Seri v. Crosscountry Mortgage, Inc. et al
Filing
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Memorandum Opinion and Order For the reasons stated in the Order, Motion to Dismiss, Doc #: 4 , is GRANTED. Defendant CrossCountry Mortgage, Inc. is dismissed without prejudice. Furthermore, Plaintiff Christopher Seri must, by October 10, 2016, SHOW CAUSE why Defendant Michael Crawford d/b/a Direct Source should not be dismissed for failure to serve. Signed by Judge Dan Aaron Polster on 9/28/2016. (K,K)
UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF OHIO
EASTERN DIVISION
CHRISTOPHER SERI, individually and
on behalf of all other similarly situated
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)
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Plaintiff,
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vs.
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CROSSCOUNTRY MORTGAGE, INC. and )
MICHAEL CRAWFORD d/b/a DIRECT
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SOURCE
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Defendants.
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CASE NO. 1:16-cv-01214-DAP
JUDGE DAN AARON POLSTER
OPINION AND ORDER
Before the Court is Defendant CrossCountry Mortgage’s Motion to Dismiss, Doc #: 4.
For the reasons discussed below, this Motion is granted.
I. Background
Christopher Seri filed this class action suit against Defendants CrossCountry Mortgage,
Inc. (“CrossCountry”) and Michael Crawford doing business as Direct Source (“Direct Source”)
for alleged violations of the Telephone Consumer Protection Act, 47 U.S.C. § 227 et seq. (the
“TCPA”). Compl. ¶ 1–4, Doc. #: 1. In his Complaint, Seri alleges that CrossCountry regularly
utilizes the services of third-party telemarketers and has an extensive relationship with Direct
Source. Compl. ¶¶ 14-16. Seri further claims that Cross Country and Direct Source repeatedly
call consumers on their cellular phones and consumers whose phone numbers are listed on the
National Do Not Call Registry. Compl. ¶ 21.
Seri, whose cellular phone number is listed on the National Do Not Call Registry, began
receiving calls in or around November 2015 from CrossCountry and/or Direct Source. Compl. ¶¶
27–28. Seri claims that he received these unwarranted calls “from a variety of phone numbers
associated with Defendants” at least twenty times. Compl. ¶¶ 28–29, 31. Seri “heard a noticeable
delay before being connected to an operator” during these calls. Compl. ¶ 30.
On May 19, 2016, Seri filed suit in this Court. Doc #: 1. On June 28, CrossCountry filed
the instant Motion to Dismiss, Doc #: 4. Seri filed a Response on August 8, Doc #: 12, and
CrossCountry filed a Reply on August 25, Doc #: 13.
No proof of service of Direct Source has been filed, and Direct Source has not appeared.
II. Legal Standard
Pursuant to Fed. R. Civ. P. 8(a)(2), a complaint must allege sufficient facts to compose “a
short and plain statement of the claim showing that the pleader is entitled to relief.” “To state a
valid claim, a complaint must contain direct or inferential allegations respecting all the material
elements under some viable legal theory.” Commercial Money Ctr., Inc. v. Illinois Union Ins.
Co., 508 F.3d 327, 336 (6th Cir. 2007). In evaluating a Rule 12(b)(6) motion to dismiss, courts
must construe the complaint in the light most favorable to the plaintiff and accept the complaint’s
allegations as true, drawing all reasonable inferences in favor of the plaintiff. Coley v. Lucas
Cty., Ohio, 799 F.3d 530, 537 (6th Cir. 2015).
To survive a motion to dismiss, a complaint must contain sufficient factual
matter, accepted as true, to state a claim to relief that is plausible on its face.
A claim has facial plausibility when the plaintiff pleads factual content that
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allows the court to draw the reasonable inference that the defendant is liable
for the misconduct alleged. The plausibility standard is not akin to a
probability requirement, but it asks for more than a sheer possibility that a
defendant has acted unlawfully. Where a complaint pleads facts that are
merely consistent with a defendant’s liability, it stops short of the line
between possibility and plausibility of entitlement to relief.
Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (internal citations and quotation marks omitted).
“For a claim to be viable, the complaint must, at a minimum, give the defendant fair notice of
what the claim is and the grounds upon which it rests.” Marie v. Am. Red Cross, 771 F.3d 344,
364 (6th Cir. 2014) (internal quotation marks omitted).
III. Discussion of the Motion to Dismiss
The Complaint alleges four claims implicating two federal statutes: 47 U.S.C. § 227(b)
and 47 U.S.C. § 227(c). The Court considers these two statutes in order.
