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Communication Management Services, LLC v. Harlow

United States District Court, D. Oregon

September 23, 2014

COMMUNICATION MANAGEMENT SERVICES, LLC, et al., Plaintiff,
v.
BROOKS L. HARLOW, Attorney at Law, Defendants.

FRANKLIN G. PATRICK, Portland, OR, Attorney for Plaintiffs.

JEFFREY M. PETERSON STEVEN K. BLACKHURST Ater Wynne, LLP, Portland, OR, Attorneys for Defendant.

OPINION AND ORDER

ANNA J. BROWN, District Judge.

This matter comes before the Court on Defendant Brooks L. Harlow's Request (#48) for Judicial Notice and Motion (#45) for Summary Judgment.

For the reasons that follow, the Court GRANTS Defendant's Request (#48) for Judicial Notice and DENIES Defendant's Motion (#45) for Summary Judgment.

BACKGROUND

The following facts are undisputed and taken from the parties' submissions on summary judgment.

I. Underlying Litigation Background

In 1996 Congress passed the Telecommunications Act of 1996 (TCA), which amended the Federal Communications Act of 1934 and substantially modified the regulatory scheme governing the payphone industry and directed the Federal Communications Commission (FCC) to issue regulations implementing the provisions of this new law. Telecommunications Act of 1996, Pub. L. No. 104-104, 110 Stat. 56 (codified as amended in scattered sections of 47 United States Code). The FCC adopted regulations that required carriers such as Qwest to set payphone service rates that were based on the actual cost of providing the service together with a reasonable amount for overhead.

Northwest Public Communications Council (NPCC) is a regional trade association representing companies providing public payphone services in Idaho, Montana, Oregon, and Washington. Plaintiffs are Payphone Service Providers (PSPs) and are current or former members of NPCC who purchased network payphone services from Qwest Communications Corporation. Those services included Public Access Line services (PAL) and fraud-protection services (CustomNet).

Defendant is an attorney and former partner of the Miller Nash law firm who represented NPCC when he was at Miller Nash. Defendant also represented individual members of NPCC in various matters, including litigation against Qwest in the Western District of Washington. See Davel Commc'ns, Inc. v. Qwest Corp., 460 F.3d 1075 (9th Cir. 2006).

In December 1995 the Oregon Public Utilities Commission (PUC) opened a general rate case (the Rate Case) to establish new rates for all of Qwest's Oregon telecommunications services, including its payphone services.

Three months after the commencement of the Rate Case, Congress enacted the TCA pursuant to which payphone owners were to be compensated for all calls made from their payphones, including calls using 800 numbers, credit cards, and other mechanisms that permitted calls without depositing coins into the payphones. Under the TCA intrastate payphone rates were subject to federal regulations for the first time, and the TCA required such rates to be compliant with the "new services test" (NST). Thus, the enactment of the TCA fundamentally changed the regulation of payphones during the pendency of the Rate Case.

In May 2001 NPCC (represented by Defendant) filed a complaint with the PUC seeking refunds of PAL rates that allegedly were in excess of those permitted by the TCA and certain FCC orders (the Refund Case). Although the Refund Case was filed separately from the Rate Case, it would be affected by the outcome of the Rate Case. Thus, the PUC immediately stayed the Refund Case in accordance with an agreement between the parties.

In September 2001 the PUC concluded the Rate Case and set rates that it believed were compliant with the 1996 amendments to the FCA.

In March 2002 Defendant represented NPCC in an appeal of the PUC's final determination in the Rate Case.

In 2003 Qwest implemented lower rates for the PAL and CustomNet services that it provided to PSPs.

In 2004 the Oregon Court of Appeals ruled in favor of NPCC and rejected the PUC's rate order as to payphone services, remanded the administrative proceeding to the PUC, and directed the PUC to reconsider the proposed rates in light of recent FCC orders.

In 2005 while the Rate Case was pending on remand, the administrative law judge assigned to the Refund Case abated that action in light of pending additional guidance from the FCC about the application of one of the FCC's orders.

In 2007 the PUC adopted a stipulation between Qwest and NPCC that the lower rates adopted by Qwest in 2003 complied with the FCC's orders and regulations, which effectively ended the Rate Case.

In February 2009 the PUC reactivated the Refund Case at NPCC's request when it became evident that further guidance from the FCC was not forthcoming. In part because NPCC in the original Refund Case complaint only pled claims for refunds of PAL rates, NPCC moved to amend its complaint to add claims related to CustomNet refunds.

In May 2009 the PUC denied NPCC's motion to amend to include claims for CustomNet refunds on the ground that the CustomNet claims did not relate back to the initial claim for PAL refunds and, therefore, those claims were barred by the statute of limitations.

On approximately July 22, 2009, NPCC and the individual PSPs hired Plaintiffs' current counsel, Frank Patrick, to replace Defendant. Prior to assuming representation, Patrick told Plaintiffs that they needed to file a case in the FCC or the United States District Court to protect claims that were not before the PUC ( i.e., to obtain refunds) and that they had much larger claims for damages against Qwest that Defendant had not asserted on their behalf. Patrick also specifically informed Plaintiffs that he was concerned the PUC did not have jurisdiction over the Refund Case claims because he believed the FCC or United States District Court had exclusive jurisdiction over claims arising under the TCA.

After being retained by Plaintiffs, Patrick conducted a full review of the complex history of the litigation before the PUC. On completion of this review, Patrick informed Plaintiffs in October 2009 that:

1) In addition to the refund claims, there were other claims for damages and a potential federal antitrust claim;
2) A number of state-law claims existed that provided independent bases for recovery, including recovery of the ...

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