Couser v. Pre-Paid Legal Services, Inc., No. 3:2012cv02575 - Document 51 (S.D. Cal. 2014)
Court Description: ORDER denying CallFire's 28 Motion to Dismiss. Signed by Judge Larry Alan Burns on 1/16/14. (kaj)
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Couser v. Pre-Paid Legal Services, Inc. Doc. 51 1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 SOUTHERN DISTRICT OF CALIFORNIA 10 11 CARRIER COUSER, CASE NO. 12-CV-2575-LAB-WVG Plaintiff, 12 ORDER RE: CALLFIRE’S MOTION TO DISMISS vs. 13 14 15 PRE-PAID LEGAL SERVICES, INC. d/b/a LEGAL SHIELD; TERRY FRICK; and CALLFIRE INC., Defendant. 16 17 18 This is a Telephone Communications Protection Act case in which Couser accuses 19 Defendants of making approximately 40 unsolicited and prerecorded calls to her cell phone. 20 Now before the Court is CallFire’s motion to dismiss. CallFire’s basic argument is that it’s 21 an “intermediate software provider” that doesn’t itself control the content, destination, or 22 timing of calls, and therefore can’t be liable under the TCPA. The implication of this, of 23 course, is that if there are culprits in this case, they are Legal Shield and Frick. 24 I. Legal Standard 25 A 12(b)(6) motion to dismiss for failure to state a claim challenges the legal sufficiency 26 of a complaint. Navarro v. Block, 250 F.3d 729, 732 (9th Cir. 2001). The Court must accept 27 all factual allegations as true and construe them in the light most favorable to Couser. 28 Cedars-Sinai Med. Ctr. v. Nat’l League of Postmasters of U.S., 497 F.3d 972, 975 (9th Cir. -1Dockets.Justia.com 1 2007). To defeat CallFire’s motion to dismiss, Couser’s factual allegations needn’t be 2 detailed, but they must be sufficient to “raise a right to relief above the speculative level . . . .” 3 Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). That is, “some threshold of plausibility 4 must be crossed at the outset” before a case can go forward. Id. at 558 (internal quotations 5 omitted). A claim has “facial plausibility when the plaintiff pleads factual content that allows 6 the court to draw the reasonable inference that the defendant is liable for the misconduct 7 alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). “The plausibility standard is not akin 8 to a ‘probability requirement,’ but it asks for more than a sheer possibility that a defendant 9 has acted unlawfully.” Id. 10 While the Court must draw all reasonable inferences in Couser’s favor, it need not 11 “necessarily assume the truth of legal conclusions merely because they are cast in the form 12 of factual allegations.” Warren v. Fox Family Worldwide, Inc., 328 F.3d 1136, 1139 (9th Cir. 13 2003) (internal quotations omitted). In fact, the Court does not need to accept any legal 14 conclusions as true. Iqbal, 129 S.Ct. at 1949. A complaint does not suffice “if it tenders 15 naked assertions devoid of further factual enhancement.” Id. (internal quotations omitted). 16 Nor does it suffice if it contains a merely formulaic recitation of the elements of a cause of 17 action. Twombly, 550 U.S. at 555. 18 II. Factual Background 19 This isn’t a complex case. Legal Shield is a company that provides plans, or 20 contracts, for legal services. CallFire is a company that provides software enabling its 21 customer companies to send voice messages to a wide audience. That’s the Court’s 22 description of CallFire, at least. Couser says it “provides voice and text connectivity”; 23 CallFire more or less accepts that and says it “provides its customers various web-based 24 applications that integrate communications services and other software services whereby 25 its customers can utilize CallFire’s software platform to develop and send their own voice 26 broadcasts to recipients of the customers’ choosing.” (FAC ¶ 16; Mot. at 1.) Couser has an 27 incentive to maximize CallFire’s responsibility for the calls at issue; CallFire has the opposite 28 incentive. -2- 1 In any event, Legal Shield used CallFire to promote its business, and Couser alleges 2 that she received approximately 40 unsolicited promotional calls that were made with an 3 automatic telephone dialing system and utilized an artificial or prerecorded voice. (FAC ¶ 4 30.) This is the most significant allegation: Beginning in June 2012, at the express instruction and guidance of Legal Shield, through Legal Shield’s employee and representative, Frick, Defendants began contacting Plaintiff for the purpose of soliciting Plaintiff’s business, on her cellular telephone by way of an “automatic telephone dialing system,” as defined by 47 U.S.C. § 227(a)(1) using an “artificial or prerecorded voice” as prohibited by 47 U.S.C. § 227(b)(1)(A). (FAC ¶ 26.) 