T-Mobile Files Motion To Dismiss Rural Carriers’ Call Completion Class Action Lawsuit

February 1, 2020 – On January 15, 2020, T-Mobile USA, Inc. filed a motion to dismiss the lawsuit filed against it by Craigville Telephone Co. d/b/a AdamsWells and Consolidated Telephone Co. d/b/a CTC related to T-Mobile’s violation of the Federal Communications Commission’s rural call completion rules.[1] Craigville and Consolidated must file their reply to T-Mobile’s motion to dismiss on or before February 10, 2020. T-Mobile may then reply by February 24, 2020.

T-Mobile’s motion to dismiss is based on a number of arguments, but first and foremost is standing. T-Mobile argues every claim in the complaint should be dismissed outright because the “Plaintiffs have failed to plead a plausible theory of injury.” Among other things, T-Mobile argues the Plaintiff’s claims based on violations of the Communications Act are barred by the Act’s statute of limitations, while the claims based on fraud do not satisfy the required heightened pleading standard.

The Rural Carriers’ “Class Action” Complaint – The FCC Enforcement Bureau’s 2018 Consent Decree & T-Mobile’s Confession

Craigville and Consolidated are local exchange carriers headquartered in Indiana and Minnesota, respectively. They filed their complaint in November 2019 as a class action lawsuit, individually and on behalf of a class of similarly situated companies, against T-Mobile, Inteliquent, and 10 Doe Defendants, some of which may be intermediate communications service providers.[2] The complaint alleges eight specific violations of law. The Plaintiffs are seeking a judgment in an amount no less than $750 million for all economic, monetary, actual, consequential and compensatory damages caused by the Defendants’ wrongful conduct.

The lawsuit is based on T-Mobile’s willful and continued use of  local ring back tones in violation of the FCC’s rural call completion rules. T-Mobile entered into a Consent Decree in April 2018 with the FCC’s Enforcement Bureau, which ended a lengthy investigation into T-Mobile’s conduct admitted it violated the FCC’s call completion rules.[3]

One aspect of that settlement is especially important for purposes of the class action complaint. The FCC’s Enforcement Bureau required T-Mobile to make admissions of guilt. Specifically, T-Mobile admitted that it: (1) violated Section 64.2201 of the FCC’s rules prohibiting the insertion of false ring tones; and (2) did not correct problems with its intermediate providers’ delivery of calls to consumers in certain rural areas.

T-Mobile’s Motion To Dismiss

T-Mobile’s motion to dismiss primarily argues that the “Plaintiffs have failed to plead a plausible theory of injury.” That is, T-Mobile claims the Plaintiffs do not and cannot plausibly allege they were harmed by T-Mobile’s use of local ring back tones (LRBTs). T-Mobile argues this for all eight Counts in the complaint. Here is how T-Mobile (TMUS) describes its use and the purpose of LRBTs in the motion to dismiss:

When they were in use by TMUS, LRBT would sometimes be heard by a caller if, after 4 or 5 seconds, a call had not yet reached the intended call recipient’s LEC. Without LRBT, the caller would have heard prolonged dead air. The callers who heard LRBT were TMUS customers, not customers of any LEC. Thus, whatever impact, if any, hearing LRBT may have had on TMUS’s own customers, it had no impact on Plaintiffs (or even their customers).[4]

T-Mobile is talking about standing – a plaintiff must have standing to bring a claim. As a threshold question, a court must consider whether: (1) the plaintiff has alleged an actual or imminent injury; (2) the injury is fairly traceable to the defendant’s conduct; and (3) a favorable decision is likely to redress the injury.[5]

T-Mobile claims there is no injury here – no specific facts supporting the assertion that T-Mobile engaged in conduct giving rise to any injury, and no instance of actual loss, let alone any loss resulting from the use of LRBT.[6] To be sure, the Plaintiffs, in their complaint, offer a number of injuries they claim to have sustained from T-Mobile’s call completion violations. Since we are talking about T-Mobile’s motion to dismiss, here is how T-Mobile characterizes Craigville and Consolidated’s various allegations of injury:

