Franasiak v. Palisades Collection, LLC

Filing 32

DECISION AND ORDER GRANTING Defendant's 15 Motion for Partial Judgment on the Pleadings on Plaintiff's TCPA claim. Signed by William M. Skretny, Chief Judge U.S.D.C. on 9/29/2011. (MEAL)

UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF NEW YORK
JOHN M. FRANASIAK,
Plaintiff,
v.

DECISION AND ORDER
09-CV-835S

PALISADES COLLECTION, LLC,
Defendant.
I. INTRODUCTION
In this action, Plaintiff John M. Franasiak asserts claims pursuant to the Fair Debt
Collection Practices Act, 15 U.S.C. 1692 et seq., and the Telephone Consumer Protection
Act (“TCPA”), 47 U.S.C. § 227 et seq. Plaintiff’s claims arise from Defendant’s use of an
automated telephone dialing system to telephone Plaintiff’s residence multiple times over
a period of seven months. Plaintiff seeks to recover actual damages, statutory damages
pursuant to 15 U.S.C. § 1692k and 47 U.S.C. § 223(b)(3)(B), treble statutory damages
pursuant to 47 U.S.C. § 227b(3), and costs, disbursements, and reasonable attorney’s fees
pursuant to 15. U.S.C. § 1692k. Presently before this Court is Defendant’s Motion for
Partial Judgment on the Pleadings.1
Defendant’s motion raises the issue of whether the TCPA applies to calls by debt
collectors to nondebtors. This Court first confronted that question in Spencer v. Arizona
Premium Finance Co., Inc., No. 06-CV-160S, 2008 WL 5432245, at *2 n.2 (W.D.N.Y. Dec.

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In support of its m otion, Defendant subm its a Mem orandum of Law; a Reply Mem orandum ; a
Reply to Plaintiff’s Affirm ation of Kim berly T. Irving; and m ultiple subm issions of Additional Authority.
(Docket Nos. 15, 19, 23, 24, 29.) In opposition, Plaintiff filed a Mem orandum of Law in Opposition to
Defendant’s Motion for Partial Judgm ent on the Pleadings; the Affirm ation of Kim berly T. Irving; and a
Response to Defendant’s Second Motion for Leave to Cite Additional Authority. (Docket Nos. 18, 22, 31.)

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30, 2008). Although at that time, this Court did not have occasion to provide an answer,
the present case puts the matter squarely before the Court. For the reasons discussed
below, Defendant’s motion is granted.

II. BACKGROUND
A.

Facts
In adjudicating Defendant’s Motion for Partial Judgment on the Pleadings, this Court

assumes the truth of the following factual allegations contained in the Complaint. Bank of
N.Y. v. First Millennium, Inc., 607 F.3d 905, 922 (2d Cir. 2010) (quoting Hayden v.
Paterson, 594 F.3d 150, 160 (2d Cir. 2010)). Plaintiff, John Franasiak, is a resident of Erie
County, New York. (Complaint (“Comp.”), Docket No.1, ¶ 5.) Defendant, Palisades
Collection, LLC (“Palisades”) is a Delaware corporation engaged in the debt collection
business. (Id. at ¶ 6.)
In January 2009 Palisades began calling Franasiak about a debt owed by
Franasiak’s daughter, Joy Segal. (See id. at ¶¶ 22.) Defendant called Franasiak despite
the fact that Segal neither lived with her father, nor shared a phone number. (Id. at ¶ 20.)
Furthermore, Plaintiff himself did not owe a debt. (See id. at ¶¶ 17, 18, 21.) Franasiak
informed Defendant of these facts on multiple occasions. (Id. at ¶ 25.) Plaintiff went so
far as to send Defendant a cease and desist letter, all to no avail. (Id.)

Defendant

continued contacting Franasiak several times a week through the use of an artificial or
prerecorded voice message concerning Segal’s debt. (Id. at ¶ 27.) On the basis of these
messages, Plaintiff filed suit.

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B.

Procedural History
Plaintiff commenced this action on September 24, 2009, alleging Defendant’s phone

calls were in violation of the FDCPA and TCPA. Defendant filed a motion for partial
judgment on the pleadings pursuant to Rule 12(c) of the Federal Rules of Civil Procedure
on March 24, 2010, asking this Court to dismiss Plaintiff’s TCPA claim. Following Plaintiff’s
Response on April 13, 2010 and Defendant’s Reply on April 26, 2010, Plaintiff provided
this Court with further case law in support of his opposition. Defendant followed suit and
filed a series of newly entered opinions from the Northern District of Alabama, the Eastern
District of Michigan, the Western District of New York, and the 11th Circuit Court of
Appeals.
On December 17, 2010 the parties filed a joint motion to stay this case pending a
decision on Defendant’s Motion for Partial Judgment on the Pleadings. (Docket No. 27.)
The case was subsequently stayed by order of Magistrate Judge Jeremiah J. McCarthy on
December 20, 2010.

