The opinion of the court was delivered by: Hochberg, District Judge
This matter comes before the Court upon Defendant Total Call International Inc.'s ("Total Call") Motion to Dismiss Plaintiff's class action complaint and Motion to Take Judicial Notice of the Proceedings Before the Tennessee Chancery Court in Jose Ma. A.S. Lopez et al v. Van Oriental Food Store and Total Call International, Inc., No. CH 04-228-2 (Tenn Ch. Ct, 2004). After requesting supplemental briefing from the parties, the Court held oral argument on the motions on October 22, 2008.
I. Factual and Procedural Background
Plaintiff Michael Coppolino brings this class action under 28 U.S.C. §1332(d) on behalf of himself and others similarly situated against Defendant Total Call International, Inc., a company that produces and sells prepaid calling cards. Plaintiff alleges that Defendant fails to clearly and conspicuously disclose material facts and conditions on the use of its prepaid cards.
Compl. ¶4. Specifically, Plaintiff challenges Defendant's imposition of a "host of standard conditions, fees, and charges that Defendant surreptitiously imposes for its own profit," Id. at ¶5, and Defendant's failure to "disclose on its Cards the price the consumer pays per billing decrement (10 cents per minute of calling time for example)". Id. at ¶25. These conditions allegedly reduce the stated value of the cards significantly. Id. Plaintiff seeks to represent a class of all persons who purchased Prepaid Calling Cards which were produced, sold and/or distributed by Total Call throughout the United States, and/or a Class of all residents in specific sister states with substantially similar statutes designed to protect consumers against unfair or deceptive business practices. Id. at ¶34. The Complaint asserts causes of action for violation of substantially similar consumer protection statutes (Count I), unjust enrichment (Count II), money had and received (Count III), and declaratory relief pursuant to 28 U.S.C. § 2201 (Count IV).
Defendant moves to dismiss the Complaint on the ground of res judicata, based on a previous class action against Total Call in Tennessee Chancery Court, Jose Ma. A.S. Lopez et al v. Van Oriental Food Store and Total Call International, Inc., No. CH 04-228-2 (Tenn Ch. Ct. 2004) ("Lopez"). The Lopez amended complaint brought claims against Total Call for damages and injunctive relief under the Tennessee Consumer Protection Act, and for conversion, unjust enrichment, and breach of contract under Tennessee law.*fn1
Total Call reached a settlement with the Lopez plaintiffs and the Tennessee Chancery Court entered a Consent Decree resolving the matter. The Consent Decree included a release discharging any claims and "causes of actions of any kind, by the Plaintiffs, the Class or the Class Members (except for those who have elected to "opt out" of the Class), arising out of or relating in any way to Defendant's sale of prepaid calling cards during the Class Period....
The full and general releases referred to in this Section... are intended to be full and final binding releases of all claims that were asserted or that arise out of or relate to the claims that were asserted against Defendant in this Action by the Class and such release shall be construed broadly to affect that purpose."
Defendant argues that because the Plaintiff in the instant case (Coppolino) is included in the class definition of the previous Lopez action, the release contained in the Lopez Consent Decree bars this action.
Plaintiff argues that the instant Complaint is not barred by the Lopez Consent Decree in Tennessee based on several alternate and independent bases: 1) The causes of action in this case are different because the Lopez Complaint solely addressed fees charged on calls made to and/or from cellular phones, while the instant action challenges the full range of undisclosed fees and surcharges, as well as the undisclosed billing decrement; 2) Even if the two cases were deemed sufficiently similar causes of action, the Tennessee settlement violated the due process rights of the nationwide class it purported to bind by the Lopez settlement; 3) The Notice of settlement published in the Lopez action was deficient on several grounds, the most significant of which was the failure to give notice of the right to'opt out' of the class; 4) Because class members were neither apprised of their right to opt out, nor of the fact that their claims for monetary damages would be extinguished, Plaintiff contends that the Lopez action should be deemed to have only barred injunctive relief based on the limited cause of action brought in that case; and 5) The settlement reached in Lopez was fundamentally unfair because it provided absolutely no monetary benefit to putative class members, a small award to the three named plaintiffs ($1,500 each), an inappropriate cy pres distribution which provided no benefit to class members ($100,000, split evenly between two churches and a University), and a huge provision for attorneys fees as a percentage of financial recovery ($262,500, or approximately 71.5% of the total recovery from Defendant). Such a'submarine settlement', it is argued, is fundamentally unfair and cannot extinguish the monetary claims of the instant Plaintiff.
To survive a Rule 12(b)(6) Motion to Dismiss, "factual allegations must be enough to raise a right to relief above the speculative level, on the assumption that all the allegations in the complaint are true (even if doubtful in fact)." Bell Atlantic Corp. v. Twombly, __ U.S. __, 127 S.Ct. 1955, 1965 (2007). As the Third Circuit has recently stated: The Supreme Court's Twombly formulation of the pleading standard can be summed up thus: "stating... a claim requires a complaint with enough factual matter (taken as true) to suggest" the required element. This "does not impose a probability requirement at the pleading stage," but instead "simply calls for enough facts to raise a reasonable expectation that discovery will reveal evidence of" the necessary element.
Phillips v. County of Allegheny, 515 F.3d 224, 234 (3d Cir. 2008) (internal citation omitted, alteration in original) ...