Plaintiffs allege that but for Defendants’ conduct, they would have collected more revenue in the form of “access charges.” They also claim that as a result of TMUS’s alleged wrongdoing, (a) callers blamed them—rather than TMUS—when calls did not connect, (b) they lost money trying to address customer complaints related to call delivery, and (c) they lost revenue due to discounts issued to appease allegedly disgruntled customers. None of this is plausible, and Plaintiffs’ conclusory allegations of harm are not substitutes for pleading facts sufficient to state a claim that is plausible on its face.[7]

What sticks out is the phrase none of this is plausible. Anyone who has been following rural call completion problems since the beginning (2009/2010) knows that all of that is in fact true. Of course, my opinion on this might be somewhat biased. But believe me, the problems caused by calls not being completed – they are trues. One more thing. In its motion to dismiss, T-Mobile states that the Enforcement Bureau Consent Decree “does not reference Plaintiffs or address any conduct that TMUS directed towards Plaintiffs.”[8] OK, sure. The Plaintiffs will need to show specific instances where T-Mobile’s conduct impacted them directly. Presumably, the Plaintiffs have call detail records and other information to back up their claims. In the Consent Decree, the FCC’s Enforcement Bureau estimated T-Mobile’s false ring tones were injected into hundreds of millions of calls. For the Plaintiffs, the Consent Decree is the starting point. The Plaintiffs need to get past the opening stages of the case. Whatever evidence of call completion violations they have now assumedly will be bolstered during the discovery phase. That being said, the issue here is whether the Plaintiffs have sufficiently alleged a concrete injury that’s traceable to T-Mobile’s conduct to overcome a 12(b)(6) motion. T-Mobile says no. The Plaintiffs’ reply to the motion will say yes.

Next, T-Mobile specifically addresses Count II (violation Of Section 201(b), failure to ensure delivery of calls) and Count III (violation of Section 202(a)) of the complaint. In addition to the failure to allege an injury argument, T-Mobile claims Counts II and III are barred by the non-discretionary statute of limitations that applies to Communications Act claims.

As for the Plaintiffs’ RICO claims, Counts IV and V, T-Mobile argues they don’t pass muster under the heightened pleading standard for claims of fraud. T-Mobile argues Count VI, tortious interference with contract, fails because the “Plaintiffs have not alleged any of the required elements of the tort, much less with the particularity required by [Fed. R. Civ. P.] Rule 9(b).” As for Count VII, violation of the Illinois Consumer Fraudulent and Deceptive Practices Act, T-Mobile says the Plaintiffs fail to demonstrate a nexus between their injury and Illinois consumers’ alleged injury. Finally with respect to Count VIII, civil conspiracy, T-Mobile argues Plaintiffs have not alleged facts that would demonstrate a knowing participation between the Defendants in a conspiracy.

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[1] Craigville Tel. Co. v. T-Mobile, case: 1:19-cv-07190, Memorandum Of Law In Support Of  T-Mobile USA, Inc.’s Motion To Dismiss Plaintiffs’ First Amended Class Action Complaint, U.S. District Court for the Northern District of Illinois, Eastern Division (filed Jan. 15, 2020) (T-Mobile Memorandum Of Law).

[2] Craigville Tel. Co. v. T-Mobile, 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). Craigville and Consolidated filed their initial complaint on November 1, 2019, but later filed an amended complaint.

[3] T-Mobile USA, Inc., File No.: EB-IHD-16-00023247, Acct. No.: 201832080003, FRN: 0004121760, Order, DA 18-373 (Apr. 16, 2018). As set out in the Consent Decree, T-Mobile began using a local ring back tone in 2013 for out-of-network calls from its customers that were routed via Session Initiation Protocol trunks and that took more than a certain amount of time to complete. T-Mobile continued to use LRBT after the FCC adopted a rule prohibiting the practice (January 2014). Because LRBTs were applied on a nationwide basis without regard to time of day, the FCC’s Enforcement Bureau estimated T-Mobile’s false ring tones were injected into hundreds of millions of calls each year. Yes, hundreds of millions.

[4] T-Mobile Memorandum Of Law at p. 1.

[5] Lujan v. Defs. of Wildlife, 504 U.S. 555, 559–61 (1992).

[6] T-Mobile Memorandum Of Law at p. 11.

[7] T-Mobile Memorandum Of Law at p. 3.

[8] T-Mobile Memorandum Of Law at p. 2.