CNSP, Inc. v. City of Santa Fe

Filing 94

MEMORANDUM OPINION AND ORDER by District Judge Kenneth J. Gonzales denying 75 Motion to Dismiss for Failure to State a Claim. (tah)

Case 1:17-cv-00355-KG-SCY Document 94 Filed 05/27/20 Page 1 of 20

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW MEXICO
CNSP, INC., doing business as NMSURF,
Plaintiff,
v.

Civ. No. 17-0355 KG/SCY

ALAN M. WEBBER, RENEE VILLAREAL,
SIGNE I. LINDELL, PETER IVES,
CAROL ROMERO-WIRTH, CHRIS RIVERA,
ROMAN ABEYTA, MICHAEL HARRIS,
JOANNE VIGIL COPPLER,
in their official capacities as mayor and city council
members of the City of Santa Fe, respectively,
Defendants.
MEMORANDUM OPINION AND ORDER
This matter comes before the Court upon Defendants’ (collectively, City of Santa Fe)
Motion to Dismiss Plaintiff’s First Amended Complaint, filed May 23, 2019. (Doc. 75).
Plaintiff responded on June 6, 2019, and Defendants replied on June 18, 2019. (Docs. 76 and
77). Having considered the Motion to Dismiss, the accompanying briefing, the record of the
case, and relevant law, the Court denies the Motion to Dismiss as described below.
I.

Background
The Telecommunications Act of 1996 (“TCA”) was enacted by Congress “to promote
competition and reduce regulation in order to secure lower prices and higher quality services for
American telecommunications consumers and encourage the rapid deployment of new
telecommunications technologies.” Pub. L. No. 104-104, 110 Stat. 56, 56 (1996), codified at 47
U.S.C. § 253. The statute, therefore, preempts state and local laws that “have the effect of
prohibiting the ability of any entity to provide any interstate or intrastate telecommunications

Case 1:17-cv-00355-KG-SCY Document 94 Filed 05/27/20 Page 2 of 20

service.” 47 U.S.C. § 253(a). However, local governments may “require fair and reasonable
compensation from telecommunications providers, on a competitively and neutral
nondiscriminatory basis, for use of public rights-of-way … if the compensation required is
publicly disclosed by such government.” 47 U.S.C. § 253(c). In addition, the statute provides
the Federal Communications Commission (“FCC”) shall preempt enforcement of any state or
local law that violates § 253(a). 47 U.S.C. § 253(d).
Under Chapter 27 of the City of Santa Fe’s ordinances, entities must apply for and obtain
a franchise agreement to access a public right of way (“PROW”) to construct
telecommunications infrastructure. City of Santa Fe Ord. (2016-42, §7); § 27-2.4(A) (as
amended Nov. 9, 2016). If the application is approved, the City negotiates terms of the franchise
and the City council adopts the agreement by ordinance. Id. § 27-2.4 (2016). An entity that
obtains a franchise must pay the City of Santa Fe a 2% infrastructure maintenance fee for all
gross charges sought for “telecommunications originating or received in the city.” Id. § 27-2.5
(as amended Nov. 9, 2016).
A. Plaintiff’s Original Complaint
In its original Complaint filed March 20, 2017, Plaintiff, an internet service provider,
brought three causes of action against the City of Santa Fe. (Doc. 1). Under the first cause of
action, Plaintiff alleged that certain provisions of Chapter 27 of the City of Santa Fe’s municipal
code had the effect of prohibiting it from providing telecommunications services in violation of §
253 of the TCA. Id. at ¶¶ 31-43. Additionally, Plaintiff alleged that the City of Santa Fe’s
failure to act on Plaintiff’s franchise application also prohibited it from providing
telecommunications services in violation of § 253. Id. Plaintiff’s second cause of action alleged
the City of Santa Fe discriminated against it in violation of the equal protection clauses of the

2

Case 1:17-cv-00355-KG-SCY Document 94 Filed 05/27/20 Page 3 of 20

Fifth Amendment of the United States Constitution and Section 18 of the New Mexico
Constitution. Id. at ¶¶ 46-55. Under the third cause of action, Plaintiff alleged the City of Santa
Fe violated the Anti-donation Clause of Article IX Section 14 of the New Mexico Constitution
by using tax revenue bond funds to pay for an infrastructure project with a different service
provider and donating material for that project. Id. at ¶¶ 56-64.
B. Defendants’ Motion to Dismiss Plaintiff’s Complaint
On April 11, 2017, Defendants filed a Motion to Dismiss Plaintiff’s Complaint under
Fed. R. Civ. P. 12(b)(6) for failure to state a claim upon which relief can be granted. (Doc. 14).
The Court granted the Motion to Dismiss on all counts. (Doc. 54). The Court dismissed
Plaintiff’s § 253(a) claim for damages with prejudice, holding such a claim cannot be brought
under § 1983 or an implied private cause of action. Id. at 9.1 Regarding Plaintiff’s preemption
claim seeking injunctive relief, the Court dismissed the claim without prejudice, holding the FCC
has the authority for such claims pursuant to § 253(d). Id. at 10. The Court also dismissed
Plaintiff’s constitutional equal protection claims without prejudice and declined to exercise
supplemental jurisdiction over the remaining state law claims. Id. at 14-16.
C. Plaintiff’s Appeal to the Tenth Circuit Court of Appeals
On March 20, 2018, Plaintiff filed a Notice of Appeal to the United States Court of
Appeals for the Tenth Circuit. (Doc. 56). Plaintiff sought review of the dismissal of its claims
for damages under §§ 253(a) and (c), brought as a § 1983 private right of action, and of its

