Meyer v. Capital Alliance Grp., Case No.: 15-CV-2405-WVG

• Decision Date: 06 November 2017
• Docket Number: Case No.: 15-CV-2405-WVG
• Court: U.S. District Court — Southern District of California
• Parties: DAVID MEYER et. al., Plaintiffs, v. CAPITAL ALLIANCE GROUP et. al., Defendants.

DAVID MEYER et. al., Plaintiffs, v. CAPITAL ALLIANCE GROUP et. al., Defendants.

Case No.: 15-CV-2405-WVG

UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF CALIFORNIA

November 6, 2017

ORDER (1) GRANTING-IN-PART DEFENDANTS' MOTION FOR PARTIAL SUMMARY JUDGMENT; (2) GRANTING-IN-PART DEFENDANTS' MOTION TO DISMISS; and (3) DENYING PLAINTIFFS' MOTION FOR PARTIAL SUMMARY JUDGMENT.

[Doc. Nos. 48, 49, 50, 61 & 76.]

In this action, Plaintiffs allege they received unlawful facsimile advertisements and telemarketing calls in violation of the Telephone Consumer Protection Act ("TCPA") and other federal and state statutes and regulations. Pending before the Court are cross-motions for partial summary judgment and a motion to dismiss the Second Amended Complaint ("SAC"). As explained below, Defendants' summary judgment motion is GRANTED-IN-PART, their motion to dismiss is GRANTED-IN-PART, and Plaintiffs' summary judgment motion is DENIED. Ultimately only Claims One and Three, both under the TCPA, remain from the Second Amended Complaint.

I. CASE SUMMARY

Plaintiffs David Meyer, Arnie Katz, and Ken Moser are individual business owners who maintain fax and telephone lines in furtherance of their businesses.¹ According to Plaintiffs, Defendant Capital Alliance Group, in its various formulations, is engaged in the business of advertising small business loans through third-party companies, which then illegally sent "junk faxes" and initiated telemarketing "robocalls" on its behalf.² All three plaintiffs received several junk faxes, which they allege ultimately traced back to Defendants. Plaintiff Moser also received telemarketing calls on his mobile telephone, which he alleges traced back to Defendants. Plaintiffs brought this action under various state and federal statutes and regulations and ultimately seek treble damages and attorneys' fees based on what they allege is Defendants' longstanding, willful, and knowing pattern of violative conduct. Trial is scheduled to commence on December 4, 2017.

II. DISCUSSION

A. Defendants' Motion for Partial Summary Judgment (Doc. No. 50)

1. Legal Standard

"A party may move for summary judgment, identifying each claim or defense - or the part of each claim or defense - on which summary judgment is sought. The court shall grant summary judgment if the movant shows there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a). The party seeking summary judgment bears the initial burden of establishing the basis for its motion and of identifying the portions of the declarations, pleadings, and discovery that demonstrate absence of a genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317 (1986). The party opposing summary judgment cannot "'rest upon the mereallegations or denials of [its] pleading' but must instead produce evidence that 'sets forth specific facts showing that there is a genuine issue for trial.'" Estate of Tucker v. Interscope Records, 515 F.3d 1019, 1030 (9th Cir. 2008), cert. denied, 555 U.S. 827 (2008) (quoting Fed. R. Civ. P 56(e)).

The moving party has "the burden of showing the absence of a genuine issue as to any material fact, and for these purposes the material it lodged must be viewed in the light most favorable to the opposing party." Adickes v. S. H. Kress & Co., 398 U.S. 144, 157 (1970); see also Tolan v. Cotton, 572 U.S. ___, 134 S. Ct. 1861, 1866 (2014). A fact is material if it could affect the outcome of the suit under applicable law. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248-49 (1986). A dispute about a material fact is genuine if there is sufficient evidence for a reasonable jury to return a verdict for the non-moving party. Id. at 248.

2. Claims Two, Seven, and Eight

a. Claims Two (Cal. Bus. & Prof. Code § 1758.41, Junk Fax Law) and Eight (Cal. Bus. & Prof. Code §§ 17200 et seq., Unfair Competition Law)

Defendants contend Plaintiffs lacks standing to bring both Claim Two (the so-called "Junk Fax Law," Cal. Bus. Prof. Code § 1758.41)³ and Claim Eight (California's Unfair Competition Law ("UCL"), Cal. Bus. Prof. Code §§ 17200 et seq.) because they lack themeasurable economic damages that both statutes require. (Doc. No. 48 at 16-17; Doc. No. 50 at 12.)⁴ Defendants are correct.

Although an alleged violation of the TCPA is enough to bestow standing under federal law, Van Patten v. Vertical Fitness Grp., LLC, 847 F.3d 1037, 1042 (9th Cir. 2017), the UCL and FAL have a "more limited standing requirement" than the general standing requirement for federal claims, id. at 1048. "Because elements for standing 'are not mere pleading requirements but rather an indispensable part of the plaintiff's case, each element must be supported in the same way as any other matter on which the plaintiff bears the burden of proof, i.e., with the manner and degree of evidence required at the successive stages of the litigation.'" Troyk v. Farmers Grp., Inc., 90 Cal. Rptr. 3d 589, 622 (Cal. Ct. App. 2009) (quoting Lujan v. Defenders of Wildlife, 504 U.S. 555, 561 (1992).

