Beattie v. Centurytel, Inc.

• Decision Date: 18 December 2007
• Docket Number: No. 06-1565.,06-1565.
• Citation: 511 F.3d 554
• Parties: Barbrasue BEATTIE and James Sovis, Plaintiffs-Appellees, v. CENTURYTEL, INC., Defendant-Appellant.
• Court: U.S. Court of Appeals — Sixth Circuit

511 F.3d 554

Barbrasue BEATTIE and James Sovis, Plaintiffs-Appellees, v. CENTURYTEL, INC., Defendant-Appellant.

No. 06-1565.

United States Court of Appeals, Sixth Circuit.

Argued: September 18, 2007.

Decided and Filed: December 18, 2007.

ARGUED: David J. Houston, Dickinson Wright, Lansing, Michigan, for Appellant. Elwood S. Simon, Elwood S. Simon & Associates, Birmingham, Michigan, for Appellees. ON BRIEF: David J. Houston, Jeffery V. Stuckey, Scott R. Knapp, Dickinson Wright, Lansing, Michigan, for Appellant. Elwood S. Simon, John P. Zuccarini, Elwood S. Simon & Associates, Birmingham, Michigan, Patrick E. Cafferty, of Cafferty Faucher LLP, Ann Arbor, Michigan, for Appellees.

Before: COLE and COOK, Circuit

Judges; FROST, District Judge.^*

OPINION

R. GUY COLE, JR., Circuit Judge.

Plaintiffs-Appellees brought this suit in federal district court, alleging that Defendant-Appellant CenturyTel, Inc. ("CenturyTel") violated federal and state law by using deceptive billing practices to bill customers for WireWatch, a wire maintenance program. Plaintiffs-Appellees brought suit under the Federal Communications Act of 1934, 47 U.S.C. § 151 et seq., the Federal Communications Commission's Truth-in-Billing Act, 47 C.F.R. § 64.2400 et seq., and the Michigan Consumer Protection Act, Mich. Comp. Laws § 445.901 et seq. Plaintiffs-Appellees moved the district court for class certification and for judgment on the pleadings on Count I of the Complaint, which alleged that CenturyTel engaged in unjust and unreasonable billing practices in violation of 47 U.S.C. § 201(b) and 47 C.F.R. § 64.2401. The district court certified Plaintiffs-Appellees' claims and granted Plaintiffs-Appellees judgment on the pleadings as to Count I. CenturyTel appeals only the district court's decision to certify the class. For the reasons discussed below, we AFFIRM the district court's order to certify the Plaintiffs-Appellees' class on its federal-law claims under Rule 23 of the Federal Rules of Civil Procedure ("Rule 23"). We further remand the state-law claims to the district court to conduct a Rule 23 analysis.

I.

A. Factual Background

CenturyTel is a telecommunications service provider. As the eighth largest telephone company in the United States, CenturyTel provides telephone services to more than 1.7 million customers in twenty-two states, including Michigan. CenturyTel offers its customers a service entitled "WireWatch," an "inside wire maintenance plan," described by the company as follows:

WireWatch covers the cost of diagnosis and repair of inside wiring and/or jack damages that can interrupt your phone service. Once your telephone wiring enters your house, it becomes your responsibility to maintain it and typical repairs can be costly. For a low monthly fee, enjoy the convenience and satisfaction of having a certified CenturyTel Tech to diagnose and make any necessary repairs.

(JA 17; Compl. ¶ 19.)

WireWatch is an unregulated service, and therefore is not covered by CenturyTel's tariffs or rate filings. (JA 17; Compl. ¶ 20.) CenturyTel does not require its customers to subscribe to WireWatch as a condition to obtaining or keeping the company's "tariffed telephone and transmission services." (Id.) As the district court pointed out, WireWatch varies from state to state: "In some states, CenturyTel has offered WireWatch for a number of years, but in others, such as Alabama and Missouri, WireWatch only recently has become available through CenturyTel to its customers." Beattie v. CenturyTel, Inc., 234 F.R.D. 160, 163 (E.D.Mich.2006).

Plaintiffs-Appellees allege that CenturyTel began billing customers for WireWatch as early as 1994. (JA 18; Compl. ¶ 22.) From 1994 until 2001, the price of WireWatch gradually increased, starting from as little as $0.50 per month in 1994, increasing to $0.99 per month in 1999, and capping off at $3.95 per month in 2001. (JA 19; Compl. ¶ 23.) Until January 2002, CenturyTel billed customers for WireWatch using the description "Non-Regulated Services" under a section of its bill titled "Monthly Service Detail." (JA 18-19; Compl ¶ 22-23.) In or around January 2002, CenturyTel reorganized its telephone bills, changing the description used to bill customers for WireWatch from "Non-Regulated Services" to "Inside Wire Maintenance Plan." (JA 19; Compl. ¶ 24.) CenturyTel also changed the heading under which it billed for WireWatch to reflect "that these charges were for `Other Services or Equipment,' and not for transmission services." (Id.) It was this change, the Plaintiffs-Appellees allege, which triggered complaints from customers who were unaware that they were being billed for WireWatch. (Appellee's Br. 11; JA 19; Compl. ¶ 25 ("Numerous customer complaints have been lodged against CenturyTel since January 2002, when CenturyTel first revealed that . . . it had been systematically billing and charging customers for . . . [WireWatch].").)

