Arsberry, Katie v. State of Illinois

In the
United States Court of Appeals
For the Seventh Circuit
No. 00-1777
Katie Arsberry, et al.,
Plaintiffs-Appellants,
v.
State of Illinois, et al.,
Defendants-Appellees.
Appeal from the United States District Court
for the Northern District of Illinois, Eastern
Division.
No. 99 C 2457--William J. Hibbler, Judge.
Argued December 5, 2000--Decided March 19, 2001
Before Posner, Easterbrook, and Evans,
Circuit Judges.
Posner, Circuit Judge. This is a suit by
Illinois prison and jail inmates,
inmates’ family members (and other
intimates of the inmates), and a public-
interest law firm that specializes in the
defense of inmates on death row in
Illinois. Grounded in 42 U.S.C. sec.
1983, the Sherman Act, and Illinois state
law, the suit attacks the practice by
which each prison and jail grant one
phone company the exclusive right to
provide telephone service to the inmates
in return for 50 percent of the revenues
generated by the service. The suit claims
that the rates for the service, which are
collect only and are contained in tariffs
filed by the phone companies with the
Federal Communications Commission and the
Illinois Commerce Commission, are
exorbitant, being far higher than
required to cover the costs involved in
providing phone service to inmates. The
plaintiffs seek damages and injunctive
relief against the phone companies and
the state agencies and officials
responsible for the arrangements with the
companies. The district court dismissed
the suit as beyond its jurisdiction by
reason of the filed-rate and primary-
jurisdiction doctrines.
There are a number of jurisdictional
bars or quasi-jurisdictional bars (by the
latter term we mean defenses that a court
can invoke even if the defendant has not
done so, see, e.g., Higgins v.
Mississippi, 217 F.3d 951 (7th Cir.
2000)) to various pieces of this suit,
quite apart from the ones identified by
the district court. The State of Illinois
is not a person within the meaning of
section 1983. E.g., id. at 953; Will v.
Michigan Dept. of State Police, 491 U.S.
58, 66 (1989). The individual defendants
have qualified immunity from the damages
claims, given the novelty of the suit.
The law firm has no standing to sue
because there is no indication that it
has suffered any detriment from the high
price of its phone conversations with its
clients; the cost of these phone calls
is, at least so far as its counsel is
aware, an expense that the firm is
reimbursed for by the state or federal
government. And the inmate plaintiffs are
barred from suing because they have
failed to exhaust their administrative
remedies, as required by the Prison
Litigation Reform Act. 42 U.S.C. sec.
1997e(a); Massey v. Wheeler, 221 F.3d
1030, 1034 (7th Cir. 2000); Perez v.
Wisconsin Dept. of Corrections, 182 F.3d
532, 535-38 (7th Cir. 1999); Nyhuis v.
Reno, 204 F.3d 65, 71 (5th Cir. 2000);
Alexander v. Hawk, 159 F.3d 1321, 1323-28
(11th Cir. 1998); Brown v. Toombs, 139
F.3d 1102, 1104 (6th Cir. 1998) (per
curiam). The plaintiffs say they have no
such remedies against exorbitant phone
bills, but the cases we have cited reject
a "futility" exception to the requirement
of exhaustion. We have left open the
possibility of an exception to the
exception for cases in which the only
relief sought is monetary and is beyond
the power of the prison authorities to
give. Davis v. Streekstra, 227 F.3d 759(7th Cir. 2000). That possible exception
is unavailable to these plaintiffs,
because they are seeking injunctive as
well as monetary relief.
But since these various grounds do not
dispose of all the plaintiffs or all the
defendants, we proceed to consider
whether the district court was right to
think that the filed-rate and primary-
jurisdiction doctrines place the entire
suit outside the jurisdiction of the
district court. The filed-rate doctrine,
which is based both on historical
antipathy to rate setting by courts,
deemed a task they are inherently
unsuited to perform competently, and on a
policy of forbidding price discrimination
by public utilities and common carriers,
forbids a court to revise a public
utility’s or (as here) common carrier’s
filed tariff, which is to say the terms
of sale that the carrier has filed with
the agency that regulates the carrier’s
service. AT&T Co. v. Central Office
Telephone, Inc., 524 U.S. 214, 223
(1998); Maislin Industries, U.S., Inc. v.
Primary Steel, Inc., 497 U.S. 116, 126
(1990); Arkansas Louisiana Gas Co. v.