To demonstrate standing under the UCL and FAL, Plaintiffs must "(1) establish a loss or deprivation of money or property sufficient to qualify as injury in fact, i.e., economic injury, and (2) show that that economic injury was the result of, i.e., caused by, the unfair business practice or false advertising that is the gravamen of the claim." Kwikset Corp. v. Superior Court, 246 P.3d 877, 885 (Cal. 2011) (emphasis in original).

The UCL and FAL's "economic injury requirement is 'more restrictive than federal injury in fact' because it encompasses fewer kinds of injuries." Van Patten, 847 F.3d at 1048-49 (quoting Kwikset, 246 P.3d at 886). To satisfy California's statutory injury-in-fact requirement, a plaintiff must show "a personal, individualized loss of money or property in any nontrivial amount." Kwikset Corp., 246 P.3d at 887.

Although this bar is not high, trivial, de minimis, or non-existent alleged injuries are not sufficient and do not constitute injury-in-fact for UCL and FAL standing. Kwikset Corp., 246 P.3d at 887 (requiring "nontrivial amount"; noting that where California courtshave found standing present, "the plaintiff could allege or prove an identifiable monetary or property injury."). For example, in Van Patten, the Ninth Circuit found that the plaintiff's receipt of an unwanted text was sufficient to confer Article III standing, but not enough for standing under the UCL. 847 F.3d at 1043, 1049. There, the only economic injury plaintiff alleged was that he was required to pay for receiving defendant's text messages, but the evidence showed that his cell phone plan allowed unlimited messaging, meaning that he had no measurable economic loss. Id. at 1049; see also Reichman v. Poshmark, Inc., No. 16-CV-2359-DMS(JLB), 2017 U.S. Dist. LEXIS 36371, at *17-18 (S.D. Cal. Jan. 3, 2017) (finding allegations insufficient where that unsolicited text "advertising uses the paid for and economically valuable text message allotments."); Olmos v. Bank of Am., N.A., No. 15-CV-2786-BAS(BGS), 2016 U.S. Dist. LEXIS 72329, at *10-11 (S.D. Cal. June 1, 2016) ("[T]he allegation that Plaintiff received two short text messages is insufficient to convey standing because the loss of battery life and bandwidth as a result of these two messages was de minimis."). As Defendants point out, this economic damages requirement was the result of California Proposition 64, which amended the UCL and FAL to require economic damages.

In 2004, California voters passed Proposition 64, which amended the UCL and FAL to require plaintiffs to establish economic damages. Plaintiffs here argue that Proposition 64 amended only the UCL and had no impact on the Junk Fax Law as codified in § 17538.43. (Doc. No. 63 at 4.) Plaintiffs are decidedly wrong. Proposition 64 also amended the FAL in the same manner as the UCL. McGill v. Citibank, N.A., 393 P.3d 85, 92 (Cal. 2017) ("In 2004, the voters, by passing Proposition 64, amended [the UCL and FAL] to provide that private individuals may . . . file an action for relief only if they have 'suffered injury in fact and [have] lost money or property as a result of' a violation . . . ."); Kwikset Corp., 246 P.3d at 887 ("Proposition 64 requires that a plaintiff's economic injury come "as a result of" the unfair competition or a violation of the false advertising law.") (emphasis added); Angelucci v. Century Supper Club, 158 P.3d 718, 728 n.10 (Cal. 2007) ("We note as well that in 2004 the California electorate enacted legislation restrictingpreviously broad standing requirements for a private right of action under the state unfair competition and false advertising laws (Bus. & Prof. Code, §§ 17200 et seq., 17500 et seq.)") (emphasis added). Accordingly, section 17538.43 of the FAL requires the same economic injury as the UCL.⁵

Here, Defendants contend none of the three Plaintiffs incurred cognizable economic damages as a result of receiving Defendants' faxes. The Court agrees and addresses each Plaintiff in turn. In doing so, the Court keeps in mind that Plaintiffs bear the burden of proving they having standing and that "[i]n response to a summary judgment motion [they cannot rest on] . . . mere allegations, but must set forth by affidavit or other evidence specific facts, which for purposes of the summary judgment motion will be taken to be true." Lujan v. Defs. of Wildlife, 504 U.S. 555, 561 (1992) (emphasis added; citation and internal quotations omitted); see also Kwikset Corp., 246 P.3d at 888-89 (applying Lujan standard to state claim, but at motion to dismiss stage); Troyk v. Farmers Grp., Inc., 90 Cal. Rptr. 3d 589, 622 (Cal. Ct. App. 2009) (same).⁶

i. DCM Properties, Inc. and David Meyer

Meyer, DCM's president, testified at deposition that he did not recall whether his fax machine required service after he received Defendants' faxes. (Defendants' Fact No. 10; Doc. No. 50-3 at 18.) Meyer testified he pays...