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Bagg v. Highbeam Research, Inc.

United States District Court, Seventh Circuit

July 10, 2013

ROBERT BAGG, DAVID CROTTY, KATHLEEN GEISSE, CRYSTAL DILLON and LESLIE JOHNSTON, Individually and on Behalf of All Other Persons Similarly Situated, Plaintiffs,
v.
HIGHBEAM RESEARCH, INC., THE GALE GROUP, INC., and CENGAGE LEARNING, INC., Defendants.

MEMORANDUM OPINION AND ORDER

HARRY D. LEINENWEBER, District Judge.

Before the Court is Defendants' Motion to Dismiss Plaintiffs' First Amended Complaint. For the reasons stated herein, the Motion is granted in part and denied in part.

I. FACTUAL BACKGROUND

Plaintiffs Robert Bagg, David Crotty, Crystal Dillon, Kathleen Geisse and Leslie Johnston, (hereinafter, collectively, the "Plaintiffs"), on behalf of themselves and others similarly situated, brought the instant suit against Defendants HighBeam Research, Inc., The Gale Group, Inc., and Cengage Learning, Inc. (hereinafter, collectively, "HighBeam" or "Defendants"). In their Amended Complaint, Plaintiffs claim Defendants are liable for violations of (1) the Massachusetts Consumer Protection Act (the "MCPA"); (2) the Illinois Consumer Fraud and Deceptive Practices Act (the "ICFA"); (3) the Illinois Automatic Contract Renewal Act (the "IACRA"); and (4) unjust enrichment.

The crux of the case concerns HighBeam's alleged use of deceptive practices on its website www.highbeam.com. According to Plaintiffs, HighBeam tricked consumers into paying for subscriptions to its online research services by offering a free seven-day trial and then after the trial ended, charged consumers for the subscriptions without their knowledge. Plaintiffs describe this practice as a "Free-To-Pay" conversion, and explain that this occurs when "consumers are automatically billed for a service or membership if consumers do not take affirmative steps to cancel during the Free Trial period." Amend. Compl. at 1-2.

Plaintiffs filed this suit initially in the United States District Court of Massachusetts. However, the case was transferred to this Court after the District Court in Massachusetts determined that a forum-selection clause in the User Agreement on HighBeam's website (the "User Agreement") required the case to be heard in the Northern District of Illinois.

Defendants filed the instant Motion pursuant to Rule 12(b)(6). Attached to their Motion are two declarations and a handful of other documents which they contend support dismissal. Plaintiffs have objected to these attachments and argue that the Court's consideration of such would transform the Motion to Dismiss to a motion for summary judgment pursuant to Rule 12(d). Plaintiffs argue, in the alternative, that if the Court considers these documents, then it should also review the documents Plaintiffs included with their response brief.

After reviewing the filings of both parties, the Court declines to consider any of attachments at this stage in the litigation. None are dispositive in determining whether the Plaintiffs' claims should be dismissed, and do not fall under any of the Seventh Circuit's exceptions to Rule 12(d). See Moore v. Martin, No. 89-C-7473, 1990 WL 71029, at *1 (N.D. Ill. May 8, 1990) (the Court has discretion whether to consider extraneous documents to a motion to dismiss and often rejects such evidence if it is not "substantial or comprehensive enough to facilitate disposition of the action."); see also, Tierney v. Vahle, 304 F.3d 734, 738 (7th Cir. 2002) (explaining that if documents outside the pleadings are (1) referred to in the complaint; (2) concededly authentic; or (3) central to the plaintiff's claim, the Court may consider such documents without converting a 12(b)(6) motion to one for summary judgment). Thus, in ruling on the instant Motion, the Court proceeds under Rule 12.

II. LEGAL STANDARD

A motion to dismiss pursuant to Rule 12(b)(6) tests the sufficiency of the complaint, not the merits of the suit. See Gibson v. City of Chicago, 910 F.2d 1510, 1520 (7th Cir. 1990). Accordingly, the Court takes all well-pled allegations of the complaint as true, and views them in the light most favorable to the plaintiff. Appert v. Morgan Stanley Dean Witter, Inc., 673 F.3d 609, 622 (7th Cir. 2012). To satisfy the notice-pleading standard of Rule 8, a complaint must provide a "short and plain statement of the claim showing that the pleader is entitled to relief, " and provide the defendant with fair notice of the claim and its basis. FED. R. CIV. P. 8(a)(2); Bell Atl. Corp. v. Twombly, 550 U.S. 544, 545, 555 (2007).

When a plaintiff asserts claims of fraud, such allegations must satisfy the heightened pleading requirements of Rule 9(b). FED. R. CIV. P. 9(b); see also, Borsellino v. Goldman Sachs Group, Inc., 477 F.3d 502, 507 (7th Cir. 2007). A complaint satisfies Rule 9(b) when it alleges "the who, what, when, where, and how" of the fraud. See Borsellino, 477 F.3d at 507. Rule 9(b), read in conjunction with Rule 8, requires plaintiffs to plead "the time, place and contents" of the purported fraud, but not evidence. Fujisawa Pharm. Co., Ltd. v. Kapoor, 814 F.Supp. 720, 726 (N.D. Ill. 1993).

III. ANALYSIS

As an initial matter, Plaintiffs have indicated that Kathleen Geisse, one of the originally named Plaintiffs, seeks to dismiss her claims voluntarily. See Pls.' Resp. at 2 n.1. The Court grants this request and dismisses Geisse's claims without prejudice. Thus, the Plaintiffs that remain are Bagg, ...


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