City of Gurdon, Arkansas v. At&t Corp.

Cite as 2026 Ark. App. 346

ARKANSAS COURT OF APPEALS

DIVISIONS III & IV

No. CV-24-32

CITY OF GURDON, ARKANSAS, EX

REL. LARRY THOMERSON, IN HIS Opinion Delivered May 20, 2026

OFFICIAL CAPACITY AS MAYOR OF

APPEAL FROM THE CLARK COUNTY

GURDON, ARKANSAS, INDIVIDUALLY

CIRCUIT COURT

AND ON BEHALF OF A CLASS OF

[NO. 10CV-18-95]

SIMILARLY SITUATED PARTIES

HONORABLE GARY M. ARNOLD,

APPELLANT

JUDGE

V.

AT&T CORP. AND SOUTHWESTERN

BELL D/B/A AT&T ARKANSAS

APPELLEES

AFFIRMED IN PART; REVERSED AND

REMANDED IN PART

MIKE MURPHY, Judge

This appeal arises from a class-action lawsuit filed by the city of Gurdon against

AT&T Corp. and Southwestern Bell d/b/a AT&T Arkansas (collectively “AT&T”), which

alleged that AT&T unlawfully charged Gurdon and other Arkansas cities three fees for the

cities’ use of AT&T’s telephone services. The circuit court granted AT&T’s motion for

summary judgment and denied Gurdon’s motion for class certification as moot. Gurdon

appeals the circuit court’s grant of summary judgment in favor of AT&T. We affirm in part

and reverse and remand in part.

I. Background

AT&T provided telephone services to the city of Gurdon from 2011 to 2017. As part

of providing those services, AT&T assessed a 911 fee, a Special Municipal Charge, and an

Arkansas Universal Service Fee. The 911 fee is an emergency telephone service charge that

AT&T was required, under the Arkansas Public Safety Communications Act (“APSCA”), to

bill and collect from its “service users” and remit to the government. Ark. Code Ann. § 12-

10-318(f)(4) (Repl. 2016). The Special Municipal Charge is a charge that AT&T collected

from “its customers residing in each municipality” to recover the amount of the franchise

fee assessed by the municipality on AT&T for authorization to use the municipal streets and

rights-of-way to deploy AT&T’s facilities. Ark. Code Ann. § 14-200-101(b)(2) (Supp. 2025).

The Arkansas Universal Service Fee is a surcharge collected by AT&T to recover mandatory

payments that AT&T made to the Arkansas High Cost Fund (“AHCF”). Ark. Code Ann. §

23-17-404(2)(B) (Repl. 2015). Gurdon filed a class-action lawsuit against AT&T alleging that

the imposition of these three fees against the city was unlawful and thereafter filed a motion

for class certification.1

1

Gurdon’s motion defined the proposed class as: “All Arkansas cities which have been

charged or have paid Defendant’s 911, or Arkansas Universal Service or Special municipal

charge fees or related charges from the five years immediately prior to the filing of this lawsuit

up through the date of the entry of judgment in this case.”

2

In the operative complaint, filed May 31, 2018, Gurdon requested relief pursuant to

Arkansas Code Annotated section 16-111-101, et seq., seeking a declaratory judgment that:

(1) Gurdon and the putative class members are not subject to 911 fees under the

provisions of APSCA, Ark. Code Ann. § 12-10-300, et seq;

(2) Gurdon and the putative class members are not subject to the payment of a Special

Municipal Charge;

(3) AT&T has no basis to collect from Gurdon and the putative class members an

Arkansas Universal Service Fee;

(4) AT&T improperly charged, billed, and collected public funds from Gurdon and

from the putative class members;

(5) Such improper and unlawful fees include, but are not limited to, the following:

(a) 911 fees and associated administrative charges collected by AT&T;

(b) “Arkansas Universal Service” charges;

(c) “Special municipal charges”; and

(d) taxes imposed on each of these improper charges;

(6) Gurdon and the putative class members are entitled to a refund of all such fees

which were unlawfully exacted from public funds.

On June 21, AT&T answered and asserted that Gurdon’s claim challenging the

“Arkansas Universal Service Fee” is subject to the primary jurisdiction of the Arkansas Public

Service Commission (“PSC”). AT&T further asserted that Gurdon’s “claims are barred by

the voluntary payment doctrine” and that Gurdon “failed to name as necessary parties those

entities for whom the 911 fees at issue were collected and turned over.”2

2

AT&T Arkansas simultaneously filed a third-party complaint against Clark County,

alleging that “the County is or may be liable for part of [Gurdon’s] claim against AT&T.”

