On August 8, 2016 a Federal Judge in Illinois dismissed a Telephone Consumer Protection Act (TCPA) case by determining that the Plaintiff in the matter was not an individual or entity in the “zone of interests” intended to be protected by the TCPA.

The case is Telephone Science Corporation. v. Asset Recovery Solutions, Case No. 15-CV-5182 (N.D. Ill. Aug. 8, 2016). A copy of the Memorandum Opinion and Order can be found here.

The Plaintiff in the case, Telephone Science Corporation (TSC) is the operator of a service called “Nomorobo.” The website for the Nomorobo service is https://www.nomorobo.com/.

On the website the company claims they have stopped over 125,504,140 robocalls. In 2013, the FTC declared Nomorobo a winner of its contest to “design a system to stop unsolicited telemarketing calls before the calls can ring through to the subscriber of the called telephone number.”

District Court Judge Amy J. St. Eve describes the Nomorobo service.

“Specifically, TSC maintains a “honeypot” of telephone numbers to which TSC subscribes.  Nomorobo analyzes calls placed to TSC’s honeypot numbers using a specialized algorithm, enabling it to “detect high frequency robocalling patterns and distinguish between calls placed by robocallers and calls placed by non-robocallers.

Consumers and businesses subscribe to Nomorobo’s call-blocking services for a fee. These users choose to route their incoming calls to both their personal phones and the Nomorobo server, using simultaneous ring technology. “If Nomorobo determines that it is a robocaller, Nomorobo answers the call on behalf of the user.” The robocaller, however, is “presented with an audio CAPTCHA [Completely Automated Public Turing Test to tell Computers and Humans Apart]. If the caller passes the test and proves they are human, the call is allowed through. If they fail, Nomorobo hangs up the call. Nomorobo either blocks or allows the call within 200 milliseconds of its receipt.”

Background

The Defendant, Asset Recovery Solutions (ARS), is an asset recovery management and debt purchasing company that uses a “predictive dialer” in connection with its business. Judge St. Eve wrote that the ARS “predictive dialer is an ATDS within the meaning of the TCPA.”

In the complaint TSC alleged:

1. Around March 2014, ARS began calling telephone numbers in the TSC honeypot (“TSC Numbers”) using a predictive dialer.
2. TSC “was the subscriber to each TSC Number [that ARS] called at the time of the call,” and TSC “continues to subscribe to each TSC Number.”
3. TSC never consented to these calls.
4. TSC does not solicit or otherwise entice incoming calls to TSC Numbers.
5. Each TSC Number is assigned to a voice over Internet protocol (“VoIP”) telephone service.
6. The VoIP service provider, Twilio, Inc. (“Twilio”), assesses (i) a monthly per-line charge for each TSC Number, as well as (ii) a per-minute charge for each inbound call that TSC answers.
7. That between March 2014 and February 2016, ARS placed approximately 12,240 robocalls to TSC Numbers from ten telephone numbers using a predictive dialer.

ARS brought a Motion to Dismiss the TSC Complaint under Rule 12(b)(1) and Rule 12(b)(6). Rule 12(b)(1) is motion to dismiss for lack of standing. Rule 12(b)(6) challenges the viability of a complaint by arguing that it fails to state a claim upon which relief may be granted.

The Judge’s Opinion

The Judge’s Memorandum Order and Opinion is 33 pages long. The first portion discusses the Rule 12(b)(1) motion and the “standing” issue that has become a hot topic since the Supreme Court decision in Spokeo, Inc. v. Robins.

After a lengthy analysis of the law, Judge St. Eve determined that Plaintiff did, in fact, have standing under Rule 12(b)(1).

The court then turned to the Rule 12(b)(6) motion. As noted above, the 12(b)(6) motion is based upon the argument that the complaint fails to state a claim upon which relief may be granted.  ARS argued that TSC was outside the TCPA’s “zone of interests.” In short, that TSC was not the person or entity intended to be protected by the TCPA as their claims did not fall into the category of interests against privacy intrusion and nuisance that underpin the TCPA.

According to ARS arguments, the TCPA guards against the “invasion of privacy, the nuisance, and the cost that results when consumers receive certain types of unwanted calls;” it does not protect a company that “intentionally sought out the alleged calls so that it could build and sustain its for-profit telecom business.”

Judge St. Eve agreed with ARS. She wrote:

“The Court discerns several interests protected under 47 U.S.C. § 227(b)(1)(A)(iii), including individual privacy rights, public safety interests, and interstate commerce. Underlying each is the principle that a person or business should be free from nuisance robocalls and their associated costs.

