Mendez v. Optio Solutions, LLC et al

Filing 25

ORDER denying 21 Defendant's Motion to Stay. Accordingly, the motion hearing presently set for 3/30/2017, is VACATED. Signed by Judge Anthony J. Battaglia on 3/8/2017. (acc)

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UNITED STATES DISTRICT COURT

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SOUTHERN DISTRICT OF CALIFORNIA

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ORDER DENYING DEFENDANT’S
MOTION TO STAY CASE

Plaintiff,

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Case No.: 3:16-cv-01882 AJB (KSC)

SARAH MENDEZ, On Behalf Of Herself
And All Others Similarly Situated,
v.
OPTIO SOLUTIONS, LLC, dba
QUALIA COLLECTION SERVICES,
Defendant.

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Presently before the Court is Defendant Optio Solutions, LLC’s, doing business as

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Qualia Collection Services, (“Defendant”) motion to stay the case pending the United

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States Court of Appeals for the District Court of Columbia Circuit’s decision in ACA

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International v. Federal Communications Commission, No. 15-1211, which is currently

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reviewing the Federal Communication Commission’s July 10, 2015, declaratory ruling and

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order (the “2015 FCC Order”). (Doc. No. 21.) Defendant contends that the disputed issue

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for review in ACA International, whether the FCC correctly interpreted the definition of

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an “automated telephone dialing system,” (“ATDS”), bears directly on the viability of

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Plaintiff Sarah Mendez’s (“Plaintiff”) claims under the Telephone Consumer Protection

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Act, 47 U.S.C. § 227 (“TCPA”). (Id.) Upon consideration of the parties’ moving papers,

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the Court finds this motion suitable for determination on the papers without oral argument
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pursuant to Local Rule 7.1.d.1. Accordingly, the motion hearing presently set for March

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30, 2017, is VACATED. Finding the relevant considerations, including the interests of

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justice, do not support a stay of this matter, Defendant’s motion to stay is DENIED.

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BACKGROUND

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On July 25, 2016, Plaintiff filed a class action complaint alleging negligent and

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willful violations of the TCPA. (Doc. No. 1.) The complaint alleges that as early as October

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2015 and without Plaintiff’s prior consent, Defendant called Plaintiff on her cellular phone

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approximately 120 times, attempting to collect a debt. (Id. ¶¶ 17, 18.) Plaintiff claims that

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Defendant placed the unsolicited phone calls with the use of an ATDS and an artificial or

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prerecorded voice system, which had the capacity to produce or store numbers randomly

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or sequentially, and to dial such numbers. (Id. ¶ 20.) Plaintiff further alleges that Defendant

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left generic, pre-recorded voice messages on Plaintiff’s voicemail, which began mid-

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message. (Id. ¶ 22.) According to Plaintiff, she never consented to receiving the unsolicited

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phone calls and/or revoked any alleged prior express consent. (Id. ¶ 25.) Plaintiff seeks to

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represent a nationwide class of similarly situated persons who have received unsolicited

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calls from Defendant via either an ATDS or an artificial or prerecorded voice system. (Id.

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¶ 29.)

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On September 2, 2016, Defendant filed a motion to dismiss for failure to state a

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claim, (Doc. No. 10), which the Court granted with leave to amend on the basis that

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Plaintiff’s failure to include a redacted version of her cell phone number did not provide

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Defendant fair notice of her claims. (Doc. No. 17 at 6.) On December 1, 2016, Plaintiff

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filed her first amended complaint, (Doc. No. 18), and on December 15, 2016, Defendant

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answered, (Doc. No. 20). On December 16, 2016, Defendant moved to stay the matter

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pending a decision in ACA International. (Doc. No. 21.) Plaintiff opposes a stay. (Doc. No.

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23.)

