| No. 06-____ In the Supreme Court of the United States. ____________________ Alpha Communications Inc., Petitioner, -v International Business Machines Corporation, Respondent.
On Petition for Writ of Certiorari to the United States PETITION FOR WRIT OF CERTIORARI
-i- Questions Presented. 1. Did the court of appeals violate the Supremacy Clause when despite the controlling force of the FCC's order extending the time for performing and funding the parties' contract to provide telecommunication and internet services to school districts, it relied upon state contract law to conclude that the contract between the parties had expired well before any extension ordered by the FCC? 2. Has the decision below which relies on state law instead of federal regulatory law to determine the length of the parties's contract under the Telecommunications Act undermined Congress' intent in passing the Act, diminished the FCC's role in administering the Act, discouraged small business contractors from partnering with major suppliers and inhibited free and open competition to provide schools and libraries with discounts for telecommunication and internet services? 3. Is it in the public interest to allow a major supplier of telecommunications and internet services under the Act to evade payment to its subcontractor by claiming that its contract with the subcontractor had terminated under State law even after it had sought and obtained from the FCC an extension for performing this very contract while letting the subcontractor continue to provide it with 90% of the contract work until the FCC rendered its decision? -ii Table of Contents Questions Presented For Review..................................................................................................... i
Conclusion................................................................................................................................ Appendix.................................................................................................................................. post -iii- Table of Authorities Citations of Opinions and Orders. The unpublished opinion of the United States Court of Appeals for the Sixth Circuit in Alpha Telecommunications, Inc. v. International Business Machines Corporation, C.A. Nos. 05-3974 and 05-4022, decided September 8, 2006, affirming the order of the District Court sua sponte granting summary judgment in favor of the respondent in this contract action brought by the petitioner, is set forth in the Appendix hereto(App. 1-19). The unpublished decision of the District Court for the Northern District of Ohio, Eastern Division, in Alpha Telecommunications, Inc. v. International Business Machines Corporation, Docket No. 1:04 CV 489, filed July 8, 2005, sua sponte granting summary judgment in favor of the respondent in this contract action brought by the petitioner, is set forth in the Appendix hereto(App. 20-32). The unpublished opinion of the United States Court of Appeals for the Sixth Circuit in Alpha Telecommunications, Inc. v. International Business Machines Corporation, C.A. Nos. 05-3974 and 05-4022, decided December 27, 2006, denying the petitioner's combined petition for rehearing or for rehearing en banc, is set forth in the Appendix hereto(App. 33). The Affidavit of Michael J. Pratt in support of the respondent's motion for sanctions, is set forth in the Appendix hereto(App. 34-37). Basis for Jurisdiction in this Court. The decision of the United States Court of Appeals for the Sixth Circuit affirming the decision of the District Court which sua sponte granted summary judgment to the respondent in this action brought by the petitioner for breach of contract, was entered on September 8, 2006; and its further order denying the petitioner's timely filed combined petition for panel rehearing or for rehearing en banc was filed and decided on December 27, 2006(App. 1-19;33). This petition for writ of certiorari is filed within ninety (90) days of December 27, 2006. 28 U.S.C. Section 2101(c). The jurisdiction of this Court is invoked pursuant to the provisions of 28 U.S.C. Section 1254(1). Constitutional, Statutory and Rule Provisions United States Constitution, Article VI, Paragraph 2:
United States Constitution, Amendment V:
47 U.S.C. Section 160:
47 U.S.C. Sections 251 et seq. (The Telecommunications Act of 1996):
47 U.S.C. Sections 254(b)(6) and (h)(1)(b) :
Customer Solutions Agreement (“CSA”), Paragraphs 3.1-3.3:
Statement of Work (“SOW”):
