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West v. C.J. Prestman Co.

United States District Court, D. Utah, Central Division

October 13, 2017

ROBERT WEST, SAMARA WEST, LYDIA GREEN, TODD PALMER, TRACI PALMER, GLOYD GREEN, JAKE WEST, SAMUEL DALSASSO, CRAIG WEST, DHYANI SHAW, ASHELY WEST, JOHN ROBERT LESTER HAVERSTOCK, LILIANA ELIZABETH HAVERSTOCK, AUTOZINC.COM, Plaintiffs,
v.
C.J. PRESTMAN COMPANY JASON OLSEN, CORY OLSEN, SHAUN OLSEN, DAVE WHITE, Defendants.

          MEMORANDUM DECISION AND ORDER GRANTING IN PART AND DENYING IN PART [17] DEFENDANTS' MOTION TO DISMISS AND [19] PLAINTIFFS' MOTION TO AMEND

          David Nuffer United States District Judge.

         This case concerns the surveillance practices of a car dealership in Utah. The plaintiffs are a group of former employees and their family members and customers of the dealership who allege they were subjected to undisclosed, invasive audio surveillance at the dealership. Plaintiffs' original complaint filed in Utah State court on November 27, 2015[1] was removed to this court on January 29, 2016.[2]

         The Amended Complaint[3] filed by plaintiffs Robert West, Samara West, Lydia Green, Todd Palmer, Traci Palmer, Gloyd Green, Jake West, Samuel Dalsasso, Craig West, Dhyani Shaw, Ashely West, John Robert Lester Haverstock, Liliana Elizabeth Haverstock, and Autozinc.com (collectively, “Plaintiffs”) alleges:

1. violations of the Federal Wiretap Act and the Utah Interception of Communications Act;
2. intrusion upon seclusion;
3. violation of the Utah Payment of Wages Act, conversion, and wrongful termination in violation of public policy; and
4. violation of the Utah Consumer Sales Practices Act.

         Defendants C.J. Prestman Company, Jason Olsen, Cory Olsen, Shaun Olsen, (collectively “Prestman Auto”), and Dave White (together with Prestman Auto, “Defendants”) filed a Motion to Dismiss the Amended Complaint[4] (the “Motion to Dismiss”). Plaintiffs opposed[5] the Motion to Dismiss, arguing that they had alleged sufficient facts under Federal Rules of Civil Procedure 8 and 12.[6] Because Plaintiffs have alleged sufficient facts to state some but not all of their claims, and because some claims are without a legal basis, the Motion to Dismiss is GRANTED as to Counts III and IV, and DENIED as to Counts I and II.

         Provoked by the Motion to Dismiss, Plaintiffs filed a Motion for Leave to File a Second Amended Complaint (“Motion to Amend”).[7] Defendants opposed[8] the Motion to Amend, arguing prejudice from “Plaintiffs' undue delay, bad faith, dilatory motive, and the overall futility of the amendments.”[9] Defendants will not be prejudiced by a second amended complaint. However, the second amended complaint proposed by Plaintiffs does not cure all defects in Plaintiffs' claims and is in improper form. Plaintiffs' Motion to Amend is DENIED IN PART and GRANTED IN PART. Plaintiffs are permitted to file a second amended complaint consistent with this Order.

         Table of Contents

         MOTION TO DISMISS ................................................................................................................. 3

         Background ......................................................................................................................... 4

         Discussion ........................................................................................................................... 6

         Autozinc.com has failed to state a claim. . .............................................................. 6

         Plaintiffs sufficiently pleaded facts for State and Federal wiretap claims. . ............ 7

         Plaintiffs sufficiently pleaded a claim for intrusion upon seclusion ....................... 9

         Plaintiffs do not state claims for pay violations, conversion, and wrongful discharge. . ................................................................................................. 10

         Plaintiffs have not sufficiently pleaded a claim under the Utah Consumer Sales Practices Act (“UCSPA”). . ....................................................................... 12

         MOTION TO AMEND ................................................................................................................. 14

         ORDER ......................................................................................................................................... 15