Hall, 453 U.S. 571, 577-78 (1981);
Cahnmann v. Sprint Corp., 133 F.3d 484,
487 (7th Cir. 1998); Wegoland Ltd. v.
Nynex Corp., 27 F.3d 17 (2d Cir. 1994). A
customer or competitor can challenge the
tariff before the agency itself, and if
disappointed with the agency’s response
can seek judicial review, 47 U.S.C.
sec.sec. 204(a) (2)(C), 402, but it
cannot ask the court in any other type of
suit (such as this civil rights and
antitrust suit) to invalidate or modify
the tariff. Nor can it seek damages based
on the difference between the actual
tariff and a hypothetical lawful tariff.
That would require the court to determine
the lawful tariff, and this is not
regarded as a proper judicial function.
Wegoland Ltd. v. Nynex Corp., supra, 27
F.3d at 19-21.
The plaintiffs deny that they are
challenging tariffs. They say their
objection is to the deals by which the
correctional authorities in Illinois have
granted exclusive rights to telephone
companies in return for what the
plaintiffs characterize as kickbacks.
They want to dissolve the deals in the
hope that competition among phone
companies will lead companies to file
prison tariffs that have lower rates.
They point out that a conspiracy to file
(or not file) particular tariffs is not
insulated by the filed-rate doctrine from
attack under the antitrust laws or other
sources of independent rights, Square D
Co. v. Niagara Frontier Tariff Bureau,
Inc., 476 U.S. 409, 422 and n. 28 (1986);
United States v. Radio Corp. of America,
358 U.S. 334, 346-47 (1959); Georgia v.
Pennsylvania Railroad Co., 324 U.S. 439,
455 (1945); United States v. Pacific &
Arctic Ry. & Navigation Co., 228 U.S. 87,
104-05 (1913); City of Mishawaka v.
Indiana & Michigan Electric Co., 560 F.2d
1314, 1323 (7th Cir. 1977); Town of
Norwood v. New England Power Co., 202
F.3d 408, 419-20 (1st Cir. 2000); Barnes
v. Arden Mayfair, Inc., 759 F.2d 676, 679
(9th Cir. 1985), provided that only
injunctive relief is sought. Square D Co.
v. Niagara Frontier Tariff Bureau, Inc.,
supra; Keogh v. Chicago & Northwestern
Ry., 260 U.S. 156 (1922). Such an attack
does not seek to invalidate any tariff,
but merely to create an environment in
which the regulated firm is more likely
to file a tariff that contains terms more
favorable to customers. Whether what the
plaintiffs are attacking here is aptly
described as a "conspiracy" remains to be
considered; provisionally, however, the
suit is not barred by the filed-rate
doctrine.
The doctrine of primary jurisdiction is
not a bar either. The doctrine is really
two doctrines. In its central and
original form, in which it is more
illuminatingly described, however, as
"exclusive agency jurisdiction," it
applies only when, in a suit involving a
regulated firm but not brought under the
regulatory statute itself, an issue
arises that is within the exclusive
original jurisdiction of the regulatory
agency to resolve, although it will
usually be subject to judicial review.
United States v. Western Pacific R.R.,
352 U.S. 59, 64 (1956); Cahnmann v.
Sprint Corp., supra, 133 F.3d at 487;
Advance United Expressways, Inc. v.
Eastman Kodak Co., 965 F.2d 1347, 1352-53
(7th Cir. 1992); City of Peoria v.
General Electric Cablevision Corp., 690
F.2d 116, 121-22 (7th Cir. 1982). When
such an issue arises, the suit must stop
and the issue must be referred to the
agency for resolution. If the agency’s
resolution of the issue does not dispose
of the entire case, the case can resume
subject to judicial review of that
resolution along whatever path governs
review of the agency’s decisions, whether
back to the court in which the original
case is pending or, if the statute
governing review of the agency’s
decisions designates another court, to
that court. Id. at 122; 2 Kenneth Culp
Davis & Richard J. Pierce, Jr.,
Administrative Law Treatise sec. 14.1,
pp. 272-80 (3d ed. 1994).
If the plaintiffs in this case wanted to
get a rate change, the version of the
doctrine that we have described would
kick in; but they do not, so it does not.
