Pegg v. Collecto, Inc.

Filing 26

Judge Richard G. Stearns: ORDER entered in case 1:13-cv-11944-RGS; denying (44) Motion for Summary Judgment in case 1:14-md-02513-RGS Associated Cases: 1:14-md-02513-RGS, 1:13-cv-11944-RGS, 1:14-cv-10478-RGS, 1:14-cv-10532-RGS(RGS, law2)

UNITED STATES DISTRICT COURT
DISTRICT OF MASSACHUSETTS
MASTER NO. 14-MD-02513-RGS
IN RE COLLECTO, INC.,
TELEPHONE CONSUMER PROTECTION ACT LITIGATION
MEMORANDUM AND ORDER
ON DEFENDANT COLLECTO’S
MOTION FOR SUMMARY JUDGMENT
February 10, 2016
STEARNS, D.J.
Defendant Collecto, Inc., pursues debts on behalf of third-party
providers of goods and services.

Plaintiffs John Lofton, Robert Pegg,

Richard Davenport, and Ralph Davenport brought separate causes of action
against Collecto under the Telephone Consumer Protection Act (TCPA), 47
U.S.C. § 227 et seq., on behalf of themselves and putative classes of similarly
situated plaintiffs. Plaintiffs allege that Collecto repeatedly dialed their
cellular telephones using an automated telephone dialing system (ATDS)
without their prior express consent. Collecto now seeks summary judgment
against all plaintiffs, arguing that its telephone dialers do not meet the legal
definition of an ATDS.
BACKGROUND
The TCPA, enacted in 1991, provides in relevant part:
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It shall be unlawful for any person within the United States, or
any person outside the United States if the recipient is within the
United States—
(A) to make any call (other than a call made for emergency
purposes or made with the prior express consent of the
called party) using any automatic telephone dialing system
or an artificial or prerecorded voice.
47 U.S.C. § 227(b). The statute defines an 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. at § 227(a)(1).
The FCC determined in 2003, 2008, and most recently in 2015, that a
so-called “predictive dialer”1 fits the definition of an ATDS. See In re Rules
and Regulations Implementing the Telephone Consumer Protection Act of
1991, 18 FCC Rcd. 14014, 14091-93 (July 3, 2003) (“[T]he Commission finds
that a predictive dialer falls within the meaning and statutory definition of
‘automatic telephone dialing equipment’ and the intent of Congress.”); see
also In the Matter of Rules and Regulations Implementing the Telephone
Consumer Protection Act of 1991, 23 FCC Rcd. 559, 566 (Jan. 4, 2008)

The FCC has defined a “predictive dialer” as “equipment that dials
numbers and, when certain computer software is attached, also assists
telemarketers in predicting when a sales agent will be available to take calls.
The hardware, when paired with the software, has the capacity to store or
produce numbers and dial those numbers at random, in sequential order, or
from a database of numbers.” 18 FCC Rcd. at 14091.
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(“[W]e affirm that a predictive dialer constitutes an automatic telephone
dialing system and is subject to the TCPA’s restrictions on the use of
autodialers.”); In the Matter of Rules and Regulations Implementing the
Telephone Consumer Protection Act of 1991, 30 FCC Rcd. 7961, 7974 (July
10, 2015) (“We . . . reiterate that predictive dialers, as previously described
by the Commission, satisfy the TCPA’s definition of ‘autodialer’ for the same
reason.”).
On August 26 and 27, 2009, Collecto placed calls using a “Maestro
Dialer” manufactured by Noble Systems, Inc. (Noble Dialer), to a cellular
telephone owned by plaintiffs Richard and Ralph Davenport, seeking to
collect a debt. From May 31, 2012, through June 7, 2012, Collecto used the
Noble Dialer to place multiple calls to plaintiff John Lofton’s cellular
telephone, also seeking to recover an outstanding debt. Between June 11 and
June 20, 2013, Collecto made a series of calls using a “Guaranteed Contacts”
dialer to call plaintiff Robert Pegg’s telephone in a similar dunning effort.2 It
is undisputed that Collecto did not have plaintiffs’ prior express consent for
the calls.

