Autauga County Emergency Management Communication District et al v. Bellsouth Telecommunications LLC
Filing
27
MEMORANDUM OPINION and ORDER- The deft's Motion to Dismiss (Doc 20 ) is DENIED for the reasons stated within; Pltf's motion for leave to file additional authority (Doc 25 ) is GRANTED. Signed by Magistrate Judge Staci G Cornelius on 10/6/16. (MRR, )
FILED
2016 Oct-06 AM 10:10
U.S. DISTRICT COURT
N.D. OF ALABAMA
UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ALABAMA
SOUTHERN DIVISION
AUTAUGA COUNTY EMERGENCY
MANAGEMENT
COMMUNICATION DISTRICT, et
al.,
Plaintiffs,
v.
BELLSOUTH
TELECOMMUNICATIONS,
LLC,
Defendant.
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Case No.: 2:15-cv-00765-SGC
MEMORANDUM OPINION AND ORDER
Plaintiffs, Autauga County Emergency Management Communication
District, et al. (collectively, "Defendants" or the "Districts"), initiated this matter
by filing a complaint in the Circuit Court of Jefferson County on March 31, 2015.
(Doc. 1-1 at 5-17). Defendant, BellSouth Telecommunications, LLC, removed to
this court on May 6, 2015, on the basis of federal diversity jurisdiction. (Doc. 1).1
After removal, Plaintiffs filed an Amended Complaint. (Doc. 19). Presently
pending is Defendant's motion to dismiss, pursuant to Rule 12(b)(6) of the Federal
Rules of Civil Procedure. (Doc. 20). The motion is fully briefed and ripe for
1
Plaintiffs are political and legal subdivisions of the State of Alabama; Defendant is an LLC, the
sole member of which is a Georgia Corporation. (See Doc. 1 at 3; Doc. 19 at 3-4). Plaintiffs
seek damages in excess of the $75,000 jurisdictional threshold. (See Doc. 1 at 4; Doc. 19 at 4-5).
adjudication. (Docs. 21, 23-24). Also pending is Plaintiffs' motion for leave to file
additional authority, which is GRANTED. (Doc. 25).
For the reasons that
follow, Defendant's motion to dismiss will be denied.
I.
FACTS AND RELEVANT BACKGROUND
The Alabama Emergency Telephone Services Act (“ETSA”) created
emergency communications districts within Alabama to establish "911" local
emergency telephone service. ALA. CODE § 11-98-1, et seq.; (see Doc. 21-1 at 353). Pursuant to the prior version of the ETSA, which was in effect until October
1, 2013,2 a district's board of commissioners could impose an emergency telephone
service charge to be collected by service suppliers such as BellSouth. ALA. CODE.
§§ 11-98-5(a)(1), 11-98-5(c); (see Doc. 21-1 at 14-15).
The statute required
service suppliers to submit the service charges to the districts on a monthly basis.
ALA. CODE. § 11-98-5(e); (see Doc. 21-1 at 15). The ETSA also allowed districts
to audit the service suppliers' billing, collection, and remittance of 911 charges
annually. Id. However, the service suppliers were under no obligation to take
legal action against a customer who refused to pay the 911 charge. Id.; § 11-985(d); (see Doc. 21-1 at 14-15).
The 911 charges to be collected by service
suppliers applied to all wired telephone services within each district, including so-
2
Unless otherwise noted, all references to the ETSA are to the prior version of the statute in
effect until October 1, 2013. A copy of the pre-October 1, 2013 version of the statute is attached
to the motion to dismiss. (Doc. 21-1 at 3-53).
2
called Voice-over Internet Protocol service (“VoIP”)3 and other similar technology.
ALA. CODE. § 11-98-5.1(c); (see Doc. 21-1 at 18). The ETSA required service
suppliers such as BellSouth to collect the emergency communication fee from each
non-exempt customer with a ten-digit access number and remit the fees to the
districts. Id. The ETSA also included a statutory cap of one hundred 911 charges
"per person, per location." ALA. CODE § 11-98-5(c); (see Doc. 21-1 at 14).
