Sprint Communications v. APCC Services
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[edit] Briefs and Documents
Docket: 07-552
Issue: Whether a plaintiff assigned the right to pursue a legal claim, but which stands to gain no proceeds from the outcome of the litigation, has established standing under Article III. (Disclosure: Akin Gump represents the petitioner.)
- Opinion below (D.C. Circuit)
- Petition for certiorari
- Brief in opposition
- Petitioner’s reply
- Amicus brief of Qwest Communications, Inc. (in support of the petitioners)
Merits briefs (via ABA)
- Brief for Petitioner Sprint Communications Company L.P. and AT&T Corp.
- Brief for Respondent APCC Services, Inc., et al.
- Reply Brief for Petitioner Sprint Communications Company L.P. and AT&T Corp.
Amicus briefs
- Brief for Qwest Communications Corporation in Support of Petitioner
- Brief for Network IP, LLC and Network Enhanced Telecom, LLP in Support of Petitioner
[edit] Pre-Argument Articles
[edit] Argument Preview
The following preview is by Steven Wu, an associate at Akin Gump.
On Monday, the Supreme Court will hear argument in No. 07-552, Sprint Communications Co. L.P. v. APCC Servs., Inc.. Carter G. Phillips of Sidley Austin LLP in Washington, D.C., will argue on behalf of petitioners Sprint and AT&T; Roy T. Englert, Jr., of Robbins, Russell, Englert, Orseck, Untereiner & Sauber LLP, also in Washington, D.C., will argue on behalf of respondent APCC Services. The question presented is whether an assignee of a claim "for purposes of collection" has standing to sue, but a full understanding of the case requires a brief digression into the surprisingly complex world of payphones.
Most payphones are not operated by large telecommunications companies such as Sprint and AT&T; instead, they are operated by smaller companies known as payphone service providers (PSPs). The PSPs, in turn, rely upon a network of "exchange carriers" to actually connect payphone callers to call recipients. Simplifying somewhat, when somebody places a call through a payphone, a "local exchange carrier" is the first to receive the call. If the call is local, the local exchange carrier can complete the call itself. However, if the call is long distance, the local exchange carrier transfers the call to a long-distance carrier, which may in turn transfer the call to numerous other carriers (and other services) before the connection is complete. (These long-distance carriers are technically known as "interexchange carriers," though this overview will avoid that term.)
Before 1990, a typical PSP would route all users of its payphones through a single, preferred long-distance carrier. But in 1990, in response to complaints about high rates for long-distance payphone calls, Congress passed a statute requiring PSPs to give payphone users the freedom to choose their own long-distance carrier. This led to a proliferation of "dial-around" methods -- such as access codes (e.g., "10-10-220") -- that allowed payphone users to make coinless calls through the long-distance carrier of their choice. To ensure that PSPs would not be unfairly disadvantaged by this new free market, Congress required the long-distance carriers to compensate the PSPs for dial-around calls under a regulatory scheme propounded by the Federal Communications Commission.
Under this scheme, most PSPs do not deal directly with the long-distance carriers. Instead, PSPs tend to rely on "aggregators" to act as intermediaries. These aggregators, each of which represents a large number of PSPs, submit billing information from the PSPs to the long-distance carriers and then distribute any compensation they receive to their PSP clients. APCC Services, the respondent in this case, is the country's largest aggregator; it represents over 1,400 PSPs, which in turn own over 400,000 payphones.
The litigation currently before the Court began when several PSPs accused long-distance carriers (including petitioners Sprint and AT&T) of shirking their compensation obligations under the FCC's regulatory scheme. But, rather than suing the long-distance carriers directly, the PSPs instead assigned their claims to their aggregators, including APCC. These assignments, which were expressly "for purposes of collection," required the aggregators to litigate "on behalf of" the PSPs and to "pass back to the [PSPs] any amounts [the aggregators] recovered thereby." The question before the Supreme Court this Monday is whether such assignments give the aggregators standing to sue the long-distance carriers for their alleged failure to compensate the PSPs.
Petitioners Sprint and AT&T argue that the aggregators do not have standing. First, petitioners argue that the aggregators lack Article III standing because the assignments related only to the PSPs' claims, and not to any recovery, and did not transfer to the aggregators the PSPs' alleged entitlement to compensation. As a result, the aggregators can expect no practical or concrete benefit from this litigation aside from the purely psychological thrill of victory. Second, even if the assignments created Article III standing, the aggregators lack prudential standing because the individual PSPs are fully capable of litigating their own claims and because the underlying claims will, in any event, ultimately require individualized proof of the PSPs' injuries.
