Craigville Tel. Co. v. T-Mobile USA Inc.
| Decision Date | 16 November 2020 |
| Docket Number | No. 19 C 7190,19 C 7190 |
| Parties | CRAIGVILLE TELEPHONE CO., d/b/a ADAMS WELLS INTERNET TELECOM TV, and CONSOLIDATED TELEPHONE CO., d/b/a CTC, Plaintiffs, v. T-MOBILE USA INC., and INTELIQUENT, INC., Defendants. |
| Court | U.S. District Court — Northern District of Illinois |
MEMORANDUM OPINION AND ORDER
In this putative class action, local phone companies claim that T-Mobile USA Inc. ("T-Mobile") and Inteliquent, Inc. ("Inteliquent") (collectively "Defendants") intentionally refrained from fixing connection issues that interfered with calls placed by cellular phones to landline telephones located in rural areas. Instead, Plaintiffs contend, T-Mobile and Inteliquent utilized fake ring tones that led consumers to mistakenly blame local phone companies for those problems. Based on that conduct, Craigville Telephone Co. ("Craigville") and Consolidated Telephone Co. ("Consolidated") (collectively "Plaintiffs") bring claims under the Communications Act, 47 U.S.C. § 201 et seq., (Counts I to III); and the Racketeer Influenced and Corrupt Organizations Act ("RICO"), 18 U.S.C. § 1961 et seq. (Counts IV and V); as well as several state-law tort claims (Counts VI to VIII).
Defendants have moved to dismiss. Alternatively, Inteliquent has moved to stay the case and refer certain questions to the Federal Communications Commission ("the Commission"). And a group of local phone companies has sought to intervene. For the reasons below, the motions to dismiss are granted in part and denied in part, the motion to refer is denied, and the motion to intervene is denied as moot.
Most of the time, when a consumer initiates a call, multiple telecommunication carriers work together to route that call to the intended recipient. Am. Compl. ¶ 34, ECF No. 19. As relevant here, these carriers fall into three broad categories:
Compared with other carriers, LECs typically incur higher costs to build and maintain their networks. Id. ¶ 31. To help LECs recover those expenses, the Commission has introduced a system of intercarrier compensation. Id. Under that regime, mobile carriers and intermediate providers pay "access charges" for each call LECs complete.2 Id. ¶ 58.
Those fees are especially steep for calls that terminate with rural LECs. Id. ¶ 31. Because access charges account for a substantial portion of mobile carriers' and intermediate providers' expenses, they have an incentive to reduce the volume of calls they route to rural LECs. Id. ¶¶ 63-70.
Calls meant for recipients in rural areas often suffer from delayed or degraded connections. Id. ¶ 97. "[T]o mask the silence the caller would otherwise hear duringexcessive call setup time," some carriers play a ring tone that makes it appear to the caller that the recipient's phone is ringing, even when it is not. In re T-Mobile USA, Inc. ("Consent Decree"), 33 FCC Rcd. 3737, 3742 (2018). According to the Commission, such "false audible ringing" occurs "when an originating or intermediate provider prematurely triggers audible ring tones to the caller before the call setup request has actually reached the terminating rural provider." Id.
The Commission has highlighted two harms associated with false ringing. First, "the caller may often hang up, thinking nobody is available to receive the call." Id. Second, false ringing makes it "appear to the caller that the terminating rural provider is responsible for the call failure, instead of the originating or intermediate provider." Id. To avoid these problems, the Commission has adopted a rule forbidding "long-distance voice service providers" from deploying fake ring tones in this manner. See 47 C.F .R. § 64.2201(a).
In 2016, rural LECs submitted several complaints about T-Mobile to the Commission. Consent Decree, 33 FCC Rcd. at 3742. When the Commission's enforcement arm opened an investigation, T-Mobile acknowledged that it had inserted false ringtones into some of its subscribers' calls. Id. Based on that admission, the Commission estimated that T-Mobile "likely injected" ring tones "into hundreds of millions of calls each year." Id.
