Valentine v. WideOpen West, Finance, LLC

Filing 157

MEMORANDUM Opinion and Order Signed by the Honorable Edmond E. Chang on 12/20/2012:Mailed notice(slb, )

UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
DAN VALENTINE and W. BRAND
BOBOSKY, individually and (proposed)
behalf of themselves and all others
similarly situated,
Plaintiffs,
v.
WIDEOPEN WEST FINANCE, LLC,
Defendant.

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No. 09 C 7653

Judge Edmond E. Chang

MEMORANDUM OPINION AND ORDER
Plaintiffs Dan Valentine and W. Brand Bobosky bring this proposed class action
against their Internet service provider (ISP), Defendant WideOpen West Finance, LLC
(which does business as WOW!, but the opinion will lower the volume and drop the
exclamation point), alleging that WOW intercepted their electronic communications
in violation of the Electronic Communications Privacy Act (ECPA), 18 U.S.C. § 2510
et seq.1 Specifically, Plaintiffs allege that WOW contracted with NebuAd, Inc., a thirdparty advertising service, to divert WOW’s customers’ Internet communications to a
NebuAd device installed on WOW’s network. NebuAd then used this information to
serve targeted advertisements to WOW’s customers. Plaintiffs allege that WOW’s
diversion of their electronic communications without their consent constitutes a direct
violation of §§ 2511(1)(a), 2511(1)(c), and 2511(1)(d) of the ECPA. In the alternative,
Plaintiffs allege that WOW and NebuAd acted jointly and severally to intercept
Jurisdiction is proper under 28 U.S.C. § 1331.

