Meza et al v. Sirius XM Radio Inc.
Filing
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ORDER Denying 16 Defendant's Motion to Dismiss; and Staying the Case. Defendants are ORDERED to file a status report on that case's progress every 6 months with this court and either party must notify this Court within 14 days after a decision is ordered. Signed by Judge Anthony J. Battaglia on 9/25/2018. (acc)
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UNITED STATES DISTRICT COURT
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SOUTHERN DISTRICT OF CALIFORNIA
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Michelle Meza and Steve Meza,
Case No.: 17-cv-2252-AJB-JMA
Plaintiffs,
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ORDER:
(1) DENYING DEFENDANT’S
MOTION TO DISMISS, (Doc. No. 16);
AND
(2) STAYING THE CASE
v.
Sirius XM Radio, Inc.,
Defendant,
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United States of America,
Intervenor.
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Defendant Sirius XM Radio, Inc’s motion to dismiss raises constitutional issues
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currently pending before the Ninth Circuit. Sirius argues that a provision of the Telephone
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Consumer Protection Act violates the First Amendment because it is a content-based
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restriction on speech which is not narrowly tailored under a strict scrutiny analysis.
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Recently, a number of defendants have appealed district court orders on identical grounds,
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asserting that a government-debt exemption written into a provision of the statute turns a
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content-neutral provision into a content-based one. Because the Ninth Circuit has granted
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briefing concerning the same constitutional issues Sirius raises, the Court chooses to STAY
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this case pending the Ninth Circuit’s decision regarding the constitutionality of
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47 U.S.C. § 227(b)(1)(A)(iii). Thus, the Court DENIES Sirius’ motion to dismiss on First
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Amendment grounds as premature, given that the issue is before the Ninth Circuit. (Doc.
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No. 16.) The Court also DENIES Sirius’ argument that the complaint should be dismissed
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for failure to allege a key element under the TCPA, finding the complaint adequately pleads
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Sirius used an ATDS.
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I.
BACKGROUND
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Plaintiffs allege Sirius contacted their cellular phones for illegal marketing purposes,
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violating the TCPA. (Doc. No. 1 ¶ 1.) Under the Telephone Consumer Protection Act,
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(“TCPA”), businesses are prevented from calling a cell phone using an “automatic
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telephone dialing system, (“ATDS”). 47 U.S.C. § 227 (b)(1)(a). The Act, however, allows
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the use of an ATDS if the caller has been given “the prior express consent of the called
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party,” or if the call is made “solely to collect a debt owed to or guaranteed by the United
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States.” (Doc. No. 16-1 at 7.)
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II.
REQUEST FOR JUDICIAL NOTICE
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Sirius requests the Court take judicial notice of a settlement agreement and a fee
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memorandum in Hooker v. Sirius XM Radio Inc., No. 13-cv-3 (E.D. Va. 2013).
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(Doc. No. 16-2.) In that case, Sirius was the defendant and the Meza’s current attorneys
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were also plaintiff’s attorneys-of-record.
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Pursuant to Federal Rule of Evidence 201(b), “[t]he court may judicially notice a
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fact that is not subject to reasonable dispute because it: (1) is generally known within the
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trial court’s territorial jurisdiction; or (2) can be accurately and readily determined from
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sources whose accuracy cannot reasonably be questioned.” However, “[a]s a general rule,
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[the court] ‘may not consider any material beyond the pleadings in ruling on a Rule
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12(b)(6) motion.’” United States v. Corinthian Colleges, 655 F.3d 984, 998 (9th Cir. 2011)
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(citing Lee v. City of Los Angeles, 250 F.3d 668, 688 (9th Cir. 2001)). The Court may “take
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judicial notice of ‘matters of public record,’ but not of facts that may be ‘subject to
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reasonable dispute.’” Corinthian Colleges, 655 F.3d at 999.
