Fox v. Time, Inc.
Filing
166
OPINION and ORDER Granting defendant's motion for summary judgment 119 , 123 ; Denying plaintiff's MOTION for Summary Judgment 126 , 128 and Denying defendant's MOTION to Stay Case/for Certification 156 . Signed by District Judge George Caram Steeh. (MBea)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MICHIGAN
SOUTHERN DIVISION
ROSE COULTER-OWENS, individually and
on behalf of all others similarly situated,
Plaintiff,
CASE NO. 12-CV-14390
HONORABLE GEORGE CARAM STEEH
v.
TIME, INC., a Delaware Corporation,
Defendant.
/
OPINION AND ORDER GRANTING DEFENDANT’S MOTION FOR
SUMMARY JUDGMENT (DOCS. #119, 123), DENYING PLAINTIFF’S
MOTION FOR SUMMARY JUDGMENT (DOCS. #126, 128) AND DENYING
DEFENDANT’S MOTION TO STAY/FOR CERTIFICATION (DOC. #156)
This matter is before the court on the parties’ cross-motions for summary judgment
and the defendant’s motion to stay/for certification to the Michigan Supreme Court. The
court held oral argument on the motions on December 15, 2015. For the reasons that
follow, defendant’s motion for summary judgment will be granted, plaintiff’s motion for
summary judgment will be denied, and defendant’s motion to stay/for certification will be
denied.
I. BACKGROUND
This action was filed as a putative class action under Michigan’s Video Rental
Privacy Act (“VRPA”), Mich. Comp. Laws §§ 445.1711, et seq. Plaintiff alleges that
defendant improperly disclosed the private information of people who subscribed to
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defendant’s magazines, TIME, Fortune, and Real Simple, through third-party websites. In
addition, plaintiff’s complaint alleges unjust enrichment under Michigan law.
The court certified the following class as it relates to the VRPA claim, only:
All Michigan residents who between March 31, 2009 and November 15, 2013
purchased a subscription to TIME, Fortune, or Real Simple magazines
through any website other than Time.com, Fortune.com, and
RealSimple.com.
See (Doc. #117 at 22). Plaintiff is proceeding on an individual basis on the unjust
enrichment claim.
As explained in the court’s certification order, plaintiff alleges that Michigan
consumers who purchased the magazines described above through defendant’s third-party
agents on the Internet, such as www.magazines.com (as opposed to having purchased the
magazines directly through defendant), had their “record or information concerning the
purchase” unlawfully disclosed to two third parties—Wiland and Axciom—in violation of the
VRPA. Rather than repeat the entirety of the facts, the court incorporates by reference the
background facts stated in the order certifying the class. (Doc. #117 at 1–6). The court
explains the facts as necessary when discussing the parties’ arguments below.
II. CROSS-MOTIONS FOR SUMMARY JUDGMENT
A. Legal Standard
Federal Rule of Civil Procedure 56(c) empowers the court to render summary
judgment "forthwith if the pleadings, depositions, answers to interrogatories and admissions
on file, together with the affidavits, if any, show that there is no genuine issue as to any
material fact and that the moving party is entitled to judgment as a matter of law." See
Redding v. St. Eward, 241 F.3d 530, 532 (6th Cir. 2001). The Supreme Court has affirmed
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the court's use of summary judgment as an integral part of the fair and efficient
administration of justice. The procedure is not a disfavored procedural shortcut. Celotex
Corp. v. Catrett, 477 U.S. 317, 327 (1986); see also Cox v. Kentucky Dep’t of Transp., 53
F.3d 146, 149 (6th Cir. 1995).
The standard for determining whether summary judgment is appropriate is "'whether
the evidence presents a sufficient disagreement to require submission to a jury or whether
it is so one-sided that one party must prevail as a matter of law.'" Amway Distrib. Benefits
Ass’n v. Northfield Ins. Co., 323 F.3d 386, 390 (6th Cir. 2003) (quoting Anderson v. Liberty
Lobby, Inc., 477 U.S. 242, 251-52 (1986)). The evidence and all reasonable inferences
must be construed in the light most favorable to the non-moving party. Matsushita Elec.
Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986); Redding, 241 F.3d at 532
(6th Cir. 2001). "[T]he mere existence of some alleged factual dispute between the parties
will not defeat an otherwise properly supported motion for summary judgment; the
requirement is that there be no genuine issue of material fact." Anderson, 477 U.S. at 24748 (emphasis in original); see also Nat’l Satellite Sports, Inc. v. Eliadis, Inc., 253 F.3d 900,
907 (6th Cir. 2001).
If the movant establishes by use of the material specified in Rule 56(c) that there is
no genuine issue of material fact and that it is entitled to judgment as a matter of law, the
opposing party must come forward with "specific facts showing that there is a genuine issue
for trial." First Nat'l Bank v. Cities Serv. Co., 391 U.S. 253, 270 (1968); see also McLean
v. 988011 Ontario, Ltd., 224 F.3d 797, 800 (6th Cir. 2000). Mere allegations or denials in
the non-movant's pleadings will not meet this burden, nor will a mere scintilla of evidence
supporting the non-moving party. Anderson, 477 U.S. at 248, 252. Rather, there must be
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evidence from which a jury could reasonably find for the non-movant. McLean, 224 F.3d
at 800 (citing Anderson, 477 U.S. at 252).
B. The VRPA Claim
One disputed issue central to resolving the summary judgement motions is whether
the magazine subscriptions purchased by plaintiff and the class members constitute an “at
retail” purchase under the VRPA. The VRPA provides, in relevant part:
Sec. 2. Except as provided in section 3 or as otherwise provided by law, a
person, or an employee or an agent of the person, engaged in the business
of selling at retail, renting, or lending books or other written materials . . . ,
shall not disclose to any person, other than the customer, a record or
information concerning the purchase, lease, rental, or borrowing of those
materials by a customer that indicates the identity of the customer.
Mich. Comp. Laws § 445.1712 (emphasis added) (internal footnote omitted).
Defendant argues that none of the proposed class members, including plaintiff,
purchased magazines directly from defendant, and, thus, did not purchase the magazines
“at retail.” Indeed, the class is defined as those persons who, for a discrete period,
purchased magazines from third-party websites. Thus, defendant argues that the VRPA
is inapplicable to this action.
Plaintiff responds that it does not matter whether the magazines were purchased
directly from defendant. All that matters, according to plaintiff, is that defendant is indeed
engaged in the business of “selling at retail . . . written materials.” In other words, plaintiff
argues that there need not be a direct sale from defendant to a customer for the sale to be
considered “at retail” under the VRPA, i.e. a retailer-customer relationship is not necessary.
Because defendant sells magazines to customers, albeit not to the plaintiff and the class
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members, plaintiff argues that defendant is in the business of selling magazines “at retail”
and subject to the restrictions of the VRPA. Plaintiff’s reading of the statute is incorrect.
This court is not the first to address the issue. Another judge in this district, Judge
Thomas Ludington, considered the question in Kinder v. Meredith Corporation, No. 14-cv11284, 2014 WL 4209575 (E.D. Mich. July 27, 2015). In Kinder, the plaintiff brought a
putative class action suit against the defendant magazine publisher, Meredith Corporation
(“Meredith”), alleging that Meredith disclosed her personal information to third-parties in
violation of the VRPA. Id. at *1. Meredith filed a motion to dismiss the complaint arguing,
in part, that the plaintiff had not established that the magazine subscriptions were sold at
retail by Meredith because the plaintiff had not alleged how she subscribed to the
Meredith’s publications. Id. at *4–*5. Rather, the plaintiff merely alleged in the complaint
that she purchased written materials “directly from” Meredith. Id. at *5. Given plaintiff’s
allegations, and the requirement on a motion under Rule 12(b)(6) of the Federal Rules of
Civil Procedure to take the plaintiff’s well-pleaded allegations as true, the Kinder court
rejected Meredith’s argument that the plaintiff had not established that she purchased
magazines directly from Meredith. Id. at *6. In so doing, Judge Ludington analyzed the
term “at retail” in the statute in detail.
