Complaint Review: MWI/MEMBERWORKS= WEST TELEMARKETING CORP. COURT DOCS - Omaha Nebraska

CAN BE FOUND @

http://www.stopjunkcalls.com/west%20v%20sup%20ct%20san%20diego%20upsell%20is%20tm%20call.pdf

Filed 3/17/04

CERTIFIED FOR PUBLICATION

COURT OF APPEAL - FOURTH APPELLATE DISTRICT

DIVISION ONE

STATE OF CALIFORNIA

WEST CORPORATION et al.,

Petitioners,

v.

THE SUPERIOR COURT OF SAN

DIEGO COUNTY,

Respondent;

D042633

(San Diego County

Super. Ct. No. GIC805541)

PATRICIA SANFORD,

Real Party in Interest.

Proceedings in mandate after superior court denied a motion to quash service of

summons for lack of personal jurisdiction. E. Mac Amos, Judge. Petition denied.

Walsh & Furcolo, Timothy M. Twomey, Daniel W. Kelsberg; Bondurant, Mixson

& Elmore, M. Jerome Elmore, Joshua F. Thorpe and Corey F. Hirokawa for Petitioners.

No appearance for Respondent.

Milberg Weiss Bershad Hynes & Lerach, Patrick J. Coughlin, Frank J. Janecek,

Jr., Kevin K. Green; Law Office of Artie Baran and Artie Baran for Real Party in Interest.

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Petitioners West Corporation (West) and West Telemarketing Corporation (WTC)

seek a writ of mandate directing the superior court to grant their motion to quash service

of summons on the grounds of lack of personal jurisdiction. The issue presented is

whether California may constitutionally assert jurisdiction over a nonresident

telemarketing corporation when a California resident initiates a phone call to buy a

product, reaches a telemarketer who handles the order, the telemarketer then initiates a

sale of a separate product and allegedly makes misrepresentations during the sales pitch

for the separate product. We conclude personal jurisdiction is proper.

FACTUAL AND PROCEDURAL BACKGROUND

WTC is a wholly owned subsidiary of West. Both corporations are organized

under the laws of the state of Delaware and have their headquarters in Nebraska. Neither

maintains any offices or employees in California, is licensed to do business in California,

nor owns property in California.

WTC is an "inbound teleservices bureau." WTC answers telephone calls for 800

numbers and collects orders for various products and services on behalf of its clients.

One of WTC's clients advertised and sold Tae-bo fitness tapes. Another one of WTC's

clients was Memberworks, Inc. (MWI). MWI is incorporated under the laws of the state

of Delaware and has its principal place of business in Connecticut.

In March 1998, WTC and MWI entered into a "Joint Marketing Agreement" to

market MWI's membership programs and to share net profits and losses equally. In

January 1999, WTC and MWI entered into a separate "Wholesale Agreement" providing

that WTC, at its sole expense, would market, accept orders, and charge consumers for

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enrollment in the membership programs while MWI would mail out the memberships kits

for a fee.

In January 1999, West accepted and assumed all of WTC's rights and obligations

under the Joint Marketing and Wholesale Agreements. West used WTC to fulfill its

contractual obligations. In July 1999, WTC, West, and MWI entered into a "Joint and

Wholesale Marketing Agreement" which superseded and essentially consolidated the

prior agreements into one contract.

In late February 1999, Patricia Sanford, a California resident, called an 800

number to order some Tae-bo fitness videotapes. A WTC operator located in Virginia

answered the phone call. After the WTC operator processed Sanford's order for the Taebo

tapes including obtaining her credit card information, the operator proceeded to read a

sales pitch from a prepared script for a purportedly free trial membership in a "buying

club" that was serviced by MWI. This type of sales pitch for additional products or

services is commonly called an "upsell." When Sanford "accepted" the MWI offer, WTC

forwarded her information, including credit card information, to MWI. According to

Sanford, she and other consumers are told to look for materials in the mail confirming the

"risk-free" membership. Sanford alleged several weeks later her credit card was charged

"an unsolicited and unexpected $72.00" for "MWI Essentials." In January 2000, she

"was assessed another unsolicited and unexpected $84.00 charge . . . again charged as

'MWI Essentials.' " After inquiring about this charge, Sanford learned this was a renewal

fee for the membership buying program. She was not informed that she had been

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enrolled in the program the prior year and she had never used it. Sanford requested and

received a refund of the $84.00 renewal charge.

Melinda

Hubert, North Carolina
U.S.A.

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