Judge Denies “Nomorobo” Operator’s Request to Alter Her Prior Opinion Dismissing TCPA Case

On January 5, 2017 a federal judge in Illinois issued another Opinion and Order in a case insideARM initially wrote about on August 17, 2016. The case is Telephone Science Corporation (TSC) v. Asset Recovery Solutions, Case No. 15-CV-5182 (N.D. Ill. Aug. 8, 2016). The Plaintiff in the case, TSC, is the operator of a service called “Nomorobo.” The website for the Nomorobo service is www.nomorobo.com.

A copy of the latest Memorandum Opinion and Order can be found here.

Background

The facts in this matter were described in detail in our August 17, 2016 story but will be summarized here.

TSC operates a service called “Nomorobo,” designed to help consumers avoid incoming computerized telephone calls known as “robocalls” – calls made with either an automatic telephone dialing system (“ATDS”) or with a prerecorded or artificial voice. In order to provide the Nomorobo service to consumers, TSC maintains a ‘honeypot’ group of telephone numbers, from which TSC is able to gather data related to inbound calls. Nomorobo analyzes calls placed to TSC’s honeypot numbers using a specialized algorithm, enabling it to “detect high frequency robocalling patterns and distinguish between calls placed by robocallers and calls placed by non-robocallers."

According to TSC, around March 2014, ARS began calling telephone numbers in the TSC honeypot using a predictive dialer. TSC alleged that, between March 2014 and February 2016, ARS placed approximately 12,240 robocalls to TSC Numbers – 747 of which TSC answered.

TSC sought relief under the Telephone Consumer Protection Act (TCPA) “based on past and future ARS robocalls to TSC Numbers, which TSC answered (or will answer) and for which TSC has incurred (or will incur) per-minute charges. TSC brought suit under 47 U.S.C. § 227(b)(1)(A)(iii), alleging that “ARS violated [this provision] on multiple and separate occasions by using an ATDS to call TSC at a telephone number assigned to a service for which TSC is charged for the call without TSC’s prior express consent." 

On August 8, 2016 United State District Court Judge Amy J. St. Eve granted Defendant ARS's Rule 12(b)(6) motion to dismiss the Second Amended Complaint of TSC, with prejudice, for failure to satisfy the “zone-of-interests” test under 47 U.S.C. § 227(b), the TCPA.

TSC brought a motion requesting the Court for an order: (i) altering its Opinion to dismiss the Second Amended Complaint without prejudice pursuant to Federal Rule of Civil Procedure 59(e); and (ii) granting TSC leave to file an amended complaint pursuant to Federal Rule of Civil Procedure 15(a)(2). (R.129).

The Opinion and Order

Judge St. Eve denied TSC’s motion. She wrote:

TSC now alleges that the ARS robocalls at issue in this case "serve no useful purpose to TSC and are, therefore, unwanted and a nuisance. The continued calls also have an adverse effect on TSC’s business and interstate commerce in general.” Ultimately, even accepting these allegations as true and drawing all reasonable inferences in TSC’s favor, see Virnich v. Vorwald, 664 F.3d 206, 212 (7th Cir. 2011), TSC—a telecommunications service provider interested in commercial data collection for its customer service offerings—does not fall “within the class of plaintiffs whom Congress has authorized to sue” under the TCPA.

TSC’s supplemental allegations do not change the Court’s prior recognition that the “only reason for this volume of calls . . . is due to the nature of TSC’s business, which is providing telecommunications services rather than consuming them. In other words, TSC’s “nuisance” theory—that ARS robocalls became a “nuisance” after they no longer provided “fresh data” to optimize the Nomorobo service—does not alter the reality that TSC used the TSC Numbers as a telecommunications service provider, rather than a consumer.

Furthermore, as the Court previously held, TSC’s alleged damages—the per-minute charges it incurred when it began to answer known robocalls in May 2015—“are not of the vexatious and intrusive nuisance nature sought to be redressed by Congress in enacting the TCPA, but rather are indirect, economic, and inherent to [its] business. TSC’s clarification that it only answered “unwelcome” robocalls—i.e., those that once did, but no longer do, provide useful data for its business algorithm—does not result in a different outcome.

In other words, although TSC did not subscribe to the TSC Numbers “purely for the purpose of filing TCPA lawsuits, it made a business decision to purchase “thousands” of Twilio’s “dirtiest” telephone numbers on a per-line charge, initially welcoming robocalls for the purpose of data collection and identification. Once continuing and known robocalls proved non-useful to its business model, and prevented TSC from exchanging a “clean” TSC Number for another “dirty” TSC Number to welcome unknown robocalls, it began to answer such calls. TSC then sought relief under a consumer protection statute based on 747 known and answered robocalls incident to its business. Based on these facts, it is not reasonable to assume that Congress intended to permit TSC’s lawsuit.

insideARM Perspective

Our perspective on this case remains the same as on August 17, 2016. insideARM agrees with Judge St. Eve’s analysis. TSC is not the type of claimant the TCPA was designed to protect.