Goodell v. Berkshire Hathaway Automotive Incorporated

• Court: District Court, D. Arizona
• Decided: September 22, 2021
• Docket: 2:20-cv-01657
• Status: Unknown

Opinion

1 WO 2 3 4 5 6 IN THE UNITED STATES DISTRICT COURT 7 FOR THE DISTRICT OF ARIZONA

9 Brian Goodell, et al., No. CV-20-01657-PHX-JJT

10 Plaintiffs, ORDER

11 v.

12 Van Tuyl Group LLC,

13 Defendant. 14 15 At issue is Defendant Van Tuyl Group, LLC’s Motion to Dismiss (Doc. 23, MTD), 16 to which Plaintiffs Brian Goodell and Kerri Wolski filed a Response (Doc. 24, Resp.), and 17 Defendant filed a Reply (Doc. 31). Plaintiffs also filed a Sur-Reply (Doc. 36), to which 18 Defendant filed a Response (Doc. 37). The Court additionally considered Plaintiffs’ Notice 19 of Supplemental Authority (Doc. 38). 20 I. BACKGROUND 21 Plaintiffs are two individuals who received calls from two different car dealerships 22 (collectively, the “Car Dealerships”) soliciting their business. Ms. Wolski purchased two 23 vehicles from Chv Motors, LLC dba Camelback Kia in Phoenix, Arizona (the “Camelback 24 Dealership”) in 2011 and 2015. (Doc. 16, First Amended Complaint (“FAC”) ¶ 37.) In 25 August 2018, she received four calls from the Camelback Dealership soliciting business 26 and offering promotions for new vehicles. (FAC ¶¶ 43, 45.) At the beginning of each call, 27 Ms. Wolski heard a distinctive “click and pause” sound. (FAC ¶ 44.) Despite Ms. Wolski’s 28 1 consistent requests for the calls to stop, the Camelback Dealership continued to call through 2 March 2019. (FAC ¶ 46.) 3 Similarly, Mr. Goodell purchased a vehicle from Showcase Honda, LLC dba 4 Showcase Honda in Phoenix, Arizona (the “Showcase Dealership”) in March 2017. (FAC 5 ¶ 55.) Starting in approximately July 2019, Mr. Goodell received 10 calls from the 6 Showcase Dealership regarding promotional offers. (FAC ¶¶ 60-61.) Mr. Goodell also 7 noticed a distinctive “click and pause” sound. (FAC ¶ 62.) Based on his extensive call 8 center experience, he identified the sound as both a predictive dialing system and an 9 Automatic Telephone Dialing System (“ATDS”) (FAC ¶¶ 63-64.) Mr. Goodell requested 10 that the calls stop but was initially ignored. The calls finally stopped in March 2020 after 11 Mr. Goodell posted a negative review. (FAC ¶¶ 67-69.) 12 Plaintiffs filed their initial lawsuit under the Telephone Consumer Protection Act 13 (“TCPA”), 47 U.S.C. § 227 against Berkshire Hathaway Automotive, Inc. (“BHAI”) 14 (Doc. 1, Complaint (“Compl.”)). BHAI holds an ownership interest in 85 car dealerships 15 throughout the United States, including the Car Dealerships who allegedly initiated the calls 16 at issue. (Doc. 13-1, First Declaration of Assane Faye (“First Faye Decl.”) ¶ 7.) BHAI moved 17 to dismiss for lack of subject-matter jurisdiction pursuant to Fed. R. Civ. P. 12(b)(1), arguing 18 that Plaintiffs did not have standing. BHAI provided Assane Faye’s declaration as evidence 19 in support of its jurisdictional arguments. Mr. Faye is the Vice President of Marketing for 20 Van Tuyl Group, LLC dba Berkshire Hathaway Automotive (“BHA”), which is a wholly 21 owned subsidiary of BHAI. (First Faye Decl. ¶¶ 1-2.) BHAI asserted that it was merely a 22 holding company without employees (First Faye Decl. ¶¶ 6-8.) 23 Plaintiffs subsequently filed the operative Complaint against Van Tuyl Group 24 (hereinafter “BHA”) alleging that it was vicariously liable under §§ 227(b) & 227(c) of the 25 TCPA for the Car Dealerships’ repeated calls (Doc. 16, First Amended Complaint 26 (“FAC”)). Plaintiffs allege that Defendant maintains a Business Development Center from 27 which the Car Dealerships initiate marketing calls (FAC ¶ 77.) On or around November 19, 28 2018, Defendant contracted with Century Interactive dba Car Wars Own the Phone (“Car 1 Wars”) for customer relations management (“CRM”) software, digital marketing, and call 2 tracking services that Defendant provided to the Car Dealerships. (FAC ¶ 78.) Through the 3 CRM, Defendant directs and controls the Car Dealerships’ telemarketing campaigns to 4 consumers, including providing the Car Dealerships with telephone numbers to call. (FAC 5 ¶¶ 78, 90.) Plaintiffs further allege that Defendant received profits based on the illegals 6 calls from the Car Dealerships. (FAC ¶ 86.) 