Edward Makaron v. Enagic USA, Inc.

REPLY in Support NOTICE OF MOTION AND MOTION to Dismiss Plaintiff's Second Amended Complaint 25

C.D. Cal.April 29, 2016

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 ENAGIC USA, INC.’S REPLY IN SUPPORT OF ITS MOTION TO DISMISS PLAINTIFF’S SECOND AMENDED COMPLAINT Page 1 SHEPPARD MULLIN RICHTER & HAMPTON, LLP Andre Cronthall (SB # 117088) Fred Puglisi (SB # 121822) 333 S. Hope St., 43rd floor Los Angeles, California 90071-1422 (213) 620-1780 acronthall@sheppardmullin.com GARDERE WYNNE SEWELL, LLP Dwight M. Francis, Pro Hac Vice (Texas Bar 00785877) 1601 Elm St., Ste. 3000 Dallas, TX 75201 Telephone: (214) 999-3000 Facsimile: (214) 999-4667 dfrancis@gardere.com ATTORNEYS FOR DEFENDANT UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA EDWARD MAKARON, on behalf of himself and all others similarly situated, Plaintiff, v. ENAGIC USA INC., Defendant. Case No. 2:15-CV-05145-DDP-E DEFENDANT ENAGIC USA, INC.’S REPLY IN SUPPORT OF ITS MOTION TO DISMISS PLAINTIFF’S SECOND AMENDED COMPLAINT Assigned to: The Honorable Dean D. Pregerson Referred to: Magistrate Judge Charles F. Eick Hearing Date: May 9, 2016 Time: 10:00 a.m. Dept. 3 Case 2:15-cv-05145-DDP-E Document 28 Filed 04/29/16 Page 1 of 13 Page ID #:220 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 ENAGIC USA, INC.’S REPLY IN SUPPORT OF ITS MOTION TO DISMISS PLAINTIFF’S SECOND AMENDED COMPLAINT Page 2 Pursuant to Federal Rules of Civil Procedure 8, 9, and 12(b)(6), Defendant Enagic USA, Inc. (“Enagic”) files this Reply in Support of its Motion to Dismiss Plaintiff’s Second Amended Complaint (Doc. No. 25). I. SUMMARY Plaintiff fails to state a claim against Enagic for violation of the Telephone Consumer Protection Act, 47 U.S.C. § 227, et seq. (the “TCPA”). According to Plaintiff’s allegations, third party agents attempted to recruit him to become a distributor of Enagic water ionizers. These allegations do not state a claim because such recruiting calls do not constitute advertising or telemarking and therefore cannot be the basis for a TCPA claim. Further, Plaintiff has not alleged any wrongful conduct by Enagic. Instead, Plaintiff’s claims are based solely on the alleged conduct of one or two individuals, who Plaintiff asserts are agents of Enagic. This agency allegation fails because vicarious or agency liability must be premised on some action of the alleged principal, not the agent. In failing to allege any wrongful conduct that creates a factual basis for agency and vicarious liability the claims asserted in the Second Amended Complaint (the “SAC”) fail. For each of these reasons, Plaintiff fails to assert any claim against Enagic, and the motion to dismiss should be granted. Case 2:15-cv-05145-DDP-E Document 28 Filed 04/29/16 Page 2 of 13 Page ID #:221 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 ENAGIC USA, INC.’S REPLY IN SUPPORT OF ITS MOTION TO DISMISS PLAINTIFF’S SECOND AMENDED COMPLAINT Page 3 II. DISCUSSION A. The Two Alleged Recruiting Calls to Plaintiff Are Not Actionable. Plaintiff provided the following information regarding the two calls: On May 18, 2015, Plaintiff received a call from Defendant from telephone number 469-340-4080, who owns it. … During this call, Defendant’s agents sought to enlist Plaintiff as an agent-sales representative for Enagic-Kangen alkaline water filtration systems. **** On May 20, 2015, Plaintiff received a call from one of Defendant’s representatives (Gary Nixon living at 15*** **** Ln., Roanoke Texas 76262, cell phone number (469) 223-****, who tried to recruit Plaintiff as a salesperson for Defendant. SAC, (Doc. No. 24) ¶¶ 30 -31 (Emphasis Added). The descriptions of the calls are consistent with the exhibits attached to the SAC. For example, exhibit B, an email from Gary Nixon to Plaintiff offers “the opportunity of a lifetime.” SAC, (Doc. No. 24) Exhibit B. Gary Nixon’s attempts to tell Plaintiff about the opportunity to become an Enagic sales person are not actionable under the TCPA. Recruiting calls that the Plaintiff allegedly received do not constitute advertising or telemarketing and are not a violation of the TCPA. Dolemba v. Ill. Farmers Ins. Co, 2015 WL 4727331, (N.D. Ill. Aug. 