The Amended Complaint alleges Defendant provided telephone service to
customers within the districts comprised by Plaintiffs; much of this service
constituted VoIP service and similar technology. (Doc. 19 at 5-7). Each Plaintiff
assessed 911 charges on all telephone service within its geographical territory and
relied on these charges to fund facilities continually staffed by personnel trained to
receive emergency calls and transfer them to the appropriate authorities. (Doc. 19
at 5).
Plaintiffs contend "Defendant failed to bill, collect, and remit 911 Charges in
accordance with the law." (Doc. 19 at 6). Specifically, the Amended Complaint
alleges Defendant did not bill, collect, and remit 911 charges for every non-exempt
ten-digit access number assigned to VoIP users. (Id.). While not providing a
3
Interconnected VoIP Service, as defined by the Code of Federal Regulations, is a service that
“(1) Enables real-time, two-way voice communications; (2) Requires a broadband connection
from the user’s location; (3) Requires Internet protocol-compatible customer premises equipment
(CPE); and (4) Permits users generally to receive calls that originate on the public switched
telephone network and to terminate calls to the public switched telephone network.” 47 C.F.R. §
9.3 (2009).
3
precise number, the Amended Complaint alleges Defendant did not properly bill,
collect, and remit 911 charges associated with "thousands" of VoIP numbers.
(Doc. 19 at 8). Plaintiffs also allege Defendant incorrectly applied the statutory
cap on 911 charges; while the ETSA capped 911 charges at one hundred per
person, per location, Defendant capped 911 charges at one hundred per customer,
even when that customer had multiple locations. (Doc. 19 at 8). The Amended
Complaint also contends Defendant submitted remittance forms to the Districts
stating there were no exempt customers or lines, despite the fact that Defendant did
not assess 911 charges to all non-exempt lines. (Doc. 19 at 8). Plaintiffs allege
Defendant's actions caused financial damage. (Doc. 19 at 9). The Amended
Complaint also contends Defendant's practices allowed it to offer services at lower
costs and, thus, gain a competitive advantage. (Doc. 19 at 9).
On these facts, the Amended Complaint states five claims against
Defendant: (1) a statutory claim under the ETSA; (2) a claim styled as
"Negligence/Negligence Per Se/Gross Negligence/Recklessness"; (3) breach of
fiduciary
duty;
(4)
wantonness;
and
(5)
a
claim
for
"Negligent
Misrepresentation/Fraud." (Doc. 19 at 9-15). Defendant contends all of Plaintiffs'
claims are due to be dismissed.
4
II.
STANDARD OF REVIEW
Under Rule 8 of the Federal Rules of Civil Procedure, a plaintiff must plead
“a short and plain statement of the claim showing that the pleader is entitled to
relief” and “a demand for the relief sought.” FED. R. CIV. P. 8(a)(2), (3). Rule 8 is
satisfied where the complaint gives "the defendant fair notice of what . . . the claim
is and the grounds upon which it rests." American Dental Ass'n v. Cigna Corp.,
605 F. 3d 1283, 1288 (11th Cir. 2010). As explained by the Supreme Court, “a
complaint attacked by a Rule 12(b)(6) motion to dismiss does not need detailed
factual allegations,” but must include more than “labels and conclusions, and a
formulaic recitation of a cause of action’s elements will not do.” Bell Atl. Corp. v.
Twombly, 550 U.S. 544, 555 (2007). To survive a motion to dismiss, “a complaint
must contain sufficient factual matter, accepted as true, to ‘state a claim to relief
that is plausible on its face.’” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting
Twombly, 550 U.S. at 570).
A plaintiff alleging fraud is held to a higher pleading standard. See FED. R.