7 BHA moved to dismiss the case under Rule 12(b)(1) arguing that Plaintiffs lack 8 standing. In support of the Motion to Dismiss, BHA filed Mr. Faye’s second declaration. 9 (Doc. 23-1, Second Declaration of Assane Faye (“Second Faye Decl.”). Plaintiffs argue 10 that they have standing but in the alternative, request that the Court grant leave for 11 jurisdictional discovery. 12 II. LEGAL STANDARD 13 To bring a judicable lawsuit into Federal Court, Article III of the Constitution 14 requires that one have “the core component of standing.” Lujan v. Defenders of Wildlife, 15 504 U.S. 555, 560 (1992). To satisfy Article III’s standing requirements, a plaintiff must 16 show that he suffered a “concrete and particularized” injury that is “fairly traceable to the 17 challenged action of the defendant,” and that a favorable decision would likely redress the 18 injury. Friends of the Earth, Inc. v. Laidlaw Environmental Servs. (TOC), Inc., 528 U.S. 19 167, 180 (2000). In the complaint, the plaintiff must “alleg[e] specific facts sufficient” to 20 establish standing. Schmier v. U.S. Court of Appeals for Ninth Circuit, 279 F.3d 817, 821 21 (9th Cir. 2002). Accordingly, courts should dismiss a plaintiff’s complaint if he has failed 22 to provide facts sufficient to establish standing. See, e.g., Chandler v. State Farm Mut. 23 Auto. Ins. Co., 598 F.3d 1115, 1123 (9th Cir. 2010). 24 A motion to dismiss for lack of subject matter jurisdiction brought pursuant to Rule 25 12(b)(1) may facially attack the existence of subject matter jurisdiction or may challenge 26 the truth of the alleged facts that would confer subject matter jurisdiction on the court. 27 Renteria v. United States, 452 F. Supp. 2d 910, 919 (D. Ariz. 2006) (citing Thornhill Publ’g 28 Co. v. Gen. Tel. & Elecs. Corp., 594 F.2d 730, 733 (9th Cir. 1979)). Courts are permitted 1 to consider evidence to decide a factual attack on subject matter jurisdiction. Thornhill, 2 594 F.2d at 733. The party asserting jurisdiction has the burden of showing that the court 3 has subject matter jurisdiction. See Indus. Tectonics, Inc. v. Aero Alloy, 912 F.2d 1090, 4 1092 (9th Cir. 1990). Where a claimant lacks standing, the court must dismiss the action 5 for lack of subject matter jurisdiction pursuant to Rule 12(b)(1). Ervine v. Desert View Reg. 6 Med. Ctr. Holdings, LLC, 753 F.3d 862, 868 (9th Cir. 2014). 7 III. ANALYSIS 8 A. Standing 9 Defendant mounts a factual attack on the second and third prongs of the Article III 10 inquiry – whether Plaintiffs’ claims are traceable to or redressable by Defendant. Defendant 11 argues that BHA is merely a management consulting company that provides consulting 12 services to the individual automotive dealerships and thus Plaintiffs sued the wrong party. 13 (MTD at 2.) Mr. Faye’s Second Declaration refutes many of Plaintiff’s allegations 14 regarding BHA’s corporate structure, its influence on the Car Dealerships, as well as other 15 allegations forming the basis of Plaintiffs’ claim for vicarious liability. 16 Plaintiffs argue that Defendant’s factual attack on subject matter jurisdiction is 17 procedurally improper because the merits of their TCPA claim and the question of 18 jurisdiction are intertwined. (Resp. at 12.) “Normally, the question of jurisdiction and the 19 merits of an action will be considered intertwined where ... a statute provides the basis for 20 both the subject matter jurisdiction of the federal court and the plaintiff's substantive claim 21 for relief.” Sun Valley Gasoline, Inc. v. Ernst Enterprises, Inc., 711 F.2d 138, 139 (9th Cir. 22 1983). However, courts do not limit their inquiry to cases where interpretation of a federal 23 statute is at issue. See, e.g., Rosales v. United States, 824 F.2d 799, 803 (9th Cir. 1987). 