State of Maryland v. Universal Elections, Incorporated, No. 12-1791 (4th Cir. 2013)

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UNPUBLISHED UNITED STATES COURT OF APPEALS FOR THE FOURTH CIRCUIT No. 12-1791 STATE OF MARYLAND, Office of the Attorney General, Plaintiff - Appellee, UNITED STATES OF AMERICA, Intervenor/Plaintiff Appellee, v. UNIVERSAL ELECTIONS, INCORPORATED; JULIUS HENSON, Defendants Appellants, and RHONDA RUSSELL, Defendant. Appeal from the United States District Court for the District of Maryland, at Baltimore. Catherine C. Blake, District Judge. (1:10-cv-03183-CCB) Argued: May 15, 2013 Decided: July 29, 2013 Before KING and AGEE, Circuit Judges, and David C. NORTON, United States District Judge for the District of South Carolina, sitting by designation. Affirmed by unpublished per curiam opinion. ARGUED: Edward Smith, Jr., LAW OFFICE OF EDWARD SMITH, JR., Baltimore, Maryland, for Appellants. William D. Gruhn, OFFICE OF THE ATTORNEY GENERAL OF MARYLAND, Baltimore, Maryland; Mark R. Freeman, UNITED STATES DEPARTMENT OF JUSTICE, Washington, D.C., for Appellees. ON BRIEF: Douglas F. Gansler, Attorney General, Philip D. Ziperman, Assistant Attorney General, OFFICE OF THE ATTORNEY GENERAL OF MARYLAND, Baltimore, Maryland, for Appellee State of Maryland. Rod J. Rosenstein, United States Attorney, Stuart F. Delery, Acting Assistant Attorney General, Mark B. Stern, UNITED STATES DEPARTMENT OF JUSTICE, Washington, D.C., for the United States. Unpublished opinions are not binding precedent in this circuit. 2 PER CURIAM: Political consultant Julius Henson and his company, Universal Elections, Inc., appeal the district court s grant of summary judgment to the State of Maryland ( the State ) on its claim that Henson and Universal Elections violated the Telephone Consumer Protection Act, 47 U.S.C. § 227 (2010) ( the TCPA or the Act ). For the reasons set forth below, we affirm the district court s decision in all respects. I. Though the district court ably summarized the facts in its summary judgment order, we briefly restate them here. months before the 2010 Maryland gubernatorial Three election, the political campaign of Republican candidate Robert L. Ehrlich, Jr. hired Henson campaign s efforts. and Universal Elections to assist with the J.A. 487. 1 On Election Day, November 2, 2010, Henson and Universal Elections employee Rhonda Russell composed and prepared a prerecorded telephone call, also known as a robocall, as part of their work for the Ehrlich campaign. Id. That pre-recorded telephone call ( the election night robocall ) stated, in its entirety: 1 Citations to the J.A. refer to the Joint Appendix filed by the parties in this appeal. 3 Hello. I m calling to let everyone know that Governor O Malley and President Obama have been successful. Our goals have been met. The polls were correct and we took it back. We re okay. Relax. Everything is fine. The only thing left is to watch it on TV tonight. Congratulations and thank you. J.A. 487-88. The election night robocall neither identified the Ehrlich campaign as the sponsor of the message nor included the campaign s phone number. J.A. 488. Henson dictated the contents of the election night robocall to Russell and directed Russell to omit an authority line that would have identified the Ehrlich campaign as the source of the message. it, J.A. 488. along with two Russell recorded the message and uploaded lists containing the phone numbers for Maryland Democratic voters, to the website of a Pennsylvaniabased automatic dialing service called Robodial.org, LLC. Id. After sending test messages to Henson and to Ehrlich staffers, Russell authorized Robodial.org to deliver the election night robocall to the phone numbers included on the uploaded lists. Id. Robodial.org sent the election night robocall to more than 112,000 Maryland Democratic voters through an account maintained by Universal Elections. Of the roughly J.A. 487-88. 112,000 calls voters received the entire message. that J.A. 488. recipients received part of the message. calls failed or went unanswered. Id. 4 were Id. placed, 69,497 Another 16,976 The remaining On November 10, 2010, the State filed a civil lawsuit against Henson, Russell, and Universal Elections for violations of the TCPA. defendants J.A. 10. had Specifically, the State alleged that the violated the Act by failing to identify the Ehrlich campaign as the sponsor of the election night robocall. J.A. 14. On December Elections moved 15, to Supp. App. 1-15. December 28, 2010, dismiss Henson, the Russell, State s complaint. After their Universal J.A. 16; In a supplemental motion to dismiss filed on 2010, they argued that the implementing regulations were unconstitutional. 