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Jenkins v. National Grid USA

United States District Court, E.D. New York

March 31, 2017

JARRETT JENKINS, EMMOT STEELE, and FRANCES ROYAL, on behalf of themselves and all others similarly situated, Plaintiffs,
v.
NATIONAL GRID USA, NATIONAL GRID NORTH AMERICA INC., NATIONAL GRID PLC, NATIONAL GRID USA SERVICE COMPANY, INC., NATIONAL GRID ELECTRIC SERVICES, LLC, BOSTON GAS COMPANY, COLONIAL GAS COMPANY, ESSEX GAS COMPANY, KEYSPAN CORPORATION, KEYSPAN GAS EAST CORPORATION, MASSACHUSETTS ELECTRIC COMPANY, NANTUCKET ELECTRIC COMPANY, NIAGARA MOHAWK HOLDINGS, INC., NIAGARA MOHAWK POWER CORPORATION, THE BROOKLYN UNION GAS COMPANY, and THE NARRAGANSETT ELECTRIC COMPANY, Defendants.

          For Plaintiffs: Daniel M. Hutchinson, Esq., Lieff Cabraser Heimann & Bernstein LLP, Douglas Ian Cuthbertson, Esq., Jonathan D. Selbin, Esq., Michael Frederick Decker, Esq., Lieff Cabraser Heimann & Bernstein LLP, Joseph S. Tusa, Esq. Tusa, P.C.

          For Defendants: Richard H. Brown, Esq., Day Pitney LLP, Anthony Joseph Marchetta, Esq. Day Pitney LLP

          For Interested Party Experian Information Solutions, Inc.: Chris J. Lopata, Esq.Jones Day

          MEMORANDUM & ORDER

          JOAANA SEYBERT, U.S.D.J.

         In this putative class action, Plaintiffs Jarrett Jenkins (“Jenkins”), Emmot Steele (Steele”) and Frances Royal (“Royal” and collectively “Plaintiffs”) allege that Defendants Niagara Mohawk Power Corporation, Keyspan Gas East Corporation, the Brooklyn Union Gas Company and National Grid USA Service Company, Inc. (“National Grid USA Services” and collectively “Defendants”)[1] violated the Telephone Consumer Protection Act, 47 U.S.C. § 227, et seq. (the “TCPA”) and New York General Business Law (“NY GBL”) § 399-p.

         Currently pending before the Court are: (1) Defendants' motion to dismiss the Second Amended Complaint for lack of subject matter jurisdiction, lack of personal jurisdiction, and failure to state a claim (Docket Entries 159, 160)[2] and (2) Defendants' motion to dismiss or, in the alternative, to stay Count II of the Second Amended Complaint as to Jenkins (Docket Entry 161).[3] For the following reasons, Defendants' motion to dismiss for failure to state a claim, lack of subject matter jurisdiction, and lack of personal jurisdiction (Docket Entries 159, 160) is GRANTED IN PART and DENIED IN PART, and Defendants' motion to dismiss or stay Count II as to Jenkins (Docket Entry 161) is DENIED.

         BACKGROUND

         I. Factual Background[4]

         The Court assumes familiarity with the facts of this case, which are detailed in this Court's Order dated March 31, 2016. (March 2016 Order at 3-5.)

         Briefly, National Grid PLC (“National Grid”) is a utility company that provides gas and electricity to consumers in the northeast United States. (Sec. Am. Compl., Docket Entry 214, ¶¶ 21, 23.)[5] The company has a complex corporate structure, including several holding companies and numerous regional subsidiaries. (See List of Subsidiaries, Sec. Am. Compl. Ex. 1, Docket Entry 214-1.) Three of the Defendants--Niagara Mohawk Power Corporation (“Niagara Mohawk”), Keyspan Gas East Corporation ("Keyspan East”) and the Brooklyn Union Gas Company (“Brooklyn Union”)--are distributors of electricity and/or natural gas and subsidiaries of National Grid. (Sec. Am. Compl. ¶¶ 25-28.) The remaining Defendant, National Grid USA Service Company, Inc., “render[s] . . . services, to companies in the National Grid USA holding company system, ” including, inter alia, accounting, customer services and property acquisition and management. (Sec. Am. Compl. ¶ 29.) For regulatory purposes, National Grid has “retained certain historical legacy corporate names” such as Niagara Mohawk, Keyspan East, and Brooklyn Union; however, National Grid is “the only name used for customer interaction.” (Sec. Am. Compl. ¶ 21.) In other words, “regardless of the technical legal name of the company involved, ” National Grid operates as a “single utility company” and uses the National Grid “name for all public-facing purposes-including marketing, billing, and service matters.” (Sec. Am. Compl. ¶ 21.)