Eventually they want a different rate, of
course, but at present all they are
seeking is to clear the decks--to
dissolve an arrangement that is
preventing the telephone company
defendants from competing to file tariffs
more advantageous to the inmates. We are
oversimplifying, because the complaint
includes a claim under the Federal
Communications Act, 47 U.S. sec.sec. 151
et seq., that the phone companies charge
unreasonably high rates and also engage
in rate discrimination. These claims are
squarely within the FCC’s jurisdiction,
but have been forfeited. They are not
mentioned in the plaintiffs’ opening
briefs, and are merely brushed in their
reply brief.
The doctrine of primary jurisdiction is
sometimes defined quite differently, as a
doctrine that allows a court to refer an
issue to an agency that knows more about
the issue, even if the agency hasn’t been
given exclusive jurisdiction to decide
it. So, for example, we read in National
Communications Ass’n, Inc. v. AT&T Co.,
46 F.3d 220, 222-23 (2d Cir. 1995), that
"the doctrine of primary jurisdiction
allows a federal court to refer a matter
extending beyond the ’conventional
experiences of judges’ or ’falling within
the realm of administrative discretion’
to an administrative agency with more
specialized experience, expertise, and
insight." This definition obscures the
core of the doctrine, described earlier.
Cases in which a court refers an issue to
an agency because of the agency’s
superior expertise, such as the case just
cited and American Automobile
Manufacturers Ass’n v. Massachusetts
Dept. of Environmental Protection, 163
F.3d 74, 81, 83 (1st Cir. 1998), rather
than because of the agency’s
jurisdiction, are not felicitously
described as cases of primary
jurisdiction. They are akin to those
Burford abstention cases that like the
granddaddy of the line, Burford v. Sun
Oil Co., 319 U.S. 315, 332-34 (1943),
itself, or the more recent New Orleans
Public Service, Inc. v. Council of City
of New Orleans, 491 U.S. 350, 361 (1989),
concern arcane regulatory issues; or
cases in which the court solicits an
amicus curiae brief from an interested
agency; or cases in which the court has
in effect appointed the agency to be a
special master-- an analogy embraced in
Lodge 1858, American Federation of
Government Employees v. Webb, 580 F.2d
496, 508-09 (D.C. Cir. 1978). In such
cases, either court and agency have
concurrent jurisdiction to decide an
issue, or only the court has the power to
decide it, and seeks merely the agency’s
advice. (In the core of the doctrine, in
contrast, the court has jurisdiction of
the case, but the agency of the issue.)
That model doesn’t fit this case either.
The FCC has no authority to approve a
collusive arrangement among telephone
companies; nor is there any indication
that it knows anything that would be
useful in evaluating the claim of
collusion.
Prudently the defendants have not rested
wholly on jurisdictional or procedural
grounds for the dismissal of this suit,
but have argued that the plaintiffs’
claims lack merit. They are right.
Consider first the claim that exorbitant
telephone rates violate the First
Amendment. It is true that communications
the content of which is protected by the
First Amendment are often made over the
phone, but no one before these plaintiffs
supposed the telephone excise tax an
infringement of free speech. Saltzman v.
United States, 516 F.2d 891 (9th Cir.
1975) (per curiam). Communications
protected by the amendment are also
frequently made by printing words on
paper, yet no one supposes that the
consequence is to bring the corporate
income tax, when imposed on manufacturers
of paper, within the purview of the First
Amendment, or even to forbid taxing those
manufacturers more heavily than
manufacturers of products that are less
important as inputs into the production
of communications media. Any regulation
direct or indirect of communications can
have an effect on the market in ideas and
opinions, but that possibility in itself
does not raise a constitutional issue.
Minneapolis Star & Tribune Co. v.
Minnesota Commissioner of Revenue, 460
U.S. 575, 581-83 (1983); BellSouth Corp.
v. F.C.C., 144 F.3d 58, 69 (D.C. Cir.
1998). Otherwise the entire tax and
regulatory operations of American
government would be brought under the
rule of the First Amendment.
There is no suggestion that the scheme
of which the plaintiffs complain is
motivated by a desire to limit free
speech, as in Grosjean v. American Press
Co., 297 U.S. 233 (1936); the plaintiffs
themselves contend that it is motivated
by pure greed; and of course the
telephone rates of which they complain
are independent of the protected or
unprotected character of the phone calls
being charged for. We note
parenthetically that "greed" doesn’t seem
the right characterization either,
considering that prisons are costly to
build, maintain, and operate, and that
the residents are not charged for their
room and board. By what combination of
taxes and user charges the state covers
the expense of prisons is hardly an issue
for the federal courts to resolve.
