LADY DI’S, INC. v. ENHANCED SERVICES BILLING, INC. (August 16, 2011)

Enhanced Services Billing and ILD Telecommunications are what are known as "billing aggregators." They are, in essence, the middleman between telephone companies and service providers. Service providers are vendors that provide services, sometimes related to telecommunications and sometimes not, to individuals and businesses. They use billing aggregators to process and transmit the costs of the services to their customers on the customer’s telephone bill. Lady Di's is a small Indiana business run by Dianne Markin-Venn. AT&T is its telephone company. In 2008, both ESBI and ILD placed charges on Lady Di’s AT&T bill. Lady Di’s filed suit, alleging unjust enrichment and a violation of Indiana's Deceptive Commercial Solicitation Act. It alleged that the charges were all unauthorized. Judge Barker (S.D. Ind.) granted summary judgment to the defendants. Lady Di’s appeals.

In their opinion, Seventh Circuit Judges Rovner and Hamilton and District Judge Lefkow affirmed. Lady Di’s case arises out of Indiana's attempts to control cramming, which is the practice of charging telephone customers for unauthorized services. The Indiana General Assembly passed a statute the provided that a customer could not be billed for unauthorized services. The Indiana Utility Regulatory Commission promulgated a rule that required certain telecommunications providers to maintain several kinds of documentation before charging a customer for a service. The regulation only applies to primary inter-exchange carriers, local exchange carriers, and their billing agents and does not provide a private cause of action. Although the plaintiff originally alleged that the charges were actually unauthorized, defendants brought forth evidence that the services were authorized. Notwithstanding the facts that Lady Di’s authorized the services and that the regulation provided no private cause of action, Lady Di’s asserts its claims for unjust enrichment and Deceptive Commercial Solicitation Act. The Court rejected the arguments. First, the Court concluded that ESBI and ILD were not subject to the regulation because they were not billing agents for a primary inter-exchange carrier or a local exchange carrier. The undisputed facts show that they were neither authorized nor retained to act on these carriers’ behalf. In fact, the local carrier charged these defendants a fee for using its monthly billing system to collect on behalf of itself and its service providers. Second, even if ESBI and ILD were subject to the regulation, they would still be entitled to summary judgment on the unjust enrichment claim. Unjust enrichment requires that the defendant’s retention of a benefit be unjust. Here, Lady Di’s ordered the services for which it was charged. The Court concluded that an Indiana court would not extend the theory of unjust enrichment to such a case. Third, even if ESBI and ILD were subject to the regulations, they would be entitled to summary judgment on the Deceptive Commercial Solicitation Act claim. The statute, on its face, applies to the act of billing for services not yet ordered. Lady Di’s ordered the services in question -- the statute simply does not apply.