United States District Court, C.D. Illinois, Springfield Division
UNITED STATES OF AMERICA, and the STATES of CALIFORNIA, ILLINOIS, NORTH CAROLINA, and OHIO, Plaintiffs,
DISH NETWORK LLC, Defendant,
[Copyrighted Material Omitted]
For United States of America, State of Illinois, State of North Carolina, State of Ohio, Plaintiffs: Albert N Shelden, LEAD ATTORNEY, CALIFORNIA ATTORNEY GENERAL'S OFFICE, San Diego, CA; Daniel Kadane Crane-Hirsch, LEAD ATTORNEY, Patrick R Runkle, U.S. DEPT OF JUSTICE, Washington, DC; Elizabeth A Blackston, LEAD ATTORNEY, ILLINOIS ATTORNEY GENERAL, Springfield, IL; Erin B Leahy, LEAD ATTORNEY, OHIO ATTORNEY GENERAL'S OFFICE, Columbus, OH; Gregory M Gilmore, LEAD ATTORNEY, U.S. ATTY, Springfield, IL; Jeffrey Mark Feltman, LEAD ATTORNEY, OFFICE OF THE ATTORNEY GENERAL, Carbondale, IL; Kevin Anderson, LEAD ATTORNEY, NORTH CAROLINA DEPARTMENT OF JUSTICE, CONSUMER PROTECTION DIVISION, Raleigh, NC; Michael S Ziegler, LEAD ATTORNEY, OHIO ATTORNEY GENERAL'S OFFICE, Consumer Protection Section, Columbus, OH; Lisa K Hsiao, UNITED STATES DEPARTMENT OF JUSTICE, CIVIL DIVISION- OFFICE OF CONSUMER LITIGATION, Washington, DC.
For State of California, Plaintiff: Albert N Shelden, Jinsook Ohta, LEAD ATTORNEYS, CALIFORNIA ATTORNEY GENERAL'S OFFICE, San Diego, CA; Daniel Kadane Crane-Hirsch, LEAD ATTORNEY, U.S. DEPT OF JUSTICE, Washington, DC; Elizabeth A Blackston, LEAD ATTORNEY, ILLINOIS ATTORNEY GENERAL, Springfield, IL; Erin B Leahy, LEAD ATTORNEY, OHIO ATTORNEY GENERAL'S OFFICE, Columbus, OH; Jeffrey Mark Feltman, LEAD ATTORNEY, OFFICE OF THE ATTORNEY GENERAL, Carbondale, IL.
For Dish Network LLC, Defendant: Catherine Emily James, Henry T Kelly, KELLEY DRYE & WARREN LLP, Chicago, IL; Edward Ellis Weiman, KELLEY DRYE & WARREN LLP, Los Angeles, CA; Geoffrey W Castello, III, Joseph A Boyle, Lauri A Mazzuchetti, KELLEY DRYE & WARREN LLP, Parsippany, NJ.
Sue E. Myerscough, UNITED STATES DISTRICT JUDGE.
This matter comes before the Court on Defendant Dish Network LLC's (Dish) Motion to Preclude the Expert Testimony of Dr. Yoeli (d/e 398) (Motion). For the reasons set forth below, the Motion is DENIED.
Dish sells satellite television programming and related services. Dish markets its services in several ways, including telemarketing. The Plaintiffs allege that Dish violated state and federal laws (" Do-Not-Call" or " DNC" Laws) governing: (1) outbound telemarketing calls to the telephone numbers of persons who have indicated that they do not want to receive such calls; and (2) telemarketing calls that convey a prerecorded message. Second Amended Complaint and Demand for Jury Trial (d/e 257) (Second Amended Complaint).
The Plaintiffs submitted several reports by Dr. Erez Yoeli, Ph.D., to support their claims. Dr. Yoeli is an economist employed by the Federal Trade Commission (FTC). Dr. Yoeli's reports contain analyses and opinions based on telemarketing call records from Dish, Dish's telemarketing vendors, and several of Dish's authorized retailers. Dr. Yoeli's reports relate to all twelve counts in the Second Amended Complaint.
