Miller et al v. 1-800-Flowers.com, Inc. et al
ORDER granting The Defendants' 180 Motion to Dismiss. See the attached memorandum of decision. The Clerk is directed to terminate the following Defendants: Bank of America, N.A., Capital One Financial Corporation, Chase Bank USA, N.A., Citibank, N.A., Citigroup, Inc., Chase Paymentech Solutions, LLC, and Wells Fargo Bank, N.A. Signed by Judge Vanessa L. Bryant on 3/28/2014. (Burkart, B.)
UNITED STATES DISTRICT COURT
DISTRICT OF CONNECTICUT
In re Trilegiant Corporation, Inc.
CIVIL ACTION NO.
March 28, 2014
MEMORANDUM OF DECISION GRANTING
BANK DEFENDANTS’ MOTION TO DISMISS [DKT. 180]
The Plaintiffs, Debra Miller (“Miller”), Brittany DiCarolis (“DiCarolis”), Hope
Kelm (“Kelm”), Jennie H. Pham (“Pham”), Brett Reilly (“Reilly”), Juan M. Restrepo
(“Restrepo”), Brian Schnabel, Edward Schnabel, Lucy Schnabel, Annette Sumlin
(“Sumlin”), Regina Warfel (“Warfel”), and Debbie Williams (“Williams”), bring this
proposed class action against three categories of Defendants, the Trilegiant
Defendants, which includes Affinion Group, LLC (“Affinion”), Trilegiant
Corporation, Inc. (“Trilegiant”), and Apollo Global Management, LLC (“Apollo”),
the Credit Card Defendants, which includes Bank of America, N.A. (“Bank of
America”), Capital One Financial Corporation (“Capital One”), Chase Bank USA,
N.A. (“Chase”), Citibank, N.A. (“Citibank”), Citigroup, Inc. (“Citigroup”), Chase
Paymentech Solutions, LLC (“Paymentech”), and Wells Fargo Bank, N.A. (“Wells
Fargo”), and the E-Merchant Defendants, which includes 1-800-Flowers.com, Inc.
(“1-800 Flowers”), Beckett Media LLC (“Beckett”), Buy.com, Inc. (“Buy.com”),
Classmates International, Inc. (“Classmates”), Days Inns WorldWide, Inc. (“Days
Inns”), Wyndham WorldWide Corporation (“Wyndham”), FTD Group, Inc. (“FTD”),
Hotwire, Inc. (“Hotwire”), IAC/InterActiveCorp (“IAC”), Shoebuy.com, Inc.
(“Shoebuy”), PeopleFindersPro, Inc. (“PeopleFinder”), Priceline.com, Inc.
“Priceline”), and United Online, Inc. (“United Online”).
The Plaintiffs allege several causes of action against the Defendants,
including violations of the Racketeer Influenced Corrupt Organizations Act, 18
U.S.C. § 1962(c) (RICO), against all Defendants; conspiring to violate RICO, 18
U.S.C. § 1962(d), against all Defendants; aiding and abetting RICO, 18 U.S.C. §§
1961-1968, against the Credit Card Defendants; aiding and abetting commissions
of mail fraud, 18 U.S.C. § 1341, wire fraud, 18 U.S.C. § 1343, and bank fraud, 18
U.S.C. § 1344, against the Credit Card Defendants; violations of the Electronic
Communications Privacy Act, 18 U.S.C. §§ 2510, et seq. (ECPA), against
Trilegiant, Affinion, and the E-Merchant Defendants; aiding and abetting ECPA
violations under 18 U.S.C. §§ 2510, et seq., against the Credit Card Defendants;
violations of the Connecticut Unfair Trade Practices Act, Conn. Gen. Stat. § 42110a, et seq. (CUTPA), against the Trilegiant Defendants and E-Merchant
Defendants; aiding and abetting and conspiracy to violate CUTPA, Conn. Gen.
Stat. § 42-110a, et seq., against the Credit Card Defendants; violations of the
California Business and Professional Code § 17602 (Automatic Renewal Statute),
against the Trilegiant Defendants and E-Merchant Defendants; and claims of
unjust enrichment against all Defendants.
Before the Court is the Banks’ Motion to Dismiss, filed by Bank of America,
Capital One, Chase, Paymentech, Citibank, Citigroup, and Wells Fargo [Dkt. 180;
Memorandum of Law in Support, Dkt. 181-1, hereinafter “MTD”]. The Credit Card
Defendants move to dismiss the Plaintiffs’ Consolidated Amended Class Action
Complaint (the “Complaint”) for failure to state a claim upon which relief can be
granted. [Dkt. 141, hereinafter “CAC at ¶”]. For the reasons stated below, the
motion to dismiss is GRANTED.
A full recitation of the background and facts is set forth in the Court’s
Memorandum of Decision Granting In Part and Denying In Part Defendants’
Motion to Dismiss Plaintiffs’ Consolidated Amended Complaint or, in the
Alternative, to Strike Portions of the Complaint [Dkt. 276, hereinafter “Court Order
at Dkt. 276”].
Standard of Review
“‘To survive a motion to dismiss, a complaint must contain sufficient
factual matter, accepted as true, to state a claim to relief that is plausible on its
face.’” Sarmiento v. United States, 678 F.3d 147, 152 (2d Cir. 2012) (quoting
Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)). While Rule 8 does not require detailed
factual allegations, “[a] pleading that offers labels and conclusions or formulaic
recitation of the elements of a cause of action will not do. Nor does a complaint
suffice if it tenders naked assertion[s] devoid of further factual enhancement.”
Iqbal, 556 U.S. at 678 (citations and internal quotation marks omitted). “Where a
complaint pleads facts that are ‘merely consistent with’ a defendant's liability, it
‘stops short of the line between possibility and plausibility of ‘entitlement to
relief.’” Id. (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 557 (2007)). “A claim
has facial plausibility when the plaintiff pleads factual content that allows the
court to draw the reasonable inference that the defendant is liable for the
misconduct alleged.” Id. (citations and internal quotation marks omitted).
