Jenkins v. National Grid USA et al

Filing 222

MEMORANDUM & ORDER granting in part and denying in part 159 Motion to Dismiss for Failure to State a Claim; granting in part and denying in part 160 Motion to Dismiss for Failure to State a Claim; denying 161 Motion to Dismiss; For the fo regoing reasons, Defendants' motion to dismiss the Second Amended Complaint for failure to state a claim, lack of subject matter jurisdiction, and lack of personal jurisdiction (Docket Entry 159, 160) is GRANTED IN PART and DENIED IN PART. Plai ntiffs shall re-file the Second Amended Complaint in accordance with the instructions set forth herein within fourteen (14) days of the date of this Memorandum and Order. Defendants' motion to dismiss or, in the alternative, to stay Count II of the Second Amended Complaint as to Jenkins (Docket Entry 161) is DENIED. So Ordered by Judge Joanna Seybert on 3/31/2017. C/ECF (Valle, Christine)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NEW YORK
-------------------------------------X
JARRETT JENKINS, EMMOT STEELE, and
FRANCES ROYAL, on behalf of
themselves and all others similarly
situated,
Plaintiffs,

MEMORANDUM & ORDER
15-CV-1219(JS)(GRB)

-against–
NATIONAL GRID USA, NATIONAL GRID
NORTH AMERICA INC., NATIONAL GRID
PLC, NATIONAL GRID USA SERVICE
COMPANY, INC., NATIONAL GRID
ELECTRIC SERVICES, LLC, BOSTON GAS
COMPANY, COLONIAL GAS COMPANY,
ESSEX GAS COMPANY, KEYSPAN
CORPORATION, KEYSPAN GAS EAST
CORPORATION, MASSACHUSETTS ELECTRIC
COMPANY, NANTUCKET ELECTRIC COMPANY,
NIAGARA MOHAWK HOLDINGS, INC.,
NIAGARA MOHAWK POWER CORPORATION,
THE BROOKLYN UNION GAS COMPANY, and
THE NARRAGANSETT ELECTRIC COMPANY,
Defendants.
-------------------------------------X
APPEARANCES
For Plaintiffs:
Daniel M. Hutchinson, Esq.
Lieff Cabraser Heimann & Bernstein LLP
275 Battery Street, 29th Floor
San Francisco, California 94111
Douglas Ian Cuthbertson, Esq.
Jonathan D. Selbin, Esq.
Michael Frederick Decker, Esq.
Lieff Cabraser Heimann & Bernstein LLP
250 Hudson Street, 8th Floor
New York, New York 10003
Joseph S. Tusa, Esq.
Tusa, P.C.
53345 Main Road, Suite 10-1
Southhold, New York 11971

For Defendants:

Richard H. Brown, Esq.
Day Pitney LLP
7 Times Square
New York, New York 10036
Anthony Joseph Marchetta, Esq.
Day Pitney LLP
1 Jefferson Road
Parsippany, New Jersey 07054

For Interested
Party Experian
Information
Solutions, Inc.:

Chris J. Lopata, Esq.
Jones Day
222 East 41st Street
New York, New York 10017

SEYBERT, District Judge:
In

this

putative

class

action,

Plaintiffs

Jarrett

Jenkins (“Jenkins”), Emmot Steele (Steele”) and Frances Royal
(“Royal” and collectively “Plaintiffs”) allege that Defendants
Niagara Mohawk Power Corporation, Keyspan Gas East Corporation,
the Brooklyn Union Gas Company and National Grid USA Service
Company,

Inc.

(“National

Grid

USA

Services”

and

collectively

“Defendants”)1 violated the Telephone Consumer Protection Act, 47

The Court previously dismissed the following twelve defendants
for lack of subject matter jurisdiction: (1) National Grid PLC;
(2) National Grid North America Inc.; (3) National Grid USA; (4)
Massachusetts Electric Company; (5) The Narragansett Electric
Company; (6) Boston Gas Company; (7) National Grid Electric
Services LLC; (8) Colonial Gas Company; (9) Essex Gas Company;
(10) Nantucket Electric Company; (11) Keyspan Corporation; and
(12) Niagara Mohawk Holdings, Inc. (collectively, the “Dismissed
Defendants”). (See March 2016 M&O, Docket Entry 152, at 15.)
The Court will address Plaintiffs’ inclusion of the Dismissed
Defendants in the Second Amended Complaint in greater detail
infra.
1

2

U.S.C. § 227, et seq. (the “TCPA”) and New York General Business
Law (“NY GBL”) § 399-p.
Currently pending before the Court are: (1) Defendants’
motion to dismiss the Second Amended Complaint for lack of subject
matter jurisdiction, lack of personal jurisdiction, and failure to
state a claim (Docket Entries 159, 160)2 and (2) Defendants’ motion
to dismiss or, in the alternative, to stay Count II of the Second
Amended Complaint as to Jenkins (Docket Entry 161).3

For the

following reasons, Defendants’ motion to dismiss for failure to
state a claim, lack of subject matter jurisdiction, and lack of

Defendants initially filed a sealed copy of their motion
(Docket Entry 159) and a public version of their motion with
redactions (Docket Entry 160) without asking for leave from this
Court. Although the parties have a confidentiality order in
place, (See Confi. Order, Docket Entry 132-1), they must seek
permission to file documents under seal before doing so. On
February 24, 2017, this Court directed Defendants to explain why
the motion and attached exhibits should remain sealed.
(Electronic Order, Feb. 24, 2017.) Defendants responded that,
with the exception of Exhibit A to the Brown Declaration (Docket
Entry 159-4), the motion could be unsealed. (Defs.’ Ltr.,
Docket Entry 212.) Accordingly, the motion was unsealed, and a
redacted version of Exhibit A to the Brown Declaration was filed
as Docket Entry 159-5. Although Docket Entries 159 and 160 are
essentially the same motion, the Court has included both entries
here to ensure that both motions are resolved. However, the
Court will refer to Docket Entry 159 as the operative motion.
2

As of January 2016, the undersigned’s Individual Practices
require that a party request a pre-motion conference before
moving to dismiss under Rule 12. See Individual Rule IV.G.
Despite Defendants’ failure to do so, the Court will consider
the motions. However, Defendants are directed to review this
Court’s rules before engaging in further motion practice.
3

3

personal jurisdiction (Docket Entries 159, 160) is GRANTED IN PART
and DENIED IN PART, and Defendants’ motion to dismiss or stay
Count II as to Jenkins (Docket Entry 161) is DENIED.
BACKGROUND
I.

