Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-casd-3_07-cv-02231/USCOURTS-casd-3_07-cv-02231-3/pdf.json

Nature of Suit Code: 890
Nature of Suit: Other Statutory Actions
Cause of Action: 28:1332 Diversity-Breach of Contract

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ORDER - 1

UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF CALIFORNIA

UTILITY CONSUMERS’ ACTION

NETWORK and ERIC TAYLOR, on

behalf of themselves, their members

and/or all others similarly situated, as

applicable,

Plaintiffs,

v.

SPRINT SOLUTIONS, INC.; SPRINT

SPECTRUM, L.P.; SPRINT-NEXTEL

CORPORATION,

Defendants.

CASE NO. C07-2231RJB

ORDER GRANTING

DEFENDANTS’ MOTION TO

DISMISS PLAINTIFFS’ FIFTH

CAUSE OF ACTION

This matter comes before the Court on Defendants’ Motion to Strike Plaintiffs’ Second

Amended Complaint (Dkt. 31-2) and Defendants’ Motion to Dismiss Plaintiffs’ Second Amended

Complaint (Dkt. 32-2). The Court has considered the pleadings filed in support of and in

opposition to the motions and the remainder of the file herein.

I. PROCEDURAL BACKGROUND

On November 21, 2007, Plaintiffs Utility Consumers’ Action Network (“UCAN”) and

Eric Taylor filed a civil action against Defendants Sprint Solutions, Inc., Sprint Spectrum L.P.,

and Sprint-Nextel Corporation (Sprint). Dkt. 1. On January 2, 2008, Plaintiffs filed an amended

complaint, alleging that Sprint improperly included taxes, fees and other charges on monthly

Case 3:07-cv-02231-RJB Document 37 Filed 07/10/08 Page 1 of 9
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ORDER - 2

invoices to customers who obtained data service or data card plans from Sprint, and improperly

charged these customers for text messages. Dkt. 9. The amended complaint asserts class action

claims for (1) violation of California Business and Professions Code § 17200; (2) breach of

contract; (3) violation of the Consumers Legal Remedies Act (“CLRA”), Cal. Civ. Code § 1750

et seq.; (4) declaratory relief; (5) violation of the Federal Communications Act (“FCA”), 47

U.S.C. § 201(b); (6) money had and received, money paid and unjust enrichment; (7) conversion;

and (8) cramming, pursuant to California Public Utilities Code § 2890. Id. The amended

complaint requests certification of this case as a class action; declaratory, equitable, injunctive

and/or monetary relief; actual, direct, incidental, consequential, statutory and exemplary damages;

pre- and post-judgment interest; attorneys’ fees; and other relief as the court may deem just and

proper. Dkt. 9 at 26.

On January 23, 2007, Defendants filed a motion to dismiss pursuant to Fed. R. Civ. P.

12(b)(6) and to strike pursuant to Fed. R. Civ. P. 12(f). Dkt. 12. On April 25, 2008, the Court

issued an order granting in part and denying in part Defendants’ motion. Dkt. 27. The Court

ordered Plaintiffs to provide a more definite statement on their Fifth Claim for Relief under the

Federal Communications Act, 47 U.S.C. § 201(b). Id. at 12. 

On May 9, 2008, Plaintiffs responded to the order for a more definite statement by filing a

Second Amended Complaint. Dkt. 30. The Court has not granted authority for the filing of a

Second Amended Complaint under Fed. R. Civ. P. 15(a). On May 23, 2008, Defendants filed this

Motion to Strike Plaintiffs’ Second Amended Complaint (Dkt. 31-2) and this Motion to Dismiss

Plaintiffs’ Second Amended Complaint (Dkt. 32-2). Although Defendants title their motion as a

request for complete dismissal of the Second Amended Complaint, they only argue for the

dismissal of Plaintiffs’ Fifth Cause of Action. See id. On June 13, 2008, Plaintiffs responded to

both motions. Dkt. 33, 34. On June 20, 2008, Defendants replied to both motions. Dkt. 35, 36.