10, 2015) and Reardon v. Uber Technologies, Inc., 2015 WL 4451209 (N.D. Cal., July 19, 2015). Case 2:15-cv-05145-DDP-E Document 28 Filed 04/29/16 Page 3 of 13 Page ID #:222 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 ENAGIC USA, INC.’S REPLY IN SUPPORT OF ITS MOTION TO DISMISS PLAINTIFF’S SECOND AMENDED COMPLAINT Page 4 The Dolemba court specifically recognized that a motion to dismiss should be granted when a plaintiff fails to allege that a call was either an “advertisement” or “telemarketing” within the meaning of the TCPA. In Dolemba, the plaintiff alleged that defendant Farmers Insurance Company and others called his cellular telephone in violation of the TCPA. The Dolemba court noted that the “TCPA makes it unlawful for any person to make a call using an automatic telephone dialing system or a prerecorded voice to a cellular telephone”; however, the court reasoned that the “TCPA authorizes the Federal Communications Commission (“FCC”) to exempt by rule or order “calls that are not made for a commercial purpose,” and “such classes or categories of calls made for commercial purposes as the Commission determines”: (1) “will not adversely affect the privacy rights that this section is intended to protect”; and (2) “do not include the transmission of any unsolicited advertisement.” Dolemba, 2015 WL 4727331 *2, citing 47 U.S.C. § 227(b)(2)(B). The FCC has implemented such regulations. See 47 C.F.R. § 64.1200 et seq. The FCC’s implementing regulations make it unlawful to use an automatic telephone dialing system, or a prerecorded voice, to initiate a call to a cellular telephone “that includes or introduces an advertisement or constitutes telemarketing.” Id. (citing 47 C.F.R. § 64.1200(a)(1)-(2)). Relying on the FCC’s implementing regulations, the Dolemba court ruled that the plaintiff had not Case 2:15-cv-05145-DDP-E Document 28 Filed 04/29/16 Page 4 of 13 Page ID #:223 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 ENAGIC USA, INC.’S REPLY IN SUPPORT OF ITS MOTION TO DISMISS PLAINTIFF’S SECOND AMENDED COMPLAINT Page 5 adequately alleged that the call he received was an “advertisement” or constituted “telemarketing” as the FCC’s regulations and the TCPA define those terms. Id. The Dolemba court noted it was not alone in ruling that recruiting calls to cellular telephones do not violate the TCPA and stated that “several district courts have held, however, that a mere “recruitment” call is not actionable. See AL & PO Corp. v. Med-Care Diabetic & Med. Supplies, Inc., No. 14 C 01893, 2014 WL 6999593, at *2 (N.D.Ill.Dec. 10, 2014) (“[D]rawing attention to a job opening does not equate to promoting the ‘commercial availability or quality of any property, goods, or services’ ”) (quoting 47 U.S.C. § 227(a)(5)); Friedman v. Torchmark Corp., No. 12-CV-2837-IEG (BGS), 2013 WL 4102201, at *5 (S.D.Cal. Aug. 13, 2013) (similar); Lutz App. Servs., Inc. v. Curry, 859 F.Supp. 180, 181 (E.D.Pa.1994) (similar); see also Reardon v. Uber Tech., Inc., Case No. 14-cv- 05678-JST, --- F.Supp.3d ----, 2015 WL 4451209, at *5 (N.D.Cal. July 19, 2015).” Plaintiff’s response makes no attempt to distinguish the Dolemba case, although this is not surprising since the allegations in Dolemba are virtually indistinguishable from Plaintiff’s allegations. The plaintiff in Dolemba alleged that he received an automated telephone call on his cell phone which provided him with the opportunity to become a Farmers Insurance agent. Dolemba, 2015 WL 4727331 *1. In this case, Plaintiff alleges that “defendant’s agents sought to enlist Case 2:15-cv-05145-DDP-E Document 28 Filed 04/29/16 Page 5 of 13 Page ID #:224 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 ENAGIC USA, INC.’S REPLY IN SUPPORT OF ITS MOTION TO DISMISS PLAINTIFF’S SECOND AMENDED COMPLAINT Page 6 Plaintiff as an agent-sales representative for Enagic-Kangen alkaline water filtration systems” and that “the Plaintiff received a call from one of Defendant’s representatives (Gary Nixon), who tried to recruit Plaintiff as a salesperson for Defendant, and suggested Plaintiff watch a video about Defendant’s products.” SAC, (Doc. 24) ¶¶ 30-31. Like the recruiting call in Dolemba, the call at issue in this