Factual Background4
The Court assumes familiarity with the facts of this

case, which are detailed in this Court’s Order dated March 31,
2016.

(March 2016 Order at 3-5.)
Briefly,

National

Grid

PLC

(“National

Grid”)

is

a

utility company that provides gas and electricity to consumers in
the northeast United States.
¶¶ 21, 23.)5

(Sec. Am. Compl., Docket Entry 214,

The company has a complex corporate structure,

The facts alleged in the Second Amended Complaint are presumed
to be true for the purposes of this Memorandum and Order. Bell
Atl. Corp. v. Twombly, 550 U.S. 544, 572, 127 S. Ct. 1955, 1975,
167 L. Ed. 2d 929 (2007) (“[A] judge ruling on a defendant’s
motion to dismiss a complaint must accept as true all of the
factual allegations contained in the complaint.” (internal
quotation marks and citation omitted)).
4

Initially, Plaintiffs filed the Second Amended Complaint under
seal without asking for leave from this Court. (Sealed Sec. Am.
Compl., Docket Entry 158.) As discussed, permission from the
Court is required before filing any document under seal. See
supra note 2. On February 27, 2017, the Court directed
Plaintiffs to explain why the Second Amended Complaint, exhibits
and certain other documents should remain sealed. (Electronic
Order, Feb. 27, 2017.) Plaintiffs subsequently agreed to refile the Second Amended Complaint and exhibits with redactions
and did so on March 7, 2017. (Pls.’ Ltr., Docket Entry 210;
Pls.’ Sec. Ltr., Docket Entry 213.) The Court regards the
redacted Second Amended Complaint docketed at Docket Entry 214
as the operative complaint in this action.
5

4

including

several

subsidiaries.

holding

companies

and

numerous

regional

(See List of Subsidiaries, Sec. Am. Compl. Ex. 1,

Docket Entry 214-1.) Three of the Defendants--Niagara Mohawk Power
Corporation

(“Niagara

Mohawk”),

Keyspan

Gas

East

Corporation

("Keyspan East”) and the Brooklyn Union Gas Company (“Brooklyn
Union”)--are distributors of electricity and/or natural gas and
subsidiaries of National Grid.

(Sec. Am. Compl. ¶¶ 25-28.)

The

remaining Defendant, National Grid USA Service Company, Inc.,
“render[s] . . . services, to companies in the National Grid USA
holding

company

system,”

including,

inter

alia,

accounting,

customer services and property acquisition and management.
Am. Compl. ¶ 29.)
“retained
Niagara

certain
Mohawk,

(Sec.

For regulatory purposes, National Grid has
historical

Keyspan

legacy

East,

and

corporate
Brooklyn

names”
Union;

such

as

however,

National Grid is “the only name used for customer interaction.”
(Sec. Am. Compl. ¶ 21.)

In other words, “regardless of the

technical legal name of the company involved,” National Grid
operates as a “single utility company” and uses the National Grid
“name for all public-facing purposes—including marketing, billing,
and service matters.”
Plaintiffs

(Sec. Am. Compl. ¶ 21.)
allege

that

Defendants

and

their

agents

violated the TCPA by contacting customers via their cellular
telephone numbers using automated telephone dialing systems and
automated

or

prerecorded

voice
5

messages

without

their

prior

express consent. (Sec. Am. Compl. ¶ 1.) Plaintiffs further allege
that

Defendants

and

their

agents

called

New

York

customers’

residential and cellular telephone numbers and left prerecorded
messages that violated NY GBL § 399-p.
addition

to

calls

made

by

(Sec. Am. Compl. ¶ 2.)

Defendants

on

their

own

In

behalf,

Plaintiffs maintain that Defendants are vicariously liable for
violations of the TCPA and NY GBL § 399 by third parties hired by
Defendants.

(Sec. Am. Compl. ¶¶ 4, 6.)

Such agents included debt

collectors hired by Defendants to collect outstanding bills. (Sec.
Am. Compl. ¶¶ 7-8.)
II.

Procedural History
Plaintiff Jenkins filed the original complaint on March

9, 2015 against fourteen National Grid entities.
Entry 1.)

(Compl., Docket

Those entities moved to dismiss on April 30, 2015.

(First Mot., Docket Entry 80.)

While the motion was pending, the

parties agreed to allow Plaintiff to either oppose the motion or
file an Amended Complaint, and Plaintiff elected to file an Amended
Complaint on July 2, 2015.
Docket Entry 99.)

(Order, Docket Entry 97; Am. Compl.,

The Amended Complaint named sixteen National

Grid entities and added two Plaintiffs, Royal and Steele.
Am. Compl.)

(See,

On August 24, 2015, the National Grid entities moved

to dismiss the Amended Complaint pursuant to Federal Rules of Civil
Procedure 12(b)(1), 12(b)(2) and 12(b)(6).
Entry 135.)

(Sec. Mot., Docket

Additionally, they filed a motion to stay the case
6

pending a decision by the Federal Communications Commission on an
issue they deemed pertinent to the case.

(Mot. to Stay, Docket

Entry 141.)
A.

The Court’s Prior Order
On March 31, 2016, the Court granted the motion to

dismiss in part and denied it in part, and denied the motion to
stay.

(March 2016 Order at 26-27.)

The Court summarizes the

relevant determinations below.
First,

the

Court

dismissed,

without

prejudice,

the

claims against twelve of the sixteen National Grid entities (the
“Dismissed Defendants”).6
it

lacked

subject

(Id. at 2 n.1, 15.)

matter

jurisdiction

The Court held that

over

the

Dismissed

Defendants because Plaintiff failed to demonstrate an injury-infact as required by Article III of the Constitution.
11.)

(Id. at 10-

Specifically, the Court held that the Dismissed Defendants

“ha[d] no plausible connection to Plaintiffs’ alleged injuries”
because the injuries arose from the provision of utility services
in New York, and none of the Dismissed Defendants provided utility
services in New York.

(See id. at 11-12.)

The Court rejected

Plaintiffs’ arguments that the Dismissed Defendants were liable as
co-conspirators
subsidiaries.

