Johnson v. Yahoo! Inc.

Filing 89

MEMORANDUM Opinion and Order. Signed by the Honorable Manish S. Shah on 12/11/2014: In case no. 14-cv-02028, Yahoo!'s motion for summary judgment 26 is denied. Johnson's motion to exclude the expert report of Monica Desai 60 is denied. In case no. 14-cv-02753, Yahoo!'s motion for summary judgment 21 is denied. [For further detail see attached order.] (psm, )

UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
RACHEL JOHNSON and
ZENAIDA CALDERIN,
Plaintiffs,

Nos. 14 CV 2028
14 CV 2753

v.

Judge Manish S. Shah

YAHOO!, INC.,
Defendant.

MEMORANDUM OPINION AND ORDER
Plaintiffs are cell phone subscribers who each received at least two text
messages from defendant Yahoo!. The first: personalized text messages originally
sent to plaintiffs by some acquaintance. The second: Yahoo!’s explanation for why
plaintiffs received the first. While plaintiffs take no issue with the former, they
contend Yahoo!’s sending of the latter violated the Telephone Consumer Protection
Act.
Plaintiffs’ claims can survive only if Yahoo! sent the second messages using
an “automatic telephone dialing system.” Yahoo! has moved for summary judgment
contending the undisputed record shows that it did not. However, because there
remain genuine issues of fact, the motion is denied.
I.

Legal Standard
Summary judgment is appropriate if the movant shows that there is no

genuine dispute as to any material fact and the movant is entitled to judgment as a

matter of law. Spurling v. C & M Fine Pack, Inc., 739 F.3d 1055, 1060 (7th Cir.
2014). A genuine dispute as to any material fact exists if “the evidence is such that
a reasonable jury could return a verdict for the nonmoving party.” Anderson v.
Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). The party seeking summary judgment
has the burden of establishing that there is no genuine dispute as to any material
fact. See Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). In determining whether
a genuine issue of material fact exists, the court must construe all facts and
reasonable inferences in the light most favorable to the nonmoving party. See CTL
ex rel. Trebatoski v. Ashland School District, 743 F.3d 524, 528 (7th Cir. 2014).
II.

Background
Defendant Yahoo! is widely known for its free online consumer services. [57]

¶ 5. One such service is an instant messaging client called Yahoo! Messenger, which
allows registered users to send online messages to others. Id. ¶ 6. Of primary
importance to this case, Yahoo! Messenger also allows users to send personalized
messages to people’s cell phones through a feature called Mobile SMS1 Messenger
Service, or PC2SMS. Id. ¶ 8. PC2SMS bridges the gap between the online and SMS
worlds by converting the Yahoo! user’s online instant message into a text message
that is sent to a recipient’s cell phone. Id. ¶ 9.
Databases
PC2SMS interacts, either directly or indirectly, with three relevant
databases. The first is the MO/MT database, which keeps track of all the cell phone

1

SMS stands for “short message service” and is another name for a text message.

2

numbers that PC2SMS has ever texted. [57] ¶ 18. Whenever PC2SMS texts a cell
phone for the first time, it adds the number to the database. [28] ¶¶ 31, 33; [57]
¶ 18. For that reason, if a number isn’t in MO/MT, it means PC2SMS has never
texted it. [28] ¶ 32. MO/MT also records whether a cell phone has opted out of
PC2SMS. [57] ¶ 19. If it has, Yahoo! won’t text that cell phone even if a user asks it
to. Id. ¶ 22. If the phone hasn’t opted out—either because it opted into PC2SMS or
because its prior decision to opt out has automatically expired—Yahoo! will send
text messages to the phone as soon as a user asks. Id. ¶¶ 22-26.
The second database PC2SMS interacts with is the Address Book. [57] ¶ 15.
This database stores the information contained in a Yahoo! user’s contacts list,
including the user’s contacts’ cell phone numbers, if any. Id. An Address Book
service pulls information from the Address Book database and provides it to
PC2SMS by means of the user’s local Yahoo! Messenger application. [84] at 10 n.3.
The third database PC2SMS interacts with is the Session database, which
temporarily records the numbers of cell phones that have sent “INFO” messages to
Yahoo! [85] ¶¶ 34-35.2 The Session database records these numbers so Yahoo! can
send responsive text messages back to the originating cell phones. Id.
Input methods
There are two ways for a Yahoo! user to send a message to a cell phone as a
text message through PC2SMS. First, the user can manually input the recipient’s

