Appendix — Alltel Communications, LLC v. City of Springfield, Missouri (No. 08-548)

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APPENDIX A — OPINION OF THE UNITED STATES

COURT OF APPEALS FOR THE EIGHTH CIRCUIT

FILED JULY 3, 3008

UNITED STATES COURT OF APPEALS

FOR THE EIGHTH CIRCUIT

No. 07-2884

City of Jefferson City, Missouri,

Plaintiff,

City of Springfield, Missouri,

Plaintiff/Appellee,

Cingular Wireless LLC; Southwestern Bell Wireless, LLC,

Debendéetel/dgndlants,

SBC Communications, Inc., Southwestern Bell

Telephone, LP; Nextel West Corp.;

Alltel Communications, Ine.,

Defendants.

Appendix A

No. 07-2885

City of Jefferson City, Missouri,

Plaintiff,

City of Springfield, Missouri,

Plaintiff/Appellee,

Cingular Wireless LLC; SBC Communications, Inc;

Southwestern Bell Wireless, LLC; Southwestern

Bell Telephone, LP; Nextel West Corp.,

Defendants,

Alltel Communications, Inc.,

Defendant/Appellant.

Submitted: March 12, 2008

Filed: July 3, 2008

Before WOLLMAN, HANSEN, and MELLOY, Circuit

Judges.

Appendix A

WOLLMAN, Circuit Judge.

The issue before us is whether providing cell phone

services! in the City of Springfield (“Springfield”)*

makes a company subject to a local tax ordinance on

businesses who engage in “supplying telephones, and

telecommunications and telephonic service, and

telecommunications services, within the city.”* Springfield

Code § 70-452 (2000). The district court* granted

Springfield’s request for declaratory judgment and held

that the defendants, Alltel Communications, Inc. (“Alltel’’),

Cingular Wireless LLC, and Southwestern Bell Wireless,

LLC (Cingular and Southwestern Bell hereinafter referred

to as “Cingular”), provide telephonic services within

Springfield and are therefore subject to the tax. The

district court dismissed Springfield’s tax collection claim

under Missouri's exclusive tax remedy doctrine because

1. The defendants in this case describe their services as

wireless, telecommunications, or “Commercial Mobile Radio

Services.” We will refer to the services generally as “cell phone

services,” as that is how the services are marketed to the public

and generally recognized.

2. The City of Jefferson’s claims were dismissed by

stipulation.

3. It is undisputed that the defendants engage in providing

services within Springfield. Whether these services are

telephones and telephonic services is the issue in this case. The

quantity of services provided “within the city,” and the resulting

amount of taxes owed is an issue of fact not before us today.

4. The Honorable Nanette K. Laughrey, United States

District Judge for the Western District of Missouri.

Appendix A

Springfield must follow its own tax assessment and

collection procedures before bringing suit to collect the

tax. Because we conclude that Springfield’s request for a

declaratory judgment on the issue of liability was properly

before the district court and that a cell phone is a telephone

and cell phone services are telephonic services for purposes

of Springfield’s tax ordinance, we affirm.

I. Background

Springfield has a long-standing ordinance that

imposes a 6% tax on the gross receipts of any business

that supplies telephone and telephonic service within

Springfield. This ordinance was modified in 2000 as part

of a recodification that changed section numbers,

clarified existing language, and made the code

electronically searchable. The 2000 recodification of the

tax ordinance added “telecommunications” and

“telecommunications services” to the existing language

in the ordinance. Springfield Code § 70-452.

In 2004, Springfield sent a demand letter to cell

phone companies that did business within Springfield

requesting payment of the tax for the past five years

and indicating that if no action was taken, Springfield

would pursue legal remedies.’ The defendants did not

comply, and Springfield brought this suit in federal

district court to collect the past-due taxes.

5. The letter stated that the five-year time frame was

chosen because of the relevant statute of limitations.

Appendix A

Springfield’s complaint sought collection of the tax

owed. Springfield filed a motion for summary judgment

on the issue of whether the defendants were liable to pay

the tax, which the district court and the parties treated as

a request for a declaratory judgment on the issue of liability.

The defendants argued that they provide “Commercial

Mobile Radio Service” (“CMRS”), and therefore the tax

does not apply to them. The defendants also challenged

the validity of the ordinance. On June 9, 2005, the district

court held that the term “telephone” in the tax ordinance

encompasses CMRS and that the defendants offer these

services within Springfield and are therefore subject to

the tax. City of Jefferson v. Cinguiar Wireless, LLC,

No. 04-4099, 2005 WL 1384062 (WD. Mo. June 9, 2005)

(City of Jefferson I) (order granting plaintiffs’ motion for

partial summary judgment). The district court did not

reach the issue of whether the 2000 modification of the

ordinance violated the Hancock Amendment to the

Missouri Constitution because it concluded that the issue

in the case involved the language in the ordinance that

existed before 2000. The district court did not rule on the

amount of tax owed.

On August 21, 2006, Alltel filed a motion to dismiss for

lack of subject matter jurisdiction or, in the alternative,

that the district court abstain from deciding the case.

On October 17, 2006, the district court denied the motion

to dismiss on the legal issue of liability, but dismissed

Springfield’s claim for tax collection without prejudice,

concluding that because Springfield had an exclusive

administrative remedy for tax assessment and collection,

it was required to follow that procedure. City of Jefferson

. oe ~~ 7"

Appendix A

v. Cingular Wireless, LLC, No. 04-4099, 2006 WL 2987678

(W.D.Mo. Oct.17, 2006) (City of Jefferson IT) (order

dismissing Springfield’s tax collection claim without

prejudice). On Alltel’s motion for reconsideration, the

district court declined to vacate its June 9, 2005, order

and held that the defendants were liable to pay the tax.

City of Jefferson v. Cingular Wireless, LLC, No. 04-

| 4099, 2006 WL 3937243 (W.D.Mo. Dec.20, 2006) (City of

; Jefferson III) (order declining to vacate or amend City

of Jefferson I and City of Jefferson II).

Alltel then argued that it had not been given a fair

opportunity to litigate the propriety of the request for

declaratory judgment. The district court vacated City

of Jefferson I and City of Jefferson II and allowed

Springfield to amend its complaint to add a claim for

declaratory judgment on the issue of liability.* Count I

of the second amended complaint requested past-due

taxes from the defendants. Count III sought a

declaratory judgment that the tax ordinance applies to

6. During a teleconference on January 29, 2007, the district

court discussed with the parties the prospect of allowing

Springfield the opportunity to amend its complaint to add a

claim for declaratory judgment. The district court noted that it

was allowing the amendment for Alltel’s benefit because Alltel

argued that it was unfair that it did not have a chance to raise

its abstention argument in a timely fashion. In the July 3, 2007,

order, the district court further noted that it believed

Springfield’s claim for declaratory judgment, while not

originally pleaded, was properly before the court, even before

the second amended complaint, pursuant to Rule 15 of the

Federal Rules of Civil Procedure. City of Jefferson IV, 2007 WL

1965572, at *2 n. 4.

Appendix A

the defendants. Alltel filed a motion to dismiss the

second amended complaint. On July 3, 2007, the district

court dismissed Count I without prejudice as to all

defendants and denied the motion to dismiss Count ITI.

City of Jefferson v. Cingular Wireless, LLC, No. 04-

4099, 2007 WL 1965572 (W.D.Mo. July 3, 2007) (City of

Jefferson IV) (order nunc pro tunc dismissing without

prejudice Springfield’s tax collection claim).

Also on July 3, 2007, the district court entered

another order, which held that the tax is enforceable

against the defendants because it applies to cell phone

services provided within Springfield. City of Jefferson

v. Cingular Wireless, LLC, No. 04-04099, 2007 WL

1965572 (W.D.Mo. July 3, 2007) (City of Jefferson V)

(order nunc pro tunc granting Springfield’s motion for

summary judgment). Accordingly, the district court

granted Springfield’s motion for summary judgment on

the issue of liability. The district court noted that the

amount of tax owed is a fact-intensive inquiry that must

be resolved through Springfield’s administrative

process, and it thus dismissed Springfield’s request for

monetary damages.

II. Jurisdiction, Exhaustion, and Abstention

Alltel asserts that the district court lacked subject

matter jurisdiction under Missouri’s exclusive tax

remedy doctrine and exhaustion doctrine, that the

constitutional justiciability requirements of ripeness and

standing were not met, that Springfield failed to state a

claim, and that even if the district court had jurisdiction,

it should have abstained.

Appendix A

Our resolution of this case requires us to interpret

Missouri law.

We review ihe district court’s interpretation of

state law de novo. We are bound by the decisions

of the Supreme Court of Missouri in

interpreting Missouri law. Because the Supreme

Court of Missouri has not yet addressed this

precise issue, we must determine what that

court would probably hold if it were called upon

to decide the issue. In making this determination

a federal court may consider relevant state

precedents, analogous decisions, considered

dicta, scholarly works, and any other reliable

data tending convincingly to show how the

highest court in the state would decide the issue.

Missouri v. City of Glasgow, 152 F:3d 802, 805-06 (8th

Cir.1998) (internal citations and quotation omitted).

We review de novo questions of federal subject matter

jurisdiction and the district court’s disposition of a motion

to dismiss. Canady v. Allstate Ins. Co., 282 F.3d 1005, 1012

(8th Cir.2002) (discussing subject matter jurisdiction);

Breedlove v. Earthgrains Baking Cos., Inc., 140 F:3d 797,

798-99 (8th Cir.1998) (on a motion to dismiss, “(a] district

court must accept the allegations contained in the

complaint as true, and all reasonable inferences from the

complaint must be drawn in favor of the nonmoving party”

(internal citation omitted)). We review the district court’s

decision regarding whether to abstain for abuse of

discretion. Aaron v. Target Corp., 357 F.3d 768, 774 (8th

Cir.2004) (“the underlying legal determinations receive

plenary review”).

Appendix A

A. Subject Matter Jurisdiction

It is undisputed that the parties are diverse and that

more than $75,000 is in controversy. Furthermore, we

note that Cingular believes that the district court

properly exercised its jurisdiction in this case. Alltel’s

argument that the district court did not have subject

matter jurisdiction rests on the assertion that a Missouri

state court would not have jurisdiction to hear this case

under the Missouri exclusive tax remedy doctrine and

the doctrine of administrative exhaustion, with the

result that, pursuant to Erie R. Co. v. Tompkins, 304

U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188 (1938), federal

subject matter jurisdiction is lacking. Even if we

assume, without deciding, that the exclusive tax remedy

doctrine is jurisdictional,’ we conclude that neither

doctrine would prevent a Missouri state court from

exercising its jurisdiction in this case and therefore

subject matter jurisdiction is not lacking.

1. Missouri’s Exclusive Tax Remedy Doctrine

The Missouri exclusive tax remedy doctrine

requires a taxing authority to follow its tax assessment

and collection procedures before a tax collection claim

can be brought in court. City of St. Louis v. United Rys.

Co. of St. Louis, 263 Mo. 387, 174 S.W. 78, 93 (1914) (en

banc) (“if a remedy is specified for the collection of a

7. The district court dismissed Springfield’s tax collection

claim for failure to state a claim, not for lack of subject matter

jurisdiction. City of Jefferson IT, No. 04-4099, 2006 WL 2987678

(W.D.Mo. Oct. 17, 2006).

10a

Appendix A

tax, it will be held to be exclusive, where no other is

provided”); Missouri ex rel. Hayes v. Snyder, 1389 Mo.

549, 41 S.W. 216, 217 (1897). The Missouri exclusive tax

remedy doctrine does not apply, however, to the question

in this case because the district court was presented

with the legal question of whether the tax applies to the

defendants, not the factual question of how much

Springfield can collect from the defendants, assuming

that they are subject to the tax. See M.L. Cross,

Annotation, Tax Questions as Proper Subject of Action

for Declaratory Judgment, 11 A.L.R.2d 359 (Supp.2005)

(outlining cases from other jurisdictions, including New

York, which have similar exclusive tax remedy doctrines

but allow declaratory judgments for the pure legal issue

of the validity or application of a tax). Although

Springfield has an administrative remedy for tax

assessment and collection, the ordinance does not

provide a specific or exclusive remedy for a challenge to

the validity or application of the ordinance.® The cases

cited by Alltel address only tax collection claims in which

the state or local governmental entity is seeking a money

judgment. See Missouri ex rel. Hayes, 41 S.W. at 217

(“if the statutes of this state make special provisions

for the collection of taxes against real estate, and do

not apparently .ontemplate that any others will be

necessary, the niode of collection prescribed by statute

is exclusive”); Missouri ex rel. George v. Dix, 159

Mo.App. 573, 141 S.W. 445, 446 (1911) (“The point at

8. See City of Jefferson IV, 2007 WL 1965572, *3-*4

(discussing the tax assessment and collection procedures and

concluding that such administrative procedures are sufficient

for Springfield’s tax collection claim).

er hs

lla

Appendix A

issue is whether the remedy provided in the ordinance

is exclusive or merely cumulative. If exclusive, an action

for a money judgment for the delinquent tax will not lie,

but if cumulative the present suit was properly brought,

and, as the facts are undisputed, the judgment should

have been for the city.”); see also Missouri ex rel. Steed

v. Nolte, 345 Mo. 1103, 138 S.W.2d 1016 (1940) (en banc)

(identifying the procedure for fourth-class cities to

collect delinquent taxes); Kansas City v. Field, 285 Mo.

253, 226 S.W. 27 (1920) (outlining cases); City of

Carondelet, to Use of Reuter v. Picot, 38 Mo. 125, 1866

WL 4243, at *3 (1866) (cannot bring action to compel

_ the payment of taxes unless the tax statute authorizes

the action). Alltel has not pointed to any cases in which

the exclusive tax remedy doctrine was used to dismiss a

claim involving the legal issue of whether a tax was valid

or whether it applied to a particular taxpayer.

Alltel’s assertion that a Missouri court would have

to dismiss Springfield’s claim for declaratory judgment

is unfounded because the doctrine does not apply to

Springfield’s claim. Because there is no established

precedent indicating that Springfield’s claim for

declaratory judgment may not be heard until after the

administrative procedures for tax assessment and

collection have been completed, we conclude that the

doctrine would not require a Missouri court to dismiss

Springfield’s claim for declaratory judgment. This

conclusion is supported by several cases in which

Missouri courts have considered the legal issue of the

validity or the applicability of a tax ordinance without

requiring the exhaustion of administrative assessment

12a

Appendix A

and collection procedures. See Council House Redev.

Corp. v. Hill, 920 S.W.2d 890 (Mo.1996) (en banc) (trial

court erroneously dismissed taxpayer’s claim for

declaratory judgment; administrative exhaustion not

required when the issue was only whether the taxpayer

was exempt from taxation, not the valuation of the tax

assessment); Nicolai v. City of St. Louis, 762 S.W.2d

423 (Mo.1988) (en banc) (taxpayer sought declaratory

judgment that St. Louis did not have authority to tax

his premises as a cat kennel]; circuit court dismissed for

failure to state a claim and failure to exhaust

administrative remedies, but the Missouri Supreme

Court reversed and issued declaratory judgment even

though neither St. Louis nor the taxpayer had pursued

administrative collection or appellate procedures);

B & D Inv. Co., Inc. v. Schneider, 646 S.W.2d 759

(Mo.1983) (en banc) (“It is a firmly established principle

that when an administrative remedy is adequate,

ordinarily that remedy is exclusive. ... However, the

availability of an administrative remedy does not bar

other remedies under all circumstances. For instance,

when a taxpayer does not question the valuation of his

property, but asserts it is not subject to the tax, he need

not appear before the Board of Equalization but may

enjoin the enforcement of the tax.”); Washington Univ.

v. Baumann, 341 Mo. 708, 108 S.W.2d 403 (1937) (en

banc) (allowing taxpayer an injunction against the sale

of property for the collection of taxes even though

administrative remedies were not exhausted because

the taxpayer was contractually immune from taxation,

one judicial proceeding on the issue of exemption could

avoid a multitude of litigations, and the taxpayer would

13a

Appendix A

suffer irreparable injury without the injunction); United

Rys. Co. of St. Louis, 263 Mo. 387, 174 S.W. 78 (giving

res judicata effect to prior federal court case that held

the railroad was subject to a city tax); Holland Furnace

Co. v. City of Chaffee, 279 S.W.2d 63 (Mo.Ct.App.1955)

(considering claim for declaratory judgment regarding

the validity of a tax ordinance).

ide

Alltel asserts that any case in which a taxpayer

requested a declaratory judgment that it was not

subject to a tax ordinance is inapposite because, in the

case before us, Springfield is the entity seeking a

declaratory judgment and is thereby attempting to

avoid its own administrative procedures. We disagree.

If, under the exclusive tax remedy doctrine, Missouri

courts will address the pure legal issue of whether a tax

applies in a particular situation before the parties

complete the administrative tax assessment and

collection procedures, it should not matter which party

is seeking the declaratory judgment. Furthermore, we

note that completing the administrative procedures in

this case would be time-consuming, expensive, and

ultimately unnecessary if the ordinance is held to not

apply to the defendants. Additionally, the pure legal

issue involved in this case is more suited for judicial

determination than for administrative determination.

See State Tax Comm’n v. Admin. Hearing Comm’n, 641

S.W.2d 69, 75 (Mo.1982) (en banc) (“Agency adjudicative

power extends only to the ascertainment of facts and

the application of existing law thereto in order to resolve

issues within the given area of agency expertise. The

declaratory judgment is a judicial remedy. . . . The

ee ee ee ig Oe er eR et OT hee ee

l4a

Appendix A

declaration of the validity or invalidity of statutes and

administrative rules thus is purely a judicial function.”