5 6 7 8 9 10 To be clear—because the relevant TCPA statute contains four distinct prohibitions—Couser 11 is alleging a violation of 47 U.S.C. § 227(b)(1)(A)(iii). (FAC ¶ 26; Opp’n Br. at 2.) This 12 makes it unlawful “to make any call (other than a call made for emergency purposes or made 13 with the prior express consent of the called party) using any automatic telephone dialing 14 system or an artificial or prerecorded voice . . . to any telephone number assigned to a . . . 15 cellular telephone.” 16 III. 17 18 Discussion CallFire makes a number of arguments favoring dismissal of Couser’s claims against it. The Court will try to tease those arguments out and address them in sequence. 19 A. 20 CallFire’s first argument seems to be that Couser has failed to allege that CallFire 21 even called her. If that’s true, then naturally Couser’s TCPA claims fail, because they 22 require an actual call. 47 U.S.C. § 227(b)(1)(A). Couser Doesn’t Allege That CallFire Called Her. 23 The Court disagrees with CallFire. The allegations against it are thin, to be sure. 24 Couser says CallFire is a California company “that provides voice and text connectivity” and 25 “advertises and engages in text messaging through the use of automated dialers and 26 prerecorded messages,” which doesn’t speak to its actions in this case at all. (FAC ¶¶ 16, 27 18.) And then it says “Defendants began contacting Plaintiff for the purpose of soliciting 28 Plaintiff’s business,” which CallFire argues isn’t an allegation with respect to it. (FAC ¶ 26.) -3- 1 It essentially is, though. The whole allegation, quoted above, is that “at the express 2 instruction and guidance of Legal Shield, through Legal Shield’s employee and 3 representative, Frick, Defendants began contacting Plaintiff for the purpose of soliciting 4 Plaintiff’s business, on her cellular telephone . . . .” Considering that there are only three 5 Defendants in this case—Legal Shield, Frick, and CallFire—this sentence only makes sense 6 if “Defendants” refers to CallFire. That is, the clear meaning of this allegation is that Legal 7 Shield, through Frick, commissioned CallFire to contact Couser. Thus, the Court isn’t 8 troubled by the fact that, as CallFire puts it, “Plaintiff never makes an allegation specifically 9 as to CallFire.” (Mot. at 5.) The allegation is adequately there in ¶ 26 of Couser’s complaint. 10 B. 11 CallFire’s next argument is that, as a matter of fact, it isn’t the party that called 12 Couser, and this turns on a rather technical argument about how its service works that is 13 most likely beyond the scope of a motion to dismiss. In any event, the Court is inclined to 14 disagree with it. CallFire Didn’t Call Couser, Anyway 15 CallFire’s motion to dismiss employs rather cagey language to describe its 16 responsibility for the unwanted calls Couser allegedly received. Initially, this language 17 deflects responsibility and places on its customers. For example, customers use CallFire’s 18 “software platform to develop and send their own voice broadcasts.” (Mot. at 1.) CallFire 19 “provides its customers connectivity to transmit their own messages to the recipients they 20 selected and at the time of their choosing.” (Mot. at 2.) The clear implication here is that 21 CallFire just provides software while its customers actually pull the trigger and make 22 telephone calls with that software. 23 But CallFire also describes its service in a way that suggests it actually places the 24 calls. For example, its Terms of Service notifies customers, “You represent and warrant that 25 the owners of the phone numbers you provide to CallFire, to which outbound messages and 26 broadcasts are transmitted through the Service . . . .” (Mot. at 2.) It also says, “You further 27 agree that CallFire is, under no circumstances, responsible for the contents and/or accuracy 28 of your messages or broadcasts and CallFire will only transmit them . . . .” CallFire argues -4- 1 later in its motion that its role “is akin to a common carrier or software provider that simply 2 receives instructions and transmits based on those instructions without alteration.” (Mot. at 3 6.) This all gives the impression that CallFire is the caller, or certainly close enough to the 4 caller. 