Keating v. Peterson's Nelnet, LLC et al
Filing
108
Memorandum Opinion and Order For the reasons stated in the Order, the Defendants' Motions for Summary Judgment are granted. Related documents 85 , 86 . Signed by Judge Donald C. Nugent on 5/12/2014.(K,K)
IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF OHIO
EASTERN DIVISION
GRANT KEATING,
Plaintiff,
v.
PETERSON’S NELNET, LLC, et al.,
Defendants.
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CASE NO.:
1:11 CV 1775
JUDGE DONALD C. NUGENT
MEMORANDUM OPINION
AND ORDER
This matter is before the Court on Motions for Summary Judgment filed by Defendants
Nelnet, Inc., Peterson’s Nelnet, LLC, and CUnet, LLC. (ECF # 85, 86). Plaintiff filed a
Consolidated Opposition to the Motion[s] for Summary Judgment, (ECF #92), and the
Defendants filed Replies in support of their respective motions. (ECF #96, 97). For the reasons
set forth below, Defendants’ Motions are GRANTED.
I. PROCEDURAL AND FACTUAL HISTORY
On August 24, 2011, Plaintiff filed a Complaint against Defendants Peterson’s Nelnet,
LLC, and Nelnet, Inc., alleging violations of the Telephone Consumer Protection Act, 47 U.S.C.
§ 227, et seq. (“TCPA”). (ECF #1).
In August of 2012, the Complaint was amended to add
CUnet, LLC (“CUnet”) as an additional defendant. (ECF #50). The Amended Complaint is a
putative class action complaint that alleges the Defendants violated federal law by using
automatic telephone dialing systems to call and text cellular telephones without the express
consent of the telephone’s owner. Specifically, Mr. Keating, the named Plaintiff contends that
he received a text message on June 10, 2011, sent on Defendants’ behalf, that read: “Searching
for a college or trade school? Get FREE education advice. Call to speak to an advisor now at
866-944-3042. Send STOP to opt out.”
Mr. Keating further contends that the 866 number
contained in the text message is the “Defendants’ phone number,” and that the Defendants sent
this message and/or caused this message to be sent using an automatic telephone dialing system.
Finally, Mr. Keating claims that he never gave express consent to receive a call (or text) from the
Defendants. The Amended Complaint also alleges that other calls were sent, by the same
method, by the Defendants and their agents, to other cellular telephone numbers without the
owners’ prior express consent. The Plaintiff seeks statutory damages of $500.00 for each proven
violation, treble damages pursuant to 47 U.S.C. § 227(b)(3), and reasonable costs and attorney
fees.
Taken in the light most favorable to the Plaintiff, the basic facts underlying Plaintiff’s
claim are as follows1: Plaintiff, Grant Keating received an unsolicited text message on the
cellular phone that is provided to him by his employer. (ECF #85-8).2 The phone number of this
1
The following facts are not necessarily true, or un-controverted, but they will be viewed
in the light most favorable to the Plaintiff, and accepted as true for purposes of deciding
these summary judgment motions.
2
From April 3, 2009 through the time the text was allegedly received, the phone number
(216) 409-2311 was a Verizon Wireless account registered to Dworken & Bernstein Co.
LPA. (ECF #86-7 at 10). From August 15, 2002 to May 9, 2007, it had been registered to
Mr. Keating. (ECF #86-7 at 9). There are no records in evidence showing who the phone
number was registered to between May of 2007 and April of 2009. There is evidence to
show that a person by the name of Lillian Horne from Cleveland represented this to be her
number on several web based forms all throughout 2010. (ECF #92-2 at 67-69; ECF #86-9
at 36-37). There is also evidence to suggest that Ms. Horne, using this phone number,
consented to receive text messages relating to educational opportunities. (Id.).
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cellular phone is (216) 409-2311. (Amended Complaint; ECF #86-9 at 35). The text message
was intended to solicit business for Defendant CUnet’s CollegeQuest marketing campaign, and
included the CollegeQuest phone bank number (*866)-944-3042).3 (ECF #92-2 (CU00184)).
Mr. Keating never authorized or consented to receive text messages from any of the Defendants,
CollegeQuest, or any other entity associated with the CollegeQuest campaign. (ECF #92-9).