The case is a bit closer to Minneapolis
Star, which invalidated a special tax
arbitrarily imposed on newspapers. Yet to
extend that decision to the telephone
excise tax, or to the "tax" imposed by
the contracts attacked in this case,
would overlook a vital distinction. The
entire content of newspapers, in contrast
to telephone calls, is protected by the
First Amendment; and so there was in the
Minneapolis Star case a gratuitous and
potentially substantial, even if not
deliberate, impairment of the interests
that the amendment is designed to
protect. Although the telephone can be
used to convey communications that are
protected by the First Amendment, that it
is not its primary use and it is
extremely rare for inmates and their
callers to use the telephone for this
purpose. Not to allow them access to a
telephone might be questionable on other
grounds, but to suppose that it would
infringe the First Amendment would be
doctrinaire in the extreme, United States
v. Footman, 215 F.3d 145, 155 (1st Cir.
2000), though the Ninth Circuit
disagrees. Johnson v. California, 207
F.3d 650, 656 (9th Cir. 2000) (per
curiam). The telephone, and the nation’s
telecommunications infrastructure more
generally, are more commonly used for
First Amendment purposes than prison
phones are, but the federal courts do not
use that fact as the excuse to bring the
taxation and regulation of
telecommunications under comprehensive
judicial surveillance in the name of free
speech.
The plaintiffs also argue that the
kickback scheme, as they regard it,
impairs contracts to which the plaintiffs
are parties. No contracts are specified;
and in any event a tax, which is what the
allegedly exorbitant component of the
questioned telephone rates functionally
is, is not an impairment of contracts
within the meaning of the Constitution.
Barwise v. Sheppard, 299 U.S. 33, 40
(1936); Kehrer v. Stewart, 197 U.S. 60,
70 (1905); North Missouri R.R. v.
Maguire, 87 U.S. 46, 61 (1873). The cases
that establish this proposition are old,
but that is only because it’s been a long
time since anyone thought to make the
argument. And the contention that by
charging a high price for phone calls the
defendants have taken the plaintiffs’
property and must pay just compensation
is downright absurd.
There is a little more substance to the
argument that the scheme violates the
equal protection and due process clauses
of the Fourteenth Amendment. We must take
the facts pleaded in the complaint as
true, and they are that the very high
price charged anyone who wants to talk to
an inmate over the phone is greatly in
excess of any additional cost to the
phone companies or the prisons and jails
of allowing inmates to make collect
calls. Treating what we have called the
exorbitant component of the prison inmate
tariffs as a tax, we may appear to have
a conventional case in which a class of
taxpayers complains about a grossly
discriminatory tax rate. Allegheny
Pittsburgh Coal Co. v. County Commission,
488 U.S. 336, 345 (1989); Metropolitan
Life Insurance Co. v. Ward, 470 U.S. 869,
875 (1985); Rinaldi v. Yeager, 384 U.S.
305, 308 (1966); Wallers v. United
States, 847 F.2d 1279, 1282 (7th Cir.
1988). But here the fact that it is not
a tax but a tariffed rate bites. A claim
of discriminatory tariffed telephone
rates is precisely the kind of claim that
is within the primary jurisdiction of the
telephone regulators. The plaintiffs are
asking us to compare the rates on inmate
calls with rates on comparable calls of
other persons; that is what we cannot do
but the regulatory agencies can.
The plaintiffs argue that inmates and
their families have an interest
encompassed by the concept of "liberty"
in the due process clause and that the
defendants (both the agencies and
officials directly subject to the
Fourteenth Amendment and the telephone
companies, which are liable under section
1983 as their coconspirators, Adickes v.
S.H. Kress & Co., 398 U.S. 144, 152
(1970); Tarpley v. Keistler, 188 F.3d
788, 791-92 (7th Cir. 1999)) have
arbitrarily deprived them of that
interest by preventing competition for
inmate phone service. It is conceivable
(no stronger statement is possible in the
current state of the case law) that the
constitutional concept of liberty may
encompass a limited right to make or
receive prison visits involving family
members, Burgess v. Lowery, 201 F.3d 942,
947 (7th Cir. 2000); Froehlich v.
Wisconsin, 196 F.3d 800, 801-02 (7th Cir.
1999); Mayo v. Lane, 867 F.2d 374, 375-76
(7th Cir. 1989), and a telephone call is
an electronic visit and may be the only
form of visit that is feasible if the
family lives far from the inmate’s
prison. But even if this is so, which we
needn’t decide, the plaintiffs cannot get
anywhere with their due process claim.
