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County of Dorchester v. Level 3 Communications LLC

United States District Court, D. South Carolina, Charleston Division

March 14, 2019

County of Dorchester, South Carolina, and Town of Summerville, South Carolina, Plaintiffs,
v.
Level 3 Communications, LLC, et al., Defendants.

          ORDER AND OPINION

          RICHARD MARK GERGEL UNITED STATES DISTRICT COURT.

         Before the Court is Defendants' joint partial motion to dismiss the Complaint. (Dkt. No. 15.) For the reasons set forth below, the motion is denied.

         I. Background

         The 911 Act authorizes local governments such as Plaintiffs to adopt an ordinance imposing monthly charges on telephone consumers in order to fund local 911 call centers. See S.C. Code Ann. § 23-47-10 et seq. Plaintiffs adopted such ordinances. See Dorchester Cnty. Ord. § 12-20(2). (Dkt. No. 1 ¶¶ 26-27, No. 1-1.) The companies providing telephone service to consumers in the jurisdiction bill the 911 charges to their consumers, collect the charges from the consumers, and remit the amount to the local government minus a 2% administrative fee. See S.C. Code Ann. §§ 23-47-40, 50.

         Plaintiffs allege that Defendants violate the 911 Act among other claims by undercharging their consumers the 911 charge and, as a result, under-remitting the charge to Plaintiffs, which results in inadequately funded 911 call centers and a potential public safety concern. Plaintiffs seek to enforce their implied private rights of action under the 911 Act and bring claims for (i) violation of the South Carolina Unfair Trade Practices Act, (ii) violation of the 911 Act, (iii) breach of statutory duty, (iv) breach of fiduciary duty, (v) negligence and negligence per se, and (vi) constructive fraud. Plaintiffs also seek a declaratory judgment, a permanent injunction, and punitive damages. (Dkt. No. 1.)

         II. Legal Standard

         Rule 12(b)(6) of the Federal Rules of Civil Procedure permits the dismissal of an action if the complaint fails "to state a claim upon which relief can be granted." Fed.R.Civ.P. 12(b)(6). A motion to dismiss, therefore, tests the legal sufficiency of the complaint and "does not resolve contests surrounding the facts, the merits of the claim, or the applicability of defenses." Republican Party of N.C. v. Martin, 980 F.2d 943, 952 (4th Cir. 1992). The court's "inquiry then is limited to whether the allegations constitute a short and plain statement of the claim showing that the pleader is entitled to relief." Id. The allegations are sufficient if they offer "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). The Rule 8 standard is satisfied when the complaint gives "the defendant fair notice of what ... the claim is and the grounds upon which it rests." Am. Dental Ass'n v. Cigna Corp., 605 F.3d 1283, 1288 (11th Cir. 2010).

         The "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 Ail. Corp. v. Twombly, 550 U.S. 544, 555 (2007). Meaning, 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). This plausibility requirement does not impose a probability requirement, but the complaint must show more than a "sheer possibility that a defendant has acted unlawfully." Iqbal, 556 U.S. at 678. The claims are plausible on their face where the complaint "allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Id.

         A plaintiff alleging fraud is held to a higher standard and "must state with particularity the circumstances" constituting the fraud. Fed. R. Civ. Pro. 9(b). The circumstances of the fraud are "the time, place, and contents of the false representations, as well as the identity of the person making the misrepresentations and what he obtained thereby." Weidman v. Exxon Mobil Corp., 776 F.3d 214, 219 (4th Cir. 2015) (internal quotation marks omitted). A plaintiff claiming constructive fraud may allege that the defendant knew or should have known the falsity of its misrepresentations; alleging intent to deceive or actual dishonesty is not required. Cheney Bros. Inc. v. Batesville Casket Co., Inc., 47 F.3d 111, 114 (4th Cir. 1995); see also Pitts v. Jackson Nat. Life Ins. Co., 574 S.E.2d 502, 509 (S.C. 2002).

         On a Rule 12(b)(6) motion, the court is obligated to "assume the truth of all facts alleged in the complaint and the existence of any fact that can be proved, consistent with the complaint's allegations." E. Shore Mkts., Inc. v. J.D. Assocs. Ltd P'ship, 213 F.3d 175, 180 (4th Cir. 2000). But while the court must accept the facts in a light most favorable to the Plaintiff, it "need not accept as true unwarranted inferences, unreasonable conclusions, or arguments." Id.

