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Mojica v. Securus Technologies, Inc.

United States District Court, W.D. Arkansas, Fayetteville Division

June 29, 2018

SUSAN MOJICA and THOMAS MOJICA PLAINTIFFS
v.
SECURUS TECHNOLOGIES, INC. DEFENDANT and IN RE GLOBAL TEL*LINK CORPORATION ICS LITIGATION

          MEMORANDUM OPINION AND ORDER

          TIMOTHY L. BROOKS, DISTRICT JUDGE.

         These two cases are nationwide class action lawsuits involving rates and fees charged for the provision of inmate calling services (“ICS”) to prisoners and their loved ones. The defendants, Securus Technologies, Inc. (“Securus”) and Global Tel*Link Corporation (“GTL”) are ICS providers; and the plaintiffs and class members are users of ICS. The lawsuit against Securus is brought by Susan and Thomas Mojica; and the lawsuit against GTL is brought by Kaylan Stuart, Dustin Murilla, Walter Chruby, and Rocky Hobbs. In both cases, the plaintiffs seek to recover allegedly exorbitant rates and fees they paid to the defendants, bringing claims under the Federal Communications Act (“FCA”) and the common law of unjust enrichment.

         These lawsuits against Securus and GTL were filed in August and September of 2014, respectively. This Court previously certified nationwide classes in both cases on February 3, 2017. But since that time, several events have transpired that significantly undermined the rationale for those prior class certifications. In the meantime, a large number of motions has been filed in both of these cases. In this Opinion and Order, the Court will rule on all such pending motions that request class decertification, summary judgment, or primary jurisdiction referral. As a consequence of those rulings, both nationwide classes will be decertified, and the named plaintiffs' individual claims in both cases will be dismissed with prejudice.

         I. BACKGROUND

         In February 2000, a woman named Martha Wright, along with other similarly situated individuals, filed a class action complaint in the United States District Court for the District of Columbia against a variety of defendants (including those named in the instant cases). The plaintiffs in that lawsuit alleged that various telephone companies entered into exclusive agreements to provide ICS at correctional facilities throughout the United States and exploited those monopolies by charging unjust and unreasonable rates for inmate phone calls in violation of the FCA, thereby unjustly enriching themselves. See No. 5:14-cv-5258, Doc. 36, p. 2; No. 5:14-cv-5275, Doc. 29, p. 2. In 2001, the Wright lawsuit was stayed, pending the resolution of related proceedings before the Federal Communications Commission (“FCC”). See Id. Twelve years later, in September 2013, the FCC instituted an interim regulatory scheme designed to prospectively curb the practices complained of in the Wright lawsuit. See No. 5:14-cv-5258, Doc. 36, p. 3; No. 5:14-cv-5275, Doc. 29, p. 3.

         As noted above, these two lawsuits were filed in this Court the following year, in 2014. But importantly, the two instant lawsuits are not the only lawsuits that were filed in this Court against these defendants regarding ICS. The instant lawsuits are concerned solely with rates and fees associated with interstate calls. But after these two lawsuits were filed, two other lawsuits dealing only with intrastate calls were filed in this Court: one against GTL in June 2015, see Chruby et al. v. Global Tel*Link Corp., No. 5:15-cv-1536, and one against Securus in January 2017, see Antoon v. Securus Techs., Inc., No. 5:17-cv-5008.

         In 2015, the FCC entered a Second Report and Order and Third Further Notice of Proposed Rulemaking In the Matter of Rates for Interstate Inmate Calling Services, 30 FCC Rcd. 12763 (2015) (“Second Report and Order”), that imposed caps on the amounts that ICS providers could charge consumers in calling rates and ancillary fees. As noted above, on February 3, 2017, this Court entered orders in the two instant cases, certifying nationwide classes on the plaintiffs' claims under the FCA for unjust and unreasonable calling rates and deposit fees on prepaid accounts, along with multi-state subclasses on the plaintiffs' claims under state common law for unjust enrichment from calling rates. The plaintiffs' theory of liability for class certification depended on the proposition that “site commissions, ” which the defendants would pay to states in order to obtain ICS contracts, were not legitimate costs of business, and that it was unjust and unreasonable for the defendants to recoup site commissions from the class members through inflated calling rates and deposit fees.