In analyzing the term “at retail,” Judge Ludington reasoned:
As Meredith correctly contends, “at retail” is not defined in the statute, and
therefore it should receive “its ordinary and natural meaning.” Ltd., Inc. v.
C.I.R., 286 F.3d 324, 332 (6th Cir. 2002). The Oxford English Dictionary
defines “retail” as “[t]he action or business of selling goods in relatively small
quantities for use or consumption rather than for resale.” Therefore, if Kinder
had purchased her magazine subscription through a third-party, rather than
directly from Meredith, she would not have bought them at retail.
Accordingly, Meredith argues, because Kinder has not explicitly denied
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purchasing her magazine subscription from a third-party, she has failed to
allege that she purchased the subscription “at retail.”
Meredith’s contention is without merit. Although Kinder did not provide the
specific method of subscription, she alleged that she “purchased written
materials directly from Meredith.” Compl. ¶ 63, 64. . . Here, Kinder’s
allegations meet Iqbal’s requirements: she alleges that she purchased the
subscription directly from Meredith, i.e., she did not purchase the subscription
from any other entity (such as third-parties). Thus, although Kinder did not
provide the exact method she used to subscribe, she did claim that she
purchased them directly from Meredith.
Id.
Here, unlike the plaintiff in Kinder, the entire class purchased subscriptions to
defendant’s magazines through third-party websites. None of the purchases were directly
from defendant. The court agrees with Judge Ludington’s reasoning that, under the
ordinary and plain reading of the term “at retail,” magazine subscription purchases from a
third-party, such as the purchases involved in this case, are not encompassed by the
statute. The statute covers disclosures arising out of a retailer-customer relationship.
Reading the phrase “at retail” in the context of the entire statute supports the
conclusion that “at retail” does not encompass the magazine purchases at issue in this
case. As explained, the statute forbids a person “engaged in the business of selling at
retail . . . written materials” to disclose a “record or information concerning the purchase”
if that disclosure is “to any other person, other than the customer.” Mich. Comp. Laws §
445.1712 (emphasis added). “It is a fundamental canon of statutory construction that
words of a statute must be read in their context and with a view to their place in the overall
statutory scheme.” Nat’l Ass’n of Home Builders v. Defenders of Wildlife, 551 U.S. 644,
666 (2007) (citation and internal quotation marks omitted). When reading the term “at
retail” in the context of the entire statute, it is evident that purchases by third-parties do not
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fall within the statute’s reach. The statute permits disclosure of a “record or information
concerning the purchase” if that disclosure is to the “customer.” The Oxford English
Dictionary defines “customer” as “[o]ne who frequents any place of sale for the sake of
purchasing.” Therefore, the statute contemplates a relationship created when there is a
sale “at retail”—i.e., selling goods for use not for resale—to a “customer”—i.e., the person
purchasing the magazine from the seller. In this case, the sale was not between defendant
(the retailer) and plaintiff/the proposed class members (the customer). Rather, it was a
sale from the retailer to a reseller, then to the plaintiff/proposed class members. Therefore,
it was not a sale “at retail” as contemplated by the VRPA.
The court’s interpretation also makes sense when reading Section 2 of the VRPA
in context with Section 3. Section 3 of the VRPA provides certain exceptions or “allowable
circumstances” of a disclosure of the customer’s “record or information.” Mich. Comp.