In considering a motion to dismiss for failure to state a claim, the Court
should follow a “two-pronged approach” to evaluate the sufficiency of the
complaint. Hayden v. Paterson, 594 F.3d 150, 161 (2d Cir. 2010). “A court ‘can
choose to begin by identifying pleadings that, because they are no more than
conclusions, are not entitled to the assumption of truth.’” Id. (quoting Iqbal, 556
U.S. at 679). “At the second step, a court should determine whether the ‘wellpleaded factual allegations,’ assumed to be true, ‘plausibly give rise to an
entitlement to relief.’” Id. (quoting Iqbal, 556 U.S. at 679). “The plausibility
standard is not akin to a probability requirement, but it asks for more than a sheer
possibility that a defendant has acted unlawfully.” Iqbal, 556 U.S. at 678 (citations
and internal quotation marks omitted).
In general, the Court’s review on a motion to dismiss pursuant to Rule
12(b)(6) “is limited to the facts as asserted within the four corners of the
complaint, the documents attached to the complaint as exhibits, and any
documents incorporated by reference.” McCarthy v. Dun & Bradstreet Corp., 482
F.3d 184, 191 (2d Cir. 2007). The Court may also consider “matters of which
judicial notice may be taken” and “documents either in plaintiffs' possession or
of which plaintiffs had knowledge and relied on in bringing suit.” Brass v. Am.
Film Techs., Inc., 987 F.2d 142, 150 (2d Cir.1993); Patrowicz v. Transamerica
HomeFirst, Inc., 359 F. Supp. 2d 140, 144 (D. Conn. 2005).
The Credit Card Defendants (the “Defendants”) move to dismiss several of
the Plaintiffs’ claims for failure to state a claim upon which relief may be granted.
1. RICO Claims
The Defendants move to dismiss the Plaintiffs’ RICO claims on several
grounds. “First, Plaintiffs do not allege that the [Credit Card Defendants]
‘directed the affairs’ of an alleged RICO enterprise, as required by controlling
precedent. Second, Plaintiffs fail to allege facts sufficient to establish that the
[Credit Card Defendants] committed predicate acts of racketeering. Third,
Plaintiffs fail to allege facts sufficient to establish that the [Credit Card
Defendants] caused the Plaintiffs’ alleged injury.” MTD p. 11. For similar
reasons, the Defendants argue that the Plaintiffs’ RICO conspiracy claim must
also fail. Id. These issues have already been addressed in the Courts Order at
Dkt. 276. In that Order, the Court dismissed the Plaintiffs’ substantive RICO
claims and their RICO conspiracy claims. This issue, therefore, is moot as it was
already dismissed.1 However, the Plaintiffs also allege an aiding and abetting
The Defendants also argue that the Plaintiffs have failed to allege sufficiently the
Credit Card Defendants’ intent in commit the RICO predicate acts and that the
Defendants’ acts caused the injuries. Because the Plaintiffs have insufficiently
alleged racketeering activity, they have also failed to allege that the Credit Card
Defendants had the requisite intent to commit a racketeering conspiracy.
Moreover, in response to the lack of causation issue, the Plaintiffs argue that they
only need to prove the conspiracy or enterprise caused the injuries, not that each
charge only against the Credit Card Defendants. Since that claim has not yet
been addressed, it is ripe for decision.
2. Aiding and Abetting RICO and Wire, Mail, and Brank Fraud
The Defendants argue that Count III and IV of the Complaint must be
dismissed because there is no independent cause of action for aiding and
abetting RICO violations or for aiding and abetting the commission of mail, wire,
or bank fraud. MTD p. 31-32. In the alternative, they argue that even if there is
such a cause of action, the Plaintiffs have not sufficiently alleged the elements
necessary to prove an aiding and abetting claim. [Dkt. 245, Reply Memorandum
of Law in Support of the Bank Defendants’ Motion to Dismiss, p. 12-14,
hereinafter “Reply”]. In response, the Plaintiffs seem to argue that they are not
claiming independent causes of action based on wire, mail or bank fraud, but are
arguing that the Credit Card Defendants are liable for the substantive RICO
violations and conspiracy to violate the RICO statute because they aided and
abetted the RICO predicate acts. [Dkt. 219, Consolidated Memorandum of Law in
Opposition to Defendants’ Motions to Dismiss, p. 12-14, hereinafter “Opp.”].
While aiding and abetting the commission of mail, wire, or bank fraud does
constitute a predicate act under RICO, the Plaintiffs have insufficiently alleged
how the Credit Card Defendants aided and abetted any such acts.
individual Defendant did. [Dkt. 219, Consolidated Memorandum of Law in
Opposition to Defendants’ Motions to Dismiss, p. 67-71, hereinafter “Opp.”].
Since the Court found that there was no RICO enterprise or conspiracy, this
argument is moot. However, if there were such an enterprise or conspiracy, the
Plaintiffs have sufficiently alleged injury resulting therefrom.
a. Aiding and Abetting RICO
The relevant RICO provision that provides for civil liability states in its
[a]ny person injured in his business or property by
reason of a violation of section 1986 of this chapter may
sue therefor in any appropriate United States district
court and shall recover threefold the damages he
sustains and the cost of the suit, including a reasonable
attorney’s fee, except that no person may rely upon any
conduct that would have been actionable as fraud in the
purchase of sale of securities to establish a violation of
section 1962. The exception contained in the preceding
sentence does not apply to an action against any person
that is criminally convicted in connection with the fraud,
in which case the statute of limitations shall start to run
on the date on which the conviction becomes final.
18 U.S.C. § 1964(c). As is apparent from the text, the statute does not explicitly or
implicitly create a cause of action for aiding and abetting liability. In a separate
provision of the Code, Congress extended criminal liability to “[w]hoever
commits an offense against the United States or aids, abets, counsel, commands,
induces or procures its commission . . . .” 18 U.S.C. § 2(a). Notwithstanding that
criminal statute, the Supreme Court later held that because there was no similar
general civil aiding and abetting statute, there is no presumption that federal
statutes create a civil cause of action for aiding and abetting unless Congress
has affirmatively demonstrated its intent to create such a cause of action. Cent.
