In the

United States Court of Appeals

For the Seventh Circuit

____________

Nos. 04-2262, 04-2385, 04-4308 & 05-1002

AMERITECH CORPORATION,

Plaintiff-Appellant, Cross-Appellee,

v.

E. MICHAEL MCCANN, District Attorney

of Milwaukee County, Wisconsin,

Defendant-Appellee, Cross-Appellant.

____________

Appeals from the United States District Court

for the Eastern District of Wisconsin.

No. 99-C-675—Rudolph T. Randa, Chief Judge.

____________

ARGUED DECEMBER 6, 2004—DECIDED APRIL 12, 2005

____________

Before EASTERBROOK,KANNE, and EVANS, Circuit Judges.

EASTERBROOK, Circuit Judge. Now making its second

appearance in this court, this suit presents questions about

the meaning and constitutionality of 18 U.S.C. §2706, part

of the Electronic Communications Privacy Act. This section

requires any “governmental entity” that demands certain

information from phone companies to pay for the expense of
2 Nos. 04-2262, 04-2385, 04-4308 & 05-1002

its provision. Michael McCann, the District Attorney for

Milwaukee County in Wisconsin, has refused to comply with

this statute. When Ameritech (a subsidiary of SBC), which

provides phone service in Wisconsin and other parts of the

Midwest, sued to enforce §2706, the district judge ruled that

the litigation is foreclosed by principles of state sovereign

immunity. (District Attorneys in Wisconsin are officers of

the state.) We reversed, 297 F.3d 582 (2002), holding that

prospective obedience may be compelled under Ex parte

Young, 209 U.S. 123 (1908). On remand the district court

opined that the District Attorney must comply with §2706

whenever it governs—but the district judge refused to say

when it does govern. 308 F. Supp. 2d 911 (E.D. Wis. 2004).

Ameritech has appealed again. Following oral argument we

held matters in abeyance until the district court entered a

proper judgment, which it had neglected to do. See Buck v.

U.S. Digital Communications, Inc., 141 F.3d 710 (7th Cir.

1998); American Interinsurance Exchange v. Occidental Fire

& Casualty Co., 835 F.2d 157 (7th Cir. 1987); Azeez v.

Fairman, 795 F.2d 1296, 1297 (7th Cir. 1986). A real

declaratory judgment and a fresh notice of appeal at last

present the case for decision.

The dispute concerns “terminating AMA reports.” Unlike

cell phone companies, which bill their customers for calls

received as well as calls made, landline phone companies

bill for outgoing calls only. The network that routes and connects each call “knows” its destination; how else could it

connect the call and compute the customer’s bill (which may

vary by distance between the call’s origin and destination)?

The system for generating and retaining this information is

called “automated message accounting” or AMA. Customers’

bills often show this information. Ask a landline phone

company such as Ameritech “who placed the calls received

by customer X?”, however, and it has no easy way to answer,

as the computer databases organize all of the information

by which customer placed the calls rather than by which

customer received them.
Nos. 04-2262, 04-2385, 04-4308 & 05-1002 3

AMA information is stored on searchable media, but compiling a report about the origin of calls terminated (= received) at a given number—hence, “terminating AMA report”—

takes both human and computer time. Each report for a

given number requires an hour or two of employees’ time to

set up the data-processing request and turn the resulting

raw data into a report that non-specialists can follow, plus

about 15 minutes of computer time per day covered by the

report. These are powerful (and expensive) computers

needed to handle a flood of information: Ameritech terminates about 25 million calls daily in Wisconsin alone. Fifteen minutes per recipient per day adds up; when the

District Attorney wants a terminating AMA report for one

number for one month, he is requisitioning at least seven

hours of time on a mainframe computer (potentially as much

as 20 hours), plus an hour or two of skilled labor. And

Ameritech receives more than 400 requests for terminating

AMA reports monthly in the Midwest.

Ameritech wants to be compensated for the expense of

producing these reports. The need to pay for services rendered also will induce law-enforcement personnel to be less

profligate in their demand for these reports, which at least

in Wisconsin they see as free goods. According to Ameritech,

§2706 requires law-enforcement agencies to pay for the

information. Here is the statute:

(a) Except as otherwise provided in subsection (c),

a governmental entity obtaining the contents of communications, records, or other information under

section 2702, 2703, or 2704 of this title shall pay to

the person or entity assembling or providing such

information a fee for reimbursement for such costs

as are reasonably necessary and which have been

directly incurred in searching for, assembling, reproducing, or otherwise providing such information.