(internal citations omitted)); see also Springfield,

Mo., Code §§ 70-131 through 70-157 (administrative

hearings do not have formality requirements such as

the rules of evidence). Accordingly, we conclude that the

district court properly decided that the Missouri

exclusive tax remedy doctrine did not require it to

dismiss Springfield’s claim for declaratory judgment on

the issue of liability.

2. Administrative Exhaustion Doctrine

a ee Se eR ee Pe he eee Se py

Alltel’s remaining arguments regarding subject

matter jurisdiction, justiciability,’ failure to state a claim,

and abstention all vest on the contention that Springfield

failed to exhaust its administrative remedies. See

Premium Standard Farms, Inc. v. Lincoln Twp. of

Putnam County, 946 S.W.2d 234, 237 (Mo.1997) (en banc)

(exhaustion of administrative remedies generally

required before a court has jurisdiction unless the

6 th en, de Bibb iat ok ae

9. We note that, although justiciability requirements

cannot be waived by the parties, Alltel’s Answer to Springfield’s

i} Complaint and First Amended Complaint conceded that it

| believed a justiciable controversy existed. Even without this

7 concession, we conclude that Springfield’s claim for declaratory

judgment raises a case or controversy and meets the

constitutional justiciability requirements. See Arsenal Credit

| Union v. Giles, 715 S.W.2d 918, 921 (Mo.1986) (en banc)

‘ (concluding that a case or controversy existed regarding a claim

for declaratory judgment on the constitutionality of a tax

exemption and therefore the claim was properly before the

a court).

Thats tn Atta tale, Oi id ee vf ee F te Y

1Sa

Appendix A

administrative remedy is not adequate or the controlling

issue in the case is a pure legal issue). As the district

court found, and as discussed above, Springfield’s tax

assessment and collection procedures do not provide an

adequate remedy for determining whether the tax

applies to the defendants. Although Alltel vigorously

asserts that the administrative remedy for tax

assessment and collection should be used to determine

liability, the district court noted in City of Jefferson III

that Alltel has refused to pay the tax and refused to file

the information needed for Springfield to make a tax

assessment.” See 2006 WL 3937243, at *2. Although

Alltel’s refusal to cooperate may not make the tax

collection remedy impossible, it does highlight the

inadequacy of those procedures, which would require a

lengthy and expensive calculation of the tax owed before

a legal determination is made whether the defendants

are liable for the tax. Thus, we conclude that

Springfield’s administrative procedures for tax

assessment and collection are not adequate to determine

the issue of liability and do not represent an exclusive

remedy on that issue.

Furthermore, in the absence of any tax collection

claim, no factual disputes remained, nor was the district

court required to make any classifications or value

10. Springfield’s Second Amended Complaint, filed on

February 7, 2007, states that Alltel has made a recent payment

of taxes without waiving its position in this litigatien but further

notes that the defendants have refused to pay their full tax

liability despite opportunities to do so under protest.

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l6a

Appendix A

determinations.'' Instead, Springfield’s request for a

declaratory judgment presented the court with an issue

of statutory interpretation. Such questions present pure

legal issues and therefore satisfy an exception to the

general exhaustion of remedies rule. Premium Std.

Farms, 946 S.W.2d at 237-38 (permitting court to resolve

a purely legal issue of whether a township had authority

to impose certain regulations, even though the plaintiff

had not sought a variance and therefore had not

exhausted administrative remedies); City of Bridgeton

v. City of St. Louis, 18 S.W.3d 107, 112 (Mo.Ct.App.2000)

(question of whether zoning ordinance applied was

question of law and therefore administrative remedies

did not need to be exhausted before the court could

determine immunity). Accordingly, we conclude that

Springfield’s claim for declaratory judgment satisfies

at least one of the exceptions to the exhaustion doctrine.

Thus, the district court had subject matter jurisdiction,

the justiciability requirements are met, and the district

court did not err in denying Alltel’s motion to dismiss

for failure to state a claim.

11. Alltel repeatedly argues that the issue before the

district court was not a pure legal issue and that it was at least

a mixed question of fact and law. This argument ignores the

fact that the district court dismissed Springfield’s tax collection

claim. Without the collection claim, there are no facts to

determine. The sole issue before the court is whether the

defendants’ business activity falls within the statutory language

of providing telephones and telephonic services.

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Appendix A

3. Tax Injunction Act

Alltel raises the application of the Tax Injunction

Act, 28 U.S.C. § 1341, which presents a question of

subject matter irisdiction. See Burris v. City of Little

Rock, 941 F2c 4.7, 721 (8th Cir.1991) (raising issue of

Tax Injunction Act sua sponte). Section 1341 states that

“(t]he district courts shall not enjoin, suspend or restrain

the assessment, levy or collection of any tax under State

law where a plain, speedy and efficient remedy may be

had in the courts of such State.” In addition to

prohibiting injunctive relief, § 1341 also bars declaratory

judgment actions. Burris, 941 F.2d at 720 (citing

California v. Grace Brethren Church, 457 U.S. 393, 411,

102 S.Ct. 2498, 73 L.Ed.2d 93 (1982)). The objective of §

1341 is:

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(1) to eliminate disparities between taxpayers

who could seek injunctive relief in federal

court—usually out-of-state corporations

asserting diversity jurisdiction—and

taxpayers with recourse only to state courts,

which generally required taxpayers to pay

first and litigate later; and (2) to stop

taxpayers, with the aid of a federal injunction,

from withholding large sums, thereby

disrupting state government finances.

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Hibbs v. Winn, 542 U.S. 88, 104, 124 S.Ct. 2276, 159

L.Ed.2d 172 (2004) (citing the Senate Report). When

Congress enacted § 1341, “Congress trained its attention

on taxpayers who sought to avoid paying their tax bill

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Appendix A

by pursuing a challenge route other than the one 4

specified by the taxing authority. Nowhere does the

legislative history announce a sweeping congressional

direction to prevent federal-court interference with all

aspects of state tax administration.” Jd. at 104-05, 105 :

n. 7, 124 S.Ct. 2276 (internal quotation omitted) (“The .

TIA does not prohibit interference with ‘the operation

of, or compliance with,’ state tax laws; rather, § 1341 :

proscribes interference only with those aspects of state

tax regimes that are needed to produce revenue—i.e.,

assessment, levy, and collection.”). Accordingly, there is

a crucial distinction between a plaintiff who seeks a

declaratory judgment that a specific tax is

unconstitutional or invalid and a plaintiff who seeks a

declaratory judgment that a particular taxpayer is

engaged in an activity that makes the taxpayer subject

to a state or local tax. See id. at 104, 124 S.Ct. 2276

(allowing party to challenge in federal court the

constitutionality of a state tax credit given to a third-

party); Jefferson County v. Acker, 527 U.S. 423, 433-35,

119 S.Ct. 2069, 144 L.Ed.2d 408 (1999) (allowing federal

jurisdiction over a claim brought in state court to collect

state taxes and removed by defendants to federal court

wherein the defendants argued that application of the

tax violated federal law; the Court noted that in enacting

§ 1341, “the state laws to which Congress referred

surely do not preclude the States from enforcing their

taxes in court”).

Alltel’s citation to Orange County v. Expedia, Inc.,

is neither controlling nor persuasive. See 440 F.'Supp.2d

1341 (M.D.Fla.2006). In Expedia, a district court

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‘

19a

Appendix A

dismissed a claim by a county sccwing a declaratory

judgment that it had the “power, privilege and right to

audit the Defendants regarding the [tax], and to assess

and collect [the tax] due from the Defendants.” Jd. at

1343. The court acknowledged that the Supreme Court

has sanctioned federal jurisdiction over claims by local

governments seeking tax collectior. Jd. at 1343 (citing

Acker, 527 U.S. at 433-34, 119 S.Ct. 2069). Nevertheless,

without analyzing the text of § 1341, its purpose, or its

legislative history, the court held that declaratory

judgments sought by local governments are always

barred by § 1341. Expedia, 440 F.Supp.2d at 1344. We

conclude that neither the text of § 1341 nor the relevant

Supreme Court holdings compel such a result.

Springfield’s claim in this case is distinguishable from

that asserted in Expedia because Springfield is not

seeking a determination of its “right” or “power” to tax

telephones and telephonic services. Rather, the issue is

one of statutory interpretation affecting the application

of the tax, with the specific question being whether the

defendants provide telephones and telephonic services

and not whether the tax is valid.

We find more persuasive the reasoning in Mayor &

City Council of Balt. v. Vonage Am. Inc., in which a

district court was faced with a situation similar to the

one before us today. See 544 FSupp.2d 458 (D.Md.2008).

In Vonage, the City of Baltimore brought suit against a

provider of “Voice over Internet Protocol,” seeking a

declaratory judgment that a local tax on

telecommunications applied to the provider. /d. at 461.

The provider filed a counterclaim seeking a declaratory

Le aes ee CO a Ee RT OE LO IP ee Lay Cn eH oe ee oe See ee, ee

20a

Appendix A

judgment that it was not subject to the tax. Jd. The

district court analyzed § 1341 and concluded that the

provider’s declaratory judgment was barred, but

adopted the argument that Baltimore’s claim for

declaratory judgment was not barred by § 1341 because

it was not a claim by a taxpayer seeking to prevent tax

collection proceedings. Jd. at 465-66 (citing Acker, 527

U.S. 423, 119 S.Ct. 2069, 144 L.Ed.2d 408). For the same

reason, we conclude that § 1341 does not bar

Springfield’s claim in this case.

B. Abstention

With regard to its abstention claim, Alltel cites

Brillhart v. Excess Ins. Co. of Am., for the proposition

that even if a district court has jurisdiction to enter a

declaratory judgment, it is not required to exercise that

jurisdiction. See 316 U.S. 491, 494, 62 S.Ct. 1173, 86 L.Ed.

1620 (1942). Brillhart does not suggest, however, that

the “istrict court in this case was required to abstain.

Sze id. at 494-°5, 62 S.Ct. 1173 (motion to dismiss based

upon a pending state proceeding). With regard to Alltel’s

citation to a state court case filed in the Circuit Court in

St. Louis County on August 28, 2006, No. 01 CC-4454,

Alltel has not indicated where in the record it made the

district court aware of this case. Accordingly, we accept

the district court’s finding that there are no parallel state

court cases and rest on the district court’s conclusion,

after conducting a thorough analysis of the six factors

that should be considered, that it need not abstain. See

City of Jefferson IV, 2007 WL 1965572, at *10 (discussing

Scottsdale Ins. Co. v. Detco Indus., Inc., 426 F.3d 994,

998-99 (8th Cir.2005)).

2la

Appendix A

Alltel also argues that the district court should have

abstained under Burford v. Sun Oil Co. because timely

and adequate state review was available and the case

involves difficult questions of state law and public policy.

See 319 U.S. 315, 63 S.Ct. 1098, 87 L.Ed. 1424 (1943).

Again, Alltel’s argument comes down to the assertion

that Springfield did not exhaust its administrative

remedies. As discussed above, we agree with the district

court that because there is no adequate administrative

remedy for the legal issue presented in this case,

exhaustion is not required. Additionally, the district

court noted that early in the litigation it had inquired of

the parties why the case was in federal court and heard

no argument that it should abstain from hearing the

case. City of Jefferson IV, 2007 WL 1965572, at *8; see

Evanston Ins. Co. v. Johns, 530 F.3d 710, 713-14, 2008

WL 2493008, at *2 (8th Cir.2008). In fact, Alltel did not

raise the issue of abstention until much time and effort

had been invested by all parties and the district court

had ruled against it. City of Jefferson III, 2006 WL

3937243, at *3. Accordingly, we conclude that the case

was properly before the district court and the district

court did not abuse its discretion by declining to abstain.

Ill. Springfield’s Tax Ordinance

Alltel and Cingular argue that the district court

erred in granting Springfield’s motion for summary

judgment because cell phone services are not telephonic

services. Alltel contends that the district court erred

by not strictly construing Springfield’s authority to tax

“telephone companies” and by not strictly construing

22a

Appendix A

the terms “telephones” and “telephonic services” in the

tax ordinance itself. Cingular asserts that it provides

telecommunications services, not telephonic services,

and that the district court erred by ignoring the 2000

modification of the tax ordinance and applying the

language of the pre-2000 version. Defendants further

argue that they are not subject to the tax on

“telecommunications services” because Springfield’s

Charter grants it the authority to tax “telephone

companies,” not “telecommunications companies,” and

the 2000 recodification of the tax ordinance violated the

Hancock Amendment. In the alternative, the defendants

argue that the tax ordinance is ambiguous and therefore

must be construed in favor of the defendants.

We review de novo a district court’s grant of

summary judgment. Med. Liab. Mut. Ins. Co. v. Alan

Curtis LLC, 519 F.3d 466, 471 (8th Cir.2008). In so doing,

we view the record in the light most favorable to the

nonmoving party and affirm if there are no genuine

issues of material fact and the moving party is entitled

to judgment as a matter of law. Jd. We review de novo

the district court’s determinations of law. Jd.

A. The Plain Language of Springfield’s Tax

Ordinance

Section 70-452 of the Springfield Code states that

“[e]very person engaged in the business of supplying

telephones, and telecommunications and telephonic

service, and telecommunications services, within the city

shall pay as a license tax a sum equal to six (6) percent

23a

Appendix A

of the gross receipts from such business.” The

ordinance does not define the terms “telephones,”

“telecommunications,” “telephonic services,” or

“telecommunications services.” To ascertain the

meaning of a city ordinance, we utilize the same rules of

construction applied to statutes. Neske v. City of St.

Louis, 218 S.W.3d 417, 424 (Mo.2007) (en banc). “The

primary rule of statutory interpretation is to give effect

to legislative intent as reflected in the plain language of

the statute.” Missouri ex rel. Young v. Wood, No. SC

88840, 2008 WL 2346199, at *1 (Mo.2008) (en banc). The

standard for determining whether a statute’s terms are

plain and clear is whether the terms are plain and clear

to a person of ordinary intelligence. Wolff Shoe Co. v.

Dir. of Revenue, 762 S.W.2d 29, 31 (Mo.1988) (en banc).

“When the statute’s language is unambiguous, a court

must give effect to the legislature’s chosen language.”

Missouri ex rel. Young, 2008 WL 2346199, at *1. In the

absence of statutory definitions, we turn to the ordinary

meaning of the statutory terms as derived from a

dictionary and consider the context of the statute in

which the language appears. Missouri ex rel. Burns v.

Whittington, 219 S.W.3d 224, 225 (Mo.2007) (en banc).

In so doing, we presume that the legislature did not

intend the statute to create an absurd result. Weeks v.

Missouri, 140 S.W.3d 39, 47 (Mo.2004) (en banc).

The Springfield Code does not explicitly define the

term “telephone.” The use of the term throughout the

Code, however, provides some insight into its intended

meaning. See Crum v. Vincent, 493 F.3d 988, 996 (8th

Cir.2007) (Missouri law requires courts to read statutes

24a

Appendix A

in pari materia by harmonizing sections covering the

same subject matter). Several sections list the

information that must be provided to apply for a

franchise or license. See, e.g., Springfield, Mo., Code

§§ 70-323(a), 70-594(b), 100-5.1. Among the information

required is the applicant’s “telephone number.”

Certainly the request for a telephone number in this

context is not limited to the individual’s land-line

telephone, for a cell phone number would satisfy the

purpose of these sections and it is unlikely an application

would be denied on the basis that the applicant had a

cell phone bué not a land-line telephone. Additionally,

section 78-62 describes the criminal offense of

“Harassment by telephone.” Surely this section is not

limited to callers who harass others via a land-line

telephone. See also Springfield, Mo., Code § 120-152(f)(1)

(to report a potential problem regarding a discharge,

“it is the responsibility of the industrial user to

immediately telephone and notify the POTW of the

incident”).

It is also true that some provisions in the Springfield

Code refer to telephones and their accompanying wires

or cables. For instance, section 98-46(b) specifies the

proper placement of “underground telephone cables,

junction boxes and appurtenances thereto.” See also

Springfield, Mo., Code §§ 70-481, 70-482. It does not

necessarily follow, however, that because some

telephones have wires or cables, certain aspects of which

are regulated by Springfield, those devices that do not

have wires or cables are not telephones.

25a

Appendix A

The word “telephonic” appears in only two Articles

of the Code. Once in Article XI, which contains the tax

ordinance at issue in this case, and secondly in Article V

related to underground facility safety and damage

prevention. Neither use suggests that the definition of

the term is limited to land-line telephones.

Because the Springfield Code does not explicitly

define the terms “telephone” or “telephonic services,”

we also look to the dictionary definition of these

statutory terms to determine their ordinary meanings.

See Schumacher v. Cargill Meat Solutions Corp., 515

F.3d 867, 871 (8th Cir.2008) (looking to Merriam-

Webster’s Collegiate Dictionary for the ordinary

meaning of a statutory term). The district court

analyzed definitions from older dictionaries to determine

the meaning of the word “telephone” during the time

when the original tax ordinance was in effect. See City

of Jefferson V, No. 04-04099, 2007 WL 1965572 (W.D.Mo.

