Should federal courts abstain from remedial actions—state administrative proceedings initiated by a private party—involving a federal question?
Sprint brought an action before the Iowa Utility Board to prevent Windstream, then called Iowa Telecom, from cutting off service to Sprint’s customers. After refusing Sprint’s request to cancel the hearing, the Board required Sprint to pay interstate access charges to Windstream. Sprint, thinking that the Iowa Utility Board did not have jurisdiction to make this determination, initiated suits in federal and state courts against Elizabeth S. Jacobs and other members of the Iowa Utility Board in their official capacity. In the federal suit, the district court granted the Board members’ abstention motion under Younger v. Harris—which requires a federal court to abstain from interfering with certain ongoing state judicial proceedings. The Eighth Circuit affirmed the abstention. The Supreme Court will clarify the difference between remedial and coercive actions, and determine whether Younger abstention applies to a federal suit when there is an ongoing remedial action in state court. The Court’s ruling implicates important issues of federalism including whether a party can seek federal judicial review of a state agency’s decision after the party voluntarily initiated the action.
Whether the Eighth Circuit erred by concluding, in conflict with decisions of nine other circuits and this Court, that Younger abstention is warranted not only when there is a related state proceeding that is "coercive" but also when there is a related state proceeding that is, instead, "remedial."
Petitioner Sprint Communications Company, L.P. (“Sprint”) connected Voice over Internet Protocol (“VoIP”) calls from Sprint’s to Windstream’s customers.Sprint Commc’n. Co., L.P. v. Jacobs, et al., 690 F.3d 864, 866 (8th Cir. 2012). Windstream billed Sprint intrastate access charges for these connections. See id. While it initially paid these charges, Sprint determined that these VoIP calls were an “information service” and not subject to intrastate charges. See id. Based on this determination, Sprint discontinued payments to Windstream and, in response, Windstream allegedly threatened to cut off service to Sprint’s customers. Brief for Petitioner, Sprint Communications Company, L.P, at 6. Sprint filed a complaint with the Iowa Utility Board (“IUB”) seeking a declaration that Sprint’s decision to withhold access charges was an appropriate measure. See id. Respondents, including Elizabeth S. Jacobs, work in an official capacity as IUB members.
After Windstream promised not to discontinue service if Sprint paid its bill, Sprint filed motions to withdraw its complaint and cancel the hearing with the IUB. See Sprint Commuc’ns Co. v. Iowa Telecommc’ns Servs., Docket No. FCU-2010-0001 (IA Util. Bd. Feb. 1, 2010) (order granting motion to withdraw, denying motion for clarification, canceling hearing, and revising procedural schedule). The IUB granted Sprint’s motion to withdraw the complaint, but denied the motion to cancel the hearing. See id. The IUB wanted to address the underlying dispute over intrastate access charges, which the parties acknowledge was likely to recur.Id. Sprint argued that the IUB lacked jurisdiction to decide that issue because only the Federal Communications Commission (“FCC”) has authority to classify VoIP traffic.Sprint Commc’n. Co., L.P. v. Jacobs, et al., 690 F.3d at 866. The IUB determined that it had jurisdiction and ruled that Sprint had to pay the access charges. Id.
Sprint sued in the United States District Court for the Southern District of Iowa seeking declarative and injunctive relief against the IUB.Sprint Commc’n. Co., L.P., 690 F.3d at 866. On the same day, Sprint sued in Iowa state court, seeking review of the IUB’s decision.Id. Sprint filed the state action, in part, because of a fear that if the federal court did not review the case, and the statute of limitations expired, Sprint might be left without a forum to try its case. Brief for Petitioner at 7-8.
