MBS-Certified Pub. Accountants, LLC v. Wisconsin Bell Inc., CASE NO. : 2008AP1830

• Decision Date: 14 February 2012
• Docket Number: CASE NO. : 2008AP1830,L.C No. 2006CV8092
• Parties: MBS-Certified Public Accountants, LLC and Thomas H. Schmitt, CPA, d/b/a Metropolitan Business Services, Plaintiffs-Appellants-Cross Respondents-Petitioners, v. Wisconsin Bell Inc., d/b/a AT & T Wisconsin, Defendant-Respondent, ILD Telecommunications, Inc., d/b/a ILD Teleservices, Local Biz USA, Inc. and Americatel Corporation, Defendant s-Re spondent s-Cross-Appellants, US Connect, LLC, Defendant.
• Court: Wisconsin Supreme Court

MBS-Certified Public Accountants, LLC
and Thomas H. Schmitt, CPA, d/b/a Metropolitan Business Services, Plaintiffs-Appellants-Cross Respondents-Petitioners,
v.
Wisconsin Bell Inc., d/b/a AT & T Wisconsin, Defendant-Respondent,
ILD Telecommunications, Inc., d/b/a ILD
Teleservices, Local Biz USA, Inc.
and Americatel Corporation, Defendant s-Re spondent s-Cross-Appellants,
US Connect, LLC, Defendant.

CASE NO. : 2008AP1830
L.C No. 2006CV8092

SUPREME COURT OF WISCONSIN

Date: February 24, 2012
Oral argument: September 16, 2011

REVIEW OF THE DECISION OF THE COURT OF APPEALS Reported at 329 Wis. 2d 709, 790 N.W.2d 542 (Ct. App. 2010-Unpublished)

SUBMITTED ON BRIEFS:

SOURCE OF APPEAL:
COURT: CIRCUIT
COUNTY: MILWAUKEE
JUDGE: RICHARD J. SANKOVITZ

JUSTICES:

CONCURRED: PROSSER, J., concurs in part and dissents in part (Opinion filed).
GABLEMAN, J., joins concurrence/dissent.

DISSENTED:
NOT PARTICIPATING: ABRAHAMSON, C. J., did not participate.

ATTORNEYS:

For the plaintiffs-appellants-cross-respondents-petitioners, there briefs filed by Douglas P. Dehler and O'Neil Cannon, Hollman, DeJong & Laing, S.C., Milwaukee, James E. Miller, pro hac vice, James C. Shah, pro hac vice, and Shepherd,

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Finkelman, Miller & Shah, LLC, Media, PA, and oral argument by Douglas P. Dehler.

For the defendant-respondent there were briefs filed by Paul F. Linn, Ted A. Wisnefski, and Michael, Best & Friedrich, LLP, Milwaukee, and oral argument by Paul F. Linn.

For the defendant-respondent-cross-appellant there were briefs filed by Robert H. Friebert, Christopher M. Meuler and Friebert, Finerty & St. John, S.C. of Milwaukee, and Gregory F. Harley, pro hac vice, and Burr & Forman, LLP, and oral argument by Gregory F. Harley.

An amicus curiae brief was filed by John S. Greene, assistant attorney general, with whom on the brief was J. B. Van Hollen, attorney general, on behalf of the State of Wisconsin.

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NOTICE

This opinion is subject to further editing and modification. The final version will appear in the bound volume of the official reports.

No. 2008AP1830

MBS-Certified Public Accountants, LLC

and Thomas H. Schmitt, CPA, d/b/a Metropolitan Business Services,

Plaintiffs-Appellants-Cross-Respondents-Petitioners,

v.

Wisconsin Bell inc., d/b/a AT & T Wisconsin, Defendant-Respondent,

ILD Telecommunications, Inc., d/b/a ILD

Teleservices, Local Biz USA, Inc. and Americatel Corporation,

Defendants-Respondents-Cross-Appellants, US Connect, LLC, Defendant.

REVIEW of a decision of the Court of Appeals. Reversed and cause remanded to the court of appeals.

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¶1 ANN WALSH BRADLEY, J. The petitioners, Thomas H. Schmitt and MBS-Certified Public Accountants, LLC (collectively, MBS), seek review of an unpublished decision of the court of appeals affirming a circuit court order dismissing their claims for monetary relief.¹ The circuit court determined that the common law voluntary payment doctrine barred MBS's claims against Wisconsin Bell, Inc. and ILD Telecommunications, Inc. for damages under Wis. Stat. § 100.207 and other statutes.²

¶2 The defendant telecommunications companies assert that Putnam v. Time Warner Cable of Southeastern Wisconsin, 2002 WI 108, 255 Wis. 2d 447, 649 N.W.2d 626, is squarely on point and forecloses the argument advanced by MBS. Additionally, they contend that under the rule of Fuchsgruber v. Custom Accessories, Inc., 2001 WI 81, 244 Wis. 2d 758, 628 N.W.2d 833, the legislature was required to make explicit reference to the voluntary payment doctrine in the text of Wis. Stat. § 100.207 if it intended the doctrine to be inapplicable to claims under that statute.

