Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

Paldo Sign and Display Company v. Unified Marketing, LLC

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

March 10, 2017

PALDO SIGN AND DISPLAY COMPANY, an Illinois corporation, and SABON, INC., a Florida corporation, individually and as representatives of a class of similarly-situated persons, Plaintiffs,
v.
UNIFIED MARKETING, LLC, et al., Defendants.

          MEMORANDUM OPINION AND ORDER

          JORGE L. ALONSO United States District Judge

         Before the Court are four motions. For the reasons explained below, the motions of defendants j2 Global Canada, Inc. and j2 Global, Inc. (the “j2 Defendants”) for summary judgment [147, 150] are granted; plaintiffs' motion to strike declarations and portions of defendants' motions, memoranda, and fact statements; to bar certain evidence; and to set a briefing schedule on class certification [153] is granted in part and denied in part; and the j2 Defendants' motion to strike portions of plaintiffs' memorandum in opposition to defendants' motions and statement of additional facts [175] is denied.

         BACKGROUND

         This is a single-count putative class action under the Telephone Consumer Protection Act, 47 U.S.C. § 227 (“TCPA”), in which plaintiffs, Paldo Sign and Display Company (“Paldo”) and Sabon, Inc. (“Sabon”) allege that they received junk faxes that did not display a proper opt-out notice as required. Paldo alleges that on September 28, 2009, it was sent an unsolicited fax that advertised a “limited time offer” for a “free” “brand new combination snack & soda vending machine.” (ECF No. 71, Second Am. Class Action Compl. ¶¶ 28, 32 & Ex. A.) Sabon alleges that it was sent a nearly identical unsolicited fax on May 23, 2011. (Id. ¶¶ 29, 32 & Ex. B.) The operative complaint, the Second Amended Complaint, names the following defendants: Unified Marketing, LLC (“Unified Marketing”); United Vending and Marketing, Inc. (“United Vending”); Sunrise Marketing & Vending, Inc. (“Sunrise”); Global Vending Services Inc. (“Global Vending”); Matthew A. Capicchioni; Nicholas G. Chomakos; Laura E. Chomakos (all of whom plaintiffs collectively call the “Vending Machine Advertisers”); Accelero Communications, Inc. (“Accelero”); Digitalspeed Communications, Inc. (“Digitalspeed”); Slingshot Technologies Corporation (“Slingshot”); j2 Global, Inc. (“j2 Global”); j2 Global Canada, Inc. (“j2 Canada”); Tyler Eyamie; and John Does 1-10.

         Although plaintiffs have not filed a return of service as to Unified Marketing, United Vending, Sunrise, Global Vending, or Matthew A. Capicchioni, it appears that those defendants have been served. The parties stated in a joint status report that Capicchioni was served but has not appeared. (ECF No. 124 at 2.) Unified Marketing, United Vending, Sunrise, and Global Vending are entities affiliated with the Chomakoses, who are proceeding pro se. No attorney has entered an appearance on behalf of those entities. Judge Darrah, to whom this case was previously assigned, dismissed Eyamie for lack of personal jurisdiction. (ECF No. 104.) After the case was reassigned to this Court, plaintiffs voluntarily dismissed Accelero, Digitalspeed, and Slingshot. (ECF Nos. 132 & 134.)

         Defendants j2 Global[1] and j2 Canada filed motions for summary judgment, which are now before the Court. Both sides have filed motions to strike certain evidence submitted in connection with the summary judgment motions; the Court first will address the motions to strike.

         MOTIONS TO STRIKE

         A. Plaintiffs' Motion to Strike

         Plaintiffs ask the Court to strike the declarations of David Allen Tough, David Guerrero, and Teruko Furuya (the “Declarants”)-which the j2 Defendants submitted in support of their motions for summary judgment-as well as “all portions” of defendants' motions, memoranda in support, and Local Rule 56.1 Statements that rely on those declarations. (ECF No. 153, Pls.' Mot. Strike 1.) Plaintiffs contend that defendants should not be permitted to use the evidence the Declarants supply because defendants did not previously disclose them as potential witnesses. Plaintiffs also seek to strike “untimely produced documents.” (Id.)

