Court: District Court, E.D. Pennsylvania; December 13, 2018; Federal District Court
This case involves plaintiffs Brian Richardson, Michelle Hunt, Jacqueline Bowser, Kris Villiger, and Donna Schley, who received unsolicited telemarketing calls promoting Verde Energy USA, Inc.'s low-priced electricity. They are seeking to initiate two nationwide class actions against Verde, alleging violations of the Telephone Consumer Protection Act of 1991 (TCPA). Verde has filed motions for partial summary judgment and to strike the class allegations, which the court has granted in part and denied in part.
Verde's telemarketing operations involved hiring Fluent, Inc. to generate leads through websites that incentivized users to provide their contact information in exchange for cash promotions. Users consented to receive calls from Fluent's marketing partners via a TCPA consent form. Fluent then shared this information with Verde, which forwarded it to Transparent BPO, Inc., a telemarketing firm. Transparent BPO employed CallShaper, LLC’s predictive dialing software to make calls to the plaintiffs' cellular phones, resulting in a total of seventy-five calls.
Key points of contention include whether the CallShaper Predictive Dialer could generate phone numbers randomly or sequentially and whether the calls included artificial or pre-recorded messages. The legal standard for summary judgment requires that a moving party is entitled to judgment if there is no genuine dispute over material facts. Courts must view the evidence in the light most favorable to the non-moving party unless one party's story is blatantly contradicted by the evidence, in which case that version will not be considered for summary judgment purposes.
The TCPA, enacted by Congress in 1991, prohibits calls to cellular telephones using an automatic telephone dialing system (ATDS) or an artificial or prerecorded voice, with exceptions for emergency calls and those made with prior express consent. The statute allows for a private right of action with statutory damages of $500 per violation and treble damages for willful violations. Verde's motion for partial summary judgment presents three main arguments:
1. The CallShaper Predictive Dialer does not qualify as an ATDS under the TCPA.
2. The calls were made using a live voice, warranting dismissal of claims based on artificial or prerecorded voice delivery.
3. Richardson provided prior express consent to be contacted by Verde, supporting dismissal of his claims.
The determination of whether the CallShaper Predictive Dialer is an ATDS hinges on its capability to generate random or sequential numbers versus merely calling from a pre-existing list. The TCPA defines an ATDS as equipment that can store or produce numbers using a random or sequential number generator and dial those numbers. The FCC has clarified that predictive dialers, designed to ensure a salesperson is available when a consumer answers, fall under the definition of ATDS.
Predictive dialing software is characterized primarily by its timing function rather than by its ability to store or generate numbers. The FCC classified predictive dialers as automatic telephone dialing systems (ATDSs) because they can store or produce numbers and dial them randomly or sequentially. This classification was reaffirmed in a 2008 ruling, which confirmed that predictive dialers fall under the restrictions of the Telephone Consumer Protection Act (TCPA). In 2015, prompted by an increase in complaints about telemarketing calls, the FCC revisited the ATDS definition, emphasizing that the capacity of a device to store or produce numbers is not limited to its current capabilities but includes potential functionalities. This broader interpretation indicated that any device with the capacity to dial random or sequential numbers qualifies as an autodialer.
However, industry groups challenged this expansive definition, leading to a D.C. Circuit review under the Administrative Procedure Act. The court struck down the 2015 Order's definition of ATDS, finding it overly broad. It argued that the FCC's interpretation could classify all smartphones as autodialers, as they could potentially gain autodialer functionality through app downloads. The court deemed it unreasonable to interpret the statutory definition of an ATDS so broadly that it would label nearly every smartphone user as a potential TCPA violator, concluding that the 2015 Order's interpretation of capacity was impermissibly expansive.
The D.C. Circuit determined that the 2015 Order's definition of an autodialer (ATDS) lacked clarity, failing to provide a definitive answer regarding whether a device must generate random or sequential numbers itself or if it suffices to call from an external database. The court noted inconsistencies within the 2015 Order, which at times suggested that a device qualifies as an ATDS only if it can generate numbers, while at other times indicated that a device could qualify without that capability. The court concluded that the FCC could not maintain conflicting interpretations within the same order and, due to this ambiguity, invalidated the 2015 Order's definition of an ATDS, making it non-binding in the Third Circuit and on the current court.
Following the ACA International decision, two critical questions arose: whether the invalidation of the 2015 Order also invalidated similar provisions in the 2003 and 2008 Orders regarding predictive dialers, and what capabilities equipment must have to qualify as an ATDS without the 2015 Order. The Third Circuit has addressed these issues minimally, with only two opinions in the Dominguez cases considering whether Yahoo's practices constituted a violation of the TCPA through the use of an ATDS. Dominguez II, being the only Third Circuit ruling post-ACA International, provides some guidance, though it remains ambiguous regarding the status of the 2003 and 2008 Orders. Plaintiffs argue that the invalidation of the 2015 Order does not affect the earlier Orders, a view supported by several lower courts.