The Court also held that, to the extent Plaintiff brought a cause of action under § 253(c), §
253(c) was a safe harbor provision and did not create a cause of action. Thus, the Court
dismissed with prejudice any purported claim under § 253(c). Id. at 10.
1

3

Case 1:17-cv-00355-KG-SCY Document 94 Filed 05/27/20 Page 4 of 20

preemption claims that certain provisions of the City of Santa Fe’s municipal code violated §
253, brought as an implied right of action under the Supremacy Clause. 2 App. br. at 10.
D. Order of the Tenth Circuit Court of Appeals
The Tenth Circuit issued its Order and Judgement on January 14, 2019, which was filed
with this Court on March 7, 2019. (Doc. 61).
1. Private Right of Action for Damages
The Tenth Circuit affirmed the district court’s holding that Qwest precluded Plaintiff
from bringing a private right of action for damages under 42 U.S.C. § 1983. (Doc. 61) at 11
(citing Qwest Corp v. City of Santa Fe, 380 F.3d 1265, 1265-67 (10th Cir. 2004)) (finding no
implied private right of action in § 253).
2. Preemption Claim for Equitable Relief
On appeal, Plaintiff contested the district court’s conclusion that only the FCC has the
authority to declare preemption under § 253(d), and relied on the Tenth Circuit’s holding in
Qwest that “[a] party may bring a claim under the Supremacy Clause that a local enactment is
preempted even if the federal law at issue does not create a private right of action.” (Doc. 61) at
7 (quoting Qwest, 380 F.3d at 1266). In considering this argument, the Tenth Circuit explained
that after Qwest was decided, the United States Supreme Court issued a decision “clarif[ying]
that no implied right of action is contained in the Supremacy Clause.” Id. (quoting Armstrong v.
Exceptional Child Care Center, Inc., 575 U.S. 320, 326 (2015)). The Tenth Circuit stated that
Armstrong reaffirmed that “federal courts may in some circumstances grant injunctive relief
against state officers who are violating, or planning to violate, federal law,” however, “the power

2

Plaintiff also asked the Tenth Circuit Court of Appeals to determine whether, if Plaintiff’s
claims are valid, the district court correctly declined to exercise supplemental jurisdiction over its
state claims. App. br. at 11.
4

Case 1:17-cv-00355-KG-SCY Document 94 Filed 05/27/20 Page 5 of 20

of federal courts of equity to enjoin unlawful executive action is subject to express and implied
statutory limitations.”3 Armstrong, 575 U.S. at 326, 328. In addition, the Tenth Circuit noted
that in Safe Streets Alliance v. Hickenlooper, it held in a divided opinion that to maintain an
equitable cause of action to enforce a federal statute’s preemptive effects, a plaintiff must allege
the statute confers on the plaintiff “a federal substantive right of her or his own to vindicate.”
859 F.3d 864, 902-03 (10th Cir. 2017).
Based on the holdings in Armstrong and Safe Streets Alliance, the Tenth Circuit
suggested that authority for preemption adjudication may not be limited to the FCC under §
253(d). See (Doc. 61) at 7-8. Accordingly, the Court reversed the district court’s holding that
Plaintiff failed to state a claim on grounds that preemption was limited to the authority of the
FCC and remanded the case to allow Plaintiff to amend its complaint to allow the district court to
analyze whether Plaintiff can state an equitable preemption claim in light of Armstrong and Safe
Streets Alliance. Id. at 9. Additionally, the Court instructed the district court to address whether
Plaintiff’s claims are moot since the City of Santa Fe awarded Plaintiff a franchise while the
appeal was pending. Id. at 10.
E. Plaintiff’s First Amended Complaint
In its First Amended Complaint filed on May 9, 2019, Plaintiff pleads two causes of
action. See (Doc. 71). First, Plaintiff alleges that Chapter 27-2 of the City of Santa Fe’s
Telecommunication Facilities in the Public Rights-of-Way Ordinance, as amended in 2017 (the
“2017 Ordinance”) violates § 253 of the TCA for the following reasons: (i) the 2% fee does not
distinguish between charges for service addresses relating to PROW and addresses not relating to

The Tenth Circuit noted that Plaintiff’s complaint did not name any state officers or City
officials as defendants. (Doc. 61) at 7, n.4.
3