According to the third-party complaint, in the event that Gurdon is entitled to the requested

declaratory relief and refund relating to the 911 fees, “then AT&T would be entitled to (a)

3

On August 24, AT&T filed a “Motion to Dismiss or Stay Pursuant to the Doctrine

of Primary Jurisdiction.” The motion stated that, because the PSC has regulatory authority

over the AHCF, AT&T had, on July 2, 2018, filed an application for a declaratory ruling by

the PSC relating to the “Arkansas Universal Service Fee” surcharge. According to the

motion, AT&T specifically “asked the PSC to hold that nothing in the AHCF statute or the

PSC’s AHCF regulations exempts an intrastate retail telecommunications service customer

from AHCF surcharges based on its status as a governmental entity.” AT&T contended that

because the PSC has primary jurisdiction over claims relating to the AHCF, the circuit court

should dismiss or stay that part of Gurdon’s lawsuit challenging the “Arkansas Universal

Service Fee” pending the outcome of the administrative proceeding in the PSC.

Gurdon, on the other hand, maintained that the city’s lawsuit should proceed in the

circuit court in whole because circuit courts “are vested with the responsibility of

determining declaratory judgments under A.C.A. § 16-111-101.” Gurdon further noted that

telecommunications providers such as AT&T, unlike other public utilities, are not entirely

regulated by the PSC.

The circuit court did not rule on AT&T’s motion to dismiss or stay.

On January 16, 2019, AT&T filed a “Notice of Supplemental Authority” informing

the circuit court of an order entered by the PSC on October 30, 2018, in connection with

monetary relief from the County for the 911 fees collected from [Gurdon] and remitted to

the County, and (b) declaratory relief that the County cannot impose 911 fees upon

[Gurdon’s] telephone services and cannot require AT&T to collect and remit such fees.”

4

AT&T’s administrative proceeding. According to the order, the PSC found “it to be

essential” to exercise its discretionary authority to issue a declaratory order, “as the Universal

Services Statute, Ark. Code Ann. §§ 23-17-401 et seq. should be interpreted uniformly, this

is a case of first impression, and this Commission has the duty to administer and interpret

such law.” The order includes the following declarations: (1) that Gurdon, in its capacity as

an intrastate retail telecommunications service customer, is subject to AHCF surcharges like

any other retail customer; and (2) that governmental entities that purchase intrastate retail

telecommunications services are not exempt from Ark. Code Ann. § 23-17-404(b)(2)(B) and

AHCF Rule 4.04(A).

On August 1, AT&T moved for summary judgment. AT&T argued that because the

PSC resolved the issue in a final order that Gurdon did not appeal, “the claim-preclusion

facet of res judicata,” bars Gurdon from re-litigating its claim of exemption from the

“Arkansas Universal Service Fee,” and “the doctrine of administrative res judicata” bars

Gurdon from attempting to collaterally attack the PSC’s decision. Additionally, AT&T

argued that it is statutorily authorized, pursuant to Ark. Code Ann. § 14-200-101(b)(2), to

impose special municipal charges upon “its customers residing in each municipality” to

recover the franchise fees imposed upon AT&T by the municipality and, further, that

“nothing in Arkansas law exempts municipalities from this charge when the municipality

itself is a customer.” Finally, AT&T argued that the APSCA, Ark. Code Ann. § 12-10-318,

requires AT&T to bill 911 fees to all “service users” and that Gurdon was a “service user” as

defined by the statute.

5

Among other documents, AT&T submitted the affidavit of Lisa Lake, an AT&T-

employed “regulatory liaison in Arkansas.” In her affidavit, Ms. Lake stated that Gurdon

purchased telephone services from AT&T beginning in 2011 and discontinued its AT&T

telephone services in 2017. According to Ms. Lake, “[o]ne landline telephone service that

Gurdon obtained from AT&T was local telephone service that included the capability of

calling 9-1-1 in the event of an emergency.”

Ms. Lake also stated that Gurdon imposes a franchise fee on local telephone service

provided by AT&T under a city ordinance. She explained that AT&T “charges customers of

its local telephone services, including Gurdon, a special municipal charge to recover

franchise fees imposed by Gurdon for authorization to use the municipal streets and rights-

of-way to deploy AT&T’s facilities.”

AT&T also submitted with its summary-judgment motion a copy of Gurdon

Ordinance No. 370. Ordinance No. 370, enacted in 1991, memorializes an agreement

authorizing the Southwestern Bell Telephone Company (and its successors and assigns) “to

operate its telephone system and all business incidental to or connected with the conducting

of a telephone business and system in the City of Gurdon” and to use “the public streets,

avenues, alleys, and the public grounds and places within the [city] limits” for the telephone

company’s “plant construction and appurtenances.” In exchange, the telephone company

agreed to pay to the city an annual franchise payment in “an amount equal to 5 percent of

the company’s local exchange access line charges collected in the corporate limits of Gurdon

for the previous calendar year.” Ordinance No. 370, in section 3, states:

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The annual payment herein returned shall be in lieu of all other licenses, charges, fees

or impositions (other than the usual general or special ad valorem taxes) which may

be imposed by the City under authority conferred by law. The Telephone Company

shall have the privilege of crediting such sums with any unpaid balance due said

Company for telephone services rendered or facilities furnished to said City.

