Christopher Hesse v. Sprint Corporation

I. Background

The State of Washington imposes a business and occupa- tion tax (“B&O tax”) on every person engaged in business activities in the state. Wash. Rev. Code § 82.04.220. Wash- ington law specifies that the B&O tax must be collected from a business as part of its “operating overhead” rather than imposed as a separate “tax[ ] upon the purchasers or custom- 3850 HESSE v. SPRINT ers.” Id. § 82.04.500 (the “B&O Tax Statute”). It is alleged that Sprint passed the tax directly to its customers as a sepa- rate line item labeled “Washington State B&O Tax Sur- charge” starting in April 2001.

Christopher Hesse and Nathaniel Olson (“the Washington Plaintiffs”) filed separate class actions in Washington state court alleging violations of the B&O Tax Statute and the Washington Consumer Protection Act (“CPA”), Wash. Rev. Code § 19.86.030, as well as common law breach of contract and unjust enrichment. Sprint removed both cases to the United States District Court for the Western District of Wash- ington pursuant to 28 U.S.C. § 1441(a).

The district court dismissed all claims predicated on the B&O Tax Statute as preempted by the Federal Communica- tions Act…