Bank of Denver, N.A. v. First Interstate Bank of Denver, 511 U.S. 164, 182-83
(1994) (precluding aiding and abetting liability under the securities laws because
the statutory language does not provide for such liability). Even though the
Supreme Court was not specifically considering the RICO statute in Cent. Bank of
Denver, several courts in this circuit interpreting the decision have held that
Congress did not create a cause of action for aiding and abetting a RICO
For example, in Dep’t of Econ. Dev. v. Arthur Andersen & Co., the court
found that because 18 U.S.C. § 2 only created criminal liability for aiders and
abettors and the RICO statute provides no indication that Congress intended to
create a cause of action for accessorial liability, the plaintiffs could not maintain a
claim for “aiding and abetting a RICO violation because there is no such federal
tort.” Dep’t of Econ. Dev. v. Arthur Andersen & Co., 924 F. Supp. 449, 477
(S.D.N.Y. 1996). In arriving at that conclusion, the court stated it did not need “to
go beyond the text of the statute” because the text clearly did not create an
aiding and abetting cause of action. Id. at 476. Accord Pa. Ass'n of Edwards
Heirs v. Rightenour, 235 F.3d 839, 843-44 (3d Cir. 2000); Ling v. Deutsche Bank,
AG, No. 04 Civ. 4566, 2005 WL 1244689, at *3 (S.D.N.Y. May 26, 2005); Lippe v.
Bairnco Corp., 218 B.R. 294, 303-04 (S.D.N.Y. 1998); Bank Brussels Lambert v.
Credit Lyonnais (Suisse) S.A., No. 93 CIV 6876 LMM, 2000 WL 1694322, at *4
(S.D.N.Y. Nov. 13, 2000); see also Jed S. Rakoff, Aiding and Abetting Under Civil
RICO, N.Y.L.J., May 12, 1994, at 3 (“[T]here is no suggestion that § 2, enacted in
1909, was intended to authorize civil liability for aiding and abetting in any
situation in which Congress thereafter combined civil and criminal penalties in
one statute, whether in RICO (enacted in 1970), the Securities Exchange Act
(enacted in 1934), or elsewhere.”). There is also no language elsewhere in the
statute that would clearly militate against applying the default presumption that
no aiding and abetting liability exists.
As the Supreme Court noted thirty years ago in Cent. Bank of Denver, N.A.,
the text of 18 U.S.C. § 1962 does not create a civil cause of action for aiding and
abetting RICO claims, and “Congress is presumed to be aware of an
administrative or judicial interpretation of a statute.” Lorillard v. Pons, 434 U.S.
575, 580 (1978). Since Congress has not amended the statute to clearly reflect
the creation of aiding and abetting liability in the wake of the decisions holding
that no such liability exists, there is no legal footing upon which this Court could
declare a cause of action for such liability. Accordingly, to the extent that the
Plaintiffs are alleging causes of action against the Credit Card Defendants
directly for aiding and abetting RICO violations under 18 U.S.C. § 1962, the
motion to dismiss is GRANTED.
b. Sufficient Allegations for Aiding and Abetting Claims
Assuming, arguendo, that the RICO statute provided a private cause of
action for aiding and abetting liability, the Plaintiffs’ claims must be dismissed
because they have not sufficiently alleged how the Credit Card Defendants aided
and abetted the RICO violation.
To plead a claim of aiding and abetting, the Plaintiffs are required to show
“(1) a primary violation; (2) knowledge of that violation on the part of the aider
and abettor; and (3) ‘substantial assistance’ by the aider and abettor in the
achievement of the primary RICO violation.” Charamac Props., Inc. v. Pike, No.
86civ.7919(KMW), 1993 WL 427137, at *4 (S.D.N.Y. 1993); see also United States v.
Cruz, 363 F.3d 187, 197-98 (2d Cir. 2004) (a defendant may only be convicted of
aiding and abetting if the underlying crime was committed). The “Plaintiff must
also assert facts showing how the defendant participated as an aider and abettor
in the requisite predicate acts.” Id.
The Plaintiffs’ aiding and abetting claim fails for several reasons. First, the
Plaintiffs have failed to allege sufficiently a primary violation of RICO. See Court
Order at Dkt. 276. Second, the Plaintiffs do not allege sufficient facts to show that
the Credit Card Defendants actually knew about or had constructive knowledge of
the fraudulent scheme. Id. Finally, the Plaintiffs have not alleged that the Credit
Card Defendants substantially assisted the primary violation or any of the
predicate acts. The Plaintiffs argue that the Credit Card Defendants substantially
assisted in the fraud by processing charges that they knew to be fraudulent, but
only allege insufficient conclusory allegations explaining why they assumed the
Defendants knew the charges were fraudulent. CAC at ¶ 12. Furthermore, the
Plaintiffs also allege that the Credit Card Defendants sent each Plaintiff monthly
bank statements that identified the Trilegiant membership fees. CAC at ¶ 160(h).
These statements had the opposite effect of substantially assisting the alleged
scheme; they repeatedly revealed the scheme to the Plaintiffs. Therefore, the
Plaintiffs have not alleged any of the elements necessary to prove aiding and
c. Aiding and Abetting Mail, Wire, and Bank Fraud as Independent
Causes of Action
Even though the Plaintiffs initially asserted a claim against the Credit Card
Defendants for aiding and abetting commission of mail, wire, and bank fraud,
they later conceded that they “do not assert direct claims for mail and wire fraud
against the Credit Card Defendants.” CAC at ¶ 186; Opp. p. 60, n.39. The
Plaintiffs have therefore abandoned this claim. Massaro v. Allingtown Fire Dist.,
No. 3:03-cv-00136(EBB), 2006 WL 1668008, at *5 (D. Conn. June 16, 2006) (“When
a plaintiff’s specific claim is attacked in a motion to dismiss, a plaintiff must rebut
the defendant’s argument against that claim or it shall be deemed abandoned.”).
