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Fox v. The International Conference of Funeral Service Examining Boards

United States District Court, S.D. New York

March 17, 2017

TRENT FOX, Plaintiff,

          Brian S. Sokoloff, Esq. Kaitlyn R. McKenna, Esq. Mark A. Radi, Esq. Sokoloff Stern LLP Carle Place, NY Counsel for Plaintiff

          David P. Zaslowsky, Esq. Jennifer Semko, Esq. Baker & McKenzie LLP New York, NY Washington, DC Counsel for Defendants

          OPINION & ORDER

          KENNETH M. KARAS, District Judge.

         Plaintiff Trent Fox (“Plaintiff”) filed this Action against Defendants Deborah Orecki (“Orecki”) and the International Conference of Funeral Service Examining Boards (the “Conference, ” and collectively “Defendants”), alleging that Defendants breached a contract and violated his constitutional rights. (See generally Am. Compl. (Dkt. No. 25).) Plaintiff is also seeking certain declaratory relief, including a declaration that the Conference's copyrights are invalid and that certain provisions of a non-disclosure agreement are unconscionable. Before the Court are Defendants' Motions To Dismiss the Amended Complaint (the “Motions”) pursuant to Federal Rule of Civil Procedure 12(b)(6). (Dkt. Nos. 35, 38.) The Conference is seeking to dismiss every cause of action except for Plaintiff's breach of contract claim (claim 5). Orecki is seeking the dismissal of all of the causes of action asserted against her. For the reasons explained herein, Orecki's Motion is denied as moot because Plaintiff has withdrawn all claims against her with prejudice, (see Dkt. No. 58), and the Conference's Motion is granted.

         I. Background

         A. Factual Background

         The following facts are drawn from Plaintiff's Amended Complaint, and are taken as true for the purpose of resolving the Conference's Motion.

         Plaintiff is a licensed funeral director and embalmer in New York. (Am. Compl. ¶ 68.) From October 2006 through April 2008, he attended the American Academy McAllister Institute of Funeral Service, Inc. (“AAMI”), (id. ¶ 70), which is an accredited educational institution that provides education and training to funeral service students, (id. ¶ 50). Its programs also include preparing students to take the National Board Exam (“NBE”), (id. ¶ 1), the exam students must pass to become licensed funeral directors and embalmers in New York and other states, (id. ¶¶ 23, 42). The NBE is created and administered by the Conference. (Id. ¶ 1.)

         The Conference is a non-profit 501(c)(3) corporation organized under the laws of Indiana and comprised of all of the state funeral service regulatory agencies, including the New York State Department of Health Bureau of Funeral Directing (the “DOH”), and several Canadian funeral service regulatory boards. (Id. ¶¶ 11, 13.) Plaintiff alleges that the Conference is a “state actor and quasi-governmental body, whose purpose is to administer licensing examinations on behalf of, with the cooperation of, and under the direction of” New York State. (Id. ¶ 12.) Orecki is a former member of the Conference Board of Directors, serving as the “Director for District 1, ” which includes New York. (Id. ¶ 14.) She also was a “public official in the State of New York, serving as Director of [DOH].” (Id.)

         The NBE is comprised of two sections, an arts section and a sciences section, and is administered at a testing center on a computer. (Id. ¶¶ 44, 77.) Plaintiff took the arts and sciences sections of the NBE on April 21, 2008, and re-took the arts section on May 23, 2008. (Id. ¶ 75.) Ultimately, he passed both sections and his scores were certified to the DOH. (Id. ¶¶ 76, 83.)