The IUB filed a motion to dismiss the federal action on abstention grounds, claiming that the district court should refrain from hearing the case.Sprint Commc’n. Co., L.P., 690 F.3d at 866, 869. The district courtgranted the motion, concluding that Iowa had a substantial interest in regulating utilities inside the state, and dismissed the action. See id. Sprint appealed to the Eighth Circuit, arguing that abstention was inappropriate and, even if appropriate, that the district court should have stayed the case instead of dismissing it.Id. The Eighth Circuit agreed that Sprint had a right to challenge the IUB’s decision in federal court. See id. at 868-69. However, the court concluded that, under Younger v. Harris, abstention was appropriate given the ongoing state judicial proceeding, even if Sprint’s case was a remedial action (i.e., an action voluntarily brought by a private party). See id. at 868-69 (referencing Younger v. Harris, 401 U.S. 37 (1971)). The Eighth Circuit vacated the dismissal—because of the possibility that the parties would return to federal court—but affirmed the district court’s decision to abstain under Younger. Id. at 866, 869.
Sprint petitioned for a writ of certiorari on January 2, 2013.Brief for Petitioner at 2. The Supreme Court granted the petition on April 15, 2013 to decide whether Younger abstention applies to remedial actions. See id. at i, 2.
In this case, the Court will decide whether, under Younger v. Harris, a federal court can abstain—i.e., not exercise jurisdiction over a case—in a remedial action. Sprint contends that federal court abstention is inappropriate in a remedial action, especially one that involves only federal questions. See Brief for Petitioner at 29. Jacobs and the other IUB members (“IUB members”) argue that distinguishing coercive and remedial actions is improper and that, even if a distinction exists, the IUB’s proceeding was coercive, thus warranting affirmance of the Eighth Circuit’s decision. See Brief for Respondent, Elizabeth S. Jacobs, Nick Wagner, and Sheila K. Tipton, at 21, 29.
EFFECTS ON CUSTOMERS AND BUSINESSES
The CTIA—Wireless Association (“CTIA”), in support of Sprint, argues that federal judicial review of state proceedings assures uniform resolution of complex federal questions in the wireless communications industry. Brief of Amicus Curiae CTIA—The Wireless Association in Support of Petitioner. It points out that CTIA and its members regularly appear before state regulatory bodies and depend on the availability of federal judicial review to ensure a uniform and stable environment for their businesses. See id. at 19. In CTIA’s view, the uncertainty stemming from 50 states each ruling on federal regulatory questions would disrupt wireless communications companies’ ability to provide services, and could chill investments in new technology. See id. at 19, 36-37. CTIA worries that consumers might have to pay for the cost of this uncertainty with higher prices for services. See id. at 20.
On the other hand, the Iowa Office of Consumer Advocate (“IOCA”) argues that Iowa’s rural users, who often depend on long distance calls to seek medical assistance, among other things, are directly affected by carrier disputes and threats of discontinued service. See Brief of Amicus the Iowa Office of Consumer Advocate (“IOCA”) in Support of Respondent at 7. The IOCA contends that such disruptions endanger customers’ health and safety. See id. To guard against this scenario, a coalition of state legislatures argues that state courts should handle proceedings like disruptions of utilities services, which implicate local interests.Brief of Amici Curiae National Conference of State Legislatures, the Council of State Governments, and the International Municipal Lawyers Association (“NCSL, CSG, and IMLA”) in Support of Respondent at 14. In the view of Michigan and twenty-one other states, distinguishing coercive and remedial actions would upset the balance of power which has prevented federal courts from freely interfering with state proceedings involving local interests such as utilities. See Brief of Amici Curiae State of Michigan and 21 Other States in Support of Respondent at 26.