July 3, 2007). The district court looked to the 1969 and

1982 editions of the American Heritage Dictionary, which

both define a “telephone” as “[a]n instrument that

directly modulates carrier waves with voice or other

acoustic source signals to be transmitted to remote

locations and that directly reconverts received waves

into audible signals; especially such an instrument

connected to others by wire.” The 1966 Webster’s Third

New International Dictionary defines “telephone” as “an

instrument for reproducing sounds esp. articulate

speech at a distance.” The district court also looked at

the 2000 edition of the American Heritage Dictionary,

which defines “telephone” as “[aJ]n instrument that

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26a

Appendix A

converts voice and other sound signals into a form that

can be transmitted to remote locations and that receives

and reconverts waves into sound signals.” Although the

district court noted that these definitions provide

examples of telephones that use wires, the examples are

not exhaustive and do not preclude the conclusion that

a device that meets the definition of telephone but which

does not have wires is nonetheless a telephone.

Accordingly, we also believe the following definition of

“telephone” is especially helpful: “any of various devices

(as a sound-signaling device or a speaking tube)

resembling or suggesting the telephone.” Webster’s

Third New International Dictionary 2350 (1981).

The 1999 edition of Merriam-Webster’s Collegiate

Dictionary defines “telephonic” as “of, relating to, or

conveyed by a telephone.” Webster’s Collegiate

Dictionary 1211 (10th ed.1999). The definition of

“telephonic” in other dictionaries is substantially the

same. Webster’s Third New International Dictionary,

for instance, defines “telephonic” as “conveying sound

to a distance,” or “of or relating to the telephone,” or

“carried or conveyed by telephone.” Webster’s Third

New International Dictionary 2350 (1981).

Applying Missouri’s rules of statutory construction,

we conclude that the plain language of the tax ordinance

makes it clear that the ordinance was intended to cover

all telephonic services, regardless of the type of

technology used to provide the services. Cell phones are

commonly described as telephones and are used to

accomplish the same function and purpose as a land-

’

27a

Appendix A

line telephone.'* Both devices convert voice and other

sound signals into a form that can be transmitted to

remote locations, both devices receive and reconvert

waves into sound signals, and a cell phone resembles a

telephone.

Admittedly, cell phones have newer and more

advanced features than the telephones commonly used

when the tax ordinance was first enacted. Nevertheless,

nothing about the term “telephonic” in the tax

ordinance is limited to the technology generally used to

operate telephones in 1944. In fact, cases dating back

to pre-1944 which discuss telephones and telephone

systems describe them in terms of their purpose and

not with regard to the type of technology used to operate

them. See Gilpin v. Savage, 60 Misc. 605, 112 N.Y.S.

802, 805 (N.Y.Sup.1908), rev’d on other grounds, 201 N.Y.

167, 94 N.E. 656 (1911) (“The telephone is simply an

instrument by which two persons may talk directly to

each other.”); see also Missouri ex rel. Baltimore &

Ohio Tele. Co. v. Bell Tele. Co., 23 F. 539, 541

(C.C.E.D.Mo.1885) (“A telephonic system is simply a

system for the transmission of intelligence and news.”).

As the district court noted, there have been many

advances in telephone technology over the past sixty

years, and with each technological advancement we

12. The Oxford English Dictionary defines a cell phone as

a type of telephone. Oxford English Dictionary Additions Series

OED Online (1993), available at http:// dictionary. oed. com

(defining “cellphone” as “[a] hand-held or mobile radio-

telephone providing access to a cellular radio network; a cellular

telephone”).

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;

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28a

Appendix A

continue to refer to the product and services as

telephonic. See City of Jefferson V, No. 04-04099, 2007

WL 1965572 (W.D.Mo. July 3, 2007). Springfield is not

required to update its Code for the purpose of

recognizing the advent of each new form of technology

used to provide telephonic services. Accordingly, we

conclude that the language of the tax ordinance is

unambiguous and that the tax ordinance applies to cell

phone services.

B. Extrinsic Evidence

Even if we believed the tax ordinance was

ambiguous, however, we would conclude that extrinsic

evidence supports the conclusion that Springfield

intended the original language of the ordinance to cover

services such as cell phone services, that the ordinary

meaning of the term “telephone” includes cell phones,

and that cell phone services are telephonic services.

The defendants describe their products as

telephones and their services as telephonic services. See

City of St. Louis v. Miss. River Fuel Corp., 57 FSupp.

549, 554 (E.D.Mo.1944) (terminology related to a

particular industry should be given the meaning

attributed to it by the industry). Cingular’s website

states that “(t]he world of wireless can be confusing.

That’s why we’ve provided this extensive glossary of

terms to help you better understand the technologies

behind wireless communications.” The website’s

glossary defines “telephony” as “[oJriginally meaning

voice (analog) communication by telephone (land line),

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29a

Appendix A

this term has come to encompass virtually

all telecommunications, because virtually all

telecommunications can be done over or while connected

to a telephone line.” “Cellular” is defined as “[a] wireless

telephone network that connects radio frequencies from

a mobile phone to a system of multiple cell sites, each

consisting of an antenna and a base station, to a mobile

telephone switching office, and ultimately to the public

wireline telephone system.” CMRS is defined as “[a]n

FCC designation for any carrier or licensee whose

wireless network is connected to the public switched

telephone network and/or is operated for profit.”

Telecommunications is defined as “(c]ommunicating by

telephone, telegraph or radio technology.” These

definitions do not indicate that telephonic services and

telecommunications services are mutually exclusive. On

the contrary, they support the conclusion that a cell

phone, despite the fact that it is using a different

technology than land-line telephones to accomplish the

same purpose, is inherently telephonic in nature and

should be subject to the same taxes as traditional land-

line telephones regardless of what new terminology the

defendants wish to use to describe their products and

services in the course of this litigation. See Rhodes v.

City of Hartford, 201 Conn. 89, 513 A.2d 124, 126 (1986)

(“[o]ne should not be able to avoid a tax on shoes by

calling shoes slippers” (alteration in original) (internal

quotation omitted)).

Although there is no case law specifically addressing

Springfield’s tax ordinance, the Missouri courts have

recently discussed issues related to the question before

”

30a

Appendix A

us today. In City of Sunset Hills v. Sw. Bell Mobile Sys.,

Inc., the Mizsouri Court of Appeals concluded that

Southwestern Bell, a provider of cellular communication

services, is a telephone company for purposes of the

Sunset Hills’ Charter authorizing it to tax telephone

companies. 14 S.W3d 54, 58-59 (Mo.Ct.App.1999)

(Southwestern Bell described its cell prone business as

“telecommunications antennae business”). Thereafter, in

City of Springfield v. Sprint Spectrum, L.P, the Missouri

Supreme Court characterized the holding in City of Sunset

Hills as stating that it is “absurd to deny that companies

providing ‘wireless communications services’ were a part

of the class of ‘telephone companies’ subject to a telephone

business license fee.” 203 S.W.3d 177, 187 n. 13 (Mo.2006)

(en banc). Additionally, in other cases, Missouri courts have

discussed cell phone companies and the services they

provide in terms of telephones and telephonic services.

See, e.g., Missouri v. Purl, 236 S.W.3d 680, 682

(Mo.Ct.App.2007) (describing a call on a “cellular phone”

as a “telephone call”); Auto-Owners Ins. Co. v. Ennulat,

231 S.W.3d 297, 300 (Mo.Ct.App.2007) (discussing a “cellular

telephone tower”); Whitney v. Alltel Commce’ns, Inc., 173

S.W.3d 300, 304, 312 (Mo.Ct.App.2005) (describing a

customer of Alltel’s as a “wireless telephone customer” and

citing Powertel, Inc. v. Bexley, 743 So.2d 570, 572

(Fla.Dist.Ct.App.1999), wherein a person purchased a

“cellular telephone service plan” allowing them to make

“telephone calls” within the local service area). These cases

lead us to the conclusion that if presented with the question

before us, the Missouri Supreme Court would conclude

that a cell phone is a telephone and that cell phone services

are telephonic services.

3la

Appendix A

Cases from other jurisdictions also support the

conclusion that the ordinary definition of “telephone”

includes cell phones and that a cell phone company is a

telephone company. See Sw. Bell Mobile Sys., Inc. v. Ark.

Pub. Serv. Comm’n, 73 Ark.App. 222, 40 S.W.3d 838, 842

(2001) (concluding that CMRS providers are telephone

companies because they “use their assets to provide a

service whereby persons who are at some distance from

each other may communicate by voice in real time”);

Galloway v. Alltel Comme’ns, Inc., No. C99-2097, 2001

WL 34149071, at *1 (N.D.Iowa 2001) (“Alltel is a

communications-related corporation which includes the

sale of wireless telephone service and equipment.”);

Cent. Ky. Cellular Tel. Co. v. Commonwealth of Ky., 897

S.W.2d 601, 603 (Ky.Ct.App.1995) (“The fact that the

{cellular telephone companies] operate with technology

that did not exist when the statute was adopted does

not mean that they are not to be included for the

purposes of [the statute]. . . . This fact does not

mean that telephone companies become something

else simply because they use improved communication

techniques.”); Nebraska v. Robinson, 272 Neb. 582, 724

N.W.2d 35, 62 (2006) (describing Alltel’s record keeping

process for “wireless telephones”); Airtouch Comm’ns,

Inc. v. Dep't of Revenue, State of Wyo., 76 P3d 342, 349

(Wyo.2003) (concluding that cellular companies are

telephone companies because, “[t]o most reasonable

people, Petitioners’ business is indistinguishable from

that of a telephone company. In fact, in today’s society,

many people use telephone services and cellular services

interchangeably” (internal quotation omitted)).

32a

Appendix A

The cases cited by the defendants in which cell phone

companies have been found to be something other than

telephone companies are distinguishable. For example,

Alltel’s citation to an order from the Administrative Law

Court in South Carolina for the proposition that Alltel is

not a “telephone company” is not instructive. See Alltel

Comme’ns, Inc. v. S.C. Dep't of Revenue, Nos. 07-ALJ-17-

0299-CC through 07-ALJ-17-0304-CC (Apr. 22, 2008) (order

granting Petitioners’ motion for summary judgment). In

that case, the parties stipulated that “[t]lelephones and

telephone companies transmit intelligence over a vast

network of wires located in public rights of way and in

easements over private property.” Jd. at 10, 1 50. The

parties also stipulated that Alltel did not have any facilities

located in public rights of way. Jd. at 10, 151. As a result,

the court’s conclusion that Alltel did not meet the definition

of a telephone company does not compel a similar

conclusion in the present case because that definition is of

no binding effect here. The citation to a Missouri

Administrative Hearing Commission decision from 1982 is

also unhelpful. See Mobile Radio Commce’ns, Inc. v. Dir.

of Revenue, No. RS-79-0199, 1982 WL 12037

(Mo.Admin.Hrg.Com. Dec. 16, 1982). In Mobile Radio

Comme'ns, the administrative commission relied on a Texas

Supreme Court case in which mobile radio communications

were not subject to a local ordinance because the ordinance

referred to transmission of voice communication “by lines

and wires.” Jd. Because our analysis of whether the

defendants are subject to the Springfield tax ordinance

does not include stipulated definitions for telephone

company or telephonic services, the cases cited by the

defendants are inapposite.

’

33a

Appendix A

Likewise, Cingular’s citation to a Massachusetts

case does not further its position. See Bell Atl. Mobile

of Mass. Corp., Ltd. v. Comm’r of Revenue, 451 Mass.

280, 884 N.E.2d 978 (2008). The case is interesting,

however, because Bell Atlantic Mobile took the position

that it provided telephone services and was therefore a

telephone company for purposes of receiving a property

tax exemption. See id. at 984; Bell Atl. Mobile Corp.,

Ltd. v. Comm’r of Revenue, No. C269569, 2007 WL

597941, at *14 (Mass.App.Tax.Bd.2007) (Bell Atlantic

defined “telephone service” as “two-way, party-to-party

voice communication and data transmission”). The court

reached its conclusion that Bell Atlantic Mobile was not

a telephone company after considering the fact that it

owned virtually none of the property eligible for the

property tax exemption. Bell Atl. Mobile, 884 N.E.2d

at 983-84. The court quickly dismissed one of its prior

cases addressing the issue of whether a company that

provided land-line telephone services, cable television,

and Internet services, qualified as a telephone company

for purposes of the property tax exemption. See 884

N.E.2d at 984 (discussing RCN-BecoCom, LLC v.

Comm ’r of Revenue, 443 Mass. 198, 820 N.E.2d 208

(2005)). Interestingly, in RCN-BecoCom, the court

included dial-up Internet connections in the calculation

of the financial receipts the company received from

telephone service. 820 N.E.2d at 215, 216 n. 4. In so

doing, the court reasoned that dial-up Internet service

is analogous to the transmission of information by

facsimile, which is a telephone service. /d. The court

also noted that Digital Subscriber Line (DSL) Internet

access was a telephone service, thus providing further

34a

Appendix A

support for our conclusion that the definition of

telephones and telephonic services is indeed broad and

is not limited to any particular type of technology.

We acknowledge that tax ordinances are to be

strictly construed and that if there is any doubt about

the applicability of the tax, it must be resolved in favor

of the taxpayer. See Morton v. Brenner, 842 S.W.2d 538,

542 (Mo.1992) (en banc); Armack’s Estate v. Missouri,

561 S.W.2d 109, 111 (Mo.1978) (en banc). Nevertheless,

even if we apply the strictest of definitions to

“telephones” and “telephonic services,” we conclude

that the extrinsic evidence leaves no doubt that the

phrase “telephonic services” covers cell phone services.

Alltel contends that the appropriate standard is not

whether “telephonic services” is broad enough to cover

CMRS but whether reasonable minds can differ on the

question of whether CMRS constitutes telephonic

services. Springfield’s authority to tax “telephones” and

“telephonic services” is not at issue, however, and we

conclude that the application of the tax to the defendants

is clear. The fact that Alltel can present an argument

that the ordinance is susceptible to more than one

interpretation does not mean that the ordinance is

ambiguous. See J.B. Vending Co., Inc. v. Dir. of Revenue,

54 S.W.3d 183, 188 (Mo.2001) (en banc) (“the mere fact

that the litigants disagree over the meaning of ‘public’

does not render the statute ambiguous”). That courts

in other jurisdictions, applying different statutory terms

and definitions to different facts, have at times concluded

that a particular business is not a telephone company

;

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Se Ewe ee eee

35a

Appendix A

does not alter our conclusion, for we find the Missouri

Court of Appeals’ 1999 holding that a cell phone

provider could be taxed as a telephone company to be

more compelling. See City of Sunset Hills, 14 S.W.3d at

58-59. Because we must assume that the Springfield City

Council was aware of this case law when it modified the

tax ordinance in 2000, we conclude that if the Council

had intended that cell phone services be excluded from

the tax on telephonic services, it would have made that

intention clear in 2000. See Hudson v. Dir. of Revenue,

State of Mo., 216 S.W.3d 216, 222-23 (Mo.Ct.App.2007)

(“The legislature is presumed to know the existing case

law when it enacts a statute.” (internal quotation

omitted)). Thus, even if we assume that the tax

ordinance is ambiguous and look to extrinsic evidence

interpreting it, we conclude that the legislative intent

to tax “telephonic services” makes the ordinance

applicable to cell phone services.

C. The2000 Recodification of the Springfield Code

The defendants argue that the 2000 modification of

the tax ordinance must be given some effect. Cingular

contends that it provides “telecommunications” services

and that the definitions of telephonic services and

telecommunications services are mutually exclusive.

Furthermore, both defendants argue that they are not

subject to the tax under the telecommunications

language in the ordinance because Springfield’s Charter

authorized it to tax only telephone companies, and not

telecommunications companies, and the 2000

modification of the ordinance violated the Hancock

Amendment.

;

36a

Appendix A

When the legislature amends a statute, we presume

its intent was to change the existing law or to accomplish

some legislative purpose. Hagan v. Dir. of Revenue, 968

S.W.2d 704, 706 (Mo.1998) (en banc); Missouri v.

Rousseau, 34 8.W.3d 254, 261 (Mo.Ct.App.2000). The

legislative purpose of a statutory amendment can be to

clarify the law rather than change the existing law.

Andresen v. Bd. of Regents of Mo. W. State Coll., 58

S.W.3d 581, 589 (Mo.Ct.App.2001) (concluding that the

amendment clarified the legislature’s original intent to

exclude academic institutions from the State Personnel

Law); Flipps Nine, Inc. v. Mo. Prop. and Cas. Ins. Guar.

Ass’n, 941 S.W.2d 564, 568 (Mo.Ct.App.1997) (concluding

that the amendment to the statute was intended to

clarify and particularize existing law); Carter v.

Pottenger, 888 S.W.2d 710, 714 (Mo.Ct.App.1994)

(concluding that the amendment indicated legislative

intent that “personal representative” under the earlier

version of the statute did not mean “a representative of

a probate estate appointed under the time constraints”

of another statute). We consider the legislative act in

its entirety and harmonize all of its provisions if possible.

Hagan, 968 S.W.2d at 706. If the legislature amends only

part of a statute, we presume that the unamended and

unchanged parts of the statute are intended ‘o remain

operative and effective. Citizens Bank and Trust Co. v.

Dir. of Revenue, State of Mo., 639 S.W.2d 833, 835

(Mo.1982).

The Code contains several references to

“telecommunications” and “telecommunications services.”

Section 100-2.48 defines “telecommunications” as “the

37a

Appendix A

transmission, between or among points specified by the

user, of information of the user’s choosing (e.g. data,

video, and voice), without change in the form or content

of the information sent and received regardless of the

technology used.” See also The Telecommunications Act

of 1996, 47 U.S.C. § 153(43) (using substantially the same

definition).

