Opinion
CIVIL ACTION NO. 3:15-cv-01243
11-09-2018
TERRY McNEIL, Plaintiff, v. GLOBAL TEL-LINK, et al., Defendants.
(BRANN, J.)
() REPORT AND RECOMMENDATION
The plaintiff, Terry McNeil, commenced this action by filing his original pro se complaint on June 25, 2015. At the time, McNeil was incarcerated at SCI Benner Township, in Centre County, Pennsylvania.
I. BACKGROUND
McNeil's original complaint alleged that defendant Global Tel-Link ("GTL"), a private-sector telecommunications company that provides inmate calling services ("ICS"), charged excessive long-distance telephone service rates to him and other inmates at SCI Benner Township between 2012 and 2015, and that this conduct violated his federal civil rights, made actionable under 42 U.S.C. § 1983. (Doc. 1). On November 7, 2016, we recommended that the original complaint be dismissed as frivolous because GTL is not a state actor for § 1983 purposes, and for failure to state a claim because McNeil's dissatisfaction with the long-distance rates charged by GTL did not rise to the level of a constitutional violation. (Doc. 37). On November 13, 2017, the Court adopted our recommendations over the plaintiff's objections and dismissed the original complaint as frivolous and for failure to state a claim, granting the plaintiff leave to file an amended complaint within twenty-one days. (Doc. 51).
Within that twenty-one day period, the plaintiff submitted two separate documents styled as amended complaints, which we liberally construed together as McNeil's operative amended complaint. (Doc. 54; Doc. 55). See generally Mala v. Crown Bay Marina, Inc., 704 F.3d 239, 244-46 (3d Cir. 2013) (discussing a court's obligation to liberally construe pro se pleadings and other submissions, particularly when dealing with imprisoned pro se litigants). This amended complaint, mostly comprised of photocopied pages from a class action complaint previously filed in another federal district court, asserted two claims against GTL: a statutory claim under Section 207 of the Federal Communications Act ("FCA"), 47 U.S.C. § 207, and an unjust enrichment claim under Pennsylvania state common law. These claims are based on allegations that GTL charged "exorbitant rates and fees" for telephone calls to and from inmates under exclusive contracts with correctional facilities around the United States, which the Federal Communications Commission had found to be "unreasonably high, unfair, and far in excess of the cost of providing service." The non-photocopied pages of the amended complaint added allegations of fact specific to McNeil and his own personal use of GTL telephone services on and after June 18, 2001.
In re Global Tel*Link Corp. ICS Litig., Civil Action No. 5:14-cv-5275-TLB (W.D. Ark. filed Apr. 23, 2015).
II. LEGAL STANDARD
A plaintiff proceeding in forma pauperis is subject to 28 U.S.C. § 1915(e)(2), which provides that a court "shall dismiss the case at any time if the court determines that . . . the action . . . fails to state a claim on which relief may be granted." 28 U.S.C. § 1915(e)(2)(B)(ii). The Court has a similar obligation with respect to actions concerning prison conditions. See 42 U.S.C. § 1997e(c)(1). See generally Banks v. County of Allegheny, 568 F. Supp. 2d 579, 587-89 (W.D. Pa. 2008) (summarizing prisoner litigation screening procedures and standards). The legal standard for dismissing a complaint for failure to state a claim under § 1915(e)(2)(B)(ii) or § 1997e(c)(1) is the same as that for dismissing a complaint pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure. Brodzki v. Tribune Co., 481 Fed. App'x 705, 706 (3d Cir. 2012) (per curiam); Mitchell v. Dodrill, 696 F. Supp. 2d 454, 471 (M.D. Pa. 2010); Banks, 568 F. Supp. 2d at 588. "Under Rule 12(b)(6), a motion to dismiss may be granted only if, accepting all well-pleaded allegations in the complaint as true and viewing them in the light most favorable to the plaintiff, a court finds the plaintiff's claims lack facial plausibility." Warren Gen. Hosp. v. Amgen Inc., 643 F.3d 77, 84 (3d Cir. 2011) (citing Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555-56 (2007)). In deciding the motion, the Court may consider the facts alleged on the face of the complaint, as well as "documents incorporated into the complaint by reference, and matters of which a court may take judicial notice." Tellabs, Inc. v. Makor Issues & Rights, Ltd., 551 U.S. 308, 322 (2007). Although the Court must accept the fact allegations in the complaint as true, it is not compelled to accept "unsupported conclusions and unwarranted inferences, or a legal conclusion couched as a factual allegation." Morrow v. Balaski, 719 F.3d 160, 165 (3d Cir. 2013) (quoting Baraka v. McGreevey, 481 F.3d 187, 195 (3d Cir. 2007)). Nor is it required to credit factual allegations contradicted by indisputably authentic documents on which the complaint relies or matters of public record of which we may take judicial notice. In re Washington Mut. Inc., ___ Fed. App'x ___, No. 17-2360, 2018 WL 4600668, at *2 n.3 (3d Cir. Sept. 25, 2018); Sourovelis v. City of Philadelphia, 246 F. Supp. 3d 1058, 1075 (E.D. Pa. 2017); Banks, 568 F. Supp. 2d at 588-89.