         Federal Rule of Civil Procedure 26 requires a party to provide to the other parties “the name and, if known, the address and telephone number of each individual likely to have discoverable information-along with the subjects of that information-that the disclosing party may use to support its claims or defenses, unless the use would be solely for impeachment.” Fed.R.Civ.P. 26(a)(1)(A)(i). A party who has made a Rule 26(a) disclosure must supplement that disclosure “in a timely manner if the party learns that in some material respect the disclosure or response is incomplete or incorrect, and if the additional or corrective information has not otherwise been made known to the other parties during the discovery process or in writing.” Fed.R.Civ.P. 26(e)(1)(A). To ensure compliance with these requirements, Rule 37(c)(1) provides that if a party “fails to provide information or identify a witness as required by Rule 26(a) or (e), the party is not allowed to use that information or witness to supply evidence on a motion, at a hearing, or at a trial, unless the failure was substantially justified or is harmless.” Preclusion is “automatic and mandatory” unless “the offending party can establish that its violation of Rule 26(a)(2) was either justified or harmless.” Ciomber v. Coop. Plus, Inc., 527 F.3d 635, 641 (7th Cir. 2008) (internal quotation marks omitted). “In addition to or instead of” preclusion, the court may order other sanctions. Fed.R.Civ.P. 37(c)(1). “Whether a failure to comply with Rule 26(a) or (e) is substantially justified, harmless, or warrants sanctions is left to the broad discretion of the district court.” Dynegy Mktg. & Trade v. Multiut Corp., 648 F.3d 506, 514 (7th Cir. 2011).

         It is undisputed that the j2 Defendants never identified Tough, Guerrero, or Furuya as individuals who were likely to have discoverable information. The j2 Defendants contend, however, that they had no duty to supplement their Rule 26 disclosures because the Declarants were otherwise made known to plaintiffs before the close of discovery. Tough and Guerrero were the individuals who verified, respectively, j2 Canada and j2 Global's supplemental responses to interrogatories.[2] (ECF Nos. 153-6 & 153-8.) As for Furuya, defendants state that it is “unclear” whether plaintiffs knew about her prior to the submission of her declaration in connection with the summary judgment motions, but they argue that she is “simply a j2 representative testifying in her corporate capacity” and the information contained in her declaration already became known to plaintiffs during the discovery process. (ECF No. 171, Defs.' Mem. Opp'n Pls.' Mot. Strike 8-9.) Even if they did have a duty to supplement, say defendants, plaintiffs have failed to demonstrate a lack of substantial justification or that they suffered any harm from the failure to disclose the Declarants. Alternatively, defendants suggest, any harm could be cured by allowing plaintiffs to depose the Declarants regarding the statements they make.

         Plaintiffs concede that Tough and Guerrero verified defendants' supplemental interrogatory responses but emphasize that defendants tendered those responses as well as certain j2 Canada documents on January 11, 2016, the last day of the discovery period. According to plaintiffs, those disclosures were untimely. (ECF No. 181, Pls.' Reply Supp. Mot. Strike 2, 9-10.) The Court disagrees. Plaintiffs knew within the discovery period that Tough and Guerrero were individuals with information responsive to their interrogatories. Moreover, j2 Canada produced the documents at issue within the discovery period. Yet plaintiffs did not follow up on these matters, seek to extend the discovery period in an effort to depose Tough or Guerrero, or file any discovery motion despite the fact that they now complain broadly about defendants' discovery responses and “substantial[] and irreparabl[e]” prejudice. This Court held a status hearing on January 21, 2016, during which plaintiffs' counsel did not raise any discovery concerns and in fact affirmed that discovery was closed and indicated that the next step after settlement discussions would be to set a briefing schedule on j2 Global's anticipated motion for summary judgment. (ECF No. 186, Tr. of 1/21/16 Hr'g 3.) The Court therefore set such a briefing schedule.

         The Court further notes that despite having been on notice through the j2 Defendants' Rule 26(a)(1) disclosures that defendants would rely on unnamed corporate representatives and employees who had knowledge of defendants' relevant business practices and policies and extent of involvement in the transmission of faxes, plaintiffs never sought a Rule 30(b)(6) deposition of a j2 representative. Consequently, plaintiffs' claims of prejudice ring hollow. See Physicians Healthsource, Inc. v. Allscripts Health Sols., Inc., No. 12 C 3233, 2016 WL 7034074, at *4 n.9 (N.D. Ill.Dec. 2, 2016) (“[I]nferences from silence are often perilous. But not always in a context where some prompt outcry would be expected. If the plaintiff truly was handicapped by not having names of those who it was claimed had agreed to receive faxes, it is doubtful that it would have said nothing and proceeded through discovery.”); Krawczyk v. Centurion Capital Corp., No. 06 C 6273, 2009 WL 395458, at *6 (N.D. Ill. Feb. 18, 2009) (“Any prejudice to Plaintiff resulted from not conducting his own discovery with respect to Defendants' witnesses, not from Defendants' bad faith or willfulness in failing to specify the names of the representatives whom they intended to use.”). It is telling that plaintiffs do not invoke Federal Rule of Civil Procedure 56(d) or contend that the Court should reopen discovery to allow them to obtain facts essential to justify their opposition, but rather simply move to strike the declarations of Tough, Guerrero, and Furuya and urge the Court to “reject Defendants' ‘offer' to reopen discovery.” (Pls.' Reply Supp. Mot. Strike 14.)

