Bowers v. Windstream Ky. East LLC
| Decision Date | 30 April 2010 |
| Docket Number | Civil Action No. 3:09-CV-440-H. |
| Citation | 709 F.Supp.2d 526 |
| Parties | Dana BOWERS, Plaintiffv.WINDSTREAM KENTUCKY EAST, LLC., et. al., Defendants. |
| Court | U.S. District Court — Western District of Kentucky |
COPYRIGHT MATERIAL OMITTED
David R. Gibson, Douglas F. Brent, Deborah T. Eversole, Stoll Keenon Ogden PLLC, Louisville, KY, for Plaintiff.
Joseph Lee Hamilton, Marjorie Ann Farris, Mark R. Overstreet, Stites & Harbison, PLLC, Louisville, KY, for Defendants.
Plaintiff, Dana Bowers (“Bowers”) brings this putative class action lawsuit alleging that Defendants Windstream Kentucky East, LLC (“Windstream East”), Windstream Kentucky West, LLC (“Windstream West”), and Windstream Communications, Inc. (“Windstream Communications”) (collectively, “Windstream” or “the Windstream companies”), overcharged her for monthly telecommunications services and included misleading statements on her bills, in violation of various federal and state statutes and common law. The matter is before the Court on Defendants' Motion to Dismiss or Stay.
On April 20, 2010, the Court conducted a hearing to discuss the various issues and to clarify certain arguments the briefs presented. This case raises interesting questions about the proper forum for resolving disputes over regulated utility tariffs. These questions are crystalized in the Court's application of the judicial doctrine of primary jurisdiction. For the reasons set forth below, the Court will partially grant Defendants' motion by staying Count III. The Court will deny the remainder of Defendant's Motion to Dismiss or Stay.1
Plaintiff Bowers is a residential customer of Windstream East, a telecommunications company.2 Windstream East is affiliated with telecommunications companies Windstream West and Windstream Communications. 3 Collectively, the Windstream companies provide services to hundreds of thousands of Kentucky customers in forty-plus counties. Plaintiff filed this putative class action in June 2009, alleging that for the two years prior to the Complaint, the Windstream companies overcharged her and other customers and used misleading descriptions of certain charges on their bills. Specifically, Bowers alleges that the Windstream companies charged customers for a tax imposed by Kentucky statute without updating their “tariffs,” or schedules of rates on file with the Federal Communications Commission (“FCC”) and the Kentucky Public Service Commission (“PSC”). Furthermore, Bowers claims that even after the Windstream companies updated their tariffs, they charged more than those tariffs allowed. Bowers also alleges that the manner in which the Windstream companies described and applied their charges was misleading and violated federal and state law.
This case involves a regulatory system established to govern telecommunications company charges. The Court will address that broad regulatory framework next.
Windstream East, Windstream West and Windstream Communications provide various interstate and intrastate telecommunications services. As such, The Federal Communications Act of 1934 (“the Communications Act”), 47 U.S.C. § 151 et seq., regulates some of their interstate services. Section 203(a) of that Act requires that the companies file schedules with the Federal Communications Commission (“FCC”), describing, among other things, all of the rates and charges for their services. These schedules, commonly called tariffs, are public documents “that set[ ] forth the services offered by a telecommunication carrier, the fees charged for those services, and the terms on which those services are offered.” AT & T Commn'cs of S. States, Inc. v. BellSouth Telecomm., Inc., 268 F.3d 1294, 1296 n. 4 (11th Cir.2001). The FCC tariffs control the rights and liabilities for interstate services between the Windstream companies and their customers. Section 203(c) of the Communications Act states that “no carrier shall (1) charge, demand, collect or receive a greater or less or different compensation ... than the charges specified in the schedule then in effect.” 47 U.S.C. § 203(c).
The Windstream companies also provide intrastate telecommunications services. The Kentucky Public Service Commission (“PSC” or “Kentucky PSC”) regulates the rates for some of those services. Like federal tariffs, PSC tariffs for intrastate services control the rights and liabilities between the Windstream companies and their customers. KRS § 278.160(2) states that “[n]o utility shall charge, demand, collect, or receive from any person a greater or less compensation for any service rendered or to be rendered than that prescribed in its filed schedules....”
