1. The Primary Jurisdiction Doctrine Under Federal and California Law Jonathan H. Blavin Munger, Tolles & Olson LLP CCPUC, October 6, 2009

2. Roadmap The origin of the doctrine The origin of the doctrine The elements and rationale of the doctrine The elements and rationale of the doctrine Intersection of doctrine with other legal doctrines Intersection of doctrine with other legal doctrines Open issues Open issues

3. Origins of the Doctrine Texas and Pacific Railway Co v Abilene Cotton Oil Co., 204 US 426 (1907). Texas and Pacific Railway Co v Abilene Cotton Oil Co., 204 US 426 (1907). –Uniformity: Held that rates “might be found reasonable by the Commission in the first instance and unreasonable by a court acting originally, and thus a conflict would arise.” Far East Conference v United States, 342 US 570 (1952). Far East Conference v United States, 342 US 570 (1952). –Agency expertise: A decision would implicate considerations “generally unfamiliar to a judicial tribunal, but well understood by an administrative body especially trained and experienced in the intricate and technical facts.”

4. Modern Formulation United States v Western Pacific Railroad Co, 352 US 59 (1956) (emphasis added): “Primary jurisdiction applies where a claim is originally cognizable in the courts, and comes into play whenever enforcement of the claim requires the resolution of issues which, under a regulatory scheme, have been placed within the special competence of an administrative body; in such a case the judicial process is suspended pending referral of such issues to the administrative body for its views.” United States v Western Pacific Railroad Co, 352 US 59 (1956) (emphasis added): “Primary jurisdiction applies where a claim is originally cognizable in the courts, and comes into play whenever enforcement of the claim requires the resolution of issues which, under a regulatory scheme, have been placed within the special competence of an administrative body; in such a case the judicial process is suspended pending referral of such issues to the administrative body for its views.”

5. Modern Formulation Ninth Circuit: Ninth Circuit: –(1) a need to resolve an issue that –(2) has been placed by Congress within the jurisdiction of an administrative body having regulatory authority –(3) pursuant to a statute that subjects an industry or activity to a comprehensive regulatory authority that –(4) requires expertise or uniformity in administration. Clark v. Time Warner Cable, 523 F.3d 1110, 1115- 16 (9th Cir. 2008) (emphasis added).

6. Modern Formulation California law substantially similar: California law substantially similar: –CA courts recognize that doctrine “originated in the United States Supreme Court and has since been developed largely in federal courts.” –CA courts recognize that doctrine “originated in the United States Supreme Court and has since been developed largely in federal courts.” Wise v. Pacific Gas and Elec. Co., 132 Cal.App.4th 725, 739 (2005). –Same rationale discussed. Regulatory expertise. Wise v. Pacific Gas & Electric Co. 77 Cal.App.4th 287, 298 (1999). Regulatory expertise. Wise v. Pacific Gas & Electric Co. 77 Cal.App.4th 287, 298 (1999). Uniformity. Farmers Ins. Exchange v. Superior Court 2 Cal.4th 377, 391-92 (1992). Uniformity. Farmers Ins. Exchange v. Superior Court 2 Cal.4th 377, 391-92 (1992).

7. Agency Expertise Courts consider whether issues are “beyond the conventional experiences of judges.” National Communications Association, Inc v AT&T, 46 F3d 220, 222-23 (2d Cir 1995). Courts consider whether issues are “beyond the conventional experiences of judges.” National Communications Association, Inc v AT&T, 46 F3d 220, 222-23 (2d Cir 1995). Technical issues? Statutory interpretation? Technical issues? Statutory interpretation?

8. Agency Expertise Cundiff v. GTE California Inc., 101 Cal.App.4th 1395, 1412 (2002): “The subject of this suit... is... alleged intentional or negligent misrepresentation.... This is not a topic about which the commission would have more expertise than the trial court....” Cundiff v. GTE California Inc., 101 Cal.App.4th 1395, 1412 (2002): “The subject of this suit... is... alleged intentional or negligent misrepresentation.... This is not a topic about which the commission would have more expertise than the trial court....” Hart v. Comcast of Alameda, 2008 WL 2610787 (N.D. Cal. 2008): issue of whether “file sharing applications are unlawful, and unfairly discriminate against P2P applications” – i.e., the “reasonableness of a broadband provider's network management practices-has, however, been firmly placed within the jurisdiction” of the FCC Lyons v. Coxcom, Inc., 2009 WL 347285 (S.D. Cal. 2009): “FCC proceedings with Comcast concern a different internet provider and different claims” and the “issues involved in this case are primarily grounded in contract, false advertising, and unfair competition, issues traditionally within the scope of the judiciary.”

