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Community Voice Line, L.L.C. v. Great Lakes Communication Corp.

United States District Court, N.D. Iowa, Western Division

May 6, 2014

COMMUNITY VOICE LINE, L.L.C., a Maryland limited liability company, Plaintiff,
v.
GREAT LAKES COMMUNICATION CORP., an Iowa corporation; COMITY COMMUNICATIONS, L.L.C., a Nevada limited liability company; ALPINE AUDIO NOW, L.L.C., a Delaware limited liability company; JOSH NELSON; FRANCE MEDIAS MONDE t/a RADIO FRANCE INTERNATIONALE; SIGNAL FM HAITI; and JOHN DOES 1 THROUGH 10, Defendants

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[Copyrighted Material Omitted]

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For Community Voice Line, LLC, a Maryland Limited Liability Company, Plaintiff: Daniel L Hartnett, LEAD ATTORNEY, Crary-Huff-Inkster-Sheehan-Ringenberg-Hartnett-Storm, Sioux City, IA; David S Sellman, Tammy Gail Cohen, PRO HAC VICE, Sellman Hoff, LLC, Baltimore, MD.

For Great Lakes Communication Corp, an Iowa Corporation, Defendant: Anthony Lee Osborn, Jeana L Goosmann, LEAD ATTORNEYS, Bruce M Smith, Goosmann Law Firm, PLC, Sioux City, IA; Douglas L Phillips, Klass Law Firm, L.L.P., Sioux City, IA.

For Josh Nelson, Defendant: Douglas L Phillips, Klass Law Firm, L.L.P., Sioux City, IA.

OPINION

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MARK W. BENNETT, U.S. DISTRICT COURT JUDGE.

MEMORANDUM OPINION AND ORDER REGARDING MOTIONS TO DISMISS BY DEFENDANT ALPINE AUDIO NOW AND DEFENDANTS GLCC, COMITY, AND NELSON

TABLE OF CONTENTS

I. INTRODUCTION

II. LEGAL ANALYSIS

A. AudioNow's Motion To Dismiss

1. AudioNow's challenge to " improper" venue

2. AudioNow's challenge to personal jurisdiction

a. Dismissal

b. Abstention

3. Summary

B. The Nelson Defendants' Motion To Dismiss

1. Rule 12(b)(6) standards

2. The fraud-based claims

3. The conversion claims

a. Elements

b. Conversion of telephone numbers

c. Conversion of confidential information

d. Summary

4. The § 258 claim

a. Statutory and regulatory provisions

b. Standing

c. Statutory violation

d. Summary

III. CONCLUSION

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I. INTRODUCTION

This case originated on May 15, 2012, as a diversity action by plaintiff Community Voice Line, L.L.C. (CVL), a Maryland limited liability company, which provides conference call services, recorded content, audio streams, and other business services, alleging claims of breach of contract and unjust enrichment. The original defendant was Great Lakes Communication Corporation (GLCC), an Iowa competitive local exchange carrier (CLEC), which provides local telephone services, other related telecommunications services, and, more specifically, " hosting" of the telephone numbers that CVL's customers would call to obtain CVL's services. CVL's original claims against GLCC arose from GLCC's alleged failure to pay CVL a marketing fee or commission from revenues that GLCC collected from originating carriers for calls from CVL's customers to CVL's telephone numbers " hosted" by GLCC.

On December 4, 2013, United States Magistrate Judge Leonard T. Strand granted CVL leave to file its Second Amended Complaint (docket no. 187), adding five named defendants, ten " John Doe" defendants, and seventeen new counts, including several new counts against existing defendant GLCC. In a Memorandum Opinion And Order (docket no. 213), filed January 23, 2014, I overruled GLCC's December 18, 2013, Objection To Order Granting Motion For Leave To File Second Amended Complaint (docket no. 195), and affirmed Judge Strand's December 4, 2013, Order Granting Plaintiff's Motion For Leave To File Second Amended Complaint (docket no. 186). In doing so, I explained that several of GLCC's challenges to the " futility" of the Second Amended Complaint were more appropriately addressed at a later procedural stage, that is, on motions pursuant to Rule 12(b) of the Federal Rules of Civil Procedure in response to the Second Amended Complaint, by the appropriate parties, including GLCC.

The two motions now pending before me are, indeed, Rule 12(b) motions to dismiss by both " old" and " new" defendants attacking claims against them in CVL's Second Amended Complaint. I will consider those motions to dismiss in turn.

