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County of Dorchester v. AT&T Corp.

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

August 13, 2019

County of Dorchester, South Carolina, and Town of Summerville, South Carolina, Plaintiffs,
v.
AT&T Corp. and Bellsouth Telecommunications, LLC, Defendants.

          ORDER AND OPINION

          RICHARD MARK GERGEL UNITED STATES DISTRICT COURT JUDGE

         Before the Court is Defendants' joint partial motion to dismiss the Complaint and to strike the class allegations. (Dkt. No. 14.) For the reasons set forth below, the motion is granted in part and denied in part.

         I. Background

         The 911 Act authorizes local governments, such as Plaintiffs, the County of Dorchester and the Town of Summerville, 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 ¶ 2, 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.

         In their class action Complaint, Plaintiffs allege that Defendants violate the 911 Act, among other claims, by under-charging 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 911 Act, (ii) breach of statutory duty imposed by the 911 Act, (iii) breach of fiduciary duty imposed by the 911 Act, (iv) negligence and negligence per se, (v) constructive fraud (all as to Plaintiffs and the class), and (vi) violation of the South Carolina Unfair Trade Practices Act (as to Plaintiffs only). Plaintiffs also seek a declaratory judgment, permanent injunction and punitive damages (each as to Plaintiffs and the class). (Dkt. No. 1 ¶¶ 70-135.)

         II. Legal Standard

         A. Motion to Dismiss Pursuant to Rule 12(b)(6)

         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." A motion to dismiss 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. . . . Our 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." Republican Party of N.C. v. Martin, 980 F.2d 943, 952 (4th Cir. 1992) (internal quotation marks and citation omitted). 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). Although the Court must accept the facts in a light most favorable to the Plaintiff, the Court "need not accept as true unwarranted inferences, unreasonable conclusions, or arguments." Id.

         Generally, to survive a motion to dismiss the complaint must provide enough facts to '"state a claim to relief that is plausible on its face.'" Ashcroft v. Iqbal, 556 U.S. 662, 679 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)); see also Fed. R. Civ. P. 8(a)(2). Although the requirement of plausibility does not impose a probability requirement at this stage, the complaint must show more than a "sheer possibility that a defendant has acted unlawfully." Iqbal, 556 U.S. at 678. A complaint has "facial plausibility" where the pleading "allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Id. A complaint alleging fraud or mistake, by contrast, "must state with particularity the circumstances" constituting the fraud. Fed.R.Civ.P. 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. See, e.g., Cheney Bros. Inc. v. Batesville Casket Co., Inc., 47 F.3d 111, 114 (4th Cir. 1995); Pitts v. Jackson Nat. Life Ins. Co., 574 S.E.2d 502, 509 (S.C. 2002).

         A plaintiff alleging fraud is held to a higher standard and "must state with particularity the circumstances" constituting the fraud. Fed.R.Civ.P. 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., 116 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).

         B. Motion to Strike Class Action Allegations Pursuant to Rule 12(f)

         Rule 12(f) of the Federal Rules of Civil Procedure provides that "the court may strike from a pleading any insufficient defense or any redundant, immaterial, impertinent, or scandalous matter." Fed.R.Civ.P. 12(f). A motion to strike class allegations "ask[s], in other words, that the Court preemptively terminate the class aspects of this litigation, solely on the basis of what is alleged in the complaint, and before plaintiffs are permitted to complete the discovery to which they would otherwise be entitled on questions relevant to class certification. Defendants' contention is, in effect, that there is no set of facts plaintiffs could adduce under which they could meet the requirements for class certification of Rule 23[.]" Bryant v. Food Lion, Inc., 774 F.Supp. 1484, 1495 (D.S.C. 1991). "Rule 12(f) empowers courts to strike immaterial matter to promote judicial efficiency and avoid needless expenditure of time and money." Gibson v. Confie Ins. Grp. Holdings, Inc., No. 2:16-cv-02872-DCN, 2017 WL 2936219, at *12 (D.S.C. July 10, 2017). "[S]uch motions are to be granted infrequently" and are reviewed for abuse of discretion: "decisions that are reasonable, that is, not arbitrary, will not be overturned." Renaissance Greeting Cards, Inc. v. Dollar Tree Stores, Inc., 227 Fed.Appx. 239, 246-47 (4th Cir. 2007) (quoting Seay v. TVA, 339 F.3d 454, 480 (6th Cir. 2003)).

         "In a motion to dismiss class allegations, the defendants have the burden of demonstrating from the face of the plaintiffs' complaint that it will be impossible to certify the classes alleged by the plaintiffs regardless of the facts the plaintiffs may be able to prove, analogous to the standard of review for motions brought pursuant to Rule 12(b)(6)." Mungo v. CUNA Mut. Ins. Soc, No. 0:11-464-MBS, 2012 WL 3704924, at *4 (D.S.C. Aug. 24, 2012) (citing Bryant, 774 F.Supp. 1484 at 1495); see also Whitt v. Seterus, Inc., No. 3:16-2422-MBS, 2017 WL 1020883, at *2 (D.S.C. Mar. 16, 2017); Adams v. Air Methods Corp., No. 3:15-cv- 1683-TLW, 2016 WL 7115905, at *2 (D.S.C. Aug. 12, 2016). "A court may grant a motion to strike class allegations where the pleading makes clear that the purported class cannot be certified and no amount of discovery would change that determination." Waters v. Electrolux Home Prod., Inc., No. 5:13-cv-0151, 2016 WL 3926431, at *4 (N.D. W.Va. July 18, 2016).

         III. ...


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