Lennartson v. Papa Murphy's Holdings, Inc.
| Decision Date | 05 January 2016 |
| Docket Number | CASE NO. C15-5307 RBL |
| Court | U.S. District Court — Western District of Washington |
| Parties | JOHN LENNARTSON, on behalf of himself and all others similarly situated, Plaintiff, v. PAPA MURPHY'S HOLDINGS, INC.,; and PAPA MURPHY'S INTERNATIONAL LLC, Defendants. |
HONORABLE RONALD B. LEIGHTON
ORDER DENYING SUMMARY JUDGMENT AND STAYING THE CASE
THIS MATTER comes before the Court on Defendants Papa Murphy's Motion for Summary Judgment. [Dkt. #19, 23 praecipe]. Plaintiff Lennartson claims Papa Murphy's text messaged him and his putative class members without adequate prior express consent in violation of the Telephone Consumer Protection Act (TCPA), 47 U.S.C. § 227. Papa Murphy's argues that it obtained proper prior consent, and the FCC's 2012 interpretation of the TCPA is unconstitutional. It alternatively asks for a stay of these proceedings until the Supreme Court decides in Spokeo, Inc. v. Robbins, ___ U.S. ___, 135 S. Ct. 1892 (2015), whether Congress may confer Article III standing upon plaintiffs who suffer no concrete harm by authorizing private rights of action for bare violations of a federal statute.
In 2011, Papa Murphy's started texting those who had signed-up on its website to receive promotional messages and those who had texted numbers appearing in its advertisements. Its website informed consumers that they would receive four text messages per month and that message and data rates might apply. Lennartson registered through Papa Murphy's website in March 2012 to receive promotional text messages. [Dkt. #21, Brawley Dec.].
Papa Murphy's texted him at least eleven times. [Dkt. #2, Exhibit A, Text Message Screenshots]. He did not reply "stop" to any of these messages. On June 15, 2015, Papa Murphy's stopped texting those who had opted to receive messages before October 16, 2013.
Under the TCPA, it is unlawful for any person to use an automatic telephone dialing system1 to call or text another's cell phone except for emergency purposes or unless prior express consent has been given. See 47 U.S.C. § 227(b)(1)(A)(iii); see also Satterfield v. Simon & Schuster, Inc., 569 F.3d 946, 954 (9th Cir.) (). The FCC ruled in 1992 that absent instructions to the contrary, persons who knowingly released their phone numbers consented to be autodialed. See In re Rules & Regs. Implementing the TCPA of 1991, 7 FCC Rcd. 8752, 8769 (Oct. 16, 1992).
The FCC revised this ruling in February 2012, concluding that the required prior express consent must be in writing. See In re Rules & Regs. Implementing the TCPA of 1991, 27 FCC Rcd. 1830, 1838, (Feb. 15, 2012) (hereinafter 2012 Order). It defines "prior express written consent" as a written agreement authorizing delivery of advertisements or telemarketing messages by an autodialer to the signatory's telephone number. See id. at 1863. It requires thewritten agreement to include a clear and conspicuous disclosure: entering into the agreement is not a condition of purchase, an electronic signature is enforceable, and by executing the agreement, the signatory authorizes the seller to deliver telemarketing text messages using an autodialer. See id. at 1844, 1863. The FCC granted those who had obtained consent under the 1992 Order until October 16, 2013 to comply with these new prior written consent requirements. See id. at 1857; see also In re Rules & Regs. Implementing the TCPA of 1991, 30 FCC Rcd. 7961, 8015 (July 10, 2015) (hereinafter 2015 Order).
In July 2015, the FCC answered petitions by the Coalition of Mobile Engagement Providers and Direct Marketing Association to clarify its 2012 Order. See 2015 Order, 30 FCC Rcd. at 8012. Petitioners asked whether written consent obtained in congruence with the 1992 Order satisfied the 2012 Order. See id. The FCC reiterated such consent was not compliant merely because it was in writing. See id. at 8014. To be sufficient, the consent had to meet the definitional requirements of "prior express written consent" that the FCC's 2012 Order had outlined and had given telemarketers nearly two years to meet. Compare 2012 Order, 27 FCC Rcd. at 1844, 1863, with 2015 Order, 30 FCC Rcd. at 8013-14.
The FCC acknowledged, however, that petitioners could have reasonably interpreted its 2012 Order to suggest that consent previously given in writing would remain valid even if it did not satisfy the additional requirements of "prior express written consent" outlined by that Order. See id. For this reason, the FCC granted petitioners a waiver, effective retroactively and 89 days from the Declaratory Ruling, giving them additional time to make the disclosures necessary to obtain proper consent (as defined by the 2012 Order). See id. at 8014-15.
