Spiegel v. Reynolds
MEMORANDUM Opinion and Order signed by the Honorable Edmond E. Chang on 10/11/2017. For the reasons stated in the Opinion, Defendant ACS's motion for summary judgment 93 is granted. Judgment is entered in favor of ACS and against Spiegel. A se parate AO-450 judgment shall be entered. With the prior Rule 54(b) judgments already entered against individual Defendants James T. Reynolds and Kristina Hixon Reynolds, R. 106, this is the final judgment in the case. The status hearing of 10/19/2017 is vacated. Civil case terminated. Mailed notice (ags, )
UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
MARSHALL SPIEGEL, individually and on )
behalf of a class of those similarly situated, )
JAMES T. REYNOLDS; JIM REYNOLDS; )
KRISTINA HIXSON; and
ASSOCIATED COMMUNITY SERVICES, )
No. 15 C 8504
Judge Edmond E. Chang
MEMORANDUM OPINION AND ORDER
Plaintiff Marshall Spiegel contends that Associated Community Services
(which does business under its acronym, ACS) violated the Telephone Consumer
Protection Act (TCPA), 47 U.S.C. § 227, by calling him when his name appeared on
the do-not-call registry and by using prerecorded voices in its solicitations.1 R. 46,
Am. Cmplt. ¶¶ 24-30; R. 97-1, Pl.’s Resp. Br. at 5.2 He seeks class certification for
himself and similarly situated persons. Id. at ¶ 1. After a sufficient period of
discovery on limited issues, the Court authorized ACS to move for summary
judgment. R. 93, Def. Mot. Summ. J. ACS argues that it is entitled to summary
judgment because no material facts are genuinely disputed and (1) its calls to
people on the do-not-call registry were made “on behalf of” a tax-exempt nonprofit
The Court has federal-question jurisdiction over this case. 28 U.S.C. § 1331.
Citations to the docket are indicated by “R.” followed by the docket number and,
where appropriate, a page or paragraph number.
organization, and thus not covered by the TCPA; (2) its calls to people on the do-notcall registry were not “telephone solicitation[s]” covered by the TCPA; and (3)
Spiegel’s prerecorded-voice claim was not alleged in the complaint and comes too
late now. R. 94., Def.’s Br. at 8, 13; R. 100, Def. Reply at 5-6. For the reasons
explained below, ACS’s motion is granted.
In deciding a motion for summary judgment, the Court views the record in
the light most favorable to the non-moving party (here, Spiegel) and draws all
reasonable inferences in that party’s favor. Darst v. Interstate Brands Corp., 512
F.3d 903, 907 (7th Cir. 2008). In this case, the parties agree on most of the facts.
Defendant ACS is a registered professional fundraiser in the state of Illinois. Pl.’s
Resp. DSOF3 ¶ 5; DSOF Exh. 2. ACS had a longstanding contractual relationship
with an organization called the Breast Cancer Society. Pl.’s Resp. DSOF ¶¶ 15-17.
ACS’s efforts for the Society involved placing phone calls to persons in an attempt to
raise funds. Am. Cmplt. ¶ 13. The parties do not dispute that, at all times relevant
to this litigation, the Society was recognized by the Internal Revenue Service as a
tax-exempt nonprofit organization.4 Pl.’s Resp. DSOF ¶¶ 12-13; DSOF Exh. 6.
Citations to the parties’ Local Rule 56.1 Statements of Fact are identified as
follows: “DSOF” for ACS’s Statement of Facts [R. 95], “Pl.’s Resp. DSOF” for Spiegel’s
response to the ACS’s Statement of Facts [R. 97-1], and “PSOF” for Spiegel’s Statement of
Additional Facts [R. 97-1]. Unless otherwise noted, all facts are undisputed.