CIV. P 9(b).
Specifically, a plaintiff must “state with particularity the
circumstances constituting fraud or mistake.” Id. To properly state a claim for
fraud, Rule 9(b) requires a complaint to state:
(1) precisely what statements were made in what documents or oral
representations or what omissions were made, and (2) the time and
place of each such statement and the person responsible for making
(or, in the case of omissions, not making) same, and (3) the content of
5
such statements and the manner in which they misled the plaintiff, and
(4) what the defendants obtained as a consequence of the fraud.
Ziemba v. Cascade Intern., Inc., 256 F.3d 1194, 1202 (11th Cir. 2001) (quoting
Brooks v. Blue Cross and Blue Shield of Florida, Inc., 116 F.3d 1364, 1371 (11th
Cir. 1997) (internal quotation omitted)). However, "Rule 9(b) does not abrogate
the concept of notice pleading." FindWhat Investor Group v. FindWhat.com, 658
F.3d 1282, 1296 (11th Cir. 2011).
III.
DISCUSSION
Defendant's motion to dismiss asserts a number of grounds. First, Defendant
contends the Amended Complaint fails to state a claim under Rule 8 of the Federal
Rules of Civil Procedure and the standard set forth in Twombly and Iqbal. (Doc.
21 at 10-14). Next, Defendant argues the ETSA provides Plaintiff's sole remedy,
and accordingly, the common-law claims are due to be dismissed as duplicative.
(Id. at 14-15).
Specifically, as to the claim for "Negligence/Negligence Per
Se/Gross Negligence/ Recklessness," Defendant also argues: (1) the claim is barred
in its entirety under the economic loss rule; and (2) any claim for negligence per se
is barred because Plaintiffs do not belong to a class of persons the ETSA was
designed to protect. (Id. at 15-16). As to the claim for breach of fiduciary duty,
Defendant contends its relationship with Plaintiffs is not fiduciary in nature. (Id. at
16-18). Regarding wantonness, Defendant contends the claim is inadequately pled
and is barred under the economic loss rule. (Id. at 18-19). Finally, the motion to
6
dismiss asserts the Fraud claim is not pled with particularity under Rule 9(b). (Id.
at 19-20). Defendant's arguments are addressed in turn, although not in the order
presented.
A.
Count I: Violation of the ETSA
The only argument in the motion to dismiss applicable to Plaintiff's claim
under the ETSA is that the Amended Complaint is insufficiently pled. (Doc. 21 at
10-14).
To this end, Defendant asserts Plaintiffs have not included factual
allegations to give plausible support for the claim that it underbilled 911 charges.
(Doc. 21 at 10-13). Defendant contends the Amended Complaint contains only
conclusory allegations, which do not provide notice of the claim asserted. (Id.).
Defendant appears to take issue with Plaintiffs' failure to plead: (1) the amount of
911 charges Defendant billed or remitted each month; (2) the amount of 911
charges Plaintiffs contend Defendant should have billed or remitted each month;
(3) the identities of customers Defendant incorrectly billed or to whom the
statutory cap was misapplied; and (4) the identities of exempt customers Defendant
should have identified on the remittance forms. (E.g., Doc. 21 at 11).
The Amended Complaint alleges Plaintiffs are districts and BellSouth is a
service supplier to Plaintiffs under the ETSA. Plaintiffs allege BellSouth violated
the ETSA prior to October 1, 2013, by: (1) failing to bill, collect, and remit 911
charges for thousands of non-exempt ten-digit access number assigned to users of
7
VoIP and similar technology; (2) incorrectly applying the ETSA's statutory cap on
911 charges; and (3) submitting remittance forms indicating there were no exempt
customers or lines within the districts when, in fact, there were. Taken as true,
these allegations are sufficient to place Defendant on notice of the nature of
Plaintiffs' claim under the ETSA and the grounds upon which it rests.
See
American Dental Ass'n, 605 F.3d at 1288. Accordingly, more specific allegations
are not required under Rule 8.4
To the extent the motion to dismiss is premised on the Amended Complaint's
lack of detail concerning the amount of 911 charges Defendant billed and
remitted—or should have—and the identities of customers, "detailed factual
allegations” are not required to survive a motion to dismiss under Rule 12(b)(6).
