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Duke Entergy Carolinas, LLC v. Fronteir Communications of Carolinas, LLC

United States District Court, W.D. North Carolina, Bryson City Division

August 6, 2014

DUKE ENTERGY CAROLINAS, LLC, Plaintiff,
v.
FRONTEIR COMMUNICATIONS OF THE CAROLINAS, LLC, Defendant.

ORDER

DENNIS L. HOWELL, Magistrate Judge.

Pending before the Court is Defendant's Motion to Transfer [# 23]. Defendant moves to transfer this case to the Eastern District of North Carolina or, in the alternative, stay this case pending a determination by the Federal Communications Commission as to the applicable pole attachment rate Plaintiff may charge Defendant. Upon a review of the record, the parties' briefs, and the relevant legal authority, the Court GRANTS in part and DENIES in part the motion [# 23].

I. Background

Plaintiff Duke Energy Carolinas, LLC is an electric utility provider that provides electricity for customers in North Carolina. (Pl.'s Am. Compl. ¶ 6.) Plaintiff's principal place of business is in Mecklenburg County, North Carolina. (Id. ¶ 1.) As part of its business of providing electricity to consumers, Plaintiff owns utility poles throughout North Carolina. (Id. ¶ 6.)

Defendant Frontier Communications of the Carolinas LLC is an incumbent local exchange carrier ("ILEC") that provides telephone and other services to customers in North Carolina. (Id. ¶ 7.) Defendant is a Delaware corporation with its principal place of business in Connecticut. (Id. ¶ 2.) As part of its business of providing telephone services to customers, Defendant also owns utility poles. (Id. ¶ 7.)

In 1979, the two parties entered into an agreement (the "Joint Use Agreement") to allow each party to use the other party's utility poles to distribute their services to customers in Clay, Cherokee, Graham, Jackson, Macon, and Swain counties in North Carolina. (Id. ¶¶ 9-11.) Pursuant to the terms of the Joint Use Agreement, the party using the other party's utility pole would pay an annual rental fee, as set forth in the agreement, per pole occupied. (Id. ¶¶ 13-15.) The rate for 2011 was $18.40. (Id. ¶ 15.)

On April 7, 2011, however, the FCC adopted an order revising its pole attachment rules to limit telecommunication pole rental rates in certain circumstances and establishing a formula for determining pole rental rates. See In the Matter of Implementation of Section 224 of the Act , 26 F.C.C.R. 5240, 2011 WL 1341351 (Apr. 7, 2011). One of the purposes behind the FCC's Order was to eliminate the disparity between telecommunication and cable rates. Id . at 5244.

After the FCC issued its order, Defendant notified Plaintiff that it was terminating the Joint Use Agreement effective August 8, 2012. (Id. ¶ 19.) Plaintiff accepted Defendant's notice of termination, and the Joint Use Agreement was subsequently terminated. (Id. ¶ 20.) Despite the fact that the parties did not enter into a new agreement, the parties continued utilizing each other's utility poles. (Id. ¶¶ 20-37.)

On November 15, 2012, Plaintiff sent Defendant a schedule of payment for the 2012 pole rentals. (Id. ¶¶ 23-24.) Defendant then informed Plaintiff that it was adjusting the pole rental rates set forth in Plaintiff's schedule pursuant to the telecommunications formula as set forth by the FCC. (Id. ¶ 25.) Defendant forwarded payment of this reduced rate to Plaintiff. (Id. ¶ 30.)

Plaintiff then brought this action against Defendant in the Superior Court of Macon County, North Carolina. The Complaint asserted a claim for breach of contract and a claim for unjust enrichment arising from Defendant's alleged breach of the Joint Use Agreement.[1] Plaintiff contends that it is owned an additional $801, 483.88 for pole rentals because Defendant was not entitled to adjust the pole rental rates downward from the rate set forth in the schedule. (Id. ¶ ¶ 29-31.)

Meanwhile, Defendant filed a complaint with the FCC challenging the pole rental rates charged by Plaintiff. (Id. ¶ 26; Ex. A to Def.'s Memo in Support of Mot. Transfer.) In addition, two similar actions involving unpaid pole rental fees based on distinct joint use agreements covering other areas of North Carolina are pending in the United States District Court for the Eastern District of North Carolina. See Frontier Commc'ns of the Carolinas, LLC v. Duke Energy Carolinas, LLC, No. 5:13cv00791 (E.D. N.C. filed Nov. 12, 2013); Duke Energy Progress, Inc. v. Frontier Commc'ns of the Carolinas Inc., 5:13cv00617 (E.D. N.C. removed Aug. 26, 2013.) Both cases in the Eastern District of North Carolina are before United States District Judge Louise Wood Flanagan.

Defendant now moves to transfer this case to the Eastern District of North Carolina. In the alternative, Defendant moves the Court to Stay this case pending a determination by the FCC regarding the pole rental rate charged by Plaintiff to Defendant. Finally, Plaintiff moves to strike a supplemental pleading filed by Defendant.

II. Analysis

A. Motion to ...


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