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Plaintiffs’ electronic communications in violation of the ECPA. WOW now moves to
dismiss Plaintiffs’ second amended complaint pursuant to Federal Rule of Civil
Procedure 12(b)(6), as well as to strike the class allegations under Federal Rule of Civil
Procedure 23(d)(1)(D). For the following reasons, WOW’s motion to dismiss [R. 136] is
granted as to the § 2511(1)(a) interception claim, but the parties have not addressed
the disclosure and use claims under, respectively, §§ 2511(1)(c) and (d). WOW’s motion
to strike Plaintiffs’ class allegations [R. 139] is denied.
I. Background
In evaluating a motion to dismiss, the Court must accept as true the complaint’s
factual allegations and draw reasonable inferences in the Plaintiffs’ favor. Ashcroft v.
al-Kidd, ––– U.S. –––, 131 S. Ct. 2074, 2079 (2011). Plaintiffs Dan Valentine and W.
Brand Bobosky are Illinois residents who contracted with WOW to receive Internet
service. R. 135, 2d Am. Compl. ¶¶ 13, 14. WOW is a commercial provider of high-speed,
broadband Internet services to over 300,000 customers in several major metropolitan
areas in Illinois, Indiana, Michigan, and Ohio. Id. ¶ 15. Plaintiffs allege that, in around
late 2007, WOW entered into an agreement with NebuAd, Inc., a company that serves
targeted online advertisements. Id. ¶ 25. The agreement required WOW to license and
install a NebuAd Ultra-Transparent Appliance in each of WOW’s broadband network
facility locations, a process which WOW completed by early March 2008. Id. ¶¶ 26, 32.
WOW diverted its customers’ Internet traffic—including their navigation activity, file
downloads, email messages, instant messages, and certain voice-over-Internet-protocol
conversations—to the Appliance, which allowed NebuAd to access and analyze the
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information to serve targeted advertisements to WOW customers. Id. ¶¶ 45, 93. In
exchange, WOW received monthly payments from NebuAd for ongoing access to its
customers’ information. Id. ¶ 7. Plaintiffs, who claim to be WOW customers whose
communications were intercepted pursuant to WOW’s agreement with NebuAd,
brought this proposed class action against WOW, alleging that WOW’s interception of
customers’ electronic communications violated § 2511(1)(a) of the ECPA. Id. ¶¶ 12, 87,
88, 107. As discussed later, Plaintiffs also allege that WOW disclosed and used their
electronic communications to NebuAd in violation of § 2511(1)(c) and § 2511(1)(d) of the
ECPA. Id. ¶¶ 48, 52, 56, 58, 59, 64(i), 64(j), 89 (citing 2511(1)(c)), 92, 95, 98 (those
preceding paragraphs all allege disclosure); id. ¶ 107 (citing 2511(1)(d), use).
By way of background, this lawsuit originates from a proposed class action filed
by Plaintiff Valentine and others in the United States District Court for the Northern
District of California in November 2008. R. 137, Def.’s Br. at 2. In that proceeding,
Plaintiffs sued WOW and five other ISPs who had contracted with NebuAd, claiming
that the ISPs had violated the ECPA by installing hardware on their network facilities
that intercepted their online communications. Id. at 3. In October 2008, the ISPs were
dismissed for lack of personal jurisdiction, forcing the Plaintiffs to file individual
actions against each of the six ISPs in various federal courts. Id.; see also Valentine v.
NebuAd, Inc., No. 08-5113, 2009 WL 8186130, at *1 (N.D. Cal. Oct. 6, 2009). In this
District, Valentine brought the present lawsuit against WOW in December 2009,
asserting seven claims under both federal and Illinois state law. Def.’s Br. at 3. In April
2011, this Court determined that the six non-ECPA claims were subject to WOW’s
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mandatory arbitration clause, and stayed the ECPA claim pending the resolution of the
arbitration. Id. Plaintiffs subsequently announced their intent to abandon the
arbitrable claims and to proceed solely on the ECPA claim. Id. This Court thus
dismissed the arbitrable claims and allowed Plaintiffs to file the present second
amended complaint. Id.
II. Standard of Review
Under Federal Rule of Civil Procedure 8(a)(2), a complaint generally need only
include “a short and plain statement of the claim showing that the pleader is entitled
to relief.” Fed. R. Civ. P. 8(a)(2). This short and plain statement must “give the
defendant fair notice of what the claim is and the grounds upon which it rests.” Bell