9. Uniformity Possibility of conflict? McConnell v. Pacificorp Inc., 2007 WL 2385096 (N.D. Cal. 2007): FERC findings may be “relevant and could even assist the experts herein, those findings could not take the place of the factual determinations to be made by the jury” and that “decision herein would simply be an application of the available facts to the relevant California state law. Defendant has not demonstrated how this would disrupt FERC's administrative proceedings.” Possibility of conflict? McConnell v. Pacificorp Inc., 2007 WL 2385096 (N.D. Cal. 2007): FERC findings may be “relevant and could even assist the experts herein, those findings could not take the place of the factual determinations to be made by the jury” and that “decision herein would simply be an application of the available facts to the relevant California state law. Defendant has not demonstrated how this would disrupt FERC's administrative proceedings.”

10. Stays and Referrals Stays and Referrals Stays and Referrals –The “proper procedure is to stay the action pending resolution of the issues within the administrative body’s expertise.” Wise v. Pacific Gas & Electric Co., 77 Cal.App.4th 287, 296 (1999). –Where no pending proceeding, stay may accompany a “referral” calling for the agency to take action. Farmers Ins., 2 Cal.4th at 378.

11. Stays and Referrals Procedural issue: how “referral” is accomplished – –“the Public Utilities Act does not include a provision by which the court is authorized to request a determination from the PUC.” Wise v. Pacific Gas and Elec. Co., 132 Cal.App.4th 725, 741 (2005). – –“there is a basis for believing the [Insurance] Commissioner would not have accepted the referral.” Krumme v. Mercury Ins. Co., 123 Cal.App.4th 924, 938 (2004).

12. Relationship to Other Doctrines Section 1759: Divests superior courts of jurisdiction over actions which not only would reverse or annul a specific PUC order, but also those actions against utilities which would “have the effect of undermining a general supervisory or regulatory policy of the commission, i.e., when it would ‘hinder’ or ‘frustrate’ or ‘interfere with’ or ‘obstruct’ that policy.” San Diego Gas & Electric Co. v. Superior Court, 13 Cal.4th 893, 918 (1996). Section 1759: Divests superior courts of jurisdiction over actions which not only would reverse or annul a specific PUC order, but also those actions against utilities which would “have the effect of undermining a general supervisory or regulatory policy of the commission, i.e., when it would ‘hinder’ or ‘frustrate’ or ‘interfere with’ or ‘obstruct’ that policy.” San Diego Gas & Electric Co. v. Superior Court, 13 Cal.4th 893, 918 (1996). By contrast, primary jurisdiction not doctrine of exclusive jurisdiction; issue is “originally cognizable” in the courts. By contrast, primary jurisdiction not doctrine of exclusive jurisdiction; issue is “originally cognizable” in the courts.

13. Relationship to Other Doctrines the “PUC does not have exclusive jurisdiction over the issues raised in the instant action.... Had we concluded the PUC should be the final arbiter of the issue... we would have held plaintiffs' action was barred by Public Utilities Code section 1759 and not applied the primary jurisdiction doctrine.” Wise v. Pacific Gas and Elec. Co., 132 Cal.App.4th 725, 742 (2005): the “PUC does not have exclusive jurisdiction over the issues raised in the instant action.... Had we concluded the PUC should be the final arbiter of the issue... we would have held plaintiffs' action was barred by Public Utilities Code section 1759 and not applied the primary jurisdiction doctrine.” Limits of Section 1759: People ex rel. Orloff v. Pacific Bell, 31 Cal.4th 1132 (2003): action not barred by Section 1759 even though “potential for inconsistent findings of fact and conclusions of law in the present civil action and in the administrative proceeding”; court suggests that parties “might seek a stay of a civil action to await the outcome of parallel PUC proceedings” Limits of Section 1759: People ex rel. Orloff v. Pacific Bell, 31 Cal.4th 1132 (2003): action not barred by Section 1759 even though “potential for inconsistent findings of fact and conclusions of law in the present civil action and in the administrative proceeding”; court suggests that parties “might seek a stay of a civil action to await the outcome of parallel PUC proceedings”

14. Relationship to Other Doctrines Doctrine supported where ordinarily would defer to agency. Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837 (1984) – –Chevron creates after-the-fact deference by upholding any agency interpretation that is “permissible.” – –Primary jurisdiction creates a before-the-fact opportunity for an agency to decide certain issues. Hobbs Act, 28 U.S.C. § 2342(1): federal courts of appeals have “exclusive jurisdiction to enjoin, set aside, suspend (in whole or in part) or to determine the validity of” certain agency rulings, FCC.

