Gonzalez v. Hosopo Corp.
Gonzalez v. Hosopo Corp.
Opinion of the Court
*28This is a putative class action under the Telephone Consumer Protection Act ("TCPA"),
Defendants Horizon Solar and Flowmedia have each moved to dismiss the complaint for failure to state a claim upon which relief can be granted. On January 30, 2019, Flowmedia filed a suggestion of bankruptcy, automatically staying the proceeding as to it. For the following reasons, the motion of defendant Horizon Solar will be denied.
I. Background
A. Factual Background
William Gonzalez and Jeremiah Davila-Lynch are residents of Massachusetts whose cell phone numbers have a "508" area code. (Second Amended Compl. ¶ 6-7, 32, 48). HOSOPO Corporation, doing business as Horizon Solar Power, designs and installs residential solar-power systems. (Id. ¶ 8, 22). To generate new clients, Horizon Solar makes telemarketing calls and hires third parties, including Flowmedia Solutions LLC and TMI 4 U COMM LLC, to make telemarketing calls on its behalf. (Id. ¶ 23-24, 60).
In November and December 2017, Davila-Lynch received at least five calls from Solar Spectrum, a company he contends is the "same" as Horizon Solar. (Id. ¶ 33, 36).
In January 2018, Gonzalez received an unidentified number of calls on his cell phone from TMI. (Id. ¶ 49). Gonzalez contends that those calls included "scripted telemarketing pitches" on behalf of Horizon Solar, and were made by a "ViciDial predictive dialer," a type of ATDS. (Id. ¶ 50-51).
Finally, during the end of January, and at times through February and March 2018, Gonzalez received at least eight telemarketing phone calls directly from Horizon Solar. (Id. ¶ 55). Gonzalez alleges that these calls were made with Five9, yet another type of ATDS. (Id. ¶ 56).
B. Procedural Background
On January 15, 2018, Davila-Lynch filed a complaint against Horizon Solar and "John Doe Corporation" on "behalf of a proposed nationwide class of other persons who received illegal telemarketing calls from or on behalf of the defendants."
*29On April 25, 2018, Davila-Lynch filed an amended complaint that added Flowmedia as a defendant.
On August 31, 2018, Davila-Lynch, now joined by Gonzalez, filed a second amended complaint. The second amended complaint added TMI and David Goodstein as defendants and alleges two counts: (1) a violation of the Telephone Consumer Protection Act; and (2) a violation of Mass. Gen. Laws ch. 93A.
Defendants Horizon Solar and Flowmedia both moved to dismiss the complaint under Fed.R.Civ.P. 12(b)(6) for failure to state a claim upon which relief can be granted. On January 30, 2019, Flowmedia filed a suggestion of bankruptcy.
II. Standard of Review
On a motion to dismiss under Fed. R. Civ. P. 12(b)(6), the court "must assume the truth of all well-plead[ed] facts and give the plaintiff the benefit of all reasonable inferences therefrom." Ruiz v. Bally Total Fitness Holding Corp. ,
III. Analysis
A. The Telephone Consumer Protection Act
Congress enacted the TCPA in 1991 after determining that "[m]any consumers [were] outraged over the proliferation of intrusive, nuisance calls ... from telemarketers."
Under the TCPA, an ATDS is defined as "equipment which has the capacity-(A) to store or produce telephone numbers to be called, using a random or sequential number generator; and (B) to dial such numbers."
The dispute in this case centers on "[a] basic question raised by" that definition: "whether a device must itself have the *30ability to generate random or sequential telephone numbers to be dialed" or whether "it [is] enough" that "the device can call from a database of telephone numbers generated elsewhere." ACA Int'l ,
1. FCC Rulings
The TCPA gives the Federal Communications Commission the authority to "prescribe regulations to implement the requirements" of the TCPA.
In 2003, however, the FCC decided that "significant changes in the technologies and methods used to contact consumers" in the telemarketing industry "warrant[ed] modifications" to the existing rules. In re Rules & Regulations Implementing the Telephone Consumer Protection Act of 1991 ,
The FCC issued a new declaratory ruling in January 2008. See In re Rules & Regulations Implementing the Telephone Consumer Protection Act of 1991 ,
The FCC re-affirmed its view in a declaratory ruling issued in 2012. See In re Rules & Regulations Implementing the Telephone Consumer Protection Act of 1991 ,
In 2015, the FCC issued another declaratory ruling that "purport[ed] to reaffirm" its 2003, 2008, and 2012 rulings. ACA Int'l ,
2. ACA International
Various entities regulated by the FCC sought review of its 2015 ruling in the Court of Appeals for the District of Columbia Circuit. ACA International v. Federal Communications Commission ,
After a thorough review, the court was unable to find a "clear answer" as to what the 2015 ruling considered to be an ATDS.
3. Effect of ACA International
The parties agree that ACA Int'l is binding on this Court. (See Pl. Opp. Mem. at 7, "Plaintiffs agree with Horizon Solar that the D.C. Circuit's opinion in [ ACA Int'l ] is binding on this Court."). They also agree that ACA Int'l "overturned" the 2015 ruling's interpretation of an ATDS.