¶3 We conclude that no Wisconsin court has addressed whether the legislature intended the voluntary payment doctrine to be a viable defense against any cause of action created by a statute. In Putnam, the question of whether the voluntary

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payment doctrine was a viable defense to a claim under Wis. Stat. § 100.18(1) may have lurked in the record, but it was neither brought to the attention of the court nor was it specifically addressed. Accordingly, it was not decided by this court.

¶4 We further determine that the defendants misinterpret Fuchsgruber. Application of the common law voluntary payment doctrine would undermine the manifest purposes of Wis. Stat. § 100.207. Under these circumstances, the conflict between the statute's manifest purpose and the common law defense leaves no doubt that the legislature intended that the common law defense should not be applied to bar claims under the statute.

¶5 Accordingly, we reverse and remand to the court of appeals to address ILD's cross-appeal and, if appropriate, any previously unresolved appellate issues regarding Wis. Stat. § 100.18(1) and the Wisconsin Organized Crime Control Act.

I

¶6 The allegations at issue in this case relate to an illegal telecommunications practice called "cramming." According to MBS, cramming is a deceptive billing scheme in which telecommunications companies insert relatively small, unauthorized charges into customers' telephone bills with the expectation that the customers will unwittingly pay the unauthorized charges.

¶7 The facts set forth below are taken primarily from MBS's complaint. Because we are reviewing the circuit court's

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grant of a motion to dismiss for failure to state a claim, we must assume that these facts are true.

¶8 Thomas Schmitt is an accountant who owns and operates MBS-Certified Public Accountants, LLC (MBS). Wisconsin Bell is the local exchange carrier that provides MBS's telephone service.³ At some point, Schmitt discovered that Wisconsin Bell's telephone bills contained unauthorized charges. Schmitt and MBS filed suit.⁴

¶9 According to the allegations in the complaint, the unauthorized charges, which ranged from $2 to $40 per month, were generated by three service providers, Local Biz USA, U.S. Connect, and AmericaTel. These service providers are in the business of providing internet and web hosting services, directory assistance services, and international calling plans, respectively. MBS asserted: "Because consumers would be more likely to question unauthorized charges if they were contained in bills sent to them directly by the Service Provider Defendants . . . , those Service Provider Defendants enlist the

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aid of third-party billing companies, . . . which agree to take part in the deceptive business practices in exchange for a fee."

¶10 According to MBS, the unauthorized charges were forwarded to ILD Communications (ILD), a billing clearinghouse. ILD aggregated the unauthorized charges and then forwarded them on to Wisconsin Bell, where they were incorporated into MBS's telephone bills under the heading "Miscellaneous Charges and Credits." The complaint alleges that Schmitt did not notice the unauthorized charges and unwittingly paid them.

¶11 The defendants named in MBS's complaint fall into three categories: service providers (Local Biz USA, U.S. Connect, and AmericaTel); billing clearinghouses (ILD); and local exchange carriers (Wisconsin Bell). At this point, however, only two defendants, ILD and Wisconsin Bell, remain as parties to this appeal.⁵

¶12 In relevant part, the complaint alleged violations of Wis. Stat. § 100.207(2) and (3)(a), violations of Wis. Stat. § 100.18(1), and violations of the Wisconsin Organized Crime Control Act, Wis. Stat. § 946.80, et seq. (hereinafter, the Crime Control Act).⁶ The telecommunications company defendants

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filed motions to dismiss, alleging various defenses including the voluntary payment doctrine. Under that doctrine, a party cannot bring an action "to recover payments that [were] paid voluntarily, with full knowledge of the material facts, and absent fraud or wrongful conduct inducing payment." Putnam, 255 Wis. 2d 447, ¶13.

¶13 At a hearing on the defendants' motions, the circuit court dismissed all claims for monetary relief against ILD and Wisconsin Bell with one exception.⁷ The circuit court's analysis focused primarily on the language of 100.207(2) and (3)(a). It determined that although the complaint properly alleged violations of Wis. Stat. § 100.207, the voluntary payment doctrine would bar any entitlement to monetary relief.

¶14 Taking the allegations in the complaint as true, the court concluded that each of the defendants made false statements with regard to the provision of telecommunications service in violation of § 100.207(2).⁸ It explained: "Stating on

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a phone bill that a customer owes money for services the customer did not authorize is false. . . . And that seems to be the only element that must be shown to demonstrate a violation of Wis. Stat. § 100.207(2)."

¶15 The court also concluded that all of the defendants except ILD violated § 100.207(3)(a).⁹ The court excepted ILD because it was "satisfied that ILD did not bill the plaintiffs. ILD collected, packaged, and communicated billing information to Wisconsin Bell, but that conduct cannot fairly be described as 'billing'[.]"

¶16 Nevertheless, the court went on to conclude that "the complaint also establishes a possible defense to the damage claim." Relying on MBS's allegation that Schmitt "did not notice the charges and unwittingly paid them," it asserted:...