         MOTION TO DISMISS

         Rule 8(a)(2) of the Federal Rules of Civil Procedure requires a complaint to provide “a short and plain statement of the claim showing that the pleader is entitled to relief.”[10] Rule 12(b)(6) allows a court to dismiss a case for “failure to state a claim upon which relief can be granted” at any point.[11] To survive a motion to dismiss, a complaint must state “sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face.”[12] The facts as alleged will be accepted as true for the purposes of evaluating the sufficiency of the complaint. Legal conclusions in the complaint need not be accepted as true.[13] Whether a complaint states a plausible claim for relief is a “context-specific” question that requires a court to “draw on its judicial experience and common sense”[14] and determine if the pleading's content “allows the court to draw the reasonable inference that the defendant is liable.”[15] The standard does not require “detailed factual allegations, ” though a “formulaic recitation of the elements of a cause of action will not do.”[16] Under “the compromise enacted by Rule 8's notice pleading . . . [t]echnical fact pleading is not required, but the complaint must still provide enough factual allegations for a court to infer potential victory.”[17]

         Background West Parties:

         Plaintiff Robert West was an at-will employee of Prestman Auto from April 2012 to May 2012.[18] In June 2012, West entered a written employment contract with Prestman Auto effective through August 2013.[19] Plaintiffs Samara West, Craig West, Jake West, Samuel Dalsasso, [20] and Ashley West (the “West Family”) are family members of Robert West.[21]

         Palmer Parties:

         Plaintiff Todd Palmer was a salesman at Prestman Auto from at least April 2013 to June 2014.[22] Plaintiff Traci Palmer is Todd Palmer's wife.[23]

         Other Parties:

         Plaintiffs Lydia Green and Gloyd Green were Prestman Auto's customers.[24] The remaining Plaintiffs, Dhyani Shaw, Bob Haverstock, and Liliana Haverstock, are either family of Robert West or Todd Palmer or customers of Prestman Auto.[25]

         Plaintiffs allege that Prestman Auto used a complex audio surveillance system to systematically and intentionally intercept and record Plaintiffs'[26] live oral conversations for 24 hours a day over the time period from April 2013 through September 2015 or later.[27] Plaintiffs assert Prestman Auto did not provide formal or adequate notice of the audio surveillance and that Plaintiffs did not have knowledge of, or consent to the audio surveillance during this period.[28]Plaintiffs allege Defendant Dave White joined in Prestman Auto's surveillance no later than August 2013[29] and that Defendants continued to record and monitor audio at Prestman Auto until September 2015.[30]

         Timeframe of Interceptions of West Conversations:

         Robert West and Todd Palmer allege that thousands of their personal conversations were recorded by Prestman Auto.[31] The West Family had private conversations with Robert West which were surveilled between April and August of 2013, [32] when Robert West was fired.[33] Plaintiffs Dhyani Shaw, Bob Haverstock and Liliana Haverstock did not have any communications intercepted after August 2013.

         Timeframe of Interceptions of Palmer Conversations:

         The audio surveillance continued as to Todd Palmer and his wife, until Todd Palmer was fired from Prestman Auto in June 2014.[34] Todd Palmer alleges he was fired because he witnessed Defendants listening in on private conversations and warned them that it was illegal.[35]

         In addition to surveilling Todd Palmer's conversations, Defendants allegedly withheld $700 from Todd Palmer's paycheck to pay for a customer's damaged bumper.[36]

         Green Allegations:

         In the winter of 2013, Green went to Prestman Auto to purchase a car and had her private phone conversations with Robert West and her father, plaintiff Gloyd Green, intercepted by Defendants.[37] These private conversations revealed Green's bargaining and negotiation strategies, which allowed Defendants to gain an unfair bargaining advantage over Green.[38]

         Damage Allegations:

         As a result of this secret audio surveillance, Plaintiffs contend they have been injured due to the “stress and anxiety of knowing their personal privacy was violated in such a continuous and wanton way.”[39]

         Discussion

         Autozinc.com has failed to state a claim.

         Plaintiff Autozinc.com is a dealership owned by Robert West.[40] The Amended Complaint asserts conclusively that Autozinc.com has been disadvantaged by Defendants' audio surveillance.[41] No other allegations in the Amended Complaint pertain to Autozinc.com. Autozinc.com has not alleged any facts on which to base a claim against Defendants. Because Autozinc.com has not satisfied Rule 8's notice pleading requirement, [42] the Motion to Dismiss is GRANTED as to all claims asserted on behalf of plaintiff Autozinc.com, subject to more specific pleading in the second amended complaint.

         Plaintiffs sufficiently pleaded facts for State and Federal wiretap claims.

