Birmingham Emergency Communications District v. Bandwith.com Inc et al
Filing
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MEMORANDUM OPINION. Signed by Judge R David Proctor on 4/2/2018. (JLC)
FILED
2018 Apr-02 PM 02:09
U.S. DISTRICT COURT
N.D. OF ALABAMA
IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ALABAMA
SOUTHERN DIVISION
BIRMINGHAM EMERGENCY
COMMUNICATIONS DISTRICT,
Plaintiff,
v.
BANDWIDTH.COM, INC., et al.,
Defendants.
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Case No. 2:17-cv-00395-RDP
MEMORANDUM OPINION
This matter is before the court on Plaintiff’s Motion for Leave to File First Amended
Complaint. (Doc. # 32). The Motion is fully briefed. (Docs. # 32, 34, 35). For the reasons
explained below, the Motion is due to be granted.
I. Relevant Procedural History
On March 13, 2017, Plaintiff Birmingham Emergency Communication District
(“Plaintiff” or “the District”) filed this action against Defendants Bandwidth.com, Inc. and
Bandwidth.com CLEC, LLC (collectively “Defendants” or “Bandwidth”), alleging (1) violation
of the Emergency Telephone Services Act (“ETSA”),1 Ala. Code § 11-98-1 et seq., (2)
negligence / negligence per se / gross negligence / recklessness, (3) breach of fiduciary duty, (4)
wantonness, and (5) misrepresentation / fraud. (Doc. # 1). Specifically, Plaintiff alleged that
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The ETSA was amended in 2012 (effective October 1, 2013); however, this case involves events occurring prior to
October 1, 2013. (Doc. # 1 at ¶ 16). Accordingly, the court only refers to and considers the pre-amendment version
of the ETSA.
The ETSA established 911 as the statewide emergency telephone number and created Emergency Communication
Districts (“ECDs”) in order to form local emergency telephone services (“911 services”). (Docs. # 1 at ¶ 11; 11 at p.
2). Prior to October 1, 2013, the ETSA authorized municipalities and counties to assess charges on exchange access
lines and Voice over Internet Protocol telephone services (“911 charges”) in order to fund the ECDs’ 911 services.
(Docs. # 1 at ¶ 2, 11; 11 at p. 2).
Bandwidth failed to bill, collect, and remit 911 charges in accordance with the ETSA, causing
Plaintiff to suffer substantial financial loss.
(Id. at ¶ 16-17, 26-27).
On May 31, 2017,
Bandwidth moved to dismiss Count I (violation of the ETSA) to the extent that the District
sought to impose liability on Bandwidth as a wholesaler and not in connection with Bandwidth’s
retail business. (Doc. # 11). The court found that the ETSA did not require telecommunication
wholesalers to collect and remit 911 charges, and granted Defendants’ Partial Motion to Dismiss
Count I of Plaintiff’s Complaint (Doc. # 11) on December 5, 2017. (Docs. # 26, 27).
On January 11, 2018, Plaintiff filed the instant Motion for Leave to File First Amended
Complaint. (Doc. # 32). In its Proposed Amended Complaint Plaintiff adds (among other
alleged facts) allegations that Bandwidth “treated the vast majority of its customers as being
‘exempt from taxation,’ and thus exempt from 911 Charges, even though the Defendant did not
obtain exemption certificates or other documentation to substantiate the tax exempt status” and
that “[t]ypically, service providers that sell telephone service ‘at wholesale’ must obtain
exemption certificates from their ‘wholesale’ customers.”
(Doc. # 32-1 at ¶ 4, 21-23).
Defendants oppose this Motion because they argue that (1) Plaintiff’s new theory of recovery is
incompatible with the court’s previous Memorandum Opinion (Doc. # 26) and is based on an
unsupported reading of the ETSA and (2) Plaintiff is seeking an “impermissible second bite at
the apple.” (See Doc. # 34).
II. Standard of Review
Rule 15 of the Federal Rules of Civil Procedure governs amended and supplemental
pleadings. Absent circumstances not relevant here, a party may amend the pleadings only by
leave of the court or by written consent of the adverse party. See Fed R. Civ P. 15(a)(2). “The
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court should freely give leave when justice so requires.” Id. “Ordinarily, a party must be given
at least one opportunity to amend before the district court dismisses the complaint.”