Atl. v. Twombly, 550 U.S. 544, 555 (2007) (quotation and citation omitted). The
Seventh Circuit has explained that this rule “reflects a liberal notice pleading regime,
which is intended to ‘focus litigation on the merits of a claim’ rather than on
technicalities that might keep plaintiffs out of court.” Brooks v. Ross, 578 F.3d 574, 580
(7th Cir. 2009) (quoting Swierkiewicz v. Sorema N.A., 534 U.S. 506, 514 (2002)).
“A motion under Rule 12(b)(6) challenges the sufficiency of the complaint to state
a claim upon which relief may be granted.” Hallinan v. Fraternal Order of Police
Chicago Lodge No. 7, 570 F.3d 811, 820 (7th Cir. 2009). “[W]hen ruling on a defendant’s
motion to dismiss, a judge must accept as true all of the factual allegations contained
in the complaint.” Erickson v. Pardus, 551 U.S. 89, 94 (2007) (citing Twombly, 550 U.S.
at 555-56); McGowan v. Hulick, 612 F.3d 636, 638 (7th Cir. 2010) (courts accept factual
allegations as true and draw all reasonable inferences in plaintiff’s favor). “[A]
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complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to
relief that is plausible on its face.’” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting
Twombly, 550 U.S. at 570). These allegations “must be enough to raise a right to relief
above the speculative level.” Twombly, 550 U.S. at 555. The allegations that are
entitled to the assumption of truth are those that are factual, rather than mere legal
conclusions. Iqbal, 556 U.S. at 678-79.
III. Analysis
WOW advances two theories in support of its motion to dismiss. First, WOW
contends that Plaintiffs failed to plead a valid interception claim under the ECPA
because they do not allege that WOW actually acquired the contents of any customer
communications. Second, and in the alternative, WOW asserts that Plaintiffs
consented to any interception of their Internet activity. The Court addresses each of
these arguments in turn.
A. Interception & Secondary Liability
WOW first contends that Plaintiffs’ second amended complaint must be
dismissed because Plaintiffs have failed to plead a valid ECPA claim. Specifically,
WOW asserts that Plaintiffs’ complaint must fail because they do not allege that WOW
ever acquired the contents of any intercepted communications. R. 136, Def.’s Mot.
Dismiss at 1. The ECPA, which amended the Federal Wiretap Act of 1968, 18 U.S.C.
§ 2510 et seq., was designed to “protect against the unauthorized interception of
electronic communications.” Ameritech Corp. v. McCann, 297 F.3d 582, 583 (7th Cir.
2002). Plaintiffs allege that WOW intentionally intercepted and diverted their Internet
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communications to the NebuAd Appliance in violation of § 2511(1)(a) of the ECPA,
which prohibits the intentional interception of any electronic communication. 2d Am.
Compl. ¶ 87; see also 18 U.S.C. § 2511(1)(a).
The only issue in dispute is whether Plaintiffs have sufficiently pled that WOW
“intercepted” their electronic communications within the meaning of the ECPA. The
ECPA defines “intercept” as the “aural or other acquisition of the contents of any . . .
electronic . . . communication through the use of any electronic, mechanical, or other
device.” 18 U.S.C. § 2510(4) (emphasis added). “Contents” include “any information
concerning the substance, purport, or meaning of that communication.” 18 U.S.C. §
2510(8).
WOW contends that because Plaintiffs have not alleged that WOW itself
acquired the contents of Plaintiffs’ communications, they have failed to state a valid
claim under 18 U.S.C. § 2511(1)(a). Def.’s Br. at 12. To make out a valid interception
claim under the ECPA, a plaintiff must allege that the defendant “acqui[red]” the
contents of his or her electronic communications. § 2510(4) (defining interception as
“acquisition”); see, e.g., Kirch v. Embarq Mgmt. Co., 2011 WL 3651359, at *6 (D. Kan.
Aug. 19, 2011). In Kirch, the district court granted summary judgment for the
defendant ISP where the plaintiff had failed to plead that the ISP had actually
acquired the plaintiff’s electronic communications. Id. Like this case, Kirch was an
ECPA action brought against an ISP for diverting its customers’ Internet
communications through the NebuAd Appliance. There, the court noted that although
the term “acquisition” is not defined in the ECPA, “to acquire” commonly means “to