6

or

as

parent

(Id. at 13-15.)

companies

of

National

Grid

Significantly, the Court declined

See supra note 1.
7

to grant Plaintiffs leave to re-plead subject matter jurisdiction
as to the Dismissed Defendants in any subsequent complaint.7
Second,
allegations

as

the

to

Court

the

addressed

remaining

the

sufficiency

Defendants--Niagara

of

the

Mohawk,

Keyspan East, Brooklyn Union, and National Grid USA Services.8

The

Court focused on the allegations in Count II of the Amended
Complaint, namely, that Defendants were liable for the conduct of
third party debt collectors.

The Court noted that although

Plaintiffs advanced a theory of direct liability, the TCPA “is
construed to incorporate common law agency principles of vicarious
liability.”

(Id. at 20-21 (quoting In re Joint Petition filed by

Dish Network, LLC, 28 F.C.C.R. 6574 (2013)).)
The

Court

then

examined

whether

the

allegations

demonstrated a principal-agent relationship between Defendants and
the

debt

collectors

and

found

that

“Plaintiffs

ha[d]

not

affirmatively shown a principal-agent[ ] relationship with the
debt collectors.”

(Id. at 21.)

Specifically, the Court held that

Nine of the sixteen National Grid entities named in the Amended
Complaint also moved to dismiss for lack of personal
jurisdiction. However, because the claims against those nine
entities were dismissed due to lack of subject matter
jurisdiction, the Court found the personal jurisdiction
arguments to be moot. (March 2016 Order at 15.)
7

Initially, Defendants argued that Plaintiffs’ Amended Complaint
“lumped” the entities together and failed to set forth specific
allegations against each Defendant. (March 2016 Order at 17.)
The Court disagreed. (Id. at 18-20.)
8

8

“there [was] no indication that Defendants had the power to give
interim instructions” to the debt collectors. (Id. at 22 (internal
quotation marks omitted).)

As a result, the Court dismissed Count

II without prejudice but granted to leave to amend.

(Id.)

The

Court directed that “[p]laintiffs should make clear [in their
Second Amended Complaint] whether or not Defendants could give
interim instructions to the debt collectors or otherwise exercise
the

type

of

relationships.”
B.

control

contemplated

in

principal-agency

(Id.)

The Second Amended Complaint
Plaintiffs filed their Second Amended Complaint on May

5, 2016, asserting four causes of action: (1) violations of the
TCPA,

specifically

47

U.S.C.

§

227(b)(1)(A),

on

behalf

of

Plaintiffs and a class of customers directly contacted by National
Grid (the “TCPA Direct-Dialed Class”); (2) violations of the TCPA,
specifically 47 U.S.C. § 227(b)(1)(A), on behalf of Plaintiffs and
a class of customers contacted by third parties (the “TCPA AgentDialed Class”); (3) violations of NY GBL § 399-p on behalf of
Plaintiffs and a class of New York customers directly contacted by
National Grid (the “GBL § 399-p Direct-Dialed Class”); and (4)
violations of NY GBL § 399-p on behalf of Plaintiffs and a class
of New York customers contacted by third-parties (the “GBL § 399-

9

p Agent-Dialed Class”).9

(Sec. Am. Compl. ¶¶ 118-182.)

For ease

of reference, the Court will refer to the claims as Count I, Count
II, Count III, and Count IV.

Although Counts I and III are broadly

similar to the First Amended Complaint, Plaintiffs added Count IV,
a vicarious liability claim for violations of NY GBL § 399-p.
(Sec. Am. Compl. ¶¶ 165-182.)

Of note, Plaintiffs included the

Dismissed Defendants in the Second Amended Complaint, which they
contend is necessary to preserve their appeal rights.

(Sec. Am.

Compl. at 1, 2 n.1.)
Pursuant

to

the

Court’s

Order,

the

Second

Amended

Complaint contains more detailed allegations related to Count II,
the TCPA vicarious liability claim. For example, Plaintiffs allege
that Defendants retained numerous third party debt collectors
during

the

relevant

class

periods,

and

that

Defendants

are

vicariously liable for violations of the TCPA by those debt
collectors based on three theories: (1) express or implied agency,
(2) apparent authority, and (3) ratification.10

(Sec. Am. Compl.

The sealed version of the Second Amended Complaint was filed on
May 5, 2016. However, as indicated above, the Court will treat
the redacted version of the Second Amended Complaint, filed at
Docket Entry 214, as the operative complaint. See supra note 5.
9

The Second Amended Complaint alleges that Defendants hired the
following debt collectors during the relevant class periods:
“(1) NCO Financial Services, Inc.; (2) Mercantile Adjustment
Bureau, LLC; (3) Allied Account Services; (4) Credit Protection
Association, L.P.; (5) Rochester Credit Center, Inc., d/b/a The
Credit Bureau/NACM New York; (6) Collecto, Inc. d/b/a EOS CCA;
(7) I.C. System, Inc.; (8) NRA Group a/k/a National Recovery
10

10

¶¶ 57-69.)

Plaintiffs allege that Defendants executed Collection

Agency Account Collection Agreements (the “Agreements”) with these
debt collectors which “provid[ed] that Defendants would exercise
control over their debt collectors’ collection activities.”
Am. Compl. ¶ 60.)

(Sec.

They further aver that the Agreements, which

include Scope of Work specifications (“Scope of Work”), “vest
Defendants with the power to provide interim instructions to their
debt collectors directing their debt collection conduct.”
Am. Compl. ¶ 61.)

(Sec.

Plaintiffs point to several provisions in the

Agreements and Scope of Work to support this theory, including
provisions that give Defendants the authority to determine which
accounts to assign to debt collectors, provisions that require
weekly progress and remittance reports, and provisions requiring
Defendants’ approval for certain decisions.11
¶ 62.)

Moreover,

the

Scope

of

Work

includes

requirements that debt collectors must meet.
¶ 64.)
that

(Sec. Am. Compl.
minimum

work

(Sec. Am. Compl.

As to the apparent authority theory, Plaintiffs allege
“Defendants

vest

their

debt

collectors

with

apparent

authority . . . by permitting their debt collectors to represent

Agency, Inc.; (9) Penn Credit Corporation; (10) RUI a/k/a
Recovery’s Unlimited East, Inc.; [and] (11) Solomon and Solomon,
P.C.” (Sec. Am. Compl. ¶ 59.)
The Court has limited direct quotations and discussion of
specific contractual provisions in an effort to preserve the
confidentiality of the redacted portions of the Second Amended
Complaint.
11

11

to consumers in letters and during telephone calls that the debt
collectors are authorized to act on Defendants’ behalf.”
Am. Compl. ¶ 66.)
“ratify

the[

]

.

