G.M. Sign, Inc. v. Stealth Security Systems, Inc.
Filing
34
MEMORANDUM Opinion and Order: The motion to dismiss 15 is denied for the reasons stated in the Memorandum Opinion and Order. This case is set for status on 1/13/16 at 9 AM. Signed by the Honorable John J. Tharp, Jr on 12/21/2015. Mailed notice(air, )
IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
G.M. SIGN INC., an Illinois
corporation, individually and as the
representative of a class of similarlysituated persons,
Plaintiff,
v.
STEALTH SECURITY SYSTEMS,
INC.,
Defendants.
)
)
)
)
)
)
)
)
)
)
)
)
No. 14 C 09249
Judge John J. Tharp, Jr.
MEMORANDUM OPINION AND ORDER
Plaintiff G.M. Sign, Inc. (“G.M.”) brings this two-count Complaint on behalf of a
nationwide class of all persons who, on or after January 4, 2003 (for Count I) or January 4, 2002
(for Count II), received telephone facsimile messages “advertising the commercial availability of
any property, goods, or services by or on behalf of Defendant” Stealth Security Systems, Inc.
(“Stealth”), with respect to whom Stealth cannot prove prior permission to receive such faxes.
Compl. ¶¶ 18, 37. G.M. alleges breach of the Telephone Consumer Protection Act (“TCPA”), as
amended by the Junk Fax Prevention Act (“JFPA”), 47 U.S.C. § 227, and an Illinois state-law
claim of conversion. Stealth brings this motion to dismiss. Dkt. 15. For the following reasons, the
motion is denied.
BACKGROUND 1
On or about October 17, 2006, Stealth transmitted by telephone facsimile, i.e. “faxed,” an
unsolicited advertisement to G.M.’s facsimile machine. Compl. ¶ 10, Dkt. 1. The fax is an
advertisement to purchase Stealth’s security services. See id. Ex. A. Printed in small font at the
bottom of the single-page fax is the statement, “To be removed from our list immediately go to
www.removemyfaxnumber.com . . . To be removed from our list within 30 days write your 10digit fax number on this fax and fax this document back . . . .” Id. G.M. had not given Stealth
permission to send the fax. Compl. ¶ 13.
G.M. filed suit on November 18, 2014 on behalf of a nationwide class of recipients of
Stealth’s faxes under the TCPA and for conversion, alleging that Stealth violated the TCPA by
sending unsolicited faxes and/or failed to comply with the Opt-Out Requirements of the JFPA
and that Stealth unlawfully converted its fax machines, toner, paper, and employees’ time. Id.
¶¶ 30, 41. G.M. purports to bring these claims on behalf of the following class:
All persons who (1) on or after January 4, 2003, (2) were sent
telephone facsimile messages of material advertising the
commercial availability of any property, goods, or services by or
on behalf of Defendant, and (3) which [sic] respect to whom
Defendant cannot prove evidence of prior express permission or
invitation for the sending of such faxes.
Compl. ¶ 18.
DISCUSSION
“To survive a motion to dismiss under Rule 12(b)(6), a complaint must ‘state a claim to
relief that is plausible on its face.’” Adams v. City of Indianapolis, 742 F.3d 720, 728 (7th Cir.
1
The facts are taken from G.M.’s Complaint, Dkt. 1, and are taken as true for the
purposes of the motion to dismiss. See Adams v. City of Indianapolis, 742 F.3d 720, 728 (7th
Cir.) cert. denied, 135 S. Ct. 286 (2014) (“Factual allegations are accepted as true at the pleading
stage . . . .”).
2
2014) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (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.’” Adams, 742 F.3d at 728
(quoting Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)). Although a court must accept all of the
plaintiff’s factual allegations as true when reviewing the complaint, conclusory allegations
merely restating the elements of a cause of action do not receive this presumption: “A complaint
must allege facts to support a cause of action’s basic elements; the plaintiff is required to do at
least that much.” Adams, 742 F.3d at 728 (emphasis added).
I.
Statute of Limitations
Stealth argues that both of G.M.’s claims are barred by the relevant statute of limitations.
