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Gantchev v. Predicto Mobile

September 18, 2009

KIRIL GANTCHEV AND MARGARET RYAN, INDIVIDUALLY AND ON BEHALF OF A CLASS OF SIMILARLY SITUATED INDIVIDUALS, PLAINTIFFS,
v.
PREDICTO MOBILE, LLC, A DELAWARE LIMITED LIABILITY COMPANY, NEXTWEB MEDIA, LLC, A NEVADA LIMITED LIABILITY COMPANY, OPENMARKET, INC., A MICHIGAN CORPORATION, ENHANCED BILLING SERVICES, INC., A DELAWARE CORPORATION, DEFENDANTS.



The opinion of the court was delivered by: Judge Ronald A. Guzmán

MEMORANDUM OPINION AND ORDER

Kiril Gantchev and Margaret Ryan have sued defendants on behalf of themselves and all others similarly situated for tortious interference with contract, violation of the Illinois Consumer Fraud and Deceptive Business Practices Act, 815 Ill. Comp. Stat. 505/1 et seq., and restitution. The case is before the Court on defendant NextWeb Media, LLC ("NextWeb"), Predicto Mobile, LLC ("Predicto"), and Email Discounts, LLC's ("EDS") motion pursuant to Federal Rule of Civil Procedure ("Rule") 12 to dismiss or, in the alternative, for a more definite statement. For the reasons set forth below, the Court denies the motion.

Facts

Defendant NextWeb provides telephone services like traffic alerts, games and email services to cellular and landline telephone subscribers. (Am. Compl. ¶¶ 3, 10-11.) NextWeb markets this so-called "premium content" through a variety of subsidiaries or affiliates, two of which are defendants Predicto and EDS. (Id. ¶¶ 3-5.) Predicto and EDS are "shell corporations" that are "owned, operated and controlled" by NextWeb. (Id. ¶¶ 5, 12-13.)

NextWeb, Predicto and EDS (hereafter, "defendants") do not bill telephone subscribers directly for premium content. (Id. ¶ 14.) Rather, they bill through so-called "aggregators," which act as conduits between the premium content providers and the telephone carriers. (Id.) The content providers tell the aggregators which telephone numbers are to be billed and in what amounts, and the aggregators relay the information to the carriers. (Id. ¶ 18.)

In 2008, defendants caused plaintiff Gantchev to be charged for premium content services that he did not want, request or authorize. (Id. ¶¶ 32-34.) In 2009, defendants caused plaintiff Ryan to be charged for premium content services that she did not want, request or authorize. (Id. ¶¶ 37-39.) Despite their demands, defendants have not refunded the charges to either plaintiff. (Id. ¶¶ 35, 40.)

Discussion

On a Rule 12(b)(6) motion, the Court "accept[s] the well-pleaded allegations in the complaint as true and draw[s] all reasonable inferences in favor of the plaintiffs. Travel All over the World, Inc. v. Kingdom of Saudi Arabia, 73 F.3d 1423, 1429 (7th Cir. 1996). However, the complaint must give defendants "fair notice of what the claim[s] [are] and the grounds upon which [they] rest[]" and "raise [their] right to relief above the speculative level." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007) (quotation omitted).

Vicarious Liability

NextWeb contends that it should be dismissed from this suit because plaintiffs do not allege that it engaged in any wrongful conduct or that it is vicariously liable for any alleged acts of Predicto and EDS. The Court disagrees. Plaintiffs allege that NextWeb, through Predicto and EDS, which are "shell corporations" that NextWeb wholly "own[s], operate[s] and control[s]," intentionally caused them to be billed for premium content services they did not request. (Compl. ¶¶ 5, 12-13.) Those allegations are sufficient to state vicarious liability claims against NextWeb for any wrongful conduct Predicto and EDS allegedly committed. See Van Dorn Co. v. Future Chem. & Oil Corp., 753 F.2d 565, 569-70 (7th Cir. 1985) (stating that the corporate veil may be pierced if there is a "such a unity of interest and ownership" that "the separate personalities of the corporation[s]... no longer exist" and "adher[ing] to the fiction of separate corporate existence would sanction a fraud or promote injustice").

Illinois Consumer Fraud Act

In Count III of their complaint, plaintiffs allege that defendants violated the Illinois Consumer Fraud and Deceptive Business Practices Act ("ICFA") by causing them to be charged for premium content services they knew plaintiffs had neither requested nor authorized. The ICFA prohibits:

Unfair methods of competition and unfair or deceptive acts or practices, including but not limited to the use of employment of any deception, fraud, false pretense, false promise, misrepresentation or the concealment, suppression or omission of such material fact... in the conduct of any trade or commerce.... 815 Ill. Comp. Stat. 505/2. Plaintiffs contend that their claims challenge an unfair practice, and thus, is governed by the notice pleading standard of Rule 8. See Windy City Metal Fabricators & Supply, Inc. v. CIT Tech. Fin. Serv., Inc., 536 F.3d 663, 670 (7th Cir. 2008) ("[A] cause of action for unfair practices under the [ICFA] need only meet the notice pleading standard of Rule 8(a), not the particularity requirement in Rule 9(b)."). Defendants contend that plaintiffs' ICFA claim sounds in fraud and must be pled with the particularity required by Rule 9(b). See Centerline Equip. Corp. v. Banner Personnel Serv., Inc., 545 F. Supp. 2d 768, 778-79 (N.D. Ill. 2008) ("Federal Rule of Civil Procedure 9(b) requires claims of fraud to be pleaded with particularity, and... this requirement extends to fraud claims brought pursuant to the ICFA.").

The Court agrees with plaintiffs. The gist of a fraud-based ICFA claim is that the plaintiff was harmed by his reliance on a false statement made by the defendant. See AGFA Corp. v. Wagner Printing Co., No. 02 C 2400, 2002 WL 1559663, at *3 (N.D. Ill. July 10, 2002). Plaintiffs do not allege that NextWeb, Predicto or EDS made any false statements to them. Rather, they allege that they were harmed by their telephone carriers' reliance on defendants' false statements that plaintiffs had ordered premium content services. (See Compl. ΒΆΒΆ 18-20, 49.) Because ...


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