******************************************************** NOTICE ******************************************************** This document was converted from WordPerfect to ASCII Text format. Content from the original version of the document such as headers, footers, footnotes, endnotes, graphics, and page numbers will not show up in this text version. All text attributes such as bold, italic, underlining, etc. from the original document will not show up in this text version. Features of the original document layout such as columns, tables, line and letter spacing, pagination, and margins will not be preserved in the text version. If you need the complete document, download the WordPerfect version or Adobe Acrobat version, if available. ***************************************************************** Before the Federal Communications Commission Washington, D.C. 20554 ) In the Matter of ) ) Metacomm Cellular Partners ) Complainant ) ) v. ) File No. WB/ENF-F-96-010 ) WWC Holding Co., Inc. ) Defendant ) ) In the Matter of ) ) WWC Holding Co., Inc. ) Complainant ) ) v. ) File No. WB/ENF-F-96-016 ) Metacomm Cellular Partners ) Defendant ) MEMORANDUM OPINION AND ORDER Adopted: January 13, 1999 Released: January 22, 1999 By the Acting Chief, Wireless Telecommunications Bureau: I. INTRODUCTION 1. The Acting Chief, Wireless Telecommunications Bureau, has under consideration (a) a formal complaint, filed on August 19, 1996, pursuant to Section 208 of the Communications Act of 1934, as amended, by Metacomm Cellular Partners ("Metacomm") against WWC Holdings Co., Inc. ("WWC"); and (b) a cross-complaint filed on October 7, 1996, by WWC against Metacomm. For the reasons discussed below, we dismiss Metacomm's complaint and WWC's cross-complaint with prejudice and terminate this proceeding. II. BACKGROUND 2. Metacomm is the Block A cellular licensee in the Wyoming 1 Rural Service Area ("RSA"). WWC holds Block A cellular licenses in the Montana 2 RSA, the Montana 8 RSA and the Montana 9 RSA. WWC's Montana 8 and 9 RSAs are adjacent to the Wyoming 1 RSA in which Metacomm operates. The westernmost portion of the Wyoming 1 RSA is within Yellowstone National Park. The north and west boundaries of the Park are also the borders between Metacomm's Wyoming 1 RSA and WWC's Montana 8 RSA. Metacomm's Wyoming 1 RSA license was granted on September 29, 1989, and WWC's Montana 8 and 9 RSA licenses were granted on September 8, 1989, and on November 20, 1989, respectively. These dates started the running of the "five-year build-out period," in which the Commission's Rules allow a cellular licensee to expand its cellular system within its RSA without competing applications. After the expiration of the five-year build-out period, however, competing applications can be filed to serve those parts of the RSA which have not yet been covered by the initial licensee's cellular system, i.e., "the unserved area." 3. On September 28, 1994, the day before the five-year build-out period for its Wyoming 1 RSA license was to expire, Metacomm filed the following with the Commission: (a) notifications on FCC Forms 489 for six new cell sites that it proposed to construct, but had not yet constructed; (b) an application on FCC Form 401 for an alternative Cellular Geographic Service Area ("CGSA") determination, pursuant to Section 22.911(b) of the Commission's Rules, based on a propagation study of Metacomm's then existing three cell sites; and (c) a System Information Update ("SIU") map depicting the service area boundary ("SAB") contours of Metacomm's three existing cells, the SAB contours for the six additional cells proposed in Metacomm's FCC Form 489 notifications, and Metacomm's proposed CGSA, reflecting the alternative CGSA proposed in its concurrent application. 4. On October 31, 1994, WWC filed a "Phase I" application for a license to provide cellular service in the unserved area of the Wyoming 1 RSA in competition with Metacomm's application. In its application, WWC alleged that Metacomm's CGSA had been "misdepicted" in its SIU map because WWC's studies indicated that at least one of the new cells, at Mount Washburn, for which Form 489 notifications had been filed by Metacomm, had not yet been constructed. Thereafter, WWC filed a number of pleadings and informal letters relating to the competition between the carriers to provide service in the unserved part of the Wyoming 1 RSA, which Metacomm alleges in its complaint were frivolous and constitute an "abuse of the Commission's processes." However, it does not appear that Metacomm explicitly raised the issue of abuse of process in the licensing proceedings or that it sought the imposition of sanctions against WWC for the alleged abuses in those proceedings. 