case does not violate the TCPA. Thus, the Plaintiff has failed to plead a claim for violation of the TCPA, and the SAC should be dismissed pursuant to Rule 12(b)(6). The Reardon court similarly found that a motion to dismiss should be granted when the plaintiff only alleges a recruiting contact. In Reardon, the plaintiffs sued Uber on the grounds that its practice of sending text messages to potential drivers’ cellular telephones violated the TCPA. Uber moved to dismiss the complaint under Rule 12(b)(6) on the grounds that the texts do not constitute “advertising” or “telemarketing” under the statute. Reardon v. Uber Technologies, Inc., 2015 WL 4451209 * 2. The Reardon court noted that the applicable regulations, 47 C.F.R. §§ 64.1200(f)(1) and 64.1200(f)(12), define “advertisement” and “telemarketing.” Specifically, the regulations state that an “advertisement” is “any material advertising the commercial availability or quality of any property, goods, or services.” 47 C.F.R. § 64.1200(f)(1). Further, “Telemarketing” is defined as “the initiation of a telephone call or message for the purpose of encouraging the Case 2:15-cv-05145-DDP-E Document 28 Filed 04/29/16 Page 6 of 13 Page ID #:225 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 ENAGIC USA, INC.’S REPLY IN SUPPORT OF ITS MOTION TO DISMISS PLAINTIFF’S SECOND AMENDED COMPLAINT Page 7 purchase or rental of, or investment in, property, goods, or services, which is transmitted to any person.” 47 C.F.R. § 64.1200(f)(12). Uber argued that “the text messages it allegedly sent could not be said to “constitute telemarketing” or to “include or introduce an advertisement” because the texts did not promote its provision of property, goods, or services.” Reardon, 2015 WL 4451209 at * 4. Rather, Uber argued that its text messages were directed toward job recruitment, a category of communications that fall outside of the definitions of “telemarketing” or “advertisement.” Id. The Reardon court agreed with Uber and held that “given the allegations in the complaint, the texts at issue do not contain advertisements and do not constitute telemarketing.” Id. at *6. In ruling, the court noted that “several prior cases have held that recruiting calls are not advertising or telemarketing texts for the purposes of the TCPA,” including Lutz Appellate Servs., Inc. v. Curry, 859 F.Supp. 180, 181-82 (E.D.Pa.1994) and Murphy v. DCI Biologicals Orlando, LLC, No. 6:12- cv-1459-Orl-36KRS, 2013 WL 6865772, at *10 (M.D.Fla. Dec. 31, 2013). Id. While the court also considered Uber’s argument that prior express consent is an affirmative defense under the TCPA after reaching its conclusion that recruiting texts do not constitute advertising or telemarketing, that discussion in no way detracted from the court’s ruling regarding recruiting calls. Plaintiff does not and cannot adequately address the multiple courts’ rulings that recruiting calls do not Case 2:15-cv-05145-DDP-E Document 28 Filed 04/29/16 Page 7 of 13 Page ID #:226 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 ENAGIC USA, INC.’S REPLY IN SUPPORT OF ITS MOTION TO DISMISS PLAINTIFF’S SECOND AMENDED COMPLAINT Page 8 violate the TCPA. B. Plaintiff’s Allegations That Enagic’s Independent Contractors are Employees Fail. To state a claim under the TCPA, Plaintiff must allege that Enagic physically placed a telephone call to him or took the steps necessary to physically place a telephone call to him. Plaintiff does not make any such allegations. Instead, Plaintiff offers a concession - “Plaintiff would agree that, most likely, Defendant did not house the dialing systems used to place these allegedly unlawful calls.” Doc. No. 27, p. 13. This concession is not surprising since Plaintiff could have easily determined who owned the telephone number he was called from and did not do so or, for whatever reason, has chosen not to disclose this information. Plaintiff further tries to rehabilitate his failed claim by alleging that Enagic’s independent distributors are employees. To support this notion, Plaintiff relies on Enagic’s Policies and Procedures (“Enagic’s Policies”). SAC, (Doc. 24) ¶ 18. Rather than support Plaintiff’s claims however, Enagic’s Policies