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APCC Services, Inc. v. AT&T Corp.

September 3, 2003


The opinion of the court was delivered by: Ellen Segal Huvelle United States District Judge


On March 28, 2003, this Court dismissed claims brought by five of six plaintiffs against AT&T for payment of dial-around compensation allegedly owed to the payphone service providers ("PSPs") that plaintiffs represent.*fn1 The Court concluded that it lacked subject matter jurisdiction, finding that plaintiffs lacked Article III standing based on either the assignments executed by the PSPs or the doctrine of associational standing.*fn2 See APCC Services, Inc. v. AT&T Corp., 254 F. Supp. 2d 135 (D.D.C. 2003) [hereinafter " APCC I "]. In response to this decision, the aggregator plaintiffs have now filed a Motion for Reconsideration ["Mot. for Recons."] and a Motion for Leave to Amend Complaint. Plaintiff Peoples Telephone Company has also filed a Motion for Leave to Amend.

In their Motion for Reconsideration, plaintiffs cite, for the first time, a host of authorities that recognize the validity of an assignment for collection and that offer a principled basis for differentiating an assignment of title to a claim, which vests assignees with legally enforceable rights, from an assignment merely of the right to bring suit, which does not. These authorities persuasively distinguish the instant matter from Connecticut v. Physicians Health Services of Connecticut. Inc., 287 F.3d 110 (2d Cir. 2002) – the primary case on which the Court relied in its prior Memorandum Opinion. The Court therefore no longer believes that this case can be decided based on Physicians Health, and instead will hold that the aggregator plaintiffs have standing based on the assignments from the PSPs they represent. Because the Court is vacating its March 28, 2003 Memorandum Opinion, it need not reach plaintiffs' motions to amend. It must, however, address defendant's challenge to the validity of plaintiff APCC Services' assignments under Virginia law. The Court finds this challenge to be unavailing. Accordingly, defendant's Motion to Dismiss Assignee Plaintiffs' Claims will be denied.


Plaintiffs APCC Services, Inc., Data Net Systems, LLC, Jaroth, Inc. d/b/a Pacific Telemanagement Services, NSC Telemanagement Corp., Davel Communications Group, Inc., and Peoples Telephone Company, Inc. filed this action pursuant to sections 206 and 207 of the Communications Act of 1934, as amended, 47 U.S.C. §§ 206, 207, on behalf of more than one thousand PSPs that own and operate over 400,000 public payphones throughout the United States.*fn3 (First Amended Complaint ["Am. Compl."] ¶¶ 1, 11.) Five of the six plaintiffs are "aggregators," or clearinghouses, created to streamline the billing and collection of dial-around compensation from common carriers of telephone calls, like defendant, who are subject to the compensation payment obligations mandated by section 276 of the Act. ( Id. ¶ 10.) Pursuant to section 276, defendant is required to compensate PSPs for completed access code and toll free calls that are made using PSPs' payphones and carried over defendant's telephone network facilities. ( Id. ¶ 1.) PSPs contract with aggregators to facilitate the billing and payment process.

Plaintiffs bring this suit as assignees of the claims of the PSPs they represent. The assignments provide that each PSP "assigns, transfers and sets over to [plaintiff] for purposes of collection all rights, title and interest of the [PSP] in the [PSP]'s claims, demands or causes of action for 'Dial-Around Compensation.'" (AT&T's Motion to Dismiss Assignee Plaintiffs' Claims ["AT&T Mot. to Dismiss"] Ex. A at 1.)*fn4 The assignments do not give plaintiffs the right to retain or share in any proceeds of the litigation. ( Id.)

In January 2003, defendant filed a motion to dismiss for lack of subject matter jurisdiction, which challenged plaintiffs' standing to bring suit. Defendant argued that as assignees of the PSPs, plaintiffs did not suffer an injury-in-fact of their own and did not have a personal stake in the outcome of the litigation. Defendant further argued that even if plaintiffs have standing, APCC Services' claims cannot be assigned under applicable state law, and therefore, the assignments are invalid. Because the Court concluded that plaintiffs did not have standing to sue, it did not reach the validity of APCC Services' assignments. See APCC I, 254 F. Supp. 2d at 138. Defendant's motion was granted and the claims asserted by the aggregator plaintiffs were dismissed. Id. at 144.

Plaintiffs have now moved the Court to reconsider its decision or, alternatively, for leave to amend their complaint to substitute several independent payphone service providers to act as class representatives or to name all independent payphone service providers on whose behalf suit was initially brought. Plaintiff Peoples Telephone Company has also filed a similar motion for leave to amend. Defendant opposes these motions, arguing that plaintiffs are procedurally barred from moving for reconsideration; that the Court's prior finding of lack of standing is correct; and that leave to amend may not be granted given the lack of subject matter jurisdiction.


I. Rule 54(b) Standard

Plaintiffs request the Court to reconsider its March 28, 2003 Memorandum Opinion and Order pursuant to FED. R. CIV. P. 54(b). Under Rule 54(b), when multiple parties are involved in a case and an order adjudicating fewer than all the claims is issued, the order "is subject to revision at any time before the entry of judgment adjudicating all the claims and the rights and liabilities of all the parties" unless the court has directed the entry of final judgment as to the particular claims addressed by the order. FED. R. CIV. P. 54(b). Thus, Rule 54(b) "addresses interlocutory judgments." Campbell v. United States Dep't of Justice, 231 F. Supp. 2d 1, 6 n.8 (D.D.C. 2002). "Reconsideration of an interlocutory decision is available under the standard, 'as justice requires.'" Id. at 7 (quoting Childers v. Slater, 197 F.R.D. 185, 190 (D.D.C. 2000)).

That standard "differs from the standards applied to final judgments under Federal Rules of Civil Procedure 59(e) and 60(b)," where the Court must find "an intervening change of controlling law, the availability of new evidence, or the need to correct a clear error or prevent manifest injustice." Id. In arguing that the stricter standard of Rule 60(b) should be applied, defendant disregards this important distinction.*fn5

The Court's March 28, 2003 ruling did not dispose of the entire matter as it did not involve one of the plaintiffs -- Peoples Telephone Company. Nor did the Court expressly direct the entry of final judgment with respect to the claims addressed. Consequently, the order is interlocutory, and it may be revised where "justice requires." See Fed. R. Civ. P. 60(b) Advisory Comm. Notes ("[I]nterlocutory judgments are not brought within the restrictions of [Rule 60(b)], but rather they are left subject to the complete power of the court rendering them to afford such relief from them as justice requires."); see also Childers, 197 F.R.D. at 190.

II. Plaintiffs' Standing as Assignees

In APCC I, the Court was persuaded by defendant's argument that plaintiffs lacked standing because they were required to remit any damages to the PSPs, and thus, did not have a concrete stake in the outcome of the litigation. In opposition, plaintiffs relied almost exclusively on Vermont Agency of Natural Resources v. United States, 529 U.S. 765 (2000), arguing that the Supreme Court's decision in that case enshrines the principle that all assignments conferstanding. Rejecting plaintiffs' overly expansive reading of Vermont Agency, the Court granted defendant's motion. While the Court remains of the view that Vermont Agency alone does not decide this case, plaintiffs have now presented more convincing authority for their position and have persuaded the Court that it was in error when it concluded that plaintiffs lacked standing. In particular, and as discussed below, plaintiffs have successfully differentiated the assignments at issue here, which convey legal title in the dial-around compensation claims, from those in Physicians Health, which conveyed merely the power of attorney to bring suit. Moreover, plaintiffs have established that the requirement that assignees ultimately account to ...

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