Helping Hand Caregivers, Ltd. v. Darden Restaurants, Inc. et al
Filing
30
MEMORANDUM Opinion and Order. Signed by the Honorable Manish S. Shah on 5/14/2015. Mailed notice(ep, )
UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
HELPING HAND CAREGIVERS, LTD.,
Plaintiff,
No. 14 CV 10127
v.
DARDEN RESTAURANTS, INC., et al.,
Judge Manish S. Shah
Defendants.
MEMORANDUM OPINION AND ORDER
This is a “junk fax” case brought under the federal Telephone Consumer
Protection Act. Plaintiff claims a health consultant and an Italian restaurant chain
faxed it an unsolicited advertisement, thereby causing it damage. Plaintiff further
claims that it was treated “unfairly,” as proscribed by the Illinois Consumer Fraud
and Deceptive Business Practices Act.
The restaurant defendant has moved to dismiss the two-count complaint for
failure to state a claim. For the following reasons, the motion is granted in-part and
denied in-part.
I.
Legal Standard
“A motion under Rule 12(b)(6) tests whether the complaint states a claim on
which relief may be granted.” Richards v. Mitcheff, 696 F.3d 635, 637 (7th Cir.
2012). Under Rule 8(a)(2), a complaint must include “a short and plain statement of
the claim showing that the pleader is entitled to relief.” Fed. R. Civ. P. 8(a)(2). The
short and plain statement under Rule 8(a)(2) must “give the defendant fair notice of
what the claim is and the grounds upon which it rests.” Bell Atlantic Corp. v.
Twombly, 550 U.S. 544, 555 (2007) (quotation omitted). In reviewing the sufficiency
of a complaint, a court accepts the well-pleaded facts as true. Alam v. Miller
Brewing Co., 709 F.3d 662, 665–66 (7th Cir. 2013).
II.
Background
On October 31, 2014, plaintiff, Helping Hand Caregivers, received an
unsolicited one-page fax promoting a free seminar offered by Social Wellness—the
business name of defendant Mid Wilshire Consulting, Inc. [1] ¶¶ 10, 15, 16; [1-1].
The fax featured the logos of both Social Wellness and Olive Garden, a national
restaurant chain. [1-1]. Defendant Darden Restaurants, Inc. owns Olive Garden. [1]
¶ 16.
The invitation stated that “Social Wellness is teaming up with Olive Garden
to help jump start your employees towards a healthier lifestyle.” [1-1]. It offered a
“fun 30-45 minute Wellness Presentation on Stress & Nutrition.” Id. The fax offered
a “complimentary catered lunch from Olive Garden,” including “fresh salad, warm
breadsticks, and our soup of the day—utensils included.” Id. Those wishing to
participate in the program were instructed to contact only Social Wellness. Id. The
health company’s contact information alone was displayed on the page. Id.
On December 17, 2014, plaintiff filed a two-count complaint against Darden,
Mid Wilshire, an individual named Brian Kang, and John Does 1-12. [1]. In Count I,
plaintiff alleges these defendants collectively violated the Telephone Consumer
Protection Act by (1) sending it an advertisement by fax without first obtaining
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plaintiff’s prior express invitation, (2) not providing a clear and conspicuous opt-out
notice, and (3) not indicating it would comply with any opt-out request within 30
days. Id. ¶¶ 45–47. In Count II, plaintiff alleges that sending the fax violated the
unfairness predicate of the Illinois Consumer Fraud and Deceptive Business
Practices Act. Id. ¶ 56. Plaintiff claims it was damaged by being forced to incur the
cost of defendants’ advertising, by losing paper, toner, use of its fax machine, and
use of its time. Id. ¶¶ 52, 58. Plaintiff seeks to represent a class of at least 39
individuals who also received the fax. Id. ¶¶ 26–34.
Darden has moved under Federal Rule of Civil Procedure 12(b)(6) to dismiss
the complaint for failure to state a claim.
III.
Analysis
A.
Count I – Telephone Consumer Protection Act
The TCPA prohibits the “use [of] any telephone facsimile machine, computer,
or other device to send, to a telephone facsimile machine, an unsolicited
advertisement . . . .” 47 U.S.C. § 227(b)(1)(C). The statute defines “unsolicited
advertisement” as “any material advertising the commercial availability or quality
of any property, goods, or services which is transmitted to any person without that
person’s prior express invitation or permission, in writing or otherwise.” Id.