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II. LEGAL ANALYSIS

A. AudioNow's Motion To Dismiss

The first motion now before me is the March 10, 2014, Motion To Dismiss (docket no. 228) by " new" defendant Alpine Audio Now, L.L.C., which refers to itself simply as " AudioNow." AudioNow seeks dismissal of the claims against it in CVL's Second Amended Complaint for improper venue and lack of personal jurisdiction pursuant to Rule 12(b)(2) and (3). CVL filed its sealed Resistance (docket no. 241) to AudioNow's Motion To Dismiss on March 31, 2014, and AudioNow filed its Reply (docket no. 243) on April 7, 2014. AudioNow's Reply prompted CVL to file a Surreply (docket no. 251), with leave of court, on April 14, 2014. AudioNow then sought and, on April 18, 2014, was granted, leave to file its Response To CVL's Surreply To Motion To Dismiss (docket no. 258). I found it appropriate to give AudioNow, as the movant, the " last word" on its Motion To Dismiss, adding, " At some point, the back and forth must end, and the underlying Motion To Dismiss must be resolved!" Order (docket no. 257).

Notwithstanding that statement, on April 29, 2014, CVL filed a Motion To Present New Evidence seeking to add to its Resistance to AudioNow's Motion To Dismiss additional documents, some of which are from what CVL describes as a " treasure trove" of previously unproduced documents and certain pleadings and documents produced in other litigation. In an Order (docket no. 262), filed April 29, 2014, I reiterated that, at some point, the back and forth must end, and the underlying Motion To Dismiss must be resolved. Therefore, I set an accelerated deadline for AudioNow to file a resistance to consideration of the additional documents offered by CVL and a response to those documents, if they were considered, prohibited CVL from filing any reply; denied AudioNow's request for oral arguments on its Motion To Dismiss; and stated that AudioNow's Motion To Dismiss would be considered fully submitted upon the filing of AudioNow's resistance and response to CVL's Motion To Present New Evidence. Although I had only authorized AudioNow to respond to CVL's Motion To Present New Evidence, GLCC filed a Response (docket no. 265) on April 30, 2014, disputing CVL's allegations about the disclosure of documents. On May 5, 2014, AudioNow filed its Resistance And Response To CVL's Motion And Argument To Present Newly Discovered Evidence (docket no. 267). AudioNowa also disputes CVL's allegations that the evidence in question is " newly discovered" and CVL's allegations that the " newly discovered evidence" is somehow contrary to Mr. Barbulescu's affidavit supporting AudioNow's allegations that this court lacks personal jurisdiction over AudioNow. AudioNow also disputes CVL's contention that it was improper for Mr. Barbulescu to have a business meeting with Nelson.

In my April 29, 2014, Order, I stated that oral arguments on AudioNow's Motion To Dismiss are unnecessary and would only further delay disposition of that Motion. Elaborating somewhat on that explanation for denying oral arguments, now, I add that I find the parties' briefing either adequate or, as to one part of AudioNow's Motion To Dismiss, wholly inadequate, so that I do not believe that oral arguments are likely to be of benefit to me. Therefore, I will resolve AudioNow's Motion To Dismiss on the parties' written submissions.

1. AudioNow's challenge to " improper" venue

AudioNow first seeks dismissal of the claims against it for improper venue, pursuant to Rule 12(b)(3), on the ground

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that there is a valid and enforceable " forum selection clause" in the contract between CVL and AudioNow selecting the Circuit Court of Baltimore City, State of Maryland, as the exclusive venue for " any dispute arising under or relating to" the parties' agreement. See Second Amended Complaint, Exhibit A, ¶ 12.5. In its Reply, AudioNow belatedly acknowledged the Supreme Court's decision in Atlantic Marine Construction Co. v. U.S. District Court for the Western District of Texas, __ U.S. __, 134 S.Ct. 568, 187 L.Ed.2d 487 (2013). AudioNow even noted that Atlantic Marine " holds that the proper analysis in the presence of a valid forum selection clause pointing to a non-federal forum is an adjusted forum non conveniens analysis." AudioNow's Reply (docket no. 243) at 2-3 & n.2. It is plain, however, that AudioNow missed the full import of the Supreme Court's decision in Atlantic Marine.

As the Supreme Court explained in Atlantic Marine, Rule 12(b)(3) and 28 U.S.C. § 1406(a) " authorize dismissal only when venue is 'wrong' or 'improper' in the forum in which it was brought." __ U.S. at __, 134 S.Ct. at 577. The Court then held, " If the federal venue statutes establish that suit may be brought in a particular district, a contractual bar cannot render venue in that district 'wrong.'" Id. at, 134 S.Ct. at 578. The Court held, further, " Although a forum-selection clause does not render venue in a court 'wrong' or 'improper' within the meaning of § 1406(a) or Rule 12(b)(3), the clause [pointing to a different federal forum] may be enforced through a motion to transfer under § 1404(a)." Id.