III. DISCUSSION
McNeil alleges that the defendant, GTL, charged "exorbitant rates and fees" for telephone calls to and from inmates under exclusive contracts with correctional facilities around the United States, which the Federal Communications Commission ("F.C.C.") found in 2013 to be "unreasonably high, unfair, and far in excess of the cost of providing service[,] . . . driven largely by substantial commission payments ICS providers have agreed to make to prison authorities," and thus in violation of Sections 201 and 276 of the FCA. In re Rates for Interstate Inmate Calling Servs., 28 FCC Rcd. 15927, 15929 (F.C.C. Nov. 21, 2013) [hereinafter, ICS Rates II]. In the alternative, he alleges that imposition of these "exorbitant rates and fees" on inmates and their families constitutes unjust enrichment under the common law of Pennsylvania. He further appears to seek certification of a class action, with himself as a class representative.
A. Class Certification
Although he has not filed a separate motion for certification of a class action pursuant to Rule 23(c) of the Federal Rules of Civil Procedure, McNeil's amended complaint expressly states that he is seeking certification of a class action.
McNeil has failed to meet the minimum requirements for certification of a class action.
Four prerequisites must be met to obtain certification of a class action:Fed. R. Civ. P. 23(a).
(1) the class is so numerous that joinder of all members is impracticable;
(2) there are questions of law or fact common to the class;
(3) the claims or defenses of the representative parties are typical of the claims or defenses of the class; and
(4) the representative parties will fairly and adequately protect the interests of the class.
A class can only be certified if all four requirements of Rule 23(a) are met. Fotta v. Trustees of United Mine Workers of Am., 319 F.3d 612, 618-19 (3d Cir. 2003). McNeil, who is proceeding pro se, cannot satisfy the fourth requirement, adequacy of representation. Reid v. Ebbert, Civil Action No. 1:16-cv-01403, at *1 (M.D. Pa. June 19, 2017), report and recommendation adopted by 2017 WL 4408539 (M.D. Pa. Oct. 4, 2017); Nunez v. Lindsay, No. 3:CV-05-1763, 2006 WL 3242111, at *1 (M.D. Pa. Nov. 7, 2006) (citing Oxendine v. Williams, 509 F.2d 1405, 1407 (4th Cir. 1975)); see also Alexander v. N.J. State Parole Bd., 160 Fed. App'x 249, 250 n.1 (3d Cir. 2005) (per curiam) ("[A] prisoner proceeding pro se may not seek relief on behalf of his fellow inmates.") (citing Oxendine); Oxendine, 509 F.2d at 1407 ("[I]t is plain error to permit [an] imprisoned litigant who is unassisted by counsel to represent his fellow inmates in a class action."). This is so because the "[a]bility to protect the interests of the class depends in part on the quality of counsel, and . . . the competence of a layman representing himself [is] clearly too limited to allow him to risk the rights of others." Oxendine, 509 F.2d at 1407.
Because McNeil cannot satisfy all four of the prerequisites to class certification under Rule 23(a), his request for the certification of a class action should be denied.
Accordingly, it is recommended that the request for class certification implicit in McNeil's amended complaint be denied.
B. Federal Communications Act Claim
Section 201 of the FCA requires that all carriers' interstate rates be "just and reasonable." 47 U.S.C. § 201(b). Section 276 of the FCA additionally requires that payphone rates be "fair." Id. § 276(b). Section 207 of the FCA permits a plaintiff to bring suit for the recovery of damages for violations of the FCA. Id. § 207.