III. DISCUSSION
A.

Legal Standards
1.

Judgment on the Pleadings

Federal Rule of Civil Procedure 12(c) provides that “[a]fter the pleadings are
closed–but early enough not to delay trial–a party may move for judgment on the
pleadings.” Fed. R. Civ. P. 12(c). The standard by which to decide a 12(c) motion is the
same as for a 12(b)(6) motion to dismiss for failure to state a claim upon which relief may
be granted. Bank of N.Y., 607 F.3d at 922 (citing Sheppard v. Beerman, 18 F.3d 147, 150

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(2d Cir. 1994)). The court will accept as true all factual allegations in the non-moving
party’s pleadings and draw all reasonable inferences in favor of the party opposing the
motion. See id. (quoting Hayden v. Paterson, 594 F.3d 150, 160 (2d Cir. 2010)).
B.

Defendant’s Motion for Partial Judgment on the Pleadings
Plaintiff claims Defendant violated the TCPA by calling Franasiak on his landline

even after Defendant learned that Plaintiff was not a debtor. Defendant responds that debt
collection calls are exempted under the TCPA.

Defendant also argues that any

determination by this Court that the TCPA does apply to calls to nondebtors, would be
contrary to the Hobbs Act, 28 U.S.C. § 2342, which vests the courts of appeals with
exclusive jurisdiction to review the validity of rulings by the Federal Communications
Commission (“FCC”).
“Congress’s stated purpose in enacting the TCPA was to ‘protect the privacy
interests of residential telephone subscribers by placing restrictions on unsolicited,
automated telephone calls to the home and to facilitate interstate commerce by restricting
certain uses of facsimile (fax) machines and automatic dialers.’” Bonime v. Avayu, 547
F.3d 497, 499 (2d Cir. 2008) (quoting S. Rep. No. 102-178, at 1 (1991)), abrogation on
other grounds recognized by Holster v. Gatco, Inc., 618 F.3d 214 (2d Cir. 2010). In
relevant part, the TCPA provides that:
It shall be unlawful for any person within the United States . .
. to initiate any telephone call to any residential telephone line
using an artificial or prerecorded voice to deliver a message
without the prior express consent of the called party, unless
the call is exempted by rule or order by the FCC under
paragraph (2)(B).
47 U.S.C. § 227(b)(1)(B).
The FCC has authority to exempt a category of calls from this prohibition, if it
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determines that such calls “will not adversely affect the privacy rights that this section is
intended to protect” and “do not include the transmission of any unsolicited advertisement.”
47 U.S.C. § 227(b)(2)(B)(ii). Pursuant to this authority, the FCC created an exception in
47 C.F.R. § 64.1200(a)(2)(iii), which provides that 47 U.S.C. § 227(b)(1)(B) will not apply
where a call “[i]s made for a commercial purpose but does not include or introduce an
unsolicited advertisement or constitute a telephone solicitation.”
The FCC addressed the applicability of this regulation to debt collection calls in a
Report and Order in 1992, and again in 1995. In those decisions, the FCC concluded that
“an express exemption from the TCPA’s prohibitions for debt collection calls is
unnecessary because such calls are adequately covered by exemptions we are adopting
here for commercial calls which do not transmit an unsolicited advertisement and for
established business relationships.” In the Matter of Rules and Regulations Implementing
the Telephone Consumer Protection Act of 1991, 7 F.C.C.R. 8752, 8773 (FCC Sept.17,
1992); In the Matter of Rules and Regulations Implementing the Telephone Consumer
Protection Act of 1991, 10 F.C.C.R. 12391, 12400 (FCC Aug. 7, 1995).
In the present case, the parties do not dispute that Defendant’s calls would be
exempted under the TCPA were Franasiak a debtor from whom Defendant was trying to
collect a debt. See Pugliese v. Prof’l Recovery Serv., Inc., No. 09-12262, 2010 WL
2632562, at *7 (E.D. Mich. June 29, 2010); Bates v. I.C. Sys., Inc., No. 09-CV-103A, 2009
WL 3459740, at *1 (W.D.N.Y., Oct. 19, 2009). However, Plaintiff argues that the FCC did
not consider calls by debt collectors to nondebtors, such as himself, and therefore
Defendant’s calls must fall outside the exceptions carved out by the FCC. Defendant
responds that the FCC has “concluded that debt collection calls are exempt from the