5

Case 1:17-cv-00355-KG-SCY Document 94 Filed 05/27/20 Page 6 of 20

PROW; (ii) the 2% gross charge fee and the $2,500 land use application fee “exceed the level of
costs permitted by FCC Order 18-133;” (iii) the “amount of the charges imposed by the 2017
Ordinance is prohibitive for telecommunications providers, or retailers, on whom the charges are
imposed;” (iv) “the 2% fee is not imposed in a fair and balanced manner, or nondiscriminatory
manner, because certain companies are exempted from paying the 2% fee;” and (v) “provisions
5, 8, 17, and 19 in the 2017 Ordinance on their own, or in combination, violate 47 U.S.C. §
253(a).” (Doc. 71) at ¶¶ 24-28.
Second, Plaintiff alleges the City of Santa Fe has engaged in preferential treatment of
Cybermesa, a telecommunications company, in violation of § 253 of the TCA. In support of this
claim, Plaintiff alleges the City of Santa Fe allows Cybermesa “to use a fiber line owned by the
City for free, and to charge other telecommunications providers a fee for the same use, and retain
the charges … .” Id. at ¶ 31. Plaintiff alleges that such “preferential treatment of Cybermesa
materially inhibits or limits the ability of Plaintiff to compete in a fair and balanced and nondiscriminatory legal and regulatory environment, and impedes Plaintiff in the provision of
telecommunications services, causing injury to Plaintiff.” Id. at ¶ 32.
Plaintiff seeks a declaration that the referenced provisions of the 2017 Ordinance and the
City of Santa Fe’s preferential treatment of Cybermesa violate federal law and are thus
preempted. Id. at 9, ¶ 1. Plaintiff also seeks preliminary and permanent injunctive relief to
enjoin enforcement of the referenced provisions 2017 Ordinance and to enjoin the preferential
treatment of Cybermesa. Id. at ¶ 2. Finally, Plaintiff asks the Court to enjoin the Defendants
from enforcing “any provision of franchise ordinance No. 2018-13 with Plaintiff that is
inconsistent with or preempted by federal law.” Id. at ¶ 3.

6

Case 1:17-cv-00355-KG-SCY Document 94 Filed 05/27/20 Page 7 of 20

II.

Discussion
A. Mootness
A claim must be capable of resolution through the judicial process. Brown v. Buhman,
822 F.3d 1151, 1163 (10th Cir. 2016) (citing Hollingsworth v. Perry 570 U.S. 693 (2013)). The
plaintiff’s personal interest “that must exist at the commencement of the litigation (standing)
must continue throughout its existence (mootness).” Baca v. Colorado Department of State, 935
F.3d 887, 922 (10th Cir. 2019), cert. granted, 140 S.Ct. 918 (2020) (quoting Arizonians for
Official English v. Arizona, 520 U.S. 43, 68 (1997)). Thus, a case becomes moot when “an
intervening circumstance deprives the plaintiff of a personal stake in the outcome of the lawsuit[]
at any point during litigation.” Id. (quoting Campbell-Ewald Co. v. Gomez, 136 S.Ct. 663, 669
(2016)).
In its original Complaint, Plaintiff sought both prospective relief (declaration and
injunction) and retrospective relief (damages and retrospective declaration). See (Doc. 1).
Plaintiff alleged, inter alia, that the City of Santa Fe’s failure to act on its franchise application
amounted to a prohibition to provide telecommunications services in violation of § 253 of the
TCA and discrimination in violation of the equal protection clauses of the United States
Constitution and New Mexico Constitution. Id. at ¶¶ 44, 48. Plaintiff sought relief in the form
of “compensatory damages and all other appropriate monetary and equitable relief, including the
value of lost revenue . . . to make Plaintiff whole for the loss suffered as a result of the
discriminatory conduct alleged in this complaint.” Id. at ¶ 65(d).
As to the City of Santa Fe’s failure to act on Plaintiff’s franchise application, there is no
question that an “intervening circumstance” occurred when the City of Santa Fe granted Plaintiff
a franchise. Had Plaintiff’s Complaint concerned allegations primarily related to the City’s