Twombly, 550 U.S. at 555. Therefore, the motion to dismiss is due to be denied as
to the claim under the ETSA.
B.
Duplicative Common Law Claims
The Alabama Supreme Court has held:
It is a fixed principle of the common law, that if a right exists, an
appropriate remedy for its enforcement necessarily follows as an
incident. This is true, however, only of common-law rights; and of
these it is equally true, as a general proposition, if there is not an
adequate remedy at law, a court of equity will intervene to correct the
4
The briefing on the motion to dismiss includes arguments regarding whether Plaintiffs were
precluded from pleading with more specificity by non-disclosure agreements between the parties,
as well as provisions of the ETSA regarding disclosure of trade secrets. (See Docs. 23 at 6-8, 24
at 3-4). Because the Amended Complaint states a claim under the ETSA, discussion of these
contentions is unnecessary.
8
deficiency, and grant appropriate relief. But, if a statute creates a new
right, and provides a specific remedy, that remedy is exclusive.
Janney v. Buell, 55 Ala. 408, 410 (Ala. 1876) (emphasis added). Additionally, in
2015, the Alabama Supreme Court affirmatively answered the following certified
question: "Does the [ETSA] authorize a right of action by local 911 districts
seeking damages from telephone providers for allegedly failing to bill 911
charges?” Century Tel of Ala., LLC v. Dothan/Houston Cty. Commc'ns Dist., --So. 3d ---, No. 1131313, 2015 WL 5725111, at *6–7 (Ala. Sept. 30, 2015), reh'g
denied (Dec. 11, 2015). As Defendant would have it, the Alabama Supreme
Court's recognition of the Districts' right of action under the ETSA means that
Plaintiffs' sole remedy lies in the ETSA and, further, renders Plaintiffs' common
law claims duplicative of the statutory claim. Defendant relies on Johnson v.
Brunswick Riverview Club, Inc., 39 So. 3d 132, 139-40 (Ala. 2009), which held a
plaintiff alleging a claim under Alabama's Dram Shop Act could not allege
common law negligence claims on the same facts. (Doc. 21 at 15).
Although not argued by Plaintiffs, Defendant has not shown, and the
undersigned cannot discern, a "specific remedy" provided in the ETSA. Indeed,
the only reference to legal remedies the undersigned has found in the former
version of the ETSA is a provision providing the districts "shall be political and
legal subdivisions of the state, with power to sue and be sued in their corporate
9
names." ALA. CODE § 11-98-2. (See Doc. 21-1 at 5).5 This stands in stark contrast
to the Dram Shop Act, which provides:
Every wife, child, parent, or other person who shall be injured in
person, property, or means of support by any intoxicated person . . .
shall have a right of action against any person who shall . . . cause the
intoxication of such person for all damages actually sustained, as well
as exemplary damages.
ALA. CODE § 6-5-71 (emphasis added).
The ETSA does not include any description of the types of claims or
damages available to the districts. This distinction, together with the fact that two
courts sitting in this district have allowed common law claims to proceed alongside
a statutory claim under the ETSA, persuades the undersigned that Plaintiffs'
common law claims are not due to be dismissed as duplicative of their statutory
claim. See Madison Cty. Commc’ns Dist. v. BellSouth Telecomms., Inc., No. 061786-CLS, 2009 WL 9087783 (N.D. Ala. Mar. 31, 2009) (denying motion for
summary judgment on common law claims for breach of fiduciary duty,
negligence, and wantonness, as well as a claim for declaratory judgment under the
ETSA); see also Madison Cty. Commc’ns Dist. v. MagicJack Vocaltec, Ltd., et al,
No. 12-1922 (N.D. Ala. October 23, 2012) (Doc. 24) (denying motion to dismiss
concerning both a statutory claim under the ETSA and common law claims for
negligence per se, breach of fiduciary duty, and wantonness).
