United States District Court, D. South Dakota, Southern Division
LINDA PENDLETON, on behalf of herself, and all others similarly situated, Plaintiff,
1st FINANCIAL BANK, USA Defendant.
MEMORANDUM OPINION AND ORDER DENYING MOTION TO STAY
Lawrence L. Piersol United States District Judge
Linda Pendleton ("Pendleton"), filed a putative
class action Complaint against Defendant, 1st Financial Bank,
USA ("1st Financial"), seeking damages and
injunctive relief pursuant to the Telephone Consumer
Protection Act ("TCPA"), 47 U.S.C. § 227. The
Complaint alleges that 1st Financial used an automatic
telephone dialing system ("ATDS") and "an
artificial or prerecorded voice" system to call
Pendleton's cellular telephone sometimes multiple times a
day, attempting to collect an alleged debt owed by her adult
son. 1 st Financial moves to stay this case pending a ruling
by the D.C. Circuit in a case involving the definition of an
ATDS. (Doc. 18.) Pendleton resists the motion. For the
following reasons, the motion to stay will be denied.
A makes it unlawful "to make any call ... using any
automatic telephone dialing system or an artificial or
prerecorded voice to any ... cellular telephone service ...
or any service for which the called party is charged for the
call, unless such call is made solely to collect a debt owed
to or guaranteed by the United States." 47 U.S.C. §
227(b)(1)(A)(iii). Congress defined the term "automatic
telephone dialing system" as "equipment which has
the capacity to store or produce telephone numbers to be
called, using a random or sequential number generator; and to
dial such numbers." 47 U.S.C. § 227(a)(1)(A) and
(B). Congress vested the Federal Communication Commission
("FCC") with authority to issue regulations
implementing the TCPA. See 47 U.S.C. §
10, 2015, the Federal Communications Commission
("FCC") issued a Declaratory Ruling and Order
addressing key language in the TCPA, including whether
dialing equipment meets the definition of an ATDS "when
it does not have the 'current capacity' or
'present ability' to generate or store random or
sequential numbers or to dial sequentially or randomly at the
time the call is made." Doc. 19-5, FCC 15-72 at 7972.
The FCC looked at the language of the TCPA which expressly
defines "automatic telephone dialing system" as
"equipment which has the capacity" to
store or produce telephone numbers, FCC 15-72 at 7973, and
the FCC reiterated two of its previous rulings stating that
"autodialers need only have the 'capacity' to
dial numbers, rather than the 'present ability'"
to do so, id. at 7974. "In other words, the
capacity of an autodialer is not limited to its current
configuration but also includes its potential
functionalities." Id. at 7974.
FCC's July 10, 2015 ruling ("FCC ruling") is
binding on federal courts pursuant to the Administrative
Orders Review Act, also known as the Hobbs Act. See
Vonage Holdings Corp. v. Minn. Pub. Util. Comm 'n,
394 F.3d 568 (8th Cir. 2004) (holding that FCC Declaratory
Order and Opinion is binding on the court). The Hobbs Act
reserves to the courts of appeals the "exclusive
jurisdiction to determine the validity of FCC orders."
Nack v. Walburg, 715 F.3d 680, 685-86 (8th Cir.
2013) ("[T]he procedural path designed by Congress
serves a number of valid goals: It promotes judicial
efficiency, vests an appellate panel rather than a single
district judge with the power of agency review, and allows
'uniform, nationwide interpretation of the federal
statute by the centralized expert agency created by
Congress' to enforce the TCPA.") (quoting
CEDesign, Ltd. v. Prism Bus. Media, Inc., 606 F.3d
443, 450 (7th Cir. 2010)). Petitions challenging the 2015 FCC
ruling defining an ATDS were filed in the D.C. Circuit and
the Seventh Circuit. See Doc. 19-2. By order of the
Judicial Panel on Multidistrict Litigation, the petitions
were consolidated pursuant to 28 U.S.C. § 2112(a)(3) and
assigned to the D.C. Circuit under the heading of ACA
International v. Federal Communications Commission and United
States of America. See Id. Oral argument was heard on
October 18, 2016. See Doc. 19-4. A decision has not
yet been issued.
