American Bankers Ins. Group v. U.S.

• Decision Date: 10 May 2005
• Docket Number: No. 04-10720.,04-10720.
• Parties: AMERICAN BANKERS INSURANCE GROUP, Plaintiff-Appellant, v. UNITED STATES of America, Defendant-Appellee.
• Court: U.S. Court of Appeals — Eleventh Circuit

408 F.3d 1328

AMERICAN BANKERS INSURANCE GROUP, Plaintiff-Appellant, v. UNITED STATES of America, Defendant-Appellee.

No. 04-10720.

United States Court of Appeals, Eleventh Circuit.

May 10, 2005.

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Stephen J. Rosen, Henry D. Levine, Levine, Blaszak, Block & Boothby, LLP, Franklin G. Burt, Jorden Burt, LLP, Washington, DC, Farrokh Jhabvala, Jorden, Burt, Berenson & Johnson, LLP, Miami, FL, for Plaintiff-Appellant.

Teresa E. McLaughlin, Robert W. Metzler, Tax Div., Dept. of Justice, App. Sec., Washington, DC, for Defendant-Appellee.

David Isaacson, New York City, for Black Radio Network, Inc., Amicus Curiae.

Appeal from the United States District Court for the Southern District of Florida.

Before ANDERSON, DUBINA and BLACK, Circuit Judges.

DUBINA, Circuit Judge:

American Bankers Insurance Group, Inc. ("ABIG") appeals the district court's grant of summary judgment to the United States, finding the long distance telephone services ABIG purchased from AT&T subject to an excise tax under Internal Revenue Code § 4252(b)(1). For the reasons that follow, we reverse the district court's judgment and hold that the long distance telephone services at issue are not subject to taxation under § 4252(b)(1)¹ or § 4252(b)(2)².

I. BACKGROUND

A. Facts

Between October 1, 1998, and March 31, 2002, taxpayer, ABIG, purchased interstate international, and (in five states) intrastate long distance service from AT&T. ABIG paid a uniform toll rate for all interstate calls made within the United States, uniform toll rates for all intrastate long distance calls made within the five states in which it purchased service, and toll rates for international calls (other than calls to and from Mexico) that varied only according to which country the calls were being placed. AT&T collected federal excise taxes from ABIG on the services pursuant to § 4252(b)(1) of the Internal Revenue Code ("I.R.C."), and remitted the taxes collected to the Internal Revenue Service ("IRS").

Subsequently, ABIG filed claims with the IRS for a refund of $288,496.10, representing the federal excise taxes collected on services rendered between October 1, 1998, and September 30, 2001. ABIG later filed claims for an additional refund in the amount of $73,267.14 for the taxes on telephone calls placed between October 1, 2001, and March 31, 2002. ABIG sought the refunds, contending that the federal excise tax on long distance telephone calls does not apply to calls for which the rate does not vary based upon the distance of the call.

B. Procedural History

The IRS did not respond to either of ABIG's refund claims. ABIG then brought suit in the Southern District of Florida seeking a refund in the amount of $361,763.24 in communications excise taxes and interest. The parties filed cross-motions for summary judgment, and the district court ruled in favor of the government finding that the word "and" as used in § 4252(b)(1) is ambiguous and in the context of the statute means "or." According to the district court, the excise tax at issue applies to toll telephone service varying by distance or elapsed transmission time. ABIG then perfected this appeal.

II. ISSUE

Whether Internal Revenue Code § 4252(b)(1), defining "toll telephone service" as a service for which there is a "toll charge which varies in amount with the distance and elapsed transmission time" of each call, is applicable to a toll charge varying with elapsed transmission time, but not distance.

III. STANDARD OF REVIEW

This court reviews the district court's disposition of cross-motions for summary judgment de novo, applying the same legal standards used by the district court, viewing the evidence and all factual inferences therefrom in the light most favorable to the non-movant, and resolving all reasonable doubts about the facts in favor of the non-moving party. Gerling Global Reinsurance Corp. of America v. Gallagher, 267 F.3d 1228, 1233-34 (11th Cir.2001). Statutory interpretation is a question of law that we also review de novo. Smith v. BellSouth Telecomm., Inc., 273 F.3d 1303, 1305 (11th Cir.2001).

IV. DISCUSSION

A. The plain meaning of § 4252(b)(1)'s requirement that rates vary by "distance and elapsed transmission time" uses "and" conjunctively

1. The phrase is unambiguous

The IRS collects taxes for toll telephone service, defined as "(1) a telephonic quality communication for which (A) there is a toll charge which varies in amount with the distance and elapsed transmission time of each individual communication." 26 U.S.C. § 4252(b)(1)(A) (emphasis added). ABIG contends that the statutory language quoted above is unambiguous, requiring the word "and" in the phrase "distance and elapsed transmission time" to be interpreted according to its ordinary, natural meaning. Accordingly, ABIG asserts "and" is used conjunctively. ABIG urges that to be taxable toll telephone service under this provision, the toll service must vary by both distance and elapsed transmission time.

