CBE Group Defeats TCPA Claim Over its Proprietary Dialing System in Case Supported by ACA's Industry Advancement Program

*** This article is from the ACA International website on April 5, 2018. View their story here

Citing ACA Int'l v. FCC, a Nevada federal court found that The CBE Group Inc.'s Manual Clicker Application to dial calls, used in conjunction with LiveVox's equipment to connect calls, is not an ATDS under the TCPA.

The U.S. District Court for the District of Nevada handed the accounts receivable management industry a significant win March 30 when it ruled that ACA International member The CBE Group Inc. did not violate the Telephone Consumer Protection Act when it placed a series of outbound calls to a consumer’s cellphone allegedly without her consent in its effort to reach her to collect the unpaid debt she owed to DirecTV. The district court held that CBE was not liable under the TCPA for such calls because the Manual Clicker Application (MCA), CBE’s patent-pending web-based software platform used to dial the consumer’s cell phone, paired with LiveVox, Inc.’s cloud-based call connectivity pass-through system, do not constitute an automatic telephone dialing system (ATDS).  ACA supported its member’s initiative to obtain an important, potentially precedent-setting TCPA decision positively impacting ACA’s members and the accounts receivable management industry by providing Industry Advancement Funds to help defray the cost of litigation. 

In the case Marshall v. The CBE Group, Inc., No. 16-02406, 2018 WL 1567852 (D. Nev. March 30, 2018), DirecTV referred the consumer’s account to CBE for collection. CBE placed 189 calls to the consumer over a six month period using CBE’s proprietary MCA to dial.  In order for a number to be called using the MCA, the MCA requires a CBE agent to manually initiate the call by “clicking” a “bull’s-eye on a computer screen. Once a CBE agent clicks the bull's-eye, a call is passed through LiveVox’s cloud connecting a CBE agent with the person to whom the call is placed.” 

After the consumer filed her complaint against CBE alleging violations of the TCPA, the Fair Debt Collection Practices Act, and the Nevada Deceptive Trade Practices Act, the parties each moved for summary judgment. 

Granting in part CBE's motion for summary judgment, the district court concluded that CBE’s “communications infrastructure does not constitute an ATDS.” Relying on the U.S. Court of Appeals for the District of Columbia Circuit’s ruling in ACA Int’l v. FCC, which explicitly rejected the Federal Communications Commission’s unreasonably expansive interpretation of which devices qualify as an ATDS, the district court based its decision in Marshall by adhering to the statute’s clear language that mandates “’the focus be on whether the equipment has the capacity “to store or produce telephone numbers to be called, using a random or sequential number generator.”’” In doing so, the district court said that the MCA, which initiated the calls, does not, by itself, “qualify as an ATDS.”  The district court also said that the LiveVox system used in conjunction with the MCA, which system has the ability to track calling information, “does not have the capacity to operate as an ATDS” because it is not capable of and does not have the capacity to store or produce numbers in a random or sequential order or to dial numbers in such a manner.  

As for the nationwide precedential effect of the D.C. Circuit Court’s ruling in ACA Int’l, the district court summarily rejected the consumer’s argument that it is not required to follow the decision in ACA Int’l.  The district court explained that “[t]he D.C. Circuit’s decision is binding on this Court because appellate courts have exclusive jurisdiction to determine the validity of all FCC final orders and the Judicial Panel on Multidistrict Litigation has consolidated the various appeals in that case in the D.C. Circuit.”  And notwithstanding the district court’s well-reasoned explanation for why it is bound by the ACA Int’l ruling, the district court said that even if the 2015 FCC Order, as well as the 2003 FCC Order, remained intact, it would still find that “the MCA, in conjunction with LiveVox, is not an ATDS” because the “overwhelming weight of authority applying [the “human intervention”] element hold that ‘point-and-click’ dialing systems, paired with a cloud-based pass-through services, do not constitute an ATDS as a matter of law in light of the clicker agent’s human intervention.” 

Turning to the consumer’s FDCPA claim under § 1692d, the district court found that “a reasonable jury could conclude that CBE placed the calls with an intent to annoy, abuse, or harass.” The district court based its decision on the consumer’s allegations that during a six month period:  (1) CBE placed 189 calls to her; (2) She received more than two calls in one day; (3) She asked CBE to stop calling; and (4) CBE placed 10 calls to her place of employment. Therefore, the district court denied CBE’s Motion for Summary Judgment on this issue.   

As for the consumer’s § 1692f claim under the FDCPA, which prohibits a debt collector from using “unfair or unconscionable means to collect or attempt to collect any debt,” the district court ruled that the claim failed as matter of law because the consumer did not allege, or argue, any § 1692f violation that was independent of her § 1692d claim. In so ruling, the district court explained that “[c]ourts in other Circuits have recognized a ‘growing consensus  . . . that a claim under § 1692f must be based on conduct either within the listed provisions, or be based on conduct which falls outside of those provisions, but which does not violate another provision of the FDCPA.’”

Finally, the district court ruled that the consumer’s NDTPA claim failed as a matter of law, holding that the NDTPA does not apply to debt collection. 

Given the significance of the TCPA to participants in the accounts receivable management industry who face lingering uncertainty over the meaning of ATDS, which has created unreasonable and unworkable compliance burdens, ACA committed Industry Advancement Funds to CBE to help it defeat the consumer’s claims in the Marshall case and obtain industry-favorable case law narrowing the definition of ATDS in the TCPA. 

As a result of ACA’s ongoing and sustained TCPA advocacy efforts, the D.C. Circuit Court of Appeals decision in ACA Int’l. v. FCC has already proven to have enormous positive litigation and financial impact in the Marshall case and will most assuredly continue to do so for the many other ACA members currently involved in TCPA litigation across the country. Similarly, ACA is encouraged by the Marshall decision and confident that judges, regulators and industry participants will look to it as positive persuasive authority for interpreting what equipment constitutes an ATDS under the TCPA. And ACA is pleased that the Marshall decision raises the number of industry-favorable decisions, or wins, the association has helped to achieve for its members through the Industry Advancement Program to a total of 37 in just four years. 

ACA International’s efforts to proactively support the accounts receivable management industry are part of the association’s Industry Advancement Program, and are made possible by funding through ACA’s Industry Advancement Fund. 

If you missed any of the articles previously published in ACA Daily that provided more detailed information about Industry Advancement Program supported cases, like the Marshall case, you can always see the archived articles on the Industry Advancement Program website. Watch for updates when decisions are issued in these cases and learn more about new cases supported by the Industry Advancement Program in the future by reading ACA Daily and logging onto the Industry Advancement Program website throughout the year. The association's TCPA Resource Center, also features related news, ACA SearchPoint documents, legal and regulatory materials, compliance guidelines and more.