Court Opinion

ID: 4539475
Source: CourtListenerOpinion
Date Created: 2020-06-05 18:00:20.895982+00
Date Added: 2024-06-11T12:46:30.909001
License: Public Domain

Case: 19-60287      Document: 00515442254         Page: 1    Date Filed: 06/05/2020

           IN THE UNITED STATES COURT OF APPEALS
                    FOR THE FIFTH CIRCUIT    United States Court of Appeals
                                                      Fifth Circuit

                                                                                 FILED
                                                                              June 5, 2020
                                      No. 19-60287
                                                                              Lyle W. Cayce
                                                                                   Clerk
ELIZABETH R. ALEXANDER, individually and on behalf of all others
similarly situated; JOHN P. ALEXANDER, individually and on behalf of all
others similarly situated; MARY SESSUMS, individually and on behalf of all
others similarly situated; SANDRA GLASSMIRE, individually and on behalf
of all others similarly situated; JAI GIBSON, individually and on behalf of all
others similarly situated; SHARON JOSEPH, individually and on behalf of
all others similarly situated; PATRICIA BROUSSARD,

               Plaintiffs - Appellants

v.

GLOBAL TEL LINK CORPORATION; CHRISTOPHER EPPS; SAM
WAGGONER,

               Defendants – Appellees

                   Appeal from the United States District Court
                     for the Southern District of Mississippi
                             USDC No. 3:17-CV-560

Before SOUTHWICK, COSTA, and DUNCAN, Circuit Judges.
PER CURIAM:*
       Plaintiff-appellants are inmates of the Mississippi Department of
Corrections and their family members (collectively, “the inmates”). They allege

       * Pursuant to 5TH CIR. R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH
CIR. R. 47.5.4.
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                                    No. 19-60287

they were charged illegally inflated fees to use inmate telephone services
administered by defendant-appellee Global Tel Link. Their lawsuit follows on
the heels of the criminal convictions of defendant-appellees Christopher Epps
and Sam Waggoner, who orchestrated a kickback scheme to give GTL a
monopoly over the MDOC’s prison telephone services, which, the inmates
allege, GTL used to inflate telephone fees illegally.
      The district court dismissed the inmates’ fourth amended complaint,
holding in relevant part that their racketeering claims were pleaded
insufficiently to overcome the so-called “filed-rate doctrine,” which “bars
judicial recourse against a regulated entity” based on a claim that a
government-approved rate of service, or “filed rate,” is “too high, unfair or
unlawful.” Tex. Comm’l Energy v. TXU Energy, Inc., 413 F.3d 503, 507 (5th Cir.
2005). We affirm.
                                           I.
      We take the operative facts from the fourth amended complaint, viewed
in the light most favorable to the inmates. See Childers v. Iglesias, 848 F.3d
412, 413 (5th Cir. 2017).
      This case involves a bribery scheme effected by Christopher Epps, the
former head of the Mississippi Department of Corrections (“MDOC”), and Sam
Waggoner, a former consultant to defendant-appellee Global Tel Link (“GTL”).
In 2005, the MDOC contracted with GTL to manage inmate phone services.
The contract has been renewed several times with no competing bids. The
complaint alleges that in exchange for payments from Waggoner, Epps “turned
a blind eye” to GTL’s imposition of excessive, illegal fees on the inmates, 1
allowing GTL to “inflat[e] its profits” at the inmates’ expense. This was the

      1  As noted above, plaintiff-appellants include individuals who called inmates from
outside prison. Where appropriate, the term “inmates” includes those individuals, too.