In its summary-judgment opposition, Gurdon argued that the city is not a “service

user,” within the statutory definition, and therefore is not subject to the 911 fees imposed

under the APSCA. In support, Gurdon submitted the affidavit of Clark County Assessor

Lana Clark attesting that (1) “Clark County exempts various forms of public property from

county taxes, including, but not limited to, real and personal property owned by the public

schools and government subdivisions located within the County”; and (2) “Real and personal

property owned by the City of Gurdon is not taxed by the County.”

Relating to the “Special Municipal Charge,” Gurdon argued that “AT&T has

admitted that it owes Gurdon a fee for the use of Gurdon’s public rights-of-ways[,]” that

“AT&T is obligated to pay this amount to Gurdon[,]” and that “AT&T has improperly

exacted public funds from Gurdon and the putative class members which AT&T has used

to pay for franchise fees and the use of public rights-of-ways.” In support, Gurdon submitted

the affidavit of Mayor of Gurdon Sherry Kelley, attesting that the city of Gurdon “has never

appropriated public funds to be used for AT&T purposes” and “never agreed to reduce the

amount of the franchise fee which AT&T is obligated to pay Gurdon.”

As to the “Arkansas Universal Service Fee,” Gurdon asserted that “AT&T receives

around $5 million a year from the AHCF” and argued that it “is improper for AT&T to

exact public money from Gurdon and putative class members to pay into a fund which is

7

later used to provide money which AT&T can use for private purposes.” Gurdon further

maintained that “AT&T has failed to demonstrate any basis which would support the

application of the doctrine of res judicata.” Gurdon argued that there “is simply no legal

authority for allowing a defendant in a pending circuit court action to unilaterally file a

counterclaim in an administrative agency[,]” noting that the city filed an action against

AT&T in the circuit court and had never asked any other court to rule on its claims. Further,

according to Gurdon, the PSC did not address, and lacks jurisdiction to address, the issue

before the circuit court: “whether AT&T should be collecting the fee from public funds.”

Among other supporting documents, Gurdon submitted the deposition testimony of

Lisa Lake. Regarding whether the city is a “service user” under the APSCA, Ms. Lake said

that AT&T is a supplier for the 911 service and collects the 911 fee; “any phone lines that

we provide the ability to call 911 to, those customers would be considered service users.”

Relating to the “Arkansas Universal Service Fee,” Ms. Lake said that AT&T’s seeking

an administrative ruling from the PSC mid-litigation was essentially “a counterclaim to prove

that the funds that we were collecting on customer bills as the universal service fee to recoup

what we pay to the high cost fund were legitimate charges and applicable to all of our

customers.” According to Ms. Lake’s testimony, the administrator of the AHCF determines,

based on reported intrastate revenues, the amount that each telephone company owes to the

AHCF. AT&T collects its AHCF payments back from its customers through a per-access-line

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charge that is periodically recalculated by AT&T’s finance department.3 Ms. Lake explained

that all telecommunications service providers (including AT&T Long Distance and AT&T’s

cellular company) are required to pay into the AHCF and are permitted to recoup such

payment from their customers. However, only “local ILECs, the incumbent local exchange

carriers” such as AT&T Arkansas, can receive funding from the AHCF. Ms. Lake testified

that “AT&T has committed to use its high cost fund money for broadband expansion.” She

elaborated: “Technically, we don’t have to do anything with the money because it’s to recoup

our cost of providing service. So what we have to do with it is make sure that we serve all of

our customers, that we provide universal service to all of our customers.” The “AR Universal

Service Fee” charge on the bill “is AT&T recouping that payment back from its customers[.]”

On November 20, the circuit court entered an order denying AT&T’s motion for

summary judgment.

In the meantime, a similar class-action lawsuit brought by Clark County against

AT&T proceeded to a bench trial in the circuit court.4

In a final order, entered November 8, 2023, the circuit court noted that the trial held

in connection with the Clark County lawsuit had given the court “an opportunity for further

consideration of the legal basis of the claims and defenses in this action.” Upon

reconsideration of its prior ruling, the circuit court concluded in the order “that there is no

3

This charge is labeled “AR Universal Service Fee” on AT&T customers’ monthly

bills.

4

Clark County’s action against AT&T led to the appeal in the companion case in No.

CV-24-54, also handed down today.

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dispute of material fact and that AT&T is entitled to judgment as a matter of law.”

Accordingly, the circuit court granted AT&T’s motion for summary judgment and denied

Gurdon’s pending motion for class certification as moot.

