Cosper et al v. Veros Credit, LLC

Filing 40

MEMORANDUM AND ORDER signed by District Judge Morrison C. England, Jr. on 9/12/2017 DENYING 31 Motion to Dismiss; GRANTING the plaintiff's Motion to Strike the Declaration of Scott Hyman. (Michel, G.)

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1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 EASTERN DISTRICT OF CALIFORNIA 10 11 12 13 YOLANDA COSPER, FRED LUMPKIN, and SEBASTIAN McGHEE, individually and on behalf of all others similarly situated, Plaintiffs, 14 15 16 No. 2:15-cv-01752-MCE-CKD MEMORANDUM AND ORDER v. VEROS CREDIT, LLC, Defendant. 17 18 19 Plaintiffs Yolanda Cosper, Fred Lumpkin, and Sebastian McGhee (collectively, 20 “Plaintiffs”) filed the present action against Veros Credit, LLC (“Defendant”) alleging 21 violations of the Telephone Consumer Protection Act (“TCPA”). Presently before the 22 Court is Defendant’s Motion to Dismiss Plaintiffs’ Second Amended Complaint (“SAC”) 23 for failure to state a claim upon which relief may be granted pursuant to Federal Rule of 24 Civil Procedure 12(b)(6).1 Def. Mot., ECF No. 31. Defendant argues Plaintiffs only 25 provide formulaic recitations that track the verbiage of the statute and do not allege facts 26 (1) supporting the actual “use” of an automated telephone dialing system (“ATDS”); 27 1 28 Unless otherwise noted, all further references to “Rule” or “Rules” are to the Federal Rules of Civil Procedure. 1 1 (2) showing that the calls were made randomly; or (3) demonstrating that the calls were 2 made without human intervention. Defendant also moves to strike Plaintiffs’ “willful or 3 knowing” allegations pertaining to Defendant’s alleged TCPA violations. Id. Plaintiff 4 opposed the Motion to Dismiss and further moves to strike the declaration of Scott 5 Hyman. Pl. Opp., ECF No. 35. 6 For the reasons set forth below, Defendant’s Motion to Dismiss Plaintiffs’ Second 7 Amended Complaint is DENIED, the Motion to Strike Plaintiffs’ “willful or knowing” 8 allegations is DENIED, and Plaintiffs’ Motion to Strike the Declaration of Scott Hyman is 9 GRANTED.2 10 11 BACKGROUND3 12 13 Plaintiffs allege Defendant began calling Plaintiffs’ cellular phones utilizing an 14 ATDS in an attempt to collect a debt from a third-party account holder that had listed the 15 Plaintiffs as personal references. Plaintiffs assert that these calls were not for an 16 emergency purpose, and maintain they did not provide prior express consent to receive 17 calls from Defendant. Consequently, Plaintiffs allege that such calls violated the TCPA. 18 More specifically, the SAC alleges Plaintiffs Yolanda Cosper and Fred Lumpkin, a 19 husband and wife, received at least five calls from Defendant to their cellular phone 20 starting sometime after August 2014. These Plaintiffs allege that Defendant contacted 21 them in an attempt to collect a debt from a third party who had listed Plaintiffs as a 22 reference. When Plaintiffs Cosper and Lumpkin answered the phone calls, they were 23 greeted by Defendant’s agent who inquired about the third-party account holder. The 24 agent then asked Plaintiffs to contact the third party and advise him or her to contact 25 Defendant. Plaintiffs further allege that Defendant used an ATDS to make the calls, that 26 27 2 Because oral argument would not have been of material assistance, the Court ordered this matter submitted on the briefs. See E.D. Cal. Local R. 230(g). 3 28 The following recitation of facts is taken, sometimes verbatim, from Plaintiffs’ SAC, ECF No. 30, and from a general review of the docket. 2 1 the calls were made without Plaintiffs’ consent, that they were not made for emergency 2 purposes, and that Defendant’s actions both wasted Plaintiffs’ time and money, and 3 interfered with Plaintiffs’ rights and interests in their cellular phones. 