Larson v. Harman-Management Corporation et al

Filing 73

ORDER Denying Defendant Harman Management Corporation's 64 Motion to Stay Proceedings, signed by District Judge Dale A. Drozd on 7/26/2017. (Gaumnitz, R)

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UNITED STATES DISTRICT COURT

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FOR THE EASTERN DISTRICT OF CALIFORNIA

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CORY LARSON,

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Plaintiff,

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No. 1:16-cv-00219-DAD-SKO

v.
HARMAN MANAGEMENT
CORPORATION and 3SEVENTY, INC.,

ORDER DENYING DEFENDANT HARMAN
MANAGEMENT CORPORATION’S
MOTION TO STAY PROCEEDINGS
(Doc. No. 64)

Defendants.

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This matter comes before the court on defendant Harman Management Corporation’s

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motion to stay proceedings in this action. A hearing on the motion was held on July 6, 2017.

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Attorney Bruce Boehm appeared on behalf of defendant Harman Management Corporation

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(“HMC”), and attorney Adam Bowser appeared on behalf of defendant 3Seventy, Inc.

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(“3Seventy”). Attorney Sergei Lemberg appeared on behalf of plaintiff Cory Larson. The court

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has considered the parties’ briefs and oral arguments. For the reasons stated below, the court will

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deny the motion to stay.
BACKGROUND

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A.

Factual Background
According to plaintiff’s first amended complaint, defendants HMC and 3Seventy set out

on a telemarketing campaign in 2012 to send coupons to consumers for restaurant food items via
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automated text messages. (Doc. No. 22 ¶ 19.) In response to one A&W Restaurant promotional

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offer, plaintiff texted the word “BURGER” to an SMS short code licensed to and operated by

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defendants. (Id. ¶¶ 21, 23.) After initially responding to plaintiff’s text message, defendants

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allegedly stored plaintiff’s telephone number and thereafter sent multiple unprompted and

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uninvited automated text messages related to other A&W Restaurant food items. (Id. ¶¶ 23–25.)

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Plaintiff received at least two such messages—on November 16, 2014, and on June 1, 2015—

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without prior express written consent, and continued to receive such messages through February

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2016. (Id. ¶ 28.)

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In this action, plaintiff alleges that defendants violated the Telephone Consumer

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Protection Act (“TCPA”), in part by using an automatic telephone dialing system (“ATDS”) to

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send the uninvited text messages. Specifically, plaintiff alleges that defendants’ system “has the

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capacity to store or produce telephone numbers to be called, using a random or sequential number

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generator.” (Id. ¶¶ 37–41.) Alternatively, plaintiff also alleges that “[i]n the unlikely event that

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Defendant’s system does not already have the capacity to generate random or sequential numbers,

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that capacity can be trivially added.” (Id. ¶ 42.) Finally, plaintiff alleges specific illustrative lines

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of computer code that could be added to defendants’ system to generate random and sequential

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numbers. (See id. ¶¶ 43–48.)

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B.

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The Telephone Consumer Protection Act and the ACA International Litigation
The TCPA makes it unlawful for any person “to make any call . . . using any automatic

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telephone dialing system” to certain types of telephones without the called party’s prior express

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consent. 47 U.S.C. § 227(b)(1)(A)(iii). The term “automatic telephone dialing system” is defined

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as “equipment which has the capacity—(A) to store or produce telephone numbers to be called,

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using a random or sequential number generator; and (B) to dial such numbers.” 47 U.S.C.

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§ 227(a)(1). In 2015, the Federal Communications Commission (“FCC”) adopted rules and

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regulations concerning the defining features of an ATDS. See In re Rules & Regulations

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Implementing the Tel. Consumer Prot. Act of 1991, 30 FCC Rcd. 7961 (2015) (effective July 10,

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2015). Therein, the FCC took the position that the term “capacity” in the TCPA refers to not only

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a system’s “present ability” to dial random or sequential numbers, but also a system’s potential
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ability to do so. Id. at 7974. Thus, even equipment that presently lacks software necessary to

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enable sequential or random dialing—but might later be programmed to do so—could constitute

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an ATDS. Id.

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This distinction between present and potential ability is at issue in ACA International v.

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Federal Communications Commission, a case currently pending before the D.C. Circuit Court of

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Appeals. Appellants in that case contend that the FCC’s definition of an ATDS is unlawful. (See

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Doc. No. 66-1, Ex. A at 21–39.) Specifically, they argue the FCC’s definition of the term

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“capacity” is erroneously broad and must be limited to a system’s present abilities only. (See id.

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at 22.) All briefing in that case has concluded, and the court conducted oral argument in October

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2016. See Oral Argument, ACA Int’l v. Federal Commc’ns Comm’n, No. 15-1211 (D.C. Cir. Oct.

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19, 2016), Doc. No. 1641668. To date, however, no order in that case has issued.

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C.

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Defendant HMC’s Motion to Stay
On June 8, 2017, defendant HMC filed the instant motion to stay proceedings in this case,

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pending the outcome in ACA International, arguing that resolution of the issues in that case will

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directly affect plaintiff’s claims here. (See Doc. No. 65 at 8.) On June 22, 2017, plaintiff Larson

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filed his opposition. (Doc. No. 67.) That same day, defendant 3Seventy filed its response,

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indicating its non-opposition to the motion for a stay and raising several unrelated concerns.

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(Doc. No. 68.) On June 29, 2017, defendant HMC filed its reply. (Doc. No. 70.)

