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Mey v. Venture Data, LLC
Citations: 245 F. Supp. 3d 771; 2017 WL 1193072; 2017 U.S. Dist. LEXIS 135429Docket: CIVIL ACTION NO. 5:14-CV-123 (BAILEY)
Court: District Court, N.D. West Virginia; March 29, 2017; Federal District Court
The Court denied Public Opinion Strategies, Inc.’s (POS) Motion for Summary Judgment, which argued that the plaintiff lacked Article III standing due to the absence of a cognizable injury and claimed she was a 'professional plaintiff' without standing. POS also asserted that it did not make the disputed calls and claimed no vicarious liability for calls made by Venture Data. Additionally, POS contended that the calls were not made using an automatic telephone dialing system (ATDS) and argued that the Telephone Consumer Protection Act (TCPA) is unconstitutional as applied to political speech. The civil action originated on September 9, 2014, against Venture Data, with POS added as a defendant in 2016. POS had previously sought dismissal on similar grounds, which the Court denied after the Supreme Court's decision in Spokeo, Inc. v. Robins clarified standing requirements. The TCPA, enacted to address consumer complaints regarding intrusive telemarketing, prohibits the use of autodialers and prerecorded messages without consent, among other telemarketing practices. The TCPA (Telephone Consumer Protection Act) is intended as a remedial statute and should be interpreted broadly to deter evasion by wrongdoers, although it cannot be applied beyond its language and statutory framework. The court will address the arguments regarding the plaintiff's standing as raised in the POS Motion, with prior allegations deemed insufficient at the summary judgment stage. Under the TCPA, calls made using automatic dialing systems to cellular numbers without consent are prohibited, allowing individuals to sue for actual damages or $500 per violation. For a case to qualify as a "case or controversy" under Article III of the Constitution, a plaintiff must demonstrate a concrete and particularized injury that is actual or imminent and traceable to the defendant's conduct. The Supreme Court's ruling in Spokeo, Inc. v. Robins clarified that a concrete injury can be tangible or intangible, and established the necessity for the injury to affect the plaintiff personally. Courts may assess whether an intangible harm closely resembles traditional harms recognized in legal contexts to meet the concreteness requirement. Recovery for tort victims can occur even when the harm is difficult to prove, as established in the Restatement (First) of Torts. Congress has the authority to recognize previously inadequate injuries as legally cognizable and define injuries that create a case or controversy. A mere procedural violation is insufficient to meet the concreteness requirement, but claims under the Telephone Consumer Protection Act (TCPA) involve substantive prohibitions against specific actions affecting consumers. Additionally, a risk of real harm can satisfy Article III standing, highlighting that the violation of a procedural right may constitute injury in fact without needing to demonstrate further harm. The Supreme Court's ruling in Spokeo did not undermine statutory damage claims; instead, it remanded the case to the Ninth Circuit to analyze the concreteness of the plaintiff's injuries, reiterating that an injury must be both concrete and particularized. The Court recognized that unwanted phone calls result in concrete harm, particularly for consumers with prepaid or limited-minute plans, as these calls incur monetary costs and deplete resources like battery life. Furthermore, unwanted calls inflict intangible injuries such as invasion of privacy, intrusion on cell phone capacity, and the waste of time. Invasion of privacy is a recognized common law tort, which supports the argument that such intangible injuries can be considered concrete under the standards set in Spokeo. The majority of states recognize the intrusion upon seclusion as a valid invasion of privacy claim, supported by both common law and statute. The Fourth Circuit has acknowledged that the Telephone Consumer Protection Act (TCPA) addresses privacy interests concerning robocalls, indicating that unwanted calls can constitute an invasion of privacy. Under Ohio law, repeated telemarketing calls, particularly after a do-not-call request, may be actionable. The TCPA serves to codify and liberalize the application of this tort to unwanted calls. Although the TCPA may have different elements than common law claims, the Supreme Court’s decision in Spokeo emphasized that the focus is on whether the harm aligns with traditionally recognized common law claims. Additionally, the right to privacy is constitutionally protected, as evidenced by key Supreme Court cases. Even absent a common law tort, invasion of privacy is seen as a concrete harm, as recognized by Congress in enacting the TCPA to protect consumer privacy. Congressional findings indicate that unrestricted telemarketing invades privacy and poses risks to public safety, with a clear intent to ban automated calls unless consent