Gensel v. Performant Recovery Inc

Filing 69

ORDER signed by Judge Rudolph T. Randa on 10/20/2015 GRANTING 65 Defendant's Motion to Continue Stay. Not later than 180 days from now parties to file joint report advising the Court of the status of appellate proceedings discussed in this Order. (cc: all counsel) (cb)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF WISCONSIN
LENNETT GENSEL,
Plaintiff,
-vs-

Case No. 13-C-1196

PERFORMANT TECHNOLOGIES, Inc.,
Defendant.
DECISION AND ORDER
On January 28, 2015, the Court granted Performant Technologies,
Inc.’s motion to stay this matter pending a ruling from the Federal
Communications Commission on two petitions regarding the Telephone
Consumer Protection Act (“TCPA”). The FCC issued its ruling on July 10,
from which three appeals are currently pending, one in the Seventh Circuit
and two in the D.C. Circuit. Now before the Court is Performant’s motion
to continue the stay pending the outcome of those appeals. This motion is
granted.
The FCC ruled, as relevant here, that the TCPA’s use of the term
“capacity” in the definition of “automatic telephone dialing system,” 47
U.S.C. § 227(a)(1), does not exempt equipment that lacks the “present
ability” to dial randomly or sequentially. July 10, 2015 FCC Declaratory

Ruling and Order, ¶ 15. “In other words, the capacity of an autodialer is
not limited to its current configuration but also includes its potential
functionalities.” Id. at ¶ 16.
The FCC also considered the issue of calls to reassigned telephone
numbers. In this context, the FCC found that the statutory term “called
party” refers to the “subscriber, i.e., the consumer assigned the telephone
number dialed and billed for the call, or the non-subscriber customary user
of a telephone number included in a family or business calling plan.” Id. at
¶ 73. The FCC did, however, create a very limited safe harbor for “callers
who make calls without knowledge of reassignment and with a reasonable
basis to believe they have valid consent to make the call.” Id. at ¶ 72. Such
callers “should be able to initiate one call after reassignment as an
additional opportunity to gain actual or constructive knowledge of the
reassignment and cease future calls to the new subscriber. If this one
additional call does not yield actual knowledge of reassignment, we deem
the caller to have constructive knowledge of such.” Id. Subject to this
exception, “calls to reassigned wireless numbers violate the TCPA when a
previous subscriber, not the current subscriber or customary user, provided
the prior express consent on which the call is based.” Id. at ¶ 73.
The Court’s initial decision to stay this case was based upon the
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primary jurisdiction doctrine, which “allows a federal court to refer a
matter extending beyond the ‘conventional experience of judges’ or ‘falling
within the realm of administrative discretion’ to an administrative agency
with more specialized experience, expertise, and insight.’” Arsberry v. Ill.,
244 F.3d 558, 563 (7th Cir. 2001). Now that the FCC has ruled, Performant
appeals to the Court’s general power to manage its docket in the normal
course of resolving cases. This power 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, 254 (1936).
Performant pins its hopes on the expectation that the appellate
courts, particularly the Seventh Circuit, will overrule the FCC. This seems
unlikely on the number reassignment/safe harbor issue. The FCC split 3-2
on this issue, but the FCC majority expressly agreed with the Seventh
Circuit that “the TCPA nowhere indicates that caller intent is relevant to
the definition of ‘called party.’” FCC Ruling at ¶ 78 (citing Soppet v.
Enhanced Recovery Co., LLC, 679 F.3d 637, 639-40 (7th Cir. 2012)). Put
another way, the Seventh Circuit has already held that “[c]onsent to call a
given number must come from its current subscriber,” Soppet at 641, and
three of the five FCC Commissioners generally agree with that conclusion,
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subject to the limited safe harbor discussed herein.
That said, a contrary result seems more likely on the capacity issue.
As explained by one of the dissenting Commissioners:
The Order dramatically expands the TCPA’s reach. The TCPA
prohibits a person from making ‘any call’ to a mobile phone
‘using any automatic telephone dialing system,’ except in
certain defined circumstances. The statute defines an
‘automatic telephone dialing system’ as ‘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. As three separate petitions explain,
trial lawyers have sought to apply this prohibition to
equipment that cannot store or produce telephone numbers to
be called using a random or sequential number generator and
that cannot dial such numbers.
That position is flatly inconsistent with the TCPA. The statute
lays out two things that an automatic telephone dialing
system must be able to do or, to use the statutory term, must
have the ‘capacity’ to do. If a piece of equipment cannot do
those two things – if it cannot store or produce telephone
numbers to be called using a random or sequential number
generator and if it cannot dial such numbers – then how can it
possibly meet the statutory definition? It cannot. To use an
analogy, does a one-gallon bucket have the capacity to hold
two gallons of water? Of course not.
Dissenting Statement of Commissioner Ajit Pai. The other dissenting
Commissioner further expounded that it “seems obvious that the
equipment must have the capacity to function as an autodialer when the
call is made not at some undefined future point in time. … Not so
according to the order. Equipment that could conceivably function as an
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autodialer in the future counts as an autodialer today.” Statement of
Commissioner Michael O’Rielly Dissenting In Part and Approving In Part.1
Thus, it seems to the Court, as it seemed to the dissenting
Commissioners, that the FCC majority’s interpretation of the term
“capacity” contradicts the plain language of the statute. If so, then the
FCC’s ruling on this issue is not entitled to deference on appeal. See, e.g.,
Qwest Comm’n Int’l, Inc. v. F.C.C., 398 F.3d 1222, 1230 (10th Cir. 2005) (“If
Congress has spoken, our inquiry ceases; the agency, as well as the court,
must give effect to Congress’s unambiguously expressed intent”) (citing
Chevron U.S.A. Inc. v. Nat. Res. Def. Council, 467 U.S. 837, 842-43 (1984)).
Finally, and most importantly, if the Seventh Circuit were to rule that
“capacity” means “present capacity” in accordance with the plain language
of the statute, such a ruling would be dispositive of the instant case
because it is undisputed that Performant’s telephony system did not and
does not have the capacity to randomly or sequentially call phone numbers.
Therefore, the Court finds that a stay pending the outcome of the appeals
from the FCC’s July 10 Declaratory Ruling and Order is in the interest of

Commissioner O’Rielly continued, colorfully: “Indeed, the new definition is so
expansive that the FCC has to use a rotary phone as an example of a technology that
would not be covered because the modifications needed to make it an autodialer would
be too extensive. That is like the FAA regulating vehicles because with enough
modifications cars and trucks could fly, and then using a skateboard as an example of a
vehicle that does not meet the definition.”
1

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judicial economy.
NOW, THEREFORE, BASED ON THE FOREGOING, IT IS
HEREBY ORDERED THAT Performant’s motion to continue the stay
[ECF No. 65] is GRANTED. Not later than 180 days following the date of
this Order, the parties are directed to file a joint status report advising the
Court of the status of the appellate proceedings discussed herein.
Dated at Milwaukee, Wisconsin, this 20th day of October, 2015.
BY THE COURT:
__________________________
HON. RUDOLPH T. RANDA
U.S. District Judge

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