CELLCO PARTNERSHIP, dоing business as Verizon Wireless; Verizon Wireless, doing business as Verizon Wireless, (VAW) L.L.C.; Duluth MSA, doing business as Verizon Wireless, Limited Partnership; Midwest Wireless Holdings, L.L.C.; Midwest Wireless Communications, L.L.C.; American Cellular Corporation; Rural Cellular Corporation, doing business as Cellular 2000; Sprint Spectrum L.P.; AT & T Wireless Services of Minnesota, Inc.; Voicestream Minneapolis, Inc.; T-Mobile USA, Inc., Appellants, v. Mike HATCH, in his official capacity as Attorney General of Minnesota and not as an individual, Appellee.
No. 04-3198
United States Court of Appeals, Eighth Circuit
Dec. 9, 2005
431 F.3d 1077
Submitted: May 11, 2005. Cellular Telecommunications & Internet Associatiоn; Federal Communications Commission, Amici on Behalf of Appellant. AARP; National Association of State Utility Consumer Advocates; National Association of Consumer Advocates, Amici on Behalf of Appellee.
v.
Mike HATCH, in his official capacity as Attorney General of Minnesota and not as an individual, Appellee.
Cellular Telecommunications & Internet Association; Federal Communications Commission, Amici on Behalf of Appellant,
AARP; National Association of State Utility Consumer Advocates; National Association of Consumer Advocates, Amici on Behalf of Appellee.
No. 04-3198.
United States Court of Appeals, Eighth Circuit.
Submitted: May 11, 2005.
Filed: Dec. 9, 2005.
Jacob M. Lewis, Minneapolis, MN, argued, for amici.
Brian Hans Sande, Asst. Atty. Gen., St. Paul, MN, argued, for aрpellee.
Before WOLLMAN, BYE, and COLLOTON, Circuit Judges.
COLLOTON, Circuit Judge.
Cellco Partnership and its co-appellants (collectively, “Cellco“) appeal from the district court‘s partial denial of their request for a preliminary injunction against implementation and enforcement of Minnesota
I.
On May 29, 2004, the Governor of Minnesota signed into law Article 5 of House File No. 2151, entitled “Wireless Consumer Protection.” Article 5 imposes several requirements on Cellco and other providers of wireless telecommunications services. The statute forbids the providers to implement changes in the terms and conditions of subscriber contracts that “could result” in increased rates or an extеnded contract term, unless they first obtain affirmative written or oral consent from the subscriber.
The district court first granted a temporary restraining order against enforcement of Article 5, ruling that Cellco had “shown an initial likelihood of success on at least a portion of [its] preemption argument.” (Add. at 24). On consideration of Cellco‘s request for a preliminary injunction, however, the court reached a different conclusion. The district court concluded that Cellco had not satisfied the standard for preliminary injunctions set forth in Dataphase Systems, Inc. v. C L Systems, Inc., 640 F.2d 109, 113 (8th Cir.1981) (en banc), with respect to its claim that Article 5 is preempted, except to the extent that Article 5 applied to Cellcо‘s attempts to pass along the costs of contributions to the Universal Service Fund pursuant to
Although the district court analyzed the preemption question under the “likelihood of success on the merits” prong of the tеst for granting preliminary injunctions, see Dataphase, 640 F.2d at 113, Cellco now proposes without objection from the State that there are only legal issues unresolved on appeal. Accordingly, we consider Cellco‘s motion as one for a permanent injunction. See Bank One v. Guttau, 190 F.3d 844, 847 (8th Cir.1999).
Cellco urges that Article 5 is expressly preempted by a federal statute,
[N]o State or local government shall have any authority to regulate the entry of or the rates charged by any commercial mobile service or any private mobile service, except that this paragraph shall not prohibit a State from regulating the other terms and conditions of commercial mobile services.
Section 332(c)(3) was added to the Communications Act in 1982, see An Act to amend the Communications Act of 1934, Pub. L. No. 97-259, § 120(a), 96 Stat. 1087, 1096 (1982), and its original preemption language provided that “[n]o State or local government shall have any authority to impose any rate or entry regulation upon any private land mobile service, exсept that nothing in this subsection may be construed to impair such jurisdiction with respect to common carrier stations in the mobile service.”