The circuit court concluded that Gurdon falls within the statutory definition of a

“service user” and is therefore subject to the 911 fees imposed under the APSCA as a matter

of law. In reaching this conclusion, the court found that Gurdon received landline telephone

services capable of 911 calls and further found that “Gurdon, like any other Arkansas

municipality,” is “not exempt from county or municipal taxes or utility franchise

assessments.”

Additionally, the circuit court concluded that Gurdon’s challenge to the “Special

Municipal Charge” fails as a matter of law. The court found that such fees are permitted by

Arkansas law and further found that nothing exempted Gurdon from this fee, and the city

is not entitled to reimbursement. The court rejected Gurdon’s arguments based on the

Arkansas Constitution and the public-purpose doctrine. In so doing, the court found that

“AT&T is the party that is being taxed, and the special municipal fee is merely a statutorily

authorized pass through charge to customers.” As the court noted, “AT&T is required by

law to pay municipal franchise fees” and is permitted “to recover that cost of doing business

from its customers (just as any business would do).” The court found that “Gurdon may not

have specifically appropriated funds to pay franchise fees or to make AHCF contributions,

but it did have full authority and appropriations to pay its telephone bills (which is why it is

seeking refunds).” “By paying its bills, including the special municipal fee,” the court

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concluded, “Gurdon was not giving ‘financial aid’ to AT&T—it was merely paying its bills,

in an amount sufficient for AT&T to recover its costs of providing telephone services.” The

court noted that “[n]othing in the Arkansas constitution prohibits [cities] from paying for

the services they receive.”

The circuit court concluded that Gurdon’s challenge to the “Arkansas Universal

Service Fee” also fails as a matter of law. The court found that nothing in the AHCF statute

or in the PSC’s AHCF regulations exempted Gurdon, or any other municipality customer,

from this surcharge. Additionally, the court found that “the PSC has already squarely

decided this dispute,” and the doctrine of res judicata applies to the PSC’s decision. The

court rejected Gurdon’s constitutional and public-purpose-doctrine arguments for similar

reasons as the special municipal charges. The court also found that these arguments

“constitute an improper collateral attack on the Arkansas PSC’s final order, as Gurdon could

have and should have raised the same arguments before the PSC, and/or on appeal of the

PSC’s decision.”

Finally, the circuit court concluded that to the extent Gurdon argues that the

statutory provisions authorizing the special municipal charges and the universal service fees

“are unconstitutional or violate the public-purpose doctrine as applied to telephone

customers who are [municipalities], it was required to give notice to the Attorney General.”

The court found that, absent such notice, Gurdon’s arguments are “procedurally improper.”

Gurdon now appeals the grant of summary judgment, raising five points for reversal:

(1) The circuit court erred by ruling that the APSCA allowed AT&T to collect 911 fees from

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a political subdivision; (2) The circuit court erred by ruling that AT&T could collect “Special

Municipal Charges” from Gurdon to pay the franchise fee that AT&T owed Gurdon; (3)

The circuit court erred by ruling that Gurdon was required to pay AT&T’s “Arkansas

Universal Service Fee” charges; (4) The circuit court erred by ruling that Gurdon’s challenge

to the “Arkansas Universal Service Fee” was barred by res judicata; and (5) The circuit court

erred in concluding that Gurdon was required to provide notice to the Attorney General.

II. Standard of Review

Summary judgment should be granted only when there are no genuine issues of

material fact to be litigated, and the moving party is entitled to judgment as a matter of law.

Washington County v. Bd. of Trustees of the University of Arkansas, 2016 Ark. 34, at 3, 480

S.W.3d 173, 175. Once the moving party has demonstrated an entitlement to summary

judgment, the opposing party must meet proof with proof and demonstrate the existence of

a material issue of fact. Cent. Okla. Pipeline, Inc. v. Hawk Field Servs., LLC, 2012 Ark. 157, at

8, 400 S.W.3d 701, 707. On review, this court determines if summary judgment was

appropriate based on whether the evidentiary items presented by the moving party in support

of the motion leave a material fact unanswered. Id. We view the evidence in the light most

favorable to the party against whom the motion was filed, resolving all doubts and inferences

against the moving party. Id. Our review focuses not only on the pleadings, but also on the

affidavits and documents filed by the parties. Id. at 8–9, 400 S.W.3d at 707.

As to issues of law presented, our review is de novo, meaning the entire case is open

for review. Bd. of Trs. of the Univ. of Ark., 2016 Ark. 34, at 3, 480 S.W.3d at 175. The question

12

of the correct application and interpretation of an Arkansas statute is a question of law,

which we decide de novo. Cent. Okla. Pipeline, Inc., 2012 Ark. 157, at 9, 400 S.W.3d at 707.