The 1999 edition of Merriam-Webster’s Collegiate

Dictionary defines “telecommunication” as

“communication at a distance (as by telephone).”

Merriam-Webster’s Collegiate Dictionary 1211 (10th

ed.1999). “Telecommunication” has also been defined as

“communication at a distance (as by cable, radio,

telegraph, telephone, or television).” Webster’s Third

New International Dictionary 2349 (1981).

Given these definitions, we conclude that cell phone

services could be considered both telephonic services

and telecommunications services. Cell phones are

telephonic, as discussed above. Cell phones may also be

telecommunications devices under the definition in the

Springfield Code and the ordinary definition of the term

because they transmit information. including vuice,

data, and in the case of some newer cell phones, video.

Thus, the terms used in the tax ordinance are not

necessarily mutually exclusive and there is no merit to

the argument that cell phones are telecommunications

devices and therefore cannot be taxed as telephonic

devices.

38a

Appendix A

This brings us to Cingular’s argument that the 2000

modification must have had some purpose, to which we

must give effect. See Schoemehi v. Treasurer of Mo.,

217 S.W.3d 900, 902 (Mo.2007) (en banc) (noting that an

entire clause of a statute should not be considered excess

verbiage). We conclude that the legislative intent of the

2000 recodification that added the terms

“telecommunications” and “telecommunications

services” was to clarify the scope of the tax ordinance,

making it clear that cell phone services are telephonic

services subject to the tax, and not to expand the scope

of the ordinance. See Missouri ex rel. Thomas v. Kelly,

631 S.W.2d 685, 688 (Mo.Ct.App.1982) (when a new act

supersedes an old law for the purpose of repealing

conflicting or inconsistent provisions, any variation in

the terminology in the new law is not as meaningful for

the purpose of showing legislative intent to change the

effect of the statute).

The record indicates that Springfield’s recodification

of § 70-452 in 2000 was not intended to be a substantive

change to the scope of the ordinance. The modification

occurred as part of a complete update of the Springfield

Cede, the purpose of which was to create an

electronically searchable version thereof, eliminate

inconsistencies or unclear provisions of the Code, and

to identify ordinances of questionable enforceability,

expired language, duplications and conflicts with state

or federal law. The modification process was conducted

by a private company and was specifically intended to

create “non-substantive” changes in the Code unless

needed to be internally consistent or consistent with

39a

Appendix A

state or federal law. Mary Mannix, Springfield’s

Assistant Director of Finance and Comptroller, testified

in her deposition that “We viewed [the recodification]

as a modernization of the language.” She testified

further that “Anything that was a substantial change

to what the ordinances that existed at the time that this

was codified would have been covered by a separate city

council ordinance at that time.” Nancy Yendes, a

Springfield city attorney, testified that the tax ordinance

was not brought before the Council separately and that

no one working for Springfield was aware of the updated

language in the tax ordinance until after the Council

approved the recodification of the entire Code. In sum,

this evidence reveals that the modification of the tax

ordinance was not intended to be, and was not viewed

as, a substantive change to the scope of the ordinance.

The record also indicates that prior to the 2000

modification, Springfield interpreted the tax ordinance

as applying to cell phone services. The original

ordinance, enacted in 1944, included the phrase

“telephonic services,” a phrase that, despite Cingular’s

argument to the contrary, is broader than the term

“telephone.” As indicated by the definitions of these

terms analyzed above, “telephonic” means something

that is related to a telephone, which necessarily includes

items or services that are not the physical telephone

itself. The record also indicates that Springfield

interpreted the tax ordinance to apply to cell phones

before 2000. Yendes testified that she believed the term

“telephonic” is broader than “telecommunications,” and

that the new language in the tax ordinance was only

40a

Appendix A

included to update the ordinance with the new phraseology

and clarify the scope of the ordinance.'* Yendes also

testified that she had discussions with cell phone

companies, including Alltel, in the mid-to-late 90s regarding

their need to comply with the tax ordinance. The fact that

Springfield did not send the cell phone companies a demand

letter prior to 2004 does not establish that Springfield

believed that the ordinance did not apply to the defendants

and, in any event, does not relieve the defendants of their

obligation to pay the tax. See Med. House, Inc. v. Dir. of

Revenue, 799 S.W.2d 80, 82-83 (Mo.1990) (en banc). Thus,

we conclude that the original scope of the ordinance

included cell phones, and that the legislative purpose of

the 2000 modification was to clarify this interpretation and

not to expand the scope of the ordinance.

The defendants argue that because Springfield

referred to them as telecommunications companies in the

original pleadings, it cannot succeed in taxing them under

the original language of the ordinance. Springfield’s

pleadings do not, however, change the scope of the question

before us. Springfield has always asserted its authority to

tax the defendants as telephone companies. Furthermore,

Count III of the Complaint seeks a declaratory judgment

that “the Springfield Ordinance, which includes the terms

‘telephone’ and ‘telephonic’ applies to the Wireless

Defendants’ services;” and that “the Wireless Defendants

13. Yendes testified that one way in which the 2000

modification clarified the ordinance was to draw peoples’ attention

to the ordinance regardless of whether they searched the

Springfield Code for provisions related to telephones, telephonic

services, telecommunications, or telecommunications services.

4la

Appendix A

[are] liable to pay taxes under the Ordinance.”

Springfield’s motion for summary judgment clearly argued

that CMRS is subject to taxes applicable to telephones

and telephonic services. Additionally, the record indicates

that the district court and the parties treated the

declaratory judgment as an issue of whether the

defendants provide telephones and telephonic services.

The defendants also argue that Springfield’s attempt

to tax them exceeds the scope of Springfield’s Charter.

Section 18.1(3) of Springfield’s Charter authorizes it to tax

telephone companies. A company that provides telephones

and telephonic services is a telephone company. Thus, a

tax on the defendant’s cell phone services, which are

telephonic services, is authorized by the Charter. We need

not reach the question whether the City’s Charter grants

it the authority to tax telecommunications companies, but

we note that Springfield has the authority to tax a business

and occupation that, although not specifically listed as

subject to a license tax, “clearly comes within the definition

and meaning of the enumerated subjects or is in fact a

genus of one of the named occupations.” See City of St.

Charles v. St. Charles Gas Co., 353 Mo. 996, 185 S.W.2d

797, 798 (1945). Whether a telecommunications company

clearly comes within the definition of, or is a genus of, a

telephone company is a question we leave for another day.

The defendants’ final argument is that the 2000

recodification of the tax ordinance violated the Hancock

Amendment to the Missouri Constitution, with the result

that they cannot be taxed under the language added in

42a

Appendix A

2000 or under the original language of the ordinance.

See Mo. Const. art. X, § 22(a). Because we are not applying

the language of the ordinance that was added in 2000 to

the facts of this case, we do not need to reach the question

whether the 2000 recodification violated the Hancock

Amendment.” Even if the language added in 2000 was

unconstitutional, a question we do not decide, we see no

reason why the original language of the ordinance cannot

be severed. See Mo. Ann. Stai. § 1.140 (allowing

unconstitutional language to be severed from a statute

unless “the valid provisions of the statute are so essentially

and inseparably connected with, and so dependent upon,

the void provision that it cannot be presumed the legislature

would have enacted the valid provisions without the void

one; or unless the court finds that the valid provisions,

standing alone, are incomplete and are incapable of being

executed in accordance with the legislative intent”). The

2000 modification merely added language to the ordinance

and did not affect the validity of the original decades-old

language.'® See Mo. Ass'n of Club Executives v. Missouri,

208 S.W.3d 885, 888-89 (Mo.2006) (en banc) (challenged

provisions could be severed); Weinschenk v. Missorw', 203

14. We do note, however, that the Hancock Amendment

provides for a reduction in the levy of a tax if the tax base is

broadened without voter approval; it does not result in the

abolition of the tax altogether. Mo. Const. art. X, § 22(a).

15. The language enacted in 1944 was “telephones and

telephonic services.” In 1968, the Code was updated and the “s”

on “telephones” was omitted. It is unclear whether this change

was intentional, but in any event, the parties have not argued

that this change affects the issue before us today.

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43a

Appendix A

S.W.3d 201, 219-21 (Mo.2006) (en banc) (provisiuizs were

not severable). Therefore, even if the language added to

the ordinance in 2000 was unconstitutional, because the

defendants provide telephones and telephonic services

within Springfield, they are subject to the tax ordinance.

The judgment is affirmed.

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44a

APPENDIX B — ORDER NUNC PRO TUNC OF THE

UNITED STATES DISTRICT COURT FOR THE

WESTERN DISTRICT OF MISSOURI, CENTRAL

DIVISION GRANTING SUMMARY JUDGMENT

DATED JULY 3, 2007

IN THE UNITED STATES DISTRICT COURT

FOR THE WESTERN DISTRICT OF MISSOURI

CENTRAL DIVISION

Case No. 04-4099-CV-C-NKL

CITY OF JEFFERSON, et ai.,

Plaintiffs,

CINGULAR WIRELESS, LLC, et al.,

Defendants.

ORDER NUNC PRO TUNC

This case raises the question of whether the

Plaintiff, City of Springfield (“Springfield”), can collect

gross receipt taxes from the Wireless Defendants’ for

1. Alltel Communications, Inc. (“Alltel”); Cingular

Wireless LLC and Southwestern Beil Wireless LLC

(collectively, “Cingular”); and Nextel West Corporation

(“Nextel”) are referred to as the Wireless Defendants.

Defendants SBC Communications, Inc., and Southwestern Bell

Telephone, LP, are not the subject of Springfield’s current

Motion for Summary Judgment.

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= > mee ayvey Mee ad 6 es a Pe pe ee wat. ‘ a ee a eee 1 ee ws eee ee eee *

45a

Appendix B

the cell phone component of their businesses. The Court

concludes that Springfield’s gross receipt tax ordinance

is enforceable and that it applies to cell phone services

just as it applies to land line telephone services.

Accordingly, the Court will grant Springfield’s Motion

for Summary Judgment [Doc. 451] against the Wireless

Defendants and enter final judgment on Springfield’s

claims against the Wireless Defendants pursuant to Fed.

R. Civ. P. 54. It will stay Springfield’s remaining claims

against the SBC Defendants until further notice.

I. Background?

Springfield is a constitutional charter city. Its

charter, which was adopted in 1953, sets forth a specific

list of business categories that are subject to taxation.

That list includes “telephone companies.” Springfield

City Charter, art. XVIII § 18.1(3) (Def. Ex. 15, p. 116).

Pursuant to its charter, Springfield enacted a gross

receipts ordinance which imposes a tax on telephone

services. Springfield’s ordinance, as originally enacted

in 1968, provided as follows:

Every person engaged in the business of

supplying telephone and telephonic service

within the City shall pay as a license tax a sum

equal to 6% of the gross receipts from such

busines::.

2. For a more complete discussion of the background of

this case, see the Court’s Order granting in part Alltel and

Nextel’s Motion to Dismiss [Doc. 476].

Py Pat Be har a RE RT Ft Ee Dy, Cah Pe ee lie AES oy Peo a chs beh ph Pte PR Gol) el” 6 ne

46a

Appendix B

Springfield Code § 20-22 (January 2, 1968) (Def. Ex. 32).

In 2000, the ordinance was amended to provide as

follows:

Every person engaged in the business of

supplying telephones, and telecommunications

and telephonic service, and telecommunications

services, within the city shall pay as a license

tax a sum equal to six (6) percent of the gross

receipts from such business.

Springfield Code § 70-452 (2000) (recodified June 2,

2003) (Def. Ex. 5).

The Wireless Defendants are telecommunication

companies which provide a variety of services, including

cell phone services. For the purposes of this case,

however, the Defendants prefer to use the term

“Commercial Mobile Radio Service” (“CMRS”) to

describe the cell phone services which they sell. Because

the Court finds that “Commercial Mobile Radio

Services” are cell phones, the Court will generally refer

to these devices as cell phones, mobile phones or cellular

telephones.

The only remaining claim in Springfield’s lawsuit

against the Wireless Defendants is Springfield’s request

for a declaratory judgment that:

(1) The terms “telephone and telephonic

services,” which are contained in

Springfield’s gross receipts tax

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47a

Appendix B

ordinance, apply to the Wireless

Defendants; and

(2) Each Wireless Defendant is liable to pay

taxes under the ordinance.

II. Discussion

A. Do the Wireless Defendants Supply Telephone

or Telephonic Services in Springfield?

Despite the voluminous briefing in this case, the

primary issue to be resolved is relatively simple. Are

the Wireless Defendants in the business of providing

telephone services in Springfield? The Defendants claim

that they or their affiliates* for whom they are responsible

only provide CMRS in Springfield and, therefore, they

are not liable to pay Springfield’s gross receipts tax.

As it did in its Jume 9, 2005 Order, the Court

concludes that the phrase “telephone and telephonic

services” as used in Springfield’s gross receipts tax

ordinance is unambiguous and thus there is no need to

resort to extrinsic evidence to interpret its meaning.

See State ex rel. Maryland Heights Fire Protection

Dist. v. Campbell, 736 S.W2d 383, 387 (Mo. 1987) (en

3. Cingular admits that although it does not provide mobile

telephone service in Springfield itself, its affiliates do. Counsel

for Cingular has further represented to the Court that it has

waived any argument that it is not the proper party in interest

and intends to be bound by the outcome of the suit on behalf of

its affiliates who do provide cell phone service in Springfield.

48a

Appendix B

banc) (“It is a basic rule of statutory construction that

words should be given their plain and ordinary meaning

whenever possible. Courts look elsewhere for

interpretation only when the meaning is ambiguous or

would lead to an illogical result defeating the purpose

of the legislature.”) (citations omitted); State ex rel. Bell

v. Phillips Petroleum Co., 160 S.W.2d 764, 769 (Mo. 1942)

(“If [the statute] is clear and unambiguous, it must be

construed in accordance with its manifest intent and we

may not search for a meaning beyond the statute itself.”).

See Cook v. Newman, 142 S.W.3d 880, 887 (Mo. Ct. App.

2004) (en banc) (“Only when a statute’s langwage is

ambiguous or uncertain or if its plain meaning would

lead to an illogical result will extrinsic matters, such as

the statute’s history, surrounding circumstances and

objectives to be accomplished through the statute, be

considered.”) (citing Riordan v. Clark, 67 S.W.3d 610,

613 (Mo. Ct. App. 2001)).

When, as in this case, the legislative body has not

defined a term or phrase at issue, the Court is required

to give the words their usual and ordinary meaning.

State v. Harris, 156 S.W.3d 817, 822 (Mo. Ct. App. 2005).

In interpreting a statute enacted a number of years ago,

it is appropriate to consider how words and phrases were

defined around the time of the statute’s enaction. See

United States v. Lachman, 387 F-3d 42, 51 n.11 (ist Cir.

2004) (citing Lamar v. United States, 241 U.S. 103, 113

(1916)). Accordingly, the Court has consulted a number

of older dictionary definitions of the word “telephone.”

Most of the dictionaries define “telephone” quite

broadly. For instance, the 1969 American Heritage

49a

Appendix B

Dictionary states that a “telephone” is “[a]n instrument

that directly modulates carrier waves with voice or other

acoustic source signals to be transmitted to remote

locations and that directly reconverts received waves

into audible signals; especially, such an instrument

connected to others by wire.” The general definition

does not require that the instrument be connected to

others by wire, but gives wired services as one example,

suggesting that other technologies are included. The

American Heritage Dictionary retained the same

definition in its 1982 publication. Similarly, the 1966

Webster’s Third New International Dictionary—the

very dictionary that the Defendants in oral argument

on Springfield’s original motion stated is “the dictionary

of choice . . . for the Missouri Supreme Court” (Tr. at

34)—defines the word as “an instrument for reproducing

sounds esp. articulate speech at a distance.”* Taken

together, these definitions reveal that being connected

to a wire is not an essential characteristic of a telephone,

even if it is a common one. CMRS—which converts an

acoustic source into a signal for transmission to remote

locations—falls squarely within these definitions.

Even today, dictionaries continue to define telephone

in substantially the same way it was done at the time

the charters and the ordinances were enacted. For

example, the Fourth Edition of the American Heritage

4. The Defendants correctly pointed out during an earlier

oral argument that the dictionary provides two examples of

telephones, both of which include wires. However, the

dictionary’s explanatory notes indicate that such examples are

not meant to be exhaustive. Jd., explanatory note 12.2.2.

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Wr « ‘ -

50a

Appendix B

Dictionary, published in 2000, defines “telephone” as

“{ajln instrument that converts voice and other sound

signals into a form that can be transmitted to remote

locations and that receives and reconverts waves into

sound signals.” (Fourth Edition, 200C). The Court has

also consulted what is perhaps the best indicator of

common usage available: Google.com.® A Google search

of over eight billion web pages yields over 2,170,000

results for the phrase “wireless telephone,” 1,950,000

results for “cordless telephone,” 1,200,000 results for

“cellular telephone,” and 1,340,000 for “mobile

telephone.” These results confirm that, even in today’s

age of innovation, a “telephone” need not be connected

to wires. People understand that if you put it up to your

ear and you speak into a microphone and someone some

distance away is able to hear you, you are using a

telephone.

In sum, the word “telephone,” as it is commonly

used, means essentially the same thing as it meant when

Springfield’s ordinances were adopted. Indeed, usage

of the word has not changed much since 1908, when a

New York court stated that “[t]he telephone is simply

an instrument by which two persons may talk directly

to each other.” Gilpin v. Savage, 112 N.Y.S. 802, 805

(N.Y. Sup. 1908), rev’d on other grounds, 94 N.E. 656

(N.Y. 1911).

