Alexander et al v. Global Tel Link Corporation et al

Filing 51

ORDER granting 33 Motion to Dismiss; finding as moot 34 Motion Take Judicial Notice. Plaintiffs are granted 14 days within which to file an amended complaint. Signed by District Judge Louis Guirola, Jr on 07/18/2018 (Guirola, Louis)

IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF MISSISSIPPI
NORTHERN DIVISION
ELIZABETH ALEXANDER,
individually and on behalf of all others
similarly situated; et al.
v.

PLAINTIFFS
CAUSE NO. 3:17cv560-LG-RHW

GLOBAL TEL LINK CORPORATION;
et al.

DEFENDANTS

MEMORANDUM OPINION AND ORDER GRANTING MOTION TO
DISMISS FOR FAILURE TO STATE A CLAIM
BEFORE THE COURT is the [33] Motion to Dismiss Pursuant to Fed. R. Civ.
P. 12(b)(6) filed by Defendant Global Tel Link Corporation (“GTL”). The Motion
argues that Plaintiffs’ Second Amended Complaint fails to state a claim for relief
and should be dismissed. The Motion is fully briefed. Having considered the
submissions of the parties, the record, and relevant law, the Court concludes that
Defendant’s [33] Motion to Dismiss Pursuant to Fed. R. Civ. P. 12(b)(6) should be
granted. However, Plaintiffs will be granted leave to amend their Complaint. Also
pending is GTL’s [34] Motion to Take Judicial Notice, which the Court finds moot.
I. BACKGROUND
This litigation involves an alleged conspiracy on the part of all named
Defendants to charge exorbitant, unfair, and unapproved prices for inmate calling
services at prisons operated by the Mississippi Department of Corrections
(“MDOC”) and at Mississippi county jails. (See 2d Am. Compl., ECF No. 11.)
Plaintiffs, who are Mississippi inmates and family members of inmates, allege a

“concerted campaign of bribery, kickbacks, and public corruption” through which
“Defendants gained a long-term monopoly over telecommunications between family
members and friends and their loved ones incarcerated in various facilities in the
State of Mississippi.” (Id. at 2-4.) Though not presently at issue, Plaintiffs seek
class certification. Named defendants include GTL, a provider of inmate calling
services; GTEL Holdings, Inc., the parent company of GTL; GTEL Acquisition
Corp., the parent company of GTEL Holdings, Inc.; GTEL Holding LLC, the parent
company of GTEL Acquisition Corp.; Sam Waggoner, a former consultant for and
agent of GTL; and Christopher Epps, the former Commissioner of MDOC. (See id. at
5-6.) By prior [50] Order, the Court dismissed GTEL Holdings, Inc. and GTEL
Acquisition Corp. for lack of personal jurisdiction. Both Waggoner and Epps are
currently serving federal prison sentences related to their alleged conduct.
According to Plaintiffs’ Second Amended Complaint the State of Mississippi
first awarded GTL a contract to provide inmate calling services to MDOC facilities
on December 13, 2005. (2d Am. Compl. 8, ECF No. 11.) This contract has been
repeatedly renewed without competing bids, and GTL remains the provider of
inmate calling services to MDOC facilities despite Epps’ and Waggoner’s related
criminal convictions. (Id. at 8, 12, 15.) The contract authorized a fixed rate
structure for calls, but Plaintiffs maintain that GTL “grossly” inflated the cost to
end users by including various unapproved surcharges, ancillary charges, and
additional per-call fees. (Id. at 8-9, 12.) Plaintiffs allege that these inflated fees –
which ran afoul of the inmate calling services contract and filed rates with the

–2–

Mississippi Public Service Commission (“PSC”) – were intentionally overlooked by
Epps in exchange for Epps’ receipt of a share of the increased profits. (Id. at 10-11.)
To effect this arrangement, GTL’s regional manager, Robert Orso, doubled
GTL’s monthly payment to Waggoner in 2011, and Waggoner funneled half of that
increase to Epps. (Id. at 10.) Plaintiffs state that these kickbacks to Epps were
intended to “curry favor with Epps for the purpose of influencing Epps’ decision
regarding GTL and its contract with MDOC and with local jails subject to Epps’
influence.” (Id. at 10-11.) Although Epps was only officially in charge of MDOC,
Plaintiffs maintain that his “influence and ability to promote GTL’s interests
extended far beyond the MDOC facilities under his direct supervision and control;”
Epps “strong-armed” local jails into using GTL’s inmate calling services by
threatening to remove state inmates – and their related per diem payments – from
these jails. (Id. at 11.)
Plaintiffs assert that this arrangement effectively ceded control of MDOC
affairs to GTL, who sought every opportunity to increase the prices paid by
Plaintiffs. (Id.) Plaintiffs submit that Waggoner found additional ways to increase
GTL’s revenue besides the inflated calling service fees: “Waggoner lobbied Epps to
allow GTL to provide video communication services between inmates and their
visitors,” which would be offered at “significantly higher cost than traditional phone
service.” (Id. at 12.) Epps approved this additional service, which increased both
GTL’s revenue and the kickbacks he received. (Id. at 13.)

