Mey v. Monitronics International, Inc. et al
Filing
171
MEMORANDUM OPINION AND ORDER denying 93 Motion for Summary Judgment and denying 95 Motion for Summary Judgment. The oral argument previously scheduled for Thursday, August 15, 2013 at 9:30 A.M. is CANCELLED. A status Conference has been set f or 8/15/2013 10:00 AM before District Judge Irene M. Keeley. The parties may participate in that statusconference by telephone. If the status conference is to be bytelephone, the Court directs lead counsel for the plaintiff toarrange the conference call and provide dial-in information toall parties and the Court. Signed by District Judge Irene M. Keeley on 8/14/2013. (copy to counsel of record via CM/ECF)(nmm)
Mey v. Monitronics International, Inc. et al
Doc. 171
IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF WEST VIRGINIA
DIANA MEY, individually and on
behalf of a class of all persons
and entities similarly situated,
Plaintiff,
v.
//
CIVIL ACTION NO. 5:11CV90
(Judge Keeley)
MONITRONICS INTERNATIONAL, INC.,
VERSATILE MARKETING SOLUTIONS, INC.,
doing business as VMS Alarms, and
UTC FIRE AND SECURITY AMERICAS
CORP., INC.,
Defendants.
MEMORANDUM OPINION AND ORDER
Pending before the Court are the motions for summary judgment
of Monitronics International, Inc. (“Monitronics”) and UTC First
and Security Americas Corp., Inc. (“UTC”). (Dkt. Nos. 93, 95). For
the reasons that follow, the Court DENIES the motions.
I.
The
plaintiff,
Diana
Mey
(“Mey”)
claims
that
Versatile
Marketing Solutions, Inc. (“VMS”), acting on behalf of Monitronics
and UTC, telephoned her nineteen times between November 16, 2009
and July 11, 2011, despite the fact that she had listed her
telephone number on the national Do Not Call Registry (the “DNC
Registry” or the “Registry”) in 2003. (Dkt. No. 13). Mey alleges
that these calls violated the Telephone Consumer Protection Act’s
Dockets.Justia.com
MEY V. MONITRONICS INT’L INC. ET AL
5:11CV90
MEMORANDUM OPINION AND ORDER
(“TCPA,”
or
the
“Act”)
prohibition
against
calls
to
DNC
registrants, 47 U.S.C. § 227(c), and that, even though Monitronics
and UTC did not physically place the calls themselves, they are
vicariously liable under that statute because VMS placed the calls
on their behalf. (Dkt. No. 13 at 5).
On January 31, 2012, Monitronics and UTC each filed motions
for summary judgment on the issue of whether the phrase “on behalf
of,” found in § 227(c)(5), exposed them to TCPA liability when
there was no dispute that they did not physically place the calls
to Mey themselves. (Dkt. Nos. 34, 35). Mey responded to both
motions on February 21, 2012 (dkt. no. 103), and Monitronics and
UTC replied on March 6, 2012. (Dkt. Nos. 113, 114). Then, on May 4,
2012, the Court stayed the case after being advised that the
Federal
Communications
Commission
(“FCC”)
would
soon
issue
a
Declaratory Ruling on the issue of the extent “on behalf of”
liability under the TCPA. (Dkt. No. 127).
Concerned
that
the
stay
–
a
year
long
–
was
becoming
prejudicial, the Court lifted it on May 9, 2013. (Dkt. No. 159).
Coincidentally, that same day, the FCC released its anticipated
Declaratory Ruling. See Dish Network, LLC, 28 F.C.C.Rcd. 6574 (the
“FCC’s Declaratory Ruling” or the “Ruling”). The Court then invited
supplemental briefing as to the effect of the Ruling, which the
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MEY V. MONITRONICS INT’L INC. ET AL
5:11CV90
MEMORANDUM OPINION AND ORDER
parties filed on June 3, 13, and August 9, 2013. (Dkt. Nos.