According to ARS, TSC’s relevant “interest” is commercial data collection – not individual privacy rights, public safety protection, or interstate commerce facilitation. Indeed, some courts have placed similar interests outside Section 227(b)(1)(A)(iii)’s zone of interests. Ultimately, even accepting all factual allegations as true, and drawing all reasonable inferences in TSC’s favor, TSC’s asserted interests do not fall within Section 227(b)’s protected zone of interests.

As TSC acknowledges, the focus of the TCPA—and related efforts—is to provide “consumer protection for millions of Americans harassed by unwanted and unwelcome robocalls.” Indeed, TSC’s Nomorobo service represents one such effort in the battle against robocalls. TSC’s “good guy” status, however, does not automatically entitle it to claim protection under the TCPA. TSC does not allege any injuries in the form of privacy invasion, nuisance, and/or inconvenience. To the contrary, the sole reason TSC subscribes to “thousands” of honeypot numbers is to gather a “large quantity” of data in order to “detect high frequency robocalling patterns” and to “distinguish” between callers for its Nomorobo customer-service offerings. Thus, instead of being “unwanted and unwelcome,” robocalls to TSC Numbers provide the analytical basis on which the Nomorobo service operates. “[T]he only reason for this volume of calls,” thus, ‘is due to the nature of [TSC’s] business, which is providing telecommunications services rather than consuming them.

Here, TSC did not suffer the injury contemplated by the TCPA— that is, invasion of privacy and/or general nuisance. Even drawing all reasonable inferences in TSC’s favor, the Court does not see how TSC suffered any injury within Section 227(b)(1)(A)(iii)’s “zone of interests” that would allow it to act as a “private attorney general” under Section 227(b)(3).”

insideARM Perspective

This decision provides an interesting discussion of the various issues surrounding “standing” to bring a TCPA case. On Monday and Tuesday of this week we wrote about 2 different TCPA “standing” cases that saw two different results, one in Minnesota and another in California. See here for the article on the Minnesota case. See here for the article on the California case.

Of note, in its reasoning, the court referenced the recent case of Stoops v. Wells Fargo Bank, N.A., (Case No. 3:15-83, Western District of Pennsylvania, June 24, 2016). That case involved an individual plaintiff who had admitted that she files TCPA actions as a business. insideARM wrote about that case on June 28, 2016.

Relying on the Supreme Court case of Spokeo v. Robbins, (136 S.Ct. 1540 (2016), on August 3rd U.S. District Court Judge Richard H. Kyle denied a request to dismiss a plaintiff’s Telephone Consumer Protection Act (TCPA) claim for lack of standing.

The case is Ung v. Universal Acceptance Corporation, (Case No. 15-127-( RHK/FLN) (United States District Court, District of Minnesota, August 5, 2016). A copy of the Order denying Defendant’s motion to dismiss for lack of subject matter jurisdiction can be found here.

In this action, Plaintiff Spencer Ung alleged that Defendant Universal Acceptance

Corporation (Universal) made unauthorized calls to his cell phone, in violation of the TCPA.

In June of this year, Defendant had asked the court to dismiss the case as moot arguing theories from the Supreme Court case of Campbell-Ewald Co. v. Gomez, 136 S. Ct. 663 (2016). On June 3, 2016 the court denied Universal’s Motion to Dismiss, concluding that a settlement offer by Universal in March 2016 had not mooted the case. A copy of the court’s June 3^rd Memorandum Opinion and Order on that motion can be found here.

On June 10, 2016 Universal moved again for dismissal, this time arguing Ung lacks standing based on the Supreme Court’s recent decision in Spokeo, Inc. v. Robins.

Background

The Complaint alleged that beginning in June 2014, Universal repeatedly called

Ung’s cell phone in an attempt to reach an individual named Joseph Holly, for whom

Mr. Ung was apparently listed as a credit reference. Ung alleged that he had no prior

relationship with Universal and had never consented to being contacted on his cell phone by the company. He also alleged that he repeatedly told Universal to stop calling, but the calls continued unabated, including from an automated telephone dialing system.

Ung eventually sued, alleging that Universal had violated the TCPA by calling his cell phone using an Automated Telephone Dialing System (ATDS) without his consent; he purported to seek relief for himself and a class of similarly situated individuals.

The Court’s Decision

Universal’s latest motion to dismiss is based upon the above referenced Spokeo decision and the Supreme Court’s discussion of “injury in fact.” Universal argued that Ung has not suffered a sufficient concrete injury here.