Even so, the Defendants correctly argue that there is no independent civil
cause of action for committing mail, wire, and bank fraud. Claude v. Am. Express
Centurion Bank, No. 3:10cv742(JBA), 2011 WL 2619065, at *1 (D. Conn. July 1,
2011) (“While violations of [the bank fraud and wire fraud statutes] can be
predicate ‘racketeering activities’ for a RICO action, neither statute explicitly or
impliedly gives rise to a standalone private cause of action.”); Pappas v. Arfaras, ,
No. B-90-326(WWE), 1991 WL 218072, at *2 (D. Conn. Aug. 28, 1991) (neither the
mail fraud statute nor the wire fraud statute “offers a basis for a private cause of
action”). Furthermore, the Plaintiffs do not have standing to raise a bank fraud
claim because none of them are financial institutions. See Court Order at Dkt.
276. Therefore, any independent claim against the Credit Card Defendants for
mail, wire, or bank fraud must be and are hereby DISMISSED.
d. Aiding and Abetting Mail and Wire Fraud as Predicate Acts
Even though there is no civil liability for aiding and abetting a RICO
violation generally, aiding and abetting the commission of predicate acts under
18 U.S.C. § 1961(1) can be considered racketeering activity for purposes of
proving a RICO violation. As the Court has already discussed, 18 U.S.C. § 1961(1)
provides an exhaustive list of predicate acts that constitute racketeering activity.
See Court Order at Dkt. 276. As related to the alleged predicate acts in this case,
18 U.S.C. § 1961(1) includes “any act that is indictable” under the mail fraud, wire
fraud, and bank fraud statutes. 18 U.S.C. § 1961(1)(B). Indictable offenses for
mail, wire, and bank fraud include aiding and abetting the commission of those
acts. 18 U.S.C. §§ 2, 1341, 1343; see United States v. Litwok, 678 F.3d 208, 213215 (2d Cir. 2012); Bank Brussels Lambert v. Credit Lyonnais (Suisse) S.A., No. 93
CIV 6876 LMM, 2000 WL 1694322, at *4-6 (S.D.N.Y. Nov. 13, 2000) (finding aiding
and abetting mail and wire fraud constitute predicate acts under 18 U.S.C. §
1961(1)). Therefore, aiding and abetting mail or wire fraud is by definition a
racketeering activity under RICO.
Even so, the Plaintiffs have failed to allege sufficiently that the Defendants
actually committed the underlying mail and wire fraud predicate acts. See Court
Order at Dkt. 276. Since an aiding and abetting claim can only be maintained
when the underlying acts alleged to have been aided and abetted were
committed, the Plaintiffs cannot sufficiently allege that the Credit Card
Defendants aided and abetted mail, wire or bank fraud. United States v. Dist.
Council of New York City, No. 90CIV.5722(CSH), 2007 WL 2697135, at *12 (S.D.N.Y.
Sept. 17, 2007) (a conviction of aiding and abetting requires the commission of
the underlying offense).
The Defendants’ motion to dismiss the Plaintiffs’ claims for aiding and
abetting mail, wire, and bank fraud is GRANTED.
3. CUTPA Claims
The Defendants also move to dismiss the Plaintiffs’ CUTPA claims on four
grounds: (1) CUTPA does not provide a cause of action for aiding and abetting;
(2) each of the Plaintiffs’ credit card agreements requires the application of
another state’s laws, thereby barring a CUTPA cause of action; (3) the Plaintiffs
have insufficiently pled that the Defendants knowingly and substantially assisted
the principle violation; and (4) the claim lacks the necessary nexus to
Connecticut. MTD p. 34-37. The Plaintiffs respond by arguing that (1) CUTPA
does permit a cause of action for aiding and abetting; (2) the Court should not
consider the Plaintiffs’ credit card agreements on a motion to dismiss, but even
so, they are not broad enough to preclude tort claims; (3) they have sufficiently
pled that the Defendants knew of and aided the CUTPA violations; and (4) there is
a sufficient nexus because the Trilegiant Defendants, which the Credit Card
Defendants were aiding, provided that requisite nexus. Opp. 117-123.
a. Aiding and Abetting Liability under CUTPA
The Defendants first argue that the Plaintiffs’ “claims for aiding and
abetting under CUTPA fail because the statute does not expressly provide for
aiding and abetting liability.” MTD p. 34. This Court finds that CUTPA does
provide a cause of action for aiding and abetting liability.
CUTPA provides that “[n]o person shall engage in unfair methods of
competition and unfair or deceptive acts or practices in the conduct of any trade
or commerce.” Conn. Gen. Stat. § 42-110b. As is always the case, when
interpreting a statute, “[o]ur fundamental objective is to ascertain and give effect
to the apparent intent of the legislature.” Sears, Roebuck & Co. v. Bd. of Tax
Review, 241 Conn. 749, 758-59 (1997). To do so, the Court “look[s] first to the text
of the statute. If that language is plain and its meaning sufficiently clear, [it] need
look no further. Only if the text of the statute is not unambiguous [does the
Court] turn for guidance to legislative history and the purposes of the statute.”
Novak v. Kasaks, 216 F.3d 300, 310 (2d Cir. 2000); see also Conn. Gen. Stat. § 1-2z
(“The meaning of a statute shall, in the first instance, be ascertained from the text
of the statute itself and its relationship to other statutes. If, after examining such
text and considering such relationship, the meaning of such text is plain and
unambiguous and does not yield absurd or unworkable results, extratextual
evidence of the meaning of the statute shall not be considered.”).
CUTPA’s text does not explicitly address whether aiding and abetting
unfair or deceptive practices constitutes a basis for liability, but it does clarify
that “this chapter [is] remedial and [should be] so construed.” Conn. Gen. Stat. §
42-110b(d). When the text does not provide a definitive answer to the issue in
question, we often turn to the statute’s legislative history, scholarly analysis, and
common law jurisprudence to guide our interpretation. See United States v.
