T-Mobile Rural Call Completion Lawsuit: Court Allows Communications Act Claims & Civil Conspiracy Claim To Move Forward
November 16, 2020 – The U.S. District Court for The Northern District Of Illinois (Eastern Division) has issued a ruling on T-Mobile’s and Inteliquent’s motions to dismiss the lawsuit filed against them alleging violations of the FCC’s rural call completion rules.[1]
The Court ruled that the claims against T-Mobile alleging violations of the Communications Act may proceed, along with the claim for civil conspiracy.
The Court ruled that only the claim for civil conspiracy against Inteliquent will move forward, while also denying Inteliquent’s motion to stay the case and refer certain questions and issues to the FCC. Below is a short summary of the lawsuit, followed by the key findings in the Court’s order.
Background
In November 2019, two rural communications providers, Craigville Telephone Co. and Consolidated Telephone Co., filed a class action lawsuit against T-Mobile USA, Inc., and Inteliquent, Inc., for damages stemming from T-Mobile’s violation of the FCC’s rural call completion rules.[2]
The alleged injuries and claims for relief in the lawsuit stem from T-Mobile’s violation of the FCC’s rural call completion rules, and rely on T-Mobile’s April 2018 Consent Decree with the FCC’s Enforcement Bureau which ended an investigation into violations of those rules.[3] Under the terms of the settlement, T-Mobile was required to confess that it had violated the FCC rule prohibiting the insertion of false ring tones into calls, and that it did not correct problems with its intermediate providers’ delivery of calls to certain rural areas.[4] At the time of the violations, intermediate provider Inteliquent carried and terminated a considerable amount of T-Mobile traffic. The complaint alleges T-Mobile and Inteliquent conspired to prevent customers from making phone calls to rural areas which had high per-minute terminating access charges.[5]
The lawsuit alleges violations of the Communications Act (Counts I to III); the Racketeer Influenced and Corrupt Organizations (RICO) Act (Counts IV and V); and several state law tort claims (Counts VI to VIII). In January 2020, T-Mobile and Inteliquent filed motions to dismiss the claims. Inteliquent also moved to stay the case and refer certain questions to the FCC.
The Court’s Order – T-Mobile
The Court ruled that the following claims against T-Mobile will move forward:
Count I – Violation Of Section 201(b) Of The Communications Act, Fake Ringtones
Count II – Violation Of Section 201(b) Of The Communications Act, Failure to Ensure Delivery of Calls
Count III – Violation Of Section 202(a) Of The Communications Act
Count VIII – Civil Conspiracy
The Court dismissed the following claims against T-Mobile without prejudice:
Count VI – Violation of the Racketeer Influenced and Corrupt Organizations Act
Count V – Violation of the Racketeer Influenced and Corrupt Organizations Act
Count VI – Tortious Interference With Contract, Illinois Law
Count VII – Violation Of Illinois Consumer Fraud And Deceptive Business Practice Act
Count I: Violation Of Section 201(b) Of The Communications Act – Fake Ringtones
To start, the Court laid out the “core issue” – whether the complaint plausibly alleges that T-Mobile’s false ringing injured the Plaintiffs – whether Plaintiffs suffered damages attributable to the alleged practice of false ringing.
Here is how the Court described the Plaintiffs two theories of injury for Count I: (1) fake ring tones resulted in diminished access charges, and (2) false ring tones misled subscribers into blaming rural LECs for connection issues, prompting an influx of customer service requests. The Court found “sufficient factual allegations” to support the second theory.
First, the Court disagreed with the Plaintiffs’ claim that fake ring tones result in diminished access charges. Interestingly, the Court said fake ring tones are actually good:
If anything, common sense dictates that a caller who encountered ringing would have stay on the line longer than one who met with dead air. As a result, fake ring tones improve, not worsen, the odds that calls connect, increasing rather than reducing Plaintiffs’ opportunity to earn access charges. Indeed, consistent with that logic, the complaint is bereft of any “factual content” showing that Plaintiffs have lost accesses charges as a result of the alleged false ringing.[6]
The Court, though, found the second theory of injury believable since “T-Mobile allegedly inserted false ring tones ‘into hundreds of millions of calls.’” The Court said it is plausible that fake ring tones could cause the calling and called party to “think[] that Plaintiffs were responsible for their call completion problems.” This injury, a depletion of customer service resources, was enough to allow Count I to move forward.
Count II: Unreasonable Practice In Violation Of Section 201(b) Of The Communications Act & Count III: Unjust Discrimination In Violation Of Section 202(a) Of The Communications Act
For Counts II and III, the Plaintiffs allege T-Mobile and Inteliquent knew that connection issues plagued calls to rural LECs, but failed to take corrective action.
First, the Court says the applicable regulation is from the 2018 Second Call Completion Order – when “evidence of persistent poor performance exists with respect to a rural area, [a] provider should know that there may be a problem with calls being completed to that area and it has a duty to investigate.” The provider then has a duty (from the 2012 Declaratory Ruling) to promptly fix the problem and ensure the problem does not recur, unless it determines the problem is the responsibility of another party.
