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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UNITED STATES DISTRICT COURT

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SOUTHERN DISTRICT OF CALIFORNIA

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Case No.: 16cv2833 JM (JMA)

TREVER DECLUE and KATHERINE
DECLUE, individually and on behalf of
those similarly situated,

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ORDER DENYING DEFENDANT’S
MOTION TO STAY PROCEEDINGS

Plaintiffs,

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v.

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UNITED CONSUMER FINANCIAL
SERVICES COMPANY,

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Defendant.

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Before the court is Defendant United Consumer Financial Services Company’s

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(“Defendant”) motion to stay proceedings pending the D.C. Circuit’s opinion in ACA

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International v. Federal Communications Commission, No. 15-1211. (Doc. No. 33.)

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Plaintiffs Trever and Katherine DeClue (collectively, “Plaintiffs”) oppose the motion. The

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court finds the matter appropriate for decision without oral argument pursuant to Local

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Rule 7.1(d)(1) and, for the following reasons, denies Defendant’s motion.
BACKGROUND

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I.

Procedural History

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On November 18, 2016, Plaintiffs filed a class action complaint alleging negligent

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and willful violations of the Telephone Consumer Protection Act (“TCPA”). (Doc. No. 1.)
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Plaintiffs’ operative first amended class action complaint (“FAC”) alleges that Defendant

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repeatedly called Mr. DeClue on his personal cell phone, which was included as part of

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Ms. DeClue’s subscription with her service provider, after Mr. DeClue revoked consent to

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do so. (Doc. No. 12 ¶¶ 13–24.) Plaintiffs allege that Defendant used an automatic

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telephone dialing system (“ATDS”) to make the calls, and at least one of the calls used an

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artificial or prerecorded voice. (Id. ¶¶ 25–29.) Plaintiffs seek to represent a nationwide

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class of similarly situated persons who received calls from Defendant through the use of

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an ATDS or an artificial or prerecorded voice. (Id. ¶ 40.)

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On July 11, 2017, Defendant moved to stay the matter pending the D.C. Circuit’s

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decision in ACA International. (Doc. No. 33.) Plaintiffs oppose a stay. (Doc. No. 35.)

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II.

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The FCC’s 2015 Order and the D.C. Circuit Appeal in ACA International
In 2015, the Federal Communications Commission (“FCC”) issued a ruling

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clarifying various provisions of the TCPA.

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Implementing the Telephone Consumer Protection Act of 1991, 30 FCC Rcd. 7961

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(July 10, 2015) (“2015 FCC Order”). Defendant highlights the FCC’s rulings on ATDS

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and revocation of consent, arguing that the definitions of these terms are at issue in this

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case, and requests a stay while those definitions are contested. (Doc. No. 33-1 at 3–4.)

In the Matter of Rules & Regulations

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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 the 2015 FCC Order, the FCC

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explained that “the capacity of an autodialer is not limited to its current configuration but

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also includes its potential functionalities.” 2015 FCC Order ¶ 16 (emphasis added).

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The TCPA does not explicitly address revocation of consent, but the FCC clarified

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that consumers may revoke consent through “any reasonable means.” Id. ¶ 55. The FCC

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found that the “most reasonable interpretation of consent is to allow consumers to revoke

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consent if they decide they no longer wish to receive voice calls or texts.” Id. ¶ 56.

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The 2015 FCC Order is currently under review by the D.C. Circuit in ACA

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International. The D.C. Circuit heard oral argument in October 2016. (Doc. No. 37 at 3.)
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LEGAL STANDARD

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District courts have inherent power to stay proceedings. This power to stay “is

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incidental to the power inherent in every court to control the disposition of the causes on

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its docket with economy of time and effort for itself, for counsel, and for litigants.” Landis

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v. N. Am. Co., 299 U.S. 248, 254 (1936). The court may grant a stay “pending resolution

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of independent proceedings which bear upon the case,” even if those proceedings are not

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“necessarily controlling of the action before the court.” Leyva v. Certified Grocers of

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California, Ltd., 593 F.2d 857, 863–64 (9th Cir. 1979).

