US Court of Appeals for Ninth Circuit Affirms Class Certification, Order Granting Preliminary Injunction to Stop Calls and Holds Prior Express Consent is Given During Transaction Resulting in Debt

by Burr & Forman
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Meyer v. Portfolio Recovery Associates, LLC, No. 11-56600, 2012 WL 4840814 (9th Cir. Oct. 12, 2012)

Pending before the U.S. Court of Appeals for the Ninth Circuit was the district court’s: (1)  Provisional certification of a class consisting of individuals with cell phone numbers that Defendant did not obtain from either a creditor or the class member, where the cell phone number had a California area code, or Defendant’s records identified the class member as living in California; and (2)  Preliminary injunction order restraining Defendant from using its dialer to place calls to cell phones with California area codes obtained via a skip trace (which the court defined as the process of developing new telephone, address, job, or asset information on a customer, or verifying the accuracy of such information). Defendant made numerous arguments in opposition to both orders, all of which were rejected.

THE CLASS CERTIFICATION ORDER

Defendant argued that the individualized issue of consent should have precluded a finding of typicality or commonality because some debtors might have agreed to be contacted at any telephone number, even numbers obtained after the original transaction. Rejecting this argument, the court said “the Federal Communications Commission (FCC) issued a declaratory ruling clarifying the requirement for consent in the context of the TCPA that defeats [Defendant's] argument. Pursuant to the FCC ruling, prior express consent is deemed granted only if the wireless telephone number was provided by the consumer to the creditor, and only if it was provided at the time of the transaction that resulted in the debt at issue. Thus, consumers who provided their cellular telephone numbers to creditors after the time of the original transaction are not deemed to have consented to be contacted at those numbers for purposes of the TCPA.”

Defendant also argued that the class was over broad because it may include individuals who provided prior express consent to be contacted on their cell phones but whose numbers had been obtained through a skip trace. According to the court, however, the evidence before the district court made the possibility of such a scenario unlikely.

Rejecting argument that the trial court improperly provisionally concluded that Plaintiff was an adequate class representative because he had been convicted of crimes of dishonesty and used multiple names in the past, the court of appeals stated that the district court did consider Defendant’s argument that Plaintiff’s criminal record included convictions for deceptive conduct, but it also considered that Plaintiff’s convictions were in 1998 and 2001, more than 10 years ago, and that Plaintiff had since taken positive steps in his life, including his graduation from the University of California.

THE PRELIMINARY INJUNCTION ORDER

Defendant’s first argument in opposition to the district court’s preliminary injunction order was that Plaintiff did not demonstrate a substantial likelihood of success on the merits. Rejecting this argument, the court cited the three elements necessary to prevail on a TCPA claim: (1) the defendant called the Plaintiff’s cell phone; (2) using an Automatic Telephone Dialing System (ATDS); (3) without prior express consent. The court went on to recognize the definition of ATDS as “‘equipment that has the capacity — (A) to store or produce telephone numbers to be called, using a random or sequential number generator; and (B) to dial those numbers’” adding that “as we explained in Satterfield v. Simon & Schuster, Inc., the clear language of the TCPA ‘mandates that the focus must be on whether the equipment has the capacity to ‘store or produce telephone numbers to be called, using a random or sequential number generator.’” (emphasis in the original). The court noted that Defendant’s securities filings showed that it uses predictive dialers, and Defendant did not dispute that its predictive dialers have the capacity described in the TCPA, concluding that this evidence was sufficient to support the district court’s finding. The court also noted the FCC’s definition of ATDS included predictive dialers. The court rejected argument that the FCC’s definition of ATDS as including predictive dialers was invalid because the FCC did not have authority to define such dialers as ATDS, and thus the regulation is invalid, concluding that this argument was waived because it had not been raised in the court below.

The court also rejected Defendant’s argument that the district court applied the wrong standard to Plaintiff’s preliminary injunction claim when it concluded Plaintiff did not need to show irreparable harm in order to obtain a preliminary injunction applying Ninth Circuit law providing that such a showing is unnecessary when injunctions are sought to prevent violations of federal statutes that specifically provide for injunctive relief. Concluding that it need not resolve whether a showing of irreparable harm is necessary to obtain an injunction relating to TCPA claims, the court stated that Plaintiff shouldered his burden of demonstrating irreparable harm even if the traditional four-part test applied. Specifically, the court stated “[w]e have little difficulty concluding the record supports the district court’s finding [Defendant] would have continued to violate the TCPA if an injunction had not been issued. Between February 1 and March 31, 2011, [Defendant] called 46,657 cellular telephone numbers with California area codes [Defendant] obtained via skip-tracing. In response to [Plaintiff's] motion for a preliminary injunction, [Defendant] did not acknowledge the wrongful nature of its conduct. Instead, [Defendant assured the court it would stop calling [Plaintiff] without making any assurance regarding other members of the provisional class. We agree with [Plaintiff] that [Defendant's] violation of the TCPA violated his right to privacy, an interest the TCPA intended to protect.”

For more information on TCPA regulation and effects, contact Burr & Forman attorney, Joshua Threadcraft, here.

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