EFFECTS ON FEDERAL JUDICIAL REVIEW AND STATE INTERESTS
In support of Sprint, a group of law professors contends that permitting abstention in cases involving state interests would affect every federal challenge to state law. See Brief of Amici Curiae Law Professors in Support of Petitioner at 11-12. Without some limitations, the law professors contend, federal courts would regularly be forced to abstain from hearing preemption or constitutional challenges to state agency decisions that have a possibility of state judicial review.Id. at 19. Echoing this concern, the Chamber of Commerce believes there would be almost no state proceeding to which abstention would not apply if there is no distinction between coercive and remedial actions. See Brief of Amicus Curiae Chamber of Commerce of the United States of America (“Chamber of Commerce”) in Support of Petitioner at 12. As a result, theChamber fears that businesses would lose the protection of federal courts checking state regulators who violate federal law. See Brief of Chamber of Commerce at 17. Specifically, the Chamber argues that a business operating under state and federal regulation would lose its option of bringing suit in federal court. See id. at 20. Additionally, the Chamber contends, extending Younger abstention to remedial actions would force parties to litigate their federal claims in state courts even if their opponent used legal tactics such as filing a state administrative action. See id. at 22.
The IUB members’ supporters counter that a remedial/coercive distinction is unnecessary; specifically, that a framework without the distinction would not be so expansive as to swallow up the current limitations on Younger abstention. See Brief of NCSL, CSG, and IMLA at 8. The National Conference of State Legislators (“NCSL”), Council of State Governments (“CSG”), and International Municipal Lawyer Association (“IMLA”) believe that the federal government will be better off if states can manage their own interests and activities without federal interference. See id. at 6-7. The IUB members agree, arguing that comity between state and federal courts will ease potential tensions between the two court systems. Brief for Respondent at 11. Additionally, the NCSL, CSG, and IMLA suggest that a coercive/remedial distinction would undermine abstention by allowing parties to use clever pleadings and other legal tactics to circumvent it. See Brief of NCSL, CSG, and IMLA at 12. In their view, the coercive/remedial test would erode the abstention doctrine and diminish the importance of state interests. See id. at 15. According toMichigan and twenty-one other states, this test would yield absurd results where federal courts would abstain from minor coercive actions but interfere with remedial actions that involve important state interests. See Brief of State of Michigan and 21 Other States at 16. These interferences, the IUB members suggest, would be a waste of legal resources. See Brief for Respondent at 12.
Over the last century, the Supreme Court has developed various abstention doctrines where, as a matter of comity, federal courts would not hear cases involving state proceedings or state interests. See Brief for Petitioner at 19; see also Brief for Respondent at 10. One line of cases comes from Younger v. Harris, in which the Court held that federal courts should refrain from interfering with ongoing state criminal proceedings. See Brief for Petitioner at 22; see also Brief for Respondent at 10. Younger abstention was later expanded to include certain state civil proceedings as well. See Brief for Petitioner at 22. To decide whether a state civil proceeding warrants Younger abstention, a number of the circuits have adopted a requirement that the proceeding be a mandatory action brought by the state—also known as a coercive action. See id. at 29. An action brought voluntarily—also known as a remedial action—would not warrant Younger abstention under this coercive/remedial test. See id. at 29-30. The Eighth Circuit has not adopted this test, instead articulating that the coercive/remedial distinction should not be outcome-determinative of whether the proceeding should receive Younger abstention. Sprint Commc’n. Co., L.P. v. Jacobs, et al., 690 F.3d 868.
Here, the Court will determine the boundaries of the Younger v. Harris abstention doctrine —specifically, whether the doctrine is broad enough to restrict federal courts from interfering with all claims originating from state agency proceedings, or whether the doctrine should be read more narrowly to preserve federal courts’ obligation to review issues of federal law. See Brief for Petitioners at 14. Sprint argues that the federal courts’ fundamental role—deciding questions of federal law—requires that the district court hear the case. See id.The IUB members argue that while federal courts have a general obligation to decide cases properly before them, the Younger abstention doctrine is an exception to this general obligation. See Brief for Respondents at 10.
The Court will also likely settle whether the coercive/remedial distinction is a factor or a bright-line rule for determining abstention. See id. at 29. Sprint argues that the Eighth Circuit incorrectly stretched the boundaries of Younger and Burford v. Sun Oil Co. 319 U.S. 315 (1943). The IUB members counter that the Middlesex County Ethics Committee v. Garden State Bar Association requirements for Younger abstention are satisfied in this case. See Brief for Respondents at 35.
