Chubirko v. Better Bus. Bureau of Southern Piedmont Inc.

• Citation: 763 F.Supp.2d 759
• Decision Date: 10 February 2011
• Docket Number: No. 3:09–cv–502–FDW–DLH.,3:09–cv–502–FDW–DLH.
• Parties: John CHUBIRKO, Plaintiff,v.BETTER BUSINESS BUREAU OF SOUTHERN PIEDMONT, INC., et al., Defendants.
• Court: U.S. District Court — Western District of North Carolina

763 F.Supp.2d 759

John CHUBIRKO, Plaintiff,

v.BETTER BUSINESS BUREAU OF SOUTHERN PIEDMONT, INC., et al., Defendants.

No. 3:09–cv–502–FDW–DLH.

United States District Court, W.D. North Carolina,Charlotte Division.

Feb. 10, 2011.

John Chubirko, Kannapolis, NC, pro se.

Valecia M. McDowell, Barney Stewart, III, Moore & Van Allen, Douglas W. Ey, Jr., Helms Mulliss & Wicker, PLLC, David Glen Guidry, King & Spalding LLP, Marisa B. Nye, McGuire Woods, Heather C. White, Smith Moore LLP, John H. Culver, III, Christopher C. Lam, K & L Gates LLP, Charlotte, NC, Matthew W. Sawchak, Ellis & Winters, LLP, J. Mitchell Armbruster, Smith Anderson Law Firm, Christopher J. Blake, Leslie C. Lane, Nelson Mullins Riley & Scarborough, LLP, Raleigh, NC, Alyssa L. Rebensdorf, Jerry W. Blackwell, Blackwell Burke P.A., Minneapolis, MN, for Defendants.

ORDER

THIS MATTER is before the Court on Defendants Better Business Bureau of Southern Piedmont, Inc. (“BBB of Southern Piedmont”) and Council of Better Business Bureaus, Inc.'s (“CBBBI”), Jay Ashendorf and Sue Breckenridge's, Kimberly–Clark's, Coca Cola Company, Ford Motor Company, Hershey Foods, Inc., Hewlett–Packard, International Business Machines, Inc. (“IBM”), Kraft Foods, McKinsey and Co., Quaker Oats, and Visa, Inc.'s, Verizon Communications Inc.'s, and General Mills' Motions to Dismiss pursuant to Fed.R.Civ.P. 12(b)(1) and (6) for lack of subject matter jurisdiction and failure to state a claim upon which relief can be granted. (Docs. Nos. 158, 161, 165, 167, 169, 171). Defendant Verizon Communications Inc. additionally moves to dismiss pursuant to Fed.R.Civ.P. 12(b)(2) for lack of personal jurisdiction. Defendant The Proctor & Gamble Co. (“P & G”) filed a separate Motion to Dismiss pursuant to Fed.R.Civ.P. 4(m), 12(b)(2), (4), and (5) for lack of personal jurisdiction, insufficient process, and insufficient service of process. ¹ (Doc. No. 166). All motions have been fully briefed and are ripe for decision. For the reasons set forth, Defendants' Motions to Dismiss are GRANTED and Plaintiff's Second Amended Complaint (Doc. No. 157) is DISMISSED in its entirety.

I. BACKGROUND

Plaintiff, who is proceeding pro se, filed suit on November 24, 2009, against the above-named Defendants, as well as a number of others who were subsequently dismissed, alleging violations of the Sherman Antitrust Act, 15 U.S.C. § 1, et. seq., Racketeer Influenced and Corrupt Organization Act (“RICO”), 18 U.S.C. § 1961, et seq., and a number of state-law claims. Plaintiff amended his Complaint as a matter of course on December 2, 2009. (Doc. No. 3). Plaintiff originally attempted service on all Defendants by serving either CBBBI or BBB of Southern Piedmont. (Docs. Nos. 4, 5, 6, 7). The Court denied Plaintiff's Motions for Entry of Default (Docs. Nos. 34, 35, 36, 37, 38, 39, 40, 41, 42, 43, 44, 45) noting that his attempted service fell short of the requirements of Fed.R.Civ.P. 4. (Doc. No. 58). Plaintiff again attempted service pursuant to the requirements of Rule 4, attempting to serve either a registered agent within the state of North Carolina or the North Carolina Secretary of State. Notably, Plaintiff attempted service on Defendant P & G by issuing process to CT Corporation, which served as an agent for other named Defendants. (Doc. No. 79). In a March 24, 2010, letter, CT Corporation returned the summons issued to P & G as unexecuted, indicating that “The Proctor and Gamble Company is not listed in our records or on the records of the State of NC.” (Doc. No. 121–1).

Defendants responded and each filed Motions to Dismiss on various Rule 12 grounds. (Docs. Nos. 19, 50, 55, 74, 76, 120, 122, 124, 127, 129, 132, 140). In Plaintiff's untimely Response in Opposition to Defendants' motions, Plaintiff moved for leave to amend his first Amended Complaint pursuant to Fed.R.Civ.P. 15(a)(2) in the face of Defendants' motions to dismiss. (Doc. No. 147). The Court granted Plaintiff's motion, allowing Plaintiff until June 30, 2010, to file a second amended complaint, and ultimately denied as moot Defendants' motions to dismiss. (Docs. Nos. 156, 173).