is given or in emergencies. The findings also suggest a need for balancing individual privacy rights with legitimate telemarketing practices, while allowing the Federal Communications Commission to establish rules for non-intrusive calls in accordance with First Amendment rights. Businesses have expressed concerns to Congress and the Federal Communications Commission regarding automated or prerecorded phone calls, labeling them as nuisances, invasions of privacy, and disruptions to interstate commerce. The Telephone Consumer Protection Act (TCPA) was enacted with privacy invasion as a key concern, as highlighted by Senator Hollings' characterization of computerized calls as a modern scourge. Courts recognize two types of intangible harm from such calls: invasion of privacy and intrusion into the capacity of the recipient's cell phone, aligning with common law claims of trespass to chattels. The legal precedent demonstrates that even minimal evidence of possessory interference suffices to establish a claim for trespass to chattels, with several cases affirming that temporary electronic intrusions can constitute such a claim. Unauthorized access to electronic systems, whether through hacking or unwanted communications, supports claims of trespass to chattels, including in instances of unwanted phone calls and text messages. Notably, even if a recipient does not interact with the call, the mere act of the call itself can be deemed a trespass, akin to physically encroaching on someone's property. The harm from unwanted robocalls to cell phones parallels the common law tort protecting property rights, with the Telephone Consumer Protection Act (TCPA) adapting this tort for modern technology and intrusion methods. The Eleventh Circuit has established that the mere occupation of a recipient's phone line qualifies as an injury-in-fact under the TCPA, citing cases where even minimal occupation duration suffices for claims. This reasoning has been extended to robocalls, affirming that such electronic intrusions are easier and more frequent than physical property misuse. Additionally, the time wasted by recipients dealing with these calls is recognized as a concrete injury, satisfying Article III requirements. Courts have consistently held that the invasion of privacy and annoyance from robocalls constitute adequate injuries, with numerous decisions supporting that time lost due to these calls meets the criteria for standing. Pre-Spokeo rulings also validate that lost time is a sufficient injury-in-fact in TCPA cases, underscoring that recipients' need to address robocalls results in concrete harm. Courts have consistently recognized that plaintiffs can establish standing under Article III by demonstrating concrete injuries caused by unwanted communications, even outside the context of the Telephone Consumer Protection Act (TCPA). In *Freedom From Religion Foundation, Inc. v. Obama*, the court acknowledged that altering one’s daily routine to avoid an unwelcome display constituted a tangible cost. Similarly, in *Rex v. Chase Home Finance, L.L.C.*, the plaintiff's time lost in response to the defendant's wrongful actions was deemed sufficient for standing. Congress, in enacting the TCPA, highlighted the nuisance of robocalls, emphasizing the interruptions and time wasted by consumers. Senator Hollings articulated concerns about such calls disrupting daily life, which Congress recognized as a burden on consumers. The statute's findings indicate that technologies enabling consumers to block these calls impose an undue burden on them. Judicial precedent supports that the risk of harm from unwanted calls is concrete. For instance, the National Highway Traffic Safety Administration reported that distracted driving from cell phone use led to significant fatalities, illustrating the real dangers associated with such interruptions. Various pre-*Spokeo* cases have confirmed that unwanted robocalls inflict particularized harm, thus granting plaintiffs Article III standing. In the current case, the Plaintiff asserts actual injury, alleging that illegal calls from the Defendant caused financial harm through charges and privacy invasions. These claims are grounded in concrete and specific injuries rather than speculative harms, distinguishing them from the broader allegations in *Spokeo*. Cases like *Haysbert v. Navient Solutions, Inc.* and *Abante Rooter and Plumbing, Inc. v. Birch Communications, Inc.