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Telephone Science Corp. v. Asset Recovery Solutions, LLC

United States District Court, N.D. Illinois, Eastern Division

January 5, 2017



          AMY J. ST. EVE United States District Court Judge.

         The Court previously granted Defendant Asset Recovery Solutions, LLC's (“ARS”) Rule 12(b)(6) motion to dismiss the Second Amended Complaint of Plaintiff Telephone Science Corporation (“TSC”), with prejudice, for failure to satisfy the “zone-of-interests” test under 47 U.S.C. § 227(b), the Telephone Consumer Protection Act (“TCPA”). (R.127, the “Opinion”)).[1]The Court entered judgment on the basis of the Opinion. (R.128). TSC now moves the Court for an order: (i) altering its Opinion to dismiss the Second Amended Complaint without prejudice pursuant to Federal Rule of Civil Procedure 59(e); and (ii) granting TSC leave to file an amended complaint pursuant to Federal Rule of Civil Procedure 15(a)(2). (R.129). For the reasons set forth below, the Court denies TSC's motion.


         The Court assumes familiarity with the factual and procedural background of this action as set forth in detail in the Opinion, and does not recite it here. For purposes of analyzing the present motion, however, the Court recites the following facts.

         I. The Nomorobo Call-Blocking Service

         TSC operates a service called “Nomorobo, ” designed to help consumers avoid incoming computerized telephone calls known as “robocalls” - calls made with either an automatic telephone dialing system (“ATDS”) or with a prerecorded or artificial voice. (R.129-3, Proposed Third Am. Compl. ¶¶ 5-6). To date, Nomorobo has helped consumers “avoid over 122 million unwanted robocalls.” (Id. ¶ 9). “In order to provide the Nomorobo service to consumers, TSC maintains a ‘honeypot' group of telephone numbers, from which TSC is able to gather data related to inbound calls.” (Id. ¶ 10). 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.” (Id. ¶ 14). Then, using simultaneous ring technology, Nomorobo either blocks or allows an end-user call based on its data analysis. (R.127, Opinion at 2). Individuals and businesses subscribe to Nomorobo's call-blocking services for a fee. (Id.).

         According to TSC, around March 2014, ARS began calling telephone numbers in the TSC honeypot (“TSC Numbers”) using a predictive dialer. (R.129-3, Proposed Third Am. Compl. ¶¶ 31-37). “Each TSC Number is assigned to a voice over Internet protocol (“VoIP”) telephone service that assesses a monthly per-line charge for each TSC Number.” (Id. ¶ 40). The VoIP service provider, Twilio, Inc. (“Twilio”), also assesses a per-minute charge for each inbound call that TSC answers. (Id. ¶ 41). TSC alleged that, between March 2014 and February 2016, ARS placed approximately 12, 240 robocalls to TSC Numbers - 747 of which TSC answered. (Id. ¶¶ 49-53). TSC, thus, sought relief under the TCPA “based on past and future ARS robocalls to TSC Numbers, which TSC answered (or will answer) and for which TSC has incurred (or will incur) per-minute charges.” (R.129-3, Proposed Third Am. Compl. ¶ 54). In particular, TSC brought suit under 47 U.S.C. § 227(b)(1)(A)(iii), alleging that “ARS violated [this provision] on multiple and separate occasions by using an ATDS to call TSC at a telephone number assigned to a service for which TSC is charged for the call without TSC's prior express consent.” (Id. ¶ 82).

         II. The Opinion

         The Opinion, in relevant part, analyzed whether TSC's interests fell within Section 227(b)'s protected zone of interests, entitling TSC to pursue its claims as a matter of statutory standing. (R.127, Opinion at 14-33). In conducting this analysis, the Court first examined Supreme Court precedent, including Lexmark Int'l Inc. v. Static Control Components, Inc., 134 S.Ct. 1377 (2014), to conclude that the zone-of-interest limitation applied to the TCPA. (Id. at 15-19). This conclusion negated TSC's related arguments that (i) statutory standing under the TCPA was commensurate with Article III standing, and (ii) the TCPA contemplated generalized “citizen-suit” protection. (Id.). The Court then turned to the task of (i) discerning the interests sought to be protected by the statute at issue, and (ii) inquiring whether TSC's interests were among them. (Id. at 20-33 (citing Nat'l Credit Union Admin. v. First Nat'l Bank & Trust Co., 522 U.S. 479, 492 (1998); Air Courier Conference of Am. v. Am. Postal Workers Union AFL-CIO, 498 U.S. 517, 524 (1991)).