5
Accordingly,
The current version of the ETSA provides that the districts have the authority "[t]o sue and be
sued, to prosecute, and defend civil actions in any court having jurisdiction of the subject matter
and of the parties.” ALA. CODE § 11-98-4(f)(1).
10
Defendant's motion is due to be denied to the extent it seeks dismissal of Plaintiffs'
common law claims as duplicative of their statutory claim under the ETSA.
C.
Economic Loss Rule
Defendant contends Plaintiffs' claims on theories of negligence and
wantonness are due to be dismissed because the Amended Complaint alleges only
economic damages. In support of this argument, Defendant's principal brief cites a
single case from the Middle District of Alabama for the proposition that a "plaintiff
can only sue in tort when a defendant breaches the duty of reasonable care . . .
[and] such a breach causes personal injury or property damage." (Doc. 21 at 1516) (quoting Blake v. Bank of Am., N.A., 845 F. Supp. 2d 1206, 1210 (M.D. Ala.
2012)).
In response, Plaintiffs contend the Alabama Supreme Court has limited the
economic loss rule to product liability cases and noted the rule has not been
applied to dismiss tort claims alleging purely economic losses in other contexts.
(Doc. 23 at 13-14) (citing Lloyd Wood Coal Co. v. Clark Equip. Co, 543 So. 2d
671 (Ala. 1989); Pub. Bldg. Auth. v. St. Paul Fire and Marine Ins. Co., 80 So. 3d
171, 184 (Ala. 2010)). Plaintiffs also rightly note that the holding in Blake arose in
the context of a contractual relationship—a mortgage—and that the true thrust of
the holding is that "Alabama does not recognize a tort-like cause of action for the
breach of a duty created by contract." (Doc. 23 at 13) (quoting Blake, 845 F. Supp.
11
2d at 1210). Plaintiffs' reading of Blake appears to be correct; the sentence quoted
in Defendant's principal brief cites Vines v. Crescent Transit Co., which held that
"a negligent failure to perform a contract . . . is but a breach of the contract." 85
So. 2d 425, 440 (Ala. 1956).
Because there was no contractual relationship
between the parties here, Plaintiffs contend the economic loss rule is inapplicable.
In reply to this argument, Defendant cites Prickett v. BAC Home Loans, 946
F. Supp. 2d 1236 (N.D. Ala. 2013), for the proposition that a judge in this district
has applied the economic loss rule in a non-contractual setting. (Doc. 24 at 7).
However, the plaintiffs in Prickett asserted claims for negligent and wanton
mortgage servicing. Addressing this fact, the court noted, "[a]s in Blake, the duties
and breaches alleged by Plaintiffs clearly would not exist but for the contractual
relationship between the parties." Prickett, 946 F. Supp. 2d at 1244. In response
to the plaintiffs' argument that they did not have a contract with the loan servicer,
the court in Blake went on to state:
Even if Plaintiffs are correct [that no contract existed], the Court's
conclusion is nonetheless the same. The court in Blake addressed this
potential issue, noting that a borrower still cannot allege a tort claim
for a mortgage servicer's negligent conduct because an agent to an
agreement can "only incur tort liability . . . by causing personal injury
or property damages."
Prickett, 946 F. Supp. 2d 1236, 1244 (quoting Blake, 845 F. Supp. 2d at 1210)
(emphasis in original).
Accordingly, while Defendant cites Prickett, as a
categorical holding that economic injury alone does not give rise to tort liability,
12
that case arose in the context of a mortgagor-mortgagee relationship. The Alabama
Supreme Court has cited this line of federal cases but, again, only in the context of
claims for negligent or wanton mortgage servicing.
U.S. Bank Nat. Ass'n v.
Shepherd, --- So. 3d. ---, No. 1140376, 2015 WL 7356384, at *12 (Ala. Nov. 20,
2015) ("we note that the relationship between the [parties] is based upon the
mortgage and is therefore a contractual one") (emphasis in original).
