Beck v. Test Masters Educ. Servs. Inc.

• Decision Date: 18 December 2013
• Docket Number: Civil No. 1:04–CV–01391 (RCL)
• Parties: Jarrod Beck, et al., Plaintiffs, v. Test Masters Educational Services Inc., Defendant.
• Court: U.S. District Court — District of Columbia

994 F.Supp.2d 90

Jarrod Beck, et al., Plaintiffs,

v.Test Masters Educational Services Inc., Defendant.

Civil No. 1:04–CV–01391 (RCL)

United States District Court, District of Columbia.

December 18, 2013

Hassan A. Zavareei, Tycko & Zavareei LLP, Washington, DC, for Plaintiffs.

Charles T. Jeremiah, Kevin D. Jewell, Chamberlain, Hrdlicka, White, Williams & Aughtry, Houston, TX, David John Schenck, Office of the Attorney General, Austin, TX, for Defendant.

MEMORANDUM OPINION

Royce C. Lamberth, U.S. District Judge

Before the Court are the plaintiffs' motion ( [154] and [158] ) for summary judgment and the defendant's cross-motion ( [157] and [159] ) for summary judgment. For the reasons stated below, plaintiffs' motion for summary judgment will be GRANTED, and defendant's motion for summary judgment will be DENIED.

I. BACKGROUND

The relevant facts are as follows: hoping to attend law school beginning in the fall of 2004, plaintiffs Jarrod Beck, Keerthi Reddy, and Erin Galloway signed up for an LSAT prep course with defendant, Test Masters Educational Services, Inc. (“TES”). Plaintiffs claim that they believed they were signing up with TestMasters, a company known as Robin Singh Educational Services, Inc. (“Singh”). Both companies offer test preparation classes for standardized tests such as the LSAT. Plaintiffs brought claims of common law fraud and negligent misrepresentation, as well as claims under the D.C. Consumer Protection Procedures Act (“CPPA”), 28 D.C. Code § 28–3904(e), (f), (s), arising out of plaintiffs' purported confusion between the LSAT preparation courses offered by Singh and those offered by TES. Docket No. 30, Exh. 21, pp. 10–12.

This case comes before the Court after a tortured history, having been before two other judges before ending up here, on remand from the U.S. Court of Appeals for the D.C. Circuit and on transfer from Judge John Bates of this Court. Even before that, there is a documented history of Singh filing lawsuits against TES alleging trademark violations in order to prevent TES from doing business under that name. Singh's previous suits have been unsuccessful. TES claims that this losing history is driving the current, allegedly meritless suit brought by plaintiffs, which is why TES moved for sanctions based on alleged impropriety.

This action began in the Superior Court for the District of Columbia, and was removed to this Court based on diversity jurisdiction. After being transferred to Judge Vanessa Gilmore in the U.S. District Court for the Southern District of Texas, for Multi District Litigation proceedings, this case came back to this Court where Judge Robertson granted summary judgment in TES's favor on all counts brought by the plaintiffs. Further, Judge Robertson denied TES's sanctions motions—one based on Federal Rule of Civil Procedure 11 and one based on 28 U.S.C. § 1927 and the court's inherent power—“without prejudice.” Plaintiffs appealed the ruling granting summary judgment against them, and TES appealed the rulings denying without prejudice their motions for sanctions against plaintiffs and their counsel.

On the appeal of Judge Robertson's summary judgment decisions, the D.C. Circuit affirmed the grant of summary judgment on the common law fraud and negligence claims, but reversed as to the D.C. CPPA claims for statutory damages. Beck v. Test Masters Educ. Servs., Inc., 407 Fed.Appx. 491, 2011 WL 318403 (D.C.Cir. Jan. 31, 2011). The D.C. Circuit stated that plaintiffs' statutory claims could continue and granted limited discovery as to those claims. Now, both plaintiffs and defendant have filed motions for summary judgment as to the D.C. CPPA claims.

II. PLAINTIFFS' ALLEGATIONS

The thrust of plaintiffs' allegations is that when plaintiffs called to sign up for the TES class, TES failed to correct their alleged misunderstanding that the TES LSAT preparation course in which they enrolled was not the LSAT course run by Singh. Plaintiffs allege that when they talked to a TES representative, they mentioned that they were looking for the course recommended by a friend who had taken the course in a certain location—a location that both parties admit TES had never held an LSAT course—and the TES representative failed to say that TES had never conducted a course there.

III. LEGAL STANDARDSA. LEGAL STANDARD FOR VIOLATIONS OF THE D.C. CPPA

The relevant alleged unlawful practices in this case are set forth in D.C. Code § 28–3904(e) and (f):

It shall be a violation of this chapter, whether or not any consumer is in fact misled, deceived or damaged thereby, for any person to:

(e) misrepresent as to a material fact which has a tendency to mislead;

(f) fail to state a material fact if such failure tends to mislead;....