A. 47 U.S.C. § 227(b) (“Protection of subscriber privacy rights”).
Seri has failed to properly plead that CrossCountry has violated § 227(b).
1. Pleading Requirements for § 227(b)
In relevant part, § 227(b)(1) provides,
It shall be unlawful for any person within the United States, or any person
outside the United States if the recipient is within the United States-(A) 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 or an artificial or prerecorded
voice–
...
(iii) to any telephone number assigned to a paging service,
cellular telephone service, specialized mobile radio service,
or other radio common carrier service, or any service for
which the called party is charged for the call, unless such call
is made solely to collect a debt owed to or guaranteed by the
United States;
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Thus, to state a claim a complaint must allege a defendant (1) made any call (2) using any
automatic telephone dialing system (an “ATDS”), (3) to any telephone number assigned to a
paging service or cellular telephone service, (4) absent the prior express consent of the recipient.
Id.; Campbell-Ewald Co. v. Gomez, 136 S. Ct. 663, 666–67 (2016), as revised (Feb. 9, 2016);
Reo v. Caribbean Cruise Line, Inc., No. 1:14 CV 1374, 2016 WL 1109042, at *4, 2016 U.S.
Dist. LEXIS 35596, at *9 (N.D. Ohio Mar. 18, 2016) (describing elements similarly).1
2. Application
Here, Seri has properly pled only the latter three elements, with regard to CrossCountry.
a. ATDS, Cellular Phone, and Consent
First, Seri reasonably pleads the use of an ATDS. Seri alleges, “Defendants
[CrossCountry and Direct Source] utilized (and continue to utilize) a sophisticated telephone
dialing system to call cellular telephone users en masse.” Compl. ¶ 19. Seri further alleges “the
hardware and software . . . has the capacity to store, produce, and dial random or sequential
numbers, and/or receive and store lists of telephone numbers, and to dial such numbers, en
masse, in an automated fashion . . . .” Compl. ¶ 25. Seri supports these conclusions with the
factual allegation that “Plaintiff heard a noticeable delay before being connected to an operator
when Defendants made unsolicited telemarketing calls . . . .” Compl. ¶ 30. Like other courts, this
Court recognizes the difficulty a plaintiff faces in knowing the type of calling system used
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CrossCountry argues: “This Court has joined ‘the majority of courts who require some
additional factual allegations’ to satisfy the plausibility standard for pleading a TCPA claim. At a
minimum, the Complaint must allege facts regarding the content of the calls received, the
approximate dates and times that the calls were received, and facts showing that an ATDS was
used.” Mot. to Dismiss 12, quoting Reo v. Caribbean Cruise Line, Inc., 2016 WL 1109042, at
*4; accord Reply 18–19. CrossCountry’s conclusion, however, overstates the holdings of the
various cited case, and the Court accordingly declines to read such elements into TCPA claims.
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without the benefit of discovery, and therefore finds these allegations, particularly the allegation
regarding the “noticeable delay” Seri experienced, sufficient at the motion to dismiss stage. See
Reo v. Caribbean Cruise Line, Inc., No. 1:14 CV 1374, 2016 WL 1109042, at *4 (N.D. Ohio
Mar. 18, 2016) (emphasis added) (“This Court is persuaded by the majority of courts who require
some additional factual allegations, no matter how minor, in addition to parroting the language
of the statute [when pleading the ATDS issue].”); Aikens v. Synchrony Fin., No. 15-10058, 2015
WL 5818911, at *4, 2015 U.S. Dist. LEXIS 115467, at *12 (E.D. Mich. July 31, 2015)
(“Plaintiff could plead those facts which are likely within her knowledge . . . the content of
Defendant’s calls, whether she spoke to a human, whether there was dead air prior to a human
picking up the line, or any other facts which may tend to make the use of an ATDS more likely.”)
report and recommendation adopted, 2015 WL 5818860, 2015 U.S. Dist. LEXIS 115023, (E.D.
Mich. Aug. 31, 2015).
Next, Seri properly alleges the phone calls were directed to a cellular phone. Compl. ¶ 28
(alleging Seri received calls “on his cellular telephone”); Compl. ¶ 30 (alleging calls “to his
cellular phone.”). While the Court recognizes that these allegations offer little more than the
“bare elements of TCPA claims and parroted statutory language, along with conclusory
statements,” Mot. to Dismiss 14, the Court is willing to accept at the motion to dismiss stage that
Seri knows whether his phone is, in fact, a cellular phone, and consequently that the abovequoted statements from the Complaint represent assertions of this fact and not mere legal
conclusions.
