T-Mobile S., LLC v. Bonet

85 So.3d 963

T–MOBILE SOUTH, LLC, and PowerTel Memphis, Inc.

v.Leslie BONET et al.

1100107.

Supreme Court of Alabama.

Dec. 2, 2011.

August S. Dowd and Hope S. Marshall of White Arnold & Dowd P.C., Birmingham; and Timothy J. Peaden and Kristine M. Brown of Alston & Bird LLP, Atlanta, Georgia, for appellant T–Mobile South, LLC.

Anna Manasco Dionne of Bradley Arant Boult Cummings LLP, Birmingham; and Scott Burnett Smith and Daniel Kaufmann of Bradley Arant Boult Cummings LLP, Huntsville, for appellees.

M. Christian King and Kikaa Baugh Jordan of Lightfoot, Franklin & White, L.L.C., Birmingham; Sylvia H. Walbolt of Carlton Fields, P.A., Tampa, Florida; and James B. Baldinger of Carlton Fields, P.A., West Palm Beach, Florida, for amicus curiae TracFone Wireless, Inc., in support of the appellants.

James S. Williams and Marcus M. Maples of Sirote & Permutt, P.C., Birmingham; and Mark A. Loyd and John K. Bush of Greenebaum Doll & McDonald, PLLC, Louisville, Kentucky, for amicus curiae CTIA-the Wireless Association, in support of the appellants.

Craig S. Dillard and Mallory M. Combest of Webb & Eley, P.C., Montgomery, for amicus curiae Association of County Commissions of Alabama, in support of the appellees.

BOLIN, Justice.

This appeal arises from a dispute between the Alabama Commercial Mobile Radio Services ("CMRS") Board ("the CMRS Board") and the individual members of the CMRS Board, on the one hand, and T–Mobile South, LLC, and PowerTel Memphis, Inc. (hereinafter referred to collectively as "T–Mobile"), two providers of wireless telephone services, regarding emergency "911" service charges for purchasers of prepaid wireless service, on the other.

Legislative History

Traditionally, emergency 911 service provided callers with direct access to a public-safety answering point, which is responsible for dispatching emergency services, including police, fire, and medical assistance. Enhanced 911 or "E911" provides the operator with the caller's telephone number and/or location and enables the operator to direct the call to the nearest answering point. Originally, emergency 911 telephone services were tied to wired telephone exchanges at homes and businesses, and local 911 services were funded by service charges assessed to those "land lines." In 1984, Alabama adopted the Emergency Telephone Service Act, § 11–98–1 et seq., Ala.Code 1975 ("the Act"), to authorize local governing bodies to create communications districts for the purpose of establishing local emergency telephone service and to provide funding for such service.

With the advent of cellular technology, cellular telephones and other wireless devices became important means of communications, and in 1998 the legislature amended the Act to include such devices. The 1998 amendment created the CMRS Board and provided, among other things, that the CMRS Board would levy and administer an emergency-telephone-service charge on certain wireless connections in Alabama. § 11–98–7, Ala.Code 1975 (1998 amendment).¹ The Act provided that the CMRS Board would receive the revenues from the service charge and deposit those revenues in the CMRS Fund,² to be disbursed to all 911 call centers in Alabama. The 1998 amendment to the Act imposed the service charge "on each CMRS connection that has a principal wireless service address (or billing address, if the principal wireless service address is not known) within the state." § 11–98–7(b)(1), Ala.Code 1975 (1998 amendment). The 1998 amendment defined a "CMRS connection" as "each number assigned to a CMRS customer." § 11–98–6(5), Ala.Code 1975 (1998 amendment). The 1998 amendment provided that "[e]ach CMRS provider shall act as a collection agent for the CMRS Fund and shall, as part of the provider's normal monthly billing process, collect the CMRS service charges" levied pursuant to § 11–98–7(b)(1) from each CMRS connection to which the billing provider provided CMRS service. § 11–98–8(a), Ala.Code 1975 (1998 amendment). The provider, not later than 60 days after the end of the calendar month in which the charges are collected, is to remit to the CMRS Board the charges collected less an amount, not to exceed one percent of the gross aggregate amount, for the costs of collecting, handling, and processing the service charge. § 11–98–8(a) and (b). The CMRS provider is not liable for any service charge not paid by the customer.

