Ewalt v. Gatehouse Media Ohio Holdings II, Inc.

JOHN EWALT, et al., Plaintiffs, v. GATEHOUSE MEDIA OHIO HOLDINGS II, INC., d/b/a THECOLUMBUS DISPATCH, et al., Defendants.

Case No. 2:19-cv-4262

UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF OHIO EASTERN DIVISION

March 4, 2021

Chief Judge Algenon L. Marbley

Magistrate Judge Kimberly A. Jolson

OPINION & ORDER

I. INTRODUCTION

This matter comes before the Court on the following motions: (1) Defendant Copley Ohio's Motion to Dismiss for Lack of Subject-Matter Jurisdiction and Failure to State a Claim, (ECF No. 65); (2) the Holding Company Defendants' Motion to Dismiss for Lack of Personal Jurisdiction and Failure to State a Claim, (ECF No. 66); (3) Defendant GateHouse Ohio's Motion to Dismiss for Failure to State a Claim, which, in turn, generated Plaintiffs' Motion to Disregard Matters Outside the Pleadings, and Defendant GateHouse Ohio's Motion to Strike (ECF Nos. 48, 53, 57).

For the reasons that follow, this Court holds: (1) Defendant Copley Ohio's Motion to Dismiss is GRANTED for Lack of Subject-Matter Jurisdiction, (ECF No. 65); (2) the Holding Company Defendants' Motion to Dismiss is GRANTED for Lack of Personal Jurisdiction, (ECF No. 66); (3) Plaintiffs' Motion to Disregard is GRANTED, (ECF No. 53); (4) Defendant GateHouse Ohio's Motion to Strike is GRANTED, but only insofar as it is construed as a Motion to Disregard, (ECF No. 57); and (5) Defendant GateHouse Ohio's Motion to Dismiss for Failure to State a Claim GRANTED IN PART and DENIED IN PART, (ECF No. 48).

II. BACKGROUND

This case is about newspaper subscriptions. Plaintiffs Steve Wylie, John Ewalt, and Bonnie Navarre on behalf of themselves and others similarly situated filed suit against three Defendants: (1) GateHouse Media Ohio Holding II. Inc., d/b/a The Columbus Dispatch ("GateHouse Ohio"); (2) Copley Ohio Newspapers, Inc., ("Copley Ohio"); and (3) GateHouse Media, LLC, ("GateHouse Media") and Gannett Co., Inc. ("Gannett") ("the Holding Company Defendants").¹

Defendant GateHouse Ohio owns and operates The Columbus Dispatch ("The Dispatch"). Each Plaintiff subscribes to The Dispatch. (ECF No. 42 ¶¶ 128, 131, 134). Like most periodicals, The Dispatch offers subscriptions of varying lengths, e.g., 13 weeks, 26 weeks, 52 weeks. (Id. ¶ 4). This, according to Plaintiffs, is where the trouble arises. Plaintiffs lodge against Defendants a "deceptive" scheme to deprive customers of their reasonable expectations. (Id. ¶ 4). A reasonable customer would expect that Defendant GateHouse Ohio would provide The Dispatch for the number of weeks stated in the Subscription Agreements. Instead, Plaintiffs allege that GateHouse Ohio reduces its customers' fixed-length subscriptions by sending unsolicited and unwanted "premium editions." (Id. ¶ 25). Each issuance of a premium edition shortens the overall subscription length. (Id. ¶ 6). Examples of such premium editions include a cookbook, calendar, health guide, pet magazine, and puzzle book.² (Id. ¶ 9-10). Defendant GateHouse Ohio argues that multiple contracts, including the Terms of Sale posted online, disclose the impact these premium editions have subscription length.³ (See generally ECF No. 48). But Plaintiffs state that these Terms are buried in the Subscription Agreements and, worse still, subject to unilateralmodification. (ECF No. 42 ¶ 7). Thus, a customer who purchases a 52-week subscription might receive The Dispatch for 30 weeks—or even less, depending on the number of premium editions issued. (Id. ¶ 14).

More concerning, GateHouse Ohio does not bill separately for these premium editions. (Id. ¶ 16). Upon automatic renewal, a customer might not even notice that those subscriptions have been shortened through the issuance of premium editions. (Id. ¶ 15). Apparently, customers cannot easily receive copies of their invoices online. (Id. ¶ 17). When a customer receives a paper invoice, GateHouse Ohio assesses a $9.00 fee, which shortens the subscription length even further. (Id.). If Defendant wanted to provide premium content reasonably and transparently, it would have provided customers with the option not to receive the premium editions at all; or, at the very least, the impact of the premium editions on the length of the subscriptions should have been disclosed clearly, with separate billing and advance notice of the exact number, cost, and type of the premium editions. (Id. ¶ 32).

Defendant GateHouse Ohio moves for dismissal, strongly contending that the foregoing is rife with factual inaccuracies, and questioning why Plaintiffs do not avail themselves of an immediate remedy: cancel their subscriptions. (ECF No. 48).

