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Kern v. VIP Travel Services

United States District Court, W.D. Michigan, Southern Division

May 10, 2017

BRACE KERN et al., Plaintiffs,
VIP TRAVEL SERVICES et al., Defendants.


          JANET T. NEFF United States District Judge.

         Plaintiffs Brace Kern and Jessica Huigens bring this action under the Telephone Consumer Protection Act (TCPA), 47 U.S.C. § 227, alleging that they received unsolicited phone calls to cell phone numbers that are listed on the national “do-not-call” registry. Before the Court are two motions to dismiss, one filed by Defendant AM Resorts, LP (referred to herein and in the complaint as “Secrets”) (ECF No. 154), and one filed by Defendants Newport Hospitality, LLC and Newport Vacations, LLC (collectively, “Newport”) (ECF No. 157). Also before the Court is Plaintiffs' motion to amend the complaint to add Newport Marketing, LLC as a defendant to the action (ECF No. 173). For the reasons stated herein, the motions to dismiss will be granted and the motion to amend will be denied.


         Plaintiffs are residents of Michigan. Newport is incorporated in Florida and owns a resort in Florida. Secrets is incorporated in Pennsylvania and owns resorts in the Dominican Republic, Jamaica, and Mexico. The TCPA makes it unlawful to make a call using an “automatic telephone dialing system or prerecorded device . . . to any telephone number assigned to a . . . cellular telephone service.” 47 U.S.C. § 227(b)(1)(A)(iii); 47 C.F.R. § 64.1200(a)(1)(iii). Under FCC regulations, it is also unlawful to initiate a telephone solicitation to a residential telephone subscriber who has registered his or her telephone number on the national do-no-call registry. 47 C.F.R. § 64.1200(c)(2).

         Plaintiffs allege that they received several dozen telephone calls from VIP Travel Services and United Shuttle Alliance Transportation Corp. (collectively, “USA”)[1] in January, February, and October of 2013 to their cell phone numbers, which are registered on the national do-not-call registry. When answering the calls, Plaintiffs heard an automated voice telling them, “Pack Your Bags! You've won a Disney vacation.” (2d Am. Compl. ¶ 45, ECF No. 152.) The voice told Plaintiffs to press 1 to reach a representative. Plaintiffs did so, and they were told that they could purchase a discounted vacation package, but they had to verify their eligibility by meeting minimum age, income, and other requirements. Plaintiff Kern decided to purchase such a package, and he was directed to a website to complete a form to select his preferred dates of travel. After submitting the form, Kern received an email from USA encouraging him to visit USA's website and recommending that he look into Silver Lake or Summer Bay resorts. USA told Kern that he could visit any of the resorts listed on its website. Kern made reservations with USA to stay at three resorts, including Summer Bay Resort, Newport Beachside Resort, [2] and Villa Del Palmar. Plaintiffs allegedly received emails from these three resorts to confirm their reservations, but Plaintiffs did not confirm their reservations. Plaintiffs contend that the reservations would have required them to attend a presentation about owning property at the resorts.

         Plaintiffs claim that the telephone calls made by USA violated the TCPA, and that Newport and Secrets (collectively, the “Resorts”) are vicariously liable for these calls. Plaintiffs contend that the Resorts “manifested their assent” that USA act for them by:

(1) accepting reservations from people who were unlawfully solicited, (2) sharing computer database reservation information with [USA] to allow [USA] to reserve available dates and provide reservation information to the Resorts, (3) permitting [USA] to include links to the Resorts' websites on [USA's] websites, and (4) controlling the content of the telemarketing call by scripting the questions that must be asked of the potential purchaser to verify the purchaser's ability to close on the sale of real estate.

(2d Am. Compl. ¶ 55.) Plaintiffs further allege that the Resorts contracted with USA to solicit customers, knowingly, recklessly, or negligently disregarding the fact that USA would violate the TCPA. Plaintiffs claim that the Resorts failed to investigate or take adequate measures to ensure that USA would not violate the TCPA, failed to rescind their contract s w i t h USA after learning of TCPA violations, and failed to have links to the Resorts' websites removed after learning of USA's activity.

         In support of their motion to add Newport Marketing, LLC as a defendant to this action, Plaintiffs rely on evidence that Newport Marketing entered into an agreement with USA to have USA sell vacation packages for a Newport resort to qualified customers, contingent upon the customer's participation in a timeshare presentation. (Marketing Agreement, ECF No. 148-1.)