Pursuant to § 11–98–7(b)(7), the CMRS Board has the authority to promulgate rules necessary to effect the provisions of the Act. In 1999, the CMRS Board adopted an administrative rule levying a CMRS emergency-telephone-service charge on "each CMRS connection that has a principal wireless address (or billing address if the principal wireless service address is no[t] known) within the state, including prepaid connections. " Ala. Admin. Code (CMRS Board), r. 225–1–3–.01 (emphasis added). In 2005, the legislature amended the Act to, among other things, include voice over Internet protocol ("VoIP") in § 11–98–5.1 as subject to the service charge.³

In 2007, the legislature again amended the Act. The 2007 amendment changed the language in § 11–98–7(b)(1), Ala.Code 1975, to provide that the service charge was to be imposed "on each CMRS connection that has a place of primary use within the geographical boundaries of the State of Alabama." (Emphasis added.) The 2007 amendment defined a CMRS connection as "[a] mobile telephone number assigned to a CMRS customer." § 11–98–6(5), Ala.Code 1975. The 2007 amendment to the Act defined "place of primary use" as "[t]he street address representative of where the customer's use of the mobile telecommunications service primarily occur, which must be: a. The residential street address or the primary business street address of the customer; and b. within the licensed service area of the CMRS provider." § 11–98–6(17), Ala.Code 1975. The 2007 amendment established a commission to study and to make recommendations to enhance the delivery of emergency 911 services, including "[t]he process by which all providers of telephone services, including wired and wireless providers and prepaid and post-paid providers, collect and remit 911 charges...." § 11–98–7.2(b)(6) (repealed effective June 1, 2008). The 2007 amendment deleted that language in § 11–98–8(a) that required the CMRS provider to collect CMRS charges "as part of the provider's normal monthly billing process" and substituted "CMRS provider" for "billing provider" in the first sentence. The 2007 amendment also added subsections (g) and (h) to § 11–98–8 ; subsection (g) provides the CMRS Board with a remedy when a provider fails to remit collected service charges.

Facts and Procedural History

T–Mobile South, LLC, and PowerTel Memphis, Inc., are owned by T–Mobile USA, Inc., and provide wireless service to customers in Alabama. T–Mobile provides both "prepaid" and "postpaid" wireless services. Postpaid customers are those customers who pay for services (typically measured in minutes) they used the previous month and who are sent a monthly bill by their provider. T–Mobile does not send monthly bills to prepaid customers because prepaid customers pay in full for their wireless minutes at the point of sale. Prepaid customers may purchase telephones or other devices and minutes (for previously purchased devices) either directly from T–Mobile at a T–Mobile USA store, T–Mobile USA's Web site, or an authorized dealer (e.g., discount retail stores such as Wal–Mart and Target). Prepaid customers can activate their devices at a T–Mobile USA store, on T–Mobile USA's Web site, or by calling an automated telephone line. During the activation process, T–Mobile requires each prepaid customer to select an area code. Service for prepaid customers' connections (represented by telephone numbers) is available for 90 days (or 365 days if the customer purchases a $100 refill card) following activation. The Federal Communications Commission requires that a cellular telephone or device be able to connect with emergency 911 services, even if there are no minutes left on the device or in the account. This requirement applies to both prepaid and postpaid customers. Although T–Mobile does not send monthly bills to its prepaid customers, T–Mobile charges prepaid customers for "411" directory-information calls and deducts a certain amount from the prepaid customer's account when 411 calls are made, both for placing the call and for the minutes spent on the call.

From May 2003 through May 2005, T–Mobile paid the 911 service charge on behalf of its prepaid CMRS connections. T–Mobile used a monthly report of customers with an account balance of $1 or more and then looked at the prepaid wireless customers with telephone numbers with an Alabama area code. That number was multiplied by the $.70 charge set out in the Act, and the resulting amount was remitted to the CMRS Board.

In June 2005, T–Mobile ceased paying the 911 service charge for its prepaid connections. In July 2007, T–Mobile resumed paying the service charge on behalf of its prepaid customers. It is undisputed that T–Mobile has never collected the service charge from any of its prepaid customers.

On December 20, 2006, T–Mobile requested a refund of CMRS service charges it had paid the CMRS Board from May 2003 through May 2005. On March 7, 2007, the CMRS Board denied the request. On February 8, 2008, T–Mobile filed a declaratory-judgment action against the CMRS Board and the members of the CMRS Board, individually and in their official capacities (both the CMRS Board and its members are hereinafter collectively referred to as "the Board"),⁴ seeking a judgment: declaring that the service charge does not apply to prepaid wireless service; declaring that application of the service charge to prepaid wireless service would violate the uniformity requirement in the Act and would constitute an invalid increase in the service charge under the Act; declaring that application of the service charge to prepaid wireless service would...