Apcc Services, Inc. v. At & T Corp., CIV.A. 99-0696 ESH.

• Decision Date: 28 March 2003
• Docket Number: No. CIV.A. 99-0696 ESH.,CIV.A. 99-0696 ESH.
• Parties: APCC SERVICES, INC., et al., Plaintiffs, AT & T CORPORATION, Defendant.
• Court: U.S. District Court — District of Columbia

254 F.Supp.2d 135

APCC SERVICES, INC., et al., Plaintiffs,

AT & T CORPORATION, Defendant.

No. CIV.A. 99-0696 ESH.

United States District Court, District of Columbia.

March 28, 2003.

Sean Michael Hanifin, Jeffrey John Ward, Ross, Dixon & Bell, LLP, Washington, DC, Michael W. Ward, Buffalo Grove, IL, C. Barry Montgomery, Hall Adams, III, Edward R. Moor, Williams Montgomery & John, Chicago, IL, for Plaintiffs.

Clifford J. Zatz, Akin, Gump, Strauss, Hauer & Feld, L.L.P., Washington, DC, Kathryn Elizabeth Thiel, Oakton, VA, for Defendants.

MEMORANDUM OPINION

HUVELLE, District Judge.

Plaintiffs have brought suit under section 206 of the Telecommunications Act of 1996, 47 U.S.C. § 206, which requires Interexchange Carriers ("IXCs") such as defendant AT & T to pay "dial-around" compensation to payphone service providers ("PSPs") for certain long distance calls originating from their payphones. Plaintiffs seek payment of dial-around compensation that they allege defendant owes the PSPs they represent. Defendant filed this motion to dismiss for lack of subject matter jurisdiction challenging plaintiffs' standing to bring suit. Defendant argues that as assignees of the PSPs, plaintiffs have suffered no injury-in-fact of their own and have no personal stake in the outcome of the litigation. Defendant also argues that even if plaintiffs have standing, the assignments are not valid under the applicable state law. Plaintiffs claim that they have standing based on the assignments, or in the alternative, they have associational standing. Despite the fact that defendant failed to raise this jurisdictional defect during the four years that this case has been pending, the Court must agree that plaintiffs lack standing based on the assignments executed by the PSPs, and they cannot satisfy the requirements of associational standing. Therefore, defendant's motion to dismiss will be granted.

BACKGROUND

Plaintiffs APCC Services Inc.,¹ Data Net Systems, LLC, Jaroth, Inc. d/b/a Pacific Telemanagement Services, NSC Telemanagement Corp., Davel Communications Group, Inc., and Peoples Telephone Company, Inc. filed this action on behalf of more than one thousand PSPs that own and operate over 400,000 public payphones throughout the United States.² (First Amended Complaint ["Am. Compl."] ¶ 1.) Five of the six plaintiffs are "aggregators," or clearinghouses, created to streamline the billing and collection of dial-around compensation from IXCs.³ Defendant is a common carrier of telephone calls and is subject to the compensation payment obligations mandated by section 276 of the Communication Act of 1934, as amended, 47 U.S.C. § 276. (Id, f 10.)

Pursuant to section 276, defendant is required to compensate PSPs for completed access code and toll free calls that are made using PSPs' payphones and carried over defendant's telephone network facilities. (Id.¶ 1.) PSPs contract with aggregators to facilitate the billing and payment process. Thus, in return for a fee from the PSPs, plaintiffs provide billing information to defendant's collection agent—the National Payphone Clearinghouse (NPC), collect payment from the NPC, and distribute the dial-around compensation to the PSPs they represent. (Pls.' Mem. at 5).

Plaintiffs bring this suit as assignees of the claims of the PSPs they represent. The assignments provide that each PSP "assigns, transfers and sets over to [plaintiff] for purposes of collection all rights, title and interest of the [PSP] in the [PSP's] claims, demands or causes of action for `Dial-Around Compensation.'" (Def.'s Mem. Ex. A at 1.)⁴ Each assignment also appoints plaintiffs as attorney-in-fact with the power to do all acts necessary to collect dial-around compensation, including the power to retain counsel, file lawsuits, and enter into settlements. (Id.) In addition, assignors agree to be bound by any final determinations in court or regulatory proceedings prosecuted by plaintiffs on the PSPs' behalf. (Id.) The assignments do not provide plaintiffs the right to retain or share in any proceeds of the litigation. (Id.)

Defendant argues that since plaintiffs sue as assignees who have not suffered any injury-in-fact of their own and have no personal stake in the outcome of the litigation, they do not have standing to sue and their claims should be dismissed for lack of subject matter jurisdiction. Alternatively, they argue that the assignments to plaintiff APCC Services are not valid under the applicable state law so that even if this plaintiff has standing, its claims should be dismissed. Since the Court concludes that none of the plaintiffs has standing to sue as assignees or as representatives of the PSPs, it need not address the validity of plaintiff APCC Service's assignments.