Laws § 445.1713. For example, one allowable circumstance for disclosure is when the
customer consents in writing to the disclosure. Id. § 445.1712(a). For a “customer” to
consent in writing to the disclosure, the statute contemplates a retailer-customer
relationship. Here, that relationship is not between plaintiff and defendant, it is between
plaintiff and the third-party reseller. In addition, disclosure is permitted if it is for “the
exclusive purpose of marketing goods and services directly to the consumer” and the
customer is informed in writing of the ability to opt-out of such disclosures. Id. 445.1712(d).
Again, the plain reading of this portion of the statute means that the customer is informed
in writing by the person selling the magazine—here, the third-parties, not defendant (i.e.,
the “point of sale”)—of the ability to opt-out. In other words, a retailer-customer relationship
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is contemplated and the protections arise out of the transaction the retailer is then
“engaged” in.
The court’s interpretation of the statute also makes common sense. It is axiomatic
that “[s]tatutes, regulations, and rules of the court must be read in a ‘straightforward’ and
‘commonsense’ manner.” In re Laurain, 113 F.3d 595, 597 (6th Cir. 1997) (citing Bartlik
v. United States Dep’t of Labor, 62 F.3d 163, 165–66 (6th Cir. 1995) (en banc)). See also
United States v. Miami University, 294 F.3d 797, 812 (6th Cir. 2002) (“‘We read statutes
and regulations with an eye to their straightforward and commonsense meanings.’”). A
common sense reading of the VRPA would protect customers from unauthorized
disclosures by their retailer. When a magazine is purchased, the information that forms the
“record” under the VRPA is provided to the seller. It is the seller who is in a position to
disclose the customer’s record in the first instance. It is this disclosure that the VRPA
regulates. In this case, the seller is not the defendant; the sellers are third-party resellers.
Thus, to the extent there were any disclosures affecting plaintiff and the class members,
the VRPA only covers any disclosures made by the third-party resellers.
The court is also mindful that, “[t]o effectuate the intent of the Legislature, we
interpret every word, phrase, and clause in a statute to avoid rendering any portion of the
statute nugatory or surplusage.” Herald Co., Inc. v. Eastern Mich. Univ. Bd. of Regents,
719 N.W.2d 19, 23–24 (Mich. 2006) (footnote omitted). Here, plaintiff’s reading of the
statute would render the portion of the statute “other than the customer” surplusage
because, under plaintiff’s reading, there is no need for a retailer-customer relationship.
Such a reading offends the rule of statutory construction that words and phrases shall be
read to avoid rendering any portion of the statute surplusage. See Robinson v. City of
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Lansing, 782 N.W.2d 171, 181 (Mich. 2010) (“[S]tatutory provisions should not be
construed in a manner that renders language within those provisions meaningless[.]”)
Plaintiff contends that, “even when [defendant] uses subscription agents, it is
undisputed that [defendant] is still the actual entity that sells magazine subscriptions directly
to customers ‘at retail.’” (Pl’s. Resp. Br. at 20–21). Plaintiff points to the deposition
testimony of Time’s Vice President of Marketing, Scott Breininger. Breininger testified at
his deposition that, instead of selling multiple subscriptions to resellers, who then resell the
subscription to customers such as plaintiff and the class members, the resellers first obtain
an order from a customer and then purchase the subscription from defendant. Thus,
plaintiff argues that defendant is still the entity that sells the magazine subscriptions to the
customers. Plaintiff’s argument fails.
Defendant has multiple “resale agreements” with third-parties, such as
Magazines.com. These resale agreements require the third-parties to sell subscriptions
to customers, while defendant simply delivers the subscriptions.
