Tassell v. United Mktg. Group Llc

795 F.Supp.2d 770

Carole VAN TASSELL, Eric Dunn, and Janet Casinover, individually and on behalf of all others similarly situated, Plaintiffs,

v.UNITED MARKETING GROUP, LLC, an Illinois limited liability company; Permission Interactive, Inc., a Delaware corporation; Pikes Peak Direct Marketing, Inc., a Delaware corporation; and Taylor Gifts, Inc., a Pennsylvania corporation, Defendants.

No. 10 C 2675.

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

July 5, 2011.

Christopher Lillard Dore, Benjamin Harris Richman, Rafey S. Balabanian, Edelson McGuire LLC, Chicago, IL, for Plaintiffs.Brad W. Seiling, Donald R. Brown, Justin Carter Johnson, Manatt Phelps & Phillips, LLP, Los Angeles, CA, Laura K. McNally, Grippo & Elden, David C. Hartwell, Kelly Christine Elmore, Penland & Hartwell, LLC, Mary Rose Alexander, Andrew J. Mellen, Livia McCammon Kiser, Mark Steven Mester, Latham & Watkins LLP, Chicago, IL, Ari Nicholas Rothman, Venable LLP, Washington, DC, for Defendants.

MEMORANDUM OPINION AND ORDER

RUBEN CASTILLO, District Judge.

Carole Van Tassell (“Van Tassell”), Eric Dunn (“Dunn”), and Janet Casinover (“Casinover”) (collectively, “Plaintiffs”) bring this putative class action against United Marketing Group, LLC (“United Marketing”), Taylor Gifts, Inc. (“Taylor Gifts”), Pikes Peak Interactive, Inc. (“Pikes Peak”), and Permission Interactive, Inc. (“Permission Interactive”) (collectively, “Defendants”) for alleged violations of state and federal law. (R. 1, Compl.) Presently before the Court are four motions. First, United Marketing and Taylor Gifts, in a motion joined in part by Pikes Peak, move to dismiss the first amended complaint pursuant to Federal Rules of Civil Procedure 12(b)(1) and 12(b)(6), and alternatively to compel this action to arbitration and to stay further proceedings pursuant to the Federal Arbitration Act (“FAA”), 9 U.S.C. § 1 et seq. (R. 18, Defs.' Mot.; R. 19, Defs.' Mem.) Second, Permission Interactive seeks to join the motion filed by United Marketing and Taylor Gifts. (R. 45.) Third, Permission Interactive moves for partial dismissal of the first amended complaint as it pertains to Permission Interactive pursuant to Rule 12(b)(6). (R. 47, PI's Mot.; R. 48, PI's Mem.) Fourth, Pikes Peak requests the Court to compel arbitration and stay the current proceedings as they pertain to Pikes Peak pursuant to the FAA. (R. 24, PP's Mot.; R. 35, PP's Mem.). ( Id.) The Court grants Permission Interactive's motion to join the motion to dismiss, and for the reasons stated below, Defendants' joint motion to dismiss is granted in part and denied in part; Defendants' joint motion to compel arbitration is entered and continued; Permission Interactive's motion to dismiss is granted; and Pikes Peak's motion to compel arbitration is denied.¹

RELEVANT FACTS

I. Facts common to all Plaintiffs

This case arises from Plaintiffs' online purchase of products from websites owned by Permission Interactive, Pikes Pike, and Taylor Gifts (collectively, “Merchant Defendants”). (R. 10, First Am. Compl. ¶¶ 1–2.) Plaintiffs allege that after making a purchase on the Merchant Defendants' websites, the Merchant Defendants transmitted Plaintiffs' credit or debit card information to United Marketing without their knowledge or authorization. ( Id. ¶¶ 18–20.) With this information, United Marketing enrolled Plaintiffs in a negative-option membership program such as Buyer's Edge, MyAdvisor, Simply Mine, TechXperts for Consumer, Perfect Home, and Money Ahead (the “Membership Programs”). ( Id. ¶¶ 16–18.) According to Plaintiffs, United Marketing enrolled Plaintiffs in a trial Membership Program for $1, and then after a thirty-day waiting period, began charging each Plaintiff between $10 and $20 monthly until they discovered the unauthorized charges. ( Id. ¶ 18.) In some cases, United Marketing enrolled consumers in multiple Membership Programs at once. ( Id. ¶ 19.)

Plaintiffs aver that the Membership Programs are wholly unrelated to the retail purchases made by consumers on the Merchant Defendants' websites, and that most “enrolled” consumers are entirely unaware that they have been enrolled in the Membership Programs. ( Id. ¶¶ 17, 20.) The Membership Program purports to provide discounts and benefits to its enrolled members, but because most consumers are unaware of their membership, they are repeatedly billed by United Marketing while receiving nothing in return. ( Id. ¶ 20.) Plaintiffs claim that because consumers are unaware that they have been enrolled in a Membership Program and the monthly fee charged by United Marketing is relatively small, consumers often fail to discover these charges for several months. ( Id. ¶ 21.)

