Rosales v. Lexington Law Firm

Filing 21

ORDER granting 14 Defendnt's Motion to Stay. On balancing judicial and party resources against the minimal delay this stay will cause Plaintiff, the court finds a stay is appropriate. Ordered by Magistrate Judge Cheryl R. Zwart. (JAB)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEBRASKA
EUGENE ROSALES, on behalf of
himself and all others similarly situated,;
8:17CV87
Plaintiff,
MEMORANDUM AND ORDER

vs.
JOHN C. HEATH, Attorney at Law;
Defendant.

This matter is before the court on Defendant’s motion to stay. (Filing No.
14). For the following reasons, the motion will be granted and the case will be
stayed.

BACKGROUND
a. Plaintiff’s Claims

On March 20, 2017, Plaintiff Eugene Rosales filed a complaint against
Defendant John C. Heath Attorney at Law, PLLC dba Lexington Law Firm
(“Lexington Law”) alleging Lexington Law had repeatedly sent his cellular phone
automated text messages without his consent in violation of the Telephone
Consumer Protection Act (“TCPA”), 47 U.S.C. § 227, et seq. (Filing No. 1).
Rosales alleges that Defendant sent text messages using an automatic
telephone dialing system (“ATDS”). Specifically he claims “Defendant acquired
Plaintiff’s number, stored it in a database connected to its telephonic or computer
system, and then used its system to send text messages to Plaintiff’s cell phone
automatically and without human intervention.” (Filing No. 1 ¶ 38 at CM/ECF p.
7).

On May 8, 2017, Lexington Law moved to stay this case until the U.S.
Court of Appeals for the D.C. Circuit ruled in ACA International v. Federal
Communications Commission, Case No. 15-1211 (filed July 10, 2015). Lexington
Law states that the decision in ACA International will determine the definition of a
an ATDS for the purposes of the FCRA. Lexington Law contends this issue is
fundamental to Plaintiff’s claims and may affect their viability.

b. The 2015 FCC Order and ACA International v. FCC

In 2015, the FCC issued an order outlining its interpretation of numerous
provisions of the TCPA including the definition of an ATDS.1 See In the Matter of
Rules and Regulations Implementing the Telephone Consumer Protection Act of
1991, Declaratory Ruling and Order, 39 FCC Rcd. 7961 (2015). The FCC Order
expanded the definition of an ATDS to include any equipment that could
potentially be modified to generate random or sequential numbers.

Nine parties filed petitions challenging the FCC Order in various U.S.
courts of appeals. The petitions were consolidated before the Court of Appeals
for the D.C. Circuit. One issue that will be determined in ACA International is
“[w]hether the [FCC] interpreted ATDS in a way that unlawfully turns on the
equipment’s potential rather than present abilities . . . .” See Joint Brief for
Petitioners at 4, ACA International v. FCC, No. 15-1211 (D.C. Cir. Nov. 25,

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The TCPA prohibits any person from making any call to a cellular telephone
number without prior consent when using an ATDS. 47 U.S.C. § 227(b)(1)(a).
Section 227(a)(1) of the TCPA defines an ATDS as “equipment which has the
capacity – (A) to store or produce telephone numbers to be called, using random
or sequential number generator; and (B) to dial such numbers.” 47 U.S.C. §
227(a)(1).

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2015). Briefing concluded on February 24, 2016 and the Court of Appeals heard
oral arguments on October 19, 2016.

Based on the oral arguments, Lexington Law contends that the D.C. Circuit
will likely reject the expanded definition of an ATDS. Specifically, Lexington Law
surmises the court will reject the potential capacity component of the FCC’s
ATDS definition. Lexington Law argues the ACA International decision will affect,
if not invalidate, Plaintiff’s claims and have an impact on the discovery allowed in
this case.

ANALYSIS

"[T]he power to stay proceedings is incidental to the power inherent in
every court to control the disposition of the causes on its docket with economy of
time and effort for itself, for counsel, and for litigants." Landis v. N. Am. Co., 299
U.S. 248 (1936). A federal district court "has broad discretion to stay proceedings
as an incident to its power to control its own docket." Clinton v. Jones, 520 U.S.
681, 706 (1997).

In evaluating a stay, a court should consider several relevant factors
including "maintaining control of its docket, conserving judicial resources, and the
important interest of providing for the just determination of cases pending before
the court." Daywitt v. Minnesota, 2016 U.S. Dist. LEXIS 68512, 2016 WL
3004626, *5 (D. Minn. May 24, 2016). A stay may be warranted where the matter
implicates "rights which are inextricably tied to [a] pending . . . claim in [another
court]." See Kemp v. Tyson Seafood Grp., Inc., 19 F. Supp. 2d 961, 965 (D.
Minn. 1998). "Traditionally, an applicant for a stay has the burden of showing

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specific hardship or inequity if he or she is required to go forward." Jones v.
Clinton, 72 F.3d 1354, 1364 (8th Cir. 1996).

Lexington Law argues that the ACA International decision has the potential
to “drastically” affect the nature of this action. Specifically, defendant argues that
discovery in this case could be rendered moot or altered based on the
determined definition of ATDS.

The plaintiff argues the ACA International decision will not be dispositive to
the outcome of this case nor does it affect Plaintiff’s claims arising under the Fair
Credit Reporting Act (“FCRA”). Plaintiff also states that he will be prejudiced by
having to wait for a ruling from the D.C. Circuit.

Whether the communications equipment used by Lexington Law qualifies
as an ATDS is clearly an essential element of Rosales’ claim under the TCPA.
Rosales primarily argues Lexington Law’s system had the full capacity to store
and dial numbers without human intervention and that the defendant used the
system without human intervention in sending the text messages underlying
Plaintiff’s claims. That is, Plaintiff’s claims do not rely upon the potential capacity
component of the ATDS definition which is being challenged. (See Filing No. 1).
Regardless, Plaintiff also cites to the FCC Order and broad definition of an ATDS
to support his claims. (See Filing No. 1 ¶¶ 17, 18 at CM/ECF p. 4). And Plaintiff
alleges “[i]n the unlikely event that Defendant’s system does not already have the
capacity to generate random or sequential numbers, that capacity can be trivially
added.” (Filing No. 1 ¶ 48 at CM/ECF p. 9). Given this inclusion, while Plaintiff is
not currently relying on the contested definition, discovery regarding how the
defendant’s system worked would certainly include an inquiry into the potential to

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add automatic dialing capacity. The decision in ACA International could have
some affect on permissible discovery and evidence in this case.

Regarding the timeline for decision in ACA International, briefing
concluded on February 24, 2016 and the Court of Appeals heard oral arguments
on October 19, 2016. It is now June 8, 2017. The duration of any stay in this case
will likely be minimal, while Rosales’ lawsuit against Lexington Law is still in its
infancy and discovery has yet to begin. And Plaintiff has not otherwise shown
how he would be prejudiced by a short stay.

On balancing judicial and party resources against the minimal delay this
stay will cause Plaintiff, the court finds a stay is appropriate.

Dated this 9th day of June, 2017.
BY THE COURT:
s/ Cheryl R. Zwart
United States Magistrate Judge

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