Matlock v. United Healthcare Services, Inc.

Filing 56

ORDER signed by District Judge Morrison C. England, Jr on 4/15/19. The parties are directed to notify the Court within thirty (30) days following a further decision from the FCC, and shall in any event issue a joint status report as to the status of these proceedings not later than six (6) months after the date this Order is electronically filed.(Mena-Sanchez, L)

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UNITED STATES DISTRICT COURT

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EASTERN DISTRICT OF CALIFORNIA

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JACK MATLOCK, individually and on
behalf of all others similarly situated,
Plaintiff,

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v.

No. 2:13-cv-02206-MCE-EFB

ORDER

UNITED HEALTHCARE SERVICES,
INC.,
Defendant.

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On October 22, 2013, Plaintiff Jack Matlock (“Plaintiff”) filed the present putative

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class action under the Telephone Consumer Protection Act (“TCPA”), 47 U.S.C. § 227,

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et seq. Plaintiff alleges that Defendant United Healthcare Services (“Defendant”)

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violated the TCPA when it initiated calls to his cell phone without his consent. While

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Defendant apparently had the consent of the prior subscriber to Plaintiff’s phone

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number, that subscriber had, unbeknownst to Defendant, subsequently switched carriers

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and his phone number was reassigned to Plaintiff. Defendant thereafter placed calls to

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the original number to remind the subscriber to get his flu shot. Plaintiff now claims that,

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by reaching him instead, Defendant violated 47 U.S.C. § 227(b)(1)(A), which makes it

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unlawful for any person “to make any call (other than a call made for emergency
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purposes or made with the prior express consent of the called party) using any automatic

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telephone dialing system or an artificial or prerecorded voice” to, among other things,

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cellular telephones. The dispute in this case thus turns, in large part, on whether the

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“prior express consent of the called party” refers to the party the caller intended to reach

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or the actual recipient of the call.

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A number of courts have issued conflicting decisions (none of which are binding in

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this Court) as to the meaning of the phrase “called party.” Compare, e.g., Cellco

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P’ship v. Wilcrest Health Care Mgmt., Inc., 2012 WL 1638056 at *7 (D.N.J. May, 8, 2012)

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(“called party” is the intended recipient of the call), with Soppett v. Enhanced Recovery

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Co., LLC, 679 F.3d 637 (7th Cir. 2012) (“called party” is the current cell phone

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subscriber). Accordingly, Defendant filed a petition for an expedited declaratory ruling

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with the Federal Communications Commission (“FCC”) seeking an opinion as to the

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meaning of that phrase as well as what constitutes “prior express consent” in this

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particular context. Defendant also asked the FCC to confirm that there is a good faith

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exception to liability under the TCPA for situations such as this one, when a call is

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purportedly placed for informational, as opposed to telemarketing, purposes.

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Given the pendency of the agency proceedings, Defendant initially sought to stay

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the instant litigation under the primary jurisdiction doctrine until the FCC proceedings are

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resolved. The primary jurisdiction doctrine permits courts to stay litigation “pending the

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resolution of an issue within the special competence of an administrative agency.”

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Clark v. Time Warner Cable, 523 F.3d 1110, 1114 (9th Cir. 2008). “[T]the doctrine is a

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‘prudential’ one, under which a court determines that an otherwise cognizable claim

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implicates technical and policy questions that should be addressed in the first instance

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by the agency with regulatory authority over the relevant industry rather than by the

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judicial branch.” Id. “[N]o fixed formula exists for applying the doctrine of primary

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jurisdiction.” Id. at 1115 (internal citations and quotations omitted). However, the

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doctrine applies in cases where there is “(1) the need to resolve an issue that (2) has

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been placed by Congress within the jurisdiction of an administrative body having
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regulatory authority (3) pursuant to a statute that subjects an industry or activity to a

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comprehensive regulatory scheme that (4) requires expertise or uniformity in

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administration.” Davel Commc’ns, Inc. v. Qwest Corp., 460 F.3d 1075, 1086-87 (9th Cir.

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2006) (internal quotations and citations omitted).

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As the Court previously noted, the parties do not dispute that most of these

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factors are present here. Indeed, Plaintiff failed to address, and thus appeared to

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concede, that the FCC has regulatory authority pursuant to a statute subjecting the

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industry to a comprehensive regulatory scheme that requires expertise or uniformity in

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administration. Consequently, because a decision from the FCC was expected shortly,

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because judicial economy weighs against issuing a decision that may be undermined by

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an anticipated ruling of the regulatory body, because the violation alleged in this case is

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not ongoing, and because this case was in the early stages of litigation, the Court stayed

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these proceedings by Memorandum and Order filed March 20, 2014, pending a decision

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from the FCC on Plaintiff’s petition.

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On July 10, 2015, the FCC released an omnibus Declaratory Ruling and Order

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(“Order”) that addressed the TCPA-related petitions pending before it, including the

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petition filed by Defendant. In re Rules and Regulations Implementing the Telephone

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Consumer Protection Act of 1991, 30 F.C.C.R. 7964 (2015). The Order addressed a

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number of issues, including the meaning of the term “called party” under the statute as it

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relates to telephone numbers that originally belonged to individuals who gave consent to

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receive calls and were later reassigned to other subscribers. In that instance, the FCC

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concluded that “the TCPA requires the consent not of the intended recipient of a call, but

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of the current subscriber (or non-subscriber customary user of the phone). Id. at 7999.

