TracFone Wireless, Inc. v. Springfield, City of

Filing 17

ORDER. Springfield's motion to consolidate this case, Doc. 6, with City of Boonville, et al. v. Tracfone Wireless, Inc., no. 2:14-cv-04157-NKL, is granted.Tracfone's motion to remand, Doc. 14, is denied without prejudice. Signed on 9/17/14 by District Judge Nanette K. Laughrey. (Matthes, Renea)

IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF MISSOURI
CENTRAL DIVISION
TRACFONE WIRELESS, INC.,
Plaintiffs,
v.
CITY OF SPRINGFIELD,
Defendant.

)
)
)
)
)
)
)
)
)

No. 6:14-cv-03335-NKL

ORDER
This case was originally filed in Greene County, Missouri Circuit Court and
removed by Defendant City of Springfield. Doc. 1. Before the Court are Springfield’s
motion to consolidate this case, Doc. 6, with City of Boonville, et al. v. Tracfone
Wireless, Inc., no. 2:14-cv-04157-NKL, and Plaintiff Tracfone Wireless Inc.’s motion to
remand this case to state court, Doc. 14. 1 The motion to consolidate is granted and the
motion to remand is denied.
I.

Background

By ordinance, Section 70-45, the City of Springfield imposes a local tax on
suppliers of telephones and related services, specifically:
Every person engaged in the business of supplying telephones
and telecommunications and telephonic services, and
telecommunications services, within the city shall pay as a
license tax a sum equal to six percent of the gross receipts
from such business.
1

Tracfone has also filed a motion to dismiss or stay, Doc. 9, in case no. 2:14cv-04157-NKL.

The City of Boonville has a similar ordinance, Section 10-99:
Every person engage in the business of providing telephone
service for compensation in the city shall pay to the city as a
license tax a sum equal to five (5) percent of the gross
receipts from such a business.
Tracfone has not paid either city’s tax. Although both cities maintain that Tracfone
should be doing so, neither city has issued an assessment against Tracfone.
TracFone filed a declaratory judgment action against Springfield in the Circuit
Court of Greene County, Missouri, on June 19, 2014. Tracfone alleged it is “not engaged
in the business of supplying ‘telephonic service’ or ‘telecommunications service’ as”
defined by Missouri law, and that it is “not ‘engaged in the business of supplying
telephones, and telecommunications and telephonic services, and telecommunications
services, within the city’” of Springfield for purposes of the local tax ordinance. Doc. 11, p. 3. Tracfone alleges it “has a legally protectable constitutional and pecuniary interest
in not being subject to unlawful taxation by Springfield.”

Id.

More specifically,

Tracfone takes the position that it is based out of state, has no physical presence in
Springfield, and that application of the local tax to it would violate the dormant
Commerce Clause, Doc. 1-9, pp. 3-4. Springfield filed a motion to dismiss, but the
Greene County Circuit Court denied the motion. Springfield then removed Tracfone’s
state case to federal court and eventually the matter was reassigned to this Court.
On June 20, 2014, one day after Tracfone filed its case in Greene Court, the Cities
of Springfield and Boonville filed a declaratory judgment action against TracFone in this
Court, case no. 2:14-cv-04157-NKL, seeking a declaratory judgment that their respective
2

ordinances apply to Tracfone, and an injunction, accounting, and order requiring payment
of back taxes.
Tracfone now seeks to remand its declaratory action to state court and Springfield
and Boonville seek to consolidate all the declaratory actions here.
II.

Discussion

A court may order consolidation when actions involve a common question of law
or fact. Fed. R. Civ. Pro. 42(a). There is no disagreement that the instant case and case
no. 2:14-cv-04157-NKL are essentially mirror images of one other.
The gravamen of Tracfone’s opposition to consolidation and its motion to remand
is that the Court lacks subject matter jurisdiction because of the Tax Injunction Act
(TIA), 28 U.S.C. § 1341. The TIA provides 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.” 28 U.S.C.
§ 1341. Relying on Hibbs v. Winn, 542 U.S. 88, 101 (2004), Springfield argues that the
TIA does not apply when there has been no action by the government to assess, levy or
collect a tax. It also argues that the TIA does not bar federal subject matter jurisdiction
when it is the taxing authority that seeks declaratory judgment in federal court. The
Court agrees with the second argument and therefore finds it has subject matter
jurisdiction to hear Tracfone’s request for declaratory judgment. Springfield is the party
that invoked federal court jurisdiction and therefore the TIA does not bar subject matter
jurisdiction over Tracfone’s request for declaratory judgment. See, Jefferson County v

3

Acker, 527 U.S. 423, 433-434 (1999); City of Jefferson v. Cingular Wireless, 531 F.3d
595, 604 (8th Cir. 2008).
III.

Conclusion

Springfield’s motion to consolidate this case, Doc. 6, with City of Boonville, et al.
v. Tracfone Wireless, Inc., no. 2:14-cv-04157-NKL, is granted.
Tracfone’s motion to remand, Doc. 14, is denied without prejudice.

s/ Nanette K. Laughrey
NANETTE K. LAUGHREY
United States District Judge
Dated: September 17, 2014
Jefferson City, Missouri

4