Bais Yaakov v. Eductl. Testing Service

• Decision Date: 18 March 2019
• Docket Number: No. 13-CV-4577 (KMK),13-CV-4577 (KMK)
• Citation: 367 F.Supp.3d 93
• Parties: BAIS YAAKOV OF SPRING VALLEY, on behalf of itself and all others similarly situated, Plaintiff, v. EDUCATIONAL TESTING SERVICE, Defendant.
• Court: U.S. District Court — Southern District of New York

367 F.Supp.3d 93

BAIS YAAKOV OF SPRING VALLEY, on behalf of itself and all others similarly situated, Plaintiff,

v.EDUCATIONAL TESTING SERVICE, Defendant.

No. 13-CV-4577 (KMK)

United States District Court, S.D. New York.

Signed March 18, 2019

Aytan Y. Bellin, Esq., Erik L. Shawn, Esq., Bellin & Associates, White Plains, NY, Counsel for Plaintiff.

Roger Furman, Esq., Los Angeles, CA, Counsel for Plaintiff

Robert W. Gaffey, Esq., Andrew S. Kleinfeld, Esq., Brandy H. Ranjan, Esq., J. Todd Kennard, Esq., Michael M. Klotz, Esq., Sharyl A. Reisman, Esq., Jones Day, New York, NY, Columbus, OH, Counsel for Defendant.

OPINION & ORDER

KENNETH M. KARAS, District Judge:

Plaintiff Bais Yaakov of Spring Valley ("Plaintiff" or "Bais Yaakov") brings this class action suit against Defendant Educational Testing Service ("Defendant" or "ETS"), alleging that ETS caused over 17,000 unsolicited and solicited fax advertisements for goods and services to be sent out without the proper opt-out notices, in violation of the Telephone Consumer Protection Act ("TCPA"), 47 U.S.C. § 227, and N.Y. General Business Law ("GBL") § 396-aa. (See Second Am. Compl. ("SAC") (Dkt. No. 79).) Before the Court is Defendant's Motion for Summary Judgment. (Not. of Mot. (Dkt. No. 247).) For the following reasons, Defendant's Motion is granted in part and denied in part.

I. Background

A. Factual Background

The Court has described the allegations and procedural history of this case in a prior published Opinion. See Bais Yaakov of Spring Valley v. ETS , 251 F.Supp.3d 724 (S.D.N.Y. 2017). The Court therefore assumes familiarity with the dispute and will provide factual and procedural background only as relevant to the instant Motion.

The following facts are taken from the Parties' statements pursuant to Local Civil Rule 56.1, specifically Defendant's 56.1 Statement (Def.'s Rule 56.1 Statement ("Def.'s 56.1") (Dkt. No. 249) ), Plaintiff's 56.1 Response and Counterstatement (Pl.'s Rule 56.1 Response and Counterstatement ("Pl.'s 56.1") ("Pl.'s 56.1 Counter") (Dkt. No. 269) ), and Defendant's Counterstatement (Def.'s Rule 56.1 Counterstatement ("Def.'s 56.1 Counter") (Dkt. No. 276) ), and the admissible evidence submitted by the Parties.¹ The facts are recounted "in the light most favorable to" Plaintiff, the non-movant. Wandering Dago, Inc. v. Destito , 879 F.3d 20, 30 (2d Cir. 2018) (citation and quotation marks omitted). The facts as described below are in dispute only to the extent indicated.²

1. The Distribution Agreement

Bais Yaakov is a religious corporation and a high school. (Decl. of David Sussman ("Sussman Decl.") ¶ 1 (Dkt. No. 65).) ETS is a non-profit corporation known for its role in administering the SAT, PSAT, and AP exams. (Def.'s 56.1 ¶ 1.) ETS owns the rights to various educational products and services, including Criterion, which is a web-based application that evaluates a student's writing skills and provides diagnostic feedback and a holistic score. (Id. ¶ 2.)

In 2008, ETS entered into an exclusive distribution agreement ("Distribution Agreement") with Houghton Mifflin Harcourt Publishing Company ("HMH"), pursuant to which HMH obtained the exclusive right to distribute, market, and advertise Criterion in the K-12 school market in the United States. (Id. ¶ 4.) ETS and HMH signed the Distribution Agreement on June 25, 2008, and that initial contract spanned the time period of June 25, 2008 to December 31, 2011. (Id. ¶ 5.) The Distribution Agreement was extended through December 31, 2012 by amendment dated December 30, 2011. (Id. ¶ 6.) This Distribution Agreement was operative on November 15, 2012 when the fax at issue in this litigation (the "HMH Fax" or "Fax") was sent. (Id. ¶ 7.)

Pursuant to the Distribution Agreement, ETS agreed not to sell Criterion in the K-12 school market in the United States—only HMH could do so. (Id. ¶ 8.) HMH agreed to "comply with any and all applicable laws, regulations and other rules in the performance of its obligations under this agreement, including regulations relating to the marketing of the service." This included the TCPA. (Id. ¶ 9.) ETS did not itself advertise or market its Criterion Service to the K-12 market in the United States. Instead, ETS relied solely on HMH to do so. (Pl.'s 56.1 Counter ¶ 4.) The Distribution Agreement granted HMH the exclusive right to market Criterion. (Def.'s 56.1 ¶ 12.) HMH was also solely responsible for signing up new customers for ETS's Criterion Service, and for sending to ETS completed and signed subscriber agreements, which enabled ETS to activate new customers' accounts. (Pl.'s 56.1 Counter ¶ 7.) The Distribution Agreement did not address HMH undertaking any specific forms of marketing, and it made no mention of marketing by facsimile (or "fax"). (Def.'s 56.1 ¶ 13.) The Distribution Agreement provided that HMH would "use commercially reasonable efforts to promote the use and sale of Criterion," (Decl. of Andrew S. Kleinfeld, Esq. ("Kleinfeld Decl.") Ex. E, at § 5.1 (Distribution Agreement between ETS and HMH ("Distribution Agreement") ) (Dkt. No. 250-5) ), and "establish the marketing strategy ... [and] develop and distribute marketing and promotional materials," (id. §§ 5.1(i)–(ii) ).