Plaintiffs allege that Defendants have worked in deliberate cooperation with each other and are aware of the deceptive nature of this business model. ( Id. ¶¶ 4, 22.) Plaintiffs claim that for each consumer enrolled in a United Marketing Membership Program, the Merchant Defendant that transferred the consumer's financial information receives a share of the charge. ( Id. ¶ 20.) Plaintiffs also aver that Defendants have received numerous complaints from consumers disputing the authorization for these charges. ( Id. ¶ 22.) The Merchant Defendants, however, disavow any knowledge of, or responsibility for, these practices. ( Id.)

II. Facts specific to Van Tassell, Dunn, and CasinoverA. Van Tassell

Van Tassell is a citizen of New York. ( Id. ¶ 6.) In or around November of 2009, she purchased a product from a website owned by Pikes Peak and provided her credit card information to make that purchase. ( Id. ¶ 24.) Shortly thereafter, Van Tassell was billed a recurring monthly charge of $14.95 for “UMG*MINE.” ( Id. ¶ 25.) When she discovered these charges after several months, Van Tassell called United Marketing to inquire about the charges. ( Id. ¶ 27.) A United Marketing customer representative told Van Tassell that she had been enrolled in the United Marketing “Simply Mine” Membership Program following her purchase from the Pikes Peak's website. ( Id.) Van Tassell disputed that she had enrolled in any Membership Program and insisted that she had not authorized either United Marketing or Pikes Peak to bill her for the Program. ( Id. ¶ 28.) After her continued protests, United Marketing agreed to cancel the ongoing Membership Program but refused to fully refund all the charges United Marketing had “crammed” onto Van Tassell's credit card account.² ( Id. ¶ 29.) Van Tassell maintains that she never requested or authorized Pikes Peak to transfer her confidential credit card information to United Marketing, nor requested or authorized United Marketing to repeatedly charge her credit card. ( Id. ¶ 30.)

B. Dunn

Dunn is a citizen of Virginia. ( Id. ¶ 7.) In or around March 2009, Dunn made a purchase from a website owned and operated by Taylor Gifts and provided his credit card information for that purpose. ( Id. ¶ 31.) Shortly thereafter, Dunn was billed a recurring monthly charge of $11.99 for “UMG*EDGE.” ( Id. ¶ 32.) Like Van Tassell, Dunn did not discover these charges for several months and did not know the origin of these charges. ( Id. ¶¶ 32–33.) When Dunn contacted United Marketing to inquire about the charges, he was told that he had been enrolled in the United Marketing “Buyer's Edge” Membership Program following his purchase from Taylor Gifts. ( Id. ¶ 34.) Dunn disputed that he had enrolled in the “Buyer's Edge” Membership Program and stated that he had never authorized either United Marketing or Taylor Gifts to bill him for such service. ( Id. ¶ 35.) United Marketing agreed to cancel the ongoing Membership Program after Dunn's repeated protests, but refused to fully refund all of the charges on Dunn's credit card account. ( Id. ¶ 36.) Dunn contends that he never requested or authorized United Marketing to charge his credit card, nor requested or authorized Taylor Gifts to transfer his credit card information to United Marketing. ( Id. ¶ 37.)

C. Casinover

Casinover is a citizen of New York. ( Id. ¶ 8.) She purchased a product from a website owned and operated by Permission Interactive and provided her debit card information to complete the transaction. ( Id. ¶ 38.) Soon after this purchase, Casinover began being charged $14.95 a month for “UMG*EDGE” and $14.95 a month for “UMG*MYAD.” ( Id. ¶ 39.) Casinover called United Marketing numerous times to inquire about the origin of these charges, but was always placed on hold. ( Id. ¶ 41.) She never spoke with a United Marketing representative about these unknown charges. ( Id.) She finally canceled her debit card in order to stop the recurring United Marketing charges. ( Id. ¶ 42.) On information and belief, Casinover alleges that United Marketing enrolled her in its Membership Programs following her purchase from Permission Interactive, which transferred her confidential debit card information to United Marketing without her authorization, which, in turn, repeatedly charged her debit card without her authorization. ( Id. ¶¶ 43–44.)

PROCEDURAL HISTORY

On April 30, 2010, Defendants removed this case to federal court pursuant to 28 U.S.C. §§ 1332, 1441, 1446 and 1453. (R. 1, Not. of Removal.) Plaintiffs filed an amended complaint (the “complaint”) on October 28, 2010. (R. 10, First Am. Compl.) In their complaint, Plaintiffs assert eight claims: (1) violation of the Illinois Consumer Fraud and Deceptive Business Practices Act (“ICFA”), 815 Ill. Comp. Stat. 505/1 et seq. (Count I); (2) violation of the Electronic Funds Transfer Act (“EFTA”), 15 U.S.C. § 1693e (Count II); (3) violation of the Electronic Communications Privacy Act (“ECPA”), 18 U.S.C. § 2510 et seq. (Count III); (4) breach of contract (Count IV); (5) unjust enrichment (in the alternative to breach of contract) (Count V); (6) unjust enrichment (Count VI); (7) fraud in the inducement (Count VII); and (8) conspiracy to commit fraud (Count VIII). ( Id.)

On December 13, 2010, Taylor...