Case 3:07-cv-02231-RJB Document 37 Filed 07/10/08 Page 2 of 9
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1

 Plaintiffs have misquoted the FCA. Section 201(b) states that: “All charges, practices,

classifications, and regulations for and in connection with such communications shall be just and

reasonable, and any such charge, practice, classification, or regulation that is unjust or

unreasonable is declared to be unlawful.” 47 U.S.C. § 201(b)(emphasis added). “Such

communications” refers to section 201(a) which states “interstate or foreign communication by

ORDER - 3

II. DISCUSSION

A. Motion to Dismiss

Motions to dismiss may be based on either the lack of a cognizable legal theory or the

absence of sufficient facts alleged under such a theory. Balistreri v. Pacifica Police Department,

901 F.2d 696, 699 (9th Cir. 1990). Material allegations are taken as admitted and the complaint

is construed in the plaintiff's favor. Keniston v. Roberts, 717 F.2d 1295, 1301 (9th Cir. 1983). 

To survive a motion to dismiss, the complaint does not require detailed factual allegations but

must provide the grounds for entitlement to relief and not merely a “formulaic recitation” of the

elements of a cause of action. Bell Atlantic Corp. v. Twombly, 127 S. Ct. 1955, 1965 (2007). 

Plaintiffs must allege “enough facts to state a claim to relief that is plausible on its face.” Id. at

1974. When deciding a motion to dismiss, the Court’s consideration is limited to the pleadings.

Fed. R. Civ. P. 12(d).

In the Motion to Dismiss Plaintiffs’ Second Amended Complaint (Dkt. 32-2), Defendants

have moved to dismiss Plaintiffs’ Fifth Cause of Action, Violation of the Federal Communication

Act 47 U.S.C. § 201(b). Dkt. 32-2 at 6. The Court denied Defendants’ previous motion to

dismiss this cause of action and ordered Plaintiffs to provide a more definite statement connecting

facts with violations of the specific section of the Act. Dkt. 27 at 13. Plaintiffs’ Second Amended

Complaint responds to that order, and states:

FIFTH CAUSE OF ACTION

(Violation of the Federal Communications Act 47 U.S.C. § 201(b))

******

74. Section 201(b) of the Federal Communications Act (“FCA”) requires: “All

charges, practices, classifications, and regulations for and in connection with interstate

communications by radio shall be just and reasonable, and any such charge, practice,

classification, or regulation that is unjust or unreasonable is declared to be unlawful.”1

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wire or radio to furnish such communication service . . . .” Id. § 201(a)

“Radio communications” or “communication by radio” mean “the transmission by radio of

writing, signs, signals, pictures, and sounds of all kinds, including all instrumentalities, facilities,

apparatus, and services (among other things, the receipt, forwarding, and delivery of

communications) incidental to such transmission.” Id. § 153(33)

2

 “Telecommunications” means “the transmission, between or among points specified by

the user, of information of the user's choosing, without change in the form or content of the

information as sent and received.” 47 U.S.C. § 153(43). “Telecommunications service” means

“the offering of telecommunications for a fee directly to the public, or to such classes of users as

to be effectively available directly to the public, regardless of the facilities used. Id. § 153(46).

3

 “Information service” means “the offering of a capability for generating, acquiring,

storing, transforming, processing, retrieving, utilizing, or making available information via

telecommunications, and includes electronic publishing, but does not include any use of any such

capability for the management, control, or operation of a telecommunications system or the

management of a telecommunications service.” 47 U.S.C. § 153(20).

4

 “Commercial mobile service” means “any mobile service (as defined in section 153 of

this title) that is provided for profit and makes interconnected service available (A) to the public

or (B) to such classes of eligible users as to be effectively available to a substantial portion of the

public, as specified by regulation by the Commission.” 47 U.S.C. § 332(d)(1).