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Using this power “calls for the exercise of judgment, [by] which [courts] must weigh

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

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competing interests the court considers include “the possible damage which may result

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from the granting of a stay, the hardship or inequity which a party may suffer in being

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required to go forward, and the orderly course of justice measured in terms of the

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simplifying or complicating of issues, proof, and questions of law which could be expected

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to result from a stay.” CMAX, Inc. v. Hall, 300 F.2d 265, 268 (9th Cir. 1962). The party

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seeking a stay bears the “burden of showing that the circumstances justify” the court

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exercising its discretion to stay proceedings. Nken v. Holder, 556 U.S. 418, 433–34 (2009).

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DISCUSSION

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Defendant argues that the court should issue a stay because the ruling in ACA

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International could affect two issues in this case—whether Defendant used an ATDS and

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whether Plaintiffs effectively revoked any prior express consent.

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A plaintiff may bring a claim under the TCPA by alleging that the defendant called

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him or her using either an ATDS or a prerecorded voice. 47 U.S.C. § 227(b)(1). Plaintiffs,

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in their complaint, allege that Defendant used both an ATDS and an “automated” or

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prerecorded voice at least one of the times it called Mr. DeClue. (Doc. No. 12 ¶ 27–28.)

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As a result, Plaintiffs’ TCPA claims will remain even if the D.C. Circuit’s ruling impacts

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the definition of an ATDS. See Mendez v. Optio Sols., LLC, 239 F. Supp. 3d 1229, 1233

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(S.D. Cal. 2017) (“[B]ecause Plaintiff alleges Defendant violated the TCPA through both
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the use of an ATDS and an artificial or prerecorded voice, Plaintiff’s TCPA claim will

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stand despite the ATDS allegations.”) (emphasis in original). Furthermore, discovery

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regarding the type of calling system Defendant uses will be necessary to determine whether

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it fits any definition of ATDS, whether it be that of the 2015 FCC Order or a new definition

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provided by the D.C. Circuit.

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Similarly, the D.C. Circuit’s decision in ACA International is unlikely to affect

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whether Plaintiffs were able to revoke their consent to be autodialed. If the D.C. Circuit

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upholds the 2015 FCC Order, the parties will need to conduct discovery to determine

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whether Plaintiffs’ revocation of consent was effective. If the 2015 FCC Order’s ruling on

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consent revocation does not survive, the parties will still need to conduct similar discovery,

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only under Ninth Circuit precedent. See Van Patten v. Vertical Fitness Grp., LLC, 847

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F.3d 1037, 1047 (9th Cir. 2017) (holding that consumers may revoke their prior express

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consent under the TCPA); see also Riazi v. Ally Financial, Inc., 2017 WL 4269791, at *3

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(E.D. Mo. Sept. 26, 2017) (denying motion to stay because Eighth Circuit precedent prior

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to the 2015 FCC Order allowed a consumer to revoke consent under the TCPA); Terec v.

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Reg’l Acceptance Corp., 2017 WL 662181, at *2 (M.D. Fla. Feb. 17, 2017) (denying

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motion to stay because the Eleventh Circuit permits oral revocation of consent under the

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TCPA). Although the Ninth Circuit took the 2015 FCC Order into consideration, the

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FCC’s ruling did not serve as the sole basis for its decision. Instead, the Ninth Circuit

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determined that “the TCPA permits consumers to revoke their prior express consent” based

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on common law principles, the purpose of the TCPA, and other FCC guidance. Van Patten,

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847 F.3d at 1048. Therefore, its holding would remain relevant even if the D.C. Circuit

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invalidates the 2015 FCC Order.

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In sum, Defendant has not shown that this case presents those “rare circumstances”

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that warrant a stay. Landis, 299 U.S. at 255. Discovery on Defendant’s dialing system and

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Plaintiffs’ method of revoking consent will be necessary regardless of the outcome of ACA

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International; accordingly, a stay will not significantly promote judicial economy.

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Moreover, almost a year has passed since the D.C. Circuit heard oral arguments for ACA
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International, which means that it will likely render a decision that could guide the parties

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before discovery ends and issues are put before the court for a final determination.

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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.

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DATED: October 11, 2017
JEFFREY T. MILLER
United States District Judge

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