Availability of Monetary Damages for State Law Claims Against CMRS Providers

AGENCY:

Federal Communications Commission.

ACTION:

Interpretation.

SUMMARY:

In this document, the Commission responds to a Petition for Declaratory Ruling, and finds that certain portions of the Communications Act do not generally preempt the award of monetary damages against Commercial Mobile Radio Service Providers by state courts based on state consumer protection, tort, or contract claims. The action is taken to respond to the Petition and to clarify this issue.

FOR FURTHER INFORMATION CONTACT:

Mary Woytek or Susan Kimmel, 202-418-1310.

SUPPLEMENTARY INFORMATION:

This is a summary of the Memorandum Opinion and Order (MO&O) in WT Docket No. 99-263, FCC 00-292, adopted August 3, 2000, and released August 14, 2000. The complete text of this MO&O is available for inspection and copying during normal business hours at the FCC Reference Information Center, Courtyard Level, 445 12th Street, SW., Washington, DC, and also may be purchased from the Commission's copy contractor, International Transcription Services (ITS, Inc.), CY-B400, 445 12th Street, SW., Washington, DC.

Synopsis of the Memorandum Opinion and Order

1. In this Memorandum Opinion and Order (MO&O), the Commission responds to a Petition for Declaratory Ruling, filed on July 16, 1999, by Wireless Consumers Alliance, Inc. (WCA Petition). The WCA Petition concerns whether the provisions of the Communications Act of 1934, as amended, serve to preempt state courts from awarding monetary relief against Commercial Mobile Radio Service (CMRS) providers: (a) for violating state consumer protection laws prohibiting false advertising and other fraudulent business practices, or (b) in the context of contractual disputes and tort actions adjudicated under state contract and tort laws. In addition, the issue regarding damage awards raised in a Petition for Declaratory Ruling filed by Southwest Bell Mobile Systems is incorporated into the Commission's response to the WCA Petition. (FCC 99-365, 14 FCC Rcd 19898, 1999.)

2. The Commission finds that section 332(c)(3)(A) does not generally preempt the award of monetary damages by state courts based on state consumer protection, tort, or contract claims. The Commission notes, however, that whether a specific damage calculation is prohibited by section 332 will depend on the specific details of the award and the facts and circumstances of a particular case.

3. Specifically, the Commission concludes that award of damages to customers damaged by a CMRS provider's breach of contract or fraud violation would not normally require a state court to prescribe, set or fix wireless rates. A consideration of the price originally charged, for the purposes of determining the extent of harm or injury involved, is not necessarily an inquiry into the reasonableness of the original price and therefore is permissible.

4. A court will have overstepped its authority under section 332 if, in determining damages, it does enter into a regulatory type of analysis that purports to determine the reasonableness of a prior rate or it sets a prospective charge for services. Thus, while the Commission concludes that section 332 does not generally preempt damage awards based on state contract or consumer protection laws, this is not to say that such awards can never amount to rate or entry regulation. Nor does the Commission conclude that a damage award in the WCA litigation or any other specific case would or would not be consistent with section 332(c)(3). The Commission believes that the question of whether a specific damage award or a specific grant of injunctive relief constitutes rate or entry regulation prohibited by section 332 (c)(3) would depend on all facts and circumstances of the case.

Ordering Clauses

5. Pursuant to sections 4(i) and 4(j) of the Communications Act of 1934, as amended, 47 U.S.C. 154 (i) and 154 (j), section 5(d) of the Administrative Procedure Act, 5 U.S.C. 554(e), and § 1.2 of the Commission's Rules, 47 CFR 1.2, the Petition for Declaratory Ruling filed by Wireless Consumer Alliance, Inc. is granted in part, as indicated in the full text of this MO&O, and otherwise is denied.