5. Google is a comprehensive online index of over eight billion

web pages. Google’s index, which is updated constantly, includes

pages created by individuals, organizations, businesses, and

governmental entities. It is, therefore, particularly well-suited to

discerning common usage of nearly any term.

Sla

Appendix B

Furthermore, the court’s conclusion is consistent

with other courts which have considered the same or

analogous issues. See City of Sunset Hills v.

Southwestern Bell Mobile Systems, Inc., 14 S.W.3d 54,

59 (Mo. Ct. App. 1999); Airtouch Communications, Inc.

v. Dep't of Revenue, State of Wyoming, 76 P3d 342, 349-

51 (Wyo. 2003); Southwestern Bell Mobile Systems, Inc.

v. Arkansas Public Service Commission, 40 S.W.3d 838,

843 (Ark. Ct. App. 2001); City of Lebanon Junction v.

Celico Partnership, 80 S.W.3d 761 (Ky. Ct. App. 2001);

Campanelli v. AT&T Wireless Services, Inc., 706 N.E.2d

1267 (Ohio 1999); Central Kentucky Cellular Telephone

Co. v. Commonwealth of Kentucky, Revenue Cabinet,

897 S.W.2d 601, 603 (Ky. Ct. App. 1995).

In contrast to these other rulings, the Wireless

Defendants cite the Court to Bell Atlantic Mobile Corp.

v. Comm ’r of Revenue & Bds. of Assessors of 220 Cities

& Towns, 2007 WL 597941 (Mass. Appellate Tax Bd..,

Feb. 27, 2007). In that case, the Appellate Tax Board in

Massachusetts ruled that a CMRS provider was not a

“telephone company” based on its determinations that

“wireless and wired, land-line communications are

separate technologies, each with a distinct history and

development.” Jd. at *10. However, the precise issue in

that case was “whether Bell Atlantic Mobile is a

‘telephone company’ whose ‘machinery, poles, wires and

underground conduits, wires and pipes’ must be

centrally valued” for purposes of a particular tax

exemption that Bell Atlantic was claim. Bell Atlantic

essentially argued

52a

Appendix B

that it is a telephone company because it

provides telephone service, which it defines as

two-way, party-to-party voice communication

and data transmission. Because, in its view, it

uses equipment similar to wired telephone

companies to provide a service that crosses

municipal boundaries, Bell Atlantic Mobile

maintains that it is a telephone company for

purposes of [the exemption].

Id. at *14. However, the valuation scheme under the tax

code in that case pertained specifically to the

instrumentation used by the company, e.g.,

underground conduits, wires, and pipes, none of which

described the equipment relied on by Bell Atlantic to

provide its services. A tax ordinance, like any other

ordinance, has to be read as a whole to determine the

intent of its drafters, so it is not surprising that the

Massachusetts Appellate Tax Board did not characterize

Bell Atlantic as a telephone company when the

exemption included specific qualifiers that Bell Atlantic

did not fit. Given Bell Atlantic’s own insistence that it

was a “telephone company,” and the limiting language

here that is not present in Springfield’s ordinance, the

Massachusetts Tax Court’s interpretation of the word

“telephone” does little to advance the Wireless

Defendants’ arguments that they do not provide

teiephone services.

Of the cases that have concluded that cell phone

providers were in the telephone business for purposes

of municipal tax ordinances, City of Sunset Hills is

53a

Appendix B

particularly important given this Court's obligation to

follow the law of the State of Missouri. The Missouri

court clearly believed, as does this Court, that a

Commercial Mobile Radio Service is a telephone:

The services Southwestern Bell provided

clearly fell within the definition or genus of a

telephone company. First, in its brief,

Southwestern Pell labeled its business

“wireless communications services” which it

described as “transmitting radio signals

between [its] antennae located at fixed sites

throughout its service area and the mobile

units—commonly called cell phones, car

phones, or mobile phones—used by its

customers.” Southwestern Bell’s own

characterization of its services as transmitting

signals to “phones” placed its services within

a class of telephone companies enumerated

in the statute.

14 S.W.3d 54, 59 (Mo. Ct. App. 1999); see also City of

Springfield v. Sprint Spectrum, L.P., 203 S.W.3d 177,

187 (Mo. 2006) (noting that the Missouri Court of

Appeals “found it absurd to deny that companies

providing ‘wireless communications services’ were a

part of the class of ‘telephone companies’ subject to a

telephone business license fee” in City of Sunset Hills).

This is not to say that telephone technology has not

progressed since Springfield’s ordinances were adopted.

_ To the contrary, many significant advancements have

54a

Appendix B

occurred. ‘lhe rotary dialing system has given way to

tone dialing. Satellite technology enables customers to

place calls to other continents, while cordless technology

enables them to do so from their backyards. Twisted

copper telephone wires are being replaced with fiber

optics. Each of these new technologies could be

described in technical terms that may sound quite unlike

our current understanding of telephone services. But

that does not change the fact that these technologies,

just like “Commercial Mobile Radio Services,” are

created by “telephone” companies to provide what we

all think of as “telephonic services.”

If the Wireless Defendants’ approach were adopted,

then each time a new technology were incorporated into

an existing service or product, the ordinances and

charters of each city would have to be changed or no

taxes could be collected. At some point on the spectrum,

innovation might be so extreme as to alter the very

function of the disputed product or service. The mobile

telephone, however, is the functional equivalent of land

line based telephones, which have existed for more than

a hundred years. Thus, the Court again concludes that

the term “telephone” and “telephone services” in

Springfield’s charter and ordinance is generic enough

to encompass the Wireless Defendants’ “Commercial

Mobile Radio Services.”

Since the Court’s initial determination in its June

9, 2005 Order, the Wireless Defendants have attempted

to recast the issue by arguing that “the question

presented, is not whether the phrase ‘telephonic service’

‘a

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55a

Appendix B

is ‘broad enough and flexible enough to include’ CMRS,

but whether there is ‘any doubt’ that ‘telephonic service’

applies to CMRS: if there is, the Court must hold that

CMRS is not covered by the Ordinance.” Alltel’s

Suggestions in Opposition at 1 [Doc. # 468]. In support

of this new standard, the Wireless Defendants cite

numerous Missouri cases and treatises on the power of

municipalities to levy taxes. See, e.g., City of Raytown

v. Kemp, 349 S.W.2d 363, 366 (Mo. 1961) (en banc) (“[T]n

case of doubt the power to tax is denied.”); Kansas City

v. Frogge, 176 S.W.2d 498, 501 (Mo. 1943) (“a:’ doubts

will be resolved against its exercise, and in favor of the

taxpayer” (quotation marks and citation omitted)); City

of St. Charles v. St. Charles Gas Co., 185 S.W.2d 797,

798 (Mo. 1945) (“If there is a doubt as to the delegation

and existence of the [taxing] power the doubt must be

resolved against the city ... .”); see also 16 McQuillin,

The Law Of Municipal Corporations § 44.05, at 29-30

(3d ed., rev. vol. 2003) (“{I]f there is a doubt as to the

existence of the power, such doubt will be resolved

against the municipality and in favor of the taxpayer.”).

However, as Springfield notes in its Reply, the cases cited

by the Wireless defendants speak to the authority of a

city to tax, an issue which is not in dispute in this motion.

The instant case concerns the interpretation of

Springfield’s ordinance and whether it may be applied

to the Wireless Defendants’ CMRS technology, not

whether Springfield has the power to levy a gross

receipts tax in the first place. Moreover, it is clear that

this tax applies to telephone services and CMRS are

telephone services, as demonstrated by the many cases

which have so found.

56a

Appendix B

In a final attempt to render the otherwise

unambiguous language of the ordinance susceptible to

other meanings, the Wireless Defendants offer the Court

extrinsic evidence including the deposition testimony

of Springfield’s managers, Springfield’s history of non-

enforcement of the tax ordinance on some cellular phone

providers, and expert reports on the ambiguity of the

word “telephone” in tax statutes. But such extrinsic

evidence would only be relevant to the ordinance’s

construction if the word “telephone” or “telephonic

services” were ambiguous. As the Court has already

explained, “telephone and telephonic services” is

unambiguous and the Court may not look to extrinsic

evidence to create an ambiguity where none exists. See

State ex rel. Maryland Heights Fire Protection Dist. v.

Campbell, 736 S.W.2d 383, 387 (Mo. bane 1987) (when

confronted with an ordinance that is plain and

unambiguous, courts do not look to legislative history

as a guide to its meaning); State ex rel. Bell v. Phillips

Petroleum Co., 160 S.W.2d 764, 769 (Mo. 1942) (if the

statute is “clear and unambiguous,” the court may not

“search for meaning beyond the statute itself.”). It would

certainly create mischief if a word like telephone is found

to be so ambiguous that discovery would be proper of

every city manager or city council person who had

passed or administered an ordinance that contains such

a generic term.

57a

Appendix B

B. Springfield’s Other Arguments

Alltel raises the following additional arguments in

opposition to summary judgment by reference to earlier

briefing: (1) the Ordinance exceeds the City’s charter

authority; (2) the Ordinance violates the Hancock

Amendment; (3) the Order was passed in violation of

the City’s own laws and Missouri’s general tax laws; and

(4) the Order is unconstitutionally vague. However,

although Alltel refers the Court generally to Documents

Nos. 108, 145, 146, 202, 208, 454, 455, 456, 459, and 460

in support of these four arguments, it does so without

specific reference to page numbers or even which

arguments are found in which pleadings. The Court

briefly addresses each issue fairly raised by Alltel and

incorporates by reference its Order of June 9, 2005, to

the extent it addressed those issues in greater detail.

1. The City’s Charter Authority

Alltel has argued in its previous pleadings that

Springfield’s Gross Receipts Ordinance exceeds the

scope of its charter authority. Specifically, the Wireless

Defendants argue that Article 18, Section 18.1 of the

city charter only authorizes Springfield to impose a

license tax upon “telephone” companies, and makes no

mention CMRS or “telecommunications” companies. As

the Court has already ruled that the Wireless

Defendants provide telephone service and are therefore

telephone companies, Springfield is well within the

authority granted by its charter to impose a gross

receipts tax on them.

58a

Appendix B

2. The Hancock Amendment

The Wireless Defendants also contend that the 2000

amendment to Springfield’s gross receipts tax ordinance

adding the words “telecommunications” and

“telecommunications services” violates the Hancock

Amendment to the Missouri Constitution. As the Court

has explained, the cell phone service provided by the

Wireless Defendants falls within the unambiguous

definition of “telephone and telephonic service,” both

of which were included in the gross receipts tax

ordinance long before passage of the Hancock

Amendment. As Springfield has limited its Count for

Declaratory Relief to the applicability of the “telephone

and telephonic services” clauses of the gross receipts

tax, the Hancock Amendment defense is inapplicable

and fails as a matter of law.

3. Compliance with State and City Tax Laws

The Wireless Defendants argue that Springfield

failed to comply with various Missouri tax collection

statutes, including Mo. Rev. Stat. §§ 136.076, 136.365,

32.053, and 143.903. However, these statutes do not

apply to constitutional charter cities. Chapter 136, as

its title indicates, applies to “Collection of State Taxes.”

Chapter 32 applies to the “State Department of

Revenue.” And Chapter 143 applies to State “Income

Tax.” None of these statutes contains language

suggesting that it applies to constitutional charter cities

such as Springfield; nor have the Defendants cited a

case in which any of these statutes were applied to

59a

Appendix B

constitutional charter cities. Instead, they directed the

Court to City of Manchester v. Southwestern Bell

Telephone, No. 04-CV-1308, slip op. (E.D. Mo. Apr. 28,

2004), which held that third and fourth class cities are

required to collect taxes in the same manner as the State

of Missouri. However, Missouri Revised Statute §§

94.150 and 94.310 (1998), which only apply to third and

fourth class cities, specifically provide that those cities

are required to follow state tax collection procedures.

In contrast, Springfield, as a charter city, is

governed by § 94.310, for purposes of tax collection. In

that section, unlike §§ 94.150 and 94.130, there is no

requirement that a charter city must collect taxes in

the same way as the State. Given the rule of statutory

construction, inclusio unius est exclusio alterius, the

only reasonable interpretation of Missouri State law is

that charter cities are not required to follow state tax

collection procedures.

The Wireless Defendants also argue that Springfield

did not follow its own ordinances when adding the

telecommunications language to the gross receipts tax

ordinance in 2000. Even assuming Springfield failed to

comply with its own ordinances for passing new

legislation in 2000, the Court’s ruling today implicates

only the “telephone” language of the tax ordinance,

which has been in place for decades. Thus, any

noncompliance with city ordinances in amending the tax

code in 2000 to include telecommunications is irrelevant

to the declaratory relief Springfield seeks in the pending

motion.

ees

60a

Appendix B

4. Vagueness

The Wireless Defendants conflate vagueness and

ambiguity in several of their briefs, each time arguing

for a construction of Springfield’s tax ordinance that

excludes cell phone service. The Court has already

concluded that the ordinance, specifically the terms

telephone and telephonic service, are not ambiguous.

As for vagueness, “[a] statute is presumed to be

constitutional and will nct be invalidated unless it

‘clearly and undoubtedly’ violates some constitutional

provision and ‘palpably affronts fundamental law

embodied in the constitution.’” Bd. of Educ. of St. Louis

v. State, 47 S.W.3d 366, 368-369 (Mo. 2001) (quoting

Linton v. Missouri Veterinary Medical Bd., 988 S.W.2d

513, 515 (Mo. 1999)). The burden to prove a statute

unconstitutional is upon the party bringing the

challenge, and the standard for determining whether a

statute is void for vagueness is whether the terms or

words used are of “common usage and are

understandable by persons of ordinary intelligence.” Jd.

(quoting State v. Mahurin, 799 S.W.2d 840, 842 (Mo. banc

1990)). As the Court has held above, “People understand

that if you put it up to your ear and you speak into a

microphone and someone some distance away is able to

hear you, you are using a telephone.” Supra at 6. The

Wireless Defendants have not met their burden to

establish that the word “telephone” when applied to cell

phone service is so vague as to violate the Constitution.

6la

Appendix B

C. Liability for Gross Receipts Tax

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Springfield’s Gross Receipts Tax Ordinance

provides, “Every person engaged in the business of

supplying telephones, and telecommunications and

telephonic service, and telecommunications services,

within the city shall pay as a license tax a sum equal to

six (6) percent of the gross receipts from such business.”

Springfield Code § 70-452 (2000) (recodified June 2,

2003). As the Court just explained, the words

“telephone” and “telephonic services” unambiguously

include the Wireless Defendants’ CMRS technology.

None of the Defendants have challenged, in their

Suggestions in Opposition to Springfield’s current

Motion for Summary Judgment, Springfield’s assertion

that some calls made by customers of the Wireless

Defendants occurred “within the city” of Springfield.

Further, all the Wireless Defendants admit that

Springfield has demanded payment for the gross

receipts tax for such calls but that Defendants have not

paid. The Court therefore concludes that the Wireless

Defendants are liable for some amount of gross receipts

taxes and Springfield is entitled to judgment as a matter

of law on its claim for declaratory relief.®

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6. There is clearly a factual dispute about the amount of |

gross receipts taxes which are due but there is no factual dispute

about the Wireless Defendants’ legal obligation to pay the gross

receipts tax.

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62a ,

Appendix B

D. Monetary damages :

ey, ou.

In its Count for declaratory relief in its Amended

Complaint, Springfield asks for “all further relief as the

Court may deem proper and just pursuant to 28 U.S.C.

§ 2202, including monetary damages for unpaid taxes,

and penalties and interest.” Am. Compl. 9 84.

Contemporaneous with this Order, however, the Court

has dismissed Springfield’s tax collection claim because

of Missouri’s exclusive tax remedy doctrine. Awarding

damages to effectuate its declaratory judgment action

where Springfield’s claim for tax collection has been

dismissed for failure to state a claim would be an

impermissible end run around the strictures of the

exclusive tax remedy doctrine. In addition, the Court

has insufficient evidence to determine the amount of

taxes owed by each of these Defendants. That is a fact-

intensive inquiry which must be taken up through

Springfield’s administrative process.

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Therefore, to the extent Springfield is asking the

Court to declare the amount of taxes due for each

Wireless Defendant, its request for summary judgment ;

is denied, and any such claim is dismissed for the same ;

reasons discussed in this Court’s contemporaneous

Order [Doc. 476].

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63a

Appendix B

E. Final Judgment

With this Order, the Court has disposed of all of

Springfield’s claims against the Wireless Defendants and

all of the Wireless Defendants’ counterclaims against

Springfield. Although there are claims remaining

between Springfield and the SBC Defendants

precluding a final judgment as to them, the Court

finds that it is appropriate to direct an entry of final

judgment as to all claims by Springfield against Alltel

Communications, Inc.; Cingular Wireless LLC;

Southwestern Bell Wireless LLC; and Nextel West

Corporation, and all counterclaims by those Wireless

Defendants against Springfield.

Pursuant to Fed. R. Civ. P. 54, the Court finds there

is no just reason to delay appellate review of

Springfield’s claims as to Alltel Communications, Inc.;

Cingular Wireless LLC and Southwestern Bell Wireless

LLC; and Nextel West Corporation, and final judgment

is entered as to those Defendants. The Court stays

Springfield’s claims against the SBC Defendants until

further ordered.