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Here, the Court takes judicial notice of both the settlement agreement and the fee
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memorandum as the former is not subject to dispute and the latter is a matter of public
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record. (Doc. No. 16-2.)
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III.
MOTION TO DISMISS
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Sirius gives two reasons why the complaint should be dismissed: (1) the Meza’s fail
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to plead Sirius used an ATDS; and (2) the TCPA violates both the First Amendment and
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the Equal Protection Clause. Sirius also requests the class allegations should be stricken,
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arguing plaintiffs are inadequate class representatives.1
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A.
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A Federal Rule of Civil Procedure 12(b)(6) motion to dismiss tests the legal
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sufficiency of the complaint. Navarro v. Block, 250 F.3d 729, 732 (9th Cir. 2001). A
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pleading must contain “a short and plain statement of the claim showing that the pleader is
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entitled to relief . . . .” Fed. R. Civ. P. 8(a)(2). Plaintiffs must also plead, however, “enough
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facts to state a claim to relief that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550
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U.S. 544, 570 (2007). The plausibility standard thus demands more than a formulaic
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recitation of the elements of a cause of action or naked assertions devoid of further factual
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enhancement. Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). Instead, the complaint “must
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contain sufficient allegations of underlying facts to give fair notice and to enable the
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opposing party to defend itself effectively.” Starr v. Baca, 652 F.3d 1202, 1216 (9th Cir.
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2011).
Legal Standard
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In reviewing a motion to dismiss under Rule 12(b)(6), the court must assume the
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truth of all factual allegations and must construe them in the light most favorable to the
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nonmoving party. Cahill v. Liberty Mut. Ins. Co., 80 F.3d 336, 337–38 (9th Cir. 1996). The
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court need not take legal conclusions as true “merely because they are cast in the form of
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factual allegations.” Roberts v. Corrothers, 812 F.2d 1173, 1177 (9th Cir. 1987) (quoting
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W. Mining Council v. Watt, 643 F.2d 618, 624 (9th Cir. 1981)). Similarly, “conclusory
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In the interest of judicial efficiency, the Court declines to rule on Sirius’ request to strike
the class allegations. (Doc. No. 16-1 at 16–19.) Sirius can renew this request when the
case’s stay is lifted, should they wish to do so.
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allegations of law and unwarranted inferences are not sufficient to defeat a motion to
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dismiss.” Pareto v. Fed. Deposit Ins. Corp., 139 F.3d 696, 699 (9th Cir. 1998).
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B.
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Sirius argues the Meza’s failed to plead an essential element of the TCPA, namely,
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that Sirius used an ATDS. (Doc. No. 16-1 at 11.) To state a claim for a violation of the
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TCPA, a plaintiff must allege that “(1) the defendant called a cellular telephone number;
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(2) using an automatic telephone dialing system; (3) without the recipient’s prior express
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consent.” Meyer v. Portfolio Recovery Assocs., LLC, 707 F.3d 1036, 1043 (9th Cir. 2012);
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47 U.S.C. § 227(b)(1). An ATDS is “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). Complicating matters is a recent
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decision significantly narrowing what “capacity” means under the statute. ACA
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International v. FCC, 885 F.3d 687 (D.C. Cir. 2018). The FCC had previously determined
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that the “capacity” of calling equipment “includes its potential functionalities” or “future
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possibility,” not just its “present ability.” Id. at 695. However, ACA International held that
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“the FCC’s interpretation of a device that has the ‘capacity’ to operate as an ATDS was
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impermissibly expansive.” Gonzalez v. Ocwen Loan Servicing, LLC, No: 5:18-cv-340-Oc-
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30PRL, 2018 WL 4217065, at *3 (M.D. Fla. Sep. 5, 2018) (referencing ACA International,
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885 F.3d at 695–99). This is because such an interpretation could encompass any cell phone
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that could download an application or extension with the capacity to store numbers dialed
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using a random generator and dial them—thus turning any cellular phone into an
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autodialer. Id. at 699–70.