4 Spiegel characterizes the Society as a “sham charity.” Am. Cmplt. at ¶ 4. But the
prior Opinion explained why federal courts cannot second-guess the IRS’s designation of the
Society as a tax-exempt nonprofit, which is the only thing that matters for purposes of the
TCPA. See Spiegel v. Reynolds, 2016 WL 6877625, at *6 n. 13 (N.D. Ill. Nov. 22, 2016) (R.
63 at 16 n. 13).
The relationship between ACS and the Society began in 2007. DSOF ¶ 14.
The parties dispute whether the Society solicited ACS’s services. Pl.’s Resp. DSOF
¶ 14. ACS maintains that the Society approached ACS and asked whether ACS was
interested in doing work for the Society. DSOF ¶ 14. But Spiegel points out that the
evidence in the record is ambiguous on this point: ACS’s witness does not seem to
remember how the relationship began, and could not state with certainty that the
Society initially solicited ACS. Pl.’s Resp. DSOF ¶ 14; DSOF Exh. 7 at 17:1-27:17.
Although the origin of the business relationship between ACS and the Society
is disputed, the parties do agree on what were the general terms of the contract
between ACS and the Society. The contracts between ACS and the Society stated
that ACS was to conduct a public relations and solicitation campaign “on behalf of”
[the Society]. Pl.’s Resp. DSOF ¶ 16; DSOF Exh. 8. All solicitation campaigns
conducted pursuant to the 2007 ACS contract were to be “conducted in the name of
[the Society]” using materials “approved by [the Society].” Pl.’s Resp. DSOF ¶ 17.
DSOF Exh. 8 ¶¶ 2, 4, 19. ACS was contractually bound “[t]o engage in no activities
in the name of [the Society] without its consent, and at all times to conduct business
with due regard to the name and reputation of [the Society].” Pl.’s Resp. DSOF ¶ 18.
DSOF Exh. 8 ¶ 4(c). Similarly, the 2011 contract directed ACS to “promote the
purposes of [the Society]” and to “fulfill [the Society]’s purposes.” Pl.’s Resp. DSOF
¶ 23; DSOF Exh. 10 ¶ 1.
The contracts between ACS and the Society permitted the Society to exercise
control over the fundraising scripts and informational materials distributed by
ACS. For example, under the 2011 contract, ACS could only use scripts and
promotional materials that had been approved in writing by the Society. Pl.’s Resp.
DSOF ¶ 24. DSOF Exh. 10 ¶ 3.1. The parties do not dispute that the Society did
exercise its right to control the content of the telemarketing scripts. Pl.’s Resp.
DSOF ¶ 27. Emails between ACS and the Society’s employees show that the
Society’s agents suggested edits to the ACS-proposed fundraising scripts. Pl.’s Resp.
DSOF ¶ 29; see also, e.g., DSOF Exhs. 15, 17. The Society’s Executive Director,
James Reynolds, would indicate his approval of a solicitation script by signing and
dating a “Script Approval” form. Pl.’s Resp. DSOF ¶ 28; DSOF Exh. 16. ACS did not
use scripts unless they had been reviewed and approved by the Society. Pl.’s Resp.
DSOF ¶¶ 31-32. The Society also asserted editorial control over other written
materials, like pledge reminder letters and informational inserts. Pl.’s Resp. DSOF
¶ 35; DSOF Exh. 21.
ACS’s communications with call recipients emphasized that they were
donating to the Society (not to ACS). The telemarketing scripts immediately
informed donors that ACS was a professional fundraiser calling “on behalf of the
Breast Cancer Society.” Pl.’s Resp. DSOF ¶ 26; DSOF Exhs. 13-14. The written
materials that ACS distributed in connection with its Society fundraising were on
the Society’s letterhead, contained the Society’s logo, and were signed by James
Reynolds (the Society’s Executive Director). Pl.’s Resp. DSOF ¶¶ 33-34; DSOF Exhs.
18-20. Donors were instructed to make donations payable to “The Breast Cancer
Society,” and did so. Pl.’s Resp. DSOF ¶ 36; DSOF Exh. 22.