Such reimbursable costs shall include any costs due

to necessary disruption of normal operations of any
4 Nos. 04-2262, 04-2385, 04-4308 & 05-1002

electronic communication service or remote computing service in which such information may be

stored.

(b) The amount of the fee provided by subsection (a)

shall be as mutually agreed by the governmental

entity and the person or entity providing the information, or, in the absence of agreement, shall be as

determined by the court which issued the order for

production of such information (or the court before

which a criminal prosecution relating to such

information would be brought, if no court order was

issued for production of the information).

(c) The requirement of subsection (a) of this section

does not apply with respect to records or other information maintained by a communications common carrier that relate to telephone toll records and

telephone listings obtained under section 2703 of

this title. The court may, however, order a payment

as described in subsection (a) if the court determines the information required is unusually voluminous in nature or otherwise caused an undue

burden on the provider.

Section 2703 in turn provides for governmental access to

AMA records. State and federal law-enforcement officials

throughout the nation pay routinely. Not so in Wisconsin,

where officials have dug in their heels. Since 1986, when

§2706 was enacted, the statute has produced only two litigated cases—one dealt with an allegedly excessive aggregate level of requests by a user willing to pay, see Michigan

Bell Telephone Co. v. DEA, 693 F. Supp. 542 (E.D. Mich.

1988), and the other is this suit, now in its sixth year, in

which the requester is in denial. Public officials in Wisconsin

not only refuse to pay but also make a disproportionately

high number of demands compared with law-enforcement

officials in other states. That Wisconsin’s prosecutors treat
Nos. 04-2262, 04-2385, 04-4308 & 05-1002 5

terminating AMA reports as free doubtless explains this fact,

and the volume of demands explains Ameritech’s concern

about the drain on its resources.

As we’ve already mentioned, the district court originally

dismissed Ameritech’s suit on sovereign-immunity grounds,

and we remanded for decision on the merits. What followed

was peculiar. Although federal courts are supposed to

explore all non-constitutional grounds of decision first, to

ensure against unnecessary constitutional adjudication, see

Jean v. Nelson, 472 U.S. 846, 854 (1985); Horn Farms, Inc.

v. Johanns, 397 F.3d 472, 477 (7th Cir. 2005), the district

judge began with a series of constitutional issues and then

refused to address the main statutory question at

all—making the rest of its opinion largely, if not wholly,

advisory. The upshot was a declaratory judgment that the

District Attorney must pay compensation whenever it is

due, but not specifying when that might be. Neither side is

satisfied with that truism. We shall tackle the issues in the

right order, starting with the statute and moving to the

Constitution only to the extent necessary in light of the

statutory decision.

Logically the first statutory question is the one the

district judge refused to address: whether the exemption in

§2706(c) covers terminating AMA reports. If it does, then the

case is over. The district judge thought it inappropriate to

broach the subject because §2706(b) calls on the court that

required the disclosure to set the amount of compensation.

True enough, but this suit is not about the amount of

compensation; Ameritech seeks a prospective declaration

that will determine the kinds of reports for which compensation is required. That’s why, we held in 2002, the litigation comes within Ex parte Young. The district judge refused

to address the effect of §2706(c) because he treated this suit

as a quest for money. This repeats the mistake that led to

our prior reversal. We see no point in remanding a second

time and will resolve the issue ourselves. Given the District
6 Nos. 04-2262, 04-2385, 04-4308 & 05-1002

Attorney’s intransigence, and the fact that subpoenas are

issued ex parte, there are obvious gains to resolving the

question now instead of hoping that the District Attorney

will spontaneously start asking state courts to fix compensation under §2706(b). (We refer throughout this opinion to

“the District Attorney,” because one named D.A. is the sole

defendant. But that defendant is represented in this court

by the Attorney General of Wisconsin, and his position is

that of the State as an entity rather than an idiosyncratic

view from Milwaukee.)

According to the District Attorney, terminating AMA reports are exempt from compensation because they “relate

to” telephone toll records. The reports come from the AMA

data that phone companies create and use in the regular

course of business, so they must relate to those data. Language cannot be cut into little snippets, however; this phrase

takes color from the preceding language: “records or other

information maintained by a communications common carrier that relate to telephone toll records”. If state officials

want “records”—for example, bills and equivalent statements—that phone companies “maintain” in the course of

their phone business, they may have them for free; likewise

if the state wants the raw “information.” Read this way, the

exemption covers copies of customers’ bills and not, for

example, the papers that Ameritech’s accountants use to

produce its balance sheet and tax return. But the District

Attorney does not want copies of customers’ bills or the raw

data on 25 million calls a day. He wants reports that

Ameritech does not “maintain” but must create on demand.

