Yesterday, CBE Group (CBE) obtained a very favorable decision on its Motion for Summary Judgment in a Telephone Consumer Protection Act (TCPA) action concerning its product, Manual Clicker Application (MCA). The case, Strauss v. CBE Group, (Case No. 15-62026) was brought in the United States District Court for the Southern District of Florida. A copy of the Order for Motions on Summary Judgment can be found here.

Background

The action arose out of a series of phone calls placed by CBE to the cellular telephone number of Plaintiff S. Ryan Strauss. In April 2014, Verizon New England, Inc. (Verizon) referred an account belonging to a third party to CBE for collection. CBE received Plaintiff’s telephone number from Verizon and believed that the number belonged to the third party debtor. Thereafter, CBE placed 26 telephone calls to Plaintiff between April and September, 2014. Six of these calls were answered, and each time a CBE representative asked to speak with the third party debtor by name. Plaintiff did not tell CBE that he was not the third party debtor or that CBE had called the wrong number.

CBE admits that on April 14 and 15, 2014, it placed its first two calls to Plaintiff using a Noble Systems Predictive Dialer under the mistaken belief that the number was a landline. Before the third call on April 18, CBE identified the number as associated with a cell phone and placed the remaining 24 calls to Plaintiff using CBE’s patent pending product, MCA. In order to place a call using the MCA, at least as CBE has configured it, an agent must manually initiate the call by clicking a computer mouse or pressing a keyboard enter key. The MCA then uses a Noble Systems device to connect the call to a telephone carrier’s network.

Plaintiff brought this lawsuit against CBE on September 25, 2015, alleging violations of the TCPA (Count I), the Fair Debt Collection Practices Act (FDCPA) (Count II), and the Florida Consumer Collection Practices Act, Fla. (FCCPA) (Count III).

On February 4, 2016, CBE moved for partial summary judgment on Plaintiff’s FDCPA and FCCPA claims, all TCPA claims premised on the 24 calls placed after April 15, 2014, and claims for “willful and knowing” violations of the TCPA. Thereafter, Plaintiff filed a Second Amended Complaint that added Verizon as a Defendant and sought to hold it vicariously liable for CBE’s alleged TCPA violations. On February 26, 2016, Plaintiff filed his own Motion for Partial Summary Judgment as to all three Counts of the Amended Complaint, but requested a jury trial on the issue of whether Defendants knowingly and willfully violated the TCPA.

Editor’s Note: Any party to a legal proceeding may make a pre-trial motion for summary judgment. To succeed in a motion for summary judgment, the moving party must show 1) that there are no disputed material issues of fact, and 2) that the movant is entitled to judgment as a matter of law.

In this case, both Plaintiff and CBE both moved for partial summary judgment. Each argued that there is no genuine dispute of material fact regarding Defendants’ liability for two calls under the TCPA. However, with respect to the TCPA claim, the parties disagreed whether Verizon can be held vicariously liable for CBE’s alleged violations and whether CBE placed the 24 calls after April 15, 2014, using an “automatic telephone dialing system.” The parties also disagreed on whether CBE’s debt-collection practices violate the FDCPA and FCCPA.

The Court found that summary judgment should be entered for Plaintiff and against only CBE on the TCPA claims for the two (2) calls placed on April 14 and 15, 2014. However, the court awarded summary judgment to be entered in CBE’s favor on the remaining TCPA claims and in CBE’s favor on the FDCPA and FCCPA claims. The court also found that Defendants had successfully demonstrated that there is an absence of evidence to hold Verizon vicariously liable for those calls. The review of the decision will focus only on the TCPA claims.

The Court’s Analysis

The court began its analysis with a simple review of the TCPA. The court’s summary:

“The TCPA prohibits making “any call (other than a call made for emergency purposes or made with the prior express consent of the called party) using any automatic telephone dialing system (ATDS) . . . to any telephone number assigned to a . . . cellular telephone service.”

Since CBE did not contest that it used an ATDS to place its first two calls to Plaintiff on April 14 and April 15, 2014, and there is no evidence to suggest that the calls were made with Plaintiff’s consent or for emergency purposes, the court’s analysis moved to the 24 subsequent calls. CBE’s position was that those calls were not made using an ATDS.

The court then discussed the definition of an ATDS:

The TCPA defines an ATDS 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.” Various pieces of equipment and software may be combined to form an ATDS, thereby subjecting the user to the restrictions of the TCPA. The term “capacity” in the definition of an ATDS refers not only to a device’s “present capacity” or “current configuration” but also includes its “potential functionalities.” In the Matter of Rules & Regulations Implementing the Tel. Consumer Prot. Act of 1991, (FCC July 10, 2015).

A predictive dialer constitutes an ATDS within the meaning of the TCPA. A predictive dialer is “hardware, when paired with certain software, [which] has the capacity to store or produce numbers and dial those numbers at random, in sequential order, or from a database of numbers” without human intervention. To determine whether a dialer is a predictive dialing system, and therefore an ATDS, “the primary consideration . . . is whether human intervention is required at the point in time at which the number is dialed.”

The court determined the following:

  1. The evidence clearly establishes that CBE made 24 calls using the MCA.
  2. There appears to be no disagreement that the MCA, by itself, lacks the capability to dial predictively.

However, at issue was whether the Noble equipment that the MCA utilized to connect calls was a predictive dialer or was otherwise classified as an ATDS when paired with the MCA.

On this issue the court determined:

  1. The overwhelming weight of the evidence indicates that when the MCA was paired with the Noble equipment is was not an ATDS.
  2. The MCA that CBE used to dial cell phones was not connected to a predictive dialer.
  3. Because CBE presented substantial evidence that human intervention is essential at the point and time that the number is dialed using the MCA and that the Noble equipment used does not have the functionalities required to classify it as a predictive dialer, CBE made a prima facie showing that CBE is not liable as a matter of law for the calls made after April 15, 2014.
  4. The Plaintiff’s Expert’s report was insufficient to create a genuine issue of material fact regarding the dialing service that CBE used.
  5. Because Plaintiff has failed to create a material dispute over whether CBE placed calls to his cell phone using an ATDS for the 24 calls after April 15, 2014, his TCPA claims based on those calls fail as a matter of law.

insideARM Perspective

This case should be closely reviewed by the ARM industry. It is a significant victory on a significant issue in TCPA cases.  insideARM contacted both CBE and the attorney that represented CBE in the matter for comment.

Dale Golden, CBE’s Attorney at Golden Scaz Gagain, PLLC commented:

“We view this decision by the Court as confirmation that industry leaders like CBE can protect themselves from TCPA liability by designing products and procedures to ensure calls placed do not fall under the purview of the statute. While the concept of ‘human intervention’ has been subject to various interpretations by different courts, this decision leaves little doubt that CBE’s MCA lives up to its designer’s intent—protecting creditors and agencies from TCPA liability.”

Mike Frost, CBE Chief Compliance, Sales Officer and General Counsel reacted:

“CBE is humbled by the Court’s decision that affirms the compliance of our Manual Clicker Application. We’re grateful to the CBE family for the hard work and investment necessary to create this innovative solution and to Dale Golden for his work in representing CBE in this case.”

Finally, Chad Benson, CBE President and Chief Operating Officer noted:

“This very important decision from the Court validates the time, money and effort invested in our TCPA-compliant solution. This important ruling affirms this powerful compliance tool protects both CBE and its clients from TCPA risk, while eliminating performance and regulatory problems associated with other dialing alternatives.”


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