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Spiegel v. EngageTel

United States District Court, N.D. Illinois, Eastern Division

September 29, 2016

MARSHALL SPIEGEL, individually and on behalf of a class of those similarly situated, Plaintiff,
v.
ENGAGETEL, DENNIS CARLSON, ARASH AKHAVAN, ARG GROUP, WYOMING CORPORATE SERVICES, GERALD PITTS, JOHN DOES 1-10, Defendants.

          MEMORANDUM OPINION AND ORDER

          Joan B. Gottschall United States District Judge

         Plaintiff Marshall Spiegel (“Spiegel”) brings this class-action lawsuit on behalf of himself and others who have allegedly received unsolicited telephone calls from numerous defendants, including EngageTel, Inc. (“EngageTel”) and Dennis Carlson (“Carlson”) (collectively, “Defendants”), despite being on the National “Do Not Call” Registry.[1] Spiegel maintains that the telephone calls at issue were made in violation of the Telephone Consumer Protection Act and the Illinois Consumer Fraud and Deceptive Business Practices Act, and that they caused him both actual damages stemming from the need to invest in call-blocking equipment, and emotional damages stemming from aggravation and irritation associated with receiving unwanted phone calls. The Defendants have moved for judgment on the pleadings pursuant to Federal Rule of Civil Procedure 12(c), asserting that Spiegel has failed to plead any facts that support his claim for relief. For the reasons set forth below, we deny the Defendants' motion in part and grant it in part.

         I.BACKGROUND

         Spiegel's 47-page Second Amended Complaint (“SAC”) describes how the Defendants took part in a scheme to flood residential phone lines with thousands of “junk” calls containing fraudulent Caller ID information for purposes of scam marketing and to collect so-called “dip fees” associated with the calls. The most relevant allegations, along with the source of the information underlying them, if any, are set forth as follows:

. EngageTel is a shell corporation owned by Carlson. Carlson purchased EngageTel from a “company notorious for setting up business entity fronts, shell corporations, and shelf corporations.” (SAC at ¶ 6). The source of this information is a Reuter's news agency article dated June 28, 2011 about Wyoming Corporate Services, the company Spiegel described as “notorious.” (Id. at ¶ 7).
. Defendant ARG Group (“ARG”) and/or its agent/representative Arash Akhavan (“Akhaven”) “engaged” EngageTel for Caller ID spoofing services.[2] (Id. at ¶¶ 10-11). AGR markets energy services by telephone and has been sued several times for alleged violations under the Telephone Consumer Protection Act. (Id. at ¶ 52).
. Spiegel, who is on the National Do Not Call Registry, received numerous telemarketing calls made by or on behalf of ARG and/or Akhaven, as facilitated by EngageTel-who provided “platform services” that rendered it intrinsic to the generation of the calls. (Id. at ¶¶ 24-31). These calls provided misleading identification information by providing names such as “customer servic[e]” and “energy service” but not “ARG” or “Akhaven, ” and were intended to sell scam energy services. (Id. at ¶¶ 31-32). Spiegel provides as a source for some of this information the internet website “800notes.com, ” which is a free reverse phone number lookup site. (Id. . at ¶ 33).
. Spiegel received numerous other phone calls generated by EngageTel and other defendants by means of an automatic dialer and/or recorded or artificial voice, despite having a call-blocking system in place. (Id. at ¶¶ 33, 43-45). Spiegel alleges this information based on his information and belief.
. EngageTel's business is the provision of virtual telephone numbers[3] for purposes of misrepresenting one's identity on Caller ID; as such, EngageTel traffics in “spoofing” services.[4] (Id. at ¶¶ 59-66). EngageTel is not the underlying carrier for the telephone calls for which it provides Caller ID services. (Id. . at ¶¶ 61-62).
. EngageTel employs a system called “Caller ID Name” (“CNAM”) that allows its clients (here, AGR and/or Akhaven) to customize their CNAM information so as to provide fraudulent or deceptive identification information and thereby leading consumers to believe that they are getting a locally-placed phone call or one that comes from originators other than the true callers. (Id. at ¶¶ 67-77). Spiegel indicates that he derived pertinent information from “[p]re-suit investigation on internet sites, ” including 800notes.com. (Id. at ¶ 78).
. When a consumer receives a call from an EngageTel number, the consumer can call the number back, at which time he is connected to EngageTel and given the opportunity via a recording to be placed on a Do Not Call list; however, on Spiegel's information and belief, the consumer is not actually placed on a Do Not Call list but instead is providing her phone number to be “harvested” for resale. (Id. at ¶¶ 82-84).
. EngageTel receives a small “dip fee” associated with each CNAM query.[5] If the queried number is not in the phone carrier's database, the query is routed to the appropriate CNAM database, such as EngageTel's, for retrieval of the calling party's customer name. When this situation occurs, the recipient of the CNAM inquiry receives the dip fee. Because the individual dip fee is so small, and because dip fees are generated only on subscribers of landline caller-ID services, EngageTel relies on its clients to generate millions of phone calls using EngageTel numbers. Spiegel does not identify the source of this information, but the court notes that at least some of the information appears to be industry practice. (Id. at ¶¶ 89-100).
. EngageTel does not charge its clients for spoofing services because it expects its clients to generate dip fees through the placement of millions of phone calls. EngageTel is actively and constructively aware that its services are being used unlawfully because there is no legitimate purpose on the part of any EngageTel client to make a high volume of sales calls if not for purposes related to telemarking and illegal data mining, and because high volume call placement can only be done with the use of an automatic telephone dialing system (“ATDS”). (Id. at ¶¶ 100-102).