7

Case 1:17-cv-00355-KG-SCY Document 94 Filed 05/27/20 Page 8 of 20

granting of a franchise, it would be questionable whether Plaintiff would continue to have a
personal stake in the outcome of this lawsuit at this point. Campbell-Ewald Co., 136 S.Ct. at
669. However, this is not the extent of Plaintiff’s claims. Instead, at the outset of this litigation
Plaintiff alleged that a number of provisions within Chapter 27 of the City of Santa Fe’s
municipal code function as barriers to entry in violation of § 253, for which it seeks prospective
relief. For example, Plaintiff points to the “2% fee for all services terminated to an address in the
City regardless if the wireline cable originates from a PROW or a private land utility easement;”
the “provision [that] gives the City Council the right to deny PROW access;” the “provisions
[that] would charge Plaintiff a 2% gross charge fee for telecommunications services for all
customers that reside in Santa Fe;” the “City of Santa Fe [not charging] the 2% gross charge fee
to other telecommunications providers that are competitors in the marketplace to NMSURF;”
and the provision that “requires providers to keep records of all its books open for audit and
inspection to the City of Santa Fe and is not limited only to the extent necessary to manage the
PROW.” (Doc. 1) at ¶¶ 32-36.
Plaintiff maintains these allegations almost verbatim in its First Amended Complaint.
See (Doc. 71). Moreover, Plaintiff’s interest in the outcome of the litigation is perhaps even
more heightened now that it has been awarded a franchise because it must now comply with the
very provisions of Chapter 27 of the City of Santa Fe municipal code it claims are in violation of
§ 253. Accordingly, Plaintiff is now directly impacted by the City of Santa Fe’s actions that
Plaintiff claims amount to an effective prohibition of entry under § 253 of the TCA.
For the foregoing reasons, the Court concludes the claims raised in Plaintiff’s First
Amended Complaint demonstrate that Plaintiff continues to have a personal stake in the outcome

8

Case 1:17-cv-00355-KG-SCY Document 94 Filed 05/27/20 Page 9 of 20

of this litigation and are not moot. Because this issue was not raised in the briefings, the Court
assumes the parties to this action agree.
B. Defendants’ Motion to Dismiss for Failure to State a Claim
1. Standard of Review
“To survive a motion to dismiss, a complaint must contain sufficient factual matter,
accepted as true, to ‘state a claim for relief that is plausible on its face.’” Bixler v. Foster, 596
F.3d 751, 756 (10th Cir. 2010) (quoting Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)). “[W]e
assume the factual allegations are true and ask whether it is plausible that the plaintiff is entitled
to relief.” Bixler, 596 F.3d at 756 (quoting Gallagher v. Shelton, 587 F.3d 1063, 1068 (10th Cir.
2009)). The Court may dismiss a complaint under Rule 12(b)(6) if “it appears beyond doubt that
the plaintiff can prove no set of facts in support of his claim which would entitle him to relief.”
Ramirez v. Dept. of Corr., Colo., 222 F.3d 1238, 1240 (10th Cir. 2000) (quoting Conley v.
Gibson, 355 U.S. 41, 45-46 (1957)).
The Rule 12(b)(6) standard does not require a plaintiff to set forth a pima facie case for
each element. Safe Streets Alliance, 859 F.3d at 878 (quoting Khalik v. United Air Lines, 671
F.3d 1188, 1192-93 (10th Cir. 2012)). “The nature and specificity of the allegations required to
state a plausible claim will vary based on context.” Id. (quoting Kansas Penn Gaming, LLC v.
Collins, 656 F.3d 1210, 1215 (10th Cir. 2011)). However, “mere ‘labels and conclusions’ and ‘a
formulaic recitation of the elements of a cause of action’ will not suffice; a plaintiff must offer
special factual allegations to support each claim.’” Id. A “claim is facially plausible if the
plaintiff has pled ‘factual content that allows the court to draw the reasonable inference that the
defendant is liable for the misconduct alleged.’” Id. (quoting George v. Urban Settlement Svcs.,
833 F.3d 1242, 1247 (10th Cir. 2016)).

9

Case 1:17-cv-00355-KG-SCY Document 94 Filed 05/27/20 Page 10 of 20

2. Plaintiff’s Equitable Preemption Claims
Plaintiff states that it has amended its claims to now seek only prospective relief against
state officials under the Court’s equitable powers pursuant to Ex parte Young. (Doc. 76) at 2-3.
Absent waiver or Congressional abrogation, the Eleventh Amendment protects a state from
private suit in federal court. U.S. Const. am. XI. In Ex parte Young, however, the United States
Supreme Court recognized an equitable exception to Eleventh Amendment immunity for suits
seeking prospective injunctive relief against a state official where there is an ongoing violation of
federal law. 209 U.S. 123, 159-60 (1908). To determine whether a party has sufficiently pled a
claim under Ex parte Young to avoid Eleventh Amendment immunity, courts need only conduct
“a straightforward inquiry into whether [the] complaint alleges an ongoing violation of federal
law and seeks relief properly characterized as prospective.” Verizon Maryland Inc. v. Public
Serv. Comm’n of Maryland, 535 U.S. 635, 645 (2002).
In their Motion to Dismiss, Defendants argue that pursuant to Armstrong and Safe Streets
Plaintiff must demonstrate that Congress “create[d] a private right of action to invoke an Article
III court’s equitable power.” (Doc. 75) at 4. Defendants state that because the Tenth Circuit in
Qwest held that § 253 of the TCA does not create a private cause of action, and because
Congress placed preemption enforcement of the TCA with the FCC, “Plaintiff’s well-pled facts,
even if true, fail to meet the standard for an equitable preemption claim, given the constraints of
§ 253, and consequently fail to state claims for which the Court can grant relief.” Id. at 6.
Defendants also argue that “to the extent that Plaintiff is complaining of unequal treatment,
implicitly raising an equal protection claim, that claim is barred by the law of the case” because
Plaintiff did not appeal the dismissal of its equal protection claim. Id. at 6-7.