Dish seeks to bar Dr. Yoeli's testimony because Dish argues that his analyses and opinions fail to meet the standard for admissible expert opinion evidence. See Fed.R.Evid. 702; Daubert v. Merrell Dow Pharmaceuticals, Inc., 509 U.S. 579, 113 S.Ct. 2786, 125 L.Ed.2d 469 (1993). Dish argues that Dr. Yoeli's testimony " lacks a reliable foundation, is based on fatally flawed factual assumptions, is irrelevant, and will not assist the trier of fact." Motion, at 1.
The Plaintiffs argue that the Motion is untimely and should not be considered until after the pending cross-motions for summary judgment (d/e 341 and 346) are resolved. The Plaintiffs also argue that the Motion should be denied on the merits. The Court agrees that the Motion is untimely for purposes of summary judgment. The Court required Dish to file its motion
for summary judgment by January 6, 2014, and its opposition to the Plaintiffs' motion for summary judgment by March 5, 2014. Text Order entered November 7, 2013; Text Order entered February 12, 2014. Dish filed the Motion on March 19, 2014. The Motion should have been filed with Dish's summary judgment motion, or with its opposition to the Plaintiffs' summary judgment motion. See Laborers' Intern. Union of North America v. Caruso, 197 F.3d 1195, 1197 (7th Cir. 1999) (failure to raise an argument in a timely manner waives the right to raise it later to challenge summary judgment); Questar Pipeline Co. v. Grynberg, 201 F.3d 1277, 1289-90 (7th Cir. 2000) (the principle of waiver applies to Daubert challenges.). The Court, however, will address the Motion on the merits because the Motion is timely for purposes of trial.
The Motion depends in large part on Dish's legal arguments regarding the federal Do-Not-Call Laws and the application of those laws to the federal claims in the Second Amended Complaint. The Court, therefore, will describe the relevant federal laws and regulations, summarize the federal claims, summarize Dr. Yoeli's analyses and opinions, summarize Dish's evidence regarding the National Do-Not-Call Registry (Registry) and telephone area codes, and then address the merits of the Motion.
THE FEDERAL DO-NOT-CALL LAWS AND REGULATIONS
The relevant federal Do-Not-Call Laws are the Telemarketing Consumer Fraud and Abuse Prevention Act (Telemarketing Act) and the Telephone Consumer Protection Act (TCPA). 15 U.S.C. § 6101 et seq.; 47 U.S.C. § 227. The Telemarketing Act authorizes the FTC to regulate telemarketing, and the TCPA authorizes the Federal Communications Commission (FCC) to regulate telemarketing. The FTC promulgated the Telephone Sale Rule promulgated by the FTC (TSR) under the Telemarketing Act, and the FCC promulgated its rule (FCC Rule) under the TCPA. TSR, 16 C.F.R. § 310.1 et seq.; FCC Rule, 47 C.F.R. § 64.1200 et seq.
The resulting overlapping regulations prohibit three types of telemarketing practices relevant here: (1) calling a person who has previously stated that he or she does not wish to be called by or on behalf of the seller whose goods or services are being offered for sale; (2) calling a person whose telephone number is registered on the Registry; and (3) calling and delivering a prerecorded telemarketing message to the recipient of the call (hereinafter referred to as a " prerecorded call" ). The Telemarketing Act, the TCPA, and the regulations thereunder address these three issues in slightly different ways.
I. The TSR
On August 23, 1995, the FTC issued the TSR. 60 Fed.Reg. 43842 (August 23, 1995). The 1995 version of the TSR prohibited, among other things, a " telemarketer from initiating, or any seller to cause a telemarketer to initiate, an outbound telephone call to a person when that person previously has stated that he or she does not wish to receive such a call made by or on behalf of the seller whose goods or services are being offered." See 60 Fed.Reg. at 43854-55.
