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McCombs v. Cayan LLC

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

March 16, 2017

Heather McCombs, D.P.M., L.L.C., individually and on behalf of similarly situated persons, Plaintiff,
Cayan LLC, d/b/a Capital Bankcard, and Wells Fargo Bank, N.A., Defendants.


          Honorable Thomas M. Durkin United States District Judge.

         Plaintiff Heather McCombs, D.P.M., LLC brings this putative class action against Defendants Cayan LLC, doing business as Capital Bankcard (“Capital Bankcard”), and Wells Fargo Bank, N.A. (“Wells Fargo”), alleging that in late November 2015, she and others similarly situated received an unsolicited fax advertisement by or on behalf of Defendants in violation of the Telephone Consumer Protection Act (“TCPA”), 47 U.S.C. § 227, et seq. See R. 8 (motion for class certification); R. 22 (amended complaint). The defendants move to dismiss the suit for lack standing and mootness under Rule 12(b)(1), and for failure to state a claim under Rule 12(b)(6). See R. 27 (12(b)(1) motion); R. 29 (12(b)(6) motion); R. 88 (supplemental 12(b)(1) motion). They also move to strike Plaintiff's class claims under rule 12(f). See R. 29 (12(f) motion). For the following reasons, Defendants' motions are denied.

         Factual Background

         Capital Bankcard enables merchants to process electronic payments by, among other things, providing them with credit card payment processing terminals. See R. 22-1 (Fax) at 2 (“your current terminal will be upgraded to a new free EMV chip capable and PCI compliant terminal”) (emphasis omitted). It does so as a registered independent sales organization (ISO) and member services provider (MSP) of Wells Fargo.[1] See id at 3; R. 30 at 3-4 n. 2. “It is well known and established in the merchant processing industry that ISOs and MSPs are not banks and that the actual handling of merchant money is done by an acquiring or processing bank that has contracted with the ISO/MSP.” R. 30 at 4. In other words, Capital Bankcard does not process transactions for the merchants to which it provides payment processing equipment; Wells Fargo, as the sponsoring bank that has contracted with Capital Bankcard to service merchant accounts, does so. Id.; R. 22 (Complaint) ¶ 8.

         Plaintiff, a small medical business, alleges that the defendants are responsible for its receipt on November 25, 2015 of an unsolicited, four-page fax advertisement about their jointly offered merchant payment processing services. R. 22 ¶ 4. Specifically, Plaintiff alleges that Capital Bankcard sent the fax or caused it to be faxed, id. ¶ 5, and that it did so on behalf of Wells Fargo, its sponsoring bank, id. ¶ 8. The cover page of the fax indicates that was sent by “Chelsea Miller, ” “an account manager” for “Merchant Services.” R. 22-1 at 2. The sender identifies itself as “a Wells Fargo bank member.” The fax begins, “We called your office earlier regarding LOWERING your merchant rate considerably . . .” Id. (emphasis in original). Plaintiff alleges, however, that it had “no prior relationship with Defendants.” Id. ¶ 9. The cover sheet directs Plaintiff to complete the enclosed forms. R. 22-1 at 2.

         One of the forms is titled, “Merchant Processing Application and Agreement.” Id. at 5. The first page of the Merchant Processing Application and Agreement requests a variety of business and financial information from Plaintiff, and bears the following marking in its footer: “Capital Bankcard is a registered ISO/MSP of Wells Fargo Bank, N.A., Walnut Creek, CA.” Id. The second page contains the “terms” of the proposed contract, including applicable fee schedules, conditions of use, and a requirement that Plaintiff consent to receive unsolicited calls and electronic mail on a going-forward basis. Id. at 4. It also contains a Personal Guarantee, which Plaintiff is to sign for the benefit of both of the defendants. Id. It reads:

In exchange for Capital Bankcard and Wells Fargo Bank, N.A. (the Guaranteed Parties) acceptance of, as applicable, the Agreement, the undersigned unconditionally and irrevocably guarantees the full payment and performance of Client's obligations under the foregoing agreements.

Id. The Application and Agreement concludes with three signature lines, one for Plaintiff, and one for each of the defendants. Id. In addition to the Application and Agreement, the fax also enclosed a “Free Equipment Use Agreement, ” which is printed on Capital Bankcard's letterhead, bearing its logo in the top right-hand corner and its address and contact information at the bottom of the page. Id. at 3.

         In relation to the receipt of the allegedly unwanted fax, Plaintiff claims that its (and the proposed class members') “right to privacy was invaded, costs of toner and ink were incurred, or time to review and delete the subject form faxes were expended.” R. 22 ¶ 13. The complaint does not propose a class definition. It does seek certification of the suit as a class action, actual and statutory damages, injunctive relief, a determination that Plaintiff is an adequate class representative and thus entitled to a “fair, reasonable and adequate incentive award, ” and “[c]osts of suit, including an award of attorney's fees if permissible.” Id. at 2-3.

         Procedural Background

         On December 11, 2015, less than ten days after this lawsuit was filed, the defendants served upon Plaintiff a Rule 68 Offer of Judgment along with a freestanding settlement offer. R. 28-1 at 5-8. The offers read, in relevant part:

[This] offer is for the sum of $7, 500.00. This offer encompasses payment of (i) $1, 501.00 for the one allegedly unsolicited fax . . . plus a nominal payment for the ink and toner expended for the receipt of the fax; (ii) costs incurred in the Action; and (iii) reasonable attorneys' fees. . . . Cayan and Wells Fargo would agree . . . not to send any further unsolicited faxes.

Id. The freestanding offer further provided that a settlement and release would be subject to a confidentiality provision, and would be made without admission of liability or wrongdoing by the defendants. Id. Plaintiff rejected both offers, see Id. at 9, and filed a motion for class certification later the same day, R. 8.

         On January 20, 2016, the Supreme Court issued its ruling in Campbell-Ewald Company v. Gomez, 136 S.Ct. 663 (2016). Based on their reading of the Campbell-Ewald decision, the defendants sent Plaintiff an amended Rule 68 Offer of Judgment and a renewed freestanding settlement offer, this time including a $7, 500 bank check. R. 28-1 at 27-32. Plaintiff again rejected the offers and voided the tendered check. Id. at 33-36.

         The defendants then filed three motions: (1) a motion under Rule 67 to deposit the proposed-settlement funds with the Court, R. 31, (2) a motion under Rule 12(b)(1) to dismiss the case as moot, R. 27, and (3) a motion under Rules 12(b)(6) and 12(f) to dismiss the class complaint, R. 29. Though the Court denied the defendants' motion to deposit funds with the Clerk of Court, it permitted them to deposit a $7, 500 check with a trusted intermediary. R. 39.

         Shortly thereafter, the Supreme Court decided Spokeo, Inc. v. Robins, 136. S.Ct. 1540 (2016), another case Defendants interpret to require dismissal of this case. The defendants supplemented their Rule 12(b)(1) motion accordingly, R. 88, adding ...

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