November 9, 2012
MYINFOGUARD, LLC, NATIONWIDE ASSIST, LLC, SOLO COMMUNICATIONS, LLC, TOTAL PROTECTION PLUS, LLC, UNITED COMMUNICATIONS LINK, LLC, VOICEXPRESS, INC, CONTACT MESSAGE SYSTEMS, LLC, NATIONS 1ST, COMMUNICATIONS, LLC, NEW LINK, NETWORK, LLC, NATIONS VOICE PLUS, LLC, BLVD NETWORK, LLC, COAST TO COAST VOICE, LLC, EMERGENCY ROADSIDE VOICEMAIL, LLC, METELINE TECH, INC, : ROADSIDE PAL, LLC, SELECTED, SERVICES INC, SELECTED OPTIONS, INC, TRIVOICE INTERNATIONAL, LTD, USA VOICE MAIL, INC, AND VOXTRAIL, LTD, PLAINTIFFS,
WILLIAM H. SORRELL, IN HIS OFFICIAL CAPACITY AS ATTORNEY GENERAL OF THE STATE OF VERMONT, PETER SHUMLIN IN HIS OFFICIAL CAPACITY AS GOVERNOR OF THE STATE OF VERMONT, AND ELLIOT M. BURG IN HIS INDIVIDUAL CAPACITY, DEFENDANTS. STATE OF VERMONT, PLAINTIFF,
MYINFOGUARD, LLC, NATIONWIDE ASSIST, LLC, SOLO COMMUNICATIONS, LLC, TOTAL PROTECTION PLUS, LLC, UNITED COMMUNICATIONS LINK, LLC, VOICEXPRESS, INC, CONTACT MESSAGE SYSTEMS, LLC, NATIONS 1ST, COMMUNICATIONS, LLC, NEW LINK, NETWORK, LLC, AND NATIONS VOICE PLUS, LLC, BETTY STEWART, ROBERT POITRAS, DENNIS KALLIVOKAS, GEORGE LUTICH, NICHOLAS DELCORSO, NEIL WILLIAMS, LUIS A. RUELAS, CHARLES R. DARST, SCOTT A. LUCAS, BRYAN GLAUS, VINCENT DELCORSO, JOSEPH MARINUCCI, NICHOLAS KALLIVOKAS, DADATA, INC., ENHANCED SERVICES BILLING, INC., AND ILD CORP, DEFENDANTS.
The opinion of the court was delivered by: William K. Sessions III U.S. District Court Judge
These cases concern two provisions of Vermont's since-amended Consumer Protection Act ("CPA"), Vt. Stat. Ann. tit 9 § 2451 et seq (West 2012). Section 2453 contains a general prohibition of all "[u]nfair methods of competition in commerce, and unfair or deceptive acts or practices in commerce." Meanwhile, section 2466 (amended as of May 27, 2011) required that companies wishing to charge consumers on their local telephone bills notify them of the charges by first-class mail.
For the last two years, the State of Vermont has been investigating U.S. companies for practices that violate its consumer protection laws and regulations, which include charging consumers for telephone services without consumers' authorization (a practice known as "cramming"), failing to comply with notification requirements, and other unfair practices. On April 17, 2012, while the parties were engaged in initial settlement discussions, ten of those companies*fn1 located in Florida and New York (collectively, "the Sellers") filed a suit (No. 12-cv-74 or "case 74") in this Court challenging the constitutionality of section 2466 (the notification provision) on Commerce Clause, equal protection, and First Amendment grounds. Two days later, on the ninteenth, the State of Vermont filed a civil enforcement action in Washington Superior Court against the Sellers, thirteen related individuals, and three other companies for alleged violations of sections 2453 and 2466. On May 14, 2012, the Sellers filed notice that they were removing the state enforcement action to this Court (No. 12-cv-102 or "case 102"). Two days later on the sixteenth, the Sellers filed a First Amended Complaint in case 74 in which they added ten additional corporations as plaintiffs*fn2 as well as a new claim alleging that Assistant Attorney General ("AAG") Burg, the lead attorney for the State in both cases, had violated the Sellers' constitutional rights in violation of 42 U.S.C. § 1983.
In a separate state action, five of the new plaintiff corporations sought to quash civil administrative subpoenas issued by the Attorney General on the grounds that any continuing investigation should be conducted under the auspices of federal discovery in case 74. On October 19, Superior Court Judge Bent denied this request. See case 74 ECF No. 30.
Multiple motions are pending before the Court: (1) AAG Burg's Motion to Dismiss the Sellers' section 1983 claim in case 74, (case 74 ECF No. 16); (2) the State's Motion to Remand case 102 on the grounds that it was improperly removed, (case 102 ECF No. 44); (3) Motions to Dismiss the State's CPA claims in case 102, (case 102 ECF Nos. 58, 59, 80); (4) the Attorney General's Motion to Dismiss case 74 under the abstention doctrine recognized in Younger v. Harris, 401 U.S. 37 (1971), (case 74 ECF No. 7); and (5) the Sellers' Motion to Stay proceedings in Washington Superior Court relating to investigative subpoenas sought by the Attorney General (case 74 ECF No. 25 (cross-filed as case 102 ECF No. 101).