10

Case 1:17-cv-00355-KG-SCY Document 94 Filed 05/27/20 Page 11 of 20

Plaintiff disputes that Armstrong and Safe Streets mandate dismissal of its claims and
denies that it alleges a constitutional equal protection claim. (Doc. 76) at 2-11.
a. Armstrong Does Not Foreclose Plaintiff’s Preemption Claims
In Armstrong, providers of habilitation services to persons covered by Idaho’s Medicaid
plan sued state officials claiming the state was violating the federal Medicaid Act by reimbursing
providers at rates lower than the Medicaid Act permits. 575 U.S. at 323-24. The United States
Supreme Court reversed the district court and Ninth Circuit’s holdings that the providers had a
private right of action under the Supremacy Clause to seek injunctive relief. Id. at 326.4 The
Supreme Court explained that the Supremacy Clause “is not the source of any federal rights,”
and does not create a cause of action. Id. at 324 (“If the Supremacy Clause includes a private
right of action, then the Constitution requires Congress to permit the enforcement of its laws by
private actors, significantly curtailing its ability to guide the implementation of federal law.”).
Nevertheless, the Armstrong Court emphasized that “[t]o say that the Supremacy Clause
does not confer a right of action is not to diminish the significant role that courts play in assuring
the supremacy of federal law.” Id. at 326. Indeed, the Court explained, “as we have long
recognized, if an individual claims federal law immunizes him from state regulation, the court
may issue an injunction upon finding the state regulatory actions preempted.” Id. (citing Ex
Parte Young, 209 U.S. at 155-56). The Court further explained that “[t]he ability to sue to enjoin

4

The Supremacy Clause, Art. VI, cl. 2, reads:
This Constitution, and the Laws of the United States which shall be
made in Pursuance thereof; and all Treaties made, or which shall
be made, under the Authority of the United States, shall be the
supreme Law of the Land; and the Judges in every State shall be
bound thereby, any Thing in the Constitution or Laws of any State
to the Contrary notwithstanding.
11

Case 1:17-cv-00355-KG-SCY Document 94 Filed 05/27/20 Page 12 of 20

unconstitutional actions by state and federal officers is the creation of courts of equity,” and the
Court then proceeded to consider whether the providers’ suit could proceed against the state in
equity. Id. at 327. The Court concluded the claims could not proceed in equity because “the
Medicaid Act implicitly precludes private enforcement.” Id. at 328. The Court reasoned that
Congress intended to foreclose equitable relief because (1) the sole remedy provided for a state’s
failure to comply with the Medicaid Act is the withholding of Medicaid funds by the Secretary of
Health and Human Services, and (2) because the Medicaid Act’s mandate that state plans
provide for payments that are “consistent with efficiency, economy, and quality of care,” is so
broad that it is “judicially unadministrable.” Id. (quoting 42 U.S.C. § 1396a(a)(30(A)).
The Armstrong holding does not preclude Plaintiff’s equitable preemption claims here for
several reasons. First, Armstrong did not foreclose parties from bringing equitable preemption
suits under Ex parte Young, as Plaintiff does here. While Armstrong clarified there is no implied
right of action contained in the Supremacy Clause, the Supreme Court nevertheless allowed that
parties may continue to pursue equitable preemption claims via Ex parte Young as long as the
statute at issue has not foreclosed equitable relief. Id. at 326.
In addition, unlike the Medicaid Act in Armstrong, the TCA does not contain a sole
remedy. Instead, the TCA’s enforcement provision, 47 U.S.C. § 401, contemplates numerous
remedies. See, e.g., 47 U.S.C. § 401(a) (allowing Attorney General of the United States to
pursue writs of mandamus commanding compliance with TCA); § 401(b) (providing for
injunctive relief for failure to obey an FCC order). Additionally, § 414 of the TCA states:
“Nothing in this chapter shall in any way abridge or alter the remedies now existing at common
law or by statute, but the provisions of this chapter are in addition to such remedies.” See also