The parties also do not dispute the flow of cash between ACS and the Society.
The Society contracted with an entity related to ACS for the processing of donations
and follow-up correspondence with donors. This entity served as an “agent for [the
Society].” Pl.’s Resp. DSOF ¶ 19; DSOF Exh. 9 at ¶ 1. When donors contributed
money to the Society, the donated funds were deposited to a bank account “under
the exclusive custody and control of [the Society].” DSOF Exh. 9 at ¶ 5, Exh. 8 at ¶
22, Exh. 7 at 41:10-18; see also Pl.’s Resp. DSOF ¶ 20. Most supporters contributed
money by check, but any credit card donations were handled by a payment
processor hired by the Society. Pl.’s Resp. DSOF ¶ 21; DSOF Exh. 7 at 86:9-88:11.
Even though all the donations were initially sent to the Society’s bank account, ACS
ultimately received 85% of all funds collected. R. 97-2, PSOF ¶ 37 & Cole Dep. 29:214 (attached to PSOF).
Finally, the parties agree on the facts specific to Spiegel’s claims. ACS admits
that it placed multiple calls to Spiegel’s residential telephone number while that
number was listed on the do-not-call registry. DSOF ¶ 8; DSOF Exh. 5. ACS did not
call Spiegel’s cell phone. Pl.’s Resp. DSOF ¶ 9; see also R. 50, Def.’s Mot. Diss. at 1-2.
The contents of the phone calls are not in dispute. The telemarketing scripts show
that ACS calls asked the call recipients to give money donations to the Breast
Cancer Society. DSOF Exhs. 13, 14. The scripts informed the potential donors that
the Breast Cancer Society gave direct aid to breast cancer patients by “helping out
with things like medical supplies, pain medication, in-home health care, or …
household expenses.” DSOF Exh. 13. Speigel has pointed to no evidence that ACS
attempted to sell or promote any other products or services during the phone calls.
The calls were made using pre-recorded voices to deliver the scripted messages.
PSOF ¶ 38 & Cole Dep. at 47:10-50:19.
II. Summary Judgment Standard
Summary judgment must be granted “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.” Fed. R. Civ. P. 56(a). A genuine issue of 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). In evaluating
summary judgment motions, courts must view the facts and draw reasonable
inferences in the light most favorable to the non-moving party. Scott v. Harris, 550
U.S. 372, 378 (2007). The Court may not weigh conflicting evidence or make
credibility determinations, Omnicare, Inc. v. UnitedHealth Grp., Inc., 629 F.3d 697,
704 (7th Cir. 2011), and must consider only evidence that can “be presented in a
form that would be admissible in evidence.” Fed. R. Civ. P. 56(c)(2). The party
seeking summary judgment has the initial burden of showing that there is no
genuine dispute and that they are entitled to judgment as a matter of law.
Carmichael v. Village of Palatine, 605 F.3d 451, 460 (7th Cir. 2010); see also Celotex
Corp. v. Catrett, 477 U.S. 317, 323 (1986); Wheeler v. Lawson, 539 F.3d 629, 634 (7th
Cir. 2008). If this burden is met, the adverse party must then “set forth specific
facts showing that there is a genuine issue for trial.” Anderson, 477 U.S. at 256.
At this stage of the litigation, Spiegel claims that ACS violated the TCPA by
placing calls to residential phone lines listed on the do-not-call registry and by
calling residential phone lines using prerecorded voices. Pl.’s Resp. Br. at 1. Both
claims fail as a matter of law because the calls were made “on behalf of” the Society,
a tax-exempt nonprofit organization. The do-not-call claim also fails because the
calls did not constitute “telephone solicitation” under the TCPA.