         Plaintiff alleges that he entered into two different contracts with the Conference before taking the NBE. Plaintiff states that the first contract (the “Test-Taker Agreement”) consists of an agreement whereby Plaintiff paid the Conference a fee in exchange for the Conference's promise to “fairly administer and grade the NBE” and certify his passing scores to the state regulatory agencies of his choosing. (Id. ¶ 187.) The second contract is a non-disclosure agreement (the “Non-Disclosure Agreement”) to which Plaintiff assented “minutes before” taking the NBE. (Id. ¶ 77.) Plaintiff alleges that he was confronted by a prompt on the computer screen stating, in relevant part:

You are expressly prohibited from disclosing, publishing, reproducing, or transmitting this exam, in whole or in part, in any form or by any means, verbal or written, electronic or mechanical, for any purpose, without the prior express written permission of the [Conference].
[. . .]
By selecting the “Yes, I agree.” button, you signify that you have read, understand and agree to the terms of this agreement. If you do not agree to the terms of this agreement, select the “No, I do not agree.” button and see the test administrator. Please note that you will forfeit your exam fees and the session will end.

(Id. ¶¶ 199-200 (internal quotation marks omitted).) Another provision required Plaintiff to acknowledge that he had not been provided access to any examination questions in advance of the exam. (Id. ¶ 81.) Plaintiff was given “only three minutes” to review these terms but ultimately accepted them. (Id. ¶ 78.) He alleges that he did not fully understand the terms of the Non-Disclosure Agreement before accepting them and that the terms amounted to a contract of adhesion. (Id.)

         In 2011, Plaintiff passed the state counterpart to the NBE and received a New York State funeral director and embalming license. (Id. ¶ 85.) Since that time he has served as a funeral director at a funeral home in New York. (Id. ¶ 84.) In October 2014, Plaintiff requested that the Conference send his NBE scores to the Missouri State Board of Embalmers & Funeral Directors (the “Missouri Licensing Board”), also a member of the Conference. (Id. ¶¶ 13, 88.) Like in New York, Missouri law requires that applicants pass the NBE before receiving a license. (Id. ¶ 42.) Plaintiff alleges that the Conference either declined to certify his scores to the Missouri Licensing Board, or notified it that his scores were invalidated. (Id. ¶ 90.) His application for a Missouri license remains pending. (Id. ¶ 91.)

         On October 2, 2014, the Conference sent a letter to Plaintiff “requesting a response to allegations that the Conference had credible evidence of [Plaintiff's] participation in a security breach involving the harvesting and sharing of [NBE] items at [AAMI].” (Decl. of Dalene Paull in Supp. of the Conference's Mot. To Dismiss (“Paull Decl.”) Ex. 4, at 1 (“October 2014 Letter”) (Dkt. No. 37); see also Am. Compl. ¶ 92).)[1] It noted that “any requests for recognition of [Plaintiff's] previous NBE results . . . [would] be placed on hold pending the resolution of the current allegations.” (October 2014 Letter 1.) Attached to the letter were emails Plaintiff sent to various individuals discussing the NBE questions he encountered on the exams he took. (See Id. at 3-5.)[2] The security breach referenced in the letter related to a lawsuit the Conference brought against AAMI, alleging that AAMI induced students to improperly share confidential details regarding the NBE, including their recollection of exam questions, and then disseminating those questions to other students. (Am. Compl. ¶ 53.) The suit was settled in December 2014. (Id.) Plaintiff alleges that the Conference was dissatisfied with the settlement and “decided to arbitrarily and capriciously retroactively punish AAMI students.” (Id. ¶ 54.) In furtherance of this campaign, the Conference “developed a policy and practice of summarily retroactively invalidating the passing scores of numerous students who had contact with AAMI . . . faculty . . . either before or after they took the exam.” (Id. ¶ 56 (internal quotation marks omitted).)