Statement of the Case. In the wake of the court-ordered breakup of AT&T in 1984 and the ensuing explosion in telecommunications including wireless and the internet, the Telecommunications Act of 1996 became law. The first major restructuring of the telecommunications sector since 1934, its preamble reflected Congress' intent “[t]o promote competition and reduce regulation in order to secure lower prices and higher quality services for American telecommunications consumers and encourage the rapid deployment of new telecommunication technologies.” The Act outlaws artificial regulatory barriers to entry in local exchange markets; and it mandates interconnection of telecommunications networks, unbundling, non-discrimination and cost-based pricing of leased parts of the network so that competitors can enter and compete component by component as well as service by service. See generally, AT&T Corp. v. Iowa Utilities Board, 525 U.S. 366, 371-373(1999). The Act also changed how the Public Switched Telecommunications Network or the “Universal Service” for telecommunications access nationwide was subsidized in order to promote competition and minimize the unequal treatment of service providers. The Act empowered the Federal Communications Commissions (“the FCC”), to insure through its rulemaking that funding for Universal Service was achieved in an efficient and competitively neutral way. To this end, 47 U.S.C. Section 254(h)(2)(A), directs the FCC to establish “competitively neutral rules” to enhance and promote access to advanced telecommunications and information services for all public and nonprofit elementary and secondary school classrooms and libraries. Under Section 254(h)(2)(B), it can make rules to “define the circumstances under which a telecommunications carrier may be required to connect its network to such public institutional telecommunications users.” Both the Act and the FCC in its regulations provide that under the schools and libraries Universal Service support mechanism----also known as the E-rate program----eligible schools, libraries and any consortia of same may apply for discounts for telecommunications services, internet access and internal connections from telecommunication carriers “at rates less than the amounts charged for similar services to other parties....” 47 U.S.C. Section 254(h)(1)(B). 47 CFR Sections 54.502; 54.503. In order to encourage competitive bidding among telecommunication carriers in this process, the FCC's regulations mandate that a school or library first submit FCC Form 470 to the Universal Service Administrative Company, the FCC's own program administrator(“the Administrator”), certifying to a technology plan which justifies the telecommunication services being sought and describes those services in sufficient detail to enable potential providers to formulate bids. 47 CFR Sections 54.504(a) and (b). The Administrator then posts FCC Form 470 on the web site maintained by its Schools and Libraries Division (“SLD”) for review by all the service providers who then submit competitive bids. Id . Under the rules, the applicants must accept the most cost-effective bid. After giving the service providers four weeks to submit their bids, the applicant may enter into a contract with the chosen provider, submitting a completed FCC Form 471 application to the Administrator, indicating the selected service provider and the services for which discounts are sought.47 CFR Sections 54.504(b) and (c). SLD then reviews the FCC Form 471 and issues funding commitments on the SLD's web site in accordance with the FCC's rules. Applications which are received outside of this filing window are subject to separate funding priorities under the FCC's rules and typically do not receive funding. 47 CFR Section 54.507(g). However, in exercising its mandate under 47 U.S.C. Section 254(b)(6), to enhance access to advanced telecommunications and information services for all public and non-profit elementary and secondary school classrooms...and libraries,” the FCC on occasion has seen fit to waive a rigid adherence to the Administrator's procedures or funding time lines when they do not further the purposes of Section 254(b) or do not serve the public interest. Especially where there is no evidence of fraud, waste, or misuse of funds, the FCC has on its own motion waived strict compliance with its funding rules or time lines where it would impose undue hardship, inequitable results or prevent schools and libraries from receiving the E-rate funding which they otherwise should have. See, e.g., Request for Review of the Decision of the Universal Service Administrator by Alaska Gateway School District, CC Docket No. 02-6(9/14/06); Request for Review of the Decision of the Universal Service Administrator by Academia Claret, Puerto Rico, CC Docket No. 02-6(9/21/06); Request for Review of the Decision of the Universal Service Administrator by Bishop Perry Middle School, New Orleans, LA, CC Docket No. 02-6(5/19/06). See generally 47 U.S.C. Section 160(a) and (b). With these facts as background, on May 25, 1999, the petitioner and the respondent entered into a Customer Solutions Agreement (“CSA”) whereby the petitioner would provide the respondent with certain deliverables and services as described in Statements of Work or SOWs which were contemplated by the parties to be issued under the CSA. Among other things, the CSA provided that either party could terminate the CSA upon a material breach by the other party or when one of them seeks bankruptcy; or without cause when there were no outstanding SOWs in progress. However, in the event that there was an SOW in progress and the respondent terminates the CSA with cause, the petitioner was entitled to payment for all deliverables up to the time of termination at the agreed upon price. If the termination was without cause, the respondent was bound to “compensate [the