Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

Williams v. Affinion Group, LLC

United States Court of Appeals, Second Circuit

May 7, 2018

Debbie Williams, Regina Warfel, individually and on behalf of all others similarly situated, Brett Reilly, individually and on behalf of all others similarly situated, Juan M. Restrepo, individually and on behalf of all others similarly situated, Jennie H. Pham, individually and on behalf of all others similarly situated Lucy Schnabel, Brian Schnabel, individually and on behalf of all others similarly situated, Plaintiffs-Appellants,
v.
Affinion Group, LLC, Apollo Global Management, LLC, Beckett Media LLC, Buy.com, Inc., IAC/InteractiveCorp, PeopleFindersPro, Inc., Shoebuy.com, Inc., Trilegiant Corporation, Wyndham Worldwide Corp., Defendants-Appellees, Debra Miller, individually and on behalf of all others similarly situated, William Thompson, individually and on behalf of all others similarly situated, Brittany DiCarolis, Annette Sumlin, Hope Kelm, individually and on behalf of all others similarly situated, Barbara Timmcke, individually and on behalf of all others similarly situated, Edward Schnabel, individually and on behalf of all others similarly situated, David Frankel, individually and on behalf of all others similarly situated, Plaintiffs, 1-800-Flowers.com, Inc., Adaptive Marketing, LLC, Days Inns Worldwide, Inc., Rakuten USA, Inc., Vertrue Inc., Webloyalty.com, Inc., Orbitz Worldwide, LLC, Priceline.com, Inc., TigerDirect, Inc., Bank of America N.A., Wells Fargo Bank, N.A., Citigroup Inc., Capital One Financial Corporation, Chase Bank USA, N.A., Citibank, N.A. Hotwire, Inc., Chase Paymentech Solutions, LLC, United Online, Inc., Classmates International, Inc., FTD Group, Inc., Memory Lane, Inc., Defendants.

          Argued: October 27, 2017

         Seven former participants in online discount membership programs allege violation of federal privacy statutes and a racketeering conspiracy between online retailers and loyalty club businesses to defraud customers of "membership fees" for rewards programs they unwittingly joined. They allege that Trilegiant Corporation conspired with e-merchant retailers such as Buy.com, Orbitz, and Priceline to enroll the retailers' customers in the discount programs via deceptive post-transaction marketing and datapass techniques. We conclude that, because the appellants fail to raise a material issue of fact as to whether they consented to enrollment in the membership programs, the prohibitions of the Electronic Communications Privacy Act do not apply; and because the appellants identify no actionable fraud, they cannot proceed on a theory of racketeering.

         Affirmed.

          Jeffrey A. Leon (with Jamie E. Weiss, Grant Lee, on the brief), Quantum Legal LLC, Highland Park, Illinois; Laurie Rubinow, Shepherd, Finkelman, Miller & Shah, LLP, Chester, Connecticut; Nathan C. Zipperian, Shepherd, Finkelman, Miller & Shah, LLP, Ft. Lauderdale, Florida, for Plaintiffs-Appellants.

          Kenneth M. Kliebard (with Gregory T. Fouts, on the brief), Morgan Lewis & Bockius LLP, Chicago, Illinois, for Defendants-Appellees.

          Before: Jacobs and Lynch, Circuit Judges, Crotty, District Judge :[1]

          Dennis Jacobs, Circuit Judge:

         Seven former participants in online discount membership programs allege violation of federal privacy statutes and a racketeering conspiracy between online retailers and loyalty club businesses to defraud customers of "membership fees" for rewards programs they unwittingly joined. They allege that Trilegiant Corporation ("Trilegiant") conspired with e-merchant retailers such as Buy.com, Orbitz, and Priceline to enroll the retailers' customers in the membership programs via deceptive post-transaction marketing and datapass techniques. We conclude that, because the appellants fail to raise a material issue of fact as to whether they consented to enrollment in the membership programs, the prohibitions of the Electronic Communications Privacy Act do not apply; and because the appellants identify no actionable fraud, they cannot proceed on a theory of racketeering.

         The judgment of the district court is affirmed.