§ 227(a)(5). The Federal Communications Commission has interpreted this
statutory definition to include “facsimile messages that promote goods or services
even at no cost, such as free magazine subscriptions, catalogs, or free consultations
or seminars,” because “[i]n many instances, ‘free’ seminars serve as a pretext to
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advertise commercial products and services.” In the Matter of Rules and Regulations
Implementing the Telephone Consumer Protection Act of 1991, 21 FCC Rcd. 3787,
3814 (2006).
While the Seventh Circuit has not yet addressed the issue, the Eleventh
Circuit recently held that, in addition to the person who physically sends a fax, “a
person whose services are advertised in an unsolicited fax transmission, and on
whose behalf the fax is transmitted, may be held liable directly under the TCPA’s
ban on the sending of junk faxes.” Palm Beach Golf Center-Boca, Inc. v. Sarris, 781
F.3d 1245, 1254 (11th Cir. 2015). This interpretation is consistent with the statute’s
text and the FCC’s interpretation of it, and I apply the broad meaning of “sender”
here. See id. at 1256–57; see also 47 C.F.R. § 64.1200(f)(10) (“The term sender . . .
means the person or entity on whose behalf a facsimile unsolicited advertisement is
sent or whose goods or services are advertised or promoted in the unsolicited
advertisement.”).
Darden says Count I should be dismissed because plaintiff “fails entirely to
allege facts demonstrating that Darden was the sender of the fax.” [22] at 6. I
disagree. First, the complaint alleges several times that “Defendants,” which is
defined to include Darden, sent the fax to plaintiff. See [1] ¶¶ 2, 20, 45. Citing
Robinson v. Morgan Stanley, 2007 WL 2815839, at *11 (N.D. Ill. Sept. 24, 2007),
Darden argues that plaintiff had to “separately state each Defendant’s alleged
participation in sending the facsimile to attach liability to a defendant as a sender.”
[28] at 3. That case is inapposite, however, because it dealt with the heightened
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pleading standards of Rule 9(b). Rule 8(a) alone governs this case, and plaintiff’s
“Defendants” allegation suffices to let Darden know plaintiff claims it sent the fax.
Second, the complaint alleges that “it is not clear whether any entities or
persons other than Darden, Social Wellness, and Kang actively participated in the
transmission
of
the
subject
fax
advertisements,
or
benefitted
from
the
transmissions.” Id. ¶ 12 (emphasis added). In other words, plaintiff alleges that
Darden actively participated in, and benefitted from, the fax’s transmission.
Third, the face of the fax supports the inference that it was sent by or on
behalf of Darden, because it bears the Olive Garden logo, says “Social Wellness is
teaming up with Olive Garden,” says “We’re bringing healthy back,” speaks of “our
soup of the day,” and offers a free lunch from Olive Garden. [1-1] (emphasis added).
Darden argues the fax was clearly not sent by Darden because it came from Social
Wellness’s fax number and directs reservations to be made with Social Wellness and
not with Olive Garden. These allegations, however, do not preclude the plausible
possibility that the fax was sent on behalf of Darden, albeit by Social Wellness
physically.
In sum, under Rule 8(a), plaintiff need not plead the precise details of the
alleged relationship between Social Wellness and Olive Garden. The fax and
complaint allegations sufficiently support the plausible claim that Olive Garden
was a “sender” of the fax in question. 47 C.F.R. § 64.1200(f)(10). 1
Darden points to a cease-and-desist letter it sent to Social Wellness regarding the use of
its name and logo. [22] at 8 n. 2. Darden also notes that Kang sent correspondence to
plaintiff’s counsel stating that Darden and Olive Garden had nothing to do with the fax in
this case. [28] at 1-2. These materials are outside the pleadings and may not otherwise be
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Darden’s second reason for dismissing Count I is that the fax in question does
not constitute an unsolicited advertisement under the TCPA. More specifically,
Darden argues that rather than “promote any goods or services of either Social
Wellness or Olive Garden,” the fax in question was “merely an invitation to attend
an informational session on wellness in the workplace . . . .” [22] at 8. Again, I
disagree. The fax in this case can be read as communicating “the commercial
availability or quality of” Darden’s “property, goods, or services.” 47 U.S.C.
