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Hamilton County Emergency Communications District v. At & T Corp.

United States District Court, E.D. Tennessee, Chattanooga

June 12, 2019

BLOUNT COUNTY EMERGENCY COMMUNICATIONS DISTRICT, ET AL., Plaintiffs,
v.
AT&T CORP., Defendant. BLOUNT COUNTY EMERGENCY COMMUNICATIONS DISTRICT, ET AL., Plaintiffs,
v.
TELEPORT COMMUNICATIONS AMERICA, LLC, Defendant. BEDFORD COUNTY EMERGENCY COMMUNICATIONS DISTRICT, ET AL., Plaintiffs,
v.
LEVEL 3 COMMUNICATIONS, LLC, Defendant.

          MEMORANDUM

          CURTIS L. COLLIER UNITED STATES DISTRICT JUDGE.

         Before the Court are a joint motion to dismiss filed by Defendants AT&T Corporation (“AT&T”) (Doc. 29 in Case 370)[1] and Teleport Communications America, LLC (“Teleport”) (Doc. 28 in Case 371), and a motion to dismiss filed by Defendant Level 3 Communications, LLC (“Level 3”) (Doc. 21 in Case 376). The Plaintiff emergency communications districts for various Tennessee counties (the “Districts”) filed a joint response in opposition to AT&T's and Teleport's motion (Doc. 32 in Case 370; Doc. 31 in Case 371) and a response in opposition to Level 3's motion (Doc. 23 in Case 376). AT&T and Teleport filed a joint reply (Doc. 33 in Case 370; Doc. 32 in Case 371), and Level 3 filed a reply (Doc. 24 in Case 376). Plaintiffs filed a joint supplemental brief in all three cases (Doc. 62 in Case 370; Doc. 61 in Case 371; Doc. 74 in Case 376), and Defendants responded jointly (Doc. 63 in Case 370; Doc. 62 in Case 371; Doc. 75 in Case 376). The Court will GRANT IN PART AND DENY IN PART Defendant's motions (Doc. 29 in Case 370; Doc. 28 in Case 371; Doc. 21 in Case 376).

         I. BACKGROUND

         In 1984, Tennessee passed the Emergency Communications District Law, Tenn. Code Ann. §§ 7-86-101, et seq. (the “911 Law”), to formally establish 911 as the primary emergency telephone number for all Tennessee residents.[2] The 911 Law created the Districts, municipal corporations which run the 911 call centers in each county and route calls to the proper emergency service. To support these functions, the 911 Law allows the Districts to levy a charge (the “911 charge”) on telephone lines. Telephone “service suppliers, ”[3] such as Defendants, are required to bill and collect these 911 charges from their “service users, ” or customers.[4] Id. Service suppliers must then report and remit the 911 charges to the Districts at least every two months. Id.

         The Districts brought these actions to recover 911 charges they believe Defendants wrongfully failed to bill to Defendants' respective customers. Each First Amended Complaint asserts causes of action for violation of the Tennessee False Claims Act, Tenn. Code Ann. §§ 4-18-101 et seq. (the “TFCA”), violation of the 911 Law, breach of fiduciary duty, fraudulent misrepresentation, fraudulent concealment, and negligent misrepresentation. (Doc. 24 in Case 370; Doc. 23 in Case 371; Doc. 18 in Case 376 (collectively, the “Complaints”).)

         II. STANDARD OF REVIEW

         A party may move to dismiss a claim for failure to state a claim upon which relief can be granted. Fed.R.Civ.P. 12(b)(6). In ruling on such a motion, a court must accept all of the factual allegations in the complaint as true and construe the complaint in the light most favorable to the plaintiff. Gunasekera v. Irwin, 551 F.3d 461, 466 (6th Cir. 2009) (quoting Hill v. Blue Cross & Blue Shield of Mich., 49 F.3d 710, 716 (6th Cir. 2005)). The court is not, however, bound to accept as true bare assertions of legal conclusions. Papasan v. Allain, 478 U.S. 265, 286 (1986).

         In deciding a motion to dismiss under Rule 12(b)(6), a court must determine whether the complaint contains “enough facts to state a claim to relief that is plausible on its face.” Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007). Although a complaint need only contain a “short and plain statement of the claim showing that the pleader is entitled to relief, ” Ashcroft v. Iqbal, 556 U.S. 662, 677-78 (2009) (quoting Fed.R.Civ.P. 8(a)(2)), this statement must nevertheless contain “factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged, ” id. at 678. Plausibility as explained by the Court “is not akin to a ‘probability requirement,' but it asks for more than a sheer possibility that a defendant has acted unlawfully.” Id. (quoting Twombly, 550 U.S. at 556). “[W]here the well-pleaded facts do not permit the court to infer more than the mere possibility of misconduct, the complaint has alleged-but it has not ‘show[n]'-'that the pleader is entitled to relief.'” Id. at 679 (quoting Fed.R.Civ.P. 8(a)(2)). “Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice.” Id. at 678. “Determining whether a complaint states a plausible claim for relief [is] a context-specific task.” Id. at 679.