The Distribution Agreement provided that HMH would "only make such representations about [Criterion] as have been expressly approved, in writing and in advance, by ETS, or which are contained in other materials provided by ETS," (Distribution Agreement § 5.1(viii) ), and "provide ETS with all new messaging to ensure it does not make product claims not supported by ETS research," (id. § 5.1(ix) ). ETS in turn agreed to "us[e] reasonable efforts to review all new messaging submitted by [HMH]." (Id. § 4.1(vii).)³ The Distribution Agreement also provided that ETS had to approve of HMH's use of ETS logos. (Id. § 3.1.2.)⁴ The Distribution Agreement provided that "[t]he relationship between ETS and Distributor shall be that of independent contractors. Nothing contained in this Agreement shall be construed to create a partnership, joint venture, or agency relationship between the parties, and, notwithstanding anything else herein, neither party shall have the right to incur ... any obligation or liability on behalf of the other party." (Id. § 15.4).)⁵

2. The HMH Fax Campaign

In or about November 2012, HMH decided to market the Criterion product by facsimile through Riverside Publishing Inc. ("Riverside Publishing"), a division of HMH. (Kleinfeld Decl. Ex. G, at 33–36, 102–104 (Deposition Testimony of Idy Spezzano ("Spezzano Dep.") ) ); Decl. of Aytan Y. Bellin, Esq. ("Bellin Decl.") Ex. A, at 39 (Deposition Testimony of Susan Yetman ("Yetman Dep.") (Dkt. No. 265-1).)⁶ HMH conceived of, designed, and physically drafted the HMH Fax. (Def.'s 56.1 ¶ 21.)

On November 7, 2012, ETS learned that HMH intended to market Criterion by fax, when Laurel Kaczor ("Kaczor"), of HMH, emailed Susan Yetman ("Yetman"), a Criterion account manager at ETS.⁷ (Id. ¶ 31.) In her November 7, 2012 email, Kaczor asked Yetman whether she had a few minutes to review the Criterion Fax, explaining that "Riverside publishing is planning on conducting a fax campaign for 10 states within the next day or so." (Kleinfeld Decl. Ex. M, (Nov. 7 to Nov. 9, 2012 Email Exchange between Kaczor and Yetman ("Nov. 7–9 Kaczor-Yetman Emails").)⁸ On November 7, 2012, Yetman forwarded Kaczor's email to Bob Haller ("Haller"), a content specialist at ETS, and asked him to review the attached fax and let her know whether there were any "show stoppers." (Kleinfeld Decl. Ex. O (Nov. 7, 2012 Kaczor Email to Haller ("Nov. 7 Kaczor-Haller Email").) ) Yetman noted that the fax "[l]ook[ed] ok to [her]" and that she was not sure "what kind of return [HMH could] get on a fax campaign, but that's an HMH decision." (Id. ) She also noted that "there should be a footer with the ETS standard trademark language." (Id. ) On November 9, 2012, Yetman asked Kaczor whether she had had heard from Haller. When Kaczor replied that she had not, Yetman indicated she would follow up with Haller. (Nov. 7–9 Kaczor-Yetman Emails.) On November 12, 2012, Yetman followed up with Haller, who replied, "[l]ooks perfect. Nice way of putting the relationship to CCSS without claiming more than we actually do." (Kleinfeld Decl. Ex. P (Nov. 12, 2012 Yetman Email to Haller ("Nov. 12 Yetman-Haller Email").) On November 12, 2012, Yetman wrote to Kaczor that Haller had approved the fax, and conveyed Haller's comment to Kaczor. (Kleinfeld Decl. Ex. N (Nov. 7 to Nov. 12, 2012 Email Exchange between Kaczor and Yetman ("Nov. 7–12 Kaczor-Yetman Emails").)⁹

ETS made no other comment, internally or externally, on the opt-out language of the HMH Fax. (Def.'s 56.1 ¶ 34.)¹⁰ There were a total of five emails between ETS and HMH, specifically between Yetman and Kaczor, regarding the HMH Fax, and no other written or oral communications between these entities regarding the HMH Fax. (Id. ¶ 37.) ETS's only internal communications concerning the HMH Fax consisted of five emails between two ETS employees, specifically Yetman and Haller, about the description of Criterion. (Id. ¶ 38.)

Yetman testified that HMH "would not have been able to send the document in the form that it was in when it was reviewed if it was not correct as to its representation of Criterion," and that if Haller had not approved it, HMH would have had to revise it. (Yetman Dep. 49.) Idy Spezzano ("Spezzano"), an HMH employee, supervised the creation of the HMH Fax, and wrote and edited the advertisement with other HMH employees, including Kaczor. (Spezzano Dep. 33–36.) Spezzano offered conflicting testimony regarding her understanding of whether HMH needed ETS's approval. She testified that even if ETS had told HMH that they did not want it to do the fax campaign, "[HMH] would have done it anyway." (Spezzano Dep. 367–68.)

When asked if HMH would have proceeded with the fax campaign even if ETS said "we absolutely forbid it," Spezzano replied, "[i]...