Opinion
Proceedings: (IN CHAMBERS) ORDER RE: MOTION TO STAY PROCEEDINGS [35]
Honorable BEVERLY REID O'CONNELL, United States District Judge.
Pending before the Court is Defendants Healthways, Inc. (" Healthways"), Healthways WholeHealth Networks, Inc. (" WholeHealth"), and Medversant Technologies L.L.C.'s (" Medversant") motion to stay proceedings in this matter pending review by the Federal Communications Commission (" FCC"). (Dkt. No. 35.) After consideration of the papers filed in support of and in opposition to the instant motion, the Court deems this matter appropriate for decision without oral argument of counsel. See Fed.R.Civ.P. 78; C.D. Cal. L.R. 7-15. For the following reasons, the Court DENIES the Defendants' motion.
I. BACKGROUND
A. The Parties
Plaintiff Edward Simon, DC is a chiropractor who practices in Los Angeles County. (Compl. ¶ 5.) As part of his business. Plaintiff submitted an application to Defendant WholeHealth in which he provided his fax number. (Simon Decl. ¶ ¶ 3-4.) WholeHealth, a subsidiary of Healthways, serves as a healthcare intermediary that connects patients to the discounted service providers within its network. (Kent Decl. ¶ ¶ 2-3.) WholeHealth communicates with its members via email, telephone, and fax. (Kent Decl. ¶ 6.) Plaintiff is part of this network, and he submitted an application to WholeHealth in order to receive patient referrals. (Simon Decl. ¶ ¶ 3-1.)
Defendant Medversant is another healthcare company that specializes in healthcare data management. (Beckerman Decl. ¶ 2.) Medversant offers " communications compliance solutions" to help healthcare providers meet their information security obligations under the Health Information Portability and Accountability Act (" HIPAA"). Healthways and WholeHealth are both clients of Medversant. (Beckerman Decl. ¶ 2)
Plaintiff brings this action on behalf of a class of similarly situated individuals, defined as " all persons and entities that were at the time subscribers of telephone numbers to which material that discusses, describes or promotes any of Defendants' respective property, goods, or services (whether separately or in combination with the property, goods, or services of any other Defendant) was sent via facsimile transmission, commencing within four years preceding the filing of this action." (Compl. ¶ 17.)
B. The Underlying Dispute
In the summer of 2014, Defendants sent out thousands of faxes to healthcare providers advertising ProMailSource, an encrypted email program provided by Medversant. (Beckerman Decl. ¶ 3.) WholeHealth sent these faxes based on information healthcare providers provided in order to become part of the WholeHealth network. (Kent Decl. ¶ ¶ 4-6.) Medversant also faxed some of these numbers at Healthways and WholeHealths' request. (Beckerman Decl. ¶ 3.) According to Medversant, at least some of these providers had already expressly consented to receive this information when they applied for credentials through Medversant's online program. (Policarpio Decl. ¶ 2.) These applicants were required to consent to the terms of Medversant's privacy policy, which allows the company to use an applicant's information for a variety of purposes, including member relations, marketing, and sales. (Policarpio Decl. Ex. A.)
On August 13, 2014, Plaintiff received a fax advertising ProMailSource. (Compl. Ex. 1.) Plaintiff alleges that this fax violated the Telephone Consumer Protection Act of 1991 (" TCPA") and Junk Fax Prevention Act of 2005 (" JFPA") for two reasons: (1) Defendants failed to obtain his prior express permission as defined in 47 U.S.C. § 227(a)(5); and (2) Defendants failed to include the " Opt-Out Notice" required by the TCPA and JFPA. (Compl. ¶ ¶ 1, 13-15.)
On behalf of a putative class of similarly situated individuals, Plaintiff filed this action in the Superior Court of California, County of Los Angeles, on September 16, 2014. (Dkt. No. 1 at 9.) Defendants then removed the case to this Court on the basis of federal question jurisdiction on October 16, 2014. (Dkt. No. 1.) In his Complaint, Plaintiff seeks statutory damages in the amount $500 for each violation of the JFPA and requests that the Court triple these damages for what Plaintiff alleges was willful and knowing conduct. ( See Compl. ¶ ¶ 26-27; Prayer for Relief ¶ ¶ 4-6.)