Finally, Plaintiffs allege that Defendants
.

.

debt

collectors’

accepting the benefits of their conduct.”
C.

(Sec.

actions

by

knowingly

(Sec. Am. Compl. ¶ 69.)

The Pending Motions
On May 19, 2016, Defendants filed a motion to dismiss

the Second Amended Complaint pursuant to Federal Rules of Civil
Procedure 12(b)(1), 12(b)(2) and 12(b)(6).
Docket Entry 159, 160.)

(Defs.’ Third Mot.,

Plaintiffs filed their opposition on June

24, 2016, and Defendants filed their reply on July 8, 2016. (Pls.’
Third Opp., Docket Entry 167; Defs.’ Third Reply, Docket Entry
170.)
On May 26, 2016, Defendants filed a motion to dismiss
Count II or, in the alternative, to stay Count II as to Jenkins.
(Defs.’ Fourth Mot., Docket Entry 161.)

Plaintiffs opposed the

motion on July 1, 2016, and Defendants filed their reply on July
15, 2016.

(Pls.’ Fourth Opp., Docket Entry 169; Defs.’ Fourth

Reply, Docket Entry 171.)
D.

The Relevant Statutes
The

TCPA

was

enacted

to

address

concerns

that

telemarketing “‘can be an intrusive invasion of privacy.’”

Mims

v. Arrow Fin. Servs., LLC, 565 U.S. 368, 372, 132 S. Ct. 740, 745,
181 L. Ed. 2d. 881 (2012) (quoting TCPA 105 Stat. 2394 note
12

following 47 U.S.C. § 227).
at

minimizing

homes.

automated

Particularly, the statute was aimed

and

pre-recorded

calls

to

customers’

See Mims, 565 U.S. at 372, 132 S. Ct. at 745.

Subject to

certain exceptions, the TCPA prohibits the use of artificial or
prerecorded voice messages to call residential telephone lines
“without the prior express consent of the called party.” 47 U.S.C.
§ 227(b)(1)(B).

The statute also prohibits the use of automatic

telephone dialing systems and artificial or prerecorded voice
messages to call pagers, cellular telephones, or other devices
which charge the called party for the cost of the call “without
the

prior

express

§ 227(b)(1)(A)(iii).

consent

of

the

called

party.”

47

U.S.C.

Plaintiffs may recover damages in the amount

of the “‘actual monetary loss from such violation, or . . . $500
in damages for each violation, whichever is greater.’”

Ziegler v.

Allied Commercial Roofing, Inc., No. 13-CV-2638, 2014 WL 4437316,
at *2 (E.D.N.Y. Sept. 9, 2014) (quoting 47 U.S.C. § 227(b)(3)(B)
(ellipsis in original)).

“‘If the court finds that the defendant

willfully or knowingly violated [the statute,] the court may, in
its discretion, increase the amount of the award to an amount equal
to not more than 3 times the amount available.’”
4437316,

at

*2

(quoting

47

U.S.C.

§

Ziegler, 2014 WL

227(b)(3)

(brackets

in

original)).
NY GBL § 399-p requires, inter alia, that when a call is
made using an “automatic dialing-announcing service,” the device
13

shall “state at the beginning of the call the nature of the call
and the name of the person or on whose behalf the message is being
transmitted and at the end of such message the address, and
telephone number of the person on whose behalf the message is
transmitted,

provided

such

disclosures

are

not

otherwise

prohibited or restricted by any federal, state or local law.” N.Y.
GEN. BUS. LAW § 399-p(3)(a).
per violation.

Plaintiffs may recover $100 in damages

Ziegler, 2014 WL 4437316, at *2 (citing N.Y. GEN.

BUS. LAW § 396-aa).
DISCUSSION
At the outset, the Court will address two preliminary
issues: (1) the inclusion of the Dismissed Defendants in the Second
Amended Complaint and (2) the viability of Count IV, Plaintiffs’
vicarious liability claim under NY GBL § 399-p.
I.

The Dismissed Defendants
In a footnote, the Second Amended Complaint states:

“Plaintiffs

acknowledge

that

alleged

Plaintiffs’

First

in

the

Court

Amended

dismissed

Class

Action

the

claims

Complaint”

against the Dismissed Defendants but “incorporate by reference
their First Amended Class Action Complaint, including paragraphs
11-32

and

36-62,

to

defendants for appeal.”

preserve

the

claims

made

against

(Sec. Am. Compl. at 2, n.1.)

those

They refer

to a Second Circuit case, P. Stolz Family Partnership L.P. v. Daum,
355 F.3d 92 (2d Cir. 2004), for support.
14

Defendants argue that

Plaintiffs

have

misinterpreted

Stolz

and

that

re-naming

the

Dismissed Defendants is not necessary to preserve appeal rights.
(Defs.’ Third Br., Docket Entry 159-2, at 22-23.)

They contend

that this error has forced them to re-move to dismiss these
defendants

for

lack

of

subject

matter

jurisdiction,

alternatively, lack of personal jurisdiction.
at 22-23.)
strike

or

(Defs.’ Third Br.

They ask the Court to dismiss these defendants and

footnote

one

of

the

Second

Amended

Complaint,

which

incorporates by reference allegations related to the Dismissed
Defendants from the First Amended Complaint.
23.)

(Defs.’ Third Br. at

In opposition, Plaintiffs argue that Stolz left open whether

claims dismissed without prejudice are waived on appeal if not
included in an amended pleading.

(Pls.’ Third Opp., Docket Entry

167, at 23.)
In Stolz, plaintiff filed a two-count complaint for
violations of the securities laws, and the district court dismissed
Count II in its entirety and dismissed Count I as to one defendant.
Stolz, 355 F.3d at 95. Thereafter, plaintiff amended its complaint
but did not re-plead Count II.

Id.

On appeal, defendant argued

that plaintiff had waived its opportunity to appeal the dismissal
of Count II.

Id. at 96.

The Second Circuit rejected this argument

and held that, in an amended complaint, a party is not required to
“replead a dismissed claim in order to preserve the right to appeal
the dismissal when the court has not granted leave to amend.”
15

Id.