         Following a series of communications spurred on by the October 2014 Letter, (id. ¶¶ 96- 100), the Conference notified Plaintiff that “based upon available evidence and a directive of the Conference Board of Directors (BOD) it has been determined that [Plaintiff] provided items recalled from the NBE back to AAMI personnel after his test administration, ” (id. ¶ 101 (alterations and internal quotation marks omitted)). Thereafter, the Conference imposed several sanctions. It invalidated Plaintiff's NBE scores, barred him from retaking the NBE for five years, fined him $500, and “threatened that any score transfers to state licensing boards would be accompanied with a notice that the scores had been invalidated.” (Id. ¶ 102.) Plaintiff alleges that the Conference failed to conduct a good-faith investigation before imposing these sanctions and did not provide any notice that these sanctions were possible or provide an opportunity to respond. (Id. ¶¶ 105-06.) He states that he did not “disclose any trade secrets, copyrighted, copyrightable, or otherwise protected, confidential, or privileged information about the NBE.” (Id. ¶ 103.)

         Plaintiff alleges that the Conference has been delegated a public function by New York State because it engages in the “state function of creating and administering the exams the state requires for state licensure, creating criteria for licensing (by deciding when individuals can take the NBE), and imposing punishments on both licensees and license applicants.” (Id. ¶ 135.) The Conference is allegedly a state actor because only government regulators are members, New York pays dues to the Conference, New York officials attend Conference meetings, New York uses taxpayer funds so that officials can attend Conference meetings, and the DOH participates in the election of the Conference Board of Directors. (Id. ¶¶ 118-24.) According to Plaintiff, without state participation the Conference would not exist. (Id. ¶ 125.) In other words:

The Conference is an organization exclusively composed of current state regulators required by state law to (1) examine funeral director and embalming license applicants, and (2) discipline licensees with appropriate punishment. The Conference, acting through those state regulators-and only through state regulators, in turn (a) develops exams, (b) sets the method of grading the exams, (c) sets the passing score for the exams, (d) prescribes the cost to license applicants for taking the exam, (e) conditions an applicant's right to take the exam on his or her alleged agreement to forfeit constitutional and other civil rights protections, (f) decides who may-and may not-take its exams, i.e., setting de facto license qualifications and penalties, (g) imposes monetary fines for perceived infractions of Conference rules, without payment of which an applicant cannot receive a State license, and (h) engages in both the prosecution and jury function regarding perceived violations of Conference rules. By ceding these myriad State functions to the Conference, New York has adopted them as its own.

(Id. ¶ 131 (italics omitted).)

         As state actors, Defendants allegedly violated Plaintiff's procedural and substantive due process rights, the First Amendment, and the Equal Protection Clause of the Fourteenth Amendment by invalidating Plaintiff's NBE scores and imposing the other sanctions. Plaintiff also has asserted several causes of action relating to the contracts between him and the Conference: (1) a claim for breach of the Test-Taker Agreement; and (2) causes of action seeking declarations that the Non-Disclosure Agreement is unenforceable and unconstitutional. Plaintiff further asserts a series of copyright claims against the Conference on the ground that the Conference's decision to sanction him stems from the fact that Plaintiff violated the Conference's copyrights. He seeks: (1) a declaration of fair use; (2) a declaration of implied license; (3) a declaration of non-infringement; and (4) a declaration of invalid copyrights. Finally, Plaintiff seeks a declaration that the five-year ban on retaking the NBE is illegal.

         B. Procedural History

         Plaintiff initiated this Action by filing a Complaint on May 21, 2015. (Dkt. No. 1.) Thereafter, Defendants filed a pre-motion letter requesting leave to file motions to dismiss the Complaint. (Dkt. No. 16.) At the Pre-motion Conference held on October 7, 2015, the Court directed Plaintiff to file an Amended Complaint by no later than October 28, 2015. (Dkt. No. 24.) Plaintiff filed the Amended Complaint on October 28, 2015. (Dkt. No. 25.) The Parties simultaneously submitted the Motions and their papers on March 11, 2016. (Dkt. Nos. 35-44.) On January 6, 2017, the Court solicited supplemental briefing on the issue of whether New York law applied to certain of Plaintiff's causes of action. (Dkt. No. 47.) Defendants submitted a supplemental brief on January 13, 2017, (Dkt. No. 48), and Plaintiff filed a reply on January 20, 2017, (Dkt. No. 51). The Court heard oral argument on March 2, 2017. (See Dkt. (minute entry for Mar. 2, 2017).)