         After reviewing the statutory text and explicit Congressional findings, as reinforced by legislative history and FCC interpretation, the Court read 47 U.S.C. § 227(b)(1)(A)(iii) “as guarding against the receipt of, and payment for, unwelcome robocalls[, ]” particularly those which “threaten public safety and inappropriately shift marketing costs from sellers to consumers.” (Id. at 21, 33). Ultimately, after reviewing the related provisions of Section 227(b)-including 47 U.S.C. §§ 227(b)(2)(C) (recognizing “the interest of the privacy rights this section is intended to protect”)-the Court discerned “several interests protected under 47 U.S.C. § 227(b)(1)(A)(iii), including individual privacy rights, public safety interests, and interstate commerce.” (Id. at 22-25).

         The Court then held that TSC's interests fell outside of this zone of interests. (Id. at 25-33). In particular, the Court observed that “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.” (Id. at 29). Thus, “instead of being ‘unwanted and unwelcome, ' robocalls to TSC Numbers provide[d] the analytical basis on which the Nomorobo service operates.” (Id.). In addition, TSC's alleged damages-that is, the monetary harm it suffered when it began to answer known robocalls-were “not of the vexatious and intrusive nuisance nature sought to be redressed by Congress in enacting the TCPA, but rather [were] indirect, economic, and inherent to [its] business.” (Id. at 29-30 (citing Cellco P'Ship v. Wilcrest Health Care Mgmt., No. CIV.A. 09-3534 MLC, 2012 WL 1638056, at *8-9 (D.N.J. May 8, 2012)). Moreover, “even after amending its complaint twice, TSC d[id] not explain how ARS robocalls to its honeypot numbers-as opposed to its customers' numbers-threaten public safety or impede interstate commerce.” (Id. at 30-31). In so holding, the Court largely agreed with ARS' argument that Section 227(b)(1)(A)(iii) does not protect a telecommunications service provider interested in commercial data collection. (Id. at 15, 26 (citing R.85, Rule 12(b)(6) Opening Br. at 6-10 (citing Lexmark and Cellco)).

         Prior to its March 2016 dismissal motion, ARS had made this argument in two previous Rule 12(b)(6) motions - one filed in August 2015, and another filed in October 2015. (R.17-1, August 2015 Opening Br. at 3-6 (citing Lexmark and Cellco); R.46, October 2015 Opening Br. at 6-9 (citing Lexmark and Cellco)). Within two days of the initial filing, TSC had filed an amended complaint “intended to address some of the deficiencies that [ARS] alleged existed in the complaint.” (R.43-1, August 2015 Hearing Tr. at 2-3; R.26; R.27 (“By filing a first amended complaint, Plaintiff seeks to amicably address the alleged pleading deficiencies that Defendant identified in its recently filed motion to stay and motion to dismiss”)). Accordingly, the Court denied the Rule 12(b)(6) motion as moot. (R.28). Following limited jurisdictional discovery, ARS renewed its Rule 12(b)(6) motion as to the amended complaint, and filed a Rule 12(b)(1) motion. (R.45, R.47). With respect to ARS' recycled argument on statutory standing, TSC did not address either Lexmark or Cellco in any substance. (R.52, October 2015 Response Br.).[2]Before reaching a disposition on this motion, however, the Court granted ARS' pending motion to stay the proceedings pending the Supreme Court's decision in Spokeo, Inc. v. Robins, 742 F.3d 409 (9th Cir. 2014), cert. granted, 135 S.Ct. 1892 (U.S. Apr. 27, 2015) (No. 13-1339). (R.70). In light of the stay, the Court dismissed ARS' pending Rule 12 motions without prejudice to refile after having the Supreme Court's guidance in Spokeo. (Id.). Thereafter, TSC moved the Court “to enter an order lifting the stay in this case, granting TSC leave to drop with prejudice its claims based on unanswered calls[.]” (R.72). The Court granted TSC's motion, ordering TSC to file an amended complaint. (R.75; see also R.93-1, Jan. 2016 Hearing Tr. at 4). On February 9, 2016, TSC filed its Second Amended Complaint (R.77), which-upon motion-the Court dismissed with prejudice. (R.84, R.127).

         III. TSC's Supplemental Allegations

         TSC now seeks the opportunity to cure the deficiencies identified in the Opinion. In particular, TSC offers the following supplemental allegations by way of a Proposed Third Amended Complaint, as ...

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