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result of an agreement Waggoner had made with Epps to pay him kickbacks
to ensure GTL kept the phone-service contract. Waggoner’s payments to Epps
were “as much as $3,400 per month” and totaled “over $300,000.00.” In 2015,
Epps and Waggoner pleaded guilty in federal court for their roles in the
scheme.
       In 2017, the inmates brought this putative class-action suit against
Waggoner,      Epps,     GTL,    and     other    since-dismissed      parties,    alleging
racketeering, among other things. The complaint was amended twice before
GTL moved to dismiss for failure to state a claim. The district court granted
the motion, holding the inmates had failed to “show how the fees actually
charged were inconsistent with” fees approved by the MDOC and tariffs
approved by the Mississippi Public Service Commission (“PSC”). The dismissal
was without prejudice. The inmates filed a third amended complaint, which
“identifie[d] various fees that concededly are present in the tariffs governing
the rates and fees GTL may charge” and alleged they “were charged these fees
in a manner not approved by the tariffs.” But the third amended complaint
failed again to “identif[y] . . . a single instance in which one plaintiff was
charged a fee in a manner not approved by the PSC.” The district court again
dismissed without prejudice and granted leave to file a final complaint,
“encourag[ing]” the inmates “to avoid the pitfalls of shotgun pleadings.”
       The inmates then filed the now-operative fourth amended complaint,
bringing several causes of action. 2 The complaint details a total of seven
assessments it claims GTL misapplied. It admits that six of these assessments

       2 On appeal, the inmates develop arguments only as to Counts I and II, which allege
violations of the Racketeer Influenced and Corruption Organizations Act (“RICO”), 18 U.S.C.
§ 1961 et seq. They have thus waived any argument that the district court erred in dismissing
their other five causes of action.

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were authorized by a PSC tariff but alleges GTL misapplied the assessments
and therefore exceeded the tariff. 3 As to the seventh assessment, 4 the
complaint alleges only that it was “outside the scope of any rate structure or
tariff schedule approved by MDOC or” the PSC. As the district court noted, the
complaint fails to “identify a single instance in which one plaintiff was charged
a fee in a manner not approved by the PSC.” Instead, the complaint alleges
generally that the fees were assessed against “every customer” or on “every
call,” as the case may be. In other words, the complaint does not allege that
GTL imposed an unauthorized fee on any specific date or with regard to any
specific inmate or any specific call. The complaint alleges “GTL never provided
its customers with detailed bills” and “never provided its customers with any

       3   The six tariff-authorized assessments are:
- An “AdvancePay” fee which applies to customers from whom GTL “determines an advance
payment is necessary.” The complaint alleges that in reality, GTL imposed AdvancePay fees
“on every customer.”
- A “Single Bill Fee,” which was to be applied “only once per billing period, regardless of the
number of calls accepted.” The complaint alleges GTL “impos[ed] this fee on every call.”
- A fee for “Prepaid Debit Accounts.” The complaint alleges GLT “impos[ed] a significantly
higher rate structure” with regard to this fee.
- A “Regulatory and Carrier Cost Recovery Fee,” which is authorized as “a flat fee once per
month or as a percentage of an intrastate call.” The complaint alleges GTL imposed this fee
“on a per-call basis, rather than monthly.”
- A “Wireless Termination Surcharge,” which GTL “reserve[d] the right” to impose on calls
made to cell phones. The complaint alleges that “[i]n practice, GTL did not ‘reserve the
right’—it automatically and arbitrarily imposed this outrageous and excessive fee on every
call” to a cell phone.
- A “Validation Surcharge,” which, the tariff states, “will be applied to the base rate of all
calls.” The complaint alleges only that GTL imposed the surcharge “outside the scope of its
authorized tariff.”
       4The complaint alleges “GTL arbitrarily limits inmate calls to 15-minute intervals,
after which callers must pay additional per-call fees, surcharges and/or ancillary costs for
additional time.” These actions, the complaint alleges, “were outside the scope of any rate
structure or tariff schedule.”