The statute of limitations for a TCPA claim is four years, 28 U.S.C. § 1658, and the statute of
limitations for an Illinois common law conversion claim is five years, 735 ILCS 5/13-205. G.M.
received the fax from Stealth on or about October 17, 2006 and filed this lawsuit on November
18, 2014, over eight years later. Stealth’s opening brief suggests, therefore, that the complaint is
“indisputably” time-barred—but not so fast. On January 4, 2007, a company called Wellington
Homes filed a class action Complaint against Stealth in the Circuit Court of Lake County (“the
Wellington action”), alleging violations of the TCPA and the Illinois Consumer Fraud and
Deceptive Business Practices Act and conversion. See Resp. Ex. 2, Dkt. 24. Wellington proposed
to represent a class of:
All persons who (1) on or after four years prior to the filing of this
action, (2) were sent telephone facsimile messages of material
advertising the commercial availability of any property, goods, or
services by or on behalf of Defendant, and (3) with respect to
whom Defendant cannot provide evidence of prior express
permission or invitation for the sending of such faxes.
3
Id. ¶ 16. After years of discovery, G.M. moved to intervene as lead plaintiff in the Wellington
action on August 19, 2014. Resp. at 3, Ex. D. The court denied G.M.’s motion to intervene on
October 23, 2014 (without an opinion), and the next day, G.M. filed a separate action, identical
to the action it has brought against Stealth in this Court, in the Circuit Court of Lake County. See
Mem. in Supp. at 2, Dkt. 16. G.M. then initiated this lawsuit on November 18, 2014, and both
Wellington and G.M. voluntarily dismissed the Lake County cases without prejudice on
December 11, 2014. See Resp. at 3, Exs. E, F; Mem. in Supp. at 2, Ex. 2. No rulings were made
with respect to class certification in either Lake County case. Resp. at 5, Ex. F.
Stealth’s opening brief fails to address (or even mention) the state class action litigation
in which it had been engaged since January 4, 2007, and consequently failed to cite or discuss
American Pipe & Construction Co. v. Utah, 414 U.S. 538 (1974), the Supreme Court’s seminal
precedent on class action tolling. In American Pipe, the Supreme Court held that “the
commencement of a class action suspends the applicable statute of limitations as to all asserted
members of the class who would have been parties had the suit been permitted to continue as a
class action.” Id. at 554. G.M. did not omit consideration of American Pipe from its response,
however, noting that the Seventh Circuit specifically applied this class action tolling principle in
a TCPA context in Sawyer v. Atlas Heating & Sheet Metal Works, Inc., 642 F.3d 560 (7th Cir.
2011), where the court explained that “[t]olling lasts from the day a class claim is asserted until
the day the suit is conclusively not a class action—which may be because the judge rules
adversely to the plaintiff, or because the plaintiff reads the handwriting on the wall and decides”
to voluntarily dismiss. Id. at 563. Accordingly, G.M. maintains that its claims were tolled with
the filing of the Wellington action some 81 days after the fax at issue was sent and therefore its
filing in this case is timely.
4
In its reply, Stealth argues that G.M. was never a member of the class in the Wellington
action, so the statute of limitations was not tolled. Reply at 2. Stealth cites the difference in
language on the bottom of the faxes attached to the Wellington Complaint and attached to
G.M.’s Complaint, id. Exs. A, B, and that the named plaintiff in the Wellington action received
its fax in February 2006 whereas G.M. received its fax in October 2006. Reply at 2. Stealth’s
assertion that because G.M. was not a member of the class, the Saywer and American Pipe cases
are inapposite is a nonstarter. The classes alleged in the two suits are identical and include
anyone who received unsolicited faxes advertising Stealth’s services over the course of the same
four-year period. The differing language on the faxes and differing date of receipt between the
named plaintiffs does not affect tolling; the initial suit tolls the statute of limitations for “all
asserted members who would have been parties” to that action. American Pipe, 414 U.S. 554
(emphasis added). The proposed class in Wellington was not limited by the specific language of
the fax or a narrow time frame of receipt. Rather, the proposed class included all persons who
received a faxed advertisement from Stealth within the four years prior to the filing of the suit.