C. The FCC Decision
When Plaintiff filed this lawsuit, the law was unclear on whether opt-out notice was required for solicited faxes. On October 30, 2014, however, the FCC issued an order clarifying that even solicited faxes--those sent with a party's prior express permission--require " opt-out" notice. (Dkt. No. 36 at 5-29.) The FCC recognized " that some parties who have sent fax ads with the recipient's prior express permission may have reasonably been uncertain about whether [the FCC's] requirement for opt-out notices applied to them." (Dkt. No. 36 at 5.) Due to this uncertainty, the FCC granted parties a retroactive waiver from the opt-out requirement and invited similarly situated parties--those who sent fax ads without opt-out notice but with the parties' prior express permission--a six-month window to seek a similar waiver. (Dkt. No. 36 at 5.) The waiver does not affect the prohibition against sending unsolicited fax ads. (Dkt. No. 36 at 19.)
On January 8, 2015, a little more than two months after the FCC's order was issued, Medversant filed a petition with the FCC for a retroactive waiver from the opt-out requirement. (Dkt. No. 36 at 31-36.) On March 2, 2015, approximately four months after the FCC decision, Healthways and WholeHealth also filed a petition for waiver. (Lee Decl. ¶ 2.) Defendants now contend that they are eligible for such an exemption and that this litigation should be stayed until the FCC reaches a decision. Accordingly, Defendants filed the instant motion to stay these proceedings on March 3, 2015. (Dkt. No. 35.) Plaintiff opposed this motion on March 25, 2015, (Dkt. No. 41), and Defendants replied on March 30, 2015, (Dkt. No. 43).
II. REQUESTS FOR JUDICIAL NOTICE
A court may properly take judicial notice of (1) material which is included as part of the complaint or relied upon by the complaint, and (2) matters in the public record. See Marder v. Lopez, 450 F.3d 445, 448 (9th Cir. 2006); Lee v. City of L.A ., 250 F.3d 668, 688-89 (9th Cir. 2001). Under Federal Rule of Evidence 201(b), a judicially noticed fact must be one " not subject to reasonable dispute because it (1) is generally known within the trial court's territorial jurisdiction; or (2) can be accurately and readily determined from sources whose accuracy cannot reasonably be questioned." Further, a court " must take judicial notice if a party requests it and the court is supplied with the necessary information." See Fed.R.Evid. 201(c)(2); In re Icenhower, 755 F.3d 1130, 1142 (9th Cir. 2014).
A. Defendants' Request for Judicial Notice
Defendants have filed a Request for Judicial notice of two documents from other proceedings: (1) the " Fax Order" issued by the FCC, and (2) Medversant's petition for a retroactive waiver. (Dkt. No. 36.) These documents have either been issued by or filed with a public agency and are therefore matters of public record. Accordingly, the existence and authenticity of these public records is beyond dispute and therefore properly the subject of judicial notice, although the Court cannot take judicial notice of the facts alleged therein. See Lee, 250 F.3d at 688-89; see also Icenhower, 755 F.3d at 1142 (" We 'may judicially notice a fact that is not subject to reasonable dispute because it . . . can be accurately and readily determined from sources whose accuracy cannot reasonably be questioned, ' including 'court filings and other matters of public record.'" (quoting Reyn's Pasta Bella, LLC v. Visa USA, Inc., 442 F.3d 741, 746 n.6 (9th Cir. 2006))). Accordingly, the Court GRANTS Defendants' request for judicial notice.