5 Whatever the true and exact relationship between CallFire and its customers is, the 6 Court finds it to be too fact-intensive, and certainly too disputed, to be resolved at the motion 7 to dismiss phase in CallFire’s favor. By CallFire’s own words, it receives numbers from its 8 customers and it transmits or delivers a recorded message to those numbers. That 9 essentially makes it a caller, at least by some common-sense definition of the term, even if 10 the customers are the chief architect of the calls. 11 C. 12 CallFire’s last argument, and certainly its most substantive, is that Congress’s intent, 13 as well as numerous FCC rulings, make it very clear the TCPA isn’t intended to police 14 middlemen like CallFire that, even if they make calls in some technical sense, are 15 commissioned to make them by another entity and bear little responsibility for the timing, 16 content, or recipients of those calls. Couser tries to argue that this is an attempt to subject 17 her claims to a heightened pleading standard, which isn’t the case at all. CallFire’s argument 18 is simply that the TCPA doesn’t apply to it on the facts alleged, not that Couser has to allege 19 certain specific facts and has failed to do so. (The confusion seems to be that CallFire 20 believes its lack of responsibility for the content of the calls, among other things, exempts 21 it from TCPA liability, and Couser mistakenly reads this to mean that CallFire wants her to 22 specifically allege the content of the calls.) The TCPA Wasn’t Intended for CallFire 23 For example, a section-by-section analysis of the TCPA from the Senate Committee 24 on Commerce, Science, and Transportation notes that its regulations “apply to the persons 25 initiating the telephone call or sending the message and do not apply to the common carrier 26 or other entity that transmits the call or message and that is not the originator or controller 27 of the content of the call or message.” S.Rep. No. 102-178 (1991), 1991 WL 211220 at *9 28 (emphasis added). And for its own part, speaking to the analogous instance of liability for -5- 1 unsolicited faxes, the FCC has agreed that “carriers who simply provide transmission 2 facilities that are used to transmit others’ unsolicited facsimile advertisements may not be 3 held liable . . . .” In the Matter of Rules and Regulations Implementing the TCPA of 1991 4 (Oct. 16, 1992), 7 FCC Rcd. 8752, 8780. It continued, “In the absence of a high degree of 5 involvement or actual notice of an illegal use and failure to take steps to prevent such 6 transmissions, common carriers will not be held liable for the transmission of a prohibited 7 facsimile message.” Id. The FCC reiterated its opinion in 2003, finding that “if a common 8 carrier is merely providing the network over which a subscriber . . . sends an unsolicited 9 facsimile message, that common carrier will not be liable for the facsimile.” Rules and 10 Regulations Implementing the Telephone Consumer Protection Act of 1991, 68 FR 44144- 11 01, 44169 (July 25, 2003). It also found that a “high degree of involvement” was present 12 only if, for example, the carrier provides the facsimile numbers or reviews and controls the 13 actual content of the facsimiles. Id. 14 The Court is generally receptive to CallFire’s arguments; it does seem that Congress 15 and the FCC, if pressed, would absolve an entity like CallFire from liability under the TCPA 16 for Legal Shield’s promotional calls. It is also generally dismissive of Couser’s stubborn 17 rebuttal that she alleged CallFire called her and that’s all that matters. Yes, the Court has 18 to take her allegations as true at the motion to dismiss phase, but she alleges more than that 19 CallFire called her. She alleges that: (1) CallFire called “at the express instruction and 20 guidance” of Legal Shield” (FAC ¶ 26); (2) CallFire provides “voice and text connectivity” 21 (FAC ¶ 16); and (3) CallFire was Legal Shield’s actual agent (FAC ¶ 18). These allegations 22 feed right into CallFire’s argument that it is some kind of innocent middleman in Legal 23 Shield’s marketing scheme. 