162,
163, and 164). Considering the six rounds of briefing and the
fulsome guidance found in the Ruling, UTC and Monitronics’ motions
are certainly fully briefed and ripe for disposition.
II.
Summary
documents,
judgment
is
appropriate
electronically
declarations,
stored
stipulations
.
.
where
the
information,
.,
admissions,
“depositions,
affidavits
or
interrogatory
answers, or other materials” show that “there is no genuine dispute
as to any material fact and the movant is entitled to judgment as
a matter of law.” Fed R. Civ. P. 56(c)(1)(A), (a). When ruling on
a motion for summary judgment, the Court reviews all the evidence
“in the light most favorable” to the nonmoving party. Providence
Square Assocs., L.L.C. v. G.D.F., Inc., 211 F.3d 846, 850 (4th Cir.
2000). The Court must avoid weighing the evidence or determining
the truth and limit its inquiry solely to a determination of
whether genuine issues of triable fact exist. Anderson v. Liberty
Lobby, Inc., 477 U.S. 242, 249 (1986).
The moving party bears the initial burden of informing the
Court
of
the
basis
for
the
motion
and
of
establishing
the
nonexistence of genuine issues of fact. Celotex Corp. v. Catrett,
477 U.S. 317, 323 (1986). Once the moving party has made the
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MEY V. MONITRONICS INT’L INC. ET AL
5:11CV90
MEMORANDUM OPINION AND ORDER
necessary showing, the nonmoving party “must set forth specific
facts showing that there is a genuine issue for trial.” Anderson,
477 U.S. at 256 (internal quotation marks and citation omitted).
The “mere existence of a scintilla of evidence” favoring the
nonmoving party will not prevent the entry of summary judgment; the
evidence
must
be
such
that
a
rational
trier
of
fact
could
reasonably find for the nonmoving party. Id. at 248–52.
III.
The appropriate breadth of liability under the TCPA lies at
the
heart
of
Monitronics
and
UTC’s
motions.
Therefore,
some
background about the Act is helpful prior to considering the
particular circumstances of this case.
A.
The Act
The TCPA was enacted in response to “[v]oluminous consumer
complaints about abuses of telephone technology.” Mims v. Arrow
Financial Services, LLC, 132 S.Ct. 740, 744 (2012). In Mims, the
Supreme Court summarized Congress' findings on the matter:
In enacting the TCPA, Congress made several findings . .
. “Unrestricted telemarketing,” Congress determined, “can
be an intrusive invasion of privacy.” TCPA, 105 Stat.
2394, note following 47 U.S.C. § 227 (Congressional
Findings)
(internal
quotation
marks
omitted).In
particular, Congress reported, “[m]any consumers are
outraged over the proliferation of intrusive, nuisance
[telemarketing] calls to their homes.” Ibid. (internal
quotation marks omitted).
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MEY V. MONITRONICS INT’L INC. ET AL
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MEMORANDUM OPINION AND ORDER
The TCPA is a remedial statute and thus entitled to a broad
construction.
See,
e.g.,
Holmes
v.
Back
Doctors,
Ltd.,
695
F.Supp.2d 843, 854 (S.D.Ill. 2010) (“It is true that . . . the TCPA
is
a
remedial
statute.”).
As
such,
it
“should
be
liberally
construed and should be interpreted (when that is possible) in a
manner tending to discourage attempted evasions by wrongdoers.”
Scarborough v. Atlantic Coast Line R. Co., 178 F.2d 253, 258 (4th
Cir. 1950). At the same time, a remedial purpose “will not justify
reading a
provision
statutory
scheme
‘more
broadly
reasonably
than
permit.’”
its language
Touche
Ross
&
and
Co.
the
v.
Redington, 442 U.S. 560, 578 (1979) (quoting SEC v. Sloan, 436 U.S.
103, 116 (1978)).
Mey claims that VMS, acting “on behalf of” Monitronics and UTC
telephoned
her
numerous
times
in
violation
of
47
U.S.C.
