Verizon Wants Debt Collector's Claims Dismissed in Countersuit

Verizon's debt collector, CBE Customer Solutions, failed to state a claim upon which relief can be granted and its counterclaims should be dismissed, said Verizon Wireless Friday in a memorandum supporting its motion for summary judgment in a breach of contract lawsuit (docket: (1:22-cv-08703) stemming from a Telephone Consumer Protection Act class action.

Verizon says an April 2014 master services agreement stipulates that debt-collection company CBE should indemnify Verizon for fees and costs the carrier incurs "in defending any claims arising out of CBE's services." CBE countersued for unjust enrichment and breach of the implied covenant of good faith, alleging any negligence that mushroomed into a TCPA class action and settlement was of Verizon’s doing, not CBE’s (see 2212140027).

In a “transparent attempt to create litigation leverage,” CBE asserted “two baseless counterclaims” against Verizon for breach of the implied covenant of good faith and fair dealing, along with unjust enrichment, said the plaintiff. Both “fail to allege any actionable conduct by Verizon” and are “barred by well-settled law,” it asserted.

CBE’s breach of the implied covenant claim fails because CBE doesn’t identify any specific breaching conduct by Verizon, said Verizon. CBE “vaguely” alleges Verizon breached the implied covenant by excluding CBE from the defense strategy and then “insisting that CBE pay for the [TCPA] settlement” by filing the lawsuit, Verizon said, making the counterclaim that a contractual right can never be a breach of the implied covenant of good faith and fair dealing. CBE’s breach of the implied covenant claim fails to allege Verizon deprived it of a bargained-for benefit under the parties’ agreement, it said.

CBE alleges Verizon was “unjustly enriched” because CBE partially indemnified Verizon for some of its TCPA attorneys’ fees under the parties’ agreement, which it “never had any obligation to pay and now wants back," said Verizon, citing “a large body of New York law barring unjust enrichment claims.”

In 2016, CBE “negligently failed to remove a non-customer” from a Verizon call list it was hired to manage, leading to a TCPA class action against Verizon and a multi-million-dollar settlement. Verizon requested indemnification from CBE for its losses under the parties’ written agreement “but CBE refused,” prompting Verizon to file a lawsuit to seek enforcement of the indemnification provision, it said.

In November 2017, following the parties’ preliminary discovery, the U.S. District Court for Massachusetts granted Verizon’s motion for summary judgment. In an appeal, the 1st U.S. Circuit Court of Appeals in Boston reversed the ruling and remanded the case for further proceedings. In October 2021, the parties executed a class settlement, and Verizon agreed to pay a one-time settlement of $3.95 million to a class of 61,485 individuals.

Since the district court granted final approval of the class settlement in May, CBE “refused to indemnify Verizon" for the settlement sum and fees, Verizon said. In October, CBE removed to U.S. District Court in Manhattan Verizon's complaint alleging the debt-collection agency is guilty of breach of contract (see 2210140026). U.S. District Judge Jed Rakoff for Southern New York set a May 16 trial date over the culpability for $6.1 million in damages and court costs associated with the settlement.