At issue is whether Papa Murphy's made sufficient disclosures to Lennartson such that it obtained proper consent to text him with an autodialer system and whether this case should be stayed pending resolution of Spokeo, Inc. v. Robbins.
Summary judgment is proper "if the pleadings, the discovery and disclosure materials on file, and any affidavits show that there is no genuine issue as to any material fact and that the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a). In determining whether an issue of fact exists, the Court must view all evidence in the light most favorable to the nonmoving party and draw all reasonable inferences in that party's favor. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248-50, 106 S. Ct. 2505 (1986); see also Bagdadi v. Nazar, 84 F.3d 1194, 1197 (9th Cir. 1996). A genuine issue of material fact exists where there is sufficient evidence for a reasonable factfinder to find for the nonmoving party. See Anderson, 477 U.S. at 248. The inquiry is "whether the evidence presents a sufficient disagreement to require submission to a jury or whether it is so one-sided that one party must prevail as a matter of law." Id. at 251-52. The moving party bears the initial burden of showing no evidence exists that supports an element essential to the nonmovant's claim. See Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S. Ct. 2548 (1986). Once the movant has met this burden, the nonmoving party then must show the existence of a genuine issue for trial. See Anderson, 477 U.S. at 250. If the nonmoving party fails to establish the existence of a genuine issue of material fact, "the moving party is entitled to judgment as a matter of law." Celotex, 477 U.S. at 323-24.
Papa Murphy's argues that it should not be penalized for its noncompliance with the 2012 Order because (1) under its interpretation of that rule, the prior express consent it had obtained under the 1992 Order remained valid because it was in writing, and the FCC concedes that its 2012 Order could have reasonably been interpreted that way; and (2) the 2015 Order represents an agency adjudicatory restatement that this Court cannot apply retroactively under Montgomery Ward, 691 F.2d 1322, 1333 (9th Cir. 1982), because its consent requirements caused a significant change in the law.
Lennartson argues that (1) the 2012 Order did not grandfather existing written consents that did not meet the definitional requirements of "prior express written consent"—that did not include a disclosure that an autodialer would be used and consent was not a condition of purchase—and (2) the 2015 Order, which only clarified an existing rule, can be applied retroactively under Qwest Services Corporation v. FCC, 509 F.3d 531, 540 (D.C. Cir. 2007).
Papa Murphy's failed to comply with the requirements of written consent as defined by the 2012 Order. It continued to text Lennartson after October 16, 2013 without disclosing that it was using an autodialing system to do so. See 2012 Order, 27 FCC Rcd. at 1843-44, 1857, 1863.
In Montgomery Ward, the Ninth Circuit explained when an agency's interpretation of a rule—an application of a previously articulated rule to particular factual circumstances—applies retroactively. See 691 F.2d at 1328-29, 1333. It adopted the D.C. Circuit's five factor test for balancing a regulated party's interest in being able to rely on a rule's plain terms against an agency's interest in retroactive application:
Among the considerations that enter into a resolution of the problem are (1) whether the particular case is one of first impression, (2) whether the new rule represents an abrupt departure from well established practice or merely attempts to fill a void in an unsettled area of law, (3) the extent to which the party against whom the new rule is applied relied on the former rule, (4) the degree of the burden which a retroactive order imposes on a party, and (5) the statutory interest in applying a new rule despite the reliance of a party on the old standard.
See id. at 1333 (citing Retail, Wholesale and Department Store Union v. NLRB, 466 F.2d 380, 390 (D.C. Cir. 1972)). The presumption of retroactivity does not apply if balancing weighs in favor of the regulated party—when retroactivity would cause manifest injustice. See Qwest Servs. Corp. v. FCC, 509 F.3d 531, 539 (D.C. Cir. 2007) (citing AT&T v. FCC, 454 F.3d 329, 332).
The FCC's 2015 Order clarified its 2012 Order. The 2015 consent requirements were not an abrupt shift in the law, but rather, an affirmation of a rule articulated three years earlier. The 2012 Order "requires prior express written consent for all telephone calls using an automatic telephone dialing system or a prerecorded voice to deliver a telemarketing message to wireless numbers and residential lines." 2012 Order, 27 FCC Rcd. at 1838. It defines "prior express written consent" as a written agreement that includes a conspicuous disclosure: by executing the agreement, the signator authorizes the seller to deliver her telemarketing...
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