12

Case 1:17-cv-00355-KG-SCY Document 94 Filed 05/27/20 Page 13 of 20

Louisiana Pub. Serv. Comm’n v. FCC, 476 U.S. 355, 360 (1986) (“The [TCA] establishes,
among other things, a system of dual state and federal regulation over telephone service.”).
While § 247(d) provides that the FCC shall preempt state or local laws that violate §
247(a), that does not equate to congressional intent to bar other parties from invoking federal
jurisdiction to bring preemption claims. See Friends of the East Hampton Airport, Inc. v. Town
of East Hampton, 841 F.3d 133, 146 (2nd Cir. 2016) (holding Armstrong did not mandate
dismissal of preemption claims even though challenged statute conferred enforcement authority
on the Federal Aviation Administration, because plaintiffs did not seek “to enforce the federal
law themselves, but to preclude a municipal entity from subjecting them to local laws enacted in
violation of federal requirements”). It is significant that Plaintiff here seeks to use Ex parte
Young as a shield in that it seeks injunctive relief, in contrast to the plaintiffs in Armstrong who
sought affirmative relief in the form of additional payments. See Michigan Corr. Org. v.
Michigan Dept. of Corr., 774 F.3d 895, 906 (6th Cir. 2014) (explaining parties “may use Ex
parte Young as a shield against the enforcement of contrary (and thus preempted) state laws, …
[b]ut matters differ when litigants wield Ex parte Young as a cause-of-action-creating sword”
because the relief sought “in reality is retroactive and monetary in nature”); see also Private
Rights of Action-Equitable Remedies to Enforce the Medicaid Act-Armstrong v. Exceptional
Child Center, Inc., 129 Harv. L. Rev. 211, 216 (2015) (“[T]he [Armstrong] majority, by not
calling the Court’s previous reading of Ex parte Young into question, suggests that the
displacement of negative injunctions demands a more robust showing of congressional intent.”).
Also, unlike the Medicaid claim at issue in Armstrong, Plaintiff’s TCA-based challenge
to the City of Santa Fe’s ordinance would not require application of a judicially unadministrable
standard. In Armstrong, the plaintiffs sought enforcement of a statute that broadly mandated

13

Case 1:17-cv-00355-KG-SCY Document 94 Filed 05/27/20 Page 14 of 20

payments that are “consistent with efficiency, economy, and quality of [medical] care.” 575 U.S.
at 327. The Tenth Circuit concluded this statute was judicially unadministrable because agency
expertise and judgment was necessary to provide “uniformity, widespread consultation, and
resulting administrative guidance” while avoiding “the comparative risk of inconsistent
interpretations and misincentives that can arise out of an occasional inappropriate application of
the statute in a private action.” Id. at 328-329. The TCA, however, sets forth a simple rule: that
state and local laws are preempted if they “have the effect of prohibiting the ability of any entity
to provide any interstate or intrastate telecommunications service.” 47 U.S.C. § 247(a). Not
only is the TCA not as “judgment-laden,” “broad,” or “unspecific” as the Medicaid Act, but
several courts have already considered similar preemption claims by telecommunications
providers under § 253. See, e.g., Qwest, 380 F.3d 1258 (considering plaintiff’s equitable
preemption claims under § 253); Virgin Mobile USA, LP v. Pat Apple, et al., 2018 WL 2926576
(D. Kan.) (same); City of Austin v. Abbott, 385 F.Supp.3d 537 (W.D. Tex. 2019) (same).
Finally, the United States Supreme Court has held that the TCA does not “display any
intent to foreclose jurisdiction under Ex parte Young.” Verizon, 535 U.S. at 638. The Supreme
Court in Armstrong did not disturb its holding in Verizon and, instead, relied on Verizon’s “intent
to foreclose” standard in considering whether Congress intended to foreclose equitable relief in
the Medicaid statute. Moreover, other courts have found that equitable preemption claims may
proceed after Armstrong. For example, in Virgin Mobile, the plaintiff alleged that a state
regulation was preempted by §§ 253 and 254 of the TCA. 2018 WL 2926576, *2. The court
rejected defendants’ argument that plaintiff’s claims were no longer viable after Armstrong,
reasoning the TCA does not contain a sole remedy like the Medicaid Act and Congress did not
confer enforcement of the TCA on the FCC alone. Id. at *4-5. Relying on Verizon’s application

14

Case 1:17-cv-00355-KG-SCY Document 94 Filed 05/27/20 Page 15 of 20

of Ex Parte Young to the TCA, the court held that because plaintiff alleged an ongoing violation
of federal law and sought prospective relief, the complaint “presents a traditional Ex parte Young
action” and concluded “it has equitable jurisdiction to hear Virgin Mobile’s claims.” Id. at 6.
Similarly, in City of Austin, the court considered the defendant’s argument that
Armstrong barred a preemption claim under § 253 of the TCA. 385 F.Supp.3d at 541-42. The
court rejected defendant’s argument, explaining Armstrong did not modify clear precedent “that
a plaintiff seeking injunctive relief from a state regulation on the grounds that the regulation is
pre-empted by federal statute presents a federal question which the federal courts have
jurisdiction to resolve.” Id. at 542 (citing Shaw v. Delta Airlines, 463 U.S. 85, 96 (1983) and Ex
parte Young, 209 U.S. 123). The court further explained that Verizon provides the basis for the
court’s jurisdiction because the Supreme Court “held that even though the [TCA] did not create a
private right of action to challenge the state agency’s order, the district court still had
jurisdiction” pursuant to Ex parte Young. Id. at 542; see also Green v. Mansour, 474 U.S. 64, 68
(1985) (explaining “the availability of prospective relief of the sort awarded in Ex parte Young
gives life to the Supremacy Clause”); Air Evac EMS, Inc. v. Texas Dept. of Ins., Div. of Workers’
Comp., 851 F.3d 507, 515 (5th Cir. 2017) (rejecting assertion that Armstrong modified prior
Supreme Court cases authorizing preemption claims, stating Armstrong instead “reaffirmed that
plaintiffs seeking injunctive relief against state officers must satisfy Ex parte Young’s equitable
exception”); Friends of the East Hampton Airport, 841 F.3d at 144 (finding Armstrong does not
bar equity jurisdiction pursuant to Ex parte Young, and recognizing Verizon authorizes suits by
telecommunications carriers asserting federal preemption claims); CareFirst, Inc. v. Taylor, 235
F.Supp.3d 724, 742 (D. Md. 2017) (distinguishing Verizon and TCA from Armstrong and
Medicaid Act and stating TCA preemption claim “is a classic application of Ex parte Young”);

