Benko v. Clearing Solutions, LLC et al
Filing
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Amended Memorandum Opinion and Order that Defendant's Motion to dismiss for failure to state a claim is moot (Related Doc # 16 ) and granting Defendant's Motion to dismiss for lack of jurisdiction. The amended complaint is dismissed in it's entirety. Judge John R. Adams on 4/21/16. (K,C)
UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF OHIO
EASTERN DIVISION
ANDREW BENKO,
Plaintiff,
vs.
CLEARING SOLUTIONS, LLC, et al.,
Defendants.
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Case No. 1:16 CV 300
JUDGE JOHN R. ADAMS
AMENDED MEMORANDUM
OPINION AND ORDER
*** The Court hereby issues an amended Memorandum Opinion to correct clerical errors
pursuant to Fed.R.Civ.P. 60. ***
This matter comes before the Court on Clearing Solutions, LLC’s Motion to Dismiss
(Doc. # 9). Clearing Solutions, LLC (“Defendant”) seeks dismissal on two grounds: lack of
personal jurisdiction under Fed.R.Civ.P. 12(b)(2) and failure to state a claim on which relief can
be granted under Fed.R.Civ.P. 12(b)(6). For the reasons stated herein, the motion is GRANTED.
I.
Facts
Defendant states that it has no knowledge of the claims made by Andrew Benko
(“Plaintiff”). Plaintiff alleges, without providing a date or other context, that he received mail, a
copy of which is attached to the complaint, offering him debt reduction or relief services. The
mailer is titled “certified benefits notice” and states “your tri-scored report reflects,” gives a
number for the alleged total debt, and offers to “resolve this distressed debt for as little” as a
number that is less than a third of the total stated debt. (Amended Complaint, Exhibit A.)
According to Plaintiff, at some point many months after having received the mailer, he called the
number listed and spoke to an individual identified as James Kennedy. Kennedy told him that he
could purchase debt invalidation services for the “low price of $896.78.” (Amended Complaint, ¶
25.) According to the Amended Complaint, Kennedy “indicated” that he was “working on behalf
of Hardship Assistance Center,” which he described as “a ‘clearing house of sorts for various law
firms.’” (Amended Complaint, ¶ 20.) Kennedy “described various debt resolution services and
then described debt invalidation to Plaintiff.” (Amended Complaint, ¶ 24.)
Kennedy further
“indicated” that Clearing Solutions, LLC (“Defendant”) was a document preparation company
that would provide the debt invalidation services offered to Plaintiff. Plaintiff alleges that
Kennedy offered to enroll him in Defendant’s debt invalidation services; Plaintiff did not
purchase services. (Amended Complaint, ¶ 25.)
Plaintiff, apparently on the strength of the piece of mail and the phone call, filed the
instant complaint against Defendant, alleging generally, based on “information and belief,”
multiple violations of the Fair Credit Reporting Act, 15 U.S.C. §1681 et seq.; the Ohio Consumer
Sales Practices Act, O.R.C. § 1345 et seq.; the Ohio Telephone Solicitors Act, O.R.C. § 4719 et
seq.; and the Ohio Credit Services Organization Act, O.R.C. § 4712 et seq.. (Amended
Complaint, ¶¶30—66.) Plaintiff further seeks multiple forms of relief including: statutory
damages; declaratory judgment; permanent injunctions; costs; attorney’s fees; and further award
for alleged mental and emotional hardship and embarrassment. (Amended Complaint, ¶ 67, and
Prayer for Relief a.–g.)
During the Case Management Conference, Plaintiff revealed that the Amended
Complaint was based on both more and less information than the allegations indicate. Counsel
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stated that Plaintiff may have received the mailer at some point in October 2014, but that he
waited until approximately August of 2015 to call the number, and, at the direction of counsel,
inquire who sent it. Counsel further revealed that some investigation had occurred to identify
what entity requested Plaintiff’s credit reports prior to sending the mailer; however the
information was not included in the original or the Amended Complaint; counsel was unable to
recall any identifying information about the entity; and had not brought a file with the
information to the Case Management Conference.
Counsel further stated that, although
allegations in the Amended Complaint indicate that sending such mailers is Defendant’s regular
practice, neither counsel nor Plaintiff have actual knowledge or any other factual basis for the
claim that other Ohio consumers have been sent such mailers to solicit business.
II.
Law and Analysis
(a) Personal Jurisdiction
This Court follows “state law in determining the bounds of [its] jurisdiction over
persons.” Daimler AG v. Bauman, 134 S.Ct. 746, 753, 187 L.Ed.2d 624 (2014) (citing Fed. Rule
Civ. Proc. 4(k)(1)(A)). Ohio’s jurisdictional “long-arm” statute is “not coterminous with federal
constitutional limits. Thus, ‘to establish a prima facie case of personal jurisdiction, a plaintiff
must demonstrate that (1) Ohio's long-arm statute has been satisfied and (2) exercising
jurisdiction would comport with the Due Process Clause of the Fourteenth Amendment.
Schneider v. Hardesty, 669 F.3d 693, 700 (6th Cir.2012) (quoting Estate of Thompson, 545 F.3d
357, 361 (6th Cir. 2008)). Under Ohio law, “a court may exercise personal jurisdiction over a
non-resident defendant only if specific jurisdiction can be found under one of the enumerated
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bases in Ohio's long-arm statute.” Conn v. Zakharov, 667 F.3d 705, 717–18 (6th Cir. 2012).