In 2013, the F.C.C. found that rates charged by various ICS providers were "unreasonably high, unfair, and far in excess of the cost of providing service." ICS Rates II, 28 FCC Rcd. at 15929. In doing so, the F.C.C. expressly rejected an argument by the ICS providers that the substantial site commissions they paid to prison authorities should be considered as part of the cost of providing service. Id. at 15940-41; see also id. at 15946 (ruling that "site commission payments are not part of the cost of providing ICS and therefore not compensable in interstate ICS rates"); In re Rates for Interstate Inmate Calling Servs., 28 FCC Rcd. 14107, 14135-39 (F.C.C. Sept. 26, 2013) [hereinafter, ICS Rates I] (ruling that "site commission payments are not part of the cost of providing ICS and therefore not compensable in interstate ICS rates") (footnote omitted). Subsequently, in 2015, the F.C.C. set rate caps and ancillary fee caps for interstate ICS calls. In re Rates for Interstate Inmate Calling Servs., 30 FCC Rcd. 12763, 12775-76, 12838-62 (F.C.C. Nov. 5, 2015) [hereinafter, ICS Rates III], reprinted in 80 Fed. Reg. 79136, 79139-40, 79156-62 (Dec. 18, 2015).
Based exclusively on these administrative rulings by the F.C.C., McNeil claims that the ICS rates he was charged by GTL over a period of more than a decade were unjust and unreasonable, in violation of Section 201 of the FCA, and unfair, in violation of Section 276 of the FCA.
But in August 2017, these rulings by the F.C.C. were overturned and abrogated on review by the United States Court of Appeals for the D.C. Circuit. In Global Tel*Link v. Federal Communications Commission, 866 F.3d 397 (D.C. Cir. 2017), the D.C. Circuit rejected the F.C.C.'s categorical exclusion of site commission payments as a legitimate cost of providing ICS, reversing the F.C.C.'s ruling in ICS Rates III and remanding it for further proceedings. Id. at 402 ("We find that [ICS Rates III]'s proposed wholesale exclusion of site commission payments from the FCC's cost calculus is devoid of reasoned decisionmaking and thus arbitrary and capricious."); id. at 413 ("If agreeing to pay site commissions is a condition precedent to ICS providers offering their services, those commissions are 'related to the provision of ICS.'"); see also Mojica v. Securus Techs., Inc., Case No. 5:14-CV-5258, 2018 WL 3212037, at *2 (W.D. Ark. June 29, 2018) (noting the D.C. Circuit's holding that "site commissions are legitimate costs of business when they are a condition precedent to obtaining ICS contracts") (emphasis in original), appeal filed, No. 18-2763 (8th Cir. Aug. 10, 2018); id. at *5 (quoting Global Tel*Link, 866 F.3d at 413).
The only theory of liability pleaded in McNeil's amended complaint is one based on GTL's alleged practice of recouping site commissions it had paid to prison authorities through excessive surcharges and per-minute interstate calling rates charged to inmates and their families. Such a theory of liability under the FCA is foreclosed by the D.C. Circuit's decision in Global Tel*Link. As our sister court has observed under substantially identical circumstances, "a lawsuit in federal district court may be brought under 47 U.S.C. §207 only if 'the FCC could properly hold that a carrier's [practice] is an 'unreasonable practice' deemed 'unlawful' under § 201(b).'" Mojica, 2018 WL 3212037, at *8 (quoting Global Crossing Telecomm., Inc. v. Metrophones Telecomm., Inc., 550 U.S. 45, 52-53 (2007)) (alteration in original). Thus, "the D.C. Circuit opinion precludes the FCC from holding that the practice of passing on to ICS users the cost of site commissions that are a condition precedent of doing business." Id. at *8. In the absence of any other theory of liability to support McNeil's claims under the FCA for unjust, unreasonable, and unfair ICS rates, he has failed to plausibly state a claim upon with relief can be granted.