T-Mobile made three arguments in support of dismissal of Counts II and III: (1) the alleged connection issues did not impact Plaintiffs’ service areas; (2) it complied with its obligations by promptly resolving the alleged problems; and (3) Counts II and III are barred by the Communication Act’s two-year statute of limitations.
First, the Court said the complaint sufficiently alleges that the call completion problems may have harmed the Plaintiffs by citing an example from the complaint in which a Minnesota subscriber reported that 56 out of 109 calls she placed to Craigville customers dropped. This is enough at this point in the case. The Court also shot down T-Mobile’s second argument based on this example. The Court noted, however, “discovery may show that T-Mobile lacked sufficient notice about the Minnesota subscriber’s issues or bore no responsibility for rectifying them.”[7]
Next, the Court found Counts II and III were not barred by the Communication Act’s two-year limitations period. The limitations period begins “when the plaintiff has inquiry notice” about the claim, with the claim being “persistent poor performance” and the provider knowingly failed to fix the problem. While the Plaintiffs were aware of problems as early as 2013, the Court determined that “nothing in the complaint indicates that Plaintiffs knew that T-Mobile had persistent poor performance and intentionally declined to take remedial action prior to the two-year limitations period.”[8] In other words, the Court found it plausible that Plaintiffs were not aware of the claims until learning of them in T-Mobile’s 2018 Consent Decree with the FCC.
Count VIII: Civil Conspiracy (T-Mobile & Inteliquent)
At this stage, the Court determined that the Plaintiffs have alleged enough for the civil conspiracy claim to withstand dismissal. Generally, a civil conspiracy is two or more persons conspiring to commit an unlawful act, which is shown by an agreement and an act in furtherance of that agreement. In their complaint, the Plaintiffs explain that “Inteliquent assumed responsibility for terminating calls placed by T-Mobile subscribers, reviewed information about completion rates, and realized economic rewards from T-Mobile’s apparent refusal to fix connection issues.” The Court covers two conclusions you could draw from this, which are advanced by the Defendants and the Plaintiffs, respectively: (1) Inteliquent tolerated T-Mobile’s practices without endorsing them; and (2) Inteliquent’s extensive involvement in routing T-Mobile’s calls is evidence that Defendants agreed not to remedy call failures. Right now, the Court says it’s unclear which is correct. The claim moves forward.
The Court’s Order – Inteliquent
Inteliquent filed a motion to dismiss all claims, and to stay the case and refer three questions to the FCC. Since Inteliquent is an intermediate provider, Counts II and III were dismissed. As mentioned, Count VIII, the claim for Civil Conspiracy against Inteliquent will move forward. Counts IV through VII were dismissed for the same reasons they were dismissed as to T-Mobile. Also, the Court denied Inteliquent’s motion to refer to the FCC, finding the dismissal of Counts II and III mooted the need for FCC input.
Motion To Intervene – Denied For Now
In March 2020, a group of rural communications providers filed a motion to intervene in the case. They are Dakota Central Telecom I, Inc., Pioneer Telephone Cooperative, Inc., DeKalb Telephone Cooperative, and Peoples Telecommunications, LLC. They sought to intervene based on the Defendants’ motions to dismiss on statute of limitations grounds. The Court denied the motion to intervene without a prejudice, finding it was moot because none of the Plaintiffs’ claims were dismissed under a statute of limitations. The intervenors are free to submit a revised motion to intervene after reviewing the Court’s order.
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[1] Craigville Tel. Co. & Consolidated Tel. Col. v. T-Mobile & Inteliquent, Case: 1:19-cv-07190, Document #: 91, Memorandum Opinion And Order, U.S. District Court for the Northern District of Illinois, Eastern Division (filed Nov. 16, 2020) (Order), https://cases.justia.com/federal/district-courts/illinois/ilndce/1:2019cv07190/370250/91/0.pdf?ts=1605608476.
[2] Craigville Tel. Co. & Consolidated Tel. Col. v. T-Mobile & Inteliquent, Case: 1:19-cv-07190, First Amended Class Action Complaint And Jury Demand, U.S. District Court for the Northern District of Illinois, Eastern Division (filed Nov. 25, 2019) (Complaint). The complaint listed T-Mobile, Inteliquent, and 10 Doe Defendants, who may include intermediate communications service providers, as the original defendants.
[3] T-Mobile USA, Inc., File No.: EB-IHD-16-00023247, Acct. No.: 201832080003, FRN: 0004121760, Order, Consent Decree, DA 18-373 (Apr. 16, 2018). T-Mobile was required to pay a $40 million civil penalty to the U.S. Treasury, and follow a compliance plan, for three years, designed to ensure T-Mobile obeys the FCC’s call completion rules.
[4] Id. at ¶ 17.
[5] Complaint at ¶ 9.
[6] Order at p. 9.
[7] Order at p. 13.
[8] Order at p. 14.
