Mattson v. New Penn Financial, LLC

Filing 71

ORDER: The Court DECLINES TO ADOPT Magistrate Judge You's Findings and Recommendation 63 . Defendant's Motion for Summary Judgment 46 is DENIED. IT IS SO ORDERED. Signed on 10/25/2020 by Judge Marco A. Hernandez. (pvh)

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IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF OREGON

ERIK MATTSON,

No. 3:18-cv-00990-YY
Plaintiff,

ORDER

v.
NEW PENN FINANCIAL, LLC,
Defendant.

HERNÁNDEZ, District Judge:
Magistrate Judge You issued a Findings and Recommendation on November 7, 2019, in
which she recommends that this Court grant Defendant’s motion for summary judgment. The
matter is now before the Court pursuant to 28 U.S.C. § 636(b)(1)(B) and Federal Rule of Civil
Procedure 72(b).
Plaintiff filed timely objections to the Magistrate Judge’s Findings & Recommendation.
Pl. Obj., ECF 74. When a party objects to any portion of the Magistrate Judge’s Findings &
Recommendation, the district court must make a de novo determination of that portion of the

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Magistrate Judge’s report. 28 U.S.C. § 636(b)(1); Dawson v. Marshall, 561 F.3d 930, 932 (9th
Cir. 2009); United States v. Reyna-Tapia, 328 F.3d 1114, 1121 (9th Cir. 2003) (en banc).
After carefully considering Plaintiff’s objections, Defendant’s response, and the relevant
portions of the record, the Court declines to adopt the Magistrate Judge’s Findings &
Recommendation.
A. Business Number
Plaintiff brings claims under the Telephone Consumer Protection Act of 1991, 47 U.S.C.
§ 227 (“TCPA”). The regulations promulgated under the TCPA provide that “No person or entity
shall initiate any telephone solicitation to . . . [a] residential telephone subscriber who has
registered his or her telephone number” on the Do Not Call Registry (“DNCR”). 47 C.F.R. §
64.1200(c)(2). The TCPA does not apply to business telephone numbers. In Re Rules & Regs.
Implementing the Tel. Consumer Prot. Act of 1991, 23 F.C.C. Rcd. 9779, 9785 (June 17, 2008)
(“[T]he National Do Not Call Registry applies to ‘residential subscribers’ and does not preclude
calls to businesses.”). As the Magistrate Judge pointed out, there is “there is little guidance on
the applicability of the TCPA to phones used for both business and personal purposes[.]” F&R 7,
ECF 63. The Findings and Recommendation concluded that no genuine issue of material fact
remains that Plaintiff’s cell phone number was a business number that is not subject to the
protections of the TCPA. The Court disagrees.
Plaintiff purchased a cell phone and personal cellular service in or about 2007. Kristensen
Decl. Ex. 7 (“Mattson Decl.”) ¶ 8–9, ECF 56-7. He has used the cell phone number primarily for
personal use since that time. Mattson Decl. ¶ 13. At some point, a business in which Plaintiff is a
one-third owner, Westland Investors, began to pay the bill for Plaintiff’s cell phone service. Id.
At the time of the relevant phone calls, the subject number was part of a Westland Investors