          I

         The post-transaction marketing employed by Trilegiant and its e-merchant partners functions as follows. Online merchants such as Buy.com, Inc. and Priceline.com, Inc. enter into an arrangement with Trilegiant to permit the advertisement of membership club programs to their customers. In the course of completing a transaction, a link, banner, or webpage appears on the e-merchant's website advertising a Trilegiant program. A customer who selects the link is immediately taken to an enrollment page for a Trilegiant membership product, or the customer may see the Trilegiant enrollment page after completing a purchase on the e-merchant's site, but before reaching the e-merchant's confirmation page. These enrollment pages purport to offer a coupon or rebate, in addition to a membership in a program that makes available special discount rates on future sales (such as the "Great Fun" program in which plaintiffs enrolled).

         The customer is solicited to enter basic personal information, such as a birth date or hometown, and then asked to select "YES" to accept the offer. The online offer screens disclose, in less conspicuous placement and font, the terms of the program, including billing, renewal, cancellation, and the transfer of data from the e-merchant to Trilegiant. These terms advise that "[b]y entering my information and clicking 'Yes, ' I acknowledge that I have read and agreed to these offer details and Terms & Conditions, " including the information transfer. Supp. App. 37; see also App. 67-70. If the customer opts to participate, the e-merchant seamlessly shares the customer's credit card and personal identifying information with Trilegiant to complete the enrollment. This exchange is a "datapass." Supp. App. 35. The customer is then billed monthly to that credit card (between $10 and $20 per month) until the customer cancels the membership, an internet sale technique termed "negative option billing." Trilegiant follows up after enrollment with confirmation emails welcoming the customer to the program and providing again the full list of terms and conditions. When the customer calls in to cancel the membership, Trilegiant's call center engages in "refund mitigation, " a customer retention strategy.

         The plaintiffs allege that they did not consent to join any membership clubs, and that they were duped by techniques of post-transaction marketing, datapass, negative option billing, and refund mitigation into paying for a product that had no apparent value to them. The named plaintiffs testified or declared that: they never agreed to sign up for a membership club with a monthly recurring fee; they did not recall entering any registration information; and they did not recall selecting "YES" to accept the terms and conditions of the program. Supp. App. 40-43. They complain that at no point in the purported transaction did they re-enter their credit card or billing information, and that datapass abets a scam devised by Trilegiant to collect monthly fees without their knowledge.

         To snare members, Trilegiant (with the implicit approval of the e-merchant defendants) allegedly designs its enrollment screens to appear as confirmation pages for the legitimate, just-completed transaction, so that the customer is unaware of having registered to buy a new and completely different product. Trilegiant's cancellation and billing process allegedly prolongs the fraud. To cancel a subscription, the customer must first discover the monthly billing on a credit card statement and call Trilegiant's customer service; Trilegiant's representatives then attempt to keep members enrolled as long as possible, either through promotion of the program benefits or delay in the cancellation process.

         To evidence intentional deceit, the plaintiffs present: expert witness testimony describing the characteristics of the pages as inherently deceptive; a 2010 congressional report condemning Trilegiant's post-confirmation offer and refund mitigation practices as deceptive and exploitative in 2010;[2] and the testimonials of duped plaintiffs. For example, Debbie Williams testified that she was enrolled in the "Great Fun" program after booking a hotel room on Priceline in 2009. Supp. App. 42. She cancelled her membership in October 2011 after discovering the recurring charges on her bank statements. At her deposition, she did not recall ever seeing the offer screen, but also did not deny that she may have selected "YES" or entered her personal information. Id. The other named plaintiffs claimed similar experiences.

         The plaintiffs initiated a class action in 2010 against Trilegiant and (its parent) Affinion Group LLC. Their 2012 amended complaint ("the complaint") included claims under the Racketeer Influenced and Corrupt Organizations Act ("RICO"), 18 U.S.C. §§ 1961-1968; the Electronic Communications Privacy Act ("ECPA"), 18 U.S.C. § 2511; the Connecticut Unfair Trade Practices Act ("CUTPA"), Conn. Gen. Stat. Sec. 42-110; the California automatic renewal statute, Cal. Bus. & Prof. Code § 17600 et seq.; and common law unjust enrichment. The e-merchants and various financial institutions were also added as co-defendants. In 2014 the district court dismissed the RICO claims, the California state law claims, and most of the CUTPA claims. Claims against ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.