Accordingly, because it appears Alabama courts do not apply the economic
loss rule in the circumstances presented in the instant case, Defendant's motion is
due to be denied to the extent it relies on that rule to seek dismissal of the
negligence and wantonness claims.
D.
Count II: Negligence
In addition to the grounds already addressed, Defendant contends: (1) the
Amended Complaint does not state a claim for negligence; and (2) the claim for
negligence per se is due to be denied because Plaintiffs are not within the class of
persons the statute was designed to protect.
(Doc. 21 at 15-16).
Instead,
Defendant contends the ETSA was designed to protect the public as a whole by
providing a means of communication during emergency circumstances. Defendant
further argues the statute does not define a standard of care, and therefore,
negligence per se is not implicated. (Doc. 21 at 16). The foregoing arguments are
persuasively resolved by two cases adjudicated in this district.
13
First, to the extent Defendant argues Plaintiffs have failed to state a
negligence claim under Rule 8, the court in BellSouth, on a motion for summary
judgment, found:
This court finds that [Plaintiff] has proven each of the elements of its
negligence claims. First, BellSouth was subject to a statutory duty to
collect the E911 charge and remit it to [Plaintiff]. Second, it is
undisputed that BellSouth has breached that duty by failing to collect
an E911 charge for each voice pathway capable of local exchange
service. Third, [Plaintiff] has suffered financial losses due to
BellSouth's failure to collect and remit the E911 charge in accordance
with the Act. Fourth, [Plaintiff]'s financial loss is the proximate result
of BellSouth's breach of its statutory duty.
BellSouth, 2009 WL 9087783, at *13.
Here, the Amended Complaint alleges the following facts in support of
Plaintiffs’ negligence claim: 1) Defendant had a duty to bill, collect, and remit 911
charges; 2) Defendant breached those duties; 3) Defendant’s breach proximately
caused injury to the Districts, specifically in the form of financial loss of resources;
and 4) the injuries were the same as the ones the ETSA was intended to prevent.
Accordingly, accepting the Amended Complaint's factual allegations as true,
Plaintiffs have stated a claim for negligence.
Next, to the extent Defendant contends the negligence per se claim is due to
be dismissed, the court in MagicJack, on a motion to dismiss, found:
Defendants next contend that the plaintiff’s claims for
negligence per se, breach of fiduciary duty, and wantonness should be
dismissed. Defendants are correct in stating that negligence per se
“requires that the statute have been enacted to protect a class of
14
persons,” as opposed to the general public. See Parker Bldg. Servs.
Co., v. Lightsey, 925 So. 2d 927, 931 (Ala. 2005). Plaintiff asserts a
negligence per se claim against the defendants for the violation of
Ala. Code §§ 11-98-5 and 11-98-5.1(c). These statutes assess a
charge on lines that allow for VoIP telephone service and that charge
funds emergency communication districts such as plaintiff. See Ala.
Code §§ 11-98-5 & 11-98-5.1(c). While the overall purpose of the
ETSA is the establishment of 911 service for the benefit of the general
public, the sections at issue are meant to fund emergency
communications districts, like plaintiff. The failure to remit the
applicable service charge, therefore, directly results in harm to the
plaintiff and the court declines to dismiss plaintiff’s negligence per se
claim.
MagicJack, No. 12-1922, Doc. 24 at 8-9.
The arguments presented in MagicJack regarding negligence per se are the
same arguments presented in Defendant's motion to dismiss in the instant case.
(See Doc. 21 at 16). The undersigned finds the reasoning in MagicJack to be
persuasive on this point.
Accepting the factual allegations in the Amended
Complaint as true, Plaintiffs have stated a claim for negligence per se.
Accordingly, for all of the foregoing reasons, Defendant's motion to dismiss is due
to be denied as to the negligence claim.
E.
Count III: Breach of Fiduciary Duty
Count III of the Complaint alleges breach of fiduciary duty against
Defendant.
(Doc. 19 at 11-13).
