As we have established in previous briefing, the Federal Communications Act (“FCA’s”) contains an explicit Savings Clause, and Note C to § 152 of that act explicitly bars claims of implied preemption. According to AT&T, this Court may not form its own judgments of these provisions, because this Court is “required” (Brief at 4) to follow the FCC’s statements (or at least AT&T’s interpretation of those statements) about the preemptive effect of the FCA.

            By its terms, Section 4 of the CSA limits punitive and other statutorily-provided damages not for negligence, but for “any other claim,” and provides that these limitations “apply whether the claim is based on contract, tort, statute, fraud, misrepresentation, or any other legal or equitable theory.” According to AT&T, this Court should not read that language to mean what it says, but should defer to AT&T’s purported good intentions and Professor Priest’s reading of these words.

            By its terms, the confidentiality provision provides that consumers may not “disclose the existence, content, or results of any arbitration or award, except as may be required by law. . . .” According to AT&T, this Court should not read this language, because AT&T’s witness Mr. Delery testified that two years ago a non-lawyer (Mr. McEldowney) failed to tell AT&T of its significance, because another non-lawyer (Mr. Delery) says he didn’t mean anything unreasonable by it, and because another non-lawyer (Mr. Pines) says he doesn’t read such provisions literally.

            On these points and several others, AT&T misunderstands and understates the role and responsibilities of this Court. It is for this Court to decide the meaning and legal effect of the words of the FCA, the CLRA, the Unfair Practices Act and the CSA, however uncomfortable those meanings are for AT&T. The plain language of these statutes and the CSA establish that California state law of unconscionability governs this case, and that §§ 4 and 7 of the CSA are illegal and unenforceable under that law.

I.         THE FCA DOES NOT PREEMPT PLAINTIFFS’ CLAIMS

            A.        There is No “Conflict” Preemption Under the FCA 

            AT&T points out that in addition to express preemption (which it apparently concedes does not exist here), state laws may be preempted when they “conflict” with the purpose of a federal statute. Brief at 3. AT&T misses, however, that “conflict preemption” is used interchangeably in the precedents with the phrase “implied preemption,” and that Note C to § 152 of the FCA provides that the Act has no preemptive effect as to state law unless expressly stated in the Act.

            In its statement of the purposes of the FCA, AT&T also leaves out the fact that in adopting the 1996 Amendments to the FCA, Congress was deeply concerned with principles of federalism, and added a Savings Clause for state law and Note C to § 152. Accordingly, one of Congress’s central purposes in the 1996 amendments was to preserve state law from preemption.

            B.        The FCC’s Statements Do Not Require This Court to Find Preemption.

            AT&T’s reading of the FCC’s statements would require this Court to ignore much of the FCC’s language. While AT&T would have it that state law only plays a role with respect to whether the parties agreed to a contract (without respect to whether that contract is valid under state law), the FCC repeatedly states that carriers are subject to state “consumer protection laws.” State consumer protection laws generally do not play a role with respect to whether parties agree to a contract, however, but go instead to the legality and validity of business arrangements. AT&T effectively reads the phrase “consumer protection laws” out of numerous FCC statements.

            AT&T claims that this Court is not free to reach its own judgments as to the meaning of the FCA’s preemption provisions, because it is “required” to adopt the FCC’s position (as AT&T reads that position). Brief at 5. AT&T’s statement of law was rejected by the Supreme Court in a case involving the FCC in language that directly applies to AT&T’s theory here:

[A] federal agency may preempt state law only when and if it is acting within the scope of its congressionally delegated authority. This is true for at least two reasons. First, an agency literally has no power to act, let alone pre-empt the validly enacted legislation of a sovereign State, unless and until Congress confers power upon it. Second, 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. Section 152(b) constitutes, as we have explained above, a congressional denial of power to the FCC to require state commissions to follow depreciation practices for intrastate rate-making purposes. Thus, we simply cannot accept an argument that the FCC may nevertheless take action which it thinks will best effectuate a federal policy. An agency may not confer power upon itself. To permit an agency to expand its power in the fact of a congressional limitation on its jurisdiction would be to grant to the agency power to override Congress. This we are both unwilling and unable to do.

Louisiana Public Service Comm’n v. FCC, 476 U.S. 355, 374 (1986). Even if the FCC had said what AT&T claims it said, let there be no more talk about how this Court is “required” not to look at the statute because of such statements. Courts can and do sometimes find that federal statutes do not preempt state law even where the Government argues in support of preemption.

            C.        There is No Field Preemption Here

            “Field preemption” is “where the scheme of federal regulation is so pervasive as to make reasonable the inference that Congress left no room for the States to supplement it . . . .” Fireman’s Fund Ins. Co. v. City of Lodi, 2001 WL 1416545 *14 (9^th Cir. Oct. 30, 2001). It is flatly impossible to claim that the FCA preempts the field, when even AT&T acknowledges that state regulation of contract formation is preserved. Moreover, given the presence of the Savings Clause in § 253 of the FCA, field preemption is foreclosed. In the Lodi case, for example, the Ninth Circuit noted that there is no “field preemption” with CERCLA because there are “savings clauses to preserve the ability of states to regulate in the field. . . .”

            D.        AT&T’s Position Contradicts Its Own Approach in Other Cases

            Attached to the Declaration of James Sturdevant, Exhibit 1 hereto, is the December 1997 Recommended Ruling on Defendants’ Motions in AT&T v. Southern New England Telephone Co./MCI Telecommunications Corp. v. Southern New England Telephone Company, of United States Magistrate Judge Garfinkel, dated December 8, 1997. Plaintiffs request that this Court take judicial notice of this opinion. In that case, as the Recommended Ruling makes clear, AT&T sued Southern New England Telephone (“SNET”) for alleged violations of the Connecticut Unfair Trade Practices Act, and brought no claims under the FCA. Recommended Ruling at 6, n.3. The lengthy opinion traces reasons why SNET’s arguments of FCA preemption did not defeat AT&T’s claim under the state consumer protection statute, and in adopting AT&T’s position in the case pursued an analysis that is very similar to plaintiffs’ approach here, focusing heavily upon the FCA’s Savings Clauses for state law claims. To put it mildly, there is enormous tension between the position taken by AT&T in the SNET case and its position here.

            E.        It is Of No Consequence that an Individual’s Right to Participate in a Class Action May Be Waived Under Some Federal Statutes.

            AT&T cites to several cases holding that the Truth in Lending Act does not prohibit a contracts that foreclose class actions. This case is not about the proper interpretation of the provisions or the legislative intent underlying TILA, however, and the California Supreme Court has conclusively determined that arbitration clauses that prohibit class actions fall outside of the reasonable expectations of AT&T’s customers. Several other jurisdictions have reached similar conclusions with respect to state law conscionability challenges. See Powertel v. Bexley, 743 So. 2d 570 (Fla. Ct. App. 1999) (arbitration clause’s prohibition on class actions one factor in finding it to be unconscionable); In re Knepp, 229 B.R. 821 (N.D. Ala. 1999) (same).