Hamilton Cnty. Emergency Commc'ns Dist. v. BellSouth Telecomms., LLC, 1:11-CV-330 (Lead Case)

CourtUnited States District Courts. 6th Circuit. Eastern District of Tennessee
Citation154 F.Supp.3d 666
Docket Number1:12-CV-176,1:12-CV-186,1:11-CV-330 (Lead Case),1:12-CV-003,1:12-CV-139,1:12-CV-138,1:12-CV-166,1:12-CV-149,1:12-CV-056,1:12-CV-131
Parties Hamilton County Emergency Communications District, et al., Plaintiffs, v. BellSouth Telecommunications, LLC, d/b/a AT&T Tennessee, Defendant.
Decision Date05 January 2016

154 F.Supp.3d 666

Hamilton County Emergency Communications District, et al., Plaintiffs,
BellSouth Telecommunications, LLC, d/b/a AT&T Tennessee, Defendant.

1:11-CV-330 (Lead Case)

United States District Court, E.D. Tennessee, Southern Division, at Chattanooga.

Filed January 5, 2016

154 F.Supp.3d 674

John H. Lawrence, Tom Greenholtz, Yousef A. Hamadeh, Frederick L. Hitchcock, Chambliss, Bahner & Stophel, PC, Michael J. Mahn, Law Office of Michael J. Mahn, Chattanooga, TN, Donald D. Howell, Frantz, McConnell & Seymour, LLP, Knoxville, TN, for Plaintiffs.

Cindy D. Hanson, James Henry Walker, IV, Jeffrey Fisher, Michael J. Breslin, Kilpatrick Townsend & Stockton, LLP, Atlanta, GA, Robert G. Norred, Jr., Logan-Thompson, P.C., Cleveland, TN, Scott H. Angstreich, Kellogg, Huber, Hansen, Todd, Evans & Figel, PLLC, Washington, DC, for Defendant.



For many years, the Tennessee 911 emergency telephone call system has served and continues to serve a very worthwhile public purpose. That system relies upon the collection of mandatory fees from subscribers to telephone land lines. However, as communication technology has advanced, the telecommunications industry has become much more sophisticated, and communications technology inconceivable in the not-too-distant past is in common use today. A result of this tremendous advance in technology is that more and more people rely upon telecommunications by methods other than land lines. This has resulted in a decrease in the number of telephone subscribers supporting the 911 system and a decrease in the revenue on which these systems must operate. And with the advance in communication technology and its ever-increasing technological complexity, it is much more difficult for the non-technician to understand how that technology functions and how telecommunication companies use that technology. As is true in many industries, the new technological environment has its own technical vocabulary.

The case before the Court presents the question of whether one such company, Defendant BellSouth Telecommunications, LLC, d/b/a AT&T Tennessee (“BellSouth” or “Defendant”), has properly billed its subscribers for 911 services as required by Tennessee law and has properly remitted those collections to the Plaintiff Emergency Communications Districts (the “Districts” or “Plaintiffs”)1 to which they were due. The parties are sharply divided on the factual issues and the law. They have engaged in lengthy litigation at considerable costs.

Because of the advanced technology, the technical detail, and the technical language

154 F.Supp.3d 675

involved, the facts of this case are somewhat difficult to master. Ultimately, however, the resolution of this case does not depend on technological questions but rather on general principles of law that are familiar and well known. Thus, while the case law on the specific questions presented is sparse, these general, familiar principles guide the determination of this case. Applying these principles and the sparse case law available, the Court will GRANT Defendant BellSouth's motion for partial summary judgment (Court File No. 152) and motion for summary judgment (Court File No. 256) and will DENY the Districts' second motion for partial summary judgment (Court File No. 248).2








1. The Parties' Arguments ...681

2. Statutory Construction ...683

3. The Court's Reading ...683

4. Other Arguments Raised by the Parties ...686


1. Per Se Fiduciary Duty ...687

2. Confidential Relationship ...689


1. Background ...692

2. Tennessee False Claims Act ...694

3. Fraudulent Misrepresentation ...701

4. Fraudulent Concealment ...701

5. Negligent Misrepresentation ...703



This lawsuit arises at the confluence of two regulatory systems: the Tennessee system designed to ensure the continued existence of 911 as the universal emergency number and the federal system designed to facilitate the deregulation of the telecommunications industry.

Before the federal Telecommunications Act of 1996, the telecommunications industry was dominated by monopolists, so-called Incumbent Local Exchange Carriers (“ILECs”), like BellSouth. To facilitate entry by new competitors, the Telecommunications Act forced these ILECs, who had made huge investments in infrastructure, to allow competitors access to this infrastructure. These competitors are called Competitive Local Exchange Carriers (“CLECs”).

