District Court (Ill.) Says FCC’s Anti-Robocall Technology Winner Plausibly Alleged Injury-in-Fact in TCPA Case, But Not Statutory Standing

In Telephone Science Corporation v. Asset Recovery Solutions, LLC, 2016 WL 4179150, at *5 (N.D.Ill., 2016), Judge St. Eve found adequate standing in a TCPA case.

TSC operates a service called “Nomorobo,” designed to help consumers avoid incoming computerized telephone calls that the Federal Trade Commission (“FTC”) refers to as “robocalls”—calls made with either an automatic telephone dialing system (“ATDS”) or with a prerecorded or artificial voice. (R.77, ¶¶ 5-6). In 2013, the FTC declared Nomorobo a winner of its contest to “design a system to stop unsolicited telemarketing calls before the calls can ring through to the subscriber of the called telephone number.” (Id. ¶ 7). To date, Nomorobo has helped consumers “avoid over 64 million unwanted robocalls.” (Id. ¶ 9). Specifically, TSC maintains a “honeypot” of telephone numbers to which TSC subscribes. (Id. ¶¶ 10-12). Nomorobo analyzes calls placed to TSC’s honeypot numbers using a specialized algorithm, enabling it to “detect high frequency robocalling patterns and distinguish between calls placed by robocallers and calls placed by non-robocallers.” (Id. ¶¶ 13, 8). Consumers and businesses subscribe to Nomorobo’s call-blocking services for a fee. (R.115, TSC Response to ARS’ Mot. to Take Judicial Notice; see also R.113, R.116).1 These users choose to route their incoming calls to both their personal phones and the Nomorobo server, using simultaneous ring technology. “If Nomorobo determines that it is a robocaller, Nomorobo answers the call on behalf of the user.” (R.82-3, TSC Ltr. to FCC). The robocaller, however, is “presented with an audio CAPTCHA [Completely Automated Public Turing Test to tell Computers and Humans Apart]. If the caller passes the test and proves they are human, the call is allowed through. If they fail, Nomorobo hangs up the call.” (R.82-4, Twilio Customer Stories at 2). Nomorobo either blocks or allows the call within 200 milliseconds of its receipt. (Id.).

The District Court found standing.

The Court, thus, accepts the Second Amended Complaint’s “injury-in-fact” allegations as true. SeeApex, 572 F.3d at 444-46. These allegations “plausibly suggest” that TSC incurred— and paid for—per-minute charges based on ARS robocalls, supporting injury-in-fact sufficient for Article III standing. . .  Even if the law required more of TSC in this case, it has satisfied its “burden of proof” at this stage of the litigation. SeeLujan, 504 U.S. at 561. Taken together, (i) the Second Amended Complaint, (ii) the Foss Declaration, (iii) the VoIP Service Agreement, (iv) the Twilio invoices, and (v) TSC’s invoice payment receipts, all support the existence of an injury.

The District Court found, however, that the TCPA did not protect the plaintiff.

Ultimately, even accepting all factual allegations as true, and drawing all reasonable inferences in TSC’s favor, TSC’s asserted interests do not fall within Section 227(b)’s protected zone of interests.  As TSC acknowledges, the focus of the TCPA—and related efforts—is to provide “consumer protection for millions of Americans harassed by unwanted and unwelcome robocalls.” (R.77, Second Am. Compl. ¶¶ 44-45). Indeed, TSC’s Nomorobo service represents one such effort in the battle against robocalls. (Id. at ¶ 9 (“As of the date on which this second amended complaint is being filed, the Nomorobo service has helped consumers to avoid over 64 million unwanted robocalls”)). TSC’s “good guy” status, however, does not automatically entitle it to claim protection under the TCPA. (R.95, Rule 12(b)(6) Response Br. at 1-2). Like the plaintiffs in Cellco and Stoops—and unlike the plaintiff in Fitzhenry—TSC does not allege any injuries in the form of privacy invasion, nuisance, and/or inconvenience. To the contrary, the sole reason TSC subscribes to “thousands” of honeypot numbers is to gather a “large quantity” of data in order to “detect high frequency robocalling patterns” and to “distinguish” between callers for its Nomorobo customer-service offerings. (R.77, Second Am. Compl. at ¶ 10 (“In order to provide the Nomorobo service to consumers…”)). Thus, instead of being “unwanted and unwelcome,” robocalls to TSC Numbers provide the analytical basis on which the Nomorobo service operates. “[T]he only reason for this volume of calls,” thus, ‘is due to the nature of [TSC’s] business, which is providing telecommunications services rather than consuming them.” Cellco, 2012 WL 1638056 at *9. Furthermore, TSC suffered alleged monetary damages because it began to answer—and incur charges for—known robocalls in May 2015. Even construed in the light most favorable to TSC, these damages “are not of the vexatious and intrusive nuisance nature sought to be redressed by Congress in enacting the TCPA, but rather are indirect, economic, and inherent to [its] business.” Id. at *8. . . .Here, TSC did not suffer the injury contemplated by the TCPA— that is, invasion of privacy and/or general nuisance. See generally Pub. L. No. 102-243, § 2; see also Mims, 132 S. Ct. at 745; Lozano, 702 F. Supp. 2d at 1008-09.