Court Stays TCPA Class Action So Parties Can Request FCC Ruling Regarding Whether Defendants Used An Automatic Telephone Dialing System

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The Southern District of Texas recently granted a motion to stay proceedings pending a primary jurisdiction referral to the FCC in Fried v. Sensia Salon, Inc., et al., No. 4:13-cv-00312, 2013 U.S. Dist. LEXIS 168645 (S.D. Tex. Nov. 27, 2013).  A copy of the decision is available here.

Sensia, a beauty salon in Houston, contracted with Textmunications, Inc., a mobile technology company, which in turn contracted with Air2Web, a mobile messaging aggregator (“MMA”), to transmit text message advertisements to Sensia’s former and current customers.  Plaintiffs allege violations of the TCPA, violations of § 305-053 of the Texas Business and Commerce Code (“TBCC”), invasion of plaintiffs’ privacy, and conspiracy to violate the TCPA and TBCC.

The court explained that MMAs like Air2Web receive data from their customers (text message content and recipient information), format the data into short message peer-to-peer (“SMPP”) protocol, and then transmit the formatted messages to commercial wireless carriers that ultimately pass along the messages to their customers.  Id. at *4-6.  Air2Web is a “Tier 1 MMA,” meaning it has contractual relationships with some or all of the major wireless carriers and maintains “direct ‘binds,’ (a type of persistent socket connection) with the carriers’ networks through which it delivers its customer’s messages.  Air2Web does not ‘signal,’ or dial, a carrier to establish a telecommunications circuit prior to transmitting a message.”  Id. at *6.

Sensia argued that the technology used to send the text messages does not qualify as an ATDS because it does not “dial” a telephone number as the statutory text requires.  See id. at *11-12; see also 47 U.S.C. § 227(a)(1) (“The term ‘automatic telephone dialing system’ means 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.”).  In response, plaintiffs argued that “the FCC has not always adhered to the statutory language of the TCPA,” and “rather than focusing on whether a message was ‘dialed,’ [the FCC has] focused on whether a telephone number was ‘called’ and, as a result, cost the consumer money.”  Id. at *12-13.

Citing the FCC’s expertise in the field and its experience analyzing and interpreting the TCPA, the court found that the FCC is in the best position to opine in the first instance on whether the technology used to send the text messages qualifies as an ATDS.  Id. at *13-15.  It reasoned that, “[b]ecause the FCC must continually supervise companies and technologies that engage in mass messaging services, such as MMAs, it is appropriate for the agency to decide, at least in the first instance, contested issues relating to new messaging technologies.”  Id. at *16.  The court then stayed the action in its entirety and instructed the parties to ask the FCC to resolve the dispositive definitional dispute.  Id. at *19.

Considering that the FCC has broadly interpreted the TCPA to cover text messages, as the district court acknowledged, see id. at *10-11, it will be interesting to see what importance the FCC will attach to whether the technology used to send a text message literally “dials” the consumer for purposes of alleging use of an unlawful ATDS.  Compare Pls.’ Opp’n to Mot. to Stay Pending Referral to FCC, Fried v. Sensia Salon, Inc., 4:13-cv-00312 (S.D. Tex.), ECF No. 55 at 8 (“[T]he proper focus is not on the particular technology, but on the use of equipment to deliver messages to wireless services and any other numbers for which the consumer is charged for the call.  Whether the message is ‘dialed’ or faxed or transmitted through non-dialing equipment is irrelevant.”) with Def.’s Reply in Sup. Of Mot. to Stay Pending Referral to FCC, Fried v. Sensia Salon, Inc., 4:13-cv-00312 (S.D. Tex.), ECF No. 59 at 4 (“If the text message was not sent by an ATDS, there is no TCPA violation and the issue of cost is moot.  Plaintiffs’ attempt to convince this Court that [it] should bypass the ATDS requirement and make any text message that would ‘cost’ the recipient unlawful, regardless of the technology used to transmit the text, is not supported by the law.”).  The FCC has previously declined to address this issue, finding other grounds for disposing of a case.  See In Re Rules and Regulations Implementing the Telephone Consumer Protection Act of 1991, Declaratory Ruling, FCC 12-143, 2012 WL 5986338, ¶ 4 (Nov. 29, 2012) (“SoundBite contends that it does not use an automatic telephone dialing system … because the software used to send the confirmation text does not have the capacity to … to dial such numbers.”); id. ¶ 14 (“Because we have concluded that a consumer’s prior express consent to receive autodialed text messages from an entity encompasses consent to receive a final one-time text message . . . we need not address SoundBite’s arguments that it is not using an autodialer….”).  But even if the FCC punts on or disagrees with the defendant’s argument, this case is a helpful reminder about the availability of primary jurisdiction referrals (and their resulting stays) as a litigation tool when there is an arguable ambiguity in the statute.