Sherman v. Yahoo! Inc.
Filing
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ORDER: (1) Denying 33 Motion for Partial Reconsideration of Order Denying Defendant's Motion for Summary Judgment; (2) Denying Motion in the Alternative for Interlocutory Appeal. Signed by Judge Gonzalo P. Curiel on 7/3/2014. (srm)
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UNITED STATES DISTRICT COURT
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SOUTHERN DISTRICT OF CALIFORNIA
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RAFAEL DAVID SHERMAN,
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individually and on behalf of all others )
similarly situated,
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Plaintiff,
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v.
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YAHOO! INC., a Delaware
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corporation,
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Defendant.
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Case No. 3:13-cv-41-GPC-WVG
ORDER:
1) DENYING MOTION FOR
PARTIAL RECONSIDERATION
OF ORDER DENYING
DEFENDANT’S MOTION FOR
SUMMARY JUDGMENT
[Dkt. No. 33.]
2) DENYING MOTION IN THE
ALTERNATIVE FOR
INTERLOCUTORY APPEAL
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Presently before the Court is a Motion for Reconsideration filed by Defendant
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Yahoo! Inc. (“Defendant” or “Yahoo!”). (Dkt. No. 33.) The Parties have fully briefed
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the motion. (Dkt. Nos. 37, 38, 39, 40, 43.) The Court held a hearing on the matter on
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June 13, 2014. Joshua Swigart, Esq. appeared on behalf of Plaintiff Rafael David
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Sherman, and Ian Ballon, Esq. appeared on behalf of Defendant Yahoo!. For the
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following reasons, the Court DENIES the motion.
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BACKGROUND
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This case concerns a text notification message that was sent to a cellular phone
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number as part of Yahoo!’s Instant Messenger service. Plaintiff Rafael David Sherman
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(“Plaintiff”) brings this action individually and on behalf of those similarly situated,
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claiming Defendant violated the Telephone Consumer Protection Act (“TCPA”), 47
3:13-cv-41-GPC-WVG
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U.S.C. § 227(b)(1)(A) by “illegally contact[ing] Plaintiff and the Class members via
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their cellular telephones by using unsolicited SPAM text messages.” (Dkt. No. 1,
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Compl. ¶ 26.)
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On February 3, 2014, this Court issued an Order denying Defendant’s motion for
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summary judgment. (Dkt. No. 30.) Specifically, the Court held that: (1) a single,
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confirmatory text message may be actionable under the TCPA; (2) issues of fact
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precluded summary judgment on the issue of whether Yahoo!’s PC to SMS Service
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constitutes an Automatic Telephone Dialer System (“ATDS”) within the meaning of
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the TCPA; and (3) that “Good Samaritan Immunity” did not render Yahoo! immune
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from liability in this case. (Id.)
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On March 24, 2014, Defendant filed a motion for reconsideration of the Court’s
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February 3, 2014 Order. (Dkt. No. 33.) Defendant contends the Court erred by relying
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on FCC commentary to construe what constitutes an ATDS under the TCPA and that
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new evidence warrants summary judgment on Plaintiffs’ claim that Yahoo!’s PC to
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SMS Service equipment is an ATDS. (Dkt. No. 33.) In the alternative, Defendant seeks
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certification of the Court’s Order denying summary judgment for appeal due to
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conflicting constructions of the phrase ATDS among district courts in the Ninth
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Circuit. (Id.)
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LEGAL STANDARD
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District courts have the discretion to reconsider interlocutory rulings until a final
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judgment is entered. Fed. R. Civ. P. 54(b); United States v. Martin, 226 F.3d 1042,
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1048-49 (9th Cir. 2000). While the Federal Rules of Civil Procedure do not set forth
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a standard for reconsidering interlocutory rulings, the “law of the case” doctrine and
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public policy dictate that the efficient operation of the judicial system requires the
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avoidance of re-arguing questions that have already been decided. See Pyramid Lake
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Paiute Tribe of Indians v. Hodel, 882 F.2d 364, 369 n.5 (9th Cir. 1989).
