Inteliquent, Inc. v. Free Conferencing Corporation et al
Filing
381
MEMORANDUM Opinion and Order Signed by the Honorable John Robert Blakey on 5/23/2018. Mailed notice(gel, )
Case: 1:16-cv-06976 Document #: 381 Filed: 05/23/18 Page 1 of 6 PageID #:9409
UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
INTELIQUENT, INC.,
Plaintiff,
Case No. 16-cv-6976
v.
FREE CONFERENCING CORP., et al.,
Judge John Robert Blakey
Defendants.
MEMORANDUM OPINION AND ORDER
This case involves a complex telecommunications dispute between, among
others, Plaintiff Inteliquent and Defendants Free Conferencing, HD Tandem, and
Carrier X. Free Conferencing, HD Tandem, and Carrier X filed a third amended
counterclaim in February 2018, asserting five counts against Inteliquent and
Matthew Carter, formerly Inteliquent’s President and Chief Executive Officer.
[336]. Inteliquent moved to dismiss two of the counts. [350]. For the reasons
explained below, this Court grants Inteliquent’s motion.
This Court presumes familiarity with, and incorporates by reference, its prior
opinion partially granting Inteliquent’s motion to dismiss the second amended
counterclaim. [168]. Thus, this opinion omits a background section.
I.
Legal Standard
A counterclaim must meet the same standard as a complaint to survive a
motion to dismiss under Federal Rule of Civil Procedure 12(b)(6). See Cozzi Iron &
Metal, Inc. v. U.S. Office Equip., Inc., 250 F.3d 570, 574 (7th Cir. 2001). Thus, a
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counterclaim must provide a “short and plain statement of the claim” showing that
the pleader merits relief, Fed. R. Civ. P. 8(a)(2), so the defendant has “fair notice” of
the claim “and the grounds upon which it rests,” Bell Atl. Corp. v. Twombly, 550
U.S. 544, 555 (2007) (quoting Conley v. Gibson, 355 U.S. 41, 47 (1957)).
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counterclaim must also contain “sufficient factual matter” to state a facially
plausible claim—one that “allows the court to draw the reasonable inference” that
the defendant committed the alleged misconduct. Ashcroft v. Iqbal, 556 U.S. 662,
678 (2009) (quoting Twombly, 550 U.S. at 570). This plausibility standard “asks for
more than a sheer possibility that a defendant has acted unlawfully.” Williamson v.
Curran, 714 F.3d 432, 436 (7th Cir. 2013).
In evaluating a counterclaim on a Rule 12(b)(6) motion, this Court accepts all
well-pleaded allegations as true and draws all reasonable inferences in the
counterclaimant’s favor. Iqbal, 556 U.S. at 678. This Court does not, however,
accept legal conclusions as true. Brooks v. Ross, 578 F.3d 574, 581 (7th Cir. 2009).
On a motion to dismiss, this Court may consider the counterclaim itself, documents
attached to the counterclaim, documents central to the counterclaim and to which
the counterclaim refers, and information properly subject to judicial notice. See
Williamson, 714 F.3d at 436.
II.
Analysis
A.
Count II: Unjust Enrichment
Count II claims that Inteliquent unjustly enriched itself by accepting HD
Tandem’s voice termination services without paying for them. [336] ¶¶ 141–46.
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Inteliquent argues that this claim fails because an express contract governed its
relationship with HD Tandem. [351] at 4–5.
Under Illinois law, an unjust enrichment claim fails when “the claim rests on
the breach of an express contract.” Shaw v. Hyatt Int’l Corp., 461 F.3d 899, 902 (7th
Cir. 2006) (citing Guinn v. Hoskins Chevrolet, 826 N.E.2d 681, 704 (Ill. 2005)). Even
if the claimant pleads unjust enrichment in the alternative, the claim “necessarily
fails” if the parties do not dispute the existence and validity of a contract between
them. Hickman v. Wells Fargo Bank N.A., 683 F. Supp. 2d 779, 797 (N.D. Ill. 2010)
(applying Illinois law and dismissing a similar claim with prejudice).
Here, Inteliquent and HD Tandem agree that a valid, enforceable contract—
the Master Services Agreement (MSA)—governed how HD Tandem provided voice
termination services to Inteliquent.
See [315-1] at 412 (MSA attached to
Inteliquent’s third amended complaint as an exhibit); [336] ¶ 36 n.1 (the third
amended counterclaim directs this Court to Inteliquent’s MSA exhibit). Because
the parties had a valid, enforceable contract, this Court dismisses Count II with
prejudice. See Hickman, 683 F. Supp. 2d at 797.
