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Flexicorps, Inc. v. Benjamin & Williams Debt Collectors

October 30, 2007

FLEXICORPS, INC., AN ILLINOIS CORPORATION, INDIVIDUALLY AND AS THE REPRESENTATIVE FOR A CLASS OF SIMILARLY SITUATED PERSONS, PLAINTIFF,
v.
BENJAMIN & WILLIAMS DEBT COLLECTORS, INC., BENJAMIN & WILLIAMS CONSULTING, INC., BENJAMIN & WILLIAMS MARKETING CORP. A/K/A BENJAMIN AND WILLIAMS CREDIT INVESTIGATORS, INC. DEFENDANTS.



The opinion of the court was delivered by: Judge Virginia M. Kendall

MEMORANDUM OPINION AND ORDER

Plaintiff Flexicorps, Inc. ("Flexicorps") brings this putative class action against Defendants for alleged violations of the Telephone Consumer Protection Act ("TCPA"), 47 U.S.C. § 227 and the Illinois Consumer Fraud and Deceptive Practices Act ("ICFA"), 815 Ill. Comp. Stat. 505/2, and conversion. Plaintiff's claims arise from a fax allegedly sent by Defendant Benjamin & Williams Debt Collectors, Inc. ("BW Debt Collectors") to Plaintiff on March 1, 2004. Benjamin and Williams Consulting Inc. ("BW Consulting") and Benjamin and Williams Marketing Corp. a/k/a Benjamin and Williams Credit Investigators, Inc. ("BW Marketing") were corporations formed to continue the business of BW Debt Collectors. William Mecca is the sole shareholder in all three corporations. Defendants BW Consulting and BW Marketing have moved to dismiss this action as against them for failure to state a claim upon which relief may be granted. For the reasons set forth below, Defendants BW Consulting and BW Marketing's Motion to Dismiss is denied.

PLAINTIFF'S ALLEGATIONS*fn1

On March 1, 2004, BW Debt Collectors transmitted by telephone facsimile machine an unsolicited advertisement to Plaintiff's telephone facsimile machine. (Compl. ¶ 12.) Plaintiff is an Illinois corporation. (Compl. ¶ 9.) BW Debt Collectors is a New York corporation with an office in New York. (Compl. ¶ 10.) Mecca is President and sole shareholder of BW Debt Collectors. (Compl. ¶ 10.) BW Debt Collectors did not adopt bylaws, hold annual meetings, or hold elections for directors or officers of the corporation. (Compl. ¶ 10.)

Mecca also wholly owns and operates BW Consulting and BW Marketing. (Compl. ¶ 11.) BW Consulting and BW Marketing are New York corporations that were formed to carry on the business of BW Debt Collectors. (Compl. ¶ 11.) Plaintiff alleges that BW Consulting and BW Marketing were formed to avoid liability in the current suit. (Compl. ¶ 11.) After Plaintiff initiated the instant litigation, Mecca transferred to BW Consulting and BW Marketing the remaining accounts and assets of BW Debt Collectors. (Compl. ¶ 11.) BW Consulting and BW Marketing operate with the same employees, telephone numbers, and website as BW Debt Collectors. (Compl. ¶ 11.)

Defendants have sent thousands of unsolicited facsimile advertisements throughout the United States. (Compl. ¶ 14.) By sending these unsolicited faxes to Flexicorps and the other class members, BW Debt Collectors, BW Consulting, and BW Marketing violated the ICFA and TCPA. (Compl. ¶¶ 16-29; 40-50.) BW Debt Collectors, BW Consulting, and BW Marketing also improperly and unlawfully converted Plaintiff's and other class members' fax machine toner, paper, memory, and employee time to Defendants' own use. (Compl. ¶¶ 30-39.) While BW Consulting and BW Marketing were formed after BW Debt Collectors sent the unsolicited fax to Flexicorps, Flexicorps alleges that BW Consulting and BW Marketing are liable as successor corporations to BW Debt Collectors. (Compl. ¶ 11.)

STANDARD

When considering a motion to dismiss under Rule 12(b)(6), a court must accept as true all facts alleged in the complaint and construe all reasonable inferences in favor of the plaintiff. See Murphy v. Walker, 51 F.3d 714, 717 (7th Cir. 1995). To state a claim upon which relief can be granted, 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). A plaintiff need not allege all facts involved in the claim. See Sanjuan v. Am. Bd. of Psychiatry & Neurology, Inc., 40 F.3d 247, 251 (7th Cir. 1994). However, in order to survive a motion to dismiss for failure to state a claim, the claim must be supported by facts that, if taken as true, at least plausibly suggest that the plaintiff is entitled to relief. See Bell Atlantic Corp. v. Twombly, 127 S.Ct. 1955, 1974 (2007). Such a set of facts must "raise a reasonable expectation that discovery will reveal evidence" of illegality. Id. at 1965.

DISCUSSION

BW Consulting and BW Marketing have moved to dismiss Plaintiff's claims, pursuant to Federal Rule of Civil Procedure 12(b)(6), for failure to state a claim. Plaintiff's claims against BW Consulting and BW Marketing are based on the theory of successor liability. Before evaluating the sufficiency of the allegations, the Court must ascertain the applicable body of law governing successor liability in the current suit. When the laws of two different states conflict such that the difference between the relevant laws will affect the outcome of the case, a choice of law analysis is required. Int'l Adm'rs, Inc. v. Life Ins. Co., 753 F.2d 1373, 1376 n.4 (7th Cir. 1985). Because the Court believes that such a difference exists between New York and Illinois successor liability law, a choice of law analysis is necessary.

I. Choice of Law Analysis

The Complaint alleges that Defendants are liable, as successor corporations, for: (I) violating the TCPA; (II) conversion; and (III) violating the ICFA. While successor liability is typically governed by state law, Flexicorps asserts a federal claim (Count I) as well as two state claims (Counts II and III). Thus, the Court must conduct a choice of law analysis for the federal claim and a separate choice of law analysis for the state claims to determine what law governs each claim. Because it will inform the federal claim analysis, the Court will look first at the choice of law analysis for Plaintiff's state claims.

A. Conversion (Count II) and the Illinois Consumer Fraud Act (Count III)

When addressing a state claim, this Court must apply the substantive law of Illinois, including its choice of law principles. See Klaxon Co. v. Stentor Elec. Mfg. Co., 313 U.S. 487 (1941); Bancoklahoma Mortgage Corp. v. Capital Title Co., 194 F.3d 1089, 1103 (10th Cir. 1999) ("A federal court sitting in diversity applies the substantive law, including choice of law rules, of the forum state. This rule also applies when a federal court exercises supplemental jurisdiction over state law claims in a federal question lawsuit.") (citation omitted). Under the principles of depecage, a court must "cut[] up a case into individual issues," and apply the law of the state that has the most significant relationship to the occurrence and the parties with respect to each issue involved. Ruiz v. Blentech, 89 F.3d 320, 324 n.1, 324-25 (7th Cir. 1996). Thus, when conducting a choice of law analysis for successor liability, a court should conduct one ...


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