Court Opinion

ID: 183418
Source: CourtListenerOpinion
Date Created: 2011-01-25 04:58:03+00
Date Added: 2024-06-11T17:26:03.674016
License: Public Domain

FOR PUBLICATION
  UNITED STATES COURT OF APPEALS
       FOR THE NINTH CIRCUIT

JARED PECK,                              
                            Plaintiff,
                  and
JAMES BOWDEN, a Washington
resident, individually and on
behalf of all the members of the
class of persons similarly situated,
                  Plaintiff-Appellant,
                                                No. 09-36113
                   v.
                                                  D.C. No.
AT&T MOBILITY, a Delaware                    2:09-cv-00106-TSZ
limited liability company doing
business as Cingular Wireless,
AKA Cingular Wireless, LLC;
                                                 ORDER
                                              CERTIFYING A
NEW CINGULAR WIRELESS SERVICES,                QUESTION TO
INC., a Delaware corporation doing            THE SUPREME
business as AT&T Wireless; NEW                  COURT OF
CINGULAR WIRELESS SERVICES                    WASHINGTON
PURCHASING COMPANY LP, a
Delaware limited partnership doing
business as Cingular Wireless;
NEW CINGULAR WIRELESS PCS
LLC, a Delaware limited liability
company doing business as
Cingular Wireless,
               Defendants-Appellees.
                                         
        Appeal from the United States District Court
          for the Western District of Washington
      Thomas S. Zilly, Senior District Judge, Presiding

                    Filed January 24, 2011

                              1329
1330                  PECK v. AT&T MOBILITY
       Before: Pamela Ann Rymer and N. Randy Smith,
            Circuit Judges, and Donald E. Walter,
                    Senior District Judge.*

                            COUNSEL

Daniel F. Johnson, Breskin Johnson & Townsend PLLC,
Seattle, Washington, for the plaintiff-appellant.

Leonard J. Feldman, Stoel Rives LLP, Seattle, Washington,
for the defendants-appellees.

                              ORDER

   Pursuant to Rule 16.16 of the Washington Rules of Appel-
late Procedure (RAP) and Revised Code of Washington
§ 2.60.020, we respectfully certify to the Supreme Court of
Washington the question of law set forth in Section III of this
order. That question will determine an issue pending before
this court. No precedent in the decisions of the Supreme Court
of Washington controls that issue.

I.   Background

   In November 2004, James Bowden purchased three cellular
telephones and a monthly cellular service plan for each tele-
phone at a Cingular kiosk in a mall. He discussed the various
rate plans and prices with the Cingular representatives at the
kiosk before deciding to purchase the Cingular telephones
with their accompanying service plans. As part of the pur-
chase process, he signed and initialed a one-page Wireless
Service Agreement (“Agreement”) for each plan. The Agree-

   *The Honorable Donald E. Walter, Senior United States District Judge
for Western Louisiana, sitting by designation.
                    PECK v. AT&T MOBILITY                   1331
ment included a statement that “Cingular also imposes the fol-
lowing charges: a Regulatory Cost Recovery Fee of up to
$1.25 to help defray its costs incurred in complying with obli-
gations and charges imposed by State and Federal telecom
regulation, a gross receipts surcharge, and State and Federal
Universal Service charges.” The Agreement also incorporated
the Terms of Service, which were outlined in a separate bro-
chure that Bowden received when he purchased the tele-
phones and signed up for service. The Terms of Service also
reiterated that, in addition to the rate plan, Cingular’s charges
would include “applicable taxes and governmental fees,
whether assessed directly upon you or upon Cingular.” Bow-
den did not thoroughly read the Agreement and did not read
the Terms of Service. Information about gross receipts sur-
charges was also on the Cingular website, which Bowden vis-
ited prior to making his purchase, although he primarily
accessed the coverage maps. His rate plan price did not
include Washington’s business and occupations (“B & O”)
tax; the B & O tax, however, was listed as a “State B & O
Surcharge” on Bowden’s monthly bill. Bowden’s bills show
that he was charged varying amounts for the B & O surcharge
for each of the three phones—ranging from $.05 to $.44 per
month.

   The current suit was filed by Jared Peck (alleging similar
facts) in Washington state court, and Cingular removed to
federal court. Peck successfully appealed the district court’s
dismissal of his claims on federal preemption grounds, and his
case was remanded to state court. Thereafter, Bowden joined
the suit and sought class certification. Cingular again removed
to federal court and moved for summary judgment. The dis-
trict court granted Cingular’s motion for summary judgment,
holding that Cingular’s billing practice did not violate
Revised Code of Washington section 82.04.500. In so hold-
ing, the district court relied on the reasoning in a previous,
factually similar case, Riensche v. Cingular Wireless LLC, et
al., W.D. Wash. Case No. C06-1325Z. Riensche is also cur-
rently pending before the Ninth Circuit. In that case, Riensche
1332                PECK v. AT&T MOBILITY
purchased his cellular service plan on the internet. Before pur-
chasing, he had the chance to review the plan details, which
specified that a gross receipts surcharge was collected in addi-
tion to the rate plan. He also acknowledged his assent to the
Terms & Conditions, which informed him that Cingular
would collect charges that include “applicable taxes and gov-
ernmental fees, whether assessed directly upon you or upon
Cingular.” The court determined that, as in Johnson v. Camp
Automotive, Inc., 148 Wn. App. 181, 199 P.3d 491 (2009),
“the B & O surcharge was disclosed during the negotiation
process and it was treated as part of the base amount charged
to customers, rather than as a tax added to the final price.”
Like other taxes and fees, Cingular was not required to dis-
close the computation of the tax or predict the amount of the
surcharge. Thus, there was no violation of Washington code.