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As such, most courts adhere to a fairly narrow standard by which to reconsider
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their interlocutory rulings. This standard requires that the party show: (1) an
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intervening change in the law; (2) additional evidence that was not previously
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available; or (3) that the prior decision was based on clear error or would work
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manifest injustice. Id.; Marlyn Natraceuticals, Inc. v. Mucos Pharma GmbH & Co., 571
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F.3d 873, 880 (9th Cir. 2009); Sch. Dist. No. 1J v. ACandS, Inc., 5 F.3d 1255, 1263
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(9th Cir. 1993).
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Reconsideration is an “extraordinary remedy, to be used sparingly in the interests
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of finality and conservation of judicial resources.” Kona Enters., Inc. v. Estate of
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Bishop, 229 F.3d 877, 890 (9th Cir. 2000). “‘A motion for reconsideration is not an
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opportunity to renew arguments considered and rejected by the court, nor is it an
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opportunity for a party to re-argue a motion because it is dissatisfied with the original
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outcome.’” FTC v. Neovi, Inc., 2009 WL 56130 at *2 (S.D. Cal. Jan. 7, 2009) (quoting
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Devinsky v. Kingsford, 2008 WL 2704338 at *2 (S.D.N.Y. July 10, 2008)).
DISCUSSION
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I. Reconsideration
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Defendant brings the present motion seeking reconsideration solely as to the
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Court’s conclusion that issues of fact preclude summary judgment on Plaintiff’s claim
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that Yahoo!’s PC to SMS service equipment constituted an automatic telephone
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dialing system within the meaning of the Telephone Consumer Protection Act
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(“TCPA”), 47 U.S.C. § 227. (Dkt. No. 33.) Under the TCPA, an “automatic telephone
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dialing system” (“ATDS”) is defined as “equipment which has the capacity (A) to store
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or produce telephone numbers to be called, using a random or sequential number
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generator; and (B) to dial such numbers.” 47 U.S.C. § 227(a)(1).
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Defendant argues reconsideration is warranted on two grounds: (1) that the Court
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erred in relying on Federal Communications Commission (“FCC”) commentary
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regarding “predictive dialers” to construe the statutory term “ATDS”; and (2) that the
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Court erred in relying on Yahoo!’s testimony regarding its ability to write or install
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new software to dial telephone numbers to deny summary judgment. (Dkt. No. 33-1.)
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Having reviewed the Parties’ arguments and the applicable legal authority, the Court
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finds no basis for granting the “extraordinary remedy” of reconsideration.
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A. FCC Commentary on Predictive Dialers
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Defendant first argues the Court erred in construing the term ATDS according
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to FCC guidance on predictive dialers because the Ninth Circuit has held in Satterfield
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v. Simon & Schuster, Inc., 569 F.3d 946, 951 (9th Cir. 2009), that the statutory
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definition of ATDS is “clear and unambiguous,” and therefore deference to the FCC
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guidance under Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467
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U.S. 837 (1984), would be inappropriate. (Dkt. No. 33-1 at 4.) Defendant argues the
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Court’s citation to FCC rulings beyond the plain meaning of the TCPA thus constituted
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clear error. (Id.)
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The Court disagrees. This Court’s construction of ATDS is premised on the
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statutory text of the TCPA as interpreted by the Satterfield court. (See Dkt. No. 30 at
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11-12) (citing Satterfield for the proposition that the focus of the ATDS inquiry is on
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whether the equipment has the capacity to store and dial phone numbers). In
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Satterfield, the Ninth Circuit reversed the district court’s grant of summary judgment
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in favor of defendant Simon and Schuster, Inc., finding that the district court “focused
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its analysis on the wrong issue in its determination of what constitutes an ATDS.” 569
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F.3d at 951. The Ninth Circuit found that, when courts evaluate whether equipment is
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an ATDS under the TCPA, “the statute’s clear language mandates that the focus must
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be on whether the equipment has the capacity ‘to store or produce telephone numbers
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to be called, using a random or sequential number generator.’ ” Id. (emphasis in
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original). Although the court concluded that the statutory text “is clear and
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unambiguous,” the court did so in the context of finding that the statute clearly and
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unambiguously focuses on the equipment’s requisite “capacity” rather than present
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functionality. Id. Ultimately, it is unnecessary to rely on the FCC guidance on
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predictive dialers to reach the result arrived at in this case.
