Qwest Corp. v. City of Surprise
| Decision Date | 13 January 2006 |
| Docket Number | No. 04-16940.,04-16940. |
| Citation | 434 F.3d 1176 |
| Parties | QWEST CORPORATION, Plaintiff-Appellant, v. CITY OF SURPRISE, a municipal corporation, Defendant, and City of Tucson, Arizona, a municipal corporation; City of Globe, Arizona, a municipal corporation; City of Miami, Arizona, a municipal corporation; City of Nogales, Arizona, a municipal corporation, Defendants-Appellees. |
| Court | U.S. Court of Appeals — Ninth Circuit |
David R. Goodnight, Stoel Rives LLP, Seattle, WA, for the plaintiff-appellant.
John H. Ridge, Stoel Rives LLP, Seattle, WA, for the plaintiff-appellant.
Joseph Van Eaton, Miller & Van Eaton, PLLC, Washington, DC, Kenneth A. Brunetti, Miller & Van Eaton, LLP, San Francisco, CA, for defendants-appellees the City of Tucson.
Thomas K. Irvine, Irvine Law Firm, PA, Phoenix, AZ, for defendants-appellees Cities of Nogales, Miami and Globe.
Before: TROTT, NELSON, and PAEZ, Circuit Judges.
OVERVIEW
Qwest Corporation (Qwest) appeals the district court's grant of summary judgment in favor of City of Tucson, City of Miami, City of Globe, and City of Nogales (collectively "the Cities"). Qwest contends that the Cities' telecommunications licensing and franchise ordinances are preempted by § 253 of the Federal Telecommunications Act of 1996(the FTA). Qwest argues also that the Cities charge an improper rental fee for use of the Cities' rights-of-way. We have jurisdiction pursuant to 28 U.S.C. § 1291, and we disagree with Qwest. The Cities' subsequent amendments to the ordinances exempt Qwest from the licensing and franchise ordinances, rendering moot Qwest's claims challenging these ordinances. Additionally, the charges that the Cities impose upon Qwest are taxes, not fees, so the Tax Injunction Act deprived the district court of jurisdiction to consider their validity.
Qwest provides communication services to residents in the Cities. Qwest, in conjunction with its predecessors-in-interest has provided telecommunications services throughout Arizona since prior to Arizona's statehood. In January 2002, Qwest filed an amended complaint alleging that the Cities were charging unlawful fees and imposing unlawful requirements on Qwest for use of the Cities' rights-of-way.
The Cities charge Qwest for operating in their respective cities. The Cities' ordinances imposing this charge are not identical, but they are substantially similar.1 The amount of the charge is determined as a percentage of Qwest's gross revenues and is as low as 2% and as high as 5%. Globe imposes the charge on all telecommunications providers, but Miami and Nogales charge only those telecommunications providers using their rights-of-way. Tucson imposes a 2% charge on all telecommunications providers, but charges an additional 1.5% for rights-of-way users. Only Tucson's ordinance is telecommunications specific; the other cities' ordinances apply to all public utility companies. Each of the Cities deposits the revenues into its general fund, and none of the funds are ear-marked for expenses related to the rights-of-way.
In addition to these charges, the Cities' ordinances require that certain telecommunications providers obtain licenses and franchises before operating within the Cities. Qwest has always maintained that these licensing and franchise requirements do not apply to it because it operates pursuant to a grant of territorial franchise, which Qwest claims it received by operating in Arizona before it became a state.
In 1997, Arizona enacted a statute exempting telecommunications providers operating pursuant to a territorial franchise from local licensing and franchise requirements. Ariz.Rev.Stat. Ann. § 9-582(E). Despite the Arizona statute, the Cities' licensing and franchise ordinances remained unchanged and continued to apply to Qwest when it filed this action. Although the ordinances applied to Qwest, the Cities never enforced them against Qwest.
After Qwest commenced this action, the Cities enacted new ordinances exempting from their respective licensing and franchise requirements telecommunications providers operating under a claim of territorial franchise. For example, Tucson's ordinance reads,
Section 7B-37. Exemption for pre-statehood telecommunications providers.
The provisions of this chapter 7B shall not apply to any telecommunications provider in connection with the provision of wireline local exchange services who is providing, and with its predecessors-in-interest has been continuously providing, local exchange service within the city since prior to February 14, 1912, under a claim of a territorial franchise.
These new ordinances brought the Cities' ordinances in line with state law.