Two amici curiae filed briefs in support of petitioners. The brief by Qwest Communications Corp. emphasizes the practical consequences of recognizing third-party standing. (Along with Sprint and AT&T, Qwest is one of the three biggest long-distance carriers in this country, and it has also been sued by aggregators on similar grounds.) In particular, Qwest notes that long-distance carriers' ability to defend themselves in this litigation or to bring counter-claims would be severely constrained if the aggregators are the suing parties, because the aggregators themselves do not own or operate payphones. Qwest contends that a class action by the PSPs would be a more appropriate procedural vehicle. Sounding a similar note, the second brief, by Network IP and Network Enhanced Telecom, criticizes the aggregators for their abusive litigation techniques -- and particularly their tendency to interfere with defendants' attempts to obtain the underlying facts from the PSPs.
In response, APCC first contends that there are two agreements at issue here -- an assignment of claims and an agreement about returning any proceeds from this litigation -- and that standing can be established under the assignment without reference to the separate agreement about proceeds. Second, APCC relies heavily upon Vermont Agency of Natural Resources v. United States ex rel. Stevens (2000), in which the Court upheld the standing of qui tam relators in part on the theory that "the assignee of a claim has standing to assert the injury in fact suffered by the assignor." Third, APCC argues that assignees-for-collection like APCC have historically been deemed to have standing to sue. Finally, APCC dismisses the petitioners' and amici's complaints about their inability to obtain discovery from individual PSPs, contending that such discovery has already been ordered and is, at any rate, relevant only to the trial court, not the Supreme Court.
Petitioners' reply, aside from reiterating the arguments in the opening brief, makes two new points. In response to APCC's contention that there were two agreements, petitioners argue that both the assignment of the claim and the transfer of proceeds are in fact part of just a single document -- and that every court that had considered this case had so recognized. In response to APCC's reliance on Vermont Agency and historical practice, petitioners contend that these precedents are distinguishable because they involved assignments of an entire claim plus recovery, and not the narrower assignment solely "for purposes of collection" that was made here.
[edit] Oral Argument Recap
The following argument recap is by Tobias Zimmerman, an associate at Akin Gump in Washington, DC. Tobias participated in the case in the lower courts, and Akin Gump also served as co-counsel to the Petitioners in this case.
The Court heard argument on Monday, April 21 in this case. At oral argument, the Court grappled with standing and the unique procedural vehicle employed by respondents in asserting claims for payphone compensation on behalf of more than 1400 individual payphone owners. Carter Phillips, representing petitioners Sprint et al., faced lively questioning by Justice Ginsburg, who appeared unconvinced by petitioners’ claim that respondents’ agreement to account for all of the proceeds to the assigning payphone owners made the case materially different from one in which an assignee is entitled to retain a portion of any winnings. After Mr. Phillips sought to describe some of the practical problems created by having 1400 absent plaintiffs, Justice Ginsburg pointed out that “you would have the same problems” in a case in which an assignee indisputably has Article III standing because he is entitled to retain a portion of any recovery. Mr. Phillips agreed, but noted that the practical difficulties petitioners identify really only go to the question of prudential standing - not to the issue of constitutional standing under Article III.
Justice Scalia appeared most favorable to petitioners’ position that respondents lack Article III standing by virtue of their agreement to surrender the proceeds to the assignors. Noting that he had authored the opinion in Vermont Agency, on which respondents closely rely, Justice Scalia asked respondents’ counsel, Roy Englert, to name the “oldest” and “most recent” cases supporting the “long tradition” of standing by an assignee for collection. Mr. Englert identified Spiller v. Atchison Topeka & Santa Fe (1920) and Titus v. Wallick (1939) - dates which Justice Scalia dismissed when compared to the history examined in Vermont Agency, which stretched far back into the origins of qui tam actions in British common law. Justice Alito also noted that Spiller and Titus are distinguishable. Justice Scalia and the Chief Justice appeared most hostile to respondents’ claim to have standing as “assignees for collection,” while Justice Ginsburg appeared the most determined to identify the respondents as an appropriate plaintiff.
Justice Breyer (and, to a lesser extent, Justice Souter), pursued both sides on prudential standing, asking questions about the availability of discovery and the practical differences between the chosen form of action versus the already available class action device. Mr. Englert argued that the action could have been brought under Rule 23 as a class action, but that the chosen form is superior because it required affirmative claims by all of the individual payphone operators. Petitioners, however, argued that the action would not satisfy the typicality and commonality requirements of Rule 23, and therefore would not be eligible for class certification.
Finally, Justice Breyer posited a hypothetical to Mr. Englert in which the cost of defending each separate claim for compensation out of the billions of potentially relevant calls would exceed the compensation the payphone owners stand to gain. In such a case, Justice Breyer asked, doesn’t the inherent inefficiency of the federal forum dictate against accepting the case? Mr. Englert responded by noting that such situations are hardly uncommon, and defendants are used to making the appropriate cost-benefit analyses to determine when it is more economical to settle (rather than fight) such claims, and that settlement is an important part of federal litigation. Justice Breyer, however, suggested that the Federal Communications Commission might play a role in resolving this dispute more efficiently and fairly.
[edit] Opinion Analysis
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