         The Omnibus Crime Control and Safe Streets Act of 1968 (“Federal Wiretap Act”)[43] and the Utah Interception of Communications Act[44] (collectively “Wiretap Acts”) prohibit any person, including corporations[45] from intercepting, using, or disclosing the contents of any oral communication[46] uttered by a person. The Wiretap Acts allow for a civil cause of action and have a two-year statutes of limitation barring suits brought more than two years “after the date upon which the claimant first has a reasonable opportunity to discover the violation.”[47]

         Oral communication is defined by the Wiretap Acts as “any oral communication uttered by a person exhibiting an expectation that such communication is not subject to interception under circumstances justifying such expectation[.]”[48] As recognized by the Tenth Circuit, the legislative history of the Federal Wiretap Act reveals that “Congress intended this definition to parallel the ‘reasonable expectation of privacy test' articulated by the Supreme Court in Katz v. United States, 389 U.S. 347, 88 S.Ct. 507, 19 L.Ed.2d 576 (1967).”[49] Thus, Plaintiffs are required to allege facts showing that (1) they had an actual, subjective expectation of privacy, and (2) that their expectation of privacy is one that society is willing to recognize as reasonable.[50]

         As a threshold matter, Defendants argue[51] that Plaintiffs' claims are barred because they were brought more than two years after they had a reasonable opportunity to discover the audio surveillance in April 2013. Defendants argue that they installed a video surveillance system in April 2013 which Plaintiffs knew about, and thus reasonably should have known about the audio surveillance system.[52] If Plaintiffs knew about the audio surveillance in April 2013, such knowledge would have triggered the Wiretap Acts' two-year statutes of limitations, making Plaintiffs' claims untimely because the original complaint was filed on November 27, 2015.[53]

         This argument requires inferences in the Defendants' favor, which is inappropriate on the motion to dismiss.[54] “A statute of limitations defense ‘may be appropriately resolved on a [Rule] 12(b) motion when the dates given in the complaint make clear that the right sued upon has been extinguished.'”[55] Plaintiffs alleged in the Amended Complaint that they did not know about Defendants' audio surveillance capabilities.[56] This allegation, coupled with the allegation that the Plaintiffs filed their claims within two years of discovering the audio surveillance, [57] is enough to survive the motion to dismiss.

         The Wiretap Acts require Plaintiffs to have had “an actual, subjective expectation of privacy . . . [that] society would objectively consider reasonable.”[58] For purposes of this Motion to Dismiss, accepting Plaintiffs' allegation that they believed they had a legitimate expectation of privacy in their conversations as true, [59] the first element is satisfied. Whether society might consider this expectation to be reasonable is a question of fact that is better answered at the summary judgment stage or later.

         Likewise, Defendants' argument that Plaintiffs impliedly consented to the audio surveillance is a fact question which cannot now be resolved. Plaintiffs have alleged consistently, if not plainly, that they did not know about the audio surveillance.[60] Arguments or evidence to the contrary are outside of the pleadings and may not be resolved on a Rule 12(b)(6) motion.

         Therefore, because Plaintiffs have alleged a plausible claim for violations of the Wiretap Acts, Defendants' Motion to Dismiss is DENIED as to Count One.

         Plaintiffs sufficiently pleaded a claim for intrusion upon seclusion

         A claim for intrusion upon seclusion in Utah requires Plaintiffs to sufficiently plead two elements: (1) they have suffered “an intentional substantial intrusion” on their privacy, and (2) the intrusion would be “highly offensive” to a reasonable person.[61]

         Utah courts have determined that electronic eavesdropping may support a claim of intrusion upon seclusion.[62] Plaintiffs allege an intrusion into their privacy through live audio surveillance.[63] The fact that the Wiretap Acts criminalize the interception, use and disclosure of oral communications without consent[64] lends credibility to the argument that wiretapping is offensive to the reasonable person. Additionally, taking the allegations in the Amended Complaint as true, Defendants intercepted Plaintiffs' conversations for various improper purposes and without Plaintiffs' consent.[65]

         Plaintiffs' have sufficiently pleaded wiretap allegations at this stage to sustain a claim of intrusion upon seclusion. Defendants have not shown failure to state a claim under Rule 12(b)(6). Accordingly, Defendants' Motion to Dismiss is DENIED as to Count Two.

         Plaintiffs do not state claims for pay violations, conversion, and wrongful discharge.

         Todd Palmer alleges that Defendants withheld $700 from his paycheck in violation of the Utah Payment of Wages Act (“UPWA”) and an act of conversion. Palmer also alleges he ...


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