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Carroll v. TDS Telecommunications Corp.

United States District Court, W.D. Tennessee, Eastern Division

December 29, 2017

MARTHA CARROLL, individually, and also on behalf of all similarly situated persons, Plaintiff,
v.
TDS TELECOMMUNICATIONS CORPORATION, TDS TELECOM SERVICE CORPORATION, and TENNESSEE TELEPHONE COMPANY, Defendants.

          ORDER DENYING DEFENDANTS' MOTION TO DISMISS

          S. THOMAS ANDERSON CHIEF UNITED STATES DISTRICT JUDGE

         Before the Court is the Motion to Dismiss (ECF No. 16) of Defendants TDS Telecommunications Corporation, TDS Telecom Service Corporation, and Tennessee Telephone Company. Defendants seek the dismissal of Plaintiff Martha Carroll's Second Amended Complaint (ECF 1-1), in which Plaintiff asserts both individual and class-action claims and over which the Court exercises diversity jurisdiction. Plaintiff's claims center around what is essentially an accusation of false advertising regarding Defendants' provision of “High-Speed Internet.” Plaintiff claims that the quality of internet service she received could not be called high speed under the nature of the parties' agreement or any meaning of the phrase. But Defendants maintain that Plaintiff has failed to state any claim for which relief may be granted.

         The Court disagrees and finds that Plaintiff has plausibly alleged sufficient facts to support each claim. For reasons set forth below, Defendants' Motion is DENIED.

         I. BACKGROUND

         A. Allegations of the Complaint

         The following allegations by Plaintiff are taken as fact for the purposes of this Motion. See Defendants' Notice of Removal, Ex. A, at 318-41, June 29, 2017, ECF No. 1-1 [hereinafter “State Court Record”]; supra Part II. Plaintiff's Second Amended Complaint refers to Defendants as a single entity (“TDS”) that the Court will use interchangeably with Defendants. See Id. at 318. The Court would further note that, although Plaintiff begins to veer towards conclusory language in some of the specific, claim-related allegations, such allegations are supported by the specific facts alleged in the general allegations and other count-specific allegations, all of which incorporated into the allegations made under each count of the Second Amended Complaint.

         1. General Allegations

         Plaintiff is an adult Tennessee citizen residing in Perry County, Tennessee. TDS is an internet provider that advertises and sells high-speed internet plans to customers in rural Tennessee. Upon enrolling in TDS's high-speed “Turbo Internet” plan, Plaintiff received correspondence from TDS based out of Madison, Wisconsin. Defendant TDS Telecommunications Corporation (“TDS Delaware”) is a Delaware corporation with its principal place of business located in Madison, Wisconsin. Defendant TDS Telecom Service, LLC, (“TDS Iowa”) is an Iowa limited liability company with a principal place of business in Madison, Wisconsin. Defendant Tennessee Telephone Company (“TTC”) is a Tennessee company with a principal place of business in Madison, Wisconsin. TDS Delaware, TDS Iowa, and TTC all have the same address in Madison, Wisconsin. TDS Delaware is the parent corporation of TDS Iowa. TDS Iowa provides administrative and support services to operating companies owned by TDS Delaware. TDS Iowa employs individuals who receive orders from customers, such as Plaintiff, when they order new services or make changes to their services.

         Most importantly, TDS Iowa hosts the internet site and publishes the advertisements that are at issue in this case. TTC operates the TDS infrastructure in Tennessee. TDS owns the internet site on which the high-speed internet plans are advertised. TDS also owns the trademark “TDS” that is used in connection with the advertisements. TDS Delaware, TDS Iowa, and TTC[1] have been involved in the drafting, formation, publishing, and all other aspects of the advertisements related to the Turbo Internet plan and have conducted their actions from the same address in Madison, Wisconsin.

         TDS's high-speed internet plans include “Mach Internet, ” “Turbo Internet, ” “Express Internet, ” and “Lite Internet.” For the Mach Internet plan, TDS has advertised the download speed as a range of 18 Megabits per second (“Mbps”) to 25Mbps and the upload speed as a range of 2Mbps to 5Mbps. For the Turbo Internet plan, TDS has specifically advertised the plan as:

Fast speed for typical users with multiple computers or Internet-connected devices.
Get the speed you need to do what you want online. You'll be able to easily handle complex web pages, download large files, and upload larger files. Provides faster upload speed, too.