Defendant contends that the D.C. Circuit's invalidation of the 2015 Order also invalidates the 2003 and 2008 Orders, a position supported by the Ninth and Second Circuits, as well as some federal district courts. However, the Third Circuit has not definitively addressed the status of the 2003 and 2008 Orders post-ACA International. The only relevant Third Circuit case, Dominguez II, acknowledges the invalidation of the 2015 Order but ambiguously interprets the statutory definition of an autodialer (ATDS) without clarifying the continuing validity of the earlier Orders. Prior to Dominguez II, the Third Circuit had not provided its own interpretation of ATDS. In Dominguez I, the court relied on the now-invalid 2015 Order, making it non-instructive. The D.C. Circuit's analysis in ACA International indicated that the 2003 and 2008 Orders were similarly flawed, as they lacked clarity on whether an autodialer needed to generate numbers or could call from a pre-existing list. The D.C. Circuit criticized both the 2003 and 2008 Orders for offering inconsistent definitions of an ATDS, ultimately labeling their positions as arbitrary and capricious. The analysis suggests that the invalidation of the 2015 Order implies the invalidation of the earlier Orders as well, given their shared ambiguities regarding the definition of an ATDS.
The D.C. Circuit's concerns regarding the FCC's lack of clarity in defining autodialers in the 2015 Order also apply to the definitions in the 2003 and 2008 Orders regarding predictive dialers. The Court affirms that predictive dialers are considered automatic telephone dialing systems (ATDS) and are thus subject to the TCPA's restrictions. Consequently, the invalidation of the 2015 Order also nullifies the 2003 and 2008 Orders as they share the same understanding that all predictive dialers qualify as ATDSs.
Despite the invalidation of the earlier orders, the ACA International decision did not clarify what technologies qualify as ATDS. This leaves the Court to re-evaluate the definition of ATDS under the TCPA. The TCPA defines an ATDS as equipment capable of storing or producing telephone numbers to be called, using a random or sequential number generator. The interpretation of whether a device must generate random numbers itself or can call from a pre-existing database is contested. Plaintiffs assert that the clause "using a random or sequential number generator" modifies only "to produce," allowing devices that store numbers to still qualify as ATDS even if they do not generate numbers. Conversely, the Defendant argues that the clause modifies both "to store" and "to produce," indicating that numbers must be generated using a random or sequential number generator to qualify as ATDS.
To qualify as an Automatic Telephone Dialing System (ATDS) under the Telephone Consumer Protection Act (TCPA), equipment must possess the ability to generate random or sequential telephone numbers to be dialed. A predictive dialer that only stores and dials pre-existing numbers does not meet this definition. The statutory language is ambiguous; while a comma before a modifying phrase suggests it modifies all items in a series, neither party's interpretation fully resolves the ambiguity. The Ninth Circuit's approach in Marks indicates that equipment making automatic calls from lists of recipients is covered by the TCPA, even if it uses numbers generated elsewhere. However, the Third Circuit's ruling in Dominguez II requires that a device must have the ability to generate random or sequential numbers to qualify as an ATDS. In that case, the court found that Yahoo's messaging service did not qualify because it only sent messages to numbers manually inputted by users. Therefore, the Third Circuit's reasoning indicates that a device must generate numbers randomly or sequentially and then dial them to be classified as an ATDS. This Court is bound by that precedent and concludes that a predictive dialer that only uses stored numbers does not qualify as an ATDS.
Defendant contends that the CallShaper Predictive Dialer does not qualify as an automatic telephone dialing system (ATDS) because it can only store and call manually uploaded telephone numbers, lacking the capacity to generate numbers randomly or sequentially. Plaintiffs assert there is a genuine issue of material fact regarding the dialer’s ability to produce such numbers, relying on telecommunications consultant Randall A. Snyder's testimony, which claims that the technology can generate random numbers. However, the Third Circuit previously excluded a similar report from Snyder, noting it failed to demonstrate how the system could generate random numbers for dialing. The court emphasized that Snyder's assertions were generalized and did not address whether the CallShaper actually functioned as an autodialer. As a result, the court found no genuine dispute regarding the dialer’s classification and granted Defendant's motion for partial summary judgment concerning the ATDS claims.
Regarding calls made using an artificial or prerecorded voice, the Telephone Consumer Protection Act (TCPA) prohibits such calls to cellular phones. Plaintiffs conceded that three out of seventy-five calls received were not made using an artificial or prerecorded voice, thus no violation occurred for those calls. However, a genuine issue of material fact remains concerning the nature of the other calls, as Defendant claims all were delivered by a live voice while Plaintiffs presented testimony suggesting some utilized an artificial or prerecorded voice.