petitioner] for the actual and reasonable expenses incurred by [the petitioner] for work in process up to and including the date of termination provided [petitioner] uses reasonable efforts to mitigate [respondent]'s liability under this Subsection....” One of the SOWs which the parties expressly contemplated in the 1999 CSA—in fact, it has the identical Agreement Number (4999CSO442) as the CSA itself----is the SOW they executed on January 2, 2002. There the petitioner, a company experienced in telecommunications regulation, federal funding rules and contract requirements, agreed for compensation to provide the respondent with advice and assistance in offering to provide telecommunications services under the 1996 Act to school districts in the Western and Southwestern Regions. The petitioner was to furnish this assistance “throughout the project” and the Project Year was to run from July 1, 2002, to June 30, 2003. However, in view of the fact that funding commitments by the SLD might not be timely for the identified Project Year, the SOW itself qualified this Project Year timetable with an “Estimated Schedule” for the petitioner's performance as starting on December 1, 2001, and terminating December 1, 2003. In addition, a key assumption expressly made the SOW “contingent on funding confirmation from the...SLD...[and [f]unding confirmation shall occur when the SLD posts funding of the SLD web site.” The petitioner began work under the SOW in January of 2002. In January of 2003, the SLD denied funding for some of the respondent's contracts worth $250,977,707.08 with various schools because of the schools' failure to specify properly in the bidding process what services they were requesting. On January 30, 2003, seven school districts appealed to the FCC these decisions by the SLD denying E-rate funding of Universal Service for Funding Year 2002. The respondent also appealed, requesting review of these decisions denying funding by the SLD. See Request for Review of the Decision of the Universal Service Administrator by International Business Machines, Inc., on behalf of Ysleta Independent School District, CC Docket Nos. 96-45 and 97-21(filed January 30, 2003)(“IBM Request for Review”). On December 8, 2003, the FCC issued an opinion finding that while the missteps were not consistent with its rules, it would waive the filing requirements for Funding Year 2002. Consistent with its prior rulings which had excused strict compliance with its funding rules or time lines, it found good cause in the “unique” circumstances here to direct the Administrator to “reopen the filing window for Funding Year 2002 " for these seven school districts as well as for the respondent . The FCC directed that FCC Form 470 be submitted to the Administrator by February 6, 2004, and that after a contract was signed with a service provider, FCC Form 471 was to be filed on or before April 23, 2004. As the FCC expressly ruled, “[n]othing in this Order prevents IBM from submitting new bids for services” for these school districts. On February 25, 2004, however, the respondent told the petitioner to stop working on the SOW even though the E-rate year for this SOW had not yet concluded and despite the fact that the window for this funding year and this SOW remained open until April 23, 2004. The respondent told the petitioner that it would not use the petitioner in any re-bid process since the SOW “had expired” and was “not renewed.” The petitioner responded by contending that it had completed 90% of the work under the SOW; that the E-rate year for this SOW had not yet expired and that the respondent's unilateral termination before the E-rate year had occurred for funding purposes breached the CSA and the SOW without cause entitling the petitioner to damages under the CSA. With no payment forthcoming from the respondent for the work it had performed under the CSA and the SOW, the petitioner brought this civil action against the respondent in federal district court for the Northern District of Ohio positing jurisdiction on diversity of citizenship and seeking damages of $16,135,053.97 for breach of contract or, alternatively, for the fair value of the work it performed pursuant to the SOW before the respondent had wrongfully terminated the SOW. Alleging that it had performed 90% of the work due under the SOW and was ready to perform the remaining 10% before the respondent breached the agreement by terminating it, the petitioner claimed that the respondent's actions breached the duty of good faith and fair dealing implied in both the CSA and the SOW. The respondent's answer denied liability and asserted inter alia that it had properly terminated the CSA and the SOW with cause. With the pleadings in this posture, the petitioner moved for summary judgment in its favor contending that regardless of whether the respondent terminated the SOW with or without cause, it was bound by the terms of the CSA to compensate the petitioner for the work it had performed under the SOW up to the time it terminated the SOW contract, i.e., from January of 2002 to February 25, 2004. Besides opposing this motion, the respondent moved for sanctions against the petitioner under Fed. R. Civ. P. 11. On July 8, 2005, the federal district judge issued a memorandum of decision denying the petitioner's summary judgment motion, sua sponte granting summary judgment for the respondent and denying the respondent's motion for sanctions(App. 20-32). While the district judge adverted briefly to the CSA as one of the contracts governing the parties' conduct in the circumstances, it focused on one of the three “key assumptions” of the SOW itself, i.e., that the SOW was “contingent on funding confirmation from the...SLD....