Declue et al v. United Consumer Financial Services Company

Filing 38

ORDER denying 33 Defendant's Motion to Stay proceedings. Signed by Judge Jeffrey T. Miller on 10/11/2017. (jpp)

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1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 SOUTHERN DISTRICT OF CALIFORNIA 10 11 12 Case No.: 16cv2833 JM (JMA) TREVER DECLUE and KATHERINE DECLUE, individually and on behalf of those similarly situated, 13 ORDER DENYING DEFENDANT’S MOTION TO STAY PROCEEDINGS Plaintiffs, 14 v. 15 UNITED CONSUMER FINANCIAL SERVICES COMPANY, 16 Defendant. 17 18 19 Before the court is Defendant United Consumer Financial Services Company’s 20 (“Defendant”) motion to stay proceedings pending the D.C. Circuit’s opinion in ACA 21 International v. Federal Communications Commission, No. 15-1211. (Doc. No. 33.) 22 Plaintiffs Trever and Katherine DeClue (collectively, “Plaintiffs”) oppose the motion. The 23 court finds the matter appropriate for decision without oral argument pursuant to Local 24 Rule 7.1(d)(1) and, for the following reasons, denies Defendant’s motion. BACKGROUND 25 26 I. Procedural History 27 On November 18, 2016, Plaintiffs filed a class action complaint alleging negligent 28 and willful violations of the Telephone Consumer Protection Act (“TCPA”). (Doc. No. 1.) 1 16cv2833 JM (JMA) 1 Plaintiffs’ operative first amended class action complaint (“FAC”) alleges that Defendant 2 repeatedly called Mr. DeClue on his personal cell phone, which was included as part of 3 Ms. DeClue’s subscription with her service provider, after Mr. DeClue revoked consent to 4 do so. (Doc. No. 12 ¶¶ 13–24.) Plaintiffs allege that Defendant used an automatic 5 telephone dialing system (“ATDS”) to make the calls, and at least one of the calls used an 6 artificial or prerecorded voice. (Id. ¶¶ 25–29.) Plaintiffs seek to represent a nationwide 7 class of similarly situated persons who received calls from Defendant through the use of 8 an ATDS or an artificial or prerecorded voice. (Id. ¶ 40.) 9 On July 11, 2017, Defendant moved to stay the matter pending the D.C. Circuit’s 10 decision in ACA International. (Doc. No. 33.) Plaintiffs oppose a stay. (Doc. No. 35.) 11 II. 12 The FCC’s 2015 Order and the D.C. Circuit Appeal in ACA International In 2015, the Federal Communications Commission (“FCC”) issued a ruling 13 clarifying various provisions of the TCPA. 14 Implementing the Telephone Consumer Protection Act of 1991, 30 FCC Rcd. 7961 15 (July 10, 2015) (“2015 FCC Order”). Defendant highlights the FCC’s rulings on ATDS 16 and revocation of consent, arguing that the definitions of these terms are at issue in this 17 case, and requests a stay while those definitions are contested. (Doc. No. 33-1 at 3–4.) In the Matter of Rules & Regulations 18 The TCPA defines an ATDS as “equipment which has the capacity (A) to store or 19 produce telephone numbers to be called, using a random or sequential number generator; 20 and (B) to dial such numbers.” 47 U.S.C. § 227(a)(1). In the 2015 FCC Order, the FCC 21 explained that “the capacity of an autodialer is not limited to its current configuration but 22 also includes its potential functionalities.” 2015 FCC Order ¶ 16 (emphasis added). 23 The TCPA does not explicitly address revocation of consent, but the FCC clarified 24 that consumers may revoke consent through “any reasonable means.” Id. ¶ 55. The FCC 25 found that the “most reasonable interpretation of consent is to allow consumers to revoke 26 consent if they decide they no longer wish to receive voice calls or texts.” Id. ¶ 56. 27 The 2015 FCC Order is currently under review by the D.C. Circuit in ACA 28 International. The D.C. Circuit heard oral argument in October 2016. (Doc. No. 37 at 3.) 2 16cv2833 JM (JMA) 1 LEGAL STANDARD 2 District courts have inherent power to stay proceedings. This power to stay “is 3 incidental to the power inherent in every court to control the disposition of the causes on 4 its docket with economy of time and effort for itself, for counsel, and for litigants.” Landis 5 v. N. Am. Co., 299 U.S. 248, 254 (1936). The court may grant a stay “pending resolution 6 of independent proceedings which bear upon the case,” even if those proceedings are not 7 “necessarily controlling of the action before the court.” Leyva v. Certified Grocers of 8 California, Ltd., 593 F.2d 857, 863–64 (9th Cir. 1979). 