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TCPA’s prohibitions . . . because they are commercial calls,” and that this language is
sufficiently broad to cover calls made to both debtors and nondebtors. 7 F.C.C.R. at 877172.
The parties’ dispute is one a number of courts, confronted with factually analogous
cases, have addressed with varying results. The court in Watson v. NCO Group, Inc., on
which Plaintiff primarily relies, found that “the FCC has not directly addressed the issue of
erroneous debt collection calls.” 462 F. Supp. 2d 641, 644 (E.D. Pa. 2006). Having so
found, the court considered whether such calls could fall under the exemption for calls
made for a commercial purpose. Id. Reasoning that the FCC’s authority to exempt calls
is premised on a determination that the call will not adversely affect privacy rights the
TCPA is intended to protect, the court considered whether the calls had adversely affected
plaintiff’s privacy rights. Id. The court concluded that “a non-debtors rights are in fact
violated when he is subjected to repeated annoying and abusive debt collection calls that
he remains powerless to stop.” Id. at 645. Consequently, the court determined that the
commercial calls exception did not cover the calls, and held the TCPA applicable.
A different decision was reached by the court in Meadows v. Franklin Collection
Service, Inc. No. 7:09-CV-00605-LSC, 2010 WL 2605048, at *6 (N.D. Ala. June 25, 2010)
affirmed in part, reversed in part by 414 Fed. Appx. 230 (11th Cir. 2011). In that case,
plaintiff argued, as Franasiak does here, “that since [plaintiff] is a non-debtor, the debt
collection exemption does not apply.” Id. The court rejected that argument, noting that
“the FCC has determined that all debt collection circumstances are excluded from the
TCPA’s coverage.”

Id. (emphasis in original).

This language, the court held, was

sufficiently broad to cover calls made to a nondebtor. (Id.) The 11th Circuit affirmed this
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part of the District Court’s decision, holding that “[b]ecause [defendant] had an existing
relationship with the intended recipient of its prerecorded calls, and the calls were made
for a commercial, non-solicitation purpose, we conclude that those calls are exempt from
the TCPA’s prohibitions on prerecorded calls to residences.” Meadows, 414 Fed. Appx.
at 235. The court echoed the district court’s holding, stating that “the FCC has determined
that all debt-collection circumstances are excluded from the TCPA’s coverage, and thus
the exemptions apply when a debt collector contacts a non-debtor in an effort to collect a
debt.” Id. The court expressed its concern that a contrary ruling would place a debt
collector in violation of the TCPA anytime it called a debtor’s number and another member
of the debtor’s family answered. Id.
Recently, the court in McBride v. Affiliated Credit Services, Inc. came to the same
conclusion. See No. 10-6015-AA, 2011 WL 841176, at *3 (D. Or. Mar. 7, 2011). “While
I certainly agree that non-debtors lack a prior business relationship with a debt collector,
according to the Commission debt collection calls are not solicitations or advertisements
and thus fall within a recognized exemption.” Id.; see also Anderson v. AFNI, Inc., No. 104064, 2011 WL 1808779, at *11-12 (E.D. Pa. May 11, 2011) (holding that “the exemption
codified at 47 C.F.R. § 64.1200(a)(2)(iii) applies to calls to non-debtors made purely for the
purpose of debt collection”).
Even more recently, Judge Curtin of the Western District of New York expressly
rejected the Watson court’s reasoning. Santino v. NCO Fin. Sys., Inc., No. 09-CV-982JTC, 2011 WL 754874, at *5 (W.D.N.Y. Feb. 24, 2011). Santino involved a debt collector’s
calls to individuals who did not even know the person the debt collector was trying to reach.
Id. at *1. As here, plaintiffs in Santino relied on Watson. Id. at *4. Although Judge Curtin

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found that “the reasoning in Watson might be seen as persuasive on a common sense
level,” he ultimately found that reasoning erroneous. Id. at *5. The court noted that
Congress had granted the FCC authority to exempt certain calls from the TCPA and that
judicial deference favored interpreting the FCC’s rulemaking to include all debt collection
calls.
This Court concurs with Judge Curtin’s holding that judicial deference to the FCC
is warranted, and that this deference favors grouping calls to debtors and nondebtors
together under the FCC’s commercial calls exception. That is not to say the FCC’s
rulemaking in this area has been unambiguous. For example, the FCC has determined
that debt collection calls are excluded under either of two exceptions, the aforementioned
commercial calls exception, as well as an exception for established business relationships.
7 F.C.C.R. at 8773.2