Pettus, 303 F.3d 480, 488 (2d Cir. 2002); Conn. Pipe Trades Health Fund v. Philip
Morris, Inc., 153 F. Supp. 2d 101, 110-112 (D. Conn. 2001).
As expected from a remedial consumer-protection statute, CUTPA’s
legislative history indicates that the Connecticut legislature intended that the
statute be implemented broadly to stamp out the practice of fraudulent,
deceptive, and unfair business conduct generally. For example, one
representative introducing the legislation stated that CUTPA “gives honest
businessmen great protection in [fighting] deceptive or unscrupulous
competitors . . . who by unfair methods of competition and deceptive advertising,
etc. unlawfully divert trade away from law abiding businessmen.” 16 H. R. Proc.,
Pt. 14, 1973 Sess., p. 7323. When debating the bill another representative stated
that “[h]opefully this is an umbrella kind of a measure that will . . . take care of all
deceptive and fraudulant (sic) practices.” Conn. Joint Standing Committee
Hearings, General Law, Pt. 2, 1973 Sess., p. 692. These representatives,
therefore, did not view the bill as having implicit constraints that would frustrate
the execution of its remedial purpose.
The Connecticut Supreme Court has also consistently interpreted CUTPA
broadly, declaring that in its jurisprudence “we have interpreted the statute
generously to implement its remedial purposes even without a specific statutory
basis for our decision.” Kim v. Magnotta, 249 Conn. 94, 108 (1999); Larsen
Chelsey Realty Co. v. Larsen, 232 Conn. 480, 492 (1995) (“CUTPA, by its own
terms, applies to a broad spectrum of commercial activity.”)
Even though no appellate court has specifically addressed whether aiding
and abetting liability is actionable under CUTPA, the Connecticut Supreme Court
has permitted CUTPA claims based on other accessorial conduct such as
conspiracy. Conn. Nat. Bank v. Voog, 233 Conn. 352, 368 (1995) (defendants
counter-claim was proper when it alleged that the plaintiff “conspired with and
provided aid to” another party to fraudulently induce the defendant to make a
valueless purchase). Moreover, several trial courts have permitted claims under
CUTPA based on allegations of a party’s aiding and abetting activity. See State v.
Liberty Mut. Holding Co., Inc., No. 09cv06402387, 2009 WL 943094, at *5 (Conn.
Super. Ct. March 20, 2009) (holding that CUTPA liability can be based on
accessorial conduct such as aiding and abetting, and adopting the reasoning and
conclusions stated in Fee v. Benefit Plan Adm’rs, Inc., No. 406726, 2000 WL
1398898 (Conn. Sup. Ct. Sept. 7, 2000) (finding that aiding and abetting is
actionable under CUTPA)); State v. Tomasso, 93 Conn. L. Rptr. 127, 2005 WL
1091763, at *6 (Conn. Super. Ct. 2005) (holding that allegations that defendants
acted “in concert with and by giving substantial assistance or encouragement to”
alleged possible accessory liability under CUTPA); Rossman v. Morasco, 38
Conn. L. Rptr. 897, 2005 WL 1023118, at *3-4 (Conn. Super. Ct. 2005) (holding that
CUTPA allows for aiding and abetting liability). The Defendants argue, however,
that we should ignore these precedents because the “the most recent case” that
addressed the issue of whether CUTPA provided for aiding and abetting liability
“reject[ed] it.” MTD p. 17-18. However, the case that Defendants cite did nothing
of the sort. Hoffman v. Signature Const. Servs. Intern., LLC, No. CV106007598S,
2011 WL 1168470 (Conn. Sup. Ct. Feb. 25, 2011). That court merely highlighted
that the “statutory text of CUTPA is silent on whether CUTPA allows for
accessory liability and the appellate courts have not directly addressed the
issue.” Id. at *1. It then dismissed the claim on other grounds. Id. Therefore, the
Defendants have not provided a single case in which the court dismissed an
aiding and abetting claim under CUTPA because the statute did not create the
cause of action.
CUTPA also provides that courts interpreting the statute “shall be guided
by interpretations given by the Federal Trade Commission and the federal courts
to Section 5(a)(1) of the Federal Trade Commission Act . . .” Conn. Gen. Stat. §
42-110b(b). Historically, and indeed in 1973 when CUTPA was adopted, it was
settled law that the Federal Trade Commission Act (“FTCA”) provided a cause of
action for aiding and abetting liability. See Gay Games, Inc. v. Fed. Trade
Comm’n, 204 F.2d 197 (10th Cir. 1953) (FTCA violations for a distributor of lotterytype devices for aiding and abetting); Globe Cardboard Novelty Co., Inc. v. Fed.
Trade Comm’n, 192 F.2d 444, 446 (3d Cir. 1955) (aiding and abetting liability for
assisting in the commission of unfair trade practices); Deer v. Fed. Trade
Comm’n, 152 F.2d 65, 66 (2d Cir. 1945) (a party need not participate in the unfair
conduct, it is sufficient if he aided and abetted such actions); see also The
Antitrust Counselor, The Federal Trade Commission Rules on Advertising, 213
Antitrust Counselor NL 1 (Sept. 2012) (“the FTC historically assumed there to be
an implied cause of action for aiding and abetting under § 5 of the FTC Act.”)
As discussed in the Court Order at Dkt. 276, however, in 1994, the Supreme
Court changed how courts view aiding and abetting liability by declaring that
there is no general presumption of aider and abettor liability under federal
securities laws. Cent. Bank of Denver, N.A., 511 U.S. at 182-183. Since that
decision, it appears that no circuit court has explicitly held whether aiding and
abetting liability still exists under the FTCA. Moreover, in a subsequent decision,
the Connecticut Supreme Court adopted the Supreme Court’s reasoning in Cent.
Bank of Denver, N.A., and held that the Connecticut Securities Act did not impose
liability on aiders and abettors or co-conspirators. Conn. Nat. Bank v. Giacomi,
233 Conn. 304, 339 (Conn. 1995). In a footnote, however, the court noted that
“aiding and abetting a wrongdoer ought to be actionable in certain instances. Cf.