Similarly, Seri has fairly alleged the absence of prior express consent. Compl. ¶ 31
(“Plaintiff Seri has repeatedly informed the Defendants: . . . that (2) that he had never given
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Defendants permission to call him, and (3) that Defendants were not to call him again.”); Compl.
¶ 34 (“Simply put, Plaintiff has never provided any form of prior express written consent to
Defendants to place calls to him . . . .”).
b. Calls
However, Seri has not properly plead that CrossCountry made any calls to him.
Seri argues three possible ways CrossCountry could be liable for phone calls made to
Seri. First, it is possible that CrossCountry and Direct Source each independently made offending
phone calls: i.e., that Direct Source used an ATDS to dial cell phones without consent and also
that CrossCountry itself used an ATDS to dial cell phones without consent. Second, it may be
possible for CrossCountry to be directly liable for calls made by Direct Source. While, generally,
sellers are not directly liable for calls by third-party telemarketers, the Court notes the possibility
of an exception to this general rule. See In the Matter of Dish Network, LLC, 28 F.C.C. Rcd.
6574, 6583 (2013) (“[O]ne can imagine a circumstance in which a seller is so involved in the
placing of a specific telephone call as to be directly liable for initiating it—by giving the third
party specific and comprehensive instructions as to timing and the manner of the call, for
example”). Third, CrossCountry may by vicariously liable for calls made by Direct Source as its
agent. Id. at 6587 (“While section 227(b) does not contain a provision that specifically mandates
or prohibits vicarious liability, we clarify that the prohibitions contained in section 227(b)
incorporate the federal common law of agency and that such vicarious liability principles
reasonably advance the goals of the TCPA.”). The Complaint, however, does not allege facts
which clearly support any of these three theories of liability.
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Here, regarding CrossCountry’s role in the offending calls, Seri allegations include,
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“Defendants CrossCountry Mortgage and Direct Source conducted (and continue to
conduct) a wide scale telemarketing campaign that features the making of repeated
unsolicited calls to consumers’ telephones—including cellular telephones and numbers
that appear on the National Do Not Call Registry—without consent . . . .” Compl. ¶ 4.
“Defendants utilized (and continue to utilize) a sophisticated telephone dialing system to
call cellular telephone users en masse for the purpose of promoting its services, often
times calling consumers on their cellular phones.” Compl. ¶ 19.
“In Defendants’ overzealous marketing attempts, they placed (and continue to place)
phone calls to consumers that never provided consent . . . .” Compl. ¶ 21.
“CrossCountry Mortgage and Direct Source use a variety of local phone numbers to make
these unlawful sales calls to consumers.” Compl. ¶ 23.
“Defendants and/or their agent utilized an ATDS . . . .” Compl. ¶ 25.
“Defendants knowingly made (and continue to make) telemarketing calls without the
prior express consent . . . .” Compl. ¶ 26.
“Starting in or around November 2015, Plaintiff Seri began receiving calls from Direct
Source and/or CrossCountry Mortgage on his cellular telephone from a variety of phone
numbers associated with Defendants, including 510-730-3142, 247-632-1471, 209-2714442, 512-999-7211, and 916-634-0107.” Compl. ¶ 28.
“Over the course of the next six months, Defendants called Plaintiff at least twenty (20)
times.” Compl. ¶ 29.
Notably, these allegations do not describe what individual roles CrossCountry and Direct
Source had in making the alleged phone calls. CrossCountry correctly observes that Seri has
“lumped” CrossCountry and Direct Source together for most allegations. While this style of
pleading is not necessarily fatal to the Complaint, such pleading makes a complaint less likely to
“give the defendant fair notice of what the claim is and the grounds upon which it rests.” Marie,
771 F.3d 364; see also Reo, 2016 WL 1109042, at *3 (“Defendants’ [sic] argue that Plaintiffs’
‘shotgun’ style complaint lumping the defendants and claims together results in contradictory and
confusing allegations, requiring dismissal. . . . These discrepancies are sloppy and mildly
confusing but, standing alone, do not require dismissal.”). Here, the Complaint does not describe
with any clarity what CrossCountry’s actual, individual role in the offending call is alleged to be.
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For example, alleging that “Defendants and/or their agent utilized an ATDS” or “they placed
(and continue to place) phone calls to consumers” confusingly combines the likely disparate acts
of two parties into one allegation with no way to understand which party allegedly did what acts.