Collecto allegedly acquired plaintiffs’ telephone numbers through a
harvesting technique known as “skip tracing” or “skip location.” “Skip
tracing” is used to glean up-to-date contact information for debtors who
have, figuratively speaking, skipped town. Dkt. # 51-3 at 30.
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The three plaintiffs filed separate class action Complaints against
Collecto: Lofton in the Northern District of California; Pegg in the District of
Massachusetts; and the Davenports in the Eastern District of Michigan. (The
TCPA expressly authorizes a private right of action. 47 U.S.C. § 227(b)(3)).
Plaintiffs allege that Collecto’s Noble and Guaranteed Contact Dialers are
ATDS’s, the use of which violates the TCPA. Collecto’s Director of Telephony,
Peter Cappola, acknowledges that Collecto’s dialers have predictive dialing
capabilities. The Noble Dialer, for example, is configured to interface with
Collecto’s Flexible Automated Collection Software (FACS) database. This
database contains information on debtors’ accounts, including telephone
numbers supplied by Collecto’s clients. Collecto employees enter the account
information into FACS, then import the telephone numbers into the Noble
Dialer to create call lists. When a Collecto employee logs onto the Noble
Dialer, he or she selects a “group” of call lists to initiate calls. The Noble
Dialer then automatically calls the numbers on the list.

Based on the

employee’s predicted availability, the dialer will connect the recipient of the
call with the employee logged onto that “group.”3 The parties disagree

It is undisputed that the Guaranteed Contacts Dialer functions in
essentially the same way as the Noble Dialer.
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whether Collecto’s dialers have the capacity to store or generate random or
sequential numbers.
On February 19, 2014, the Judicial Panel on Multidistrict Litigation
transferred the Davenport and Lofton actions to this district to be
consolidated with the Pegg action for pretrial proceedings. A hearing on
Collecto’s motion for summary judgment was held on January 26, 2016.
DISCUSSION
Summary judgment is appropriate when “the pleadings, depositions,
answers to interrogatories, and admissions on file, together with the
affidavits, if any, show that there is no genuine issue as to any material fact
and that the moving party is entitled to judgment as a matter of law.” Fed.
R. Civ. P. 56(c). Summary judgment shall not be granted 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 moving party
bears the initial burden of establishing that no genuine issue of material fact
exists. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986).
Collecto’s summary judgment argument begins with the contention
that the court should give no weight whatsoever to the FCC’s determination
that a predictive dialer is an ATDS for TCPA purposes. According to Collecto,
the FCC lacks the statutory authority to “modify” Congress’ definition of an
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ATDS, and, in any event, relied on “false hearsay” in doing so.4 Def.’s Mem.
at 14; Reply at 5-6. Collecto’s opening argument does not survive the
Administrative Orders Review Act (Hobbs Act), 28 U.S.C. § 2342(1), under
which this court lacks jurisdiction to set aside, suspend, or adjudicate the
validity of an FCC ruling and final order. See Fed. Commc’ns Comm’n v. ITT
World Commc’ns, 466 U.S. 463, 468-469 (1984) (the Hobbs Act precludes
any exercise of a district court’s jurisdiction, even over a claim that an agency
acted ultra vires). 5

Collecto spends substantial portions of its briefs arguing that the
FCC’s determination was based on “false hearsay.” Even if true, courts are
not free to impose additional procedural requirements (including
evidentiary restrictions) on agency adjudications. See Vermont Yankee
Nuclear Power Corp. v. Natural Res. Def. Council, Inc., 435 U.S. 519, 524
(1978) (“Agencies are free to grant additional procedural rights in the
exercise of their discretion, but reviewing courts are generally not free to
impose them if the agencies have not chosen to grant them.”); see also
Pension Benefit Guar. Corp. v. LTV Corp., 496 U.S. 633, 654-655 (1990)
(applying Vermont Yankee to informal agency adjudications).
4

