Self v. Bellsouth Mobility, Inc.

• Decision Date: 30 October 2012
• Docket Number: No. 11–13998.,11–13998.
• Citation: 700 F.3d 453
• Court: U.S. Court of Appeals — Eleventh Circuit
• Parties: Martha SELF, an Individual, Plaintiff–Appellant, v. BELLSOUTH MOBILITY, INC., a Corporation, American Cellular Communications Corporation, Cingular Wireless, LLC, Defendants–Third Party Plaintiffs–Appellees, GTE Wireless Incorporated, a Corporation, et al., Defendants, AT&T Mobility, LLC, Defendant–Appellee, Federal Communications Commission, et al., Third Party Defendants.

700 F.3d 453

23 Fla. L. Weekly Fed. C 1638

Martha SELF, an Individual, Plaintiff–Appellant,

v.BELLSOUTH MOBILITY, INC., a Corporation, American Cellular Communications Corporation, Cingular Wireless, LLC, Defendants–Third Party Plaintiffs–Appellees,GTE Wireless Incorporated, a Corporation, et al., Defendants,AT&T Mobility, LLC, Defendant–Appellee,Federal Communications Commission, et al., Third Party Defendants.

No. 11–13998.

United States Court of Appeals,

Eleventh Circuit.

Oct. 30, 2012.

W. Cone Owen, Jr., William W. Smith, Smith & Alspaugh, PC, George M. Boles, Weaver & Boles, Birmingham, AL, Jack Lee Roberts, Jr., Turnbach, Warren, Roberts & Lloyd, PC, Gadsden, AL, for Plaintiff–Appellant.

Jeffrey Edward Holmes, Gilpin Givhan, PC, Birmingham, AL, for Defendants–Appellees.

Appeal from the United States District Court for the Northern District of Alabama.

Before TJOFLAT, CARNES and JORDAN, Circuit Judges.

CARNES, Circuit Judge:

Spurred on by Congress, the Federal Communications Commission issued an order requiring telecommunications carriers to make payments into a Universal Service Fund for subsidizing services for certain categories of consumers. The carriers' mandatory payments into the fund were calculated based on their interstate and intrastate revenues. The FCC allowed the carriers to recover the amount of their payments by charging their customers a monthly fee.

After the order went into effect and the carriers made payments into the fund and collected fees from their customers, a federal appeals court held that the FCC had exceeded its authority by including intrastate revenues in the calculation of the payments the carriers were required to make. The court did not decide what should be done about the money the carriers had already paid into the fund or about the fees the customers had already paid to the carriers. The FCC, however, issued orders determining that the court decision would not be applied retroactively and that there would be no refunds of the payments that the carriers had made. The question remains what should happen to the intrastate portion of the fees that the customers paid to reimburse the carriers for the payments they made to the fund. Are the customers entitled to a refund of any portion of the fees they paid the carriers even though the FCC has denied the carriers a refund of any portion of the payments the carriers made to the fund?

That is the motivating issue in this case, but it is not the specific question presented by this appeal. Instead, the question we have is whether the district court has subject matter jurisdiction to decide that issue. In answering that question, we are reminded of Justice Holmes' view about the comparative difficulty of deciding cases. He said that “when you walk up to the lion and lay hold the hide comes off and the same old donkey of a question of law is underneath.”¹ In our experience that view is not always accurate, but it is here. The best way for us to get the hide off the lion in this case is to summarize the applicable law, including the relevant FCC orders, before setting out the procedural history and facts. Be forewarned that there is a lot of hide.

I.

Congress passed the Telecommunications Act of 1996, Pub. L. No. 104–104, 110 Stat. 56, to ensure that all Americans have access to a baseline level of affordable telecommunications services. To help achieve that goal, the Act directs the FCC to create “specific, predictable and sufficient Federal and State mechanisms to preserve and advance universal service.” 47 U.S.C. § 254(b)(5). The Act also lists several “[u]niversal service principles” that the FCC must follow when creating those federal and state mechanisms. Id. § 254(b). One principle is that telecommunications services should be available to consumers “in all regions of the Nation, including low-income consumers and those in rural, insular, and high cost areas.” Id. § 254(b)(3). Another principle is that “schools and classrooms, health care providers, and libraries should have access to advanced telecommunications services.” Id. § 254(b)(6).

The Act does not allocate any funds to finance the FCC's creation and administration of the “universal service support mechanisms.” Id. § 254(a)(1); see also id. § 254(d). Instead, it provides that all interstate telecommunications carriers “shall contribute, on an equitable and nondiscriminatory basis, to the ... mechanisms established by the [FCC] to preserve and advance universal service.” Id. § 254(d). In other words, carriers must fund any universal service support mechanisms that the FCC creates under its § 254(b) authority.