15

Case 1:17-cv-00355-KG-SCY Document 94 Filed 05/27/20 Page 16 of 20

Bellsouth Telecommunications, LLC v. Louisville/Jefferson Cnty. Metro Gov’t, 2016 WL
4030975, *5-6 (W.D. Ky.) (finding Armstrong does not foreclose claim state law is preempted
by federal statute and comparing statute at issue to TCA).
For the foregoing reasons, the Court concludes Armstrong does not mandate dismissal of
Plaintiff’s equitable preemption claims.
b. Safe Streets Does Not Foreclose Plaintiff’s Preemption Claims
Next, Defendants argue the Tenth Circuit’s decision in Safe Streets supports dismissal of
Plaintiff’s claims. In Safe Streets, the plaintiffs alleged, inter alia, that an amendment to the
state’s constitution repealing criminal and civil proscriptions on recreational marijuana, along
with state and local laws enforcing that amendment, are preempted by the federal Controlled
Substances Act (“CSA”). 859 F.3d at 892. The plaintiffs asserted jurisdiction for their
preemption claims pursuant to the Supremacy Clause and the CSA’s preemption provision. Id.
The Tenth Circuit held “the Supremacy Clause is not the source of any federal rights …
and certainly does not create a cause of action.” Id. at 900 (citing Armstrong, 575 U.S. at 32425). Therefore, the Tenth Circuit considered whether the plaintiffs could pursue their claims in
equity, stating to do so the plaintiffs must demonstrate they have a federal substantive right to the
relief sought. Id. at 901-02 (“[T]o invoke the Article III courts’ equitable powers, a plaintiff
asserting a cause of action to enforce a federal statute must have a federal right that he or she
possesses against the defendant. … Therefore, unless a private plaintiff has been given a federal
right of her or his own to vindicate in the CSA, the plaintiff cannot maintain a cause of action—
in law or in equity—against any defendant for violating the CSA.”) (citations omitted). The
Court further explained “[f]or a statute to create such private rights, its text must be phrased in
terms of the persons benefited,” while “statutes that focus on the person regulated rather than the

16

Case 1:17-cv-00355-KG-SCY Document 94 Filed 05/27/20 Page 17 of 20

individuals protected create no implication of an intent to confer rights on a particular class of
persons.” Id. at 903 (citations omitted).
Turning to the CSA, the Tenth Circuit reasoned the plaintiffs did not allege any
substantive rights in the CSA by which they can enforce the CSA’s preemptive effects, and
federal courts “will not entertain citizen suits to vindicate the public’s nonconcrete interest in the
proper administration of the laws.” Id. at 904 (citations omitted). In contrast, Plaintiff here
specifically alleges a substantive right in the TCA in that it seeks to restrain City of Santa Fe
officials from enforcing the 2017 Ordinance in violation of § 253. Not only has the Supreme
Court recognized the right for telecommunication services providers to pursue preemption claims
under the TCA, but the Tenth Circuit in Safe Streets distinguished the CSA from the TCA and
other federal statutes that provide substantive rights. Id. at 905, n.17 (stating the TCA and other
federal statutes are different from the CSA in that they “leave no doubt that the federal statutes
… in question were the purported sources of the private plaintiffs’ substantive rights under
consideration) (citing Verizon, 535 U.S. at 640-46). Moreover, in Safe Streets the Court
emphasized the plaintiffs could not maintain their preemption claims because they did not seek
to enjoin the state from enforcing the state marijuana laws “against them.” Id. at 906 (emphasis
in original). The Tenth Circuit contrasted the plaintiffs’ claims with claims brought pursuant to
Ex parte Young, explaining “if an individual claims federal law immunizes him from state
regulation, the court may issue an injunction upon finding the state regulatory actions
preempted.” Id. at 906, n.19 (quoting Armstrong, 575 U.S. at 324, and Ex parte Young, 209 U.S.
at 155-56). Here, Plaintiff brings the exact claims Safe Streets exempted from its holding—that
§ 253 immunizes it from the City of Santa Fe enforcing the 2017 Ordinance against them.