         Because it was made known to plaintiffs within the discovery period that Tough and Guerrero possessed relevant information and plaintiffs had a fair opportunity to ask the Court to allow additional discovery from them prior to the filing of defendants' summary judgment motions (and prior to the Court's setting a briefing schedule), as well as a fair opportunity to seek follow-up discovery on the j2 Canada documents, the Court will not strike Tough or Guerrero's declarations, bar them from testifying, bar use of the j2 Canada documents, or strike the portions of defendants' statements, motions, and memoranda that rely on these declarations or documents. See Gutierrez v. AT&T Broadband, LLC, 382 F.3d 725, 732-33 (7th Cir. 2004) (where defendants submitted an affidavit in support of their summary-judgment motion and plaintiffs had known prior to the close of discovery about the affiant and that she had relevant information, the district court did not abuse its discretion in denying plaintiffs' motion to strike the affidavit).

         In contrast with Tough and Guerrero, Furuya was not made known to plaintiffs before the close of discovery. And the Court is not persuaded that it should excuse defendants' failure to disclose her as a potential witness on the ground that she is “simply” a corporate representative of j2 whose declaration consists of information of which defendants say plaintiffs are aware. The issue is not whether plaintiffs already knew generally of the information contained in her declaration, but whether plaintiffs were on notice that Furuya had relevant information. See, e.g., Gutierrez, 382 F.3d at 733-34. They were not. Furthermore, defendants misstate the burden when they assert that plaintiffs have failed to demonstrate a lack of substantial justification or that they suffered any harm from the failure to disclose Furuya. It is defendants' burden to show that their failure to disclose Furuya was either justified or harmless. See Ciomber, 527 F.3d at 641. Defendants rely only upon the latter. To evaluate harmlessness, the Court considers the following factors: “(1) the prejudice or surprise to the party against whom the evidence is offered; (2) the ability of the party to cure the prejudice; (3) the likelihood of disruption to the trial; and (4) the bad faith or willfulness involved in not disclosing the evidence at an earlier date.” See David v. Caterpillar, Inc., 324 F.3d 851, 857 (7th Cir. 2003).

         Defendants argue that plaintiffs are not prejudiced by the use of Furuya's declaration because plaintiffs “already deposed all of the key witnesses with personal knowledge relating to the transactions at issue” and they chose not to depose any j2 witnesses other than Eyamie. (Defs.' Mem. Opp'n Pls.' Mot. Strike 11.) These arguments miss the point. j2 Global uses Furuya's testimony about defendants' corporate structure to support its motion, and her identity was never disclosed prior to the filing of defendants' summary-judgment motions. Plaintiffs were prejudiced because they were not put on notice that Furuya possesses information pertinent to the case such that they would be expected to request her deposition or anticipate the use of her declaration in support of summary judgment. It matters not that defendants believe plaintiffs should have taken other depositions or that Furuya is not a “key” witness.

         Because defendants failed to disclose Furuya as a potential witness, her identity as a potential witness was not otherwise made known to plaintiffs during the discovery process, and defendants have failed to show that the failure to disclose her was substantially justified or harmless, the Court strikes her declaration. But the Court denies as unnecessary plaintiffs' request to strike those portions of defendants' summary-judgment materials that rely solely on Furuya's declaration. As discussed below, the Court is not an editor and has not relied on Furuya's declaration in deciding the instant motions.

         Plaintiffs also ask the Court to 1) strike the defendants' motions for summary judgment for failure to timely disclose the Declarants; 2) bar the Declarants from offering evidence or participating in this litigation; and 3) set a briefing schedule on plaintiffs' anticipated motion for class certification. The Court denies each request. Striking Furuya's declaration itself is a sanction commensurate with the failure to disclose her, but striking defendants' motions would be highly disproportionate. There is no ripe controversy as to plaintiffs' second request because defendants do not seek at this time to use the Declarants to offer any additional testimony in this litigation. As to the third request, there is no pending motion for class certification, so the Court will cross the scheduling bridge when it comes to it.