         However, four months later in the case of Global Tel*Link v. FCC, 866 F.3d 397 (D.C. Cir. 2017), the United States Court of Appeals for the D.C. Circuit reversed and remanded the Second Report and Order in part on the grounds that site commissions are legitimate costs of business when they are a condition precedent to obtaining ICS contracts. Then, five months after that, this Court entered an order denying certification of an Arkansas unjust enrichment class in the intrastate case of Chruby, No. 5:15- cv-1536, and suggested that its reasons for doing so might also warrant decertification of the unjust-enrichment classes in the instant two interstate cases of Mojica v. Securus Techs., Inc., No. 5:14-cv-5258, and In re Global Tel*Link Corp. ICS Litig., No. 5:14-cv-5275 (“In re GTL”). Now, nine months and several stays later, the Court finally takes up the issues in these two cases that were foreshadowed by the D.C. Circuit opinion and this Court's denial of class certification in Chruby. The discussion that follows will begin with the issue of decertification, in conjunction with the plaintiffs' pending requests for primary jurisdiction referral to the FCC.[1] Then, the Court will turn to the parties' pending requests for summary judgment.

         II. DISCUSSION

         A. DECERTIFICATION AND PRIMARY JURISDICTION

         The Court has previously explained the legal standard for primary jurisdiction referral as follows:

The doctrine of primary jurisdiction is a common-law doctrine that “allows a district court to refer a matter to the appropriate administrative agency for a ruling in the first instance, even when the matter is initially cognizable by the district court.” Access Telecomm. v. Southwestern Bell Telephone Co., 137 F.3d 605, 608 (8th Cir. 1998). The doctrine “applies where a claim is originally cognizable in the courts, and comes into play whenever enforcement of the claim requires the resolution of issues which, under a regulatory scheme, have been placed within the special competence of an administrative body.” Alpharma, Inc. v. Pennfield Oil Co., 411 F.3d 934, 938 (8th Cir. 2005) (internal quotation marks omitted).
“The contours of primary jurisdiction are not fixed by a precise formula.” Id. Primary jurisdiction is typically invoked to make use of agency expertise, or to promote uniformity and consistency within the particular field of regulation. Access Telecomm., 137 F.3d at 608. The doctrine of primary jurisdiction “is to be ‘invoked sparingly, as it often results in added expense and delay.'” Alpharma, Inc., 411 F.3d at 938. However, “[c]ourts have consistently held that claims of unjust and unreasonable practices under 47 U.S.C. § 201(b) fall within the primary jurisdiction of the FCC.” Scott v. Pub. Comm. Servs., 2012 WL 381780, at *3 (E.D. Mo. Feb. 6, 2012).

Mojica, 2015 WL 429997, at *2-*3 (W.D. Ark. Jan. 9, 2015).

         The Court has also previously described the legal standard for class certification, of which the parties are of course all well aware-under Rule 23, certifying a class action requires a two-step analysis, the first step of which considers whether the requirements of numerosity, commonality, typicality, and fair and adequate representation are satisfied, and the second step of which determines whether the requirements of predominance and superiority are satisfied. See In re GTL, 2017 WL 471571, at *3 (Feb. 3, 2017). However, “[a]n order that grants . . . class certification may be altered or amended before final judgment, ” Fed.R.Civ.P. 23(c)(1)(C), and the Court has a continuing duty to assure compliance with Rule 23 after certification, see Hervey v. City of Little Rock, 787 F.2d 1223, 1227 (8th Cir. 1986). And while the party seeking class certification bears the burden of showing that Rule 23's requirements are satisfied when it is initially sought, see Wal-Mart Stores, Inc. v. Dukes, 564 U.S. 338, 350 (2011), a party moving for decertification typically bears “a more onerous burden” of showing decertification is warranted when “the initial certification decision was carefully considered and made after certification-related discovery, ” as was the case here. See Day v. Celadon Trucking Servs., Inc., 827 F.3d 817, 832 & n.9 (8th Cir. 2016). Nevertheless, a district court “has the discretion to decertify a class by amending the order granting the certification if the court finds that certification should not have been granted or is no longer appropriate.” East Maine Baptist Church v. Union Planters Bank, N.A., 244 F.R.D. 538, 541 (E.D. Mo. 2007). “In considering a defendant's motion for decertification, the Court follows the legal standard required for class certification.” Id.

