Sprint Communications Inc. v. Jacobs, No. 12-815; U.S. Supreme Court; opinion by Ginsburg, J.; decided December 10, 2013. On certiorari to the U.S. Court of Appeals for the Eighth Circuit.
Sprint Communications Inc., a national telecommunications service provider, withheld payment of intercarrier access fees imposed by Windstream Iowa Communications Inc., a local telecommunications carrier, for long distance Voice over Internet Protocol (VoIP) calls, after concluding that the Telecommunications Act of 1996 preempted intrastate regulation of VoIP traffic. Windstream responded by threatening to block all Sprint customer calls, which led Sprint to ask the Iowa Utilities Board (IUB) to enjoin Windstream from discontinuing service to Sprint. Windstream retracted its threat, and Sprint moved to withdraw its complaint. Concerned that the dispute would recur, the IUB continued the proceedings in order to resolve the question whether VoIP calls are subject to intrastate regulation. Rejecting Sprint’s argument that this question was governed by federal law, the IUB ruled that intrastate fees applied to VoIP calls.
Sprint sued respondents, IUB members (collectively IUB), in federal district court, seeking a declaration that the Telecommunications Act of 1996 preempted the IUB’s decision. As relief, Sprint sought an injunction against enforcement of the IUB’s order. Sprint also sought review of the IUB’s order in Iowa state court, reiterating the preemption argument made in Sprint’s federal-court complaint and asserting several other claims. Invoking Younger v. Harris, 401 U.S. 37, the federal district court abstained from adjudicating Sprint’s complaint in deference to the parallel state-court proceeding. The Eighth Circuit affirmed the district court’s abstention decision, concluding that Younger abstention was required because the ongoing state-court review concerned Iowa’s important interest in regulating and enforcing state utility rates.
Held: This case does not fall within any of the three classes of exceptional cases for which Younger abstention is appropriate. Pp. 6-12.
(a) The district court had jurisdiction to decide whether federal law preempted the IUB’s decision, see Verizon Md. Inc. v. Public Serv. Comm’n of Md., 535 U.S. 635, 642, and thus had a “virtually unflagging obligation” to hear and decide the case, Colorado River Water Conservation Dist. v. United States, 424 U.S. 800, 817. In Younger, this Court recognized an exception to that obligation for cases in which there is a parallel, pending state criminal proceeding. This Court has extended Younger abstention to particular state civil proceedings that are akin to criminal prosecutions, see Huffman v. Pursue, Ltd., 420 U.S. 592, or that implicate a state’s interest in enforcing the orders and judgments of its courts, see Pennzoil Co. v. Texaco Inc., 481 U.S. 1, but has reaffirmed that “only exceptional circumstances justify a federal court’s refusal to decide a case in deference to the States,” New Orleans Public Service Inc. v. Council of City of New Orleans, 491 U.S. 350, 368 (NOPSI). NOPSI identified three such “exceptional circumstances.” First, Younger precludes federal intrusion into ongoing state criminal prosecutions. See 491 U.S. at 368. Second, certain “civil enforcement proceedings” warrant Younger abstention. Ibid. Finally, federal courts should refrain from interfering with pending “civil proceedings involving certain orders … uniquely in furtherance of the state courts’ ability to perform their judicial functions.” Ibid. This court has not applied Younger outside these three “exceptional” categories, and rules, in accord with NOPSI, that they define Younger‘s scope. Pp. 6-8.
(b) The initial IUB proceeding does not fall within any of NOPSI‘s three exceptional categories and therefore does not trigger Younger abstention. The first and third categories plainly do not accommodate the IUB’s proceeding, which was civil, not criminal in character, and which did not touch on a state court’s ability to perform its judicial function. Nor is the IUB’s order an act of civil enforcement of the kind to which Younger has been extended. The IUB proceeding is not “akin to a criminal prosecution.” Huffman, 420 U.S. at 604. Nor was it initiated by “the State in its sovereign capacity,” Trainor v. Hernandez, 431 U.S. 434, 444, to sanction Sprint for some wrongful act, see, e.g., Middlesex County Ethics Comm. v. Garden State Bar Assn., 457 U.S. 423, 433-34. Rather, the action was initiated by Sprint, a private corporation. No state authority conducted an investigation into Sprint’s activities or lodged a formal complaint against Sprint.
Once Sprint withdrew the complaint that commenced administrative proceedings, the IUB argues, those proceedings became, essentially, a civil enforcement action. However, the IUB’s adjudicative authority was invoked to settle a civil dispute between two private parties, not to sanction Sprint for a wrongful act.
In holding that abstention was the proper course, the Eighth Circuit misinterpreted this Court’s decision in Middlesex to mean that Younger abstention is warranted whenever there is (1) “an ongoing state judicial proceeding, which (2) implicates important state interests, and (3) … provide[s] an adequate opportunity to raise [federal] challenges.” In Middlesex, the Court invoked Younger to bar a federal court from entertaining a lawyer’s challenge to a state ethics committee’s pending investigation of the lawyer. Unlike the IUB’s proceeding, however, the state ethics committee’s hearing in Middlesex was plainly “akin to a criminal proceeding”: An investigation and formal complaint preceded the hearing, an agency of the state’s supreme court initiated the hearing, and the hearing’s purpose was to determine whether the lawyer should be disciplined for failing to meet the state’s professional conduct standards. See 457 U.S. at 433-35. The three Middlesex conditions invoked by the court of appeals were therefore not dispositive; they were, instead, additional factors appropriately considered by the federal court before invoking Younger. Younger extends to the three “exceptional circumstances” identified in NOPSI, but no further. Pp. 8-11.
690 F.3d 864, reversed.