See Resp. Ex. 2, ¶ 16. Thus, G.M. was included in the proposed class in the Wellington action,
and its claims were tolled from the filing of that lawsuit on January 4, 2007 through its dismissal
in December 2014. Because G.M. initiated this lawsuit in November 2014 prior to dismissal of
the Wellington action, the claims it asserts in this case are timely. The motion to dismiss based
on the statute of limitations is, therefore, denied.
II.
Conversion
With respect to the conversion claim, Stealth points to the split in the Northern District of
Illinois regarding conversion claims for junk faxes, compare R. Rudnick v. G.F. Protection, 2009
WL 112380, at *3-4 (N.D. Ill. 2009) (permitting conversion claim for junk fax despite minimal
5
loss due to “complete interference” with the chattel), with Stonecrafters, Inc. v. Foxfire Printing
& Packaging, Inc., 633 F. Supp. 2d 610, 613 (N.D. Ill. 2009) (dismissing junk fax conversion
claim because plaintiff’s damages “are minuscule to the point of nonexistent”), and asks the
Court to find that, under the doctrine of de minimis non curat lex (“the law does not concern
itself with trifles”), G.M.’s harm is too trivial to permit a claim for conversion. Reply at 3-4.
Stealth cites Section 222A of the Restatement (Second) of Torts, which Illinois follows
for conversion claims. See In re Thebus, 483 N.E.2d 1258, 1260 (Ill. 1985) (quoting Restatement
(Second) of Torts § 222A (1965)). According to § 222A of the Restatement, “Conversion is an
intentional exercise of dominion or control over a chattel which so seriously interferes with the
right of another to control it that the actor may justly be required to pay the other the full value of
the chattel.” This is of no help to Stealth, because it focuses the question of conversion on the
degree of control exercised rather than on the value of the property converted. As explained in R.
Rudnick,
Section 222A is referring to the degree of loss of the use of the
chattel, not to the chattel’s value. Id. (“...so seriously interferes
with the right of another to control it that the actor may justly be
required to pay the other the full value of the chattel.” Id.
(emphasis added). Section 222A does not require that the chattel
have some minimal value, but only that a conversion claim
requires such complete interference that full compensation for the
chattel is required. This is made clear in comment c of Section
222A, where the commentators distinguish between trespass to
chattels (which permits damages only in the amount of the
diminished value to the chattel) and conversion of chattels (which
requires full compensation for the chattel converted).
2009 WL 112380, at *3 (emphasis in original). Here, there was complete conversion of the
property at issue—the paper and ink fully and completely transformed from unused office
supplies in G.M.’s supply closet to a printed and delivered advertising for Stealth’s services, so
Stealth’s reliance on Section 222A appears quite misplaced. And although G.M., individually,
6
has suffered minimal financial injury due to the conversion, Illinois courts permit nominal
damages in conversion actions. 2 Id. at *4 (citing Ind. Hi–Rail Corp. v. Decatur Junction, 37 F.3d
363, 366 (7th Cir. 1994)). Thus, G.M. has adequately stated a claim for conversion upon which
relief can be granted. The motion to dismiss on this basis is denied as well.
Dated: December 21, 2015
John J. Tharp, Jr.
United States District Judge
2
A number of courts on the “de minimis requires dismissal” side of the conversion split
have reasoned that nominal damages are an insufficient basis upon which to permit a conversion
claim to proceed. See, e.g., G.M. Sign, Inc. v. Elm St. Chiropractic, Ltd., 871 F. Supp. 2d 763,
769 (N.D. Ill. 2012) (“[T]here is a critical distinction between the concept of nominal damages
and the doctrine of de minimis non curat lex. An award of nominal damages presupposes a
violation of sufficient gravity to merit a judgment, even if significant damages cannot be
proved.” (internal quotations omitted)). Black’s Law Dictionary, however, defines “nominal
damages” as a “trifling sum awarded when a legal injury is suffered but there is no substantial
loss or injury to be compensated.” Nominal Damages, Black’s Law Dictionary (10th ed. 2014).
That is exactly the case here; thus, the provision of nominal damages is a permissible basis upon
which G.M.’s individual conversion claim may proceed.
7
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?