After a series of motions for summary judgment, the district court entered judgment in favor of the Cities on all claims. The court concluded that the Cities' charges were taxes and therefore saved from preemption by § 601 of the FTA. The court also dismissed Qwest's claims challenging Tucson's licensing and franchise requirements as moot because it found Qwest not subject to those ordinances. In a separate order, the district court dismissed Qwest's claims against Globe, Nogales, and Miami, concluding the claims were not ripe for review. The court noted it could also have dismissed these claims as moot. After dismissing Qwest's underlying claims as moot or not ripe, the district court dismissed as moot Qwest's § 1983 claim for damages. Qwest appeals these rulings.
The district court's grant of summary judgment is reviewed de novo, San Jose Christian Coll. v. Morgan Hill, 360 F.3d 1024, 1029 (9th Cir.2004), and may be affirmed on any ground supported by the record. Id. at 1030. Mootness and ripeness are questions of law also reviewed de novo. Foster v. Carson, 347 F.3d 742, 745 (9th Cir.2003) (mootness); Chang v. United States, 327 F.3d 911, 921 (9th Cir.2003) (ripeness).
Qwest asserts two main arguments to prove that its § 253 preemption arguments are not moot. First, Qwest argues that the Cities' ordinances excluding Qwest from the licensing and franchise requirements are invalid under Arizona state law because they constitute special legislation. If Qwest is correct, its challenge to the licensing and franchise requirements would not be moot because it would be subject to those requirements. Second, Qwest argues its claims are not moot because Qwest still faces a real threat of future liability under the ordinances if its territorial franchise is adjudged invalid. We are persuaded by neither argument.
Qwest argues that the Cities' new ordinances granting the exemption from the licensing and franchise requirements violate the Arizona constitutional prohibition against special legislation. Qwest, however, lacks standing to challenge the enactment of the ordinances because it suffered no injury in fact. A party must have standing as determined by federal law when litigating in federal court, even if the party is challenging a state law. See Lee v. Am. Nat. Ins. Co., 260 F.3d 997, 1001-02 (9th Cir.2001). The first standing requirement is that the party suffered an injury in fact. Lujan v. Defenders of Wildlife, 504 U.S. 555, 560, 112 S.Ct. 2130, 119 L.Ed.2d 351 (1992). An injury in fact is "an invasion of a legally protected interest which is (a) concrete and particularized, and (b) actual or imminent, not conjectural or hypothetical." Id. (quotation marks and citations omitted).
Here, the challenged ordinances exempt Qwest from the Cities' licensing and franchise requirements, which is a benefit not an injury. Qwest argues that the ordinances are discriminatory because telecommunications providers that do not qualify for the exemption must make burdensome disclosures. While this contention might be true, Qwest suffers no injury when its competitors are subjected to additional, costly requirements. During oral argument, Qwest admitted that the only harm Qwest suffered from the ordinances' enactment is that Qwest can no longer adjudicate the merits of its preemption claim, but the ordinances provide Qwest with the very benefit it seeks on the merits — relief from the licensing and franchise requirements. Because Qwest has not suffered an injury in fact, it lacks standing to challenge the validity of the Cities' new ordinances under Arizona law.
Qwest contends that the district court erred in dismissing its FTA claims against the Cities as moot or not ripe. Qwest admits it is currently not subject to the Cities' licensing and franchise ordinances because it falls within the exception created by section 7B-37, but argues it would become subject to the challenged ordinances if its territorial franchise were to be adjudged invalid by a future court. Although Nogales, Globe, and Miami stipulate to the validity of Qwest's territorial franchise, Tucson makes no such concession. Qwest therefore requests that we conclude that the Cities' licensing and franchise requirements are preempted by § 253(a) of the FTA to eliminate the possibility that Qwest would be subject to the ordinances in the future if somehow its territorial franchise were to be invalidated. Qwest expressly chose not to adjudicate the validity of its territorial franchise in this action.
"It is well settled that a defendant's voluntary cessation of a challenged practice does not deprive a federal court of its power to determine the legality of the practice." City of Mesquite v. Aladdin's Castle, Inc., 455 U.S. 283, 289, 102 S.Ct. 1070, 71 L.Ed.2d 152 (1982). "[I]n cases involving the amendment or repeal of a statute or ordinance, mootness is `a matter relating to the exercise rather than the existence of judicial power.'" Coral Constr. Co. v. King County, 941 F.2d 910, 927 (9th Cir.1991) (citations omitted). A court may...
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