The 1995 version of the TSR also provided a safe harbor defense for sellers and telemarketers:
The safe harbor states that a seller or telemarketer will not be liable for such violations if: (1) it has established and
implemented written procedures to comply with the " do not call provisions" ; (2) it has trained its personnel in those procedures; (3) the seller, or the telemarketer acting on behalf of the seller, has maintained and recorded lists of persons who may not be contacted; and (4) any subsequent call is the result of error.
60 Fed.Reg. at 43855. The parties refer to the " lists of persons who may not be contacted" as an " entity-specific do-not-call list" or an " internal do-not-call list."
On January 29, 2003, the FTC amended the TSR. 68 Fed.Reg. 4580 (January 29, 2003). The FTC amended the TSR pursuant to the 2001 amendments to the Telemarketing Act. See National Federation of the Blind v. F.T.C., 420 F.3d 331, 334-35 (4th Cir. 2005).
The amended 2003 TSR established the Registry. 16 C.F.R. § 310.4(b)(1)(iii). Telephone customers who do not wish to be called by sellers or telemarketers generally may place their telephone numbers on the Registry. Sellers and telemarketers may not call a person whose telephone number has been on the Registry for at least 30 days unless the seller or telemarketer has an Established Business Relationship with the person or has prior written consent.
The Registry opened for registrations in June 2003 and was scheduled to take effect October 1, 2003. 68 Fed.Reg. 16238 (April 3, 2003). Interested parties immediately filed actions to challenge the FTC's authority to establish the Registry; however, on September 29, 2003, Congress resolved the question of the FTC's authority by ratifying the creation of the Registry. Pub. L. 108-82, 117, codified at 15 U.S.C. § 6151; see Mainstream Mktg. Services, Inc. v. F.T.C., 358 F.3d 1228, 1250 (10th Cir. 2004). The Registry became operational in October 2003.
The FTC Statement of Basis and Purpose accompanying the 2003 amendments to the TSR (2003 FTC Statement) stated that the Registry applied to both land lines and wireless or cellular phones:
The Commission intends that § 310.4(b)(1)(iii) apply to any call placed to a consumer, whether to a residential telephone number or to the consumer's cellular telephone or pager. Consumers are increasingly using cellular telephones in place of regular telephone service, which is borne out by the dramatic increase in cellular phone usage. The Commission believes that it is particularly important to allow consumers an option to reduce unwanted telemarketing calls to cellular telephones or to pagers because some cellular services charge the consumer for incoming calls, thus adding insult to injury when the consumer is charged for the unwanted telemarketing call to the consumer's cellular telephone.
68 FR 4580, at 4632-33 (January 29, 2003) (footnotes omitted).
Section 310.4(b)(1) of the 2003 TSR stated, " It is an abusive telemarketing act or practice and a violation of this Rule for a telemarketer to engage in, or for a seller to cause a telemarketer to engage in the following conduct:" Section 310.4(b)(1) then listed certain specific prohibited acts, including:
(iii) Initiating any outbound telephone call to a person when:
(A) That person previously has stated that he or she does not wish to receive an outbound telephone call made by or on behalf of the seller whose goods or services are being offered or made on behalf of the charitable organization for which a charitable contribution is being solicited; or
(B) That person's telephone number is on the " do-not-call" registry, maintained by the Commission, of persons who do not wish to receive outbound telephone calls to induce the purchase of goods or services unless the seller
(i) Has obtained the express agreement, in writing, of such person to place calls to that person. Such written agreement shall clearly evidence such person's authorization that calls made by or on behalf of a specific party may be placed to that person, and shall include the telephone number to which the calls may be placed and the signature of that person;
(ii) Has an established business relationship with such person, and that person has not stated that he or she does not wish to receive outbound telephone calls under paragraph (b)(1)(iii)(A) of this section; or
(iv) Abandoning any outbound telephone call. An outbound telephone call is " abandoned" under this section if a person answers it and the telemarketer does not connect the call to a sales representative within two (2) seconds of the person's completed greeting.