A. The TCPA Nonprofit Exemption
The TCPA’s implementing regulations prohibit “telephone solicitation[s]” to
residential telephone subscribers whose phone numbers appear on the national donot-call registry. 47 C.F.R. § 64.1200(c)(2). The regulations and the TCPA itself
define “telephone solicitation” as “the initiation of a telephone call or message for
the purpose of encouraging the purchase or rental of, or investment in, property,
goods, or services.” 47 C.F.R. § 64.1200(f)(14); 47 U.S.C. § 227(a)(4). Calls by or on
behalf of tax-exempt nonprofit organizations are not considered “telephone
solicitation[s].” 47 U.S.C. § 227(a)(4); 47 C.F.R. § 64.1200(f)(14)(iii).5
ACS has the burden of establishing the applicability of the nonprofit
exemption, because the exemption is in the nature of an affirmative defense. See
Spiegel v. Reynolds, 2016 WL 6877625 at *6 (N.D. Ill. Nov. 22, 2016) (R. 63 at 1516). What’s more, as the moving party on summary judgment, ACS has the burden
of demonstrating that there is no genuine dispute of material fact and that it is
The TCPA exempts calls “by” a tax-exempt nonprofit organization; its
implementing regulations exempt calls made “by or on behalf of” a tax-exempt nonprofit
organization. 47 U.S.C. § 227(a)(4); 47 C.F.R. § 64.1200(f)(14)(iii).
entitled to judgment as a matter of law on its nonprofit exemption defense. Fed. R.
Civ. P. 56(a). Although case law applying the TCPA nonprofit exemption is sparse,
the prior Opinion pointed to the thorough discussion in Wengle v. DialAmerica
Marketing, Inc. 132 F. Supp. 3d 910 (E.D. Mich. 2015). In Wengle, the court held
that a call is placed “on behalf of” a tax-exempt nonprofit when it is placed “for the
benefit of or in the interest of the nonprofit, concepts that encompass common law
agency principles.” Wengle, 132 F. Supp. 3d at 919 (quotation marks omitted). So, in
order to establish the applicability of the nonprofit exemption, ACS must show that
it made the solicitation calls “on behalf of” the Society6—in other words, that ACS
was acting in the Society’s interest and as the Society’s agent.7
ACS has met its burden. This is true even giving Spiegel the benefit of
reasonable inferences. The undisputed evidence in the record demonstrates that
ACS and the Society had a series of contracts which required ACS to solicit funds
“on behalf of” the Society. Pl.’s Resp. DSOF ¶ 16; DSOF Exh. 8 (2007 ACS contract).
It is undisputed that the Society was, at all relevant times, registered with the IRS
as a tax-exempt nonprofit organization. Pl.’s Resp. DSOF ¶¶ 12-13; DSOF Exh. 6. Calls
made “on behalf of” the Society would therefore qualify for the nonprofit exemption.
7 At some points in the litigation, Spiegel appeared to argue that the applicability of
the nonprofit exemption should depend on the percentage of funds received by the
nonprofit. See, e.g., DSOF Exh. 4, Pl.’s Resp. to Interrog. at ¶ 15. Spiegel backs off this
argument in his brief, see Pl. Resp. at 2-4. This retreat is sensible: in addition to being a
poor legal standard, interpreting the nonprofit exemption to include a percentage-of-funds
threshold would likely cause the TCPA to run afoul of the First Amendment. See
Schaumburg v. Citizens for a Better Env’t, 444 U.S. 620, 624, 626 (1980) (invalidating an
ordinance that prohibited charitable organizations from soliciting contributions unless they
used at least 75 percent of their receipts “directly for the charitable purpose of the
organization”); Sec. of State of Md. v. Joseph H. Munson, Co, Inc., 467 U.S. 947, 966 (1984)
(invalidating a law prohibiting charitable organizations from soliciting if they paid or
agreed to pay as expenses more than 25 percent of the amount raised); Riley v. Nat’l Fed’n
of Blind of N.C., Inc., 487 U.S. 781, 800 (1988) (invalidating a law requiring professional
fundraisers to disclose to potential donors the percentage of the prior year’s charitable
contributions the fundraisers had actually turned over to the charity).
