Opinion
HHDCV136042594
09-02-2016
William M. Rubenstein, Commissioner of Consumer Protection v. Reservation Services International, Inc.
UNPUBLISHED OPINION
MEMORANDUM OF DECISION
Nina F. Elgo, J.
Before this court is a motion filed by the respondent, Reservation Services International, Inc. (RSI), seeking to dismiss an application to enforce a Civil Investigative Demand (CID), issued by the petitioner, William M. Rubenstein, Commissioner of Consumer Protection (Commissioner), pursuant to the Commissioner's authority under General Statutes § 42-110d and the enforcement provisions embodied in General Statutes § 42-110k.
General Statutes § 42-110d(a) provides, in relevant part: " the commissioner shall have the power to order an investigation and examination to be made. In addition to other powers conferred upon the commissioner by this chapter, the commissioner or his authorized representatives may issue subpoenas to any person involved in any matter under investigation and examination, administer an oath or affirmation to any person, and conduct hearings in aid of any investigation or examination, provided none of the powers conferred by this chapter shall be used for the purpose of compelling any natural person to furnish testimony or evidence which might tend to him or subject him to a penalty or forfeiture."
As part of his investigatory authority under the Connecticut Unfair Trade Practices Act, the petitioner issued the CID to RSI in the course of its investigation of complaints made by Connecticut residents regarding the offer and sale of travel club memberships involving discounted or preferred vacations with misleading and/or fraudulent terms. RSI, which the parties do not dispute, is a foreign corporation based in Florida and Georgia. The petitioner asserts that RSI has been identified as the entity which provides the reservation system for these travel services and is the common denominator in complaints involving the different travel clubs who have sold memberships to Connecticut consumers.
As a foreign corporation, therefore, the respondent files its motion to dismiss asserting that this court lacks subject matter jurisdiction and personal jurisdiction over it.
" [A] motion to dismiss . . . properly attacks the jurisdiction of the court, essentially asserting that the plaintiff cannot as a matter of law and fact state a cause of action that should be heard by the court." (Internal quotation marks omitted.) Santorso v. Bristol Hospital, 308 Conn. 338, 350, 63 A.3d 940 (2013). " A motion to dismiss tests, inter alia, whether, on the face of the record, the court is without jurisdiction." (Internal quotation marks omitted.) MacDermid, Inc. v. Leonetti, 310 Conn. 616, 626, 79 A.3d 60 (2013). " A court deciding a motion to dismiss must determine not the merits of the claim or even its legal sufficiency, but rather, whether the claim is one that the court has jurisdiction to hear and decide." (Internal quotation marks omitted.) Hinde v. Specialized Education of Connecticut, Inc., 147 Conn.App. 730, 740-41, 84 A.3d 895 (2014).
1. Subject Matter Jurisdiction
The respondent's first ground for dismissal is its claim that this court does not have subject matter jurisdiction because this court lacks authority to enforce an administrative CID against an out of state corporation for information located outside Connecticut. In support of this claim, the respondent cites to authority from other jurisdictions which either do not address the issue of subject matter jurisdiction or do not support its claim that subject matter jurisdiction is implicated here. Indeed, the respondent's literal framing of the issue, that this court lacks subject matter jurisdiction because it lacks authority to enforce the CID against an out of state corporation is misleading or at best, misapprehends the nature of subject matter jurisdiction.
As our courts have oft stated, " [j]urisdiction of the subject-matter is the power [of the court] to hear and determine cases of the general class to which the proceedings in question belong . . . A court has subject matter jurisdiction if it has the authority to adjudicate a particular type of legal controversy." (Emphasis added; internal quotation marks omitted.) Lostritto v. Communiy Action Agency of New Haven, Inc., 269 Conn. 10, 31, 848 A.2d 418 (2004). " [T]he court's authority to act pursuant to a statute is different from its subject matter jurisdiction. The power of the court to hear and determine, which is implicit in jurisdiction, is not to be confused with the way in which that power must be exercised in order to comply with the terms of the statute." (Internal quotation marks omitted.) In re Jose B., 303 Conn. 569, 573-74, 34 A.3d 975 (2012).
A cursory reading of § 42-110d in combination with § 42-110k makes clear that the court has subject matter jurisdiction as a function of its authority to enforce orders stemming from the commissioner's actions initiated pursuant to these provisions. In other words, this court has the power to hear and determine the kinds of cases encompassed by § 42-110d.
Section 42-110d(a) provides, in relevant part: " the commissioner shall have the power to order an investigation and examination to be made. In addition to other powers conferred upon the commissioner by this chapter, the commissioner or his authorized representatives may issue subpoenas to any person involved in any matter under investigation and examination, administer an oath or affirmation to any person, and conduct hearings in aid of any investigation or examination, provided none of the powers conferred by this chapter shall be used for the purpose of compelling any natural person to furnish testimony or evidence which might tend to incriminate him or subject him to a penalty or forfeiture."