         Plaintiffs allege that Defendants and their agents violated the TCPA by contacting customers via their cellular telephone numbers using automated telephone dialing systems and automated or prerecorded voice messages without their prior express consent. (Sec. Am. Compl. ¶ 1.) Plaintiffs further allege that Defendants and their agents called New York customers' residential and cellular telephone numbers and left prerecorded messages that violated NY GBL § 399-p. (Sec. Am. Compl. ¶ 2.) In addition to calls made by Defendants on their own behalf, Plaintiffs maintain that Defendants are vicariously liable for violations of the TCPA and NY GBL § 399 by third parties hired by Defendants. (Sec. Am. Compl. ¶¶ 4, 6.) Such agents included debt collectors hired by Defendants to collect outstanding bills. (Sec. Am. Compl. ¶¶ 7-8.)

         II. Procedural History

         Plaintiff Jenkins filed the original complaint on March 9, 2015 against fourteen National Grid entities. (Compl., Docket Entry 1.) Those entities moved to dismiss on April 30, 2015. (First Mot., Docket Entry 80.) While the motion was pending, the parties agreed to allow Plaintiff to either oppose the motion or file an Amended Complaint, and Plaintiff elected to file an Amended Complaint on July 2, 2015. (Order, Docket Entry 97; Am. Compl., Docket Entry 99.) The Amended Complaint named sixteen National Grid entities and added two Plaintiffs, Royal and Steele. (See, Am. Compl.) On August 24, 2015, the National Grid entities moved to dismiss the Amended Complaint pursuant to Federal Rules of Civil Procedure 12(b)(1), 12(b)(2) and 12(b)(6). (Sec. Mot., Docket Entry 135.) Additionally, they filed a motion to stay the case pending a decision by the Federal Communications Commission on an issue they deemed pertinent to the case. (Mot. to Stay, Docket Entry 141.)

         A. The Court's Prior Order

         On March 31, 2016, the Court granted the motion to dismiss in part and denied it in part, and denied the motion to stay. (March 2016 Order at 26-27.) The Court summarizes the relevant determinations below.

         First, the Court dismissed, without prejudice, the claims against twelve of the sixteen National Grid entities (the “Dismissed Defendants”).[6] (Id. at 2 n.1, 15.) The Court held that it lacked subject matter jurisdiction over the Dismissed Defendants because Plaintiff failed to demonstrate an injury-in-fact as required by Article III of the Constitution. (Id. at 10-11.) Specifically, the Court held that the Dismissed Defendants “ha[d] no plausible connection to Plaintiffs' alleged injuries” because the injuries arose from the provision of utility services in New York, and none of the Dismissed Defendants provided utility services in New York. (See id. at 11-12.) The Court rejected Plaintiffs' arguments that the Dismissed Defendants were liable as co-conspirators or as parent companies of National Grid subsidiaries. (Id. at 13-15.) Significantly, the Court declined to grant Plaintiffs leave to re-plead subject matter jurisdiction as to the Dismissed Defendants in any subsequent complaint.[7]

         Second, the Court addressed the sufficiency of the allegations as to the remaining Defendants--Niagara Mohawk, Keyspan East, Brooklyn Union, and National Grid USA Services.[8] The Court focused on the allegations in Count II of the Amended Complaint, namely, that Defendants were liable for the conduct of third party debt collectors. The Court noted that although Plaintiffs advanced a theory of direct liability, the TCPA “is construed to incorporate common law agency principles of vicarious liability.” (Id. at 20-21 (quoting In re Joint Petition filed by Dish Network, LLC, 28 F.C.C.R. 6574 (2013)).)

         The Court then examined whether the allegations demonstrated a principal-agent relationship between Defendants and the debt collectors and found that “Plaintiffs ha[d] not affirmatively shown a principal-agent[ ] relationship with the debt collectors.” (Id. at 21.) Specifically, the Court held that “there [was] no indication that Defendants had the power to give interim instructions” to the debt collectors. (Id. at 22 (internal quotation marks omitted).) As a result, the Court dismissed Count II without prejudice but granted to leave to amend. (Id.) The Court directed that “[p]laintiffs should make clear [in their Second Amended Complaint] whether or not Defendants could give interim instructions to the debt collectors or otherwise exercise the type of control contemplated in principal-agency relationships.” (Id.)