B.
Count V: Fraudulent Concealment
Count V claims that, during a February 2016 meeting of senior managers
from Inteliquent and Free Conferencing, Inteliquent concealed certain information
about “fraudulent routing” that it used to slow down Free Conferencing’s network.
[336] ¶¶ 167–74. Inteliquent allegedly concealed this information despite knowing
that Free Conferencing expected, pursuant to the parties’ Master Addendum, that
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Inteliquent would cooperate to discover the source of the routing issues plaguing
Free Conferencing’s network. Id. Inteliquent argues that this claim fails because
Inteliquent had no duty to disclose that information, and the alleged wrongdoing
falls within the counterclaim for breach of contract. [351] at 6–7.
To state a claim for fraudulent concealment under Illinois law, a claimant
must allege, among other things, that a party concealed a material fact while under
a duty to disclose that fact to the claimant. See Connick v. Suzuki Motor Co., Ltd.,
675 N.E.2d 584, 593 (Ill. 1996). Ordinarily, such a duty arises from a fiduciary or
“special trust” relationship between the parties. See Wigod v. Wells Fargo Bank,
N.A., 673 F.3d 547, 570 (7th Cir. 2012). Illinois courts also recognize, however, that
silence during a business transaction—when accompanied by deceptive conduct or
suppression of material facts—creates a duty to disclose. See Henderson Square
Condo. Ass’n v. LAB Townhomes, L.L.C., 16 N.E.3d 197, 216 (Ill. App. Ct. 2014);
W.W. Vincent & Co. v. First Colony Life Ins. Co., 814 N.E.2d 960, 969 (Ill. App. Ct.
2004); Russow v. Bobola, 277 N.E.2d 769, 771 (Ill. App. Ct. 1972).
Free Conferencing and HD Tandem do not argue that Inteliquent had a
fiduciary relationship with them; instead, they argue that Inteliquent’s silence and
deceptive conduct during the February 2016 meeting created a duty for Inteliquent
to reveal what it knew about the disruption of calls through Free Conferencing’s
network via the fraudulent routing. [364] at 13. But like the cases cited above,
each case that the counterclaimants offer to support their claim involved a
defendant who concealed a material fact during the formation of a contract. See,
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e.g., O’Donoghue v. Inland Bank & Trust, No. 15-cv-11603, 2017 WL 5891199, at *3
(N.D. Ill. Nov. 27, 2017) (despite knowing otherwise, company orally represented
during merger negotiations that regulatory authorities would approve the merger);
Henderson Square, 16 N.E.3d at 202 (property developers remained silent about
defects in units to induce sales); The Clearing Corp. v. Fin. & Energy Exch. Ltd., No.
09-cv-5383, 2010 WL 2836717, at *1 (N.D. Ill. July 16, 2010) (corporation made false
representations to encourage the plaintiff to contract it as a service provider);
Heider v. Leewards Creative Crafts, Inc., 613 N.E.2d 805, 814 (Ill. App. Ct. 1993)
(warehouse seller remained silent about asbestos in the building when prospective
buyer asked about the condition of certain areas).
In contrast, the parties here entered the MSA and the Master Addendum
well before February 2016. The Master Addendum contains a fraud provision that
Free Conferencing and HD Tandem interpret as requiring Inteliquent to cooperate
with Free Conferencing to address any “fraudulent traffic” on Free Conferencing’s
network. [336] ¶ 76. In other words, Count V essentially alleges that Inteliquent
breached its obligations under the Master Addendum by failing to disclose its
fraudulent routing practices. See [364] at 5 (“Inteliquent had a duty to disclose this
information based on the Fraud Provision of the Master Addendum.”). Repackaged
breach-of-contract claims cannot support a cause of action for fraudulent
concealment. See Greenberger v. GEICO Gen. Ins. Co., 631 F.3d 392, 395 (7th Cir.
2011). Thus, this Court dismisses Count V.
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III.
Conclusion
This Court grants Inteliquent’s motion to dismiss Counts II and V of the
third amended counterclaim [350]. This Court dismisses Count II with prejudice
and Count V without prejudice because this Court has not previously ruled on
Count V.
If Free Conferencing, HD Tandem, and Carrier X choose to file an
amended counterclaim, they must do so by June 15, 2018.
This Court strikes the motion hearing set for June 12, 2018 and sets this case
for a final discovery status on September 20, 2018 at 9:45 a.m. in Courtroom 1203.
All other dates and deadlines stand.
Dated: May 23, 2018
Entered:
____________________________________
John Robert Blakey
United States District Judge
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