–3–

Plaintiffs allege that Waggoner paid Epps over $300,000 in kickbacks and
bribes from 2011 through 2014 with money from GTL. (Id.) They maintain that
“GTL knew, or had every reason to know and should have known, that the money it
was paying Waggoner was being used to pay bribes and kickbacks to Epps for the
purpose of obtaining and retaining the aforementioned contract.” (Id. at 14.)
Plaintiffs claim that they have suffered monetary damages as a result of this
alleged scheme to impose exorbitant fees for inmate telephone calls. (Id. at 15.)
Plaintiffs characterize these actions in furtherance of acquiring and maintaining
control of MDOC as a pattern of racketeering activity conducted by a criminal
enterprise consisting of Epps, Waggoner, and GTL. (Id. at 14.) Accordingly,
Plaintiffs assert claims pursuant to the Racketeer Influenced and Corruption
Organizations Act (“RICO”), 18 U.S.C. §§ 1961(a)-(d), and various state law causes
of action. (Id. at 19-25.)
On September 22, 2017, Defendant GTL filed the instant Motion to Dismiss
for failure to state a claim pursuant to Federal Rule of Civil Procedure 12(b)(6). The
parties finished briefing the Motion on February 2, 2018.

II. DISCUSSION
a. Motion to Dismiss Standard
To survive a motion to dismiss pursuant to Rule 12(b)(6), “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 Bell Atl.

–4–

Corp. v. Twombly, 550 U.S. 544, 570 (2007)). A claim is facially plausible “when the
plaintiff pleads factual content that allows the court to draw the reasonable
inference that the defendant is liable for the misconduct alleged.” Id.
In deciding a Rule 12(b)(6) motion to dismiss, the Court accepts all well
pleaded facts as true and views them in the light most favorable to Plaintiff. New
Orleans City v. Ambac Assur. Corp., 815 F.3d 196, 199 (5th Cir. 2016). But “the
complaint must allege more than labels and conclusions, a formulaic recitation of
the elements of a cause of action will not do, and factual allegations must be enough
to raise a right to relief above the speculative level.” Jabaco, Inc. v. Harrah’s
Operating Co., Inc., 587 F.3d 314, 318 (5th Cir. 2009). “While legal conclusions can
provide the complaint’s framework, they must be supported by factual allegations.”
Iqbal, 556 U.S. at 664. “Threadbare recitals of the elements of a cause of action,
supported by mere conclusory statements, do not suffice.” Id. at 678.
Generally, if a court considers materials outside of the pleadings, the motion
to dismiss must be treated as a motion for summary judgment. Causey v. Sewell
Cadillac-Chevrolet, Inc., 394 F.3d 285, 288 (5th Cir. 2004). However, “[d]ocuments
that a defendant attaches to a motion to dismiss are considered part of the
pleadings if they are referred to in the plaintiff's complaint and are central to her
claim.” Id. GTL has attached numerous exhibits to its Motion, of which GTL
separately asks the Court to take judicial notice. (See Mot. Take Judicial Notice,
ECF No. 34.) These exhibits include GTL’s 2005 contract with MDOC, GTL’s initial
bid response, GTL’s 2016 contract with MDOC, the Mississippi Attorney General’s

