Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-azd-4_11-cv-00501/USCOURTS-azd-4_11-cv-00501-3/pdf.json

Nature of Suit Code: 360
Nature of Suit: Other Personal Injury
Cause of Action: 28:1441 Petition for Removal

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IN THE UNITED STATES DISTRICT COURT 

FOR THE DISTRICT OF ARIZONA 

Richard Shupe, et al., 

Plaintiffs, 

v. 

JPMorgan Chase Bank NA, 

Defendant.

No. CV-11-00501-TUC-RCC (BPV)

ORDER 

Before the Court is the November 5, 2013, Report and Recommendation (R&R) 

from Magistrate Judge Bernardo P. Velasco (Doc. 140) recommending that this Court 

deny Plaintiffs’ Motion for Default Judgment (Doc. 96), deny Plaintiffs’ Partial Motion 

for Summary Judgment (Doc. 88), and grant in part Defendant’s Motion for Summary 

Judgment (Doc. 115). The R&R further recommends the Court remand this action to the 

state court. 

Defendant filed its objections to the R&R (Doc. 143) on November 19, 2013. 

Defendant objects only to the recommendation to remand this matter to the state court. 

After an extension of time, Plaintiffs filed their objections on December 17, 2013 (Doc. 

149). Defendant filed its response to the Plaintiffs’ objections on January 3, 2014 (Doc. 

150). Plaintiffs also filed a reply (Doc. 151) to Defendant’s response; however, no replies 

are permitted and the Court struck Document 151 from the record. 

Part of Plaintiffs objections stem from Plaintiffs’ assertion that the Magistrate 

Judge is biased against pro se litigants and “had a desire to quickly push the case through, 

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or out of the Federal Court.” (Doc. 149 at 1). As one example of this alleged bias, 

Plaintiffs assert it is “fundamentally unfair” for the Magistrate Judge “to quote rare 

common law ...that [Plaintiffs] must comport to the FRCP’s.” (Doc. 149 at 13). It is 

hardly unfair or unusual to require Plaintiffs to comply with the Federal and Local Rules, 

as is required of all litigants in this Court, pro se or not. Further, this action has been 

pending in federal court for nearly three years, and the Court previously rejected a motion 

by Plaintiffs themselves to remand the matter to state court. The Court has granted 

Plaintiffs numerous extensions and has consistently acted to ensure Plaintiffs’ access to 

the justice process. The Court finds absolutely no merit or evidence to support Plaintiffs’ 

allegations of bias or prejudice and they warrant no further discussion here. 

Plaintiffs also attach a number of exhibits to their objections, which Defendant 

notes are unauthenticated and unverified. The exhibits consist of 1) letters sent to 

Defendant directing it to stop calling Plaintiffs, 2) a letter Plaintiffs sent to NCO 

Financial Systems Inc., a private entity not a party to this action, wherein Plaintiffs 

directed NCO to stop calling them, 3) a letter sent from NCO to Plaintiffs indicating it 

had no record of making any calls to Plaintiffs, and 4) a Wikipedia page on NCO. (Doc. 

149 Exs. 1 & 2). The Court finds these exhibits irrelevant to the issues at hand and will 

not consider them here. 

For the following reasons, this Court will adopt in part and reject in part the 

Magistrate Judge’s findings in the R&R. 

I. BACKGROUND 

The factual and procedural background in this case is thoroughly detailed in 

Magistrate Judge Velasco’s R&R (Doc. 140). This Court fully incorporates by reference 

the Summary section of the R&R into this Order. 

II. LEGAL STANDARD 

The duties of the district court in connection with a R&R are set forth in Rule 72 

of the Federal Rules of Civil Procedure and 28 U .S.C. § 636(b)(1). The district court 

may “accept, reject, or modify the recommended disposition; receive further evidence; or 

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return the matter to the magistrate judge with instructions.” Fed.R.Civ.P. 72(b)(3); 28 

U.S.C. § 636(b)(1). The Court will not disturb a Magistrate Judge’s Order unless his 

factual findings are clearly erroneous or his legal conclusions are contrary to law. 28 

U.S.C. § 636(b)(1)(A). “[T]he magistrate judge’s decision ... is entitled to great deference 

by the district court.” United States v. Abonce-Barrera, 257 F.3d 959, 969 (9th Cir. 