The ATDS Element is Adequately Pled
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Sirius asserts that the conclusory allegations the Meza’s pled are insufficient to
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support a claim for relief. (Doc. No. 16-1 at 11.) The Meza’s assert they have included
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“several factual allegations” which create “at a minimum a reasonable inference that [ ]
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Sirius used an ATDS here.” (Doc. No. 19 at 14.) The complaint states “[u]pon information
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and belief, the calls were placed via an automatic telephone dialing system.”
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(Doc. No. 1 ¶ 13 (internal quotations omitted).) The complaint also alleges that “[u]pon
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information and belief, this telephone dialing equipment used by Sirius has the capacity to
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store or produce telephone numbers to be called, using a random or sequential number
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generator.” (Id. ¶ 20.) Also, upon “information and belief,” the Meza’s allege that “this
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telephone dialing equipment also has the capacity to dial telephone numbers stored in a
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database or as a list without human intervention.” (Id. ¶ 21.) Sirius cites several cases which
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held such conclusory allegations are insufficient to support a claim. (Doc. No. 16-1 at 11–
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12; See Dugiud v. Facebook, Inc., No. 15-cv-00985-JST, 2016 WL 1169365, at *4
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(N.D. Cal. Mar. 24, 2016 (“This conclusory allegation that Facebook used an ATDS is not,
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without more, sufficient to support a claim for relief under the TCPA.”).)
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However, the Meza’s provided a few additional facts beyond these conclusory
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allegations. Supporting the claim Sirius used an ATDS, the Meza’s also pled that “[a]t the
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beginning of some of the calls there was a long pause before a live agent of Sirius would
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come on the line.” (Id. ¶ 19.) Mr. Meza also stated he heard a prerecorded voice and waited
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twenty minutes before connecting to a live person. (Id. ¶ 14.) While courts have held that
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isolated assertions based upon information and belief that defendant is using an ATDS need
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not be taken as true, here, the Meza’s provided additional information inferring the use of
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an ATDS. See Lofton v. Verizon Wireless (VAW) LLC, No. 13-cv-05665-YGR, 2015 WL
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1254681, at *5 (N.D. Cal. Mar. 18, 2015) (finding an allegation of a “telltale” pause after
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plaintiff picked up the telephone is sufficient at the pleadings stage to allege use of an
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ATDS); Thomas v. Dun & Bradstreet Credibility Corp., 100 F. Supp. 3d 937 (C.D. Cal.
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2015) (finding that plaintiffs’ allegations that defendant used an ATDS and that he heard
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a “pause” after answering the telephone was sufficient at the pleading stage).
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Thus, the Court finds the Meza’s plausibly stated a claim that Sirius used an ATDS
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when contacting plaintiffs. The issues raised the parties’ supplemental filings on what
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constitutes an ATDS post-ACA International is better suited for a summary judgment
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motion, as the Court is bound to accept well-pleaded allegations as true at this stage.
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(See Doc. No. 48.) As such, the Court declines to analyze the parties’ arguments regarding
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the classification of Sirius’ dialing equipment. As such the Defendant’s 12(b)(6) motion is
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Denied.
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Sirius’ Constitutional Arguments Require a Stay
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C.
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Sirius also challenges the constitutionality of the TCPA, arguing it violates the First
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Amendment and the Equal Protection Clause. (Doc. No. 16-1 at 13.) The United States
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intervened to oppose Sirius’ assertions of unconstitutionality and filed a brief in support of
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the TCPA. (Doc. No. 36.) The Meza’s assert these “unconstitutionality arguments have
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been rejected before.” (Doc. No. 19 at 23.)
