The opinion of the court was delivered by: Freda L. Wolfson, U.S.D.J.
This matter comes before the Court on a motion to dismiss pursuant to Rules 12(b)(1) and 12(b)(6) of the Federal Rules of Civil Procedure brought by defendants Dealers Preferred Warranties, LLC, Direct Protect Warranty and National Dealers Warranty, Inc., joined by defendants Telephone Management Corporation, TMC Caller ID, LLC, Dealers Warranty, LLC and Dealers Warranty Services, LLC (collectively, "Defendants").*fn1 The allegations giving rise to the instant complaint stem from the purported placement of unsolicited telemarketing calls offering to sell extended auto warranties to millions of subscribers of plaintiffs Cellco Partnership d/b/a Verizon Wireless and OnStar, LLC ("Plaintiffs"), through the use of an autodialing mechanism and prerecorded messages. Plaintiffs assert claims under the Telephone Consumer Protection Act ("TCPA"), 47 U.S.C.A. § 227, et seq. and the Telemarketing and Consumer Fraud and Abuse Prevention Act ("TCFAPA"), 15 U.S.C.A. § 6101 et seq. This Court held oral argument on July 29, 2010, and reserved decision. Having considered the arguments presented by counsel on July 29, 2010, as well as the supplemental submissions of the parties, Defendants' motion to dismiss is GRANTED with a limited right for Plaintiffs to re-plead claims consistent with this Opinion.
On April 16, 2009, Plaintiffs filed suit against defendants Dealers Warranty, National Dealers Warranty, Inc. and Tele Europe B.V. and various entities associated with seven (7) telephone numbers from which auto warranty telemarketing calls originated. Plaintiffs sought both damages and injunctive relief. On May 19, 2009, Dealers Warranty entered into a permanent injunction on consent wherein it agreed to cease "directly or indirectly making any calls using an automatic telephone dialing system or an artificial or prerecorded voice to any telephone number assigned to the cellular telephone of a Verizon Wireless customer or having such calls made on behalf of Dealers Warranty." National Dealers Warranty entered into a similar permanent injunction on May 21, 2009. Default has been entered against defendant TeleEurope B.V.
Plaintiffs filed a First Amended Complaint on June 15, 2009, naming additional defendants Dealers Preferred Warranties, Dealer Warranty Services, LLC, Direct Protect Warranty d/b/a Warranty Services and Telephone Management Corporation, TM Caller ID, LLC, as well as entities associated with thirty-one additional telephone numbers from which auto warranty Telemarketing Calls had been received. On July 20, 2009, preliminary injunctions on consent were entered as to Dealers Preferred Warranties and Direct Protect. Thereafter, on August 18, 2009, an interim preliminary injunction was issued as to Telephone Management Corporation and TM Caller ID.
On March 1, 2010, Defendants moved to dismiss pursuant to Fed. R. Civ. P. 12(b)(1) and (6). Subsequently, Plaintiffs were granted leave to file a second amended complaint and, on June 15, 2010, filed the Second Amended Complaint asserting diversity jurisdiction under 28 U.S.C. § 1332 as an additional basis for this Court's subject matter jurisdiction. Thereafter, Defendants renewed their motion to dismiss the remaining counts of the Second Amended Complaint. See Sunset Financial Resources, Inc. v. Redevelopment Group V, LLC, 417 F.Supp.2d 632, 642 n.15 (D.N.J. 2006) (quoting 6 Charles A. Wright, Arthur R. Miller & Mary Kay Kane, Federal Practice and Procedure § 1476 (2005)("[A] defendant 'should not be required to file a new motion to dismiss simply because an amended pleading was introduced while their motion was pending.' Rather, '[i]f some of the defects raised in the original motion remain in the new pleading, the court simply may consider the motion as being addressed to the amended pleading.'" (internal citations omitted)).
In the Second Amended Complaint, Plaintiffs alleged that beginning in October 2008, Defendants, or those acting on their behalf made more than 8 million unsolicited telemarketing calls to Verizon wireless subscribers, and over 400,000 unsolicited telemarketing calls to OnStar subscribers, through the apparent use of an autodialing mechanism and a prerecorded message, offering to sell an extended auto warranty in contravention of the TCPA (Count I), the TCFAPA (Counts II and III), and the New Jersey Consumer Fraud Act ("NJCFA"), N.J.S.A. 56:8-130 (Count IV).*fn2 Second Am. Compl. at ¶ 1. However, immediately prior to oral argument on the instant motion, Plaintiffs informed the Court that they were withdrawing their NJCFA claims. Accordingly, the only claims remaining are those under the TCPA and the TCFAPA.
