Judge Throws Out 1 of 2 CBE Counterclaims Against Verizon

U.S. District Judge Jed Rakoff for Southern New York signed a memorandum order Monday (docket 1:22-cv-08703) dismissing debt collector CBE Customer Solutions’ first counterclaim that Verizon breached the implied covenant of good faith and fair dealing in their April 2014 master services agreement (MSA) (see 2211210034). He left intact CBE’s second counterclaim alleging Verizon was unjustly enriched when CBE assisted in Verizon’s defense of a Telephone Consumer Protection Act class action that Verizon asserts originated from the negligence of a CBE employee. The class action evolved into a settlement valued at nearly $4 million. CBE alleged Verizon breached the implied covenant by settling with a class that contained people who weren't injured by CBE’s actions. But Rakoff said Verizon’s lawsuit to enforce the MSA’s indemnity provisions didn't breach the implied covenant of good faith and fair dealing, as CBE alleged. CBE’s first counterclaim asserts Verizon undertook a litigation strategy that unnecessarily increased the likelihood of risk to CBE to the sole benefit of Verizon during the class action, said Rakoff: “But these allegations, even if taken as true, do not support a claim for breach of the implied covenant of good faith and fair dealing.”