YVONNE GONZALEZ ROGERS, District Judge.
This putative class action generally relates to defendant's alleged practice of using third-party debt collectors who employed predictive dialers and recorded calls without consent. (Third Amended Complaint ("TAC") at Dkt. No. 1-1 ¶ 1.) Specifically, plaintiff John Lofton alleges he received two "wrong number" calls in June 2012 on his cell phone from third-party debt collector Collecto, Inc. ("Collecto"), wherein Collecto sought to collect an unpaid bill for defendant Verizon Wireless (VAW) LLC ("Verizon") cell phone services. Plaintiff asserts violations of three statutes: (i) California's Invasion of Privacy Act, Cal. Penal Code § 632.7 ("IPA"); (ii) the Telephone Consumer Protection Act, 47 U.S.C. § 227 ("TCPA"); and (iii) California's Unfair Competition Law, Cal. Bus. & Prof. Code §§ 17200 et seq. ("UCL").
On December 15, 2014, Verizon filed a motion for partial judgment on the pleadings pursuant to Federal Rule of Civil Procedure 12(c) regarding the allegations in Count II (TCPA) as to third-party debt collectors other than Collecto. (Dkt. No. 77 ("Mot.").)
Having carefully considered the papers submitted,
Verizon contracts with various third-party vendors, including Collecto, to collect consumer debts. (TAC ¶ 1.) The vendors use predictive dialers to place debt collection calls, often without the prior consent of certain cell phone users who receive the calls. (Id.) They also record such calls without first disclosing the practice or obtaining consent from the called party. (Id.)
In plaintiff's case, he received "persistent[] and repeated[]" calls on his cell phone from Collecto. (Id. ¶ 16.) Collecto was apparently trying to reach a delinquent Verizon subscriber. (Id.) Collecto obtained plaintiff's number by "skip-tracing," a process whereby it finds possible contact numbers for a target individual using services such as LexisNexis or CBCInnovis. (Id. ¶ 24.) It does not obtain the numbers from Verizon and does not receive prior express consent to call those numbers. (Id.)
For instance, plaintiff received a call from Collecto on June 4, 2012, and during the call, he explained that he was not the person Verizon was trying to reach. (Id. ¶ 18.) On June 7, 2012, he received another call from Collecto. (Id. ¶ 19.) He asked if the call was being recorded and was informed that it was. (Id.) He had not previously been notified that the call was being recorded. (Id.) He said he did not consent and told Collecto's representative to stop the recording. (Id.) She responded that she was not able to do so, and that Collecto records all calls for quality assurance purposes. (Id.) During each of these calls, plaintiff noticed a "significant pause" after answering the phone before Collecto's representative began speaking, a "telltale sign"
Plaintiff alleges Verizon is vicariously liable for Collecto's—and Verizon's other debt collection vendors'—accused conduct. (Id. ¶¶ 26, 36, 41-54.) Verizon gave these purported agents the authority to collect debts on its behalf and to use Verizon's name in the course of the calls and it exercised control over their debt collection activities. (Id.) When Collecto's representatives called plaintiff, for instance, they stated they were "with Verizon," and calls to the number Collecto used to reach plaintiff are answered by an "automated voice" stating "thank you for calling Verizon Wireless." (Id. ¶ 53.)
Plaintiff filed the instant action in California Superior Court on June 14, 2012. (Dkt. No. 1 ¶¶ 1-2.) He filed a Third Amended Complaint on November 12, 2013, which raised for the first time a federal law claim. (Dkt. No. 1 ¶ 3.) Thereafter, on December 6, 2013, defendant filed a notice of removal. (Dkt. No. 1.) On March 14, 2014, the Court denied (i) defendant's motion to dismiss plaintiff's first cause of action and (ii) plaintiff's motion for a preliminary injunction. (Dkt. No. 22.) Various motion practice followed, including the instant motion.
Under Federal Rule of Civil Procedure 12(c), judgment on the pleadings may be granted when, accepting as true all material allegations contained in the nonmoving party's pleadings, the moving party is entitled to judgment as a matter of law. Chavez v. United States, 683 F.3d 1102, 1108 (9th Cir. 2012). The applicable standard is essentially identical to the standard for a motion to dismiss under Rule 12(b)(6). United States ex rel. Cafasso v. Gen. Dynamics C4 Sys., Inc., 637 F.3d 1047, 1054 n.4 (9th Cir. 2011). Thus, although the Court must accept well-pleaded facts as true, it is not required to accept mere conclusory allegations or conclusions of law. See Ashcroft v. Iqbal, 556 U.S. 662, 678-79.