DOES THIS CASE SATISFY THE MIDDLESEX COUNTY THREE-PRONG TEST FOR YOUNGER ABSTENTION?
In Middlesex County, the Supreme Court articulated a three-prong test to determine when Younger abstention is appropriate; the test requires that (1) there be an ongoing state judicial proceeding that (2) implicates important state interests and (3) provides an adequate opportunity to raise constitutional challenges. See Brief for Petitioner at 27. Sprint argues that abstention analysis is inapplicable here, and thus, analyzing the Middlesex County factors is unnecessary. See id. at 28. The IUB members counter that federal courts should abstain in cases where all three factors are satisfied, unless bad faith, harassment, or other extraordinary circumstances would render abstention inappropriate. See Brief for Respondents at 13.
On appeal to the Eighth Circuit, Sprint disputed whether the first (ongoing state proceeding) and second Middlesex County factors (important state interests) were satisfied. See Sprint Commc’n. Co., L.P., 690 F.3d at 867. However, Sprint now argues that where the question is whether federal courts have the authority and obligation to decide issues of federal law, abstention doctrines are inapplicable and, consequently, the Middlesex County factors do not apply. See Brief for Petitioner at 19. Specifically, Sprint contends that the Eighth Circuit took the Middlesex County factors out of context by failing to first consider whether Younger even applies to this case. See id. at 12. According to Sprint, the Eighth Circuit’s application of Younger and Middlesex County exceeded the boundaries of the abstention doctrines. See Brief for Petitioner at 13. Specifically, Sprint argues that this case does not implicate state decision-making and enforcement power; rather, it concerns a commercial dispute over the division of authority between the FTC and the states – a federal question appropriate for review by a federal court. See id. Accordingly, Sprint argues, because abstention doctrines were developed to encourage state court review of state issues without undue federal interference, the federal question here does not warrant abstention analysis. See id. at 19.
The IUB members counter that principles of comity, in which federal and state jurisdictions respect the judgments of the other, and federalism, whereby the federal courts defer at certain times to state courts, are important to the Younger analysis; specifically, that federal courts must consider these principles when deciding whether Younger abstention applies to state civil and administrative proceedings implicating state interests. See Brief for Respondents at 11-12. The IUB members argue that states, as sovereigns, must have the opportunity to consider federal constitutional challenges. See id. at 12. Moreover, the IUB members contend that federal court interference would lead to the inefficient use of judicial resources by increasing concurrent federal litigation. See id.
The IUB members further argue that abstention analysis is appropriate and necessary when there is a risk of federal court interference with state interests. See Brief for Respondent at 11-12. Specifically, the IUB members argue that all three Middlesex County factors have been satisfied here. See id. at 13. First, the IUB members contend that because Sprint did not seek certiorari on whether there was an ongoing state proceeding, the Court should affirm the Eighth Circuit’s decision. See id. at 14. Second, the members claim that the state proceedings implicate important state interests–the regulation of utilities and protecting citizens from telephone service disruptions. See id. at 15. Third, the members contend that the IUB afforded Sprint enough opportunity to present its constitutional challenges by requiring any constitutional challenges to be raised at the IUB proceedings. See id. at 16. Additionally, the IUB members argue that a fourth consideration—the distinction between judicial and legislative proceedings found in New Orleans Pub. Serv. Inc. v. Council of the City of New Orleans (“NOPSI”), where only judicial actions are entitled to Younger abstention – should be included in the Middlesex County analysis. See id. at 17.
WHAT ARE THE BOUNDARIES OF THE YOUNGER ABSTENTION DOCTRINE?
DOES YOUNGER APPLY TO EVERY STATE-AGENCY PROCEEDING WITH IMPLICATED STATE INTERESTS?