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come into possession, control, or power of disposal.” Id. Thus, the court reasoned that
in order to “intercept” a communication, one must come into possession or control of
its contents. Id. Because there was nothing in the record alleging that the ISP itself
had acquired the contents of any communications, the defendant could not have
intercepted the communications within the meaning of the ECPA. Id.
Here, the Plaintiffs have not alleged sufficient facts to support a valid ECPA
interception claim. The complaint asserts that “[t]he scope of WOW’s wholesale
acquisition of Internet traffic and diversion of that traffic to the Appliance
encompassed all of Plaintiffs’ and Class Members’ web navigation activity and other
Internet transactions,” 2d Am. Compl. ¶ 45 (emphasis added), and that the
“Defendant’s network facility resources together with the Appliance were devices used
to acquire the ‘contents’ of communications . . . in that Defendant used its network
facility resources and the Appliance to divert and transfer the substance, purport, and
meaning of the communications to the Appliance.” Id. ¶ 78 (emphasis added). Although
these assertions contain the proper buzzwords, they are mere legal conclusions that do
not count as factual allegations. See Iqbal, 556 U.S. at 678-79 (“Although for purposes
of a motion to dismiss [the court] must take all of the factual allegations in the
complaint as true, [courts] are not bound to accept as true a legal conclusion couched
as a factual allegation.”) (internal citations and quotations omitted). Here, setting aside
the legal conclusions, the facts that Plaintiffs allege in detailing the nature of WOW
and NebuAd’s relationship, recited above, make it clear from the face of the complaint
that WOW merely facilitated NebuAd’s acquisition of Plaintiffs’ information. Yes,
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WOW diverted the communications to NebuAd, but it was NebuAd that actually
acquired the communications in the sense of the statute, meaning it was NebuAd that
actually accessed the communications when it analyzed them to fashion targeted ads.
Id. ¶¶ 45, 93. Because the complaint does not adequately allege that WOW acquired
Plaintiffs’ electronic communications, Plaintiffs have failed to state a claim for direct
ECPA liability under 18 U.S.C. § 2511(1)(a).
In the absence of sufficient factual allegations to support a direct liability claim
under § 2511(1)(a), the next question is whether there is some other basis for ECPA
liability—namely, whether the complaint supports some form of secondary liability
against WOW. As a general matter, courts have declined to find a private cause of
action against those who aid and abet or conspire with others to intercept, disclose, or
use electronic communications in violation of the ECPA. See, e.g., Doe v. GTE Corp.,
347 F.3d 655, 658-69 (7th Cir. 2003); Freeman v. DirecTV, 457 F.3d 1001, 1004 (9th
Cir. 2006); Kirch, 2011 WL 3651359, at *7; In re Toys R Us Privacy Litigation, 2001 WL
34517252, at *7 (N.D. Cal. Oct. 9, 2001). This is because federal courts normally refrain
from creating secondary liability that is not specified by Congress in the statute’s text.
Central Bank of Denver, N.A. v. First Interstate Bank of Denver, N.A., 511 U.S. 164, 184
(1994). Although a statute’s structure may show that secondary liability has been
established implicitly, see Boim v. Quranic Literacy Institute, 291 F.3d 1000, 1019-1020
(7th Cir. 2002), the Seventh Circuit has declined to read 18 U.S.C. § 2511 in that way,
Doe, 347 F.3d at 659. 18 U.S.C. § 2511(1)(a) criminally punishes anyone who
“intentionally intercepts, endeavors to intercept, or procures any other person to
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intercept or endeavor to intercept, any . . . electronic communication.” The civil
provision of the ECPA 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 . . . which engaged in
that violation.” 18 U.S.C. § 2520(a). These provisions do not explicitly impose secondary
civil liability on those who conspire with or aid and abet others in intercepting
electronic communications.2 Nor does a structural reading of the ECPA implicitly
establish secondary liability. Because “[a] statute that is this precise about who, other
than the primary interceptor, can be liable, should not be read to create a penumbra
of additional but unspecified liability,” Doe, 347 F.3d at 659, this Court declines to read

