Sprint Communications v. APCC Services, Inc.

I. Whether Respondent APCC aggregators establish standing under Article III

Article III, Section 2 of the Constitution provides that the judicial power extends to all "Cases" and "Controversies." One component of this case-or-controversy requirement is that a plaintiff must establish standing to bring a suit in federal court. Brief for Petitioners at 16. To establish standing, the plaintiff has the burden to show (1) a personal "injury-in-fact" of a "legally protected interest," and (2) that the injury could be redressed by a favorable decision. See Id. at 12-13.

A. Whether Respondent APCC has established an "injury-in-fact"

Petitioners Sprint and AT&T ("Sprint") argue that Respondent American Public Communications Council Services ("APCC") fails the first prong of the standing test because APCC has not suffered any personal injuries-in-fact. Brief for Petitioners at 18. Sprint maintains that the payphone service operators ("PSPs") assigned to APCC only the right "of collection," and that such assignments do not transfer the PSPs' injuries. Id. Sprint argues that an interest only in litigating on behalf of a third party does not fulfill the injury-in-fact requirement. Id. at 32-33. Rather, APCC's motivation to enforce the law on behalf of its clients makes APCC no different than the clients' lawyers and "at best concerned bystanders." Id.at 33. In fact, Sprint argues, the assignment documents between the PSPs and the aggregators are nothing more than a contract for legal services. Id. at 35. In addition, Sprint argues that APCC fails to establish that the assignment made a complete transfer of the PSPs' injuries because the terms of the collection agreement explicitly advise the PSPs that they can take back their claims and pursue them on their own simply by discontinuing payment of litigation fees. See Id. at 36.

Respondent APCC, on the other hand, argues that it does establish an injury-in-fact. APCC argues that the "Assignment and Power of Attorney" agreement ("APOA") between the aggregators and the PSPs assigned to APCC all rights, title, and interest in the PSPs' compensation claims against Sprint, including the PSPs' injuries-in-fact. See Brief for Respondents at 16-19. In addition, APCC notes that the APOA binds the PSPs to final judgments or settlements, and that the assignments cannot be revoked without the written consent of the aggregators. See Id. at 18.Consequently,APCC argues that this complete transfer of legal title confers standing to APCC. See id. at 24. APCC emphasizes that the initial APOA contract assigns irrevocable legal title to the damages to APCC, and that the APOA is separate from APCC's later decision in the second agreement to turn over the litigation proceeds to the PSPs. See Id. at 21-24. APCC further clarifies that only the cover letter to the agreements mentions the possibility that APCC might no longer represent a PSP in litigation, and that only in cases with prospective claims would a PSP be able to pursue the claim on its own. See Id.at 23. In addition, APCC reiterates the D.C. Circuit's finding that APCC controls when this can occur, either by repudiating the assignment itself or giving consent to the PSP to withdraw. See Id.

B. Whether APCC has established redressability by a favorable decision

Furthermore, APCC maintains that because it has legal title to the litigation proceeds, it has legal authority to direct the proceeds how it wants. See Brief for Respondents at 21. In addition, APCC points out that the direction of the proceeds is determined by a contract between it and the PSPs, and does not involve Sprint or other third-party beneficiaries. See Id. Furthermore, APCC contends that Sprint cannot cite to any cases where assignees who have legal title to their claims lack standing because of how they plan to use the litigation proceeds. Id. at 24. APCC cites to Vermont Agency of Natural Resources v. United States ex rel. Stevens to argue that the Court there rejected the bounty (i.e., opportunity for redress) as a basis for standing because it was an interest that was merely a "byproduct" of the suit itself. See Id.at 27. Instead, APCC argues, the Court there found that the doctrine that an assignee has standing to assert the injury-in-fact suffices to establish standing. See Id.at 24. Furthermore, APCC contends that this practice of allowing assignees-for-collection to bring suits in federal court was established when the Constitution was ratified and has been long recognized by federal courts. Id. at 30-31.