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The FCC nonetheless created a “one-call” safe harbor in which a caller without

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knowledge of reassignment could make a single call without risking liability. Id. at 8000.

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The FCC’s ruling was appealed the same day its Order was released, and this

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Court’s stay was continued pending that ruling. Ultimately, on March 16, 2018, the D.C.

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Circuit “set aside” the FCC’s entire treatment of reassigned numbers, including its
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interpretation of both “called party” and its one-call safe harbor. ACA Int’l v. Fed.

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Communications Comm., 885 F.3d 687, 691 (D.C. Cir. 2018). While the Court did not

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question the FCC’s refusal to impose strict liability for calls placed to reassigned

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numbers, it nonetheless concluded that the safe harbor - - which granted only a single

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call free of liability - - did not make sense in light of the FCC’s incorporation of

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reasonable reliance considerations. Id. at 706-07. It accordingly held the adoption of

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the one-call safe harbor to be arbitrary and capricious, and set aside the FCC’s

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“treatment of reassigned numbers as a whole,” including its interpretation of “called

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party.” Id. at 706, 708-09.

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In the wake of D.C. Circuit’s directive in ACA, the FCC quickly moved to

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reconsider its definitions of both “called party” and “prior express consent.” As

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Defendant advised the Court it is July 27, 2018, brief in support of a continued stay, two

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ongoing proceedings initiated by the FCC in March and May of 2018 seek to revisit these

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questions. See Def’s Brief, ECF No. 54, pp. 6-7.

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Given the fact that this case revolves around the legality of calls placed to a

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number where the original holder gave consent but the subsequent transferee did not,

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the forthcoming new guidelines from the FCC may well be determinative for the outcome

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of this litigation. As indicated above, the TCPA currently provides an absolute defense

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to liability if it can be shown that the call at issue “was made with the prior express

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consent of the called party.” 47 U.S.C. § 227(b)((1)(A). As the FCC’s May 14, 2018,

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Public Notice indicated, it seems to address not only the interpretation and

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implementation of the TCPA following the ACA decision, but also “how to treat calls to

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reassigned wireless numbers under the TCPA,” and more specifically “how to interpret

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the term ‘called party’ for calls to reassigned numbers.” See Def.’s Brief in Support of a

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Continued Stay, ECF No. 54: 6:20-28.

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Not only are these issues directly germane to this litigation, they are also being

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considered by the agency with the primary jurisdiction for interpreting the FCC.

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“Congress vested the FCC with considerable authority to implement the [TCPA]”
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including the power to “prescribe regulations to implement the legislation” and

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“interpretive authority over the . . . Act . . . and its accompanying regulations.” Charvat v.

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EchoStar Satellite, LLC., 630 F.3d 459, 466-67 (6th Cir. 2010); see also Clark, 523 F.3d

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at 1115 (primary jurisdiction doctrine applies to “agencies possessing ‘quasi-legislative

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powers’ and are ‘actively involved in the administration of regulatory statues’ . . . the

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FCC is such an agency.”).

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Recognizing the FCC primary jurisdiction over implementation of the TCPA,

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several courts have imposed stays pending the FCC’s interpretation of TCPA provisions.

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See, e.g., Charvat, 630 F.3d at 465 (where resolution of a case “turns[s] on the meaning

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of several provisions” of the TCPA, staying the case pursuant to primary jurisdiction is

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appropriate); Fried v. Sensia Salon, Inc., 2013 WL 6195483 at *4, *5 (S.C. Tex. Nov. 27,

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2013 (noting that “the FCC has significant experience analyzing and interpreting [the

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TCPA]” and “conclud[ing] that the FCC is in the best position to opine, in the first

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instance, on . . . whether the [conduct alleged by plaintiff] violates the TCPA.”). This is

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especially true, where, as here, courts to date have reached conflicting conclusions over

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issues where the FCC has primary jurisdiction.

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Given the high number of both reassigned numbers and TCPA lawsuits, it is

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equally important that these matters be treated uniformly, and the FCC is the best party

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to do that in the first instance. Moreover, because waiting for the FCC’s ruling may

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dispense with all or part of the issues confronted with this case, a continued stay would

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appear to promote economy and efficiency for both the parties and this Court. While the

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Court is mindful that more than five years has passed since the instant matter was

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initiated, as the foregoing summary of what has transpired in the meantime makes clear,

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the process has been a continuing one with further clarity expected soon.

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Consequently, for all the above reasons, the Court believes that a continued stay

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pending the FCC’s issuance of new guidelines remains appropriate.

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The parties are directed to notify the Court within thirty (30) days following a further

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decision from the FCC, and shall in any event issue a joint status report as to the status

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of these proceedings not later than six (6) months after the date this Order is

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electronically filed.

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IT IS SO ORDERED.
Dated: April 15, 2019

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