The Court further held that plaintiff could properly appeal the
dismissal of Count II.

Id.

This Court did not grant leave to amend the allegations
against the Dismissed Defendants.
Plaintiffs

to

plead

these

Thus, it is unnecessary for

allegations

in

the

Second

Amended

Complaint to preserve their right to appeal the dismissal.

See,

e.g., Leber v. Citigroup, Inc., No. 07-CV-9329, 2011 WL 5428784,
at *2 n.1 (S.D.N.Y. Nov. 8, 2011) (holding that there was “no need”
for Plaintiffs to plead two counts dismissed without leave to amend
to preserve appeal rights).12
For the avoidance of doubt, the claims against National
Grid PLC, National Grid North America Inc., National Grid USA,
Massachusetts Electric Company, The Narragansett Electric Company,
Boston Gas Company, National Grid Electric Services LLC, Colonial
Gas

Company,

Essex

Gas

Company,

Nantucket

Electric

Company,

For support, Plaintiffs cite Elliott v. City of Hartford, 649
F. App’x 31 (2d Cir. 2016). (Pls.’ Third Opp. at 24.) In that
case, the Second Circuit discussed whether the district court
erred when it assumed that plaintiff had waived certain claims
when she sought leave to file a third amended complaint that
omitted claims that were in her second amended complaint.
Elliott, 649 F. App’x at 32. The Second Circuit affirmed the
decision of the district court, finding no error in its
determination that the claims were waived. Id. at 33. However,
Elliott does not address the issue here. In this case,
Plaintiffs did not seek leave to amend, nor were they granted
leave to amend by the Court. Additionally, Elliott focuses on
waiver--not whether claims dismissed by the Court must be
included in subsequent pleadings to preserve appeal rights. As
set forth above, the case that is controlling on that issue,
Stolz, clearly states that it is unnecessary.
12

16

Keyspan

Corporation,

and

Niagara

Mohawk

Holdings,

Inc.

are

DISMISSED for lack of subject matter jurisdiction as stated in the
Court’s March 31, 2016 Order.13

Accordingly, the Court STRIKES the

Dismissed Defendants from the Second Amended Complaint.

The Court

further STRIKES the allegations in footnote one and paragraph 30
of

the

Second

Amended

Complaint

incorporating

by

reference

allegations from the First Amended Complaint.14
II.

The NY GBL § 399-p Vicarious Liability Claim
Defendants argue that Count IV, the vicarious liability

claim under NY GBL § 399-p, must be dismissed because the Court
did not grant leave to add this claim.

(Defs.’ Third Br. at 15.)

Specifically, they maintain that Plaintiffs were given leave to
re-plead only Count II, the TCPA vicarious liability claim, and
that Plaintiffs did not separately request leave to add a second
vicarious liability claim.15

(Defs.’ Third Br. at 15.)

Plaintiffs

contend that the Court “did not limit amendment to the TCPA

Because the dismissal moots Defendants’ personal jurisdiction
arguments, the Court declines to address them. (March 2016
Order at 15.)
13

The court may strike “redundant, immaterial [or] impertinent”
matter from any pleading pursuant to Federal Rule of Civil
Procedure 12(f). FED. R. CIV. P. 12(f). The Court finds that the
allegations from the First Amended Complaint related to the
Dismissed Defendants are immaterial and impertinent in light of
its prior decision.
14

Under Federal Rule of Civil Procedure 15(a)(2), “a party may
amend its pleading only with the opposing party’s written
consent or the court’s leave.” FED. R. CIV. P. 15(a)(2).
15

17

[claim]” and they “followed both the letter and spirit of the
Court’s ruling[ ] by amending their complaint to include vicarious
liability claims . . . under the TCPA (Count II) and [NY] GBL §
399-p (Count IV).”

(Pls.’ Third Opp. at 20.)

Plaintiffs also

broadly assert that the Court “granted Plaintiffs leave to replead Defendants’ vicarious liability for the unlawful acts of
their agents.”

(Pls.’ Third Opp. at 21.)

Plaintiffs have misconstrued the Court’s prior Order.
The Court only discussed leave to amend in the context of Count
II.

(March 2016 Order at 22.)

Moreover, the Court concluded:

“Count II of the Amended Complaint is DISMISSED WITHOUT PREJUDICE
and with leave to replead in a manner consistent with this Court’s
opinion.”

Id. at 27 (first emphasis supplied).

Plaintiffs were

entitled to replead Count II, the TCPA vicarious liability claim,
but were not entitled to add an additional claim.
of the Second Amended Complaint is DISMISSED.

Thus, Count IV
See Palm Beach

Strategic Income, LP v. Salzman, 457 F. App’x 40, 43 (2d Cir. 2012)
(“District courts in this Circuit have routinely dismissed claims
in amended complaints where the court granted leave to amend for
a limited purpose and the plaintiff filed an amended complaint
exceeding the scope of the permission granted.”).
III. Sufficiency of Plaintiffs’ Count II Allegations
The Court now turns to the heart of Defendants’ motion.
Defendants argue that Count II of the Second Amended Complaint
18

must be dismissed pursuant to Federal Rules of Civil Procedure 8
and 12(b)(6).

(Defs.’ Third Br. at 2.)

They argue that Count II

fails to state a claim for vicarious liability because Plaintiffs’
allegations do not demonstrate a principal-agent relationship.
(Defs.’ Third Br. at 6-7.)

Additionally, Defendants argue that

Plaintiffs’ allegations fail to establish that Plaintiffs relied
on the debt collectors’ apparent authority or that Defendants knew
of the alleged TCPA violations and accepted payments obtained as
a result of such violations.

(Defs.’ Third Br. at 6.)

The Court

will

legal

analyzing

discuss

the

relevant

standards

before

Defendants’ arguments.
A.

Legal Standards
Under Rule 8, a complaint must contain “a short and plain

statement of the claim showing that the pleader is entitled to
relief.”

FED. R. CIV. P. 8(a)(2).

Rule 12(b)(6) provides that

dismissal is appropriate if the complaint fails “to state a claim
upon which relief can be granted.”

FED. R. CIV. P. 12(b)(6). To

survive a motion to dismiss, a complaint must plead “enough facts
to state a claim to relief that is plausible on its face.” Twombly,
550 U.S. at 570, 127 S. Ct. at 1974.

