Hamilton Cnty. Emergency Commc'ns Dist. v. Bellsouth Telecomms. LLC

• Citation: 852 F.3d 521
• Decision Date: 24 March 2017
• Docket Number: Nos. 16-5149 through 16-5158,s. 16-5149 through 16-5158
• Parties: HAMILTON COUNTY EMERGENCY COMMUNICATIONS DISTRICT (16-5149); Bradley County Emergency Communications District (16-5150); Blount County Emergency Communications District (16-5151); Bedford County Emergency Communications District (16-5152); Coffee County Emergency Communications District (16-5153); Roane County Emergency Communications District (16-5154); Franklin County Emergency Communications District (16-5155); Giles County Emergency Communications District (16-5156); Cheatham County Emergency Communications District (16-5157); Knox County Emergency Communications District (16-5158), Plaintiffs-Appellants, v. BELLSOUTH TELECOMMUNICATIONS LLC, dba AT&T Tennessee, Defendant-Appellee.
• Court: United States Courts of Appeals. United States Court of Appeals (6th Circuit)

852 F.3d 521

HAMILTON COUNTY EMERGENCY COMMUNICATIONS DISTRICT (16-5149); Bradley County Emergency Communications District (16-5150); Blount County Emergency Communications District (16-5151); Bedford County Emergency Communications District (16-5152); Coffee County Emergency Communications District (16-5153); Roane County Emergency Communications District (16-5154); Franklin County Emergency Communications District (16-5155); Giles County Emergency Communications District (16-5156); Cheatham County Emergency Communications District (16-5157); Knox County Emergency Communications District (16-5158), Plaintiffs-Appellants,
v.
BELLSOUTH TELECOMMUNICATIONS LLC, dba AT&T Tennessee, Defendant-Appellee.

Nos. 16-5149 through 16-5158

United States Court of Appeals, Sixth Circuit.

Argued: September 14, 2016
Decided and Filed: March 24, 2017
Rehearing En Banc Denied May 4, 2017

ARGUED: Frederick L. Hitchcock, CHAMBLISS, BAHNER & STOPHEL, P.C., Chattanooga, Tennessee, for Appellants. Scott H. Angstreich, KELLOGG, HUBER, HANSEN, TODD, EVANS & FIGEL, P.L.L.C., Washington, D.C., for Appellee. ON BRIEF: Frederick L. Hitchcock, Willa B. Kalaidjian, CHAMBLISS, BAHNER & STOPHEL, P.C., Chattanooga, Tennessee, for Appellants. Scott H. Angstreich, Jeremy S. Newman, KELLOGG, HUBER, HANSEN, TODD, EVANS & FIGEL, P.L.L.C., Washington, D.C., for Appellee. Kate Comerford Todd, Steven P. Lehotsky, UNITED STATES CHAMBER LITIGATION CENTER, Washington, D.C., Jonathan G. Cedarbau, WILMER CUTLER PICKERING HALE AND DORR LLP, Washington, D.C., Brook Hopkins, Sameer Ahmed, WILMER CUTLER PICKERING HALE AND DORR LLP, Boston, Massachusetts, Misty Smith Kelley, BAKER, DONELSON, BEARMAN, CALDWELL & BERKOWITZ, PC, Chattanooga, Tennessee, Gregory L. Skidmore, KIRKLAND & ELLIS LLP, Washington, D.C., for Amici Curiae.

Before: BATCHELDER, MOORE, and COOK, Circuit Judges.

BATCHELDER, J., delivered the opinion of the court in which COOK, J., joined, and MOORE, J., joined in part. MOORE, J. (pp. 540–41), delivered a separate opinion concurring in part and dissenting in part.

OPINION

ALICE M. BATCHELDER, Circuit Judge.

In this diversity action, the plaintiff municipal corporations operate the local "emergency communications" or "911" programs in their respective counties; specifically, the call centers that receive and route the 911 emergency calls to the proper emergency responders (e.g., police, fire, ambulance). They allege that the defendant telephone company—to reduce costs, offer lower prices, and obtain more customers—engaged in a covert practice of omitting fees mandated by Tennessee statute, and they seek compensation under that statute. They also allege that, while concealing this practice, the telephone company violated the Tennessee False Claims Act. The defendant telephone company moved to dismiss the first claim, arguing that the statute contained no implied private right of action. The district court agreed. The telephone company then moved for summary judgment on the second claim, arguing that its statements were not knowingly false. The district court agreed again, ending the action. When the plaintiffs appealed, we consolidated their appeals and, finding that the district court erred in both the dismissal and the summary judgment, we REVERSE both judgments and REMAND for further proceedings consistent with this opinion.

I.

In 1984, Tennessee passed its Emergency Communications District Law (hereinafter the "911 Law"), Tenn. Code Ann. (T.C.A.) § 7–86–101 et seq. , to formally establish 911 as the primary emergency telephone number for all Tennessee residents.

852 F.3d 525

¹ The 911 Law created municipal corporations for each county, i.e., Emergency Communications Districts ("Districts"), to run the 911 programs, specifically including the call centers that receive and route the 911 emergency calls to the proper emergency service. Id . at §§ 104 to 107. To support these functions, the 911 Law empowers the Districts to levy a charge (the "911 charge") on telephone users' phone lines. Id . at § 108(a). Correspondingly, the 911 Law compels a telephone "service supplier" such as BellSouth to bill and collect these 911 charges from their "service users."² Id . at § 108(d). The 911 Law completes the loop by ordering the service suppliers (phone companies) to report and remit the 911 charges to the Districts.³ Id . at § 110(a).