–5–

complaint against GTL in a separate state court action, the Order of Dismissal in
that state court action, the settlement agreement that resolved that state court
action, GTL’s telecommunications tariffs approved by the PSC, and the PSC’s Order
initiating a generic docket on February 4, 1992 to consider the provision of coinless
telephone services to Mississippi inmates.
The Court has reviewed these documents. Although many of them are
referenced in Plaintiffs’ complaint or are otherwise public documents, GTL
ultimately asks the Court to consider these documents in ruling on the 12(b)(6)
motion to dismiss. However, the Court may not rely on these documents without
converting GTL’s Motion to Dismiss to a Motion for Summary Judgment. But see S.
Indus. Contractors, LLC v. Neel-Schaffer, Inc., No. 1:17CV255-LG-JCG, 2017 WL
5906041, at *1 (S.D. Miss. Nov. 30, 2017) (“This contract is referred to in Southern
industrial’s Complaint, and the contract is central to Southern Industrial’s claims,
because Southern Industrial claims that it is a third-party beneficiary of that
contract.”).
b. Analysis
Plaintiffs’ Complaint asserts the following causes of action: (1) racketeering
activity and conspiracy in violation of RICO, (2) negligence per se predicated upon
the Mississippi Consumer Protection Act (“MCPA”), (3) civil conspiracy, (4) common
law fraud, (5) breach of fiduciary duty and conspiracy to breach a fiduciary duty, (6)
breach of duty of good faith and fair dealing, (7) unjust enrichment, and (8) punitive
damages. GTL makes numerous arguments in support of its position that each and

–6–

every one of Plaintiffs’ claims should be dismissed for failure to state a claim.
However, because the Court finds that Plaintiffs have failed to adequately allege
causation and damages in any of their claims, the Court need not proceed further
through GTL’s Motion and address the merits of each individual claim.
As GTL notes, “[c]ausation and injury are elements of Plaintiffs’ claims.”
(Def.’s Mem. Supp. 8, ECF No. 37.) But GTL maintains that Plaintiffs’ complaint
fails to plausibly allege that GTL’s conduct caused Plaintiffs’ injuries. GTL argues
(1) that the complaint does not allege that Epps had any control over the
Mississippi Department of Information Technology Services (“ITS”), which
administered the bidding process by which GTL was awarded the initial contract in
2005, (2) that Plaintiffs fail to allege facts showing that Waggoner’s payments to
Epps actually affected the rates Plaintiffs’ paid, and (3) that Plaintiffs fail to
identify any surcharges or ancillary charges they actually paid, let alone whether
and to what extent they were made different by Waggoner’s payments.
GTL’s first argument challenges the evidentiary basis for Plaintiffs’ claims.
Plaintiffs’ allegations concerning Epps have little to do with the initial contract
awarded in 2005 – they assert that the contract was repeatedly renewed without
bid and at Epps’ behest. Plaintiffs’ allege that Robert Orso, GTL’s regional
manager, increased GTL’s payments to Waggoner so that Waggoner could increase
his payments to Epps, and that these payments were to ensure that GTL
maintained its MDOC contract and could continue to charge excessive and
unapproved fees for inmate calling services. Orso is alleged to have acted on behalf

–7–

of GTL to funnel money through Waggoner to Epps. ITS is not alleged to have had
a role in this arrangement, and the Court may not here weigh evidence to
determine whether ITS – rather than Epps – actually had control over awarding the
MDOC inmate calling services contract. As to GTL’s second argument, it is
plausible that these alleged bribes caused Epps to allow GTL to charge excessive
and unapproved fees. Plaintiffs need not provide additional evidentiary support at
the pleading stage connecting these bribes to the rates charged in order to survive a
motion to dismiss.
However, the Court finds that Plaintiffs’ failure to properly identify the
unapproved surcharges or ancillary fees actually paid is fatal to each of the claims
alleged. Plaintiffs’ factual allegations primarily tell a story in which Defendants
conspired to charge unreasonably high rates by defrauding the public at large. But,
in their Response in Opposition, Plaintiffs withdraw any claims premised upon
having been charged “unreasonable” rates for services, emphasizing that they “are
not challenging or seeking to alter or amend the applicable filed rates or services.”
(Pls.’ Resp. Opp. 11, ECF No. 45.) Thus, what remains are Plaintiffs’ causes of
action premised upon having been charged surcharges and ancillary fees that were
not approved by the PSC.
To plausibly allege that GTL charged fees unapproved by the PSC, Plaintiffs
must show how the fees actually charged were inconsistent with the approved fees.
Atlas Trading Conglomerate Inc. v. AT&T Inc., 714 F. App’x 318, 322 (5th Cir.
2017). Plaintiffs’ Second Amended Complaint does not identify the unapproved

