McGee v. Halsted Financial Services LLC

Filing 17

MEMORANDUM re 11 MOTION for Default Judgment as to Halsted Financial Services LLC, Pran Navanandan. Signed by Judge Richard G. Andrews on 3/19/2014. (nms)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF DELAWARE
KYLE J. MCGEE,
Plaintiff,
Civil Action No. 13-cv-1555 (RGA)

V.

HALSTED FINANCIAL SERVICES, LLC, :
SYED ALI, and PRAN NAV ANANDAN,
Defendants.

Kyle J. McGee, Esq., Wilmington, Delaware, prose plaintiff.
MEMORANDUM

March

lq, 2014

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The Court sees four issues in this case: (1) whether the defendants, as debt collectors, are
exempt under 47 C.F.R. § 64.1200(a)(2)(iii), (2) whether Pran Navanandan may be held
personally liable under the Telephone Consumer Protection Act {TCPA), (3) whether the
plaintiff can have two legal injuries arising from the same phone call under § 227(b)(1 )(A)(iii) of
the TCPA, and (4) what conduct is required for the defendants to have acted willfully and/or
knowingly.
First, the defendants are not exempt under TCPA regulations. See 47 C.F.R. §
64.1200(a)(2)(iii) (2012) (effective until Oct. 16, 2013) (current version at 47 C.F.R. §
64.1200(a)(3)(iii) (2013)). The regulations permit an entity to call a residential telephone line
using a prerecorded or artificial voice when the call is made for a commercial purpose, not
including unsolicited advertisements or telemarketing. In a recent case, the Third Circuit found
that this exemption does not apply to debt collectors calling cellular phones. Gager v. Dell Fin.

Servs., LLC, 727 F.3d 265, 273 (3d Cir. 2013); see also Forrest v. Genpact, No. 3:12-CV-2249,
2013 WL 4516479, at *2 (M.D.P.A. Aug. 26, 2013) ("Defendant's argument that Plaintiffhas
failed to state a claim under the TCP A because the TCP A does not apply to debt collection calls
will be rejected based on Third Circuit precedent."). Here, the defendants called Mr. McGee's
cellular phone, so this exemption could not apply to them.
Second, the TCP A may hold individuals personally liable if they developed or authorized
the policies and procedures that led to violations of the TCP A. The TCP A applies to "any
person" who violates it. 47 U.S.C. § 227 (2012). In 2013, the Fourth Circuit found that a
company's owner and its employee were personally liable (in addition to the company itself)
under§ 227 for violating the TCP A. Maryland v. Universal Elections, Inc., 729 F.3d 370, 378
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(4th Cir. 2013) ("[T]he TCP A's language makes clear that individuals can be sued under the
Act."). Therefore, Pran Navanandan may be held personally liable in this case. 1
Third, this Court finds that the plaintiff cannot have two, separate legal injuries arising
from a single phone call under one subsection of the TCP A. Section 227 states that no person
may call a cellular phone "using any automatic telephone dialing system or an artificial or
prerecorded voice," unless it is an emergency or the called party previously gave express
consent. 47 U.S.C. § 227(b)(1)(A)(iii). The plaintiff argued that the defendants were liable for
two violations because "the violations stem from separate, disjunctive phrases." (D.I. 12, p. 11).
I disagree. When a defendant calls a plaintiff's cellular phone using an automatic dialing system

and a recording, the defendant only violated one subsection of the law, so there is only one
violation. Charvat v. NMP, LLC does not apply because, in that case, the two violations arising
from one phone call were grounded in separate subsections ofthe TCPA. 656 F.3d 440,448-49
(6th Cir. 2011). The defendant used a recording and violated the "do-not-call-list requirements."

!d. The Sixth Circuit specifically noted that the subsections targeted different harms. !d. at 449.
The first rule "impose[ d] greater restrictions on automated telephone calls and transmissions,"
and the second rule "impose[ d] minimum procedures for maintaining a do-not-calllist that apply
to all calls." !d. Here, the subsection that the defendants violated targets the same harm by

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The plaintiff says that Mr. Navanandan knowingly "created and/or authorized" policies
that clearly violated the TCPA by engaging "third party providers of automatic telephone dialing
systems and services required for the creation of pre-recorded and automated voice messaging."
(D.I. 1, ~ 17-18). Further, the plaintiff alleges that Mr. Nevanandan set up the automatic telephone
dialing systems and designed them to automatically dial phone numbers "without first requiring
manual dialing to confirm that the telephone numbers dialed in fact lead to contact with the
appropriate debtors." (!d.,~ 18).

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restricting automated calls to cell phones, not separate harms like the subsections in the Charvat
case.
Fourth, the Court does not need to choose between the two standards to determine
whether the defendants acted willfully or knowingly because the plaintiff met both standards.
The defendants must have known that they were violating the TCP A because others had
previously sued them for TCPA violations. (D.I. 12, pp. 12-13). Therefore, an increased award
is appropriate. See 47 U.S.C. § 227(b)(3)(C).

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