§ 227(c)(5). That subsection states, in relevant part:
A person who has received more than one telephone call
within any 12-month period by or on behalf of the same
entity in violation of the regulations prescribed under
this subsection may, if otherwise permitted by the laws
or rules of court of a State bring in an appropriate
court of that State-(A)
an action based on a violation of the regulations
prescribed under this subsection to enjoin such
violation,
(B)
an action to recover for actual monetary loss from
such a violation, or to receive up to $500 in
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MEY V. MONITRONICS INT’L INC. ET AL
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MEMORANDUM OPINION AND ORDER
damages for each
greater . . . .
such
violation,
whichever
is
Id. (emphasis added).
Section 64.1200(c)(2) of Title 47 of the Code of Federal
Regulations prohibits any “person or entity” from “initiat[ing] any
telephone
solicitation
to
.
.
.
[a]
residential
telephone
subscriber who has registered his or her telephone number on the
national do-not-call registry of persons who do not wish to receive
telephone solicitations . . . .” Section 64.1200(f)(9) defines the
term “seller” as “the person or entity on whose behalf a telephone
call or message is initiated for the purpose of encouraging the
purchase or rental of, or investment in, property, goods, or
services,
which
is
transmitted
to
any
person.”
47
C.F.R.
§ 64.1200(f)(9).
B.
Early cases
Neither the TCPA nor its associated regulations define “on
behalf of,” but courts that have considered the issue have applied
principles of agency to determine when entities are liable for
calls made by third parties. Some of these courts have relied upon
the laws of the states in which they sit, while others have applied
a
more
general
agency
analysis,
resulting
in
a
variety
of
approaches to determining the reach of “on behalf of” liability.
See, e.g.,
United States v. Dish Network, LLC, 667 F. Supp. 2d
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MEY V. MONITRONICS INT’L INC. ET AL
5:11CV90
MEMORANDUM OPINION AND ORDER
952, 963 (C.D. Ill. 2009) (holding that strict agency relationship
is not required if entity plausibly could have benefitted from
calls made by third party); Charvat v. Echostar Satellite, 676 F.
Supp. 2d 668, 675 (S.D. Ohio 2009) (applying Ohio law to determine
whether entities had sufficient control over third parties who made
calls); Applestein v. Fairfield Resorts, No. 0004, 2009 WL 5604429
(Md.
Ct.
App.
July
8,
2009)
(examining
the
“totality
of
circumstances” surrounding the parties’ relationship).
The United States Court of Appeals for the Sixth Circuit
recently recognized this lack of uniformity in Charvat v. EchoStar
Satellite, LLC, 630 F.3d 459, 466 (6th Cir. 2010). There, the
plaintiff, Phillip Charvat (“Charvat”), like Mey, sued an entity,
EchoStar Satellite, LLC (“EchoStar”), that did not place illegal
calls to him, but whose independent contractors did. The Sixth
Circuit concluded that EchoStar’s liability turned on the meaning
of
“on
behalf
of”
in
§
227(c)(5),
but
that
the
phrase
ambiguous:
Does § 227(c)(5) create liability for entities on whose
behalf calls are made even when the calls are placed by
independent contractors rather than by agents or
employees? And does § 225(c)(5) create liability for
entities on whose behalf calls are made even though the
section is labeled only as a private right of action and
even though individuals still must sue for violations of
regulations? The regulations contain a similar ambiguity.
Just one of the relevant regulations explicitly creates
liability for entities on whose behalf calls are made, 47
7
was
MEY V. MONITRONICS INT’L INC. ET AL
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MEMORANDUM OPINION AND ORDER
C.F.R. § 64.1200(d)(3), while the others concern entities
who
make
or
initiate
calls,
see,
e.g.,
id.
§ 64.1200(d)(1), (d)(6).
Id. at 465. The court observed that this ambiguity has resulted in
courts announcing a variety of different measures for determining
whether a third party acts on behalf of an entity and that this
lack
of
uniformity
“heightens
the
risk
that
individuals
and
companies will be subject to decisions pointing in different
directions.” Id. at 466.