Restatement (Second) of Torts § 876(b) (1977).” Id. at n.25. Interestingly, the
provision of the restatement that the Connecticut Supreme Court cited provides
liability for tortious conduct if one “knows that the other’s conduct constitutes a
breach of duty and gives substantial assistance or encouragement . . . .”
Restatement (Second) of Torts § 876(b) (1979). Unlike in Conn. Nat. Bank, which
dealt with securities laws violations, CUTPA’s cause of action relates to tortious
Finally, Connecticut courts often view interpretations of the Massachusetts
unfair trade practices act as instructive because “the governing statutes” “are
virtually identical to CUTPA.” Westledge Real Estate, Inc. v. Suffield Bank, No. cv
90-0372765S, 1991 WL 27996, at *3 (Con. Super. Ct. Jan. 18, 1991). The relevant
Massachusetts statute has been definitively interpreted to permit aiding and
abetting liability. See Prof’l Servs. Grp., Inc. v. Town of Rockland, 515 F. Supp. 2d
179, 192 (D. Mass. 2007) (“Aiding and abetting a breach of fiduciary duty may
provide the basis for a Chapter 93A violation.”); Hanover Ins. Co. v. Sutton, 46
Mass. App. Ct. 153, 173 (Conn. App. 1999), cert denied, 429 Mass. 1105 (1999).
Given CUTPA’s legislative history, its remedial purpose that the
Connecticut Supreme Court has consistently interpreted broadly, the general
consensus of the lower courts in this district, the status of federal law referenced
in CUTPA at the time the statute was adopted, and the interpretations of the
nearly identical Massachusetts statute, the Court holds that CUTPA provides an
independent cause of action for aiding and abetting liability. There is no
indication either legislatively or jurisprudentially that CUTPA is restricted by the
Supreme Court’s analysis in Cent. Bank of Denver, N.A. Accordingly, the
Defendant’s motion to dismiss the CUTPA claims on the basis that there is no
liability under that statute for aiding and abetting is DENIED.
b. Credit Card Agreements
The Defendants next argue that each of the Plaintiffs’ contracts with the
relevant Credit Card Defendant has a choice of law provision which bars a CUTPA
cause of action. MTD p. 35. The Defendants claim that the Court may take
judicial notice of these agreements because they are integral to the Plaintiffs’
claims. See Schnall v. Marine Midland Bank, 225 F.3d 263, 266 (2d Cir. 2000)
(considering a cardholder agreement in motion to dismiss even though it was not
attached to the complaint or incorporated by reference because it was integral to
the plaintiff’s truth in lending claims).
Even if the Defendants’ argument on judicial notice is correct, the language
in the specific credit card agreements is not broad enough to bar the Plaintiffs’
tort causes of action under CUTPA. While it seems that neither the Connecticut
Supreme Court nor the Second Circuit has addressed this issue, in Country Club
Assocs. v. Shaw’s Supermarkets, Inc., the court held that general choice-of-law
provisions in contracts must explicitly include tort claims to prevent a plaintiff
from binging a cause of action under CUTPA. Country Club Assocs. v. Shaw’s
Supermarkets, Inc., 643 F. Supp. 2d 243, 252 (D. Conn. 2009); cf. W. Dermatology
Consultants, P.C. v. VitalWorks, Inc., 146 Conn. App. 169 (2013). The contract
provision in Country Club Assocs. stated that “[t]he Lease shall be governed by
and construed in accordance with the laws of the state in which the Center is
located.” Id. The court found that the provision was not broad enough to bar a
CUTPA claim because it did not explicitly encompass tort claims, and “allowing a
non-specific choice of law clause of this sort to preclude the operation of CUTPA
would violate the public policy of the state.” Id. at 253. Similarly here, the
language in the credit card agreements only states “[t]he terms and enforcement
of this agreement and your account shall be governed and interpreted in
accordance with federal law and, to the extent state law applies, the law of
Delaware, without regard to conflict-of-law principles.” MTD, declaration, p. 3.
The credit card agreements, therefore, are not specific enough to preclude the
operation of CUTPA as they do not explicitly cover causes of action arising from
tortious conduct. Since the Plaintiffs’ credit card agreements are not broad
enough to bar their CUTPA claims, the motion to dismiss the CUTPA claims on
this basis is DENIED.
c. Sufficiency of Pleading
The Defendants argue that the Plaintiffs have not alleged sufficient facts to
maintain their claim that the Credit Card Defendants aided and abetted Trilegiant
and Affinion in violating CUTPA. MTD p. 36. Pursuant to the Court Order at Dkt.
276, only the CUTPA claims related to the refund mitigation strategy have been
sufficiently pled to sustain the Defendants’ motion to dismiss. For that reason,
the Court restricts its analysis to the relationship alleged between the Credit Card
Defendants and that strategy.
To state an aiding and abetting claim, the Plaintiffs “must plead the specific
details of the knowledge of each aider and abettor of the primary fraud, and
specifically how the particular aider and abettor provided substantial assistance
in the furtherance of the fraud.” Short v. Conn. Cmty. Bank, N.A., No. 3:09-cv1955, 2012 WL 1057302, at *12 (D. Conn. Mar. 28, 2012). When describing the
refund mitigation strategy in the Complaint, the Plaintiffs allege that “[m]any
customers of the Defendant Credit Card Companies were unwittingly enrolled in
privacy or credit guard type programs that Chase, Bank of America, Capital One
and Wells Fargo contracted to allow Trilegiant to ‘sell’ to their card members.”