“Mobile service” means “a radio communication service carried on between mobile

stations or receivers and land stations, and by mobile stations communicating among themselves,

and includes (A) both one-way and two-way radio communication services, (B) a mobile service

which provides a regularly interacting group of base, mobile, portable, and associated control and

relay stations (whether licensed on an individual, cooperative, or multiple basis) for private

one-way or two-way land mobile radio communications by eligible users over designated areas of

operation, and (C) any service for which a license is required in a personal communications

service established pursuant to the proceeding entitled ‘Amendment to the Commission's Rules to

Establish New Personal Communications Services’ (GEN Docket No. 90-314; ET Docket No.

92-100), or any successor proceeding.” Id. § 153(27)( further defined at 47 C.F.R. § 20.3).

ORDER - 4

75. Title II of the FCA is intended to regulate “common carriers” such as Sprint

Nextel that provides telecommunications services.2 Though the [Federal

Communications Commission (“FCC”)] may specify that some provisions of Title II

are inapplicable to common carriers, 47 U.S.C. §332(c)(1)(A) explicitly prohibits the

FCC from specifying that any provisions of 47 U.S.C. §§201,202, and 208 are

inapplicable to providers such as Sprint Nextel.

76. Under the FCA, a service is subject to a different regulatory framework

depending on whether it constitutes an “information service”3

 or a

“telecommunications service”, the latter of which includes a “commercial mobile

service”.4 The FCC concluded in its decision in In re Appropriate Regulatory

Treatment for Broadband Access to the Internet Over Wireless Networks (22 FCCR

5901, dated March 22, 2007 (“Declaratory Ruling”)) that “‘mobile wireless broadband

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5

 “Mobile wireless broadband Internet access service” means “wireless broadband Internet

access service that meets the ‘mobile service’ definition contained in the Act and the

Commission's rules (47 U.S.C. § 153(27); 47 C.F.R. § 20.3).” 22 F.C.C.R. 5901 n.96.

6

 Plaintiffs do not define the term “data services.” “Data service” appears to be a term of

art and “Typically refers to a telecommunications service that transmits high-speed data rather

than voice. Internet access is the most common data service, which may be provided by the

telephone and cable companies as well as cellular carriers. Text messaging is a cellular data

service.” http://www.techweb.com/encyclopedia (define “data service”)(search completed at

10:00am, PST, July 7, 2008).

7

 Plaintiffs do not define the term “SMS.” “SMS” appears to be a term of art and is an

acronym for Short Message Service. It is a text message service that enables short messages of

generally no more than 140-160 characters in length to be sent and transmitted from a cellphone.

Unlike paging, but similar to e-mail, short messages are stored and forwarded at SMS centers,

which means a person can retrieve messages later if the person is not immediately available to

receive them. SMS messages travel to the cellphone over the system's control channel, which is

separate and apart from the voice channel. http://www.techweb.com/encyclopedia (define

“SMS”)(search completed at 10:01am, PST, July 7, 2008).

ORDER - 5

Internet access service’5 is not a ‘commercial mobile service’”. The impact of the

Declaratory Ruling is that Class members cannot be billed for taxes, fees, and

surcharges associated with the provision of a standard telecommunications or a

commercial mobile service by a common carrier such as Sprint Nextel.

77. Despite this directive, Sprint Nextel, apparently believing it is acting as a

common carrier for all its customers, bills all of its customers using the same billing

format and uniformly applies the same terms and conditions to all services provided by

Sprint Nextel. As such, Sprint Nextel does not distinguish between customers who

contract with Sprint Nextel for “telecommunications services” only, those who

contract with Sprint Nextel for “information services” only, and those who contract

with Sprint Nextel for “telecommunications services” and “information services”.

Sprint Nextel is treating all of its customers as “telecommunications services”

subscribers and collecting charges associated with “telecommunications services” from

its customers, regardless of whether the customer actually receives

“telecommunications services” or only receives “information services”.

78. Because, based on the Declaratory Ruling and other FCC decisions, Class

members are exempt from paying any Title II tax obligations that can only be imposed

on “telecommunications services”, Sprint Nextel cannot through its practices subject

its customers to these Title II obligations if such customers have contracted for

services that are not subject to Title II obligations. Any charges associated only with

providing “telecommunications services” that are charges to data services6

 only

customers are “unjust and unreasonable” per se, because they are unlawfully imposed.