2001). Where the parties object to a R&R, “[a] judge of the [district] court shall make a 

de novo determination of those portions of the [R&R] to which objection is made.” 28 

U.S.C. § 636(b)(1); see Thomas v. Arn, 474 U.S. 140, 149-50 (1985). 

III. DISCUSSION 

a. Motion for Default Judgment 

Magistrate Judge Velasco recommended this Court deny Plaintiffs’ Motion for 

Default Judgment. Plaintiffs moved for default judgment on the basis that Defendant 

allegedly failed to file an answer to Plaintiffs’ amended complaint. Judge Velasco 

recommended the motion be denied because Plaintiffs never properly served Defendant 

with the amended complaint pursuant to Rule 15(a)(3), Fed.R.Civ.P., and as ordered by 

the Court (Doc. 71). 

Neither Plaintiffs nor Defendant contest the recommendation on this motion in 

their objections to the R&R. Accordingly, the Court adopts Magistrate Judge Velasco’s 

recommendation to deny Plaintiffs’ Motion for Default Judgment. 

b. Cross Motions for Summary Judgment 

Magistrate Judge Velasco recommended this Court enter an order denying 

Plaintiff’s Partial Motion for Summary Judgment, and granting in part and denying in 

part Defendant’s Cross-Motion for Summary Judgment. Plaintiffs moved for summary 

judgment on counts one, two, and three of their amended complaint, while Defendant 

moved for summary judgment on all counts of the amended complaint. Because Plaintiffs 

object to the R&R, the Court will address each claim of the amended complaint below. 

1. Telephone Consumer Protection Act 

Plaintiffs allege Defendant willfully or knowingly violated the TCPA by calling 

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Plaintiffs fifty times, and that the calls were for a dual purpose: to collect an alleged debt 

and to solicit mortgage products and services. Defendant counters that the calls do not 

violate the TCPA because they were not telemarketing calls, were only made to collect a 

debt, and Defendant has a separate existing business relationship with Plaintiffs. 

Magistrate Judge Velasco recommended that Defendant’s calls to Plaintiffs did not 

violate the TCPA because the calls were not made for marketing purposes, but solely for 

debt collection purposes, and calls regarding debt collection do not constitute 

telemarketing or solicitation. (Doc. 140 at 9-10). Judge Velasco further found that 

Plaintiffs’ evidence, consisting of a handwritten call log of fifty calls, was inadmissible as 

unauthenticated. (Doc. 140 at 9). Judge Velasco therefore recommended the Court deny 

Plaintiffs’ partial motion for summary judgment on the TCPA claim and grant summary 

judgment in favor of Defendant. 

In their objections to the R&R, Plaintiffs dispute two main points: whether the 

calls were made solely for collection purposes, and whether the Defendant is a debt 

collector. Plaintiffs maintain the Magistrate Judge erred in his conclusions on both of 

these points, and therefore wrongly recommended dismissal of Plaintiffs’ TCPA claim 

and Arizona telephone solicitation claim. 

Plaintiffs assert that the calls made by Defendant were marketing calls, not debt 

collection calls, but fail to provide persuasive evidence on this point. Plaintiffs first argue 

that a message left on their answering machine refers to www.chase.com, and that the 

reference to the website therefore means the calls were either marketing or dual purpose 

calls, but not solely for collection purposes. (Doc. 149 at 6). Second, Plaintiffs state that 

because their caller id said “JP Morgan Chase” and not “debt collection service,” any 

calls from Chase were therefore marketing calls. Id. These arguments are both illogical 

and unpersuasive to refute Defendant’s affidavit that it made the calls solely for debt 

collection purposes. 

As Defendant notes, Plaintiffs did not actually answer most of the calls, and 

because messages generally were not left, “Plaintiffs have no idea what the ‘purpose’ of 

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the calls would have been,” and therefore cannot refute Defendant’s affidavit stating the 

calls were made solely for debt collection purposes. (Doc. 150 at 5). 

Plaintiffs also argue that Defendant is not a debt collector, but a “Bank engaged in 

the business of making financial transactions.” (Doc. 149 at 3). Plaintiffs further suggest 

that another entity, NCO Group, which is not a party to this action, but which Plaintiffs 

allege is a third-party subsidiary of Defendant, made the calls. However, Plaintiffs have 

not presented the Court with any evidence that would make Defendant liable for the 

actions of a third party, nor have Plaintiffs presented any evidence that the calls were 

made by NCO Group. 