References to [85] are limited to Defendant’s Responses to Plaintiffs’ Statement of
Additional Facts. I do not consider Yahoo!’s “replies” to plaintiffs’ responses, see [85] at 1-35,
because they are not authorized under Local Rule 56.1.
2

3

cell phone number into a dialog box that appears within the Yahoo! Messenger
client. Id. ¶ 16. Second, the user can select the recipient’s name from the user’s
Yahoo! contacts list (that is, if the Yahoo! user has previously inputted the
recipient’s cell phone number into the contacts list). Id. Under this latter approach,
the recipient’s cell phone number is pulled from Yahoo!’s Address Book database.
[57] ¶ 15; [57-2] at 31:16-32:24.
System Messages
In addition to sending personalized user-originated messages, PC2SMS also
sends “system messages.” See, e.g., [57] ¶¶ 27-29. For example, PC2SMS sends a
“Welcome” system message3 whenever a Yahoo! user sends a personalized message
to a number that has never before received a text message from PC2SMS. Id. ¶ 27.
Likewise, if a cell phone number opts out of receiving text messages, but then has
its opt-out status expire, PC2SMS will send the number the “Welcome” system
message when it receives its first post-expiration personalized message. [85] ¶ 26.
Finally, PC2SMS sends a “Warning” system message4 to any cell phone number
that receives a personalized message after having failed to respond to three
consecutive personalized messages. Id. ¶ 32.
A system message is never sent to a cell phone number wholly independent of
a person-generated message. A system message is sent only if (1) a Yahoo! user
The “Welcome” system message states: “A Yahoo! user has sent you a message. Reply to
that SMS to respond. Reply INFO to this SMS for help or go to y.ahoo.it/imsms.” [56] at 5.
3

The “Warning” system message states: “To continue receiving Y! messages you need to
reply to one. Or reply to this msg with RESET. Reply INFO for help or go to
y.ahoo.it/imsms.” [56] at 6.
4

4

sends the cell phone number a personalized message, or (2) the cell phone
subscriber requests additional information from PC2SMS by replying “INFO.” [57]
¶¶ 35-37; [85] ¶ 17 (citing [72-1] at 74:5-75:22).
Messages to Contacts
When a Yahoo! user sends a personalized message by selecting a recipient
from her contacts list, the corresponding cell phone number is pulled from the
Address Book database and PC2SMS uses it to send not only personalized
messages, but also any concomitant system message. [85] ¶ 17; [57-2] at 31:1633:15.
Yahoo! purports to “deny” this fact by (1) calling it irrelevant and immaterial,
(2) arguing that it takes human intervention to send a system message, and (3)
arguing that “the Address Book Database does not interact directly with the
PC2SMS Service.” [85] ¶ 17. Of these, only the third contention is arguably relevant
to the factual question of whether the Address Book database stores and provides
the number that PC2SMS uses to send system messages to users’ contacts. As
evidence in support of the assertion, Yahoo! cites the testimony of its employee,
Amir Doron, stating that PC2SMS and the Address Book “don’t interact.” Id. (citing
[57-2] at 31:16-18). The testimony that immediately follows makes clear, however,
that PC2SMS and the Address Book database do interact, albeit indirectly (as
Yahoo!’s brief acknowledges). [57-2] at 31:19-32:24. Thus, Yahoo! presents no
evidence controverting plaintiffs’ claim that the Address Book database provides the
number that is used by PC2SMS in sending system messages, and so Local Rule

5

56.1 deems the fact admitted. See NDIL LR 56.1(a)(3) (“All material facts set forth
in the statement filed pursuant to section (b)(3)(C) [i.e., the Statement of Additional
Facts] will be deemed admitted unless controverted by the statement of the moving
party.”).
III.

Analysis
The Telephone Consumer Protection Act makes it unlawful “to make any

call5 . . . using any automatic telephone dialing system . . . to any telephone number
assigned to a . . . cellular telephone service . . . .” 47 U.S.C. § 227(b)(1)(A)(iii). The
Act defines “automatic telephone dialing system” (ATDS) as “equipment which has
the capacity—(A) to store or produce telephone numbers to be called, using a
random or sequential number generator; and (B) to dial such numbers.” Id.
§ 227(a)(1).