Because Ameritech does not “maintain” terminating AMA

reports, they are not covered by §2706(c)’s exception.

According to the District Attorney, §2706(a) requires judgment in his favor even if §2706(c) does not. Section 2706

applies only to demands by “governmental entities,” and

that means (the District Attorney contends) the federal

government alone. Certainly that’s not what §2706(a) says.
Nos. 04-2262, 04-2385, 04-4308 & 05-1002 7

“A governmental entity” is considerably broader than “the

federal government.” The point of §2706 is not to distinguish

the federal government from other governments, but to distinguish the public from the private sector. Any private

actor who wants information from a phone company will

have to negotiate and pay for the service, when §2702

allows disclosure at all. Governments have a power of compulsion, and §2706 attaches a price tag to the use of that

power, just as the Constitution’s takings clause requires

compensation for other uses of governmental power to

obtain private property.

Although the Electronic Communications Privacy Act does

not define the term “governmental entity,” it uses that

phrase in several sections in ways that make application to

state and local governments unmistakable. For example,

§2703 specifies how a “governmental entity” can go about

obliging a phone company to hand over records. The statute

gives examples, such as “an administrative subpoena authorized by a Federal or State statute or a Federal or State

grand jury or trial subpoena”, §2703(b)(1)(B)(i). Other options

include a “State warrant” (referred to in three subsections)

and a “Federal or State grand jury or trial subpoena” (in

§2703(c)(2)). Then there is §2703(d), which distinguishes

what “a State governmental authority” must do from how

a federal governmental body proceeds, an odd reference indeed if the category “governmental entity” does not include

states.

The language of §2703 and §2706 taken together is enough

to satisfy any plain-statement requirement for application

of federal law to the states. Cf. Gregory v. Ashcroft, 501 U.S.

452, 460-61 (1991). Although the Congressional Budget

Office expressed an opinion that the 1986 law would not

impose new costs on states, this view—on which Congress

did not vote, and the President did not sign—cannot alter

the meaning of enacted statutes. It suggests instead that

the CBO erred (or perhaps thought that compensable de-
8 Nos. 04-2262, 04-2385, 04-4308 & 05-1002

mands would be so rare that the expenses under §2706

would not make a dent in a governmental budget).

Next in line is the District Attorney’s argument that

§2706 does not preempt state law. It does not contain an

express declaration of preemption, the District Attorney

observes, and therefore (he says) does not supersede state

law. Since when has such a declaration been required? The

Constitution’s supremacy clause does all the heavy lifting.

Federal statutes prevail over state and local statutes to the

extent of any inconsistency, whether or not Congress so

declares one statute at a time. See International Paper Co.

v. Ouellette, 479 U.S. 481, 489 (1987).

What’s more, the parties’ to and fro about preemption

is beside the point. No state law excuses or forbids compensation. Federal and state law may differ without one

preempting the other: for example, a federal speed limit of

80 miles per hour on interstate highways would not preempt

a lower speed limit under state law, because a driver could

comply with both rules at the same time. See Amanda

Acquisition Corp. v. Universal Foods Corp., 877 F.2d 496 (7th

Cir. 1989). So, too, state law that fails to provide for compensation when telephone companies disclose information is not

inconsistent with a federal law that does require compensation; payment is compatible with both laws. Only a state

law along the lines of “a District Attorney is entitled to

records for free” would pose a preemption issue, and there

is no such law in Wisconsin. Thus the question is simply

what §2706 itself requires.

Section 2706(a) provides that compensation is payable

when “a governmental entity obtain[s] the contents of

communications, records, or other information under

section 2702, 2703, or 2704 of this title”. The District

Attorney insists that he obtains terminating AMA reports

under Wis. Stat. §968.135 rather than under any federal

statute. That does not fly, for reasons that should be appar-
Nos. 04-2262, 04-2385, 04-4308 & 05-1002 9

ent from our discussion of the “governmental entity”

question. Section 2703 specifies how information is obtained

from phone companies, and a subpoena authorized by a

state statute is one of those means. Thus when the District

Attorney invokes Wis. Stat. §968.135 or any equivalent

route to compel Ameritech to produce a terminating AMA

report he has obtained information “under” §2703.