§ 227(a)(5). First, the fax makes plain that Olive Garden has available for sale
“fresh salad, warm breadsticks, and [a] soup of the day . . .” [1-1]. Second, a
reasonable inference from the fax as a whole is that eating Olive Garden is
consistent with “a healthier lifestyle”—after all, it is the food that Social Wellness
has “team[ed] up” with to serve during a “Wellness Presentation on Stress &
Nutrition.” This all speaks to the quality of Darden’s goods. And it makes no
difference, furthermore, that the fax says nothing about charging for Olive Garden’s
food—“In many instances, ‘free’ seminars serve as a pretext to advertise commercial
products and services.” 21 FCC Rcd. at 3814. It is plausible that an employer
attending this “Lunch n’ Learn” might respond to what she learns by ordering Olive
Garden for her office in an effort to “jump start [her] employees towards a healthier
lifestyle.” [1-1].
considered on a motion under Rule 12(b)(6). To the extent Darden claims plaintiff’s counsel
is maintaining this suit in bad faith, that is an issue more appropriately addressed under
Rule 11.
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Darden notes that in several cases cited by plaintiff, in which there are
seminars hosted at restaurants, there are “no allegations” of the restaurants being
liable. See Physicians Healthsource, Inc. v. Stryker Sales Corp., 2014 WL 7109630
(W.D. Mich. Dec. 12, 2014) (Jeff Ruby’s Steakhouse); Physicians Healthsource, Inc.
v. Boehringer Ingelheim Pharms., Inc., 2015 WL 144728 (D. Conn. Jan. 12, 2015)
(McCormick & Schmick). But the mere fact that the plaintiffs in those cases chose
not to name the restaurants as defendants in no way supports the argument that a
restaurant that has “teamed up” with a company to send faxes, cannot be held liable
under the TCPA.
Darden notes a concern raised by the court in Cin-Q Auto, Inc. v. Buccaneers
Limited Partnership—that concluding that an entity is necessarily a “sender” under
the TCPA merely because their goods or services appear as advertised in a fax,
would give rise to “sabotage liability.” 2014 WL 7224943, at *6 (M.D. Fla. Dec. 17,
2014). In other words, “it would allow a rabid Tampa Bay Buccaneers fan . . . to
trigger per se liability for the organization under the TCPA by gratuitously, and
without directive from or notice to the organization, promoting season ticket sales
via fax.” Id. But that is not this case. Olive Garden’s food does not “merely appear”
in the fax in question. Among other things, the fax states that Social Wellness and
Olive Garden are “teaming up” and describes the soup of the day as “our[s].”
Accordingly, the fax here can reasonably be taken as having been sent on behalf of
both Social Wellness and Olive Garden.
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To be sure, a rogue person could cause an entity to be sued—and have the
case survive a motion to dismiss—by sending a fax he made appear to have been
sent by, or on behalf of, the entity. But, to the extent the proof required to clear the
air is not contained or referenced in the pleadings, the possibility of a frame up is
not a reason to dismiss the case on the pleadings.
On Count I, Darden’s motion to dismiss is denied.
B.
Count II – Illinois Consumer Fraud
To state a claim under the Illinois Consumer Fraud and Deceptive Business
Practices Act (815 ILCS 505/1 et seq.), a plaintiff must allege “(1) a deceptive act or
practice by the defendant, (2) the defendant’s intent that the plaintiff rely on the
deception, (3) the occurrence of the deception in the course of conduct involving
trade or commerce, and (4) actual damage to the plaintiff (5) proximately caused by
the deception.” Oliveira v. Amoco Oil Co., 201 Ill. 2d 134, 149 (Ill. 2002). Recovery
under the Consumer Fraud Act is available for actions that are “unfair as well as
deceptive.” Robinson v. Toyota Motor Credit Corp., 201 Ill. 2d 403, 417 (Ill. 2002).
Here, plaintiff alleges only that Darden’s actions were unfair. [1] ¶¶ 56–57.
To determine whether an accused practice is unfair under the Act, Illinois
courts consider “(1) whether the practice offends public policy; (2) whether it is
immoral unethical, oppressive, or unscrupulous; [and] (3) whether it causes
substantial injury to consumers.” Robinson, 201 Ill. 2d at 417–18 (citing F.T.C. v.