Ohio's long-arm statute provides:
(A) A court may exercise personal jurisdiction over a person who acts directly or
by an agent, as to a cause of action arising from the person's:
(1) Transacting any business in this state;
(2) Contracting to supply services or goods in this state;
(3) Causing tortious injury by an act or omission in this state;
(4) Causing tortious injury in this state by an act or omission outside this
state;
(5) Causing an injury in this state to any person by breach of warranty . . .;
(6) Causing tortious injury in this state to any person by an act outside
this state committed with the purpose of injuring persons . . .;
(7) Causing tortious injury to any person by a criminal act, any element of
which takes place in this state . . . ;
(8) Having an interest in, using, or possessing real property in this state;
(9) Contracting to insure any person, property, or risk located within this
state at the time of contracting.
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(C) When jurisdiction over a person is based solely upon this section, only a cause
of action arising from acts enumerated in this section may be asserted against him.
O.R.C. § 2307.382. Although Plaintiff argues generally that this Court “has multiple avenues to
find” personal jurisdiction “within the parameters of Ohio’s Long Arm Statute” Plaintiff’s
arguments actually address only R.C. 2307.382 (A)(1) which provides that a court has
jurisdiction over entities that transact “any business in Ohio.” Plaintiff emphasizes the Ohio
Supreme Court’s interpretation of O.R.C. § 2307.382(A)(1) as a phrase “so broad” it has
“engendered cases which have been resolved on ‘highly particularized fact situations, thus
rendering any generalization unwarranted.’” Goldstein v. Christiansen, 70 Ohio St.3d 232, 236,
638 N.E.2d 541 (1994) (quoting U.S. Sprint Communications Co., Ltd. P’ship v. Mr. K’s Foods,
Inc., 68 Ohio St.3d 181, 185 (1994) (further citation omitted)). Physical presence in the State of
Ohio is not required. Id.
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Although the clause is broad, both the Ohio Supreme Court and the Federal Sixth Circuit
Court of Appeals have found that “the mere solicitation of business by a foreign corporation does
not constitute transacting business in Ohio.”
U.S. Sprint, 68 Ohio St.3d at 185; see also
Burnshire Development, LLC v. Cliffs Reduced Iron Corp., 198 Fed.Appx. 425, 431-432 (6th
Cir. 2006) (“Similarly, as under the Constitution, mere solicitation of business in Ohio is
insufficient to create jurisdiction.”).
Plaintiff has offered no affidavit or other support for his opposition to the motion to
dismiss. In the absence of an affidavit or other support, this Court will, nevertheless, consider
the pleadings in a light most favorable to Plaintiff. Serras v. First Tennessee Bank Nat’l Assn.,
875 F.2d 1212, 1214 (6th Cir. 1989). Setting aside any potential deficiency in the Amended
Complaint’s broad allegations of statutory violations, with regard to personal jurisdiction
Plaintiff states that Clearing Solutions, acting through an agent of some kind, solicited his
business in Ohio. During the case management conference, counsel for Plaintiff admitted that
neither counsel nor plaintiff had any actual knowledge that any other person in the State of Ohio
had received a mailer from Hardship Assistance Center which nullifies the allegation “on
information and belief” that Clearing Solutions regularly directed the production of such mailers
as a business practice. Plaintiff has presented nothing in support of his alleged “belief” that
Clearing Solutions engaged in purposeful activity directed to the State of Ohio. Instead, Plaintiff
asks that this Court conclude that because he called the number provided in a letter and spoke to
James Kennedy who identified himself as an employee of the “Hardship Assistance Center,” a
“clearing house” for “various law firms,” Kennedy was actually an employee of Clearing
Solutions, LLC who illegally obtained information from Plaintiff’s credit report and directed the
creation and mailing of the letter.
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Even liberally construing the allegations in the complaint, it is clear, at most, that
someone who identified his employer as an entity other than Clearing Solutions offered to sell
Plaintiff services from Clearing Solutions, which Plaintiff refused. Applying the law as reflected
in the decisions of the Ohio Supreme Court, the act of soliciting business is not sufficient to
establish personal jurisdiction over a foreign corporation or nonresident under O.R.C. § 2307.382
(A)(1). U.S. Sprint, supra; Wainscott v. St. Louis-San Francisco Ry. Co., 47 Ohio St.2d 133, 351
N.E.2d 466 (1976).
In the absence of an enumerated basis of personal jurisdiction under Ohio’s long-arm
statute, this Court need not consider whether an exercise of jurisdiction in this instance satisfies
the requirements of the Due Process Clause of the Fourteenth Amendment to the Constitution of
the United States. Brunner v. Hampson, 441 F.3d 457, 467 (6th Cir. 2006) (“As set forth above,
we hold that the Ohio long arm statute is not satisfied in this case. We thus have no reason to
analyze whether the Fourteenth Amendment’s Due Process Clause is a limitation on the exercise
of personal jurisdiction.”); Conn, 667 F.3d. at 711-712.
III. Conclusion
For the reasons stated above, Clearing Solutions, LLC’s Motion to Dismiss for lack of
personal jurisdiction is GRANTED. Accordingly, the Amended Complaint is DISMISSED in its
entirety. Clearing Solutions, LLC’s Motion to dismiss for failure to state a claim is MOOT.
IT IS SO ORDERED.
/s/ John R. Adams
_________________________
U.S. DISTRICT COURT JUDGE
NORTHERN DISTRICT OF OHIO
Dated: April 21, 2016
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