17

Case 1:17-cv-00355-KG-SCY Document 94 Filed 05/27/20 Page 18 of 20

In their Motion to Dismiss, Defendants argue Safe Streets requires Plaintiffs to
demonstrate that the TCA provides a “private right of action” to invoke this Court’s equitable
power and Plaintiff lacks a private right of action under the TCA. (Doc. 75) at 4-5 (citing Qwest,
380 F.3d at 1265). Defendants’ argument conflates a “private right of action” to pursue a
constitutional claim with a statutory “substantive right” to pursue equitable relief under Ex parte
Young. Indeed, the Tenth Circuit in Safe Streets explained that “[t]he question of who may
enforce a statutory right is fundamentally different from the question of who may enforce a right
that is protected by the Constitution.” Safe Streets Alliance, 859 F.3d at 902, n.14; see also
Qwest, 380 F.3d at 1266 (stating a private right of action “is not required where a party seeks to
enjoin the enforcement of a regulation on the ground that the local ordinance is preempted by
federal law”). Moreover, while the Tenth Circuit in Qwest dismissed the § 1983 action because
the plaintiff could not assert a constitutional private right of action under § 253, the Tenth Circuit
nevertheless proceeded to consider the equitable preemption claims under § 253. See Qwest, 380
F.3d at 1266-73. Therefore, Defendant’s argument that there is no private right of action to
enforce the TCA is misplaced. Instead, the Court must determine whether the TCA provides
Plaintiff a substantive right of enforcement, and, pursuant to Verizon, the Court concludes that it
does.
c. Ex Parte Young
Having found that neither Armstrong nor Safe Streets bar Plaintiff’s preemption claims,
the Court must next determine whether Plaintiff has sufficiently stated Ex parte Young claims.
Ex parte Young allows a party to obtain prospective equitable relief against a state official,
applies only to alleged ongoing violations of federal law, and does not permit suits seeking
retroactive, compensatory, or monetary relief. Ex parte Young, 209 U.S. at 159-60; see also

18

Case 1:17-cv-00355-KG-SCY Document 94 Filed 05/27/20 Page 19 of 20

Verizon, 535 U.S. at 645-46 (“In determining whether the doctrine of Ex parte Young avoids an
Eleventh Amendment bar to suit, a court need only conduct a straightforward inquiry into
whether the complaint alleges an ongoing violation of federal law and seeks relief properly
characterized as prospective … [and] does not include an analysis of the merits of the claim.”).
Applying the straightforward inquiry here, Plaintiff alleges an ongoing violation of
federal law and seeks prospective relief in the form of an injunction. Specifically, Plaintiff has
now named the mayor and city council members for the City of Santa Fe in its First Amended
Complaint and alleges that multiple provisions of the City of Santa Fe’s 2017 Ordinance violate
§ 253. (Doc. 71) at 1. Plaintiff also alleges the City of Santa Fe has “continued favored
treatment” of another telecommunications provider in violation of § 253. Id. Plaintiff seeks
prospective relief in the form of a declaratory judgment that the provisions of the 2017
Ordinance and preferential treatment of Cybermesa violates federal law. Id. at 9 (asking the
Court to enjoin Defendants from enforcing certain provisions of the 2017 Ordinance and
franchise ordinance No. 2018-13, and to enjoin the preferential treatment of Cybermesa).
Therefore, the Complaint presents an Ex parte Young action and the Court concludes it has
equitable jurisdiction to hear Plaintiff’s claims. See also Verizon, 535 U.S. at 645 (holding court
has jurisdiction under Ex parte Young to hear telecommunications service provider’s claim
against state officials that ordinance was preempted by TCA); Virgin Mobile USA, LP, 2018 WL
2926576, *2 (same); City of Austin, 385 F.Supp.3d at 544-45 (same); Bellsouth Telecomm. LLC,
2016 WL 4030975 (same).
III.

Conclusion
Based on the foregoing the Court concludes the claims raised in Plaintiff’s First
Amended Complaint are not moot and are not barred by either Armstrong or Safe Streets. In

19

Case 1:17-cv-00355-KG-SCY Document 94 Filed 05/27/20 Page 20 of 20

addition, the Court has jurisdiction to hear Plaintiff’s equitable preemption claims under Ex parte
Young. Accordingly, the Court denies Defendants’ Motion to Dismiss.5
IT IS THEREFORE ORDERED that Defendants’ Motion to Dismiss for Failure to State
a Claim, (Doc. 75), is denied.

________________________________
UNITED STATES DISTRICT JUDGE

5

Defendants briefly state in their Motion to Dismiss that Plaintiff also fails to state a claim
because § 253(c) allows state and local governments to require reasonable compensation for the
use and occupancy of PROW. (Doc. 75) at 2. However, neither party addressed this argument
and the Court will not consider issues not adequately briefed. See Mitchell v. City of Moore, 218
F.3d 1190, 1199 (10th Cir. 2000) (“The district court [i]s not obligated to comb the record in
order to make [a party’s] arguments for him.”); Phillips v. Calhoun, 956 F.2d 949, 953-54 (10th
Cir. 1992) (holding litigant must support argument with legal authority); Gross v. Burggraf
Constr. Co., 53 F.3d 1531, 1547 (10th Cir.1995) (declining to consider issues not adequately
briefed).
20