CAC at ¶ 11(b). The Plaintiffs then conclude that because some of the Credit
Card Defendants were acting as merchants in that context, they also participated
in the refund mitigation strategy and selected the number of rebuttal steps, were
aware of the call script, and were contractually required to conference in the
Trilegiant call center to handle consumer complaints stemming from enrollment
in the membership programs. CAC at ¶ 11(b). There are no other allegations
directly tying the Credit Card Defendants to the development and implementation
of the refund mitigation strategy, nor do any of the Plaintiffs allege to have
purchased one of these credit guard type products. These allegations alone,
however, only relate to the Credit Card Defendants as E-Merchants, but the
Plaintiffs did not bring a claim against them in this role. The Complaint only
alleges that the Credit Card Companies caused the Plaintiffs’ injury by
processing the unauthorized membership charges. Furthermore, the Plaintiffs do
not allege that the Defendants were actively involved in the refund mitigation
strategy in their role as Credit Card Defendants. Based on the Complaint, the
Credit Card Defendants appear to do the opposite of “mitigation” because they
were the entities responsible for clearly disclosing the membership enrollment to
the Plaintiffs. Also, when Paymentech, the exclusive processor of credit card
charges for Affinion and Trilegiant, finally became aware of the extent of the
customer complaints related to the membership programs, it confronted
Trilegiant and required it to “propose a plan of action ‘in order to reduce the
number of reported ‘potential fraud’ transactions each month.” CAC at ¶¶ 42, 110.
These facts prove that the Credit Card Defendants hindered, not aided, the
alleged fraudulent scheme. Regardless, since the Plaintiffs’ Complaint is
conjectural and does not allege any facts showing that the Credit Card
Defendants knew about the refund mitigation strategy or took steps to
substantially aid the creation or implementation of this strategy, they have not
sufficiently alleged that the Credit Card Defendants have aided and abetted the
alleged CUTPA violations.
The Plaintiffs have also claimed that the Credit Card Defendants are liable
for conspiracy to violate CUTPA. CAC at ¶ 214. Even though no Defendant
seems to directly attack this claim in the several motions to dismiss, the
Plaintiffs’ defense that it has sufficiently alleged a RICO conspiracy makes this
claim ripe for determination.
“The [elements] of a civil action for conspiracy are: (1) a combination
between two or more persons, (2) to do a criminal or an unlawful act or a lawful
act by criminal or unlawful means, (3) an act done by one or more of the
conspirators pursuant to the scheme and in furtherance of the object, (4) which
act results in damage to the plaintiff.” Halo Tech. Holdings, Inc. v. Cooper,
3:07CV489(SRU), 2010 WL 1330770, at *9 (D. Conn. Mar. 31, 2010) (quoting
Macomber v. Travelers Prop. and Cas. Corp. 277 Conn. 617, 635–36 (2006)).
“[T]here is no independent claim of civil conspiracy. Rather, [t]he action is for
damages caused by acts committed pursuant to a formed conspiracy rather than
by the conspiracy itself. Thus, to state a cause of action, a claim of civil
conspiracy must be joined with an allegation of a substantive tort.” Pierce v.
Emigrant Mortg. Co., No. CIV.A. 304CV1767JCH, 2005 WL 2406007, at *7 (D. Conn.
Sept. 29, 2005) (citations and internal quotation marks omitted).
In Ramos, the court found that plaintiffs’ “general allegation[s]” of a civil
conspiracy based on fraud were not sufficient to sustain a motion to dismiss.
Ramos v. Patrician Equities Corp., 765 F. Supp. 1196, 1199 (S.D.N.Y. 1991).
Specifically, that court said that “[a] proper allegation of conspiracy in a civil
complaint must ‘set forth with certainty facts showing particularly what a
defendant or defendants did to carry the conspiracy into effect, whether such
acts fit within the framework of the conspiracy alleged, and whether such acts, in
the ordinary course of events, would proximately cause injury to the plaintiff.” Id.
Reviewing this standard, it is clear that the Plaintiffs have not alleged sufficient
facts to prove a civil conspiracy, even if they are only alleging a conspiracy based
on unfair and deceptive practices.
The Plaintiffs have alleged that the Credit Card Defendants conspired with
Trilegiant and Affinion in violating CUTPA. CAC ¶ 215. However, they do not
state with any specificity how exactly or even when the Credit Card Defendants
conspired to commit the unfair, deceptive, or fraudulent practices. Just as in our
analysis of the RICO conspiracy claim, the Plaintiffs have failed to show any one
agreement by the parties to commit the illegal acts. See Court Order at Dkt. 276.
Without sufficient allegations of an agreement, there can be no conspiracy. In
response, the Plaintiffs request that we accept the Defendants’ alleged
knowledge of the scheme as constituting sufficient proof of an agreement. Opp.
49-50. However, the only allegations the Plaintiffs assert in support of the claim
that the Credit Card Defendants knew of the scheme are the unquantified
customer complaints against Trilegiant and the allegations that all of the Credit
Card Defendants have sophisticated anti-fraud software that should have
detected the fraudulent charges. CAC at ¶¶ 88-110. The Plaintiffs fail to quantify
or qualify the customer complaints and fail to identify the software, specify what
it is designed to detect, how it is used, or allege any other facts which would raise
this claim beyond the realm of conjecture. These allegations alone are
insufficient to show affirmatively that an agreement had been reached by the
parties to violate the law. Accordingly, the Plaintiffs have not sufficiently pled
that the Credit Card Defendants conspired to violate or aided and abetted others’
violations of CUTPA, and, therefore, these claims are DISMISSED.
d. Insufficient Nexus
The Defendants also argue that the Plaintiffs have not demonstrated a
sufficient nexus to Connecticut to maintain their CUTPA claim. MTD p. 37. A
court in this district has held that while it is not enough to have a tenuous nexus
to Connecticut, if the alleged actions are undertaken by Connecticut
corporations, the nexus is sufficient. See Country Club Assocs. LLC v. Shaw's
Supermarkets, Inc., No. CIV.A 06-CV-0491(JCH), 2009 WL 1537952, at *29 (D.
Conn. May 29, 2009), amended sub nom., 643 F. Supp. 2d 243 (D. Conn. 2009).