         If a party presents matters outside the pleadings in connection with the motion, the court must either exclude those matters from consideration or treat the motion as one for summary judgment. Fed.R.Civ.P. 12(d).

         III. ANALYSIS

         Defendants move to dismiss all six counts of the Complaints on the ground that they fail to plead factual matter sufficient to state a claim under Twombly, 550 U.S. 544, and Iqbal, 556 U.S. 662. In the alternative, Defendants move to dismiss the fraud-related claims, Counts I, IV, V, and VI, for failure to plead fraud with sufficient particularity as required by Rule 9(b) of the Federal Rules of Civil Procedure.[5] Also in the alternative, Defendants move to dismiss all of the Districts' common-law claims, Counts III-VI, [6] on the grounds that the 911 Law establishes the exclusive remedy for the Districts.

         A. Sufficient Factual Matter

         AT&T and Teleport do not make individualized arguments under Twombly and Iqbal about the adequacy of pleading of the Districts' causes of action or their respective elements. Rather, they assert that all of the Districts' causes of action hinge on the allegation that Defendants underbilled 911 charges, but that the Complaints do not include enough factual allegations to provide plausible support for those “conclusory allegations of underbilling.” (AT&T Doc. 30 at 9.) Level 3 takes the same approach, criticizing the Districts' failure to allege how the underbillings occurred, such as by identifying specific illegal practices that led to the underbillings. (Level 3 Doc. 22 at 7, 16-17.) The Court accordingly turns first to the general sufficiency of the Districts' allegations about underbilling.

         Each Complaint includes the following allegations about Defendants' duties to bill, collect, and remit 911 Charges to the Districts, the reports Defendants made to the Districts, and Defendants' alleged failure to collect and accurately report on enough charges:

. The 911 Law required Defendants to bill, collect, and remit 911 charges to the appropriate District “for each line capable of transmitting a voice call to a 911 emergency communications district.” (AT&T Compl. ¶ 30; Teleport Compl. ¶ 30; Level 3 Compl. ¶ 40 (each citing Tenn. Code Ann. §§ 7-86-103, -108(c), -110).)
. Defendants provided reports to the Districts, annually and either monthly or bi-monthly, regarding the 911 charges they collected and remitted to the Districts (the “Reports”). (AT&T Compl. ¶¶ 37-38; Teleport Compl. at 10 ¶¶ 37-38[7]; Level 3 Compl. ¶¶ 47-48.)
. Defendants “intentionally billed, collected, reported, and remitted 911 Charges on only a fraction of the lines provided to [their] customers.” (AT&T Compl. ¶ 42; Level 3 Compl. ¶ 53 (emphasis omitted); see also Teleport Compl. at 11 ¶ 39 (“Defendant intentionally billed, collected, reported, and remitted 911 Charges on only a small fraction of the voice lines or pathways supplied in the counties served by the Districts”).
. Defendants “knowingly submitted Reports to each District that contained false records and statements of the number of voice lines that Defendant[s] supplied to customers through multiplexed circuits . . . and single circuit lines in those Districts.” (AT&T Compl. ¶ 46; Level 3 Compl. ¶ 57; see also Teleport Compl. ¶ 55 (“Defendant knowingly submitted Reports to the Districts that contained false records and statements of the number of voice lines or pathways that Defendant supplied to customers through multiplexed circuits . . . and single circuit lines in those Districts.”).)
. “The false records and statements contained in the Reports had the effect of concealing, avoiding, or decreasing an existing legal obligation by Defendant[s] to pay or transmit monies in the form of applicable 911 Charges to each District [or “the Districts”].” (AT&T Compl. ¶ 54; Teleport Compl. ¶ 50; Level 3 Compl. ¶ 65.)

         The Complaints also contain specific allegations about the extent of underbilling during certain months, as well as how the Districts know what they think they know about the underbillings: discrepancies between the numbers of lines Defendants included in the Reports and the numbers of lines Defendants included in two other types of reports.

         The AT&T and Teleport Complaints compare the Reports to an Automatic Location Information (“ALI”) Database. For each line Defendants have in service, Defendants provide telephone number and address information that is collected in the ALI Database. The Districts use the information in the ALI Database to route 911 calls to the appropriate District and to dispatch emergency services to the correct address. (AT&T Compl. ¶¶ 31-32; Teleport Compl. ¶¶ 31-32.[8]) The Districts allege that “[t]he ALI Database includes information about the lines that can be used to call 911 Centers, such as those operated by the Districts.” (AT&T Compl. ¶ 33; Teleport Compl. ¶¶ 31-32 (emphasis in original).) The Districts allege that the number of lines listed in the ALI Database for given months exceeded the number of lines on which AT&T and Teleport ...


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