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Furthermore, to the extent that the Defendant complains of the Court’s citation
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to the FCC commentary, the Ninth Circuit has itself cited the same FCC regulations
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regarding predictive dialers in defining an ATDS. Meyer v. Portfolio Recovery
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Assocs., LLC, 707 F.3d 1036, 1043 (9th Cir. 2012) (citing In the Matter of Rules &
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Regs Implementing the Tel. Consumer Prot. Act of 1991, 18 FCC Rcd. 14014, 14091-
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93 (July 3, 2003)).
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In the alternative, Defendant argues the Court erred in relying on the FCC’s
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definition of “ATDS” to include “predictive dialers” because of evidence since
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obtained in another case. (Dkt. No. 33-1 at 6.) Specifically, Defendant argues
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Plaintiff’s expert testified in Benzion v. Vivint, Inc., No. 12-cv-61826WJZ (S.D. Fla.),
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that “there’s no such thing as predictive dialing in text.” (Id.) As such, Defendant
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argues the Court erred in relying on the FCC’s guidance related to predictive dialers.
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(Id. at 6-7.)
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This argument also fails to show clear error in the Court’s prior Order. Although
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the Court cited FCC rules and regulations related to predictive dialers in its Order
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denying summary judgment, the Court did not rest its conclusion regarding the Parties’
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“ATDS” showing on a finding that Defendant’s equipment was or was not a predictive
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dialer. (See Dkt. No. 30 at 12.) The Court cited to the FCC’s rulings regarding
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predictive dialers to support the proposition that equipment may fall under the statutory
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definition of “ATDS” without the present functionality of randomly or sequentially
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generating numbers to be called. (Id. at 9.) The focus of the Court’s analysis was on the
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Parities’ respective evidence as to whether Yahoo!’s server and system had the capacity
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to store or produce telephone numbers to be called, using a random or sequential
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number generator. (Dkt. No. 30 at 10-12) (citing Satterfield, 569 F.3d at 951) (“[T]he
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statute’s clear language mandates that the focus must be on whether the equipment has
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the capacity ‘to store or produce telephone numbers to be called, using a random or
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sequential number generator.’”). Having reviewed the Parties’ respective evidence
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regarding the statutorily mandated “capacity,” the Court found that genuine issues of
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material fact precluded summary judgment. (Dkt. No. 30 at 12.) Defendant’s newly
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proffered evidence that Plaintiffs’ expert has testified in another case that there is “no
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such thing as predictive dialing in text” is therefore inapposite and fails to show clear
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error in the Court’s previous Order.
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B. Present versus Future Capacity
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Defendant next argues the Court erred in relying on Yahoo!’s testimony
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regarding its ability to write or install new software to dial telephone numbers to deny
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summary judgment, because “subsequent case law makes clear that the mere ability to
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write or install new software does not, as a matter of law, make Yahoo!’s system an
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ATDS under [the TCPA].” (Dkt. No. 33-1 at 7) (citing Gragg v. Orange Cab Co., Inc.,
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–F. Supp. 2d –, No. C12-0576RSL, 2014 WL 494862 at *2-3 (W.D. Wash. Feb. 7,
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2014)). As an initial matter, the Court notes that Defendant’s new proffered authority,
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as district court opinion, does not qualify as an “intervening change in the controlling
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law” sufficient to justify reconsideration. See Kona Enters., Inc. v. Estate of Bishop,
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229 F.3d 877, 890 (9th Cir. 2000) (citing 398 Orange St. Partners v. Arnold, 179 F.3d
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656, 665 (9th Cir. 1999)).