The Courts of Appeals appear unanimous in the view that when a
challenge to an FCC order “arises in a dispute between private parties [it]
makes no difference – the Hobbs Act’s jurisdictional limitations are equally
applicable whether [a party] wants to challenge the rule directly . . . or
indirectly.” CE Design v. Prism Bus. Media, 606 F.3d 443, 448 (7th Cir.
2010) (internal citations and quotation marks omitted). See also Mais v.
Gulf Coast Collection Bureau, Inc., 768 F.3d 1110, 1120-1121 (11th Cir. 2014)
(“By refusing to enforce the FCC’s interpretation, the district court exceeded
its power.”); Nack v. Walburg, 715 F.3d 680, 686 (8th Cir. 2013) (“To hold
[that a party can challenge the validity of a regulation] merely because the
issue has arisen in private litigation would permit an end-run around the
administrative review mandated by the Hobbs Act. Such an end run could
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Alternatively, Collecto contends that to the extent that the FCC has
statutory authority to regulate autodialers, it is located in 47 U.S.C. §
227(b)(2), which grants the agency the authority to “implement the
requirements of this subsection.” According to Collecto, this wording was
intended by Congress as a limitation precluding the FCC from issuing rules
interpreting subsection 227(a) (which defines an ATDS). The argument,
however, founders on 47 U.S.C. § 201(b), which provides in relevant part:
“The Commission may prescribe such rules and regulations as may be
necessary in the public interest to carry out the provisions of this chapter.”
(Emphasis added). Congress, in other words, delegated plenary authority to
the FCC to promulgate regulations to implement the provisions of Chapter 5

result in a judicial determination of a regulation’s invalidity without
participation by the agency and upon a record not developed by the
agency.”); Leyse v. Clear Channel Broad., Inc., 545 Fed. App’x 444, 457-458
(6th Cir. 2013) (“Attacks such as these – on the procedural genesis of
administrative rules – are exactly the kind of facial attacks on the validity of
FCC orders that the Hobbs Act meant to confine.”) (internal citation and
quotation marks omitted); United States v. Dunifer, 219 F.3d 1004, 1007
(9th Cir. 2000) (“We have squarely held . . . that challenging FCC regulations
is equivalent to an action to enjoin, annul, or set aside an order of the FCC.”).
Collecto’s suggestion that the Supreme Court’s recent decision in Util. Air
Regulatory Grp. v. EPA, 134 S. Ct. 2427, 2446 (2014), overruled this line of
Hobbs Act cases, is wrong. Utility Air simply affirms the principle that an
agency cannot promulgate a rule that is directly at odds with an
unambiguous statutory term. It does not address the larger issue of a district
court’s jurisdiction to set aside such a ruling.
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of Title 47 (governing all wire and radio transmissions), including those of
47 U.S.C. § 227(a).
Finally, Collecto argues that even if deemed a valid exercise of agency
powers, the FCC’s autodialer determination does not deserve any deference
under the doctrine of Chevron, U.S.A., Inc. v. Natural Res. Def. Council, 467
U.S. 837 (1984). As a rule, before applying Chevron deference, a reviewing
court is to decide whether the government agency was granted statutory
authority by Congress to issue rules and declaratory rulings that carry the
force of law. See United States v. Mead Corp., 533 U.S. 218, 232-236 (2001).
But this is a matter to be addressed in the Court of Appeals, not this court.
Even if I were to read the FCC’s definition as inconsistent with the text of the
TCPA, I do not have the authority to undo or revise an FCC ruling. The
jurisdictional limitation of the Hobbs Act is clear in this regard: “The court
of appeals (other than the United States Court of Appeals for the Federal
Circuit) has exclusive jurisdiction to enjoin, set aside, suspend (in whole or
in part), or to determine the validity of . . . all final orders of the Federal
Communication Commission made reviewable by section 402(a) of title 47.”
28 USC § 2342 (emphasis added).

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Collecto objects that “[f]or this Court to hold that it has jurisdiction to
decide Collecto’s motion for summary judgment, but [to also] hold that it
does not have jurisdiction to address the validity of the FCC’s ATDS Rules
would be fundamentally unfair and violate Collecto’s right to due process.”
Def. Mem. at 15.6 Collecto proposes that the court either disregard the FCC’s
rulings (which is a nonstarter),7 or alternatively, dismiss the case for lack of
subject matter jurisdiction. Collecto’s due process argument ignores the fact
that the Hobbs Act provides a powerful forum in which to challenge an FCC
ruling – the federal circuit courts of appeal. See 28 U.S.C. § 2344. Collecto
admits as much, but argues that the limited window in which to file an appeal