Not long after the investigation began, T-Mobile signed a consent decree conceding that it had violated the rule prohibiting the "insertion of false ring tones." Id. at 3744. T-Mobile also admitted that it "did not correct problems with itsIntermediate Providers' delivery of calls to consumers in certain rural [LECs]."3 Id. T-Mobile agreed to alter its operating procedures, create a compliance plan, and pay a $40 million civil penalty. Id. at 3744-47.
T-Mobile serves more than eighty million subscribers. Am. Compl. ¶ 18. It engages Inteliquent to handle the long-distance portion of most of those subscribers' calls. Id. ¶ 196. Working together, T-Mobile and Inteliquent have implemented what industry insiders call "least-cost routing." Id. ¶¶ 74, 127-29. That strategy seeks to minimize expenses by dispatching calls to the cheapest "carrier options for a given route." Id. Sometimes, however, lower costs come at the price of degraded service. Id. ¶ 76. The crux of Plaintiffs' complaint is that T-Mobile and Inteliquent adopted least-cost routing, recognized that it resulted in poor connection rates for calls to rural areas, and yet refrained from taking corrective action. Id. ¶¶ 76, 77.
Instead, Plaintiffs say, T-Mobile sought to conceal those problems by inserting fake ring tones into certain calls. Id. ¶¶ 183, 289. Although Plaintiffs are uncertain of Inteliquent's precise role in that aspect of the scheme, they allege that Inteliquent routed many of the T-Mobile's calls at issue, reaped economic rewards from the insertion of fake ringtones, and knew or should have known about that practice. Id. ¶¶ 172, 176-77.
Both Plaintiffs perceived "problems with calls originating on T-Mobile's network." Id. ¶ 273. Craigville, for instance, an Indiana LEC with about 2,800subscribers, recounts an incident that started in 2015. Id. ¶ 270. At the time, a T-Mobile subscriber living in Minnesota reported that she struggled to reach her parents' Craigville landline telephone. Id. Out of 109 calls the Minnesota subscriber placed to her parents, just 53 connected. Id. During failed call attempts, she "hear[d] one or two rings and dead air, ring[ing but] no rings on my Parent's end, sometimes a single ring on their end and then . . . a dial tone, music, messages such as 'you are unable to make long distance calls,' [or] faint dial tones." Id. ¶ 274.
When the Minnesota subscriber complained to T-Mobile and Craigville about those issues, both companies searched for a solution. Id. ¶¶ 280-88. In time, Craigville determined that its systems were not responsible for the failed calls. Id. ¶¶ 281, 287. A few months later, T-Mobile implemented a fix, but the Minnesota subscriber's connection issues eventually returned. Id. ¶¶ 286-87.
Consolidated, which serves about 15,000 consumers in central Minnesota, encountered a similar problem in 2013. Id. ¶ 292. That year, Consolidated received a complaint from Louie's Bucket of Bones, a barbecue restaurant that subscribed to its landline service. Id. ¶ 295. According to Louie's owner, a T-Mobile customer had been unable to reach the restaurant to place her order. Id. ¶¶ 296-97. When her calls failed, the T-Mobile customer said she heard a message claiming that Louie's number "was out of reach." Id. ¶ 299. Due to similar incidents involving multiple mobile carriers, Consolidated assigned the equivalent of one and a half full-time employees to field similar complaints. Id. ¶ 300. Believing that T-Mobile andInteliquent's routing practices depleted their resources, damaged their reputations, and depressed their access charge revenues, Plaintiffs filed this lawsuit.
To survive a motion to dismiss pursuant to Rule 12(b)(6), a complaint must "state a claim to relief that is plausible on its face." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). "A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009).
When considering motions to dismiss, the Court accepts "all well-pleaded factual allegations as true and view[s] them in the light most favorable to the plaintiff." Lavalais v. Vill. of Melrose Park, 734 F.3d 629, 632 (7th Cir. 2013) (citing Luevano v. Wal-Mart Stores, Inc., 722 F.3d 1014, 1027 (7th Cir. 2013)). At the same time, "allegations in the form of legal conclusions are insufficient to survive a Rule 12(b)(6) motion." McReynolds v. Merrill Lynch &...
To continue reading
Request your trial