Roane Cty. Emer. Commc'ns v. BellSouth
16-5154
| 6th Cir. | Mar 24, 2017Background
- Tennessee’s 911 Law (pre-2014 version) created county Emergency Communications Districts (Districts) to operate 911 call centers and authorized a per-line 911 charge; it also required telephone service suppliers (e.g., BellSouth) to bill, collect, report, and remit those charges to Districts.
- Beginning in 2011, several Districts sued BellSouth alleging it had omitted statutorily-mandated 911 charges (reducing remittances) and concealed that practice via monthly/annual remittance reports.
- Plaintiffs advanced three principal theories: (1) an implied private right of action under the 911 Law; (2) breach of fiduciary duty based on an agency theory (BellSouth as agent for billing/collection); and (3) violations of the Tennessee False Claims Act (TFCA) based on allegedly false billing reports.
- The district court dismissed the statutory claim (holding no implied private right), granted summary judgment to BellSouth on the TFCA claim (finding BellSouth’s interpretations reasonable and no knowing falsity), and rejected agency/fiduciary theories.
- The Sixth Circuit reversed: it held the 911 Law implies a private right of action for the Districts against service suppliers, found genuine factual disputes on TFCA claims (including unexplained unbilled lines), and remanded for further proceedings; it declined to reach or adopt a statutory agency/fiduciary theory because the implied statutory remedy sufficed (Judge Moore partially dissented re fiduciary claim).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the 911 Law implies a private right of action for Districts to sue service suppliers | 911 Law created Districts dependent on supplier remittances, so legislature intended Districts as intended beneficiaries and no other enforcement exists; an implied cause of action is consistent with the statute’s purposes | No express cause of action against suppliers; Brown factors counsel against implying a private remedy and statute provides enforcement structure for other actors | Court held the 911 Law implies a private right of action for Districts against service suppliers and reversed dismissal |
| Whether BellSouth was agent of Districts and thus owed fiduciary duties for billing/collection | Statute creates a scheme where Districts set rates and suppliers act under statutory duty; this can imply an agency/fiduciary relationship for billing/collection | Relationship was statutory and ministerial but not an agency; parties lacked reciprocal control and no express statutory agency exists | Majority declined to decide agency fully (statutory remedy made fiduciary remedy unnecessary); concurrence would remand fiduciary claim as triable fact issue |
| Whether BellSouth violated TFCA by knowingly using false statements to conceal under-billing (reports claiming it billed/collected as required) | Reports suggested BellSouth represented it had billed all required lines; data (including BellSouth expert report) show unexplained unbilled lines and possible concealment — raises factual dispute on knowing falsity | Reports merely stated amounts billed and remitted (not a certification of completeness); any disputes are reasonable statutory-interpretation disagreements, not knowing falsity | Reversed summary judgment on TFCA: genuine disputes (including unexplained unbilled lines and whether statements were knowingly false) preclude summary judgment; remanded for further findings |
| Whether the district court properly required proof of "bad faith" or lack of a reasonable interpretation to establish TFCA knowledge element | "Knowing" under TFCA includes actual knowledge, deliberate ignorance, or reckless disregard; specific intent to defraud not required, so plaintiff need not prove bad faith | Reasonable statutory interpretation defeats scienter; where good-faith dispute exists, TFCA liability inappropriate | Court rejected district court’s imposition of a bad-faith requirement and held that summary judgment was erroneous on that basis; scienter remains a jury/bench question on remand |
Key Cases Cited
- Brown v. Tennessee Title Loans, 328 S.W.3d 850 (Tenn. 2010) (articulates three-factor test for implying private rights of action under Tennessee law)
- Hamilton Cty. Emergency Commc’ns Dist. v. BellSouth Telecomms., LLC (Hamilton I), 890 F. Supp. 2d 862 (E.D. Tenn. 2012) (district court dismissal ruling on implied right of action)
- Hamilton Cty. Emergency Commc’ns Dist. v. BellSouth Telecomms., LLC (Hamilton II), 154 F. Supp. 3d 666 (E.D. Tenn. 2016) (district court summary judgment opinion on TFCA and agency issues)
- White v. Revco Disc. Drug Ctrs., Inc., 33 S.W.3d 713 (Tenn. 2000) (discussed in context of control test for agency)
- Gordon v. Greenview Hosp., Inc., 300 S.W.3d 635 (Tenn. 2009) (agency analysis and control requirement)
- United States v. Southland Mgmt. Corp., 326 F.3d 669 (5th Cir. 2003) (addressed in discussion of good-faith/interpretation defenses under FCA framework)
- Hogan v. Jacobson, 823 F.3d 872 (6th Cir. 2016) (cited for standard of appellate review)