Defendant contends there is no fiduciary
relationship between itself and the Districts. (Doc. 21 at 16-17). Alabama law
defines a fiduciary relationship as existing where:
15
one person occupies toward another such a position of adviser or
counselor as reasonably to inspire confidence that he will act in good
faith for the other's interests, or when one person has gained the
confidence of another and purports to act or advise with the other's
interest in mind; where trust and confidence are reposed by one
person in another who, as a result, gains an influence or superiority
over the other; and it appears when the circumstances make it certain
the parties do not deal on equal terms, but, on the one side, there is an
overmastering influence, or, on the other, weakness, dependence, or
trust, justifiably reposed; in both an unfair advantage is possible. It
arises in cases in which confidence is reposed and accepted, or
influence acquired, and in all the variety of relations in which
dominion may be exercised by one person over another.
Power Equipment Co., Inc. v. First Alabama Bank, 585 So. 2d 1291, 1297-98 (Ala.
1991) (quoting Bank of Red Bay v. King, 482 So. 2d 274 (Ala. 1985)).
In BellSouth, the court found at summary judgment that the plaintiff
established a fiduciary relationship with Bellsouth where it demonstrated: (1) it had
placed its trust and confidence in BellSouth to accurately assess the 911 charges
each month: (2) BellSouth submitted monthly statements to the plaintiff stating it
had billed and collected the charges in accordance with the ETSA; and (3) the
plaintiff was forced to trust that BellSouth's statements reflecting its collections
and remittances were correct.
BellSouth, 2009 WL 9087783, at *13. While
BellSouth contended there was no fiduciary relationship because it had no superior
knowledge over the plaintiff, the court noted that superior knowledge is only one
factor in finding a fiduciary relationship. Id. Under these circumstances, the court
16
found the plaintiff "established that BellSouth breached its fiduciary duty to
[Plaintiff] to collect and remit the E911 charge in accordance with the Act.” Id.
Here, the Amended Complaint alleges §§ 11-98-1 and 11-98-5.1 created a
special and confidential relationship with Defendant.
(Doc. 19 at 11).
Specifically, Plaintiffs allege they relied on Defendant to act in good faith due to
their inability to calculate the number of access numbers provided to customers of
VoIP and that they were, therefore, unable to calculate the amount of charges
Defendant should have paid.
(Id. at 12).
The Amended Complaint alleges
Defendant was in a dominant position over the Districts because Defendant
“determined the amount of 911 Charges received by the Districts, and as those 911
Charges were the principal source of operating capital funds, the Defendant
effectively exercised a level of control over the Districts.” (Id.). Plaintiffs also
allege they relied on Defendant “to act in good faith and with honesty because the
Districts are not aware of and had no way of calculating the number of ten-digit
access numbers provided to customers of VoIP or similar service,” and that
Defendant had “sole and exclusive control of that information.” (Doc. 19 at 12).
While Defendant cites Plaintiff's statutory right to audit the 911 charges, this is
similar to the circumstances presented in Bellsouth, in which the defendant argued
its knowledge was not superior to that of the plaintiffs. There, the court found the
lack of superior knowledge was but one factor to be considered, and its absence did
17
not preclude the existence of a fiduciary relationship. See BellSouth, 2009 WL
9087783, at *13.
Accepting the factual allegations in the Amended Complaint as true,
Plaintiffs have sufficiently pled the existence of a fiduciary relationship.
Accordingly, Defendant's motion to dismiss the claim for breach of fiduciary duty
is due to be denied.
F.
Count IV: Wantonness
In addition to the arguments already addressed, Defendant contends the
Amended Complaint fails to state a claim for wantonness. (Doc. 21 at 18-19). A
plaintiff asserting wantonness under Alabama law must show the defendant "with
reckless indifference to the consequences, consciously and intentionally . . .
omitted some known duty with knowledge of the existing conditions and that this
act or omission would likely or probably lead to the plaintiff’s injury." Richards v.