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In criminal cases, conspiracy and aiding-and-abetting liability are generally created
by 18 U.S.C. § 371 and 18 U.S.C. § 2, respectively, for Title 18 offenses.

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a private cause of action for secondary liability into the ECPA.3 Accordingly, WOW’s
motion to dismiss is granted as to the interception claim under 18 U.S.C. § 2511(1)(a).
The question remains, however, on what to do with Plaintiffs’ claims under 18
U.S.C. §§ 2511(1)(c) (disclosure of communications) and (d) (use of communications).
Plaintiffs do allege in the second amended complaint that WOW illegally disclosed and
used their electronic communications in violation of §§ 2511(1)(c) and (d). 2d Am.
Compl. ¶¶ 48, 52, 56, 58, 59, 64(i), 64(j), 89 (citing 2511(1)(c)), 92, 95, 98, 107. But
neither party appears to have addressed these claims in their briefs. On the one hand,

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The Court notes that the Fifth Circuit in Peavy v. WFAA-TV, 221 F.3d 158 (5th Cir.
2000), arrived at the same conclusion by comparing the textual differences between the
criminal and civil provisions of the ECPA. 18 U.S.C. §§ 2511(1)(a) (criminal), 2520(a) (civil).
Peavy reasoned that because the “procures any other person to intercept . . .” language had
been amended out of the civil provision but not the criminal provision of the ECPA, Congress
must have intended to limit the class of persons who may be held civilly liable under the
ECPA. Peavy, 221 F.3d at 169. Peavy thus held that § 2511(1)(a)’s prohibition on the
procurement of interceptions can only be enforced in criminal proceedings. Id. at 169.
Although this Court agrees with the ultimate holding of Peavy (that is, there is no
secondary civil liability under the ECPA), this Court does not rely on the combination of the
presence of the “procures” language in § 2511(1)(a) and its absence in § 2520(a). Indeed, in the
Court’s view, the text of § 2520(a) actually does authorize civil actions against those who
“procure” a banned interception. Section 2511(1)(a) imposes liability on anyone who
“intentionally intercepts, endeavors to intercept, or procures any other person to intercept or
endeavor to intercept any . . . electronic communication.” 18 U.S.C. § 2511(1)(a). Section 2520
permits “any person whose . . . electronic communication is intercepted, disclosed, or
intentionally used in violation of this chapter” to pursue a civil action against “the person or
entity, other than the United States, which engaged in that violation.” 18 U.S.C. 2520
(emphases added). The first part of the provision describes the plaintiff in the civil ECPA suit
(namely, any person whose communication is intercepted, disclosed or used); that first half
does nothing to limit who may be sued as a defendant under § 2520. It is the second part of the
provision that describes the defendant (namely, the person or entity which engaged in that
violation). The procurer of an interception has indeed engaged in a violation of § 2511(a), and
may thus be sued by the person whose communication was intercepted. This interpretation
also makes sense because the procurer of a violation—the one who brings about the violation—
is not secondarily liable as that term is usually understood; the procurer is the principal, not
the merely secondary actor.

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WOW does not seem to mention those liability theories in its motion to dismiss or its
reply brief; on the other hand, Plaintiffs do not mention in their response that those
liability theories must survive because WOW did not challenge those theories. On the
third hand, perhaps the parties assumed that the decision on the interception liability
theory would control the decision on the other two. In any event, in advance of the next
status hearing, the parties shall file concise position papers on this topic: first, on or
before December 28, 2013, Plaintiffs shall file a position paper stating whether
Plaintiffs wish to pursue §§ 2511(1)(c) and (d) claims, and if so, what Plaintiffs propose
as the next step in the litigation. On or before January 10, 2013, WOW shall file a
responsive paper setting forth its position.
B. Consent to Interception
WOW argues in the alternative that dismissal of Plaintiffs’ § 2511(1)(a) claim
is warranted because Plaintiffs consented to the interception of their Internet
communications. Specifically, WOW contends that it conditioned its service on the use
of third-party advertising, which was made explicit in its Terms of Service. Def.’s Br.
at 13. Moreover, WOW claims that it separately notified customers of its deployment
of the NebuAd service and gave customers an opportunity to opt out. Id. at 13-14.
WOW asserts that Plaintiffs’ failure to opt out and continued use of WOW’s services
amounted to consent that serves as a bar to ECPA liability. Although the Court has
already held that dismissal of the § 2511(1)(a) interception claim is warranted under

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Rule 12(b)(6), for the sake of completeness (and because the status of the disclosure
and use claims is unclear), the Court will address the consent argument.
WOW is correct that consent is an exception to ECPA liability. See 18 U.S.C.
§ 2511(2)(d). However, consent is an affirmative defense to an ECPA claim that need
not be anticipated by Plaintiffs in the pleadings. Doe v. Smith, 429 F.3d 706, 709 (7th
Cir. 2005) (noting that one participant had obviously consented to the recording, but
that does not justify dismissing the suit at the motion to dismiss stage because
“[c]omplaints need not anticipate or attempt to defuse potential defenses.”). Here,
discovery might very well reveal that Plaintiffs did consent to NebuAd’s interception,
but the Court may only consider the pleadings at this stage of the litigation. Plaintiffs
flatly deny receiving notice of or giving consent to the alleged interception in their
complaint. 2d Am. Compl. ¶¶ 54-59. And because the Court must accept as true all
factual allegations contained in a complaint when evaluating a motion to dismiss,
Erickson v. Pardus, 551 U.S. 89, 94 (2007) (internal citations omitted), a determination
of consent at this time is premature.
Even if it were permissible to go beyond the pleadings at this stage, WOW’s
consent argument would also fail because the facts it submits in support of the motion
are contestable. WOW contends that it notified its customers on three separate
occasions that third-party advertisements may be used. Def.’s Br. at 13-14. WOW
claims that these notices are outlined in a letter from WOW’s CEO to Congressman
John Dingell of the Committee on Energy and Commerce, in which WOW responded