–8–

charges to which they were allegedly subjected. In their response brief, they
mention a “LEC Billing Fee,” a “Carrier Access Rec. Fee,” an “AdvancePay
Transaction Fee,” and a “Regulatory and Carrier Cost Recovery Fee.” (Pls.’ Resp.
Opp. 4-5, ECF No. 45). However, Plaintiffs may not supplement their allegations
through their briefing. See Car Carriers, Inc. v. Ford Motor Co., 745 F.2d 1101,
1107 (7th Cir. 1984) (“[I]t is axiomatic that the complaint may not be amended by
the briefs in opposition to a motion to dismiss.”). Even if this passing mention of
these various allegedly unapproved fees were present in the Second Amended
Complaint, Plaintiffs would still fail to state a plausible claim for relief. See Atlas,
714 F. App’x at 321-22 (“Atlas points out that it pled four types of charges assessed
by the ILECs but allegedly ‘not found in any applicable switched-access tariff’. . . .
Atlas has neither pled nor shown, though, how these charges are inconsistent with
the tariffed rates. That the terms are not found in the tariffs is insufficient.”)
Plaintiffs’ allegations concerning causation and damages do not meet the
standard of plausibility set forth by Twombly and Iqbal. They must, therefore, be
dismissed pursuant to Rule 12(b)(6). Plaintiffs will be given an additional
opportunity to amend their pleadings in order to state a plausible claim for relief
premised upon having been charged specific surcharges and ancillary fees not
approved by the PSC.
Finally, the Court notes that Plaintiffs’ twenty-seven page Second Amended
Complaint has been characterized by the Movants as a “shotgun pleading.”
Though the groupings cannot be too finely drawn, we
have identified four rough types or categories of shotgun
–9–

pleadings. The most common type—by a long shot—is a
complaint containing multiple counts where each count
adopts the allegations of all preceding counts, causing
each successive count to carry all that came before and
the last count to be a combination of the entire complaint.
The next most common type, at least as far as our
published opinions on the subject reflect, is a complaint
that does not commit the mortal sin of re-alleging all
preceding counts but is guilty of the venial sin of being
replete with conclusory, vague, and immaterial facts not
obviously connected to any particular cause of action. The
third type of shotgun pleading is one that commits the sin
of not separating into a different count each cause of
action or claim for relief. Fourth, and finally, there is the
relatively rare sin of asserting multiple claims against
multiple defendants without specifying which of the
defendants are responsible for which acts or omissions, or
which of the defendants the claim is brought against. The
unifying characteristic of all types of shotgun pleadings is
that they fail to one degree or another, and in one way or
another, to give the defendants adequate notice of the
claims against them and the grounds upon which each
claim rests.
Weiland v. Palm Beach Cty. Sheriff’s Office, 792 F.3d 1313, 1321-23 (11th Cir.
2015).
In as much as the Second Amended Complaint is dismissed, the shotgun
pleading claim is now largely moot. However, it is also worth noting that one
inevitable consequence of shotgun pleadings is to “delay cases by wasting scarce
judicial and parajudicial resources.” See Starship Enters. of Atlanta, Inc. v. Coweta
Cty. Ga., 708 F.3d 1243, 1251 (11th Cir. 2013). Plaintiffs are encouraged to
carefully review future filings to ensure that they have “give[n] the defendants
adequate notice of the claims against them and the grounds upon which each claim
rests.” Weiland, 792 F.3d at 1323.

– 10 –

III. CONCLUSION
Plaintiffs have failed to state a claim for which relief may be granted. GTL’s
Motion to Dismiss must, therefore, be granted. Plaintiffs will be granted an
pportunity to amend their pleadings, consistent with the Court’s conclusions herein.
Any amended complaint must be filed within fourteen days of the entry of this
Order.
IT IS THEREFORE ORDERED AND ADJUDGED that [33] Motion to
Dismiss Pursuant to Fed. R. Civ. P. 12(b)(6) filed by Defendant Global Tel Link
Corporation is GRANTED.
IT IS FURTHER ORDERED that Plaintiffs are granted leave to file a third
amended complaint, consistent with the Court’s conclusions in this Order, to be filed
within fourteen (14) days of the entry of this Order. If Plaintiffs do not timely file a
third amended complaint stating claims against Global Tel Link Corporation,
Global Tel Link Corporation will be dismissed from this lawsuit.
IT IS FURTHER ORDERED that the [34] Motion to Take Judicial Notice is
MOOT.
SO ORDERED AND ADJUDGED this the 18th day of July, 2018.

s/

Louis Guirola, Jr.

LOUIS GUIROLA, JR.
UNITED STATES DISTRICT JUDGE

– 11 –