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LEGAL STANDARD

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A court’s power to stay proceedings is incidental to the inherent power to control the

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disposition of its cases in the interests of efficiency and fairness to the court, counsel, and
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litigants. Landis v. N. Am. Co., 299 U.S. 248, 254–55 (1936); Single Chip Sys. Corp. v.

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Intermec IP Corp., 495 F. Supp. 2d 1052, 1057 (S.D. Cal. 2007). A stay may be granted

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pending the outcome of other legal proceedings related to the case in the interests of judicial

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economy. Leyva v. Certified Grocers of Cal., Ltd., 593 F.2d 857, 863–64 (9th Cir. 1979).

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Discretion to stay a case is appropriately exercised when the resolution of another matter

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will have a direct impact on the issues before the court, thereby substantially simplifying

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the issues presented. See Mediterranean Enters. v. Ssangyong Corp., 708 F.2d 1458 (9th

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Cir. 1983); San Diego Padres Baseball P’ship v. U.S., Case No. 99CV0828, 2001 WL

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710601, at * 1 (S.D. Cal. May 10, 2001).

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In determining whether a stay is appropriate, a district court “must weigh competing

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interests and maintain an even balance.” Landis, 299 U.S. at 254–55. These competing

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interests include the possible damage resulting from granting a stay, the hardship or

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inequity a party may suffer if required to go forward, and the simplifying or complicating

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of issues, proof, and questions of law that could result from a stay. CMAX, Inc. v. Hall, 300

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F.2d 265, 268 (9th Cir. 1962) (citing Landis, 299 U.S. at 254–55). “If there is even a fair

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possibility that the stay will work damage to someone else, the stay may be inappropriate

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absent a showing by the moving party of hardship or inequity.” Dependable Highway

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Express, Inc. v. Navigators Ins. Co., 498 F.3d 1059, 1066 (9th Cir. 2007) (quotation

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omitted). “A stay should not be granted unless it appears likely the other proceedings will

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be conducted within a reasonable time in relation to the urgency of the claims presented to

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the court.” Levya, 593 F.2d at 864.

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DISCUSSION

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The crux of Defendant’s motion is based upon two key inquiries: (1) whether the

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FCC was authorized to interpret or modify the ATDS definition set forth by Congress, and

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if so, (2) whether the FCC correctly interpreted that definition. (Doc. No. 21 at 2-3.)

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Specifically, Defendant believes that resolution of ACA International will greatly impact

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the merits of Plaintiff’s ATDS claim because the 2015 FCC Order expanded its prior ATDS

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definition by concluding that every predictive dialer is an ATDS, and that the term
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“capacity” was not limited to the “present capacity” of the telephone equipment at issue.

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(Id. at 1.) Defendant contends a stay is warranted to conserve judicial resources and to

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avoid the hardship of conducting expensive and time-consuming discovery and motion

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practice. (Id. at 5.)

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Alternatively, Plaintiff argues that a stay is inappropriate because the outcome of the

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ACA International has no bearing on Plaintiff’s ATDS claim. (Doc. No. 23.) First, Plaintiff

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contends the 2015 FCC Order merely reiterated and reaffirmed the FCC’s previous

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determinations regarding automatic dialing equipment. Thus, the Court is bound to uphold

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the FCC’s prior regulatory determinations, which are consistent with the ATDS definition

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set forth in the 2015 FCC Order, stating that dialing equipment need not generate random

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or sequential numbers to constitute an ATDS. (Id. at 2-4.) Second, because Plaintiff alleges

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Defendant violated the TCPA through both the use of an ATDS and an artificial or

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prerecorded voice, Plaintiff’s TCPA claim will stand despite the ATDS allegations. (Id. at

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5.) Lastly, Defendant failed to establish genuine hardship because fact discovery is still

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necessary and postponing such process will be prejudicial to Plaintiff where “delay could

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result in loss of testimonial and documentary evidence.” (Id. at 9-10.)

