City of Jefferson City, Mo. v. Cingular Wireless

• Decision Date: 03 July 2008
• Docket Number: No. 07-2884.,No. 07-2885.,07-2884.,07-2885.
• Citation: 531 F.3d 595
• Parties: CITY OF JEFFERSON CITY, MISSOURI, Plaintiff, City of Springfield, Missouri, Plaintiff/Appellee, v. CINGULAR WIRELESS LLC; Southwestern Bell Wireless, LLC, Defendants/Appellants, SBC Communications, Inc., Southwestern Bell Telephone, LP; Nextel West Corp.; Alltel Communications, Inc., Defendants. City of Jefferson City, Missouri, Plaintiff, City of Springfield, Missouri, Plaintiff/Appellee, v. Cingular Wireless LLC; SBC Communications, Inc; Southwestern Bell Wireless, LLC; Southwestern Bell Telephone, LP; Nextel West Corp., Defendants, Alltel Communications, Inc., Defendant/Appellant.
• Court: U.S. Court of Appeals — Eighth Circuit

531 F.3d 595

CITY OF JEFFERSON CITY, MISSOURI, Plaintiff, City of Springfield, Missouri, Plaintiff/Appellee, v. CINGULAR WIRELESS LLC; Southwestern Bell Wireless, LLC, Defendants/Appellants, SBC Communications, Inc., Southwestern Bell Telephone, LP; Nextel West Corp.; Alltel Communications, Inc., Defendants.

City of Jefferson City, Missouri, Plaintiff, City of Springfield, Missouri, Plaintiff/Appellee, v. Cingular Wireless LLC; SBC Communications, Inc; Southwestern Bell Wireless, LLC; Southwestern Bell Telephone, LP; Nextel West Corp., Defendants, Alltel Communications, Inc., Defendant/Appellant.

No. 07-2884.

No. 07-2885.

United States Court of Appeals, Eighth Circuit.

Submitted: March 12, 2008.

Filed: July 3, 2008.

Todd W. Ruskamp, argued, Kansas City, MO, Dana M. Mehrer and Elizabeth C. Burke, on the brief, Kansan City, MO, for Appellants Cingular Wireless LLC and Southwestern Bell Wireless LLC.

John E. Barry, argued, Washington, DC, Andrew G. McBride and Joshua S. Turner, on the brief, Washington DC, and James B. Deutsch, on the brief, Jefferson City, MO, for Appellant Alltel Communications.

Angela K. Drake, argued, Springfield, MO, John W. Housley and Nicole D. Lindsey, on the brief, Springfield, MO, for appellee.

Before WOLLMAN, HANSEN, and MELLOY, Circuit Judges.

WOLLMAN, Circuit Judge.

The issue before us is whether providing cell phone services¹ in the City of Springfield ("Springfield")² makes a company subject to a local tax ordinance on businesses who engage in "supplying telephones, and telecommunications and telephonic service, and telecommunications services, within the city."³ Springfield Code § 70-452 (2000). The district court⁴ granted Springfield's request for declaratory judgment and held that the defendants, Alltel Communications, Inc. ("Alltel"), Cingular Wireless LLC, and Southwestern Bell Wireless, LLC (Cingular and Southwestern Bell hereinafter referred to as "Cingular"), provide telephonic services within Springfield and are therefore subject to the tax. The district court dismissed Springfield's tax collection claim under Missouri's exclusive tax remedy doctrine because Springfield must follow its own tax assessment and collection procedures before bringing suit to collect the tax. Because we conclude that Springfield's request for a declaratory judgment on the issue of liability was properly before the district court and that a cell phone is a telephone and cell phone services are telephonic services for purposes of Springfield's tax ordinance, we affirm.

I. Background

Springfield has a long-standing ordinance that imposes a 6% tax on the gross receipts of any business that supplies telephone and telephonic service within Springfield. This ordinance was modified in 2000 as part of a recodification that changed section numbers, clarified existing language, and made the code electronically searchable. The 2000 recodification of the tax ordinance added "telecommunications" and "telecommunications services" to the existing language in the ordinance. Springfield Code § 70-452.

In 2004, Springfield sent a demand letter to cell phone companies that did business within Springfield requesting payment of the tax for the past five years and indicating that if no action was taken, Springfield would pursue legal remedies.⁵ The defendants did not comply, and Springfield brought this suit in federal district court to collect the past-due taxes.

Springfield's complaint sought collection of the tax owed. Springfield filed a motion for summary judgment on the issue of whether the defendants were liable to pay the tax, which the district court and the parties treated as a request for a declaratory judgment on the issue of liability. The defendants argued that they provide "Commercial Mobile Radio Service" ("CMRS"), and therefore the tax does not apply to them. The defendants also challenged the validity of the ordinance. On June 9, 2005, the district court held that the term "telephone" in the tax ordinance encompasses CMRS and that the defendants offer these services within Springfield and are therefore subject to the tax. City of Jefferson v. Cingular Wireless, LLC, No. 04-4099, 2005 WL 1384062 (W.D. Mo. June 9, 2005) (City of Jefferson I) (order granting plaintiffs' motion for partial summary judgment). The district court did not reach the issue of whether the 2000 modification of the ordinance violated the Hancock Amendment to the Missouri Constitution because it concluded that the issue in the case involved the language in the ordinance that existed before 2000. The district court did not rule on the amount of tax owed.

