970 F.3d 1106
9th Cir.2020Background
- MetroPCS (a T‑Mobile subsidiary) sells prepaid wireless plans in California; federal law requires carriers to contribute to the Universal Service Fund on revenues attributable to interstate traffic.
- The FCC allows three methods for wireless/VoIP providers to apportion interstate vs. intrastate revenue for federal contribution purposes: actual revenue data, traffic studies, or an FCC safe‑harbor percentage.
- California’s 2014 Prepaid Mobile Telephony Services Surcharge Collection Act (the Prepaid Act) and CPUC implementing resolutions required prepaid providers (but not postpaid providers) to use a uniform intrastate allocation factor (e.g., 72.75% for 2017, 69.45% for 2018) to calculate intrastate revenue subject to state surcharges.
- MetroPCS sued, arguing the CPUC resolutions (and, as construed, the Prepaid Act) were preempted by federal law because the methodology could cause double assessment and violate the FCC’s competitive‑neutrality principle; the district court granted MetroPCS summary judgment.
- The Prepaid Act expired by its terms on Jan. 1, 2020; the Ninth Circuit held the case was not moot (CPUC could still seek enforcement/liability) and reversed the district court, concluding the CPUC resolutions are not facially preempted and remanding remaining, fact‑dependent claims.
Issues
| Issue | Plaintiff's Argument (MetroPCS) | Defendant's Argument (CPUC) | Held |
|---|---|---|---|
| Mootness after the Prepaid Act expired | Expiration moots forward‑looking relief; case should be dismissed | CPUC may still enforce resolutions and seek liability for past noncompliance; case remains live | Not moot — reasonable possibility of enforcement/liability preserves jurisdiction |
| Facial preemption — do CPUC resolutions conflict with federal law (competitive neutrality/double assessment)? | Resolutions force prepaid providers to use CPUC factor (not FCC methods) causing double assessment and disadvantaging prepaid vs. postpaid carriers | Resolutions fall within state authority to collect intrastate surcharges and do not invariably cause impermissible double assessment | Reversed district court: resolutions are not facially preempted because MetroPCS failed to show every application would unfairly disadvantage prepaid providers |
| Existence of a freestanding federal “right” to use FCC methods for state surcharge purposes | FCC rulings require states to allow providers to treat the same revenues as intrastate for state purposes as they treat for federal purposes; so CPUC deprived carriers of that right | FCC language is tentative and does not clearly preempt state approaches; conflict must be shown concretely | Court rejects a freestanding right theory as a basis for facial preemption here; any double‑assessment issue is properly analyzed under competitive neutrality/conflict preemption |
| As‑applied challenges and other statutory/ methodological claims (e.g., Mobile Telecommunications Sourcing Act) | CPUC application to MetroPCS caused unlawful double assessment and mis‑sourcing | CPUC disputes and raises factual defenses | Remanded to district court for factual development; Ninth Circuit declines to resolve these claims in the first instance |
Key Cases Cited
- Rural Cellular Ass'n v. FCC, 588 F.3d 1095 (D.C. Cir. 2009) (background on universal service and competitive‑neutrality principle)
- Vonage Holdings Corp. v. FCC, 489 F.3d 1232 (D.C. Cir. 2007) (explaining allocation difficulties for wireless/VoIP providers)
- AT&T Corp. v. Pub. Util. Comm'n, 373 F.3d 641 (5th Cir. 2004) (state fee causing double assessment placed multijurisdictional carriers at competitive disadvantage)
- Qwest Corp. v. Ariz. Corp. Comm'n, 567 F.3d 1109 (9th Cir. 2009) (presumption against preemption may not apply where federal regulation historically dominated)
- Ting v. AT&T, 319 F.3d 1126 (9th Cir. 2003) (similar preemption/industry history principles)
- Jacobus v. Alaska, 338 F.3d 1095 (9th Cir. 2003) (mootness exception where enforcement/liability for past conduct remains)
- Decker v. Nw. Envtl. Def. Ctr., 568 U.S. 597 (2013) (possibility of liability can avoid mootness)
- United States v. Salerno, 481 U.S. 739 (1987) (standard for facial challenges)