District Court (Cal.) Allows TCPA Class Action to Proceed Beyond Pleadings Stage; Finds Use of ATDS Adequately Pleaded and that Plaintiffs Need Not Plead that They Were Charged for Calls

In Blair v. CBE Group Inc., 2013 WL 2029155 (S.D.Cal. 2013), Judge Anello rejected a debt collector’s home-run FRCP 12(b)(6) motion to dismiss a TCPA class action at the pleadings stage.  First, Judge Anello found that debt collectors such as CBE Group might be subject to the TCPA, and Plaintiff’s Complaint had pleaded enough.

Relying on extensive legislative history and statutory construction arguments, CBE Group next argues that the TCPA categorically does not apply to debt collection calls. However, it is clear that the TCPA may apply to TCPA claims under the right circumstances. See Lee v. Credit Mgmt., LP, 846 F.Supp.2d 716, 728 (S.D.Tex.2011) (“Defendant leads with the argument that the TCPA does not apply to its debt collection activities. This argument is not well-taken. In a declaratory ruling, one to which the Court will defer, the FCC determined that debt collectors, such as Defendant, can be responsible for any violation of the TCPA.”) (citing In re Rules Implementing the Tel. Consumer Prot. Act of 1991, 23 FCC Rcd 559, 562 (F.C.C.2007).); Meyer v. Portfolio Recovery Assocs., LLC, 2011 U.S. Dist. LEXIS 156610, at *10 n. 6 (S .D. Cal. Sept. 14, 2011); Robinson v. Midland Funding, LLC, 2011 U.S. Dist. LEXIS 40107, at *13 (S.D.Cal. Apr. 13, 2011) (“The FCC has already issued a declaratory ruling stating debt collectors who make autodialed or prerecorded calls to a wireless number are responsible for any violation of the TCPA.”); see also Mims v. Arrow Fin. Servs., 565 U.S. ––––, 132 S.Ct. 740, 746, 748, 181 L.Ed.2d 881 (2012) (holding federal district courts have jurisdiction over private TCPA actions in a case involving debt collection agency). It may very well turn out that CBE Group’s specific activities are exempt from the TCPA based on the two exemptions the Federal Communications Commission has allowed, see Martinez v. Johnson, 2013 U.S. Dist. LEXIS 35826, at *41 (D.Utah Mar. 14, 2013); Sussman v. I.C. Sys., 2013 U.S. Dist. LEXIS 31721, at *10–11 n. 2 (S.D.N.Y. Mar. 6, 2013), but the issue presently before the Court is whether the TCPA categorically “does not apply to debt collectors.” [See Doc. No. 7–1 at 7:25.] The TCPA may apply to debt collectors who do not fall under the FCC’s two exemptions. Accordingly, the Court DENIES CBE Group’s motion to dismiss on the basis that the TCPA does not apply to CBE Group’s debt collection activities.

  Judge Anello found that the Plaintiff had adequately pleaded the use of an ATDS, notwithstanding a declaration from the Defendant to the contrary:

 CBE Group next argues that Plaintiff fails to sufficiently allege a TCPA claim because the claim is couched in conclusory facts that track the elements of the claim and because CBE Group’s “technology does not have the capacity to generate numbers randomly because it does not have any type of number generator.” ¶  The Ninth Circuit Court of Appeals has stressed: “When evaluating the issue of whether equipment is an [automatic telephone dialing system (“ATDS”) ], the statute’s clear language 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 genera-tor.’ ” Satterfield v. Simon & Schuster, Inc., 569 F.3d 946, 951 (9th Cir.2009) (emphasis in original). Thus, the issue is not whether CBE Group used an ATDS, but whether its equipment had the requisite capacity. ¶  CBE Group proffers the declaration of Michael L. Frost, CBE Group’s Senior Vice President and General
Counsel, who declares that CBE Group “does not employ calling technology that has the capacity to general numbers randomly or sequentially because it does not have any type of number generator.” [Doc. No. 7–2 ¶ 4.] As an initial matter, the Court questions whether Mr. Frost has the requisite technical expertise to make statements on features of CBE Group’s technology. Mr. Frost’s declaration certainly does not provide any basis for his ability to make the above statement. In any event, because this evidence is extraneous to the Complaint, the Court may not consider it when ruling on a motion to dismiss without converting the motion into a summary judgment motion, Fed.R.Civ.P. 12(d), which the Court declines to do. Whether CBE Group’s calling technology has the requisite capacity for TCPA purposes is a factual question that is not properly resolved without formal discovery or at this stage of the proceedings. ¶ With respect to CBE Group’s employment of an ATDS, Plaintiff alleges: “Defendant used an automatic telephone dialing system which had the capacity to produce or store and dial numbers randomly or sequentially, to place telephone calls to Plaintiff’s cellular telephone and/or used an artificial or pre-recorded voice message system, to place telephone calls to Plaintiff’s cellular telephone.” [Compl. ¶ 8.] As other Courts have found, the above allegation is sufficient under Rule 8’s pleading standard. See, e.g., Hickey v. Voxernet LLC, 887 F.Supp.2d 1125, 1129–30 (W.D.Wash.2012); In re Jiffy Lube Int’l, Inc., 847 F.Supp.2d 1253, 1260 (S.D.Cal.2012); Lozano v. Twentieth Century Fox Film Corp., 702 F.Supp.2d 999, 1010–11 (N.D.Ill.2010); Robinson v. Midland Funding, LLC, 2011 U.S. Dist. LEXIS 40107, at *8–9 (S.D.Cal. Apr. 13, 2011). CBE Group’s motion to dismiss is DENIED insofar as it argues Plaintiff has failed to sufficiently allege the use of a an “ATDS” within the meaning of the TCPA.