LEGAL ANALYSIS

I. Legal Standard

Defendant's motion to dismiss for lack of standing is a challenge to the Court's subject matter jurisdiction brought pursuant to Fed.R.Civ.P. 12(b)(1). "For purposes of ruling on a motion to dismiss for want of standing ... courts must accept as true all material allegations of the complaint, and must construe the complaint in favor of the complaining party." Warth v. Seldin, 422 U.S. 490, 501, 95 S.Ct. 2197, 45 L.Ed.2d 343 (1975). The burden is on plaintiffs to establish the elements of standing. Lujan v. Defenders of Wildlife, 504 U.S. 555, 561, 112 S.Ct. 2130, 119 L.Ed.2d 351 (1992).

Questions regarding both constitutional and prudential requirements for standing are at issue here. Constitutional standing requirements are drawn from Article III and require plaintiffs to demonstrate "(1) a concrete and particularized actual or imminent injury (2) that is fairly traceable to Defendant's conduct (3) which a favorable court decision will redress." Id. at 560, 112 S.Ct. 2130. "These requirements together constitute the `irreducible constitutional minimum' of standing, which is an `essential and unchanging part' of Article III's case or controversy requirement." Vermont Agency of Natural Resources v. United States ex rel. Stevens, 529 U.S. 765, 771, 120 S.Ct. 1858, 146 L.Ed.2d 836 (2000) (quoting Lujan, 504 U.S. at 560, 112 S.Ct. 2130).

The injury-in-fact requirement for standing is met only if the party bringing the action suffers an injury as a direct result of the challenged conduct. Lujan, 504 U.S. at 563, 112 S.Ct. 2130. Plaintiffs must also demonstrate that they have a concrete private interest in outcome of the suit. Id. at 573, 112 S.Ct. 2130. The concrete interest must be related to the injury-in-fact and consist of obtaining compensation for, or preventing, the violation of a legally protected right. Vermont Agency, 529 U.S. at 776, 120 S.Ct. 1858.

The prudential requirements for standing are judicially imposed limits on the exercise of federal jurisdiction. United Food and Commercial Workers Union Local 751 v. Brown Group, Inc., 517 U.S. 544, 551, 116 S.Ct. 1529, 134 L.Ed.2d 758 (1996). These include the "general prohibition on a litigant's raising another person's legal rights, the rule barring adjudication of generalized grievances more appropriately addressed in the representative branches, and the requirement that a plaintiffs complaint fall within the zone of interests protected by the law invoked." Allen v. Wright, 468 U.S. 737, 751, 104 S.Ct. 3315, 82 L.Ed.2d 556 (1984). Federal courts have adopted prudential limits on standing in order "to avoid deciding questions of broad social import where no individual rights would be vindicated and to limit access to the federal courts to those litigants best suited to assert a particular claim." Phillips Petroleum Co. v. Shutts, 472 U.S. 797, 804, 105 S.Ct. 2965, 86 L.Ed.2d 628 (1985).

II. Plaintiffs' Standing as Assignees

Plaintiffs are assignees of the PSPs that claim that defendant owes them dialaround compensation, and they argue that they have standing based on these assignments. Their position is that an assignment from an injured party satisfies the constitutional standing requirement of a concrete injury traceable to defendant's conduct. Defendant challenges plaintiffs' standing relying on a recent Second Circuit case which held that where an assignment does not convey a concrete stake in the outcome of the litigation, the assignee does not "suffer an injury of a nature that would confer standing upon it under Article III of the Constitution." Connecticut v. Physicians Health Services of Conn., 287 F.3d 110, 115 (2d Cir.2002) [hereinafter "Physicians Health"].

The Second Circuit's analysis in Physicians Health is persuasive and that case is indistinguishable from the instant one. In Physicians Health, the State of Connecticut brought suit under ERISA against an insurance company offering managed care plans to Connecticut residents. Id. at 112. The State asserted standing to sue as the assignee of participants in the managed care plans who had been injured by the plans' actions and who had assigned their right to seek injunctive or other equitable relief to the State. Id. at 113. The assignments did not, however, include the right to sue for money damages. Id. The Court explained that "[t]ypically, the assignee, obtaining the assignment in exchange for some consideration running from it to the assignor, replaces the assignor with respect to the claim or the portion of the claim assigned, and thus stands in the assignor's stead with respect to both injury and remedy." Id. at 117. In Physicians Health, there was no such exchange, and the assignments "d[id] not shift the loss suffered by individual enrollees from the alleged breach ... from the individuals to the State." Id at 116. As a result, the Court concluded that the assignment did not confer standing on the State.

Plaintiffs' situation is precisely the same as that of the State of Connecticut. The assignments on which plaintiffs rely for standing do not shift the loss suffered by the PSPs to the aggregators that represent them. Nor did plaintiffs obtain their assignments in...