Tuesday, April 6, 2010

Why The Two-Year Statute Of Limitations In Section 415(a) of The FCA Does Not Apply To Telephone Bills

Consumer attorneys have argued that collection lawsuits filed to recover unpaid telephone bills are governed by the two-year statute of limitations found at section 415(a) of Federal Communications Act (“FCA”), 47 U.S.C. § 415(a), rather than the limitations periods established in the law of the state where the suit is filed. Armed with this theory, they have filed actions under the FDCPA, claiming that the collectors are improperly seeking to collect on time-barred debts. But section 415(a) of the FCA does not apply except in those extremely rare circumstances where a collector is seeking to recover charges imposed by a tariff. All telephone charges – both landline and cellular – have been detariffed since no later than 2001. The two-year limitations period from section 415(a) will almost never apply.

Section 415(a) provides that any claim for “lawful charges” by a carrier must be filed within two years of the date the claim accrues. It states: “All actions at law by carriers for recovery of their lawful charges, or any part thereof, shall be begun within two years from the time the cause of action accrues, and not after.” 47 U.S.C. § 415(a). But the only “lawful charges” covered by this limitations period are charges imposed by a carrier pursuant to a tariff filed with the Federal Communications Commission. See Castro v. Collecto, Inc., 668 F. Supp. 2d 950, 976-77 (W.D. Tex. Oct. 27, 2009) (“Castro II”) (“Under the ICA, and subsequently under the FCA, ‘lawful charges’ were those which were included in tariffs.”); see also 47 U.S.C. § 415(g) (“The term ‘overcharges’ as used in this section shall be deemed to mean charges for services in excess of those applicable thereto under the schedules of charges lawfully on file with the Commission.”).

Consumer attorneys may seek to rely on an earlier opinion issued by the same court. See Castro v. Collecto, Inc., 256 F.R.D. 534 (W.D. Tex. March 4, 2009) (“Castro I”). But Castro I is no longer good law. Months after Castro I was decided, after conducting an exhaustive review of the FCA and its legislative history, the same court reversed itself and held that the two-year statute of limitations in section 415(a) did not apply:

"Because the FCA's statutory scheme and legislative history manifestly evince that Congress did not intend to preempt a CMRS providers' state law remedies when the action does not touch on rates or entry market and because the FCC has eliminated the tariff requirement for such providers, the Court concludes section 415 does not apply to a CMRS provider who is attempting to collect a debt from a consumer and is not preemptive. Rather, the state law governing the debt collection action provides the applicable statute of limitations."

Castro II, 278 F. Supp. 2d at 978. Consumers may also rely on a district court case from Illinois which, relying on Castro I, certified a class action without analyzing the language or legislative history of section 415(a) the FCA. See Cotton v. Asset Acceptance, LLC, 2008 WL 2561103 (N.D. Ill. June 26, 2008). The Cotton decision is no longer persuasive in light of Castro II.

A state court collection complaint filed by a telephone company or its successor-in-interest will rarely, if ever, seek to recover “lawful charges” imposed under a tariff. Collectors typically assert common count claims arising under state law, such as account stated or book account. It is highly unlikely that any of these charges will be based upon tariffs, given that mandatory detariffing for landline charges occurred in 2001. See Frontline v. Sprint, 178 F. Supp. 2d 432, 434 (S.D.N.Y. 2001) (“On February 5, 2001, the F.C.C. issued public notice that all domestic tariffs must be cancelled by August 1, 2001. Common Carrier Bureau Extends Transition Period for Detariffing Consumer Domestic Long Distance Services, 16 F.C.C. Rcd. 2906 (2001).”). Cellular charges were detariffed years before that in 1993. See Castro II, 278 F. Supp. 2d at 977.

Once the FCC did away with tariffs, claims by carriers for unpaid telephone bills were to be governed by state law. See, e.g., Ting v. AT&T, 319 F.3d 1126, 1132 (9th Cir. 2003) (“Under mandatory detariffing, rather than having carriers file their rates, terms, and conditions with the FCC, the Commission required telecommunications carriers to establish contracts with consumers governing the rates, terms, and conditions of interstate long distance service.”).

Unless a consumer can allege and prove that a collector is seeking to recover “lawful charges” imposed pursuant to a tariff, the two-year limitations period found in section 415(a) will not apply. It will impossible for a consumer to prove this, unless the debt is for landline charges incurred prior to 2001, or cell phone charges incurred before 1993. In the absence of such charges, the state law statute of limitations will control.

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