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The TCPA defines an ATDS as “equipment which has the capacity – (A) to store or

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produce telephone numbers to be called, using a random or sequential number generator;

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and (B) to dial such numbers.” 47 U.S.C. § 227(a)(1). In July 2015, the FCC clarified that

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the “TCPA’s use of ‘capacity’ does not exempt equipment that lacks the ‘present ability’

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to dial randomly or sequentially,” and that ‘the capacity of an autodialer . . . also includes

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its potential functionalities.” See In the Matter of Rules & Regulations Implementing the

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Telephone Consumer Protection Act of 1991, 30 F.C.C. Rcd. 7961, 7974 (July 10, 2015).

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ACA International represents a consolidation of various petitions that request the D.C.

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Circuit to vacate the 2015 FCC Order regarding the definition of ATDS. Defendant seeks

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a stay pending the resolution of ACA International. Through resolution of the pending

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appeal, the D.C. Circuit will address, among other things, what type of equipment

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constitutes an ATDS.
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Upon review of the parties’ arguments in support and in opposition of a stay, as well

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as the reasoning of other courts to address the present issue, the Court finds a stay is

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inappropriate. Defendant has not shown this is one of the “rare circumstances” in which a

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stay pending the resolution of an appeal in another case is appropriate. See Landis, 299

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U.S. at 255; Lathrop v. Uber Tech., Inc., No. 14-CV-5678-JST, 2016 WL 97511 at *5

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(N.D. Cal. Jan. 8, 2016). First, while Defendant correctly asserts that briefing and oral

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arguments in the appeal are now complete, “it is far from guaranteed that a final result in

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ACA International is imminently forthcoming.” Glick v. Performant Fin. Corp., No. 16-

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CV-5461-JST, 2017 WL 786293, at *2 (N.D. Cal. Feb. 27, 2017) (emphasis added). In

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fact, courts in this Circuit have recently rejected this argument on the basis that whatever

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the outcome, appeal is likely and will further delay proceedings until a final determination

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is made by the U.S. Supreme Court. See id.; Cabiness v. Educ. Fin. Solutions, LLC, No.

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16-CV-1109-JST, 2017 WL 167678, at *3 (N.D. Cal. Jan 17, 2017); Lathrop, 2016 WL

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97511, at *4 (“[T]he D.C. Circuit is unlikely to be the final step in the litigation over the

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FCC’s 2015 Omnibus Order. Whichever party is unsuccessful in that court is almost certain

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to appeal to the Supreme Court. Thus, even the most optimistic estimate of the time

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required for a decision from the D.C. Circuit significantly understates both the delay a stay

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might engender and the concomitant prejudice to Plaintiff.”). Thus, as presently

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considered, a stay pending ACA International would be of indefinite duration, which

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weighs against issuance of a stay.

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Second, it is unclear what impact the D.C. Circuit’s decision would have on the

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issues raised in this matter and Defendant similarly fails to articulate the same. Though

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ACA International has the potential to clarify what constitutes an ATDS, and regardless of

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the authoritative weight of such a clarification, Defendant will still be required to produce

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discovery to settle the factual disputes regarding its autodialing technology. See, e.g., Glick,

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2017 WL 786293 at *2; Lathrop, 2016 WL 97511, at *4 (“Even if the D.C. Circuit were to

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modify or vacate the 2015 FCC Order, factual disputes such as whether an ATDS was used

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and whether [ ] recipients provided their consent, will remain here.”); Richardson v. Verde
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Energy USA, Inc., No. CV 15-6325, 2016 WL 4478839, at *3 (E.D. Pa. Aug. 25, 2016)

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(“This action is not automatically over even if the ACA [International] outcome is

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favorable to the defendant. The impact the ACA decision might have on this case is limited

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only to the scope of the definition of an automatic telephone dialing system.”); Sliwa v.