Plaintiff filed his Second Amended Complaint (“SAC”) on June 30, 2010. (Doc. No. 157). The SAC is substantially similar to Plaintiff's first Amended Complaint and alleges violations of the Sherman Antitrust Act and RICO, as well as causes of action for conspiracy, fraud, libel and defamation, and reckless negligence.² The gravamen of Plaintiff's claims against Defendants is that CBBBI, working through its regional offices including the BBB of Southern Piedmont, is engaged in a large-scale “white collar protection racket” designed to extort money from small- and medium-sized businesses in the form of membership fees. Plaintiff alleges that BBB of Southern Piedmont and the other regional BBB entities penalize those smaller-scale businesses that do not pay membership fees in an effort to drive them out of business, allowing consolidation of commercial activity in member corporations, which includes the named corporate Defendants, and “enable their own global corporations to monopolize interstate commerce in the United States.” (SAC ¶ 44).

Specifically, Plaintiff alleges that he is a former agent of a limited liability corporation called American Benefits Company (“ABC”) that went out of business in May 2009.³ (SAC ¶ 22). After ABC ended its operations, two of ABC's former customers allegedly filed complaints with BBB of Southern Piedmont claiming that Plaintiff owed them money. (SAC ¶ 23). Plaintiff alleges that these complaints triggered an “extortion” effort by BBB of Southern Piedmont in which the complaints were assigned case numbers and BBB of Southern Piedmont listed Plaintiff's personal information on their website and sent “threatening” communications to Plaintiff. (SAC ¶ 27). When Plaintiff did not respond to these communications, BBB of Southern Piedmont gave Plaintiff's business an “F” rating, allegedly in an effort to “destroy Plaintiff in his business and personal reputation.” (SAC ¶ 31). After Plaintiff resolved his disputes with the former customers, they withdrew their complaints and informed BBB of Southern Piedmont that their complaints were satisfactorily resolved (SAC ¶¶ 35–37), at which point Plaintiff's rating was upgraded to “D+.” (SAC ¶ 38). After Plaintiff filed suit, BBB of Southern Piedmont gave Plaintiff “no rating,” purportedly for lack of information regarding Plaintiff's business. (SAC ¶ 43).

Plaintiff alleges that BBB of Southern Piedmont's rating system is structured to favor its member corporations and CBBBI's corporate directors, with certain corporations maintaining “A+” ratings despite having thousands of unresolved consumer complaints. (SAC ¶¶ 45–52). Plaintiff further alleges that the rating system is structured in such a way so that only fee-paying corporate members of regional BBB associations enjoy high ratings, despite high numbers of unresolved complaints, while smaller-sized firms with only a few complaints have low ratings. (SAC ¶¶ 66–68). Furthermore, the CBBBI complaint system is actually a scheme designed to glean valuable marketing information from the consumers filing the complaints. (SAC ¶¶ 62–65).

The purpose of this “racket” is to exploit CBBBI's reputation for providing impartial and trustworthy consumer ratings in order to advance the interests of BBB member corporations while destroying smaller businesses. (SAC ¶¶ 44, 70, 73–74, 76–78, 99, 101). Plaintiff alleges that all Defendants have joined together in a massive conspiracy to “set up and operate a nationwide network of fraudulent sham non-profits for purposes of destroying small businesses and business owners and monopolizing interstate commerce for global corporate interests.” (SAC ¶ 101).

Defendants now renew their motions to dismiss. Defendants all argue substantially similar and related grounds for dismissal. Specifically, Defendants Kimberly–Clark, Coca Cola Company, Ford Motor Company, Hershey Foods, Inc., Hewlett–Packard, IBM, Kraft Foods, McKinsey and Co., Quaker Oats, and Visa, Inc., Verizon Communications Inc., and General Mills (collectively referred to as “Corporate Defendants”), and Defendants Sue Breckenridge and Jay Ashendorf argue Plaintiff has failed to state a claim against them because Plaintiff has not pled sufficient facts to hold them individually liable. (Docs. Nos. 162, 168, 170, 172). Additionally, Defendants argue Plaintiff has failed to plead sufficient facts to make out the elements necessary for each of Plaintiff's claims and that Plaintiff has not pled any actual injury and therefore lacks standing to sue. (Docs. Nos. 159, 165, 168, 170, 172). Because Plaintiff's SAC fails to sufficiently make out Plaintiff's federal claims, Defendants argue the Court lacks subject matter jurisdiction to hear Plaintiff's state-law claims. (Docs. Nos. 159, 162).

On August 2, 2010, after the instant Motions were filed, the Court issued a Roseboro notice, reminding Plaintiff of the burden he carries in confronting Defendants' motions. (Doc. No. 173).

II. DISCUSSION

Because Defendants move for dismissal for lack of subject matter jurisdiction and jurisdiction is a threshold question, see, e.g., Discover Bank v. Vaden, 396 F.3d 366, 367 (4th Cir.2005), the Court notes at the outset that Plaintiff has adequately alleged subject matter jurisdiction.⁴ Specifically, Plaintiff alleges federal question jurisdiction under 28 U.S.C. §§ 1331 and 1337, 15 U.S.C. § 15(a) and 18 U.S.C. § 1964(a) to consider Plaintiff's Sherman Antitrust Act and RICO claims, as well as supplemental jurisdiction under 28 U.S.C. § 1367 to consider Plaintiff's state law claims.

Additionally, the Court will assume for the purposes of this Order, without deciding, that it has personal jurisdiction over Defendants Verizon Communications Inc. (“Verizon”) and P & G. Both Verizon and P & G separately move to dismiss for lack of personal jurisdiction. (Docs. No. 166, 169)....