A claim is plausible “when

the plaintiff pleads factual content that allows the court to draw
the reasonable inference that the defendant is liable for the
misconduct alleged.”

Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.

Ct. 1937, 1949, 173 L. Ed. 2d 868 (2009).
19

Although the Court must

accept all allegations in the Amended Complaint as true, this tenet
is “inapplicable to legal conclusions.”

Id.

Thus, “[t]hreadbare

recitals of the elements of a cause of action, supported by mere
conclusory statements, do not suffice.”

Id. (citation omitted).

Ultimately, the Court’s plausibility determination is a “contextspecific task that requires the reviewing court to draw on its
judicial experience and common sense.”

Id. at 679, 129 S. Ct. at

1950.
In deciding a motion to dismiss, the Court is generally
confined to “the allegations contained within the four corners of
[the] complaint.”

Pani v. Empire Blue Cross Blue Shield, 152 F.3d

67, 71 (2d Cir. 1998).

However, the Court may consider “any

written instrument attached to [the complaint] as an exhibit,
materials incorporated in it by reference, and documents that,
although

not

complaint.”

incorporated

by

reference,

are

integral

to

the

Sira v. Morton, 380 F.3d 57, 67 (2d Cir. 2004)

(internal quotation marks and citation omitted); see also Chambers
v. Time Warner, Inc., 282 F.3d 147, 153 (2d Cir. 2002) (observing
that a document is “integral” if the complaint “relies heavily
upon its terms and effect”) (internal quotation marks and citation
omitted).
It is well established that companies can be vicariously
liable for violations of the TCPA.

See In re Joint Pet. filed by

Dish Network, LLC, 28 F.C.C.R. 6574, 6586 (2013) (“We find that
20

vicarious

seller

principles

[are]

liability
.

.

.

under

available

federal
for

common

law
of

violations

agency
section

227(b).”); Campbell-Ewald Co. v. Gomez, --- U.S. ----, 136 S. Ct.
663, 674, 193 L. Ed. 2d 571 (2016) (stating that the Court had “no
cause

to

question”

the

Federal

“there

is

Communications

vicarious

Commission’s

determination

that

liability

for

TCPA

violations”).

Plaintiffs seeking to hold companies vicariously

liable for the TCPA violations of third parties can show either
that (1) there was a principal-agent relationship between them,
(2) the third party acted with apparent authority or (3) the
company ratified the conduct of the third party. See Dish Network,
28 F.C.C.R. at 6586-87.
B.

Agency Theory
Plaintiffs allege that Defendants are vicariously liable

for the conduct of the debt collectors because the debt collectors
were Defendants’ agents.

(Sec. Am. Compl. ¶ 4.)

To demonstrate

an agency relationship, Plaintiffs rely on provisions in the
Agreements between Defendants and the debt collectors to show that
Defendants
conduct.

had

sufficient

control

over

(See Sec. Am. Compl. ¶¶ 60-64.)

the

debt

collectors’

Defendants argue that

the Agreements do not demonstrate that Defendants had the “right
to give interim instructions or to otherwise control the debt
collectors’ means and methods,” but merely show a contractual
relationship between them.

(Defs.’ Third Br. at 6-7.)
21

Defendants

contend that the Agreements are analogous to service contracts,
and at most, demonstrate that the Defendants “exercised general
supervisory

power

over

the

debt

collectors”

while

collectors retained control over their operations.
Br. at 8-9.)

the

debt

(Defs.’Third

They also point out that the Agreements do not

dictate the “equipment to be used by the debt collectors,” “the
manner in which [they] . . . contact customers” and “the content
of the messages conveyed to customers.”

(Defs.’ Third Br. at 10-

11.) Finally, Defendants emphasize that they cannot be vicariously
liable for the debt collector’s actions because the Agreements
state

that

while

engaged

in

collection

services,

collectors were acting as independent contractors.

the

debt

(Defs.’ Third

Br. at 11.)
The Court looks to the federal common law of agency to
determine whether Plaintiffs have plausibly alleged an agency
relationship between Defendants and the debt collectors.
is

a

fiduciary

relationship

that

arises

when

one

“‘Agency

person

(a

‘principal’) manifests assent to another person (an ‘agent’) that
the agent shall act on the principal’s behalf and subject to the
principal’s control, and the agent manifests assent or otherwise
consent to act.’”

Jackson v. Caribbean Cruise Line, Inc., 88 F.

Supp. 3d 129, 138 (E.D.N.Y. 2015) (quoting Restatement (Third)
Agency § 1.01 (2006)).

Of particular importance is whether

Defendants had the power to give interim instructions to the debt
22

collectors, which has been deemed “the hallmark of an agency
relationship.”

Jackson, 88 F. Supp. 3d at 138 (citing Restatement

(Third) Agency § 1.01 cmt. f(1)). Determining whether a principalagent relationship exists is a fact-sensitive inquiry and “can
turn on a number of factors including: ‘the situation of the
parties, their relations to another, and the business in which
they are engaged; the general usages of the business in question
and the purported principal’s business methods; the nature of the
subject matters and the circumstances under which the business is
done.’”

Melito v. Am. Eagle Outfitters, Inc., Nos. 14-CV-2440,

15-CV-0039, 15-CV-2370, 2015 WL 7736547, at *6 (S.D.N.Y. Nov. 30,
2015) (quoting Cleveland v. Caplaw Enters., 448 F.3d 518, 522 (2d
Cir. 2006)).
The Court finds that Plaintiffs have plausibly alleged
that the debt collectors operated as agents of Defendants.

The

Second Amended Complaint contains detailed allegations concerning
the

relationship

between

Defendants

and

the

debt

collectors,

including allegations regarding the level of control Defendants
exercised over the debt collectors pursuant to the Agreements and
Scope of Work specifications.
¶¶ 57-69.)

(See generally Sec. Am. Compl.

For example, Plaintiffs allege that Defendants control

the means and methods used by the debt collectors through minimum
work

requirements

and

provisions

frequency of contact with consumers.
23

mandating

the

method

and

(See Sec. Am. Compl. ¶¶ 63-

64.)