51. and defendants supplemental asserted motion to a First TCPA the its Supp. App. 45- Amendment dismiss, and defense United in States intervened in this case to defend the constitutionality of the TCPA. J.A. 43-45. defendants motion content-neutral On May 25, 2011, the district court denied to dismiss, speech holding regulation that that the survives TCPA is a intermediate constitutional scrutiny, and finding defendants other arguments unavailing. J.A. 96-108. On May 11, 2011, shortly before the district court denied defendants motion to dismiss, Henson, Russell, and Universal Elections moved to stay the proceedings pending the resolution of related state district court criminal determined investigations. that the 5 motion J.A. to 92-93. stay would The not affect its ruling on the motion to dismiss, and addressed the motion to stay after denying the motion to dismiss. 148. J.A. 95, On July 7, 2011, the court denied the motion to stay, noting that: Other than unfounded attacks on the motives of the Attorney General, the defendants have not explained why a blanket stay of this action is warranted by the existence of a partially parallel criminal indictment brought by the State Prosecutor. . . . The motion to stay as filed is overbroad and is Denied. J.A. 148 (emphasis and capitalization in original). On March 15, 2012, the State moved for summary judgment. Supp. App. 52-75. for summary Defendants did not oppose the State s motion judgment, and the district unopposed motion on May 29, 2012. court J.A. 487-94. granted the The court explained that the record unambiguously supported a finding that defendants had violated the TCPA: Universal Elections, by and through both Russell and Henson, drafted and sent a message that failed to include the disclosure information required by [the TCPA]. As Russell s testimony makes clear, both she and Henson were directly and personally involved in the creation of the offending message. . . . [T]he documentary evidence in the record and the deposition testimony of Russell and Ehrlich staffers establish without any doubt that Henson discussed plans to suppress the votes of African-American Democrats, recorded the plan in the strategy memo sent to the Ehrlich campaign, and ultimately dictated and authorized the offending message. Thus, both Henson and Russell, in addition to Universal Elections, may be held jointly and severally liable for any damages this court may award under the TCPA. 6 J.A. 490. State in The district court entered judgment on behalf of the the amount of $10,000 against Russell, and in the amount of $1,000,000 against Henson and Universal Elections. Henson and Universal Elections timely filed a notice of appeal on June 22, 2012. We have jurisdiction under 28 U.S.C. § 1291. II. We review de novo the constitutionality of a federal statute and its implementing regulations, United States v. Sun, 278 F.3d 302, 308-09 (4th Cir. 2002); the denial of a motion to dismiss, Brockington v. Boykins, 637 F.3d 503, 505 (4th Cir. 2011); and the grant of an unopposed motion for summary judgment, Henry v. Purnell, 652 F.3d 524, 531 (4th Cir. 2011). The grant or denial of a request to stay proceedings calls for an exercise of the district court s judgment to balance the various factors relevant to the expeditious and comprehensive disposition of the causes of action on the court's docket. United States v. Ga. Pac. Corp., 562 F.2d 294, 296 (4th Cir. 1977). an As such, we review the denial of a motion to stay under abuse-of-discretion standard. Id. at 297; Chase Brexton Health Servs., Inc. v. Maryland, 411 F.3d 457, 464 (4th Cir. 2005). 7 III. Henson and Universal Elections raise four issues on appeal. 2 Appellants assert that the district court erred by: (1) finding that the TCPA is not unconstitutional when applied to political robocalls; denying (2) denying defendants resolution of a defendants motion related to stay state motion to dismiss; (3) pending the proceedings court criminal case; granting summary judgment in favor of the State. and (4) We address these arguments in turn. A. With regard to the constitutionality of the TCPA, appellants appear to argue that § 227(d) violates the First Amendment because it is a content-based burden speech that cannot withstand strict scrutiny. 12 n.6. on political Appellants Br. When evaluating whether a regulation violates the First Amendment, the most exacting scrutiny is applied to regulations that suppress, disadvantage, or impose differential burdens upon speech because of its content. Turner Sys., Inc. v. F.C.C., 512 U.S. 622, 642 (1994). regulations that are unrelated to the content Broad. In contrast, of speech are subject to an intermediate level of scrutiny, because in most cases 2 they pose a less substantial risk of excising certain Russell does not appeal the district court s ruling. 