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Ott v. Mortgage Investors Corp. of Ohio, Inc.

United States District Court, D. Oregon, Portland Division

December 3, 2014

KELLY OTT; NANCY LUEBBEN; and BENJAMIN GESLER, on behalf of themselves and all others similarly situated, Plaintiffs,

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For Kelly Ott, on behalf of himself and all others similarly situated, Plaintiff: Michael D. Daudt, LEAD ATTORNEY, PRO HAC VICE, Terrell Marshall, Daudt & Willie PLLC, Seattle, WA; Roblin J. Williamson, LEAD ATTORNEY, PRO HAC VICE, Williamson and Williams, Seattle, WA; Whitney B. Stark, LEAD ATTORNEY, Jennifer Rust Murray, Terrell Marshall Daudt & Willie PLLC, Seattle, WA; Beth E. Terrell, PRO HAC VICE, Terrell Marshall, Daudt & Willie PLLC, Seattle, WA; Michael J. Estok, Lindsay Hart, LLP, Portland, OR.

For Nancy Luebben, Benjamin Gesler, Plaintiffs: Michael D. Daudt, LEAD ATTORNEY, Beth E. Terrell, Jennifer Rust Murray, Terrell Marshall Daudt & Willie PLLC, Seattle, WA; Michael J. Estok, Lindsay Hart, LLP, Portland, OR.

For Mortgage Investors Corporation of Ohio, Inc., an Ohio corporation assumed business name Mortgage Investors Corporation, assumed business name Amerigroup Mortgage Corporation, assumed business name Veterans Information Department, assumed business name Veterans Home Loans, Defendant: John Huh, Lesli C. Esposito, LEAD ATTORNEYS, PRO HAC VICE, DLA Piper LLP (U.S.), Philadelphia, PA; Nicole M. Tadano, LEAD ATTORNEY, PRO HAC VICE, DLA Piper LLP (U.S.), Seattle, WA; Stellman Keehnel, LEAD ATTORNEY, DLA Piper LLP (U.S.), Seattle, WA.

For William Edwards, individually, Jeffrey Crilley, James Shatz, individually, John Wesley Bailey, III, individually, Defendants: John Huh, LEAD ATTORNEY, PRO HAC VICE, DLA Piper LLP (U.S.), Philadelphia, PA; Nicole M. Tadano, LEAD ATTORNEY, PRO HAC VICE, DLA Piper LLP (U.S.), Seattle, WA; Stellman Keehnel, LEAD ATTORNEY, DLA Piper LLP (U.S.), Seattle, WA; Lesli C. Esposito, DLA Piper LLP (U.S.), Philadelphia, PA.

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Janice M. Stewart, United States Magistrate Judge.


Plaintiffs, Kelly Ott, Nancy Luebben, and Benjamin Gesler, filed this class action against defendants for violations of the Telephone Consumer Protection Act, 47 U.S.C. § 227 et seq, (" TCPA" ), by means of a nation-wide telemarketing scheme targeted at U.S. military veterans. Defendant, Mortgage Investors Corporation of Ohio, Inc. (" MIC" ), is a mortgage lending company doing business under several other names and specializing in Interest Rate Reduction Refinance Loans (" IRRRLs" ) guaranteed by the U. S Department of Veterans Affairs. The individual defendants are directors, officers and employees of MIC.

The TCPA prohibits using a predictive dialer to make any telephone call for non-emergency purposes to a number assigned to a " cellular telephone service" without the " prior express consent of the called party." 47 U.S.C. § 227(b)(1)(A)(iii). The TCPA also prohibits initiating two or more telephone calls within a 12-month period to a residential telephone line in violation of either the internal do-not-call rules or National Do-Not-Call Registry (" NDNCR" ) rules enacted by the Federal Communications Commission (" FCC" ). 47 U.S.C. § 227(c)(1)-(2) (internal do-not-call lists); 47 U.S.C. § 227(c)(3) (NDNCR); 47 CFR § 64.1200(c)-(d) (FCC). A person who receives a call in violation of these prohibitions may bring a civil action to recover statutory damages of $500.00 per violation, as well as treble damages and injunctive relief. 47 U.S.C. § 227(b)(3), (c)(5)(A)-(C).

Plaintiffs allege that defendants violated the TCPA by: (1) initiating calls through an Automated Telephone Dialing System (" ATDS" ) to cellular telephone numbers for non-emergency purposes (First Claim); (2) continuing to make calls to individuals who made " do-not-call requests" (Third Claim); and (3) initiating more than one call within a 12-month period to individuals on the NDNCR (Fifth Claim). Alleging that the violations were " knowing and/or willful," plaintiffs seek statutory damages up to $500.00 and treble damages up to $1,500.00 for each call that violated the TCPA (Second, Fourth and Sixth Claims).

