On Thursday February 2, 2017 a United States Magistrate Judge in Michigan issued a Report and Recommendation in a Telephone Consumer Protection Act (TCPA) case that determined the LiveVox, Inc. Human Call Initiator (HCI) System was not an Automatic Telephone Dialing System (ATDS) and that calls made to a consumer’s cell phone using that system did not violate the TCPA.

A copy of the Report and Recommendation can be found here.

Background

Plaintiff brought this lawsuit alleging that Defendant Stellar Recovery (Stellar) used an ATDS to call her cell phone dozens of times regarding a consumer debt, in violation of the Fair Debt Collection Practices Act, 15 U.S.C. §§ 1692-1692p (FDCPA), the Telephone Consumer Protection Act, 47 U.S.C. §§ 151-231 (TCPA), and various provisions of state law.

Before the Court was Plaintiff’s Motion for Partial Summary Judgment and Defendant’s Motion for Partial Summary Judgment.

In her Motion, Plaintiff contended that Stellar, a debt collection agency, used an ATDS to knowingly and willfully call her 53 times regarding a debt owed to Comcast of Detroit, LLC (Comcast). She claimed that the calls were made without her prior express consent, and after she filed Chapter 7 bankruptcy and subsequently had the debt discharged.

Stellar disputed the total number of calls made, claiming that it called Plaintiff only 35 times. Stellar further responded that it contacted Plaintiff using two different outbound “dialing systems”: Right Party Connect (“RPC”) and Human Call Initiator (“HCI”).

Stellar conceded that the RPC is an ATDS, and that it used the RPC to contact Plaintiff from July 18, 2014 until August 12, 2014. However, Stellar argued that the undisputed facts establish that HCI, which Defendant began using on August 12, 2014, is not an ATDS, and that Stellar was entitled to summary judgment regarding all the calls made using that system.

Magistrate Judge Mona K. Majzoub provided a succinct description of the issue before her:

“The primary issue in the motions for partial summary judgment is, therefore, whether the HCI system used by Defendant Stellar Recovery is an ATDS.”

The Opinion

Magistrate Judge Majzoub highlighted the major characteristics of the HCI system from the evidence presented to her: 

  • The HCI equipment is configured in such a way that it cannot dial phone numbers without the clicker agents initiating the call, and therefore the system, while clearly an advanced and efficient method of contacting debtors, is not an autodialer.
  • The equipment cannot store numbers, nor can it dial numbers without the call being initiated by the clicker agents.
  • When the HCI system is in use, human intervention—the function of the clicker agents—is clearly required.
  • The HCI system includes both software and hardware components, that these are not shared by the RPC or any of the other dialing systems, and that they are unique to the HCI system.

In her Report Judge Majzoub also noted:

“At least one other court considering the same HCI system found that it did not constitute an autodialer. See Pozo v. Stellar Recovery Collection Agency, Inc., No. 8:15-cv-929-T-AEP, 2016 WL 7851415 (M.D. Fla. Sept. 2, 2016). Regarding the HCI system’s capacity, the court reasoned that:

Of course, Stellar could hypothetically hire a team of programmers to modify and rewrite large portions of HCI’s code to enable HCI to make autodialed calls, eliminating clicker agents, the dashboard, and all human input. However, the fact that Stellar might be able to undertake such a pointless endeavor does not mean that HCI has the “capacity” to be an autodialer or that it has the “potential functionality” to be an autodialer within the meaning of the TCPA and the 2015 Order.

Moreover, as the court pointed out in Pozo, other courts have upheld the use of dialing systems which employ a “‘point and click’ function.” 2016 WL 7851415, at *5 (collecting cases). One such case, Strauss v. CBE Group, Inc., 173 F. Supp. 3d 1302 (S.D. Fla. 2016), even involved a debt collection agency, like Defendant Stellar Recovery, which used two different systems to contact the plaintiff. Id. at 1307. The court found that one of the systems was a predictive dialer and therefore violated the TCPA, but that the other system “at least as [the defendant] has configured it,” requires an agent to “manually initiate the call by clicking a computer mouse or pressing a keyboard enter key.” The court granted summary judgment to the defendant for the claims arising from calls made using that system.  Plaintiff is correct that the 2015 TCPA Order provides that “[h]ow the human intervention element applies to a particular piece of equipment is specific to each individual piece of equipment, based on how the equipment functions and depends on human intervention, and is therefore a case-by-case determination.” 30 F.C.C.R. at 7975. However, the undersigned finds the cases that involve systems which require a person to initiate each individual call, like Strauss, instructive.”

 The Judge concluded:

“Plaintiff has failed to create a genuine material dispute of fact over whether the HCI dialing system constitutes an autodialer. Defendant Stellar Recovery indisputably began using the HCI system to contact Plaintiff starting August 12, 2014. Therefore, summary judgment should be awarded to Defendant Stellar Recovery on Plaintiff’s TCPA claims arising from all calls made on or after August 12, 2014.” Editor’s Note: Defendant Stellar Recovery’s Motion only sought summary judgment on Plaintiff’s TCPA claims arising from the calls made using the HCI system.

insideARM Perspective

The analysis of Magistrate Jude Majzoub was thorough and thoughtful.  She was clearly persuaded by the evidence presented by Stellar.

insideARM contacted LiveVox for reaction. Mark Mallah, LiveVox's General Counsel commented:

"LiveVox is very pleased to have now won two out of two cases concerning HCI, our clicker app.  We believe that the Smith ruling not only reinforces our prior victory in Pozo, it expands upon it with respect to potential capacity."

"We think that the Smith decision is great for the industry in that it once again validates point and click applications such as ours, continuing a series of successful cases in this regard."

However, to be clear, Stellar was successful in defending the TCPA claims regarding calls made using the HCI system. Plaintiff was awarded summary judgment regarding calls made using the RPC system.  The Judge determined that there was still a question of fact regarding whether Plaintiff is entitled to treble damages on these calls and regarding the number of calls made using the RPC, and therefore regarding the total amount of damages.

Calls to cell phones using any ATDS equipment are still a potential TCPA liability.

Editor's Note: See also the Stellar Recovery Press Release on this case here.


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