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                                   No. 19-60287

itemization of any bill.” But it contains no allegations regarding any efforts to
obtain itemized bills or any other information regarding GTL’s rates. As the
district court observed, “[a]t no point have the Plaintiffs suggested that they
even attempted to acquire” this information.
      The district court dismissed the fourth amended complaint, finding
again that the inmates had failed to plead specific facts sufficient to overcome
the filed-rate doctrine. It also rejected the inmates’ argument that they could
not be expected to provide such detailed allegations because GTL failed to give
its customers itemized bills, noting that none of the complaints had detailed
any efforts taken to secure itemized bills or otherwise determine which fees
were being applied to which calls or inmates. Having given the inmates two
previous opportunities to correct these deficiencies, the district court dismissed
the fourth amended complaint with prejudice. The inmates timely appealed.
                                         II.
      We review the grant of a motion to dismiss de novo. Childers, 848 F.3d
at 413). We accept all well-pleaded facts as true and “view those facts in the
light most favorable to the plaintiff.” Id. We do not accept as true “conclusory
statements” or “naked assertions devoid of further factual enhancement.”
Morgan v. Swanson, 659 F.3d 359, 370 (5th Cir. 2011) (en banc) (cleaned up).
      We will affirm the dismissal if the complaint fails to plead “enough facts
to state a claim to relief that is plausible on its face.” Bell Atl. Corp. v. Twombly,
550 U.S. 544, 570 (2007). A claim is facially plausible if the complaint alleges
facts sufficient to “allow[] the court to draw the reasonable inference that the
defendant is liable for the misconduct alleged.” Ashcroft v. Iqbal, 556 U.S. 662,
678 (2009). “The plausibility standard is not akin to a ‘probability
requirement,’ but it asks for more than a sheer possibility that a defendant has
acted unlawfully.” Id. (citing Twombly, 550 U.S. at 556). “Where a complaint

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                                 No. 19-60287

pleads facts that are ‘merely consistent with’ a defendant’s liability, it ‘stops
short of the line between possibility and plausibility of entitlement to
relief.’” Id. (quoting Twombly, 550 U.S. at 557).
                                      III.
      RICO provides a civil cause of action for “[a]ny person injured in his
business or property by reason of a violation of” RICO’s substantive provisions.
18 U.S.C. § 1964(c); see id. § 1962 (enumerating substantive violations). To
recover under § 1964(c), a plaintiff must prove not only all elements of a
substantive RICO violation but also that “he has been injured in his business
or property by the conduct constituting the violation.” Sedima, S.P.R.L. v.
Imrex Co., 473 U.S. 479, 496 (1985). The plaintiff must also demonstrate that
the substantive violation proximately caused his injury. Holmes v. Sec. Inv’r
Prot. Corp., 503 U.S. 258, 268 (1992). Here, the inmates argue they have
suffered an injury “in the form of excessive and illegal charges paid for” GTL’s
telephone fees. Taffet v. South Co., 967 F.2d 1483, 1487 (11th Cir. 1992) (en
banc). This argument “rests on the assumption that [the inmates] enjoy a legal
right to have been charged a lower rate than they actually were charged.” Id.
at 1488.
      Under the so-called “filed-rate doctrine,” however, a ratepayer has no
right to a rate lower than one approved by a governing regulatory agency. The
filed-rate doctrine “bars judicial recourse against a regulated entity based upon
allegations that the entity’s ‘filed rate’ is too high, unfair or unlawful.” Tex.
Comm’l Energy v. TXU Energy, Inc. [TCE], 413 F.3d 503, 507 (5th Cir. 2005)
(citing Square D Co. v. Niagara Frontier Tariff Bureau, Inc., 476 U.S. 409
(1986)). “Simply stated, the doctrine holds that any ‘filed rate’—that is, one
approved by the governing regulatory agency—is per se reasonable and
unassailable in judicial proceedings brought by ratepayers.” Id. at 508 (quoting

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                                      No. 19-60287

