it is not correct. First, 332(c)(3)(A)s text does not expressly bar state-law claims arising out of the misuse or effect to the savings provision present in 332(c)(3)(A). Id. Farina is currently on review to this Court (Docket No. 10-1064).

6 wrongful procurement of an FCC license. Thus, as discussed in the Petition (at 19-28), Petitioners claims pass muster under the express preemption rubric developed by the Eighth, Fourth and Sixth Circuits. See Pinney v. Nokia, 402 F.3d 430, 450 (4th Cir. 2005); GTE Mobilnet Ohio v. Johnson, 111 F.3d 469, 479 (6th Cir. 1997) (The language of 332(c)(3)(A) does not compel the conclusion that . . . the state may no longer adjudicate individual cases involving specific allegations of anti-competitive or discriminatory conduct.). As the Third Circuit recently noted in Farina, [r]emoval of barriers to entry, is directed at preventing state or local regulations that prohibit the ability of any entity to provide any interstate or intrastate telecommunications service. Farina, 625 F.3d at 120 n.24 (citing 47 C.F.R. 253 and S. Rep. No. 104230, at 126 (1996) (Conf. Rep.). (emphasis added)). Accordingly, Farina also noted that [r]egulation of entry, then, appears to refer to laws that erect obstacles to the provision of wireless services. Id.4 Under this standard, Petitioners state-law claims cannot possibly be preempted because the prosecution of Petitioners claims for damages would not prohibit or preclude Respondents from providing telecommunications service or otherwise impede the

See also Fedor v. Cingular Wireless, 355 F.3d 1069 (7th Cir. 2004) (claims not barred by 332s market entry provision where the plaintiffs claim did not relate to the construction or placement of towers at all.).

7 provision of wireless services generally. In short, the express scope of market entry preemption is limited to state regulation that affects actual, physical entry into the telecommunications marketplace. See Pinney v. Nokia, 402 F.3d 430, 456 (4th Cir. 2005) (In order for a state law to constitute a barrier to entry, it must, at a minimum, obstruct or burden a wireless service providers ability to provide a network of wireless service coverage.) (emphasis added); See also Centennial Puerto Rico License Corp. v. Puerto Rico Tel. Co., Inc., 634 F.3d 17, 32 (1st Cir. 2011) (PRTCs reliance upon [332(c)(3)(A) is misplaced. On its face 332(c) preempts only state attempts to prevent new mobile service carriers from entering the market . . . Any other state regulation of mobile service providers remains unaffected.).5 Moreover, Respondents immunity argument ignores the patent case law cited in the Petition (at 24-26), which has consistently held in an analogous context that the issuance of a patent does not bar state-law damage claims arising out of the misuse of the patent, particularly if the patent is found to have unlawfully awarded at the outset. See e.g., Dow The Centennial case was not cited in the Petition because that case had yet to be formally published at the time the Petition was filed (it was not published until July 11, 2011). Nevertheless, the narrow view of market entry preemption adopted in that case appears to be consistent with the Eighth, Fourth and Sixth Circuit approaches discussed in the Petition.
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Chemical Co. v. Exxon Corp., 139 F.3d 1470, 1473-78 (Fed. Cir. 1998). Respondents do not address this line of case law, let alone demonstrate how the logic of these cases is inapplicable here.
Given the lack of any textual evidence of Congressional intent to preempt Petitioners claims, and the absence of any particularized allegation that the prosecution of Petitioners claims would affect the actual, physical entry into the telecommunications marketplace, Respondents are forced to rely entirely upon the presumed intent of Congress in enacting 332(c)(3)(A). See Response at pgs. 14-15 (Any interpretation of the scope of an express preemption clause must rest primarily on a fair understanding of congressional purpose.). However, where, as here, the claimed preemptive scope of a statute is based on a supposed Congressional purpose (as opposed to statutory text), the putative basis for preemption is not express preemption at all. See e.g., Altria Group, Inc. v. Good, 129 S. Ct. 538, 543 (2008) (Congress may indicate pre-emptive intent through a statute's express language or through its structure and purpose.). It is a leap of logic to necessarily presume that state regulation of rates or market entry encompasses any common-law claim for damages. See Cippolone v. Liggett, 505 U.S. 504, 519 (1992) (the term regulation most naturally refers to positive enactments by those bodies, not to common-law damages actions.)