In these resale
agreements, each particular reseller agrees to “provide a toll free customer service
number” for purchasers of subscriptions. (Def’s. Mot. Ex. F, Resale Agreement between
defendant and Magazines.com). Moreover, the reseller acknowledges being the “retailer
and reseller of all magazine subscriptions.” (Id.). The agreements reflect that the thirdparty is the reseller of the magazines and the point of contact for customers. This is
different than a subscription agent who essentially serves as a middleman. The court
agrees with defendant that the fact that defendant did not first sell a packet of subscriptions
to third-party sellers for resale is a distinction without a difference. Defendant correctly
reasons “[t]hat third-party sellers sell the subscriptions first, and then (sometimes) remit
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payment to [defendant], as opposed to ‘buying’ subscriptions from [defendant] up-front and
re-selling them to subscribers, [which] does not change that the third-party seller is
transacting with the ‘customer’ ‘at retail.’” (Def’s. Resp. Br. at 9).
For these reasons, defendant is entitled to summary judgment on the VRPA claim.
C. The Unjust Enrichment Claim1
Defendant also seeks summary judgment on plaintiff’s unjust enrichment claim.
Plaintiff is proceeding on an individual basis, rather than on a classwide basis, on the unjust
enrichment claim. Defendant is entitled to summary judgment on this claim.
To succeed on an unjust enrichment claim under Michigan law, the plaintiff is
required to prove “(1) the receipt of a benefit by the other party from the complaining party
and (2) an inequity resulting to the complaining party because of the retention of the benefit
by the other party.” Karaus v. Bank of New York Mellon, 831 N.W.2d 897, 905 (Mich. Ct.
App. 2012). “‘One is not unjustly enriched . . . by retaining benefits involuntarily acquired
which law and equity give him absolutely without any obligation on his part to make
restitution.’” Id. at 23 (citations omitted). In other words, “‘[n]o person is unjustly enriched
unless the retention of the benefit would be unjust.’” Tkachik v. Mandeville, 790 N.W.2d
260, 266 (Mich. 2010) (quoting Buell v. Orion State Bank, 41 N.W.2d 472 (Mich. 1950)).
Defendant argues that plaintiff did not confer a benefit directly to defendant because
she purchased magazines from third-party resellers, not from defendant. Moreover,
1
This claim is brought as an alternative claim to plaintiff’s breach of contract
claim. It is undisputed that the parties do not have a contractual relationship. Thus,
plaintiff cannot proceed on a breach of contract theory.
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defendant contends that the alleged detriment to plaintiff—a portion of the magazine price
going towards ensuring confidentiality—is not supported by any evidence.
Plaintiff opposes summary judgment on the unjust enrichment claim in a footnote
of her brief. See (Pl’s Resp. Br. at 3–4 n.2). First, plaintiff says that it is undisputed that
she paid defendant for her magazine subscriptions through a subscription agent. Second,
plaintiff argues that defendant profited off of its subscriber list revenue benefit to her
detriment.
Here, assuming that defendant received a benefit from plaintiff— (1) the discounted
purchase price of the magazines, which, eventually was paid to defendant from third-party
resellers, and (2) plaintiff’s personal reading information—plaintiff has not established that
defendant’s retention of the benefit would be unjust. Plaintiff’s theory is that retention of
the benefit is unjust because defendant violated the VRPA. However, as explained,
defendant is entitled to summary judgment on the VRPA claim. Thus, plaintiff has not
offered any evidence that establishes an unjust retention of benefits by the defendant.
Defendant is entitled to summary judgment on the unjust enrichment claim.
D. Article III Standing and Subject-Matter Jurisdiction
Although the court denied defendant’s motion to dismiss on the grounds that plaintiff
lacks Article III standing, defendant raises the issue again. Defendant argues that plaintiff
does not have Article III standing because the only injury alleged is a statutory injury under
the VRPA. The court sees no reason to revisit its prior ruling. For the reasons explained
in the court’s order denying defendant’s motion to dismiss, plaintiff has Article III standing.