Wegoland, Ltd. v. NYNEX Corp., 27 F.3d 17, 18 (2d Cir. 1994)). The doctrine
stems from judicial reluctance to revisit agencies’ determinations of what rates
are reasonable or unreasonable. See Montana-Dakota Utilities Co. v. Nw. Pub.
Serv. Co., 341 U.S. 246, 251 (1951) (“[A ratepayer] can claim no rate as a legal
right that is other than the filed rate, whether fixed or merely accepted by the
[agency], and not even a court can authorize commerce in the commodity on
other terms.”). The doctrine applies regardless of “the culpability of the
defendant’s conduct or the possibility of inequitable results.” Marcus v. AT&T
Corp., 138 F.3d 46, 59 (2d Cir. 1998); see also Maislin Indus., U.S., Inc. v.
Primary Steel, Inc., 497 U.S. 116, 128 (1990) (“Despite the harsh effects of the
filed rate doctrine, we have consistently adhered to it.” (collecting cases)).
       While the filed-rate doctrine originated with federally approved rates,
“[c]ourts have uniformly held . . . that the rationales underlying the filed rate
doctrine apply equally strongly to regulation by state agencies.” TCE, 413 F.3d
at 509 (quoting Wegoland, 27 F.3d at 20, and citing H.J. Inc. v. Nw. Bell Tel.
Co., 954 F.2d 485, 494 (8th Cir. 1992), Taffet, 967 F.2d 1483, and Korte v.
Allstate Ins. Co., 48 F. Supp. 2d 647 (E.D. Tex. 1999)) (second alteration in
original). Similarly, while the doctrine originated in the antitrust context,
every circuit court to consider the question has concluded the doctrine applies
to lawsuits brought under § 1964(c). See, e.g., Wah Chang v. Duke Energy
Trading & Mktg., LLC, 507 F.3d 1222, 1226 & n.4 (9th Cir. 2007); Wegoland,
27 F.3d at 20; Taffet, 967 F.2d 1483; H.J. Inc., 954 F.2d at 494. 5
       As the district court noted, we recently applied the filed-rate doctrine to
telephone services, affirming dismissal of a complaint that alleged ratepayers

       5 We have not had occasion to decide whether the filed-rate doctrine extends to
§ 1964(c), but the inmates do not argue the doctrine is inapplicable here. We have, however,
cited Wegoland and Taffet with approval. See TCE, 413 F.3d at 509. With no contrary
argument before us, we assume without deciding that the doctrine applies to § 1964(c).

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were charged certain fees “not found in any applicable” agency-approved tariff.
See Atlas Trading Conglomerate Inc. v. AT&T Inc., 714 F. App’x 318, 322 (5th
Cir. 2017), as revised (Oct. 19, 2017) (per curiam). We “accept[ed] as true” the
allegation that the charges were not found in the tariffs but held this did not
constitute “a plausible allegation that the defendants [had] charged [the
ratepayer] different rates from those on file with the FCC.” Id.
       Similarly, here, the fourth amended complaint fails to plead specific facts
sufficient to overcome the filed-rate doctrine. As discussed above, the
complaint admits that of the seven challenged assessments, six were
authorized by a PSC-approved tariff. As to the seventh assessment, the
complaint merely alleges the assessment is “not found in any applicable”
agency-approved tariff. Cf. id. The complaint does allege that, in practice, GTL
exceeded the tariff-approved rates, but it does so in the broadest of terms. It
claims, for example, that GTL imposed one assessment “on every customer.” 6
But, as the district court noted, the complaint does not “identify a single
instance in which one plaintiff was charged a fee” contrary to the tariff or any
other approved rate. In other words, the complaint fails to allege that GTL
imposed any specific, unauthorized fee on any specific date or with regard to
any specific inmate or any specific call. We agree with the district court that

       6  That allegation was made as to the “AdvancePay” fee. The complaint similarly
alleges GTL imposed the Single Bill Fee “on every call.” It alleges GLT “impos[ed] a
significantly higher rate structure” with regard to “Prepaid Debit Accounts” but does not
explain that structure. Similarly, the complaint alleges GTL imposed the Validation
Surcharge “outside the scope of its authorized tariff” without explaining how it exceeds that
scope. It alleges GTL imposed the Regulatory and Carrier Cost Recovery Fee “on a per-call
basis, rather than monthly,” but does not allege the actual charges were not “a percentage of
an intrastate call,” as the tariff authorizes. It alleges GTL failed to “reserve [its] right” to
impose the Wireless Termination Surcharge but admits that under the tariff, GTL had the
right to impose the surcharge. Finally, the complaint alleges GTL’s “costs for additional time”
exceeding fifteen minutes “were outside the scope of any rate structure or tariff schedule.”
But it fails to identify a specific instance of the charge being applied.

