WASHINGTON-The Federal Communications Commission, which has been asked to declare whether federal law pre-empts state courts from awarding monetary damages against wireless carriers in consumer fraud cases, may have tipped its hand on how the matter might be decided.
In an amicus (friend of the court) brief filed in an Illinois state court in May, the FCC said its pre-emption powers do not necessarily extend to competitive telecom markets.
Though the case of Donna Crain vs. Lucent Technologies Inc. involves long-distance services and customer premises equipment (CPE), the FCC’s explanation of its pre-emption policy in the brief appears to be relevant to a wireless industry that is detariffed, largely deregulated and competitive.
“The FCC … pre-empted state tariff regulation of CPE under public utility statutes; but it did not intend to pre-empt the application of more general state laws to telephone companies that provide CPE in a competitive market,” stated the FCC.
The FCC goes on to say it “intended the carriers to be `subject to the same incentives and awards’ that other firms in competitive markets confront when they offer detariffed CPE-including `remedies provided by state consumer protection laws and contract law.’ “
The Wireless Consumers Alliance, which is pressing the FCC to declare that federal telecom law does not pre-empt state courts from awarding money in wireless consumer fraud litigation, highlighted the amicus brief in reply comments filed with the FCC.
The wireless industry, which convinced Congress to give it liability protection for emergency calls and non-911 calls alike, claims 1993 legislation that pre-empted state entry and rate regulation of commercial wireless carriers bans states from awarding monetary damages against service providers.
The theory is that carriers hit with monetary damages would be obliged to pass the cost onto consumers in the form of higher rates, thereby violating the 1993 law.
In two California state court cases, trial judges have agreed with industry’s argument. The cases have been appealed, but are on hold while the FCC considers the WCA petition.
“To allow a state court to interfere in a matter fenced-off by Congress from state legislatures and PUCs (public utility commissions) would completely defeat the objective of the [1993] legislation,” stated the Cellular Telecommunications Industry Association.