79. In addition, any charges such as the SMS7 text message charges at issue herein,

which occurred through assigning “telecommunications services” characteristics, e.g.,

a telephone number and SMS text message service, to devices that facilitate the use of

data services only, e.g., a data card, are “unjust and unreasonable” per se because

these are charges for messages that cannot be accessed.

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ORDER - 6

80. Sprint Nextel’s practice of collecting the charges set forth in detail above, and

treating Class members as if Sprint Nextel was acting as a common carrier for

purposes of such charges and refusing to return such monies, violated §201(b) of the

FCA, 47 U.S.C. §201(b). It would be inequitable to allow Sprint Nextel to claim it

was acting as a “common carrier” and properly imposing charges that can only be

charged for “telecommunications services”, yet not hold Sprint Nextel liable under the

FCA in terms of being required to refund any “unjust and unreasonable” charges

resulting from such practices because in fact it was supplying “information services” in

connection with imposing such charges. Allowing Sprint Nextel to make such an

argument would permit it to claim the FCA does not apply at all, even though that

could be the only basis for imposing the charges it claims were lawfully imposed

(although, based on the FCC’s previous rulings, such charges were not lawfully

imposed). If the FCA does not apply, then the charges in question must have been

illegally imposed because Sprint Nextel would have no basis for imposing such charges

at all.

81. Members of the class suffered damages and will continue to suffer damages as

a result of Sprint Nextel’s failure to refund all previously collected monies plus

interest, in an amount to be determined at trial.

82. Pursuant to, inter alia, §§206 and 207 of the FCA, 47 U.S.C. §§ 206 and 207,

members of the Class are entitled to recover the full amount of damages sustained due

to Sprint Nextel’s above-described violations and obtain appropriate injunctive relief,

together with reasonable attorneys’ fees and costs.

Dkt. 30.

Defendants argue that Plaintiffs have failed to state a valid claim for relief in the Second

Amended Complaint:

Paragraphs 75, 76, 78 and 80 of the [Second Amended Complaint] are new. 

Each contains only legal argument. No new facts are alleged in them. Paragraph 77 is

also new. It, too, contains mostly legal argument, but it also adds a legally-irrelevant

argument regarding the alleged similarity of Sprint’s invoices to its customers. 

Similarly, paragraph 79 is technically new, but merely repeats allegations from the First

Amended Complaint regarding text messages [].

Dkt. 32-2 at 6. Moreover, Defendants claim that “No new facts are alleged and no facts are

connected to specific provisions of the FCA.” Id. Plaintiffs counter that they have complied with

the Court’s order and have added paragraphs that show “how the numerous facts detailed in the

[Second Amended Complaint] connect to the relevant law and why Defendants are subject to the

provisions of the [FCA] under those circumstances.” Dkt. 34 at 2. In other words, Plaintiffs

argue that they have only further explained their legal theories under what they allege is applicable

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ORDER - 7

law. Taking the Second Amended Complaint as it stands, the Court will turn to the issue of

whether Plaintiffs’ Fifth Cause of Action suffers from the “lack of a cognizable legal theory.”

Plaintiffs claim that “a service is subject to a different regulatory framework depending on

whether it constitutes an ‘information service’ or a ‘telecommunications service’”. See above, ¶

76. Specifically, Plaintiffs outline their cause of action as:

First, Plaintiffs assert that Defendants are assessing charges that are only

proper in connection with providing a wire or radio communication service. Second,

Plaintiffs assert that Defendants are acting as common carriers, as established through

their conduct as alleged throughout the [Second Amended Complaint]. Third,

Plaintiffs assert that the data plan service customers have not contracted for or receive

telecommunications services, but rather have only contracted with Defendants to

provide information services, and as a consequence may not be assessed charges in

connection with telecommunications services. Fourth, they allege it is unlawful under

the FCA to assess taxes for such services when it is not permitted under the law.

