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Spiegel v. Reynolds

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

November 22, 2016

MARSHALL SPIEGEL, individually and on behalf of a class of those similarly situated, Plaintiff,
v.
JAMES T. REYNOLDS; JIM REYNOLDS; KRISTINA HIXSON REYNOLDS[1]; and ASSOCIATED COMMUNITY SERVICES, INC., Defendants.

          MEMORANDUM OPINION AND ORDER

          EDMOND E. CHANG, UNITED STATES DISTRICT JUDGE

         In this proposed class action lawsuit, Marshall Spiegel claims that James T. Reynolds, Jim Reynolds, Kristina Hixson Reynolds, and Associated Community Services, Inc. (ACS) violated the Telephone Consumer Protection Act, 47 U.S.C. § 227 et seq.[2] R. 1, Compl.; R. 46, Am. Compl.[3] Specifically, Spiegel alleges that he and other class members received unwanted phone calls from ACS on behalf of The Breast Cancer Society, Inc., which Spiegel says is a sham charity run by the Reynoldses. Am. Compl. ¶¶ 1, 3. Now, James and Kristina Reynolds[4] move to dismiss the case for lack of personal jurisdiction and all of the defendants move to dismiss for failure to adequately state a claim.[5] R. 48, Reynolds Defs.' Mot. to Dismiss; R. 49, Reynolds Defs.' Br.; R. 50, ACS Def.'s Mot. to Dismiss; R. 51, ACS Def.'s Br. For the reasons discussed below, the Court denies the Reynoldses' motion to dismiss for lack of personal jurisdiction, but without prejudice so that they may file another Rule 12(b)(2) motion to dismiss if, after jurisdictional discovery, the facts still support the motion. The Court also denies the Defendants' motion to dismiss for failure to state a claim.

         I. Background

         For purposes of this motion, the Court must accept as true the allegations in Spiegel's First Amended Complaint. Erickson v. Pardus, 551 U.S. 89, 94 (2007). Spiegel has been on the National Do Not Call Registry since 2003. Am. Compl. ¶ 12. Between October 2013 and August 2014, Spiegel received four calls on his home telephone from ACS, a Michigan-based telemarketing company. Id. ¶¶ 5, 13, 29. These calls “sought donations and/or the purchase of goods or services” on behalf of The Breast Cancer Society, Inc. (call it the “Society” for short) pursuant to a services contract between ACS and the Society. Id. ¶¶ 1, 28, 30(e); R. 49-1, James Reynolds Decl. ¶¶ 9-10. According to Spiegel, the Society is a “sham charity” run by the Reynoldses. Am. Compl. ¶¶ 1, 3, 30(a). That is, the Reynoldses used the donations collected by the Society to line their own pockets, not for any charitable purpose. Id. ¶¶ 34, 35. ACS also was in on the scheme, feathering its own nest with the donations it elicited on behalf of the Society all the while knowing that the Society was a sham charity. Id. ¶¶ 30(b), 34, 39. So, even though “each call placed by ACS [was] purportedly for the benefit of [the Society], ” in reality ACS made the calls “on behalf of, and for the benefit of, ACS and the Reynolds family.” Id. ¶ 38; see also Id. ¶¶ 7, 9, 13, 30.

         Spiegel now brings one claim against the Reynoldses and ACS for violation of the Telephone Consumer Protection Act (TCPA).[6] See Am. Compl. He alleges that the Defendants violated the TCPA's do-not-call provisions when ACS called him and other Illinois residents on behalf of the Society, id. ¶¶ 25, 30; see 47 U.S.C. § 227(c). Because the Society is a sham charity, Spiegel's theory goes, the calls do not fall under the TCPA's exception for calls made “[b]y or on behalf of a tax-exempt nonprofit organization.” 47 C.F.R. § 64.1200(f)(14)(iii). The Reynoldses move to dismiss the case against them for lack of personal jurisdiction, and all of the Defendants move to dismiss for failure to adequately state a claim.

         II. Standard

         A. Rule 12(b)(2)

         The plaintiff bears the burden of establishing that personal jurisdiction is proper when jurisdiction is challenged by the defendant. Purdue Research Found. v. Sanofi-Synthelabo, S.A., 338 F.3d 773, 782 (7th Cir. 2003) (noting that the plaintiff must generally only make a prima facie case of personal jurisdiction). When personal jurisdiction is challenged under Federal Rule of Civil Procedure 12(b)(2) and material facts necessary to rule on the issue are in dispute, the Court must grant discovery and hold an evidentiary hearing to resolve the dispute. Hyatt Int'l Corp. v. Coco, 302 F.3d 707, 713 (7th Cir. 2002). Then, “the plaintiff must establish jurisdiction by a preponderance of the evidence, ” Purdue Research Found., 338 F.3d at 783, and “prove what it alleged” at that hearing, Hyatt Int'l Corp., 302 F.3d at 713. This is in contrast to what is “[n]ormally [done] on review of a motion to dismiss, ” where the Court “accepts all well-pleaded allegations in the complaint as true.” Purdue Research Found., 338 F.3d at 783.