Concluding that “[t]he answers to these questions implicate
the FCC’s statutory authority to interpret the Act, to say nothing
of its own regulations,” the Sixth Circuit invited the FCC to file
an amicus brief offering its views on the case. In its brief, the
FCC “made clear that a person can be liable for calls made on its
behalf even if the entity does not directly place those calls” and
that, “[i]n those circumstances, the person or entity is properly
held to have ‘initiated’ the call within the meaning of the statute
and the Commission’s regulations.” Brief for the FCC and the United
States as Amici Curiae, No. 09-4525, 2010 WL 7325986, at *9-10
(Oct. 15, 2010). The FCC also argued that “although § 227(c)(5) may
incorporate agency principles, there are compelling reasons to
conclude that it does not incorporate principles of state agency
law.” Id. (emphasis in original). Before it could offer further
8
MEY V. MONITRONICS INT’L INC. ET AL
5:11CV90
MEMORANDUM OPINION AND ORDER
interpretation, however, the FCC argued that a referral under the
primary jurisdiction doctrine would be necessary.
The Sixth Circuit agreed that a referral to the FCC under the
doctrine of primary jurisdiction was proper because it would
advance regulatory uniformity and answer a question within the
agency’s discretion and technical expertise. Charvat, 630 F.3d at
466, 467 (citing In re StarNet, Inc., 355 F.3d 634, 639 (7th Cir.
2004) (“Only the FCC can disambiguate the word[s] [on behalf of];
all we could do would be to make an educated guess.”)) Accordingly,
the Sixth Circuit referred the case to the FCC, which, on April 4,
2011, issued a public notice seeking comment on the matter. Public
Notice, CG Docket No. 11-50, 26 F.C.C.R. 5040 (Apr. 4, 2011).
C.
The FCC’s Declaratory Ruling
On May 9, 2013, the FCC issued its Declaratory Ruling as to
the scope of “on behalf of” liability under the TCPA. The FCC
stated that “while a seller does not generally ‘initiate’ calls
made through a third-party telemarketer within the meaning of the
TCPA, it nonetheless may be held vicariously liable under federal
common law principles of agency for violations of either section
227(b)
or
section
227(c)
that
are
committed
by
third-party
telemarketers.” FCC Declaratory Ruling, ¶ 1. The FCC, however, made
plain that “on behalf of” liability does not require a formal
9
MEY V. MONITRONICS INT’L INC. ET AL
5:11CV90
MEMORANDUM OPINION AND ORDER
agency relationship. Id. at ¶ 28. Instead, a plaintiff proceeding
under 47 U.S.C. § 227(c) could also use principles of ratification
and
apparent
authority1
to
establish
the
seller’s
vicarious
liability for the illegal acts of a third-party telemarketer. Id.
Armed with the FCC’s guidance, the Court turns to the pending
motions.
III.
Applying the FCC’s Declaratory Ruling, it is patently clear
that Mey, the non-movant, has met her burden at summary judgment
and adduced more than a scintilla of evidence that VMS acted “on
behalf
of”
Monitronics
and
UTC,
exposing
them
to
potential
liability under 47 U.S.C. § 227(c). Fundamentally, both entities
have agreements with VMS that enable it to hold itself out as an
“authorized dealer” of Monitronics’ and UTC’s products. See (Dkt.
Nos. 103-3 at 16; 103-9; 103-4). Drawing all permissible inference
in Mey’s favor, that fact alone could lead a reasonable finder of
fact to conclude that UTC and Monitronics cloaked VMS with the
1
As explained in the Declaratory Ruling, “[s]uch ‘[a]pparent
authority holds a principal accountable for the results of a third-party
beliefs about an actor’s authority to act as an agent when the belief is
reasonable and traceable to a manifestation of the principal.” FCC
Declaratory Ruling, ¶ 34 (quoting Restatement Third of Agency § 2.03,
cmt. c).
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MEY V. MONITRONICS INT’L INC. ET AL
5:11CV90
MEMORANDUM OPINION AND ORDER
apparent authority to act on their behalf, thus exposing them to
liability under § 227(c).