Plaintiffs classify Defendants as falling within three categories: (i) "Caller Defendants," (ii) "Advertiser Defendants," and (iii) "Facilitator Defendants." Id. at ¶ 2. Plaintiffs allege that entities from each of the three identified categories acted in concert to originate the telemarketing calls and to use various methods either to conceal or fail to disclose information to consumers regarding the source of the calls. Id. Plaintiffs identify the Caller Defendants as including Voice Touch, Inc. and TeleEurope B.V., as well as other yet unknown entities, and allege that these Caller Defendants physically placed calls to consumers on behalf of the Advertiser Defendants using automatic telephone dialing systems and recorded voice messages. Second Am. Compl. at ¶ 3. Additionally, Plaintiffs allege that if a customer expressed interest in response to an automated call, the customer was then connected to a representative of the Advertiser Defendants. Id. Moreover, Plaintiffs allege that in some cases, the Caller Defendants, acting in concert with the Facilitator Defendants, employed methods of concealing or disguising the telephone numbers from which the calls were placed and/or the Caller Defendants' and Advertise Defendants' identities so that neither the telephone number nor the identity of the caller appeared on the consumer's caller ID. Id.
Plaintiffs define the Advertiser Defendants to include Transcontinental Warranty, Inc., Dealer Warranty Services, Inc., Direct Protect Warranty, Dealers Preferred Warranties, LLC, Dealers Warranty, LLC and National Dealers Warranty, Inc. Second Am. Compl. at ¶ 4. According to Plaintiffs, the Advertiser Defendants employed the Caller Defendants to make the telemarketing calls on their behalf, in order to sell automobile warranties to recipients of the calls. Id.
The Facilitator Defendants are identified by Plaintiffs as Telephone Management Corporation and TM Caller ID, LLC. Second Am. Compl. at ¶ 5. Plaintiffs allege that these Facilitator Defendants enabled the Caller Defendants to make the telemarketing calls by providing the telephone numbers that the Caller Defendants can have appear as the caller ID when a customer receives a telemarketing call. Id. According to Plaintiffs, the Caller Defendants used these caller ID's -- and the ability to change these caller ID's on an almost daily basis -- to obscure their identity as well as the identities of the parties on whose behalf the calls were being made. Id.
As evidence of the unlawful practices of the Defendants, Plaintiffs provide numerous examples of instances in which Verizon Wireless employees received automated messages seeking to sell them auto warranties from various telephone numbers, which they contend were assigned by various carriers for the purposes of placing the calls and concealing their identities. Second Am. Compl. at ¶¶ 24-83. In short, Plaintiffs contend that Defendants used a variety of means and techniques to perpetrate their unlawful scheme, including automatic and predictive dialing equipment, prerecorded voice messages and sophisticated techniques purposely designed to conceal their identities from the call recipients. See Id. at ¶ 1.
As previously noted, the instant motion to dismiss is premised on both Rules 12(b)(6), for failure to state a claim, and 12(b)(1), for lack of subject matter jurisdiction. "When a motion to dismiss is based on lack of subject matter jurisdiction pursuant to Rule 12(b)(1), as well as other Rule 12(b) defenses, the Court should consider the Rule 12(b)(1) challenge first because, if it must dismiss the complaint for lack of subject matter jurisdiction, the accompanying defenses become moot and need not be addressed." Wyeth and Cordis Corporation v. Abbott Laboratories, No. 08-0230 (JAP), 2008 WL 2036805, * 2 (D.N.J. May 8, 2008) (quoting Pashun v. Modero, No. 92-3620, 1993 WL 185323 (D.N.J. May 26, 1993)). Accordingly, the Court turns first to Defendants' contention that this Court lacks subject matter jurisdiction over the instant action.
