712 F.3d 905
6th Cir.2013Background
- TracFone provides prepaid wireless service using third-party retailers and activated by TracFone; it remitted 911 fees in KY until 2003 and then stopped.
- KY CMRS Act of 1998 imposed a monthly fee and required CMRS providers to collect and remit the charges to the CMRS Board; the statute defined a CMRS provider as the end-user service provider, including resellers.
- The 1998 Act applies to prepaid providers, and TracFone was determined to be a CMRS provider under Kentucky law; the Act’s mandate to collect fees does not depend on a specific billing method.
- The 2006 Amendments added three collection options (A, B, C) for prepaid providers, with Option C allowing board-promulgated regulations; TracFone elected Option C but the Board did not promulgate regulations under C.
- TracFone ultimately selected Option B; the district court held TracFone liable for fees from the 2006 Amendments’ effective date, and awarded attorney’s fees to the Board but denied prejudgment interest.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the 1998 Act applies to prepaid providers | TracFone argues 1998 Act excludes prepaid providers | Board argues 1998 Act applies to all CMRS providers, including prepaid | Yes; 1998 Act applies to prepaid providers |
| Effect of the 2006 amendments and option choices on liability start date | TracFone only liable after Board permitted collection method under Option C | TracFone liable from the amendments’ effective date; Options A or B mandated | TracFone liable from the effective date; Options A/B required collection |
| Whether Option C was a valid selectable option for TracFone | Option C was a viable path if Board promulgated regulations | Option C was discretionary and not a concrete collection method absent regulations | Option C was not a valid actionable method; Board’s lack of promulgation did not excuse liability |
| Whether prejudgment interest was warranted on unliquidated fees | Unliquidated fees should accrue prejudgment interest | Interest discretionary; fees unliquidated | Prejudgment interest was not warranted; discretionary denial upheld |
Key Cases Cited
- Commonwealth of Ky CMRS Emergency Telecomms Bd. v. TracFone Wireless, 735 F. Supp. 2d 713 (W.D. Ky. 2010) (district court held 1998 Act applies to prepaid providers and liability from 2006 amendments’ effective date)
- Imwalle v. Reliance Med. Prods., Inc., 515 F.3d 531 (6th Cir. 2008) (abuse of discretion standard for attorneys’ fees)
- United States v. Simpson, 520 F.3d 531 (6th Cir. 2008) (statutory interpretation guidance in absence of controlling state precedent)
- Nucor Corp. v. Gen. Elec. Co., 812 S.W.2d 136 (Ky. 1991) (liquidated damages and prejudgment interest framework under Kentucky law)
- Popplewell’s Alligator Dock No. 1, Inc. v. Revenue Cabinet, 133 S.W.3d 456 (Ky. 2004) (statutory construction; read act as a whole)
- Commonwealth v. Derringer, 386 S.W.3d 123 (Ky. 2012) (statutory interpretation of Kentucky acts and purpose)