Opinion ID: 186459
Heading Depth: 2
Heading Rank: 1

Heading: The Aggregators' Standing

Text: 14 Sprint and AT & T argue the aggregators lack standing to sue because they do not have a concrete personal stake in the litigation. As these IXCs see things, the aggregators' skeletal and conditional assignments from the PSPs are insufficient to confer standing because they transfer only bare legal title to the claims of the PSPs, that is, the right to sue for purposes of collection but not the right to the recovery. Here the IXCs point out that the aggregators have promised to return to the PSPs all the proceeds from the litigation.  Further, they contend the assignments, notwithstanding their terms, are in fact completely revocable by the PSPs. 15 In terms of the irreducible constitutional minimum requirements for standing — injury-in-fact, causation, and redressability, see Lujan v. Defenders of Wildlife, 504 U.S. 555, 560, 112 S.Ct. 2130, 119 L.Ed.2d 351 (1992) — the IXCs first argue the aggregators have not suffered any injury of their own, and the assignments do not confer upon the aggregators the right to assert the injury of the PSPs. The IXCs also argue the relief the aggregators seek would not redress their purported injury because the aggregators would not keep any portion of such damages as may be awarded. 16 There are some circumstances in which a plaintiff has standing to sue based upon an injury to someone else. Indeed, in Vermont Agency of Natural Resources v. United States ex rel. Stevens, 529 U.S. 765, 773, 120 S.Ct. 1858, 146 L.Ed.2d 836 (2000), the Supreme Court stated in no uncertain terms that the assignee of a claim has standing to assert the injury in fact suffered by the assignor. At the same time, however, the Court said that the assignee must have a concrete private interest in the outcome of the suit that is related to the injury asserted. Id. at 772, 120 S.Ct. 1858. 17 Therefore, in order to determine whether the aggregators have standing, we must first determine the effect of the assignments, which purport to transfer to them all rights, title and interest in the PSPs' dial-around compensation claims. We must then determine whether the aggregators have a stake in the outcome of the suit, notwithstanding their contractual obligation to account to the PSPs for any award of damages.
18 Sprint and AT & T offer two reasons to believe the assignments did not transfer the PSPs' compensation claims to the aggregators so as to give the aggregators standing to sue. First, the transferred ownership interest was only for purposes of collection. Second, the assignments were completely revocable by the PSPs. 19 We need not dwell upon the IXCs' first argument The quoted phrase appears in the following context: [The PSP] hereby assigns, transfers and sets over to [the aggregator] 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. The phrase for purposes of collection, which the IXCs portray as a fatal limitation, we think a mere reflection of the aggregator's promise to pass back to the PSP whatever it is able to collect. Whether that obligation affects the aggregator's standing is a distinct question, which we consider in Part II.A.2 below, but it certainly does not affect the validity of the assignment of the PSP's dial-around compensation claim. The IXCs, therefore, give us no reason to believe the assignment is anything less than a complete transfer to the aggregator of the PSP's dial-around compensation claim. 20 Equally unavailing is the IXCs' contention that the assignments are completely revocable. By their terms, the assignments may not be revoked without the written consent of [the aggregator]. Sprint and AT & T suggest the court should treat this provision as a mere formality, because APCCS sent to each of its client PSPs a letter stating: If at any point APCCS is no longer representing you in the litigation, you will be able to pursue your claims on your own, should you so choose. The possibility that APCCS would no longer represent a PSP in litigation does nothing, however, to suggest the PSP could revoke the assignment as long as APCCS continues to represent the PSP in the litigation. Of course, APCCS itself could repudiate the assignment and presumably would do so if it no longer wanted to represent the PSP in the litigation. In any event, the assignment itself is plain: the PSP may not revoke it without the consent of the aggregator. 21 Having rejected both the IXCs' arguments challenging the effect of the assignments, we turn to the question whether the aggregators' promise to pass along the proceeds of litigation affects their standing to sue.