[which] shall occur when the SLD posts funding on the SLD web site”(App.21-22). Applying Ohio contract law to determine the substantive rights of the parties in this diversity action, the federal district court ruled that while the petitioner had proven an express contract, it had not proven by a preponderance of the evidence that the condition precedent about the SLD posting funding of these contracts had been fulfilled(App. 27). Accordingly, it had failed to show a right to recover any damages on account of the respondent's breach(App.26-28). As the district court concluded,
(App. 27)(footnote omitted). The federal district court reached this conclusion despite the fact that the FCC's decision of December 8, 2003, extended the E-rate year or the Project year for purposes of this SOW and therefore kept open the funding window for this SOW until April 23, 2004, a funding opportunity the respondent expressly repudiated on February 25, 2004, when it unilaterally decided to terminate the SOW(App. 28). Summary judgment therefore entered in the respondent's favor on Count I(App. 28). Because there was an express contract between the parties, the petitioner could not recover in quantum meruit under Count II(App. 28-29). Finally, the respondent's motion for sanctions against the petitioner was denied(App. 29-30). The petitioner appealed and a majority of the court of appeals affirmed the district court but for different reasons(App. 1-19). It disagreed with the district judge that the petitioner had not proved damages; however, it determined that summary judgment for the respondent was nonetheless proper since the petitioner had “failed to establish that [the respondent] had breached the contract in question”(App. 9). Applying Ohio contract law, it first ruled that the petitioner's right to damages in the event of a breach by the respondent was governed by the language of the CSA (detailing termination with and without cause) rather than by the occurrence of a condition precedent that the respondent obtain funding from the SLD(App. 10-11). As the court of appeals put it, “[c]onditions precedent render a party's performance conditional; [they] do not grant a party the right to repudiate a contract prior to the occurrence of the condition”(App. 10). However, it rejected the petitioner's claims that by extending the funding window for this SOW, the FCC's order of December 8, 2003, extended the Project Year under the SOW as well as the time for performance of the SOW and thus the SOW itself, making the respondent's without cause termination of the SOW on February 25, 2004, actionable under Section 3.3 of the parties' CSA(App. 11-14). The court determined instead that the respondent had not repudiated “the SOW in issue” because its terms, i.e., the “Estimated Schedule” recited in its Section 1.5, provide that the petitioner
(App. 12)(emphasis supplied). Thus, according to the court of appeals, the terms of the SOW now overrode the FCC's order of December 8, 2003, an order achieved as the result of the respondent's own appeal , about how long the contract would last; and thus when the respondent notified the petitioner on February 25, 2004, to stop working under the SOW, the SOW had already expired by its own terms and the respondent “could not have repudiated or terminated the SOW”(App. 12). In reaching this result, the court of appeals rejected as “meritless” the petitioner's argument that the FCC's decision of December 8, 2003, extended the E-rate year for this SOW and kept open the funding window for this SOW until April 23, 2004, extending the SOW's termination date by its very terms(App. 12-14). It saw no relationship between the FCC's extension of the SOW's Project Year for funding purposes and the termination date for a SOW whose work itself hinged on the same Project Year and, in fact, made funding for its work dependent on the extent of the Project Year:
