In re Trilegiant Corp.

• Decision Date: 28 March 2014
• Docket Number: Civil Action No. 3:12–CV–00396 VLB.
• Citation: 11 F.Supp.3d 82
• Court: U.S. District Court — District of Connecticut
• Parties: In re TRILEGIANT CORPORATION, INC.

11 F.Supp.3d 82

In re TRILEGIANT CORPORATION, INC.

Civil Action No. 3:12–CV–00396 VLB.

United States District Court, D. Connecticut.

Signed March 28, 2014.

David Pastor, Pastor Law Office, LLP, Boston, MA, David L. Belt, David A. Slossberg, Hurwitz Sagarin Slossberg & Knuff LLC, Milford, CT, Kenneth G. Gilman, Thomas E. Shea, Gilman Law LLP, Bonita Springs, FL, James C. Shah, Shepherd, Finkelman, Miller & Shah, LLP, Media, PA, Jamie E. Weiss, Jeffrey A. Leon, Complex Litigation Group LLC, Highland Park, IL, Karen Leser Grenon, James E. Miller, Laurie Rubinow, Sheperd Finkelman Miller & Shah, LLP, Chester, CT, Nathan Zipperian, Shepherd, Finkelman, Miller & Shah, LLP, Weston, FL, Jay Douglas Dean, Robert J. Axelrod, Pomerantz Haudek Grossman & Gross LLP, New York, NY, James Edward Cecchi, Caroline F. Bartlett, Carella, Byrne, Cecchi, Olstein, Brody & Agnello, P.C., Roseland, NJ, Rose F. Luzon, Shepherd, Finkelman, Miller & Shah, LLP, San Diego, CA, for Plaintiffs.

Margaret M. Sheahan, Robert Burdette Mitchell, Mitchell & Sheahan, P.C., Stratford, CT, Karen L. Cavalier, Thomas J. Kavaler, Cahill, Gordon & Reindel, LLP, New York, NY, Kenneth M. Kliebard, Gregory T. Fouts, Howrey LLP, Romeo S. Quinto, Jr., Morgan, Lewis & Bockius, L.L.P., Chicago, IL, Rowena Amanda Moffett, Brenner, Saltzman & Wallman, New Haven, CT, Bryan James Orticelli, Day Pitney LLP, Hartford, CT, James H. Bicks, Thomas F. Clauss, Jr., Wiggin & Dana LLP, Stamford, CT, for Defendants.

MEMORANDUM OF DECISION GRANTING IN PART AND DENYING IN PART DEFENDANTS' MOTION TO DISMISS PLAINTIFFS' CONSOLIDATED AMENDED CLASS ACTION COMPLAINT OR, IN THE ALTERNATIVE, TO STRIKE PORTIONS OF THE COMPLAINT [DKT. 189]

VANESSA L. BRYANT, District Judge.

I. Introduction

The Plaintiffs, Debra Miller (“Miller”), Brittany DiCarolis (“DiCarolis”), Hope Kelm (“Kelm”), Jennie H. Pham (“Pham”), Brett Reilly (“Reilly”), Juan M. Restrepo (“Restrepo”), Brian Schnabel, Edward Schnabel, Lucy Schnabel, Annette Sumlin (“Sumlin”), Regina Warfel (“Warfel”), and Debbie Williams (“Williams”), bring this proposed class action against three groups of Defendants, the Trilegiant Defendants, which includes Affinion Group, LLC (“Affinion”), Trilegiant Corporation, Inc. (“Trilegiant”), and Apollo Global Management, LLC (“Apollo”), the Credit Card Defendants, which includes Bank of America, N.A. (“Bank of America”), Capital One Financial Corporation (“Capital One”), Chase Bank USA, N.A. (“Chase”), Citibank, N.A. (“Citibank”), Citigroup, Inc. (“Citigroup”), Chase Paymentech Solutions, LLC (“Paymentech”), and Wells Fargo Bank, N.A. (“Wells Fargo”), and the E–Merchant Defendants, which includes 1–800–Flowers.com, Inc. (“1–800 Flowers”), Beckett Media LLC (“Beckett”), Buy.com, Inc. (“Buy.com”), Classmates International, Inc. (“Classmates”), Days Inns WorldWide, Inc. (“Days Inns”), Wyndham WorldWide Corporation (“Wyndham”), FTD Group, Inc. (“FTD”), Hotwire, Inc. (“Hotwire”), IAC/InterActiveCorp (“IAC”), Shoebuy.com, Inc. (“Shoebuy”), PeopleFindersPro, Inc. (“PeopleFinder”), Priceline.com, Inc. “Priceline”), and United Online, Inc. (“United Online”).

The Plaintiffs allege several causes of action against the Defendants, including violations of the Racketeer Influenced Corrupt Organizations Act, 18 U.S.C. § 1962(c) (RICO), against all Defendants; conspiring to violate RICO, 18 U.S.C. § 1962(d), against all Defendants; aiding and abetting RICO, 18 U.S.C. §§ 1961 –1968, against the Credit Card Defendants; aiding and abetting commissions of mail fraud, 18 U.S.C. § 1341, wire fraud, 18 U.S.C. § 1343, and bank fraud, 18 U.S.C. § 1344, against the Credit Card Defendants; violations of the Electronic Communications Privacy Act, 18 U.S.C. § 2510 et seq. (ECPA), against Trilegiant, Affinion, and the E–Merchant Defendants; aiding and abetting ECPA violations under 18 U.S.C. § 2510 et seq., against the Credit Card Defendants; violations of the Connecticut Unfair Trade Practices Act, Conn. Gen.Stat. § 42–110a et seq. (CUTPA), against the Trilegiant Defendants and E–Merchant Defendants; aiding and abetting and conspiracy to violate CUTPA, Conn. Gen.Stat. § 42–110a et seq., against the Credit Card Defendants; violations of the California Business and Professional Code § 17602 (Automatic Renewal Statute), against the Trilegiant Defendants and E–Merchant Defendants; and claims of unjust enrichment against all Defendants.