The legislative history of the 1993 amendment speaks only briefly and indirectly about the meaning of “rate” regulation. A report from the House Budget Committee elaborated on the meaning of “other terms and conditions,” which the statute distinguishes from the regulation of “rates” and “market entry“:
By “terms and conditions,” the Committee intends to include such matters as customer billing information and practices and billing disputes and other consumer protection matters; facilities siting issues (e.g., zoning); transfers of control; the bundling of services and equipment; and the requirement that carriers make capacity available on a wholesale basis or such other matters as fall within a state‘s lawful authority. This list is intended to be illustrative only and not meant to preclude other matters generally understood to fall under “terms and conditions.”
H.R.Rep. No. 103-111, at 261 (1993), reprinted in 1993 U.S.C.C.A.N. 378, 588.
As the agency charged with administering the Communications Act, see
In light of the legislative history classifying billing information, practices, and disputes as “other terms and conditions,” however, the FCC has concluded that “state law claims stemming from state contract or consumer fraud laws governing disclosure of rates and rate practices are not generally preempted under Section 332.” Id. at 19908. The FCC later clarified that while
Cellco focuses its preemption arguments primarily on subdivision 3 of the Minnesota statute. Subdivision 3 is entitled “Provider-initiated substantive change,” and it mandates that providers
must notify the customer in writing of any proposed substantive change in the contract between the provider and the customer 60 days beforе the change is proposed to take effect. The change only becomes effective if the customer opts in to the change by affirmatively accepting the change prior to the proposed effective date in writing or by oral authorization which is recorded by the provider and maintained for the duration of the contract period. If the customer does not affirmatively opt in to accept the proposed substantive change, then the original contract terms shall apply.
But even accepting the State‘s interpretation, under which rates may be changed as soon as a customer manifests assent, the statute still fixes rates for at least some customers to some degree. If even one customer declines to “opt in” to a provider‘s proposed rate increase, then the rate for that customer‘s service would be fixed for the term of the existing contract, often one or two years. Even assuming, arguendo (and contrary to our experience with human nature), that all consumers would willingly accept rate hikes when proposed, and thus “opt in” before the expiration of the 60-day period, subdivision 3 indisputably freezes rates for some period—at least until the cоnsumer manifests acceptance. The statute thus requires providers to maintain rates different from those that would be charged if the providers were left to follow the terms of their existing contracts, which typically allow an adjustment of rates after reasonable notice of fewer than 60 days. (J.A. at 146, 149).
The State argues that subdivision 3 is a consumer protection measure that “further[s] the underlying traditional requirements of contract law as a way to protect consumеr interests” by guarding consumers against unilateral contract changes. “Consumer protection matters,” it notes, were among the matters listed by the House Budget Committee as illustrative of “terms and conditions” that would be open to state regulation under
Subdivision 3, moreover, goes beyond traditional requirements of contract law, and thus falls outside the scope of the “neutral application of state contractual or consumer fraud laws,” which the FCC has said is permissible state regulation of wireless providers. This statute effectively voids the terms of contracts currently used by providers in one industry, and substitutes by statute a different contractual arrangement. The existing contracts exemplify an “opt-out” structure—that is, they permit the providers to effect rate increases upon reasonable notice to the customer, whose continued use of the service binds him to the new rate unless he affirmatively declines to accept the changes. (J.A. at 149). Subdivision 3 mandates an “opt-in” contract structure: the provider cannot increase rates unless the customer affirmatively accepts the changes. The State contends that the current structure used by the providers renders the contracts “illusory,” because it permits the prоviders “unilateral[ly]” to “change the contract‘s terms,” (Appellee‘s Br. at 33), but we are not convinced. There is no indication that “opt-out” contracts of the sort used by the providers are considered illusory under Minnesota‘s consumer protection statutes or its common law, and in fact, such contracts are generally accepted as legal and binding. See Iberia Credit Bureau, Inc. v. Cingular Wireless LLC, 379 F.3d 159, 173-74 (5th Cir.2004); cf. Pine River State Bank v. Mettille, 333 N.W.2d 622, 627 (Minn.1983) (declaring enforceable the acceptance, by continued performance, of modification in a unilateral contract for employment). Subdivision 3, therefore, cannot be deemed a “neutral application of state contractual or consumer fraud laws” that avoids the preemptive force of the federal statute. See Wireless Consumers Alliance, 15 F.C.C.R. at 17025-26. A waiting period on any proposed rate changes, whether it be for 60 days or some shorter period pending a customer‘s decision to “opt in,” has a clear and direct effect on rates. We thus conclude that subdivision 3 effectively regulates rates, and is preempted by
III.
