Dominguez v. Yahoo!, Inc.
| Decision Date | 27 January 2017 |
| Docket Number | CIVIL ACTION NO. 13-1887 |
| Parties | BILL DOMINGUEZ, on behalf of himself and all others similarly situated, Plaintiff v. YAHOO!, INC., Defendant |
| Court | U.S. District Court — Eastern District of Pennsylvania |
MEMORANDUM - YAHOO MOTION FOR SUMMARY JUDGMENT
On remand from the Third Circuit, this case relates to an alleged violation of the Telephone Consumer Protection Act ("TCPA"). In the initial phase of this case, this Court granted summary judgment in favor of Defendant Yahoo!, Inc. ("Yahoo" or "Defendant"), and Plaintiff appealed. In part due to a new ruling by the FCC regarding the TCPA that was issued as the appeal was pending, the Third Circuit remanded the case for further proceedings and factual development.
Before the Court are two motions: Yahoo's Renewed Motion for Summary Judgment, and Yahoo's Motion to Exclude Plaintiff's experts. For the reasons outlined below, both of Yahoo's Motion will be GRANTED.
Plaintiff alleges that Yahoo violated the TCPA, enacted by Congress in 1991. Plaintiff purchased a used cellular telephone with an assigned phone number. The previous owner of the telephone number had subscribed to Yahoo's email service and also enrolled the number in the Defendant's E-mail SMS Service, through which the phone would receive text messages upon receiving an e-mail at the owner's Yahoo e-mail account. Plaintiff, on behalf of himself and other similarly situated consumers, initiated this class action lawsuit against Defendant Yahoo to challenge Yahoo's practice of sending unsolicited text messages to cellular telephone numbers owned by individuals who never consented to receive such text messages.
It is undisputed that Plaintiff received text messages solely because the previous owner of Plaintiff's mobile phone number was a Yahoo subscriber who affirmatively signed up to receive text messages each time he received an email in his Yahoo email inbox. Yahoo has consistently, without dispute, asserted it could not "disarm" the system. Yahoo denies liability and argues that the TCPA only prohibits unsolicited automated telemarketing and bulk communications sent via an Automatic Telephone Dialing System ("ATDS"), which means a system that has the capacity to store or produce telephone numbers to be called using a random or sequential number generator, and dial those numbers. See 47 U.S.C. § 227(b)(3).
Yahoo contends that its system is not an ATDS because the system lacks the capacity to store or produce telephone numbers to be called, using a random or sequential number generator.
The TCPA prohibits any person from making:
47 U.S.C. § 227(b)(1)(A).
The statute defines an ATDS as "equipment which has the capacity (A) to store or produce telephone numbers to be called, using a random or sequential number generator; and (b) to dial such numbers." Id. § 227(a)(1).
In granting Yahoo's first motion for summary judgment (ECF 55), this Court held that Plaintiff has not offered any evidence to show that Yahoo's system had the capacity to randomly or sequentially generate telephone numbers (as opposed to simply storing telephone numbers), and call those numbers, as required by the statutory definition of ATDS. The Court thus found that Yahoo did not send text messages to Plaintiff via an ATDS and, therefore, granted judgment in favor of Yahoo. See Dominguez v. Yahoo!, Inc., 8 F. Supp. 3d 637 (E.D. Pa. 2014).
The Third Circuit agreed with this Court's definition of "random or sequential" number generation (i.e., "the phrase refers to the numbers themselves rather than the manner in which they are dialed") and its holding that the statutory definition does in fact include such a requirement. However, the Third Circuit reversed the grant of summary judgment as follows:
We disagree that the record supports entry of summary judgment in Yahoo's favor. The only evidence Yahoo can point to that is probative of whether its equipment has the requisite capacity is the conclusory affidavit of its expert Ajay Gopalkrishna, who states that "[t]he servers and systems affiliated with the Email SMS Service did not have the capacity to store or produce numbers to be called, using a random or sequential number generator, and to call those numbers." Not only does this restating of the statutory definition amount to nothing more than a legal conclusion couched as a factual assertion, compare with 47 U.S.C. § 227(a)(10 ("The term 'automatic telephone dialing system' means equipment which has the capacity (A) to store or produce telephone numbers to be called, using a random or sequential number generator; and (B) to dial such numbers."), it begs the question of what is meant by the word "capacity."