The claim has no procedural dimension;
there is no suggestion that the
defendants have denied them their due
process right to challenge the inmate
telephone rates in the regulatory
agencies. The claim is substantive, is
that the defendants have unreasonably
curtailed the liberty of being visited
and visiting by denying reasonably priced
phone service. And as a substantive claim
it cannot fly. It is no different from
claiming that a state that raised the
gasoline tax and by doing so increased
the cost to the plaintiffs of traveling
to visit their inmate relatives would be
violating the Constitution.
We are also unimpressed by the
plaintiffs’ antitrust claim. Were they
arguing that the defendant phone
companies had gotten together to divide
the inmate phone market, using state
officials as their cat’s paws, the
defendants, in order to avoid liability,
would have to show that the initiative
for and control over the scheme resided
with the officials, acting in furtherance
of a state policy of limiting
competition. Southern Motor Carriers Rate
Conference, Inc. v. United States, 471
U.S. 48, 56-57 (1985); California Retail
Liquor Dealers Ass’n v. Midcal Aluminum,
Inc., 445 U.S. 97, 105-06 (1980); Hardy
v. City Optical Inc., 39 F.3d 765, 768
(7th Cir. 1994); Massachusetts Food Ass’n
v. Massachusetts Alcoholic Beverages
Control Comm’n, 197 F.3d 560, 563-64 (1st
Cir. 1999). There is a bare hint of
horizontal agreement--the sort of thing
that the Georgia v. Pennsylvania line of
cases that we cited earlier holds are not
protected from antitrust attack by the
filed-rate doctrine--in the allegation of
the complaint that the telephone company
defendants and the other defendants are
acting "jointly and in concert." But the
entire thrust of the plaintiffs’ argument
is that the prisons are principals, not
tools; remember, they are said to be
motivated by greed, but greed that is
institutional rather than personal. Far
from being mere agents of the phone
companies, the prisons are in the
driver’s seat, because it is they who
control access to the literally captive
market constituted by the inmates.
Indeed the plaintiffs’ real argument has
nothing to do with any horizontal
conspiracy; it is rather that a
monopolist, namely the State of Illinois
(and its subdivisions), exercising as it
does an iron control over access to the
inmate market, has rented pieces of the
market to different phone companies, in
much the same way that an airport will
charge a high fee to concessionaires
eager to sell to the captive market
represented by the airline passengers who
perforce spend time in the airport. Cf.
Elliott v. United Center, 126 F.3d 1003(7th Cir. 1997). The concessionaires will
pass on much of the fee to their
customers, who will thus pay a higher
than competitive price. States and other
public agencies do not violate the
antitrust laws by charging fees or taxes
that exploit the monopoly of force that
is the definition of government. They
have to get revenue somehow, and the
"somehow" is not the business of the
federal courts unless a specific federal
right is infringed. Nor do the persons
with whom the states contract violate the
antitrust laws by becoming state
concessionaires, provided those persons
do not collude among themselves or engage
in other anticompetitive behavior, of
which charging high prices as a state
concessionaire is not a recognized
species.
Insofar as the plaintiffs’ concern is
with the purely vertical arrangement
between each defendant telephone company
and a particular prison or jail, the
filed-rate doctrine pops back in as a
jurisdictional bar. The vertical
agreement is effectively the tariff, that
is, the contract between the provider of
the regulated service (the phone company)
and the customer. Technically, the
inmates are the customers; but
realistically it is the prisons and
jails. The plaintiffs don’t want to clear
away an obstacle to a voluntarily
negotiated lower tariff; they want a
lower tariff.
The dismissal of the plaintiffs’ federal
claims must be affirmed, though on the
merits rather than (with the exception of
the equal protection claim, which is
within the scope of the doctrine of
primary jurisdiction in its core sense of
exclusive agency jurisdiction to decide
an issue, and the vertical dimension of
the antitrust claim, which is barred by
the filed-rate doctrine) on
jurisdictional grounds. Since all the
plaintiffs’ federal claims have fallen
out well before trial and their state
claims are not even mentioned in the
district court’s opinion, we direct that
court to relinquish jurisdiction over the
state claims. 28 U.S.C. sec. 1367(c)(3).
Doubtless the court would have done that
on its own had it not thought the entire
case outside its jurisdiction, which is
why it had no occasion even to mention
those claims.
Modified and Affirmed.