Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-4_06-cv-02893/USCOURTS-cand-4_06-cv-02893-4/pdf.json

Nature of Suit Code: 890
Nature of Suit: Other Statutory Actions
Cause of Action: 28:1331 Fed Question: Fed Communications Act of 1934

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United States District Court

For the Northern District of California

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IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF CALIFORNIA

LACI SATTERFIELD, Individually, and

on behalf of others similarly

situated,

Plaintiff,

v.

SIMON & SCHUSTER, a New York

Corporation; IPSH!NET, INC., a

Delaware Corporation d/b/a IPSH!

Defendants.

 /

No. C 06-2893 CW

ORDER GRANTING

DEFENDANTS'

MOTION FOR

SUMMARY JUDGMENT

Defendants Simon & Schuster, Inc. and ipsh!net, Inc. d/b/a

ipsh! move for summary judgment. Plaintiff Laci Satterfield

opposes this motion. The matter was heard on June 7, 2007. Having

considered all of the papers filed by the parties, the evidence

cited therein and oral argument, the Court grants Defendants'

motion.

BACKGROUND

Plaintiff has two cellular, or mobile, telephones, one of

which is used by her minor son. In December, 2004, at her son's

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1

According to Nextones' Chief Operating Officer, Nextones

intended the phrase "Nextones affiliates and brands" to include

companies to whom it licensed subscriber information for the

purpose of sending the subscriber promotional materials based on

the demographic information subscribers provided on the

registration page. "About Nextones.com," which was available on

Nextones' web page when Plaintiff became a subscriber, however,

suggests that affiliates are those interested in selling mobile

ringtones and graphics.

2

request, Plaintiff visited www.nextones.com (Nextones) to download

a free ringtone for the mobile telephone used by her son, who was

then six or seven years old. Before receiving the free ringtone,

Plaintiff had to sign up to become a Nextones Member. She typed in

her son's initials in the space for "First name" and the first

three letters of her son's last name in the space for "Last name,"

but she provided her email address, her gender and her age. She

checked an empty box, next to which were the word: "Yes! I would

like to receive promotions from Nextones affiliates and brands. 

Please note, that by declining you may not be eligible for our FREE

content."1 She then clicked the "Submit" button; above the button

appeared, "By clicking Submit, you accept that you have read and

agreed to the Terms and Conditions." Nextones' terms and

conditions state that Nextones and its affiliates may use a user's

mobile phone number in connection with any text message offering or

other campaign. According to its privacy policy, Nextones

maintains a strict "no-spam" policy and, absent prior consent, does

not share personal profile information, including mobile phone

numbers, with any third party.

A little over a year after Plaintiff subscribed to Nextones,

on January 18, 2006, at half past midnight, Plaintiff's son

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2As explained in Joffe v. Acacia Mortgage Corp., 211 Ariz.

325, 331 (2005), "SMS is a messaging system that allows cellular 

telephone subscribers to send and receive short messages (hence,

the name) usually limited to 160 or so characters on their cellular

telephones." A SMS message is commonly called a text message. 

When receiving a text message, the recipient of the message can

perform other functions using her mobile device, such as talking on

the cell phone or composing a different text message.

3According to Defendants, "PwdbyNexton" means powered by

Nextones. Defendant ipsh! required that this be included in the

promotional text message to brand the message as coming from

Nextones. 

3

received a SMS message2 on the cellular telephone he used. The

message stated:

The next call you take may be your last... Join the Stephen

King VIP Mobile Club at www.cellthebook.com. RplySTOP2OptOut.

PwdByNexton.3

The message contained only text, and no sound. The message

frightened Plaintiff's son, and he showed it to Plaintiff, who

assured him she would take care of it. Plaintiff replied, "STOP." 

Although Plaintiff's cellular telephone plan does not charge her

for incoming text messages, she is charged for outgoing text

messages. Thus, she did not have to pay for the promotional text

message, but she did have to pay for the "STOP" text message she

sent in response. 