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However, having considered the Gragg court’s reasoned disagreement with this
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Court’s holding, the Court finds itself nonetheless bound by Ninth Circuit precedent
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to the contrary and finds no clear error in its February 3, 2014 Order denying Yahoo!’s
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motion for summary judgment. In particular, the Gragg court held that the statutory
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definition of ATDS focuses on the “system’s present, not potential, capacity to store,
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produce, or call randomly or sequentially generated telephone numbers.” 2014 WL
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494862 at *2 (emphasis in original). In further denying the plaintiff’s motion for
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reconsideration, the Gragg court specifically rejected this Court’s February 3, 2014
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Order, finding that “[t]here is no indication that the Ninth Circuit would deem a system
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that has to be reprogrammed or have new software installed in order to perform the
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functions of an ATDS to be an ATDS.” Gragg v. Orange Cab Co., Inc., No. C12-
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0576RSL, 2014 WL 801305 at *2 (W.D. Wash. Feb. 28, 2014). As Yahoo! has argued,
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two other district courts applying Ninth Circuit law have found similarly. See Hunt v.
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21st Mortg. Corp., No. 2:12-CV-2697-WMA, 2013 WL 5230061 at *4 (N.D. Ala. Sept.
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17, 2013) (holding that to “meet the TCPA definition of an [ATDS], a system must
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have a present capacity, at the time the calls were being made, to store or produce and
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call numbers from a number generator”); Dominguez v. Yahoo! Inc., –F. Supp. 2d –,
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2014 WL 1096051 (E.D. Pa. March 20, 2014).
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This Court respectfully disagrees. In Satterfield v. Simon & Schuster, No. C 06-
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2893 CW, 2007 WL 1839807 at *6 (N.D. Cal. June 26, 2007), the district court granted
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summary judgment to defendant Simon & Schuster, concluding that the plain language
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of the TCPA precluded a finding that Simon & Schuster’s equipment was an ATDS
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where the parties did not dispute that the equipment at issue did not “store, produce or
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call randomly or sequentially generated telephone numbers.” On appeal, the Ninth
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Circuit reversed and remanded the district court’s conclusion, emphasizing that the
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focus must be on the equipment’s capacity rather than whether the equipment actually
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stored, produced, or called randomly or sequentially generated telephone numbers.
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Satterfield v. Simon & Schuster, 569 F.3d 946, 951 (9th Cir. 2009).
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Furthermore, in Meyer v. Portfolio Recover Associates, LLC, 707 F.3d 1036,
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1043 (9th Cir. 2012), the Ninth Circuit specifically considered and rejected a
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defendant’s argument that its dialers did not fall within the statutory definition of
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ATDS because its dialers did not “have the present capacity to store or produce
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numbers using a random or sequential number generator.”1 See Meyer v. Portfolio
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Recover Associates, LLC, Case No. 11-56600, Dkt. No. 6-1 (appellant’s opening brief)
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at 25 (9th Cir. filed Oct. 14, 2011) (arguing that “[t]he question at issue is the present
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capacity of [defendant’s] dialers to store and produce numbers using a random and
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sequential number generator, not what theoretical, future capacity could be possible if
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The Court notes that the defendant in Meyer had argued to the district court that
it “would be required to invest significant resources to change the dialers to achieve
[the capacity to store or produce numbers using a random or sequential number
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Case No. 11-56600, Dkt. No. 6-1 at 25 (9th Cir. filed Oct. 14, 2011) (“[defendant]
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capacity, and it would make no sense for [defendant’s] business to do so.”).