Sprint argues that adopting the Eighth Circuit’s application of the Younger standard would impermissibly extend federal abstention to any state-agency proceeding with state interests at stake. See Brief for Petitioner at 27. Sprint claims that the Eighth Circuit conflated the Younger and Burford abstention doctrines. See id. at 32. In Sprint’s view, Younger prevented federal interference with criminal and civil-enforcement regimes, whereas Burford prevented interference with state regulatory schemes. See id. Here, Sprint argues that the State’s interest in regulating its utilities and protecting citizens from telephone service disruptions are more closely aligned with the Burford prevention of federal interference with state regulatory schemes. See id. at 33.
On the other hand, the IUB members argue that the Younger abstention doctrine has inherent limits that prevent its overbroad application to every state-agency proceeding. See Brief for Respondents at 20. For example, the IUB claims that NOPSI excludes the application of Younger abstention in cases where the state administrative proceedings are legislative in nature, where there has been no prior pending state proceeding, and where the plaintiff seeks non-equitable relief. See id. at 21. The IUB members argue that additional safeguards include judicial bias and express Congressional declarations that a state action should be reviewed in federal court – e.g., 47 U.S.C. § 252(e)(6). See id. Furthermore, the IUB members claim that Younger’s internal limitations identify those proceedings which require abstention– i.e., those that are most judicial in nature, implicate important state interests, and offer an opportunity to present federal challenges. See id.
DOES YOUNGER ABSTENTION APPLY TO BOTH COERCIVE AND REMEDIAL STATE PROCEEDINGS?
Sprint contends that Younger abstention should only apply to coercive proceedings; according to Sprint, the Eighth Circuit erred by failing to use the coercive/remedial test that other courts have recognized as part of the Younger analysis. See Brief for Petitioner at 29. Sprint argues that the Court should follow the Tenth Circuit’s definitions of coercive and remedial proceedings: a remedial proceeding is an action initiated by the plaintiff against the state; a coercive proceeding is one initiated by the state against the plaintiff. See id. at 30. Sprint argues that the NOPSI coercion inquiry, which provides that Younger abstention only applies to criminal cases, ensures that administrative proceedings are correctly categorized as “not subject to” or “potentially subject to” Younger. See id. at 29. Finally, Sprint argues that the Eighth Circuit erred in applying the Younger doctrine, by failing to consider the threshold question of whether abstention analysis is required before considering the coercive/remedial distinction. See id. at 32.
The IUB members argue that Sprint’s coercive/remedial test should not be outcome-determinative for whether Younger abstention should apply. See Brief for Respondents at 22.The IUB members assert that courts will struggle to apply this bright-line test for two primary reasons. See id. First, the IUB members contend that the coercive/remedial test cannot be reconciled with the Court’s decisions in Pennzoil Co. v. Texaco and Juidice v. Vail. See id. In these cases, the IUB members argue, the Court was concerned with comity between state and federal courts, and whether abstention is required where sufficiently important state interests are at stake. See id.at 24. Second, the IUB members argue that courts have already encountered difficulty in applying the coercive/remedial distinction consistently; for example, in Remed Recovery Care Centers v. Township of Worcester, the Eastern District of Pennsylvania found a cease and desist action to be remedial, while the same court found a similar cease and desist action in Gentlemen’s Retreat, Inc v. City of Philadelphia to be coercive. See id. at 28. The IUB members argue that a good bright-line rule must produce correct and consistent results, which is not the case here. See id. at 22.
In this case, the Supreme Court will consider the boundaries of Younger abstention and whether the abstention doctrine applies to both coercive and remedial state proceedings. The Court must also determine whether the distinction between coercive and remedial proceedings should be a factor in considering whether abstention is appropriate, or whether the distinction is a bright-line rule. The Court’s ruling will impact the use of telephone services by state consumers, which in turn raises health and safety concerns due to consumer reliance on telephone services to obtain emergency services. Additionally, the Court’s decision will implicate principles of comity and federalism.
- Lawrence Hurley, U.S Top Court Agrees to Hear Sprint Appeal Over Fees, CNBC (15 Apr. 2013)