Sprint Commc'ns Co. v. Jacobs
| Decision Date | 14 August 2015 |
| Docket Number | No. 14–3109.,14–3109. |
| Citation | 798 F.3d 705 |
| Parties | SPRINT COMMUNICATIONS COMPANY, L.P., Plaintiff–Appellant v. Elizabeth S. JACOBS; Geri D. Huser;Nick Wagner, in their official capacities as members of the Iowa Utilities Board, Defendants–Appellees v. Windstream Iowa Communications, Inc. ; Office of Consumer Advocate, Intervenor Defendants–Appellees. |
| Court | U.S. Court of Appeals — Eighth Circuit |
Timothy J. Simeone, argued, Washington, DC (Christopher J. Wright, Timothy J. Simeone, Mark Daniel Davis, Washington, DC., Bret A. Dublinske, Des Moines, IA., on the briefs), for appellant.
Gregory Jon Vogt, argued, Black Mountain, NC (Gregory Jon Vogt, Black Mountain, NC., Andrew Anderson, Todd P. Langel, Des Moines, IA., on the briefs), for appellee Windstream Iowa Communications, Inc., (David Lynch, Mary Frances Whitman, Des Moines, IA., on the briefs), for appellees Elizabeth S. Jacobs, Ms. Sheila K. Tipton and Nick Wagner, (Mark R. Schuling, Des Moines, IA., on the brief), for Office of Consumer Advocate.
Before WOLLMAN, SMITH, and BENTON, Circuit Judges.
As explained below, this case is before us yet again, with the present proceeding being an appeal by Sprint Communications Company, L.P. (Sprint) from the dismissal of its complaint against members of the Iowa Utilities Board (the Board). We reverse and remand for further proceedings.
Under the Telecommunications Act of 1996, local exchange carriers such as Windstream Iowa Communications, Inc. (Windstream) must connect calls made to their customers by the customers of national telecommunications companies such as Sprint. Prior to 2009, Sprint paid Windstream state access charges for connecting nonnomadic intrastate long-distance VoIP calls—that is, calls made by cable-telephone customers over the Internet in Iowa, delivered to Sprint for format conversion, and then transferred to Windstream for delivery to its telephone customers in Iowa. In 2009, Sprint began withholding payment of state access charges for these calls, claiming that VoIP calls were “information services” and that payment to Windstream thus should be governed by a reciprocal compensation agreement between the parties, not by state access charges. In response, Windstream threatened to block Sprint traffic from reaching Windstream's customers.
The dispute was presented to the Board for resolution. In February 2011, the Board found that the calls at issue were telecommunications services subject to state regulation, not information services, and ordered Sprint to pay Windstream all unpaid state access charges. Sprint petitioned for review of the Board's decision in Iowa state trial court. At the same time, Sprint brought an action in federal court against members of the Board,2 seeking to enjoin the Board's decision. The district court abstained because of the parallel state proceedings, a ruling that we affirmed in Sprint Communications Co. v. Jacobs, 690 F.3d 864 (8th Cir.2012), only to have our judgment reversed by the Supreme Court in Sprint Communications, Inc. v. Jacobs, ––– U.S. ––––, 134 S.Ct. 584, 187 L.Ed.2d 505 (2013). By the time the case returned to the district court following our remand order, the state trial court had upheld the Board's decision, including its determination that VoIP calls were not information services preempted from state regulation. The district court dismissed Sprint's complaint, holding that issue preclusion barred Sprint from raising the same arguments in federal court that the state trial court had already addressed.
Sprint appeals, arguing that although the elements of issue preclusion are met, we should not give preemptive effect to the state trial court's decision in this case. We review this issue of law de novo. See Hines v. Anderson, 547 F.3d 915, 920 (8th Cir.2008).
Sprint relies on Iowa Network Services, Inc. v. Qwest Corp., 363 F.3d 683, 690 (8th Cir.2004), in which we held that a decision by the Board interpreting the Telecommunications Act did not have preclusive effect in federal court. Here, the issue is whether preclusive effect should be given to a state-court decision, not that of the Board. Federal courts must accord state-court decisions “full faith and credit” under 28 U.S.C. § 1738, whereas the common law governs the preclusive effect of administrative decisions. See Astoria Fed. Sav. & Loan Ass'n v. Solimino, 501 U.S. 104, 107, 109, 111 S.Ct. 2166, 115 L.Ed.2d 96 (1991). None of the defendants argued in their briefs that this distinction mattered, however. Moreover, at oral argument, defense counsel expressly disclaimed any reliance on this distinction, arguing instead that the preclusive effect of a state-court decision under § 1738 is the same as that of an agency decision under the common law. We will thus assume—without deciding—that the Iowa Network Services framework applies here.
In Iowa Network Services, the parties disputed whether certain mobile calls were local calls or long-distance calls under the Telecommunications Act. 363 F.3d at 687. If the calls were local, the parties would be required to enter a reciprocal compensation agreement, which would govern payment for the calls; if the calls were long distance, payment for the calls would be governed by state access charges. Id. The Board determined that the calls at issue were local calls and that compensation should thus be governed by a reciprocal compensation agreement. Id. at 688–89. The local exchange carrier then filed a collection action in federal district court, seeking unpaid state access charges based on its argument that the calls were long distance. Id. at 689. The district court held that because the Board had already determined that the calls were local and not long distance, the claims were barred by res judicata. Id. at 689. We reversed. Id. at 685. We recognized that unreviewed state administrative decisions should be given preclusive effect unless Congress intended otherwise and held that “Congress intended to supplant the common law principles of claim preclusion when it enacted the [Telecommunications] Act, at least with respect to the issues here involved.” Id. at 690. We further recognized that “[f]ederal courts have the ultimate power to interpret provisions of the [Telecommunications] Act,” id. at 692, and that “if the federal courts believe a state commission is not regulating in accordance with federal policy they may bring it to heel,” id. at 693 (quoting AT & T Corp. v. Iowa Utils. Bd., 525 U.S. 366, 378 n. 6, 119 S.Ct. 721, 142 L.Ed.2d 835 (1999) ). We reasoned that by adopting the Telecommunications Act, “Congress greatly expanded the federal government's involvement in the telecommunications industry, even into areas ... that previously had been left to state regulation.” Id. at 690. We emphasized that the Board had determined that payment for the traffic should be governed by a reciprocal compensation agreement, the terms of which would eventually be subject to federal review (after the parties entered into a reciprocal compensation agreement and had it approved or rejected by the Board). Id. at...
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