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Sirius argues that 47 U.S.C. § 227(b)(1)(A)(iii) is unconstitutional because it is a
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content-based restriction on freedom of speech and is not narrowly tailored. (Doc. No. 16-
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1 at 13.) This section prohibits an unconsented call from an ATDS to a “cellular telephone
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service . . . unless such call is made solely to collect a debt owed to or guaranteed by the
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United States.” 47 U.S.C. § 227(b)(1)(A)(iii). The government-debt exception clause was
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added in November 2015. (Doc. No. 36 at 10.) Sirius asserts the law is “content-based”
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because it draws a distinction based on the message conveyed, namely, that “[a] caller may
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use an ATDS or prerecorded voice to collect a government debt, but not (for example) to
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urge church attendance, solicit a charitable contribution, or (as here) communicate with a
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customer.” (Id. at 14.) Sirius states “this law singles out calls about government debts for
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special favor. The preferential treatment here amounts not just to content discrimination,
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but to outright viewpoint discrimination. . . .” (Id.) Because the Meza’s allege their cellular
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phone was the called phone, which is prohibited only under § 227(b)(1)(A)(iii), Sirius
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argues the entire provision is unconstitutional and must be struck, leaving all ATDS-based
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allegations asserted by the Meza’s unfounded.
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In 2015, the Supreme Court held that a town ordinance prohibiting the display of
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outdoor signs without a permit, but which also exempted 23 categories of signs (including
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political and ideological signs), was a content-based restriction under the First Amendment.
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Reed v. Town of Gilbert, 135 S. Ct. 2218, 2226 (2015). The Court reasoned the ordinance
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was content-based because the restrictions “depend entirely on the communicative content
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of the sign.” Id. at 2228. The Court struck down the ordinance finding it did not pass strict
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scrutiny because it was not narrowly tailored and was “hopelessly underinclusive.” Id. at
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2231. Post-Reed, a number of defendants have asserted, as Sirius does, that the TCPA is
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similarly unconstitutional as a content-based restriction under the First Amendment. The
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United States acknowledged that at least “[s]ix courts have determined the TCPA is content
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based, after Reed and as amended in 2015. . . .” (Doc. No. 36 at 12 n.1.) However, each of
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those courts “upheld the statute under strict scrutiny.” (Id.) Of those six cases, however,
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four have been appealed: three to the Ninth Circuit and one to the Fourth Circuit. (Id.)
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In Brickman v. Facebook, Inc., Facebook makes a nearly identical argument as
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Sirius, arguing that “the TCPA is content-based because it’s riddled with exceptions that
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draw[ ] distinctions based on the message a speaker conveys.” Brickman v. Facebook, Inc.,
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230 F. Supp. 3d 1036, 1044 (N.D. Cal. 2017), appeal filed, No. 17-80080 (9th Cir. May 9,
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2017) (internal quotations omitted). The district court, agreeing with Facebook, held that
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§ 227(b)(1)(A)(iii) is “content-based and therefore subject to strict scrutiny.” Id. The Court
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reasoned that the section is content-based because it “would require a court to examine the
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content of the message that is conveyed in order to determine if a violation of the TCPA
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has occurred.” Id. The Court went on to find the TCPA withstood strict scrutiny and denied
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Facebook’s dismissal motion. Id. at 1045–49.
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Facebook requested permission to appeal to the Ninth Circuit, arguing the First
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Amendment question is one of great importance because “if this Court [the Ninth Circuit]
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were to agree with Facebook . . . there would be nothing left to do but dismiss this case
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entirely.” (Petition for Permission to Appeal at 9, Brickman, No. 17-80080 (9th Cir. May
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9, 2017).) The petition was stayed pending the outcome of ACA International. (Order at 2,
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Brickman, No. 17-80080, ECF No. 12.) Facebook renewed its request for permission to
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appeal post-ACA International, as that case did “not address the constitutionality of the
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TCPA’s content-based speech exceptions.” (Notification of Decision in ACA International
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v. FCC at 2, Brickman, No. 17-80080.)