9 In other words, when Respondents contentions are stripped of their rhetoric, they really amount to implied preemption arguments that Petitioners claims could potentially frustrate the purpose underlying the FCCs exclusive regulation of telecommunications licenses.6 The Ninth Circuits decision below, although couched in terms of express preemption, also appears to have been premised, at least in part, on an implied preemption rationale. Pet. App. 25 ([T]here is an irreconcilable conflict between the FCC's exclusive licensing authority, i.e. its power to regulate market entry, and Telesaurus's allegations that Radiolink wrongfully or unlawfully operated under its FCC license.) But no explanation is proffered by the Ninth Circuit as to how Congress vesting the FCC with exclusive licensing authority and power to regulate market entry is tantamount to an unmistakable evidence of Congressional intent to preempt state-law damages claims that do not seek to have a court determine the validity of a license, or the circumstances under which a licensee may enter (or even remain within) the telecommunications market. See Jones v. Rath Packing Co., 430 U.S. 519, 525 (1977) (express preemption occurs when Congress has unmistakably ordained that its enactments alone are to regulate a subject); Centennial Puerto Rico

See, e.g., Response at 22 (Telesauruss state law claims are inconsistent with federal law because . . . they seek to penalize RadioLink for engaging in conduct expressly authorized by the FCC.)

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License Corp. supra, at 34 (noting that the requirement of a clear indication of the agencys intent to preempt is especially important in the context of the TCA given the unusual regime of cooperative federalism embodied by the Telecommunications Act); see also, Id., at 36 (ambiguity [as to preemption] is not enough to preempt state regulation here.)
The proper characterization of Respondents preemption argument as one of implied preemption serves to expose the inherent weakness in Respondents position. As noted in the Petition (at 12-13), similar implied preemption arguments have been rejected by courts across the country adjudicating 332 cases. See, e.g., Pinney v. Nokia, 402 F.3d 430 (4th Cir. 2005); Pacific Bell Wireless, LLC, v. Public Utilities Commission, 140 Cal. App. 4th 718, 735 (2006). This view that 332 should not be accorded implied preemptive effect is bolstered by an express provision in the FCA entitled No Implied Effect, which states that This Act. . . shall not be construed to modify, impair, or supersede Federal, State, or local law unless expressly so provided in such Act or amendments. See 47 U.S.C. 152 (note).7 And as the Fourth Circuit has noted, the Although the Note in question was added via the Telecommunications Act of 1996, the phrase this Act, as used in 47 U.S.C. 152, refers more broadly to the Communications Act of 1934. See 47 U.S.C. 152, explanatory note 1 ("This Act", referred to in this section, is . . . the Communications Act of
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11 savings clause found in 152, along with a similar savings clause found at 47 U.S.C. 414, counsel against any broad construction of the goals . . .[of the FCA] that would create an implicit conflict with state law. Pinney, at 458; see also, Holk v. Snapple Bev. Corp., 575 F.3d 329 (3rd Cir. 2009) (no preemption disclaimer in Nutritional Label in Education Act deemed to extend to implied preemption). For these reasons, Respondents effort to characterize 332(c)(3)(A) as a statute with broad implied preemptive effect over all state law claims relating to the procurement of an FCC license necessarily fails. B. Chevron Deference Is Inapplicable Here Respondents also maintain that Petitioners state-law claims are foreclosed by the 2004-2005 FCC administrative orders (the FCC Orders) under which the FCC revoked the frequencies at issue. For example, Respondents argue that the FCCs failure to issue sanctions against Respondents in the FCC Orders is entitled to deference under Chevron U.S.A. Inc. v. Natural Resources Defense Council, Inc., 467 1934 . . .). As such, the savings provision contained in this Note applies to provisions of the FCA which predated the Telecommunications Act of 1996, including to 332(c)(3)(A). See also, Pinney, at 458 (applying the savings provision of 152 in a case involving alleged 332(c)(3)(A) preemption.)