5. The WWC pleadings and letters, which are the basis of Metacomm's formal complaint, contained characterizations of Metacomm's conduct in submitting the FCC Form 489 notifications for the six proposed, but not constructed, cell sites and Metacomm's other related filings on September 28, 1994, which Metacomm contends in its complaint were neither "well grounded in fact nor legally tenable." Specifically, Metacomm refers to WWC's November 28, 1994, petition to deny Metacomm's application for an alternative CGSA, in which WWC contended that Metacomm's application, which was filed just prior to the expiration of its build-out period, was "obviously designed to protect territory without having to build cells." WWC therein also alleged that Metacomm "clearly misrepresented" that its six cell cellular facilities which were the subject of its Form 489 filing, were constructed and operating; that Metacomm "falsely certified" to the addition of six new cellular facilities, as well as to the requisite site availability for those sites in its FCC Form 489; that Metacomm, in connection with the FCC Form 401, "misrepresented facts" regarding the extent of its existing system coverage; and that Metacomm "clearly 'gamed' the cellular licensing process by attempting to become licensed for unbuilt facilities." Metacomm also relied on WWC's reply in that proceeding in which WWC asserted that Metacomm's Form 489, Form 401 and its SIU map were filed for the purpose of "preventing or delaying" the grant of a Phase I application" and that Metacomm had filed "a fraudulent Form 489, covering fictitious cells." Metacomm also complains that, after it had completed construction of four of the cell sites, for which Form 489 notices had been prematurely filed, WWC wrote a number of letters to the Commission's staff and filed additional pleadings in which it repeated its prior allegations and otherwise accused Metacomm of violating the Act. WWC also argued that it had raised issues concerning Metacomm's character that "would give the Commission grounds to revoke Metacomm's licenses under most of the enumerated bases in [47 U.S.C.  312(a)]." 6. Metacomm filed its instant formal complaint while the foregoing licensing matters were pending. Metacomm contends in its complaint that WWC's pleadings were "frivolous," because WWC did not have a sufficient factual basis to justify its accusations that Metacomm was guilty of unlawful and deceptive conduct that disqualified it from holding radio licenses. Metacomm alleged that WWC filed its pleadings "for the ulterior purpose of coercing Metacomm to make business concessions." Metacomm requests the Commission to "issue a declaratory ruling that WWC has filed frivolous pleadings and abused the Commission's processes." Metacomm also seeks an order requiring WWC to pay damages, consisting principally of Metacomm's legal expenses in defending against WWC's petitions to deny. Finally, Metacomm asks the Commission to issue a notice of apparent liability for forfeitures against WWC in an amount not to exceed $1,000,000. 7. On October 7, 1996, WWC filed an answer and a motion to dismiss in which it argued, among other things, that Metacomm's complaint "exceeds the adjudicatory authority granted to the Commission under Sections 206-209 of the Act, and fails to state a cause of action under the Act." WWC also filed a cross-complaint in which it contends that "Metacomm abused the Commission's processes and violated Sections 1.17, 1.53 and 1.734(c) of the Commission's Rules by filing [the subject] formal complaint, without good grounds . . . ." WWC alleges that Metacomm filed its formal complaint for the illegitimate purpose of deterring "resolution of a two year old licensing proceeding in which WWC seeks authority to serve unserved area in Wyoming 1, and to obtain a judgement that certain areas illegally served and claimed by Metacomm in the market should be forfeited." WWC seeks damages from Metacomm in an amount to be proved after the conclusion of the liability phase of this proceeding. Metacomm interposed an answer to WWC's cross- complaint on November 12, 1996, and disputed WWC's claims. 