The FCC implemented the Act's universal service requirements by issuing a “Universal Service Order” in May 1997. In re Fed.–State Joint Bd. on Universal Serv., 12 FCC Rcd. 8776, 1997 WL 236383 (1997) [hereinafter “Universal Service Order”], aff'd in part and rev'd in part by Tex. Office of Pub. Util. Counsel v. FCC, 183 F.3d 393 (5th Cir.1999). That order created “universal service support mechanisms” for four different categories of need: high-cost areas, low-income consumers, rural healthcare providers, and schools and libraries. Id. at 8787, 8792–97. All four categories of support were financed through a Universal Service Fund (“USF”), which was in turn funded by mandatory contributions from interstate telecommunications carriers. Id. at 8797; see also id. at 8780–81. The contributions used to finance the high-cost and the low-income support mechanisms were based solely on the carriers' interstate revenues. Id. at 9201; see also id. at 9198. The contributions used to support schools, libraries, and rural healthcare providers, however, were based in part on the carriers' intrastate revenues. Id. at 9203–05; cf. id. at 9192 (“[T]he Commission has jurisdiction to assess contributions for the universal service support mechanisms from intrastate as well as interstate revenues ....”).

The Universal Service Order authorized carriers to recover their mandatory USF contributions from certain customers. Id. at 9198–99. Specifically, the order stated that “carriers will be permitted, but not required, to pass through their contributions to their interstate access and interexchange customers.” Id. at 9199 (emphasis added). It seems odd to describe the carriers as “pass[ing] through their contributions” by requiring customers to pay them, but such is FCC-speak. The Universal Service Order did not specify how the carriers should pass through their USF contributions if they chose to do so (which, of course, they did). The order did provide that any passing through had to be done “in an equitable and nondiscriminatory fashion.” Id. at 9209; see also id. at 9199. Carriers started making their mandatory USF contributions and passing them through to customers on January 1, 1998. Id. at 8813.

In later orders, the FCC appointed the Universal Service Administrative Company to administer all universal service program activities. See, e.g., In re Changes to the Bd. of Directors of the Nat'l Exch. Carrier Ass'n Inc., 12 FCC Rcd. 18400, 18407, 18415, 1997 WL 408266 (1997); see also47 C.F.R. § 54.701(a). That company is responsible for, among other things, “billing [carriers], collecting contributions to the universal service support mechanisms, and disbursing universal service support funds.” 47 C.F.R. § 54.702(b).

After the FCC issued the Universal Service Order, several carriers challenged it by filing petitions for review in various federal courts of appeals. See generally28 U.S.C. § 2344 (“Any party aggrieved by [a] final order [of the FCC] may, within 60 days after its entry, file a petition to review the order in the court of appeals wherein venue lies.”). The Judicial Panel on Multidistrict Litigation consolidated those challenges in the Fifth Circuit, which resolved all of them in Texas Office of Public Utility Counsel v. FCC, 183 F.3d 393 (5th Cir.1999).

The Texas Office decision resolved a number of issues about the legality of different parts of the Universal Service Order, but only one of the rulings is relevant here. The Fifth Circuit decided that the FCC had “exceeded its jurisdictional authority when it assessed contributions ... based on the combined intrastate and interstate revenues of interstate telecommunications providers.” Id. at 409. The Court reasoned that, because the FCC has no jurisdiction to regulate intrastate telecommunications matters, it could not calculate carriers' USF contributions based on a percentage of their intrastate revenues. See id. at 447–48. For that reason, the Court “reverse [d] that portion of the [Universal Service] Order that includes intrastate revenues in the calculation of universal service contributions.” Id. at 448;see also id. at 449 (“[We] deny the FCC jurisdiction over ... universal service contributions based on intrastate revenues.”).

That is what the Fifth Circuit decided in Texas Office, but equally important for our purposes is what the Court did not decide in that case. The Court did not decide the legality of those parts of the Universal Service Order that allowed carriers to pass through their USF contributions to customers. Nor did the Court decide whether the Universal Service Administrative Company must refund the intrastate-revenue-based USF contributions it had already collected from carriers. Neither of those issues was before the Court.

The Fifth Circuit released its Texas Office decision on July 30, 1999, with the mandate scheduled to issue on September 20, 1999. See In re Fed.–State Joint Bd. on Universal Serv., 15 FCC Rcd. 1679, 1685, 1999 WL 809713 (1999) [hereinafter “Fifth Circuit Remand Order”]. Before the mandate issued, the FCC moved for a stay of proceedings, which the Court granted in part by ordering that its mandate would issue on November 1, 1999. Id. Until that date, the FCC, via the Universal Service Administrative Company, continued to collect some of the USF contributions from...