This court's subject matter jurisdiction follows from the commissioner's authority to seek judicial enforcement of his orders pursuant to § 42-110k. Said provision states: " If any person fails or refuses to file any statement or report, or obey any subpoena or investigative demand issued by the commissioner or his authorized representatives, the commissioner may, after notice, apply to the superior court for the judicial district of Hartford, which court, after a hearing thereon, may issue an order: (1) Granting injunctive relief to restrain the person from engaging in the advertising or sale of any commodity or the conduct of any trade or commerce that is involved in the alleged or suspected violation; (2) vacating, annulling or suspending the corporate charter of a corporation created by or under the laws of Connecticut or revoking or suspending the certificate of authority to do business in this state of a foreign corporation or revoking or suspending any other licenses, permits or certificates issued pursuant to law to such person which are used to further the allegedly unlawful practice; and (3) granting such other relief as may be required, until the person files the statement or report, or obeys the subpoenas or investigative demand. Any disobedience of any final order entered under this section by any court shall be punished as a contempt thereof." General Statutes § 42-110k.
As the petitioner points out, the respondent cites irrelevant case law from other jurisdictions, most of which do not address subject matter jurisdiction and largely implicate disputes between private parties seeking discovery from out of state nonparties. The court thus finds that it does have subject matter jurisdiction over this action and denies the motion to dismiss based on this claim.
This court acknowledges that in the case of F.T.C. v. Compagnie de Saint-Gobain-Pont-a- Mousson, 636 F.2d 1300, 1318, 205 U.S.App.D.C. 172 (D.C. Cir. 1980), cited by the respondent, the issue before the court involved a federal agency, specifically the Federal Trade Commission, which sought to enforce its administrative CID against a foreign corporation. Although the court found that the FTC improperly served its subpoena, the case does not, as the respondent implies, stand for the proposition that the authority to enforce a CID against a foreign corporation implicates subject matter jurisdiction. In fact, the court clarified the distinction between subject matter jurisdiction and personal jurisdiction, noting that they are frequently confused. Nevertheless, because Congress explicitly authorized the FTC to investigate conditions affecting foreign trade, it had explicitly conferred subject matter jurisdiction.
2. Personal Jurisdiction
a. Writ of Summons
The respondent's next claim is that the action should be dismissed for lack of personal jurisdiction because the summons was legally insufficient pursuant to General Statutes § 52-45a and Practice Book § 8-1. The petitioner argues, however, that the process of initiating enforcement actions is governed by § 42-110d and § 42-110k, which belong to a category of litigation before our courts long recognized as special proceedings. In a compelling analysis of this very issue comparing matters similarly characterized as special proceedings, the court held in Rubenstein v. Vacation Smart International, Inc., that because § 42-110k creates its own specialized procedure, the statutory application to enforce an investigatory subpoena does not constitute one of the " civil actions" that would require a writ of summons as otherwise provided in Practice Book § 8-1 or General Statutes § 52-45a. Concluding that § 42-110k " contains sufficient procedural guidance to initiate an action . . . [and] . . . provides that, if a person fails to obey a subpoena, the commissioner shall 1) apply to the superior court, 2) provide notice to the party of interest, 3) file the application in the judicial district of Hartford, and 4) expect a hearing thereon, " the court denied the respondent's motion to dismiss finding that it had personal jurisdiction. Rubenstein v. Vacation Smart International, Inc., supra, 56 Conn.L.Rptr. 437, ; see also Southridge Capital Management, LLC v. Pitkin, Superior Court, judicial district of Hartford, Docket No. CV-07-4034033 (March 24, 2008, Elgo, J.) (45 Conn.L.Rptr. 238, ) (applications to quash investigative subpoenas under the Connecticut Uniform Securities Act are special statutory proceedings as distinct from civil actions and therefore not subject to ordinary pleading requirements of the Practice Book); This court concludes that the writ of summons requirements of General Statutes § 52-45a and Practice Book § 8-1 are not applicable to this action and denies the motion to dismiss on this ground.
" Connecticut authorities have long recognized that several types of special proceedings not listed in § 8-1(b) do not require a writ of summons. Indeed, the Supreme Court stated in 1950 that: Not every proceeding requires service of process before it gets into court . . . Among them are an application relating to the taking of property by eminent domain under General Statutes, 2267, an appeal from probate and a foreclosure action in which the defendant cannot be served because he is out of the state. To these might be added an application for the reduction of an attachment under 8044 and a writ of prohibition under 8226. In all of these instances the case is in court upon the filing of the application; the notice to the adverse party comes thereafter . . . The Appellate Court has specifically held that, in a condemnation case in which a statute allows a person aggrieved by a statement of compensation to apply to the Superior Court for review, an application rather than a separate civil action is legally sufficient. Killingly v. Wells, 18 Conn.App. 508, 511-13, 558 A.2d 1039, cert. denied, 212 Conn. 807, 563 A.2d 1357 (1989) (citing General Statutes § 8-132 and noting that the Practice Book forms are illustrative and not mandatory). See also Waterbury v. Waterbury Police Union, 176 Conn. 401, 407, 407 A.2d 1013 (1979) (It has long been established by the courts of this state that certain statutory proceedings are not civil actions within the meaning of title 52 of the General Statutes); W. Horton & K. Knox, 1 Connecticut Practice Series: Connecticut Superior Court Civil Rules (2012) § 8-1a, authors' comments, pp. 419-23 (identifying writs of habeas corpus, writs of mandamus, small claims cases, and eminent domain matters as special proceedings not requiring a writ of summons)." (Citation omitted; footnote omitted; internal quotation marks omitted.) Rubenstein v. Vacation Smart International, Inc., Superior Court, judicial district of Hartford, Docket No. CV-13-6039784 (July 9, 2013, Schuman, J.) (56 Conn.L.Rptr. 436, 436-37, ).