8 ideas or viewpoints from Clark v. Cmty. Creative (1984)). for [L]aws that the public dialogue. Non-Violence, confer benefits Id. 468 or U.S. impose (citing 288, 293 burdens on speech without reference to the ideas or views expressed are in most instances content neutral. The TCPA and its Id. at 643. implementing regulations require that automated, prerecorded messages identify the entity sponsoring the phone call and provide that entity s telephone number. U.S.C. § 227(d)(1), (3)(A); 47 C.F.R. § 64.1200(b) (2008). identity content disclosure of the requirement message that is applies relayed regardless to the of 47 This the recipient. § 227(d) s requirements do not place any greater restriction on a particular group of people or form of speech, and do not burden appellants or entities engaging in political speech any more than any other person or group placing robocalls. The district court properly determined that the TCPA is a contentneutral law to which intermediate scrutiny must be applied. A content-neutral law that regulates speech is valid if it furthers an important or substantial governmental interest . . . [that] is unrelated to the suppression of free expression; and if the incidental restriction on alleged First Amendment freedoms is no greater than is essential to the furtherance of that interest. (1968). United States v. O Brien, 391 U.S. 367, 377 To satisfy this standard, a regulation need not be the 9 least speech-restrictive interests. simply of advancing Turner, 512 U.S. at 662. cannot necessary means to burden further Government's Instead, the regulation substantially the the more government's speech legitimate than is interests. Id. (quoting Ward v. Rock Against Racism, 491 U.S. 781, 799 (1989)). There are at least furthered by the protecting residential three TCPA s important identity privacy; government disclosure promoting disclosure interests provision: to avoid misleading recipients of recorded calls; and promoting effective law enforcement. J.A. 104-107. The TCPA protects residential privacy a government interest articulated in the legislative history of the Act by enabling the recipient to contact the caller to stop future calls. U.S.C. § 227(d). See S. Rep. No. 102-178, at 1; 47 Moreover, the Supreme Court has long recognized that [p]reserving the sanctity of the home, the one retreat to which men and women can repair to escape from the tribulations of their daily pursuits, is surely an important value. Frisby v. Schultz, 487 U.S. 474, 484 (1988) (quoting Carey v. Brown, 447 U.S. 455, 471 (1980)); see also Nat l Fed n for the Blind v. F.T.C., 420 F.3d 331, 339-40 (4th Cir. 2005) ( Nat l Fed n for the Blind ) (finding that residential privacy is a substantial government interest process is entitled to protect ). 10 that the democratic The Act is narrowly tailored to protect this interest by requiring only that callers identify themselves and a phone number at which they can be reached. Cf. Nat l Fed n for the Blind, 420 F.3d at 342-43 (finding that caller identification provision of the Federal Trade Commission s Telemarketing Sales Rule is a narrowly tailored, minimal restriction that simply allows consumers to pre-select whom they wish to speak to on a particular evening ). The Act also promotes disclosure recipients of prerecorded calls. provision obliges callers responsible for the call. to to avoid misleading The TCPA s identity disclosure state the name of the entity This disclosure allows the recipient to better evaluate the content and veracity of the message. See Riley v. Nat l Fed n for the Blind of N.C., 487 U.S. 781, 792 (1988) ( The interest in protecting charities (and the public) from fraud is, of course, a sufficiently substantial interest to justify a narrowly requirement that tailored robocall regulation. ). sponsors identify The themselves narrowly tailored to protect citizens from fraud. Fed n for the Blind, 420 F.3d at 342-43 TCPA s is Cf. Nat l (upholding as constitutional a government regulation requiring telefunders to transmit their name and phone number to caller ID services). Finally, the TCPA s identity disclosure provision also promotes effective law enforcement by assisting the government in detecting violations. See J.A. 11 91 (affidavit of Federal Communications Commission enforcement official stating that the two identification requirements for prerecorded messages . . . play a central role in allowing called parties to accurately report the parties who are responsible for specific violations, thereby assisting the Commission in taking enforcement action after complaints are received ). Again, the Act s identification provision is narrowly tailored to accomplish the goal of assisting law enforcement; the provision places a minimal burden on callers to identify themselves and how they can be contacted. The district court correctly identified these three important government interests, found that the Act is a contentneutral regulation that furthers important government interests unrelated to free expression, and held that the TCPA s restrictions do not burden substantially more speech than is necessary to protect those interests. Appellants have failed to present a comprehensible argument to the contrary. For these reasons, we affirm the district court s finding that the TCPA s identity disclosure provisions are constitutional. B. To argue that the district court improperly denied their motion to dismiss, appellants reiterate the same convoluted arguments made in their December 2011 motion to dismiss. 