The call was made by an automated dialing machine. (ECF #92-3 at 4).4
The uncontroverted evidence presented by the Defendants establishes the following
additional facts. The text message was not sent by any of the Defendants. Defendant CUnet
contracted with CornerBlue, Inc. (“CornerBlue”) to provide mobile media marketing services for
the CollegeQuest campaign. (ECF #92-2 at 52-55). CornerBlue contracted with AKMG, Inc.
(“AKMG”), who runs an affiliate network or marketplace, to find available third party affiliate
marketers for the CollegeQuest campaign. (ECF #86-8; 92-2 at 59). AKMG contracted with
third party affiliate marketer River City Media, LLC (“River City”), to provide mobile media
marketing for the CollegeQuest campaign. (ECF # 86-8). River City sent the text to Mr.
Keating’s number. (ECF #92-3 at 2, 4).
3
Mr. Keating, himself, testified that he did not know why the text was sent, who it was
intended to benefit, or who sent it. (ECF #86-6).
4
Matt Ferris of River City testified that the text messages sent in connection with the
CollegeQuest campaign were sent via “auto dialer.” (ECF #92-3 at 4). This is insufficient,
in and of itself, to determine whether the messages were sent using an “automatic
telephone dialing system” as defined by the TCPA. (ECF #92-3 at 5). See, Buslepp v.
Improv Miami, Inc., 2012 Dist. LEXIS 148527 (S.D. Fla. Oct. 16, 2012)(Plaintiffs bear the
burden of proving that the means of sending a text message meets the precise definition of
an “automatic telephone dialing system” under the TCPA). However, this testimony is
sufficient when taken in the light most favorable to the Plaintiff, to establish this fact for
the sole purpose of defending against a motion for summary judgment.
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River City had no dealings whatsoever with CUnet, or any other Defendant in this case.
(ECF #92-3 at 4). Likewise River City had no dealings whatsoever with CornerBlue. (ECF #923 at 4). AKMG asked River City to do a texting campaign on the CollegeQuest campaign and
provided River City with the language to be used in the text messages. (ECF #92-3 at 3, 5).
CUnet did not provide or approve any language or other creative materials that were used in
connection with the text messages at issue in this case. (ECF # 86-3, ¶¶ 7, 10-11).
II. STANDARD OF REVIEW
Summary judgment is appropriate when the court is satisfied “that there is no genuine
issue as to any material fact and that the moving party is entitled to a judgment as a matter of
law.” FED. R. CIV. P. 56(c). The burden of showing the absence of any such “genuine issue”
rests with the moving party:
[A] party seeking summary judgment always bears the initial responsibility of
informing the district court of the basis for its motion, and identifying those portions
of ‘the pleadings, depositions, answers to interrogatories, and admissions on file,
together with affidavits, if any,’ which it believes demonstrates the absence of a
genuine issue of material fact.
Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986) (citing FED. R. CIV. P. 56(c)). A fact is
“material” only if its resolution will affect the outcome of the lawsuit. Anderson v. Liberty
Lobby, Inc., 477 U.S. 242, 248 (1986). Determination of whether a factual issue is “genuine”
requires consideration of the applicable evidentiary standards. The court will view the summary
judgment motion in the light most favorable to the party opposing the motion. Matsushita Elec.
Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986).
Summary judgment should be granted if a party who bears the burden of proof at trial
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does not establish an essential element of their case. Tolton v. American Biodyne, Inc., 48 F.3d
937, 941 (6th Cir. 1995) (citing Celotex, 477 U.S. at 322). Accordingly, “[t]he mere existence of
a scintilla of evidence in support of the plaintiff’s position will be insufficient; there must be
evidence on which the jury could reasonably find for the plaintiff.” Copeland v. Machulis, 57
F.3d 476, 479 (6th Cir. 1995) (citing Anderson, 477 U.S. at 252). Moreover, if the evidence
presented is “merely colorable” and not “significantly probative,” the court may decide the legal
issue and grant summary judgment. Anderson, 477 U.S. at 249-50 (citations omitted). In most
civil cases involving summary judgment, the court must decide “whether reasonable jurors could
find by a preponderance of the evidence that the [non-moving party] is entitled to a verdict.” Id.
at 252. However, if the non-moving party faces a heightened burden of proof, such as clear and
convincing evidence, it must show that it can produce evidence which, if believed, will meet the
higher standard. Street v. J.C. Bradford & Co., 886 F.2d 1472, 1479 (6th Cir. 1989).
