Ott v. Mortgage Investors Corporation of Ohio, Inc. et al
Filing
121
OPINION AND ORDER: Denying Motion of Individual Defendants to Certify Order for Interlocutory Appeal 103 . Signed on 4/14/15 by Magistrate Judge Janice M. Stewart. (ST)
UNITED STATES DISTRICT COURT
DISTRICT OF OREGON
PORTLAND DIVISION
KELLY OTT; NANCY LUEBBEN; and
BENJAMIN GESLER, on behalf of
themselves and all others similarly situated,
Case No. 3:14-cv-00645-ST
Plaintiffs,
OPINION AND ORDER
v.
MORTGAGE INVESTORS
CORPORATION OF OHIO, INC., an Ohio
corporation also doing business as
MORTGAGE INVESTORS
CORPORATION, AMERIGROUP
MORTGAGE CORPORATION,
VETERANS INFORMATION
DEPARTMENT and VETERANS HOME
LOANS; WILLIAM EDWARDS,
individually; JEFFREY CRILLEY,
individually; JAMES SHATZ, individually;
and JOHN WESLEY BAILEY III,
individually,
Defendants.
STEWART, Magistrate Judge:
INTRODUCTION
Plaintiffs filed this class action against defendants for violations of the Telephone
Consumer Protection Act, 47 USC § 227 (“TCPA”), by means of a nationwide telemarketing
1 – OPINION AND ORDER
scheme targeted at U.S. military veterans. Defendant, Mortgage Investors Corporation of Ohio,
Inc. (“MIC”), is a mortgage lending company doing business under several other names and
specializing in Interest Rate Reduction Refinance Loans guaranteed by the United States
Department of Veterans Affairs. The four individual defendants (William Edwards, Jeffrey
Crilley, James Shatz, and John Wesley Bailey III) are directors, officers and employees of MIC
(“Individual Defendants”).
The Individual Defendants filed a Motion to Dismiss pursuant to FRCP 12(b)(2) based on
lack of personal jurisdiction (docket #33) which this court denied by Order dated December 3,
2014 (docket #83). Ott v. Mortgage Investors Corp. of Ohio, Inc., No. 3:14-CV-00645-ST, 2014
WL 6851964 (D Or Dec 3, 2014). The Individual Defendants now have filed a Motion to
Certify Order for Interlocutory Appeal (docket #103). For the reasons set forth below, that
motion is denied.
LEGAL STANDARD
Pursuant to 28 USC § 1291, appellate review is available only after a final judgment has
been entered by a district court. However, the Interlocutory Appeals Act, 28 USC § 1292(b),
provides a limited exception to this final judgment rule. It authorizes district courts to certify an
order for interlocutory appeal if: (1) the “order involves a controlling question of law;” (2) there
is “substantial ground for difference of opinion;” and (3) “an immediate appeal from the order
may materially advance the ultimate termination of the litigation.” Id; Reese v. BP Exploration
(Alaska), Inc., 643 F3d 681, 687-88 (9th Cir 2011).
Even if these three statutory criteria are satisfied, district courts have “unfettered
discretion” to deny certification. Villareal v. Caremark LLC, No. CV-14-00652–PHX–DJH,
2015 WL 545522, at *3 (D Ariz Feb. 2, 2015) (internal quotation marks and citation omitted);
2 – OPINION AND ORDER
see also Exec. Software N. Am., Inc. v. U.S. Dist. Court for the Cent. Dist. of Cal., 24 F3d 1545,
1550 (9th Cir 1994) (noting that a district court’s certification decision is “unreviewable”). As
the Ninth Circuit has cautioned, § 1292(b) “is to be applied sparingly and only in exceptional
cases.” United States v. Woodbury, 263 F2d 784, 799 n11 (9th Cir 1959) (citations omitted).