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LEGAL STANDARD
“[T]he power to stay proceedings is incidental to the power inherent in every court to

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control the disposition of the causes on its docket with economy of time and effort for itself, for

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counsel, and for litigants.” Landis v. N. Am. Co., 299 U.S. 248, 254 (1936); accord Stone v.

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I.N.S., 514 U.S. 386, 411 (1995) (“[W]e have long recognized that courts have inherent power to

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stay proceedings and ‘to control the disposition of the causes on its docket with economy of time

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and effort for itself, for counsel, and for litigants.’” (Breyer, J., dissenting) (quoting Landis, 299

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U.S. at 254)). Deciding whether to grant a stay pending the outcome of other proceedings “calls

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for the exercise of judgment, which must weigh competing interests and maintain an even

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balance.” Landis, 299 U.S. at 254–55. The party seeking such a stay must “make out a clear case
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of hardship or inequity in being required to go forward, if there is even a fair possibility that the

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stay for which he prays will work damage to some one [sic] else.” Id. at 255. In considering

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whether to grant a stay, this court must weigh several factors, including “[1] the possible damage

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which may result from the granting of a stay, [2] the hardship or inequity which a party may

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suffer in being required to go forward, and [3] the orderly course of justice measured in terms of

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the simplifying or complicating of issues, proof, and questions of law which could be expected to

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result from a stay.” CMAX, Inc. v. Hall, 300 F.2d 265, 268 (9th Cir. 1962) (citing Landis, 299

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U.S. at 254–55). A stay may be granted regardless of whether the separate proceedings are

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“judicial, administrative, or arbitral in character, and does not require that the issues in such

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proceedings are necessarily controlling of the action before the court.” Leyva v. Certified

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Grocers of Cal., Ltd., 593 F.2d 857, 864 (9th Cir. 1979).

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DISCUSSION

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The court begins its analysis, as the Supreme Court did in Landis, by inquiring whether

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there is “a fair possibility that [a] stay . . . will work damage” to the non-moving party. Landis,

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299 U.S. at 255. Here, the court agrees with defendant HMC that a short stay in this action will

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likely result in little damage, if any, to plaintiff and the putative class.1 Thus, this factor weighs

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slightly in favor of a stay.
Next, the court must examine whether defendant HMC has made out “a clear case of

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hardship or inequity in being required to go forward.” Landis, 299 U.S. at 254–55. Based on the

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court’s review of the briefing in ACA International, one dispute appears to center around whether

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the definition of the term “capacity” may be properly broadened to include automatic telephone

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dialing systems that only have the potential ability to dial random or sequential numbers. In this

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case, as noted above, plaintiff has pled alternative theories of liability under the TCPA—i.e., that

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defendants’ autodialing system had either the present or the potential ability to dial numbers

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randomly or sequentially. Thus, even if the D.C. Circuit Court of Appeals issues an opinion in

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defendants’ favor, plaintiff’s claims under the TCPA are likely to survive on plaintiff’s “present

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It is worth noting, however, that nearly nine months have elapsed since the court of appeals took
the matter under submission, and it is far from certain that a decision is imminent.
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ability” theory. In moving for a stay of this action, defendant HMC principally argues that all

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parties will suffer some degree of economic hardship resulting from unnecessary litigation

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expenses and the “uncertain scope of discovery.” (See Doc. No. 65 at 9.) HMC further suggests

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that moving forward without a stay may result in tens of thousands of dollars in discovery costs.

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(Doc. No. 70 at 6.) However, in this courts view, defendants have been unable to describe the

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extent to which they believe discovery would be rendered unnecessary in the event of a favorable

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decision in ACA International. Where defendants have not identified any particular harm beyond

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the cost of litigating this action, the Ninth Circuit has held that “being required to defend a suit,

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without more, does not constitute a ‘clear case of hardship or inequity’ within the meaning of

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Landis.” Lockyer v. Mirant Corp., 398 F.3d 1098, 1112 (9th Cir. 2005). Accordingly,

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consideration of this factor weighs against the imposition of a stay.
Finally, the court must look to whether there is a benefit to “the orderly course of justice

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measured in terms of the simplifying or complicating of issues, proof, and questions of law which

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could be expected to result from a stay.” CMAX, 300 F.2d at 268. In its motion, defendant HMC

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principally relies on the argument that a decision in ACA International might ultimately affect

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this court’s interpretation of the FCC’s 2015 rules and regulations and, relatedly, help narrow the

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scope of discovery in this case. (See Doc. No. 65 at 9–10.) However, the issue of actual or

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potential ability of defendants’ alleged ATDS is only one of several issues that require resolution

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in this case. Any marginal simplification of the issues that may result from the anticipated ruling

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ACA International litigation is far outweighed by the volume of issues the parties must address

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irrespective of the D.C. Circuit’s ultimate decision on the issues before it. To the extent the

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appellate court’s decision might ultimately affect the law applicable to this case, the court

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concludes that at this stage, a stay would provide little benefit to the orderly course of justice. See

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Knapper v. Cox Communication, No. CV-17-00913-PHX-SPL, 2017 WL 2983912, at *2 (D.

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Ariz. July 10, 2017) (denying defendant’s motion for a stay pending the ruling in ACA Int’l);

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Petras v. Ocwen Loan Servicing, LLC, Case No: 5:17-cv-73-Oc-30PRL, 2017 WL 2426846, at *1

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(M.D. Fla. June 5, 2017) (same).

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CONCLUSION
Accordingly, defendant HMC’s motion to stay (Doc. No. 64) is denied without prejudice.
IT IS SO ORDERED.
Dated:

July 26, 2017
UNITED STATES DISTRICT JUDGE

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