Conversely, Sprint argues that APCC has not suffered a redressable injury because the aggregators lack a direct and personal stake that can be redressed by a judgment in its favor. Brief for Petitioners at 18-19. Sprint maintains that the Court in Vermont Agency held that both the opportunity for redress and the injury-in-fact were critical to the decision. <cite?> Sprint contrasts Vermont Agency with Steel Co., where the Court held that a party lacked standing where injury-in-fact was paired with only a "request for relief that would be worthless to respondent or that would be paid to a third party." Id. at 25-26. Consequently, Sprint contends that APCC would have standing only if the assignments transferred the full legal right and title to both the claim and the recovery. See Id. at 22. However, APCC' assignment merely "for collection" does not transfer the right and title to recovery, as the assignments require the aggregators to turn over any proceeds acquired from the litigation. See Id.at 23. Sprint argues that here, as in Steel Co., APCC stands to "gain absolutely nothing" from the judgment. Id.Furthermore, Sprint maintains that parties may not manipulate their contracts to evade the Constitution's standing requirements, and that the Court examines the practical reality of the parties' status, looking past a plaintiff's formal legal status to determine whether there is a genuine stake in the litigation. See Id. at 27-28.

II. Whether allowing standing would violate the doctrine of prudential standing

Sprint contends that even if the Court finds APCC to have met the Article III requirements, APCC should still be denied standing because it would violate the doctrine of prudential standing. See Brief for Petitioners at 43-44. This judicially created doctrine serves to protect the institutional interests of the federal judiciary by self-imposing limits on its jurisdiction. Id.Thus, Sprint argues, even when a party has standing under Article III, federal courts may still decline to hear the case under the prudential standing doctrine. Id. Sprint maintains that APCC's attempt to establish standing violates three core elements of the doctrine. First, Sprint contends, APCC is litigating on behalf of third parties, which prevents full and fair litigation by creating the risks of lack of concrete adverseness, lack of meaningful discovery and the failure of the third parties to comply with the judgment. See Id.at 46-48. Second, the doctrine dictates that bringing suit on behalf of third parties should be allowed only when third parties are unable to "advance their own interests." Id. at 49. Here, Sprint argues, the PSPs are fully capable of suing on their own, and at least one PSP is doing so in this case. Id. at 50. Sprint contends that consolidating the claims into a single lawsuit for "efficiency" reasons "may simply be another way of saying [the PSPs] lack motivation." Id. If the PSPs want to file collectively, they should file jointly or under a class action under Federal Rule of Civil Procedure 23, which provides safeguards to protect all of the parties' interests. Id. at 49, 54-58. Lastly, Sprint argues, APCC does not fall within the "zone of interests" that Congress intended to protect under law. Id. at 51. The Telecommunications Act and FCC's regulations concern only the long-distance carriers and PSPs, and do not extend to aggregators such as APCC. See Id.

APCC, on the other hand, argues that the doctrine of prudential standing does not provide any reasons to depart from the established principle that assignees-for-collection can bring federal claims. Brief for Respondents at 42. First, APCC maintains that their claims establish concrete adverseness because they have a genuine stake in the litigation. Id. at 43. APCC argues that their interests are akin to those of the PSPs in their mutual financial interests in collecting compensation owed and in maintaining the long-standing business relationships between them. See Id. In addition, APCC maintains that Sprint's alleged difficulties with obtaining discovery are exaggerated because Sprint in fact has received discovery from individual PSPs. Furthermore, Sprint is in the best position to acquire and already has the information necessary to prove liability and damages. See Id. at 48-51. Second, APCC argues that the assignments for collection are not only the most fair and efficient method to obtain compensation owed, but are for many PSPs the only method, as PSPs are typically small businesses who lack the resources to track their compensation owed or pursue claims independently. See Id.at 3, 44. In addition, APCC maintains that the problems related with class actions and the doctrine of associational standing do not exist where, as here, the assignors have voluntarily and expressly transferred all of their rights, title, and interest in their claims. See id. at 44-46. Lastly, APCC contends that they do fall within the "zone of interests" because their claims "fulfill the mandate of Congress that PSPs be compensated" and "effectuate the FCC's remedial scheme." See Id. at 43-44.