24 Here, questions regarding Defendant’s potential vicarious liability under the TCPA 25 are central to determining both the Court’s subject matter jurisdiction and Defendant’s 26 liability. (MTD at 12-13; Resp. at 15-17.) Defendant, however, argues that only the 27 question of whether the Car Dealerships’ alleged calls violated the TCPA goes towards the 28 merits and thus the question of Defendant’s vicarious liability solely implicates the Court’s 1 subject-matter jurisdiction. (Reply at 7.) The Court disagrees. It is impossible to separate 2 the issue of whether Defendant violated the TCPA due to the Car Dealerships’ calls from 3 whether Defendant is vicariously liable. See McGovert v. United States, 2004 WL 4 1729953, at *2 (N.D. Cal. July 14, 2004) (holding jurisdictional issue intertwined with 5 merits where both depended on whether individual was acting within the scope of his 6 employment at time of incident). Defendant’s arguments regarding vicarious liability 7 demonstrate the overlap. See Reply at 11 n. 3 (arguing Plaintiffs do not have standing 8 because they “have not offered a single decision, whether from a court or the FCC, where 9 a defendant entity has been found vicariously liable under the TCPA for a third-party’s 10 telemarketing where the defendant entity was neither a seller of the marketed product nor 11 an owner/franchisor.”). Because determining whether Defendant is vicariously liable under 12 the TCPA goes directly to the merits of the case, the Court finds that subject matter 13 jurisdiction and the merits are intertwined. 14 However, contrary to Plaintiffs’ contentions, the Court’s finding does not 15 automatically warrant denial of Defendant’s Motion. Rather, Plaintiffs must produce 16 evidence showing that there are disputed factual issues regarding Defendant’s vicarious 17 liability. See Roberts v. Corrothers, 812 F. 2d 1173, 1177 (9th Cir. 1987) (explaining that 18 if there are no issues of fact, the court may dismiss for lack of jurisdiction even though 19 jurisdictional and merits issues are intertwined); Sun Valley Gasoline, Inc., 711 F.2d at 139 20 (“jurisdictional finding of genuinely disputed facts is inappropriate when ‘the jurisdictional 21 issue and substantive issues are so intertwined that the question of jurisdiction is dependent 22 on the resolution of factual issues going to the merits’ of an action.”) (quoting Augustine 23 v. United States, 704 F.2d 1074, 1077 (9th Cir. 1983)) (emphasis added). To determine the 24 existence of factual disputes, the district court should “employ the standard applicable to a 25 motion for summary judgment and grant the motion to dismiss for lack of jurisdiction only 26 if the material jurisdictional facts are not in dispute and the moving party is entitled to 27 prevail as a matter of law.” Rosales, 824 F.2d at 803; see Williams v. Facebook, Inc., 498 28 F. Supp. 3d 1189, 1195–96 (N.D. Cal. 2019) (where merits and subject matter jurisdiction 1 are intertwined, plaintiff must submit “competing evidence to create a dispute of material 2 fact warranting [the court’s] deferral”). 