Judge Cites “Zone of Interests” Protections, Dismisses “Nomorobo” TCPA Lawsuit

On August 8, 2016 a Federal Judge in Illinois dismissed a Telephone Consumer Protection Act (TCPA) case by determining that the Plaintiff in the matter was not an individual or entity in the “zone of interests” intended to be protected by the TCPA.

The case is Telephone Science Corporation. v. Asset Recovery Solutions, Case No. 15-CV-5182 (N.D. Ill. Aug. 8, 2016). A copy of the Memorandum Opinion and Order can be found here.

The Plaintiff in the case, Telephone Science Corporation (TSC) is the operator of a service called “Nomorobo.” The website for the Nomorobo service is https://www.nomorobo.com/.

On the website the company claims they have stopped over 125,504,140 robocalls. In 2013, the FTC declared Nomorobo a winner of its contest to “design a system to stop unsolicited telemarketing calls before the calls can ring through to the subscriber of the called telephone number.”

District Court Judge Amy J. St. Eve describes the Nomorobo service.

“Specifically, TSC maintains a “honeypot” of telephone numbers to which TSC subscribes.  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.

Consumers and businesses subscribe to Nomorobo’s call-blocking services for a fee. These users choose to route their incoming calls to both their personal phones and the Nomorobo server, using simultaneous ring technology. “If Nomorobo determines that it is a robocaller, Nomorobo answers the call on behalf of the user.” The robocaller, however, is “presented with an audio CAPTCHA [Completely Automated Public Turing Test to tell Computers and Humans Apart]. If the caller passes the test and proves they are human, the call is allowed through. If they fail, Nomorobo hangs up the call. Nomorobo either blocks or allows the call within 200 milliseconds of its receipt.”

Background

The Defendant, Asset Recovery Solutions (ARS), is an asset recovery management and debt purchasing company that uses a “predictive dialer” in connection with its business. Judge St. Eve wrote that the ARS “predictive dialer is an ATDS within the meaning of the TCPA.”

In the complaint TSC alleged:

1. Around March 2014, ARS began calling telephone numbers in the TSC honeypot (“TSC Numbers”) using a predictive dialer.
2. TSC “was the subscriber to each TSC Number [that ARS] called at the time of the call,” and TSC “continues to subscribe to each TSC Number.”
3. TSC never consented to these calls.
4. TSC does not solicit or otherwise entice incoming calls to TSC Numbers.
5. Each TSC Number is assigned to a voice over Internet protocol (“VoIP”) telephone service.
6. The VoIP service provider, Twilio, Inc. (“Twilio”), assesses (i) a monthly per-line charge for each TSC Number, as well as (ii) a per-minute charge for each inbound call that TSC answers.
7. That between March 2014 and February 2016, ARS placed approximately 12,240 robocalls to TSC Numbers from ten telephone numbers using a predictive dialer.

ARS brought a Motion to Dismiss the TSC Complaint under Rule 12(b)(1) and Rule 12(b)(6). Rule 12(b)(1) is motion to dismiss for lack of standing. Rule 12(b)(6) challenges the viability of a complaint by arguing that it fails to state a claim upon which relief may be granted.

The Judge’s Opinion

The Judge’s Memorandum Order and Opinion is 33 pages long. The first portion discusses the Rule 12(b)(1) motion and the “standing” issue that has become a hot topic since the Supreme Court decision in Spokeo, Inc. v. Robins.

After a lengthy analysis of the law, Judge St. Eve determined that Plaintiff did, in fact, have standing under Rule 12(b)(1).

The court then turned to the Rule 12(b)(6) motion. As noted above, the 12(b)(6) motion is based upon the argument that the complaint fails to state a claim upon which relief may be granted.  ARS argued that TSC was outside the TCPA’s “zone of interests.” In short, that TSC was not the person or entity intended to be protected by the TCPA as their claims did not fall into the category of interests against privacy intrusion and nuisance that underpin the TCPA.

According to ARS arguments, the TCPA guards against the “invasion of privacy, the nuisance, and the cost that results when consumers receive certain types of unwanted calls;” it does not protect a company that “intentionally sought out the alleged calls so that it could build and sustain its for-profit telecom business.”

Judge St. Eve agreed with ARS. She wrote:

“The Court discerns several interests protected under 47 U.S.C. § 227(b)(1)(A)(iii), including individual privacy rights, public safety interests, and interstate commerce. Underlying each is the principle that a person or business should be free from nuisance robocalls and their associated costs.

According to ARS, TSC’s relevant “interest” is commercial data collection – not individual privacy rights, public safety protection, or interstate commerce facilitation. Indeed, some courts have placed similar interests outside Section 227(b)(1)(A)(iii)’s zone of interests. Ultimately, even accepting all factual allegations as true, and drawing all reasonable inferences in TSC’s favor, TSC’s asserted interests do not fall within Section 227(b)’s protected zone of interests.

As TSC acknowledges, the focus of the TCPA—and related efforts—is to provide “consumer protection for millions of Americans harassed by unwanted and unwelcome robocalls.” Indeed, TSC’s Nomorobo service represents one such effort in the battle against robocalls. TSC’s “good guy” status, however, does not automatically entitle it to claim protection under the TCPA. TSC does not allege any injuries in the form of privacy invasion, nuisance, and/or inconvenience. To the contrary, the sole reason TSC subscribes to “thousands” of honeypot numbers is to gather a “large quantity” of data in order to “detect high frequency robocalling patterns” and to “distinguish” between callers for its Nomorobo customer-service offerings. Thus, instead of being “unwanted and unwelcome,” robocalls to TSC Numbers provide the analytical basis on which the Nomorobo service operates. “[T]he only reason for this volume of calls,” thus, ‘is due to the nature of [TSC’s] business, which is providing telecommunications services rather than consuming them.

Here, TSC did not suffer the injury contemplated by the TCPA— that is, invasion of privacy and/or general nuisance. Even drawing all reasonable inferences in TSC’s favor, the Court does not see how TSC suffered any injury within Section 227(b)(1)(A)(iii)’s “zone of interests” that would allow it to act as a “private attorney general” under Section 227(b)(3).”

insideARM Perspective

This decision provides an interesting discussion of the various issues surrounding “standing” to bring a TCPA case. On Monday and Tuesday of this week we wrote about 2 different TCPA “standing” cases that saw two different results, one in Minnesota and another in California. See here for the article on the Minnesota case. See here for the article on the California case.

Of note, in its reasoning, the court referenced the recent case of Stoops v. Wells Fargo Bank, N.A., (Case No. 3:15-83, Western District of Pennsylvania, June 24, 2016). That case involved an individual plaintiff who had admitted that she files TCPA actions as a business. insideARM wrote about that case on June 28, 2016.