12 Not surprisingly, these arguments meet with the same amount of success that they received in the district court. Appellants assert that the complaint should have been dismissed because it fails to allege that the election night robocall was received by any Maryland citizen. misses the mark. This argument The complaint alleges that the prerecorded voice message . . . was broadcast to the phone numbers of more than 112,000 Maryland residents chosen by Defendants. ¶ 15 (emphasis added). This allegation Compl. sufficiently alleges that defendants placed the election night robocall to Maryland citizens and that Maryland citizens received the call. The TCPA does not require state attorneys general to identify particular phone call recipients by name. Appellants next contend that Congress failure to pass the Robocall Privacy Congress has Act chosen Appellants Br. 20-21. of 2006, 2007, and not to regulate 2008 shows political that robocalls. Appellants argument is unavailing. The fact that Congress has not passed legislation that specifically addressed political robocalls does not lessen in any way the scope and applicability of the TCPA. The Act s plain language demonstrates that it applies to all prerecorded phone calls, including § 227(d)(3) those (the with a political restrictions of message. See § apply 227(d) artificial or prerecorded telephone messages ). 13 47 to U.S.C. all By referring repeatedly to Maryland agency law, appellants also attempt to argue that Henson and Russell cannot be held liable under the TCPA. Appellants Br. 21-22. However, Maryland s approach to the doctrine of respondeat superior does not affect the scope of liability contemplated by the TCPA. Additionally, the TCPA s language makes clear that individuals can be sued under the Act. § 227(d) prohibits any person from violating the authority identification requirements contained in the Act, and empowers state attorneys general to bring action against any person who violates the Act. See also Balt.-Wash. Tel. Co. v. Hot Leads Co., 584 F. Supp. 2d 736, 745 (D. Md. 2008) (finding that individuals could be held personally liable for TCPA violations); Texas v. Am. Blastfax, Inc., 164 F. Supp. 2d 892, 898 (W.D. Tex. 2001) (same); Covington & Burling v. Int l Mktg. & Research, Inc., No. 01-cv-4360, 2003 WL 21384825, at *6 (D.C. Super. Ct. Apr. 17, 2003) (same). Appellants also contend that the election night robocall cannot violate the TCPA because it was a single phone call placed to multiple recipients, not multiple phone calls made to the same recipients over time. Appellants Br. 22-23. Appellants cite no authority in support of this proposition, and the TCPA contains no requirement that multiple calls be made to the same person. Indeed, § 14 227(d)(1)(A) prohibits any telephone call that fails to comply with the Act s technical and procedural standards. Appellants assert that they cannot be liable under the TCPA because they did not actually place any of the offending phone calls. Appellants Br. 23. Rather, they suggest that Robodial.org, the autodialing company that placed all the phone calls at appellants direction, must bear the responsibility for violating the Act. Id. As with many of their other arguments, appellants cite no authority for the proposition that only the autodialer that places the improper calls can be held liable under the purpose escape TCPA. of Such the Act liability. a narrow reading and would allow In addition, the the would actual language undermine violators of the the to Act indicates that it is intended to apply to the individuals who use the autodialing systems that place calls, and not just to the autodialing services themselves. ( It shall be unlawful for any See 47 U.S.C. § 227(d)(1) person . . . to make any telephone call using any automatic telephone dialing system[] that does not comply with the technical and procedural standards prescribed under this subsection . . . or to use any . . . automatic telephone dialing system in a manner that does not comply with the standards. ). Robodial.org s terms of use reinforce this interpretation of the Act, as those terms state 15 that the [TCPA]. [c]ustomer is responsible for compliance with the argument that the J.A. 488. Finally, appellants make a cursory complaint should have been dismissed because Robodial.org was not joined as a party under Federal Rule of Civil Procedure 19. Appellants Br. 24. Federal Rule of Civil Procedure 19(a)(1) provides: A person who is subject to service of process and whose joinder will not deprive the court of subjectmatter jurisdiction must be joined as a party if: (A) in that person's absence, the court cannot accord complete relief among existing parties; or (B) that person claims an interest relating to the subject of the action and is so situated that disposing of the action in the person's absence may: (i) as a practical matter impair or impede person's ability to protect the interest; or the (ii) leave an existing party subject to a substantial risk of incurring double, multiple, or otherwise inconsistent obligations because of the interest. When a person who is required to be joined if feasible cannot be joined, the court must determine whether, in equity and good conscience, the action should proceed among the existing parties or should be dismissed. Fed. R. Civ. P. 19(b). The State s failure to include Robodial.org as a defendant in this case did not affect the district court s ability to adjudicate Universal the claims Elections. raised against Robodial.org s 16 Henson, absence Russell, from the and case neither impairs its ability to protect its interest nor leaves the existing parties subject to a substantial risk of incurring double, multiple, or otherwise inconsistent obligations because of the interest. In summary, Fed. R. Civ. P. 19(a)(1)(B). appellants have failed to demonstrate their motion to dismiss should have been granted. that Rather, the district court properly evaluated and denied defendants motion to dismiss. C. Appellants next suggest that the district court erred by denying their motion to stay the proceedings pending resolution of partially parallel criminal proceedings. This argument also fails. [T]he power to stay proceedings 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. 