We also review the circuit court’s interpretation of the constitution de novo. Id. When the

question involves applying the legal doctrine of res judicata, we simply determine whether

the appellee was entitled to judgment as a matter of law. Luckett v. Ark. Parole Bd., 2024 Ark.

139, at 2, 697 S.W.3d 518, 520; Duggar v. City of Springdale, 2020 Ark. App. 220, at 7, 599

S.W.3d 672, 680.

III. Discussion

A. 911 fees

In its first point, Gurdon argues that the circuit court erred in upholding the

imposition of the 911 fees, which, as previously mentioned, arise under the APSCA. We

agree.

This issue turns on statutory interpretation, which we review de novo. Cent. Okla.

Pipeline, Inc., 2012 Ark. 157, at 9, 400 S.W.3d at 707. The basic rule of statutory construction

is to give effect to the legislative intent underlying the statute. Sw. Bell Telephone Co. v. Ark.

Public Serv. Comm’n, 69 Ark. App. 323, 329, 13 S.W.3d 197, 200 (2000). When the language

of a statute is plain and unambiguous, we determine legislative intent from the ordinary

meaning of the language used. Helena-W. Helena Sch. Dist. v. Fluker, 371 Ark. 574, 580, 268

S.W.3d 879, 884 (2007). In considering the meaning of a statute, we construe it just as it

reads, giving the words their ordinary and usually accepted meaning in common language.

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Id. We construe the statute so that no word is left void, superfluous, or insignificant, and

give meaning and effect to every word in the statute, if possible. Id.

A statute is ambiguous if it is open to more than one construction. Id. When the

statute is ambiguous, an appellate court is permitted to look at the language of the statute,

its subject matter, the object to be accomplished by the statute, the purpose to be served, and

other appropriate matters. Sw. Bell Telephone Co., 69 Ark. App. at 329, 13 S.W.3d at 201. As

a guide in ascertaining the legislature’s intent, we examine the history of the statutes

involved, as well as the contemporaneous conditions at the time of their enactment, the

consequences of interpretations, and all other matters of common knowledge within the

court’s jurisdiction. Id. In determining legislative intent, we must look at the whole act and,

as far as practicable, give effect to every part, reconciling provisions to make them consistent,

harmonious, and sensible. Id. at 333, 13 S.W.3d at 203. We do not, however, engage in

statutory interpretations that defy common sense and produce absurd results. McDaniel v.

Ark. Public Serv. Comm’n, 2014 Ark. App. 529, at 9, 444 S.W.3d 380, 385.

The APSCA was enacted in furtherance of “the public interest to shorten the time

and simplify the method required for a citizen to request and receive emergency aid.” Ark.

Code Ann. § 12-10-302(a) (Repl. 2016). The statute lists the legislative purposes behind the

Act:

(1) Establish the National Emergency Number 911 (nine, one, one) as the

primary emergency telephone number for use in participating political

subdivisions of the State of Arkansas;

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(2) Authorize each chief executive to direct establishment and operation of

911 public safety communications centers in their political subdivisions and

to designate the location of a 911 public safety communications center and

agency which is to operate the center. . . .;

(3) Encourage the political subdivisions to implement 911 public safety

communications centers; and

(4) Provide a method of funding for the political subdivisions which will allow

them to implement, operate, and maintain a 911 public safety

communications center.

Ark. Code Ann. § 12-10-302(e) (Repl. 2016).

In line with these stated purposes, the APSCA authorizes and encourages the “chief

executive of each political subdivision” to create a 911 public safety communications center.5

See Ark. Code Ann. § 12-10-304 (Repl. 2016). The statute, in this vein, provides: “When so

authorized by a majority of the persons voting within the political subdivision in accordance

with the law, the governing authority of each political subdivision may levy an emergency

telephone service charge in the amount assessed by the political subdivision on a per-access-

line basis as of January 1, 1997, or the amount up to five percent (5%) of the tariff rate[.]”

Ark. Code Ann. § 12-10-318(a)(1)(A) (Repl. 2016). “Upon its own initiative, the governing

authority of the political subdivision may call such a special election to be held in accordance

with § 7-11-201 et seq.”6 Ark. Code Ann. § 12-10-318(a)(2) (Repl. 2016).

5

The “chief executive” of a political subdivision means “the Governor, county judges,

mayors, city managers, or city administrators of incorporated places, and is synonymous with

head of government, dependent on the level and form of government.” Ark. Code Ann. §

12-10-303(5) (Repl. 2016).

6

The “governing authority” of a political subdivision means “county quorum courts

and governing bodies of municipalities.” Ark. Code Ann. § 12-10-303(12) (Repl. 2016).

15

The Act provides that the “emergency telephone service charge . . . shall be added to

and may be stated separately in the billing by the service supplier to the service user.” Ark.

