Passero et al v. Diversified Consultants, Inc.

Filing 25

DECISION AND ORDER granting Defendant's 19 MOTION to Stay Proceedings. All discovery and other pretrial proceedings are stayed until a decision is issued by the FCC addressing the TCPA issues discussed herein. Within 14 days of the FCC 9;s ruling, defendant shall file a status report. If the FCC does not issue a ruling on these matters by 11/21/2014, defendant shall file a status report advising the court as to the FCC's progress on resolving the petition. Signed by Hon. John T. Curtin on 5/28/2014. (JEC)

UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF NEW YORK

MARIO PASSERO and CAROL PASSERO,
Plaintiffs,
-vs-

13-CV-338C

DIVERSIFIED CONSULTANTS, INC.,
Defendant.

Plaintiffs Mario and Carol Passero brought this action in April 2013 against
defendant Diversified Consultants, Inc. (“DCI”) seeking actual and statutory damages for
violations of the Telephone Consumer Protection Act (“TCPA”), 47 U.S.C. 227 et seq.,
based on allegations that defendant utilized an automatic telephone dialing system
(“ATDS”), as defined in the TCPA,1 to place multiple calls to plaintiffs’ cellular telephone
service in an effort to collect on a debt incurred by non-party Tamieka Jones.2 See Item
1, ¶ 13. In its answer, along with denying the allegations that it engaged in conduct
violating the TCPA, DCI pleaded an affirmative defense specifically denying that it utilized
an ATDS to contact plaintiffs. See Item 6, ¶ 49.

1

(1) The term “automatic telephone dialing system” means 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.

47 U.S.C. § 227(a).
2

Plaintiffs also sought damages pursuant to the Fair Debt Collection Practices Act (“FDCPA”), 15
U.S.C. § 1692 et seq., based on the same conduct. The parties have since settled the FDCPA claims.

DCI has now moved for a temporary stay of proceedings in this action pending the
outcome of several petitions filed with the Federal Communications Commission (“FCC”)
seeking declaratory rulings for clarification of the very same TCPA issues raised by plaintiff
in this action. See Item 19. For example, DCI has submitted as an exhibit a copy of a
petition filed with the FCC in June 2012 by Communications Innovators, requesting that the
FCC “clarify, consistent with the text of the TCPA and Congressional intent, that predictive
dialers that (1) are not used for telemarketing purposes and (2) do not have the current
ability to generate and dial random or sequential numbers, are not ‘automatic telephone
dialing systems’ (‘autodialers’) under the TCPA and the Commission’s TCPA rules.” Item
19-3, p. 4 (In Re Communications Innovators, filed June 7, 2012). Similar issues are
presented by petitions in In re GroupMe, Inc., filed March 1, 2012 (see Item 19-4); In re
YouMail, Inc., filed April 19, 2013 (see Item 19-5); and In re ACA International, filed
January 31, 2014 (see Item 19-6).

DCI has also submitted copies of recent

correspondence between FCC Commissioners and Members of Congress indicating that
the FCC anticipates a ruling on the matters raised by these petitions “in the near future.”
Item 19-1, p.2; see Item 19-7.
DCI’s argument for a stay rests on the doctrine of “primary jurisdiction,” which
“allows a federal court to refer a matter extending beyond the conventional experiences of
judges or falling within the realm of administrative discretion to an administrative agency
with more specialized experience, expertise, and insight.” Nat'l Commc'ns Ass'n, Inc. v.
AT & T Co., 46 F.3d 220, 222-23 (2d Cir. 1995) (internal quotation marks and citation
omitted).

This practice of judicial deference to agency expertise is concerned with

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“promoting proper relationships between the courts and administrative agencies charged
with particular regulatory duties.” United States v. W. Pac. R.R. Co., 352 U.S. 59, 63
(1956), quoted in Ellis v. Tribune Television Co. 443 F.3d 71, 81 (2d Cir. 2006). “Overall,
the ‘doctrine seeks to produce better informed and uniform legal rulings by allowing courts
to take advantage of an agency's specialized knowledge, expertise, and central position
within the regulatory regime.’ ” Ellis, 443 F.3d at 82 (quoting Pharm. Research & Mfrs. of
Am. v. Walsh, 538 U.S. 644, 673 (2003) (Breyer, J., concurring).
While “[n]o fixed formula has been established for determining whether an agency
has primary jurisdiction” to consider issues within its recognized expertise that are pending
before the court, United States v. Western Pacific Railroad Co., 352 U.S. 59, 65 (1956),
the analysis generally focuses on the following four factors:
(1) whether the question at issue is within the conventional experience of
judges or whether it involves technical or policy considerations within the
agency's particular field of expertise;
(2) whether the question at issue is particularly within the agency's discretion;
(3) whether there exists a substantial danger of inconsistent rulings; and
(4) whether a prior application to the agency has been made.
Ellis, 443 F.3d at 82 (citing Nat'l Commc'ns Ass'n, Inc., 46 F.3d at 222 )). The Second
Circuit has noted that “[t]he court must also balance the advantages of applying the
doctrine against the potential costs resulting from complications and delay in the
administrative proceedings.” Id. at 223.
As indicated by the pleadings and submissions presently before the court, DCI has
raised questions in this case regarding (1) whether the “predictive dialer” apparatus utilized