In ruling on a motion for judgment on the pleadings, the Court may consider documents incorporated by reference in the pleadings and "may properly look beyond the complaint to matters of public record" that are judicially noticeable. Mack v. South Bay Beer Distrib., Inc., 798 F.2d 1279, 1282 (9th Cir. 1986), abrogated on other grounds by Astoria Fed. Sav. & Loan Ass'n v. Solimino, 501 U.S. 104 (1991); Durning v. First Boston Corp., 815 F.2d 1265, 1267 (9th Cir. 1987). The Court "need not . . . accept as true allegations that contradict matters properly subject to judicial notice or by exhibit" attached to the complaint. Sprewell v. Golden State Warriors, 266 F.3d 979, 988 (9th Cir. 2001) (citation omitted). Courts may also dismiss a cause of action in place of granting judgment, and may grant leave to amend where appropriate. See, e.g., In re Dynamic Random Access Memory (Dram) Antitrust Litig., 516 F.Supp.2d 1072, 1084 (N.D. Cal. 2007).
The TCPA prohibits the use of an "automatic telephone dialing system" ("ATDS") to place certain calls to cellular telephones without the recipient's "prior express consent." 47 U.S.C. § 227(b)(1). The term "automatic telephone dialing system" is defined as "equipment which has the capacity . . . to store or produce telephone numbers to be called, using a random or sequential number generator[, and] to dial such numbers." 47 U.S.C. § 227(a)(1). For violations thereof, the TCPA provides a private right of action for injunctive relief and/or monetary damages. 47 U.S.C. § 227(b)(3). As monetary damages, a plaintiff may receive either actual damages or statutory damages in the amount of $500 per violation. Id. In the case of knowing or willful violations, statutory damages of up to $1,500 per violation may be awarded. Id. As "a remedial statute that was passed to protect consumers from unwanted automated telephone calls," the TCPA "should be construed to benefit consumers." Gager v. Dell Fin. Servs., LLC, 727 F.3d 265, 271 (3d Cir. 2013).
Defendant bases its motion for judgment on the pleadings on two central arguments: standing and sufficiency of the pleadings. First, defendant argues plaintiff lacks statutory standing to assert TCPA claims on behalf of a putative class with respect to calls made by third-party debt collectors other than Collecto. Second, defendant challenges the sufficiency of the allegations as to those other vendors' use of automatic telephone dialing systems. The Court addresses each argument in turn:
Under the TCPA, a defendant may be held vicariously liable for calls it does not directly initiate "under federal common law principles of agency." In re Joint Petition filed by Dish Network, LLC, 28 FCC Rcd. 6574, 6584 (2013) ("[A] seller may be liable for violations by its representatives under a broad range of agency principles, including not only formal agency, but also principles of apparent authority and ratification."); see also Thomas v. Taco Bell Corp., 582 F. App'x 678, 679 (9th Cir. 2014) ("[V]icarious liability can provide the basis for liability for a TCPA violation.").
Here, defendant concedes Lofton has standing to bring a TCPA claim based on calls he (and, presumably, certain putative class members) received from Collecto. (Dkt. No. 100 ("Reply") at 2.) However, the motion challenges plaintiff's statutory standing with respect to calls made by third-party debt collectors other than Collecto.
In many class actions, a named plaintiff and putative class members suffered injury as a result of different, but similar, transactions with a defendant. For instance, in any TCPA class action, each class member would have received distinct accused calls, often on different dates and times, and possibly involving unique content.
Defendant's cited authority does not compel otherwise. For instance, in those cases, a named plaintiff sought to (i) assert claims he did not individually have on behalf of absent class members, or (ii) represent absent class members in asserting claims he had against one defendant against a second defendant, with whom the named plaintiff had no direct contact. See, e.g., Lierboe v. State Farm Mut. Auto. Ins. Co., 350 F.3d 1018, 1022 (9th Cir. 2003) ("`[I]f none of the named plaintiffs purporting to represent a class establishes the requisite of a case or controversy with the defendants, none may seek relief on behalf of himself or any other member of the class.'");
Here, the proposed class for the TCPA claim is limited to individuals who are not current or past Verizon subscribers but who nevertheless received debt collection calls from Collecto or another vendor acting on Verizon's behalf, apparently as a result of inaccurate skip-tracing attempts that the vendors were required to perform under certain circumstances in light of their contracts with Verizon. (TAC ¶¶ 27, 44.) A single defendant—Verizon—stands accused of similar vicarious TCPA violations made against a class of individuals by its purported agents. So long as the conduct at issue as to each member of the class was sufficiently related, Verizon's statutory standing arguments lack merit. Here, the TAC alleges substantial similarity between the conduct of each third-party debt collector at issue. For example, they each allegedly entered into contractual debt collection agreements with Verizon that contained a number of similar provisions, requiring the vendors to: obtain possible phone numbers for delinquent Verizon subscribers through skip-tracing and then initiate calls to those numbers; follow various Verizon procedures regarding recording calls and supervising their employees and contractors; follow Verizon's directives regarding the frequency and content of communications with delinquent subscribers; and use Verizon's name in only certain circumstances. (TAC ¶¶ 44-54.) Moreover, the TAC generally alleges that Verizon's contracts with Collecto and with its other third-party debt collection vendors are "materially similar." (TAC ¶ 36.) Critically, the nature of the calls at issue, whether placed by Collecto or by the other vendors, was apparently also the same: they were all attempts to collect unpaid service fees on Verizon's behalf. The Court therefore finds that the statutory standing argument does not require dismissal (or warrant judgment) at this juncture in light of these allegations of a similar course of conduct by Verizon through its various debt collection vendors. The Court therefore moves now to the sufficiency of the pleadings in the TAC regarding ATDS usage.