This court has jurisdiction over the TCPA claims pursuant to 28 U.S.C. § 1331. All parties have consented to allow a Magistrate Judge to enter final orders and judgment in this case in accordance with FRCP 73 and 28 U.S.C. § 636(c) (docket #82).

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After plaintiffs filed a First Amended Complaint (docket #19), MIC filed a Motion to Strike Certain Paragraphs (docket #25) and a Motion to Dismiss Pursuant to the Federal First-to-File Rule (docket #27). In addition, the individual defendants filed a Motion to Dismiss Pursuant to FRCP 12(b)(2) and (6) (docket #33), MIC filed a Motion to Strike Class Allegations (docket #51), and all defendants filed a Motion for Involuntary Dismissal (docket #57). Later the parties agreed that MIC would withdraw its first two motions, that the remaining three motions would be deemed to address plaintiffs' Second Amended Complaint, and that MIC would join part of the individual defendants' motion to dismiss (dockets #74). An Order was then entered accordingly (docket #75), and plaintiffs filed a Second Amended Complaint (docket #77).

For the reasons set forth below, defendants' motions are denied, except that MIC's motion to strike the class allegations is granted in part.


I. Plaintiffs

Ott and Luebben are veterans of the United States military, but Gesler is not. Second Amended Complaint, ¶ ¶ 41, 49, 56. All of them are citizens of Oregon, and all received telemarketing calls from MIC urging them to refinance their home loans. Id, ¶ ¶ 2-4, 43-45, 50-52, 57-59.

MIC called Ott even after he had registered his residential telephone number on the NDNCR and asked MIC to stop calling him. Id, ¶ ¶ 42-45. MIC called Luebben even after she asked MIC to stop calling her several times. Id, ¶ ¶ 50-52. Neither Ott nor Luebben had any interest in refinancing, contacted MIC, or otherwise consented to MIC's calls. Id, ¶ ¶ 46, 48, 53, 55. Ott seeks to represent a class of similarly situated individuals called by MIC after they had registered their telephone numbers on the NDNCR (" National Do-Not-Call Class" ). Id, ¶ 66(e)-(f). Luebben seeks to represent a class of consumers called by MIC after they had asked not to be called again (" Internal Do-Not-Call Class" ). Id, ¶ 66(c)-(d).

MIC also repeatedly called Gesler's cell phone even after he asked MIC to stop calling him. Id, ¶ ¶ 57-59. Gesler had no interest in refinancing his home loan, never contacted MIC or otherwise consented to MIC's calls. Id, ¶ ¶ 60, 62. Gesler seeks to represent a class of similarly situated individuals whom MIC called on their cell phones (" Cell Phone Class" ) and the Internal Do-Not-Call Class. Id, ¶ 67(a)-(d).


MIC claims to be the largest U.S. Department of Veteran Affairs home loan refinancer and provides home loan refinancing in 42 states to current and former members of the United States military. Id, ¶ ¶ 20-21. To increase the volume of its customers, it uses an ATDS, also known as a predictive dialer. Id, ¶ 19. From its offices in Florida, hundreds of telemarketers use written scripts to make unsolicited outbound telephone calls, encouraging consumers to schedule in-home sales appointments with company-affiliated loan officers. Id, ¶ ¶ 21-22.

Consumers reported receiving dozens of unwanted calls from MIC which repeatedly failed to remove their telephone numbers from its call list upon demand. Id, ¶ 23. According to company training materials, MIC's telemarketers were not authorized to remove consumers' telephone numbers from company call lists and transferred " irate" customers to a manager who would then try to convince the consumer to schedule an appointment.

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Id, ¶ 24. MIC's telemarketers were trained to attempt to " turn around" consumers who had requested that the company stop calling and, if unsuccessful, were reprimanded. Id. MIC placed more than 5.4 million calls to numbers listed on the NDNCR between February 2, 2009, and July 30, 2012. Id, ¶ 25. Thousands of consumers have filed complaints with the Federal Trade Commission and other agencies regarding the unwanted and harassing telemarketing calls by MIC. Id, ¶ 26.

MIC also made calls using an ATDS to cellular telephones whose owners did not expressly consent to receive such calls, including Gesler. Id, ¶ 27. Consumers continued to receive calls, despite requesting that MIC stop calling, until MIC ceased telemarketing operations in October 2013. Id, ¶ 28. Many of the recipients of these calls did not consent to receive such telephone calls. Id, ¶ 29.