16 C.F.R. § 310.4(b)(1)(iii) & (iv) (footnote omitted).
The 2003 TSR retained the prohibition in the original 1995 TSR against assisting and facilitating a violation of the TSR:
(b) Assisting and facilitating. It is a deceptive telemarketing act or practice and a violation of this Rule for a person to provide substantial assistance or support to any seller or telemarketer when that person knows or consciously avoids knowing that the seller or telemarketer is engaged in any act or practice that violates § § 310.3(a), (c) or (d), or § 310.4 of this Rule.
16 C.F.R. § 310.3(b).
The TSR defined " Established Business Relationship," " person," " seller," " telemarketing," and " telemarketer" in relevant part, as follows:
(o) Established business relationship means a relationship between a seller and a consumer based on:
(1) the consumer's purchase, rental, or lease of the seller's goods or services or a financial transaction between the consumer and seller, within the eighteen (18) months immediately preceding the date of a telemarketing call; or
(2) the consumer's inquiry or application regarding a product or service offered by the seller, within the three (3) months immediately preceding the date of a telemarketing call.
. . . .
(w) Person means any individual, group, unincorporated association, limited or general partnership, corporation, or other business entity.
. . . .
(aa) Seller means any person who, in connection with a telemarketing transaction, provides, offers to provide, or arranges for others to provide goods or services to the customer in exchange for consideration.
. . . .
(cc) Telemarketer means any person who, in connection with telemarketing, initiates or receives telephone calls to or from a customer or donor.
(dd) Telemarketing means a plan, program, or campaign which is conducted to induce the purchase of goods or services or a charitable contribution, by use of one or more telephones and which involves
more than one interstate telephone call. . . .
16 C.F.R. § 310.2(o), (w), (aa), (cc), and (dd). The TSR also exempted telemarketing calls " between a telemarketer and any business, except calls to induce the retail sale of nondurable office or cleaning supplies." 16 C.F.R. § 310.6(b)(7).
Any violation of the TSR constituted an unfair and deceptive act or practice in or affecting commerce in violation of § 5(a) of the Federal Trade Commission Act (FTC Act). 15 U.S.C. § § 45(a), 57a(d)(3), 6102(c). The FTC may authorize the Attorney General to bring actions on behalf of the United States against anyone violating § 5(a) of the FTC Act. The United States may seek injunctive relief and, in appropriate cases, civil penalties. 15 U.S.C. § § 45(m), 53(b), 56(a)(1). The United States has brought this action pursuant to FTC authorization under these provisions.
The 2003 amendments to the TSR also amended the safe harbor provisions to cover calls to persons whose telephone numbers are on the Registry or on an internal do-not-call list. The 2003 TSR safe harbor provisions provided in relevant part:
(3) A seller or telemarketer will not be liable for violating § 310.4(b)(1)(ii) and (iii) if it can demonstrate that, as part of the seller's or telemarketer's routine business practice:
(i) It has established and implemented written procedures to comply with § 310.4(b)(1)(ii) and (iii);
(ii) It has trained its personnel, and any entity assisting in its compliance, in the procedures established pursuant to § 310.4(b)(3)(i);
(iii) The seller, or a telemarketer or another person acting on behalf of the seller or charitable organization, has maintained and recorded a list of telephone numbers the seller or charitable organization may not contact, in compliance with § 310.4(b)(1)(iii)(A);
(iv) The seller or a telemarketer uses a process to prevent telemarketing to any telephone number on any list established pursuant to § 310.4(b)(3)(iii) or 310.4(b)(1)(iii)(B), employing a version of the " do-not-call" registry obtained from the Commission no more than thirty-one (31) days prior to the date any call is made, and maintains records documenting this process;
(v) The seller or a telemarketer or another person acting on behalf of the seller or charitable organization, monitors and enforces compliance with the procedures established pursuant to § 310.4(b)(3)(i); and
(vi) Any subsequent call otherwise violating § 310.4(b)(1)(ii) or (iii) is the result of error.