The Third Circuit also remanded for consideration of an FCC ruling in 2015, Rules & Regulations Implementing Tel. Consumer Protection Act of 1991, 30 FCC Rcd. 7961, 8074; 2015 WL 4387780, at *81 (2015) [hereinafter 2015 Ruling], that impacted the definition of "capacity." The Circuit Court noted changes in telephone technology in the context of the TCPA, the evolution of the FCC regulations, and a dispute in the industry about the scope of its regulations:
In a series of declaratory rulings - the most recent being the one referred to above in July 2015, see 2015 FCC Ruling, 2015 WL 4387780, at *5-*6 - the FCC appeared to take a middle-of-the-road view. Although hardly a model of clarity, its orders (as we interpret them) hold that an autodialer must be able to store or produce numbers that themselves are randomly or sequentially generated "even if [the autodialer is] not presently used for that purpose." Id. at *5. But importantly, in the most recent ruling the FCC also clarified that neither "present ability" nor the use of a single piece of equipment is required. Thus, so long as the equipment is part of a "system" that has the latent "capacity" to place autodialed calls, the statutory definition is satisfied.
The Court will discuss the concept of "capacity" in the context of FCC regulations, determine whether there are any genuine issues of fact requiring that Yahoo's motion for summary judgment be denied, and consider other legal issues. Below is a summary of the Court's decisions.
1. As the Third Circuit specifically noted that this Court's prior opinion did not have a detailed discussion of "capacity," a descriptive definition of this term will precede the discussion of the other issues in the case. The definition will describe the meaning of "capacity" in the context of this case, relying on FCC rulings and any applicable case law. In thisdiscussion, the Court will consider the 2015 Ruling, which in relevant part was adopted by a 3-2 vote,1 and is currently on appeal before the Court of Appeals for the District of Columbia Circuit.
2. The Court determines that the applicable standard to apply is the concept of "present capacity" because that was the governing principal of communications law at the time that Plaintiff bought his telephone and this case was filed.
a. Under a standard of "present capacity," the Yahoo system did not qualify under the TCPA's requirements. The Third Circuit affirmed this Court's interpretation of statutory language, which, in the absence of any other evidence, requires granting Yahoo's motion for summary judgment.
3. The Court concludes that the 2015 Ruling should not be applicable to this case under any principle of retroactivity, Supreme Court decision or Third Circuit precedential opinion, and finds that it would not be fair to Yahoo to apply the 2015 Ruling to this case.
4. Alternatively, if the Court were to consider the 2015 Ruling, then Plaintiff would have the burden of showing that the Yahoo system could meet the statutory definition, and that concepts of "latent capacity" or "potential capacity" must be considered.
a. Plaintiff has proffered the opinions of four separate experts and argues that these expert reports show a genuine issue of fact requiring a jury trial that the Yahoo system meets the concepts of "latent capacity" or "potential capacity."
i. After detailed consideration of the expert reports, and Yahoo's Daubert motion to exclude them, the Court concludes that the Daubert motion should be granted because the Plaintiff's experts have not shown that their opinions are reliable or "fit" the facts of this case and also, their opinions are notsupported by any empirical testing, which is an important requirement under Daubert and subsequent Third Circuit cases.
b. Without the expert testimony, Plaintiff has failed to show a genuine issue of fact so as to defeat summary judgment.
5. Even if admissible, Plaintiff's experts' reports fail to show the Yahoo system was capable of generating random/sequential numbers and "calling" those numbers, and are therefore insufficient to defeat summary judgment.
6. On the issue of waiver, the record shows the Plaintiff relied on a theory of "present capacity" when the case was originally filed. However, the Plaintiff, promptly after the FCC issued the 2015 Ruling, notified the Third Circuit about the Ruling. The 2015 Ruling was clearly one of the reasons for the remand back to this Court. Because Plaintiff promptly filed an Amended Complaint in this Court after the remand, without any objection by Yahoo, the Court will not find waiver.
In its appellate decision, the Third Circuit noted that this Court's prior opinion did not contain a detailed discussion of the meaning of "capacity," a key term at the heart of this...
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