24 There are some limits, however, to what the Court can make of CallFire’s legal 25 sources. First, with respect to the Senate report, gleaning guidance from such sources is 26 a notoriously difficult endeavor. See Gonzalez v. Arizona, 677 F.3d 383, 441 (9th Cir. 2012) 27 (“The Supreme Court has warned us time and again not to rely on legislative history in 28 interpreting statutes, largely because of the ease with which floor statements and committee -6- 1 reports can be manipulated to create a false impression as to what the body as a whole 2 meant.”) (Kozinski, J., concurring). Second, with respect to the FCC sources, there are a 3 few problems. The first is that CallFire’s arguments seems somewhat incomplete; the Court 4 can’t consider the FCC sources without some argument that the Chevron doctrine entitles 5 or compels it to—an argument that is quite easy to make. See, e.g., Asher & Simons, P.A. 6 v. j2 Global Canada, Inc., 2013 WL 5645354 at *2–5 (D. Md. Oct. 16, 2013). Second, 7 analogous as facsimile transmissions may be to the phone calls at issue in this case, they 8 are prohibited by a different TCPA rule. Facsimiles are covered by 47 U.S.C. § 227(b)(1)(C), 9 and that is apparently the rule addresses by the FCC sources CallFire cites, while Couser 10 accuses CallFire of violating 47 U.S.C. § 227(b)(1)(A)(iii). Finally, with only pleadings to go 11 on and no discovery as to the precise relationship between CallFire and Legal Shield, it is 12 simply too early in this litigation for the Court to affirmatively conclude that CallFire is the 13 middleman it claims. That certainly looks to be the case, but CallFire well knows that the 14 evidence 15 Thinakaran—cannot be considered at the motion to dismiss phase. it submits—for example the declaration of its COO Jagannathan 16 For the above reasons, the Court rejects CallFire’s argument that Couser’s claim 17 should be dismissed based upon the intent of Congress in enacting the TCPA and the FCC’s 18 rulings in administering the statute. The motion to dismiss is therefore DENIED. 19 D. 20 This brings the Court to CallFire’s final argument, which is that the case should be 21 referred to the FCC under the primary jurisdiction doctrine, especially while it is already 22 considering the TCPA liability of software providers that merely transmit users’ own 23 messages. The primary jurisdiction doctrine applies when “an otherwise cognizable claim 24 implicates technical and policy questions that should be addressed in the first instance by 25 the agency with regulatory authority over the relevant industry rather than by the judicial 26 branch.” Clark v. Time Warner Cable, 523 F.3d 1110, 1114 (9th Cir. 2008). It “prescribes 27 deference to an administrative agency where (1) the issue is not within the conventional 28 experience of judges, (2) the issue involves technical or policy considerations within the Alternatively, this case should be stayed. -7- 1 agency’s particular field of expertise, (3) the issue is particularly within the agency’s 2 discretion, or (4) there exists a substantial danger of inconsistent rulings.” Maronyan v. 3 Toyota Motor Sales, U.S.A., Inc., 658 F.3d 1038, 1048–49 (9th Cir. 2011). While CallFire 4 asks the Court to refer this case to the FCC, it may simply be asking the Court to stay this 5 case while the FCC considers the issue at hand. See, e.g., Glauser v. Twilio, 2012 WL 6 259426 (N.D. Cal. Jan. 27, 2012). 7 For the reasons CallFire gives in its motion to dismiss, the Court believes the primary 8 jurisdiction doctrine has traction in this case. Not only that, but at least one other district 9 court case has stayed a TCPA case while the FCC considers the question this case 10 presents—the liability of a software provider under the TCPA. See Glauser at *2–3. Couser 11 is right to note that Glauser involves text messages and not prerecorded voice messages, 12 but for the purposes of the TCPA they are essentially the same and are actionable under the 13 very same statutory subdivision that’s at issue in this case. See Hickey v. Voxernet LLC, 14 887 F.Supp.2d 1125, 1129 (W.D. Wash. 2012) (“A text message is a call under the TCPA.”). 