Having interpreted §2706 as obliging state and local

governments to pay for the phone records they require, we

must address the District Attorney’s multiple constitutional

objections. He contends, for example, that Congress lacks

authority to regulate this subject. Yet the commerce power

includes all channels of interstate commerce, including the

phone system. See Pensacola Telegraph Co. v. Western Union

Telegraph Co., 96 U.S. 1 (1878); United States v. Lopez, 514

U.S. 549, 558 (1995); United States v. Morrison, 529 U.S.

598, 608-09 (2000). That’s one point of AT&T Corp. v. Iowa

Utilities Board, 525 U.S. 366, 377-86 (1999), which rejected

another state’s argument that the national government

must keep hands off of the state’s regulation of firms that

carry intra-state phone calls. See also Louisiana Public

Service Commission v. FCC, 476 U.S. 355 (1986).

The District Attorney might as well argue that he (and

the state judiciary) may ignore the federal wiretap statutes

(including §2702), and the fourth amendment, when obtaining access to the contents of “local” calls. Prudently, however,

he concedes that the Omnibus Crime Control and Safe

Streets Act of 1968, which regulates wiretapping, is within

the commerce power even as applied to intra-state calls. See

United States v. D’Antoni, 874 F.2d 1214, 1218-19 (7th Cir.

1989). If that statute may be applied to states, why not the

Electronic Communications Privacy Act? It is an interesting

detail, though not vital to the constitutional analysis, that

the Electronic Communications Privacy Act is an amendment to Title III of the Omnibus Crime Control and Safe

Streets Act. What does matter is that both of these statutes
10 Nos. 04-2262, 04-2385, 04-4308 & 05-1002

regulate the telephone network, which reaches worldwide

and is securely within the national power.

As for the contention that §2706(b) impinges unduly on

state sovereignty by opening state courts to private suits,

see Alden v. Maine, 527 U.S. 706 (1999): the District

Attorney (which is to say the state itself), not a private

party, is the plaintiff in state court. Once states open their

courts to litigation, they must apply federal rules as well as

those under state law. The supremacy clause gives no other

alternative. See Testa v. Katt, 330 U.S. 386 (1947). State

courts must comply with the wiretap laws and the fourth

amendment; so too they must comply with other federal

rules affecting what information, and under what conditions, telecommunications firms provide to state prosecutors. Thus when the District Attorney petitions the state

court for an order compelling Ameritech to prepare and

provide a terminating AMA report, Ameritech (as the

respondent) is entitled to insist that the state court follow

federal law by attaching a price tag under §2706(b). See

Erickson v. Board of Governors, 207 F.3d 945, 952 (7th Cir.

2000).

No prosecutor or court in Wisconsin has been “commandeered” to do anything; §2706 just places a condition on

activity that states elect to engage in, and from which they

may desist as freely. Cf. Reno v. Condon, 528 U.S. 141 (2000).

This is another thing (beyond the use of Ex parte Young)

that our case has in common with Verizon Maryland Inc. v.

Public Service Commission of Maryland, 535 U.S. 635

(2002): nothing compelled Maryland to regulate phone service and prices, but if it chose to do so it had to comply with

applicable federal laws. See also MCI Telecommunications

Corp. v. Illinois Bell Telephone Co., 222 F.3d 323, 345 (7th

Cir. 2000). If Wisconsin wants to keep compensation questions out of its courts, it can repeal Wis. Stat. §968.135 (and

any similar sources of authority), and then the state

judiciary will not need to resolve these disputes—but of
Nos. 04-2262, 04-2385, 04-4308 & 05-1002 11

course the prosecutors then won’t have compulsory process

and will need to negotiate with Ameritech about the price

to be paid for terminating AMA reports.

The judgment of the district court is vacated, and the case

is remanded with instructions to issue a new declaratory

judgment covering all of the points in this opinion. Given

Wisconsin’s longstanding noncompliance with §2706, and

its penchant for litigation, the declaratory judgment should

provide that in the future the District Attorney must tender

compensation as part of every request under Wis. Stat.

§968.135 that Ameritech provide a terminating AMA report,

and must agree to litigate the amount of compensation in

state court if Ameritech deems the tender inadequate.

Unless such an offer is made and included in the state

court’s order, Ameritech need not provide the requested

information. A provision of this kind will prevent the

District Attorney from prolonging the guerilla warfare in

which the state has been engaged for almost 20 years.

A true Copy:

Teste: 

 ________________________________

Clerk of the United States Court of

Appeals for the Seventh Circuit 

USCA-02-C-0072—4-12-05