Richardson v. Verde Energy USA, Inc.
Richardson v. Verde Energy USA, Inc.
Opinion of the Court
This case concerns unwanted telemarketing calls and the technology used to make those calls. Plaintiffs-Brian Richardson, Michelle Hunt, Jacqueline Bowser, Kris Villiger, and Donna Schley-are five individuals who received promotional calls from a firm advertising Verde Energy USA, Inc.'s ("Verde") low-priced electricity. Plaintiffs now propose two nation-wide class actions against Verde claiming those calls violated various provisions of the Telephone Consumer Protection Act of 1991 (TCPA),
For the reasons set forth below, Defendant's motions are granted in part and denied in part.
I. Facts
Verde offers consumers "low-priced electricity" through telemarketing firms it hires to contact potential customers. Defendant's telemarketing campaign worked as follows. Defendant hired an advertising company, Fluent, Inc., to generate "customer leads." Various websites operated by Fluent prompted visitors to register for cash promotions by providing their personal contact information-including, name, physical address, email address, and telephone number. The final step of the registration process required visitors to complete a "TCPA consent form" that stated: "By checking the box below I consent to receive phone sales calls and text messages ... from [Fluent's] Marketing Partners." Fluent provided registered users' contact information to Verde, which passed the contact information on to Transparent BPO, Inc., a telemarketing firm that operated several outbound call centers. Transparent BPO then marketed Verde's service to potential customers, using telecommunications software from CallShaper, LLC-specifically, CallShaper's predictive dialing platform (hereinafter "CallShaper Predictive Dialer").
The operation of the CallShaper Predictive Dialer is at the heart of this dispute. All parties agree that Transparent BPO used the CallShaper Predictive Dialer to call Plaintiffs' cellular phones to market Defendant's service. Each Plaintiff received multiple calls, totaling seventy-five in all. It is further undisputed that the CallShaper Predictive Dialer allowed Transparent BPO to "load lists of targeted leads to be called" and call those numbers.
From there, the parties diverge. Specifically, the parties disagree as to whether the CallShaper Predictive Dialer had the inherent capability to produce telephone numbers to be called using a random or sequential number generator. The parties *643also dispute several details concerning the calls placed using the CallShaper Predictive Dialer-most notably, whether the calls were delivered with an artificial or pre-recorded message.
II. Summary Judgment Standard
Summary judgment must be granted to a moving party if "there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a) ; see also Alabama v. North Carolina ,
When the moving party's version of events differs substantially from the non-moving party's version, "courts are required to view the facts and draw reasonable inferences 'in the light most favorable to the party opposing the [summary judgment] motion.' " Scott v. Harris ,
III. Motion for Partial Summary Judgment
To address Verde's arguments with respect to its motion for partial summary judgment, it is necessary to first review the history of the TCPA and its interpretation by the Federal Communications Commission (FCC), which has authority to promulgate regulations concerning the Act. Congress enacted the TCPA in 1991 to address consumers' concerns about undesired robocalls. ACA Int'l v. Fed. Commc'ns Comm'n ,
any call (other than a call made for emergency purposes or made with the prior express consent of the called party) using any automatic telephone dialing system ["ATDS"] or an artificial or prerecorded voice to any number assigned to a ... cellular telephone service.
Verde's summary judgment argument is threefold. First, Verde argues that the CallShaper Predictive Dialer is not an ATDS as defined by the TCPA, and thus does not fall within the statute's reach. Second, Verde claims that its calls were made with a live voice, so Plaintiffs' claims should be dismissed to the extent they are premised on calls being delivered using an artificial or prerecorded voice. Third, Verde contends that, whatever the merits of the first two arguments, Richardson's claims should be dismissed because he provided "prior express consent" to be called by Verde.
*644A. Whether the CallShaper Predictive Dialer is an ATDS.