64a

Appendix B

III. Conclusion

Accordingly, it is hereby

ORDERED that Plaintiff City of Springfield’s

Motion for Summary Judgment [Doc. # 451] is

GRANTED. It is further

ORDERED that any request by Springfield for

monetary damages in Count III of its Second Amended

Complaint is DISMISSED for failure to state a claim

for the same reasons that the Court dismissed Count I

of Springfield’s Complaint. It is further

ORDERED that Springfield’s claims against Alltel

Communications, Inc.; Cingular Wireless LLC;

Southwestern Bell Wireless LLC; and Nextel West

Corporation, and their counter claims against

Springfield, are final pursuant to Rule 54b. It is further

ORDERED that all other proceedings in this case

are STAYED until further order of the Court.

s/ Nanette K. Laughrey

NANETTE K. LAUGHREY

United States District Judge

Dated: July 3, 2007

Jefferson City, Missouri

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65a

APPENDIX C — ORDER NUNC PRO TUNC OF THE

UNITED STATES DISTRICT COURT FOR THE

WESTERN DISTRICT OF MISSOURI, CENTRAL

DIVISION DENYING MOTIONS TO DISMISS

DATED JULY 3, 2007

IN THE UNITED STATES DISTRICT COURT

FOR THE WESTERN DISTRICT OF MISSOURI

CENTRAL DIVISION

Case No. 04-4099-CV-C-NKL

CITY OF JEFFERSON, et al.,

Plaintiffs,

CINGULAR WIRELESS, LLC, et al.,

Defendants.

ORDER NUNC PRO TUNC

The City of Springfield (“Springfield”) levies a gross

receipts tax on all “telecommunications and telephonic

services” supplied “within the city” of Springfield.

See Springfield Municipal Ordinance § 70-452. Because

the Defendants, Alltel Communications, Inc., Nextel

West Corporation, Southwestern Bell Wireless LLC, and

Cingular Wireless LLC (“Defendants”), take the

position that commercial mobile radio services

(“CMRS”) are not “telecommunications and telephonic

;

66a

Appendix C

services,” they do not pay gross receipts tax on cell

phone’ services that they provide in Springfield.

In April 2004, Springfield’s counsel sent a demand

letter to these Defendants requesting payment of five

years’ worth of gross receipts taxes. The letter stated

that if payment was not received by April 29, 2004,

Springfield would proceed with all legal remedies. When

the Defendants did not comply, Springfield filed the

present lawsuit on May 12, 2004, to collect the taxes

due.

Soon after filing suit, Springfield moved for partial

summary judgment to determine whether Southwestern

Bell Wireless, LLC, Nextel West Corp., Alltel

Communications, Inc., and Cingular Wireless LLC were

liable to pay Springfield’s gross receipts tax. On June

9, 2005, the Court found that cell phones are

“telecommunications and telephonic services,” within

the meaning of Springfield’s gross receipts ordinance.

It also held that the uncontroverted facts show that

Southwestern Bell Wireless, LLC, Nextel West Corp.,

Alltel Communications, Inc., and Cingular Wireless

LLC, furnish some telephone services within the City

of Springfield and obtain revenue as a result. Based on

these findings, the Court held that each Defendant owed

Springfield some amount of gross receipts tax for the

1. Commercial mobile radios are commonly referred to as

cell phones, both by lay people and the telecommunications

industry. That is the term the Court will use in the remainder of

the Order, unless referring to the Defendants’ use of the term,

CMRS.

67a

Appendix C

relevant time period. The Court reserved judgment on

the amount of taxes due or how that amount would be

determined because those issues were not raised by

Springfield’s Motion for Partial Summary Judgment.

The Court entered its June 9, 2005 Order after

considering all arguments raised by the parties,

including the Defendants’ arguments in support of their

counterclaims and defenses. The Court specifically

rejected the Defendants’ argument that Springfield’s

taxing ordinance did not comply with the Hancock

Amendment and violated the Mobile Telecommunications

Sourcing Act. It rvled that Springfield’s gross receipts

tax is not a disguised sales tax even though it is levied

in part on sales made to Defendants’ customers. It

found that Springfield was not required to comply with

the Missouri tax collection statutes. Finally, it concluded

that Missouri law would permit Springfield to determine

whether the Defendants were liable to pay a

gross receipts tax in a court proceeding prior to

commencement of an administrative collection process.

After the Court entered its Order on June 9, 2005,

the Missouri General Assembly passed HB 209 which

required Springfield to dismiss its lawsuit against the

Defendants. Springfield sought a ruling in state court

to determine the constitutionality of HB 209. At the

request of the Defendants, the Court stayed this

litigation pending the outcome of Springfield’s

constitutional challenge. After the Missouri Supreme

68a

Appendix C

court struck down HB 209 as unconstitutional,’ the stay

was lifted.

After the stay was lifted, Alltel moved to dismiss this

case for lack of subject matter jurisdiction. Alternatively,

Alltel asked the Court to abstain. In its order of October

17, 2006, the Court denied Alltel’s motion to dismiss for

lack of subject matter jurisdiction, but concluded that

Springfield’s ordinance did not authorize Springfield’s

tax collection claim because of Missouri’s exclusive tax

remedy doctrine.* The Court, therefore, dismissed

Springfield’s claim for tax collection, but did not vacate

its earlier order finding that the Defendant’s were liable

to pay Springfield’s gross receipts tax. The parties had

fully litigated that issue, thereby effectively amending

the pleadings.‘ In addition, the Court concluded that

2. See City of Springfield v. Sprint Spectrum, L.P, 203

S.W.3d 177 (Mo.2006).

3. The “exclusive tax remedy doctrine” merely provides

that both a taxing authority and taxpayer must use the remedies

provided by statute to collect or dispute taxes if there is an

adequate remedy provided See discussion infra.

4. While Springfield’s original Complaint did not

separately request a declaratory judgment on the issue of

liability, the record shows that this issue was raised by

Springfield in its Motion for Partial Summary Judgment and

joined by the Defendants in their Opposition to Springfield’s

Motion for Partial Summary Judgment and by their own

counterclaims. Therefore, pursuant to Federal Rule of Civil

Procedure 15, the Court treated Springfield’s Motion for Partial

Summary Judgment as a request for a declaration of law on

(Cont'd)

69a

Appendix C

Missouri’s exclusive tax remedy doctrine would not be

violated by a declaratory judgment that addressed only

the question of whether the Defendants were subject

to Springfield’s gross receipts tax ordinance.

Alltel then complained that it had not had a fair

opportunity to litigate the propriety of a declaratory

judgment in this case. In response, the Court vacated

its order of June 9, 2005,° and permitted Springfield to

amend its Complaint to add a separate claim for

declaratory judgment. Alltel and Nextel have now filed

Motions to Dismiss Springfield’s Amended Complaint

[Doc. 457 and Doc. 452 respectively].

In Count I of Springfield’s Second Amended

Complaint, Springfield seeks to collect past due gross

receipts taxes from the Defendants. In Count II, it seeks

a declaratory judgment that Springfield’s gross receipts

tax ordinance applies to the cell phone services which

Defendants provide within the city limits of Springfield

and that all Defendants are liable to pay taxes under

the ordinance. Only Alltel and Nextel have filed motions

to dismiss these claims. The other Defendants have

(Cont'd)

Defendants’ liability under Springfield’s gross receipts tax.

Rule 15(b) states that “[w]Jhen issues not raised by the pleadings

are tried by express or implied consent of the parties, they shal!

be treated in all respects as if they had been raised in the

pleadings.”

5. It also hereby vacates its Order of October 17, 2006. That

Order and the June 9, 2005 Order are the only two substantive

orders that the Court has previously entered in this case.

* i i i et Bee ee

70a

Appendix C

previously declined an invitation by the Court to dismiss

Springfield’s tax collection claim based on Missouri's

exclusive tax remedy doctrine.®

For the following reasons, the Court dismisses

without prejudice Springfield’s claim for tax collection

(Count I) but denies Alltel and Nextel’s Motion to

Dismiss Springfield’s claim for declaratory judgment

(Count II).

I. Count I—Tax Collection Claim

Alltel and Nextel argue that the Court has no

subject matter jurisdiction over Springfield’s claim for

tax collection because of Missouri’s exclusive tax remedy

doctrine, which was first articulated in State ez rel.

Hayes v. Snyder, 139 Mo. 549, 552 (Mo.1897). In that

case, Jackson County Collector Hayes sued the previous

owners of a parcel of real estate to collect a personal

judgment against them for taxes assessed against the

property while they had owned it. The Missouri Supreme

Court held that the state’s exclusive remedy was to

impose a lien on the property for which back taxes were

due. /d. at 554-55. In reaching this conclusion, the state

supreme court reasoned that:

6. The posture of this case is quite unusual in that it is a

local taxing authority that seeks to invoke the subject matter

jurisdiction of the federal court to collect its taxes and to resolve

the meaning of its tax ordinance. This may explain why only

two of the Defendants have filed motions to dismiss. It is

unusual for a taxpayer to have a federal forum to contest the

validity of a tax imposed by a municipality.

T7la

Appendix C

[a] tax is not a debt in the ordinary sense of that

term, as it is not founded upon contract, and as

| a general thing a debt cannot be created in any

: other way. Tax proceedings ar«. in invitum. The

tax is an impost levied by authority of the

, government for the support of the state, and

. has none of the characteristics of a contract, the

; essence of which is an agreement expressed or

implied. Therefore, if the statutes of this state

| make special provisions for the collection of

taxes against real estate, and do not apparently

: contemplate that any others will be necessary,

the mode of collection prescribed by statute is

exclusive.... [W]here the statute undertakes to

provide remedies, and those given do not

embrace an action at law, a common-law action

) for the recovery of the tax as a debt will not lie.

This is the generally accepted doctrine, though

there are exceptions to this general rule; for

et le oe) a did titel

instance, where right to bring suit is expressly

given by statute, or where the implication of an

intent to give a remedy by suit may be so strong

as to be conclusive, as where the statute provides

for a tax, but is silent as to the method of

collection.

Id. at 553-54 (internal quotations omitted).

In Kansas City v. Field, the Missouri Supreme

Court again held that “a statutory remedy for the

collection of a tax or a special assessment, whether it be

by distress or by action, is an exclusive remedy.” 285

72a

Appendix C

Mo. 253, 274 (Mo.1920). Accord City of St. Louis v.

United Rys. Co., 174 S.W. 78 (Mo.1914) (where an

ordinance provides a metliod for enforcing a tax, it will

be held to be exclusive); State ex rel. Steed v. Nolte, 138

S.W.2d 1016 (Mo.1940) (en banc) (holding that for tax

collection purposes, the city must use the collection

procedures set forth in applicable law) Although these

Missouri cases are old, Springfield has offered no

authority to suggest that Missouri no longer recognizes

the exclusive tax remedy doctrine articulated in Hayes.

Springfield’s ordinances give it a specific mechanism

for collecting past due gross receipts taxes. They provide

that:

Every person required to pay the license tax

levied by this article shall cause to be filed with

the director of finance on January 15, April

15, July 15 and October 15 of each year a true

statement, under oath, of the gross receipts

of such business for the three calendar

months preceding the filing of such statement.

The director of finance and his authorized

agents may investigate the correctness and

accuracy of such quarterly statements, and for

that purpose shall have access at all

reasonable times to the books, documents,

papers and records of the licensee.

Id. § 70-454. If a person refuses to pay any tax, the

Director may estimate the delinquent taxes and make

an assessment based on that estimate. Jd. § 70-154.

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73a

Appendix C

After the Director notifies the taxpayer of the assessment

plus penalties including interest, the taxp»yyer has ten

days to request a hearing to contest the assessment.

Id. § 70-152.

In the event a hearing is requested, “(t]he director,

employee of the city, or hearing officer appointed by the

city manager shall hear the case and make a determination

in accordance with the provisions of RSMo ch. 536.” Jd. at

§ 70-155. “Such hearing need not be conducted according

to the rules of evidence.” /d. The director is empowered

to subpoena witnesses or to issue subpoenas duces tecum

for any book, paper, record or memorandum. /d. “The

decision of the hearing officer . . . shall be in writing and

shall be subject to appeal under RSMo ch. 536.” Jd. § 70-

156. If the delinquent taxpayer fails to pay the assessment

after the decision becomes final,

the license of such person shall be revoked

without further hearing five days after the

director mails such person a notice that the

license has been revoked, unless the person

pays the city the delinquent assessment,

including penalties and interest to date, which

money shall be held for possible refund by the

director while the decision is on appeal.

Revocation of such license pursuant to the

provisions of this section is not appealable, and

such license may only be reinstated by the

person paying to the director the money due on

the assessment, including all penalties and

interest to date.

Id. § 70-157.

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74a

Appendix C

Reading together all portions of Springfield’s

Municipal Code chapter 70, the Court concludes that

the Code provides a remedial scheme for the collection

of delinquent gross receipts tax. Enforcing the ordinance

is the responsibility of the City’s Director of Finance.

All licensees must file quarterly gross receipts reports

with the City, which the Director is authorized to

investigate and verify. If the licensee refuses to do so,

the director may issue subpoenas and demand to inspect

records under penalty of revocation of the license. If

the Director determines that a licensee had failed to

pay its tax obligation, she “shall notify such person of

this determination, which determination shall be an

assessment of the license fee or tax which is due and

owing, plus all penalties including interest.” /d. § 70-

152. That assessment becomes final ten days after it is

delivered to the licensee unless the licensee requests a

hearing. If a hearing is requested, the Director or a

hearing officer “shall hear the case and make a

determination in accordance with the provisions of

RSMo ch. 536.” Jd. at § 70-155. That determination

becomes final after 30 days and may be appealed under

Mo.Rev.Stat. ch 536. However, if the licensee fails to pay

after the final determination, its license “shall be

revoked without further hearing . . . unless [and until]

the person pays the city the delinquent assessment.”

Id. § 70-157.

Springfield’s code provides a metaod for assessing

gross receipts tax and the administrative process

75a

Appendix C

appears to be adequate for purposes of tax assessment.’

While Alltel has refused to file the reports needed to make

an assessment, Springfield has the power to make an

estimate based on the information available to it. The

record shows that Alltel has reported gross receipts

revenue collected from customers having a “principal place

of use” within the city. While this may not include all

revenue subject to gross receipts tax, Springfield has the

power to estimate the actual tax due. If Alltel contests the

tax, Springfield can subpoena all of Alltel’s records.

Pending appeal, Springfield can force Alltel to pay the

taxes “in escrow” or require Alltel to stop doing business

in Springfield.

Springfield has failer to show that it cannot use this

administrative process to assess the taxes which it claims

are owed by the Defendants. Its tax collection claim must

therefore be dismissed. However, contrary to the

intimation of Nextel and Alltel, the Court has never found

that it lacks subject matter jurisdiction to hear

Springfield’s claim for tax collection. There is diversity

jurisdiction to address Springfield’s claim, and Missouri’s

exclusive tax remedy doctrine cannot divest a federal court

of its jurisdiction. Therefore, the Court’s dismissal of

Springfield’s tax collection claim is not because subject

matter jurisdiction is lacking. Instead, the dismissal is

because Missouri law does not recognize Springfield’s claim

for tax collection prior to assessment. See State ex rel.

Hayes v. Snyder, 139 Mo. 549, 552 (Mo.1897).

7. While Springfield’s ordinance is adequate to assess taxes

against the Defendants, it is not adequate to resolve the

applicability of these taxes to the Defendants when the dispute

is one of statutory interpretation. See discussion infra.

76a

Appendix C

While dismissals under Rule 12(b)(6) are generally

with prejudice, the Court is uncertain how a dismissal

would be used in subsequent litigation between these

parties. Given the contorted procedural history of this

dispute, the Court makes this dismissal without

prejudice.

II. Count IIl—Declaratory Relief

In Count II, Springfield asks the Court to declare

that Defendants’ cell phone services provided within the

city limits of Springfield are subject to Springfield’s

gross receipts tax ordinance and, therefore, all

Defendants are liable for past due taxes. As with Count

I, Alltel and Nextel seek to dismiss this claim for lack of

subject matter jurisdiction. Their primary argument is

that Missouri’s exclusive tax remedy doctrine applies

to Springfield’s declaratory judgment claim and

Missouri’s exclusive tax remedy doctrine is

jurisdictional. Alltel and Nextel also argue that

Springfield has not exhausted its administrative

remedies and therefore cannot obtain even a declaration

that its tax laws apply to the Defendants. They state

these arguments in many different ways, but all turn on

the question of whether Missouri law would permit

Springfield to obtain a judicial declaration interpreting

its tax ordinance before requiring Springfield to begin

its administrative process to assess taxes.

77a

Appendix C

A. Missouri Law

The Court finds that Missouri law permits

Springfield to seek a judicial determination that its

ordinance applies to a specific taxpayer before

Springfield begins its administrative assessment

process. As a practical matter, the administrative process

created by Springfield is not adequate when a question

of statutory interpretation is at the heart of the dispute

between the City and its taxpayers. It does not serve

the interest of either a taxpayer or the taxing authority

to go through an expensive administrative process to

resolve the amount of taxes owed, if no taxes can be

collected because the statute does not apply to the

taxpayer and, therefore, no taxes are due.

Even if a Springfield administrator can enter an

order that the taxes are due,® legal review of that ruling

could not occur until the administrative process is

completed. By that time, both parties have expended

significant resources resolving the amount of taxes due,

only to learn on judicial review that the ordinance did

not cover the services for which the taxes were sought.

Other jurisdictions which recognize similar exclusive

tax remedy doctrines have permitted court actions

under these limited circumstances. When there is a

question of statutory interpretation, these jurisdictions

will permit court action to determine the applicability

8. The parties dispute whether Springfield’s Finance

Director has such authority under Missouri law.