Defendants also control whether the debt collectors can take

certain steps during the collection process, (Sec. Am. Compl.
¶ 62), and the Scope of Work requires that Defendants and the debt
collectors meet periodically and/or as needed to discuss and
implement strategies for improvement (Sec. Am. Compl. ¶ 68). These
allegations, taken collectively, are sufficient to withstand a
motion to dismiss.
The Court is mindful that several courts have dismissed
vicarious

liability

Plaintiffs’

claims

allegations

here

on

12(b)(6)

demonstrate

grounds.
a

greater

However,
degree

of

control over the debt collectors by Defendants. See, e.g., Melito,
2015 WL 7736547 at *7 (dismissing TCPA vicarious liability claim
where Plaintiffs failed to plead “any factual content regarding
the relationship” between the alleged principal and agent because
Plaintiffs “cannot simply allege general control in a vacuum”);
Jackson, 88 F. Supp. 3d at 139 (dismissing TCPA vicarious liability
claim because the complaint did not contain any allegations that
alleged principal had power to give interim instructions to alleged
agent or any allegations of direction or control by the alleged
principal); Reo v. Caribbean Cruise Line, Inc., No. 14-CV-1374,
2016 WL 1109042, at *5 (N.D. Ohio Mar. 18, 2016) (dismissing TCPA
vicarious

liability

claim

where

Plaintiffs

alleged

only

that

alleged principal retained alleged agent to solicit business and
alleged agent made phone calls to consumers).
24

Cf. McCabe v.

Caribbean Cruise Line, Inc., No. 13-CV-6131, 2014 WL 3014874, at
*4 (E.D.N.Y. July 3, 2014) (holding that allegation that call was
made by alleged agent pursuant to a contract with principal was
sufficient to state claim).
Defendants argue that the debt collectors are akin to
independent contractors and cite to a provision in the Agreements
that refers to the debt collectors as independent contractors.
(Defs.’ Third Br. at 8, 11-12.)

Defendants contend that under New

York law, if the debt collectors are independent contractors,
Defendants are not liable for any TCPA violations committed by the
debt collectors.

(Defs.’ Third Br. at 8.)

However, the Court

must examine the relationship between Defendants and the debt
collectors to determine the nature of the relationship regardless
of how the parties have characterized it.

See In re Shulman

Transport Enters., Inc., 744 F.2d 293, 295 (2d Cir. 1984) (“[T]he
relationship between contracting parties must be determined by its
real character rather than by the form and color that the parties
have given it . . . An employee does not become an independent
contractor simply because a contract describes him as such.”).
The Court has considered Plaintiffs’ allegations, and at this
point, determines that it is plausible that the debt collectors
were Defendants’ agents.

The allegations do not prove that there

was a principal-agent relationship, but that is not the Plaintiffs’

25

burden at this juncture.

Accordingly, Defendants’ motion to

dismiss Count II is DENIED.16
IV.

Jenkins’ Allegations
Defendants move to dismiss Jenkins’ claims under Count

I and Count II.17

They argue that Jenkins fails to state a claim

for direct liability under Count I because the Second Amended
Complaint does not allege that Jenkins was contacted by Defendants.
(Defs.’ Third Br. at 20-21.)

Additionally, they move to dismiss

or, alternatively, to stay Jenkins’ claims for vicarious liability
under Count II because he is pursuing a separate lawsuit against
NCO Financial Systems, Inc., one of the debt collectors hired by
Defendants.

(Defs.’ Fourth Br., Docket Entry 161-1, at 1.)

Defendants contend that his potential recovery in both actions
would be a violation of the rule against double recovery.

(Defs.’

Fourth Br. at 1.)

Because the above-referenced agency allegations are sufficient
to state a claim for vicarious liability under the TCPA, the
Court declines to address either Plaintiffs’ apparent authority
or ratification theories.
16

Initially, Defendants moved to dismiss Royal’s claims under
Counts III and IV. (Defs.’ Third Br. at 20.) However, in light
of Defendants’ withdrawal of their motion to dismiss Royal’s
claims under Count III, and the Court’s dismissal of Court IV as
procedurally improper, the Court addresses only the remaining
arguments as to Jenkins. (See Defs.’ Third Reply at 2 n.1.)
17

26

A.

Sufficiency of Jenkins’ Count I Allegations
Defendants argue that Jenkins does not state a claim

under Count I because Count I seeks to hold Defendants liable for
calls made by them directly to customers, and Jenkins alleges that
he was called only by debt collectors.

(Defs.’ Third Br. at 20-

21.)

Defendants further argue that any calls alleged to have been

made

by

Defendants

limitations.

are

outside

the

applicable

(Defs.’ Third Br. at 21 n.15.)

statute

of

Plaintiffs’ argue

that Defendants are barred from seeking dismissal of Jenkins’
direct liability claims pursuant to Federal Rule of Civil Procedure
12(g)(2)

because

Defendants

earlier motion to dismiss.

omitted

this

argument

(Pls.’ Third Opp. at 21.)

from

their

Defendants’

respond that these arguments are not barred and urge the Court to
address them now.

(Defs.’ Third Reply at 8-9.)

Although Plaintiffs’ procedural argument has merit, the
Court will consider Defendants’ arguments in the interest of
judicial efficiency.18

The Court agrees that Jenkins must be

As a technical matter, because Defendants failed to raise
these arguments in their prior motion to dismiss, the rules
preclude them from raising them in a subsequent motion to
dismiss. Specifically, Federal Rule of Civil Procedure 12(g)(2)
provides that “a party that makes a motion under this rule must
not make another motion under this rule raising a defense or
objection that was available to the party but omitted from its
earlier motion” with certain exceptions. FED. R. CIV. P.
12(g)(2). However, Defendants could have raised these arguments
in their answer, a Rule 12(c) motion, or at trial. See FED. R.
CIV. P. 12(h)(2). The Court finds it prudent to address these
18

27

dismissed from Count I.
contain

any

plausible

directly by Defendants.
Moreover,

there

is

no

The Second Amended Complaint does not
allegations

that

Jenkins

was

contacted

(See generally Sec. Am. Compl. ¶¶ 70-93.)
mention

allegations under Count I.

of

calls

to

Jenkins

in

(See Sec. Am. Compl. ¶¶ 118-129.)

the
To

the extent Jenkins received calls from Defendants prior to the
calls he received from debt collectors, those calls are outside
the

statute

of

limitations.19

(See

Sec.

Am.

Compl.

¶

92.)

Accordingly, Defendants’ motion to dismiss Jenkins from Count I is
GRANTED, and Jenkins Count I claims are DISMISSED.
B.