Next, defendant argues plaintiff fails to allege sufficient facts to render plausible a claim that Verizon agents other than Collecto used automatic telephone dialing systems. The relevant allegations from paragraph 64 of the TAC follow:
These allegations, particularly the last, are largely conclusory and, in part, track the language of the statute. Even where a plaintiff only presents conclusory allegations regarding the use of an ATDS, the allegations may be sufficient where accompanied by specific allegations which render plausible the use of an ATDS. See Kazemi v. Payless Shoesource Inc., No. C 09-5142 MHP, 2010 WL 963225, at *2 (N.D. Cal. Mar. 16, 2010) (finding a conclusory allegation tracking the language of the TCPA's ATDS definition sufficient to state a claim where accompanied by specific allegations that rendered the use of an ATDS plausible, such as that text messages were "scripted in an impersonal manner and sent en masse"); Hickey v. Voxernet LLC, 887 F.Supp.2d 1125, 1129-30 (W.D. Wash. 2012) (quoting Knutson v. Reply!, Inc., No. 10-CV-1267, 2011 WL 1447756, at *1 (S.D. Cal. Apr. 13, 2011)) ("[C]ourts have noted `the difficulty a plaintiff faces in knowing the type of calling system used without the benefit of discovery' and found that courts can rely on details about the call to infer the use of an ATDS."). In the case of Collecto, these general allegations are sufficiently bolstered by specific descriptions of the "telltale" pause after plaintiff picked up each call until the agent began speaking, which suggests the use of a predictive dialing system, and thus renders plausible the conclusory allegation that an ATDS was used. See In Re Rules & Regulations Implementing the Tel. Consumer Prot. Act of 1991, 23 F.C.C. Rcd. 559, 566 (2008) ("[A] predictive dialer constitutes an automatic telephone dialing system and is subject to the TCPA's restrictions on the use of autodialers.").
However, the Court agrees the TAC lacks sufficient detail in the case of calls placed by vendors other than Collecto. Plaintiff argues that (i) where a debt collector places a call, it is presumptively plausible that an ATDS was used, and (ii) the volume of calls at issue would have necessitated the use of a predictive dialing system. Such arguments suggest a conclusory allegation of ATDS use would be sufficient in any case involving a commercial call center or business placing a large number of telephone calls to consumers, even in the absence of any specific supporting allegations. The Court disagrees.
Nevertheless, plaintiff has represented to the Court that he currently possesses discovery which will enable him to plead additional details regarding the types of systems used by other third-party vendors and to identify those vendors by name. Although Rule 12(c) does not so specify, courts generally have discretion to grant leave to amend, particularly where it appears a claim has the potential to be well-pleaded. See, e.g., In re Dynamic Random Access Memory (Dram) Antitrust Litig., 516 F. Supp. 2d at 1084; see also Swanson v. United States Forest Serv., 87 F.3d 339, 343 (9th Cir. 1996) (finding the decision to grant leave to amend is generally within the discretion of the trial court). There is a strong policy in favor of allowing amendment, unless amendment would be futile, would unfairly prejudice the opposing party, or in cases of bad faith or undue delay. Kaplan v. Rose, 49 F.3d 1363, 1370 (9th Cir. 1994). Finding no such exception applies, the Court
Rule 23(d) provides that courts "may issue orders that . . . require that the pleadings be amended to eliminate allegations about representation of absent persons and that the action proceed accordingly." Fed. R. Civ. P. 23(d)(1)(D). This rule merely codifies the Court's inherent power to manage class actions effectively. See 7B Charles Alan Wright & Arthur R. Miller, Federal Practice and Procedure § 1792 (3d ed. 2005). Defendant argues that for the same reasons plaintiff purportedly lacks standing to assert claims on behalf of putative class members who received calls from vendors other than Collecto, he is neither typical of nor an adequate representative for such individuals. As a result, defendant requests the Court strike the relevant allegations. Having found that the law does not necessarily prohibit plaintiff from representing putative class members who received Verizon debt collection calls from vendors other than Collecto—and because defendant's arguments as to adequacy were largely, if not entirely, premised upon a contrary finding—the Court declines to reach issues of adequacy or typicality at this time. The Court finds these issues more properly suited to determination on full briefing in connection with class certification, assuming they are in fact still relevant in light of an amended complaint. Thus, the motion on this ground is
For the foregoing reasons, the Court: (1)
This Order terminates Docket Numbers 77 and 101.