See
Corsello v. Lincare, Inc., 428 F.3d 1008, 1014 (11th Cir. 2005). That is, “[u]nless a substantial
reason exists to deny leave to amend, the discretion of the District Court is not broad enough to
permit denial.” Fla. Evergreen Foliage v. E.I. DuPont De Nemours and Co., 470 F.3d 1036,
1041 (11th Cir. 2006) (quotation marks omitted).
The court, however, need not allow an amendment that would be futile. See Bryant v.
Dupree, 252 F.3d 1161, 1163 (11th Cir. 2001). Nor must a court allow an amendment where
there has been undue delay, bad faith, dilatory motive, or repeated failure to cure deficiencies by
amendments previously allowed or where allowing the amendment would cause undue prejudice
to the opposing party. See Halpin v. Crist, 405 Fed. App’x 403, 408-09 (11th Cir. 2010)
(quoting Corsello, 428 F.3d at 1014); see also Maynard v. Bd. of Regents of Div. of Univs., 342
F.3d 1281, 1287 (11th Cir. 2003) (holding that the district court did not abuse its discretion in
denying a motion to amend filed on the last day of discovery because granting the motion
“would have produced more attempts at discovery, delayed disposition of the case, likely
prejudice . . . [and] there seems to be no good reason why [the movant] could not have made the
motion earlier”). A district court may, in the exercise of its inherent power to manage the
conduct of litigation before it, deny leave to amend a complaint, “so long as it does not outright
refuse to grant the leave without any justifying reason.” Equal Rights Center v. Niles Bolton
Assocs., 602 F.3d 597, 603 (4th Cir. 2010); see also Reese v. Herbert, 527 F.3d 1253, 1263 (11th
Cir. 2008).
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III. Analysis
Plaintiff alleges that certain services of Bandwidth may not qualify as wholesaler services
within the meaning of the ETSA and that its Amended Complaint makes additional allegations
clarifying this position. (Docs. # 32, 35). Defendants counter that Bandwidth’s Amended
Complaint is futile and seeks an impermissible second bit at the apple. (Doc. # 34). In arguing
futility, Bandwidth contends that the District’s Amended Complaint is incompatible with the
court’s previous decision in this case and the ETSA. (Doc. # 34 at p. 4-5). However, Plaintiff’s
allegations that wholesale service providers typically obtain exemption certificates to prove their
wholesale status and that Defendants have not offered proof of their wholesale status is not
necessarily incompatible with the court’s previous ruling that the ETSA did not impose a duty on
telecommunication wholesalers prior to October 1, 2013. Ultimately, at this stage, there is
insufficient legal authority for the court to make a ruling that Plaintiff’s Amended Complaint is
futile.
“Prejudice to the defendant is the most frequent reason courts deny motions for leave to
amend the complaint.” Giraldo v. Drummond Co., Inc., No. 2:09-cv-1041-RDP, 2011 WL
13136941, at *2 (N.D. Ala. Sept. 27, 2011) (citing 6 Fed. Prac. & Pro. 2d § 1487). Here,
Defendants have made no showing that they would be prejudiced by this Amended Complaint or
that there has been undue delay. As Plaintiff notes, discovery in this case has not concluded, and
the court has previously suggested that the parties may need to propose a new scheduling order.
(Docs. # 22; 29 at p. 12; 32 at p. 4). Because the court finds that Plaintiff’s “‘more carefully
drafted complaint might state a claim,’” justice requires that Plaintiff be granted leave to amend
its complaint. Bryant, 252 F.3d at 1163 (quoting Bank v. Pitt, 928 F.2d 1108, 1112 (11th Cir.
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1991)) (emphasis added); see Fed R. Civ P. 15(a)(2).
III. Conclusion
For the reasons outlined above, Plaintiff’s Motion for Leave to Amend Complaint is due
to be granted. An Order consistent with this Memorandum Opinion will be entered.
DONE and ORDERED this April 2, 2018.
_________________________________
R. DAVID PROCTOR
UNITED STATES DISTRICT JUDGE
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