A party may move for dismissal pursuant to Fed. R. Civ. P. 12(b)(1) based on lack of subject matter jurisdiction. The burden is on the plaintiff to prove that subject matter jurisdiction exists. Wyeth and Cordis Corporation v. Abbott Laboratories, 2008 WL 2036805, at * 2. "In Mortensen v. First Federal Sav. & Loan Ass'n, 549 F.2d 884 (3d Cir. 1977), the Third Circuit . . . divided Rule 12(b)(1) motions into two categories: facial and factual." International Development Corporation v. Richmond, No. 09-2495(GEB), 2009 WL 3818141, at * 2 (D.N.J. Nov. 13, 2009). "A facial attack on jurisdiction is directed to the sufficiency of the pleading as a basis for subject matter jurisdiction." Id. Accordingly, "the court must only consider the allegations of the complaint and documents referenced therein and attached thereto in the light most favorable to the plaintiff." Gould Electronics, Inc. v. United States, 220 F.3d 169, 176 (3d Cir. 2000).
In contrast, when the court considers a factual attack on jurisdiction under 12(b)(1), ". . . the trial court is free to weigh the evidence and satisfy itself as to the existence of its power to hear the case." Mortensen v. First Federal Sav. & Loan Ass'n, 549 F.2d at 891. No presumption of truthfulness attaches to the allegations of the complaint insofar as they concern subject matter jurisdiction. Id. Should factual issues arise regarding subject matter jurisdiction, the court may consider exhibits outside the pleadings. Gould Electronics, 220 F.3d at 178. "In general, when a Rule 12(b)(1) motion is supported by a sworn statement of facts, the court should treat the Defendant's challenge as a factual attack on jurisdiction." International Development Corporation v. Richmond, 2009 WL 3818141, at * 2 (quoting Med. Soc'y of N.J. v. Herr, 191 F.Supp.2d 574, 578 (D.N.J. 2002)). Here, where the factual allegations in the Second Amended Complaint are insufficient to permit the Court to ascertain whether the Plaintiffs have standing to assert the statutory claims alleged, and Plaintiffs have offered additional facts that, if permitted, would be re-plead in a third amended complaint, the Court will treat the motion as a factual attack on jurisdiction.
Defendants move to dismiss Plaintiffs' claims brought under the TCPA, 47 U.S.C.A. § 227, et seq. and the TCFAPA, 15 U.S.C.A. § 6101 et seq. on the grounds that Plaintiffs lack standing in that they are not consumers entitled to seek redress under those statutory schemes. Additionally, Defendants contend that even if Plaintiffs had standing to sue, they cannot establish jurisdiction under either statutory scheme. Defendants argue that the TCPA does not support federal question jurisdiction because Congress intended to authorize private causes of action only in state courts. Moreover, Defendants contend that Plaintiffs cannot satisfy the amount-in-controversy requirement of § 6104(a) of the TCFAPA, which requires in excess of $50,000 in actual damages. Each of the foregoing alleged grounds for dismissal of Plaintiffs' respective statutory claims will be discussed in turn.
A. Plaintiffs' Claims Under the TCPA (Count I)
In their moving papers, Defendants argued that the TCPA does not support federal question jurisdiction because "Congress intended to authorize private causes of action [under the TCPA] only in state courts and to withhold federal jurisdiction." Moving Br. at 5 (quoting Erienet, Inc. v. Velocity Net, Inc., 156 F.3d 513, 516 (3d Cir. 1998) (emphasis added)). Plaintiffs countered that Defendants' reliance on Erienet, Inc., 156 F.3d 513, is misplaced here where there exists supplemental jurisdiction pursuant to 12 U.S.C. § 1367(a), given that the TCPA claim arises out of the same nucleus of operative facts as the TCFAPA. Additionally, on June 10, 2010, subsequent to the filing of the instant motion, Plaintiffs were granted leave to file a Second Amended Complaint, which Plaintiffs argue moots the jurisdictional portion of Defendants' motion to dismiss. According to Plaintiffs,
it is well-settled that if there is complete diversity of citizenship between the parties, TCPA and NJCFA claims may be brought in federal court under the Court's diversity, rather than federal question, jurisdiction. See Gottlieb v. Carnival Corp., 436 F.3d 335, 341 (2d Cir. 2006) (holding that party may bring cause of action in federal court for violations of TCPA based on diversity jurisdiction); Baltimore-Washington Tel. Co. v. The Hot Leads Co., LLC, 584 F.Supp.2d 736, 741 (D.Md. 2008) ("Diversity is 'an independent basis for jurisdiction, regardless of whether the underlying claim is federal in nature.'"); Pacholec v. Home Depot U.S.A., Inc., 293 Fed.Appx. 939, 940, 2008 ...