         State Court Record, at 321. TDS claims that the Turbo Internet plan provides a range 8Mbps to 15Mbps and an upload speed of 768 Kilobits per second (“Kbps”). On a separate advertisement page, TDS expressly states that the Turbo Internet plan has the 8-15Mbps range. TDS's advertisements have described the Turbo Internet plan as having “Faster uploads and downloads, ” being “Great for visiting sites like Netflix, YouTube, and Hulu, ” and having a “Superior connection [that] lets you stream Netflix Super HD.” TDS's Express Internet plan is advertised as having a download speed range of 56Kbps to 5Mbps. And TDS's Lite Internet plan is advertised as having a download speed range of 56Kbps to 1Mbps. But TDS's services as provided to customers in Perry County, Tennessee, and elsewhere in rural Tennessee have fallen well short of the ranges advertised. TDS customers have complained of receiving only a 0.02Mbps (20 Kbps) download speed and having no ability to access sites such as Netflix, YouTube, or Hulu-contrary to the promises of TDS's advertisements. TDS has even admitted to complaining customers that the infrastructure simply cannot support the speeds advertised given certain capacity issues. TDS has acknowledged to complaining customers that it has been aware of these problems since at least 2013 and that there is currently no project in place to address the problems. Only after customers complain loudly enough has TDS offered any solutions for these deficiencies. But those solutions consisted of TDS trying to have customers upgrade their plans to purportedly higher speed plans despite knowing that the infrastructure problems would prevent customers from having those higher speeds or switching to a different source for internet such as subscribing to a different company or setting up a data hotspot with the customer's mobile phone.

         As stated above, Plaintiff signed up for the Turbo Internet plan. She paid between $120 and $150 per month for TDS's internet and telephone package, which is a rate commensurate with the cost of a joint package containing high-speed internet service. But TDS has not provided Plaintiff with the high speed internet as advertised. Plaintiff has not experienced the advertised range of download speed or upload speed. Plaintiff's actual download speed was as low as 0.02Mbps. Plaintiff has not been able to access or enjoy sites such as Netflix, YouTube, or Hulu. On multiple occasions, technicians came out to Plaintiff's house to try and fix the problems with her internet service. But finally, TDS representatives admitted to Plaintiff or her family that infrastructure and other problems prevented TDS from ever being able to actually provide the high-speed internet that TDS advertised and for which Plaintiff had paid.

         2. Specific Allegations of Count 1-Breach of Contract

         Plaintiff entered into a contract with TDS whereby TDS would provide high-speed internet in exchange for the monthly fee paid by Plaintiff and the class members. TDS advertised specific high-speed internet ranges of internet access but never provided speeds within those ranges. Further, the internet access could not be used for the specific activities (e.g., using Netflix, YouTube, or Hulu) advertised. TDS has failed to provide the high-speed internet that it advertised and for which Plaintiff had contracted and paid for. TDS was and knew it was incapable of providing the services that it advertised and for which Plaintiff and the class members contracted. And subsequently, TDS wrongfully assessed early termination fees against Plaintiff and some class members given that TDS had previously breached the parties' agreement by failing to provide high-speed internet services. Plaintiff and the class members have sustained damages including but not limited to modem and equipment charges, set-up fees and charges, monthly charges, costs associated with terminating the internet service for another Internet Service Provider, and early termination fees.

         3. Specific Allegations of Count 2-Violations of the WDTPA[2]

         TDS or its agents sought to sell, distribute, or increase consumption of TDS's service of high-speed internet and related equipment to the public in rural Tennessee. TDS or its agents did so through its internet and other marketing channels. TDS or its agents intended to induce the public into a contract or obligation by offerings these services and related equipment. TDS or its agents advertised in both Tennessee and Wisconsin for these services and related equipment that contained announcements, statements and representations, or statements of fact that were and are untrue, deceptive, or misleading. TDS's false advertisements originated in Wisconsin and were published over the internet in both Wisconsin and Tennessee. TDS's actions include but are not limited to substituting services of inferior value or quality for the services advertised and that Plaintiff and the class members had purchased. TDS's deceptive trade practices have caused Plaintiff and the class members pecuniary damages, including but not limited to modem and equipment charges, set-up fees and charges, monthly charges, costs associated with terminating the internet service for another Internet Service Provider, and early termination fees.

         4. Specific Allegations of Count 3-Fraud

         Defendants made material misrepresentations to Plaintiff and the class members, including but not limited to the statements that the purportedly high-speed internet plans would provide certain ranges of internet speeds and permit access to certain video streaming sites like Netflix despite the failure of TDS to provide such services. Not only were these statements false, but these statements were also made by TDS with the knowledge they were false because TDS knew their infrastructure and other problems could not support these internet speeds. Plaintiff and the class members relied on TDS's representations that it would provide high-speed internet access. As a result of relying on these misrepresentations, Plaintiff and the class members have sustained damages including but not limited to modem and equipment charges, set-up fees and charges, monthly charges, costs associated with terminating the internet service for another Internet Service Provider, and early termination fees.

         5. Specific Allegations of Count 4-Unjust Enrichment

         TDS promised certain internet services that it has failed to deliver. Plaintiff and the class members paid monthly for those services that they did not receive. And as result of those payments and others for different services, fees, and ...


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