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Bright House Networks, LLC, No. 16-CV-235-FTM-29 MRM, 2016 WL 3901378, at *4-

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5 (M.D. Fla. July 19, 2016) (“But, even if the D.C. Circuit’s decision is favorable for [the

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defendant] and the conclusions reached therein are binding on this Court, Plaintiff’s TCPA

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claim will proceed.”); see also Reichman v. Poshmark, Inc., No. 16-CV-2359-DMS, 2017

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WL 436505, at *5 (S.D. Cal. Jan. 3, 2017) (“It would be unreasonable to require Plaintiff,

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without the benefit of discovery, to describe the technical details of Defendant’s alleged

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ATDS. Therefore, whether Defendant actually used an ATDS, i.e., equipment with the

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capacity to dial numbers without human intervention, is an issue that should be decided

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after discovery has been conducted.”). Moreover, the Court finds Defendant’s argument

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to this point unpersuasive because Plaintiff’s TCPA claims are not limited to Defendant’s

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use of an ATDS, but also concern Defendant’s use of an artificial or prerecorded voice

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system. See Vaccaro v. CVS Pharmacy, Inc., No. 13-CV-174-IEG RBB, 2013 WL

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3776927, at *1 n.2 (S.D. Cal. July 16, 2013); Silwa, 2016 WL 3901378, at *4 (“[T]he

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appeal will not affect Plaintiff’s contention that Bright House called him using a

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prerecorded or automated voice, which is an independent basis for stating a claim under

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the TCPA.”). Thus, it is unclear whether the resolution of ACA International will have a

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direct impact on the issues before the Court, or substantially simplify the issues presented.

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See Leyva, 593 F.2d at 863-64. Even if the outcome was relevant to these proceedings and

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favorable to the Defendant, other issues would remain ripe for consideration, discovery,

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and resolution.

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Lastly, Defendant does not demonstrate a hardship in moving forward with

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inevitable discovery and motion practice. See Edwards v. Oportun, Inc., 193 F. Supp. 3d

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1096, 1100-1102 (N.D. Cal. 2016); Konopca v. Comcast Corp., No. CV156044, 2016 WL

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1645157, at *4 (D.M.J. Apr. 26, 2016) (denying stay pending the ACA International
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decision where “the only purported ‘hardship’ identified by Defendant is the possibility

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that the parties may engage to some extent in unnecessary discovery and/or motion

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practice”); Nussbaum v. Diversified Consultants, Inc., No. CIV. 15-600, 2015 WL

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5707147, at *2 (D.N.J. Sept. 28, 2015) (denying stay pending ACA International where the

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only hardship identified in the absence of a stay was unnecessary discovery and motion

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practice”); Jones v. AD Astra Recovery Servs., Inc., No. 16-1013-JTM-GEB, 2016 WL

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3145072, at *6 (D. Kan. June 6, 2016) (denying stay pending ACA International and

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finding the “potential that Defendant could engage in greater discovery, if the case is not

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stayed, does not constitute a ‘rare circumstance’ which justifies an indefinite stay.”).

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However, the potential of prejudice to Plaintiff in delaying discovery is likely and severe.

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Glick, 2017 WL 786293 at *2; Cabiness, 2017 WL 167678, at *3 (“[P]assage of time will

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make it more difficult to reach the class members and will increase the likelihood that

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relevant evidence will dissipate.”). Although other district courts to consider this issue have

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found a stay pending resolution of ACA International appropriate, as the Supreme Court

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has noted, “[o]nly in rare circumstances will a litigant in one c[a]se be compelled to stand

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aside while a litigant in another settles the rule of law that will define the rights of both.”

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Landis, 299 U.S. at 255.

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For the reasons set forth above, because Defendant has failed to carry its burden of

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demonstrating a stay is warranted and there is more than a fair possibility Plaintiff will

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suffer prejudice from effecting a stay, the equities considered do not support staying this

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matter. Accordingly, Defendant’s motion to stay is DENIED.

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CONCLUSION
As set forth above, Defendant’s motion to stay is DENIED.

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IT IS SO ORDERED.

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Dated: March 8, 2017

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