Plaintiffs also allege that Defendant’s calls violated the TCPA because Defendant 

used an artificial prerecorded voice. Plaintiffs conflate several issues in this argument. 

First, Plaintiffs cite a Federal Communications Commission (FCC) provision, which 

states “prerecorded debt collection calls would be exempt from the prohibitions on such 

calls to residences as: (1) calls from a party with whom the consumer has an established 

business relationship, and (2) commercial calls which do not adversely affect privacy 

rights and which do not transmit an unsolicited advertisement.” In re Rules and 

Regulations Implementing the Telephone Consumer Protection Act of 1991, 7 FCC Rcd. 

8752, 8771, 8773 (Oct. 16, 1992). Plaintiffs then assert that they terminated their business 

relationship with Defendant by sending Defendant a letter notifying Defendant of their 

default. However, Plaintiffs fail to note that the FCC has further stated that “[b]ecause the 

termination of an established business relationship is significant only in the context of 

solicitation calls, that act of terminating such a relationship would not hinder or thwart 

creditors’ attempts to reach debtors by telephone.” In re Rules and Regulations 

Implementing the Telephone Consumer Protection Act of 1991, 10 FCC Rcd. 12391, 

12400 (Aug. 7, 1995). Thus, the provision Plaintiffs cite actually undermines their 

argument— Defendant’s calls to Plaintiffs are exempt from the TCPA because the calls 

were made for debt collection purposes, and even if Plaintiffs did effectively terminate 

their business relationship with Defendant, the TCPA still permits creditors to make 

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collection calls to parties that the creditor previously had a business relationship with. 

As part of this same argument on prerecorded calls, Plaintiffs further incorrectly 

state that in a prior R&R, the Magistrate Judge “states that clearly the Defendant had 

wrongly invaded the privacy rights of the Plaintiffs.” (Doc. 149 at 8) (citing Doc. 23 at 

11). This misstatement appears to be based on a sentence in the R&R noting that 

Plaintiffs’ Complaint alleges that the Defendant “knowingly and willingly invaded the 

privacy of the Plaintiffs...” (Doc. 23 at 11) (citing Complaint, Count II). Clearly the 

R&R is referring to Plaintiffs’ own statements in their Complaint, not the Magistrate 

Judge’s opinion as to whether the Plaintiffs’ privacy rights were violated. Nowhere in the 

R&R does Judge Velasco state the Defendant clearly invaded Plaintiffs’ privacy rights. 

In the R&R, Judge Velasco thoroughly discussed the TCPA, exceptions to the 

TCPA, and relevant case law. Judge Velasco also considered the evidence submitted by 

the parties, including Plaintiffs’ call logs, which were rejected as unauthenticated, and an 

affidavit submitted by Ms. Garibay, Assistant Vice President of Chase. The Court finds 

that Magistrate Judge Velasco thoroughly considered all of the relevant issues and 

evidence, and that he made a reasoned and well-founded conclusion that Plaintiffs’ 

TCPA claim should be dismissed. The Court has considered Plaintiffs’ objections on this 

point, and finds no merit to them. Accordingly, the Court will adopt Magistrate Judge 

Velasco’s recommendation to deny Plaintiffs’ Partial Motion for Summary Judgment on 

this issue and grant Defendant’s Motion as to the same. 

2. A.R.S. § 44-1282 

Plaintiffs seek summary judgment under Arizona law, arguing that because they 

established the elements for a claim under the TCPA, they have also established the 

elements for a claim under A.R.S. § 44-1282. Section 44-1282 prohibits solicitors from 

calling numbers that are entered in the national do-not-call registry. However, the statute 

specifically exempts intrastate calls “that would be authorized or permitted by federal law 

or regulation relating to an interstate telephone solicitation.” A.R.S. § 44-1282(A). 

Based on Magistrate Judge Velasco’s finding that Defendant’s calls were not 

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solicitations and did not violate the TCPA, Judge Velasco further recommended that the 

calls are therefore not unlawful under the Arizona statute. (Doc. 140 at 13). Judge 

Velasco also recommended that “[b]ecause the calls are not unlawful, there is no need to 

determine if a factual dispute exists as to the origin of the calls.” Id. Judge Velasco 

therefore recommended the Court deny Plaintiffs’ partial motion for summary judgment 

under A.R.S. § 44-1282 and grant summary judgment in favor of Defendant. 