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by DCI to place the calls at issue is an automatic telephone dialing system subject to the
prohibitions of the TCPA, and (2) whether the TCPA even applies to the debt collection
calls complained of. See Item 19-1, p. 1. These are the essential issues raised by prior
application to the FCC in In Re Communications Innovators and the other petitions cited
above, presenting questions regarding interpretation of terms and policies clearly within the
agency’s particular field of expertise and discretion, and well outside the conventional
experience of this court. Indeed, the FCC has previously addressed the definition and
scope of the term “automatic telephone dialing system” under the TCPA, and has revisited
the issue several times in recognition of the “need to consider changes in technologies.”
In re Rules and Regulations Implementing the Telephone Consumer Protection Act of
1991, 18 F.C.C. Rcd. 14014, 14092, 2003 WL 21517853, at *46 (F.C.C. July 3, 2003); see
also 7 F.C.C. Rcd. 8752, 1992 WL 690928 (F.C.C. Oct. 16, 1992); 10 F.C.C. Rcd. 12391,
1995 WL 464817 (F.C.C. Aug. 7 1995); 23 F.C.C.R. 559, 2008 WL 65485 (F.C.C. Jan. 4,
2008).
With regard to the danger of inconsistent rulings, the court need look no further than
the split of case law authority on the threshold issue as to whether the protective provisions
of the TCPA even apply to debt collection calls. Compare Meadows v. Franklin Collection
Service, Inc., 414 F. App’x 230, 235 (11th Cir. 2011) (FCC has made clear that debt
collection calls are subject to the TCPA’s “established business relationship” and
“commercial purpose” exemptions”), and Franasiak v. Palisades Collection, LLC, 822 F.
Supp. 2d 320 (W.D.N.Y. 2011) (relying on FCC rulemaking decisions that debt collector's
ATDS calls to non-debtor fall under TCPA's “commercial call exemption”), with Iniguez v.

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The CBE Group, 969 F. Supp. 2d 1241, 1247 (E.D.Cal. 2013) (neither TCPA nor
implementing federal regulations contain a debt collector exception, or any exceptions
related to calls made to cellular phones; citing cases).
As one court has recently observed in applying the primary jurisdiction doctrine to
grant a debt collector defendant’s motion to stay a TCPA action pending the FCC’s
determination of the issues raised by the In Re Communications Innovators petition:
The law is unclear whether Congress intended the TCPA to prevent [the use
of an autodialer to call cellular phones for debt collection purposes].
Telemarketing is one activity while collecting debt from known debtors seems
to be a wholly separate activity. Whether the latter activity falls within the
scope of the TCPA is currently being addressed by Congress and the FCC
[in In Re Communications Innovators]. The issue is clearly one of policy
within those bodies, and guidance on the “capacity” of autodialing systems
would further clarify the law that [the plaintiff] seeks to enforce in this action.
Hurrle v. Real Time Resolutions, Inc., 2014 WL 670639, at *1 (W.D.Wash. Feb. 20, 2014);
see also Higgenbotham v. Diversified Consultants, Inc., 2014 WL 1930885 (D.Kan. May
14, 2014) (granting stay pending FCC’s determination of issues rased by the In Re
Communications Innovators petition); Mendoza v. UnitedHealth Group Inc., 2014 WL
722031, at * (N.D.Cal. Jan. 6, 2014) (same; finding that “the benefit to be provided by FCC
guidance on potentially dispositive issues in this litigation outweighs the benefit to plaintiff
in allowing the action to proceed.”). The court agrees with this reasoning and approach.
Finally, the court finds that the advantages of deferring to the FCC’s “primary
jurisdiction” over the issues raised by the TCPA claims in this case (and in several other
cases pending before this court) outweigh the potential for costs resulting from further
complications and delay in the administrative proceedings, considering the recent

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correspondence between the FCC and Congress indicating the likelihood of a ruling on the
pending petitions relatively soon.
Accordingly, under the circumstances presented on this motion, and based on the
foregoing considerations, the court makes the following order:

1.

Defendant's motion to stay (Item 19) is granted. All discovery and other
pretrial proceedings in this action are stayed until a decision is issued by the
FCC addressing the TCPA issues raised in In Re Communications
Innovators, or in any of the other multiple petitions pending before it, relevant
to the claims remaining for determination in this case.

2.

Within fourteen days of the FCC's ruling, defendant shall file a status report
advising the court of the FCC's order, and attaching a copy of the order as
an exhibit.

If the FCC does not issue a ruling on theses matters by

November 21, 2014, defendant shall file a status report by that date advising
the court as to the FCC's progress on resolving the petition. Upon receipt
and review of these filings, the court will set an appropriate schedule for
further proceedings.

So ordered.

\s\ John T. Curtin
JOHN T. CURTIN
United States District Judge
Dated: May 28, 2014

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