Once the moving party has satisfied its burden of proof, the burden then shifts to the
nonmover. The nonmoving party may not simply rely on its pleadings, but must “produce
evidence that results in a conflict of material fact to be solved by a jury.” Cox v. Kentucky Dep’t
of Transp., 53 F.3d 146, 149 (6th Cir. 1995). FED. R. CIV. P. 56(e) states:
When a motion for summary judgment is made and supported as provided in this
rule, an adverse party may not rest upon the mere allegations or denials of the
adverse party’s pleading, but the adverse party’s response, by affidavits or as
otherwise provided in this rule, must set forth specific facts showing that there is a
genuine issue for trial.
The Federal Rules identify the penalty for the lack of such a response by the nonmoving party as
an automatic grant of summary judgment, where otherwise appropriate. Id.
Though parties must produce evidence in support of and in opposition to a motion for
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summary judgment, not all types of evidence are permissible. The Sixth Circuit has concurred
with the Ninth Circuit that “‘it is well settled that only admissible evidence may be considered
by the trial court in ruling on a motion for summary judgment.’” Wiley v. United States, 20 F.3d
222, 225-26 (6th Cir. 1994) (quoting Beyene v. Coleman Sec. Servs., Inc., 854 F.2d 1179, 1181
(9th Cir. 1988)). FED. R. CIV. P. 56(e) also has certain, more specific requirements:
[Rule 56(e)] requires that affidavits used for summary judgment purposes be made
on the basis of personal knowledge, set forth admissible evidence, and show that the
affiant is competent to testify. Rule 56(e) further requires the party to attach sworn
or certified copies to all documents referred to in the affidavit. Furthermore, hearsay
evidence cannot be considered on a motion for summary judgment.
Wiley, 20 F.3d at 225-26 (citations omitted). However, evidence not meeting this standard may
be considered by the district court unless the opposing party affirmatively raises the issue of the
defect.
If a party fails to object before the district court to the affidavits or evidentiary
materials submitted by the other party in support of its position on summary
judgment, any objections to the district court’s consideration of such materials are
deemed to have been waived, and [the Sixth Circuit] will review such objections
only to avoid a gross miscarriage of justice.
Id. at 226 (citations omitted).
As a general matter, the district judge considering a motion for summary judgment is to
examine “[o]nly disputes over facts that might affect the outcome of the suit under governing
law.” Anderson, 477 U.S. at 248. The court will not consider non-material facts, nor will it
weigh material evidence to determine the truth of the matter. Id. at 249. The judge’s sole
function is to determine whether there is a genuine factual issue for trial; this does not exist
unless “there is sufficient evidence favoring the nonmoving party for a jury to return a verdict for
that party.” Id.
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In sum, proper summary judgment analysis entails “the threshold inquiry of determining
whether there is the need for a trial – whether, in other words, there are any genuine factual
issues that properly can be resolved only by a finder of fact because they may reasonably be
resolved in favor of either party.” Anderson, 477 U.S. at 250. It is with this standard in mind
that the instant Motion must be decided.
III. DISCUSSION
At issue in this case is an alleged violation of the TCPA’s section 227(b)(1)(A)(iii),
which provides that it shall be unlawful for any person
to make any call (other than a call made for emergency purposes or made with the
prior express consent of the called party) using any automatic telephone dialing
system . . . to any telephone number assigned to . . . a cellular telephone service, .
. . or any service for which the called party is charged for the call.
47 U.S.C. § 227(b)(1)(A)(iii). Under the TCPA, the term “automatic telephone dialing system
means any equipment that has the capacity to “store or produce telephone numbers to be called
using a random or sequential number generator” and “to dial such numbers.” The Federal
Communication Commission (“FCC”), in adopting regulations to implement the TCPA, has
opined that the prohibitions set forth above apply to both voice calls and text messaging. See In
Re Rules and Regulations Implementing the Telephone Consumer Protection Act of 1991, Report
and Order, 18 FCC Red 14014, 14115 (July 3, 2003).