* further support the sufficiency of such claims for establishing standing under Article III. To establish standing under the TCPA, a plaintiff must demonstrate that their cellular telephone line received unsolicited calls, constituting a violation of their statutory rights. Such a violation is recognized as a concrete harm. The legal precedent supports that incurring cellular charges or losing previously paid phone time due to these calls constitutes an injury in fact. The TCPA was specifically designed to protect consumers from unsolicited calls, which can result in inconvenience and additional charges. The plaintiff in this case, having received 163 unsolicited calls, clearly experienced the type of inconvenience intended to be safeguarded by Congress. Additionally, while statutory damages cannot solely confer standing, the invasion of privacy through repeated automated calls is sufficient. This privacy interest is acknowledged in the TCPA's legislative history, which identifies unsolicited calls as a nuisance. Courts have consistently held that the loss of use of a cell phone, even without specific monetary loss, establishes standing. The TCPA assumes that violations are intrusive and includes provisions for a private right of action. Demonstrating that a phone line was occupied by unsolicited calls suffices to establish standing, as the law presumes such violations are harmful. The Court finds that the plaintiff, Diana Mey, has established sufficient evidence for standing in her case. The argument presented by POS, asserting that Mey's role as a consumer advocate negates her injury and standing, is rejected. Contrary to POS's claims, Mey does not seek to receive telemarketing calls; instead, she has taken measures to avoid them, such as listing her number on the National Do Not Call Registry. Although she possesses advanced equipment to record calls, this does not imply intent to attract such calls, analogous to a homeowner with a burglar alarm not desiring a break-in. The Court distinguishes Mey's situation from the case of Stoops v. Wells Fargo Bank, where the plaintiff's actions indicated a lack of genuine injury. In Stoops, the plaintiff deliberately acquired numerous phones to pursue TCPA lawsuits, demonstrating an intent to provoke nuisance. Conversely, the Court also references Fitzhenry v. ADT Corp., where the plaintiff’s documentation efforts were deemed acceptable within the TCPA's scope. Additionally, in Murray v. GMAC Mortgage Corp., the court noted that simply being a "professional plaintiff" does not preclude standing, emphasizing that experience does not diminish the validity of a claim. Ultimately, the Court declines to adopt the reasoning from Stoops, affirming that Mey's proactive measures to document unsolicited calls do not undermine her standing. Ms. Mey's actions in enforcing the law align with Congressional intent as established by the TCPA, which encourages aggrieved individuals to act as private attorneys general. The court affirms that her expertise does not affect her standing in the case. There are significant factual disputes regarding whether POS can be held vicariously liable for the calls. According to Federal Rule of Civil Procedure 56, summary judgment is appropriate only when there are no genuine issues of material fact, and the moving party bears the initial burden to demonstrate this absence. If met, the burden shifts to the opposing party to present specific facts that create a triable issue. The inquiry focuses on whether a trial is necessary, with all evidence viewed favorably for the non-moving party. The opposing party must provide more than vague assertions to counter a properly supported motion for summary judgment; they must present substantial evidence. POS argues it is not liable because it did not directly initiate the calls, but the FCC has ruled otherwise, indicating a potential liability regardless of direct initiation. In a 2013 ruling, the Commission established that defendants could be held vicariously liable for TCPA violations committed by third parties, even if they did not initiate the calls, based on agency principles like formal agency and ratification. The Hobbs Act and the Federal Communications Act limit district courts' authority to invalidate FCC actions, with appellate courts holding exclusive jurisdiction over FCC final orders. The court emphasized that the FCC's interpretations are entitled to Chevron deference due to the agency's expertise, reinforcing that district courts cannot review the validity of FCC rulings. The court accepted the 2015 FCC Ruling as valid under 28 U.S.C. 2342(1) since it represented the agency’s final interpretation of the TCPA's ‘prior express consent’ provision, which determines legal rights and obligations. However, the court retains the authority to interpret and apply these rulings. The excerpt also notes that there is no dispute regarding the potential for vicarious liability under the TCPA, referencing various cases that support this principle. Additionally, the Sixth Circuit's decision in Charvat v. EchoStar Satellite, LLC, which involved the TCPA's application to independent contractors, highlighted the doctrine of primary jurisdiction, referring the matter to the FCC for interpretation. The FCC clarified that sellers may be vicariously liable under the Telephone Consumer Protection Act (TCPA) for violations committed by third-party telemarketers, even if the seller did not initiate the calls. This liability is based on federal common law agency principles, including formal agency, apparent authority, and ratification. The FCC emphasized that sellers are best positioned to ensure compliance with TCPA regulations by their telemarketers, and liability encourages adherence to consumer protection goals. If sellers could evade responsibility by outsourcing telemarketing, consumers could be left