Antitrust Law Daily Wrap Up, PRIVACY—C.D. Cal.: TCPA class action against Time Warner Cable stayed pending review of FCC ruling, (Dec 22, 2015)

By Michael Menzhuber, J.D., LL.M.

A putative class action against Time Warner Cable (TWC) was stayed by the federal district court in Los Angeles, pending an appellate court review of an FCC declaratory ruling, which clarified several seemingly ambiguous and contested terms in the Telephone Consumer Protection Act (TCPA) (Fontes v. Time Warner Cable, December 17, 2015, Snyder, C.).

John Fontes brought a putative class action which alleged that TWC violated the TCPA by used an automatic telephone dialing system (ATDS) to place calls and leave pre-recorded messages on his cell phone, without his prior express consent. TWC contended that it did not violate the TCPA because: (1) the calls were an attempt to reach a customer with a past due account; (2) it inadvertently called Fontes, instead of the customer, because the customer’s cell phone number had been reassigned without TWC’s knowledge; and (3) the device it used in making the calls did not have the present capacity to generate random or sequential telephone numbers and was therefore not an ATDS.

In May 2014, the court stayed the action, on its own motion, pending the issuance of a Federal Communication Commission (FCC) declaratory ruling to clarify whether the TCPA imposes liability on entities that make automated calls and inadvertently reach persons other than the person who gave prior express consent to receive such calls.

In July 2015, the FCC issued its declaratory ruling which: (1) did not exempt equipment that lacked the present ability to dial randomly or sequentially from the definition of an ATDS; (2) rejected a suggestion to define “called party” as the “intended” recipient of the phone call; and (3) provided that, subject to one limited exception, calls to a reassigned wireless number violates the TCPA when the previous subscriber, not the current subscriber or customary user, provided the express consent on which the call is based. The FCC was, however, closely divided on the issues and one dissenting commissioner stated that the ruling was “flatly inconsistent” with the TCPA.

After the FCC issued its ruling, nine companies filed petitions with U.S. Court of Appeals in Washington, D.C., seeking review of the ruling. Subsequently, TWC moved to stay the case pending a decision from the Court of Appeals regarding the validity of the FCC’s declaratory ruling.

The court determined that it was prudent to stay the case, pending the appellate court review. The close divide among the commissioners, and the belief of one commissioner that the ruling was “flatly inconsistent” with the TCPA, created the legitimate possibility that the appellate court might overturn the ruling. The court noted that, if the case was not stayed, the substantial efforts of the parties and the court in going forward could be rendered moot if the FCC’s declaratory ruling was vacated.

The plaintiffs argued that they would suffer prejudice if the case was stayed and that this would be the second time that the case would be stayed. The court, however, determined that the potential prejudice to the plaintiffs from a second stay was mitigated by the fact that: (1) two of the plaintiffs only recently had joined the case and were never subject to the earlier stay; and (2) the original plaintiff, after the earlier stay had been lifted, elected not pursue a motion for class certification.

The case is No. 2:14-cv-02060-CAS-CW.

Attorneys: Joshua B. Swigart (Hyde and Swigart APC) for John Fontes. Bryan A. Merryman (White and Case LLP) for Time Warner Cable Inc.

Companies: Time Warner Cable Inc.

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