Dkt. 34 at 6. The Court, however, is unaware of any regulatory framework for “information

services” under the Federal Communications Act. As Defendants point out, Plaintiffs

make the illogical leap [] that because wireless broadband Internet services are not

telecommunications services or commercial mobile services, information services

customers are per se “exempt” from taxes and fees. Therefore, according to Plaintiffs,

the imposition of taxes and fees upon wireless broadband Internet services customers

is a per se violation of the §201(b) FCA.

Dkt. 32-2 at 7(emphasis in original).

Plaintiffs make no showing of law to support their theory. Assuming that Plaintiffs can

establish that Defendants may not assess taxes or other charges for information services, to do so

is not a violation of the Federal Communications Act because the Act does not regulate providers

of information services. The Federal Communications Commission’s Declaratory Ruling supports

this conclusion:

Concluding that mobile wireless broadband Internet access service, as an

information service, should not be . . . subject to Title II common carrier

obligations applicable to telecommunications service providers is most consistent

with Congressional intent to maintain a regime in which information service

providers are not subject to Title II regulations as common carriers.

22 F.C.C.R. 5901, ¶ 41. Further, it is a non sequitur to claim that the “just and reasonable”

requirements of § 201(b) apply to charges for services that are not regulated by the Federal

Communications Act, including § 201(b). Accordingly, Plaintiffs have not stated a claim that the

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ORDER - 8

allegedly unlawful charges violated either § 201(b) of the Federal Communications Act or any

other provision of the Act. Plaintiffs have already been afforded the opportunity to clarify the

claim. Any further attempt to do so would be futile.

Therefore, the Court should grant Defendants’ Motion to Dismiss Plaintiffs’ Fifth Cause

of Action, Violation of the Federal Communications Act 47 U.S.C. § 201(b). Dismissal of this

federal claim does not prevent Plaintiffs from arguing that the charges questioned are improper

charges under Plaintiffs’ other theories.

Plaintiffs’ Fifth Cause of Action was a federal claim establishing the Court’s original

jurisdiction over this action. See Dkt. 30. Because that federal claim should be dismissed, the

remaining basis for original jurisdiction depends on this being a class action, diversity of

citizenship between the parties, and the amount in controversy. 28 U.S.C. § 1332(d)(2). Based

on the record, the Court cannot determine whether this action meets those requirements nor can

the Court determine whether it should decline jurisdiction pursuant to either 28 U.S.C. §

1332(d)(3) or 28 U.S.C. § 1332(d)(4). The Court should require the parties to show cause why

this Court either has original jurisdiction and/or why this Court should assume or decline federal

jurisdiction over the remaining claims in this action.

B. Motion to Strike

The Court should reserve consideration of Defendants’ Motion to Strike until a

determination is made on whether the Court has, and will retain jurisdiction over this action.

III. ORDER

Therefore, it is hereby

ORDERED that Defendants’ Motion to Dismiss Plaintiffs’ Second Amended Complaint

(Dkt. 32-2) is GRANTED and Plaintiffs’ Fifth Cause of Action is DISMISSED. The Court

reserves consideration on Defendants’ Motion to Strike Plaintiffs’ Second Amended Complaint

(Dkt. 31-2).

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ORDER - 9

Plaintiffs are ORDERED to SHOW CAUSE, if any they have, in writing, as to why the

Court has original jurisdiction and/or should assume or decline federal jurisdiction over the

remaining state law claims in this action. Plaintiffs may file a brief, no more than five pages, by

July 22, 2008. Defendants may respond, no more than five pages, by July 24, 2008. Plaintiffs

may reply, no more than three pages, by July 25, 2008. The parties may file affidavits and/or

declarations in support of their briefing.

Consideration of this SHOW CAUSE ORDER is noted for July 25, 2008, and

Defendants’ Motion to Strike (Dkt. 31-2) is renoted for consideration on the same day, July 25,

2008.

The Clerk is directed to send uncertified copies of this Order to all counsel of record and

to any party appearing pro se at said party’s last known address. 

DATED this 10th day of July, 2008.

AROBERT J. BRYAN

United States District Judge 

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