3 Plaintiffs rely on Agne v. Papa Johns Int’l, 286 F.R.D. 559, 564 (W.D. Wash. 2012) 4 to argue that the overlap of the merits and subject-matter jurisdiction alone warrants denial, 5 but that reliance is misplaced. (Resp. at 13-14.) In Papa John, the plaintiff sued Papa John’s 6 International, Inc., the franchisor, under a theory of vicarious liability for violating the 7 TCPA. In denying Defendant’s motion, the court expressly cited evidence that 8 representatives of the franchisor encouraged franchisees to work with a third-party 9 marketing company that sent unsolicited texts to plaintiffs, which created an issue of fact. 10 Id. (“The Court will not resolve a disputed issue of fact at this preliminary point in the 11 litigation under the guise of deciding whether plaintiff has standing.”). Plaintiffs 12 additionally point to Doup v. Van Tuyl Group, LLC, No. CV 20-02742-X (N.D. Tex. 13 Apr. 26, 2021), which is a separate class action against Defendant in which the plaintiff 14 also claims Defendant is vicariously liable for a BHAI car dealership’s telemarketing 15 communications. Defendant moved to dismiss for lack of standing but the court held that 16 it was inappropriate to determine subject-matter jurisdiction where issues of fact were 17 central to both subject matter jurisdiction and the claim on the merits (Doc. 38-1 at 6.) 18 Relying on Fifth Circuit precedent, the court appeared to hold that plaintiff need not 19 produce evidence to show such issues of fact. (Doc. 38-1 at 6.) The Court declines to adopt 20 this reasoning. Ninth Circuit law is clear that a plaintiff must produce evidence to create a 21 disputed issue of fact. Rosales, 824 F.2d at 803; Williams, 498 F. Supp. at 1195–96. 22 Having reviewed the evidence produced by both parties, the Court finds that 23 Plaintiffs have failed to create a disputed issue of material fact regarding Defendant’s 24 vicarious liability. Companies may be vicariously liable under theories of (1) actual or 25 “classical” agency, (2) apparent authority, and (3) ratification. In re Joint Petition Filed by 26 Dish Network, LLC, 28 FCC Rcd. 6574, 6586-87 (2013). The FCC has ruled that actions 27 under the TCPA shall “incorporate federal common law agency principles of vicarious 28 liability.” Id. at 6584. 1 Mr. Faye’s declaration refutes the majority of Plaintiffs’ allegations that are central 2 to its claim for vicarious liability. Specifically, Mr. Faye avers that BHA has no ownership 3 interest in the Car Dealerships, does not maintain a “Business Development Center” from 4 which marketing calls are made on behalf of Car Dealerships, and does not provide or 5 facilitate the use of an ATDS for any of its dealership clients. (Doc. 23-1, Second 6 Declaration of Assane Faye (“Second Faye Decl.” ¶¶ 8, 15-16.) Moreover, BHA does not 7 provide the CRM software used by dealership clients nor does it provide them with 8 telephone numbers to use for telemarketing purposes. (Second Faye Decl. ¶¶ 18-19.) While 9 Plaintiffs produce evidence in response, it fails to controvert the evidence proffered in 10 Mr. Faye’s declaration. Therefore, the Court finds that based on the current evidence before 11 it, Plaintiffs do not have standing to assert their TCPA claims against Defendant. 12 B. Jurisdictional Discovery 13 Alternatively, Plaintiffs request that the Court grant them leave to conduct limited 14 jurisdictional discovery. Specifically, Plaintiffs propose: 1) BHA answer jurisdictional 15 interrogatories and requests for production (Doc. 24-1); 2) BHA present Mr. Faye for 16 deposition; and 3) third parties Car Wars, Camelback Kia, and Showcase Honda answer 17 requests for production (Docs. 24-2, 24-3). (Resp. at 19.) Courts have “broad discretion” 18 to grant requests for jurisdictional discovery, which should be permitted where “a more 19 satisfactory showing of the facts is necessary.” City of Tombstone v. United States, No. CV 20 11-845-TUC-FRZ, 2012 WL 12841240, at *1 (D. Ariz. Sept. 21, 2012). 21 Defendant argues that discovery would be futile because neither it nor any third 22 party sells or markets VTG products to consumers.1 (Reply at 11.) But Plaintiffs do not 23 allege vicarious liability on such basis. Rather, Plaintiffs allege that BHA has an interest in 24 the Car Dealerships and is vicariously liable for coordinating and directing the Car 25 Dealerships’ telemarketing campaigns for its benefit. (FAC ¶ 79; Resp. at 5, 12.) 26