Plaintiffs also contend that this misconduct is not isolated to GateHouse Ohio. Additional Defendants in this suit are Defendants Copley Ohio and the Holding Company Defendants. (ECF No. 42). Copley Ohio owns the Akron Beacon Journal ("Akron Beacon"). None of the three Plaintiffs subscribe to the Akron Beacon but bring this putative class action on behalf of subscribers who may have been wronged in a similar manner. The Holding Company Defendants are Gannett and GateHouse Media, two non-Ohio entities. Defendant Gannett is the holding company of multiple newspaper distributors, including Defendant GateHouse Ohio (d/b/a The ColumbusDispatch), Defendant GateHouse Media, and Defendant Copley Ohio (d/b/a The Akron Beacon Journal). Gannett is a publicly traded Delaware company headquartered in Virginia. (ECF No. 66 at 14). Defendant GateHouse Media is also a holding company formed to facilitate the acquisition of newspapers. It is a Delaware LLC with its principal place of business in New York. (Id. at 15).

On April 17, 2020, Plaintiffs Wylie, Bonnie Navarre, and John Ewalt filed their Amended Complaint against Defendants GateHouse Ohio, Copley Newspapers, and the Holding Company Defendants. (ECF No. 42). Alleging individual and class claims, the Amended Complaint sets forth nine counts against Defendants: (1) Breach of Contract; (2) Breach of the Implied Covenant of Good Faith; (3) violations of the Ohio Consumer Sales Practices Act ("OCSPA"); (4) declaratory judgment on the OCSPA allegations; (5) violations of the Ohio Deceptive Trade Practices Act ("ODTPA"); (6) a declaration that certain portions of the Terms of Sale are unconscionable; (7) a declaration that the Terms of Sale are illusory agreements; (8) unjust enrichment; and (9) injunctive relief. (ECF No. 42)

All Defendants moved to dismiss for failure to state a claim upon which relief can be granted, pursuant to Rule 12(b)(6). (ECF Nos. 48, 65, 66). Defendant Copley Ohio moves for want of subject-matter jurisdiction pursuant to Rule 12(b)(1). (ECF Nos. 65). The Holding Company Defendants challenges the existence of personal jurisdiction, pursuant to Rule 12(b)(2). In moving to dismiss for failure to state a claim, Defendant GateHouse Ohio further moves to strike exhibits and portions of Plaintiffs' Memorandum in Opposition to the Motion to Dismiss. (ECF No. 57). Plaintiffs also argue that some of Defendant GateHouse Ohio's exhibits and affidavits were submitted outside the pleadings and must be disregarded. (ECF No. 63).

III. STANDARD OF REVIEW

Federal Rule of Civil Procedure 12(b) provides for the dismissal of a complaint for, among other things, lack of subject-matter jurisdiction, lack of personal jurisdiction, and failure to state a claim upon which relief can be granted. Fed. R. Civ. P. 12(b)(1), (2), and (6).

A. Motion to Dismiss for Lack of Subject-Matter Jurisdiction

Where a defendant challenges the existence of subject matter jurisdiction pursuant to Rule 12(b)(1), the plaintiff has the burden of proving jurisdiction to avoid dismissal. Moir v. Greater Cleveland Reg'l Transit Auth., 895 F.2d 266, 269 (6th Cir. 1990). Motions to dismiss for lack of subject matter jurisdiction fall into two general categories: facial attacks and factual attacks. United States v. Ritchie, 15 F.3d 592, 598 (6th Cir. 1994). A facial attack is a challenge to the sufficiency of a complaint, and, when considering the motion, the court must view the material allegations of that complaint as true and construe them in the light most favorable to the nonmoving party. Id. A factual attack is a challenge to the factual existence of subject matter jurisdiction. Id. No presumptive truthfulness applies to the factual allegations. Moir v. Greater Cleveland Reg'l Transit Auth., 895 F.2d 266, 269 (6th Cir. 1990). The district court is free to weigh the evidence to assure itself of its ability to hear the suit. Golden v. Gorno Bros., Inc., 410 F.3d 879, 881 (6th Cir. 2005).

B. Motion to Dismiss for Lack of Personal Jurisdiction

Similar to its 12(b)(1) counterpart, Rule 12(b)(2) allows a defendant to challenge the Court's jurisdiction over the person. When such a motion is filed, "[t]he party seeking to assert personal jurisdiction bears the burden of demonstrating that such jurisdiction exists." Bird v. Parsons, 289 F.3d 865, 871 (6th Cir. 2002) (citing Neogen Corp. v. Neo Gen Screening, Inc., 282 F.3d 883, 887 (6th Cir. 2002)). In the face of a supported motion to dismiss, the plaintiff may notrest on his pleadings but must, by affidavit or otherwise, set forth specific evidence supporting jurisdiction. Theunissen v. Matthews, 935 F.2d 1454, 1458 (6th Cir. 1991) (citing Weller v. Cromwell Oil Co., 504 F.2d 927, 930 (6th Cir. 1974)). When courts consider a motion to dismiss pursuant to 12(b)(2) without an evidentiary hearing, the plaintiff "need only make a prima facie showing of jurisdiction." Bird, 289 F.3d at 871 (internal citation omitted). The plaintiff can make this prima facie showing by "'establishing with reasonable particularity sufficient contacts between [the Defendants] and the forum state to support jurisdiction.'" Neogen Corp., 282 F.3d at 887 (quoting Provident Nat'l Bank v. California Fed. Savings Loan Ass'n, 819 F.2d 434, 437 (3d Cir. 1987)).

C. Motion to Dismiss for Failure to State a Claim

Under 12(b)(6), a complaint will survive a ...