4 Next, the SAC alleges that Plaintiff Sebastian McGhee received no fewer than 5 ten calls from Defendant in an attempt to collect a debt from a third-party account holder 6 who had listed Plaintiff McGhee as a reference. These calls, Plaintiff alleges, were 7 made by Defendant to Plaintiff McGhee’s cellular telephone utilizing an ATDS, without 8 his consent, and not for an emergency purpose. The SAC further alleges that each time 9 Plaintiff McGhee answered, there would be a two to three second delay (the so-called 10 “tell-tale pause”) before Defendant’s agent would respond. 11 The SAC further alleges that one of Defendant’s job postings listed employees’ 12 expected responsibilities as including: the ability to “participate in outbound calls using 13 an automated dialer system”; being “responsible for the daily readiness for call center 14 automated dialer applications”; and to “ [oversee] predictive dialer functions.” SAC, ECF 15 No. 30, ¶ 42. In addition to Defendant’s job posting, Plaintiffs point to Defendant’s 16 employees’ LinkedIn pages referencing Defendant’s telephone dialer systems. Id. at 17 Exs. A-B. 18 Plaintiffs’ original complaint was filed on August 18, 2015. A First Amended 19 Complaint was subsequently filed on November 6, 2015. A Stipulation was entered by 20 the parties on June 24, 2016, allowing Plaintiff to file an SAC in order to address recent 21 judicial rulings. On July 8, 2016, Plaintiffs filed the operative SAC. Defendant filed the 22 present Motion to Dismiss on August 8, 2016, with Plaintiffs’ Opposition being filed on 23 October 7, 2016. Defendant’s Reply was subsequently filed on November 4, 2016. 24 In the alternative to its Motion to Dismiss, Defendant moves to strike Plaintiffs’ 25 allegations that any TCPA violations were either “willful or knowing,” arguing that 26 Plaintiffs fail to plead sufficient facts to support such allegations. 27 Lastly, Plaintiffs move to strike the declaration of Scott Hyman, counsel for 28 Defendant. Defendant asserts that the declaration is proffered to show counsel’s efforts 3 1 to meet and confer, and his attempts to provide ample opportunity to Plaintiffs to remedy 2 any deficiencies within the SAC. 3 4 STANDARDS 5 6 On a motion to dismiss for failure to state a claim under Federal Rule of Civil 7 Procedure 12(b)(6), all allegations of material fact must be accepted as true and 8 construed in the light most favorable to the nonmoving party. Cahill v. Liberty Mut. Ins. 9 Co., 80 F.3d 336, 337-38 (9th Cir. 1996). Rule 8(a)(2) requires only “a short and plain 10 statement of the claim showing that the pleader is entitled to relief” in order to “give the 11 defendant fair notice of what the . . . claim is and the grounds upon which it rests.” Bell 12 Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007) (quoting Conley v. Gibson, 355 U.S. 41, 13 47 (1957)). A complaint attacked by a Rule 12(b)(6) motion to dismiss does not require 14 detailed factual allegations. However, “a plaintiff’s obligation to provide the grounds of 15 his entitlement to relief requires more than labels and conclusions, and a formulaic 16 recitation of the elements of a cause of action will not do.” Id. (internal citations and 17 quotations omitted). A court is not required to accept as true a “legal conclusion 18 couched as a factual allegation.” Ashcroft v. Iqbal, 129 S. Ct. 1937, 1950 (2009) 19 (quoting Twombly, 550 U.S. at 555). “Factual allegations must be enough to raise a 20 right to relief above the speculative level.” Twombly, 550 U.S. at 555 (citing 5 Charles 21 Alan Wright & Arthur R. Miller, Federal Practice and Procedure § 1216 (3d ed. 2004) 22 (stating that the pleading must contain something more than “a statement of facts that 23 merely creates a suspicion [of] a legally cognizable right of action.”)). 24 Furthermore, “Rule 8(a)(2) . . . requires a showing, rather than a blanket 25 assertion, of entitlement to relief.” Twombly, 550 U.S. at 556 n.3 (internal citations and 26 quotations omitted). Thus, “[w]ithout some factual allegation in the complaint, it is hard 27 to see how a claimant could satisfy the requirements of providing not only ‘fair notice’ of 28 the nature of the claim, but also ‘grounds’ on which the claim rests.” Id. (citing 5 Charles 4 1 Alan Wright & Arthur R. Miller, supra, at § 1202). A pleading must contain “only enough 2 facts to state a claim to relief that is plausible on its face.” Id. at 570. If the “plaintiffs . . . 