The Mojica opinion addressed two separate class action lawsuits, Mojica v. Securus Technologies, Inc., Case No. 5:14-CV-5258 (W.D. Ark. filed Aug. 14, 2014), and In re Global Tel*Link Corp. ICS Litigation, Case No. 5:14-cv-05275 (W.D. Ark. filed Sept. 4, 2014). McNeil's amended complaint here consists primarily of a photocopy of an amended complaint filed in the latter case, with a few minor, insubstantial alterations.
Accordingly, we recommend that the plaintiff's statutory claim under Section 207 of the FCA, 47 U.S.C. § 207, be dismissed for failure to state a claim, pursuant to 28 U.S.C. § 1915(e)(2)(B)(ii) and 42 U.S.C. § 1997e(c)(1).
C. Unjust Enrichment Claim
Based on the very same billing practices underlying the F.C.C. rulings—indeed, based on the F.C.C. rulings themselves—McNeil claims that the ICS rates he was charged over a period of more than a decade constitute unjust enrichment under state common law because GTL "charg[ed] rates and fees that are unjust, unreasonable, and greatly exceed market rates and costs of providing services," and was not entitled to this enrichment because it "was prohibited from engaging in the acts and practices that generated this enrichment by § 201(b) of the FCA." (Doc. 54 ¶¶ 63, 65).
Unjust enrichment is an equitable doctrine. Pennsylvania courts have defined the elements of unjust enrichment as "'benefits conferred on defendant by plaintiff, appreciation of such benefits by defendant, and acceptance and retention of such benefits under such circumstances that it would be inequitable for defendant to retain the benefit without payment of value.'"In re Comcast Cellular Telecomm. Litig., 949 F. Supp. 1193, 1200 (E.D. Pa. 1996) (quoting Styer v. Hugo, 619 A.2d 347, 350 (Pa. Super. Ct. 1993). "Moreover, the most significant element of the doctrine is whether the enrichment of the defendant is unjust." Styer, 619 A.2d at 350 (emphasis in original).
Here, the plaintiff has alleged unjust enrichment based solely upon a purported violation of § 201(b) of the FCA, which prohibits unjust or unreasonable ICS rates. He alleges a violation of the FCA based solely on GTL's alleged inclusion of site commissions in its cost calculations in formulating ICS rates. He has alleged no other facts to support his contention that the rates charged by GTL were unjust. Based on the D.C. Circuit's ruling in Global Tel*Link, which found the practice at issue—passing on to ICS users the cost of site commissions that are a condition precedent to doing business—to be just and reasonable under § 201 of the FCA, and in the absence any other factual allegations to support a finding that GTL was unjustly enriched, we are forced to conclude that McNeil has failed to failed to plausibly state an unjust enrichment claim upon with relief can be granted.
Moreover, we note that McNeil's unjust enrichment claim is a clear attempt to use state law to challenge the reasonableness of the rates charged by GTL for inmate calling services that are directly regulated by the federal government under the FCA. "Since 'state law is naturally preempted to the extent of any conflict with a federal statute,' this gives rise to the related question of whether the common-law of unjust enrichment 'stands as an obstacle to the accomplishment and execution of the full purposes and objectives of' the FCA.'" Mojica, 2018 WL 3212037, at *9 (quoting Crosby v. Nat'l Foreign Trade Council, 530 U.S. 363, 372 (2000), and Geier v. Am. Honda Motor Co., 529 U.S. 861, 873 (2000)). As in Mojica—where our sister court considered virtually identical claims to those raised here—McNeil "wish[es] to pursue the very theory of liability under state law that this Court has concluded [he] cannot under the FCA: that the defendant[] 'unjustly enriched [itself] by using [its] monopoly power to pass on the costs of site commissions' to consumers of ICS." Id. (emphasis in original). Under these circumstances, the FCA necessarily preempts McNeil's state law challenge to the reasonableness of the rates charged by GTL. See id.; see also In re Universal Serv. Fund Tel. Billing Practice Litig., 619 F.3d 1188, 1196-97 (10th Cir. 2010) (holding that the FCA preempts state law challenges to the reasonableness of rates charged by telecommunications carriers for interstate calls); Boomer v. AT&T Corp., 309 F.3d 404, 418 (7th Cir. 2002) (same); Comcast, 949 F. Supp. at 1200-01 (finding unjust enrichment claims challenging the reasonableness of rates charged by a cellular telephone company were preempted by the FCA).