8. Thereafter, both parties filed a number of unauthorized pleadings purporting to supplement the record, in which Metacomm alleged that WWC, subsequent to the filing of its complaint, had filed additional frivolous pleadings in the ongoing radio licensing proceedings. The unauthorized pleadings consist of an Amendment and Supplement to Complaint, filed by Metacomm on April 30, 1997; an answer thereto, filed by WWC on May 30, 1997; a Motion to Dismiss, filed by WWC on May 30, 1997; a Supplement to its cross-complaint, filed by WWC on May 30, 1997; an answer thereto, filed by Metacomm on June 30, 1997; and an answer to WWC's supplemental cross-complaint, filed by Metacomm on June 30, 1997. Discovery motions were also filed by the parties. A status conference was held on October 14, 1997, in which the parties agreed to explore the possibility of settling this case. Thereafter, by letter dated April 2, 1998, the parties notified the Enforcement and Consumer Information Division staff that the settlement negotiations had concluded unsuccessfully. 9. By Order, released June 23, 1998, the Wireless Telecommunications Bureau granted Metacomm's application for an alternative determination of its CGSA in the Wyoming 1 RSA as well as its Phase I applications for unserved areas in Wyoming RSA 1. However, the Bureau determined that it was not appropriate for Metacomm to have filed notifications on FCC Forms 489 as a means of seeking authorization to construct new cell sites. In this regard, the Order held that Metacomm's operation of the four cell sites, which it subsequently constructed, had been unauthorized. The Bureau also rejected WWC's allegations that Metacomm had "misrepresented or intentionally failed to disclose relevant facts in either its SIU or its Form 489 notification." The Bureau noted that although Metacomm's SIU map erroneously showed coverage from its proposed cells as well as coverage from its existing cells at the end of its build-out period, the expanded coverage from the proposed cells was clearly labeled as such. Similarly, the Bureau found that although Metacomm had improperly filed notifications on FCC Forms 489 for cell sites that had not yet been authorized or constructed, the notifications stated that the cell sites were proposed. The Bureau expressed its concern that "Metacomm's improper inclusion of the proposed cell sites in its amended SIU submission and submission of Form 489 may have been intended to deceive potential unserved area applicants and deter them from filing applications." However, the Bureau did not believe there was evidence that this was necessarily Metacomm's intent or that these actions actually had the effect of deterring competing applications. III. DISCUSSION 10. The Commission's jurisdiction under Section 208 of the Act is limited to complaints "of anything done or omitted to be done by any common carrier subject to this Act, in contravention of the provisions thereof." Accordingly, the Commission's Rules require that formal complaints set forth "[c]itation to the section of the Communications Act and/or order and/or regulation of the Commission alleged to have been violated." The Commission's Rules further provide that, "[a]ny document purporting to be a formal complaint which does not state a cause of action under the Communications Act will be dismissed." 11. In its formal complaint, Metacomm does not specify any provision of the Communications Act or any substantive section of the Commission's Rules that WWC has allegedly violated. Rather, it claims that WWC has violated two procedural rules, i.e., Section 22.130(a)(2) and Section 1.52. However, Section 22.130(a)(2) is merely a reference in Part 22 to the Commission's general procedural rules. It provides that petitions to deny radio applications governed by Part 22 must "[c]omply with all applicable requirements of  1.41 through 1.52 of this chapter." Similarly, Section 1.52 is a general procedural rule providing, that when a pleading is filed by a party represented by an attorney, it should be signed by at least one of the attorneys responsible for the pleading, and that the signature of an attorney "constitutes a certification by him that he has read the document; that to the best of his knowledge, information and belief there is good ground to support it; and that it is not interposed for delay." Section 1.52 also states that an attorney may be subjected to appropriate disciplinary action, pursuant to Section 1.24, for a willful violation of Section 1.52 or if scandalous or indecent matter is inserted in a pleading signed by the attorney. 