b. Service of Process by Registered Mail
The respondent also argues that should this court find that this matter is not a " civil action" within the meaning of General Statutes § 52-45a and Practice Book § 8-1, then service by registered mail pursuant to Connecticut's corporate longarm statute, General Statutes § 33-929, should logically be unavailable to the petitioner. The respondent's theory appears entirely premised on the provision's reference to " cause of action" as if it is equivalent in significance and meaning to " civil action" as referenced in General Statutes § 52-45a and Practice Book § 8-1. This court is not persuaded and rejects this proposition as a false dichotomy.
General Statutes § 33-929(f) provides: " Every foreign corporation shall be subject to suit in this state, by a resident of this state or by a person having a usual place of business in this state, whether or not such foreign corporation is transacting or has transacted business in this state and whether or not it is engaged exclusively in interstate or foreign commerce, on any cause of action arising as follows: (1) Out of any contract made in this state or to be performed in this state; (2) out of any business solicited in this state by mail or otherwise if the corporation has repeatedly so solicited business, whether the orders or offers relating thereto were accepted within or without the state; (3) out of the production, manufacture or distribution of goods by such corporation with the reasonable expectation that such goods are to be used or consumed in this state and are so used or consumed, regardless of how or where the goods were produced, manufactured, marketed or sold or whether or not through the medium of independent contractors or dealers; or (4) out of tortious conduct in this state, whether arising out of repeated activity or single acts, and whether arising out of misfeasance or nonfeasance." (Emphasis added.)
This court, however, concludes that an evidentiary hearing is required in order for this court to resolve the issue of personal jurisdiction. " A motion to dismiss may . . . raise issues of fact and would, therefore, require a . . . hearing [to determine the facts] . . . [A]ffidavits are insufficient to determine the facts unless, like the summary judgment, they disclose that no genuine issue as to a material fact exists . . . In almost every setting where important decisions turn on questions of fact, due process requires an opportunity to confront and cross-examine adverse witnesses . . . When issues of fact are necessary to the determination of a court's jurisdiction, due process requires that a trial-like hearing be held, in which an opportunity is provided to present evidence and to cross-examine adverse witnesses." (Citations omitted; internal quotation marks omitted.) Lampasona v. Jacobs, 7 Conn.App. 639, 642-43, 509 A.2d 1089 (1986).
In Cogswell v. American Transit Ins. Co., 282 Conn. 505, 923 A.2d 638 (2007), the court had before it a motion to dismiss the enforcement application of the state insurance commissioner who, as in this case, served the defendant with an investigative subpoena. In such cases, the court " must first decide whether the applicable state long-arm statute authorizes the assertion of jurisdiction over the [defendant] . . . [and] [i]f the statutory requirements [are] met . . . decide whether the exercise of jurisdiction over the [defendant] would violate constitutional principles of due process." (Internal quotation marks omitted.) Id., 514-15. As the court articulated in Standard Tallow Corporation v. Jowdy, 190 Conn. 48, 51-52, 459 A.2d 503 (1983), " [a]ll assertions of state-court jurisdiction must be evaluated according to the standards set forth in International Shoe [ Co. v. Washington, 326 U.S. 310, 66 S.Ct. 154, 90 L.Ed. 95 (1945)] and its progeny. Shaffer v. Heitner, 433 U.S. 186, 212, 97 S.Ct. 2569, 2583, 53 L.Ed.2d 683 (1977); see Hodge v. Hodge, 178 Conn. 308, 318, 422 A.2d 280 (1979). Those standards, as set out in International Shoe, require that in order to subject a defendant to a judgment in personam, if he be not present within the territory of the forum, he have certain minimum contacts with it such that the maintenance of the suit does not offend traditional notions of fair play and substantial justice." (Internal quotation marks omitted.)
Given the determinations this court must make, and having resolved the question of subject matter jurisdiction in favor of the petitioner, this court cannot conclude that there are undisputed issues of fact which allow this court to resolve the issue of personal jurisdiction without an evidentiary hearing.
This court, therefore, orders an evidentiary hearing to be scheduled forthwith before this court.