On August 21, 2006, Alltel filed a motion to dismiss for lack of subject matter jurisdiction or, in the alternative, that the district court abstain from deciding the case. On October 17, 2006, the district court denied the motion to dismiss on the legal issue of liability, but dismissed Springfield's claim for tax collection without prejudice, concluding that because Springfield had an exclusive administrative remedy for tax assessment and collection, it was required to follow that procedure. City of Jefferson v. Cingular Wireless, LLC, No. 04-4099, 2006 WL 2987678 (W.D.Mo. Oct.17, 2006) (City of Jefferson II) (order dismissing Springfield's tax collection claim without prejudice). On Alltel's motion for reconsideration, the district court declined to vacate its June 9, 2005, order and held that the defendants were liable to pay the tax. City of Jefferson v. Cingular Wireless, LLC, No. 04-4099, 2006 WL 3937243 (W.D.Mo. Dec.20, 2006) (City of Jefferson III) (order declining to vacate or amend City of Jefferson I and City of Jefferson II).

Alltel then argued that it had not been given a fair opportunity to litigate the propriety of the request for declaratory judgment. The district court vacated City of Jefferson I and City of Jefferson II and allowed Springfield to amend its complaint to add a claim for declaratory judgment on the issue of liability.⁶ Count I of the second amended complaint requested past-due taxes from the defendants. Count III sought a declaratory judgment that the tax ordinance applies to the defendants. Alltel filed a motion to dismiss the second amended complaint. On July 3, 2007, the district court dismissed Count I without prejudice as to all defendants and denied the motion to dismiss Count III. City of Jefferson v. Cingular Wireless, LLC, No. 04-4099, 2007 WL 1965572 (W.D.Mo. July 3, 2007) (City of Jefferson IV) (order nunc pro tunc dismissing without prejudice Springfield's tax collection claim).

Also on July 3, 2007, the district court entered another order, which held that the tax is enforceable against the defendants because it applies to cell phone services provided within Springfield. City of Jefferson v. Cingular Wireless, LLC, No. 04-04099, 2007 WL 1965572 (W.D.Mo. July 3, 2007) (City of Jefferson V) (order nunc pro tunc granting Springfield's motion for summary judgment). Accordingly, the district court granted Springfield's motion for summary judgment on the issue of liability. The district court noted that the amount of tax owed is a fact-intensive inquiry that must be resolved through Springfield's administrative process, and it thus dismissed Springfield's request for monetary damages.

II. Jurisdiction, Exhaustion, and Abstention

Alltel asserts that the district court lacked subject matter jurisdiction under Missouri's exclusive tax remedy doctrine and exhaustion doctrine, that the constitutional justiciability requirements of ripeness and standing were not met, that Springfield failed to state a claim, and that even if the district court had jurisdiction, it should have abstained.

Our resolution of this case requires us to interpret Missouri law.

We review the district court's interpretation of state law de novo. We are bound by the decisions of the Supreme Court of Missouri in interpreting Missouri law. Because the Supreme Court of Missouri has not yet addressed this precise issue, we must determine what that court would probably hold if it were called upon the decide the issue. In making this determination a federal court may consider relevant state precedents, analogous decisions, considered dicta, scholarly works, and any other reliable data tending convincingly to show how the highest court in the state would decide the issue.

Missouri v. City of Glasgow, 152 F.3d 802, 805-06 (8th Cir.1998) (internal citations and quotation omitted). We review de novo questions of federal subject matter jurisdiction and the district court's disposition of a motion to dismiss. Canady v. Allstate Ins. Co., 282 F.3d 1005, 1012 (8th Cir.2002) (discussing subject matter jurisdiction); Breedlove v. Earthgrains Baking Cos., Inc., 140 F.3d 797, 798-99 (8th Cir. 1998) (on a motion to dismiss, "[a] district court must accept the allegations contained in the complaint as true, and all reasonable inferences from the complaint must be drawn in favor of the nonmoving party" (internal citation omitted)). We review the district court's decision regarding whether to abstain for abuse of discretion. Aaron v. Target Corp., 357 F.3d 768, 774 (8th Cir.2004) ("the underlying legal determinations receive plenary review").

A. Subject Matter Jurisdiction

It is undisputed that the parties are diverse and that more than $75,000 is in controversy. Furthermore, we note that Cingular believes that the district court properly exercised its jurisdiction in this case. Alltel's argument that the district court did not have subject matter jurisdiction rests on the assertion that a Missouri state court would not have jurisdiction to hear this case under the Missouri exclusive tax remedy doctrine and the doctrine of administrative exhaustion, with the result that, pursuant to Erie R. Co. v. Tompkins, 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188 (1938), federal subject matter jurisdiction is lacking. Even if we assume, without deciding, that the exclusive tax remedy...