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Federal appeals court examines disputed telephone charges

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Writing for a unanimous 7th Circuit Court of Appeals panel, U.S. Judge David Hamilton authored an opinion Tuesday full of what he calls “telephonese.” The opinion delves into a small business’s disputed phone bill charges and how those matters are governed by state and common law.

The ruling comes in Lady Di’s Inc. v. Enhanced Services Billing Inc. and ILD Telecommunications Inc., No. 10-3903, a case from U.S. Judge Sarah Evans Barker in the Southern District of Indiana involving an Indianapolis beauty and hair salon.

Using AT&T as its telephone company, Lady Di’s disputes charges that were on its telephone bill in 2008 from ESBI in Delaware and ILD in Delaware – both described as “billing aggregators” that are not directly involved with the sale of telecommunications and services to customers but act as intermediaries between telephone companies such as AT&T and service providers offering e-fax services or Internet resources.

After customers pay their telephone bills, ESBI and ILD collect payments for service provider charges recovered by local telephone companies, deduct part of the payment as a fee, and forward the rest to service providers.

In this case, Lady Di’s owners dispute several months of charges in 2008 that they claim were unauthorized for an e-fax service and an Internet search engine and directory option. Lady Di’s made its October payment that year that included the $49.95 and $42.75 charges before discovering the charges, and then contacted AT&T for a refund. AT&T told the business to contact both ESBI and ILD, and the billing aggregators named as defendants here either refused a refund or didn’t respond.

After this suit was filed in state court and later removed to federal court, Lady Di’s account was credited in full for the disputed charges – but the case proceeded on claims that the allegedly unauthorized charges violated Indiana’s anti-cramming statute as well as the Deceptive Consumers Practices Act, and that the amounts were unjust enrichment under common law.

Judge Barker denied a class-certification request and later in separate rulings granted the defendants’ motion for summary judgment on the claims of unjust enrichment and statutory deception. Lady Di’s appealed both rulings, and the 7th Circuit panel affirmed the judgment, but the court followed a different path to reach that same conclusion.

“Turning first to the merits, we conclude that the Indiana anti-cramming regulation does not apply to these defendants because they are not telephone companies and did not act in this case as billing agents for telephone companies,” Judge Hamilton wrote.

Although the anti-cramming regulation detailed in both Indiana Code 8-1-29-5(2) and 170 IAC 7-1.1-19 doesn’t provide a private cause of action, Judge Hamilton wrote that it does provide a way to defend against collection actions. The judges also determined that a recorded phone conversation shows that Lady Di’s actually did order the disputed services and that defeats the unjust enrichment and deceptive commercial solicitation claims.

Precedent from state courts during the past century proves that Indiana courts likely wouldn’t agree with the plaintiffs on the unjust enrichment claims, Judge Hamilton wrote.

“We do not believe Indiana courts would use the equitable doctrine of unjust enrichment to convert a technical violation of a regulation into a right of action that would provide a (tiny) windfall for an individual customer who actually ordered, received the benefit of, and paid for the services in question,” he wrote.

“If Indiana wants to create a private right of action for a violation of the anti-cramming law, it can do so by statute or perhaps by regulation. It has not done so yet. If a customer is a victim of genuine cramming – charged for unwanted services that were not ordered – the equitable doctrine of unjust enrichment might well be applicable. But the doctrine … cannot be used in this way by a customer like plaintiff, who actually ordered and received the services.”
 

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  1. A traditional parade of attorneys? Really Evansville? Y'all need to get out more. When is the traditional parade of notaries? Nurses? Sanitation workers? Pole dancers? I gotta wonder, do throngs of admiring citizens gather to laud these marching servants of the constitution? "Show us your billing records!!!" Hoping some video gets posted. Ours is not a narcissistic profession by any chance, is it? Nah .....

  2. My previous comment not an aside at court. I agree with smith. Good call. Just thought posting here a bit on the if it bleeds it leads side. Most attorneys need to think of last lines of story above.

  3. Hello everyone I'm Gina and I'm here for the exact same thing you are. I have the wonderful joy of waking up every morning to my heart being pulled out and sheer terror of what DCS is going to Throw at me and my family today.Let me start from the !bebeginning.My daughter lost all rights to her 3beautiful children due to Severe mental issues she no longer lives in our state and has cut all ties.DCS led her to belive that once she done signed over her right the babies would be with their family. We have faught screamed begged and anything else we could possibly due I hired a lawyer five grand down the drain.You know all I want is my babies home.I've done everything they have even asked me to do.Now their saying I can't see my grandchildren cause I'M on a prescription for paipain.I have a very rare blood disease it causes cellulitis a form of blood poisoning to stay dormant in my tissues and nervous system it also causes a ,blood clotting disorder.even with the two blood thinners I'm on I still Continue to develop them them also.DCS knows about my illness and still they refuse to let me see my grandchildren. I Love and miss them so much Please can anyone help Us my grandchildren and I they should be worrying about what toy there going to play with but instead there worrying about if there ever coming home again.THANK YOU DCS FOR ALL YOU'VE DONE. ( And if anyone at all has any ideals or knows who can help. Please contact (765)960~5096.only serious callers

  4. He must be a Rethuglican, for if from the other side of the aisle such acts would be merely personal and thus not something that attaches to his professional life. AND ... gotta love this ... oh, and on top of talking dirty on the phone, he also, as an aside, guess we should mention, might be important, not sure, but .... "In addition to these allegations, Keaton was accused of failing to file an appeal after he collected advance payment from a client seeking to challenge a ruling that the client repay benefits because of unreported income." rimshot

  5. I am not a fan of some of the 8.4 discipline we have seen for private conduct-- but this was so egregious and abusive and had so many points of bad conduct relates to the law and the lawyer's status as a lawyer that it is clearly a proper and just disbarment. A truly despicable account of bad acts showing unfit character to practice law. I applaud the outcome.

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