Courts interpreting ACA Int'l have split on this issue. For example, in Marks v. Crunch San Diego, LLC , the Ninth Circuit concluded that ACA Int'l had invalidated the definitions put forward in each of the 2003, 2008, 2012, and 2015 FCC rulings.
Ultimately, however, that issue need not be decided here. Put simply, under either interpretation-that is, whether treating ACA Int'l as having invalidated all of the FCC's rulings, or treating ACA Int'l as having left the FCC's pre-2015 interpretations in place-this Court reaches the same conclusion: that equipment need not itself be able to generate random or sequential numbers to qualify as an ATDS under the TCPA.
4. ATDS
ACA Int'l did not answer the central question here: whether a device qualifies as an ATDS only if it can generate random or sequential numbers to be dialed. Indeed, the D.C. Circuit specifically stated that "[i]t might be permissible ... to adopt either interpretation" in answering that question. ACA Int'l ,
Courts since ACA Int'l have split on whether a device must itself be able to *32generate random or sequential numbers to qualify as an ATDS.
The Third Circuit addressed a related, but somewhat different, issue in Dominguez v. Yahoo, Inc. ,
Various district courts have concluded that a device must be capable of generating random or sequential telephone numbers to qualify as an ATDS. Those courts, however, have also mostly simply assumed that requirement. See, e.g., Roark v. Credit One Bank, N.A. ,
One exception is the opinion in Thompson-Harbach v. USAA Federal Savings Bank,
In the TCPA's definition of the ATDS, "the words 'using a random or sequential *33number generator' [are] set off from both verbs ('store' and 'produce') with a comma." Thompson-Harbach ,
Other courts, including the Ninth Circuit-the only other circuit to have addressed this issue directly-have reached a different conclusion: that a device may qualify as an ATDS if it is incapable of generating random or sequential numbers to be dialed, and even if it is incapable of storing numbers "generated by a random or sequential number generator." Marks v. Crunch San Diego, LLC ,
In reaching that conclusion, the Marks court looked first to the text of the statute. "After struggling with the statutory language," and concluding that the language was "ambiguous on its face" and therefore "not susceptible to a straightforward interpretation based on the plain language alone," the court "turn[ed] to other aids in statutory interpretation."
First, the court looked to "the context and the structure of the statutory scheme."
Second, the court's conclusion was supported by the record of the 2015 amendment to the TCPA by Congress. By that amendment, Congress added an exception that allowed an ATDS to be used to make calls "solely to collect a debt owed to or guaranteed by the United States."
*34Although not an obvious decision, the Court concludes that the understanding of the statute put forward in Marks is correct. In addition to the reasons provided by Marks , that conclusion is supported by the desire to avoid an anomaly that arises from the alternate reading of the statute. Under the alternate reading, the phrase "using a random or sequential number generator" applies to both "store" and "produce." Applying the phrase to both words creates the following definitions for an ATDS: (1) "equipment which has the capacity to store ... telephone numbers to be called [ ] using a random or sequential number generator" and (2) "equipment which has the capacity to produce ... telephone numbers to be called [ ] using a random or sequential number generator." The second of those two definitions makes perfect sense; it is easy to imagine an ATDS that produces numbers using a number generator. The first definition, however, does not, because it is unclear how an ATDS-or indeed anything-could "store" numbers "using" a number generator.
Courts that follow the alternate reading address that anomaly by finding that the use of the verb "store" ensures that "a system that generated random numbers and did not dial them immediately, but instead stored them for later automatic dialing" would still qualify as an ATDS. Johnson v. Yahoo!, Inc. ,
In summary, the TCPA is an unusually confusing statute. But considering the statute as it is written, the Court concludes that the phrase "using a random or sequential number generator" modifies only the verb "produce" and not the verb "store." Therefore, to qualify as an ATDS under the TCPA, a device need only have the capacity to do one of the following: either (1) "store ... telephone numbers to be called" and "dial such numbers," or (2) "produce telephone numbers to be called, using a random or sequential number generator" and "dial such numbers."
Accordingly, to the extent Horizon Solar seeks dismissal on the basis that the devices at issue do not qualify as ATDSs under the TCPA, the motion will be denied.
5. Sufficiency of Allegations
Horizon Solar also contends that "even if Plaintiffs allege[ ] the existence of an ATDS, their allegations are insufficient due to their conclusory nature." (Def. Mem. at 17). Essentially, Horizon Solar contends that plaintiffs' "bare" allegations that it called them using an ATDS are "conclusory" and do not allege enough independent details to raise an inference that an ATDS was in fact used. (Id. at 18-19).