make clear that the distributors are independent contractors. Further, the Enagic’s Policies make clear (1) there is no employer/employee relationship; (2) the distributors have no authority to bind Enagic; (3) distributors are encouraged to set their own hours; (4) distributors are encouraged to set their own methods of sale; (5) distributors are responsible for reporting and paying all taxes (with no withholding from Enagic); (6) distributors are legally liable for their own actions; (7) distributors are free to Case 2:15-cv-05145-DDP-E Document 28 Filed 04/29/16 Page 8 of 13 Page ID #:227 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 ENAGIC USA, INC.’S REPLY IN SUPPORT OF ITS MOTION TO DISMISS PLAINTIFF’S SECOND AMENDED COMPLAINT Page 9 enter separate agreements with other independent distributors; (8) distributors have the option of selling other products; and (9) distributors could sell or not sell as many or as few of the products as they see fit. SAC, (Doc. 24) Ex. A, ¶ 2, 6, 7, 19, 48, 54. When a written agreement, such as Enagic’s Policies, specifies the relationship between a hirer and a distributor including setting out the parties respective degrees of control, such an agreement is a significant determinant of whether an employer-employee relationship exists. Ayala v. Antelope Valley Newspapers, Inc. 59 Cal.4th 522, 534-535 (2014). Given the explicit language in Enagic’s policies establishing an independent contractor relationship, Plaintiff is not able to rehabilitate his failed claim. C. Plaintiff Fails to State a Claim for Vicarious Liability Under the TCPA. Plaintiff’s claim that Enagic is liable under a theory of vicarious liability similarly fails. Plaintiff does not dispute that apparent authority can only be established by proof of something said or done by the alleged principal, on which the Plaintiff reasonably relied. Doc 27, p 17. See Edward Makaron v. GE Sec. Mfg., Inc., 2015 WL 3526253, *6 (C.D. Cal. May 18, 2015). In fact, Plaintiff agrees that "apparent authority is the power held by an agent or other actor to affect a principal's legal relations with third parties when a third party reasonably believes the actor has authority to act on behalf of the principal and that belief is traceable to the principal's manifestations." Restatement (Third) of Agency § 2.03 (emphasis added). Response, [Doc. No, 27] p 17. The SAC lacks any facts which Case 2:15-cv-05145-DDP-E Document 28 Filed 04/29/16 Page 9 of 13 Page ID #:228 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 ENAGIC USA, INC.’S REPLY IN SUPPORT OF ITS MOTION TO DISMISS PLAINTIFF’S SECOND AMENDED COMPLAINT Page 10 suggest Enagic made manifestations to the Plaintiff that would lead him to reasonably believe the independent distributors were authorized to make or initiate unlawful calls to him. There are no factual allegations in the SAC of something said or done by Enagic on which the Plaintiff reasonably relied in claiming that Enagic authorized any unlawful conduct. Rather, the document Plaintiff relies on shows the opposite. Enagic’s Policies specifically state that “The use of the Company’s name or copyrighted materials may not be made with automatic calling devices or “boiler room” operations either to solicit distributors or retail customers. (Doc. No. 24, SAC, Ex. A, ¶¶ 54, 57.) As a result, the claim of vicarious liability fails. D. Plaintiff Ignores Directly Applicable Precedent Known to the Plaintiff Plaintiff urges the court to follow a case decided in West Virginia regarding his alternative theory of liability despite the fact that this Court has already rejected the non-binding decision from West Virginia and Plaintiff has full knowledge of this court’s rejection. Specifically, to prop up his alternative theory of liability Plaintiff relies on Mey v. Monitonics Int’l, Inc., 959 F. Supp. 2d 927 (N.D. W. VA 2013). However, this Court has specifically rejected the ruling in Mey. See Edward Makaron v. GE Sec. Mfg., Inc., 2015 WL 3526253, *6 (C.D. Cal. May 18, 2015). In Makaron v. GE Sec., this court stated that “[a]s an initial matter, the Court notes that a Northern District of West Virginia decision has no binding effect on a decision of this