Sperry & Hutchinson Co., 405 U.S. 233, 244 n. 5 (1972)). “All three criteria do not
need to be satisfied to support a finding of unfairness,” but rather “[a] practice may
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be unfair because of the degree to which it meets one of the criteria or because to a
lesser extent it meets all three.” Id.
In this case, the first factor weighs in favor of plaintiff because “there is little
dispute that the alleged practice of sending unsolicited fax advertisements offends
public policy.” Mussat v. Power Liens, LLC, 2014 WL 3610991, at *3 (N.D. Ill. July
21, 2014) (collecting cases).
Courts disagree, by contrast, on whether the practice alleged in this case
satisfies the second and third Robinson prongs. Compare Mussat, 2014 WL 3610991
at *3 (finding allegations related to unsolicited fax transmission did not satisfy
Consumer Fraud Act’s second and third unfairness considerations); Paldo Sign &
Display Co. v. Topsail Sportswear, Inc., 2010 WL 276701, at *2–4 (N.D. Ill. Jan. 15,
2010) (same); G.M. Sign, Inc. v. Stergo, 681 F.Supp.2d 929, 935–37 (N.D. Ill. 2009)
(same); Stonecrafters, Inc. v. Foxfire Printing & Packaging, Inc., 633 F.Supp.2d 610,
615–17 (N.D. Ill. 2009) (same); Rossario’s Fine Jewelry, Inc. v. Paddock Publ’ns, 443
F.Supp.2d 976, 978–79 (N.D. Ill. 2006) (same), with Brodsky v. HumanaDental Ins.
Co., 2011 WL 529302, at *9 (N.D. Ill. Feb. 8, 2011) (finding allegations related to
unsolicited
fax
transmission
satisfied
Consumer
Fraud
Act’s
pleading
requirements); Green v. Anthony Clark Int’l Ins. Brokers, Ltd., 2009 WL 2515594, at
*4–5 (N.D. Ill. Aug. 17, 2009) (same); R. Rudnick & Co. v. G.F. Protection, Inc., 2009
WL 112380, at *2 (N.D. Ill. Jan. 15, 2009) (same); Centerline Equip. Corp. v. Banner
Personnel Serv., Inc., 545 F.Supp.2d 768, 779–81 (N.D. Ill. 2008) (same).
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I am persuaded by the courts that have found these allegations to be
insufficient to state an unfairness claim. As relates to the second prong, I agree that
“one unsolicited fax does not rise to the level of immoral, unethical, oppressive, or
unscrupulous [behavior] as contemplated by the [Act].” Mussat, 2014 WL 3610991
at *3.
As for the third prong, plaintiff alleges Darden caused it and the class
members to lose “paper, toner, ink, use of their facsimile machines, and use of their
valuable time.” [1] ¶ 58. Plaintiff acknowledges, correctly, that the one-page fax it
received did not cause it “substantial injury.” [27] at 13. Plaintiff argues, instead,
that the “aggregated injuries to Plaintiff and the putative class” add up to a
substantial injury.
The only allegations about the size of the class are that “[o]n information and
belief, the Class consists of more than thirty-nine people . . . .” [1] ¶ 29. Forty people
receiving a one-page fax does not amount to a “substantial injury.” Nor is plaintiff
entitled to a reading of its allegations so liberal so as to presume a class size large
enough to transform an insubstantial injury into a substantial one. See also
Stonecrafters, 633 F.Supp.2d at 617 (“[A] thousand people suffering damage in the
amount of a couple of pennies . . . only amounts to an aggregate harm of $20. The
class would have to consist of 5,000 people before the alleged harm plausibly
reaches even $100, although there is no indication that the class would be so
large.”).
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Because two of the three Robinson factors cut strongly in Darden’s favor,
defendants’ alleged conduct was not “unfair” under the Consumer Fraud Act, and
plaintiff has failed to state a claim.
On Count II, Darden’s motion to dismiss is granted.
IV.
Conclusion
Darden Restaurants’ motion to dismiss [21] is granted in-part and denied in-
part. Count II is dismissed without prejudice. Count I remains pending.
ENTER:
___________________________
Manish S. Shah
United States District Judge
Date: 5/14/15
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