         Defendants now move for a judgment on the pleadings, claiming that none of the four counts asserted against them (Count II: violation of the Telephone Consumer Protection Act; Count III: violation of the Illinois Consumer Fraud and Deceptive Business Practices Act; Count IV: unfair practice; and Count V: unjust enrichment) state a claim upon which relief may be granted. Defendants also argue that Spiegel has failed to set forth facts supporting claims of vicarious liability under the TCPA or facts sufficient to pierce EngageTel's corporate veil. Defendants maintain that Spiegel's allegations are “full of sound and fury” yet signify no wrongdoing by Defendants. The court addresses each of these arguments in turn.

         II. STANDARD OF REVIEW

         A Rule 12(c) motion for judgment on the pleadings is “designed to provide a means of disposing of cases when the material facts are not in dispute and a judgment on the merits can be achieved by focusing on the content of the pleadings and any facts of which the court will take judicial notice.” Illinois Tool Works, Inc. v. Home Indem. Co., 998 F.Supp. 868, 870 (N.D. Ill. 1998) (citing 5A Charles A. Wright and Arthur R. Miller, Federal Practice and Procedure § 1367 (1990) (now 5C Fed. Prac. & Proc. Civ. § 1367 (3d ed.)). Stated somewhat differently, “[t]he motion for a judgment on the pleadings only has utility when all material allegations of fact are admitted or not controverted in the pleadings and only questions of law remain to be decided by the district court.” 5C Fed. Prac. & Proc. Civ. § 1367 (3d ed.). In evaluating a Rule 12(c) motion, the court employs the same standards that apply when reviewing a motion to dismiss for failure to state a claim under Rule 12(b)(6). Buchanan-Moore v. Cnty. of Milwaukee, 570 F.3d 824, 827 (7th Cir. 2009). Thus, the court must view the facts alleged in the complaint “in the light most favorable to the nonmoving party and will grant the motion only if it appears beyond doubt that the plaintiff cannot prove any facts that would support her claim for relief. Id. (internal citations and quotations omitted). Moreover, the complaint's factual allegations need only “be enough to raise a right to relief above the speculative level.” Pisciotta v. Old Nat'l Bancorp, 499 F.3d 629, 633 (7th Cir. 2007) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007) (quotation marks omitted)). The court makes the assumption that all the allegations in the complaint are true, even if they are “doubtful in fact.” Twombly, 550 U.S. at 555.

         The court decides a Rule 12(c) motion for judgment on the pleadings based upon its review of the pleadings alone. N. Ind. Gun & Outdoor Shows, Inc. v. City of S. Bend, 163 F.3d 449, 452 (7th Cir. 1998). The pleadings include the complaint, the answer, and any documents attached as exhibits, such as affidavits, letters, and contracts. Id. at 452-53; see also Fed. R. Civ. P. 10(c). The court may take judicial notice of matters of public record. U.S. v. Wood, 925 F.2d 1580, 1582 (7th Cir. 1991).

         III. ANALYSIS

         A. Count II: The Telephone Consumer Protection Act (TCPA), 47 ...


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