Before the Court is the Defendants' Consolidated Motion to Dismiss or, in the Alternative, to Strike Various Portions of the Complaint. [Dkt. 189]. Several of the Defendants have also filed separate motions to dismiss, strike, or stay the proceedings on various other grounds. Those motions will be decided in other subsequent orders. For the reasons that follow, Defendants' motion to dismiss or in the alternative to strike is GRANTED in part and DENIED in part as set forth herein.

II. Factual Background

The following facts and allegations are taken from the Plaintiffs' Consolidated Amended Class Action Complaint (the “Complaint”). [Dkt. 141, hereinafter “CAC at ¶ ”]. The Plaintiffs allege that through the Defendants' deceptive, unfair, and fraudulent business practices, the Plaintiffs were enrolled in Trilegiant membership programs without their knowledge or explicit consent and that their program memberships remained extant for months and in some cases years. CAC at ¶ 1. The alleged scheme was initiated and orchestrated by Trilegiant with the help of its parent companies, Apollo and Affinion, but was only successful because of a series of quid pro quo agreements executed with several of the E–Merchant Defendants and the willing participation of the Credit Card Defendants. CAC at ¶ 3.

The Complaint asserts that Trilegiant sold memberships in its discount membership clubs, which the Plaintiffs conclude have “no real value.” CAC at ¶ 4. Trilegiant marketed its memberships in collaboration with and to the customers of various E–Merchant Defendants. CAC at ¶ 72. The E–Merchant Defendants received signing bonuses and/or substantial “bounties,” equal to a percentage of “every dollar” Trilegiant earned from the E–Merchant customers that purchased Trilegiant products and services. CAC at ¶¶ 6, 7. The Plaintiffs also allege that several of the Credit Card Defendants formed partnerships with Trilegiant to allow Trilegiant to advertise and sell “credit guard type” programs to their customers, and others had marketing contracts requiring the Credit Card Defendants to send Trilegiant's hard copy mail advertisements to its customers with the customer's credit card or bank account statements. CAC at ¶¶ 11(b), 49. The Complaint does not allege, and the Court does not construe it to allege, that the Credit Card Defendants are included as E–Merchants.

The Plaintiffs further allege that the written agreements with the E–Merchant Defendants detailed at least four of the insidious business practices that were used to further the scheme's illegitimate ends.¹ CAC at ¶ 7. First, the Plaintiffs allege that Trilegiant and the E–Merchant Defendants engaged in post-transaction marketing by creating “a false and deceptive appearance,” implying “that [Trilegiant's] offers for discount Membership Programs [were] part of the consumers' original transactions with the e-merchants.” CAC at ¶ 74. The Plaintiffs also allege that the E–Merchant Defendants had review authority over these designs and have final approval of any advertisement language. CAC at ¶ 117. To induce the feeling that the membership offer was from the E–Merchant Defendant, and not Trilegiant, the Plaintiffs allege that Defendants used three different design tactics: (1) “ ‘interstitial’ sales offer pages” for Trilegiant's products, which appear between the checkout page and the confirmation page for the customer's primary, e-merchant purchase; (2) “ ‘pop up’ windows, detailing the offers, which appear on top of the e-merchant's confirmation page; and (3) a hyperlink to an enrollment offer (or ‘banners') that are included on the [E]–[M]erchant Defendant's confirmation page.” CAC at ¶ 74. Importantly, all of these marketing tactics were used before the customer received confirmation of its purchase with the E–Merchant Defendant. CAC at ¶¶ 7(a), 117.

Second, the Plaintiffs allege that the E–Merchant Defendants engaged in “datapass” with Trilegiant, meaning that each individual E–Merchant Defendant passed its customers' confidential billing information to Trilegiant without the customers' explicit consent or knowledge; according to the Plaintiffs, this process is meant to facilitate further online purchases because the customers are not required to reenter their credit card or debit account information to complete a secondary transaction with Trilegiant. CAC at ¶¶ 7(a), 75–80. While it is unclear from the pleadings how and when this process exactly occurs, the Plaintiffs allege that there is an interface token that stores each customer's confidential billing information entered while making the primary purchase on the E–Merchant's website. CAC at ¶ 117(c). When the customer clicks on a link, a banner, or a pop-up window that leads to Trilegiant's disguised offer page, the token transfers the customer's confidential billing information directly to Trilegiant, presumably before the customer accepts the offer. Id. The Plaintiffs then allege that after the customers unknowingly agree to purchase Trilegiant's product, they are returned to their original purchase and only then receive confirmation of the original E–Merchant transaction. CAC at ¶¶ 7(a), 117(c). The customer is not aware, however, that on the backend, the token has transferred its personal billing information to Trilegiant, which Trilegiant uses to begin automatically charging the customer a monthly membership fee. CAC at ¶ 117. The Plaintiffs conclude that “[b]ecause the consumer never has to enter any credit card information during a transaction with Trilegiant, they reasonably believe that they did not make any...