Simple TCPA Case Becomes Two-Year Journey to Dismissal

A United States District Court judge in Minnesota has dismissed, with prejudice, a Telephone Consumer Protection Act (TCPA) case that appeared to be a “relatively straightforward case,” but instead mushroomed into contentious and costly litigation.  The case is Ung v. Universal Acceptance Corporation, (Case No, 15-127 U.S. District Court, MN). 

The case was originally filed on January 20, 2015, and was assigned to the Honorable Richard H. Kyle, U.S. District Court Judge, MN. insideARM originally wrote about it on August 16, 2016. In that article, we reported that Judge Kyle, relying on the Supreme Court case of Spokeo v. Robbins, (136 S.Ct. 1540 (2016), denied a request to dismiss the plaintiff’s TCPA claim for lack of standing.

Though we have not previously written a second story on the case, we have included it one other time in our TCPA Resources/Caselaw grid. On January 24, 2017 Judge Kyle denied Ung’s request for class action certification.

The latest act in this case involved a motion for summary judgment brought by Universal Acceptance Corporation (Universal).

Editor’s Note:  A motion for summary judgment is based upon a claim by one party (or, in some cases, both parties) that contends that all necessary factual issues are settled or so one-sided they need not be tried. The summary judgment is appropriate when the court determines there no factual issues remaining to be tried, and therefore a cause of action or all causes of action in a complaint can be decided upon certain facts without trial.

Background 

Judge Kyle’s April 6, 2017  Memorandum Opinion and Order provides a concise background on the case and, at the same time, provides insight into his subsequent opinion: 

“On the surface, this is (and should be) a relatively straightforward case; indeed, the events giving rise to the action are undisputed. As is often the case, however, things are not quite as simple as they might seem. Universal is the financing arm of Interstate Auto Group, Inc., d/b/a CarHop (“CarHop”), an Edina, Minnesota company that sells used cars nationwide to people with poor or no credit. A person interested in buying a CarHop vehicle must submit a financing application listing credit references and the name of the buyer’s landlord. This provides Universal with contact information for persons who could pass along messages if the buyer were to fall behind on the vehicle’s payments.

Ung was one such individual whose contact information was provided by a car buyer. In 2013, Joseph Holley purchased a Kia Sorrento from a CarHop location in Crystal, Minnesota; he provided Ung’s name and cell-phone number, listing Ung as his landlord. Holley eventually fell behind on the Kia’s payments and Universal began placing calls to Ung. It is undisputed that between June and October 2014, Universal called him twelve times on his cell phone. Ung alleges that each of these calls was placed without his consent and, accordingly, violated the TCPA.

The foregoing is, in essence, the entire crux of this case. But against this simple backdrop, the parties have attempted to drag the Court down a rabbit hole, raising complex arguments about the intricacies and capabilities of the telephone system Universal used to call Ung."

In a footnote to this statement, Judge Kyle commented: 

The parties’ arguments and blizzard of briefing remind the Court of Alice, having passed through the looking glass, exclaiming, "It seems very pretty . . . but it’s rather hard to understand! . . . Somehow it seems to fill my head with ideas – only I don’t know exactly what they are!" Lewis Carroll, Through the Looking Glass, ch. 1.           

This, according to the parties, is because the TCPA only prohibits calls made using an “automatic telephone dialing system [ATDS] . . . to any telephone number assigned to a . . . cellular telephone service.” 47 U.S.C. § 227(b)(1)(A)(iii) (emphasis added). The statute 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.” § 227(a)(1). The parties’ entire dispute, therefore, has devolved into a question about the phone system on which Universal called Ung’s cell phone: Ung contends that it qualifies as an ATDS, while Universal contends it does not. The parties have submitted nearly 100 pages of briefs – and a small mountain of documents – addressing the intricacies and capabilities of Universal’s telephone system, and having pored over those submissions, the Court concludes that no genuine issue of fact exists, as set forth below.” 

