11 F. Supp. 3d 82
D. Conn.2014Background
- Plaintiffs allege a multi-defendant scheme involving Trilegiant, Affinion, Apollo, and various E-Merchant and Credit Card Defendants to enroll consumers in Trilegiant memberships without consent.
- The scheme allegedly used deceptive post-transaction marketing, data-pass of billing information, and negative option billing to charge recurring fees.
- Plaintiffs allege that E-Merchant Defendants and Credit Card Defendants knowingly participated or facilitated the scheme, enabling millions of charges.
- Plaintiffs describe a “hub-and-spoke” structure with Trilegiant at the center and various bilateral agreements with E-Merchants and Credit Card Defendants.
- Plaintiffs seek class and individual relief under federal RICO, state CUTPA, California Automatic Renewal, ECPA, and related theories.
- Defendants move to dismiss or strike portions of the Consolidated Amended Class Action Complaint.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Plaintiffs adequately plead a RICO enterprise. | Plaintiffs allege a unified association-in-fact enterprise | Hub-and-spoke structure insufficient post-Boyle | No sufficient enterprise pled under RICO |
| Whether Plaintiffs adequately plead a pattern of racketeering activity. | Predicate acts include wire/mail fraud and other schemes | Conclusory detail and lack of specificity fail Rule 9(b) | Pattern not sufficiently pled; failure to allege two acts with particularity |
| Whether RICO claims are time-barred by the statute of limitations. | Separate accrual/applied tolling due to ongoing injury | Injury and timing show limitations period exhausted | RICO claims granted dismissal as time-barred |
| Whether ECPA claims survive timeliness analysis. | Interceptions alleged contemporaneous with transmissions; not barred | Statute of limitations applies; some claims barred | ECPA claims partially barred; some survive consistent with timing |
| Whether CUTPA class-action allegations are viable and related claims timeliness. | Rule 23 allows class action; Connecticut statute allows class actions | CUTPA restricts class actions to CT residents/injured in CT; Rule 23 cannot override | CUTPA class-action allegations struck; substantive CUTPA claims discussed with selective viability |
Key Cases Cited
- Sedima, S.P.R.L. v. Imrex Co., 473 U.S. 479 (U.S. 1985) (RICO pattern elements require two predicate acts and injury)
- Boyle v. United States, 556 U.S. 938 (U.S. 2009) (Expanded interpretation of RICO enterprise to include looser associations)
- City of New York v. Chavez, 944 F. Supp. 2d 260 (S.D.N.Y. 2013) (Hub-and-spoke enterprises insufficient for RICO enterprise even post-Boyle)
- In re Insurance Brokerage Antitrust Litig., 618 F.3d 300 (3d Cir. 2010) (Hub-and-spoke enterprises insufficient absent cooperative agreement)
- In re Merrill Lynch Partnerships Litig., 154 F.3d 56 (2d Cir. 1998) (Sequential injuries do not necessarily create new RICO injuries)
- Dodds v. Cigna Sec., Inc., 12 F.3d 346 (2d Cir. 1993) (Inquiry notice and knowledge standards in fraud-based claims)
- Phelan ex rel. Estate of Phelan v. Daimler Chrysler Corp., 323 F. Supp. 2d 335 (D. Conn. 2004) (CUTPA/tolling and accrual principles in vendor-vendee contexts)
- DeSilva v. North Shore-Long Island Jewish Health Sys., Inc., 770 F. Supp. 2d 497 (E.D.N.Y. 2011) (RICO pleading standards and particularity guidance)