Code Ann. § 12-10-318(f)(4) (Repl. 2016); see also Ark. Code Ann. § 12-10-320(a) (repealed

2019) (providing that “[t]he duty of the service supplier to collect any service charge shall

commence upon the date of its implementation, which date shall be specified in the

resolution calling the election”). “Every billed service user shall be liable for any service

charge imposed under this subsection until it has been paid to the service supplier.” Ark.

Code Ann. § 12-10-318(f)(5) (Repl. 2016). The statute authorizes “the political subdivision”

to “pursue against a delinquent service user any remedy available at law or in equity for the

collection of a debt.” Ark. Code Ann. § 12-10-318(g) (Repl. 2016).

The APSCA, as it existed at times relevant to this case, required that the service

charges collected by the service supplier be remitted to “the political subdivision” on a

quarterly basis. Ark. Code Ann. § 12-10-320(c)(1) (repealed 2019). Additionally, “[t]he

service supplier shall be entitled to retain as an administrative fee an amount equal to one

percent (1%) from the gross receipts to be remitted to the political subdivision.” Ark. Code

Ann. § 12-10-320(c)(3) (repealed 2019).

The term “service user,” as defined in the Act, means “any person, company,

corporation, business, association, or party not exempt from county or municipal taxes or

utility franchise assessments who is provided landline telephone service, CMRS service, voice

over internet protocol service, or any nontraditional phone service with the capability of

placing a 911 call in the political subdivision.” Ark. Code Ann. § 12-10-303(26) (Repl. 2016).

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The list of entities identified as “service user” does not include a “political subdivision.”

Despite this omission, the circuit court concluded that a political subdivision, and

specifically a municipality such as Gurdon, is a “service user” subject to emergency telephone

service charges, or 911 fees. We disagree with this conclusion.

The APSCA demonstrates that the General Assembly knows how to expressly include

governmental entities when it intends to do so. For example, the Act, as noted above, refers

repeatedly to a “political subdivision” both within, and beyond, the definitional section.

Despite these repeated and deliberate references, the legislature did not include “political

subdivision” in the definition of “service user.” This contrast is significant. Where the

legislature includes a term in one part of a statute but omits it in another, we should not

expand those categories or add omitted entities. MacSteel Div. of Quanex v. Ark. Okla. Gas.

Corp., 363 Ark. 22, 31, 210 S.W.3d 878, 883–84 (2005). Here, the repeated used of “political

subdivision” throughout the Act—paired with the absence from the “service user”

definition—confirms that political subdivisions are not “service users” within the meaning of

the statute.

Further, the plain statutory language demonstrates the legislature’s intent to exclude

some party from the definition of “service user” to be charged the 911 fee. The APSCA

expressly excludes from the definition of “service user” any “party exempt from county or

municipal taxes or utility franchise assessments.” Cities and towns are, under the Arkansas

Constitution, local subdivisions of the state government and exist only for public purposes.

As such, property held by a municipality in connection with its governmental functions is

17

within the tax exemption clause of article 16, § 5(b) exempting public property used

exclusively for public purposes. City of Hope v. Dodson, 166 Ark. 236, 266 S.W. 68, 69 (1924)

(holding that utility owned and operated by municipality was constitutionally exempt from

taxation). We do not agree that simply because a government-entity purchaser might be

affected at the point of sale in a taxable transaction, cities such as Gurdon are “not exempt

from county or municipal taxes” as contemplated by the APSCA. Any purchaser might be

affected by sales-tax ramifications at the point of sale. Local sales and use taxes, moreover,

are subject to numerous exemptions and rebates, including rebates for certain purchases by

“a state or county, city, municipality, school district, state-supported college or university, or

any other political subdivision of the state[.]” Ark. Code Ann. § 26-52-523; see also Ark. Code

Ann. § 26-53-112(1) (exempting from taxation any property, “the use . . . of which this state

is prohibited from taxing under the United States Constitution or laws or the Arkansas

Constitution or law”).

The 911 fee at issue here, moreover, is imposed by the political subdivision that

operates a 911 public safety communications center. One of the main purposes of the

APSCA is to provide funding to political subdivisions to carry out such operations. The Act

achieves this purpose, in part, by authorizing “governing bodies of municipalities,” as the

governing authority of the political subdivision, to levy a 911 fee on local telephone lines to

be collected by the telephone-service supplier and remitted to the city. It makes little sense

for a city to levy a charge to be imposed on the city’s phone lines to fund the city’s operations.

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For these reasons, we reverse the circuit court’s grant of summary judgment relating

to the 911 fee, and we remand the case to the circuit court for further proceedings to consider

the issue of whether Gurdon is entitled to recover the fees.

B. Special Municipal Charge

In its second point, Gurdon argues that the circuit court erred in upholding the

imposition of the “Special Municipal Charge.” We agree.