3 have not nudged their claims across the line from conceivable to plausible, their 4 complaint must be dismissed.” Id. However, “[a] well-pleaded complaint may proceed 5 even if it strikes a savvy judge that actual proof of those facts is improbable, and ‘that a 6 recovery is very remote and unlikely.’” Id. at 556 (quoting Scheuer v. Rhodes, 416 U.S. 7 232, 236 (1974)). 8 9 With regard to the parties’ motions to strike, the Court may strike from a pleading “an insufficient defense or any redundant, immaterial, impertinent, or scandalous matter.” 10 Fed. R. Civ. P. 12(f). Motions to strike are a drastic remedy and generally disfavored. 11 5C Wright & A. Miller, Federal Practice and Procedure § 1380 (3d ed. 2004). Immaterial 12 matter is that which has no essential or important relationship to the claim for relief or the 13 defenses being pled. Fantasy, Inc. v. Fogerty, 984 F.2d 1524, 1527 (9th Cir. 1993), 14 rev’d on other grounds, 510 U.S. 517, 114 S. Ct. 1023, 127 L. Ed. 2d 455 (1994) 15 (internal citations and quotations omitted). A matter is impertinent if the statements do 16 not pertain, and are not necessary, to the issues in question. Id. 17 18 ANALYSIS 19 20 A. 21 The TCPA prohibits making any call “using any automatic telephone dialing Defendant’s Motion to Dismiss 22 system or an artificial or prerecorded voice” to a wireless number. 47 U.S.C. 23 § 227(b)(1)(A). 24 Specifically, the TCPA provides: 25 It shall be unlawful for any person… 26 (A) To make 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 or an artificial or prerecorded voice— 27 28 5 1 (iii) To any telephone number assigned to a paging service, cellular telephone service, specialized mobile radio service, or other radio common carrier service, or any service for which the called party is charged for the call… 2 3 4 47 U.S.C. § 227(b)(1)(A)(iii). There are three elements to a TCPA claim based upon the 5 use of an ATDS: (1) the defendant called a cellular telephone number; (2) using an 6 ATDS, or an artificial or prerecorded voice; (3) without the recipient’s prior express 7 consent. Meyer v. Portfolio Recovery Assocs., LLC, 707 F.3d 1036, 1043 (9th Cir. 8 2012). 9 The term “automatic telephone dialing system” within this section has been 10 interpreted to mean equipment that has the “capacity to store or produce telephone 11 numbers to be called, using a random or sequential number generator…to dial such 12 numbers.” 47 U.S.C. § 227(a)(1). However, under the plain language of the statute, an 13 ATDS “need not actually store, produce, or call randomly or sequentially generated 14 telephone numbers, it need only have the capacity to do it.” Satterfield v. Simon & 15 Schuster, Inc., 569 F.3d 946, 951 (9th Cir. 2009). 16 Defendant contends that the facts as alleged do not sufficiently state a TCPA 17 violation. More specifically, Defendant argues Plaintiffs fail to plead facts indicating that 18 (1) an ATDS was actually used, (2) the calls were “random,” or (3) there was an absence 19 of human intervention. None of these arguments are well taken.4 20 As indicated above, Plaintiffs’ SAC alleges Defendant used an ATDS to call 21 Plaintiffs Cosper and Lumpkin at least five times to collect a debt from a third party, 22 starting sometime after August 2014. SAC, ECF No. 30, ¶¶ 28-30. Plaintiffs never 23 24 25 26 27 28 4 As a preliminary matter, Defendant also contends that Plaintiffs fail to allege sufficient facts supporting Defendant’s use of artificial or prerecorded voice technology. ECF No. 31. Plaintiffs do not oppose this argument, and instead rely on allegations that Defendant used an ATDS in violation of the TCPA. Because the TCPA prohibits “using any automatic telephone dialing system or an artificial or prerecorded voice,” 47 U.S.C. § 227(b)(1)(A) (emphasis added), sufficient allegations of use of an ATDS are enough to state a viable claim under the TCPA. Iniguez v. The CBE Grp., 969 F. Supp. 2d 1241, 1246 (E.D. Cal. 2013) (“Since the applicable section is written in the disjunctive, a violation may occur if any one of an automated telephone dialing system, an artificial voice, or a prerecorded voice is used to make the call.”). The Court therefore focuses of the parties’ arguments surrounding Defendant’s alleged use of an ATDS. 6 1 provided express consent for Defendant to contact them, nor were the calls for any 2 emergency purpose. Id. ¶¶ 32-33. The SAC also alleges that Defendant utilized an 3 ATDS system to call Plaintiff McGhee’s cellular telephone no less than ten times starting 4 after August 2013. Id. ¶ 36-37. Additionally, Plaintiff McGhee alleges that when he 5 answered the calls from Defendant there was a two to three second pause before an 6 agent for Defendant responded. Id. ¶ 37. More broadly, the Plaintiffs’ SAC alleges that 7 employment postings for the Defendant made multiple, specific references to “automatic 8 dialers” and “predictive dialers.” Id. ¶ 42, Ex. A. The SAC also alleges Defendant’s 9 employees’ LinkedIn accounts make specific references to Defendant’s use of dialer 10 11 systems. Id. Ex. B. This Court finds that Plaintiff McGhee alleges sufficient facts with regard to the 12 characteristic, tell-tale pause at the beginning of the calls to indicate Defendant’s use of 13 an ATDS when calling the Plaintiff’s cellular telephone. While Defendant is correct that 14 bald recitations of TCPA violations will not suffice, “general allegations [of use of an 15 ATDS] are sufficiently bolstered by specific descriptions of the ‘telltale’ pause after 16 plaintiff picked up each call until the agent began speaking, which suggest the use of a 17 predictive dialing system, and thus renders plausible the conclusory allegation that an 18 ATDS was used.” Cabiness v. Educ. Fin. Solutions, LLC, No. 16-cv-01109-JST, 2016 19 U.S. Dist. LEXIS 142005 (N.D. Cal. Sept. 1, 2016) (citing Lofton v. Verizon Wireless 20 (VAW) LLC, No. 13-CV-05665-YGR, 2015 U.S. Dist. LEXIS 34516, 2015 WL 1254681, 21 at *5 (N.D. Cal. Mar. 18, 2015)). 22 While this tell-tale pause is indicative of use of an ATDS system and makes 23 Plaintiff McGhee’s allegations sufficient to defeat a motion to dismiss, Plaintiffs Cosper 24 and Lumpkin do not specifically allege a similar pause. However, when reading the SAC 25 as a whole and taking into consideration the additional allegations concerning 26 Defendant’s job postings that specifically reference automated dialer systems, as well as 27 Defendant’s employees’ LinkedIn pages referencing dialer systems, the Court finds that 28 Plaintiffs’ allegations are sufficient to withstand a motion to dismiss. 7 1 Furthermore, the Court finds Plaintiffs’ argument in opposition to Defendant’s 2 motion compelling-- that it is unlikely that Defendant utilized two systems, one that called 3 Plaintiff McGhee and a separate dialing system that called Plaintiffs Cosper and 4 Lumpkin. ECF No. 35. The more likely and plausible explanation is that the Defendant 5 utilized one phone system to make collection calls, and that phone system has the 6 capacity to be an ATDS. See e.g., Kazemi v. Payless Shoesource, Inc., No. C 09-5142- 7 MHP, 2010 U.S. Dist. LEXIS 27666, at *1 (N.D. Cal. 2010) (finding conclusory 8 allegations tracking the statutory language sufficient when accompanied by specific 9 allegations that render the use of an ATDS plausible). 10 The Court also rejects Defendant’s argument that Plaintiffs failed to allege 11 sufficient facts to show a degree of randomness. ECF No. 31. “[D]ialing equipment 12 does not need to dial numbers or send text messages “randomly” in order to qualify as 13 an ATDS under the TCPA.” Flores v. Adir Int’l, LLC, No. 15-56260, 2017 U.S. App. 14 LEXIS 5228, at *3 (9th Cir. Mar. 24, 2017); See also Satterfield, 569 F.3d at 951. 15 Therefore, Plaintiffs’ SAC does not need to allege randomness in order for the 16 equipment to qualify as an ATDS under the TCPA. 17 As for Defendant’s final argument that Plaintiffs have failed to allege the absence 18 of human intervention, the Court is not convinced that Plaintiff must make such an 19 explicit allegation to survive a motion to dismiss. Indeed, as described above, Plaintiffs 20 have plausibly alleged use of an ATDS. At this stage such allegations are sufficient. 