CenturyTel explains that historically customers have enrolled in WireWatch via oral communications with a customer service representative, such as when a customer calls to set up service, or to add or change their existing service. (Appellant's Br. 8.) According to CenturyTel, it is during these calls that a CenturyTel representative will inform customers of the benefits and costs of WireWatch. (Id.) CenturyTel maintains that it "does not utilize a script with regard to these oral communications concerning WireWatch." (Id.)

Plaintiffs-Appellees, however, allege that "CenturyTel has routinely and systematically charged customers for its optional inside wire maintenance program by `cramming' charges onto customers' telephone bills." (JA 17-18; Compl. ¶ 20.) The Federal Communications Commission ("FCC") defines cramming as "the practice of placing unauthorized, misleading, or deceptive charges on [a customer's] telephone bill. Entities that fraudulently cram people appear to rely largely on confusing telephone bills in order to mislead consumers into paying for services that they did not authorize or receive." (JA 12; Compl. ¶ 2.) The complaint alleges that "[w]hile CenturyTel has never provided Plaintiffs or other customers with an application form or other materials describing the supposed terms and obligations of CenturyTel's inside wire maintenance program, CenturyTel has continuously billed customers for this service each month for at least the last several years." (Id.)

B. Procedural History

The named Plaintiffs are two individual, residential customers of CenturyTel, each of whom reside in Michigan. (JA 13-14; Compl. ¶ 8.) The complaint alleges that plaintiff Barbrasue Beattie paid for WireWatch, unbeknownst to her, from November 1996 until January 2002, when CenturyTel's change to its billing statements alerted Beattie to this unauthorized charge. (Id.) Beattie contacted CenturyTel and asked for a refund of the charges. (Id.) Although CenturyTel admitted, in a March 29, 2002 letter, that no authorization for WireWatch was on file for Beattie's account, the company refused to credit Beattie for the charges paid prior to May 2001. (Id.) Like Beattie, plaintiff James Sovis unknowingly paid for WireWatch from 1994 until January 2002. (JA 14; Compl. ¶ 9.)

On October 28, 2002, Plaintiff-Appellees brought suit in federal district court, pleading six counts: (1) CenturyTel engaged in misleading or deceptive billing practices in violation of 47 U.S.C. §§ 201(b), 206, and 207 (Count I); (2) CenturyTel's unjust and unreasonable practices constitute cramming in violation of 47 U.S.C. §§ 201(b), 206, and 207 (Count II); (3) Under 47 U.S.C. § 401, Plaintiffs-Appellees seek (a) a declaratory judgment that CenturyTel violated 47 U.S.C. § 201(b) and the FCC's Truth-in-Billing Act, 47 C.F.R. § 64.2401, and (b) an injunction barring CenturyTel from continuing to violate these laws and regulations (Count III); (4) CenturyTel breached its contract with Plaintiffs-Appellees and breached its corresponding duties of good faith and fair dealing by engaging in unjust and deceptive billing and cramming practices in violation of state law (Count IV); (5) CenturyTel's unlawful, unconscionable, and deceptive practices have led to its unjust enrichment, and the company should be forced to disgorge any of the charges, monies, and fees that it derived from its unlawful and deceptive billing practices (Count V); and (6) CenturyTel's unlawful billing practices violated the Michigan Consumer Protection Act, Mich. Comp. Laws § 445.901 et seq. (Count VI). (JA 21-26; Compl. ¶ 29-49.)

Plaintiffs-Appellees brought this action on behalf of themselves and a putative class under Rule 23 of the Federal Rules of Civil Procedure. The parameters of the class were defined as follows:

[A]ll persons who have paid CenturyTel, Inc. for charges described in CenturyTel's residential telephone bills as "Non-Regulated Services" or "Inside Wire Maint. Plan" during the fullest period allowed by law (the "Class").

Excluded from the Class are CenturyTel; its subsidiaries, affiliates, officers and directors; any entity in which CenturyTel has a controlling interest; and the legal representatives, heirs, successors and assigns of any such excluded party.

(JA 15; Compl. ¶ 11.) On August 15, 2003, Plaintiffs-Appellees moved to certify the class. Plaintiffs-Appellees also moved for judgment on the pleadings as to Count I of their complaint under Federal Rule of Civil Procedure 12(c). On March 10, 2006, the district court certified the class, concluding that the Plaintiffs-Appellees had "satisfied all the prerequisites under Rule 23(a)," Beattie, 234 F.R.D. at 169, and had "satisfied the requirements for certification . . . under Rule 23(b)(3)." Id. at 171. The district court also granted the Plaintiffs-Appellees' motion for judgment on the pleadings as to Count I. Id. at 173 ("Based on the allegations and admissions in the pleadings, the Court concludes that the defendant's practice of billing for its WireWatch program...