27 1 To the extent Defendant argues that it does not qualify as a seller under the TCPA because it does not sell VTG or BHA branded goods, the Court notes that this is not a requirement 28 under the TCPA. See 47 C.F.R. §§ 64.1200(f)(10) (the FCC defines “seller” as “the person or entity on whose behalf a [telemarketing] call or message is initiated.” 1 While Plaintiffs’ fell short of creating an issue of fact as to vicarious liability, they 2 proffered sufficient evidence and allegations to show jurisdictional discovery would not be 3 futile. Defendant and the Car Dealerships are sister entities, which are owned or partially 4 owned by BHAI. (First Faye Decl. ¶¶ 2, 7.) The Car Dealerships’ individual websites 5 include a link to Defendant’s website, which in turn lists the Car Dealerships within 6 Defendant’s automotive group.2 (FAC ¶¶ 39, 57.) The Car Dealerships also have the same 7 mailing address as Defendant and their listed phone number is a direct line to Defendant’s 8 offices. (FAC ¶¶ 40, 58.) BHA’s website advertises that it provides dealerships with sales 9 “training, mentoring, and coaching,” including selling by telephone. (Doc. 25-11 at 9-10.) 10 Finally, Mr. Faye’s Declaration did not refute that BHA encouraged the Car Dealerships 11 to use a common type of customer relations management (“CRM”) software called “Car 12 Wars” or that it provided the Car Dealerships phone numbers to call while utilizing the Car 13 Wars CRM (FAC ¶¶ 78-79, 88-90; Resp. at 7.) 14 It would be premature to find for Defendant based on Mr. Faye’s declaration without 15 providing Plaintiffs an opportunity to conduct discovery. See Foster v. Essex Property, 16 Inc., 2017 WL 264390, at *3 (N.D. Cal. Jan. 20, 2017) (explaining that plaintiff could have 17 requested leave to conduct discovery in order to counter defendant’s declarations disputing 18 Plaintiff’s standing); Lopez v. Scully, 2019 WL 2902696, at *3 (C.D. Cal. May 13, 2019) 19 (declining to dismiss Plaintiff’s complaint for lack of standing where merits and 20 jurisdictional questions were intertwined and plaintiff had not yet had the opportunity to 21 engage in discovery and develop evidence sufficient to rebut defendant’s evidence). 22 However, the Court finds Plaintiffs’ proposed discovery requests overbroad. Accordingly, 23 the Court will permit limited discovery as set forth below. 24 1. Mr. Faye’s Deposition 25 The Court will permit Plaintiffs to conduct Mr. Faye’s deposition, which shall be 26 tailored to the contents of his Declarations filed in this matter.