For the reasons stated below, the Court grants AAG Burg's Motion to Dismiss Count V of the case 74 Complaint; dismisses the remainder of case 74 on Younger abstention grounds; and remands case 102 to the Washington Superior Court for further proceedings. The Court also denies as moot the Motions to Dismiss the CPA claims as well as the Motion to Stay additional state proceedings.
I.The § 1983 Claim Against AAG Burg
Count V of the First Amended Complaint ("Complaint") in case 74 asserts a § 1983 claim for monetary damages against AAG Burg in his personal capacity. The Sellers allege that AAG Burg violated their constitutional rights by drafting the pre-2011 version of § 2466; enforcing that provision despite being aware that its constitutionality was questionable after the Second Circuit's decision in IMS Health, Inc. v. Sorell, 630 F.3d 263 (2d Cir. 2010); testifying before the Vermont Legislature in favor of a replacement for section 2466; and otherwise improperly using his powers to investigate violations of the provision and to pursue civil cases against the Sellers and other corporations. See case 74 ECF No. 19 at *3-8. AAG Burg seeks to dismiss this claim because he is protected by absolute immunity for his official actions as an AAG. See Imbler v. Pachtman, 424 U.S. 409, 419 n.13 (1976) ("An absolute immunity defeats a suit at the outset, so long as the official's actions were within the scope of the immunity."); Shmueli v. City of New York, 424 F.3d 231, 236 (2d Cir. 2005) (Where the nature of the function being performed by the defendant official is clear from the face of the complaint, "the absolute immunity defense may be resolved as a matter of law on a motion to dismiss the complaint pursuant to Rule 12(b)(6).").
Absolute immunity extends to government officials performing functions "analogous to those of a prosecutor." Butz v. Economou, 438 U.S. 478, 515 (1978); Cornejo v. Bell, 592 F.3d 121, 127-28 (2d Cir. 2010) ("This Court has previously extended absolute immunity to state and federal officials initiating non-criminal proceedings such as administrative proceedings and civil litigation."). The purpose of such immunity is to protect government attorneys from fear of intimidation or harassment when they are advocating for the state. See Butz, 436 U.S. at 512. In determining whether a particular official is entitled to absolute immunity, courts focus on the functions performed by that official. Trial conduct as well as actions taken in preparation or in anticipation of litigation are generally afforded absolute immunity; however, a "prosecutor's administrative duties and those investigatory functions that do not relate to an advocate's preparation for the initiation of a prosecution or for judicial proceedings are not entitled to absolute immunity." Buckley v. Fitzsimmons, 509 U.S. 259, 273 (1993). Absolute immunity is inapplicable in situations where a government attorney acts beyond the scope of his or her authority or in the "'clear absence of all jurisdiction.'" Doe v. Philips, 81 F.3d 1204, 1210 (2d Cir. 1996) (quoting Stump v. Sparkman, 435 U.S. 349, 357 (1978)).
There is little question that AAG Burg was acting as the functional equivalent of a prosecutor while he was investigating potential violations of the CPA to determine whether to file civil enforcement actions. Issuing civil investigative subpoenas, threatening enforcement actions, engaging in settlement discussions, and filing a state court action are all related to the Attorney General's preparation for litigation. Accord McCormick v. City of Lawrence, Kan., 253 F. Supp. 2d 1172, 1204-05 (D. Kan. 2003); Brewer v. Hill, 453 F. Supp. 67, 69 (N.D. Tex. 1978). It is also quite clear that when AAG Burg took these actions, he was acting within the scope of his authority under Vermont law. See generally Vt. Stat. Ann. tit. 3 §§ 152, 157 (authorizing the Attorney General to prepare and try civil and criminal matters at common law, as allowed by statute, and also those in which the state is a party); id., § 153 (allowing the appointment of a Deputy Attorney General and Assistant Attorney Generals); Vt. Stat. Ann. tit. 9 §§ 2458-60 (authorizing the Attorney General to investigate and enforce Vermont's consumer protection laws). Nor is this a case in which the AAG acted without authority by, for example, enforcing a provision that was invalidated by a prior court judgment or abrogated by a superseding statute. The AAG does not retroactively lose authority to enforce the notification requirement simply because the Sellers have raised potentially valid constitutional objections.
AAG Burg's legislative activities present a different question because drafting legislation and providing testimony are not analogous to the functions of a prosecutor, even if Vermont law requires the Attorney General and his subordinates to perform these tasks. See Vt. Stat. Ann. tit. 3 § 158. Nonetheless, a different form of protection, absolute legislative immunity, attaches to all actions taken "in the sphere of legitimate legislative activity." Bogan v. Scott-Harris, 523 U.S. 44, 54 (1998) (quoting Tenney v. Brandhove, 341 U.S. 367, 376 (1951)). This immunity shelters from suit non-legislative officials who perform legislative functions, such as drafting or otherwise shaping legislation. See id. at 55; State Employees Bargaining Coal v. Rowland, 494 F.3d 71, 82 (2d Cir. 2007). For this reason, AAG Burg is also entitled to absolute immunity for his role in drafting section 2466.*fn3
Because AAG Burg is entitled to absolute immunity for enforcing the CPA and testifying before legislature, the Court dismisses the Sellers' § 1983 claim against AAG Burg for failure to state a claim upon ...
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