To give proper context to the Complaint, the Court will describe the events predating the disputed charges. In 2005, Kentucky's legislature enacted a statute that imposed a 1.3% tax on the gross revenues of telecommunications providers, including the Windstream companies. See KRS § 136.616. As originally passed, the statute prohibited telecommunications providers from collecting the tax directly from the customer or separately stating the tax on the customer's bill. KRS § 136.616(3). No one challenged Kentucky's right to impose the tax or the providers' right to pass it on to their customers. The telecom companies did object, however, to the provision prohibiting them from adding a line item to their bills explaining why they had raised prices. Id.
In short order, the telecom companies challenged the constitutionality of the provision in federal court. In February 2007, the Eastern District of Kentucky struck down the no-stating-the-tax provision, after finding that it prohibited more speech than necessary and thus violated the First Amendment's free speech protections. BellSouth Telecomm., Inc. v. Farris, 2007 WL 647561, 2007 U.S. Dist. LEXIS 13993 (E.D.Ky.2007) aff'd in part and reversed in part by 542 F.3d 499 (6th Cir.2008). The Sixth Circuit later affirmed that decision. Id.
On June 22, 2007, after the courts invalidated the Kentucky statutory provision, the Windstream companies began adding the pass-through tax, which they called the “Kentucky Gross Receipts Surcharge” (hereinafter “Surcharge” or “Kentucky Surcharge”), to their customers' bills.4 A one-time statement on the June 22 bill said that On the June 22 bill and all future bills, Windstream listed some portion of the Surcharge as a “Regulated” cost, and another portion of the Surcharge as a “Deregulated” cost. A recurring note labeled “Gross Receipts Tax/Surcharge” in the “Taxes, Surcharges and Fees” Section of each bill stated:
Irrespective of the disclosures on the customer bills, Plaintiff notes that the pertinent federal and state tariffs did not give Defendants the authority to charge the taxes to customers under any circumstances. Though the Windstream companies added the Surcharge to customers' bills in June 2007, they did not list the Surcharge on their federal tariffs until August 7, 2008. 5 The Windstream companies never added the Surcharge to their Kentucky tariffs.
Additionally, Plaintiff claims that even after the Windstream companies added the Surcharge to their federal tariffs, the companies charged their customers more than the 1.3% imposed upon them by the state of Kentucky. Plaintiff also alleges that Windstream's bills added the Surcharge to services that were not taxed under the Kentucky statute, including internet and cable services.
Thus, on June 22, 2009 Plaintiff filed her Complaint seeking (1) damages in the amount of the overcharge, (2) an injunction against the Windstream companies and (3) an award of attorney's fees.
The parties dispute whether Defendants Windstream West and Windstream Communications are properly before the Court. As noted above, Plaintiff asserts claims against Windstream East, Windstream West and Windstream Communications even though she is only a customer of Windstream East and has no relationship with the other companies. She contends that the “juridical link” doctrine allows her to join the other Defendants, especially where, as here, the companies are affiliated and operate under the same billing policy. Defendants argue that the doctrine does not apply and that the Court should dismiss claims against Windstream West and Windstream Communications.
To have standing, Plaintiff must (1) have suffered an actual, concrete and particularized “injury in fact” that (2) has a causal connection with Defendant's action and (3) is redressable in court. Lujan v. Defenders of Wildlife, 504 U.S. 555, 560-61, 112 S.Ct. 2130, 119 L.Ed.2d 351 (1992). Though Plaintiff fails the second and third prongs of the test, she asserts that the “juridical link doctrine,” discussed in Thompson v. Board of Education of the Romeo Community Schools, serves as an exception to the typical rules of standing. 709 F.2d 1200, 1204-05 (6th Cir.1983). The Thompson case involved gender discrimination claims by 22 female school teachers against various school boards based on the boards' treatment of pregnancy leave. Id. at 1200. There, the Sixth Circuit cited two limited exceptions to the rule requiring each plaintiff in a class to have a cause of action against each defendant:
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