Beginning in 2011, several Districts sued BellSouth to recover tens of millions of dollars in 911 charges that they believe BellSouth should have billed, collected, and remitted. They sought recovery on multiple theories, three of which persist to appeal. The Districts sought to recover directly under the 911 Law, but the district court dismissed that claim, holding that the 911 Law does not provide a cause of action against service suppliers such as BellSouth. Hamilton Cty. Emergency Commc'ns Dist. v. BellSouth Telecomms., LLC (Hamilton I) , 890 F.Supp.2d 862, 876 (E.D. Tenn. 2012).⁴ The Districts also sought to recover for a breach of fiduciary duty under an agency construct, but the court granted summary judgment to BellSouth, finding a lack of control and an "arm's-length business relationship," not an agency relationship with fiduciary obligations.⁵ Hamilton Cty. Emergency Commc'ns Dist. v. BellSouth Telecomms., LLC (Hamilton II) , 154 F.Supp.3d 666, 692 (E.D. Tenn. 2016). Finally, the Districts sought recovery via the Tennessee False Claims Act (TFCA), T.C.A. § 4-18-101 et seq. , but the court held that BellSouth's interpretations of the 911 Law were sufficiently reasonable and the Districts could not demonstrate "falsity" under the TFCA. Id. at 700.

852 F.3d 526

II.

Our review in this appeal is de novo. See Hogan v. Jacobson , 823 F.3d 872, 883 (6th Cir. 2016) ; Yazdian v. ConMed Endoscopic Techs., Inc. , 793 F.3d 634, 644 (6th Cir. 2015).

A.

The Districts contend that the district court erred by holding that the 911 Law implies no private right of action, arguing that the court overlooked Tennessee Code § 1-3-119(c)(4) and misapplied Brown v. Tennessee Title Loans, Inc. , 328 S.W.3d 850 (Tenn. 2010). The district court relied on Brown and, after acknowledging that the 911 Law contained no express right of action against service suppliers (phone companies), accurately recited Brown 's three-factor inquiry into "whether the legislature intended for such a right to be implied":

(1) whether the party bringing the action is an intended beneficiary within the protection of the statute,

(2) whether there is any indication of legislative intent, express or implied, to create or deny the private right of action, and

(3) whether implying such a remedy is consistent with the underlying purposes of the legislation.

Hamilton I , 890 F.Supp.2d at 874 (formatting modified) (quoting Brown , 328 S.W.3d at 855 & n.4 (relying on Cort v. Ash , 422 U.S. 66, 78, 95 S.Ct. 2080, 45 L.Ed.2d 26 (1975), which had conceived these factors in the federal context)). The district court answered "no" to each query, announcing that: (1) the Districts were not the intended beneficiaries, id . at 875 (i.e., "the actual beneficiary of the statute is the public" and "[a]lthough [a District] is the conduit through which the public receives 911 service, it is not the actual beneficiary"); (2) "it is highly likely the Tennessee legislature did not intend to create such a right of action" given that "the [911] Law explicitly provides that legal action can be taken against service users [but does not include a similar provision for] ^{[6 ]} service suppliers," id . ; and (3) "the primary purpose of the [911 Law] is to establish a uniform emergency number for the public" not to "ensur[e] service suppliers properly bill, collect, and remit 911 charges," id . at 876 (touting the applicability of "other available remedies," unspecified).

Brown warrants some further examination before we proceed. The question in Brown was whether the Tennessee Title Pledge Act (TTPA)⁷ implied a private right of action by a borrower against a lender who violated the TTPA by charging excessive interest or unauthorized fees. Brown , 328 S.W.3d at 853. In conducting the three-query analysis (supra ), the Tennessee Supreme Court found that (1) the borrowers were the intended beneficiaries, but that neither the (2) legislative intent nor the (3) underlying purpose supported a private right of action. Id . at 858-61. In its analysis, the Brown court returned repeatedly to the fact that the TTPA had specific, express enforcement provisions,

852 F.3d 527

operating "entirely through criminal and administrative penalties" (e.g., criminal misdemeanor prosecution and license suspension). Id . at 857-60. And these governmental-enforcement provisions took on added importance with the court's proclamation that "where an act as a whole provides for governmental enforcement of its provisions, we will not casually engraft means of enforcement of one of those provisions unless such legislative intent is manifestly clear." Id . at 857 (editorial marks omitted) (quoting Premium Fin. Corp. of Am. v. Crump Ins. Servs. of Memphis, Inc. , 978 S.W.2d 91, 94 (Tenn. 1998) ); see also Am. Heritage Apts., Inc. v. Hamilton Cty. Water & Wastewater Treatment Auth. , 494 S.W.3d 31, 52 (Tenn. 2016) (adopting the underlying court's reasoning to hold that Tennessee's Wastewater Treatment Authority Act, T.C.A. § 68-221-601 et seq. , creates a private right of action (citing Am. Heritage Apts., Inc. v. Hamilton Cty. Water & Wastewater Treatment Auth. , No. E201400302COAR3CV, 2015 WL 399215, at *10 (Tenn. Ct. App. Jan. 30, 2015), which emphasized the absence of any administrative remedy and applied the Brown factors)).⁸

The 911 Law here, however, contained no such governmental-enforcement provisions against a service supplier; no express criminal sanctions for even the most wanton violation, no means of imposing any administrative penalty, no governmental oversight at all, in fact. See T.C.A. § 7-86-110. The 911 Law provided the...