In their objections to the R&R, Plaintiffs present a two-sentence argument on this 

claim. Plaintiffs conclude that because they believe Defendant is liable for the TCPA 

claim, it is also liable for the state law claim. (Doc. 149 at 11). Plaintiffs further state 

there is no evidence that the calls originated from outside the state. Id. Of course, 

however, there is also no evidence that the calls originated from within the state. 

Regardless of where the calls originated, the calls are exempt from the Arizona statute 

because the calls were not made by a solicitor, they were made by the Defendant debt 

collector. 

 As noted above, this Court finds Magistrate Judge Velasco reached a logical and 

well-reasoned conclusion as to the merits of Plaintiffs’ claim under the TCPA. Because 

this Court adopts the recommendation that Defendant’s calls were not solicitations and 

did not violate the TCPA, the Court also adopts the recommendation that the calls did not 

violate A.R.S. § 44-1282. 

3. Invasion of Privacy 

Plaintiffs also seek summary judgment on their tort claim for invasion of privacy, 

based on the repeated calls made by Defendant to Plaintiffs. In the R&R, Judge Velasco 

thoroughly discussed the torts of invasion of privacy and intrusion upon seclusion, 

including an examination of the Restatement and relevant case law. Judge Velasco noted 

that although Plaintiffs’ call log was inadmissible as unauthenticated, Defendant did not 

dispute that it made calls to Plaintiffs for debt collection purposes. Judge Velasco further 

stated that “[t]he number of calls alleged is not insubstantial.” (Doc. 140 at 15-16). 

Accordingly, Judge Velasco recommended the Court deny both party’s motions for 

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summary judgment on this issue, because: 

The evidence established a genuine issue of material fact 

regarding how many telephone calls Defendant made to 

Plaintiffs, over what length of time the telephone calls were made, whether they were repeated with such persistence and frequency as to amount to a course of hounding the Plaintiffs such that they would be considered highly offensive to a 

reasonable person. (Doc. 140 at 16). 

Neither party disputes the R&R’s recommendation on this issue. Therefore, the 

Court will adopt Judge Velasco’s recommendation to deny summary judgment for the 

Plaintiffs and for the Defendant on Plaintiffs’ invasion of privacy claim. 

4. Harassment and Intentional Infliction of Emotional and/or Physical 

Distress 

As noted in the R&R, Defendant asks the Court to dismiss Plaintiffs’ harassment 

and intentional infliction of emotional distress claims and Plaintiffs do not oppose the 

request. Accordingly, the Court will adopt Magistrate Judge Velasco’s recommendation 

to dismiss these claims. 

c. Remand 

Because Judge Velasco recommends this Court grant summary judgment in favor 

of Defendants on Plaintiffs’ federal claim pursuant to the TCPA, the only remaining 

claims are state law claims. Judge Velasco therefore recommends the Court remand this 

matter to state court, concluding that the Court does not have original jurisdiction or 

diversity jurisdiction over the remaining tort claim for invasion of privacy. In its 

objections, Defendant disputes this recommendation and asserts that diversity jurisdiction 

does in fact exist. 

The Court has “the power to hear claims that would not be independently 

removable even after the basis for removal jurisdiction is dropped from the proceedings.” 

Harrell v. 20th Century Ins. Co., 934 F.2d 203, 205 (9th Cir. 1991). “It is generally 

within a district court’s discretion either to retain jurisdiction to adjudicate the pendant 

state claims or to remand them to state court.” Id. “[I]n the usual case in which all 

federal-law claims are eliminated before trial, the balance of factors to be considered 

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under the pendent jurisdiction doctrine—judicial economy, convenience, fairness, and 

comity—will point toward declining to exercise jurisdiction over the remaining state-law 

claims.” Carnegie-Mellon Univ. v. Cohill, 484 U.S. 343, 350 n.7 (1988). 

Here, Judge Velasco concluded that this action “is ‘the usual case’ in which all 

federal-law claims are eliminated early in the litigation, and the principles of judicial 

economy, convenience, fairness, and comity are not promoted by federal retention of the 

state-law claims.” (Doc. 140 at 17). In opposition, Defendant contends that this is not 

“the usual case” and because this action has been pending for almost 3 years and all 

discovery has concluded, “the principal of judicial economy weighs heavily in favor of 

this Court retaining jurisdiction.” (Doc. 143 at 2). The Court agrees with Defendant. 