The text message was sent as part of Defendant Simon &

Schuster's promotional campaign for Cell, a Stephen King novel. 

Defendant Simon & Schuster outsourced the promotional campaign to

Defendant ipsh!, a mobile marketing firm, and instructed Defendant

ipsh! that the promotional text should be sent to adults ages

eighteen to fifty who had opted in to receive advertising on their

mobile devices. Defendant ipsh! then obtained a list of 100,000

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4

MIA also licensed lists from a website known as Zingy, where

the check box through which people gave their consent to receive

promotions was pre-checked. The Cell campaign used a list

populated solely with Nextones subscribers. Nextones does not have

a pre-checked consent box.

4

individuals who fit the targeted demographic profile from Mobile

Interactive Agency (MIA), which had contracted with various website

operators, including Nextones.4 MIA was Nextones' exclusive agent

in licensing Nextones' subscriber data for use in text message

promotional campaigns. According to Defendants, Nextones would

collect consent to receive promotional material on users' mobile

devices, and MIA, in turn, would use the data in accordance with

the Mobile Marketing Association Guidelines. Defendants contend

that the agreements between Defendant ipsh! and MIA, and MIA and

Nextones, permitted Defendant ipsh! to send a text message

advertising the Stephen King novel to the wireless telephone

numbers of individual Nextones subscribers, such as Plaintiff. 

The process for sending the promotional text was as follows:

MIA provided Defendant ipsh! with electronic plain text or Excel

files containing the list of 100,000 mobile numbers of Nextones

subscribers; the list came in a series of emails, broken up by the

age of the intended recipients. The emails were forwarded to a

programmer who then imported the list into a database, which was

set up specifically for the Stephen King campaign and which was

located on Defendant ipsh!'s server. Defendant ipsh!'s employees

entered the relevant information for the promotional messages,

including the text of the messages and the time they were to be

sent, and packed the messages in "XML" format; the XML messages

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were stored on Defendant ipsh!'s server until they were programmed

to be sent to the intended recipients. 

The text messages promoting Cell were intended to go out at

12:30 p.m. Before the intended receiver could receive the message,

however, Defendant ipsh!'s program had to send the XML message, or

file, to mBlox, Inc., an "aggregator," or mobile transaction

networking services company. mBlox handled the actual transmission

of the text messages to the wireless carriers; unlike Defendant

ipsh!'s computers, mBlox's computers have the ability to determine

to which telephone carriers to send each set of data and then send

it to the appropriate carrier. Defendant ipsh!'s employee

mistakenly set the program to begin automatically to send the XML

messages at 12:30 a.m. Defendant ipsh!'s program sent 20,000 XML

messages over the Internet, at a rate of 8,000 messages an hour,

before the error was discovered. An additional 40,000 messages

were sent to mBlox after 12:30 p.m., as originally planned, and

then sent to the intended recipients. The remaining 40,000

messages, however, were not sent to the intended Nextones

subscribers. After receiving complaints from customers about the

promotional text message, T-Mobile notified mBlox, who then refused

to send out any more messages on Defendants' behalf. 

LEGAL STANDARD

Summary judgment is properly granted when no genuine and

disputed issues of material fact remain, and when, viewing the

evidence most favorably to the non-moving party, the movant is

clearly entitled to prevail as a matter of law. Fed. R. Civ.

P. 56; Celotex Corp. v. Catrett, 477 U.S. 317, 322-23 (1986);

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Eisenberg v. Ins. Co. of N. Am., 815 F.2d 1285, 1288-89 (9th Cir.

1987).

The moving party bears the burden of showing that there is no

material factual dispute. Therefore, the court must regard as true

the opposing party's evidence, if supported by affidavits or other

evidentiary material. Celotex, 477 U.S. at 324; Eisenberg, 815

F.2d at 1289. The court must draw all reasonable inferences in

favor of the party against whom summary judgment is sought. 

Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574,

587 (1986); Intel Corp. v. Hartford Accident & Indem. Co., 952 F.2d

1551, 1558 (9th Cir. 1991). 

Material facts which would preclude entry of summary judgment

are those which, under applicable substantive law, may affect the

outcome of the case. The substantive law will identify which facts

are material. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248

(1986).

Where the moving party does not bear the burden of proof on an

issue at trial, the moving party may discharge its burden of

production by either of two methods. Nissan Fire & Marine Ins.

Co., Ltd., v. Fritz Cos., Inc., 210 F.3d 1099, 1106 (9th Cir.

2000). 

The moving party may produce evidence negating an

essential element of the nonmoving party’s case, or,

after suitable discovery, the moving party may show that

the nonmoving party does not have enough evidence of an

essential element of its claim or defense to carry its

ultimate burden of persuasion at trial. 

Id. 

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If the moving party discharges its burden by showing an

absence of evidence to support an essential element of a claim or

defense, it is not required to produce evidence showing the absence

of a material fact on such issues, or to support its motion with

evidence negating the non-moving party's claim. Id.; see also

Lujan v. Nat’l Wildlife Fed’n, 497 U.S. 871, 885 (1990); Bhan v.

NME Hosps., Inc., 929 F.2d 1404, 1409 (9th Cir. 1991). If the

moving party shows an absence of evidence to support the non-moving

party's case, the burden then shifts to the non-moving party to

produce "specific evidence, through affidavits or admissible

discovery material, to show that the dispute exists." Bhan, 929

F.2d at 1409. 

If the moving party discharges its burden by negating an

essential element of the non-moving party’s claim or defense, it

must produce affirmative evidence of such negation. Nissan, 210

F.3d at 1105. If the moving party produces such evidence, the

burden then shifts to the non-moving party to produce specific

evidence to show that a dispute of material fact exists. Id.

If the moving party does not meet its initial burden of

production by either method, the non-moving party is under no

obligation to offer any evidence in support of its opposition. Id.

This is true even though the non-moving party bears the ultimate

burden of persuasion at trial. Id. at 1107.

DISCUSSION

Congress enacted the Telephone Consumer Protection Act (TCPA)

in response to various telemarketing practices arising out of the

use of "autodialers" to generate millions of automated telephone

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calls. Jaffe, 211 Ariz. at 328 (citing S. Rep. No. 102-178, at 2-3

(1991), as reprinted in 1991 U.S.C.C.A.N. 1968, 1969-71)). As

relevant here, the TCPA prohibits any call using any automatic

dialing telephone system to any telephone number assigned to a

cellular service. 47 U.S.C. § 227. Specifically, section

227(b)(1)A)(iii) makes it unlawful for any person within the United

States "to make any call (other than a call made for emergency

purposes or made with the prior express consent of the called

party) using any automatic telephone dialing system or an

artificial or prerecorded voice . . . to any telephone number

assigned to a paging service, cellular telephone service,

specialized mobile radio service, or other radio common carrier

service, or any service for which the called party is charged for

the call."

Plaintiff contends that Defendants' actions described above

constitute a textbook violation of the TCPA. According to

Defendants, however, summary judgment should be granted in their

favor because the text message at issue was not sent using an

automatic telephone dialing system, nor is it a "call" within the

meaning of the TCPA. They further argue that they are entitled to

summary judgment because Plaintiff was not charged for the text

message, because she consented to receiving such promotional 

messages and because Plaintiff is barred from recovering damages

under the doctrines of estoppel and unclean hands. 

I. "Automatic telephone dialing system"

The TCPA defines an automatic telephone dialing system as

"equipment which has the capacity -- (A) to store or produce

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telephone numbers to be called, using a random or sequential number

generator; and (B) to dial such numbers." 47 U.S.C. § 227(a)(1). 