Although preemption is an affirmative defense, which generally must be raised by way of an answer to the complaint, see Fed. R. Civ. P. 8(c), where that defense is obvious from the face of the complaint and no development of the record is necessary, a court may sua sponte dismiss preempted claims in an in forma pauperis action for failure to state a claim under 28 U.S.C. § 1915(e)(2)(B)(ii). See Myrieckes v. Woods, No. 08 CV 4297(GBD)(THK), 2009 WL 884561, at *7 (S.D.N.Y. Mar. 31, 2009).
Accordingly, we recommend that the plaintiff's state common-law claim for unjust enrichment be dismissed for failure to state a claim, pursuant to 28 U.S.C. § 1915(e)(2)(B)(ii) and 42 U.S.C. § 1997e(c)(1).
D. Leave to Amend
The Third Circuit has instructed that if a pro se complaint is vulnerable to dismissal for failure to state a claim, the district court must permit a curative amendment, unless an amendment would be inequitable or futile. Grayson v. Mayview State Hosp., 293 F.3d 103, 108 (3d Cir. 2002). Based on the record before the Court, it is clear that amendment in this case would be futile. It is therefore recommended that the complaint be dismissed without leave to amend.
IV. PLRA "THREE STRIKES" WARNING
The plaintiff is hereby notified that a prisoner may not bring a civil action or appeal a civil judgment under 28 U.S.C. § 1915,
if the prisoner has, on 3 or more prior occasions, while incarcerated or detained in any facility, brought an action or appeal in a court of the United States that was dismissed on the grounds that it is frivolous, malicious, or fails to state a claim upon which relief may be granted, unless the prisoner is under imminent danger of serious physical injury.28 U.S.C. § 1915(g).
If this recommended disposition is adopted by the presiding United States District Judge, the dismissal of this action for failure to state a claim pursuant to 28 U.S.C. § 1915(e)(2)(B)(ii) will constitute a "strike" under 28 U.S.C. § 1915(g), and the accumulation of additional strikes may bar the plaintiff from proceeding in forma pauperis in later cases absent a showing of imminent danger. See generally Byrd v. Shannon,715 F.3d 117, 126 (3d Cir. 2013) (articulating Third Circuit standard for application of § 1915(g) "three strikes" rule).
V. RECOMMENDATION
Based on the foregoing, it is recommended that:
1. The plaintiff's request for certification of a class action under Rule 23(c) of the Federal Rules of Civil Procedure be DENIED;
2. The plaintiff's amended complaint (Doc. 54; Doc. 55) be DISMISSED for failure to state a claim, pursuant to 28 U.S.C. § 1915(e)(2)(B)(ii) and 42 U.S.C. § 1997e(c)(1); and
3. The Clerk be directed to CLOSE this case. Dated: November 9, 2018
s/ Joseph F . Saporito , Jr.
JOSEPH F. SAPORITO, JR.
United States Magistrate Judge NOTICE
NOTICE IS HEREBY GIVEN that the undersigned has entered the foregoing Report and Recommendation dated November 9, 2018. Any party may obtain a review of the Report and Recommendation pursuant to Local Rule 72.3, which provides:
Any party may object to a magistrate judge's proposed findings, recommendations or report addressing a motion or matter described in 28 U.S.C. § 636(b)(1)(B) or making a recommendation for the disposition of a prisoner case or a habeas corpus petition within fourteen (14) days after being served with a copy thereof. Such party shall file with the clerk of court, and serve on the magistrate judge and all parties, written objections which shall specifically identify the portions of the proposed findings, recommendations or report to which objection is made and the basis for such objections. The briefing requirements set forth in Local Rule 72.2 shall apply. A judge shall make a de novo determination of those portions of the report or specified proposed findings or recommendations to which objection is made and may
accept, reject, or modify, in whole or in part, the findings or recommendations made by the magistrate judge. The judge, however, need conduct a new hearing only in his or her discretion or where required by law, and may consider the record developed before the magistrate judge, making his or her own determination on the basis of that record. The judge may also receive further evidence, recall witnesses or recommit the matter to the magistrate judge with instructions.
Failure to file timely objections to the foregoing Report and Recommendation may constitute a waiver of any appellate rights. Dated: November 9, 2018
s/ Joseph F . Saporito , Jr.
JOSEPH F. SAPORITO, JR.
United States Magistrate Judge