The court will look at an alleged misrepresentation “in terms of how the practice would be viewed and understood by a reasonable consumer.” Pearson v. Chung, 961 A.2d 1067, 1075 (D.C.2008). Due to the CPPA's remedial nature, the CPPA must “be construed and applied liberally to promote its purpose.” D.C. Code § 28–3901(c). As a result, Section 28–3904(e) and(f) reflect the same intent of other legislators enacting “State consumer protection statutes ... to overcome the pleadings problem associated with common law fraud claims by eliminating the requirement of proving certain elements such as intent to deceive and scienter.” Fort Lincoln Civic Ass'n, supra, 944 A.2d at 1073 n. 20 (citations omitted); Saucier v. Countrywide Home Loans, 64 A.3d 428 (D.C.2013).

Thus, under the D.C. CPPA, a plaintiff does not have to allege or prove intentional misrepresentation of failure to disclose in order to prevail on the claim. Cannon v. Wells Fargo Bank, N.A., 926 F.Supp.2d 152, 173–74 (D.D.C.2013). A plaintiff must, however, allege a material fact that tends to mislead. Id. To ascertain the definition of “material,” the court will look to that which appears in § 538(2) of the Restatement (Second) on Torts:

The matter is material [if]:

(a) a reasonable man [or woman] would attach importance to its existence or nonexistence in determining his [or her] choice of action in the transaction in question; or

(b) the maker of the representation knows or has reason to know that its recipient regards or is likely to regard the matter as important in determining his [or her] choice of action, although a reasonable man [or woman] would not so regard it.

While ordinarily, the question of materiality is one for the jury (and not a matter of law), there are some cases where a statement's importance to a reasonable consumer is readily apparent and can be resolved by the court.

B. LEGAL STANDARD FOR SUMMARY JUDGMENT

Summary judgment is appropriate when the pleadings and evidence demonstrate that “there is no genuine issue of material fact and that the moving party is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(c); Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986); Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986); see generallyWashington Post Co. v. U.S. Dep't of Health and Human Servs., 865 F.2d 320, 325 (D.C.Cir.1989). In such a proceeding, the party who would bear the burden of proof at trial—the plaintiff—bears the burden of proof in summary judgment. Celotex, 477 U.S. at 322, 106 S.Ct. 2548. All justifiable inferences are to be drawn in favor of the non-moving party, as the moving party has the burden of demonstrating the absence of a genuine issue of material fact. See Celotex, 477 U.S. at 248, 106 S.Ct. 2548; Anderson, 477 U.S. at 255, 106 S.Ct. 2505.

Further, “[t]he non-moving party's opposition must consist of more than mere unsupported allegations or denials, and must be supported by affidavits, declarations or other competent evidence setting forth specific facts showing that there is a genuine issue for trial.” MDB Communications, Inc. v. Hartford Cas. Ins. Co., 479 F.Supp.2d 136, 140 (D.D.C.2007). If a party fails to support a factual dispute with evidence in the record, “the court may ... consider the fact undisputed for purposes of the motion.” Fed. R. Civ. P. 56(e)(2).

There must be a showing more than “some metaphysical doubt as to the material facts” for a nonmoving party to succeed. Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 586, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986). Disputes over a material fact must be genuine—meaning the evidence is such that a reasonable jury could find for the nonmoving party. Mason v. United AirLines, Inc., 274 F.3d 314, 316 (5th Cir.2001). In this way, a material fact has the potential to affect the outcome of the lawsuit under the governing law. Id. “[I]f the evidence is merely colorable, or is not significantly probative, summary judgment may be granted.” Anderson, 477 U.S. at 249–50, 106 S.Ct. 2505.

IV. DISCUSSIONA. THE D.C. CODE APPLIES TO THIS SUIT.

This case—unlike Shaw v. Marriott Int'l, Inc. and Margolis v. U–Haul Int'l, Inc., which are cited by TES—has sufficient connections to the District of Columbiafor the D.C. Code to apply. “District of Columbia courts apply two tests in determining which jurisdiction's law should govern a dispute: a ‘governmental interests analysis' and a ‘most significant relationship’ test.” Shaw v. Marriott Int'l, Inc., 605 F.3d 1039, 1045 (D.C.Cir.2010). Here, both confirm that D.C. law should apply to this dispute.

First, the “governmental interests analysis” instructs courts to “evaluate the governmental policies underlying the applicable laws and determine which jurisdiction's policy would be most advanced by having its law applied to the facts of the case under review.” Hercules & Co. v. Shama Rest. Corp., 566 A.2d 31, 41 (D.C.1989). Under this test, the common refrain is that D.C. “has an interest in protecting its own citizens from being victimized by unfair trade practices and an interest in regulating the conduct of its business entities.” Id. Further, the D.C. CPPA does not...