The first issue, then, is whether the CallShaper Predictive Dialer qualifies as an ATDS-sometimes also referred to as an "autodialer." That question, in turn, requires the Court to determine whether technology-like the CallShaper Predictive Dialer-"must itself have the ability to generate random or sequential telephone numbers to be dialed," or whether it would be "enough if the device can call from a database of telephone numbers generated elsewhere." ACA Int'l ,
1. Statutory & Regulatory Background
The TCPA defines an "automatic telephone dialing system" 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 FCC has issued several declaratory rulings seeking to clarify what qualifies as an ATDS. In 2003, the FCC issued a declaratory ruling to address the proliferation of "more sophisticated dialing systems, such as predictive dialers" that were "widely used by telemarketers to increase productivity." In Re Rules & Regulations Implementing the Tel. Consumer Prot. Act of 1991 , 18 F.C.C. Rcd. 14014, 14090 (2003) (" 2003 Order"). The FCC explained that a predictive dialer is calling equipment programmed so that "the dialer calls [numbers] at a rate to ensure that when a consumer answers the phone, a sales person is available to take the call." Id. at 10491. "The principle feature of predictive dialing software is a timing function, not number storage or generation." Id. Nevertheless, the FCC determined that predictive dialers qualified as ATDSs because "the hardware, when paired with certain software, has the capacity to store or produce numbers and dial those numbers at random, in sequential order, or from a database of numbers." Id.
The FCC explicitly reaffirmed this position in a 2008 declaratory ruling. See In Re of Rules & Regulations Implementing the Tel. Consumer Prot. Act of 1991 , 23 F.C.C. Rcd. 559, 566 (2008) (" 2008 Order"). Rejecting a petition from an industry group challenging the 2003 Order, the FCC explained: "[W]e affirm that a predictive dialer constitutes an automatic telephone dialing system and is subject to the TCPA's restrictions on the use of autodialers." Id.
In 2015, the FCC felt obliged to revisit the definition of an ATDS due to the "rise in complaints, litigation, and petitions" concerning unwanted telemarketing calls. In Re Rules & Regulations Implementing the Tel. Consumer Prot. Act of 1991 ,
The 2015 Order went further, however, and explained that an ATDS's "capacity to store or produce telephone numbers to be called, using a random or sequential number generator" was "not limited to its current configuration."
*6452. ACA International
Several industry groups representing collection agencies challenged the 2015 Order, arguing, in part, that the FCC's broad definition of an ATDS was arbitrary and capricious. In ACA International , the D.C. Circuit consolidated the various petitions and reviewed the 2015 Order under the Administrative Procedure Act.
Ultimately, the D.C. Circuit struck down the 2015 Order's definition of an ATDS.
First, the D.C. Circuit concluded that the 2015 Order's interpretation of "capacity" was overbroad. According to the D.C. Circuit, "a straightforward reading of the [FCC's] ruling invites the conclusion that all smartphones are autodialers,"
Second, the D.C. Circuit concluded that the portion of the 2015 Order"describing the functions a device must perform to qualify as an autodialer, fail[ed] to satisfy the requirement of reasoned decisionmaking."
The D.C. Circuit therefore invalidated the 2015 Order's definition of an ATDS, rendering it no longer binding in the Third Circuit or on this Court.
*6463. Impact of ACA International
While all agree that ACA International invalidated the portion of the 2015 Order's definition of an ATDS, the decision left two critical questions unanswered: (1) whether the invalidation of that portion of the 2015 Order necessarily invalidated the analogous portions of the 2003 and 2008 Orders concerning predictive dialers, and (2) in the absence of the 2015 Order, what functions must calling equipment possess to qualify as an ATDS.