Here, the Plaintiffs have alleged that Trilegiant and other Connecticut-based
companies engaged in an unfair and deceptive refund mitigation strategy. Had
the Plaintiffs adequately alleged that the Credit Card Defendants aided and
abetted or conspired with that company to violate CUTPA, the Connecticut nexus
would have been sufficient. See also Titan Sports, Inc. v. Turner Broad. Sys., Inc.,
981 F. Supp. 65, 71 (D. Conn. 1997) (“A CUTPA violation, however, need not
necessarily occur in Connecticut, but instead, the violation must be tied to a form
of trade or commerce intimately associated with Connecticut.”) (citations and
internal quotation marks omitted)).
For the reasons stated above, the CUTPA claim is insufficiently pled and
the Defendants’ motion to dismiss the Plaintiffs’ CUTPA claims is GRANTED.
4. ECPA Claims
The Defendants also argue that the Plaintiffs’ ECPA claims against them
should be dismissed because ECPA does not provide a cause of action for aiding
and abetting liability. MTD p. 33. Section 2520(a) provides that “any person
whose wire, oral or electronic communication is intercepted, disclosed, or
intentionally used in violation of this chapter may in a civil action recover from
the person or entity, other than the United States, which engaged in that violation
such relief as may be appropriate.” 18 U.S.C. § 2520(a). The statutory text makes
clear that the only person or entity liable under the statute is that which
“engaged” in committing the communication’s interception. See Cent. Bank of
Denver, N.A., 511 U.S. at 182 (there is no general presumption of civil aider and
abettor liability, Congress must demonstrate its intent to create such a cause of
action in the statute).
While the Second Circuit has not directly addressed this issue, several
other courts have found that ECPA does not create a cause of action for aider
and abettor liability. See Kirch v. Embarq Mgmt. Co., 702 F.3d 1245, 1246-47 (10th
Cir. 2012), cert. denied, 133 S. Ct. 2743, 186 L. Ed. 2d 208 (2013) (“Accordingly,
almost all courts to address the issue have held that § 2520 does not impose civil
liability on aiders or abettors.”) (citing Peavy v. WFAA–TV, Inc., 221 F.3d 158, 169
(5th Cir. 2000); Council on Am.–Islamic Relations Action Network, Inc. v. Gaubatz,
891 F. Supp. 2d 13, 23-24 (D.D.C. 2012) (collecting cases); Freeman v. DirecTV,
Inc., 457 F.3d 1001, 1004-07 (9th Cir. 2006); Shefts v. Petrakis, 954 F. Supp. 2d 769,
776 (C.D. Ill. 2013)). Since courts have long held that ECPA’s text does not
provide any indication that Congress intended to create a civil cause of action for
accessorial liability, and Congress has not sought fit to amend the statute to
clarify that it intended to create one, this Court finds that ECPA does not create a
cause of action for aiding and abetting liability.2
Even if the statute provided for aiding and abetting liability, the Plaintiffs
have not sufficiently stated how the Credit Card Defendants aided or abetted the
interception of the Plaintiffs’ confidential billing information. In fact, the Plaintiffs
have not even alleged that the Credit Card Companies knew of or were involved
in the datapass at all. Even if they knowingly processed the unauthorized
charges, they only helped enhance the injury, not aid the actual interception of
the Plaintiffs’ billing information. Therefore, the Plaintiffs have not sufficiently
alleged that the Credit Card Defendants aided and abetted the ECPA violations.
The Defendants’ motion to dismiss the Plaintiffs’ ECPA claims is
The statute prohibits an entity from intercepting, endeavoring to intercept or
procuring another to intercept. We do not intend our definition of aider and
abettor to cover a “procurer” as used in the statute. See Lonegan v. Hasty, 436 F.
Supp. 2d 419, 427-28 (E.D.N.Y. 2006). A procurer is not an aider and abettor but
one who violates the statute directly.
5. Unjust Enrichment Claims
The Defendants also move to dismiss the Plaintiffs’ unjust enrichment
claims because the Plaintiffs fail to state how they were unjustly enriched, and, in
the alternative, that the claims are barred because the Defendants and the
Plaintiffs have a contractual relationship. MTD. p. 38-39. The Plaintiffs respond
that they have adequately alleged the elements of an unjust enrichment claim and
the contractual agreements do not bar equitable relief. Opp. 132-34.
The Court addressed these claims in the Court Order at Dkt. 276, and
granted the motion to dismiss the Plaintiffs’ unjust enrichment claims as to the
Credit Card Defendants. Therefore, this issue is moot.
6. Citigroup’s Involvement
Finally, the Defendants argue that Citigroup was only named as a
Defendant due to its status as a parent company of Citibank. MTD. p. 39. The
Plaintiffs argue that they have sufficiently pled that Citigroup was a Credit Card
Defendant by incorporating it into all other allegations related to the Credit Card
Defendants. Opp. p. 141.
The Complaint only makes the following allegations directly related to
Citigroup: (1) “Defendant, Citibank, . . . is a wholly owned subsidiary of
Citigroup”; and (2) “Defendant, Citigroup, is a Delaware corporation,
headquartered in New York, New York. Citigroup Inc. owns Citibank, N.A.” CAC
at ¶¶ 42, 43. There are no allegations that Citigroup was directly involved in the
alleged scheme, no allegations that Citigroup even issues or processes credit
card transactions, and no allegations that Citigroup worked directly or indirectly
with any other alleged member of the scheme. For the reasons stated in the
Memorandum of Decision Granting Defendant IAC/InterActiveCorp’s Motion to
Dismiss and Defendant Apollo Global Management, LLC’s Motion to Dismiss [Dkt.
280], these allegations are insufficient to establish the Plaintiffs’ constitutional
standing and are equally patently insufficient as a matter of law to render a parent
corporation liable for the acts of its subsidiary.
The motion to dismiss the Complaint against Citigroup is GRANTED.
For the foregoing reasons, the Defendants’ [Dkt. 180] Motion to Dismiss the
Consolidated Amended Class Action Complaint is GRANTED. All of the Credit
Card Defendants are DISMISSED as Defendants since no claims against them
IT IS SO ORDERED.
Hon. Vanessa L. Bryant
United States District Judge
Dated at Hartford, Connecticut: March 28, 2014
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