Municipalities such as Gurdon have the right to establish terms and conditions upon

which public utilities such as AT&T may be permitted to operate within the borders of said

municipalities and may by ordinance impose a reasonable franchise fee for service rendered

by any public utility occupying streets and rights-of-way within the municipality. Ark. Code

Ann. § 14-200-101(b)(1). “In common parlance, such franchise fees are, in form, rental

payments for a public utility’s use of the municipality’s right-of-way[.]” City of Little Rock v.

AT&T Communications of the Sw., Inc., 318 Ark. 616, 620, 888 S.W.2d 290, 292 (1994).

Conversely, AT&T is permitted by law “to collect from its customers residing in each

municipality an amount that equals the franchise fee assessed by the municipality on the

public utility.” Ark. Code Ann. § 14-200-101(b)(2). But “[n]othing in this act shall deprive or be

construed as depriving any municipality of the benefits or rights accrued or accruing to it under any

franchise or contract to which it may be a party, and neither the commission nor any court exercising

jurisdiction under this act shall deprive the municipality of any such benefit or right.” Ark. Code Ann.

§ 14-200-101(e) (emphasis added).

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Simply put, allowing AT&T to turn around and collect or recover from Gurdon a

portion of what it pays under the franchise-fee agreement is “depriving [Gurdon] of the

benefits or rights accrued or accruing to it under [the agreement][.]” In essence, AT&T was

collecting money from Gurdon to pay back money that it owed to Gurdon. Gurdon never

agreed to discount the amount that AT&T owed it for the use of city rights-of-way. AT&T

admits that the money it collected from this charge was actually used to pay Gurdon for the

franchise fee that it already owed to the city. Consequently, by using money from Gurdon

to pay Gurdon, AT&T failed to pay the proper amount of the franchise fees it owed Gurdon

in the first place.

Contrary to the circuit court’s conclusion, the fact that the city of Gurdon may be an

AT&T “customer” does not, by itself, render the city subject to the “Special Municipal

Charge.” To do so would dilute Gurdon’s “benefits or rights” under their franchise

agreement and is specifically prohibited under the plain language of the statute. Accordingly,

we reverse the grant of summary judgment as to the “Special Municipal Charge,” and remand

to the circuit court for further proceedings to consider Gurdon’s claim for refund of the fees.

C. Arkansas Universal Service Fee

In its third point, Gurdon argues that the circuit court erred in upholding the

imposition of the “Arkansas Universal Service Fee.” We disagree and affirm the circuit

court’s grant of summary judgment relating to this fee.

The Arkansas High Cost Fund (“AHCF”) was established “to promote and assure the

availability of universal service at rates that are reasonable and affordable and to provide for

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reasonably comparable services and rates between rural and urban areas.” Ark. Code Ann. §

23-17-404(a)(1). The AHCF accomplishes this purpose by providing funding to eligible

telecommunications carriers serving rural or high-cost areas of the state. Ark. Code Ann. §

23-17-404(a)(2)–(3). Every telecommunications provider in the state is required to pay an

amount into the AHCF that is proportionate to its intrastate retail service revenues. Ark.

Code Ann. § 23-17-404(b)(1), (2)(A)(i). The AHCF statute provides: “Because customers of

the telecommunications providers that would pay the AHCF charge receive the benefits of a

universal network, the telecommunications providers may surcharge their customers to

recover the AHCF charges paid by the telecommunications provider. Therefore, the AHCF

charge is not a tax and is not affected by state laws governing taxation.” Ark. Code Ann. §

23-17-404(b)(2)(B); see also Ark. Admin. Code 126.03.10-4.04, AHCF Rule 4.04(A) (“A

telecommunications provider may recover the amount of its contribution to the AHCF from

its interstate retail telecommunications service customers.”). The term “customer” is defined

in the AHCF Rules as “any person, firm, partnership, cooperative corporation, corporation

or lawful entity that has ordered and is receiving retail telecommunications services supplied

by any telecommunications provider and is receiving a bill from the provider for services

associated with one or more retail access lines.” Ark. Admin. Code 126.03.10, AHCF Rule

10.

AT&T chooses to collect the money it pays to the AHCF back from its customers,

including Gurdon, by adding an “AR Universal Service Fee” to its customers’ monthly bills.

Gurdon contends that while AT&T “may (but is not required to) charge customers to recover

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the amount that it paid into the fund,” it should not collect money from Gurdon and other

public entities to help pay its AHCF obligations. We agree with the circuit court’s conclusion

that the AHCF charges that AT&T, like all intrastate retail telecommunications service

providers, must pay are a required cost of doing business in Arkansas. A surcharge, such as

AT&T’s “AR Universal Service Fee,” merely recovers some of the cost necessary to provide

telecommunications services to customers. Accordingly, we agree that the “Arkansas

Universal Service Fee” is properly passed through and billed to customers receiving AT&T

service, including Gurdon.