154 F.Supp.3d 676

In 1984 Tennessee passed the Emergency Communications District Law (the “911 Law”), Tenn. Code Ann. §§ 7–86–101, et seq ., to formally establish 911 as the primary emergency telephone number for all Tennessee residents.3 The 911 Law created Emergency Communications Districts (“ECDs”), municipal corporations which run the 911 call centers in each county and route calls to the proper emergency service. To support these functions, the 911 Law allows the ECDs to levy a charge (the “911 charge”) on telephone lines. Telephone “service suppliers”4 such as BellSouth are required to bill and collect these 911 charges from their “service users.”5 Id. Service suppliers must then report and remit the 911 charges at least every two months to the ECDs. Id . To ensure that the 911 system remained viable in the new landscape created by the Telecommunications Act, the Tennessee Regulatory Authority issued a rule in 1998 (the “TRA Rule”) allocating responsibility for the collection and remission of 911 charges between the ILECs and the various types of CLECs.

The Districts brought the instant action to recover 911 charges they believe BellSouth should have assessed and remitted. They seek recovery on several theories, which can be grouped into three main categories. The Districts first sought to recover directly under the 911 Law. This theory was rejected by the Court at the motion to dismiss stage because the 911 Law does not provide a direct cause of action against service suppliers like BellSouth (Court File Nos. 38 & 39. Next, the Districts seek to recover for BellSouth's alleged failure to collect and remit certain 911 charges under several tort theories: breach of fiduciary duty, violation of the Tennessee False Claims Act (“TFCA”), fraudulent misrepresentation, fraudulent concealment, and negligent misrepresentation. Relatedly, the Districts seek declaratory and injunctive relief confirming the Districts' reading of the 911 Law. Finally, the Districts assert that BellSouth is liable for the failure of certain CLECs to collect and remit 911 charges associated with those CLECs' customers. The Districts read the law as imposing responsibility for collecting 911 charges on any line provided by BellSouth. And because these CLECs either lease or interconnect with BellSouth's network to provide service, the Districts reason that BellSouth is obligated to collect and remit 911 charges on those lines, in addition to the lines it provides to its own end-user customers.

The Court will first address the propriety of declaratory and injunctive relief. The Court will then proceed to the question of statutory interpretation: whether BellSouth may be held liable for these CLECs' failure to collect and remit 911 charges. Finally, the Court will assess whether the Districts have met their burden of production as to each of the substantive tort theories asserted by the Districts.

154 F.Supp.3d 677



BellSouth argues it would be improper for the Court to enter a declaratory judgment (either on summary judgment or after trial) addressing the issues set forth by the Districts given that the Tennessee legislature recently passed a law updating the 911 Law and putting to rest the disputed issues. See 911 Funding Modernization and IP Transition Act of 2014, 2014 Tenn. Pub. Acts 795. In evaluating requests for declaratory relief under 28 U.S.C. § 2201, courts should consider:

(1) whether the judgment would settle the controversy; (2) whether the declaratory judgment action would serve a useful purpose in clarifying the legal relations at issue; (3) whether the declaratory remedy is being used merely for the purpose of “procedural fencing” or “to provide an arena for a race for res judicata”; (4) whether the use of a declaratory action would increase the friction between our federal and state courts and improperly encroach on state jurisdiction; and (5) whether there is an alternative remedy that is better or more effective.

Bituminous Cas. Corp. v. J & L Lumber Co., Inc ., 373 F.3d 807, 813 (6th Cir.2004) (citations omitted).

Here, the second prong—whether the relief would serve a “useful purpose”—is dispositive. “The ‘useful purpose’ served by a declaratory judgment is the clarification of legal duties for the future, rather than the past harm a coercive tort action is aimed at redressing.” AmSouth Bank v. Dale , 386 F.3d 763, 786 (6th Cir.2004). “When a law has been amended or repealed, actions seeking declaratory or injunctive relief for earlier versions are generally moot.” Teague v. Cooper , 720 F.3d 973, 976 (8th Cir.2013) (quoting Phelps Roper v. City of Manchester , 697 F.3d 678, 687 (8th Cir.2012) (en banc)) accord Brandywine, Inc. v. City of Richmond , 359 F.3d 830, 836 (6th Cir.2004) (holding that a declaratory judgment action regarding the legality of a zoning regulation was rendered moot by the passage of a new zoning ordinance). Declaratory relief is also improper where the issues will be adjudicated in connection with a pending claim for damages. See AmSouth Bank , 386 F.3d at 787 (“Where a pending coercive action,...

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