“Congress did not intend that the courts abandon the final judgment doctrine and embrace the
principle of piecemeal appeals.” Id (internal quotation marks and citation omitted). Instead, the
legislative history makes clear that § 1292(b) is reserved for “exceptional cases where a decision
of the appeal may avoid protracted and expensive litigation, as antitrust and similar protracted
cases.” U.S. Rubber Co. v. Wright, 359 F2d 784, 785 n2 (9th Cir 1966) (quotation omitted). It
“was not intended merely to provide review of difficult rulings in hard cases.” Id.
DISCUSSION
I.
Timeliness
Plaintiffs first object to the Individual Defendants’ motion for certification as untimely
filed. A motion under § 1292(b) need not be filed within any particular time, but some courts
require that it be filed “within a reasonable time.” Ahrenholz v. Bd. of Trs. of Univ. of Ill., 219
F3d 674, 675 (7th Cir 2000) (emphasis omitted); Lopez v. Youngblood, No. 1:07cv0464 DLB,
2009 WL 2062883, at *3 (ED Cal July 15, 2009) (adopting the Ahrenholz “reasonable time”
requirement). Although what constitutes a “reasonable time” varies, some courts have
condemned delays of two months. Richardson Elec. Ltd. v. Panache Broad., 202 F3d 957, 958
(7th Cir 2000) (finding two month delay to file § 1292(b) motion to be “inexcusably dilatory”);
Ferraro v. Sec’y of U.S. Dep’t of Health & Human Servs., 780 F Supp 978, 979 (EDNY 1992)
(rejecting § 1292(b) motion when no justification offered for a nearly two and a half month
delay).
3 – OPINION AND ORDER
The Individual Defendants waited 78 days after entry of the court’s Order on
December 3, 2014, before filing their motion on February 19, 2015. They explain that delay due
to the intervening holiday season with previously scheduled vacations, the need to respond to
discovery requests and prepare a motion for a protective order, and the need to confer with four
individual clients to consider the utility of filing the motion. Given this explanation, this court
finds that the Individual Defendants brought this motion within a reasonable time.
II.
Statutory Criteria
A.
Controlling Questions of Law
A “question of law” is “controlling” under § 1292(b) if “resolution of the issue on appeal
could materially affect the outcome of litigation in the district court.” Shurance v. Planning
Control Int’l, Inc., 839 F2d 1347, 1347 (9th Cir 1988) (internal quotation marks and citation
omitted). A “question of law” means a “pure question of law,” not a mixed question of law and
fact or an application of law to a particular set of facts. See Ahrenholz, 219 F3d at 675-77.
However, when the underlying facts are undisputed, the issue of personal jurisdiction is a
question of law. Panavision Int’l, L.P. v. Toeppen, 141 F3d 1316, 1319-20 (9th Cir 1988).
To be “controlling,” that question of law must “materially affect the outcome” of the
action. The outcome would be materially affected if it terminated the action in its entirety.
However, reversal of this court’s Order would terminate only those claims directed against the
Individual Defendants, not the claims against MIC. Nonetheless, resolution of an issue need not
necessarily terminate the entire action in order to “materially affect the outcome,” but may
terminate all claims against some, but not all, parties. See Klinghoffer v. S.N.C. Achille Lauro Ed
Altri-Gestione Motonave Achille Lauro in Amministrazione Straordinaria, 921 F2d 21, 24 (2nd
Cir 1990); Bush v. Adams, 629 F Supp2d 468, 474 (ED Cal 2009). If this court lacks personal
4 – OPINION AND ORDER
jurisdiction over the Individual Defendants, then all claims against them would be dismissed (at
least in the District of Oregon).
Thus, the first requirement for certification under § 1292(b) is satisfied.
B.
Substantial Ground for Difference of Opinion
To demonstrate “a substantial ground for difference of opinion” on a question for
§ 1292(b) certification, “courts must examine to what extent the controlling law is unclear.”