12. Metacomm recognizes that Section 1.52 is, by its terms, applicable to attorneys practicing before the Commission, rather than to their clients. It argues that the allegedly frivolous WWC pleadings were signed by WWC's counsel in violation of Section 1.52 of the Rules, acting as agents for WWC, and that Section 217 of the Act makes common carriers liable for the acts of their agents. Metacomm also relies on the Commission's February 9, 1996, Public Notice, Commission Taking Tough Measures Against Frivolous Pleadings. It contends that by publishing this public notice, the Commission promulgated both a "formal policy statement" and an enforceable "rule." It argues that "the Commission has authority under Section 4 of the Act to adjudicate a frivolous pleading claim in a complaint proceeding if necessary to enforce its rules and policies (and protect the integrity of its processes) . . . or to serve the interests of administrative economy and justice . . . ." 13. The sanctions for the violation of Section 1.52 are set forth in that rule section. Frivolous pleadings in violation of the Rule "may be stricken as sham and false, and the matter may proceed as though the documents had not been filed." In addition, Section 1.52 provides that an attorney who violates the section "may be subject to appropriate disciplinary action." The 1996 Public Notice encourages all Bureaus and Offices within the Commission "to fully utilize the Commission's sanctions powers, which include the authority to strike such pleadings pursuant to 47 C.F.R.  1.52 or other applicable rules and to issue forfeitures under 47 C.F.R.  503 for violations of  1.52 or other applicable rules." The Commission's staff is also encouraged to refer offending attorneys to the Office of General Counsel for possible disciplinary actions. Neither Section 1.52 nor the Public Notice indicates that the filing of allegedly frivolous pleadings may provide a basis for a formal complaint pursuant to Section 208 of the Act. 14. Metacomm cites no precedent, and we are not aware of any, that contemplates consideration of a formal complaint that is filed pursuant to Section 208 and is predicated on an allegation that the defendant filed frivolous pleadings. The Commission's Public Notice, Commission Taking Tough Measures Against Frivolous Pleadings, was not, as Metacomm believes, a "formal policy statement," enforceable as a new substantive "rule." The intent of the Notice, as stated in the first paragraph thereof, was to remind "parties to our proceedings and their attorneys that our rules prohibit the filing of frivolous pleadings or pleadings filed for the purpose of delay in proceedings before the Commission or its staff" and to announce that "[t]he Commission intends to fully utilize its authority to discourage and deter the filing of such pleadings and to impose appropriate sanctions where such pleadings are filed." Moreover, the Public Notice would not have the effect of a separate binding rule. See United States Telephone Association v. FCC, 28 F.3d 1232 (DC Cir. 1994). 15. We do not agree with Metacomm that the Commission has general authority under Sections 4(i) and 4(j) of the Act to entertain Section 208 complaints based on the filing of allegedly frivolous pleadings. The Commission's authority under Section 208 is expressly limited to the adjudication of complaints alleging acts or omissions by common carriers in violation of the provisions of the Act. Moreover, the expansion of the Commission's Section 208 jurisdiction is not "necessary in the execution of its functions" as required by Section 4(i). The measures mentioned in the Commission's Public Notice, i.e., the striking of frivolous pleadings and, in extreme cases, the imposition of forfeitures and the disciplining of attorneys, are adequate to deter this abuse of the Commission's processes. 16. Also, the Commission's acceptance of formal complaints, based on the filing of alleged frivolous pleadings by the defendant in other proceedings, would not, in the language of Section 4(j), "best conduce to the proper dispatch of business and to the ends of justice." This proceeding illustrates the administrative inefficiency that results when parties attempt to initiate separate formal complaint proceedings to adjudicate the propriety of their opponents' pleadings. The pleadings filed by Metacomm and WWC in this formal complaint proceeding address the issue of whether WWC's pleadings in the radio licensing proceedings lacked a substantial factual basis and therefore were "frivolous." As such, they essentially duplicate arguments raised by the same parties in the licensing proceedings. Further, we note that Metacomm states that it elected to file a formal complaint, instead of raising its allegations of frivolous pleadings in the radio licensing proceedings, because it could not obtain an award of damages in the radio licensing proceedings. We do not believe that either the dispatch of the Commission's business or the