Sprint Communications, Inc. v. Jacobs

571 U.S. 69 (2013)

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Nature of the Case

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Facts

P paid intercarrier access fees to the Iowa communications company Windstream for long distance calls placed by P customers to Windstream’s in-state customers. In 2009, P decided to withhold payment for a subset of those calls, classified as Voice over Internet Protocol (VoIP), after concluding that the Telecommunications Act of 1996 preempted intrastate regulation of VoIP traffic. Windstream threatened to block all calls to and from P customers. P filed a complaint with the IUB asking the Board to enjoin Windstream from discontinuing service. P claimed Iowa law entitled it to withhold payment while it contested the access charges and prohibited Windstream from carrying out its disconnection threat. Windstream retracted its threat and P withdraw its complaint. The IUB decided to continue the proceedings to resolve the underlying legal question, i.e., whether VoIP calls are subject to intrastate regulation. P argued that the question retained by the IUB was governed by federal law, and was not within the IUB’s adjudicative jurisdiction. IUB ruled that the intrastate fees applied to VoIP calls. P commenced two lawsuits. P sued the members of the IUB, Jacobs (Ds) in their official capacities in the District Court. P sought a declaration that the Telecommunications Act of 1996 preempted the IUB’s decision. P requested an injunction against the enforcement of the order. P also petitioned for a review of the IUB’s order in Iowa state court. P reiterated the preemption argument and asserted state law and procedural due process claims. P claimed precedent effectively required it to exhaust state remedies before proceeding to federal court so it was forced to file the state suit as a protective measure. IUB filed a motion asking the Federal District Court to abstain in light of the state suit, citing Younger. The District Court granted the IUB’s motion and dismissed the suit. The Court of Appeals rejected the argument that Younger abstention is appropriate only when the parallel state proceedings are “coercive,” rather than “remedial,” in nature. It held that Younger abstention was required whenever “an ongoing state judicial proceeding . . . implicates important state interests, and . . . the state proceedings provide adequate opportunity to raise [federal] challenges.” The Court of Appeals vacated the judgment dismissing P’s complaint and remanded the case, instructing the District Court to enter a stay during the pendency of the state-court action. P appealed.