When

Congress

enacted

the

TCPA,

it

directed

the

Federal

Communications Commission to prescribe regulations implementing the Act’s
requirements. Id. § 227(b)(2). Pursuant to this mandate, the FCC has construed the
statutory term “automatic telephone dialing system” to include systems which—like
so-called predictive dialers—have the capacity to dial stored numbers without
human intervention. See 18 F.C.C.R. 14014, 14091-93 (2003); 23 F.C.C.R. 559, 56667 (2008); 27 F.C.C.R. 15391, 15392 n.5 (2012). Notably, the FCC does not interpret
the TCPA to require that an ATDS always have the capacity to use “a random or
sequential number generator.” See 18 F.C.C.R. at 14092 (“to exclude from these
restrictions equipment that use predictive dialing software from the definition of
A text message is a “call” under the TCPA. See Gomez v. Campbell-Ewald Co., 768 F.3d
871, 874 (9th Cir. 2014).
5

6

‘automated telephone dialing equipment’ simply because it relies on a given set of
numbers [instead of creating and dialing 10-digit telephone numbers arbitrarily]
would lead to an unintended result.”).6
I agree with Yahoo! that the FCC’s interpretation on this point conflicts with
the statutory requirement that an ATDS have the capacity “to store or produce
telephone numbers to be called, using a random or sequential number generator[.]”
47 U.S.C. § 227(a)(1) (emphasis added). And if tasked with applying only the
statute’s language, I would conclude that Yahoo!’s system does not constitute an
ATDS because the PC2SMS service does not use a random or sequential number
generator. Nevertheless, the TCPA and Hobbs Act bind me to the FCC’s
interpretation. See 47 U.S.C. § 227(b)(2); 28 U.S.C. § 2342(1).7
In Satterfield v. Simon & Schuster, the Ninth Circuit characterized the
TCPA’s definition of ATDS as “clear.” 569 F.3d 946, 951 (9th Cir. 2009). On that
basis, Yahoo! argues that I should apply Chevron v. Natural Resources Defense
Council, Inc., 467 U.S. 837 (1984), and adhere to the statute’s plain language (at the
expense of the FCC’s interpretation). However, the Satterfield court did not consider
Yahoo!’s expert, Monica Desai, contends that “[b]ased on [her] experience at the FCC . . .
the FCC has never stated that predictive dialers need not meet the statutory definition of
an ATDS to be considered an ATDS under the statute.” [28-4] ¶ 25; see also [84] at 22 (“Ms.
Desai’s testimony is important to show that the FCC has never changed [the TCPA’s
definition of ATDS].”). However, determining how the FCC has interpreted the TCPA is a
question of law for the court to decide, and thus not an appropriate subject of expert
opinion. I therefore decline to consider Desai’s declaration on this issue.
6

I am bound to the FCC’s interpretation even though the agency expounded it in the FCC
Record, and not in the Code of Federal Regulation. See CE Design, Ltd. v. Prism Business
Media, Inc., 606 F.3d 443, 450 (7th Cir. 2010) (enforcing the Hobbs Act with regard to a
legal defense articulated in the FCC Record).
7

7

whether the Hobbs Act required the district court to adopt the FCC’s interpretation
of the statute. For that reason, I decline to follow it and instead follow the Seventh
Circuit’s CE Design decision, in which the court recognized that “a district court
may [not] proceed through step one of the Chevron analysis without rubbing up
against the Hobbs Act’s jurisdictional bar.” See CE Design, 606 F.3d at 449.8
Yahoo! also cites to Dominguez v. Yahoo!, Inc., in which the court ruled that
Yahoo!’s PC2SMS system was not an ATDS. See 8 F.Supp.3d 637 (E.D. Pa. 2014). I
am not persuaded by Dominguez, however, because that court rejected the FCC’s
interpretation and, instead, conducted a Chevron analysis—an approach CE Design
forecloses. See 8 F.Supp.3d at 643 n.6; 606 F.3d at 449.9
Thus, consistent with the FCC’s interpretations, the question before me is
whether Yahoo!’s PC2SMS service has the capacity to dial numbers without human
intervention.