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78a

Appendix C

of the tax to a business operating within the jurisdiction.

See M.L. Cross, Annotation, Tax Questions as Proper

Subject of Action for Declaratory Judgment, 11

A.L.R.2d 359 (Supp.2005).

While the Court has been unable to locate a Missouri

case directly on point, in other contexts Missouri courts

have permitted legal issues to be resolved in court even

when administrative remedies were not exhausted. The

practical considerations discussed in those cases, e.g.,

Premium Standard Farms, Inc. v. Lincoln Township

of Putnam County, 946 S.W.2d 234 (Mo.1997), are

equally applicable when there is a dispute about whether

a tax is owed. Furthermore, the Missouri Supreme Court

in Nicolai v. City of St. Louis, 762 S.W.2d 423 (Mo. banc

1989), tacitly approved the use of a declaratory judgment

to test the authority of a local taxing authority to collect

a tax even when administrative procedures had not been

exhausted.

This case is a good example of when significant

factual disputes may be avoided if the threshold issue

of applicability is resolved first. The initial dispute

betwen the parties is whether Springfield’s gross

receipts tax ordinance applies to companies that provide

cell phone service, as opposed to land line services.

Defendants claim that they do not provide telephone

services within the meaning of Springfield’s ordinance,

but the unrefuted evidence is that they do provide

“Commercial Mobile Radio” services in the city limits

of Springfield. If the Defendants are correct in their

interpretation of the City’s ordinances, then no taxes

79a

Appendix C

are owed to Springfield and all parties can avoid the

cost of an expensive administrative assessment action.

For these reasons, the Court concludes that Missouri

law permits a taxing authority to obtain a judicial

interpretation of its tax ordinance to determine whether

a taxpayer is subject to it. Likewise, a Missouri court

would not require administrative exhaustion before that

issue is presented to a court. The old Missouri cases

discussing the exclusive tax remedy doctrine do not

discuss whether a declaratory judgment is proper or

improper under these circumstances and more recent

case law indicates that a declaratory judgment under

these circumstances does not violate the exclusive tax

remedy doctrine. While Springfield did not create a

specific claim for tax collection in its ordinances, Missouri

law has authorized declaratory judgments for many

years. Therefore, the silence in Springfield’s tax

ordinance concerning declaratory judgments does not

establish that declaratory judgments are impermissible

in this context.

B. Subject Matter Jurisdiction in Federal Court

Although the Court has found that Missouri law

would permit a state court to hear Springfield’s claim

for declaratory judgment, the Court must also determine

whether that claim can be heard in a federal court, given

the special deference which federal courts show to state

and local taxing authorities.

‘

;

80a

Appendix C

Nextel and Alltel argue that even if a state court

could hear Springfield’s claim, a federal court does not

have subject matter jurisdiction to do so. Many of their

arguments about federal subject matter jurisdiction are

dependent on their assumption that Missouri state

courts would not permit Springfield’s declaratory

judgment acticn because of Missouri’s exclusive tax

remedy doctrine. For example, they argue that the Court

does not have subject matter jurisdiction because Erie

RR Co. v. Tompkins, 304 U.S. 64 (1938), requires a

federal court to apply state law in a diversity action.

Because the Defendzits assume that Missouri would

not permit Springfield’s declaratory judgment action,

they conclude it would be an Erie violation for the federal

court to hear Springfield’s claim and, therefore, the

Court lacks subject matter jurisdiction. Similarly, they

argue that a federal court does not have subject matter

jurisdiction over any issue that has been committed for

initial decision to an administrative body. See Public

Service Commission of Utah v. Wycoff Co., Inc., 344

U.S. 237, 241 (1952). They also contend that there is no

federal subject matter jurisdiction because Springfield

has an adequate remedy at law. Each of these

arguments, however, necessarily fails if Missouri law

recognizes Springfield’s declaratory judgment claim and

does not require Springfield’s declaratory judgment

claim to be administratively exhausted first.

Because the Court has diversity jurisdiction and has

already found that Missouri law would authorize

Springfield’s declaratory judgment, it rejects

Defendants’ contention that this Court lacks federal

‘

;

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8la

Appendix C

subject matter jurisdiction to hear Springfield’s

declaratory judgment claim. Indeed, the Court’s subject

matter jurisdiction seems evident given the fact that a

similar issue also grounded in Missouri law was litigated

all the way to the United States Supreme Court. See

City of St. Louis v. United Railways Co. of St. Louis,

174 S.W. 78, 82 (Mo.1915).

C. Justiciability

Defendants also argue that there is a no case or

controversy before the Court. Yet, Defendants have

refused to pay Springfield’s tax, and Springfield claims

that the taxes are owed. Springfield seeks a declaration

that the ordinance covers the Defendants’ conduct, and

the Defendants are liable to pay the tax. There is little

difference between this claim and one where an

insurance company seeks a declaratory judgment that

there is not insurance coverage. Such claims are

routinely heard in the federal court.

Furthermore, any judgment in this case is not

advisory as argued by the Defendants. The Defendants

would not have fought so vigorously if a judgment here

would be of no consequence. The fact that the Missouri

legislature actually passed a statute to require

Springfield to dismiss this lawsuit suggests that the

consequences of the case are not ephemeral.

82a

Appendix C

D. Venue

Nextel and Alltel argue that this case should not

have been filed in the Central Division of the United

States District Court for the Western District of

Missouri because there is no divisional venue. Venue,

however, is determined at the time a lawsuit is filed. At

the time this suit was filed, there was divisional venue

in the Central Division because Jefferson City was also

a named plaintiff. The relevant Defendants have settled

their dispute with Jefferson City, but that does not alter

the venue of the Court to hear the claims of Springfield,

the co-plaintiff. Any trial concerning those claims will

be held in Springfield at the request of the Defendants.

E. Missouri versus Federal Dermnr eters

Judgment Acts

The Defendants’ arguments concerning the

applicability of the Missouri and federal Declaratory

Judgment Acts are rejected summarily. The Court has

already held that for purposes of this declaratory

judgment action, Springfield does not have an adequate

remedy at law. Furthermore, the federal Declaratory

Judgment Act controls here. Farmers Alliance Mutual

Ins. Co. v. Jones, 570 F .2d 1384, 1386 (10th Cir.1978);

Ohio Casualty Ins. Co. v. Marr, 98 F.2d 973, 975 (10th

Cir.1938); Amerilink Corp. v. Cerco, Inc., 1996 U.S. Dist.

LEXIS 6207 (E.D.Mo.1996); Haagen-Dazs Shoppe Co.,

Inc. v. Born, 897 F.Supp. 122, 126 (S.D.N.Y.1995);

Committee for Educational Equality v. State, 878

S.W.2d 446, 452 (Mo.1994), and it does not require proof

83a

Appendix C

that there is no adequate remedy at law. In addition, as

previously explained, Missouri law would permit a

declaratory judgment had this case been filed in state

court.

FEF. Abstention

Early in this case, the Court asked the parties why

a local tax case was in federal court. At that time, no

one stood up and asked the Court to abstain. The parties

were apparently content to have this dispute resolved

in federal court. However, now that the Court has

decided that the Defendants are subject to Springfield’s

tax, Alltel and Nextel have decided that the Court does

not have subject matter jurisdiction to even address the

merits of the dispute, and if it does have subject matter

jurisdiction, the Court should abstain.

1, Judicially Created Abstention

In support of their abstention argument, Alltel and

Nextel cite a number of federal cases that suggest that

abstention is appropriate when a local tax dispute is

raised in a federal court. For example, in Great Lakes

Dredge & Dock Co. v. Huffman, 319 U.S. 293 (1943), the

United States Supreme Court held that federal courts

should abstain if they are asked to enjoin or declare

invalid a state tax. Also see Fair Assessment in Real

Estate Ass’n, Inc. v. McNary, 454 U.S. 100 (1981)

(discussing when abstention is appropriate if

administrative exhaustion has not occurred or when a

dispute about local taxes arises). Abstention should also

84a

Appendix C

be considered when a state or local authority has

adopted a complex administrative proceeding to resolve

local disputes involving a governmental entity.

See Burford v. Sun Oil Co., 319 U.S. 315 (19438). Also

see Public Service Commission of Utah v. Wycoff Co.,

Inc., 344 U.S. 237, 241 (1952) (A declaratory judgment

should not be used to “preempt and prejudice issues

that are committed for an initial decision to an

administrative body. .. .”). Alltel and Nextel also seek

abstention under Colorado River Woter Conservation

Dist. v. United States, 424 U.S. 800 (1976), which held

that a federal court should abstain in cases where there

is a parallel state action and the issue in dispute involves

an unclear state law.

Comity and “Our Federalism” are the unifying

principles in all of these cases cited by Defendants Alltel

and Nextel. Those principles have led the Supreme

Court to conclude that the United States Constitution

contemplates a significant division of power between the

states and federal governments; thus, the federal

government should respect the right of the states to

resolve certain matters locally. Federal interference with

state administrative matters, particularly those

involving taxes, would violate these principals of comity

and “Our Federalism.”

All of the cases cited by Alltel and Nextel, however,

are distinguishable because Springfield is the plaintiff

in this case. This is not a case where a taxpayer is

seeking to avoid state procedures by invoking the

jurisdiction of the federal court. It is the taxing

85a

Appendix C

authority that is invoking federal jurisdiction. When the

taxing authority chooses the federal forum, the

reasoning behind the federal abstention cases relied

upon by Nextel and Alltel no longer apply. Comity and

“Our Federalism” are not offended except in those

situations where the federal courts encroach on the

autonomy of local authorities. It would be ironic to

conclude that a municipality’s authority is best respected

by denying it access to the federal courts.

Defendants have suggested that California v. Grace

Brethren Church, 457 U.S. 393 (1982), and Franchise

Tax Bd. of California v. Construction Laborers

Vacation Trust, 463 U.S. 1 (1983), are cases where a

state or local entity sought and was denied a federal

forum, but they are not correct. In Grace Brethren, the

litigation was initiated originally in two separate suits,

one filed by a taxpayer in federal court and one by a

taxpayer in state court. /d. at 399 n. 8. A ederal district

court eventually enjoined the State of California from

collecting its unemployment taxes and the State

successfully appealed to the United States Supreme

Court. Because Grace Brethren involved an attempt by

a taxpayer to enjoin a state, it is not persuasive. In

Franchise Tax, the State of California was denied access

to the federal courts, but that was because neither

federal question jurisdiction nor diversity existed. There

was simply no statutory basis for subject matter

jurisdiction in federal court. In contrast, Springfield’s

claim is clearly supported by diversity jurisdiction.

86a

Appendix C

Furthermore, any protections to which the state and

local authorities are entitled under abstention doctrine

are clearly waivable by them. If a state can waive its

Eleventh Amendment right by voluntarily suing in

federal court, see Lapides v. Board of Regents of

University System of Georgia, 535 U.S. 613 (2002), it

must necessarily follow that a judicially created

abstention doctrine can also be waived. It is, therefore,

not surprising that the Court has been unable to identify

a single case in which a taxing authority has invoked

the jurisdiction of the federal court to resolve a tax

dispute and the federal court abstained.

Finally, the judicially created abstention doctrines

raised by the Defendants have already come under

substantial criticism. See Robert J. Pushaw, Bridging

the Enforcement Gap in Constitutional Law, 46 William

& Mary L.Rev. 1289 (2004). Article III of the United

States Constitution gives Congress the authority to

establish the jurisdiction of the lower federal courts, and

Congress has said that this Court has jurisdiction

because of diversity. See 28 U.S.C. 1332. Absent clear

precedent, the Court will not reject Congress’s directive.

2. Statutory Abstention

In Wilton v. Seven Falls Co., 515 U.S. 277 (1995),

the United States Supreme Court, interpreting the

Declaratory Judgment Act, concluded that a court may

decline jurisdiction to hear a declaratory judgment

action when there is a parallel state court proceeding.

Nextel and Alltel argue that Wilton uv. Seven Falls Co.

thts

87a

Appendix C

requires the Court to decline jurisdiction because there

are parallel state court actions which will raise the same

issue currently before this Court. Wilton, however, does

not require anything; it permits a trial court to decline

jurisdiction in its discretion. “In the declaratory

judgment context, the normal principal that federal

court should adjudicate claims within their jurisdiction

yields to considerations of practicality and wise judicial

administration.” Jd. at 288. The Eighth Circuit has

referred to the discretion described in Wilton as broad.

Scottsdale Insurance Co. v. Detco Industries, Inc., 426

F.3d 994 (8th Cir.2005). The sound administration of

justice in this case dictates that abstention should not

be granted even if there is a parallel state court action.

It is apparent that Nextel and Alltel have raised the

issue of abstention because they were unsuccessful on

the merits of their defense. It would not promote the

sound administration of justice to permit a losing party

to take advantage of abstention under those

circumstances.

In addition, there is no parallel state court action.

Springfield’s claim against Sprint does not involve Alltel

or Nextel, or any of the other Defendants. Alltel’s refund

suit, which was filed in state court on the same day that

Springfield filed its Second Amended Complaint in this

case, is not the mirror image of Springfield’s declaratory

judgment action, as were the two suits in Wilton.

Furthermore, it does not involve all the Defendants.

Indeed, because it is a refund that Alltel seeks in state

court, the state court may never reach the issue of

whether Springfield’s gross receipts tax ordinance

88a

Appendix C

applies to Alltel, given the preliminary hurdles that Alltel

must satisfy in a refund case. Therefore, there is no

parallel state action that justifies this Court’s abstention.

The Eighth Circuit, however, has said that a court

might still abstain even when there is not a parallel

action. See Scottsdale Insurance Co. v. Detco Industries,

Inc., 426 F.3d 994 (8th Cir.2005). In Scottsdale, the

Eighth Circuit identified six factors for the Court to

consider when deciding the abstention issue. Five of

those six factors weigh in favor of the Court exercising

its jurisdiction in this case.

Springfield’s declaratory judgment action will serve

a useful purpose because it permits the parties in

advance of a costly administrative proceeding to resolve

whether Springfield’s ordinance applies to Defendants’

cell phone services. Resolution of liability permits the

parties to wisely invest in an administrative assessment

action.

As previously indicated, a refund suit has issues

which might preclude the state court from ever reaching

the question of whether the tax was owed. Therefore,

any overlapping issue might never be reached by the

state court in Alltel’s state action. That suit is in its

infancy and this federal case has been in progress for

years. In addition, there is no economy to be gained by

abstention because only two defendants out of six have

asked the Court to abstain.

89a

Appendix C

Finally, Alltel engaged in procedural fencing when

it filed its refund case in state court. Alltel filed its refund

case on the same day that Springfield amended its

complaint to conform it to the issues actually litigated

in this case nearly two years ago. In addition, both Alltel

and Nextel failed to raise their abstention arguments

when confronted with Springfield’s Motion for Partial

Summary Judgment early in this litigation. While Alltel

and Nextel contend that Springfield’s recent addition

of a declaratory judgment claim changed the landscape,

some of their arguments now raised for abstention were

equally applicable to Springfield’s Motion for Partial

Summary Judgment. Given this record, the Court finds

that it was this Court’s Order of June 9, 2005, that

motivated Alltel and Nextel to seek abstention, not

Springfield’s recent amendment to conform the

pleadings to what had already been litigated.

For all these reasons, the Court has exercised its

discretion to hear Counts I and II of Springfield’s

Second Amended Complaint.

III. Remaining Wireless Defendants

Cingular Wireless LLC, and Southwestern Bell

Wireless LLC, did not join in Alltel and Nextel’s Motion

to Dismiss. Nor have they accepted the Court’s

invitation to file their own motion to dismiss Springfield’s

tax collection claim. Nonetheless, the Court dismisses

Count I of Springfield’s Complaint as to Cingular

Wireless LLC and Southwestern Bell Wireless LLC.

90a

Appendix C

Missouri’s exclusive tax remedy doctrine precludes

this Court from granting relief on Springfield’s tax

collection claim against these Defendants. A district

court has the inherent power to dismiss a complaint swa

sponte under Rule 12(b)(6) as long as the dismissal does

not precede service of process. Smith v. Boyd, 945 F.2d

1041, 1043 (8th Cir.1991); Mildfelt v. Circuit Court, 827

F.2d 343, 345 (8th Cir.1987) (per curiam) (“A district court

has the power to sua sponte dismiss a complaint for

failure to state a claim.”); see also 5A C. Wright & A.

Miller, Federal Practice and Procedure § 1357, at 301

(2d ed.1990). Because of Missouri’s exclusive tax remedy

doctrine, Springfield’s tax collection claim against

Cingular Wireless LLC and Southwestern Bell Wireless

LLC fails to state a claim on which relief can be granted.

The Court, therefore, dismisses without prejudice

Springfield’s tax collection claims as to Defendants Alltel

Communications, Inc.; Cingular Wireless LLC;

Southwestern Bell Wireless LLC; and Nextel West

Corporation, so that such claims may be pursued

administratively.

IV. Conclusion

Count I of Springfield’s Complaint is dismissed

without prejudice for failure to state a claim. The

dismissal applies to Alltel Communications, Inc.;

Cingular Wireless LLC; Southwestern Bell Wireless

LLC; and Nextel West Corporation. In all other respects,

Alltel and Nextel’s Motions to Dismiss are DENIED.

IT IS SO ORDERED.