  Judge Anello found that the Plaintiff need not plead that the classmembers were charged for the calls at issue:

In cursory fashion, CBE Group argues that Plaintiff has failed to allege any injury because she has not sufficiently alleged she was charged for any call from CBE Group. As Plaintiff aptly points out, other courts have considered and rejected this very argument. See, e.g., Lozano v. Twentieth Century Fox Film Corp., 702 F.Supp.2d 999, 1009–10 (N.D.Ill.2010) (“The Court therefore finds that the plain language of the TCPA does not require Plaintiff to allege that he was charged for the relevant call at issue in order to state a claim pursuant to § 227.”); Agne v. Papa John’s Int’l, 286 F.R.D. 559, 571 (W.D.Wash.2012) (“[C]lass members are not required to show that they were charged for the text message advertisements they received.”); Gutierrez v. Barclays Grp., 2011 U.S. Dist. LEXIS 12546, at *6 (S.D.Cal. Feb. 9, 2011) (“Plaintiffs need not show that they were charged for … text messages to their cellular phones to prevail on their TCPA claims.”). Because Plaintiff need not allege she was charged for the calls she received, CBE Group’s motion is DENIED insofar as it seeks dismissal on this basis.

  Finally, Judge Anello declined Defendant’s invitation to dismiss the class action allegations at the pleadings stage:

Finally, CBE Group asks the Court to strike the class allegations in the Complaint because individual findings of fact predominate. The Court agrees with Plaintiff that CBE Group’s request amounts to a premature effort to defeat class certification. Moreover, the fact that other courts have certified classes in TCPA actions indicates that TCPA claims may be amenable to class treatment once the issue is properly before the Court. See, e.g., Meyer v. Portfolio Recov-ery Assocs., LLC, 707 F.3d 1036 (9th Cir.2012) (affirming district court’s provisional certification of class); Agne v. Papa John’s Int’l, 286 F.R.D. 559 (W.D.Wash.2012); Vandervort v. Balboa Capital Corp., 287 F.R.D. 554 (C.D.Cal.2012); see generally Gomez v. Campbell–Ewald Co., 805 F.Supp.2d 923, 931 (C.D.Cal.2011) (“As TCPA is silent on the subject of class relief, this Court must presume its avail-ability.”). At this stage of the proceedings, the Court cannot say that TCPA claims are generally unsuitable for class treatment. Nor is this the rare case where the pleadings indicate that the class requirements cannot possibly be met. See In re Wal–Mart Stores, Inc. Wage & Hour Litig., 505 F.Supp.2d 609, 615–16 (N.D.Cal.2007) (denying motion to dismiss class allegations prior to appropriate discovery, despite “suspicious” class definition in the pleadings). Accordingly, CBE Group’s motion is DENIED insofar as it asks the Court to strike the class action allegations in the Complaint.

Judge Anello granted the defendant’s motion to dismiss for improper venue, but allowed the Plaintiff to conduct discovery on defendant’s contacts with the forum.

Accordingly, the Court GRANTS CBE Group’s motion to dismiss for improper venue. However, the Court GRANTS Plaintiff leave to conduct limited jurisdictional discovery because at least some evidence exists that CBE Group directed its activities to residents of this District. See generally Phillips v. Hernandez, 2012 U.S. Dist. LEXIS 150361, at *17–18 (S.D.Cal. Oct. 18, 2012) (discussing standard for permitting limited jurisdictional discovery).