         B. The Second Amended Complaint

         Plaintiffs filed their Second Amended Complaint on May 5, 2016, asserting four causes of action: (1) violations of the TCPA, specifically 47 U.S.C. § 227(b)(1)(A), on behalf of Plaintiffs and a class of customers directly contacted by National Grid (the “TCPA Direct-Dialed Class”); (2) violations of the TCPA, specifically 47 U.S.C. § 227(b)(1)(A), on behalf of Plaintiffs and a class of customers contacted by third parties (the “TCPA Agent-Dialed Class”); (3) violations of NY GBL § 399-p on behalf of Plaintiffs and a class of New York customers directly contacted by National Grid (the “GBL § 399-p Direct-Dialed Class”); and (4) violations of NY GBL § 399-p on behalf of Plaintiffs and a class of New York customers contacted by third-parties (the “GBL § 399- p Agent-Dialed Class”).[9] (Sec. Am. Compl. ¶¶ 118-182.) For ease of reference, the Court will refer to the claims as Count I, Count II, Count III, and Count IV. Although Counts I and III are broadly similar to the First Amended Complaint, Plaintiffs added Count IV, a vicarious liability claim for violations of NY GBL § 399-p. (Sec. Am. Compl. ¶¶ 165-182.) Of note, Plaintiffs included the Dismissed Defendants in the Second Amended Complaint, which they contend is necessary to preserve their appeal rights. (Sec. Am. Compl. at 1, 2 n.1.)

         Pursuant to the Court's Order, the Second Amended Complaint contains more detailed allegations related to Count II, the TCPA vicarious liability claim. For example, Plaintiffs allege that Defendants retained numerous third party debt collectors during the relevant class periods, and that Defendants are vicariously liable for violations of the TCPA by those debt collectors based on three theories: (1) express or implied agency, (2) apparent authority, and (3) ratification.[10] (Sec. Am. Compl. ¶¶ 57-69.) Plaintiffs allege that Defendants executed Collection Agency Account Collection Agreements (the “Agreements”) with these debt collectors which “provid[ed] that Defendants would exercise control over their debt collectors' collection activities.” (Sec. Am. Compl. ¶ 60.) They further aver that the Agreements, which include Scope of Work specifications (“Scope of Work”), “vest Defendants with the power to provide interim instructions to their debt collectors directing their debt collection conduct.” (Sec. Am. Compl. ¶ 61.) Plaintiffs point to several provisions in the Agreements and Scope of Work to support this theory, including provisions that give Defendants the authority to determine which accounts to assign to debt collectors, provisions that require weekly progress and remittance reports, and provisions requiring Defendants' approval for certain decisions.[11] (Sec. Am. Compl. ¶ 62.) Moreover, the Scope of Work includes minimum work requirements that debt collectors must meet. (Sec. Am. Compl. ¶ 64.) As to the apparent authority theory, Plaintiffs allege that “Defendants vest their debt collectors with apparent authority . . . by permitting their debt collectors to represent to consumers in letters and during telephone calls that the debt collectors are authorized to act on Defendants' behalf.” (Sec. Am. Compl. ¶ 66.) Finally, Plaintiffs allege that Defendants “ratify the[ ] . . . debt collectors' actions by knowingly accepting the benefits of their conduct.” (Sec. Am. Compl. ¶ 69.)

         C. The Pending Motions

         On May 19, 2016, Defendants filed a motion to dismiss the Second Amended Complaint pursuant to Federal Rules of Civil Procedure 12(b)(1), 12(b)(2) and 12(b)(6). (Defs.' Third Mot., Docket Entry 159, 160.) Plaintiffs filed their opposition on June 24, 2016, and Defendants filed their reply on July 8, 2016. (Pls.' Third Opp., Docket Entry 167; Defs.' Third Reply, Docket Entry 170.)

         On May 26, 2016, Defendants filed a motion to dismiss Count II or, in the alternative, to stay Count II as to Jenkins. (Defs.' Fourth Mot., Docket Entry 161.) Plaintiffs opposed the motion on July 1, 2016, and Defendants filed their reply on July 15, 2016. (Pls.' Fourth Opp., Docket Entry 169; Defs.' Fourth Reply, Docket Entry 171.)

         D. The ...


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