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Verizon cell phone plan that included the cell phone numbers of the other partners of Westland
Investors and cell phones of Westland Investors’s employees. Id. Plaintiff, his partners, and his
employees used the cell phones on the Westland Investors Verizon plan for personal purposes,
and they were not listed on Westland Investors’s website as business phone lines. Id. ¶¶ 13, 15.
Westland Investors had a separate business telephone number that is listed on its website which
is answered by a Westland Investors employee and used for business purposes. Id. ¶ 15.
Plaintiff listed the subject number on a zoning application that he filed in relation to
Westland Investors’s business in a blank space next to the word “Mobile,” but also listed
Westland Investors’s business land line next to “Phone” on that application. Suden Decl. Ex. 8,
ECF 50-4. There is no other evidence in the record that Plaintiff held the subject number out to
the public as a business phone number. The F&R also concluded that because Westland
Investors “apparently deducted the [Verizon] bills as a business expense,” that fact supports the
conclusion that Plaintiff’s cell phone number was a business line. F&R 10. Because there is no
evidence in the record beyond Plaintiff’s testimony that he believed, but was not sure, that
Westland Investors deducted the expense of the Verizon bill as a business expense on its income
tax return, the Court cannot rely on that testimony to establish an undisputed fact that the
Verizon bill was deducted as a business expense. Additionally, the F&R’s conclusion that the
fact that Plaintiff’s call history was printed in a cell phone bill that included Westland Investors
employees and which Verizon sent to the business reflects an expectation of privacy that is “not
commensurate with a residential line” appears to be an inference drawn in favor of the moving
party. See F&R 7.
Viewing the facts in the light most favorable to the nonmoving party, as the Court must,
the Court finds that a genuine issue of material fact remains concerning whether the subject

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number was a residential or business phone number. Clauss v. Legend Sec., Inc., No. 4:13-cv00381-JAJ, 2014 WL 10007080, at *3 (S.D. Iowa Sept. 8, 2017) (denying summary judgment
where there was evidence both that the phone number was a business number and a residential
number). Although Mattson’s use of a phone line for personal calls does not automatically
transform it into a residential line for purposes of the TCPA, neither does his use of a personal
line for business calls automatically transform it into a business line. See Southwell v. Mortg.
Investors Corp. of Ohio, Inc., No. 2:13-cv-01289, 2014 WL 4057166, at *3 (W.D. Wash. Aug.
14, 2014) (holding that the plaintiff’s cell phone was a residential line for purposes of the TCPA
despite his use of the phone to occasionally sell sheep to his friends). On the facts in the record, a
reasonable jury could conclude that the subject number is a residential line that is subject to the
TCPA’s protections.
B. Safe Harbor Provision
A telemarketer may call a phone number listed on the DNCR with the subscriber’s
express invitation or permission or when the telemarketer has a personal relationship with the
recipient of the call. 47 C.F.R. § 64.1200(c)(2)(ii)–(iii). The TCPA’s implementing regulations
include a “safe harbor” provision that exempts a defendant from liability for calls to a phone
number listed on the DNCR if the defendant can (1) demonstrate that the call to the number
listed on the DNCR was in error, and (2) establish that it had implemented adequate procedures
to avoid calling numbers listed on the DNCR. 47 C.F.R. § 64.1200(c)(2)(i). The procedures that
a telemarketer must have in place to avoid liability under the safe harbor provision are listed in
47 C.F.R. § 64.1200(c)(2)(i)(A)–(E). Defendant argued that it is entitled to summary judgment
on Plaintiff’s claims because it met both safe harbor requirements.

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The Magistrate Judge declined to decide whether Defendant is entitled to summary
judgment on its safe harbor defense because she decided that the TCPA did not apply based on
her conclusion that Plaintiff’s phone number was a business number. F&R 11. Because a
question of fact remains as to whether the subject number was a residential number, the Court
must now resolve the question of whether Defendant is entitled to summary judgment under the
safe harbor defense.
Defendant argues that because it “ma[de] a good faith attempt to avoid placing calls to
phone numbers on the []DNCR,” it is entitled to summary judgment. Def. Mot. Summ. J. (“Def.
Mot.”) 15, ECF 46. Defendant failed, however, to establish that the calls it made to Plaintiff were
with Plaintiff’s express consent or were made in error.
1. Error
Having adequate procedures in place, in the absence of any error, is insufficient to avoid
liability under the safe harbor provision. 47 C.F.R. § 64.1200(c)(2)(i); In re Dynasty Mortg.,
L.L.C., 20 F.C.C. Rcd. 4921, 4929–30 (2005). Defendant can show that the calls it made to
Plaintiff were in error by showing that the calls were made unintentionally. Simmons v. Charter
Comm’ns, Inc., 222 F. Supp. 3d 121, 135 (D. Conn. 2016). One way that Defendant can show
that it called Plaintiff unintentionally is by establishing the “procedural breakdowns that led to
such calls, as well as the steps that the seller has taken to minimize future errors.” Id. (citing In re
Dynasty Mortg., L.L.C., 20 F.C.C. Rcd. at 4929–30).
In its summary judgment motion, Defendant argued that it inadvertently called Plaintiff
because it believed that it had Plaintiff’s prior express consent to call. Defendant called Plaintiff
after it received information from a third-party lead-generating vendor, QuinStreet, with
Plaintiff’s contact information. Def. Mot. 21. Defendant asserts that both it and QuinStreet