(App. 13). Nor did the majority of the court think that the SOW's heading in Section 1.5--- “ Estimated Schedule” for the SOW's work---changed the result(App. 14). Even “[a]ssuming that the December 1, 2003 was an ‘estimate' and therefore subject to change, [the petitioner] has offered the Court no reason to believe the date was actually changed'”(App. 14). Finally, the court of appeals affirmed the district judge's denial of the respondent's motion for sanctions finding no abuse of discretion(App. 14-16). In a separate concurring opinion, Circuit Judge Griffin would have affirmed the district court for the reasons relied upon by the district judge (App. 17-19). On December 27, 2006, the court of appeals denied the petitioner's timely filed combined petition for panel rehearing or for rehearing en banc (App. 33). The petitioner has now brought to this Court its petition seeking a writ of certiorari to the Court of Appeals for the Sixth Circuit. Argument Supporting Allowance of the Writ. The Decision Below Violates the Supremacy Clause By Allowing The Substantive Contract Law of Ohio To Control The Efficacy Of the Federal Protocol Established By the FCC Through Its Regulations And Decisions For Offering Schools and Libraries Telecommunication and Internet Services At Deeply Discounted Rates Under The Telecommunications Act. The Supremacy Clause of Art. VI of the Constitution gives Congress the power to preempt state law. La. Pub. Serv. Comm'n v. FCC, 476 U.S. 355, 368(1986). “Preemption may result not only from action taken by Congress itself; a federal agency acting within the scope of its congressionally delegated authority may [also] preempt state regulation. Id . at 369. See also City of New York v. FCC, 486 U.S. 57, 64(1988)(“[I]n proper circumstances, the agency may determine that its authority is exclusive and preempts any state efforts to regulate in the forbidden area.”). Moreover, the “state regulations” preempted by federal regulations can include state common law damage actions based upon breach of contract or tort. Medtronic, Inc. v. Lohr, 518 U.S. 470, 503-504(1996). Cipollone v. Liggett Group, Inc., 505 U.S. 504, 521, 548-549(1992). Because the States are independent sovereigns in our federal system, Medtronic, 518 U.S. at 485, state laws are not preempted unless preemption is “the clear and manifest purpose of Congress.” Rice v. Santa Fe Elevator Corp., 331 U.S. 218, 230(1947). See Merrill Lynch, Pierce, Fenner & Smith, Inc. v. Dabit, 547 U.S. ___,___(2006). Thus preemption analysis considers Congressional intent to be its “ultimate touchstone.” Medtronic , 518 U.S. at 485. If such preemption is found, the state law requirements touching on the controversy are “without effect.” Maryland v. Louisiana, 451 U.S. 725, 746(1981) citing McCulloch v. Maryland , 17 U.S. (4 Wheat.)316, 427 (1819). This Court has identified six situations where it can be reasonably inferred that Congress intended to preempt state statutory or regulatory law or other state common law requirements touching on a given controversy: (1) where Congress in enacting a federal statute is explicit in its intent to reserve federal supremacy over the subject matter and preempt state law, Barnett Bank, N.A. v. Nelson, 517 U.S. 25, 31(1996); Jones v. Rath Packing Co., 430 U.S. 519, 525, 530-531(1977); (2) whenthere is an outright or actual conflict between the federal and state law, even when Congress says nothing about it, Florida Lime & Avocado Growers, Inc. v. Paul, 373 U.S. 132. 143(1963); (3) where the conflict between federal and state law makes it physically impossible to comply with both sets of regulation, Crosby v. Nat'l Foreign Trade Council, 530 U.S. 363, 372-373(2000); (4) when the federal law implicitly carries with it a barrier to state regulation, Shaw v. Delta Airlines, Inc. , 463 U.S. 85, 95-96(1983); (5) where the federal regulatory scheme is so pervasive and the federal interest so dominant that there is no room for state law regulation, Rice v. Santa Fe Elevator Corp., supra; or (6) when the state law prevents the accomplishment of the objectives which Congress seeks in enacting the federal statute. Pacific Gas & Elec. v. Energy Resources Comm'n, 461 U.S. 190, 220-221(1983. Hines v. Davidowitz, 312 U.S.52, 66-67(1941). Even though with federal agency regulations, “a court should not find preemption too readily in the absence of clear evidence of a conflict,” Geier v. Am. Honda Motor Co., 529 U.S. 861, 881, 885 (2000), Congress has laid out in the Telecommunications Act of 1996 a pervasive role for the FCC in administering the Act's provisions with respect to offering Universal Service to schools and libraries nationwide at deeply discounted rates. On several scores, the Act expressly and implicitly gives the FCC and the regulations it was entitled to promulgate pursuant thereto unquestioned preemptive power over any state law or state legal requirement to the contrary. It was therefore a violation of the Supremacy Clause for the court of appeals to override the FCC's power to affect the parties' agreement about when the SOW was going to end and instead apply Ohio contract law in order to endow the SOW, specifically its language about an “estimated” termination date of December 1, 2003, with the power to control the FCC's order of December 8, 2003, one which extended the funding window for this SOW, extended the Project Year under this SOW, extended the time for the performance of this SOW and thus extended the SOW itself to April 23, 2004. Properly read consistent with Congress' intent which gives priority to the FCC's regulatory order of December 8, 2003----an order which the respondent itself invoked by pursuing its appeal to the FCC----the SOW terminated on April 23, 2004, making the respondent's termination of the SOW on February 25, 2004, premature, without cause and therefore actionable under Section 3.3 of the parties' CSA. For this reason, a