The TCPA creates a private right of action for liquidated damages in the amount of
$500.00 per violation, or actual monetary loss, whichever is greater. 47 U.S.C. § 227(b)(3)(C).
It also provides that a Court may treble the damages if it finds that the defendant committed the
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violations “willfully or knowingly.” 47 U.S.C. § 227(b)(3)(C).
Plaintiff has conceded that Defendant “Peterson’s [Nelnet, LLC,] was not involved” in
the actions giving rise to this lawsuit and has agreed to voluntarily dismiss that Defendant.
Peterson’s Nelnet, LLC, is therefore dismissed with prejudice, pursuant to Fed. R. Civ. P.
41(a)(2). Plaintiff also appears to have conceded, and in any event has produced no evidence
that contradicts Defendants’ evidence showing that none of the named defendants actually sent
the text message(s) at issue in this case. The uncontroverted evidence presented to the Court
shows that it was River City who sent the text message(s). Nonetheless, Plaintiff argues that
CUnet is vicariously liable under the TCPA for River City’s actions because CUnet entered a
mobile media marketing agreement with CornerBlue, who in turn hired AKMG, who hired River
City, who sent the text message at issue. Plaintiff also argues that Nelnet, Inc. is jointly liable
with CUnet under a theory of alter-ego, derivative liability.5
The FCC has determined, and the federal courts have recently acknowledged that the
5
It is unclear whether this derivative liability theory should even be considered. Although
the issue was clearly addressed during the discovery phase of this litigation, the Amended
Complaint did not set forth sufficient facts and allegations to support a claim for piercing
the corporate veil. See, e.g., Salatin v. Trans Healthcare of Ohio, Inc., 170 F. Supp.2d 775
(N.D. Ohio 2001); Gill v. Beyers Chevrolet LLC, 2006 U.S. Dist. LEXIS 59680, *12-14
(S.D. Ohio Aug. 23, 2006); Sudamax Industria e Comercia de Cigarros, LTDA v. Buttes &
Ashes, Inc., 516 F. Supp.2d 841, 847 (W.D. Ky. 2007). Further, if the internal affairs
doctrine were applied to the issue of whether to pierce the corporate veil, it is possible that
Delaware law would apply, and Delaware law is more stringent in the requirements
necessary to recognize liability under an alter-ego theory. See Hitachi Med. Sys. Am., Inc.
v. Branch, 2010 U.S. Dist. LEXIS 19405 (N.D. Ohio Mar. 4, 2010); Kalb, Voorhis & Co.
V. Am. Fin. Corp., 8 F.3d 130 (2d Cir. 1993); Judson Atkinson Candies, Inc. V. LatiniHohberger Dhimantec, 529 F.3d 371 (7th Cir. 2008); Wellman v. DuPont Dow Elastomers
LLC, 739 F. Supp.2d 665 (D. Del. 2010); Trevino v. Merscorp, Inc., 583 F. Supp. 2d 521,
528 (D.Del. 2008). In any case, the derivative liability issue is moot unless Plaintiff can
prove that CUnet is liable for the texts sent by River City.
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prohibitions contained in section 227(b) of the TCPA incorporate the basic agency principles of
vicarious liability. See, In re DISH Network, 28 FCC Rcd 6574, 2013 FCC LEXIS 2057, ¶¶ 3539 (May 9, 2013); see also, e.g., Mais v. GulfCoast Collections Bureau, Inc., 2013 U.S. Dist.
LEXIS 65603 (S.D. Fla. May 8, 2013). The principles of the federal common law of agency
govern the determination as to whether a seller is liable for the actions of a telemarketer who is
promoting the seller’s product. See, DISH Network v. Federal Communications Commission,
Case No. 13-1182 (DC Cir. Jan. 22, 2014).
A principal may be vicariously liable for an agent’s tortious conduct if the agent had
actual authority from the principal for the conduct. See Jones v. Federated Fin. Reserve Corp.,
144 F.3d 961, 965 (6th Cir. 1998). Thus, in order to establish vicarious liability under the TCPA,
following the federal common law principles, a plaintiff must show that the actual caller (in this
case River City) acted as an agent of the defendant and that the defendant controlled or had the
right to control them and the manner and means of the text messaging campaign they conducted.