         Newport asserts that the Court lacks personal jurisdiction over it. In the alternative, it asserts that Plaintiffs' complaint fails to state a claim. Secrets also asserts that the complaint fails to state a claim. The Court must decide the issue of personal jurisdiction first. “A federal court may not assume jurisdiction to decide the merits of a dispute; it must satisfy itself in the first instance that it has jurisdiction over the parties and the subject matter.” Miami Valley Fair Housing Ctr., Inc. v. Steiner & Assocs., Inc., 483 F.App'x 67, 70 (6th Cir. 2012). When the issue is raised, the plaintiff bears the burden of establishing personal jurisdiction over the defendant. Beydoun v. Wataniya Rest. Holding, Q.S.C., 768 F.3d 499, 504 (6th Cir. 2014).

         The Court has three options for ruling on the motion to dismiss for lack of personal jurisdiction, it may: (1) “decide the motion upon the affidavits alone”; (2) “permit discovery in aid of deciding the motion”; or (3) “conduct an evidentiary hearing to resolve any apparent factual questions.” Theunissen v. Matthews, 935 F.2d 1454, 1458 (6th Cir. 1991). Where, as here, the court considers only the parties' written submissions, “the plaintiff must make only a prima facie showing that personal jurisdiction exists.” Id. Regardless of the method employed to rule on the motion, the plaintiff cannot “rest on his pleadings to answer the movant's affidavits, but must set forth, by affidavit or otherwise [, ] . . . specific facts showing the court has jurisdiction.” Id. (quotation omitted). When ruling on such a motion without conducting an evidentiary hearing, the Court must consider the pleadings and affidavits in the light most favorable to the nonmoving party. Beydoun, 768 F.3d at 504. Nevertheless, the Court may accept as true uncontroverted factual assertions of the defendant, provided they are “consistent with the representations of the plaintiff.” Kerry Steel, Inc. v. Paragon Indus., Inc., 106 F.3d 147, 153 (6th Cir. 1997).

         In a federal-question case like this one, personal jurisdiction exists if the defendant would be subject to personal jurisdiction under the forum state's long-arm statute and if “‘exercise of personal jurisdiction would not deny the defendant[ ] due process.'” Bird v. Parsons, 289 F.3d 865, 871 (6th Cir. 2002) (quoting Mich. Coal. of Radioactive Material Users, Inc. v. Griepentrog, 954 F.2d 1174, 1176 (6th Cir. 1992)). Due process concerns are governed by the standard articulated in International Shoe and its progeny: ensuring that a defendant has “certain minimum contacts with [the forum state] such that maintenance of the suit does not offend ‘traditional notions of fair play and substantial justice.'” Int'l Shoe Co. v. Washington, 326 U.S. 310, 316 (1945) (quoting Milliken v. Meyer, 311 U.S. 457, 463 (1940)).

A. General Jurisdiction
Personal jurisdiction may be general or limited. Michigan's long-arm statute for general personal jurisdiction over a corporation provides that [t]he existence of any of the following relationships between a corporation and the state shall constitute a sufficient basis of jurisdiction to enable the courts of record of this state to exercise general personal jurisdiction over the corporation and to enable such courts to render personal judgments against the corporation.
(1) Incorporation under the laws of this state.
(2) Consent, to the extent authorized by the consent and subject to the limitations provided in section.
(3) The carrying on of a continuous and systematic part of its general business within the state.

Mich. Comp. Laws § 600.711.

         The Newport entities (including Newport Marketing, LLC) have not been incorporated under the laws of Michigan, are not residents of Michigan, do not maintain any offices or employees in Michigan, and are not licensed or registered to conduct business in Michigan. (Hurowitz Aff., ECF No. 158-1.) Nevertheless, Plaintiffs assert that Newport conducts continuous and systematic business in Michigan, as evidenced by the fact that

[USA] sent Plaintiffs['] qualifying information, including telephone recordings, to [Newport], Newport reviewed the Michigan resident's qualifying information and valid credit card before emailing [USA] to go ahead and confirm the reservation with these Plaintiffs. Upon receipt of [Newport's] reservation confirmation, [USA] mailed a confirmation package for [Newport] to these Plaintiffs' Michigan address. In addition, discovery will undoubtedly reveal numerous other reservations, and even timeshare purchases, by Michigan residents . . . .

(Pls' Response Br. 7., ECF No. 161.) In other words, Plaintiffs assert that Newport conducted systematic business in Michigan by receiving and responding to reservation requests from Plaintiffs, and probably others in Michigan. Even if this satisfies the requirements of Mich. Comp. Laws ยง 600.711(3), it is ...

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