Nonetheless, UTC and Monitronics attempt to persuade the Court
that the Declaratory Ruling somehow exceeds the FCC’s power to
interpret
the
TCPA.
Alternatively,
they
argue
that
UTC
and
Monitronics are not subject to TCPA liability because they are
“manufacturers” and not “sellers,” and thus are not entities that
are subject to liability under § 227(c). The Court will briefly
address each argument in turn.
First, as to the objection that the Declaratory Ruling somehow
exceeds the FCC’s authority to interpret the TCPA, it is important
to recall that in Charvat, 630 F.3d at 466, the Sixth Circuit
concluded that the phrase “on behalf of” is ambiguous. See also In
re StarNet, Inc., 355 F.3d at 639. Alternatively stated, the Sixth
Circuit concluded that Congress has not “directly spoken to the
precise
question
at
issue.”
Chamber
of
Commerce
of
U.S.
v.
N.L.R.B., 721 F.3d 152 (4th Cir. 2013) (quoting Chevron, U.S.A. v.
Natural Resources Defense Council, Inc., 467 U.S. 837, 843 (1984)).
Thus, “the question for the court is whether the FCC’s answer is
based
on
a
permissible
construction
of
the”
TCPA.
City
of
Arlington, Tex. v. F.C.C., 133 S. Ct. 1863, 1868 (2013) (quoting
Chevron, 467 U.S. at 843). The defendants have pointed to nothing
11
MEY V. MONITRONICS INT’L INC. ET AL
5:11CV90
MEMORANDUM OPINION AND ORDER
to suggest the Declaratory Ruling is based on an impermissible
construction of the TCPA. Indeed, as “Congress is understood to
legislate
against
a
background
of
common-law
adjudicatory
principles,” Astoria Fed. Sav. & Loan Ass’n. v. Solimino, 501 U.S.
104, 108 (1991), the FCC’s conclusion that “on behalf of” liability
embraces federal common law principles of agency is quite sensible.
See also Meyer v. Holley, 537 U.S. 280, 285 (2003) (“when Congress
creates a tort action, it legislates against a legal background of
ordinary tort-related vicarious liability rules and consequently
intends its legislation to incorporate those rules”). Furthermore,
“[t]he apparent authority theory has long been the settled rule in
the
federal
system,”
Am.
Soc.
of
Mech.
Engineers,
Inc.
v.
Hydrolevel Corp., 456 U.S. 556, 567 (1982), so there is no reason
to
conclude
that
the
inclusion
of
that
theory
of
vicarious
liability pushes the Declaratory Ruling beyond the pale of the
FCC’s broad authority to interpret the TCPA. See Charvat, 630 F.3d
at 467 (the FCC is the agency granted interpretative authority over
the TCPA).
As to the second argument, Monitronics and UTC cannot evade
TCPA liability simply by protesting that, while VMS may be a
“telemarketer” and therefore subject to TCPA liability, they are
“manufacturers” - not “sellers” – and thus immune from liability
12
MEY V. MONITRONICS INT’L INC. ET AL
5:11CV90
MEMORANDUM OPINION AND ORDER
stemming from any wrongs that VMS allegedly perpetrated on their
behalf. Although ignored by the defendants, the FCC has not left
the term “seller” undefined. Section 64.1200(f)(9) of Title 47 of
the Code of Federal Regulations states, “The term seller means the
person or entity on whose behalf a telephone call or message is
initiated for the purpose of encouraging the purchase or rental of,
or
investment
in,
property,
goods,
or
services,
which
is
transmitted to any person.” Id. (emphasis added). In other words,
the determination of whether an entity is a “seller” turns on
whether a telephone solicitation is made on its behalf. Dish
Network, L.L.C., 667 F. Supp. 2d at 962-63 (“The FCC Rule . . .
defines the seller as the person ‘on whose behalf’ a telephone
solicitation is made.”).
At bottom, the argument cannot withstand
a plain reading of the FCC’s Rules and does not persuade the Court
that summary judgment is appropriate.
