Court Lets FCC Off the Alpine PCS $21 Million Hook

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The FCC is free of a $21 million lawsuit from a bankrupt wireless company. A federal appeals court on January 2, agreed with the agency and a prior federal claims court that Alpine PCS took its case to the wrong court.

The case began in 1996, when the FCC awarded Alpine PCS two, 10-year Personal Communications Services licenses. The wireless firm bid about $8.9 million for one license and about $17.3 million for the other. Alpine was to pay for the spectrum in installments from December 1996, through September 2006.

In 1996, the Commission regulations stated if a payment was more than 90 days late and a grace period expired or the agency denied a request for a restructured payment schedule, the FCC would automatically cancel the licenses and the licensee would be subject to debt collection. In 1998, two three-month grace periods became the norm. But if the licensee did not pay the installment, plus late fees, after the second grace period, the licensee would be declared in default, have its licenses “automatically cancel[ed],” and be subject to debt collection, states the federal appeals court in its opinion.

Alpine missed its regular quarterly payment in January 2002, and received two three-month grace periods. A week before the next payment deadline, the firm asked the FCC to restructure the debt plan and waive the automatic license cancellation. But that October, the Commission’s database showed the licenses reverted back to the FCC. The Commission told Alpine that was a clerical error and continued to discuss possible payment restructuring with the company, according to the federal appeals court.

But the agency ultimately denied the debt payment restructuring and waiver-of-cancellation requests and told Alpine in January 2004, the company was in default. The Wireless Telecommunications Bureau formally denied Alpine’s requests in 2007.

The FCC announced the licenses would be auctioned in 2008. That August, Alpine filed for bankruptcy and moved for an automatic stay of the FCC auction. The bankruptcy court denied the stay, deciding the licenses were not part of the bankruptcy estate. The FCC re-auctioned the licenses in 2008.

Alpine sued the FCC in January 2013 in the U.S. District Court for the District of Columbia, alleging breach of contract, unjust enrichment, fraud, and breach of fiduciary duty, and sought judgments of no default and no debt. The district court rejected Alpine’s arguments and dismissed the claim for lack of jurisdiction, concluding the contract claims were essentially an attack on an FCC licensing decision.

In January 2016, Alpine brought its case to the U.S. Court of Federal Claims, alleging breach of contract “and breach of the duty of good faith and fair dealing,” according to the decision. The government wanted the case dismissed, arguing, among other things, the statute of limitations ran out after six years. The court dismissed the contract claims.

This week, the federal appeals court agreed with the D.C. Circuit decision, which stated: “Although camouflaged as a contractual dispute, Alpine’s suit really challenges the FCC’s decision to ‘revoke’ the licenses for nonpayment.” Alpine contended it was not challenging the license revocation, but rather “the breach of a contract that resulted in forfeiture of [the] licenses.” The court this week found that “distinction” to be “empty.” It found “the District of Columbia Circuit … has exclusive jurisdiction to review the grant or denial of FCC licenses.”

January 4, 2018                     

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