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believed that all leads that QuinStreet provided to Defendant were from customers who had
given prior express permission or invitation to be called. Id. Defendant made six calls and sent
three text messages to Plaintiff’s cell phone between September 2017 and October 2017. Daluz
Decl. ¶ 16.
Defendant’s representative testified that QuinStreet was the source of the lead. Kristensen
Decl. Ex. 2 (“Flanagan Dep.”) 19:10–20, ECF 58-2. QuinStreet obtained the customer lead from
SaveBig Leads, which administers the website www.MinuteMortgageQuotes.com. Yader Decl.
¶¶ 8–9, ECF 49. QuinStreet provided a lead to Defendant on September 1, 2017, in the name of
Jessica Mattson, Plaintiff’s wife, that included Plaintiff’s cell phone number. Id. QuinStreet’s
contract with Defendant, under which QuinStreet agreed to provide Defendant with customer
leads, provided that “QuinStreet makes no representation or warranty concerning the adequacy,
completeness or accuracy of any information provided to Client by QuinStreet or by any
consumer.” Kristensen Decl. Ex. 1 at ¶ B.3, ECF 58-1; Daluz Decl. ¶ 14, ECF 48; Daluz Decl.
Ex. C, ECF 48-3. Defendant relies on QuinStreet to provide it with TCPA-compliant leads and a
record of the consumer’s consent to receive calls. Daluz Decl. ¶ 15. Defendant uses another
third-party vendor to access the DNCR and “scrub” phone numbers on its call lists against the
DNCR to ensure TCPA compliance. Id. ¶¶ 18–19.
Defendant “assume[d]” that the information provided by its third-party lead generator
was accurate and provided with the customer’s consent, based on the consent verification that
QuinStreet provided Defendant. Kristensen Decl. Ex. 6 (“Daluz Dep.”) 24:15–25:13, 47:2–10,
ECF 58-3. The consent verification listed on MinuteMortgageQuotes.com during the relevant
time period provided that the customer consented to receive calls from “up to 4 lenders,” even if
the phone number that the customer provided was listed on the DNCR. Flanagan Decl. ¶ 6;

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Flanagan Decl. Ex. A; Yader Decl. ¶ 10. However, there is no evidence in the record that New
Penn was one of the “4 lenders” on the list that appeared in the pop-up window when a customer
clicked on the hyperlinked “up to 4 lenders” text. Ms. Flanagan testified that she did not know if
Defendant was on the list that appeared in the pop-up window after a customer clicked “up to 4
lenders” at the time that QuinStreet provided the lead to Defendant on September 1, 2017, and
Defendant did nothing to determine whether it was included on that list. Flanagan Dep. 63:5–12;
Yader Decl. ¶¶ 10–11, Flanagan Decl. Exs. A, B, ECF 15-1, 15-2.
Plaintiff presented evidence in the form of screen shots taken from a website called the
Way Back Machine, which archives historical versions of websites over time. The Way Back
Machine archived www.MinuteMortgageQuotes.com several times including, as relevant here,
on October 18, 2016 and October 28, 2017. Kristensen Decl. Ex. 14 at 18–21, ECF 56-14. The
list that appeared when a person clicked the hyperlinked phrase “4 lenders” on October 18, 2016,
or “5 lenders,” as appeared in the disclaimer on October 28, 2017, did not include New Penn
Financial. Id. The list did include SaveBig Leads, but Defendant contacted Plaintiff, not SaveBig
Leads. There is no evidence in the record that Defendant had express consent from Plaintiff or
Jessica Mattson when it called Plaintiff.
A question of remains concerning whether Defendant called Plaintiff in error because “it
had a good faith belief that it had permission” to call the number. Defendant’s alleged good faith
belief was based on its assumption that it had consent, obtained by QuinStreet through
MinuteMortgageQuotes.com, to call the customers that QuinStreet referred. But Defendant did
not verify that customers had specifically consented to receive calls from Defendant by ensuring
that New Penn was included on the list that appeared when a customer clicked “up to 4 lenders.”
Because Defendant assumed, without verifying, that QuinStreet only provided Defendant with