II.    Discussion

   In our judgment, this case represents an important, unde-
cided question of Washington law. We review de novo the
district court’s interpretation of Washington law. Vasquez v.
N. County Transit Dist., 292 F.3d 1049, 1054 (9th Cir. 2002).
“When interpreting state law, we are bound to follow the
decision of the state’s highest court.” Id. Because it is unclear
how the Supreme Court of Washington would apply its prece-
dent in Nelson v. Appleway Chevrolet, Inc., 160 Wn.2d 173,
157 P.3d 847 (2007) and the court of appeals’ precedent in
Johnson, 148 Wn. App. 181, 199 P.3d 491, we seek its guid-
ance.

   Revised Code of Washington section 82.04.220 requires
sellers to pay a B & O tax on the gross proceeds of sales. Sec-
tion 82.04.500 expresses the legislature’s intention that the B
& O tax should not be “construed as taxes upon the purchas-
ers or customers, . . . but that such taxes shall constitute a part
of the operating overhead of [the seller].” In Nelson, the
Washington Supreme Court held that a seller violated this
section when the seller added the amount of the B & O tax on
                    PECK v. AT&T MOBILITY                    1333
an automobile after the buyer and seller had negotiated a final
purchase price. 160 Wn.2d at 180-81. However, the court of
appeals found no violation of the statute in Johnson. In John-
son, the seller had informed the buyer during negotiations that
a B & O tax of $136.75 would be part of the price. 148 Wn.
App. at 183. Johnson signed a statement that the purchase
price (including the B & O tax) had been negotiated. Id. The
court relied on Nelson‘s holding that a car dealership “may
itemize the [B & O] tax if it is part of the final purchase price”
to find no violation of the statute. Id. at 184 (citing Nelson,
160 Wn.2d at 181). The court found that “Nelson is distin-
guishable because Camp disclosed the B & O charge during
negotiations . . . the Johnsons negotiated with Camp about the
B & O tax before reaching the agreed price.” Id. at 185.

   In this case, Cingular disclosed that it would charge and
collect a surcharge for gross receipts taxes before Bowden
purchased his phone service plan. However, unlike either
Johnson or Nelson, Cingular did not disclose the actual
amount of the surcharge, which would vary depending on the
service plan and the monthly usage. In addition, Bowden
accepted the plan and the B & O tax surcharge, but did not
object to the inclusion of the B & O tax surcharge nor did he
attempt to make adjustments to the terms or price of the plan.

III.   Conclusion

  Considering the substantial factual differences between the
present case and Washington case law, it is not clear how the
Washington Supreme Court would rule on this issue. Accord-
ingly, we respectfully certify the following question to the
Supreme Court of Washington:

   Under Revised Code of Washington section 82.04.500,
may a seller recoup its business and occupation taxes where,
prior to the sale of a monthly service contract, the seller dis-
closes that in addition to the monthly service fee, it collects
a surcharge to cover gross receipts taxes?
1334                PECK v. AT&T MOBILITY
   We do not intend our framing of the question to restrict the
Washington Supreme Court’s consideration of the issue. The
Washington Supreme Court, in its discretion, may choose to
reformulate the question presented. Broad v. Mannesmann
Anlagenbau AG, 196 F.3d 1075, 1076 (9th Cir. 1999). If the
Washington Supreme Court accepts review of the certified
question, we designate appellant, James Bowden, to file the
first brief pursuant to Wash. RAP 16.16(e)(1).

   The Clerk of Court is hereby ordered to transmit forthwith
to the Washington Supreme Court, under official seal of the
United States Court of Appeals for the Ninth Circuit, a copy
of this order and all briefs and excerpts of record. RCW
§§ 2.60.010, 2.60.030; Wash. RAP 16.16. Further proceed-
ings in our court on all of Bowden’s claims on appeal are
stayed pending the Washington Supreme Court’s decision on
whether it will accept review, and if so, receipt of the answer
to the certified question. The panel will resume consideration
of the appeal when either the Washington Supreme Court
answers the certified question or declines to answer the ques-
tion. When the Washington Supreme Court decides whether
to accept the certified question, the parties shall file a joint
report informing this court of the decision. If the Washington
Supreme Court accepts the certified question, the parties shall
file a joint status report informing this court when the Wash-
ington Supreme Court issues its answer.

  It is so ORDERED.

                            ______________________
                            PAMELA ANN RYMER
                            Circuit Judge, United States
                            Court of Appeals
                            for the Ninth Circuit
                            Presiding Judge of the Certifying
                            Panel