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to Congressional inquiries about its relationship with NebuAd. R. 23-1, 60-1 (“Response
to Congress”). WOW contends that because this document is part of the public record
and is “undisputedly authentic,” the Court may take judicial notice of the fact that
WOW obtained consent from its customers. Def.’s Br. at 11. This argument must be
rejected. Although a court may take judicial notice of matters of public record when
ruling on a motion to dismiss, Anderson v. Simon, 217 F.3d 472, 474 (7th Cir. 2000),
it may not take judicial notice of underlying facts that may be subject to reasonable
dispute. See Ennenga v. Starns, 677 F.3d 766, 773-74 (7th Cir. 2012); see also Travel
All Over the World, Inc. v. Kingdom of Saudi Arabia, 73 F.3d 1423, 1430 n.6 (7th Cir.
1996) (finding that the “admissions” of plaintiffs in a joint status report filed by airline
were not a matter of public record of which district court could take judicial notice
without converting airline’s 12(b)(6) motion to dismiss into a motion for summary
judgment). Here, the only fact that may be judicially noticed by the Court is the fact
that WOW submitted the Response to Congress. The underlying facts asserted in the
Response itself cannot be judicially noticed because they are subject to reasonable
dispute. Accordingly, the Court cannot take judicial notice of Plaintiffs’ alleged consent,
and dismissal is not warranted on the basis of consent.
IV. Motion to Strike Class Allegations
Because it is possible that Plaintiffs’ claims under §§ 2511(1)(c) and (d) still
survive, the Court will now address the merits of WOW’s motion to strike the class
allegations from the complaint. WOW brings a separate motion to strike Plaintiffs’

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class allegations under Federal Rules of Civil Procedure 12(f), 23(c)(1)(A), and
23(d)(1)(D). R. 139, Mot. Strike. WOW argues that Plaintiffs’ decision not to pursue the
six non-ECPA claims in arbitration constitutes impermissible claim-splitting, and
precludes the absent members from being able to pursue these claims in the future
under the doctrine of res judicata (that is, claim preclusion). Id. at 1. WOW further
asserts that striking the class allegations is warranted because Plaintiffs’ interests are
antagonistic to the class, and thus Plaintiffs cannot be adequate class representatives.
Id. For the reasons explained more fully below, WOW’s motion to strike Plaintiffs’ class
allegations is denied.
Rule 23(c)(1)(A) provides that the court, “[a]t an early practicable time . . . must
determine by order whether to certify the action as a class action.” Fed. R. Civ. P.
23(c)(1)(A). Rule 23(d)(1)(D) provides that, “[i]n conducting an action under this rule,
the court may issue orders that . . . require that the pleadings be amended to eliminate
allegations about representation of absent persons and that the action proceed
accordingly.” Fed. R. Civ. P. 23(d)(1)(D). Courts in this district have held that a motion
to strike class allegations, made pursuant to these provisions, can be an appropriate
device to determine whether a case will proceed as a class action. See, e.g., Muehlbauer
v. General Motors Corp., 431 F.Supp.2d 847, 870 (N.D. Ill. 2006). Moreover, in the right
circumstances, such motions may properly be filed before plaintiffs move for class
certification and before class discovery has been conducted. See, e.g., Wright v. Family
Dollar, Inc., 2010 WL 4962838, at *1 (N.D. Ill. Nov. 30, 2010) (“[G]iven that Rule

