Robison v. 7PN, LLC

569 F.Supp.3d 1175

Cari ROBISON, Plaintiff,

v.7PN, LLC and Jeffrey Green, Defendants.

Case No. 2:21-cv-00308-TC

United States District Court, D. Utah.

Signed November 1, 2021

Rebecca Anne Evans, Evans Law LLC, Draper, UT, Thomas Alvord, LAWHQ LLC, Salt Lake City, UT, for Plaintiff.

Mark M. Bettilyon, Catherine Margaret Maness, Thorpe North & Western LLP, Salt Lake City, UT, Alicia M. Lewis, Thorpe North & Western LLP, Sandy, UT, for Defendants.

ORDER AND MEMORANDUM DECISION

TENA CAMPBELL, United States District Judge

Plaintiff Cari Robison brings this suit against Defendants 7PN, LLC and Jeffrey Green, alleging violations of the Telephone Consumer Protection Act (TCPA), 47 U.S.C. § 227.¹ Both Defendants have moved to dismiss the suit under Federal Rule of Civil Procedure 12(b)(6). For the following reasons, the court DENIES the Defendants’ motion to dismiss.

FACTS ²

Mr. Green is the founder and owner of 7PN (short for 7 Point Nutrition). 7PN is a Utah-based business that provides health and nutrition coaching and sells nutritional supplements. At some point in the past, 7PN obtained Ms. Robison's cell phone number. Once it had her number, 7PN sent Ms. Robison fourteen promotional text messages between May 2018 and September 2019. These text messages advertised 7PN's nutritional supplements and invited the recipient to purchase the supplements. In sending these telemarketing messages, 7PN allegedly employed what is known as an Automatic Telephone Dialing System (ATDS)—"equipment which has the capacity ... to store or produce telephone numbers to be called, using a random or sequential number generator[,] and to dial such numbers." 47 U.S.C. § 227(a)(1). Ms. Robison alleges that she never consented to receiving these promotional text messages from 7PN, and that by receiving these messages she suffered "invasion of privacy, aggravation, annoyance, intrusion on seclusion, trespass, and conversion," as well as "inconvenience[ ]" and "disruption." (Am. Compl. ¶ 22, ECF No. 15.) Two months after Ms. Robison received the final message from 7PN,³ she added her phone number to the National Do Not Call Registry, a federal anti-telemarketing phone number database created in 2003. In April 2021, she sued 7PN under the TCPA, bringing a single cause of action for multiple violations of 47 U.S.C. § 227(b).

Ms. Robison originally brought her case in the Fourth Judicial District Court for Utah County, Utah. The Defendants filed a timely notice of removal in May 2021, invoking the court's federal-question jurisdiction. (ECF No. 2.) A few weeks later, Ms. Robison amended her complaint, adding new facts and a second cause of action for multiple violations of 47 U.S.C. § 227(c). (ECF No. 15.) Now the Defendants have moved to dismiss the entire action. (ECF No. 20.)

LEGAL STANDARD

To survive a Rule 12(b)(6) motion to dismiss, a plaintiff's complaint "must plead facts sufficient to state a claim to relief that is plausible on its face." Slater v. A.G. Edwards & Sons, Inc., 719 F.3d 1190, 1196 (10th Cir. 2013) (internal quotation marks omitted) (quoting Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) ). A claim is facially plausible when the complaint contains "factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Burnett v. Mortg. Elec. Registration Sys., Inc., 706 F.3d 1231, 1235 (10th Cir. 2013) (quoting Iqbal, 556 U.S. at 678, 129 S.Ct. 1937 ). The court must accept all well-pleaded allegations in the complaint as true and construe them in the light most favorable to the plaintiff. Albers v. Bd. of Cnty. Comm'rs, 771 F.3d 697, 700 (10th Cir. 2014). The court's function is "not to weigh potential evidence that the parties might present at trial, but to assess whether the plaintiff's complaint alone is legally sufficient to state a claim for which relief may be granted." Sutton v. Utah Sch. for the Deaf & Blind, 173 F.3d 1226, 1236 (10th Cir. 1999) (quoting Miller v. Glanz, 948 F.2d 1562, 1565 (10th Cir. 1991) ).

ANALYSIS

In her complaint, Ms. Robison raises two TCPA claims against the Defendants: violations of 47 U.S.C. § 227(b) and violations of 47 U.S.C. § 227(c).

I. Claims Against 7PN

As an initial matter, the Defendants argue that all claims against 7PN should be dismissed because 7PN did not exist as an entity at the time of the alleged violations. (See Mot. to Dismiss at 6, ECF No. 20.) In support, 7PN offers a copy of its certificate of organization. (See Mot. to Dismiss Ex. 1, ECF No. 20-1.) The parties disagree over whether the court can consider extrinsic evidence here, but it is clear that " ‘a court may take judicial notice of matters of public record outside the pleadings without converting a motion to dismiss’ into a motion for summary judgment." Utah Gospel Mission v. Salt Lake City Corp., 316 F. Supp. 2d 1201, 1206 n.5 (D. Utah 2004). 7PN's certificate of organization, a matter of public record, confirms that it was not formed until January 2020. (See Mot. to Dismiss Ex. 1, ECF No. 20-1.) Apparently anticipating this response, Ms. Robison argues in her complaint that 7PN should be held liable under successor liability principles. So 7PN's prior nonexistence does not foreclose liability—there can be successor liability.