ends of justice are furthered by encouraging parties in licensing proceedings to initiate separate formal complaint proceedings to adjudicate allegations that should be raised, if at all, in the licensing proceedings. It would be an inefficient use of the Commission's resources to have one licensing proceeding, and a separate proceeding deciding the propriety of pleadings filed in the licensing proceeding. The Commission personnel responsible for conducting the licensing proceeding would be in the best position to determine whether a party to that proceeding has filed a frivolous pleading or has engaged in other improper conduct. Duplicative proceedings, such as the one here, are an inefficient use of the Commission's resources, and the conduct of such duplicative proceedings could delay final resolution of the underlying licensing matters. Legitimate allegations that a party in a licensing proceeding has engaged in improper conduct should be raised and considered within the scope of the licensing proceeding, where the issues may be expeditiously adjudicated. Commencing a new formal complaint proceeding to determine whether a party in a licensing proceeding engaged in filing frivolous pleadings in the licensing proceeding is disruptive, burdensome, and contains, we believe, an element of gamesmanship. 17. We emphasize that it is the Commission's policy to investigate legitimate claims of abuses of its process and to take appropriate enforcement actions, when warranted. See K.O. Communications, Inc., 13 FCC Rcd 12765 (Wireless Tel. Bur., released July 7, 1998). In this case, however, it does not appear that the WWC pleadings to which Metacomm takes exception were frivolous. There was a basis in fact for WWC's pleadings in opposition to Metacomm's applications. Although the Bureau denied WWC's petitions to deny, it found that Metacomm had, on the eve of the expiration of its build out period, improperly filed notifications on FCC Form 489 for cell sites that had not yet been constructed and had improperly included the proposed cell sites in its SIU submission. While the Bureau did not so conclude, there was an arguable basis for WWC's contention that Metacomm made these erroneous filings intentionally to deter potential competitive applicants by deceiving them as to the extent of the unserved area within Metacomm's Wyoming 1 RSA. 18. WWC's cross-complaint is similarly based solely on alleged violations of procedural rules relating to the filing of deceptive and frivolous pleadings. In this regard, WWC contends that Metacomm, by filing a meritless formal complaint, has violated Sections 1.17, 1.52 and 1.734(c) of the Commission's Rules. Section 1.17 provides that the written submissions by licensees, applicants and permitees should be truthful. Both Section 1.52 (which is generally applicable to all Commission proceedings) and Section 1.734(c) (which applies to pleadings in formal complaint proceedings) provide that pleadings must be signed by the party submitting the pleading or by the party's attorney, and that by signing the party or attorney certifies that he or she has read the pleading, and that he or she believes that it is "well grounded in fact and is warranted by existing law. . . ." WWC has argued that Metacomm's complaint, based on an alleged abuse of process, "is outside the proper scope of Section 208 and fails to state a cause of action that can be adjudicated by the Commission." Moreover, WWC explicitly requests the Commission to accept the cross-complaint only if the Commission finds that it has jurisdiction to hear Metacomm's complaint. Accordingly, because we dismiss Metacomm's complaint, WWC's cross-complaint will also be dismissed. III. ORDERING CLAUSES 19. 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), 208, and Section 0.321 and 1.728 of the Commissions Rules, 47 C.F.R.  0.321 and 1.728, that, the above-captioned formal complaint filed by Metacomm against WWC in this proceeding is DISMISSED WITH PREJUDICE. 20. IT IS FURTHER ORDERED that the above-captioned cross-complaint filed by WWC against Metacomm in this proceeding is DISMISSED WITH PREJUDICE. 21. IT IS FURTHER ORDERED that the Motions To Compel Answers to Interrogatories, filed by Metacomm and WWC on December 30, 1996, and the Motion for Authorization to Conduct Deposition Discovery, Propound Additional Interrogatories and Request Production of Documents, filed by WWC on December 30, 1996, are DISMISSED as moot. 22. IT IS FURTHER ORDERED that this proceeding IS TERMINATED. FEDERAL COMMUNICATIONS COMMISSION Gerald P. Vaughan Acting Chief, Wireless Telecommunications Bureau