Contrary to Gurdon’s argument, the AHCF is not geared toward the private interests

of AT&T. The AHCF serves an important public interest in promoting the availability of

universal service at affordable costs. The AHCF does this not only by providing funding for

telecommunications providers like AT&T, but also by providing additional funding for

other things, including 911 public safety communications centers. Additionally, AHCF

funds are not distributed for just any purpose, whether public or private. Rather, only eligible

carriers providing certain universal service are entitled to distributions from the AHCF. For

these reasons, we affirm the circuit court’s grant of summary judgment upholding the

imposition of the “Arkansas Universal Service Fee.”

D. Res Judicata

In its fourth point, Gurdon challenges a separate ruling by the circuit court

concluding that Gurdon’s claims relating to the “Arkansas Universal Service Fee” are barred

by the doctrine of res judicata. Because we affirm the circuit court’s separate ruling on the

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merits upholding the imposition of the “Arkansas Universal Service Fee,” we need not

discuss whether these claims are also barred by res judicata. See Cent. Okla. Pipeline, Inc., 2012

Ark. 157, at 19, 400 S.W.3d at 712–13.

E. Notice to the Attorney General

In its final point, Gurdon argues that the circuit court erred in concluding that it was

required to provide notice to the Attorney General. We agree.

Arkansas law provides that when declaratory relief is sought, if the statute is alleged

to be unconstitutional, “the Attorney General of the State shall also be served with a copy of

the proceeding and be entitled to be heard.” Ark. Code Ann. § 16-111-111(a). The purpose

of the notice statute is to prevent a statute from being declared unconstitutional without a

full adjudication and adversarial parties. Sherland v. Sherland, 2015 Ark. App. 342, at 5, 465

S.W.3d 3, 7.

Gurdon did not ask the circuit court to declare any statute unconstitutional. Gurdon

merely challenged AT&T’s imposition of discretionary charges on grounds that it would

violate the public-purpose doctrine for the city to use public funds to help AT&T pay

franchise fees or to reimburse AT&T for money that AT&T owed to the AHCF. Notice to

the Attorney General was not required in these circumstances. We therefore reverse the

circuit court’s ruling on this issue.

Affirmed in part; reversed and remanded in part.

TUCKER, THYER, WOOD, and BROWN, JJ., agree.

BARRETT, J., dissents.

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STEPHANIE POTTER BARRETT, Judge, dissenting. I respectfully dissent from the

majority’s decision to reverse the circuit court on the issue of the 911 fees. I would affirm

the circuit court’s well-reasoned conclusion that Gurdon falls within the statutory definition

of a “service user” and is therefore subject to the fee imposed under the Arkansas Public

Safety Communications Act (“APSCA”).

This appeal presents an issue of statutory interpretation, which we review de novo.

See Harts v. Damsky, 2024 Ark. App. 604, 704 S.W.3d 638. Even so, our review is guided by

the plain language of the statute, and where the circuit court correctly interprets and applies

that language, affirmance is required. Id. Here, the circuit court carefully analyzed the

statutory framework and concluded that Gurdon received landline telephone services

capable of placing 911 calls and therefore satisfied the definition of a “service user” under

Arkansas Code Annotated section 12-10-303(27). The circuit court further found that no

express statutory exemption applies to municipalities such as Gurdon. I agree.

The APSCA expressly provides that the 911 service charge “shall have uniform

application and shall be imposed throughout the political subdivision to the greatest extent

possible in conformity with availability of the service in any area of the political subdivision.”

Ark. Code Ann. § 12-10-318(e) (emphasis added). The circuit court correctly recognized that

this language reflects the legislature’s intent that participation in the funding structure be

broad and uniform, not selectively limited. Construing the statute to exempt municipalities

would conflict with the legislature’s directive that the charge be imposed “throughout” the

political subdivision “to the greatest extent possible.”

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The circuit court also correctly relied on the settled principle that tax-exemption

provisions must be strictly construed against the exemption, with any doubts resolved in

favor of taxation. See Miller Cnty. v. Opportunities, Inc., 334 Ark. 88, 971 S.W.2d 781 (1998)

(citing Pledger v. Noritsu Am. Corp., 320 Ark. 371, 896 S.W.2d 595 (1995)). The APSCA

contains no explicit exemption for counties or municipalities. Thus, as the circuit court

concluded, Gurdon’s position necessarily depends on implying an exemption that the

legislature did not provide. Our rules of statutory construction do not permit such a result.

For these reasons, I must dissent.

Turner & Turner, P.A., by: Todd Turner and Dan Turner, for appellant.

Smith Williams LLP, by: Richard Smith; Mayer Brown, LLP, by: Kevin Ranlett, pro hac vice;

and Heather B. New, pro hac vice, for appellees.

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