But see CE Design, 606 F.3d at 446 n.3 (“Although the Hobbs Act
prevents the district court from considering the validity of final FCC orders,
the court retains jurisdiction to determine whether the parties’ actions
violate FCC rules.”). Nothing in the cases cited by Collecto, or those the court
has found, supports a contrary ruling.
6

Collecto relies on United States v. Any and All Radio Station
Transmission Equip., 204 F.3d 658, 667 (6th Cir. 2000) (Maquina Musical),
for the proposition that this court can rule on the validity of an FCC ruling
despite the Hobbs Act’s jurisdictional bar. Collecto also cites a nonpublished Third Circuit decision, Dominguez v. Yahoo!, Inc., 2015 WL
6405811 (3d Cir. Oct. 23, 2015), for the argument that “Collecto’s defense
does not trigger the Hobbs Act.” Reply at 9. Dominguez adds little to
Collecto’s position. Under Third Circuit rules, the opinion is not to be cited
as binding precedent. See 3d Cir. I.O.P. 5.7 (2015). Moreover, because the
Dominguez Court found the FCC’s 2015 Order (and previous Orders) to be
consistent with the text of the TCPA, it did not reach the issue of the Hobbs
Act jurisdictional bar. 2015 WL 6405811, at *3 n.2.
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– 60 days from the date of the agency’s final action – works a procedural
unfairness. Collecto complains that because of the short limitations period
a defendant may have “little reason to know or participate in the agency’s
proceedings” before it is “time-barred from Hobbs Act review.” Reply at 14.
Collecto does not, however, argue that it was unaware of either the right of
appeal or the FCC’s 2015 Order.8
In a parting shot, Collecto contends that even if the court yields to the
finality of the FCC Orders, the Noble and GC Dialers do not fit within the
definition of an ATDS because the dialers are, to a degree, dependent on
human intervention.9

The short answer is that the FCC’s definition of an

ATDS is based on the capacity of a dialer to operate without human
Indeed, prior to the issuance of the Order, Collecto petitioned this
court to stay the proceedings until the FCC had ruled. See Dkt. # 18, 19. Even
today, the door remains open to a challenge. See Mais, 768 F.3d at 1121
(“[Plaintiff] is free to ask the Commission to reconsider its interpretation . . .
and to challenge the FCC’s response in the court of appeals.”).
8

In the cases Collecto cites in support of its argument, human
intervention was required to dial the target telephones, not simply to activate
the process (by assembling a list of numbers and uploading them to the
dialer). See Luna v. Shac, 2015 WL 4941781, at *5 (N.D. Cal. Aug. 19, 2015)
(finding that human intervention “was involved in several stages of the
process . . . including . . . clicking ‘send’ on the website to transmit the
message to Plaintiff.”); Gragg v. Orange Cab Co., Inc., 995 F. Supp. 2d 1189,
1193-1194 (W.D. Wash. 2014) (finding that to dial and transmit dispatch
notification to a taxi, “the dispatcher must have pressed ‘enter’ to transmit .
. . information to both the TaxiMagic program and the nearest available
driver.”).
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intervention, and not on whether some act of human agency occurs at some
point in the process.10
ORDER
For the foregoing reasons, Collecto’s motion for summary judgment is
DENIED.
SO ORDERED.
/s/ Richard G. Stearns
UNITED STATES DISTRICT JUDGE

As plaintiffs observe, “[e]very 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.” Johnson v. Yahoo!, Inc.,
2014 WL 7005102, at *5 (N.D. Ill. Dec. 11, 2014); see also Davis v. Diversified
Consultants, Inc., 36 F. Supp. 3d 217, 225-226 (D. Mass. 2014) (Saylor, J.)
(citing the FCC’s finding that “[t]he basic function of such equipment . . . [is]
the capacity to dial numbers without human intervention” and finding that
the FCC’s Orders were entitled to deference). The parties dispute
(principally through dueling experts) whether the Noble and Guaranteed
Contacts Dialers fit the FCC’s additional defining feature of a predictive
dialer – specifically, whether it has the capacity “to store or produce
numbers and dial those numbers at random, in sequential order, or from a
database of numbers.” 18 FCC Rcd. at 14091.
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