Moreover, while the factual allegations are not inconsistent with the conclusion that
CrossCountry and Direct Source each independently made offending phone calls, nothing in the
facts actively supports the inference that CrossCountry made any phone calls, either. Seri has not
alleged that any call involved a CrossCountry operator or telemarketer or that any speaker
identified him- or herself as affiliated with CrossCountry. Seri alleges having received calls from
five phone numbers but alleges no facts suggesting any of the numbers is associated with
CrossCountry. And, in fact, Seri does not even allege that CrossCountry products or services
were offered for sale during any phone calls. See Compl. ¶ 32 (saying only, “On information and
belief, Defendants’ telemarketers were calling him in an attempt to pitch him a mortgage loan.”).
The Court does not suggest that these specific allegations are either necessary or sufficient, but
rather simply observes that the Complaint insufficiently alleges facts supporting the conclusion
that CrossCountry independently made any of the offending calls.
The Complaint’s factual allegations similarly do not support either the vicarious or direct
liability of CrossCountry using Direct Source as an agent or intermediary. In addition to the
general allegations about the calls, described above, the Complaint alleges a few specific facts
about the relationship between Direct Source and CrossCountry.
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“Defendant CrossCountry Mortgage regularly utilizes the services of third-party
telemarketers and lead generation services. Specifically, CrossCountry Mortgage has an
extensive relationship with Direct Source, a Texas-based telemarketer.” Compl.
¶¶ 14–15.
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•
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Direct Source set up a webpage, which includes names of CrossCountry employees, to
send leads to CrossCountry. Compl. ¶¶16–18.
“Direct Source seeks to generate leads for businesses that have contracted with it to
receive its leads, including mortgage companies such as Defendant CrossCountry
Mortgage.” Compl. ¶ 22.
First, these allegations are insufficient to allege an agency relationship. Liability by
agency relationship may be effected through the delegation of actual authority, apparent
authority, or ratification through acceptance of benefits of the acts. In the Matter of Dish
Network, 28 F.C.C. Rcd. at 6586. The FCC has provided examples of what this might entail:
To provide guidance in this area, we find that the following are illustrative
examples of evidence that may demonstrate that the telemarketer is the
seller’s authorized representative with apparent authority to make the seller
vicariously liable for the telemarketer’s section 227(b) violations. For
example, apparent authority may be supported by evidence that the seller
allows the outside sales entity access to information and systems that
normally would be within the seller’s exclusive control, including: access to
detailed information regarding the nature and pricing of the seller’s products
and services or to the seller’s customer information. The ability by the outside
sales entity to enter consumer information into the seller’s sales or customer
systems, as well as the authority to use the seller’s trade name, trademark and
service mark may also be relevant. It may also be persuasive that the seller
approved, wrote or reviewed the outside entity’s telemarketing scripts.
Finally, a seller would be responsible under the TCPA for the unauthorized
conduct of a third-party telemarketer that is otherwise authorized to market
on the seller’s behalf if the seller knew (or reasonably should have known)
that the telemarketer was violating the TCPA on the seller’s behalf and the
seller failed to take effective steps within its power to force the telemarketer
to cease that conduct. At a minimum, evidence of these kinds of relationships
which consumers may acquire through discovery, if they are not
independently privy to such information should be sufficient to place upon
the seller the burden of demonstrating that a reasonable consumer would not
sensibly assume that the telemarketer was acting as the seller’s authorized
agent.
In the Matter of Dish Network, 28 F.C.C. Rcd. at 6592.2 The examples described in In the Matter
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Agency is typically a factual issue, and a plaintiff is only required to allege a factual
basis that gives rise to an inference of an agency relationship. Seri correctly notes that the FCC
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of Dish Network, while neither a complete nor binding list of factors, are instructive and illustrate
effectively what Seri’s Complaint does not allege. The only fact purporting to link CrossCountry
to Direct Source’s calls is a leads website allegedly setup by Direct Source. Seri does not allege,
however, facts suggesting that CrossCountry received leads or generated sales from this website,
potentially ratifying Direct Source’s tactics, or how this website might be related to any calls he
actually received. While this website may support an inference of a business relationship broadly,
it simply does not imply an agency relationship and does not alone link CrossCountry to any
particular calls. Seri also does not allege that his personal information was passed to or from
CrossCountry or that Direct Source had access to otherwise-confidential CrossCountry
information. Seri does not even allege that any phone call included reference to CrossCountry’s
name, products, or trademarks. Again, the Court is not enumerating what might be necessary or
sufficient allegations, but rather emphasizes the Complaint’s paucity of factual allegations and
failure to support an inference of vicarious liability.