12 U.S. 837 (1984), and is tantamount to the FCCs construction of the FCA in a manner that preempts Petitioners claims. Response at 10-12. Respondents never made these arguments before either the trial court or the Ninth Circuit. In any event, these arguments fail. In U.S. v. Mead Corp., 533 U.S. 218, 228 (2001), this Court explained that the deference accorded to an agencys interpretation of a statute ranges from substantial deference to near indifference. But for any deference to be due, there has to be an actual agency interpretation of the statute at issue. Here, there was no such construction of 332(c)(3)(A) in the FCC Orders (nor do Respondents claim otherwise). The FCC Orders did not address 332(c)(3)(A) preemption at all, let alone consider the extent to which Petitioner might assert state-law claims for damages against Respondents. Although Petitioner did ask the FCC to sanction Respondents for knowingly converting Petitioners frequencies, it did not seek damages in the administrative proceedings giving rise to this case. In short, the FCCs discretionary decision not to issue sanctions against Respondents is not tantamount to an express or implied determination (let alone, one entitled to Chevron deference) that Petitioner is foreclosed from pursuing a distinct damages remedy against Respondents in court.8 Respondents mistakenly rely on City of New York v. FCC, 486 U.S. 57 (1988). That case, involved the validity of federal regulations promulgated under the authority of the Cable Communications Policy Act which expressly prohibited local
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13 CONCLUSION The 1996 amendments of the Federal Communications Act were enacted to promote competition and the reduction of regulation in the telecommunications industry, in order to secure lower prices and higher quality services for American telecommunications consumers and to encourage the rapid deployment of new telecommunications technology." Telecommunications Act of 1996, Pub.L. No. 104104, purpose statement; 110 Stat. 56 (1996). Since authorities from establishing more stringent cable television technical standards than those adopted by the FCC. In upholding the FCCs regulations, this Court held that where state law is claimed to be preempted by federal regulation, a narrow focus on Congress intent to supersede state law is misdirected, for a preemptive regulations force does not depend on express congressional authorization to displace state law. . . Instead, the correct focus is on the federal agency[s] . . . lawful authority . . . Id., at 62. Here, by contrast, there is no FCC regulation barring Petitioners claims. To the contrary, as noted in the Petition (at page 16), the FCC has said that 332 does not generally preempt the award of monetary damages based on state tort or contract claims. See In Re Wireless Consumers Alliance, Inc., 15 FCC Rcd 17021, 17026-34 (2000). As such, the framework of City of New York is inapposite.

14 1996, wireless technology has played an everincreasing role in the U.S. economy.9 As the FCC has itself recently noted in promulgating its annual Competition Report Competition has played and must continue to play an essential role in mobile leading to lower prices and higher quality for American consumers, and producing new waves of innovation and investment in wireless networks, devices, and services.10 Competition is most effectively enhanced where consumers and competitors are aware of the commercial playing field, including by being aware of their legal rights and obligations with respect to one another. This can only be achieved via clarity in the law. Such clarity is not present in the preemption provision of 332(c)(3)(A). The petition for a writ of certiorari should be granted.

See, R. Entner, The Increasingly Important Impact of Wireless Broadband Technology and Services on the U.S. Economy (2008) (available at http://files.ctia.org/pdf/Final_OvumEconomicImpact_ Report_5_21_08.pdf
See http://www.fcc.gov/reports/15th-annualmobile-wireless-competition-report.
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15 Respectfully submitted, /s/Tamir Damari Tamir Damari (Counsel of Record) Patrick Richard Nossaman, LLP 50 California Street 34th Floor San Francisco, CA 94111 (415) 438-7278 tdamari@nossaman.com Counsel for Telesaurus