Yahoo! cites Marks v. Crunch San Diego, LLC in support of the argument that the FCC
lacked statutory authority to expand the definition of ATDS because the “definitions”
subsection of the TCPA did not include language giving the FCC rulemaking authority,
while other subsections did. See -- F.Supp.3d --, 2014 WL 5422976, *2 (S.D. Cal. Oct. 23,
2014). This argument, however, is exactly the kind of attack on an FCC order that the
Hobbs Act precludes me from entertaining. There is functionally no difference between
saying the FCC got an interpretation wrong and saying it lacked the authority to give the
interpretation in the first place. Both lines would have me “determine the validity of” an
FCC decision. 28 U.S.C. § 2342(1). Moreover, the Marks decision was premised on
Satterfield, which I have already declined to apply.
8

Dominguez also reasoned that the FCC’s interpretation is strictly limited to predictive
dialers. 8 F.Supp.3d at 643 n.6. That narrow reading of the FCC’s decisions is inconsistent
with the FCC’s rationale, and I conclude that the FCC’s repeated statements that an ATDS
is a system with “the capacity to dial numbers without human intervention” amounts to the
FCC’s binding interpretation of the statute.

9

8

Capacity to Dial Stored Numbers
Yahoo! argues that its system is not an ATDS even under the FCC’s broad
definition because the “PC2SMS Service simply does not ‘store’ or produce numbers
‘to be called.’” [27] at 8. Yahoo! explains that the “Welcome” system message “can
only be sent to a phone number that has not already been stored in the server that
contains the database of previously notified mobile numbers.” Id. I agree with
Yahoo! that the undisputed record demonstrates that the MO/MT database does not
store cell phone numbers that PC2SMS directly or indirectly pulls for the purpose of
dialing numbers. While evidence suggests the database does store numbers, it does
so for cross-referencing purposes only. That is, MO/MT stores the numbers to track
(1) when the “Welcome” system message should be sent and (2) whether the cell
phone has opted out. Neither of these functions satisfies the FCC’s requirement
that the ATDS pull phone numbers from the database for the purpose of dialing
without human intervention. As Yahoo! put it, “[t]he fact that a message can be sent
to a phone number that happens to be also stored in a database does not mean that
the PC2SMS Service actually dials the number from that database . . . .” [84] at 910.
Nevertheless, plaintiffs have presented evidence demonstrating that Yahoo!’s
PC2SMS service, in conjunction with its Address Book database, has the capacity to
send text messages to numbers pulled from a database. When a user enters
information about her contacts into her Yahoo! Messenger contacts list (including
their phone numbers), that information is stored in the Address Book database. If

9

the user then employs the PC2SMS service to send a text message to a contact, the
Address Book service pulls the contact’s stored phone number from the Address
Book database and provides it to PC2SMS (by means of the local application) to
send the message.
Yahoo! counters by claiming that the “Address Book database does not
interact with PC2SMS[.]” [84] at 10. In support of this assertion, Yahoo! cites to an
expanded portion of the Doron testimony already cited above, for the point that it is
the user’s local application that retrieves the number from the Address Book, not
PC2SMS. Id. at 10 n.3. This factual distinction carries no legal significance—
whether PC2SMS pulls numbers from a database directly or indirectly (i.e., via the
local application and Address Book service), the component parts, taken together,
can constitute an automatic telephone dialing system. Accord Griffith v. Consumer
Portfolio Services, Inc., 838 F.Supp.2d 723, 727 (N.D. Ill. 2011) (“[W]e find no
support in the statute or FCC’s rulings for CPS’s argument that the dialer itself
must ‘store’ telephone numbers and/or predictive dialing software. The statute
regulates ‘equipment,’ not ‘dialers,’ so it is irrelevant for our purposes that the
Castel dialer works in tandem with CPS’s Collections System.”) (citations omitted).
There is also evidence that Yahoo!’s Session database stores cell phone
numbers that are pulled for the purpose of sending text messages. See [85] ¶ 35. As
Yahoo! admits, the “Athena Platform temporarily maintains the cellular telephone
number in the Session Database while the message is being sent.” Id. Consistent
with this admission, plaintiffs’ expert, Randall Snyder, explained that the Session