III. Individual Defendants

William Edwards holds the position of MIC's Chairman of the Board ( id, ¶ 6); Jeffrey Crilley holds the position of MIC's Chief Executive Officer ( id, ¶ 7); James Shatz is MIC's President of Operations and Information Technology ( id, ¶ 8); and John Wesley Bailey III is MIC's Chief Corporate Counsel ( id, ¶ 9). Plaintiffs allege that all four individual defendants:

30. . . . acting alone or in concert with others, had the authority and responsibility to prevent or correct unlawful telemarketing practices of Defendant MIC, and formulated, directed, controlled and participated in the acts and practices of Defendant MIC that violated the TCPA, including the acts and practices set forth in this Complaint.
31. . . . directly and personally participated in, ratified, directed and/or authorized the conduct constituting the statutory violations alleged herein.
32. . . . personally established, approved, and ratified Defendant MIC's policies and practices, oversaw operations and were directly involved in the business practices that violated the TCPA.
33. . . . were all personally and actively involved in managing the operations of Defendant MIC, and did not treat Defendant MIC as a passive investment. . . .
36. . . . personally received numerous emails concerning requests to stop the calls by members of the Internal Do-Not-Call Class, but, undaunted, . . . nonetheless continued to cause Defendant MIC to make telemarketing calls with its Do-Not-Call lists disabled. . .
39. . . .retain ownership of some of the loans made by Defendant MIC.

In addition, plaintiffs allege that Crilley, Shatz, and Bailey:

35. . . .personally devised and executed numerous telemarketing campaigns in which Defendant MIC deliberately " turned off" all Do-Not-Call lists, with the aim of making telemarketing calls to consumer[s] who had previously asked Defendant MIC to stop calling or had registered their numbers on the [NDNCR] . . .

Edwards allegedly ratified all actions by Crilley, Schatz, and Bailey. Id.


I. Motion to Dismiss

A. Personal Jurisdiction

The individual defendants seek to dismiss this action pursuant to FRCP 12(b)(2) based on lack of personal jurisdiction. All of them are residents of Florida, conduct all of their MIC-related business in Florida, have never owned any property in Oregon, have never conducted any activities

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individually in Oregon, have never traveled to Oregon for any reason, have never done any business in Oregon except through MIC, and have never participated in a telephone call to Oregon. Edwards Decl. (docket #47), ¶ ¶ 2-8; Crilley Decl. (docket #48), ¶ ¶ 2-8; Shatz Decl. (docket #49), ¶ ¶ 2-8; Bailey Decl. (docket #50), ¶ ¶ 2-8. Their only contact with Oregon is through their alleged participation in MIC's telemarketing scheme directed to Oregon and other states which they contend is insufficient to invoke personal jurisdiction over them in Oregon.

1. Legal Standard

When no federal statute governs personal jurisdiction, the district court applies the law of the forum state. See Panavision Int'l, L.P. v. Toeppen, 141 F.3d 1316, 1320 (9th Cir 1998) (applying California's long-arm statute). " Oregon's long-arm statute confers jurisdiction to the extent permitted by due process." Gray & Co. v. Firstenberg Mach. Co., 913 F.2d 758, 760 (9th Cir 1990), citing ORCP 4 and Oregon ex rel. Hydraulic Servocontrols Corp. v. Dale, 294 Or. 381, 381, 657 P.2d 211, 212 (1982). Federal due process requires that an out-of-state defendant have at least " minimum contacts" with the forum state so that " the exercise of jurisdiction 'does not offend traditional notions of fair play and substantial justice.'" Schwarzenegger v. Fred Martin Motor Co., 374 F.3d 797, 801 (9th Cir 2004), quoting Int'l Shoe Co. v. Washington, 326 U.S. 310, 316, 66 S.Ct. 154, 90 L.Ed. 95 (1945). There are two kinds of personal jurisdiction: general and specific jurisdiction.

Because plaintiffs do not assert general jurisdiction, this court has personal jurisdiction over non-resident defendants if the " controversy is related to or 'arises out of" a defendant's contacts with the forum." Helicopteros Nacionales de Colom., S.A. v. Hall, 466 U.S. 408, 414, 104 S.Ct. 1868, 80 L.Ed.2d 404 (1984), quoting Shaffer v. Heitner, 433 U.S. 186, 204, 97 S.Ct. 2569, 53 L.Ed.2d 683 (1977). The Ninth Circuit uses the following three-part test to analyze whether a party's minimum contacts meet the due process standard for the exercise of specific personal jurisdiction:

(1) The non-resident defendant must purposefully direct his activities or consummate some transaction with the forum or resident thereof; or perform some act by which he purposefully avails himself of the privilege of conducting activities in the forum, thereby invoking the benefits and protections of its laws;
(2) the claim must be one which arises out of or relates to the defendant's forum-related activities; and
(3) the exercise of jurisdiction must comport with fair play and substantial justice, ...

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