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HomeMy WebLinkAbout04-07-2021 - HEX email supplementing Re: In re TracFone Wireless, Inc. CAUTION: This email originated from outside the City of Renton. Do not click links, reply or open attachments unless you know the content is safe. Supplementing my prior email, I neglected to mention that I didn't find Mr. Malone's Fred Meyer purchase very illuminating on the issue, since I understood him to be just adding airtime to a handset that already had its own minutes. I don't believe there was anything from the description of that event that would preclude that understanding. On Wed, Apr 7, 2021 at 8:06 PM Phil Olbrechts <olbrechtslaw@gmail.com <mailto:olbrechtslaw@gmail.com> > wrote: Thank you for the reconsideration briefing. I will likely need at least a week to carefully go through the arguments presented by the parties. In the meantime, in lieu of oral argument, I’m hoping we can resolve the ambiguities of the handset issue by email. In clarifying the handset issue in my reconsideration decision, I would like to give the parties an opportunity to identify where in the administrative record it is established that the handsets are sold and charged separately from airtime. My understanding of the handsets sales was that Tracfone handsets include Tracfone airtime rights to the same extent as airtime cards, in a sense being “preloaded” with airtime in the same fashion as airtime cards. In this scenario the phones simply serve as a more expensive and functional version of plastic airtime cards. It was also my understanding that the handsets were sold to the consumer via one charge. This is why I found the Activate case pertinent. In its reconsideration request, Tracfone argued that the handset sales are not subject to the utility tax because handset sales qualify as competitive telephone service. The Activate court held that sales of handsets do not qualify as competitive telephone service if they are not charged separately from network telephone service. The evidence presented by the City left a very strong impression that the handsets were “loaded” with airtime in the same fashion as the airtime cards. The most detailed rendition of how handsets are sold and activated was in the 1/29/21 Ashpaugh declaration. Paragraph 10 of his declaration states that both airtime cards and handsets will be referenced as “equipment.” Paragraph 12 states that when “equipment” (which includes handsets) is scanned for purchase by a consumer, Tracfone is notified electronically. Mr. Ashpaugh goes on to declare that once the “equipment” (which includes handsets) is purchased, it (the handset, without an airtime card) doesn’t become activated until the consumer contacts TracFone via website or phone number. So from the Ashpaugh declaration, it was reasonable to conclude that a handset could be purchased without an airtime card and then activated for use. Under such a scenario there would be no basis for concluding that any airtime “loaded” into the handset would be charged separately from the phone itself. Indeed, my one time experience with prepaid airtime was the purchase of a disposable phone when I forgot to pack my cell phone on a business trip. As best as I can recall, there was only one charge for that phone. The City’s request for summary judgment relief also made no distinction between airtime card sales and handset sales. In its Statement of Facts, the City identified that Tracfone sells wireless services and handsets directly and to retail agents. The City then framed its second question presented as “Is TracFone’s gross income from its retail agents properly included within the City’s tax base…” Nowhere in its summary judgment argument did the City distinguish between gross income generated from handset sales and that generated from airtime cards. After being presented with the record and arguments described above, I’m now told that the City’s sj motion was only advocating for application of the utility tax to airtime card sales and also that handsets are not “activated” in the fashion described in the Ashpaugh declaration. I am happy to accommodate the parties’ request on this issue since both parties are in agreement. However, it would be helpful to be able to identify something in the record and/or briefing that clearly identifies that all handsets are sold separately from airtime and also that the City had limited is sj request to gross sales of airtime. On the latter issue, simply stating that the City was only asking for utility tax on network telephone service doesn’t resolve the situation, since handsets that serve as glorified airtime cards arguably qualify as network telephone service if the airtime is not separately charged. If the parties have any references they’d like to make to the record to clarify the handset issue, please do so by email by next Tuesday. I’ll try to get my ruling out shortly thereafter. On Wed, Apr 7, 2021 at 2:51 PM Craig, Angela <CraigA@lanepowell.com <mailto:CraigA@lanepowell.com> > wrote: Good afternoon. Attached for filing in the above matter, please find the following: * Reply in Support of TracFone’s Motion for Reconsideration Please confirm receipt. Thank you. <https://www.lanepowell.com/portalresource/LP_Logo_Bold_CMYK-105x55.png> ANGELA CRAIG Legal Assistant craiga@lanepowell.com <mailto:craiga@lanepowell.com> D 206.223.6138 LANEPOWELL.COM <https://gcc02.safelinks.protection.outlook.com/?url=https%3A%2F%2Fwww.lanepowell.com%2F&data=04%7C01%7CCMoya%40rentonwa.gov%7C95dfa002ae7a426f319d08d8fa3cf901%7C71014141061148858e98cc96a05e1675%7C1%7C0%7C637534487080243216%7CUnknown%7CTWFpbGZsb3d8eyJWIjoiMC4wLjAwMDAiLCJQIjoiV2luMzIiLCJBTiI6Ik1haWwiLCJXVCI6Mn0%3D%7C1000&sdata=oWl8pxU8hrRRGkjom3wATMInkLONjB7SkZPjtPovJ0k%3D&reserved=0> ________________________________ This message is private or privileged. If you are not the person for whom this message is intended, please delete it and notify me immediately, and please do not copy or send this message to anyone else.