Judge Velasco further found diversity jurisdiction does not exist for Plaintiffs’ tort 

claim. However, Defendant disputes this contention. In the R&R, Judge Velasco stated 

that: 

Although Defendant noted at the time of removal that 

diversity jurisdiction pursuant to 28 U.S.C. § 1331 would also 

exist, and that Plaintiffs sought at least $150,000 in damages, the damages calculation was based on the federal violations 

of $1,500 per violation with over 100 alleged violations. The Magistrate Judge recommends dismissal of the federal claims, 

as there is no evidence that the amount claimed under the 

remaining state claim, invasion of privacy, would exceed the amount in controversy requirement. (Doc. 140 at 17 n. 2). 

 In opposition, Defendant argues diversity jurisdiction still exists because 1) 

diversity of citizenship is clear (Plaintiffs are Arizona residents and Defendant’s principal 

place of business is in Ohio), and 2) the amount in controversy still exceeds $75,000. 

(Doc. 143 at 2). Defendants state that in Plaintiffs’ original Complaint, Plaintiffs sought 

$1,000 per call for at least 100 calls, plus $200,000 in punitive damages. (Doc. 143 at 2). 

In their original Complaint, Plaintiffs asked for the following damages for their invasion 

of privacy claim: “Compensatory damages in the amount of $1000.00 per each violation 

of the TCPA. The Plaintiffs seek Punitive damages in an amount twice the amount 

awarded for Compensatory damages.” (See Doc. 1 Ex 1 at 7). Thus, although Plaintiffs 

cite to the TCPA, Defendant argues the “prayer for damages is based on the theory of 

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invasion of privacy.” (Doc. 143 at 2). However, this action now proceeds not on 

Plaintiffs’ original Complaint, but on their Amended Complaint. 

In their Amended Complaint, Plaintiffs allege Defendant made “in excess of 50-75 

calls.” (Doc. 94 at 4). As to the invasion of privacy claim, Plaintiffs “seek compensatory 

damages equal to the statutory award granted under the TCPA ... [and] punitive damages 

in an amount to be determined at the time of trial.” Id. at 13. The Plaintiffs further request 

$1,500 per violation of the TCPA. Id. at 12. Thus, Plaintiffs’ damage request for their tort 

claim would be equal to at least $1,500 per call, for at least 50 calls, or $75,000, plus 

punitive damages. Pursuant to 28 U.S.C. § 1332(a), the district court has diversity 

jurisdiction if “the matter in controversy exceeds the sum of $75,000...” Here, the Court 

finds that because the requested damages for Plaintiffs’ tort claim would be at least 

$75,000 plus punitive damages, diversity jurisdiction over this claim is proper. 

In sum, the Court rejects Magistrate Judge Velasco’s recommendation that the 

Court remand this action to state court. Diversity jurisdiction over Plaintiffs’ tort law 

claim is proper, and the principles of judicial economy, convenience, and fairness to the 

litigants all weigh in favor of this Court retaining jurisdiction. 

IV. CONCLUSION 

Accordingly, 

IT IS HEREBY ORDERED that Magistrate Judge Velasco’s Report and 

Recommendation (Doc. 140) is hereby ACCEPTED and ADOPTED in part and 

REJECTED in part as follows: 

1. Plaintiffs’ Motion for Partial Summary Judgment (Doc. 88) is DENIED. 

2. Plaintiffs’ Motion for Default Judgment (Doc. 96) is DENIED. 

3. Defendant’s Motion for Summary Judgment (Doc. 115) is GRANTED IN 

PART and DENIED IN PART as follows: 

a. GRANTED as to Plaintiffs’ claims pursuant to the TCPA, A.R.S. § 44-

1281, and harassment and intentional infliction of emotional distress. 

b. DENIED as to Plaintiffs’ claim for invasion of privacy. 

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4. The Court rejects Magistrate Judge Velasco’s recommendation to remand this 

action to the state court. The Court shall retain jurisdiction over Plaintiffs’ 

invasion of privacy claim. 

 Dated this 14th day of March, 2014. 

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