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these allegations amount to nothing more than conclusory statements of fact,
which we will not accept as true. See Twombly, 556 U.S. at 570.
          The bulk of the inmates’ argument on appeal is that the assessments
were the products of bribery and fraud. But the filed-rate doctrine ignores “the
culpability of the defendant’s conduct.” Marcus, 138 F.3d at 59 (citing Square
D, 476 U.S. at 424). In Square D, for example, the Supreme Court affirmed
dismissal of antitrust claims even though it was alleged that the defendants
had engaged in rate-fixing. 476 U.S. at 410. Similarly in TCE, we applied to
doctrine to allegations that a power supplier engaged in “anti-competitive bids
and market manipulation.” 413 F.3d at 507. The inmates give no reason to
think Epps’ and Waggoner’s conduct should constitute an exception to this
rule. 7
          The inmates also argue they should be excused from usual pleading
standards because “GTL exclusively controls the billing and collections records
at issue in the case, and they are not public records.” In other contexts, we have
taken into account a plaintiff’s “limited access to crucial information” in
deciding whether to affirm a Rule 12(b)(6) dismissal. Innova Hosp. San
Antonio, Ltd. P’ship v. Blue Cross & Blue Shield of Ga., Inc., 892 F.3d 719, 731
(5th Cir. 2018) (quoting Braden v. Wal-Mart Stores, Inc., 588 F.3d 585, 598 (8th
Cir. 2009)). But we have “emphasiz[ed]” that in those contexts, the plaintiffs
alleged they were “unable to obtain plan documents even after good-faith
efforts to do so.” Id. at 729. Here, the fourth amended complaint contains no

         The inmates similarly distinguish Atlas on the ground that it “did not involve or
          7

allege a criminal conspiracy in which the defendants willfully and intentionally hid their
criminal acts.” This, too, ignores the filed-rate doctrine’s “harsh” nature. Maislin Indus., 497
U.S. at 128.

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allegations regarding any efforts to obtain specific information regarding
GTL’s billing practices. 8
                                            ***
       In sum, the district court correctly decided that the fourth amended
complaint fails to plead adequately that the inmates were charged in excess of
government-approved rates. The inmates’ allegations are threadbare and lack
the specificity required to overcome dismissal. Accordingly, the complaint fails
to demonstrate “a legal right to have been charged a lower rate than [the
inmates] actually were charged.” Taffet, 967 F.2d at 1488. Because § 1964(c)
requires a plaintiff to demonstrate that “he has been injured in his business or
property by the conduct constituting the violation,” Sedima, 473 U.S. at 496,
the complaint fails to state a civil RICO claim. We AFFIRM.

       8 The inmates do not argue the district court erred by dismissing the fourth amended
complaint with instead of without prejudice. Even if they did, we would affirm that decision.
We review the decision whether to dismiss with or without prejudice for abuse of discretion.
Club Retro, L.L.C. v. Hilton, 568 F.3d 181, 215 n.34 (5th Cir. 2009) (citing Schiller v.
Physicians Res. Grp. Inc., 342 F.3d 563, 567 (5th Cir. 2003)). The district court allowed the
inmates to file four amended complaints, two of them after it had noted the deficiency that
led to the final dismissal. Cf. Neutron Depot, L.L.C. v. Bankrate, Inc., 798 F. App’x 803, 808
(5th Cir. 2020) (“[T]he district court allowed Neutron Depot to file three amended complaints.
It was not an abuse of discretion for the district court to refuse Neutron Depot a ‘fourth bite
at the apple.’” (quoting Schiller, 342 F.3d at 566) (cleaned up)). Here, the district court did
not abuse its discretion by refusing the inmates a fifth “bite at the apple.” Id.

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