Desai v. ADT Security Services, Inc.

Filing 217

Enter MEMORANDUM Opinion and Order Signed by the Honorable Elaine E. Bucklo on 9/26/2012. Mailed notice (jdh)

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION

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Plaintiffs,
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v.
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ADT SECURITY SYSTEMS, INC., et al.,
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Defendant.
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------------------------------------ )
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ADT SECURITY SYSTEMS, INC.,
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Third-Party Plaintiff,
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v.
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MR. PETE TOLMAN; LEADS DIRECT
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MARKETING; VOICE TEL CORP.; MR.
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CHRISTOPHER LONG; EMI, INC.; CITY
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VIP, LLC; JMB ENTERPRISES; DIRECT
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SAVINGS USA, INC.; MR. OSCAR
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MONTENEGRO; EVERSAFE SECURITY
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SYSTEMS, INC.; SAFE STREETS USA,
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LLC; PARAMOUNT MEDIA GROUP; THE
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ELEPHANT GROUP, INC.; and UNKNOWN
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JOHN DOE DEFENDANTS I THROUGH XX,
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Third-Party Defendants.
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------------------------------------ )
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SAFE STREETS USA, LLC, as successor
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to EVERSAFE SECURITY SYSTEMS, INC.,
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Cross-Claimant and
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Third-Party Plaintiff
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v.
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VISHVA DESAI and PHILIP J. CHARVAT,
on behalf of themselves and others
similarly situated,

No. 11 C 1925

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DIRECT SAVINGS USA, INC.; MR. OSCAR
MONTENEGRO; DIRECT SAVINGS USA, LLC, )
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Cross-Defendants and
Third-Party Defendants.
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MEMORANDUM OPINION AND ORDER
I.
Plaintiffs Vishva Desai and Philip Charvat sued ADT Security
Systems, Inc. (“ADT”) for violating the Telephone Consumer
Protection Act (“TCPA”), 47 U.S.C. § 227, after they allegedly
received unsolicited pre-recorded telephone calls promoting ADT’s
products.
(“EMI”).

The phone calls were allegedly made by EMI, Inc.
ADT had contracted with Elephant Group, Inc. (“Elephant

Group”) to provide marketing services for ADT dealers.

In turn,

Elephant Group contracted with Paramount Media Group
(“Paramount”) to conduct certain marketing of ADT products for
Elephant Group.

Finally, Paramount contracted with EMI to

provide leads and to make phone calls marketing ADT products for
Paramount.

ADT filed its Corrected First Amended Third Party

Complaint (the “third party complaint”) against Elephant Group,
among others, asserting claims for contractual indemnification
(Count X), common law indemnification (Count XI) and common law
contribution (Count XII).

Elephant Group has filed a motion to

dismiss Counts X - XII of ADT’s third party complaint.

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For the

reasons explained below, the motion is granted in part and denied
in part.
II.
To state a claim upon which relief can be granted, a
complaint must contain a “short and plain statement of the claim
showing that the pleader is entitled to relief.”
8(a)(2).

Fed. R. Civ. P.

In considering a motion to dismiss, a court must accept

all factual allegations contained in the complaint and draw all
reasonable inferences in the plaintiff’s favor.

Reynolds v. CB

Sports Bar, Inc., 623 F.3d 1143, 1146 (7th Cir. 2010).

While

“the bar to survive a motion to dismiss is not high, the
complaint must contain sufficient factual matter, accepted as
true, to state a claim to relief that is plausible on its face.”
Bonte v. U.S. Bank, N.A., 624 F.3d 461, 463 (7th Cir. 2010)
(quoting Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937,
173 L.Ed.2d 868 (2009)) (internal quotation marks omitted).
III.
Elephant Group seeks dismissal of ADT’s claims against it on
the grounds that the two indemnification provisions in the
operative contract do not trigger a right to indemnification
under the facts alleged in the third party complaint and that
claims for common law indemnification and contribution are not
recognized by the TCPA or the federal common law per Garrett v.
Ragle Dental Laboratory, Inc., No. 10 C 1315, 2011 WL 2637227

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(N.D. Ill. July 6, 2011) (Bucklo, J.) and Glen Ellyn Pharmacy,
Inc. v. Meda Pharm., Inc., No. 09 C 4100, 2011 WL 6156800 (N.D.
Ill. Dec. 9, 2011) (Gottschall, J.).

As to its claims for common

law indemnification and contribution, ADT counters that based on
my denial of ADT’s earlier motion to dismiss, the law of the case
requires denial of Elephant Group’s present motion.