Defendants contend that the undisputed facts show that the

hardware and software used to send the promotional text messages do

not fall within this definition because they are not equipment that

stores, produces or calls numbers "using a random or sequential

number generator." Id. Rather, the equipment at issue sent

messages to a specific, finite, non-random and non-sequential list

of numbers belonging to Nextones subscribers. Plaintiff concedes

that the equipment at issue does not contain or use a random or

sequential number generator. Nonetheless, she contends that the

equipment Defendants used is an automatic telephone dialing system

because it has the capacity to store numbers to be called and to

dial numbers without human intervention, automatically making calls

to thousands of numbers in a short period of time.

Neither side provides a case on point. And the Federal

Communications Commission (FCC), the agency Congress gave authority

to prescribe regulations to implement the TCPA, has adopted,

verbatim, the TCPA's definition of automatic telephone dialing

systems, without providing further definition. See 47 C.F.R.

§ 64.1200(f). According to Defendants, there are no published

opinions construing the "automatic telephone dialing system"

portion of the TCPA; this is a case of first impression. 

The parties' dispute centers on the phrase "using a random or

sequential number generator." Defendants argue that the phrase

modifies both "to store" and to "produce telephone numbers to be

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called." They point out that where, as here, there is a comma

prior to a qualifying clause, that clause should be interpreted to

modify all antecedents, not just the last one. See United States

v. Moore, 288 F. Supp. 2d 955, 959 (E.D. Wis. 2003) (quoting 2A

Norman J. Singer, Statutes and Statutory Construction § 47:33 at

373 (6th ed. 2000) ("Evidence that a qualifying phrase is supposed

to apply to all antecedents instead of only to the immediately

preceding one may be found in the fact that it is separated from

the antecedents by a comma.")). In further support of their

argument, Defendants point to the FCC's conclusion that the

"prohibitions of § 227(b)(1) clearly do not apply to functions like

'speed dialing,' 'call forwarding,' or public telephone delayed

message services (PTDMS), because the numbers called are not

generated in a random or sequential fashion." In the Matter of

Rules and Regulations Implementing the Telephone Consumer

Protection Act of 1991, 7 FCC Rcd. 8752, 8776 (1992) (1992 FCC

Report). 

According to Plaintiff, however, the phrase "using a random or

sequential number generator" modifies only the last antecedent

"produce telephone numbers to be called," not "to store." Her

argument is not persuasive. Her interpretation is ungrammatical. 

To interpret the statute as Plaintiff proposes results in the

statute defining an automatic telephone dialing system as equipment

that has the capacity "to store. . . and to dial such numbers," 

without any referent to the numbers stored and dialed.

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A predictive dialer is dialing equipment that, through the

use of complex formulae, attempts to predict when a person will

answer the telephone; a telemarketing call is then not transferred

to a live operator until the equipment predicts a person will have

answered.

11

 Plaintiff's reliance on recent FCC guidance is also misplaced. 

In 2003, the FCC considered whether predictive dialers,5

 that use

telephone numbers from a list that is not randomly or sequently

generated, are automatic telephone dialing systems. The FCC

explained,

The statutory definition contemplates autodialing equipment

that either stores or produces numbers. It also provides

that, in order to be considered an "automatic telephone

dialing system," the equipment need only have the "capacity to

store or produce telephone numbers (emphasis added)...." It

is clear from the statutory language and the legislative

history that Congress anticipated that the FCC, under its TCPA

rulemaking authority, might need to consider changes in

technologies . . . . As one commenter points out, the

evolution of the teleservices industry has progressed to the

point where using lists of numbers is far more cost effective. 

The basic function of such equipment, however, has not changed

-- the capacity to dial numbers without human intervention. 

In re Rules and Regulations Implementing the Telephone Consumer

Protection Act of 1991, 18 FCC Rcd. 14014, 14091-92 (footnotes

omitted) (2003) (2003 FCC Report).