Court.” Id. at *10. The Court also stated that “this Court would disagree generally from the conclusion reached by the court in Mey. Case 2:15-cv-05145-DDP-E Document 28 Filed 04/29/16 Page 10 of 13 Page ID #:229 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 ENAGIC USA, INC.’S REPLY IN SUPPORT OF ITS MOTION TO DISMISS PLAINTIFF’S SECOND AMENDED COMPLAINT Page 11 Furthermore, since Mey does not contain details of the specific facts in that case, the Court would not be inclined to give it much weight in comparing it to this case.” Id. (Emphasis added). Makaron v. GE Sec. is discussed extensively throughout Enagic’s Brief. See Doc. 26, pp 13-16. It appears that the plaintiff in Makaron v. GE Sec. is the same plaintiff in the present case. In addition, Plaintiff’s counsel and defendant’s counsel discussed that Makaron v. GE Sec. is applicable to the present matter prior to Enagic filing it motion to dismiss the SAC. Given the foregoing, it is misleading of Plaintiff to urge this Court to rely on Mey v. Monitonics and to not even mention Makaron v. GE Sec. Plaintiff’s reliance on Martinez v. Combs, et al 49 Cal.4th 35 (2010) for the proposition that the alleged callers are Enagic employees is similarly nebulous. In Martinez v. Combs, plaintiffs, seasonal agricultural workers, maintained that under a certain Industrial Welfare Commission’s (“IWC”) wage order they were employees of the defendants and entitled to recover unpaid minimum wages. The lower courts rejected the plaintiffs’ claims and the California Supreme court affirmed the lower courts’ rulings. In doing so, the courts applied a wage order test set out by the IWC. Id. at 64. Contrary to Plaintiff’s assertion, Martinez v. Combs, did not state “the operative test for determining whether a laborer is an employee vs. independent contractor,” Response, Doc 27, p 15, and should not be read as such. Case 2:15-cv-05145-DDP-E Document 28 Filed 04/29/16 Page 11 of 13 Page ID #:230 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 ENAGIC USA, INC.’S REPLY IN SUPPORT OF ITS MOTION TO DISMISS PLAINTIFF’S SECOND AMENDED COMPLAINT Page 12 III. CONCLUSION For the reasons described above and in the Motion and supporting brief, Enagic USA, Inc. respectfully requests that this Court dismiss Plaintiff’s claims against it with prejudice and that this Court grant such other relief to which Enagic is justly entitled. Dated: April 29, 2016 RESPECTFULLY SUBMITTED, Dwight M. Francis, Pro Hac Vice GARDERE WYNNE SEWELL, LLP 1601 Elm St., Ste. 3000 Dallas, TX 75201 /s/ Dwight M. Francis Attorneys for ENAGIC USA, INC. Case 2:15-cv-05145-DDP-E Document 28 Filed 04/29/16 Page 12 of 13 Page ID #:231 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 ENAGIC USA, INC.’S REPLY IN SUPPORT OF ITS MOTION TO DISMISS PLAINTIFF’S SECOND AMENDED COMPLAINT Page 13 PROOF OF SERVICE STATE OF TEXAS, COUNTY OF DALLAS I am employed in the County of Dallas; I am over the age of eighteen years and not a party to the within entitled action; my business address is 1601 Elm St., Ste. 3000, Dallas, TX 75201. On April 29, 2016, I served the following document(s) described as DEFENDANT ENAGIC USA, INC.’S REPLY IN SUPPORT OF ITS MOTION TO DISMISS PLAINTIFF’S SECOND AMENDED COMPLAINT on the interested party(ies) in this action by placing true copies thereof enclosed in sealed envelopes and/or packages addressed as follows: Todd M. Friedman Suren N. Weerasuriya Adrian R. Bacon LAW OFFICES OF TODD M. FRIEDMAN 324 S. Beverly Dr. #725 Beverly Hills, CA 90212 TEL: 877-206-4741 FAX: 866-633-0228 ` BY CM/ECF NOTICE OF ELECTRONIC FILING: I electronically filed the document(s) with the Clerk of the Court by using the CM/ECF system. Participants in the case who are registered CM/ECF users will be served by the CM/ECF system. Participants in the case who are not registered CM/ECF users will be served by mail or by other means permitted by the court rules.  STATE: I declare under penalty of perjury under the laws of the State of California that the foregoing is true and correct. Executed on April 29, 2016, at Dallas, Texas. /s/ Dwight M. Francis Dwight M. Francis Case 2:15-cv-05145-DDP-E Document 28 Filed 04/29/16 Page 13 of 13 Page ID #:232