ADT also

argues that the case before me is distinguishable from both
Garrett and Glen Ellyn Pharmacy.

As Elephant Group points out,

ADT’s argument is flawed on both accounts.

My decision in my

July 18, 2011, order was based on my construction of the TCPA,
but ADT does not claim that it is entitled to indemnification and
contribution based on that statute.

In fact, in Counts XI and

XII of its third party compliant, ADT only claims such an
entitlement under the common law.

Therefore, the July 18, 2011,

order does not control the issues here.
I have, however, previously considered the issue of whether
a defendant is entitled to common law indemnification and
contribution from a third party in Garrett, a case that is
factually similar to the one before me now.

In Garrett, the

plaintiffs had filed a complaint alleging that the defendants,
Ragle and Cadent, had sent, or caused to be sent, unsolicited
faxes advertising Ragel’s services and a Cadent product in
violation of the TCPA.

In turn, Ragle filed crossclaims against

Cadent, alleging that Cadent was actually responsible for causing

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the faxes to be sent and seeking common law indemnification and
contribution.

I held that the TCPA does not create an

affirmative cause of action for indemnification or contribution
and that federal common law does not allow for such a cause of
action either.1

Garrett, 2011 WL 2637227, at *1; see also Glen

Ellyn Pharmacy, 2011 WL 6156800, at *3 (holding there is no right
to contribution under the TCPA or the federal common law under
facts that are almost identical to those presented here).

ADT

makes much of the fact that a defendant can be held liable for
treble damages under § 227(b)(3), arguing that this is a reason
for expanding the federal common law to include causes of action
for indemnification and contribution.

But as Judge Gottschall

observed, the existence of treble damages “indicates that
Congress had no intent to include a right of contribution.”

Glen

Ellyn Pharmacy, 2011 WL 6156800, at *2 (citing Texas Indus., Inc.
v. Radcliff Materials, Inc., 451 U.S. 630, 639-40, 101 S.Ct.
2061, 68 L.Ed.2d 500 (1981) (concluding that the existence of a
treble damages provision combined with a lack of any reference to
contribution in the legislative history meant that Congress did
not intend to create a right to contribution)).

Contrary to

ADT’s contentions, Garrett and Glen Ellyn Pharmacy are not
distinguishable from this case, and the reasoning applied there

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In Garrett, I also held that federal, not state, law
governs the issue of indemnification or contribution for TCPA
claims. 2011 WL 2637227, at *2.
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also applies here.

Therefore, ADT cannot state a cause of action

for indemnification or contribution under either the TCPA or the
common law.
Elephant Group also seeks to dismiss ADT’s contractual
indemnification claim, arguing that the facts of this case do not
trigger either of the two indemnification provisions in the
operative contract.

The first indemnification provision,

paragraph 6(b), reads in relevant part: “Elephant Group shall
indemnify, defend and hold ADT, its Affiliates, officers,
directors, employees and agents (collectively the ‘ADT Group’)
harmless from and against any and all damages, costs (including
court costs and attorneys’ fees), losses, fees and expenses
suffered by the ADT Group resulting from or relating to, any
negligence or intentional torts by Elephant Groups, its
Affiliates, officers, directors, employees and agents....”
Party Def.’s Ex. A) (DN 170-1).

(3d

In turn, Paragraph 4.1 of the

operative contract between ADT and Elephant Group defines an
affiliate as “any corporation or other person or entity that
directly or indirectly controls, is controlled by, a successorin-interest to, or alter ego of, or is under common control with,
ADT or Elephant Group, respectively.”

(Id.)

Elephant Group maintains that ADT has not alleged “any
negligence or intentional torts” in its third party complaint
and, also, that EMI is not an “affiliate.”

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However, the third

party complaint can reasonably be read to allege that EMI has
committed negligence or an intentional tort by placing phone
calls in violation of the TCPA and that Paramount was negligent
in its use of EMI’s services.

Elephant Group does not deny that

Paramount is an “affiliate” under the terms of the contract.
Elephant Group also fails to offer a substantive response to
ADT’s contention that the complaint alleges facts to support a
claim that Paramount itself was negligent.

As such, I will not

dismiss the claim for contractual indemnification.
IV.
For the foregoing reasons, Elephant Group’s motion to
dismiss is granted in part and denied in part.

ADT’s claims for

common law indemnification and contribution are dismissed, but
ADT’s claim for contractual indemnification remains.

ENTER ORDER:

____________________________
Elaine E. Bucklo
United States District Judge
Dated: September 26, 2012

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