writ of certiorari should issue to review and reverse the court of appeals' decision affirming the entry of summary judgment in favor of the respondent. In the first place, “the best way of determining whether Congress intended the regulations of an administrative agency to displace state law is to examine the nature and scope of the authority granted by Congress to the agency.” La. Pub. Serv. Comm'n v. FCC, 476 U.S. at 374. Since 1938 when it amended the Communications Act of1934 by adding Section 201(b), Congress has given the FCC pervasive power to “prescribe such rules and regulations as may be necessary in the public interest to carry out the provisions of the Act.” AT&T v. Iowa Utilities Bd., 525 U.S. 366, 377-378 (1999). The 1996 Act enhanced this pervasive grant of rulemaking authority to the FCC, giving it the power to make binding legal rules about the conduct of the telecommunications industry, both interstate and intrastate, making its regulatory power even more pervasive and designed to deter and remedy anti-competitive harm wherever it occurs among suppliers of telecommunications, information and internet services. National Cable & Telecommunications Assn. v. Brand X Internet Services, 545 U.S. 967, 980-981(2005). Verizon Communications Inc. v. Law Offices of Curtis & Trinko, LLP, 540 U.S. 398, 412-413(2004). AT&T v. Iowa Utilities Bd., 525 U.S. 366, 377-379 & nn.5 & 6. As this Court noted in AT&T v. Iowa Utilities Bd., the Act took the regulation of local telephone service completely away from the states and established “a new federal regime” to promote competition. Id. at 378 n.6. Thus states can no longer enforce laws that impede competition in any aspect of the Act, including the offering of telecommunication services to school districts. Id. at 525. In addition, the Act expressly prohibits state regulation of the Internet. 47 U.S.C. Section 230(b). In the second place, beyond these pervasive grants by Congress to the FCC of rulemaking and superintendent authority in administering the 1996 Act, Congress expressly provides in the Act itself that the FCC's role in this endeavor is to be predominant and that the laws of the several States are preempted to the extent inconsistent with the Act or the FCC's authority thereunder. For example 47 U.S.C. Section 253(a), provides that “[n]o State or local statute or regulation, or other State or local legal requirement, may prohibit or have the effect of prohibiting the ability of any entity to provide any interstate or intrastate telecommunications service.” In addition, subsection (d) of Section 253 gives the FCC the express power to preempt any state statute, regulation or other legal requirement which would be anti-competitive or at variance with Section 254's provisions concerning the bidding for Universal Service by inter alia school districts and libraries. In other words, the Act gives the several States the power to “preserve and advance Universal Service, protect the public safety and welfare, ensure the continued quality of telecommunications services, and safeguard the rights of consumers,” but no more--- and if any state acts beyond this limited grant, the FCC has the right to preempt such acts . 47 U.S.C. Sections (a), (b) and (d). Consistent with this statutory grant of power to the FCC, this Court has noted where federal policy is to encourage certain conduct, state law discouraging that conduct must be preempted. See Xerox Corp. v. County of Harris, 459 U.S. 145, 151-153(1982). In the third place, Congress' pervasive grant of federal authority to the FCC over both the telecommunications industry and the process of competitive bidding for both interstate and intrastate Universal Service to schools and libraries is tantamount to a complete federal occupation of the field, implicitly preempting any state or local regulation inconsistent therewith pursuant to the Supremacy Clause. California Comm'n v. United States, 355 U.S. 534, 540-544(1958). U.S. v. Allegheny County, 322 U.S. 174, 183(1944). A fortiori,
U.S. v. Allegheny County, supra (citations omitted)(emphasis supplied). Thus where federal law is so powerful as to displace entirely any state cause of action for breach of contract, any such suit is purely a question of federal law, notwithstanding the fact that state law would provide a cause of action in the absence of federal law. Franchise Tax Board of Cal. v. Construction Laborers Vacation Trust for Southern Cal., 463 U.S. 1, 23(1983). International Association of Machinists v. Central Airlines, Inc., 372 U.S. 682, 690-691(1963). The federal interest being paramount, the role of the States in this regime will always be subject to federal oversight. AT&T v. Iowa Utilities Bd. , 525 U.S. at 378 n.6. In the fourth place, substantive Ohio contract law, to the extent that it allows a federal court to ignore the force of the FCC's order of December 8, 2003, in fixing the intent of the parties about when their SOW was to end, is preempted because this state law does not accommodate the FCC's extension of the SOW for missteps in the bidding process as well as for funding purposes, extensions which are a necessary part of the federal regime