A witness for the Defendant indicated that if a live agent is unavailable within two seconds of a call being answered, a message identifying the caller as Verde Energy is played. This raises a genuine issue of material fact regarding whether any of the seventy-two calls to the Plaintiffs involved an artificial or recorded voice. The court will grant the Defendant's motion for partial summary judgment concerning three specific calls made on October 26, 2015, May 13, 2016, and November 18, 2015, while denying it for all other calls.
Regarding Richardson's claims, the Defendant seeks summary judgment, asserting he provided prior express consent to receive calls about its services, as permitted under the TCPA. The Defendant references a declaration from Miten Bhadania, an employee at Fluent, claiming that an internet user registered on a promotional website on October 29, 2015, using Richardson's name, address, phone number, and email, and submitted a TCPA consent form. Richardson, in his deposition, acknowledged he did not specifically recall registering but mentioned completing a survey on that date, which might have been related. He also indicated that only he and his fiancée knew the email used.
The court finds that the evidence presented does not justify summary judgment for the Defendant. Bhadania's declaration, while suggesting Richardson submitted the consent form, also allows for the possibility that someone else used his information to register. The court must favor the non-movant's narrative unless it is clearly contradicted by the record. Bhadania's testimony does not meet this threshold. Furthermore, Richardson's statement about possibly signing the consent form does not constitute an admission of consent. Thus, without sufficient evidence to prove Richardson's express consent, the Defendant's motion for summary judgment is not warranted.
Courts must assess facts and draw reasonable inferences favorably for the party opposing a motion. Richardson's testimony regarding his email address does not definitively prove he was the registered user on Fluent's site. While Richardson claimed that only his fiancée knew the email address, this suggests that access was limited, not that the address was entirely unknown to others. It is deemed implausible that Richardson never shared the email until October 5, 2015, when he registered for an online survey. Consequently, the issue of whether Richardson consented to the calls remains unresolved, leading to the denial of Verde's partial summary judgment motion against him.
The Defendant seeks to strike class allegations from the Plaintiffs’ Amended Complaint, which proposes two classes: the 'ATDS Class' for individuals receiving calls through an automatic dialing system, and the 'IDNC Class' for those who received calls after requesting not to. The motion to strike is partially moot due to the dismissal of ATDS-related claims. However, the Defendant's argument to strike the remaining class allegations lacks clarity regarding the procedural basis for the motion. It may rely on Rule 12(f), which allows striking matter deemed insufficient or irrelevant, although this is a rare remedy. Alternatively, Rule 23(d)(1)(D) addresses class actions specifically and permits the court to amend pleadings regarding absent persons, typically resolved post-class certification motion.
Motions to strike under Rule 23(d)(1)(D) are considered premature if filed before a motion for class certification, as they effectively serve the same purpose as an opposition to class certification. Courts emphasize that a "rigorous analysis" of Rule 23's requirements should occur only after adequate discovery and briefing on class certification. In this case, the defendant's motion to strike the plaintiffs' class allegations is denied because the determination of whether these allegations meet certification requirements is a substantial legal question that cannot be resolved through a motion to strike. The court will not conduct this analysis without complete briefing and the opportunity for the plaintiffs to engage in class discovery, which has so far been limited to the named plaintiffs' claims.
Additionally, under the Hobbs Act, the Federal Court of Appeals holds exclusive jurisdiction to challenge FCC orders, and when such challenges arise in multiple circuits, they must be consolidated and assigned to a single circuit. The D.C. Circuit has been designated as the sole forum for considering the validity of certain FCC orders following timely challenges by ACA International plaintiffs. The Third Circuit case of Manuel v. NRA Group LLC illustrates that issues not timely raised can be waived. Furthermore, interpretations of the Dominguez II decision vary among circuits, with some courts believing it nullified previous FCC orders, while others contend that it did not overrule earlier decisions.
A district court in New Jersey evaluated the validity of the 2003 and 2008 FCC Orders, concluding they were no longer applicable. The court confirmed that devices configured to generate and dial random or sequential numbers qualify as Automatic Telephone Dialing Systems (ATDS). This interpretation focuses on the numbers generated rather than the dialing method. The court referenced previous cases that support this understanding, noting that the process of number generation is crucial. Although there was no motion to exclude an expert report in this case, the Third Circuit's prior ruling in a related case established that the expert reports did not create a genuine dispute of material fact for summary judgment. The defendant claimed that the use of artificial or prerecorded messages is allowed under specific FCC regulations when a live representative is unavailable, but failed to demonstrate that any disputed calls complied with these regulations. Consequently, a genuine issue of material fact remains regarding the use of prerecorded messages in the calls at issue. The court’s ruling on the defendant's motion for partial summary judgment does not impact allegations regarding calls made with a prerecorded voice or those related to the Do Not Call (IDNC) Class.