It then concluded,

Therefore, to exclude from these restrictions equipment that

use [sic] predictive dialing software from the definition of

"automated telephone dialing equipment" simply because it

relies on a given set of numbers would lead to an unintended

result . . . . We believe the purpose of the requirement that

equipment have the "capacity to store or produce telephone

numbers to be called" is to ensure that the prohibition on

autodialed calls not be circumvented. Therefore, the

Commission finds that a predictive dialer falls within the

meaning and statutory definition of "automatic telephone

dialing equipment" and the intent of Congress.

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Id. at 14092-93 (footnotes omitted).

As Defendants point out, although the FCC rejected the

argument that predictive dialers were not automatic telephone

dialing equipment merely because they used a list of numbers, it

did not find that any program using a list of numbers is an

automatic telephone dialing system, especially when that list was

generated based on people who had agreed to receive promotions. 

Further, the FCC language that Plaintiff quotes is merely

commentary, not a regulation, and, thus, not entitled to Chevron

deference. See Chevron U.S.A. Inc. v. Natural Res. Def. Council,

Inc., 467 U.S. 837, 843-45 (1984) (ensuing regulations are binding

in the courts unless procedurally defective, arbitrary or

capricious in substance, or manifestly contrary to the statute). 

The Court concludes that the plain language of the statute

does not allow the Court to divorce "to store" from the "random or

sequential number generator," as Plaintiff suggests. Rather, the

phrase "random or sequential number generator" modifies "store,"

"produce" and "called." Because it is undisputed that the

equipment here does not store, produce or call randomly or

sequentially generated telephone numbers, the Court grants summary

judgment in Defendants' favor: the equipment at issue is not an

automatic telephone dialing system under the TCPA.

II. "Prior express consent of the called party"

The TCPA prohibits only calls made without the "prior express

consent of the called party." 47 U.S.C. § 227(b)(1)(A). 

Defendants argue that summary judgment is warranted because

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Plaintiff consented to receive promotional messages, including the

message at issue. Defendants note that, to receive the free ring

tone for the cellular telephone used by her son, Plaintiff agreed

to receive promotions from "Nextones affiliates and brands." 

Defendants concede that Nextones' website did not define "brands"

and that it suggested that "affiliates" are those interested in

selling mobile ringtones and graphics. Defendants point to no case

defining "affiliates" or "brands" as those terms relate to the

TCPA. Nonetheless, they claim that Plaintiff's causes of action

under the TCPA fail as a matter of law because the text message at

issue was identified as carrying the Nextones brand in that it

stated that it was "PwdbyNexton," i.e., powered by Nextones, and

because Defendant ipsh! and MIA were Nextones affiliates.

Plaintiff disagrees and argues that, although she consented to

receive promotional messages from Nextones affiliates and brands,

she did not consent to receive the text message at issue. She

notes that Nextones' privacy policy statement provides that it will

not share customer information, including mobile phone numbers,

with any third party without consent. According to Plaintiff,

Defendants Simon & Schuster and ipsh! are third parties. She

further argues that phrase "PwdbyNexton" did not identify the

Stephen King text message as a Nextones "brand." 

That argument, however, is contradicted by the facts in this

case. "PwdbyNexton" branded the text message as coming from

Nextones; it identified the message with a Nextones brand. Thus,

while there may be a dispute of fact concerning whether Defendants

are Nextones affiliates, there is no dispute of fact that the

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promotional text message at issue was identified with a Nextones

brand. Plaintiff expressly consented to receive promotions of

Nextones brands and, therefore, summary judgment is properly

granted on this ground as well.

CONCLUSION

Because the Court concludes that the equipment at issue is not

an automatic telephone dialing system and that Plaintiff consented

to receive the promotional text message, the Court need not address

Defendants' remaining arguments. Defendants' Motion for Summary

Judgment (Docket No. 60) is GRANTED. Judgment shall enter

accordingly. Plaintiff shall pay Defendants' costs.

IT IS SO ORDERED.

Dated: 6/26/07 

CLAUDIA WILKEN

United States District Judge

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