9 Using this power “calls for the exercise of judgment, [by] which [courts] must weigh 10 competing interests and maintain an even balance.” Landis, 299 U.S. at 254–55. The 11 competing interests the court considers include “the possible damage which may result 12 from the granting of a stay, the hardship or inequity which a party may suffer in being 13 required to go forward, and the orderly course of justice measured in terms of the 14 simplifying or complicating of issues, proof, and questions of law which could be expected 15 to result from a stay.” CMAX, Inc. v. Hall, 300 F.2d 265, 268 (9th Cir. 1962). The party 16 seeking a stay bears the “burden of showing that the circumstances justify” the court 17 exercising its discretion to stay proceedings. Nken v. Holder, 556 U.S. 418, 433–34 (2009). 18 DISCUSSION 19 Defendant argues that the court should issue a stay because the ruling in ACA 20 International could affect two issues in this case—whether Defendant used an ATDS and 21 whether Plaintiffs effectively revoked any prior express consent. 22 A plaintiff may bring a claim under the TCPA by alleging that the defendant called 23 him or her using either an ATDS or a prerecorded voice. 47 U.S.C. § 227(b)(1). Plaintiffs, 24 in their complaint, allege that Defendant used both an ATDS and an “automated” or 25 prerecorded voice at least one of the times it called Mr. DeClue. (Doc. No. 12 ¶ 27–28.) 26 As a result, Plaintiffs’ TCPA claims will remain even if the D.C. Circuit’s ruling impacts 27 the definition of an ATDS. See Mendez v. Optio Sols., LLC, 239 F. Supp. 3d 1229, 1233 28 (S.D. Cal. 2017) (“[B]ecause Plaintiff alleges Defendant violated the TCPA through both 3 16cv2833 JM (JMA) 1 the use of an ATDS and an artificial or prerecorded voice, Plaintiff’s TCPA claim will 2 stand despite the ATDS allegations.”) (emphasis in original). Furthermore, discovery 3 regarding the type of calling system Defendant uses will be necessary to determine whether 4 it fits any definition of ATDS, whether it be that of the 2015 FCC Order or a new definition 5 provided by the D.C. Circuit. 6 Similarly, the D.C. Circuit’s decision in ACA International is unlikely to affect 7 whether Plaintiffs were able to revoke their consent to be autodialed. If the D.C. Circuit 8 upholds the 2015 FCC Order, the parties will need to conduct discovery to determine 9 whether Plaintiffs’ revocation of consent was effective. If the 2015 FCC Order’s ruling on 10 consent revocation does not survive, the parties will still need to conduct similar discovery, 11 only under Ninth Circuit precedent. See Van Patten v. Vertical Fitness Grp., LLC, 847 12 F.3d 1037, 1047 (9th Cir. 2017) (holding that consumers may revoke their prior express 13 consent under the TCPA); see also Riazi v. Ally Financial, Inc., 2017 WL 4269791, at *3 14 (E.D. Mo. Sept. 26, 2017) (denying motion to stay because Eighth Circuit precedent prior 15 to the 2015 FCC Order allowed a consumer to revoke consent under the TCPA); Terec v. 16 Reg’l Acceptance Corp., 2017 WL 662181, at *2 (M.D. Fla. Feb. 17, 2017) (denying 17 motion to stay because the Eleventh Circuit permits oral revocation of consent under the 18 TCPA). Although the Ninth Circuit took the 2015 FCC Order into consideration, the 19 FCC’s ruling did not serve as the sole basis for its decision. Instead, the Ninth Circuit 20 determined that “the TCPA permits consumers to revoke their prior express consent” based 21 on common law principles, the purpose of the TCPA, and other FCC guidance. Van Patten, 22 847 F.3d at 1048. Therefore, its holding would remain relevant even if the D.C. Circuit 23 invalidates the 2015 FCC Order. 24 In sum, Defendant has not shown that this case presents those “rare circumstances” 25 that warrant a stay. Landis, 299 U.S. at 255. Discovery on Defendant’s dialing system and 26 Plaintiffs’ method of revoking consent will be necessary regardless of the outcome of ACA 27 International; accordingly, a stay will not significantly promote judicial economy. 28 Moreover, almost a year has passed since the D.C. Circuit heard oral arguments for ACA 4 16cv2833 JM (JMA) 1 International, which means that it will likely render a decision that could guide the parties 2 before discovery ends and issues are put before the court for a final determination. 3 4 5 6 CONCLUSION For the foregoing reasons, the court denies Defendant’s motion to stay proceedings pending the D.C. Circuit’s opinion in ACA International. IT IS SO ORDERED. 7 8 9 DATED: October 11, 2017 JEFFREY T. MILLER United States District Judge 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 5 16cv2833 JM (JMA)

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