without remedies, especially when telemarketers are unidentifiable or unreachable. Courts have recognized this FCC ruling, with one case determining that a seller could be liable if it controlled the telemarketer's practices or accepted benefits from their actions, regardless of knowledge of TCPA violations. The Restatement serves as a reference for federal agency principles in such cases. Determining whether a hired party qualifies as an employee under common law agency principles often relies on the Restatement of Agency. Courts, including the Supreme Court, have historically referenced the Restatement when establishing agency law. The essential element of an agency relationship is the principal's control over the agent’s actions, which, in the context of the Telephone Consumer Protection Act (TCPA), encompasses control over the agent's calling activities. Agency authority may also be implied through conduct. Evidence in the current case indicates that POS exerts significant control over Venture Data’s operations. POS dictates the numbers to be dialed, pre-writes interview scripts, and collaborates on software development for calling processes. Additionally, POS is involved in hiring decisions and receives daily performance reports, maintaining ongoing management contact. POS's financial involvement includes providing startup capital and contributing approximately 80% of Venture Data’s revenue. Examples of POS’s control include supplying call lists, writing survey scripts, sharing database access, staffing call centers according to its needs, and having Project Managers interact directly with Venture Data's teams during operations. The nature of these interactions suggests a strong agency relationship, with factual determinations typically reserved for a jury. POS Project Managers collaborate closely with Venture Data to troubleshoot and resolve survey-related issues, receiving and monitoring daily reports on calling activities, including those directed to cellular phones. The Managing Member of POS even receives updates on calling operations during late hours. These activities suggest that POS may have exercised sufficient control over Venture Data's operations to establish an agency relationship, implying that the call to Ms. Mey was within Venture Data’s authority. Summary judgment on vicarious liability is deemed inappropriate, as evidence supports a ratification theory of liability, which does not necessitate an existing agency relationship. Ratification involves affirming prior actions taken by another and requires proof that POS was aware of and accepted the benefits of Venture Data's actions. POS was aware that Venture Data was contacting cellular lines, knew the equipment used, and benefited from the calls, as reaching a certain percentage of cellular users is critical for POS's surveys. This capability is promoted in POS's marketing, highlighting its significance to their business success. Additionally, as a member of Venture Data, POS receives substantial financial distributions, further supporting the notion of ratification. The evidence aligns with the FCC's illustrative examples of vicarious liability as outlined in the 2013 FCC Ruling, including POS providing call scripts, sharing access to information systems, having data uploaded directly into POS databases, and exchanging voter registration data. Thus, a jury could reasonably conclude that POS ratified Venture Data's conduct, establishing grounds for vicarious liability. The fifth Dish Network example does not apply because the defendants misrepresent their identities while using a fictional entity. The Dish Network factors do not support POS's motion for summary judgment. There is a factual dispute regarding the use of an Automatic Telephone Dialing System (ATDS) for the calls, which is illegal under the TCPA. An ATDS is defined as equipment capable of storing or producing telephone numbers using a random or sequential number generator and dialing those numbers. The FCC has clarified that the prohibition includes “predictive dialers,” which automatically call numbers from a stored list. A system qualifies as an ATDS if it has the capacity to automatically dial from a stored list, regardless of its current use. Despite POS's denial that Venture Data used an ATDS to contact Ms. Mey, substantial evidence, including expert testimony and Venture Data’s admissions, suggests otherwise. Specifically, Venture Data admitted to using an auto-dialer during calls with Ms. Mey, where interviewers confirmed that the computer randomly generates the called numbers. A reasonable juror might find these admissions credible compared to POS's later denials. Moreover, Ms. Mey's expert witness, Jeffrey Hansen, is expected to testify that Venture Data's dialing systems, specifically the “Pro-T-S” and “CFMC” dialers, meet the ATDS criteria because they function as predictive dialers. Hansen will assert that these systems can use multiple lines to automatically dial from a list and that Venture Data used the same dialer in “power” mode for both landline and cellular calls. He argues that the ability to switch between predictive and power modes