The FCC also concluded, however, that “all debt collection

circumstances involve a prior or existing business relationship,” and defined such a
relationship as “a prior or existing relationship formed by a voluntary two-way
communication between the caller and the called party, which relationship has not been
previously terminated by either party.” Id. at 8771-72. This creates significant concern that
the FCC may not have adequately considered calls made to nondebtors who have no such
relationship with debt collectors. See McBride, 2011 WL 841176, at *3 (finding business
relationship exception inapplicable to nondebtors); see also 7 F.C.C.R. at 8769 (“[T]he
privacy rights the TCPA intended to protect . . . are not adversely affected where the called

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Defendant does not assert that the business relationship exception in 47 C.F.R. §
64.1200(a)(2)(iv) applies to the present case, assum ing as true all of Plaintiff’s allegations. (Defendant’s
Mem orandum in Support of Motion for Partial Judgm ent on the Pleadings, Docket No. 15, 5 n.1.)
Consequently, this Court will only consider the FCC’s business relationship exception to the extent it
sheds light on interpreting the FCC’s com m ercial calls exception under 47 C.F.R. § 64.1200(a)(2)(iii).

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party has or had a voluntary business relationship with the caller”), 8772 (“Commentators
concur that debt collection calls are exempt as calls to parties with whom the caller has a
prior or existing business relationship, and further argue that debtors have given express
consent to such calls by incurring a debt.”)
Nevertheless, the FCC has been clear that debt collection calls do fall under the
commercial calls exception. 7 F.C.C.R. at 8772. Although there may be some ambiguity
over whether the FCC considered calls to nondebtors, the FCC has not made explicit any
exceptions. Moreover, the FCC’s determination that “all debt collection circumstances”
involve a prior or existing business relationship, favors interpreting the FCC’s Ruling and
Order to include all conceivable circumstances involving debt collection calls, including
those made to nondebtors. See Meadows, 414 Fed. Appx. at 235. By extension, this
means the FCC also determined that such calls do not adversely affect the privacy rights
the TCPA is intended to protect. It is for the FCC, and not this Court, to determine whether
a resident’s privacy rights are adversely affected by seemingly intrusive phone calls by
prerecorded messages. 47 U.S.C. § 227(b)(2)(B)(ii)(I). Although it is this Court’s opinion
that such calls, when they are made to nondebtors, do adversely affect that individual’s
privacy interests, see Jenkins v. Allied Interstate, Inc., No. 5:08-CV-125-DCK, 2009 WL
3157399, at *3 (W.D.N.C. Sep. 28, 2009) (holding that TCPA applies to calls erroneously
made by debt collector to incorrect cell phone number), the FCC has found otherwise. See
Meadows, 2010 WL 2605048, at *6 (“This finding is broad enough to cover a debt
collection activity that contacts a non-debtor.”) Were this Court to follow the Watson
Court’s reasoning it would usurp a decision-making power Congress has properly left to
another body, in this case the FCC. See 47 U.S.C. § 227(b)(2)(B)(ii)(I). “[If] Congress left

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a ‘gap’ for an agency to fill– then we must uphold the ‘agency’s’ interpretation as long as
it is reasonable.” Zuni Pub. Sch. Dist. No. 89 v. Dep’t of Educ., 550 U.S. 81, 89, 127 S. Ct.
1534, 167 L. Ed. 2d 449 (2007). This Court does not find unreasonable the FCC’s
determination that calls to nondebtors are commercial calls and that such calls do not
adversely affect privacy rights protected under the TCPA. See Leyse v. Clear Channel
Broadcasting, Inc., No. 05 CV 6031 HB, 2006 WL 23480, at *3 (S.D.N.Y. Jan. 5, 2006)
(showing deference to FCC’s determinations despite serious questions regarding
Congress’s intent).
Consequently, Defendant’s Motion for Partial Judgment on the Pleadings on
Plaintiff’s TCPA claim will be granted.

IV. CONCLUSION
For the reasons stated above, Defendant’s Motion for Partial Judgment on the
Pleadings on Plaintiff’s TCPA claim is granted.

V. ORDERS
IT HEREBY IS ORDERED, that Defendant’s Motion for Partial Judgment on the
Pleadings (Docket No. 15) is GRANTED.
SO ORDERED.

Dated: September 29, 2011
Buffalo, New York
/s/William M. Skretny
WILLIAM M. SKRETNY
Chief Judge
United States District Court

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