While the parties-as well as various federal courts-diverge on both questions, the Third Circuit has had little opportunity to address them. Only two Third Circuit opinions-one unpublished-have considered whether a particular piece of calling equipment qualified as an ATDS, both of which were issued in a single case. See Dominguez v. Yahoo, Inc. ,
i. Continuing Validity of the 2003 and 2008 Orders
The parties-and courts-split as to whether the invalidation of the 2015 Order necessarily invalidated the 2003 and 2008 Orders as well. On the one hand, Plaintiffs suggest that the invalidation of the 2015 Order had no effect on the 2003 and 2008 Orders, such that the earlier Orders remain binding on federal courts. The majority of lower courts have held the same. See Ammons v. Ally Fin., Inc. ,
On the other hand, Defendant argues that by invalidating the 2015 Order, the D.C. Circuit necessarily invalidated the 2003 and 2008 Orders as well. Both the Ninth and Second Circuits, as well as a minority of federal district courts, have adopted this position. See Marks v. Crunch San Diego, LLC ,
*647King v. Time Warner Cable Inc. ,
The Third Circuit, however, has not taken a definite position on the continuing validity of the 2003 and 2008 Orders. As noted, the only post- ACA International decision addressing the statutory definition of an ATDS is Dominguez II. There, after acknowledging the invalidation of the 2015 Order, the court of appeals stated-somewhat cryptically-that "[i]n light of the D.C. Circuit's holding" in ACA International , "we interpret the statutory definition of an autodialer as we did prior to the issuance of the 2015 Declaratory Ruling. " Dominguez II , 894 F.3d at 119 (emphasis added). But, what that means is unclear. Prior to the Dominguez case, the Third Circuit had never interpreted the statutory definition of an ATDS. As for Dominguez I , the Third Circuit in that non-precedential opinion purported to rely upon the 2015 Order's definition of an ATDS and thus would not be instructive after ACA International . See Dominguez I ,
A careful parsing of ACA International indicates that the invalidation of the 2015 Order necessarily invalidated the 2003 and 2008 Orders as well. Recall that the D.C. Circuit found the 2015 Order arbitrary and capricious because it gave "no clear answer," ACA Int'l ,
The D.C. Circuit pointed out that the 2003 Order"suggested it saw a difference between calling from a list of numbers, on one hand, and 'creating and dialing' a random or arbitrary list of numbers, on the other hand."
*648ACA Int'l ,
Thus, the D.C. Circuit's "concern that the FCC in the [ 2015 Order ] 'fail[ed] to satisfy the requirement of reasoned decisionmaking' due to the agency's 'lack of clarity about which functions quality a device as an autodialer' ... applies with equal force to the 2003 Order ['s]" definition of which functions qualify a device as a proscribed predictive dialer. Pinkus ,
ii. Predictive Dialers under the TCPA
While the ACA International decision invalidated the 2015 Order, and by implication the 2003 and 2008 Orders, the decision did not adopt a definitive position as to what calling technology qualified as an ATDS. In the absence of binding agency interpretation, the Court must "begin anew to consider the definition of ATDS under the TCPA." Marks ,
To revisit the statutory language, the TCPA defines an ATDS 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."
Plaintiffs argue the clause only modifies the verb "to produce," and not the verb "to store," because a device that stores telephone numbers has no use for "a random or sequential number generator." On Plaintiffs' reading, an ATDS is "equipment *649which has the capacity (A) to [i] store [telephone numbers to be called] or [ii] produce telephone numbers to be called, using a random or sequential number generator; and (B) to dial such numbers." Thus, a predictive dialer that only had the capacity to store and then dial numbers-but not to randomly generate numbers-would still qualify as an ATDS. Put differently, Plaintiffs argue it is "enough [that] the device can call from a database of telephone numbers generated elsewhere." ACA Int'l ,
Verde, however, contends the clause "using a random or sequential number generator" modifies both verbs: "to produce" and "to store." The adverbial clause, Defendant argues, indicates which numbers are to be stored and then called: those generated using a "random or sequential number generator."
