Facts
- Federal regulations required long-distance carriers to compensate payphone service providers (PSPs) for “dial-around” (coinless) long-distance calls placed from payphones using access codes or 800 numbers.
- Approximately 1,400 PSPs assigned to billing and collection firms (aggregators) legal title to their claims for unpaid dial-around compensation allegedly owed by carriers including Sprint.
- Under the assignment arrangements, aggregators agreed to remit net litigation proceeds to the PSPs and were paid through agreed service fees.
- Aggregators filed federal suits seeking to recover the unpaid compensation pursuant to federal law and FCC rules.
- Sprint moved to dismiss, arguing the aggregators lacked Article III standing because they would pass any recovery to the PSPs and thus had no personal stake.
Issues
- Whether an assignee holding legal title to a claim for money owed has Article III standing to sue in federal court when the assignee is contractually obligated to remit litigation proceeds to the assignor.
Decision
- The Supreme Court affirmed the judgment for the aggregators in a 5–4 decision authored by Justice Breyer.
- The Court held that an assignee of a legal claim for money owed has standing to pursue the claim in federal court even if it has promised to remit the litigation proceeds to the assignor.
- The Court relied on a longstanding historical tradition permitting suits by assignees, including assignees for collection, and found that modern standing requirements were satisfied.
- The dissent (Chief Justice Roberts, joined by Justices Scalia, Thomas, and Alito) would have found no standing because the assignees had no direct economic benefit from the recovery.
Legal Principles
- A plaintiff with legal title to a claim may satisfy Article III standing even if the ultimate economic benefit of the suit will be received by another party.
- An assignee may sue based on the assignor’s underlying injury when the claim has been assigned such that the assignee holds the cause of action.
- Standing is not defeated merely because an assignee for collection must remit the proceeds to the assignor; legal title and the right to control prosecution of the claim are sufficient for a justiciable case.
Conclusion
Assignees for collection who hold legal title to monetary claims may sue in federal court under Article III even when they are obligated to pass litigation proceeds to the assignors.