15. Relationship to Other Doctrines Doctrine applied for an issue that is “primarily one of statutory interpretation” precisely where a court otherwise would “defer to the agency’s interpretation.” American Auto. Mfrs. Ass’n v. Massachusetts Dept. of Environmental Protection, 163 F.3d 74, 81 (1st Cir. 1998). Doctrine applied for an issue that is “primarily one of statutory interpretation” precisely where a court otherwise would “defer to the agency’s interpretation.” American Auto. Mfrs. Ass’n v. Massachusetts Dept. of Environmental Protection, 163 F.3d 74, 81 (1st Cir. 1998). Statutory interpretation issue could be referred to agency under doctrine because “[i]f we had the benefit of the [agency’s] reasoned decision... we would accord that decision substantial deference.” Northwest Airlines, Inc. v. County of Kent, 510 U.S. 355, 366 n.10 (1994). Statutory interpretation issue could be referred to agency under doctrine because “[i]f we had the benefit of the [agency’s] reasoned decision... we would accord that decision substantial deference.” Northwest Airlines, Inc. v. County of Kent, 510 U.S. 355, 366 n.10 (1994).

16. Relationship to Other Doctrines Doctrine not applied where agency determination not binding. Rhoades v. Avon Products, Inc., 504 F.3d 1151 (9th Cir. 2007): – –Court declined to defer to TTAB given that it “is not an ordinary administrative agency whose findings control unless set aside after court review under a highly deferential standard.” – –[W]here a contested Board proceeding has already addressed the validity of the mark, the Board's findings can be challenged in a civil action in district court... 15 U.S.C. § 1071(b).”

17. Relationship to Other Doctrines Nature of agency determination after doctrine applied. Wise v. Pacific Gas and Elec. Co., 132 Cal.App.4th 725, 741-42 (2005): PUC closing of investigation not “entitled to collateral estoppel effect in a subsequent judicial proceeding” because agency had not been “acting in a judicial capacity.”

18. Relationship to Other Doctrines Exhaustion doctrine – –“‘Exhaustion’”: applies “where a claim is cognizable in the first instance by an administrative agency alone; judicial interference is withheld until the administrative process has run its course. – –“Primary jurisdiction,” applies “where a claim is originally cognizable in the courts, and comes into play whenever enforcement of the claim requires the resolution of issues which, under a regulatory scheme, have been placed within the special competence of an administrative body.” Farmers Ins. Exchange v. Superior Court, 2 Cal.4th 377, 390 (1992) (emphases added).

19. Relationship to Other Doctrines Filed-rate doctrine Filed-rate doctrine –The filed-rate doctrine prohibits courts from deciding disputes concerning the reasonableness of a rate that has been filed by a regulated entity if it is the reasonableness of the rate that is in dispute. –Abilene Cotton: Supreme Court determined that a court of law had no jurisdiction to pass upon the reasonableness of a rate filed with the Commission. –Abilene Cotton: Supreme Court determined that a court of law had no jurisdiction to pass upon the reasonableness of a rate filed with the Commission. –Like primary jurisdiction, purpose of the filed- rate doctrine is to maintain uniformity and consistency in the regulatory scheme.

20. Open Issues New technologies and affect on doctrine. – –Clark v. Time Warner Cable, 523 F.3d 1110 (9th Cir. 2008): “approv[ing] of the use of the primary jurisdiction doctrine where it is unclear whether a federal statute applies to a new technology.” – –Syntek Semiconductor Co., Ltd. v. Microchip Technology Inc., 307 F.3d 775 (9th Cir. 2002): “the question of whether decompiled object code qualifies for registration as source code under the Copyright Act and regulations is an issue of first impression. It also involves a complicated issue that Congress has committed to the Register of Copyrights.”

21. Open Issues Does doctrine permit referral to state agency from federal court? – –Western Radio Services Co. v. Qwest Corp., 530 F.3d 1186, 1200 (9th Cir. 2008) (“we have questioned whether the doctrine permits referral of a case to a state, as opposed to a federal, agency”). – –Cost Mgmt. Servs., Inc. v. Wash. Nat. Gas Co., 99 F.3d 937, 949 n. 12 (9th Cir. 1996) (“[W]e are not entirely persuaded that the doctrine should be applied... to allow a federal court to ‘route’ issues to a state agency for resolution.”).

22. Open Issues Standard of Appellate Review in Federal Courts. – –Some courts say de novo review. Newspaper Guild of Salem v Ottaway Newspapers, Inc, 79 F3d 1273, 1283 (1st Cir 1996); International Brother-hood of Teamsters v American Delivery Service Co, Inc, 50 F3d 770, 773 (9th Cir 1995). – –The doctrine is not “discretionary” and “an issue either is within an agency’s primary jurisdiction or it is not, and, if it is, a court may not act until the agency has made the initial determination.” United States v. Gen. Dynamics Corp., 828 F.2d 1356, 1364 n.15 (9th Cir. 1987) (emphasis added).

23. Open Issues – –Other courts state abuse of discretion proper review. National Telephone Cooperative Association v Exxon Mobil Corp, 244 F3d 153, 156 (D.C. Cir. 2001); Environmental Technology Council v Sierra Club, 98 F3d 774, 789 (4th Cir. 1996). – –CA law suggests more discretion. “[D]iscretionary approach leaves courts with considerable flexibility to avoid application of the doctrine in appropriate situations.” Farmers Insurance, 2 Cal.4th at p. 392 (emphasis added).