Neither interpretation of the statutory language is fully satisfactory. On the one hand, the punctuation canon, which provides that "where there is a comma before a modifying phrase, that phrase modifies all of the items in a series and not just the immediately preceding item," Stepnowski v. C.I.R. ,
If the Court were writing on a blank slate, it would likely follow the course chartered by the Ninth Circuit in Marks , which observed: "After struggling with the statutory language [of the TCPA] ourselves, we conclude that it is not susceptible to a straightforward interpretation based on the plain language alone. Rather, the statutory text is ambiguous on its face." Marks ,
*650The Court, however, is not writing on a blank slate. In Dominguez II , the Third Circuit held, albeit implicitly, that "a device must itself have the ability to generate random or sequential telephone numbers to be dialed,"
Because this Court is bound to follow the holding of Dominguez II , which includes "besides the facts and the outcome, the reasoning essential to that outcome," Tate v. Showboat Marina Casino P'ship ,
4. Application
Turning to the facts of this case, Defendant argues that the CallShaper Predictive Dialer is not an ATDS because the equipment, as currently configured, only has the capacity to store and call telephone numbers manually uploaded. That is, the CallShaper Predictive Dialer "has no feature to store or produce telephone numbers to be called using a random or sequential number generator." As discussed above, equipment that only has the capacity to store and call telephone numbers manually uploaded is not an ATDS.
Plaintiffs argue, though, that there remains a genuine issue of material fact as to whether the CallShaper Predictive Dialer can, in fact, produce numbers to be called using a random or sequential number generator. The only evidence Plaintiffs introduce for this proposition is testimony from telecommunications consultant Randall A. Snyder, who claims that the "CallShaper maintains technology within its platform to generate random numbers." The Third Circuit in Dominguez II , however, upheld a district court's exclusion of a nearly identical report from the same expert on this precise issue. 894 F.3d at 120. The Third Circuit explained that the Snyder report in Dominguez II , like the report here, "explain[ed] the role that random number generators play in various commonly available computer operating systems ... and posits that 'it is a straightforward and very basic algorithm to use the available random number generation functions to generate ten-digit telephone numbers.' " Id. "Notably absent" from Snyder's declaration, *651however, was "an explanation of how the [Yahoo messaging system] actually did or could generate random telephone numbers to dial." The Third Circuit concluded that the report did not create a genuine dispute of material fact because it "d[id] not shed light on the key factual question actually at issue in this case-whether the [Yahoo messaging system] functioned as an autodialer." Id. at 121.
The same flaw is fatal to Plaintiffs' argument.
Defendant's motion for partial summary judgment will therefore be granted on Plaintiffs' claims to the extent that they are based on the alleged use of an ATDS.
B. Whether Defendant Delivered Artificial or Prerecorded Calls.
Recall that in addition to prohibiting most calls made by an ATDS to cellular phones, the TCPA also prohibits calls made "using ... an artificial or prerecorded voice."
Plaintiffs concede that, of the seventy-five calls made to their phones, three calls-those placed on October 26, 2015 to Hunt; on May 13, 2016 to Villiger; and on November 18, 2015 to Bowser-were not made with an artificial or prerecorded voice. Thus, no issue of material fact exists as to whether those three calls violated Section 227(b)(1)(A) of the TCPA; they do not.
A genuine issue of material fact does exist, however, as to whether the remainder of Defendant's calls to Plaintiffs were delivered with an artificial or prerecorded voice. Of the seventy-five calls made to Plaintiffs' phones, Defendant produced audio recordings for twenty-three, some of which were only partial recordings of the call. And while Defendant claims that all calls made to Plaintiffs were delivered by a live voice, Plaintiffs introduced testimony that at least some calls utilized an artificial or prerecorded voice. Indeed, a witness for the Defendant testified that, when a live agent is not available to take the call within two seconds of a person picking up a call, then "a message is played" that "identifies ... that the call is being made by Verde Energy." Thus, a genuine issue of material fact exists as to how many, if any, of the remaining seventy-two *652calls made to Plaintiffs were delivered with an artificial or recorded voice.