IV.
The Court notes that there is an alternative ground on which
to base its denial of Monitronics and UTC’s motions for partial
summary judgment. Citing F. R. Civ. P. 56(d), Mey argues that the
Court’s limited discovery order of November 18, 2011 (dkt. no. 68)
prevented her from discovering facts essential to justify her
13
MEY V. MONITRONICS INT’L INC. ET AL
5:11CV90
MEMORANDUM OPINION AND ORDER
opposition to the defendants’ motions on a theory of ratification,
and the Court should therefore deny those motions.
Rule 56(d) states that “[i]f a nonmovant shows by affidavit or
declaration that, for specified reasons, it cannot present facts
essential to justify its opposition, the court may . . . defer
considering the motion or deny it . . . .” Importantly, the Fourth
Circuit recently emphasized the necessity of fulsome discovery
prior to the granting of summary judgment. See Greater Baltimore
Ctr. for Pregnancy Concerns, Inc. v. Mayor & City Council of
Baltimore, — F.3d —, 2013 WL 3336884 (4th Cir. July 3, 2013) (“A
district court therefore must refuse summary judgment where the
nonmoving party has not had the opportunity to discover information
that
is
essential
to
its
opposition.”)
(internal
quotations
omitted).
Here, Mey has submitted an affidavit in which her attorney
states that, due to the limited scope of discovery permitted by the
Court,
she
was
unable
to
obtain
information
related
to
the
ratification theory of vicarious liability. For example, the Court
precluded discovery on “[w]hat actions, if any, Defendants take if
consumers who have placed their telephone numbers on any state or
federal ‘Do Not Call’ lists file a verbal or written complaint with
Defendant or any of its authorized dealers or authorized marketers
14
MEY V. MONITRONICS INT’L INC. ET AL
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MEMORANDUM OPINION AND ORDER
about being contacted by Defendants or anyone purporting to be an
authorized dealer or authorized marketer.” (Dkt. No. 164-1 at 5).
As Mey points out, such information is highly germane to the issue
of whether Monitronics or VMS ratified the alleged violations of
VMS. See Declaratory Ruling, ¶ 46 (“Finally, a seller would be
responsible under the TCPA for the unauthorized conduct of a thirdparty telemarketer that is otherwise authorized to market on the
seller’s behalf if the seller knew (or reasonably should have
known) that the telemarketer was violating the TCPA on the seller’s
behalf and the seller failed to take effective steps within its
power
to
force
the
telemarketer
to
cease
that
conduct.”).
Accordingly, as Mey has offered specific reasons why she could not
present facts to oppose the motions for partial summary judgment,
the
Court
concludes
that
denial
of
the
pending
motions
is
warranted. See also Perry v. AGCO Corp., No. WDQ-12-2043, 2013 WL
2902800 (D.Md. June 12, 2013) (“Sufficient time for discovery is
‘considered
especially
important
when
the
relevant
facts
are
exclusively in the control of the opposing party.’”) (quoting
Harrods Ltd. v. Sixty Internet Domain Names, 302 F.3d 214, 244 (4th
Cir. 2002)).
15
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MEMORANDUM OPINION AND ORDER
V.
For the reasons stated, the Court:
(1)
DENIES the pending motions for partial summary judgment (dkt.
nos. 93 and 95); and
(2)
CANCELS the oral argument previously scheduled for Thursday,
August 15, 2013 at 9:30 A.M.; and
(3)
SCHEDULES a Status Conference for Thursday, August 15, 2013 at
10:00
A.M.
The
parties
may
participate
in
that
status
conference by telephone. If the status conference is to be by
telephone, the Court directs lead counsel for the plaintiff to
arrange the conference call and provide dial-in information to
all parties and the Court
The Court directs the Clerk to transmit copies of this Order to
counsel of record.
DATED: August 14, 2013
/s/ Irene M. Keeley
IRENE M. KEELEY
UNITED STATES DISTRICT JUDGE
16
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