Couch v. Telescope, Inc., 611 F3d 629, 633 (9th Cir 2010). This difference of opinion
traditionally exists where “‘the circuits are in dispute on the question and the court of appeals of
the circuit has not spoken on the point, if complicated questions arise under foreign law, or if
novel and difficult questions of first impression are presented.’” Id, quoting 3 Fed Proc Lawyers
Ed. § 3:212 (2010) (footnotes omitted). However, “‘just because a court is the first to rule on a
particular question or just because counsel contends that one precedent rather than another is
controlling does not mean there is such a substantial difference of opinion as will support an
interlocutory appeal.’” Id (footnotes omitted). A party must show more than strong
disagreement with a court’s ruling. Id. “That settled law might be applied differently does not
establish a substantial ground for difference of opinion.” Id (citations omitted).
The Individual Defendants assert that substantial ground for a difference of opinion exists
with respect to two issues: (1) whether a court may exercise personal jurisdiction over an
Individual Defendant when the complaint alleges no other acts than the performance of official
corporate duties and no personal contacts with the forum state; and (2) whether a complaint
states a claim for individual liability under the TCPA when it does not allege sufficient
involvement by the Individual Defendants in the alleged activity of the corporate defendant.
5 – OPINION AND ORDER
With respect to the first issue, the Individual Defendants argue that under the fiduciary
shield doctrine, “a person’s mere association with a corporation that causes injury in the forum
state is not sufficient in itself to permit that forum to assert jurisdiction over the person.” Davis
v. Metro Prods., Inc., 885 F2d 515, 520 (9th Cir 1989). However, the the Ninth Circuit has held
that the fiduciary shield doctrine may be disregarded “in cases in which the corporation is the
agent or alter ego of the individual defendant . . . or where there is an identity of interests
between the corporation and the individuals.” Id at 520-21 (internal quotation marks and
citations omitted). In addition, the fiduciary shield doctrine does not trump long-arm statutes
that are coextensive with due process. Id at 522 (concluding that Arizona’s long-arm statute
extended jurisdiction to constitutional due process limits and was not limited by the fiduciary
shield doctrine). Oregon’s long-arm statute extends jurisdiction to the limits of constitutional
due process. Gray & Co. v. Firstenberg Mach. Co., Inc., 913 F2d 758, 760 (9th Cir 1990)
(citations omitted). Thus, this court concluded that under the controlling principles in Davis,
“there is no fiduciary shield protection and the court may assert personal jurisdiction over the
individuals” consistent with due process. Ott, 2014 WL 6851964, at *5, citing Garrison v. Bally
Total Fitness Holding Corp., No. 04-1331-PK, 2005 WL 3143105, at *2 (D Or Nov. 23, 2005).
The Individual Defendants fail to cite a single Ninth Circuit or out-of-circuit authority
expressing different general rules governing personal jurisdiction. Instead, they maintain that
some district court decisions conflict with this court’s application of these general principles,
citing the same cases as in their original motion. This court considered each of these cases and
found that none disregards Oregon’s long-arm statute or addresses jurisdiction over persons who
allegedly violated the TCPA. Ott, 2014 WL 6851964 at *5 (citations omitted). Given the lack of
6 – OPINION AND ORDER
a “single case that conflicts with the district court’s construction or application,” no substantial
ground for disagreement exists. Couch, 611 F3d at 633.
The Individual Defendants also fail to identify any difference of opinion over Ninth
Circuit law regarding the “minimum contacts” necessary to invoke personal jurisdiction.
Instead, they argue that this court misapplied the “purposeful direction” prong of the minimum
contacts test by imposing a less rigorous standard than other courts. The Individual Defendants
introduce nothing new that this court has not already considered, relying on the same cases cited
in their reply brief on the motion to dismiss.
As in their initial motion, they ignore plaintiffs’ allegations that the Individual
Defendants did more than simply oversee MIC’s operations because they purposely directed
their activities to Oregon when they formulated, directed, implemented, and ratified a
telemarketing scheme aimed at selected states, including Oregon. The Individual Defendants
cite no contrary case, but merely repeat the authority and argument cited in their original briefing
on the motion to dismiss. None of this argument provides a basis for interlocutory review.