Michelin Tire Corp., 21 F.3d 1048, 1057 (11th Cir. 1994) (emphasis in original)
(citing Joseph v. Stuggs, 519 So. 2d 952, 954 (Ala. 1988)).
Here, the Amended Complaint alleges Defendant purposefully failed to
collect and remit 911 Charges due under the ETSA, "with a reckless disregard for
the wellbeing of the Districts with knowledge that the underpayment of 911
Charges would likely cause injury or damage.” (Doc. 19 at 13). Plaintiffs further
allege Defendant did so to gain a competitive advantage and that its failure to
18
comply with the ETSA caused the Plaintiffs to lose operating and capital funds in
addition to impairing their ability to provide 911 services.
(Id.).
In similar
circumstances, the court in MagicJack found these allegations sufficient to state a
claim for wantonness. MagicJack, No. 12 -1922, Doc. 24 at 9-10.
Accepting the factual allegations in the Amended Complaint as true,
Plaintiffs have stated a claim for wantonness. Accordingly, Defendant's motion to
dismiss is due to be denied as to the wantonness claim.
G.
Under
Count V: Negligent Misrepresentation/Fraud
Alabama
law,
the
elements
of
a
claim
for
fraudulent
misrepresentation are: “(1) a false representation (2) concerning a material existing
fact (3) relied upon by the plaintiff (4) who was damaged as a proximate result.”
Fisher v. Comer Plantation, Inc., 772 So. 2d 455, 463 (Ala. 2000). As previously
noted, under the confines of Rule 9(b), a claim for fraudulent misrepresentation
must allege:
(1) precisely what statements were made in what documents or oral
representations or what omissions were made, and (2) the time and
place of each such statement and the person responsible for making
(or, in the case of omissions, not making) same, and (3) the content of
such statements and the manner in which they misled the plaintiff, and
(4) what the defendants obtained as a consequence of the fraud.
Ziemba, 256 F.3d at 1202. Simply put, “Rule 9(b) requires that a plaintiff set forth
the who, what, when, where, and how of the alleged fraud.” Erb v. Advantage
19
Sales & Marketing LLC, No. 11-2629-SLV, 2012 WL 3260446, at *3 (N.D. Ala.
Aug. 3, 2012) (internal quotation omitted).
Here, regarding the elements of fraud, the Amended Complaint alleges
Defendant under-reported the number of lines subject to 911 charges and the
number of exempt customers within each district. (Doc. 19 at 14). The complaint
further notes that, each time BellSouth made these statements, it certified that the
information was "true, complete and accurate." (Id.). The Amended Complaint
alleges these misstated facts were material because Plaintiffs relied upon the 911
charges to fund their operations.
(Id. at 15).
Plaintiffs contend these
misstatements caused financial harm by decreasing the amount of operating funds
and impaired their ability to provide 911 services. (Id.).
As to the requirements of Rule 9(b), the Amended Complaint states
Defendant made the alleged misstatements in its monthly remittance forms prior to
October 1, 2013. Plaintiffs assert these underreporting of lines subject to 911
charges and the total amount of charges due misled the Plaintiffs and caused them
to accept less than all of the 911 charges to which they were entitled.
The
Amended Complaint alleges Defendant purposefully underreported the amount of
911 charges due in order to decrease their operating cost and, thereby, to gain a
competitive advantage.
While not overly generous with factual detail, these
allegations state a claim for fraud with the particularity required by Rule 9(b).
20
Accordingly, Defendant's motion to dismiss will be denied as to Plaintiffs' fraud
claim.
IV. CONCLUSION
For all of the foregoing reasons, accepting the factual allegations in the
Amended Complaint as true, Plaintiffs have stated plausible claims placing
Defendant on notice of the claims asserted and the conduct about which they
complain. Accordingly, Defendant’s motion to dismiss Plaintiffs' First Amended
Complaint (Doc. 20) is DENIED.
DONE this 6th day of October, 2016.
______________________________
STACI G. CORNELIUS
U.S. MAGISTRATE JUDGE
21
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