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Sprint Communications Company, L.P. v. Lozier

United States Court of Appeals, Eighth Circuit

June 23, 2017

Sprint Communications Company, L.P. Plaintiff- Appellant
v.
Richard W. Lozier, Jr.;[1] Nick Wagner; Geri Huser, in their official capacities asmembers of the Iowa Utilities Board Defendants - Appellees
v.
Windstream Iowa Communications, Inc.; Office of Consumer Advocate Intervenor Defendants - Appellees

          Submitted: January 11, 2017

         Appeal from United States District Court for the Southern District of Iowa - Des Moines

          Before WOLLMAN, MURPHY, and COLLOTON, Circuit Judges.

          WOLLMAN, Circuit Judge.

         Having previously come before us on issues of abstention, Sprint Commc'ns Co. v. Jacobs, 690 F.3d 864 (8th Cir. 2012) (Sprint I), rev'd sub nom. Sprint Commc'ns, Inc. v. Jacobs, 134 S.Ct. 584 (2013), and issue preclusion, Sprint Commc'ns Co. v. Jacobs, 798 F.3d 705 (8th Cir. 2015) (Sprint II), this case now presents the question whether the Telecommunications Act of 1996 (Telecommunications Act or Act), preempts the Iowa Utilities Board's (Board's) authority to compel Sprint Communications Company, L.P. (Sprint) to pay intrastate access charges to Windstream Iowa Communications, Inc. (Windstream, formerly Iowa Telecom). On cross-motions for summary judgment, the district court[2]determined that the Act preserved the Board's authority and that Sprint thus was not entitled to declaratory or injunctive relief. It granted the Board's and Windstream's motions for summary judgment and denied Sprint's motion. We affirm.

         Years ago, Sprint partnered with MCC Telephony of Iowa, L.L.C. (Mediacom) to provide Voice over Internet Protocol (VoIP) voice telephony to Mediacom's customers. The VoIP calls at issue in this case were nonnomadic, intrastate longdistance calls-that is, the calling and the called parties were situated in fixed geographic locations in different exchanges in Iowa.

         The VoIP calls originated on Mediacom's cable network in Internet Protocol (IP) format. They were then routed to Sprint, which converted them from IP format to Time Division Multiplexing format for delivery on the Public Switched Telephone Network (PSTN). After Sprint converted the format, it delivered the calls to Windstream on exchange access trunks, over which Sprint routed long-distance calls. Windstream then connected the calls to end users. For years, Sprint paid Windstream intrastate access charges based on the rates set forth in the tariff that Windstream had submitted to the Board.

         Sprint adopted the position in 2009, however, that the calls were not subject to intrastate access charges, claiming that the Telecommunications Act preempted state regulation of VoIP traffic. Sprint discontinued paying the intrastate access charges to Windstream and also began withholding payment of other, undisputed amounts. Sprint explained that withholding such additional payments allowed it to recover the intrastate access charges that it erroneously had paid over the years. In response, Windstream threatened to discontinue access service to Sprint, which would block calls that Sprint routed to Windstream.

         Sprint filed a complaint with the Board, alleging that Sprint had properly disputed the intrastate access charges and that its decision to withhold payment was appropriate under Windstream's tariff. Sprint requested emergency relief to prevent Windstream from blocking calls. Windstream thereafter agreed to continue to provide access service to Sprint as long as Sprint remained current on newly billed intrastate access charges. Sprint then moved to withdraw its complaint, arguing that its claim was no longer ripe because Windstream's agreement to continue to provide access service granted Sprint the relief it had requested from the Board. The Board granted Sprint's motion to withdraw the complaint, but nonetheless decided to reach the merits of the underlying dispute, "i.e., whether VoIP calls are subject to intrastate regulation." Sprint Commc'ns, Inc., 134 S.Ct. at 589. Sprint argued that the Board lacked jurisdiction to decide the underlying dispute, which Sprint described as "whether it [was] proper for [Windstream] to charge traditional access charges on the traffic [that] originated as" VoIP traffic. The Board "disagreed, ruling that the intrastate fees applied to VoIP calls." Sprint Commc'ns, Inc., 134 S.Ct. at 589. The Board later denied Sprint's application for reconsideration.

         In April 2011, Sprint filed suit in federal district court against members of the Board in their official capacities, seeking a declaration that the Board's order compelling Sprint to pay intrastate access fees was contrary to federal law, as well as an injunction prohibiting the Board from enforcing its order. Sprint's complaint set forth one count, entitled "Preemption of State Regulation of Information Services." Sprint maintained that the disputed intrastate long-distance VoIP calls were "information services" under the Communications Act of 1934, as modified by the Telecommunications Act, and that the Communications Act preempted the authority of state utilities commissions to regulate information services. The district court permitted Windstream and the Iowa Office of Consumer Advocate to intervene and participate in the litigation.

         The same day it filed its federal complaint, Sprint also petitioned for review of the Board's order in Iowa state court. The federal district court initially abstained from exercising jurisdiction and dismissed the case without prejudice. On appeal, we affirmed the decision to abstain, but vacated the judgment of dismissal and remanded the case to the district court with instructions to enter a stay of proceedings. Sprint I, 690 F.3d at 869. The Supreme Court granted Sprint's petition for certiorari, concluded that abstention was inappropriate, and reversed our judgment. Sprint Commc'ns, Inc., 134 S.Ct. at 593-94. We thereafter vacated our panel opinion, again reversed the judgment of dismissal, and remanded the case to the district court for further proceedings. Sprint Commc'ns Co. v. Jacobs, 746 F.3d 850 (8th Cir. 2014).

         While the United States Supreme Court was considering the abstention question, the state trial court ruled on Sprint's petition for review of the Board's order. As relevant here, the state court rejected Sprint's argument that the Board lacked "jurisdiction to approve and enforce [the] tariff that permitted [Windstream] to charge Sprint . . . intrastate access charges on non-nomadic VoIP traffic." It affirmed the Board's order and later denied Sprint's motion for reconsideration.

         The state trial court issued its ruling in September 2013, well before the federal case was remanded to district court following our March 2014 order.[3] On remand, the district court gave preclusive effect to the state trial court's determination that federal law did not preempt state regulation of intrastate VoIP traffic and thus dismissed Sprint's federal complaint for failure to state a claim. We reversed and remanded, "conclud[ing] that Congress did not intend that issue-preclusion principles bar federal-court review of the issue involved here." Sprint II, 798 F.3d at 708. While we expressed no view on the merits of the case, we framed the issue as "whether the nonnomadic intrastate long-distance VoIP calls at issue are information services, payment for which should be governed by a reciprocal compensation agreement, or telecommunications services subject to state access charges." Id. On remand, the district court did not decide whether the calls were information services or telecommunications services. It determined instead that § 251(g) of the Telecommunications Act preserved state authority to regulate the VoIP calls, regardless of their classification, and that the Act "did not preempt the state tariffs [under which] Sprint was charged." D. Ct. Order of Dec. 30, 2015, at 13.

         Sprint argues that the district court erred in declining to classify the nonnomadic, intrastate long-distance VoIP calls as information services or telecommunications services. According to Sprint, our articulation of the issue presented was essential to the holding in Sprint II and thus constituted the law of the case. Sprint contends that "the upshot of the binding formulation that this Court provided . . . was that, if the calls at issue were . . . information service[s], " the Act's reciprocal ...


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