With Second Decisive Win, Stellar Solidifies Prior Milestone Victory Establishing Dialing System is TCPA Compliant

JACKSONVILLE, Fla. -- As those in the collection industry are well aware, the Telephone Consumer Protection Act (“TCPA”) prohibits the use of Automatic Telephone Dialing Systems (“ATDS”) to contact consumers on cellular telephones. Because of the tremendous growth in recent years in the use of cellular telephones by consumers, TCPA-compliant dialing systems are of paramount importance for all collection industry members. In no small part due to the lack of clarity surrounding the definition of an ATDS, an entire practice area has arisen in which consumer lawyers seek out clients who receive cellphone calls from debt collectors for the sole purpose of pursuing TCPA violations. The statutory damages for TCPA violations range from $500 to $1500 per call, and the cost of defending such cases, in which class action status is also often sought, can be staggering. With stakes this high, every victory for any member of the collection industry is a victory for the collection industry as a whole.

It is in this landscape that in September 2016 Stellar Recovery, Inc. secured its first milestone TCPA victory. That opinion, in a case called Pozo v. Stellar Recovery out of the United States District Court, Middle District of Florida, held that Stellar’s dialing technology, the LiveVox Human Call Initiator (HCI) system, was not an ATDS under the TCPA. The Pozo opinion was met with significant opposition by the consumer bar, whose mission it has been to undermine the ruling in an attempt to establish contrary authority in the Nation’s courts. Today, however, Stellar is pleased to announce that it has met that challenge and has once again prevailed on the issue, establishing favorable collection industry precedent in yet another Federal jurisdiction.

On February 7, 2017, in the case of Smith v. Stellar Recovery, Inc., Magistrate Judge Mona Majzoub of the United States District Court, Eastern District of Michigan, issued a lengthy and detailed opinion concluding—as did the Pozo court -- that the LiveVox HCI dialing system is not an ATDS, and that its use complies with the TCPA. In her 20-page opinion Judge Majzoub closely examined the HCI technology and interpretations of what constitutes an ATDS, both from a regulatory perspective and from an analysis of case law on the topic. Significantly, the Court also considered the arguments raised by the Plaintiff directly criticizing the Pozo decision and urging the Court to find that Pozo was wrongly decided. To the contrary, Judge Majzoub conducted a thorough independent analysis, yet reached the same conclusion as the Pozo court: the LiveVox HCI technology used by Stellar to dial consumer cell phones is not an ATDS.

Stellar’s victory in Smith is a sound defeat of the direct efforts to undermine Pozo and further muddy the turbulent waters surrounding the issue of what constitutes an ATDS. Instead of creating a division among the Courts on the issue, the Smith decision in fact reaffirms the solidity of Stellar’s efforts to accomplish TCPA-compliant dialing, and certainly to LiveVox’s technology which provides a platform for doing so.

Stellar thanks LiveVox for its commitment to developing leading TCPA-compliant technology which allows Stellar and other collection industry members to service clients effectively and efficiently in the ever-evolving realm of consumer contact. Stellar also credits this important victory to Stellar’s innovative use of captive legal counsel, which utilizing its industry unique risk management model allows Stellar to target legal resources to combat unwarranted, and often meritless, consumer lawsuits rather than simply settling such cases without a fight. With this model, developed by Stellar in partnership with its captive law firm, Assurance Law Group, Stellar will continue to rise to the legal and practical challenges that face the collection industry by aggressively defending lawsuits and seeking to establish favorable precedent that pushes back against the growing tide of consumer litigation.

About Stellar Recovery

Stellar Recovery Inc. is an ARM leader headquartered in Jacksonville, Florida. SRI is dedicated to excellence in the accounts receivable industry by meeting and exceeding our client’s expectations.  Stellar Recovery leverages the use of technology to drive effective and efficient collections, while eliminating risks.  Please visit our website at www.stellarrecoveryinc.com or contact us at 904-438-2500.

Editor's Note: insideARM also wrote about this case today. To see the insideARM story on this case, click here.