Jenkins’ Recovery under Count II
In a separate motion, Defendants argue that Jenkins’

claims under Count II must be dismissed because he has already
recovered from NCO Financial Systems, Inc., a debt collector
retained by Defendants, based on the same calls at issue in this
case.

(Defs.’ Fourth Br. at 1.)

In Jenkins v. NCO Financial

Systems, Inc. (the “NCO Action”), Jenkins alleged that NCO violated
the TCPA when it made calls to his cell phone using an automatic

issues now rather than delay resolution until Defendants’
inevitable Rule 12(c) motion.
Jenkins alleges that Defendants called him prior to March 7,
2011. (See Sec. Am. Compl. ¶¶ 73, 92.) However, TCPA claims
have a four-year statute of limitations, and based on the filing
of the Complaint in this action, Plaintiffs can only recover for
calls placed after March 9, 2011. (See Compl.) See
Giovanniello v. ALM Media, 726 F.3d 106, 107 (2d Cir. 2013).
19

28

dialing system between 2011 and 2013.

(See, Jenkins v. NCO

Financial Systems, Inc., (“Jenkins v. NCO”) No. 14-CV-4125, Am.
Compl., Docket Entry 18-1, ¶¶ 10-12.)

While this motion was being

briefed, Jenkins represented that he had settled his claims against
NCO, and on September 2, 2016, Jenkins voluntarily dismissed the
NCO Action with prejudice.

(Jenkins v. NCO, Notice of Voluntary

Dismissal, Docket Entry 75.) There is no information on the docket
regarding the settlement terms or the amount Jenkins received.
Defendants contend that because Jenkins’ claims under
Count II relate only to calls made by NCO, and he has already
recovered damages for those calls, Jenkins must be dismissed from
Count II.20

(Defs.’ Fourth Br. at 4-6.)

They argue that allowing

Jenkins to proceed would violate the rule against double recovery
because Jenkins is seeking additional compensation for the same
injury.

(Defs.’ Fourth Br. at 4-6.)

Plaintiffs respond that

Defendants’ motion, which was filed after the deadline for motions
to dismiss the Second Amended Complaint, is untimely and barred by
Federal Rule of Civil Procedure 12(g)(2).
at 4.)

(Pls.’ Fourth Opp.

Plaintiffs maintain that, consistent with this Court’s

prior ruling, Defendants can be vicariously liable for the TCPA
violations of their agents and that each violation of the TCPA is

As an alternative, Defendants requested that the Court stay
Count II as to Jenkins until the NCO Action is resolved.
However, because the NCO Action is closed, the request to stay
is moot.
20

29

actionable.

(Pls.’ Fourth Opp. at 5-7.)

For example, they argue,

a single call may give rise to multiple violations, and a plaintiff
can recover for each violation.

(Pls.’ Fourth Opp. at 6-7.)

Plaintiffs also represent that Jenkins’ settlement in the NCO
Action is less than the statutory damages provided for by the TCPA
($500 per call).

(Pls.’ Fourth Opp. at 8.)

On reply, Defendants

assert that the instant motion is not governed by Rule 12 or the
court-ordered briefing schedule because it is not a Rule 12(b)(6)
motion.

(Defs.’ Fourth Reply at 1.)

Defendants contend that the

motion is “a motion to allow the Court to manage its docket in an
efficient manner.”

(Defs.’ Fourth Reply at 1.)

Moreover, they

argue that although a single call may give rise to multiple TCPA
violations, it is impermissible for Jenkins to recover twice “for
a call alleged to violate a single subsection of the TCPA.”
(Defs.’ Fourth Reply at 3.)
established
“Jenkins’

principles

settlement

Defendants.”

of

with

Finally, Defendants argue that wellvicarious
NCO

liability

extinguishes

his

dictate
claim

that

against

(Defs.’ Fourth Reply at 5.)

Regardless

of

whether

the

motion

complies

with

the

relevant procedural rules, the Court finds that consideration of
this issue is premature.

It is unclear whether all of the TCPA

violations alleged in the Second Amended Complaint were resolved
in the NCO Action.

Defendants’ arguments may have merit, but the

Court declines to make any determination in the absence of a more
30

developed factual record.

Defendants’ motion to dismiss Jenkins

from Count II is DENIED.
CONCLUSION
For the foregoing reasons, Defendants’ motion to dismiss
the Second Amended Complaint for failure to state a claim, lack of
subject matter jurisdiction, and lack of personal jurisdiction
(Docket Entry 159, 160) is GRANTED IN PART and DENIED IN PART.
The claims against National Grid PLC, National Grid North America
Inc.,

National

Grid

USA,

Massachusetts

Electric

Company,

The

Narragansett Electric Company, Boston Gas Company, National Grid
Electric Services LLC, Colonial Gas Company, Essex Gas Company,
Nantucket

Electric

Company,

Keyspan

Corporation,

and

Niagara

Mohawk Holdings, Inc. are DISMISSED for lack of subject matter
jurisdiction.

Count IV is DISMISSED in its entirety, and Jenkins’

Count I claims are DISMISSED.

Steele and Royal’s Count I claims,

Plaintiffs’ Count II claims, and Plaintiffs’ Count III claims will
proceed against Niagara Mohawk Power Corporation, Keyspan Gas East
Corporation, the Brooklyn Union Gas Company, and National Grid USA
Service Company, Inc.
Plaintiffs are directed to re-file the Second Amended
Complaint: (1) removing National Grid PLC, National Grid North
America Inc., National Grid USA, Massachusetts Electric Company,
The Narragansett Electric Company, Boston Gas Company, National
Grid

Electric

Services

LLC,

Colonial
31

Gas

Company,

Essex

Gas

Company, Nantucket Electric Company, Keyspan Corporation, and
Niagara Mohawk Holdings, Inc. as Defendants in this action and
removing any references to these entities; and (2) removing the
allegations in footnote one and paragraph 30 of the Second Amended
Complaint incorporating by reference allegations from the First
Amended Complaint.

Plaintiffs shall re-file the Second Amended

Complaint in accordance with these instructions within fourteen
(14) days of the date of this Memorandum and Order.
Defendants’ motion to dismiss or, in the alternative, to
stay Count II of the Second Amended Complaint as to Jenkins (Docket
Entry 161) is DENIED.
SO ORDERED.
/s/ JOAANA SEYBERT______
Joanna Seybert, U.S.D.J.
Dated:

March
31 , 2017
Central Islip, New York

32