         III. Discussion

         Defendants move under Rule 12(b)(6) for "partial dismissal" of each count "to the extent that it claims violation of the 911 Act" predicated on two interpretations of the Act that are contrary to its clear meaning. (Dkt. No. 15 at 7.) First, the Complaint alleges that Defendants fail to fully charge and remit on VoIP lines, which could be unlimited because the 911 Act mandates that a "VoIP provider must collect the VoIP 911 charge established in subsection (A) on each VoIP service line" (S.C. Code Ann. § 23-47-67(B)); the 911 Act defines "service line" in part as "a VoIP service that offers an active telephone number" (id. § 23-47-10(38); and VoIP lines can support thousands of numbers and devices with "no physical limitation on how many users may connect to the 911 system." (Dkt. No. 1 ¶ 44.) Defendants contend, however, that the 911 Act must be read to impose a 50-charge cap on a VoIP line. This cap is expressly applied to non-VoIP lines (see S.C. Code. Ann. § 23-47-50(A), providing that for an individual local exchange access facility, the "total number of 911 charges remains subject to the maximum of fifty 911 charges per account" as tiered) and, Defendants argue, is incorporated by reference to also apply to VoIP lines (see S.C. Code. Ann. § 23-47-67(A), providing that "[t]here is hereby imposed a VoIP 911 charge in an amount identical to the amount of the 911 charge imposed on each local exchange access facility . . ."). (Dkt. No. 15 at 13-15.) Plaintiffs argue that Defendants' reading of the 911 Act requires misinterpreting the phrases "an amount" and "the amount"-in the singular-to refer to the total quantity or combined value of charges to the customer, rather than to the individual per-charge rate, which happens to be $.99 in Dorchester and $.93 in Summerville. (Dkt. No. 21 at 15-16, No. 1 ¶ 2.)[1]

         Second, the Complaint alleges that Defendants failed to fully charge and remit on multiplex customers. Plaintiffs allege that primary rate interface ("PRI") allows a service provider to carry up to twenty-three simultaneous voice conversations over a single wire connection; that the 911 Act imposes a cap of five charges per access line only where the subscriber can modify the number of channels without assistance of the service provider (see S.C. Code Ann. § 23-47-50(A)[2]); that a consumer only rarely falls into this latter autonomous category by purchasing fractional PRI service not delivered by a broadband connection; and, therefore, that "Defendants should assess a PRI with twenty-three channels no fewer than twenty-three 911 service charges because the PRI is capable of simultaneously connecting twenty-three separate users to the 911 system." (Dkt. No. 1 ¶¶ 33, 37-40.) Defendants argue in part that this interpretation of Section 23-47-50(A) is unreasonable because a consumer need not purchase fractional PRI service not delivered by a broadband connection in order to modify the voice transmission paths without assistance of the service provider. (Dkt. No. 15 at 21-22.)

         The crux of Defendants' two statutory interpretation arguments is that the 911 Act does not obligate them to charge, collect and remit the quantity, amount or volume that Plaintiffs claim they are required, but fail, to do.[3] But "[t]o the extent the motion to dismiss is premised on the [ ] Complaint's lack of detail concerning the amount of 911 charges Defendants] 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)." Autauga Cnty. Em. Mgmt. Comm. District v. Bellsouth Telecomms., LLC, No. 2:15-cv-0765-SGC, 2016 WL 5848854, at *4 (N.D. Ala. Oct 6, 2016) (denying motion to dismiss).[4] Rather, accepting the facts alleged as true, the Complaint plausibly pleads claims to the Rule 8 or Rule 9(b) standard. The facts alleged as to counts one through five are adequate to put Defendants on fair notice of the allegations and their factual foundations. See, e.g., Hamilton Cnty. Em. Comms. District v. BellSouth Telecomms LLC,852 F.3d 521 (6th Cir. 2017) (finding implied private right of action and reversing district court's grant of motion to dismiss on claim for violation of state 911 statute); Birmingham Em. Comms. District v. TW Telecomm. Holdings, Inc., et al, No. 2:15-cv-0245-AKK (N.D. Ala. Mar. 2, 2017) (denying motion to dismiss claims for negligence/negligence per se and breach of fiduciary duty). Count six is also sufficiently pled in that Plaintiffs allege Defendants knew or should have known their monthly remittance checks misstated the appropriate amount charged, collected and remitted to the local governments. See, e.g., Autauga Cnty., 2016 WL 5848854, ...


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