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23(c)(1)(A) instructs courts to determine whether a class may be certified ‘[a]t an early
practicable time,’ courts may—and should—address the plaintiff’s class allegations
when the pleadings are facially defective and definitively establish that a class action
cannot be maintained.”); Bd. of Educ. of Tp. High Sch. v. Climatemp, Inc., 1981 WL
2033, at *2, *5 (N.D. Ill. Feb. 20, 1981) (rejecting plaintiff’s argument that it would be
procedurally improper to entertain defendant’s motion to strike class action allegations
prior to a motion by plaintiff to certify class).
The standard for evaluating whether class allegations should be stricken is the
same as that for class certification, and is laid out in Rule 23(a). Under Rule 23(a),
class certification is not warranted unless the named plaintiff satisfies four
requirements: (1) numerosity; (2) commonality; (3) typicality; and (4) adequacy of
representation. Fed. R. Civ. P. 23(a); see also Oshana v. Coca-Cola Co., 472 F.3d 506,
513 (7th Cir. 2006). Here, the only issue in dispute (at this stage) is whether Plaintiffs
meet the fourth requirement of adequacy.
Rule 23(a)(4) requires that “the representative parties will fairly and adequately
protect the interests of the class.” Fed. R. Civ. P. 23(a)(4). The adequacy requirement
is satisfied where the named representative (1) has retained competent counsel; (2) has
a sufficient interest in the outcome of the case to ensure vigorous advocacy; and (3)
does not have interests antagonistic to those of the class. Saltzman v. Pella Corp., 257
F.R.D. 471, 480 (N.D. Ill. 2009) (internal citations omitted). Here, WOW argues that
Plaintiffs’ class allegations must be stricken because their interests are antagonistic

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to those of the class. Specifically, WOW contends that Plaintiffs’ decision to forgo the
six non-ECPA claims constitutes “claim-splitting,” and precludes the absent class
members from later pursuing these claims under the doctrine of claim preclusion. R.
140 at 5. This, WOW argues, creates a conflict of interest with the putative class, and
renders Plaintiffs unable to serve as adequate class representatives.
Not so. Plaintiffs’ decision not to pursue the six arbitrable claims has no bearing
on their ability to represent the class for three independent reasons: First, Plaintiffs
have not engaged in impermissible claim-splitting. Second, even if they did, there is
a class action exception in the rule against claim-splitting. And finally, even if the class
action exception does not apply, claim preclusion simply does not attach to the
proposed class members’ non-ECPA claims.
WOW mistakenly characterizes Plaintiffs’ decision to abandon the non-ECPA
claims as claim-splitting. Under the rule against claim-splitting, a plaintiff must allege
in one proceeding all claims for relief arising out of a single nucleus of operative facts,
or be precluded from raising those claims in the future. Shaver v. F.W. Woolworth Co.,
840 F.2d 1361, 1365 (7th Cir. 1988). Here, there is no question that all seven of
Plaintiffs’ original claims arose from the same nucleus of operative facts. But Plaintiffs
have not impermissibly split their claims because they are not reserving the non-ECPA
claims for a later court proceeding. Rather, Plaintiffs are simply abandoning their nonECPA claims and pursuing the ECPA claim exclusively in federal court. Accordingly,
the rule against claim-splitting does not apply to Plaintiffs in this case.

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Second, as Plaintiffs point out in their response brief, “the doctrine of claim
splitting generally does not apply to class actions.” Makor Issues & Rights v. Tellabs,
Inc., 256 F.R.D. 586, 597 (N.D. Ill. 2009) (internal citations omitted). This is because
class actions inherently involve the representation of unnamed class members in
abstentia and without notice, which limits both the claims that can be subject to class
treatment as well as the the types of recovery available. Id. (internal citations omitted)
Because of the “special nature of class actions,” the rule against claim-splitting does
not apply to class actions, id., and parties remain able to pursue separately those
claims that could not be adjudicated within the class action, including those that arise
from the same nucleus of operative facts. The logic behind this class-action exception
is grounded in § 26(1)(c) of the Second Restatement of Judgments, which describes the
exceptions to the general rule against claim splitting. See id. Section 26(1)(c) states
that the rule against claim-splitting does not apply to extinguish a subsequent claim
when
[t]he plaintiff [is] unable to rely on a certain theory of the case or seek a certain
remedy or form of relief in the first action because of the limitations on the
subject matter jurisdiction of the courts or restrictions on their authority to
entertain multiple theories or demands for multiple remedies or forms of relief
in a single action, and the plaintiff desires in the second action to rely on that
theory or seek that remedy or form of relief . . . .
Restatement (2d) of Judgments § 26(1)(c) (1982).
The same logic that animates § 26(1)(c) is applicable here. Plaintiffs originally
brought all seven of their claims against WOW in federal court. However, because