The second issue as to individual liability under the TCPA also presents no substantial
grounds for a difference of opinion. As this court previously pointed out, “[a]lthough the Ninth
Circuit has not ruled on this issue, numerous district courts have held that corporate actors may
be held individually liable for violating the TCPA where they had direct personal participation in
or personally authorized the conduct found to have violated the statute.” Ott, 2014 WL 6851964,
at *9 (internal quotation marks and citations omitted). “Where courts have declined to find
personal liability, there has been little evidence of the corporate officer’s direct participation in
the wrongdoing.” Id at *10 (citation omitted). This is consistent with general agency law. In
7 – OPINION AND ORDER
compliance with that law, plaintiffs allege that the Individual Defendants either directly
participated in the unlawful telemarketing scheme or personally authorized the scheme or both.
For a contrary conclusion, the Individual Defendants primarily rely on a single,
unpublished, out-of-circuit district court order stating in a footnote that it “does not necessarily
endorse, or find persuasive” the way in which other district courts have applied the legal
principles regarding individual liability for corporate officers. Mais v. Gulf Coast Collection
Bureau, Inc., No. 11-61936-CIV-SCOLA, 2013 WL 1283885, at n1 (SD Fla Mar. 27, 2013).
That is not a substantial basis for difference of opinion. Couch, 611 F3d at 634. Furthermore,
the Individual Defendants fail to cite a single case deciding the question of individual liability on
a motion to dismiss. All of their cited cases involve decisions on summary judgment motions or
after trial where the factual record was more fully developed.
Disagreement by the Individual Defendants with the result reached by this court is not
compelling or even persuasive with respect to showing substantial grounds for differences of
opinion. Accordingly, the Individual Defendants fail to satisfy the second requirement to certify
a question for appeal under § 1292(b).
C. Material Advancement of the Ultimate Termination of the Litigation
Even if the Individual Defendants satisfied the second requirement under § 1292(b), they
clearly falter on the third requirement that an interlocutory appeal materially advance the
ultimate termination of this litigation. Resolution of a question materially advances the
termination of litigation if it “facilitate[s] disposition of the action by getting a final decision on a
controlling legal issue sooner, rather than later in order to save the courts and the litigants
unnecessary trouble and expense.” United States v. Adam Bros. Farming, Inc., 369 F Supp2d
1180, 1182 (CD Cal 2004) (internal quotation marks and citation omitted).
8 – OPINION AND ORDER
Resolving whether this court has personal jurisdiction over the Individual Defendants
would not end this case or even slow it down. Even if the Ninth Circuit dismissed the Individual
Defendants, the parties still would proceed through discovery, class certification, dispositive
motion practice, and trial with the Individual Defendants involved in all aspects of the case. As
the alleged perpetrators of the unlawful telemarketing scheme at issue, the Individual Defendants
are key witnesses who will produce documents, give depositions, and testify at trial regardless of
whether they are named as defendants or not. Discovery will proceed in largely the same
fashion with or without them as parties. Where “a substantial amount of litigation remains in
this case regardless of the correctness of the Court’s ruling . . . arguments that interlocutory
appeal would advance the resolution of this litigation are unpersuasive.” Friedman v. 24 Hour
Fitness USA, Inc., No. 06–cv–6282, 2009 WL 545783, at *2 (CD Cal Mar. 3, 2009); see also
United States ex rel. Bagley v. TRW, Inc., No. 95–cv–4153, 2001 WL 369790, at *2 (CD Cal
Mar. 26, 2001) (same).
ORDER
For these reasons, the Motion of Individual Defendants to Certify Order for Interlocutory
Appeal Pursuant to 28 USC § 1292(b) (docket #103) is DENIED.
DATED April 14, 2015.
s/ Janice M. Stewart
Janice M. Stewart
United States Magistrate Judge
9 – OPINION AND ORDER
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?