Supreme Court Could Be Minnesota's Last Best Hope in VoIP Case

Supreme Court review of a federal appeals court ruling that interconnected VoIP is an information service is no sure thing. But petitioning the highest court may be the Minnesota Public Utilities Commission’s only remaining option if the agency wants to continue arguing the state may regulate Charter Communications cable VoIP, said experts in interviews last week. The 8th Circuit U.S. Court of Appeals earlier this month denied the PUC’s petition for en banc rehearing (see 1812040045) of a panel’s September ruling (see 1809070030). If it stands, the decision would affect a Vermont VoIP proceeding and any other state that sees traditional and VoIP services as functionally equivalent, experts said.

The Minnesota PUC is mulling next steps, a spokesperson said last week. The agency has 90 days from a court mandate (in Pacer) issued Tuesday to file a writ of certiorari with the Supreme Court. Charter didn’t comment.

The PUC's options are to seek Supreme Court review or try to get the FCC to clarify VoIP classification, an issue the agency has declined to decide, said State and Local Legal Center Executive Director Lisa Soronen. It’s unlikely the high court would take up the case because there's no circuit split, she said. The top court also may see it as a technical issue that the FCC or Congress may want to decide, she said. “This is a good wait-and-see case.”

Odds had been long for getting en banc rehearing, as they will also be for getting the Supreme Court to take up the case, said Indiana University Media School professor Barbara Cherry. Still, there “are some good legal reasons” to think filing cert wouldn’t be a “wasted effort,” she said. It was unusual for the appeals court to decide an issue that the FCC declined to address -- interconnected VoIP classification -- Cherry said. “Usually, courts don’t like to reach decisions … that they don’t have to.”

Judge Steven Grasz’s dissent from the 8th Circuit decision, coupled with the political unlikelihood of Congress passing a new law, could persuade the Supreme Court to hear the case, Cherry said. That dissent would likely be more significant than 8th Circuit Chief Judge Lavenski Smith supporting en banc hearing, which was noted in the order (in Pacer) rejecting rehearing, she said. The dissent may be a motivating factor for hearing the case -- more so than Smith’s support for rehearing, agreed Soronen, “but I don’t think that’s going to be enough."

VoIP providers said it’s unwise to continue appeal. “If they do, I doubt the Supreme Court would hear this case because there is no circuit split" and he's not sure this issue rises to the level of "national importance requiring the jurisprudence of our highest court,” said Voice on the Net Coalition Executive Director Glenn Richards. NCTA Vice President-State Affairs Rick Cimerman said the “ball is in Minnesota’s court as to whether they will further pursue this case, having been rejected at the lower and circuit court level, and rebuffed in their effort to seek en banc review.”

Cert petitions are “pretty much always a long shot,” but “the facts of the case make it a decent candidate” if the PUC chooses to appeal, countered NARUC General Counsel Brad Ramsay. The decision has significant impact and is inconsistent with 8th Circuit precedent and the FCC’s 2006 USF order, he said. Ramsay sees a court split between the 8th Circuit and the Vermont Supreme Court, which in 2013 ruled that state's commission should revisit the question of interconnected VoIP classification and jurisdiction (see 1304020075), and between the 8th and the 10th circuits, which ruled in 2014 that information services can’t qualify for federal USF subsidies, he said. Grasz’s “well-reasoned dissent” and the chief judge’s support for rehearing would help a possible bid for top court review, Ramsay said.

It wouldn’t be shocking if the PUC sought Supreme Court review, but it would be surprising if the court took the case, said Free State Foundation President Randolph May. He sees VoIP as an information service and hopes the decision convinces Minnesota and Vermont -- another state that views VoIP as telecom -- to back off: “Minnesota and Vermont are clearly outliers regarding VoIP regulation.”

Comcast flagged the 8th Circuit's September decision for the Vermont Public Utility Commission’s attention (see 1811130001). Comcast’s motion for reconsideration of the Vermont PUC’s February order -- finding VoIP is a telecom service -- remains pending, said PUC General Counsel Kyle Landis-Marinello, declining to comment on the 8th Circuit ruling. Comcast declined comment.

If the Supreme Court reviews the case, new Justices Neil Gorsuch and Brett Kavanaugh probably won’t significantly affect the dynamics, Soronen said. Pre-emption isn’t an issue owned by liberals or conservatives, she said. Some believe conservatives are more likely to support big businesses on certain telecom issues, but this isn’t a “lightning rod” issue for which it’s easy to predict views, she said. It’s not yet clear how the newest two justices would rule on the VoIP case, said Cherry. “Neither one has been on the bench long enough … to have a track record,” and procedural rather than substantive reasons could drive their decisions, she said.