         Below, the Court will first consider the nationwide classes that were certified on the FCA claims, beginning with the claims for unjust and unreasonable calling rates, and then turning to the claims for unjust and unreasonable deposit fees. Then, the Court will take up the multi-state subclasses that were certified on the unjust enrichment state law claims.

         1. FCA Claims

         a. Calling Rates

         In early February 2017, this Court certified nationwide classes in both Mojica and In re GTL on the plaintiffs' claims under the FCA for unjust and unreasonable ICS rates. In both cases, the plaintiffs advanced a theory of liability under which the proposed class members would all recover the portion of their ICS rates constituting the costs of site commissions that were passed along to consumers. Both defendants opposed class certification in part (and primarily) on the grounds that “it is not necessarily or per se unreasonable . . . to pass along the cost of site commissions to the consumers of . . . [ICS], ” see Mojica, 2017 WL 470910, at *7 (W.D. Ark. Feb. 3, 2017), and that such a “one-size-fits-all theory is untenable as a matter of law, ” see In re GTL, 2017 WL 471571, at *6 (W.D. Ark. Feb. 3, 2017). The Court granted class certification over these objections because regardless of whether the plaintiffs' theory of liability would ultimately prove correct, it did not appear at that time to be obviously foreclosed by any binding legal authority and it posed common questions of fact and law that predominated over individual ones. See Mojica, 2017 WL 470910, at *7 (W.D. Ark. Feb. 3, 2017); In re GTL, 2017 WL 471571, at *6 (W.D. Ark. Feb. 3, 2017). However, the Court also observed that if the defendants ultimately prevailed on the issue of whether it was per se unreasonable to pass the cost of site commissions on to consumers, then that might cause common issues no longer to predominate and therefore warrant decertifying the classes. See Mojica, 2017 WL 470910, at *7 (W.D. Ark. Feb. 3, 2017); In re GTL, 2017 WL 471571, at *6 (W.D. Ark. Feb. 3, 2017).

         Four months later, on appellate review of the FCC's Second Report and Order, which had excluded site commission payments from the costs used to set ICS rate caps, the D.C. Circuit vacated those rate caps and remanded to the FCC for further factfinding and rulemaking. In so doing, the D.C. Circuit held that the FCC had acted arbitrarily and capriciously by excluding site commissions from its calculus, observing that this “defies reasoned decisionmaking because site commissions obviously are costs of doing business incurred by ICS providers.” Global Tel*Link, 866 F.3d at 413. The D.C. Circuit went on to state that it “simply cannot comprehend the agency's reasoning, ” calling the exclusion of site commissions “hard to fathom, ” “implausible, ” and an action that “makes no sense.” See Id. The D.C. Circuit explained its holding as follows:

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. And it does not matter that the states may use the commissions for purposes unrelated to the activities of correctional facilities. The ICS providers who are required to pay the site commissions as a condition of doing business have no control over the funds once they are paid. None of the other reasons offered by the Commission to justify the categorical exclusion of site commissions passes muster.

Id. (internal quotation marks and citations omitted). Furthermore, the D.C. Circuit observed that “the categorical exclusion of site commissions cannot be easily squared with the requirements of [47 U.S.C.] § 276 and § 201” that payphone service providers be fairly compensated and that rates be just and reasonable. See id.

         The defendants contend that the June 2017 D.C. Circuit opinion requires decertifying the nationwide FCA classes with respect to the plaintiffs' claims for unjust and ...


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