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Karon v. Cnu Online Holdings, LLC

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

July 16, 2019

DANIEL KARON, individually and on behalf of all others similarly situated, Plaintiff,
CNU ONLINE HOLDINGS, LLC, d/b/a/ CASHNETUSA, a Delaware limited liability company, and JOHN DOE CORPORATION, Defendants.



         The motions of CNU Online Holdings, LLC's (CNU) to dismiss and strike class allegations (dkt. 19) and for sanctions (dkt. 30) are denied. Karon's motion to strike the motion for sanctions and for counter-sanctions (dkt. 32 at 14-15) is denied. See statement.[1]


         I. Background

         In 2018, Karon, an Ohio resident, received an unsolicited, prerecorded call to his cell phone encouraging him to call a phone number to obtain a cash advance loan from CNU. (Dkt. 1 ¶¶ 1-2, 28-29.) When Karon dialed the number solely to determine the caller's identity, a representative of John Doe Corporation (John Doe) answered and informed Karon that he had been preapproved for a $3, 000 loan from CNU. (Id. ¶¶ 30-31.) Karon had never given consent for CNU or its affiliates to call him. (Id. ¶¶ 32-33.)

         Karon filed a single-count complaint alleging a violation of the Telephone Consumer Protection Act, 47 U.S.C. § 227 (TCPA), individually and on behalf of a putative class of anyone who received an unsolicited call from or on behalf of CNU using a prerecorded or automated voice. (Id. ¶ 58.) Karon alleges that CNU is responsible for John Doe's call because John Doe was CNU's agent. In support, Karon alleges that CNU exercised significant control over John Doe's activities, including (1) limiting the geographical areas to which John Doe could place calls, (2) restricting John Doe's contract and call volume, (3) instructing John Doe to forward calls to a third-party verification company, (4) maintaining ultimate discretion to determine whether and when to accept customers, and (5) permitting John Doe to bind CNU in contract. (Dkt. 1 ¶¶ 51-56.)

         CNU now moves to dismiss, arguing that although John Doe may have violated the TCPA, Karon has not plausibly alleged that CNU is directly or vicariously liable. To support its motion, CNU attaches a redacted agreement that purportedly governs CNU's relationship with its marketing affiliates, under which affiliates may not make robocalls or any outgoing calls. (Dkt. 20-1 § 2.5.) CNU also attaches a printout of its website in an attempt to show that the call could not have originated from an authorized CNU agent because CNU does not originate or broker loans of that size to Ohio residents. (Dkt. 20-2.) CNU also moves to strike Karon's class allegations.

         After furnishing documents and permitting Karon to interview a CNU official, CNU argues that it proved definitively to Karon that it is not liable under the TCPA and that Karon therefore has no good-faith basis for prosecuting this action further. CNU therefore moves for sanctions. (Dkt. 30.) In response, Karon asks the court to deny or, in the alternative, strike CNU's motion for sanctions under Rule 12(f). (Dkt. 32 at 15.) He also seeks sanctions against CNU for filing what he argues is a frivolous motion for sanctions. (Id.)

         II. Motion to Dismiss

         A. Legal Standard

         A motion to dismiss under Rule 12(b)(6) challenges a complaint for failure to state a claim upon which relief may be granted. In ruling on a Rule 12(b)(6) motion, the court accepts as true all well-pleaded facts in the plaintiff's complaint and draws all reasonable inferences from those facts in the plaintiff's favor. Active Disposal, Inc. v. City of Darien, 635 F.3d 883, 886 (7th Cir. 2011); Dixon v. Page, 291 F.3d 485, 486 (7th Cir. 2002). To survive a Rule 12(b)(6) motion, the complaint must not only provide the defendant with fair notice of a claim's basis but must also establish that the requested relief is plausible on its face. See Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937 (2009); Bell Atl. v. Twombly, 550 U.S. 544, 555, 127 S.Ct. 1955 (2007). The allegations in the complaint must be “enough to raise a right to relief above the speculative level.” Twombly, 550 U.S. at 555, 127 S.Ct. 1955. At the same time, the plaintiff need not plead legal theories; it is the facts that count. Hatmaker v. Mem'l Med. Ctr., 619 F.3d 741, 743 (7th Cir. 2010); see also Johnson v. City of Shelby, 574 U.S. 10, 135 S.Ct. 346, 346 (2014) (per curiam) (“Federal pleading rules call for a short and plain statement of the claim showing the pleader is entitled to relief; they do not countenance dismissal of a complaint for imperfect statement of the legal theory supporting the claim asserted.”).

         With limited exceptions, courts may consider only the complaint's four corners when deciding a 12(b)(6) motion. Venture Assocs. Corp. v. Zenith Data Sys. Corp., 987 F.2d 429, 431 (7th Cir. 1993). CNU asks the court to consider two documents outside the complaint, but neither is appropriate here. The redacted agreement between CNU and an unspecified lead provider (dkt. 20-1) is referenced “obliquely, if at all” in the complaint and is thus not properly before the court on this motion. Elward v. Electrolux Home Prods., Inc., 264 F.Supp.3d 877, 885-86 (N.D. Ill. 2017). The printed portions of CNU's website (dkt. 20-2) are outside the complaint altogether and inappropriate for judicial notice. See Mussat v. Power Liens, LLC, No. 13-cv-7853, 2014 WL 3610991, at *3 (N.D. Ill. July 21, 2014) (refusing to take judicial notice of website in TCPA action).

         B. Direct Liability

         The TCPA prohibits “mak[ing] any call (other than a call made for emergency purposes or made with the prior consent of the called party) using any automatic telephone dialing system or an artificial or prerecorded voice . . . to any telephone number assigned to a . . . cellular telephone service . . . .” 47 U.S.C. § 227(c)(5). Karon alleges, and CNU does not contest, that John Doe called his cell phone without his ...

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