16 C.F.R. § 310.4(b)(3). The safe harbor did not apply to violations of the call abandonment provision, § 310.4(b)(1)(iv), or the assisting and facilitating provision, § 310.3(b).
The TSR, as promulgated in 2003, had no provision specifically addressing the use of prerecorded calls. The use of a recording constituted the abandonment of a call under § 310.4(b)(1)(iv) because the telemarketer only played a prerecorded message, and no human telemarketer came on the line within two seconds of the time that the person called completed his or her greeting. See F.T.C. v. Asia Pacific Telecom, Inc., 802 F.Supp.2d 925, 929-30 (N.D.Ill. 2011); The Broadcast Team, Inc. v. F.T.C., 429 F.Supp.2d 1292, 1301-02 (M.D. Fla. 2006).
On November 17, 2004, the FTC issued a Notice of Proposed Rulemaking to amend the TSR to add an additional safe harbor provision to allow some use of prerecorded
calls under limited circumstances. 69 Fed.Reg. 67287 (November 17, 2004) (2004 Notice). The proposed safe harbor amendment would have allowed a seller or telemarketer to use a prerecorded call in outbound telemarketing to a person with whom the seller or telemarketer had an Established Business Relationship and only if the prerecorded message: (1) within two seconds of the person's completed greeting, presented the person with the opportunity to communicate that he or she did not want to be called again (e.g., by pushing a number on the telephone keypad); (2) provided all required disclosures; and (3) otherwise complied with all applicable state and federal laws. 69 Fed.Reg. at 67289.
The FTC further stated in the 2004 Notice that the FTC would forbear from bringing enforcement actions for prerecorded calls that complied with the proposed amendments to the safe harbor provisions:
Therefore, the Commission has determined that, pending completion of this proceeding, the Commission will forbear from bringing any enforcement action for violation of the TSR's call abandonment prohibition, 16 CFR 310.4(b)(1)(iv), against a seller or telemarketer that places telephone calls to deliver prerecorded telemarketing messages to consumers with whom the seller on whose behalf the telemarketing calls are placed has an established business relationship, as defined in the TSR, provided the seller or telemarketer conducts this activity in conformity with the terms of the proposed amended call abandonment safe harbor.
69 Fed.Reg. at 67290.
On August 29, 2008, the FTC completed the proposed rulemaking and amended the TSR. Final Rule Amendments, 73 Fed.Reg. 51164 (August 29, 2008). The amendment added a specific clause addressing the use of prerecorded calls to the prohibitions in TSR § 310.4(b)(1). The additional provision prohibited using prerecorded telemarketing calls unless the seller or telemarketer had an Established Business Relationship with the recipient of the call and the recipient gave prior written consent to receive such calls. 16 C.F.R. § 310.4(b)(1)(v). The amendments became effective on December 1, 2008. The FTC announced that, as of December 1, 2008, the FTC would end its 2004 policy of forbearing enforcement against certain prerecorded calls. 73 Fed.Reg. at 51164.
On February 15, 2008, Congress passed the Do-Not-Call Improvements Act of 2007 (Improvements Act). Pub. L 110-87, codified at 15 U.S.C. § 6155. Congress provided in the Improvements Act that telephone numbers placed on the Registry would stay on the Registry indefinitely unless and until: (1) the individual to whom the number is assigned requested removal; or (2) the telephone number had been disconnected and reassigned. 15 U.S.C. § 6155(a) and (b). Congress directed the FTC to " periodically check . . . national or other appropriate databases" to determine whether numbers have been disconnected and reassigned. 15 ...