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phone numbers of customers who had consented to receive calls from it, Defendant believed that
it did not need to check the DNCR to determine whether the phone number it had received from
QuinStreet was on the DNCR. Daluz Dep. 56:25–57:4. A reasonable juror could conclude that
because Defendant did not attempt to verify that the consumer had consented to receive its calls,
and because Defendant’s contract with QuinStreet did not require QuinStreet to provide
“accurate” or “complete” leads, Defendant did not have a “good faith belief” that it had
permission to call anyone whose lead QuinStreet provided from
www.MinuteMortgageQuotes.com, including Plaintiff. Thus, a question of fact remains
concerning whether the calls and text to Plaintiff were made in error.
Defendant argued that even if New Penn was not listed as one of the four lenders that the
customer consented to receive calls from on www.MinuteMortgageQuotes.com, the consent
disclaimer extended beyond that list to “other business partners.” Def. Reply 21, ECF 61.
Defendant did not develop that argument, and the regulations promulgated under the TCPA
require the consumer’s prior express consent to receive calls from the specific telemarketer that
makes the call before the telemarketer can call a number listed on the DNCR. 47 C.F.R. §
64.1200(c)(2)(ii) (“Such permission must be evidenced by a signed, written agreement between
the consumer and seller which states that the consumer agrees to be contacted by this seller and
includes the telephone number to which the calls may be placed[.]”). Thus, consent to receive
calls from “other business partners” is insufficient.
A jury could infer from the facts that Defendant knew or should have known that it did
not have Plaintiff’s consent and that Defendant intentionally called Plaintiff when Defendant
knew that Plaintiff’s number was listed on the DNCR. Consequently, a question of fact remains
as to whether Defendant made an error when it called Plaintiff’s phone number.

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2. Compliance with section 64.1200(c)(2)(i)(D)
To qualify for the safe harbor defense, after establishing that its calls and text messages to
Plaintiff were made in error, Defendant must demonstrate that it met the following additional
requirements: (A) establishing and implementing written procedures to comply with the national
do-not-call rules; (B) training its personnel in the procedures it established pursuant to the
national do-not-call rules; (C) maintaining a list of telephone numbers that it may not contact;
(D) using the national do-not-call database and a procedure to ensure it does not call a number on
any list generated to comply with the do-not-call rules; and (E) purchasing and “employ[ing]”
the national do-not-call database and not sharing the database or the cost to access the database
with any other telemarketer. 47 C.F.R. § 64.1200(c)(2)(i). Because Defendant has not established
that it is entitled to judgment as a matter of law that its calls were made in error by
unintentionally calling Plaintiff, it has not established that the safe harbor defense applies, and
the Court need not determine whether Defendant’s policies and procedures to avoid placing calls
to numbers on the DNCR were adequate. 47 C.F.R. § 64.1200(c)(2)(i).
CONCLUSION
The Court DECLINES TO ADOPT Magistrate Judge You’s Findings and
Recommendation [63]. Defendant’s Motion for Summary Judgment [46] is DENIED.
IT IS SO ORDERED.

DATED:_______________________.
October 25, 2020

MARCO A. HERNÁNDEZ
United States District Judge

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