15 The Court is somewhat less receptive to Couser’s argument that the plaintiff in Glauser 16 specifically alleged that the defendant provided a connectivity application, while her 17 complaint alleges that CallFire actually called Couser. First, as the Court has said above, 18 Couser’s complaint also contains allegations that paint CallFire as a kind of middleman 19 party. But second, the Court presumably does not have to accept all of Couser’s factual 20 allegations as true for the purposes of deciding whether to invoke the primary jurisdiction 21 defense. After all, the consequences of invoking the doctrine aren’t nearly so fatal to 22 Couser’s claims as are the consequences of granting a motion to dismiss. 23 Most importantly, as CallFire and the Glauser opinion note, the FCC is now 24 considering the liability of so-called common carriers, which is the very issue this case 25 ostensibly presents. See Glauser at *2 (“Similarly, the specific issue whether a text message 26 service provider qualifies as a common carrier exempt from liability pursuant to the TCPA, 27 is also currently under submission before the FC.”). The petition under consideration would 28 essentially extend the FCC’s above-mentioned rulings with respect to facsimiles to -8- 1 companies that send or transmit voice or text messages on behalf of customers. The Court 2 therefore finds that the primary jurisdiction doctrine has great relevance in this case. 3 Nonetheless, whatever the FCC’s ruling is, the question of liability will still turn on facts that 4 are undeveloped here and need to be further developed, namely the precise relationship 5 between CallFire and Legal Shield and the allocation of responsibility between them. That 6 is an issue on which CallFire has attempted to present substantial evidence already, but only 7 in a one-sided manner without the benefit of adversarial discovery. Thus, it seems to the 8 Court that this case should go forward. If, after taking discovery from CallFire and Legal 9 Shield, Couser still believes CallFire is liable under the TCPA, the Court will entertain a 10 renewed motion to stay this case under the primary jurisdiction doctrine, or, assuming the 11 FCC has spoken to the issue by then, a motion for summary judgment. 12 The Court reaches this conclusion mindful that the stay order in Glauser came on the 13 pleadings alone, at the motion to dismiss phase, but those pleadings were a bit more precise 14 as to the common carrier’s role and liability: “Specifically, plaintiff alleges that defendants, 15 through their text messaging applications, tools, and/or technology, made unsolicited text 16 calls to plaintiff and other similarly situated, without their prior expressed consent, using an 17 automatic telephone dialer system.” Glauser at *3. It may be that Couser’s is stubbornly 18 sticking to her pleadings just to survive to discovery and increase the cost of this case to 19 CallFire, but that doesn’t change the Court’s view that one way or another CallFire’s precise 20 relationship with Legal Shield, and the nature of its business, must be factually developed 21 if the claims against it are to be either dismissed or stayed. In any event, the discovery the 22 Court imagines Couser needing from CallFire is limited, and should not impose a substantial 23 cost on CallFire. Likewise, any subsequent motion to stay or for summary judgment can 24 largely repeat arguments CallFire has made in its motion to dismiss, and shouldn’t require 25 extensive legal fees. 26 // 27 // 28 // -9- 1 IV. Conclusion 2 CallFire’s motion to dismiss is DENIED. The Court strongly senses that it has the 3 better arguments in this case, but those arguments simply can’t be ratified at the motion to 4 dismiss phase of this case. Likewise, with additional discovery confirming that CallFire’s 5 responsibility for the calls at issue is what it claims, the Court would be inclined to stay this 6 case under the primary jurisdiction doctrine, or, assuming the FCC has spoken to the issue, 7 rule definitively on it with a motion for summary judgment. 8 IT IS SO ORDERED. 9 DATED: January 16, 2014 10 11 12 HONORABLE LARRY ALAN BURNS United States District Judge 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 - 10 -
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