{

9la

Appendix C

s/ Nanette K. Laughrey

NANETTE K. LAUGHREY

United States District Judge

Dated: July 3, 2007

Jefferson City, Missouri

92a

APPENDIX D — ORDER OF THE UNITED STATES

DISTRICT COURT FOR THE WESTERN DISTRICT

OF MISSOURI, CENTRAL DIVISION DENYING

MOTION TO VACATE OR RECONSIDER

DATED DECEMBER 20, 2006

IN THE UNITED STATES DISTRICT COURT

FOR THE WESTERN DISTRICT OF MISSOURI

CENTRAL DIVISION

| Case No. 04-4099-CV-C-NKL

CITY OF JEFFERSON, et al.,

Plaintiffs,

Vv.

CINGULAR WIRELESS, LLC, et al.,

Defendants.

ORDER

On October 17. 2006, the Court dismissed all remaining

claims against Defendant Alltel Communications, Inc.

(“Alltel”), because Missouri case law precludes the Court

from granting further relief to Plaintiff City of Springfield

(“Springfield”). Springfield now moves the Court to Clarify,

or in the Alternative, to Reconsider the October 17, 2006

Order [Doc. # 408]. Alltel also moves for Reconsideration

and/or Clarification of that Order [Doc. # 412] and for

vacatur of the Court’s June 9, 2005 Partial Summary

Judgment Order [Doc. # 221]. Also pending is Springfield’s

Motion to Lift the November 10, 2004 Protective Order in

Part [Doc. # 409].

93a

Appendix D

Having considered the October 17, 2006 Order

granting Alltel’s Motion to Dismiss, as well as the June

9, 2005 Order granting Springfield’s Motion for Partial

Summary Judgment, the Court declines to vacate or

amend either Order for the reasons set forth below. The

Court, however, will grant Springfield’s Motion to

Modify or Lift the Protective Order [Doc. # 409]. The

Protective Order is amended to permit data obtained

during this litigation to be used in any subsequent

proceeding to assess or collect the tax which is the

subject of this litigation. In no way is this Order intended

to limit the ability of another court or administrative

hearing officer to enter a different protective order

concerning this material.

I. Defendant Alltel’s Motion for Reconsideration

[Doc. # 407]

This is not a complicated case, although the docket

sheet suggests otherwise.

The Court has made two substantive rulings. First,

on June 9, 2005, the Court granted Springfield’s Partial

Motion for Summary Judgment. The Court ruled that

each of the Defendants’ is liable to pay taxes under

1. The Court has made no ruling on the liability of SBC

Communications, Inc. (“SBC”). SBC was not the subject of

Springfield’s Motion for Partial Summary Judgment. Only

Defendants Southwestern Bell Wireless, LLC, Nextel West

Corp., Alltel Communications, Inc., and Cingular Wireless LLC

were the subject of and defended against Springfield’s Motion

for Partial Summary Judgment. In this Order, they are referred

to as the “Defendants.”

94a

Appendix D

Springfield’s gross receipts ordinance. The Court found

that the term “telephone” as used in Springfield’s gross

receipts ordinance applies to the Defendants’ Commercial

Mobile Radio services. It also held that the uncontroverted

facts show that each Defendant furnished some telephone

services within the City of Springfield and obtained

revenue as a result. Therefore, Alltel and the other

Defendants owe Springfield some amount of gross revenue

tax for the relevant time period.

The Court made its ruling after considering all

arguments raised by the parties, including the Defendants’

arguments in support of their counterclaims and defenses.

The Court specifically rejected the Defendants’ argument

that Springfield’s taxing ordinance did not comply with

the Hancock Amendment and violated the Mobile

Telecommunications Sourcing Act. It ruled that

Springfield’s gross receipts tax is not a disguised sales tax

even though it is levied in part on sales made to

Defendants’ customers. It found that Springfield was not

required to comply with the Missouri tax collection statutes.

Finally, it concluded that Missouri law would permit

Springfield to resolve purely legal issues in a court

proceeding prior to commencement of an administrative

collection process, even though it is a taxing authority and

not a taxpayer. In its Order, the Court said that it was not

deciding the question of whether Springfield had the right

to litigate before this Court the amount of taxes owed. That

issue was not raised by Springfield’s Motion for Partial

Summary Judgment. Each of the issues ruled by the Court

in its June 9, 2006 Order were legal issues.

95a

Appendix D

The second substantive Order was entered by the

Court on October 17, 2006. In that Order, the Court

reiterated its belief that Missouri courts would permit

Springfield to resolve purely legal questions concerning

liability before requiring either the taxing authority or

the taxpayer to incur the expense of a complicated,

factual based administrative process. However, Missouri

law would not permit the Plaintiffs to bypass its

administrative assessment procedures. Assessment

involves factual issues and the administrative hearing

officer is best able to resolve those fact issues and apply

its ordinance to those facts. As a result, the exclusive

tax remedy doctrine required the Court to dismiss

Springfield’s remaining claims without prejudice.

The Court has recited this information to make clear

that these are the only substantive rulings made by the

Court. It has made no ruling on the amount of taxes

owed or what the parties can do if they are dissatisfied

with the administrative process. Any statements made

by the Court that could be construed otherwise should

not be so construed.

In addition to seeking clarification, Defendant Alltel

requests the Court to vacate its June 9, 2005 Order

finding Alltel liable to Springfield for unpaid gross

receipts taxes. Although its argument is lengthy, the

premise of the argument is not complicated. Alltel claims

that the Court never had subject matter jurisdiction in

this case because 1) the controversy between Alltel and

Springfield is not ripe; 2) the June 9 Order is advisory;

3) the Court had no authority under the Federal

96a

Appendix D

Declaratory Judgment Act or the Missouri Declaratory

Judgment Act to issue its opinion;? and 4) Missouri’s

exclusive tax remedy doctrine does not permit a taxing

authority to resolve legal issues in a court prior to the

assessment process. In addition, it argues that the

Court should have abstained from resolving any aspect

of Springfield’s lawsuit against Alltel.

The Court has previously addressed most of these

issues. There is clearly a case or controversy before the

Court. Alltel won’t pay gross receipts taxes to

Springfield for its “Commercial Mobile Radio” services.

Alltel even refused to file the data needed by Springfield

to make an assessment. Alltel claims that it doesn’t have

to do so because Springfield’s gross receipts ordinance

does not apply to “Commercial Mobile Radio” services.

In its Motion for Partial Summary Judgment,

Springfield asked the Court to rule that its ordinance

did apply to “Commercial Mobile Radio” services. In its

2. While the original pleading in this matter did not

separately request a declaratory judgment on the issue of

liability, the record shows that this issue was raised by

Springfield in its Motion for Partial Summary Judgment and

joined by the Defendants in their Opposition to Springfield’s

Motion for Partial Summary Judgment and their own

counterclaims. Therefore, pursuant to Federal Rule of Civil

Procedure 15, the Court has treated Plaintiff’s Motion for

Partial Summary Judgment as a request for a declaration of

law on Defendants’ liability under Springfield’s gross receipts

tax. Rule 15(b) states that “[w]Jhen issues not raised by the

pleadings are tried by express or implied consent of the parties,

they shall be treated in all respects as if they had been raised in

the pleadings.”

97a

Appendix D

counterclaim, Alltel asked for a ruling that the ordinance

did not apply. If this is not a ripe case or controversy,

then neither is a declaratory judgment action to

interpret an insurance contract to resolve coverage

issues, something routinely done in federal courts based

on diversity jurisdiction.

Alltel would be correct about the ripeness issue if it

is also correct that Missouri law does not permit a

municipality to resolve tax coverage issues when the

taxpayer refuses to pay or comply with city ordinances.

No matter how you slice, dice or dress the question,

all the issues raised by Alltel in its Motion for

Reconsideration are dependent on whether Missouri law

permits Springfield to get a legal ruling from a court

that its gross receipts tax must be paid by Alltel. The

Court believes that Missouri would permit Springfield

to do so. Missouri courts have permitted taxpayers to

do so and there is no reason to think that the same

opportunity would not be extended to the taxing

authority, both for reasons of symmetry and the

practical reasons that have been relied on in other

jurisdictions which held that the exclusive tax remedy

doctrine does not preclude early court resolution of

purely legal issues.

The Missouri cases relied on by the Defendants did

not address this specific question so cannot fairly

demonstrate that Missouri courts today would not

permit taxing authorities the same economy of action

that a taxpayer has under Missouri law. Also, in

Premium Standard Farms, Inc. v. Lincoln Township

98a

Appendix D

of Putnam Co., the Missouri Supreme Court specifically

held that administrative exhaustion is excused when

“the authority of the political subdivision to impose

particular regulations is challenged. .. .” 946 S.W.2d 234,

237 (Mo. en bane 1997). That case was filed by the

taxpayer, not the taxing authority, but the Court believes

that the Supreme Court’s language is broad enough to

comfortably predict that Missouri courts would permit

Springfield to get a resolution of its own authority to

impose a tax before exhausting its administrative

process to determine the amount of taxes owed.

As to the claim that the Court is just issuing an

advisory opinion, the Court thinks that Defendants

would not be so adamant if the Court’s opinion were

merely advisory. The Court has ruled that Alltel is liable

under its gross receipts ordinances to the City of

Springfield to pay gross receipts taxes. The Court’s

June 9, 2005 Order and its Order on October 17, 2006,

are not advisory. E.g., City of St. Louis v. United

Railways Co. of St. Louis, 174 S.W. 78 (Mo.1914).

Alltel also claims tnat the Court’s Order of June 9

granting declaratory relief is not authorized by the

federal Declaratory Judgment Act, 28 U.S.C. § 2201,

nor the Missouri State Declaratory Judgment Act,

Mo. Rev. Stat., § 527.010. As for the latter, the authority

of the Court to grant a declaratory judgment appears

to be a matter of procedure, not substance. If so,

the federal Declaratory Judgment Act controls, not

the Missouri State Declaratory Judgment Act.

See Tompkins v. Erie R.R. Co., 305 U.S. 673 (1938).

: al

hor aeolian

99a

Appendix D

However, under either, if Springfield has the authority

to pursue the legal issue of liability in court before

implementing its administrative procedures to assess

taxes, then a federal court has jurisdiction to make that

legal determination. The diversity statute gives

authority to the federal court to interpret the city’s code

and determine liability just as the diversity statute

permits a federal court to interpret an insurance

contract under state law, or to decide the meaning of a

state statute or constitutional provision. E.g., City of

St. Louis v. United Railways Ce. of St. Louis, 174 S.W.

78 (Mo.1914).

As for Alltel’s request that the Court should abstain

voluntarily from deciding Alltel’s liability, too much work

has been invested by all parties and the Court to warrant

dismissing on abstention grounds. The Defendants,

including Alltel, did not asl: the Court to abstain at an early

stage in this litigation. In fact, Alltel filed a counterclaim

against the Plaintiffs seeking a declaratory judgment that

the Springfield statute was unenforceable because of the

Hancock Amendment. In addition, its opposition to

Plaintiffs’ Motion for Partial Summary Judgment did not

raise the issue of abstention. It was not until the Court

ruled against Alltel that it raised the issue of abstention.

It would violate all principles of fairness and judicial

economy to dismiss on abstention grounds at the twilight

of this litigation. If Alltel had wanted resolution of the issue

in a state court, it could have filed a declaratory judgment

action there long ago.

el ae pemet e ae bp ette ctee th te ek i Be. tee ne ie eee ine ae es

oe te a ee et lee ee |

;

100a

Appendix D

II. Springfield’s Motion to Clarify or in the

Alternative to Reconsider [Doc. # 408]

As the Court has already said, its October 17 Order

was intended to accomplish two things only. The Court has

now clarified for both parties the issues which have been

decided by the Court. The Court will not address the

question of what may happen if Alltel refuses to pay after

the administrative process is completed, including appeal

under Mo. Rev. Stat., Chapter 536. Nothing in its Order

should be construed as a ruling on this issue.

III. Plaintiffs’ Motion to Modify or Lift the Protective

Order for Limited Purposes [Doc. 409]

The Court grants the Plaintiffs’ request to lift the

Protective Order. The Protective Order is amended to

permit data obtained during this litigation to be used in

any subsequent proceeding to assess or collect the tax

which is the subject of this litigation. Nothing in this Order

should be interpreted to suggest that another court cannot

alter the Protective Order in any way that it sees fit.

Because the Protective Order will be applicable to further

proceedings absent modification by another court or the

parties, there is no reason for Alltel’s concern that

confidential matters will not be adequately protected in

collateral administrative and state court proceedings.

s/ Nanette K. Laughrey

NANETTE K. LAUGHREY

United States District Judge

Dated: December 20, 2006

Jefferson City, Missouri

oh yer

10la

APPENDIX E — ORDER OF THE UNITED STATES

DISTRICT COURT FOR THE WESTERN DISTRICT

OF MISSOURI, CENTRAL DIVISION DISMISSING

TAX COLLECTION CLAIM |

DATED OCTOBER 17, 2006 .

IN THE UNITED STATES DISTRICT COURT ;

FOR THE WESTERN DISTRICT OF MISSOURI

CENTRAL DIVISION | |

iS Rides Sota) Brads 5 Sara a

“~

Case No. 04-4099-CV-C-NKL

CITY OF JEFFERSON, et al.,

Plaintiffs,

. CINGULAR WIRELESS, LLC, et al.,

Defendants.

ORDER

The City of Springfield (“the City”) levies a gross

receipts tax on all “telecommunications and telephonic

services” supplied “within the city.” See Springfield

Municipal Ordinance § 70-452. Because Defendant Alltel

Communications, Inc. (“Alltel”), took the position that

commercial mobile radio (“CMR”)! services were not

“telecommunications and telephonic services” within the

1. Commercial mobile radios are commonly referred to as

F cell phones, both by lay people and the telecommunications

. industry. That is the term the Court will use.

Nee ON ee ee a ee ee ee oe op ee Ee

TS aD

102a

Appendix E

meaning of the City ordinance, Alltel has never paid

gross receipts tax on cell phone revenue generated

within the City.

On April 14, 2004, Counsel for the City sent a

demand letter to Alltel’s Chief Financial Officer

requesting payment for five years’ worth of gross

receipts taxes. Pif. Sugg. Opp. Exh. A. The letter further

stated that if payment was not received by April 29,

2004, the City would “proceed with all legal remedies.”

Id. When Alltel did not comply, the City filed the present

lawsuit on May 12, 2004, to collect the taxes due. The

City then filed a Motion for Summary Judgment to

determine whether Alltel was liable to pay gross receipts

taxes for revenue generated by the sale of cell phone

services to Springfield residents. In an Order issued on

June 9, 2005, the Court. found that cell phones are

“telecommunications and telephonic services,” within

the meaning of the Springfield gross receipts ordinance.

In that Order, however, the Court reserved judgment

on the question of whether the Plaintiffs could recover

past due taxes without following its administrative

procedures.

After the Court entered its Order, the Missouri

General Assembly passed HB 209 which required the

Plaintiff to dismiss its lawsuit against Alltel and the

other Defendants. Plaintiff then sought a ruling in state

court to determine the constitutionality of HB 209 and

this action was stayed. After the Missouri Supreme court

Se ee.

a — Te er

‘ae Le te

103a

Appendix E

struck down HB 209 as unconstitutional,” the stay of this

case was lifted.

Alltel now moves to dismiss the case® for lack of

subject matter jurisdiction because, according to Alltel,

the City’s only remedy is to collect taxes from Alltel

through the City’s administrative procedures. In the

alternative, Alltel asks the Court to abstain from

resolving the case in the interest of federalism

[Doc. # 353]. For the reasons set forth below, the Court

finds that the remaining claims in the case should be

dismissed because Springfield’s ordinances and

Missouri law do not give the City a common law cause of

action for tax collection.‘

2. See, City of Springfield v. Sprint Spectrum, L.P, 2006

WL 2257073 (August 8, 2006).

3. To date, none of the other Defendants has joined in

Alltel’s Motion. Because a failure to state a claim defense can

be raised at any time, the other Defendants may seek dismissal

for the reasons discussed in this order. The Court clarifies this

issue because of prior scheduling orders entered by the Court.

4. Contrary to Alitel’s assertions, the Court has subject

matter jurisdiction. Diversity jurisdiction is established by

federal law and is present in this case. Furthermore, the modern

trend in state courts is to recognize that a court has subject

matter jurisdiction in a case involving the exclusive tax remedy

doctrine, but there is no cause of action to collect past due taxes

in court. In other words, any dismissal is for failure to state a

claim and not for lack of subject matter jurisdiction. See, Dubai

Petroleum Co. v. Kazi, 12 S.W.2d 71, 76-77 (Tex.2000).

104a

Appendix E

I. The “Exclusive Tax Remedy Doctrine”

In State ex rel. Hayes v. Snyder, 139 Mo. 549, 552

(Mo.1897), Jackson County Collector Hayes sued the

previous owners of a parcel of real estate to collect a

personal judgment against them for taxes assessed

against the property while they had owned it. The

Missouri Supreme Court held that the state’s exclusive

remedy was to impose a lien on the property for which

back taxes were due. Jd. at 554-55. In reaching this

conclusion, the state supreme court reasoned that

A tax is not a debt in the ordinary sense of

that term, as it is not founded upon contract,

and as a general thing a debt can not be

created in any other way. Tax proceedings are

in invitum. The tax is an impost levied by

the authority of the government for the

support of the State, and has none of the

characteristics of a contract, the essence of

which is an agreement expressed or implied.

Therefore, if the statutes of this State make

special provisions for the collection of taxes

against real estate, and do not apparently

contemplate that any others will be necessary,

the mode of collection prescribed by statute

is exclusive.

[W]hen the statute undertakes to provide

remedies, and thos

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