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Alternatively, Facebook requested another stay pending the outcome of a similar
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case already on appeal: Marks v. Crunch of San Diego. (Id. at 3.) The Ninth Circuit opted
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to again stay the case—as well as another case Facebook requested permission to appeal,
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Holt v. Facebook, Inc., 240 F. Supp. 3d 1021 (N.D. Cal. 2017), appeal filed, No. 17-80086
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(9th Cir. May 12, 2017)—pending the outcome of Marks v. Crunch of San Diego, LLC.
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(Order at 2, Brickman, No. 17-80080, ECF No. 21.) The Ninth Circuit issued its opinion in
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Marks on September 20, 2018. Marks, No. 14-56834, 2018 WL 4495553 (9th Cir. 2018).
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The Marks opinion did not touch on the constitutionality issues raised by Sirius and
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Facebook. As the Facebook cases stand, counsel is required to notify the Circuit of the
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Marks decision—which it has yet to do—and it remains unclear whether the Ninth Circuit
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will grant Facebook’s requests to appeal.
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However, in yet another appeal debating the TCPA’s constitutionality, the Circuit
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did grant permission to appeal. Gallion v. Charter Commc’ns, Inc., 287 F. Supp. 3d 920
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(C.D. Cal. 2018), appeal docketed, No. 18-80031, No. 18-55667 (9th Cir. Mar. 8, 2018).
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In its opening brief, appellant-Defendant Charter Communications made the same
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constitutional arguments as Facebook and Sirius: that § 227(b)(1)(A)(iii) is a content-based
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and speaker-based speech restriction which fails strict scrutiny. (Opening Brief at 14,
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Gallion, No. 18-55667.) Gallion’s opening brief mentions three of Facebook’s cases in a
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“statement of related cases,” asserting “[t]hese three cases are ‘related’ to this matter
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because they ‘raise the same or closely related issues.’” (Id. at 63 (citing Ninth Circuit Rule
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28-2.6(c)).) On September 6, 2018, the Chamber of Commerce of the United States of
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America submitted an amicus brief supporting the TCPA’s constitutionality. (Brief of
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Amicus Curiae Chamber of Commerce, Gallion, No. 18-55667 (Sep. 6, 2018).)
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Additionally, on September 7, 2018, the American Association of Political Consultants
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filed an amicus brief supporting Charter Communications, arguing § 227(b)(1)(A)(iii) is
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unconstitutional. (Brief of Amicus Curiae American Association of Political Consultants
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at 10, Gallion, No. 18-55667 (Sep. 7, 2018).)
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Thus, in summarizing pending litigation before the Ninth Circuit, this Court finds
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the constitutional issues Sirius raises are substantively identical to those raised in both the
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Facebook cases and Gallion. While Sirius moved for a stay pending ACA International,
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which is now moot, the Court finds a stay pending the outcome of Gallion or either
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Facebook case is appropriate at this time (although a resolution in Gallion is likely to occur
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first, as the case is further along). If the Ninth Circuit agrees with defendants that
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47 U.S.C. § 227(b)(1)(A)(iii) is unconstitutional, then the Meza’s ATDS allegations would
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have to be dismissed as they allege both of their cellular telephones were called in violation
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of this provision. (Doc. No. 1 ¶¶ 12, 13.) Based on the forgoing, Defendant’s motion on
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constitutional grounds is Denied as premature.
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IV.
CONCLUSION
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Because the constitutionality of 47 U.S.C. § 227(b)(1)(A)(iii) is pending before the
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Ninth Circuit, the Court DENIES Sirius’ motion to dismiss and STAYS the case pending
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a ruling in Gallion v. Charter Commc’ns, Inc., No. 18-55667 (9th Cir. Mar. 8, 2018).
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Defendants are ORDERED to file a status report on that case’s progress every 6 months
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with this court and either party must notify this Court within 14 days after a decision is
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ordered.
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IT IS SO ORDERED.
Dated: September 25, 2018
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