Judge Kyle did not agree. He wrote:

“Cases, however, have repeatedly recognized that the receipt of unwanted phone calls constitutes a concrete injury sufficient to create standing under the TCPA. See, e.g., Caudill v. Wells Fargo Home Mtg., Inc., Civ. No. 5:16-066, 2016 WL 3820195, at *2 (E.D. Ky. July 11, 2016) (noting that calls caused harms “such as the invasion of privacy [that] have traditionally been regarded as providing a basis for a lawsuit in the United States”); Rogers v. Capital One Bank (USA), N.A., No. 1:15-CV-4016, 2016 WL 3162592, at *2 (N.D. Ga. June 7, 2016) (rejecting argument plaintiffs lacked standing under TCPA where they alleged “the Defendant made unwanted phone calls to their cell numbers”); Mey v. Got Warranty, Inc., __ F. Supp. 2d__, 2016 WL 3645195, at *7 (N.D. W. Va. 2016) (collecting cases); see also, e.g., Cour v. Life360, Inc., Civ. No. 16-805, 2016 WL 4039279, at *2 (N.D. Cal. July 28, 2016) (receipt of single unauthorized text message sufficient to create standing under TCPA). Indeed, Universal correctly notes that both Congress (in passing the TCPA) and the Federal Communications Commission (when interpreting the statute) have recognized the harms inherent in the receipt of automated calls, in particular the invasion of privacy and the intrusion upon seclusion. (See Def. Mem. at 8-10.) And Universal does not seriously quibble with the notion that receipt of autodialed calls constitutes an invasion of privacy sufficient to create standing.”

However, Universal’s motion was based on more than a simple “injury in fact” argument. Judge Kyle wrote:

“Universal’s argument is more nuanced. It contends the TCPA is intended only to remedy calls placed by an “automatic telephone dialing system,” 47 U.S.C. § 227(b)(1)(A)(iii), but the FCC has interpreted that term to include equipment with the capacity to place automated calls. In other words, according to the FCC, a defendant may transgress the statute by manually dialing an unwanted phone call, as long as the system used to make the call has the capacity to autodial. Universal claims that is precisely what happened here: it “called Plaintiff twelve times [and] the evidence shows[] these calls were made by a live person who manually placed the calls to Plaintiff’s phone number.” (Def. Mem. at 2.) As a result, Universal argues that Ung can demonstrate, at most, only the type of “bare procedural violation” insufficient to create standing under Spokeo, since the prevention of manually dialed calls was not the TCPA’s aim.

Ung hotly contests whether the calls he received from Universal were manually dialed rather than autodialed. But the Court need not wade into that dispute at this juncture, because assuming arguendo the calls were placed manually, Ung still has standing to sue. This is because Universal’s argument conflates the means through which it (allegedly) violated the TCPA with the harm resulting from that alleged violation.

An example best makes this clear. Assume that a plaintiff sued after receiving only one unwanted phone call from the defendant. In that instance, how would the plaintiff’s harm differ if he had received a manually dialed call placed on equipment capable of autodialing versus a call that was in fact autodialed? In either case, the plaintiff received only one call, and hence the alleged invasion of his privacy would have been precisely the same. While the injury in such a situation might well be minimal, it is enough to clear Article III’s low bar for a concrete injury.

The manner in which the call was placed has no bearing on the existence of the injury; the use of an autodialer might increase the possibility of a plaintiff receiving hundreds or thousands of phone calls, thus perhaps increasing the extent of the invasion of his privacy, but it is the fact of the call (or calls) that creates the injury sufficient to confer standing.

In this Court’s view, therefore, it makes no difference whether the calls Ung received were manually dialed or autodialed because the resultant harm is the same. And that alleged harm is a concrete injury-in-fact sufficient to confer standing.”

insideARM Perspective

This case has seen three separate issues addressed that have been used to defend TCPA cases; 1) Using Campbell Ewald to moot a TCPA claim, 2) Using Spokeo to dismiss a case for lack of subject matter jurisdiction, and, 3) The definition of an ATDS. All three issues have gone in favor of the Plaintiff and against the Defendant.

Yesterday insideARM wrote about another TCPA case (Romero v. Department Stores National Bank, (Case No. 15-cv-193-CAB-MDD) Southern District of California, August 5, 2016) that addressed Spokeo. See that article here. In Romero a United States District Court Judge in California came to a completely opposite decision on the issue of standing.

insideARM suspects that TCPA decisions will continue to be split for a significant period of time as courts throughout the country address the Spokeo ramifications.