There remains the question whether the other subdivisions of Article 5 may be enforced independent of subdivision 3. Whether one provision of a statute is severable from the remainder is a question of state law. Leavitt v. Jane L., 518 U.S. 137, 139 (1996). In Minnesota, the remaining provisions of a statute shall be valid, “unless the court finds the valid provisions of the law are so essentially and inseparably connected with, and so dependent upon, the void provisions that the court cannot presume the legislature would have enacted the remaining valid provisions without the void one,” or “unless the court finds the remaining valid provisions, standing alone, are incomplete and are incapable of being executed in accordance with the legislative intent.”
We believe that the remаining subdivisions of Article 5—a definitional section, a provision requiring wireless providers to furnish customers with a copy of written contracts, and a subdivision regulating “customer-initiated changes“—are connected with and dependent upon subdivision 3. The legislative history shows that subdivision 3 was the motivating force behind Article 5. The principal Senate sponsor, for example, explained that “the reason for the genesis of this bill ... is people in our area were contacting our lоcal representative ... and telling him that their contracts were being changed without their consent.” (J.A. 361).
The three substantive subdivisions were then conceived together as a unified effort to regulate certain practices of wireless telecommunications service providers. The requirement of subdivision 2 that providers furnish customers with a written copy of existing contracts serves as foundation for the later subdivisions, which require disclosure of proposed changes to those existing contracts. As the principal House sponsor explained, “keep in mind we are just doing two things: One) we want to verify in the records that the customer did agree to a contract in the first place and two) if a unilateral change is made in that contract by the provider, the customer is off the hook.” (J.A. 384). Subdivisions 3 and 4 work in tandem as requirements for consent and disclosure, depending on whether a change in contractual terms is “provider-initiated” or “customer-initiаted.”
The legislature recognized that the regulatory provisions would place a burden on the industry, and potentially would raise costs for consumers. The principal House sponsor remarked that depending on how the legislation was crafted, “[i]t could turn into something that ends up costing everybody more money and it does kind of complicate the whole process.” (J.A. 383). The legislature ultimately concluded that the expected benefits to the consumer outweighеd concerns about costs to providers and the system, but it enacted a two-year sunset provision, so, as one representative put it, “we can all reevaluate whether or not that is cumbersome or not, or if it works as well as many think it may work.” (J.A. 396; see also J.A. 387). “Provider-initiated” substantive changes were central to the development of Article 5, and we find it difficult to presume that the legislature would have enacted the two remaining substantive provisions standing alone, with their аttendant costs to the system, if it had been precluded at the outset from regulating in the area of principal concern and perceived benefit to consumers—that is, provider-initiated changes. It also bears noting that one senator active in the legislative process surrounding Article 5 commented on the “complexities of all the moving pieces” in the proposed legislation, and on the need to ensure that each of the “multiple moving pieсes” fit together in a final bill. (J.A. 394).
We conclude, therefore, that subdivisions 1, 2, and 4 are not severable from subdivision 3, and that Article 5 should be enjoined in its entirety. The remaining articles of House File No. 2151 operate independently, and they remain valid. This conclusion makes it unnecessary for us to consider Cellco‘s contentions that subdivisions 1, 2 and 4 of Article 5 are unconstitutionally vague, because the subdivisions fail to define such important statutory terms as “customer” and “disclosure,” and becаuse the statute defines “substantive change” indefinitely as any modification of contract that “could result”
*
For the foregoing reasons, we reverse the district court‘s partial denial of Cellco‘s request for a preliminary injunction and remand for entry of a permanent injunction against enforcement of Article 5.