to provide deeply discounted Universal Service to schools and libraries. In this way, applying Ohio contract law to this controversy prevents the accomplishment of the objectives which Congress sought when it passed the 1996Act, i.e., to provide Universal Service to schools and libraries at deeply discounted rates; to fully fund this enterprise and thereby encourage small business contractors such as the petitioner to partner with major telecommunications suppliers such as the respondent; and to have free and open competition for telecommunication and internet services with price being the sole determinant. With Ohio contract law at cross purposes with the Act's intendment, it is preempted. Chicago & N.W. Tr. Co. v. Kalo Brick & Tile Co., 450 U.S. 311, 317-318, 327(1981). See and compare American Airlines, Inc. v. Wolens, 513 U.S. 219, 232-233(1995)(preemption warranted where state law produces result which is different than the intent of the parties). Accordingly, because the situation here matches four of the six situations identified by this Court in La. Pub. Serv. Comm'n v. FCC, 476 U.S. at 368-369 for preemption of state law by federal regulations, the federal courts below should have preempted Ohio contract law in determining the intent of the parties about when their SOW ended and should have given preeminent force to the FCC's order of December 8, 2003, an order which the respondent itself invoked by its appeal and one extending the time for the SOW's performance and funding to April 23, 2004. Thus under the federal regime intended by Congress, the SOW terminated on April 23, 2004, making the respondent's termination of the SOW on February 25, 2004, premature, without cause and therefore actionable under Section 3.3 of the parties' CSA. Besides violating the Supremacy Clause, the court of appeals' decision to apply Ohio contract law in order to allow IBM to cancel the SOW prematurely without cause and without incurring liability to the petitioner subverts the protocol established by the FCC for offering to schools and libraries telecommunication and internet services at deeply discounted rates, a regulatory protocol which, as this Court held in AT&T v. Iowa Utilities Bd., 525 U.S. at 378 n.6., the FCC has the right to implement under the Act. It also discourages small businesses like the petitioner from partnering with major telecommunications suppliers such as the respondent; and it is assuredly not in the public interest to allow a major supplier of telecommunications and internet services to evade payment to its subcontractor by claiming that the contract year had terminated under state law after it had sought and obtained an extension of this very contract year from the FCC while letting the subcontractor continue to provide it with 90% of the contract work until the FCC to rendered its decision. For these reasons, federal common law rather than Ohio contract law applies to this controversy and this federal common law in defining the parties' agreement will take into account the force of the FCC's order of December 8, 2003, extending the time performing and funding the parties' SOW. A federal court sitting in diversity is an adjunct of the state courts and, as such, an action that cannot be maintained in state court cannot be maintained by a federal court. See Guaranty Trust Co. of New York v. York, 326 U.S. 99, 108-109(1945). However, complete preemption in effect allows a state law complaint such as petitioner's to be recharacterized as an action arising under federal law and justifies its retention in the federal system as though originally filed in federal court properly asserting federal jurisdiction. Metropolitan Life Ins. Co. v. Taylor, 481 U.S. 58, 64(1987). See Transamerica Mortgage Advisors, Inc. v. Lewis, 444 U.S. 11,18-19(1979)(suits by private persons to enforce contracts contemplated by federal statutes may set forth federal claims); Machinists v. Central Airlines, Inc., 372 U.S. 682, 692(1963)(same). A writ of certiorari should therefore issue to the court of appeals, ordering it to remand the matter to the district court incident to this retained federal jurisdiction for the entry of an order granting the petitioner's motion for summary judgment and setting the case down for a hearing for an assessment of damages due the petitioner as a result of the respondent's breach or based upon a recovery in quantum meruit. Conclusion. For all of these reasons identified herein, a writ of certiorari should issue to review the judgment of the United States Court of Appeals for the Sixth Circuit and, ultimately, to vacate and reverse that judgment and remand the matter to the United States District Court for the Northern District of Ohio, Eastern Division, with instructions that the petitioner's motion for summary judgment be granted and that the matter be set down for a hearing concerning the damages due the petitioner either as the result of the respondent's breach of contract or based upon a recovery in quantum meruit; or provide the petitioner with such other relief as is fair and just in the circumstances of this case.
Respectfully submitted,
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