Defendant's motion for partial summary judgment will be granted as to the calls placed on October 26, 2015 to Hunt, on May 13, 2016 to Villiger, and on November 18, 2015 to Bowser; the motion will be denied as to all other calls Defendant made to Plaintiffs.
C. Whether Richardson Provided Express Consent to Receive Calls.
Defendant also moves for summary judgment on Richardson's claims, arguing he provided prior express consent to receive calls about Defendant's service. The TCPA permits calls to a cellular device using an ATDS or an artificial or prerecorded voice when the "called party" provided "prior express consent."
Defendant first references the declaration of Miten Bhadania, a Fluent employee, in which she attests that: on October 29, 2015 an internet user visited a Fluent-run promotional website; the user registered by entering the name "Brian Richardson;" the user entered a physical address, which Richardson later confirmed corresponded to his then-fiancée's address; the user entered a phone number, which Richardson later confirmed was his phone number; the user entered an email address, which Richardson later confirmed belonged to him and his fiancée; and, the user submitted a TCPA consent form. Second, Defendant refers to Richardson's deposition in which he testified that, while he did not specifically recall registering on Fluent's site and signing the TCPA consent form, he did recall completing some survey form on October 29, 2015, which "may have" been the one run by Fluent. Richardson also testified that nobody else but he and his fiancée knew of the email address that was entered into Fluent's website. Taken together, Defendant argues that Bhadania's declaration and Richardson's own testimony establish that no reasonable jury could find that anybody other than Richardson submitted the TCPA consent form.
The evidence tendered by Verde, however, does not warrant entry of summary judgment in its favor. First, Bhadania's declaration: While her statements are entirely consistent with Verde's theory that Richardson submitted the consent form, they are also consistent with Richardson's theory that "a different person (or algorithm or 'bot') in possession" of his contact information filled out the online registration. Where, as here, "opposing parties tell two different stories," the *653Court must accept the non-movant's version of events, unless it "is blatantly contradicted by the record." Scott ,
Neither does Richardson's testimony, when construed in the light most favorable to him, establish that he gave his express consent to the calls. In his deposition, Richardson stated that he "may have" signed the TCPA consent form. Thus, he, unlike the other named Plaintiffs, did not outright deny that it was he who went to that site, supplied the personal information, and submitted the TCPA consent form. But, while Richardson did not use the magic words "I deny," he also did not admit to submitting the form. Rather, he testified only that he "may have" done so. When construed in the light most favorable to the non-movant, that statement does not amount to an admission that it was he who submitted the form and, thus, it was he who provided express consent to the calls. Scott ,
Nor does Richardson's testimony about his email address establish that he was the user that registered on Fluent's site. True enough, Richardson stated that nobody other than his fiancée knew of the email address used to register on the Fluent site. When read in context, however, it appears that Richardson meant that no one else had access to the account-not that the address was wholly unknown to anyone beside him and his fiancée. After all, it would make little sense for a person to have an active email account that no other person or entity knew of. Moreover, it would appear unlikely that, as Defendant's theory suggests, Plaintiff never gave the email address out to anyone up until October 5, 2015, when he then used it to register for an online survey.
Thus, the question of whether Richardson provided prior express consent to the calls remains an open question and Verde's motion for partial summary judgment against Richardson shall, accordingly, be denied.
IV. Motion to Strike
Finally, Defendant moves to strike the class allegations in Plaintiffs' Amended Complaint. Plaintiff seeks to certify two putative classes: (1) the "ATDS Class," consisting of all individuals who received a call from Defendant "through the use of an automatic telephone dialing system, or pre-recorded voice, or any other device having the capacity to dial numbers without human intervention;" and (2) the "IDNC Class," consisting of all individual who "after notifying Defendant that they no longer wished to receive calls from or on behalf of Defendant, received one or more calls from or on behalf of Defendant." Defendant argues the class allegations should be struck because the "claims are inherently incapable of class certification."
