WASHINGTON-The stakes are rising for next week’s expected ruling by the Supreme Court on whether to review Minnesota Attorney General Mike Hatch’s appeal of an 8th U.S. Circuit Court of Appeals decision striking down the state’s wireless consumer law on federal pre-emption grounds.
U.S. Solicitor General Paul Clement urged the high court not to take the case, but Hatch filed a supplemental brief arguing a review is justified because of division in the federal circuit on federal pre-emption as a result of the 11th Circuit’s rejection of the Federal Communication Commission’s truth-in-billing rules.
The four national carriers last week said Hatch misconstrued the 8th Circuit and 11th Circuit wireless federal pre-emption decisions. Cingular Wireless L.L.C., Verizon Wireless, Sprint Nextel Corp., T-Mobile USA Inc. and other cellular operators said because there is no conflict in the federal circuit, the Supreme Court is not obligated to take Hatch’s case.
While the mobile-phone industry tries to prevent the Hatch case from being resurrected-or worse, having the 8th Circuit ruling overturned by the Supreme Court-wireless carriers and the FCC are fighting to get the 11th Circuit’s truth-in-billing decision reversed.
Hatch wants reinstated a Minnesota law requiring wireless carriers to alert subscribers of changes to service contracts that could result in increased rates. Last December, the 8th Circuit overturned a U.S. district court ruling that had upheld Minnesota’s wireless consumer protection law. The 8th Circuit sided with the wireless industry in concluding the state statute amounted to rate regulation and therefore was pre-empted by federal law.
The Bush administration agrees.
“The decision of the court of appeals is correct. ? A state statute like Article 5 that freezes rates at their current level under existing contracts amounts to direct regulation of rates in contravention of” a 1993 law pre-empting states from regulating rates and market entry of commercial wireless carriers, Clement told the Supreme Court.
Clement also argued the 8th Circuit Hatch ruling does not conflict with the decision of any other court nor present an important question of federal law that warrants scrutiny of the Supreme Court. The Supreme Court invited Clement to intervene in June.
While largely shoving states to the side, the 1993 law does leave to states jurisdiction of “other terms and conditions” of commercial wireless service. Hatch, consumer groups and others have latched onto that reserve clause in billing, health and antenna-siting lawsuits against carriers.
Hatch hopes to bolster his chances for a Supreme Court review by calling attention to the 11th Circuit’s truth-in-billing ruling. The 11th Circuit last month vacated a 2005 FCC decision, which held states cannot regulate non-tax line items on wireless bills. The FCC ruling was part of a broader decision extending federal truth-in-billing regulations to wireless operators. The National Association of State Utility Consumer Advocates and the Vermont Public Service Board challenged the ruling in federal appeals court. Regulatory recovery fee charges are levied routinely by cellular operators to defray the cost of federal and state mandates such as local number portability, enhanced 911 and universal service. NASUCA asserted such charges are deceptive because they can come across to consumers looking like state and federal taxes. Operators insist regulatory recovery fees help consumers see precisely what they are paying for.
“The 11th Circuit decision creates a conflict in principle with the 8th Circuit decision in Cellco v. Hatch regarding the scope of states rights to regulate `other terms and conditions’ of wireless service,” stated Hatch in his latest Supreme Court brief. “This new decision creates an even more urgent need for the court to review and to determine the important federal pre-emption question presented by this petition.”
Carriers told the Supreme Court the 8th Circuit and 11th Circuit cases are apples and oranges.
“Although both decisions arise under” the 1993 law, “the type of state laws at issue in each case-and thus the results reached under the statute-are entirely different. Accordingly, as the solicitor general recently explained on behalf of the United States as amicus curiae, there is no circuit split here and the issuance of the 11th Circuit decision alters nothing,” said wireless carriers in their supplemental brief.
The court battles take on added weight, given the likelihood telecom reform legislation-which includes expanded wireless federal pre-emption-will not make it through Congress this year.