The contracts allowed the Society to exercise control over the manner of ACS’s
solicitations by giving the Society the right to review and veto the solicitation
scripts and other materials used by ACS. Pl.’s Resp. DSOF ¶ 24; DSOF Exh. 10 ¶
3.1. The Society also controlled the flow of cash from the fundraising. Pl.’s Resp.
DSOF ¶¶ 19-22. And, most importantly, the actual conduct of the parties reflects a
genuine agency relationship: Spiegel agrees that the Society did exercise control
over ACS’s activities on multiple occasions by providing edits and approval to call
scripts and other written materials. Pl.’s Resp. DSOF ¶¶ 27-29. On this undisputed
evidence, any reasonable jury must find that ACS made the calls “on behalf of” the
Society, as the Society’s agent.
Spiegel has failed to rebut this showing by “set[ting] forth specific facts
showing that there is a genuine issue for trial.” Anderson, 477 U.S. at 256. The only
fact that Spiegel disputes is ACS’s assertion that the Society solicited their services
(as opposed to ACS reaching out to the Society). Pl.’s Resp. DSOF ¶ 14. Spiegel also
points out (and ACS does not dispute) that ACS took home 85% of the funds it
raised for the Society. Pl. Resp. 2. These two facts, however, are not enough to
create a genuine issue for trial. Taking the inferences Spiegel’s favor, the Court
assumes that it was ACS that reached out to solicit the Society’s business, rather
than the other way around. But how the relationship began changes nothing; it is
undisputed that going forward, the Society acted as the principal by hiring ACS and
supervising ACS’s efforts.
The fact that ACS kept the lion’s share of the money also does not help
Spiegel. The essence of the nonprofit exemption is the recognition that some
charities find it advantageous to contract out their fundraising efforts to private
companies. See 18 FCC Rcd. at 14089 ¶ 128. But the TCPA does not require that
the terms of these contracts be favorable to the nonprofit. In fact, asking the courts
to scrutinize those relationships would come close to litigating the nonprofit’s taxexempt status—a job that Congress assigned to the IRS, not the courts. See Bob
Jones Univ. v. United States, 461 U.S. 574, 596-97 (1983); Nat’l Muffler Dealers
Ass’n, Inc. v. United States, 440 U.S. 472, 488 (1979) (“The choice among reasonable
interpretations of the Internal Revenue Code] is for the Commissioner, not the
courts.”). Of course, a one-sided funding arrangement could be evidence that a
purported agency relationship was in fact a sham. But here, in the face of
undisputed evidence that ACS was genuinely acting as the Society’s agent, no
reasonable jury could find that ACS was not acting on behalf of the Society. ACS is
therefore entitled to summary judgment on its charitable-exemption defense.
B. Telephone Solicitation
Even if ACS had not been calling “on behalf of” a tax-exempt nonprofit, it
would still be entitled to summary judgment on Spiegel’s do-not-call claim because
its calls were not “telephone solicitation[s]” covered by the TCPA. As discussed
earlier, the TCPA regulations prohibit “telephone solicitation” calls to phone lines
listed on the do-not-call registry. 47 C.F.R. § 64.1200(c)(2). Telephone solicitation is
defined as “the initiation of a telephone call or message for the purpose of
encouraging the purchase or rental of, or investment in, property, goods, or
services.” 47 C.F.R. § 64.1200(f)(14); 47 U.S.C. § 227(a)(4).
