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South Hills Area Council of Governments v. Verizon Pennsylvania LLC

United States District Court, E.D. Pennsylvania

December 15, 2014

SOUTH HILLS AREA COUNCIL OF GOVERNMENTS, et al., Plaintiffs,
v.
VERIZON PENNSYLVANIA LLC, et al., Defendants.

MEMORANDUM OPINION

MITCHELL S. GOLDBERG, District Judge.

Plaintiffs, the South Hills Area Council of Governments (South Hills), a group of eleven municipalities in the Pittsburgh area, and the Municipality of Penn Hills (Penn Hills), also in the Pittsburgh area, have filed a putative class action against Verizon Pennsylvania LLC (Verizon PA) and Verizon Delaware LLC (Verizon DE). Plaintiffs essentially allege that Verizon is improperly withholding a portion of gross revenues.

Before me is Defendants' motion to dismiss. For the following reasons, I will grant Defendants' motion.

I. FACTUAL AND PROCEDURAL HISTORY[1]

Penn Hills and South Hills entered into cable franchise agreements with Verizon PA on December 17, 2007 and February 27, 2008, respectively. The agreements grant Verizon PA the non-exclusive right to "own, construct, operate, and maintain a Cable System to provide Cable Services along the Public Rights-of-Way" within the franchise area. In exchange, the municipalities are to receive five percent of "gross revenue" from local subscriber fees. According to the terms of the agreements, "gross revenue" includes subscriber late payment fees. Plaintiffs allege that Verizon PA has underreported late payment fees received from subscribers and underpaid the franchise fees on late payment fee revenues. (Am. Compl. ¶¶ 1-4.)

Plaintiffs seek monetary damages in the form of past due franchise fees on late payment fees. They also request injunctive relief enjoining Verizon from underreporting late fees received from subscribers and underpaying franchise fees on late payment fees in the future. Plaintiffs bring this action on their own behalf and on behalf of all members of the following putative class: "All franchising authorities that have granted a cable franchise to one of the Verizon State Corporations (or any of their predecessors, divisions, subsidiaries and affiliates) that provides for the payment of franchise fees on late payment fees as part of Gross Revenues." Plaintiffs allege violations of the Federal Communications Act, breach of contract, unjust enrichment, and further demand that a full accounting be made of all late payment fees on cable service revenues by the Verizon State Corporations. (Id. at ¶¶ 4, 17, 25-45.)

Defendants have filed a motion to dismiss, Plaintiffs filed a response, and Defendants have filed a reply. The motion is now fully briefed and ready for disposition.

II. CLAIMS AGAINST VERIZON DE

Verizon DE argues that the claims against them should be dismissed due to Plaintiffs' lack of standing, this Court's lack of personal jurisdiction, and Plaintiffs' failure to plead any viable claims.

A. Standing of Plaintiffs to Sue Verizon DE

Article III of the Constitution requires that a plaintiff have standing to assert a claim for relief in the district court. See, e.g., Lujan v. Defenders of Wildlife, 504 U.S. 555, 560 (1992). Standing is "the threshold issue in every federal case, determining the power of the court to entertain the suit." Warth v. Seldin, 422 U.S. 490, 498 (1975). In order to have Article III standing, a plaintiff must adequately establish (1) an injury in fact; (2) causation; and (3) redressability. Sprint Communications Co., L.P. v. APCC Services, Inc., 554 U.S. 269, 273 (2008) (citing Lujan, 504 U.S. at 560-61). These requirements apply with equal force to class actions. "That a suit may be class action... adds nothing to the question of standing, for even named plaintiffs who represent a class must allege and show that they personally have been injured, not that injury has been suffered by other, unidentified members of the class to which they belong and which they purport to represent." Lewis v. Casey, 518 U.S. 343, 357 (1996) (internal quotations omitted).

Both South Hills and Penn Hills are Pennsylvania franchising authorities which contracted with Verizon PA, not Verizon DE. Verizon DE urges that absent a contractual relationship, Plaintiffs have suffered no harm, and therefore lack standing to sue Verizon DE. (Br. at 7-9.) Acknowledging that they have not alleged to have contracted with Verizon DE, Plaintiffs nonetheless assert that they are entitled to bring suit against Verizon DE because the question of whether representative plaintiffs in one state may represent plaintiffs suing under the law of another state can be properly addressed at the class certification stage. (Resp. at 20-22.) In support of this proposition, Plaintiffs cite to Ramirez v. S.T.I. Prepaid LLC, 664 F.Supp.2d 496 (D.N.J. 2009).

In Ramirez, purchasers of prepaid calling cards from New York and New Jersey brought suit against S.T.I. Prepaid, a company which sells prepaid calling cards nationwide. Id. at 499. The plaintiffs alleged a violation of consumer protection laws in New York and New Jersey, as well as various "sister states, " and sought to represent a class of consumers who bought calling cards from the defendant company in all of the states. Id. at 498. In its motion to dismiss, the defendant argued that the plaintiffs lacked standing in the "sister states" because "neither named plaintiff claims to have been injured in any state other than New York or New Jersey." Id. at 504. The Ramirez court rejected this argument, finding that:

Defendants do not contest the fact that the named Plaintiffs have standing to bring their individual claims [under the consumer protection laws of New York and New Jersey]. The Complaint makes clear that the so-called "sister state" consumer protection laws are only implicated by members of the putative class. Hence, the fact that the named Plaintiffs may not have individual standing to allege violations of consumer protection laws in states other than those in which they purchased Defendants' calling cards is immaterial. The issue Defendants raise is one of ...

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