         B. Rule 12(b)(6)

         Under Federal Rule of Civil Procedure 8(a)(2), a complaint generally need only include “a short and plain statement of the claim showing that the pleader is entitled to relief.” Fed.R.Civ.P. 8(a)(2). This short and plain statement must “give the defendant fair notice of what the … claim is and the grounds upon which it rests.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007) (alteration in original) (internal quotation marks and citation omitted). The Seventh Circuit has explained that this rule “reflects a liberal notice pleading regime, which is intended to ‘focus litigation on the merits of a claim' rather than on technicalities that might keep plaintiffs out of court.” Brooks v. Ross, 578 F.3d 574, 580 (7th Cir. 2009) (quoting Swierkiewicz v. Sorema N.A., 534 U.S. 506, 514 (2002)).

         “A motion under Rule 12(b)(6) challenges the sufficiency of the complaint to state a claim upon which relief may be granted.” Hallinan v. Fraternal Order of Police of Chi. Lodge No. 7, 570 F.3d 811, 820 (7th Cir. 2009). “[A] complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.'” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Twombly, 550 U.S. at 570). These allegations “must be enough to raise a right to relief above the speculative level.” Twombly, 550 U.S. at 555. The allegations that are entitled to the assumption of truth are those that are factual, rather than mere legal conclusions. Iqbal, 556 U.S. at 678-79.

         III. Analysis of the Reynoldses' 12(b)(2) Motion

         When a federal district court sits in diversity, it has personal jurisdiction over a nonresident defendant “only if a court of the state in which it sits would have jurisdiction.” Purdue Research Found., 338 F.3d at 779. An Illinois court has personal jurisdiction over a nonresident when Illinois's long-arm statute authorizes jurisdiction and when the assertion of personal jurisdiction comports with the requirements of the Fourteenth Amendment's Due Process Clause.[7] U.S. Const. amend. XIV, § 1; Hyatt Int'l Corp., 302 F.3d at 714. “Because Illinois permits personal jurisdiction if it would be authorized by … the United States Constitution, the state statutory and federal constitutional requirements merge.” uBID, Inc. v. GoDaddy Grp., Inc., 623 F.3d 421, 425 (7th Cir. 2010). Therefore, if personal jurisdiction would be constitutional, the Illinois long-arm statute is satisfied. See 735 ILCS 5/2-209(c).

         Under the Fourteenth Amendment's Due Process Clause, personal jurisdiction is proper only when the defendant has “certain minimum contacts with [the forum state] such that the maintenance of the suit does not offend ‘traditional notions of fair play and substantial justice.'” Int'l Shoe Co. v. Washington, 326 U.S. 310, 316 (1945) (quoting Milliken v. Meyer, 311 U.S. 457, 463 (1940)). Personal jurisdiction may be general or specific to the claims made in the case. uBID, 623 F.3d at 425; Tamburo v. Dworkin, 601 F.3d 693, 701-02 (7th Cir. 2010). If the defendant's contacts with the state are “continuous and systematic, ” the defendant is subject to general jurisdiction there in any action, regardless of whether the action is related to those contacts. Tamburo, 601 F.3d at 701 (internal quotation marks and citation omitted). But because Spiegel contends only that the Court has specific jurisdiction over the Reynoldses, that is the only relevant theory of jurisdiction here. See Am. Compl. ¶ 9 (“By profiting from tortious acts committed within the State [the Reynoldses] have submitted to personal jurisdiction here.”). Specific jurisdiction is proper when a defendant directs his activities at the forum state and the cause of action relates to those activities. Burger King Corp. v. Rudzewicz, 471 U.S. 462, 472 (1985). There must be “some act by which the defendant purposefully avails itself of the privilege of conducting activities within the forum State … .” Hanson v. Denckla, 357 U.S. 235, 253 (1958).

         The Seventh Circuit has explained that “the contacts supporting specific jurisdiction can take many different forms.” uBID, 623 F.3d at 426. One way to be on the personal-jurisdiction hook is to deploy agents to the forum state, Int'l Shoe, 326 U.S. at 318-20, and another way is to act through someone else to commit a tort within the forum state, see IDS Life Ins. Co. v. SunAmerica Life Ins. Co., 136 F.3d 537, 540 (7th Cir. 1998); Rice v. Nova Biomedical Corp., 38 F.3d 909, 912 (7th Cir. 1994). Above all, the defendant must “purposefully direct[]” his activities at the forum state. Keeton v. Hustler Magazine, Inc., 465 U.S. 770, 774 (1984) (internal quotation marks and citation omitted). Purposefulness is crucial: “[t]he due process clause will not permit jurisdiction to be based on contacts with the forum that are random, fortuitous, or attenuated.” uBID, 623 F.3d at 426 (citing Burger King, 471 U.S. at 475). The ...


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