ACS argues that calls soliciting money donations fall outside the letter of the
statute’s definition of telephone solicitation. Def.’s Br. . at 13-15. Although ACS has
not cited any case law directly supporting its position, the language of the statute is
clear. Telephone solicitation means a call “encouraging the purchase or rental of, or
investment in, property, goods, or services.” 47 C.F.R. § 64.1200(f)(14); 47 U.S.C. §
227(a)(4). This definition does not include requests for money donations that do not
encourage buying, renting, or investing in some sort of property, goods, or services.8
Spiegel responds that the Breast Cancer Society promised to use the donations to
buy goods and services for cancer patients. Pl.’s Resp. Br. at 4-5. His theory appears
to be that whenever a charity solicits money that will eventually be used to
purchase goods or services for someone else, it is effectively asking the call recipient
to buy those goods or services. There is no case law that supports this expansive
interpretation. Indeed, neither the statutory nor the regulatory text uses words like
“indirectly purchase” or “purchase for the benefit of another person.” Under the
Indeed, several state consumer protection statutes with parallel language explicitly
include donations in their definitions of “telephone solicitation,” making the absence of this
language in the federal statute all the more striking. See, e.g., A.S. 45.50.475(g)(5) (Alaska)
(defining “telephone solicitation” as “solicitation by a person by telephone of a customer at
the residence of the customer for the purpose of encouraging the customer to purchase
property, goods, or services, or make a donation” (emphasis added)); R.C.W.A. 80.36.390(1)
(Washington) (defining “telephone solicitation” as “the unsolicited initiation of a telephone
call by a commercial or nonprofit company or organization to a residential telephone
customer and conversation for the purpose of encouraging a person to purchase property,
goods, or services or soliciting donations of money, property, goods, or services” (emphasis
added)); N.C. Gen. Stat § 75–101(9) (North Carolina) (defining “telephone solicitation” as a
“voice communication … for the purpose of soliciting or encouraging the purchase or rental
of, or investment in, property, goods, or services … or obtaining a charitable donation”
governing text, when ACS asked for donations, it sought nothing more than gifts
from the call recipients, not any purchase, rental, or investment. This means that,
as a matter of law, the ACS calls were not TCPA-covered telephone solicitations,
and ACS is entitled to summary judgment on the do-not-call claim.
C. Prerecorded Voices
In his response to ACS’s motion for summary judgment, Spiegel contends
that ACS violated the TCPA by using prerecorded voices in calls to his residence.9
Pl.’s Resp. Br. at 5. But neither the original nor the First Amended Complaint
alleged that ACS used prerecorded voices, nor asserted a TCPA claim based on
prerecorded voices.10 See R.1, Cmplt.; Am. Cmplt. Nor has Spiegel sought leave to
amend his complaint to add that allegation or claim. But even if this eleventh-hour
claim were validly asserted, it would not help Spiegel. The TCPA restrictions on
residential calls using prerecorded voice technology explicitly exempt calls made “on
behalf of a tax-exempt nonprofit organization.” 47 C.F.R. § 64.1200(a)(3)(iv)
(exemption authorized by 47 U.S.C. § 227(b)(2)(B)). So even if Spiegel asserted a
claim premised on the prerecorded-voice theory, it would fail for the same reason as
the do-not-call theory.
The TCPA prohibits “any telephone call to any residential telephone line using an
artificial or prerecorded voice to deliver a message.” 47 U.S.C. § 227(b)(1)(B). Because the
prerecorded voice prohibition applies to any telephone call instead of only “telephone
solicitation,” ACS could still have run afoul of the TCPA even if its calls did not constitute
10 The complaints do allege that ACS made “robocalls,” Cmplt. ¶ 1; Am. Cmplt. ¶ 1,
but the only factual allegation supporting this claim is an allegation that the calls were
made using an automatic dialer. Cmplt. ¶ 23; Am. Cmplt. ¶ 14. Thus, the complaint cannot
fairly be read to allege calls using prerecorded voice technology.
For the reasons discussed, ACS’s motion for summary judgment is granted.
Judgment is entered in favor of ACS and against Spiegel. With the prior Rule 54(b)
judgments entered against individual Defendants James T. Reynolds and Kristina
Hixon Reynolds, R. 106, this is the final judgment in the case. The status hearing of
October 19, 2017 is vacated.
s/Edmond E. Chang
Honorable Edmond E. Chang
United States District Judge
DATE: October 11, 2017
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