Financial contends that this case should be stayed until the
D.C. Circuit decides if the FCC exceeded its authority in
finding that dialing equipment meets the definition of an
ATDS if the equipment has the capacity to store or produce
initial matter, the Court will grant 1 st Financial's
unopposed request in Doc. 20 to take judicial notice of
records filed in other federal courts and of the FCC
Declaratory Ruling and Order. See Great Plains Trust Co.
v. Union Pacific R. Co., 492 F.3d 986, 996-97 (8th Cir.
2007) ("we may take judicial notice of proceedings in
other courts that relate directly to matters at issue").
power to stay proceedings is incidental to the power inherent
in every court to control the disposition of the causes on
its docket with economy of time and effort for itself, for
counsel, and for litigants."
Cottrell v. Duke, 737 F.3d 1238, 1248 (8th Cir.
2013) (quoting Landis v. N. Am. Co., 299 U.S. 248,
254 (1936)). A stay determination implicates a court's
"power to coordinate the business of the court
efficiently and sensibly." Landis, 299 U.S. at
255. Ultimately, the court's decision whether to issue a
stay "calls for the exercise of judgment, which must
weigh competing interests and maintain an even balance."
Landis, 299 U.S. at 254-55.
party requesting a stay "bears the burden of
establishing its need." Kreditverein der Bank
Austria Creditanstalt fur Niederosterreich und Bergenlandv.
Nejezchleba, 477 F.3d 942, 945 n.3 (8th Cir. 2007).
Specifically, the proponent "must make out a clear case
of hardship or inequity in being required to go forward, if
there is even a fair possibility that the stay for which he
prays will work damages to some one else."
Landis, 299 U.S. at 255. Courts have held that
"being required to defend a suit, without more, does not
constitute a 'clear case of hardship or
inequity.'" Lockyer v. Mirant Corp., 398
F.3d 1098, 1112 (9th Cir. 2005).
support of its motion to stay, 1st Financial argues that: 1)
it will suffer harm in the form of unnecessary litigation
fees and expenses; 2) granting a stay will serve the public
interest by simplifying the issues and promoting judicial
economy; and 3) Pendleton will not be prejudiced by a
relatively short stay until the D.C. Circuit's ruling in
ACA International. According to 1st Financial,
Pendleton's claims could be rendered moot if the D.C.
Circuit rejects the FCC's interpretation of
"capacity, " and a short stay until the D.C.
Circuit issues its decision will not prejudice Pendleton but
rather will conserve resources both for the parties and the
Court. 1st Financial cites a number of cases in which the
district courts have granted motions to stay pending the
ACA International appeal.
counters that she could be irreparably damaged by having to
wait to conduct discovery as witnesses' memories fade and
documents potentially become misplaced. She points out that
she has a separate claim under the TCP A for 1st
Financial's use of an artificial or prerecorded voice,
which ACA International does not affect. Regardless
of how the D.C. Circuit rules in ACA International,
Pendleton will still need to conduct discovery on the
telephone dialing equipment used by 1st Financial to place
the calls to her and the putative class. Pendleton further
argues that 1 st Financial has not shown any hardship or
inequity other than having to litigate the case, which is not
sufficient to satisfy its burden to establish that a stay is
warranted. Pendleton cites numerous cases where the district
courts denied stays pending resolution of the appeal in
on the circumstances in this case and the arguments of the
parties, the Court finds that a stay is not warranted.
Pendleton filed the Complaint in this case on December 16,
2016. There is no indication when the D.C. Circuit will issue
an opinion in ACA International, or that the outcome
will be favorable to TCF's position that the FCC's
interpretation of the term "automatic telephone dialing
system" in the TCPA is unreasonable. Even if the D.C.
Circuit's decision is favorable to TCF and is binding on
this Court, that decision will not affect Pendleton's
additional claim that 1st Financial used an artificial or
prerecorded voice system to call Pendleton's cellular
telephone sometimes multiple times a day. Discovery will be
needed on that separate issue. For these reasons, the Court
is not convinced that a ...