Thomas v. Taco Bell Corp., 879 F. Supp.2d 1079, 1084 (C.D. Cal. 2012); Mey v. Pinnacle
Security, LLC, 2012 U.S. Dist. LEXIS 129267 at *12 (N.D.W.V. Sept. 12, 2012).
Representatives from both CUnet and CornerBlue testified that they both understood that
no text messaging was allowed under the CornerBlue mobile media marketing agreement (ECF
#92-2 at 92); the agreement between these parties in no way mentioned text messaging; the
banner ads submitted by and approved by CUnet under the agreement were not capable of
transmission by text message; and, CUnet at least twice suspended CornerBlue’s account when
the text messaging was discovered. Plaintiff, nonetheless, contends that there is a factual
question as to whether CornerBlue was authorized to use text messaging in its mobile media
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campaign for CUnet, citing a pre-agreement pricing sheet that mentions text messages with
receiver’s consent,6 and post-text messaging emails that Plaintiff contends do not exhibit
sufficient remorse or surprise to support a finding that the text messaging was unauthorized.
While it is doubtful, based on the evidence submitted to this Court, that any jury could find that
CornerBlue was authorized to send text messages under this agreement, and there is no way,
under the evidence presented, that anyone could find CornerBlue was authorized to send text
messages to any recipient who had not previously consented to receive the text message, we
need not determine CornerBlue’s agency or authorization status to decide this case. That is
because CornerBlue did not send the text message(s) at issue.
The question that must be determined is whether River City was acting as CUnet’s agent
when it sent the text message(s) promoting the CollegeQuest campaign. The evidence is
undisputed that River City never received any authorization, guidance, or other directive from
CUnet or CornerBlue. In fact, River City did not know the marketing was being performed on
behalf of CUnet or as a subcontractor for CornerBlue. Further, CUnet was unaware of River
City’s involvement, and had no idea the company even existed when the texts were sent. The
evidence shows that River City was hired by AKMG; AKMG authorized River City to engage
in a text messaging campaign; and, AKMG supplied the messages sent by River City. There is
no evidence to suggest that either CUnet or CornerBlue authorized AKMG or River City to use
text messaging as part of the campaign.
6
The contract between CUnet and CornerBlue specifically “supercedes all prior or
contemporaneous written or oral agreements or representations between the parties.” (ECF
#92-2 at 46). Therefore, any indication in the pricing sheets provided to CornerBlue that
texting may be allowed under some circumstances cannot override the written agreement or
any clarifications or representations made after the contract was entered into.
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Further, CUnet’s contract with CornerBlue prohibited CornerBlue from assigning,
transferring, or delegating the agreement or any obligations within the agreement without prior
written consent of CUnet. (ECF #92-2 at 46 (CU00015)). There is no evidence that CUnet gave
prior written consent for CornerBlue to hire AKMG, or for CornerBlue or AKMG to hire River
City. In addition, there is no evidence to show that prior to the messages being sent, CUnet was
even aware that CornerBlue had subcontracted out the duties it was obligated to perform under
the agreement.
In addition, under the agreement, CornerBlue was not allowed to “publish or distribute
any written material”...”without first submitting such material to [CUnet] for written approval.”
(ECF # 92-2 at 45). CUnet has provided uncontroverted evidence that the only materials it
approved in connection with this campaign were web banners that could not be used in a text
messaging campaign. The written material sent in River City’s text messages was provided by
AKMG and there is no evidence whatsoever that CUnet had ever seen these materials, let alone
approved them for distribution.
In short, Plaintiff has failed to provide any evidence that could support a finding that any
Defendant in this case ever authorized River City to send the text messages at issue. Further
there is no evidence that River City was an agent of CUnet, or an agent of CornerBlue, the only
entity authorized by CUnet to engage in mobile media marketing on its behalf. Absent evidence
that could establish such a relationship, Plaintiff cannot establish that the Defendants are
vicariously liable under the TCPA for the text messages sent by River City.
IV. CONCLUSION
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For the reasons set forth above, Defendants’ Motions for Summary Judgment are
GRANTED.
IT IS SO ORDERED.
/s/ Donald C. Nugent
DONALD C. NUGENT
United States District Judge
DATED: May 12, 2014
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