         On March 8, 2017 (and six days after oral argument), Plaintiff filed a letter with the Court seeking to dismiss without prejudice certain, but not all, of the claims asserted in his Amended Complaint, pursuant to Federal Rule of Civil Procedure 41(a)(1)(A). (See Dkt. No. 53.) Specifically, Plaintiff sought to dismiss Orecki and all of the federal claims asserted against the Conference, but asked the Court to retain jurisdiction over three state-law causes of action asserted against the Conference. (See id.) Defendants filed a response requesting that the claims be dismissed with prejudice. (Dkt. No. 54.) On March 10, 2017, the Court issued an Order, explaining that Rule 41(a)(1)(A) does not allow a plaintiff to dismiss only some of the claims asserted against a defendant. (See Dkt. No. 55.) In other words, Plaintiff had to dismiss all of the claims asserted against the Conference for his notice of dismissal to be effective. (See Id. (citing Seidman v. Chobani, LLC, No. 14-CV-4050, 2016 WL 1271066 (S.D.N.Y. Mar. 29, 2016)).) In response to the Order, Plaintiff filed a letter seeking to amend the Amended Complaint pursuant to Fed.R.Civ.P. 15(a)(2). (Dkt. No. 56.) Defendants opposed this request. (Dkt. No. 57.) The Court denied Plaintiff's request to file an amended pleading and directed him to inform the Court whether he intended to withdraw all of the claims asserted against the Conference. (Dkt. No. 59.) On March 13, 2017, Plaintiff filed a letter withdrawing all of the claims asserted against Orecki with prejudice. (Dkt. No. 58.) Plaintiff chose not to withdraw the claims asserted against the Conference. (Id.)

         II. Discussion

         A. Standard of Review

         The Supreme Court has held that although a complaint “does not need detailed factual allegations” to survive a motion to dismiss, “a plaintiff's obligation to provide the ‘grounds' of his [or her] ‘entitle[ment] to relief' requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007) (second alteration in original) (citations omitted). Instead, the Supreme Court has emphasized that “[f]actual allegations must be enough to raise a right to relief above the speculative level, ” id., and that “once a claim has been stated adequately, it may be supported by showing any set of facts consistent with the allegations in the complaint, ” id. at 563. A plaintiff must allege “only enough facts to state a claim to relief that is plausible on its face.” Id. at 570. But if a plaintiff has “not nudged [his or her] claims across the line from conceivable to plausible, the[] complaint must be dismissed.” Id.; see also Ashcroft v. Iqbal, 556 U.S. 662, 679 (2009) (“Determining whether a complaint states a plausible claim for relief will . . . be a context-specific task that requires the reviewing court to draw on its judicial experience and common sense. But where the well-pleaded facts do not permit the court to infer more than the mere possibility of misconduct, the complaint has alleged-but it has not ‘show[n]'-‘that the pleader is entitled to relief.'” (second alteration in original) (citation omitted) (quoting Fed.R.Civ.P. 8(a)(2))).

         For purposes of the Conference's Motion, the Court is required to consider as true the factual allegations contained in the Amended Complaint. See Ruotolo v. City of New York, 514 F.3d 184, 188 (2d Cir. 2008) (“We review de novo a district court's dismissal of a complaint pursuant to Rule 12(b)(6), accepting all factual allegations in the complaint and drawing all reasonable inferences in the plaintiff's favor.” (italics and internal quotation marks omitted)); Gonzalez v. Caballero, 572 F.Supp.2d 463, 466 (S.D.N.Y. 2008) (same). “In adjudicating a Rule 12(b)(6) motion, a district court must confine its consideration to facts stated on the face of the complaint, in documents appended to the complaint or ...

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