27 2 https://www.showcasehonda.com/ https://www.berkshirehathawayautomotive.com/dealership/showcase-honda.htm 28 https://www.camelbackkia.com/ https://www.berkshirehathawayautomotive.com/dealership/camelback-kia.htm 1 2. BHA Interrogatories 2 The Court will permit Plaintiffs to serve Interrogatories 1-3 and 5-7 on BHA 3 Doc. 24-1). Regarding Interrogatory 2, “Company” shall refer to employees of Van Tuyl 4 Group dba BHA but will not include employees of the Car Dealerships who allegedly 5 called the Plaintiffs. The Court further finds that Interrogatory 4 is overbroad. 6 Interrogatory 4 states: 7 If you contend that the Plaintiffs provided consent to receive solicitation 8 telephone calls, state all facts in support of that contention and identify the date(s) on which and the means by which you contend consent was obtained. 9 10 (Doc. 24-1 at 9.) This Interrogatory is premature and unrelated to whether 11 Defendant directed or encouraged the Car Dealerships to engage in telemarketing. 12 3. BHA Requests for Production 13 The Court will allow Plaintiffs to serve Requests 1-3 and 6-11. However, Requests 14 4-5 and 12 are overbroad and outside of the scope of jurisdictional discovery. Request 4 15 states: 16 All documents relating to the failure, alleged failure, or possible failure by any automobile dealership(s) that contacted the Plaintiffs to comply with any 17 agreements, contracts, statements of work, policies or other instruction(s) 18 related to telemarketing. 19 (Doc. 24-1 at 10.) This Request does not seek evidence to support allegations 20 regarding Defendant’s direction or encouragement of the Car Dealerships’ telemarketing 21 campaign. Plaintiffs chose not to sue the Car Dealerships and may not use jurisdictional 22 discovery to obtain such information. 23 Request 5 asks for: 24 All documents relating to complaints concerning telemarketing, including, but not limited to, lists or databases containing complaints and metadata 25 about them, and information identifying the complainants. This request 26 includes any complaints to you by mail, email, live call, IVR, SMS, web form, social media, FCC, FTC, CFPB, state attorney general, BBB or any 27 other source. 28 1 (Doc. 24-1 at 10.) Again, this request is not tailored the relevant issue of whether 2 Defendant influenced or otherwise played a role in the Car Dealerships’ alleged 3 telemarketing. 4 Finally, Request 12 seeks: 5 All documents related to policies for compliance with the TCPA or the 6 FCC’s regulations thereunder and all documents necessary to construct a timeline of when each policy was in force.” 7 8 It proceeds to request information on a number of specific policies such as “when and how 9 calls would be placed (e.g., the vendor, equipment, computer system, or other program, 10 etc.). (Doc. 24-1 at 12.) Although related to the case’s merits, this request is tangential to 11 Defendant’s relationship with the Car Dealerships and thus overbroad. 12 4. Subpoena to Car Wars 13 The Court will not allow Plaintiffs to subpoena third party Car Wars. Including Car 14 Wars impermissibly broadens the scope of the jurisdictional discovery. Plaintiffs can 15 obtain any relevant Car Wars information through Defendant or the third-party Car 16 Dealerships. 17 5. Car Dealerships Requests for Production 18 The Court will permit Plaintiffs to serve Requests 2-4 and 6-8 on the third-party Car 19 Dealerships. However, Requests 1 and 5 are overbroad. Request 1 seeks, “All documents 20 related to Plaintiffs.” Again, Plaintiffs chose not to include the Car Dealerships as 21 Defendants. Requesting all information related to Plaintiffs from them is inappropriate 22 where the limited purpose of jurisdictional discovery is to glean more information on the 23 Car Dealerships’ relationship with Defendant. 24 Request 5 asks for, “…all documents relating to complaints or do-not-call requests 25 concerning telemarketing, including, but not limited to, Van Tuyl’s knowledge of the 26 complaints.” This request is overbroad. Instead, Plaintiffs may request “all documents 27 relating to Van Tuyl’s knowledge of complaints or do-not-call requests concerning 28 telemarketing.” 1 IT IS THEREFORE ORDERED denying Defendant’s Motion to Dismiss 2|| (Doc. 23) without prejudice. 3 IT IS FURTHER ORDERED that Plaintiffs shall conduct limited discovery in accordance with this Order. Discovery shall be completed by December 22, 2021. Within || 30 days of the close of jurisdictional discovery, Defendant may file another motion to 6|| dismiss, which shall address the issue of whether Plaintiffs have proffered sufficient 7\| evidence to create an issue of material fact as to Defendant’s vicarious liability under the TCPA. Plaintiffs may file a response with the benefit of the focused jurisdictional 9|| discovery and Defendant may file a reply in accordance with LRCiv 56.1(d). 10 Dated this 22nd day of September, 2021. CN 11 “wok: 12 wefholee— Unifga State#District Judge 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28

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