Some courts have held that arguments against successor liability "turn[ ] on an issue of fact that is inappropriate for resolution on a motion to dismiss." Fed. Hous. Fin. Agency v. Deutsche Bank AG, 903 F. Supp. 2d 285, 291 (S.D.N.Y. 2012). However, at a minimum, the court must be able to look at the complaint and "draw the reasonable inference that the defendant"—here, 7PN—"is liable for the misconduct alleged." Burnett, 706 F.3d at 1235. The court cannot make such an inference if Ms. Robison has not plausibly pleaded successor liability here, so the court must examine the issue.

In their filings, the parties agree that Utah law should control the issue of successor liability. This would be true if this were a case involving diversity jurisdiction. But because the Defendants invoked the court's federal-question jurisdiction in removing the case, the court is "not obligated to apply substantive state law or to employ a choice of law analysis to resolve the issue of what law governs successor liability." Flexicorps, Inc. v. Benjamin & Williams Debt Collectors, Inc., No. 06 C 3183, 2007 WL 3231425, at *3 (N.D. Ill. Oct. 30, 2007). With that said, the court chooses to apply Utah law here. LLCs and corporations alike are " ‘creatures of state law,’ and state law is well equipped to handle" the issue of successor liability. Cf. Rodriguez v. FDIC, ––– U.S. ––––, 140 S. Ct. 713, 718, 206 L.Ed.2d 62 (2020) (quoting Cort v. Ash, 422 U.S. 66, 84, 95 S.Ct. 2080, 45 L.Ed.2d 26 (1975) ) (holding that state law, and not federal common law, should determine issues of corporate property rights).⁴

In general, when a predecessor company transfers its assets to a successor company, the successor is not liable for the debts or liabilities of the predecessor. There are four exceptions to this rule: (1) where the acquisition "is accompanied by an agreement for [the] successor to assume such liability," (2) where the acquisition "results from a fraudulent conveyance to escape liability for the debts or liabilities of the predecessor" (3) where the acquisition "constitutes a consolidation or merger with the predecessor" and (4) where the acquisition "results in [the] successor becoming a continuation of the predecessor." Tabor v. Metal Ware Corp., 2007 UT 71, ¶ 6, 168 P.3d 814, 816. Although Tabor is a products liability case, it quotes the same rule that the Tenth Circuit has used on other occasions. See Florom v. Elliott Mfg., 867 F.2d 570, 575 n.2 (10th Cir. 1989) ; R. J. Enstrom Corp. v. Interceptor Corp., 555 F.2d 277, 281–82 (10th Cir. 1977). For the fourth exception—the mere continuation exception—the court must analyze "not whether the ‘business operation[s]’ continued, but whether the ‘corporate entity’ continued.... A continuation demands ‘a common identity of stock, directors, and stockholders and the existence of only one corporation at the completion of the transfer.’ " Decius v. Action Collection Serv., Inc., 2004 UT App 484, ¶ 8, 105 P.3d 956, 959 (quoting Polius v. Clark Equip. Co., 802 F.2d 75, 86 (3d Cir. 1986) (Mansmann, J., concurring and dissenting)).

Ms. Robison argues that the mere continuation exception applies here. Specifically, she alleges the following facts:

7PN is the successor to Green acting in his individual capacity and doing business as 7 Point Nutrition. 7PN is merely a continuation of Green acting in his individual capacity and doing business as 7 Point Nutrition. Green is the sole owner of 7PN, just as he was when he was acting in his individual capacity or doing business as 7 Point Nutrition. Upon information, there were no changes to the way in which Green operated his business following registration of 7PN as a Limited Liability Company. 7PN is liable for acts committed by Green acting in his individual capacity and doing business as 7 Point Nutrition.

(Am. Compl. ¶¶ 9–13.) The Defendants call these allegations "formulaic," "conclusory," and "insufficient." (Mot. to Dismiss at 8–9, ECF No. 20 ; Reply at 9, ECF No. 25.)

Ms. Robison has plausibly pleaded successor liability here. She clearly articulates that Mr. Green is 7PN's sole owner, he was the sole owner when he ran the business as "7 Point Nutrition" or in his individual capacity, and that nothing changed after 7PN was created. (Am. Compl. ¶¶ 11–12.) The Defendants urge the court to disregard any allegation made "upon information and belief," but the court rejects that notion. Bell Atl. Corp. v. Twombly, 550 U.S. 544, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) and Iqbal ’s heightened standards do not prevent a plaintiff from pleading this way, "where the facts are peculiarly within the possession and control of the defendant." Arista...