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significant time and resources were spent by PRA to modify its dialers”) (emphasis in
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original). In rejecting the defendant’s argument, the court reaffirmed its previous
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holding in Satterfield that the TCPA focuses on the equipment’s capacity rather than
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present use. Meyer, 707 F.3d at 1043. The court further found that because the
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defendant used its equipment as a predictive dialer, which the FCC has found has the
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requisite “capacity,” the district court did not err in finding the plaintiff had
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demonstrated likelihood of success on the merits sufficient for a preliminary injunction.
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Id. (citing In the Matter of Rules & Regs Implementing the Tel. Consumer Prot. Act
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of 1991, 18 FCC Rcd. 14014, 14091-93 (July 3, 2003)).
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This Court therefore finds the clear mandate from the Ninth Circuit requires a
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defendant challenging a plaintiff’s ATDS showing on a motion for summary judgment
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to demonstrate that no genuine issues of material fact exist as to whether the equipment
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at issue has the requisite current and future capacity to act as an ATDS in order to
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warrant summary judgment.
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Accordingly, the Court finds no clear error in its previous conclusion that
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genuine issues of material fact exist as to whether Yahoo!’s equipment has the requisite
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“capacity” to be considered an ATDS under the TCPA. Defendant’s motion for
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reconsideration, (Dkt. No. 33), must be DENIED.
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II. Interlocutory Appeal
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District courts may certify an issue for interlocutory appeal upon satisfaction of
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certain criteria. 28 U.S.C. § 1292(b). Those criteria are: (1) the order involves a
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controlling question of law; (2) there is substantial ground for difference of opinion;
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and (3) an immediate appeal from the order may materially advance the ultimate
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termination of the litigation. In re Cement Antitrust Litig., 673 F.2d 1020, 1026 (9th
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Cir. 1982). Courts apply section 1292(b)’s requirements strictly, and grant motions for
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certification only when exceptional circumstances warrant immediate appeal. Coopers
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& Lybrand v. Livesay, 437 U.S. 463, 475 (1978). The party seeking certification to
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appeal an interlocutory order has the burden of establishing the existence of such
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exceptional circumstances. Id. “Even then, a court has substantial discretion in deciding
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whether to grant a party’s motion for certification.” Zulewski v. Hershey Co., 2013 WL
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1334159, at *1 (N.D. Cal. Mar. 29, 2013).
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Having considered the foregoing criteria, the Court finds that no exceptional
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circumstances warrant interlocutory review. The Court notes that it denied summary
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judgment on the issue of whether Yahoo!’s server and system constitutes and ATDS
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because it finds that genuine issues of fact preclude summary judgment. (Dkt. No. 30.)
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Thus, even if the Ninth Circuit ultimately reviews this Court’s February 3, 2014 Order,
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the Ninth Circuit will be more able to do so with a complete factual record. See
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McFarlin v. Conseco Servs., LLC, 381 F.3d 1251, 1259 (11th Cir. 2004) (Ҥ 1292(b)
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appeals were intended, and should be reserved, for situations in which the court of
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appeals can rule on a pure, controlling question of law without having to delve beyond
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the surface of the record in order to determine the facts.”).
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Furthermore, to the extent that Yahoo! disagrees with the Court’s interpretation
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of this circuit’s controlling law, Judge Lasnik in the Western District of Washington
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has certified an interlocutory appeal in Gragg v. Orange Cab Co. Inc., No. C12-
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057RSL, Dkt. No. 132 (W.D. Wash. Apr. 15, 2014), on the question of the proper
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interpretation of “has the capacity” in the context of the TCPA’s definition of ATDS.
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(See Dkt. No. 39-1, Chang Decl. Ex. 1.) As such, the Court will deny Defendants’
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alternative request to certify the February 3, 2014 Order for interlocutory appeal.
CONCLUSION AND ORDER
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For the foregoing reasons, Yahoo! Inc.’s Motion for Reconsideration, (Dkt. No.
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33), is DENIED. Yahoo! Inc.’s request, in the alternative, for interlocutory appeal is
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also DENIED.
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IT IS SO ORDERED.
DATED: July 3, 2014
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HON. GONZALO P. CURIEL
United States District Judge
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