The opinion of the court was delivered by: Magistrate Judge Morton Denlow
MEMORANDUM OPINION AND ORDER
This case comes before the Court for partial summary judgment on the issue of whether Defendants Johan Hendrik Smit Duyzentkunst ("Smit") and SBN Peripherals, Inc. ("SBN") (collectively "Defendants") violated FTC regulations that prohibit abandoned calls when they operated an autodialer that delivered prerecorded messages to consumers. At the suggestion of the Court, the parties agreed that resolving this discrete issue would materially advance the case. The FTC now seeks partial summary judgment as to Count X of its complaint, which alleges that Defendants incurred "assisting and facilitating" liability when their telemarketing customers abandoned calls originated from Defendants' autodialer.*fn1 A previous sanctions finding against Smit and SBN also comes into play. After an evidentiary hearing, the Court found Defendants in contempt of court and as a sanction held that they "will be subject to 'assisting and facilitating' liability for all violations of [certain FTC regulations] that occurred in calls initiated from the autodialer." FTC v. Asia Pacific Telecom, Inc., --- F. Supp. 2d ----, 2011 WL 2110220, at *10 (N.D. Ill. 2011). For the reasons explained below, the Court grants in part and denies in part the FTC's motion for partial summary judgment.
This case represents a telemarketing enforcement action by the FTC. The FTC is an independent agency of the United States Government created by statute. 15 U.S.C. §§ 41-58. The FTC enforces Section 5(a) of the FTC Act, 15 U.S.C. § 45(a), which prohibits unfair or deceptive acts or practices in or affecting commerce. The FTC is also charged with enforcement of the Telemarketing and Consumer Fraud and Abuse Prevention Act ("Telemarketing Act"), 15 U.S.C. §§ 6101-6108. Pursuant to the Telemarketing Act, the FTC promulgated and enforces the Telemarketing Sales Rule, 16 C.F.R. Part 310, which prohibits deceptive or abusive telemarketing acts or practices.
Smit and SBN operated an "autodialing" business that allowed clients to deliver large numbers of prerecorded phone calls, or "robocalls." SBN is a California corporation, with its principal offices in Agoura Hills, California. Pl.'s 56.1 ¶ 2.*fn2 Smit is the director and sole officer and shareholder of SBN. Id. ¶ 3.
The parties jointly developed a stipulation of facts that were to form the basis for this motion. Pursuant to the stipulation, SBN operated an autodialer, which delivered prerecorded messages (otherwise known as "voice prompts") in outbound telephone calls made to consumers between January 1, 2008 and August 31, 2009. Id. ¶ 9--10. The prerecorded messages delivered to consumers between January 1, 2008 and August 31, 2009 were the first thing that a call recipient would hear after the recipient's completed greeting. Id. ¶ 11. Most, and perhaps all, of the prerecorded messages the autodialer delivered to consumers between January 1, 2008 and August 31, 2009 lasted longer than two seconds. Id. ¶ 12. If a call recipient who received a prerecorded message pressed "1" during the message, the recipient would be transferred to a live operator. Stipulation ¶ 5, Ex. 2 to Pl.'s 56.1.
A previous sanctions finding is also relevant to this motion. On May 25, 2011, the Court held Smit and SBN in contempt of court for intentionally destroying an e-mail account that contained evidence relevant to this case. As a sanction, the Court entered the following adverse finding:
Within the meaning of 16 C.F.R. § 310.3(b), Johan Hendrik Smit Duyzentkunst and SBN Peripherals, Inc. provided substantial assistance and support to all sellers or telemarketers who, using the autodialer at issue in this action, made any calls that violated 16 C.F.R. §§ 310.3(a)(2)(iii), (a)(2)(vii), or (a)(4), or 16 C.F.R. § 310.4. For all such calls, Smit and SBN knew that the sellers or telemarketers were engaged in acts or practices that violated 16 C.F.R. §§ 310.3(a)(2)(iii), (a)(2)(vii), or (a)(4), or 16 C.F.R. § 310.4. As a result, Smit and SBN will be subject to "assisting and facilitating" liability for all violations of 16 C.F.R. §§ 310.3(a)(2)(iii), (a)(2)(vii), or (a)(4), or 16 C.F.R. § 310.4 that occurred in calls initiated from the autodialer. 2011 WL 2110220, at *10. This finding encompasses the abandoned calls provision at issue here. See 16 CFR § 310.4(b)(1)(iv).
Summary judgment is proper "if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a). A genuine issue of material fact exists when "the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). In deciding whether summary judgment should be granted, the court interprets all facts and reasonable inferences "in the light most favorable to the non-movant party." Mobley v. Allstate Ins. Co., 531 F.3d 539, 545 (7th Cir. 2008).
It is undisputed that Defendants operated an autodialer that delivered prerecorded messages longer than two seconds in outbound telephone calls made to consumers. The question is whether the regulatory definition of "abandoned calls" embraces prerecorded messages, and if so, whether any other genuine issues of material fact stand in the way of partial summary judgment. The FTC has limited its motion to calls occurring on or after January 1, 2008 and on or before August 31, 2009. This limited time frame obviates the issue of whether robocalling-specific regulations that took effect on September 1, 2009 impliedly removed prerecorded messages from the scope of the abandoned calls regulation.
A. The Regulatory Definition of "Abandoned Calls" Embraces Prerecorded Messages.
Before determining whether summary judgment is appropriate, the Court must decide an issue of regulatory interpretation. The FTC Telemarketing Sales Rule ("TSR")makes it illegal for a telemarketer to abandon any outbound telephone call. 16 C.F.R. § ...