The Supreme Court delayed a decision on whether to review a lower court’s pro-state pre-emption ruling, inviting the views of the U.S. solicitor general who previously signaled disinterest in pursuing an appeal.
Sprint Nextel Corp. and T-Mobile USA Inc. petitioned the high court to take the case. The 11th U.S. Circuit Court of Appeals last year overturned a provision in the Federal Communications Communication’s 2005 truth-in-billing decision that pre-empted states from regulating line-item charges on cellphone bills.
Not only did other national carriers, cellphone trade association CTIA and the FCC decide against joining Sprint Nextel and T-Mobile USA in further pursuing the case, U.S. Solicitor General Paul Clement first chose not to seek a high court appeals and later bypassed a chance to weigh in on the Supreme Court filing by the No. 3 and No. 4 mobile-phone carriers. In the past, Clement has supported cellular industry federal pre-emption arguments in consumer and health litigation.
Solicitor general invited
to comment
“We’re disappointed the court did not rule today,” said Patrick Pearlman, deputy consumer advocate of the West Virginia Public Service Commission on behalf of the National Association of State Utility Consumer Advocates. But, added Pearlman, “We think the solicitor general has indicated what his position is.”
The National Association of Regulatory Utility Commissioners joined NASUCA in defending the 11th Circuit ruling. “Obviously, the Supreme Court decision to require the solicitor general to weigh in is not a welcome development,” said Brad Ramsay, NARUC’S general counsel.
At the same time, Ramsay cautioned against reading the high court’s action as indicating it is leaning toward taking the pre-emption case. Ramsay said the case is not a good one for the FCC as the facts favor the states and the 11th Circuits decision is well written. Ramsay suggested at least one of the high court’s justices is interested in the case, though a case cannot go forward without affirmative backing from four justices.
Sprint Nextel and T-Mobile USA assert the 11th Circuit failed to give due deference to a 1993 law largely pre-empting states from regulating mobile-phone carriers. The same law reserves some oversight-specifically “terms and conditions”-to states.
“Rather than demonstrating a real and intolerable conflict among the circuits, or a conflict with this court’s prior rulings, the petition for review is based on petitioners’ claim that the 11th Circuit erred in vacating the FCC’s declaratory ruling. This is not a sufficient basis for review,” NASUCA and NARUC previously told the Supreme Court. “Recognizing this defect in their argument, petitioners seek to elevate the importance of the 11th Circuit’s decision by mischaracterizing its impact, both on wireless consumers and on the statutory schemed for regulating wireless telecommunications.”
At issue are fees itemized on cellular bills that seek to recover the cost of regulatory mandates and taxes imposed at the local, state and federal levels. Opponents of non-tax line items assert regulatory compliance is a cost of doing business that carriers should absorb and factor into pricing plans. Wireless operators contend line-item charges enable consumers to see precisely what they are paying for.
In an earlier filing, Sprint Nextel and T-Mobile USA warned the high court that the 11th Circuit’s decision “will encourage state and local governments to adopt and hide taxes on wireless service. That will increase the cost of wireless service as well as obstruct wireless carriers’ ability to offer national rate plans that collect taxes from subscribers in the taxing jurisdiction.”
Kentucky connection
Federal pre-emption is also at issue in a number of pending consumer, antenna siting and health-related lawsuit suits.
Sprint Nextel, T-Mobile USA, Verizon Wireless and AT&T Mobility sued the state of Kentucky on federal pre-emption grounds in 2005, challenging a Kentucky law prohibiting carriers from passing onto subscribers a 1.3% gross receipts wireless tax. The law was to have become effective Jan. 1, 2006, but was put on hold during the 11th Circuit litigation. The case was put back on track earlier this year, but the court again stayed the order due to other telecom lawsuits against the state based on claims other than federal pre-emption.
Last year, Senate Republicans unsuccessfully pushed a telecom reform bill that included expanded federal pre-emption in the wireless space. Neither telecom reform nor federal pre-emption is on the radar of Democratic-controlled Congress.
