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More on Yesterday’s Opinion in Sprint v. APCC

The following summary was written by Steven C. Wu, an attorney at Akin Gump. Steven briefly participated in this case when it was before the D.C. Circuit.

Yesterday, the Supreme Court handed down its decision in No. 07-552, Sprint Communications Co. L.P. v. APCC Services, Inc. The issue in the case was whether a plaintiff that has been assigned the right to pursue a legal claim, but that stands to gain no proceeds from the outcome of the litigation, has standing under Article III. By a 5-4 vote, the Court held that such a plaintiff does have standing. (Disclosure: Akin Gump was co-counsel for petitioner AT&T.)

A detailed overview of this case can be found on SCOTUSwiki; here is a quick (and much simplified) background. The case arose from the curious industry of payphones. Most payphones are operated by small companies known as payphone service providers (PSPs). Under a complex and highly regulated scheme, PSPs sometimes route payphone calls to the networks of large long-distance carriers such as Sprint and AT&T; in return, those carriers provide some compensation to the PSPs. Individual PSPs tend not to deal directly with the carriers. Instead, “aggregators” — companies that represent a large number of PSPs — submit billing information from the PSPs to the long-distance carriers and then distribute any compensation they receive to their PSP clients. APCC Services, the respondent in this case, is the country’s largest aggregator; it represents over 1,400 PSPs, which in turn own over 400,000 payphones.

The litigation currently before the Court began when several PSPs accused long-distance carriers (including petitioners Sprint and AT&T) of failing to pay enough compensation to the PSPs for routed calls. Rather than suing the carriers directly, the PSPs instead assigned their claims to their aggregators, including APCC. These assignments, which were expressly “for purposes of collection,” required the aggregators to litigate “on behalf of” the PSPs as the PSPs’ “true and lawful attorney-in-fact” and to “pass back” to the PSPs any amounts recovered through litigation. The question before the Supreme Court was whether such assignments gave the aggregators standing to sue the long-distance carriers for their alleged failure to compensate the PSPs.

In the opinion, the Court concludes that the aggregators did have standing. Writing for five justices, Justice Breyer points out that courts have long permitted assignees of a claim to bring suit, beginning in seventeenth-century England and continuing with American courts in the eighteenth and nineteenth centuries. Indeed, “during the 19th century, most state courts entertained suits virtually identical to the litigation before us: suits by individuals who were assignees for collection only, i.e., assignees who brought suit to collect money owed to their assignors but who promised to turn over to those assignors the proceeds secured through litigation.” And the federal courts during the same period had similarly permitted assignees for collection to sue on assigned claims.

This long historical tradition, the Court concludes, is “well nigh conclusive.” Even putting history aside, however, the Court finds that the aggregators satisfy the “modern” doctrine of Article III standing. Because the PSPs had “assigned their claims to the aggregators lock, stock, and barrel,” the aggregators could assert the PSPs’ injury-in-fact as their own. Moreover, the aggregators’ claimed injury is redressable because, if the aggregators prevail, “the long-distance carriers would write a check to the aggregators for the amount of . . . compensation owed,” directly resolving the parties’ dispute.

Chief Justice Roberts, writing for four justices, dissents from the majority’s ruling. “There is a legal difference between something and nothing. Respondents have nothing to gain from their lawsuit.” The dissent emphasizes that, under the terms of the assignment, the aggregators would receive none of the proceeds from this litigation; instead, “the entire relief requested will run to a party not before the court.” The dissent concludes:

The absence of any right to the substantive recovery means that respondents cannot benefit from the judgment they seek and thus lack Article III standing. “When you got nothing, you got nothing to lose.” Bob Dylan, Like A Rolling Stone, on Highway 61 Revisited (Columbia Records 1965).

(Brief aside: According to Westlaw and Lexis, this represents only the second time that Bob Dylan has been invoked in a Supreme Court opinion. The first time was in Eldred v. Ashcroft, 537 U.S. 186, 207 n.15 (2003), which cited Mr. Dylan’s support for the copyright system.)

In response to the majority’s lengthy recitation of historical practice, the dissent argues that the cited cases merely stand for the unremarkable proposition that assignees may sue on assigned claims when they have also been assigned the right to recovery. But “the historical sources are either nonexistent or equivocal” on the “precise question” before the Court: “whether an assignee who has acquired the legal right to sue, but no right to any substantive recovery, can maintain an action in court.” Moreover, even the state cases that concededly allowed such assignee suits did not represent a “long and unbroken tradition”; instead, the Chief Justice argues, they were merely a small part of an “unsettled and conflicting state of affairs” on this very question, which “spawned much litigation and diverse published decisions.”