Second, it is thus readily apparent that nothing in the alleged relationship between
CrossCountry and Direct Source permits inference of “a circumstance in which a seller is so
involved in the placing of a specific telephone call as to be directly liable for initiating it.” In the
Matter Dish Network, 28 F.C.C. Rcd. at 6583. Seri has plead insufficient facts to support such a
direct liability theory.
stressed that nothing in its order “requires a consumer to provide proof—at the time it files its
complaint—that the seller should be held vicariously liable for the offending call.” In the Matter
Dish Network, 28 F.C.C. Rcd. at 6593. This is consistent with the requirements of Federal Rule
of Civil Procedure 8, which requires that a complaint need not contain proof, but rather enough
factual content “to raise a reasonable expectation that discovery will reveal evidence” of a claim.
See Bell Atl. Corp. v. Twombly, 550 U.S. 544, 556 (2007).
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In sum, the Complaint alleges no facts to support CrossCountry’s liability for any calls.
Based on the Complaint, it is, in fact, unclear how or why Seri believes CrossCountry—as
opposed to any other specific seller—was involved in any of the calls he received. See Compl. ¶
3 (“Direct Source . . . performs live outbound lead qualification for mortgage companies and
others.”). Iqbal explains that there is no “probability requirement,” but requires more than “a
sheer possibility” of liability. 556 U.S. at 678. While Seri’s Complaint does plead facts “merely
consistent” with CrossCountry’s liability, “it stops short of the line between possibility and
plausibility.” Id. This is insufficient to survive a motion to dismiss. At this, point, there is little
more than speculation supporting CrossCountry’s involvement with any calls.
B. 47 U.S.C. § 227(c) (“Protection of subscriber privacy rights”)
Section 227(c)(5) provides that “[a] person who has received more than one telephone
call within any 12-month period by or on behalf of the same entity in violation of the regulations
prescribed under this subsection” may bring an action for injunctive relief, damages, or both. 47
C.F.R. § 64.1200(c) is a regulation promulgated under § 227(c) and provides, “[n]o person or
entity shall initiate any telephone solicitation to . . . [a] residential telephone subscriber who has
registered his or her telephone number on the national do-not-call registry . . . . ” See also
Wagner v. CLC Resorts & Developments, Inc., 32 F. Supp. 3d 1193, 1197 (M.D. Fla. 2014)
(quoting 47 U.S.C. § 227(c)(5)) (“To state a claim under section 227(c)(5) of the TCPA, a
plaintiff must allege (1) receipt of more than one telephone call within any 12-month period (2)
by or on behalf of the same entity (3) in violation of the regulations promulgated by the FCC.”).
Without engaging in a second analysis, the Court simply notes only that, for the same
reasons discussed above, Seri has failed to allege that CrossCountry “initiat[ed]” any telephone
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solicitations to him or that alleged offending calls we made “by or on behalf of” CrossCountry.
Therefore, Seri has failed to properly plead that CrossCountry has violated § 227(c).
C. Amendment
Seri requests leave to amend “after an appropriate period of discovery.” Resp. 4.
CrossCountry has not sought dismissal with prejudice, and, regardless, it is certainly not clear to
the Court that amendment would necessarily be futile. See Fed. R. Civ. P. 15(a)(2); Newberry v.
Silverman, 789 F.3d 636, 645 (6th Cir. 2015). Therefore, Seri may file an amended complaint
against CrossCountry should appropriate, relevant facts later be revealed.
IV. Failure to Serve Direct Source
“If a defendant is not served within 90 days after the complaint is filed, the court -- on
motion or on its own after notice to the plaintiff -- must dismiss the action without prejudice
against that defendant or order that service be made within a specified time. But if the plaintiff
shows good cause for the failure, the court must extend the time for service for an appropriate
period.” Fed. R. Civ. P. 4(m).
Here, the Complaint was filed on May 19, 2016, and Summons for both Defendants was
issued on May 20. Thus, service was due by August 17. CrossCountry appeared on June 28.
However, Direct Source has not appeared nor has proof of service or a waiver been filed.
Accordingly, Seri shall within ten days file proof of service or otherwise show good cause
for its failure to do so, or else Direct Source will be dismissed without prejudice, pursuant to
Federal Rule of Civil Procedure 4(m).
V. Conclusion
For the reasons discussed above, Motion to Dismiss, Doc #: 4, is GRANTED. Defendant
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CrossCountry Mortgage, Inc. is DISMISSED WITHOUT PREJUDICE. Furthermore, Plaintiff
Christopher Seri must, by October 10, 2016, SHOW CAUSE why Defendant Michael Crawford
d/b/a Direct Source should not be dismissed for failure to serve.
IT IS SO ORDERED.
/s/ Dan A. Polster Sept. 28, 2016
DAN AARON POLSTER
UNITED STATES DISTRICT JUDGE
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