"Although alleging specific details regarding a defendant's use of an ATDS can pose a challenge prior to conducting discovery, "courts nonetheless have held that to sustain a claim under the TCPA, "a plaintiff must plead more than the bare allegation that an ATDS was used. In light of these tensions, a plaintiff is permitted to rely on indirect allegations, such as the *35content of the message, the context in which it was received, and the existence of similar messages to raise an inference that an ATDS was used." Kruskall v. Sallie Mae Service, Inc. ,
The second amended complaint describes calls made to Davila-Lynch and calls made to Gonzalez separately. In describing the calls made to Davila-Lynch, it states that upon answering the calls, Davila-Lynch heard "lengthy pause[s] and [ ] click[s] followed by silence." (ECF 53, Second Am. Compl. ¶ 34). Courts have routinely held that allegations of hearing lengthy pauses, clicks, and then silence after answering a call are "adequate" to raise the "inference that [an] ATDS ... was used" to make the call. See e.g. Mauer v. American Intercontinental University, Inc. ,
Taken together, the facts alleged by the second amended complaint are sufficient to raise an inference that an ATDS was used to make the calls allegedly received by Davila-Lynch from Solar Spectrum.
The facts alleged as to the calls received by Gonzalez are more problematic. The second amended complaint alleges the following: that Gonzalez received calls from a "ViciDial predictive dialer" and a "Five9 virtual dialing sytem"; that there is "geographic distance between" him and the companies that called him; that the calls he received contained "scripted telemarketing pitches"; that he received eight calls in a period of about five weeks, including calls on five consecutive days between February 12 and February 16, 2018; and that his "experience" is apparently "not unique," as others have made online postings which claim to have received "scam" calls from Horizon Solar made from the same number that called his phone. (Second Am. Compl. ¶ 47-57).
Gonzalez does not allege that he heard a "click and pause" after he answered any of the calls. Nonetheless, the allegations are sufficient, if barely so, to raise a plausible inference that an ATDS was used. He alleges the use of a specific type of predictive dialer and dialing system, not simply a generic ATDS, and further alleges that the calls contained a scripted pitch. More significantly, the high number of calls in a short period of time, all for the same purpose, raises a plausible inference that an automated system was used. In short, therefore, Gonzalez has raised at least a plausible claim of TCPA violation.
B. Mass. Gen. Laws ch. 93A
Horizon Solar also seeks to dismiss the claims brought under the Massachusetts Consumer Protection Law, Mass. Gen. Laws ch. 93A, § 2. Mass. Gen. Laws ch. 93A prohibits "[u]nfair methods of competition and unfair or deceptive acts or practices in the conduct of any trade or commerce." Mass. Gen. Laws ch. 93A, § 2. Conduct is unfair or deceptive if it falls "within any recognized or established common law or statutory concept of unfairness." VMark Software v. EMC Corp.,
*36Plaintiffs cite to 940 C.M.R. § 3.16, a regulation promulgated by the Attorney General of Massachusetts, which states that "an act or practice is a violation of [ Mass Gen. Laws ch. 93A, § 2 ] if ... [i]t violates the Federal Trade Commission Act, the Federal Consumer Credit Protection Act or other Federal consumer protection statutes within the purview of [ Mass Gen. Laws ch. 93A, § 2 ]." 940 C.M.R § 3.16(4). Essentially, plaintiffs contend that because the TCPA is a "federal consumer protection statute[ ]," a violation of the TCPA qualifies as "a violation of [ Mass Gen. Laws ch. 93A, § 2 ]" under the regulation.
The TCPA is, indeed, a federal consumer protection statute; indeed, the very name of the statute is the Telephone Consumer Protection Act. However, a statutory violation, without more, does not constitute a violation of Chapter 93A in an action brought by a consumer. Jones v. Experian Information Solutions, Inc. ,
Plaintiffs here allege that they suffered injury when they were "temporarily deprived of legitimate use of their phones because the phone line was tied up, they were charged for the calls and their privacy was invaded." (Compl. ¶ 29). They further allege that the calls were "frustrating, obnoxious, annoying, were a nuisance and disturbed [their] solitude." (Id. ¶ 30).
A claim by a consumer under Chapter 93A requires proof of "real economic damages," separate from the violation itself; it is not enough to prove a violation of an abstract right, or merely subjective emotional injuries. See Shaulis ,
IV. Conclusion
For the foregoing reasons, the motion of defendant HOSOPO Corporation, doing business as Horizon Solar Power, to dismiss the complaint for failure to state a claim is DENIED.
So Ordered.
The second amended complaint also names David Goodstein, owner of Flowmedia and TMI, as a defendant.
Davila-Lynch alleges that Solar Spectrum and Horizon Solar merged in September 2017. (Id. ¶ 37).
Count One is brought against all defendants, while Count Two is brought against only Horizon Solar and Flowmedia.
See American International Group, Inc. v. Bank of America Corp. ,
The Second Circuit issued an opinion addressing the definition of an ATDS in June 2018. See King v. Time Warner Cable ,
Reference
- Full Case Name
- William GONZALEZ and Jeremiah Davila-Lynch, on behalf of themselves and others similarly situated v. HOSOPO CORPORATION d/b/a Horizon Solar Power TMI 4 U Comm LLC David Goodstein and Flowmedia Solutions LLC
- Cited By
- 11 cases
- Status
- Published