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WOW’s Terms of Service contains an arbitration clause that subjects six of the
Plaintiffs’ claims to mandatory arbitration, this Court granted WOW’s motion to
compel arbitration of the six non-ECPA claims. See generally R. 123. Thus, Plaintiffs
did not “split” their claims, because this Court, under the Federal Arbitration Act and
WOW’s arbitration agreement, was unable to entertain Plaintiffs’ other theories of
relief in the same action. Accordingly, under the class-action exception to the rule
against claim-splitting, Plaintiffs and class members are not precluded from pursuing
those remaining claims in a separate action down the road.
Third, even if the class-action exception does not apply, WOW is simply incorrect
that Plaintiffs’ decision to forgo the non-ECPA claims triggers claim-preclusion effects
on the absent class members. As a threshold matter, claim-preclusion attaches in class
actions only once a class has been certified, Smith v. Bayer Corp., ––– U.S. –––, 131 S.
Ct. 2368, 2376 (2011), and any action taken by the named plaintiffs before class
certification does not have preclusive effects on the rest of the class. Here, because
Plaintiffs abandoned their non-ECPA claims before class certification, claim preclusion
has not yet attached and the absent class members are not precluded from pursuing
these claims later in a separate action.
Moreover, claim preclusion is simply inapplicable to the situation at hand. WOW
contends that by not pursuing their non-ECPA claims in arbitration, the Plaintiffs
have precluded the remaining class members from litigating those claims in any future
proceeding. WOW mis-applies claim preclusion on two fronts: First, claim preclusion

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only prevents parties from re-litigating claims that were or could have been litigated
during an earlier proceeding. Hayes v. City of Chicago, 670 F.3d 810, 813 (7th Cir.
2012) (internal citations omitted) (emphasis added). It does not operate to preclude a
second suit that is based on a claim that could not have been asserted in the first suit.
Alvear-Velez v. Mukasey, 540 F.3d 672, 678 (7th Cir. 2008). As explained above, the
non-ECPA claims could not have been litigated in the present proceeding because of
WOW’s arbitration agreement. Second, even if Plaintiffs had gone ahead with the
arbitration, WOW’s arbitration clause prohibits Plaintiffs from pursuing the six nonECPA claims as a class claim. See R. 72-1, WOW Terms of Service (prohibiting class
claims in arbitration). Because Plaintiffs could not have pursued their non-ECPA
claims in a class arbitration anyway, it does not matter, for purposes of claim
preclusion, whether Plaintiffs chose to abandon them here. If the absent class members
decide at some point in the future to pursue the non-ECPA claims, they would have to
arbitrate those claims separately and individually anyway. Accordingly, Plaintiffs’
decision to abandon the six arbitrable claims has no claim preclusion effect on the
absent class members, and WOW’s motion to strike Plaintiffs’ class allegations is
denied.

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V. Conclusion
For the reasons stated above, WOW’s motion to dismiss [R. 136] is granted as
to the interception claim under 18 U.S.C. § 2511(1)(a). WOW’s motion to strike class
allegations [R. 139] is denied.
As discussed above, Plaintiffs shall file a position paper on the §§ 2511(1)(c) and
(d) claims on or before December 28, 2012. WOW shall file a response by January 10,
2013, and the next status hearing will be held on January 24, 2013, at 10:30 a.m.

ENTERED:

___________________________
Honorable Edmond E. Chang
United States District Judge
DATE: December 20, 2012

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