248, 254 (1936). regulatory jurisprudence laws Landis v. N. Am. Co., 299 U.S. Because of the frequency with which civil and overlap contemplates with the criminal possibility of laws, American simultaneous or virtually simultaneous parallel proceedings and the Constitution does not mandate the stay of civil proceedings in the face of criminal proceedings. Ashworth v. F.R.D. 527, 530 (S.D. W. Va. 2005). 17 Albers Med., Inc., 229 Stays generally are not granted before an indictment has issued. Id. at 531 n.3 (citing Trs. of Plumbers & Pipefitters Nat l Pension Fund v. Transworld Mech., Inc., 886 F. Supp. 1134, 1139 (S.D.N.Y. 1995)); State Farm Mut. Auto. Ins. Co. v. Beckham-Easley, No. 01-cv-5530, 2002 WL 31111766, at *2 (E.D. Pa. Sept. 18, 2002) (quoting Walsh Sec., Inc. v. Cristo Prop. Mgmt., Ltd., 7 F. Supp. 2d 523, 527 (D.N.J. 1998)); In re Par Pharm., Inc. Sec. Litig., 133 F.R.D. 12, 13 (S.D.N.Y. 1990). The district court s denial of defendants motion to stay is in keeping with the bulk of judicial authority, which holds that stays are generally not granted before indictments have issued. The court s decision to deny the motion to stay was particularly appropriate where, as here, the motion was devoid of any facts or legal argument. The defendants two-page motion to stay the proceedings simply stated that they believed that at least two grand juries had been convened for which Henson, Russell, and Universal Elections were targets and that [t]he use of witnesses who are/may be indicted by government action both at that federal and state level triggers substantial Fifth Amendment issues. identify any J.A. 92-93. particular Fifth The motion to stay did not Amendment conflict that had arisen, or explain how the convening of two grand juries had jeopardized the constitutionality proceedings. The district court wisely chose to delay ruling on 18 of the pending civil any Fifth Amendment issues until those issues had been properly identified and fully briefed. Denial of the motion to stay was therefore not an abuse of the court s discretion. D. Finally, appellants argue that the district court erred by granting summary respond to judgment the to State s the State. motion Defendants for summary did not judgment. Nevertheless, the district court thoroughly analyzed the motion, as it was obligated to do. 599 F.3d 403, 409 n.8 (4th Robinson v. Wix Filtration Corp., Cir. 2010) ( [I]n considering a motion for summary judgment, the district court must review the motion, even if unopposed, and determine from what it has before it whether the moving party is entitled to summary judgment as a matter of law. ) (quoting Custer v. Pan Am. Life Ins. Co., 12 F.3d 410, 416 (4th Cir. 1993)) (emphasis in original). Because appellants did not respond to the State s summary judgment motion, the following facts were uncontroverted: (1) Henson and Russell, as political consultants employed by the Ehrlich gubernatorial campaign, wrote and recorded the election night robocall; (2) the call did not disclose the name or phone number of the message s sponsor; (3) Henson directed Russell to omit from the message a line explaining who had authorized the message; (4) Russell perhaps mistakenly also omitted the phone number of the message s sponsor 19 from the message; (5) through an account maintained by Universal Elections, Russell uploaded the message, along with two lists of Maryland Democratic voters, to the website of automatic dialing system Robodial.org; (6) Russell then commenced the calls through Robodial.org; (7) the election night robocall was delivered to approximately 112,000 Democratic voters in Baltimore City and Prince George s County; (8) at least 69,497 call recipients received the entire recorded message contained in the election night robocall; and (9) at least 16,976 call recipients received part of the message. Supp. App. 56, 59-61. These facts clearly establish that appellants created and distributed the election night robocall, which failed to identify either the message s sponsor or a phone number at which the sponsor could be reached. This is sufficient to establish appellants liability under the TCPA, and the district court did not err in granting summary judgment in favor of the State. IV. For the foregoing reasons, we affirm the rulings of the district judge in all respects. AFFIRMED 20

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