The Court’s Decision 

As noted above, Kyle granted Universal’s motion for summary judgment. The key to his decision was a determination that Universal did NOT use an ATDS to call the plaintiff. 

Per the opinion: 

“According to the Federal Communications Commission (FCC) – which is tasked with enacting regulations to implement the TCPA, 47 U.S.C. § 227(b)(2) – the hallmark of an ATDS is the ability to dial numbers without human involvement. As early as 2003, the FCC recognized that the “basic function” of an ATDS is “the capacity to dial numbers without human intervention.” The FCC has never wavered from this “human intervention” requirement, repeatedly reiterating that the capacity to independently place calls without the involvement of a live person remains central to determining whether telephony qualifies as an ATDS. 

There are two key reasons for this. First, the FCC’s interpretation hews to the TCPA’s text, which requires that an ATDS have the “capacity” to “dial” telephone numbers. 47 U.S.C. § 227(a)(1) (emphasis added). Without the capacity to dial on its own, telephone equipment simply cannot be an ATDS. Second, the FCC’s interpretation hews to the purpose behind the TCPA, which was aimed at slowing (if not stopping) the rapid increase in telemarketing calls.

The FCC’s understanding of this “basic function” of an ATDS proves critical in this case, because there is no genuine issue here that Universal’s calls to Ung – and every other landlord whose contact information was provided by a CarHop customer – required human intervention.” 

However, plaintiff argued that human intervention was irrelevant to whether Universal’s telephone equipment qualifies as an ATDS. In support, he noted that in a July 2015 Order, the FCC declined to “adopt a ‘human intervention’ test” for whether telephony qualifies as an ATDS. 

Kyle responded to that argument: 

“But contrary to Ung’s assertion, this does not render human intervention irrelevant to the inquiry. Rather, the FCC’s 2015 Order simply made clear that there are no bright-line rules for determining when calling equipment is an ATDS, and human intervention remains a factor – a key one – to be considered in the analysis. This is precisely why the 2015 Order also provides that “[h]ow the human intervention element applies to a particular piece of equipment is specific to each individual piece of equipment, based on how the equipment functions and depends on human intervention, and is therefore a case-by-case determination.” 

Finally, Kyle addressed the issue of future “capacity” of a piece of equipment to become an ATDS.  He wrote: 

“Ung also makes much of the fact that in its 2015 Order, the FCC recognized that a telephone system may have the “capacity” to autodial calls even if not presently being used for that purpose. (Mem. in Opp’n at 6-7 (citing authority for the proposition that the “capacity of an autodialer is not limited to its current configuration but also includes its potential functionalities”).) Yet, by this logic, almost any telephone equipment could be considered an ATDS. It does not take a creative mind to envision a 1960s-era rotary phone attached to modern computer equipment, rendering the rotary phone capable of dialing telephone numbers, but no one would suggest a rotary phone is an ATDS because of this “potential functionality.” Indeed, the FCC cited this very example in its 2015 Order when cautioning against stretching the definition of an ATDS too far.” 

insideARM Perspective 

At insideARM we usually like to provide our own, unique, perspective to a case. However, in this case, the conclusion of Judge Kyle provides a better perspective than anything we could write.  Judge Kyle concluded his opinion with the following: 

“What started as a simple case more than two years ago has now wended its way through more than 200 docket entries, including several Motions to Dismiss, a failed mediation, a Motion for Class Certification, and the instant Motion for Summary Judgment. In the Court’s view, it is now time for this case’s journey to come to an end. Because the evidence does not suggest Ung was called using an ATDS, his TCPA claim fails as a matter of law, and Universal is entitled to summary judgment. 

Based on the foregoing, and all the files, records, and proceedings herein, IT IS ORDERED that Universal’s Motion for Summary Judgment (Doc. No. 194) is GRANTED, and Ung’s Complaint (Doc. No. 1) is DISMISSED WITH PREJUDICE. LET JUDGMENT BE ENTERED ACCORDINGLY.”