         B. Defendants' Motion to Strike

         The j2 Defendants ask the Court to strike certain portions of plaintiffs' Local Rule 56.1 statement of additional facts; corresponding portions of plaintiffs' memorandum in opposition to defendants' summary judgment motions; and several of plaintiffs' exhibits. Essentially, defendants seek to have the Court carve out what they deem to be objectionable or unpersuasive portions of plaintiffs' summary judgment materials. Defendants' motion itself (quite aside from the thirteen-page supporting memorandum) contains a ten-page detailed list of portions defendants seek to have stricken. This sort of motion to strike is particularly disfavored, see Custom Vehicles, Inc. v. Forest River, Inc., 464 F.3d 725, 726 (7th Cir. 2006), and “waste[s] time by requiring judges to engage in busywork and judicial editing without addressing the merits of a party's claim, ” U.S. Bank Nat'l Ass'n v. Alliant Energy Res., Inc., No. 09-cv-078-bbc, 2009 WL 1850813, at *3 (W.D. Wis. June 26, 2009). “The way to point out errors in an [opponent's] brief is to file a reply brief, not to ask a judge to serve as editor. . . . The judiciary has quite enough to do deciding cases on their merits.” Custom Vehicles, 464 F.3d at 726. Defendants' motion does little to advance the ball in this litigation and is therefore denied. To the extent necessary, the Court will address within its discussion of the summary judgment motions the materials to which defendants object.

         MATERIAL FACTS

         Plaintiffs' complaint sets out two time frames during which the Vending Machine Fax was allegedly unlawfully transmitted. Plaintiffs allege that the j2 Defendants are responsible for the transmission of the subject junk faxes from 2009 through 2011; this time period includes the fax allegedly sent to Paldo. For purposes of the instant motions, plaintiffs do not dispute that the fax allegedly sent to Sabon in 2011 was sent by an entity other than the j2 Defendants, nor do they dispute that the statute of limitations bars recovery for any faxes sent prior to January 18, 2009. (ECF No. 162, Pls.' Mem. Opp'n Defs.' Mots. Summ. J. 2 n.2.)

         j2 Canada is a wholly-owned subsidiary of j2 Global, with multiple layers of subsidiaries between them. j2 Canada provides communications services, including web-based facsimile broadcasting, which it defines as a “means through which a customer can transmit a single facsimile to multiple destinations.” (ECF No. 156, Pls.' Resp. j2 Canada's LR 56.1(a)(3) Stmt. ¶ 4.)[3] j2 Canada was formerly known as Protus IP Solutions, Inc. (“Protus”) until an indirect subsidiary of j2 Global acquired Protus in December 2010. Taking its cue from the parties, the Court will refer to j2 Canada and Protus interchangeably throughout this opinion (with exception of the discussion below regarding the Protus Lawsuit).

         Defendant Nicholas Chomakos is or was the owner and/or president of defendants Unified Marketing, United Vending, Sunrise, and Global Vending (collectively, “Chomakos”). Chomakos was in the business of installing vending machines for clients who owned such machines. When a client contacted Chomakos about placing a vending machine, Chomakos then sent a fax (the “Vending Machine Fax” or “Fax”) to businesses within a certain geographic area that might want a vending machine located at their place of business, free of charge. For each vending machine placement, Chomakos's clients paid him a flat fee of $200 to $300. Chomakos began sending the Fax in 2004. He, along with non-parties Yuriy Mirskiy and another individual, created its content.

         Sometime between 2007 and early 2009, Chomakos began exclusively using Mirskiy to send the Fax and to provide fax numbers to which to send it. Chomakos provided Mirskiy with zip codes of areas he wished to target, and Mirskiy responded by telling him how many fax numbers he “had” in those designated areas. Although Mirskiy arranged for the transmission of the Fax, he never disclosed to Chomakos what entity he used to do so.[4] That entity was UnixUSA, LLC (“Unix”), which is solely owned by an individual named Erol Sonmez. Unix, in turn, used other companies' fax-broadcasting systems to transmit faxes on behalf of its customers.[5]

         From 2005 through December 2010, Unix, through Sonmez, worked almost exclusively with Protus and Eyamie to send faxes. Eyamie was employed by Protus in 2009 and early 2010 as its Manager of Business Development.[6] In that capacity, Eyamie served as a commissioned sales representative for Sonmez and others. Eyamie handled customer inquiries, sold fax broadcasting and fax reception services, and performed various other duties, such as reporting on sales activities and maintaining customer relationships. With respect to Sonmez, Eyamie also handled billing matters, helped Sonmez obtain credit and multiple account numbers, addressed Sonmez's concerns about the speed with which his orders ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.