The government contends that the statute is ambiguous and does not plainly require variation by both time and distance. Contending that the word "and" can be read conjunctively or disjunctively, the government argues that the district court was correct in determining that Congress did not intend to use the conjunctive meaning of "and" in requiring under § 4252(b)(1) that taxable toll telephone service "var[y] in amount with the distance and elapsed transmission time."

In construing a statute, "[t]he preeminent canon of statutory interpretation requires us to `presume that [the] legislature says in a statute what it means and means in a statute what it says there.'" BedRoc Ltd., LLC v. United States, 541 U.S. 176, 183, 124 S.Ct. 1587, 1593, 158 L.Ed.2d 338 (2004) (second alteration in original) (quoting Connecticut Nat'l Bank v. Germain, 503 U.S. 249, 253-54, 112 S.Ct. 1146, 1149, 117 L.Ed.2d 391 (1992)). This inquiry requires the court to "begin[] with the statutory text, and end[] there as well if the text is unambiguous." Id. Furthermore, words are given their ordinary, plain meaning unless defined otherwise. Id. at 183, 124 S.Ct. at 1593-94; see also In re Paschen, 296 F.3d 1203, 1207 (11th Cir.2002). More specifically, unless the context dictates otherwise, the word "and" is presumed to be used in its ordinary sense, that is, conjunctively. Crooks v. Harrelson, 282 U.S. 55, 58, 51 S.Ct. 49, 50, 75 L.Ed. 156 (1930) (construing taxing statute and concluding that "nothing in the context or in other provisions of the statute . . . warrants the conclusion that the word `and' was used otherwise than in its ordinary sense [, conjunctively]; and to construe the clause [disjunctively,] would be to add a material element[,] and thereby to create, not to expound, a provision of law"); see also Bruce v. First Fed. Sav. and Loan Ass'n of Conroe Inc., 837 F.2d 712, 715 (5th Cir.1988) ("The word `and' is therefore to be accepted for its conjunctive connotation rather than as a word interchangeable with `or' except where strict grammatical construction will frustrate clear legislative intent.") (citing, inter alia, Peacock v. Lubbock Compress Co., 252 F.2d 892, 893-95 (5th Cir.1958) (construing "and" in the phrase "an employer engaged in . . . the ginning and compressing of cotton" as meaning "or" because "it is an acknowledged undisputed fact . . . that compressing is an operation entirely removed from ginning and that the two are never carried on together.") (emphasis added)).

Here, there is nothing in the statutory context to suggest that "and" is used in the provision as meaning "or." The phrase is unambiguous. The plain meaning is clear: "and" is used conjunctively. See also America Online, Inc. v. United States, 64 Fed.Cl. 571, 577-78 (2005) ("Section 4252(b)(1) unambiguously requires that a toll charge vary in amount according to both the distance and duration of calls."); accord Honeywell Int'l, Inc. v. United States, 64 Fed.Cl. 188, 199 (Fed.Cl. 2005); Office Max, Inc. v. United States, 309 F.Supp.2d 984, 993 (N.D.Ohio 2004); Nat'l R.R. Passenger Corp. v. United States, 338 F.Supp.2d 22, 27 (D.D.C.2004); Fortis, Inc. v. United States, No. 03 Civ. 5137(JGK), 2004 WL 2085528, at *6 (S.D.N.Y. Sept. 16, 2004); Reese Bros., Inc. v. United States, No. 03-CV-745, 2004 WL 2901579, at *7 (W.D.Pa. November 30, 2004). The district court stated that even if it were to find the statute unambiguous, "this is one of the rare cases where the legislative intent is sufficiently clear that... the [c]ourt would still be entitled to rely on extrinsic evidence of Congressional intent." American Bankers Ins. Group, Inc. v. United States, 308 F.Supp.2d 1360, 1367 n. 7 (S.D.Fla.2004). We respectfully disagree with the district court's analysis. Where the statutory text is unambiguous the inquiry ends. BedRoc Ltd., LLC, 541 U.S. at 183, 124 S.Ct. at 1593. In fact, the statutory context supports the conjunctive use of "and" in § 4252(b)(1)'s requirement that the rate must vary "by distance and elapsed transmission time." Though resort to the legislative history is unnecessary, as we conclude the statute is unambiguous, we note the legislative history supports our conclusion.

In defining taxable "toll telephone service," both parties agree that Congress, through the Excise Tax Reduction Act of 1965, Pub. L. No. 89-44, § 302, 79 Stat. 136 ("1965 Act"), sought to define the method of service provided by AT&T, the company, at the time of enactment, holding a monopoly on all long-distance telephone services. Prior to the 1965 Act, "toll telephone service" was defined as "a telephone or radio telephone message or conversation for which (1) there is a toll charge, and (2) the charge is paid within the United States." Pub. L. No. 85-859, § 133(a), 72 Stat. 1275, 1290 (1958). In 1965, it appears Congress amended the definition to its current language in an effort to modify and update it "in order to reflect and to meet the changing...