22 Sprint and AT & T also argue the aggregators lack standing because the assignments effectively give them only the right to sue; the aggregators will reap no direct financial benefit from the suit. In that respect, Sprint and AT & T argue, the interest of the aggregators in this case is unlike that of a qui tam relator, whose standing the Supreme Court upheld in Vermont Agency, 529 U.S. 765, 120 S.Ct. 1858, 146 L.Ed.2d 836. Here, the IXCs argue, the aggregators retain no genuine economic interest in the dial-around compensation claims as a result of their promises to pay the proceeds to the PSPs, whereas a qui tam relator benefits from the bounty he receives if his claim is successful. Id. at 772, 120 S.Ct. 1858. 23 According to the IXCs, this case is better compared to Connecticut v. Physicians Health Services of Connecticut, Inc., 287 F.3d 110 (2002), in which the Second Circuit held that the State of Connecticut lacked standing to assert claims against an insurance company offering managed care plans to Connecticut residents. The State claimed standing on the ground that several plan participants had assigned to the State their right to seek appropriate equitable relief with respect to any cause of action they may have as plan participants or beneficiaries. Id. at 112. The Second Circuit concluded that Connecticut did not have a concrete private interest in the outcome of the suit because [n]one of the remedies being sought would flow to the State as assignee. Id. at 118. The assignments at issue did not confer `actual' rights or benefits ... on the State. The right to recover benefits or to seek money damages remain[ed] with the assignor. Id. at 115. Therefore, the court held that, [e]ven if the assignments are valid as a contractual matter, they ... merely give the State the right to act as a nominal party. Id. at 118. 24 The assignments at issue here, in contrast, transfer to the assignees the entire interest of the PSPs in their dial-around compensation claims, and, as explained in Part II.A.1 above, there is nothing to suggest the assignments were invalid. As for the question that remains — whether the aggregators' promise to hand over any recovery to the PSPs means the aggregators have no stake in the case — Physicians Health is not helpful; it did not address the question whether an assignee that would otherwise have standing to sue loses its standing when it obligates itself to give the proceeds of the suit to another. 25 Still, we are not entirely without guidance. As the district court observed, the identical issue has arisen under Federal Rule of Civil Procedure 17(a): Every action shall be prosecuted in the name of the real party in interest. Courts and commentators agree that, if an assignment properly transfers ownership of a claim, then the assignee's interest is not affected by the parties' additional agreement that the transferee will be obligated to account for the proceeds of a suit brought on the claim. Advanced Magnetics, Inc. v. Bayfront Partners, Inc., 106 F.3d 11, 17 (2d Cir.1997); see also Titus v. Wallick, 306 U.S. 282, 289, 59 S.Ct. 557, 83 L.Ed. 653 (1939) (legal effect of assignment was not curtailed by the recital that the assignment was for purposes of suit and that its proceeds were to be turned over or accounted for to another); JAMES WM. MOORE, ET AL., MOORE'S FEDERAL PRACTICE § 17.11[1][c] (3d ed. 1997) (The assignee is real party in interest even though assignee must account to the assignor); 6A CHARLES ALAN WRIGHT & ARTHUR R. MILLER, FED. PRAC. & PROC. § 1545 at 348 (1990) ([F]ederal courts have held that an assignee for purposes of collection who holds legal title to the debt ... is a real party in interest even though the assignee must account to the assignor for whatever is recovered in the action). 26 Sprint and AT & T counter with the observation that Rule 17(a) and the requirement of standing are governed by different standards and serve distinct purposes. That is true enough, as far as it goes: Standing depends in part upon elements clearly unrelated to the rather simple proposition set out in Rule 17(a), FED. PRAC. & PROC. § 1542 at 330. But standing also depends in part, as does a plaintiff's status as the real party in interest, upon having a personal interest in the controversy, Whelan v. Abell, 953 F.2d 663, 672 (D.C.Cir.1992), and that is the only requirement at issue in the IXCs' challenge to the aggregators' standing in this case. 27 We see no basis for distinguishing the personal stake required under Rule 17(a) from the interest required for standing. What the aggregators have promised to do with any recovery is irrelevant to their standing — as it would be to their status as real parties in interest. We need only be satisfied that the aggregators received a valid assignment of the claims, so that any damage award will be payable to them in the first instance. Upon that score the IXCs have cast no doubt.