21 Therefore, looking at the SAC as a whole, and at this stage of litigation prior to 22 discovery, the Court finds Plaintiffs’ SAC pleads facts sufficient to plausibly allege that 23 Defendant called Plaintiffs’ cellular phones using an ATDS, without Plaintiffs’ consent, 24 and not for an emergency purpose. Defendant cites to no controlling authority indicating 25 otherwise, and in fact, Flores v. Adir Int’l, LLC, No. CV 15-00076-AB, 2015 U.S. Dist. 26 LEXIS 92176, at *1 (C.D. Cal. 2015)—on which Defendant heavily relies—was recently 27 reversed by the Ninth Circuit. Flores v. Adir Int’l, LLC, No. 15-56260, 2017 U.S. App. 28 /// 8 1 LEXIS 5228, at *1 (9th Cir. Mar. 24, 2017). Accordingly, the Defendant’s Motion to 2 Dismiss is DENIED. 3 B. 4 Defendant alternatively moves to strike Plaintiffs’ allegations that any TCPA 5 violations were “willful or knowing.” ECF No. 31. Defendant argues Plaintiffs’ SAC 6 pleads insufficient facts to support any knowing or willful conduct. ECF No. 31. 7 However, Plaintiffs allege facts supporting that Defendant maintained a general practice 8 of using an ATDS to make calls, which practice indicates Defendant must have been 9 aware of its ATDS use. Moreover, such a motion to strike should be denied if there is 10 doubt whether the “challenged matter may raise an issue of fact or law… leaving the 11 assessment of the sufficiency of the allegations for adjudication on the merits after 12 proper development of the factual nature of the claims through discovery.” Springer v. 13 Fair Isaac Corp., No. 14-CV-02238-TLN-AC, 2015 U.S. Dist. LEXIS 154765, at *4 (E.D. 14 Cal. Nov. 16, 2015). The Court finds that striking the knowing or willful allegations 15 would, prior to discovery, be premature. Therefore, Defendant’s Motion is DENIED. Defendant’s Motion to Strike “Willful or Knowing” Allegations 16 C. 17 In support of its Motion to Dismiss, Defendant cites to the Declaration of Scott Plaintiffs’ Motion to Strike the Declaration of Scott Hyman 18 Hyman, attorney of record for Defendant. Defendant asserts that the declaration of 19 counsel is proffered to show Defendant’s efforts to meet and confer, and is indicative of 20 counsel’s attempts to provide ample opportunity to Plaintiffs to remedy any deficiencies 21 within the SAC. ECF No. 36. 22 While that may be true, meet and confer efforts—while appreciated—are not 23 required, and the declaration is therefore unnecessary. Moreover, Mr. Hyman’s 24 declaration goes beyond recanting any meet and confer efforts and in fact argues that 25 Defendant did not use an ATDS in calling Plaintiffs. “Generally, the Court may not 26 consider material beyond the pleadings in ruling on a motion to dismiss for failure to 27 state a claim. The exceptions are material attached to or relied on by the complaint… 28 provided that they are not subject to reasonable dispute.” Iniguez v. CBE Group, 9 1 969 F. Supp. 2d 1241, 1244 (E.D. Cal. 2013) (citing Lee v. Los Angeles, 250 F.3d 668, 2 688 (9th Cir. 2001). Here, Scott Hyman’s declaration may not be considered in 3 conjunction with the Defendant’s Rule 12(b)(6) motion because the motion is limited to 4 testing the sufficiency of the claims within the pleadings. Therefore, Plaintiffs’ Motion to 5 Strike the Declaration of Scott Hyman is GRANTED, and the Court did not consider that 6 declaration in making its ruling on Defendant’s Motion to Dismiss above. 7 8 CONCLUSION 9 10 For the reasons stated above, Defendant’s Motion to Dismiss Plaintiffs’ Second 11 Amended Complaint and alternative Motion to Strike Plaintiffs’ willful or knowing 12 allegations (ECF No. 31) are DENIED. Plaintiffs’ Motion to Strike the Declaration of 13 Scott Hyman (ECF No. 36) is GRANTED. 14 IT IS SO ORDERED. 15 Dated: September 12, 2017 16 17 18 19 20 21 22 23 24 25 26 27 28 10

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