10

database stores the phone number of an incoming text message so that a responsive
text message can be sent. [57-3] ¶¶ 57-77. Yahoo! argues that Snyder’s declaration
should be disregarded (and stricken) because his opinion is based on an
assumption—not on a review of the “underlying technology or source code.” [72] at
2, 9-10. However, Snyder testified that his opinion is based on analyzing “[Yahoo!’s]
technical documents, [the] depositions of the fact witnesses[,] . . . flow diagrams[,]
[and] flow charts.” [72-1] at 58:25-59:6. Further, I do not agree with Yahoo! that
Snyder’s opinion is so baseless or outlandish on this particular point that it should
be stricken from the summary judgment record.
Yahoo! also complains that Snyder’s expert opinions are legal opinions in
disguise. [72] at 13. As an example, Yahoo! finds it improper for Snyder to opine
that “even if numbers are stored for just a millisecond in temporary cache or
random access memory (RAM), that would be sufficient storage [under the TCPA].”
Id. I agree with Yahoo! and thus consider Snyder’s opinions only with regard to the
facts of storage, and not as to whether the numbers are stored long enough to
implicate the Act.10
Human Intervention
When a user sends a personalized message to a contact, it is clear that that
transmission involves human intervention. The same cannot be said, though, for
those instances in which—in addition to sending the personalized message—
PC2SMS sends the contact a system message. For example, if the contact has
Setting aside Snyder’s assertions, the parties have not sufficiently briefed the issue of
whether the TCPA contains a de minimis storage defense. Because resolution of this motion
does not depend on it, I decline to answer that question at this time.

10

11

previously opted out of receiving messages from PC2SMS, but then that decision to
opt out expires, PC2SMS will automatically (i.e., without human intervention) send
a “Welcome” system message to the contact the first time he receives a postexpiration personalized message. Similarly, if the contact has not responded to
three consecutive text messages, PC2SMS will automatically send the AddressBook-based number a “Warning” system message (in addition to any fourth
personalized text message the user sends the contact). Finally, if a cell phone
subscriber sends an “INFO” text message to Yahoo!, a responsive text message—
which is separate and apart from the mobile originating message—will
automatically be sent to the subscriber.
Yahoo! argues that these messages are not sent “without human
intervention” because they never would have been sent absent the Yahoo! user’s
underlying personalized message (or the subscriber’s “INFO” message). This
argument is reasonable, but I disagree that the record is sufficient to hold, as a
matter of law, that PC2SMS has no capacity to act without human intervention.
Every ATDS requires some initial act of human agency—be it turning on the
machine or pressing “Go.” It does not follow, however, that every subsequent call
the machine dials—or message it sends—is a product of that human intervention.
There is some evidence to suggest that PC2SMS can pull numbers and dial them
without a person ordering a specific system message. See, e.g., [57-2] 86:11-87:17.
That is sufficient to defeat Yahoo!’s motion for summary judgment.11

A person will always be a but-for cause of any machine’s action, and therefore, I conclude
that the FCC’s “human intervention” gloss on the statute requires more than but-for
11

12

Plaintiffs’ Requested Relief
For their part, plaintiffs ask that I rule as a matter of law that “Yahoo used
an ATDS[.]” Plaintiffs have raised a genuine issue of fact suggesting that when
PC2SMS is paired with the Address Book database, that collective system
constitutes at ATDS because it has the capacity to dial numbers from a database
without human intervention—i.e., without human intervention, it is capable of
sending a “Welcome” or “Warning” system message to a cell phone number pulled
from the Address Book database. The same is true with regard to the Session
database—PC2SMS can automatically sends responsive text messages to phone
numbers it pulls from the Session database.
However, it remains to be seen whether the various components at play
constitute one singular system, or multiple independent systems (some of which
happening to share common components). See, e.g., [84] at 10 n.3. The import being,
if the PC2SMS-Address Book system is independent of the PC2SMS-manual entry
system, plaintiffs will have to prove that their texts came from the former.12
I therefore decline to hold that Yahoo! used an ATDS in this case.
IV.

Conclusion
In case no. 14-cv-02028, Yahoo!’s motion for summary judgment [26] is

denied. Johnson’s motion to exclude the expert report of Monica Desai [60] is
denied.
causation. The parties have not briefed whether a more specific definition of “human
intervention” exists, and I decline to impose one at this stage of the case.
Plaintiffs do not allege that they received texts as a result of replying “INFO” to
PC2SMS.
12

13

In case no. 14-cv-02753, Yahoo!’s motion for summary judgment [21] is
denied.

ENTER:
___________________________
Manish S. Shah
United States District Judge
Date: 12/11/14

14