Supreme Court Rules that Collectors Can Sue on Behalf of Pay Phone Operators

The U.S. Supreme Court ruled Monday that third party collectors with no financial stake in a business can sue major phone network operators on behalf of smaller pay phone operators for disputed charges.

The case has a narrow application, involving just six so-called billing and collection aggregators that work on behalf of pay phone operators. There are also only two major carriers – AT&T and Sprint – that have been involved in the nearly decade-long dispute. The case is Sprint Communications Co. and AT&T. Corp. v. APCC Services Inc., one of the aggregators.

In a 5-4 ruling, the Supreme Court held that APCC Services had the right to sue Sprint and AT&T to collect money that they should have paid back to pay phone operators for dial-around compensation. Dial-around occurs when a person uses a pay phone, but dials directly into a carrier’s network – for example, dialing 1-800-CALL-ATT – rather than making the call on the pay phone company’s network. Under agreements, the major carriers compensate the pay phone companies for these calls.

Sprint and AT&T had argued that since APCC Services stood to gain nothing from the lawsuits, they should be dismissed. APCC Services, a subsidiary of the American Public Communications Council, Inc., is compensated by pay phone operators on a flat-fee basis rather than on a percentage of money collected.

On its web site, APCC Services says it is the “premier provider for billing and collection services of dial around compensation for independent payphone service providers and local exchange carrier payphone service providers.”

The case began in 1999 when the six aggregators sued to recover the dial-around compensation. A federal court initially threw out the case, but it was revived last year when the Washington, D.C.-based U.S. Circuit Court of Appeals ruled in favor of the aggregators. Sprint and AT&T appealed the case to the Supreme Court.

The case caused a split along traditional conservative and liberal lines, with the more liberal justices — John Paul Stevens, Anthony Kennedy, David Souter and Ruth Bader Ginsburg – joining Stephen Breyer, who wrote the opinion, in the majority. Chief Justice John Roberts wrote the dissent with Antonin Scalia, Clarence Thomas and Samuel Alito joining.