does not negate the system's capacity for autodialing. Mr. Hansen has extensive experience in TCPA cases and has acted as a consultant for lawful autodialer usage. His testimony could lead a reasonable jury to conclude that Venture Data employed an ATDS to make calls on behalf of POS, providing grounds to deny POS's motion for summary judgment regarding ATDS use. POS contends that Venture Data's use of a "click-to-call" mode, which necessitates human intervention, exempts it from TCPA violations. POS references several cases where courts ruled that systems requiring manual dialing do not qualify as autodialers. However, POS's argument regarding the necessity for human intervention in calls to Ms. Mey is not decisive. The essence of an ATDS lies in its ability to dial numbers without human intervention, and it is acknowledged that both the Pro-T-S and CFMC dialers could perform predictive dialing without such intervention. Although POS differentiates between “predictive dialing” and “click-to-call,” the same equipment is utilized for both, and switching between modes does not require complex reprogramming. POS’s interpretation of "capacity" as needing to mean “present capacity” is contested by evidence indicating that the dialing systems in question can operate without human input. Venture Data’s dialers, despite having predictive dialing capabilities, should not be classified as an Automatic Telephone Dialing System (ATDS) under the Telephone Consumer Protection Act (TCPA) based on their current usage, according to POS. However, this argument has been rejected by the FCC, which affirmed in its 2015 ruling that equipment with the capability for predictive dialing qualifies as an autodialer regardless of its current use. The FCC emphasized Congress's intent for a broad definition of autodialers to prevent loopholes that could undermine TCPA protections. POS's reliance on earlier case law is ineffective, as subsequent decisions have upheld the FCC's position against the "present capacity" argument. Courts have reinforced the significance of FCC rulings in TCPA matters, indicating that district courts cannot challenge these interpretations. Therefore, the 2015 ruling bars summary judgment regarding the ATDS classification. Regarding the constitutionality of the TCPA in relation to political speech, POS argues that the TCPA infringes on First Amendment rights. The court finds it unnecessary to determine whether POS's data activities constitute political speech, as even if they do, the TCPA remains a valid, content-neutral regulation. Content-neutral laws, like the TCPA, are subject to less stringent scrutiny than content-based regulations, which require strict scrutiny. The TCPA is designed to serve significant governmental interests while allowing for alternative communication methods. A court must evaluate whether a regulation of speech distinguishes based on the message conveyed. The Telephone Consumer Protection Act (TCPA) broadly prohibits any person from using an automatic telephone dialing system or a prerecorded voice to call cellular phones, with three exceptions: calls for emergencies, calls with prior consent, and calls to collect debts owed to the U.S. These exceptions focus on the relationship between the speaker and recipient rather than the content of the message, indicating that the TCPA does not make content distinctions. In contrast, the Fourth Circuit's ruling in Cahaly v. LaRosa identified a South Carolina statute that restricted robocalls for unsolicited consumer purposes as content-based and subject to strict scrutiny due to its facial distinctions regarding speech content. The TCPA, however, is deemed content-neutral and is analyzed under the time, place, or manner restrictions standard rather than strict scrutiny. For the TCPA to comply with the First Amendment, it must be narrowly tailored to serve a significant governmental interest and provide ample alternative communication channels. The TCPA's provisions are aligned with maintaining residential privacy and tranquility, which are recognized as significant interests. The requirement of narrow tailoring is met if the regulation effectively promotes a substantial governmental interest, even if it is not the least restrictive means. Limits on the use of Automated Telephone Dialing System (ATDS) calls aim to address issues associated with this technology. While ATDS technology is restricted, the options of using a live operator and obtaining prior consent permit its continued use, safeguarding the interests of recipients. A "close fit" between objectives and means is present, fulfilling legal standards. The Telephone Consumer Protection Act (TCPA) does not ban an entire form of communication but specifically prohibits autodialed, prerecorded calls to individuals without prior consent, indicating a narrowly tailored restriction. The TCPA allows alternative communication methods, such as live calls, consented robocalls, and mail, meaning Public Opinion Strategies, Inc. is not entitled to its preferred method of outreach. Consequently, the court denies Defendant Public Opinion Strategies, Inc.’s Motion for Summary Judgment.