Defendant also argues that the court lacks subject-matter jurisdiction because
Michigan law prohibits class actions for statutory damages where the statute at issue does
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not expressly authorize such suits. See Mich. Court Rule 3.501(A)(5) (“An action for a
penalty or minimum amount of recovery without regard to actual damages imposed or
authorized by statute may not be maintained as a class action unless the statute
specifically authorizes its recovery in a class action.”). Here, defendant contends that the
VRPA does not authorize class actions for statutory damages, and, therefore, the court
lacks subject-matter jurisdiction to proceed. The court disagrees.
Plaintiff’s action is brought under the Class Action Fairness Act of 2005 (“CAFA”),
28 U.S.C. § 1332(d). The Supreme Court addressed a similar issue in Shady Grove
Orthopedic Associates, P.A. v. Allstate Ins. Co., 559 U.S. 393 (2010). New York law,
similarly to Michigan, prohibits class actions in suits seeking penalties or statutory minimum
damages. Shady Grove, 559 U.S. at 396 (citation omitted). The Court held that the
Federal Rules of Civil Procedure, rather than New York law, applied because the New York
law prohibiting statutory-damage class actions was procedural in nature. Id. at 408–09.
The Court recognized that its holding may result in forum shopping. However, “[t]he short
of the matter is that a Federal Rule governing procedure is valid whether or not it alters the
outcome of the case in a way that induces forum shopping. To hold otherwise would be
to ‘disembowel either the Constitution’s grant of power over federal procedure’ or
Congress’s exercise of it.” Id. at 416 (citation omitted).
This case is no different than Shady Grove. The issue is the same: whether
Michigan’s court rule trumps application of the Federal Rules of Civil Procedure in this
specific instance. The Supreme Court has already decided the issue. Federal Rule of Civil
Procedure 23 governs class actions in federal court; MCR 3.501(A)(5) has no application
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in this case. Thus, defendant’s argument that the court lacks subject-matter jurisdiction is
without merit.
III. DEFENDANT’S MOTION TO STAY/FOR CERTIFICATION
Finally, defendant seeks an order staying this matter until the United States
Supreme Court issues its decision in Spokeo, Inc. v. Robins, 742 F.3d 409 (9th Cir. 2014),
cert. granted, 135 S.Ct. 1892 (2015) (No. 13-1339, OT 2015 Term). In Spokeo, which has
already been argued before the Court, the Court is considering whether a statutory injury
is sufficient to allege an injury-in-fact for purposes of Article III standing. The court sees
no reason to wait for the Supreme Court to issue an opinion in Spokeo given that there is
no certainty that Spokeo is going to have an impact on this case.
In addition, defendant seeks to certify certain questions regarding the interpretation
of the VRPA to the Michigan Supreme Court. Having addressed the statutory interpretation
questions above, defendant’s request is moot. Federal courts are fully equipped to address
state law matters, even when there is a dearth of state law authority. When a federal
district court applies Michigan substantive law in the absence of Michigan Supreme Court
precedent, the court must anticipate how the Michigan Supreme Court would decide the
particular issues presented. Berrington v. Wal-Mart Stores, Inc., 696 F.3d 604, 607–08 (6th
Cir. 2012) (citing Allstate Ins. Co. v. Thrifty Rent-A-Car Sys. Inc., 249 F.3d 450, 454 (6th
Cir. 2001)). The court’s analysis above does just that, applying Michigan’s statutory
interpretation principles. Thus, the court declines to certify any questions to the Michigan
Supreme Court.
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IV. CONCLUSION
For the reasons explained above, defendant’s motion for summary judgment is
GRANTED, plaintiff’s motion for summary judgment is DENIED, and defendant’s motion
to stay/for certification is DENIED. This case is DISMISSED.
IT IS SO ORDERED.
Dated: February 16, 2016
s/George Caram Steeh
GEORGE CARAM STEEH
UNITED STATES DISTRICT JUDGE
CERTIFICATE OF SERVICE
Copies of this Order were served upon attorneys of record on
February 16, 2016, by electronic and/or ordinary mail.
s/Marcia Beauchemin
Deputy Clerk
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