Still more importantly, here, in Atlantic Marine, the Court explained, " If venue is proper under federal venue rules, it does not matter for the purpose of Rule 12(b)(3) whether the forum-selection clause points to a federal or a nonfederal forum." Id. at, 134 S.Ct. at 580. Thus, the Court explained,

[T]he appropriate way to enforce a forum-selection clause pointing to a state or foreign forum is through the doctrine of forum non conveniens. Section 1404(a) is merely a codification of the doctrine of forum non conveniens for the subset of cases in which the transferee forum is within the federal court system; in such cases, Congress has replaced the traditional remedy of outright dismissal with transfer. See Sinochem Int'l Co. v. Malaysia Int'l Shipping Corp., 549 U.S. 422, 430, 127 S.Ct. 1184, 167 L.Ed.2d 15 (2007) (" For the federal court system, Congress has codified the doctrine ..." ); see also notes following § 1404 (Historical and Revision Notes) (Section 1404(a) " was drafted in accordance with the doctrine of forum non conveniens, permitting transfer to a more convenient forum, even though the venue is proper" ). For the remaining set of cases calling for a nonfederal forum, § 1404(a) has no application, but the residual doctrine of forum non conveniens " has continuing application in federal courts." Sinochem, 549 U.S., at 430, 127 S.Ct. 1184 (internal quotation marks and brackets omitted); see also ibid. (noting that federal courts invoke forum non conveniens " in cases where the alternative forum is abroad, and perhaps in rare instances where a state or territorial court serves litigational convenience best" (internal quotation marks and citation omitted)). And because both § 1404(a) and the forum non conveniens doctrine from which it derives entail the same balancing-of-interests standard, courts should evaluate a forum-selection clause pointing to a nonfederal forum in the same way that they evaluate a forum-selection clause pointing to a federal

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forum. See Stewart [ Organization, Inc. v. Ricoh Corp.], 487 U.S. [22,] 37, 108 S.Ct. 2239, 101 L.Ed.2d 22 [(1988)] (SCALIA, J., dissenting) (Section 1404(a) " did not change 'the relevant factors' which federal courts used to consider under the doctrine of forum non conveniens" (quoting Norwood v. Kirkpatrick, 349 U.S. 29, 32, 75 S.Ct. 544, 99 L.Ed. 789 (1955))).

Atlantic Marine Constr. Co., Inc., __ U.S. at __, 134 S.Ct. at 580 (emphasis added).

It is plain, then, that AudioNow's Rule 12(b)(3) Motion To Dismiss for improper venue is not the appropriate way for AudioNow to attempt to enforce the forum-selection clause. Nowhere in the portion of its Motion seeking dismissal for improper venue does AudioNow so much as mention the statutory venue requirements in 28 U.S.C. § 1391, let alone assert that CVL has not satisfied them. Cf. id. at 577-78 (a contractual forum-selection clause notwithstanding, the forum is only " wrong" if it is not the forum established by federal statute). Even to the extent that there might be some overlap between the relevant factors in a proper forum non conveniens analysis, involving a forum-selection clause pointing to a non-federal form, and the relevant factors concerning the validity and enforceability of a forum-selection clause, I am loathe to reformulate the parties' arguments to fit the proper analytical framework.

Therefore, the part of AudioNow's Motion To Dismiss seeking dismissal for improper venue is denied. AudioNow can, however, file a proper motion challenging this forum, on the basis of a forum-selection clause, pursuant to the forum non conveniens doctrine.[1]

2. AudioNow's challenge to personal jurisdiction

In the second part of is Motion To Dismiss, AudioNow seeks dismissal of the claims against it in CVL's Second Amended Complaint for lack of personal jurisdiction pursuant to Rule 12(b)(2). This part of AudioNow's Motion To Dismiss is at least on the proper procedural footing.

a. Dismissal

I have explained the standards for dismissal for lack of personal jurisdiction pursuant to Rule 12(b)(2) in some detail on a number of occasions. See, e.g., Foreign Candy Co., Inc. v. Tropical Paradise, Inc., 950 F.Supp.2d 1017, 1024-26 (N.D. Iowa 2013). Suffice it to say that, to allege personal jurisdiction, the plaintiff must state sufficient facts in the complaint to support a reasonable inference that the defendant in question can be subjected to personal jurisdiction within the state; that I may consider affidavits and other matters outside of the pleadings on a Rule 12(b)(2) motion; that, in the absence of an evidentiary ...


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