To begin, the Court's resolution of Defendant's motion for partial summary judgment moots a portion of the motion to strike because Plaintiffs' claims based on the alleged use of an ATDS will be dismissed. Thus, the ATDS Class's allegations concerning the use of an ATDS will also be dismissed.
*654Defendant's claim that the remaining class allegations should be struck, however, is unavailing. Defendant's briefing is not entirely clear about what procedural mechanism it is relying upon to strike the class allegations. There appear to be two candidates. First, Rule 12(f) provides that "[t]he court may strike from a pleading an insufficient defense or any redundant, immaterial, impertinent, or scandalous matter." Fed. R. Civ. P. 12(f). Striking a pleading "is a drastic remedy to be used sparingly because of the difficulty of deciding a case without a factual record." Dann v. Lincoln Nat. Corp. ,
The second candidate is Rule 23(d)(1)(D), which-like all of Rule 23-specifically concerns class actions. Rule 23(d)(1)(D) permits a court to "issue orders that require that the pleadings be amended to eliminate allegations about representation of absent persons and that the action proceed accordingly." Fed. R. Civ. P. 23(d)(1)(D). Motions to strike class allegations under 23(d)(1)(D) "are generally resolved after a motion for class certification is filed." Berk v. J.P. Morgan Bank, N.A. ,
Whether proceeding under Rule 12(f) or Rule 23(d)(1)(D), Defendant has failed to establish that striking Plaintiffs' remaining class allegations is appropriate. The gist of Defendant's argument is that the class allegations will not meet the certification requirements of Rule 23. But, that is a "disputed and substantial question[ ] of law," Dann ,
*655Defendant's motion to strike the class allegations will be denied.
An appropriate order follows.
Under the Hobbs Act, the Federal Court of Appeals "has exclusive jurisdiction to enjoin, set aside, suspend (in whole or in part), or to determine the validity of all final orders of the [FCC]."
In Manuel v. NRA Group LLC ,
Federal courts are divided in their interpretation of Dominguez II. The Ninth Circuit cited the decision in support of the proposition that ACA International set aside the 2003 and 2008 Orders. Marks ,
The parties, along with all the federal courts to interpret the statute, agree that devices that, as currently configured, produce and then dial numbers produced by a random or sequential number generator qualify as ATDSs. See Marks ,
That is, the clause "refers to the numbers themselves rather than the manner in which they are dialed." Dominguez I ,
Although there is no motion to exclude Snyder's report before the Court, as there was before the district court in Dominguez v. Yahoo!, Inc. ,
Defendant argues that the use of an artificial or prerecorded message is permitted in certain limited instances as defined by FCC regulation
Whenever a live sales representative is not available to speak with the person answering the call, within two (2) seconds after the called person's completed greeting, the telemarketer or the seller must provide [a] prerecorded identification and opt-out message that is limited to disclosing that the call was for "telemarketing purposes" and states the name of the business ... on whose behalf the call was placed.
True enough, but Defendant has not shown that any of the disputed calls fall within the ambit of Section 64.1200(a)(7)(i). That is, Defendant has introduced no evidence purporting to show that the calls at issue here used a prerecorded voice because a live sales representative was not available to speak with Plaintiffs. Absent such a showing, a genuine issue of material facts exists as to whether Defendant's calls were impermissibly made with a prerecorded voice.
To be clear, the Court's resolution of Defendant's motion for partial summary judgment does not affect the ATDS Class's allegations concerning calls made using a prerecorded voice; nor does it affect the IDNC Class allegations.
Reference
- Full Case Name
- Brian RICHARDSON, Michelle Hunt, John White and Jacqueline Bowser v. VERDE ENERGY USA, INC.
- Cited By
- 15 cases
- Status
- Published