B. Plaintiff's Requests for Judicial Notice
Plaintiff requests that the Court take judicial notice of five documents: (1) Plaintiff's comments that he provided to Medservant's petition for waiver to the FCC; (2) Plaintiff's reply comments to this petition; (3) the complaint from a related case in the Northern District of Illinois, Affiliated Health Care Associates, P.C., v. Medversant Technologies, LLC & Healthways WholeHealth Networks, Inc., Case No. 1:14-cv-10247 (N.D. Ill.Dec. 22, 2014); (4) a motion to stay in the related case in the Northern District of Illinois; and (5) an order denying a motion to stay in a case from the Northern District of California, Melita Meyer v. Bebe Stores, Inc., Case No. 14-cv-00267-YGR, (N.D. Cal. Mar. 17, 2015).
Although Plaintiff requests that Court take judicial notice of the comments and reply comments that he provided to Medservant's petition, however. Plaintiff has not lodged the appropriate documents with the Court. Exhibits A and B, which Plaintiff asserts constitute his comments, appear instead to be faxes sent by WholeHealth, and not documents connected to Medservant's pending petition before the FCC. ( See Pl.'s Req. for Judicial Notice Exs. A-B). Nevertheless, it is not necessary to take notice of these documents before reaching its decision. Even if Plaintiff had provided them, the Court could only take notice of the existence of these documents--not the disputed facts or arguments for which Plaintiff may have sought to introduce them. See Lee, 250 F.3d at 688-89. Plaintiff's remaining exhibits are publicly filed judicial documents and are therefore properly the subject of judicial notice. See Trigueros v. Adams, 658 F.3d 983, 987 (9th Cir. 2011) (" In particular, we 'may take notice of proceedings in other courts, both within and without the federal judicial system, if those proceedings have a direct relation to matters at issue.'" (quoting United States ex rel. Robinson Rancheria Citizens Council v. Borneo, Inc., 971 F.2d 244, 248 (9th Cir. 1992))).
III. DISCUSSION
Defendants request that the Court stay these proceedings either under the doctrine of primary jurisdiction or for reasons within the Court's discretion, including judicial economy and the potential prejudice to Defendants. For the following reasons, the Court finds a stay to be unnecessary and therefore DENIES Defendants' motion.
A. The Doctrine of Primary Jurisdiction
To begin. Defendants argue that the Court should stay these proceedings in accordance with the primary jurisdiction doctrine due to the FCC's recent clarification that solicited faxes must provide opt-out notice. The primary jurisdiction doctrine allows courts to stay proceedings when the court determines that a claim implicates technical and policy questions that should first be addressed by the appropriate regulatory authority. Clark v. Time Warner Cable, 523 F.3d 1110, 1114 (9th Cir. 2008). The doctrine is not intended to enable courts to " secure expert advice, " but should only be used if a claim " requires resolution of an issue of first impression, or of a particularly complicated issue that Congress has committed to a regulatory agency, and if protection of the integrity of a regulatory scheme dictates preliminary resort to the agency which administers the scheme." Id. (internal citations and quotation marks omitted).
While there is no fixed formula for determining whether the primary jurisdiction doctrine applies, the Ninth Circuit has applied the doctrine where there is " (1) [a] need to resolve an issue that (2) has been placed by Congress within the jurisdiction of an administrative body having regulatory authority (3) pursuant to a statute that subjects an industry or activity to a comprehensive regulatory authority that (4) requires expertise or uniformity in administration." Id. at 1115 (modification in original). Applying these factors to the case at hand, it is clear that the primary jurisdiction doctrine does not apply.
In its recent decision, the FCC invited certain entities to apply for a retroactive waiver from the opt-out requirement. Whether Defendants qualify to seek a waiver from the FCC, however, depends on whether Defendants obtained prior express permission before sending the faxes in question. The FCC's October 30, 2014 ruling only permits entities that sent faxes with prior express permission--but without opt-out notice--to seek a waiver for these faxes. The ruling does not affect the FCC's prohibition against sending unsolicited faxes, nor does the decision affect the requirements for faxes based on an existing business relationship. ( See Dkt. No. 36 at 5 n.2 (" The waiver does not extend to the similar requirement to include opt-out notice on fax ads sent pursuant to an established business relationship, as there is no confusion regarding the applicability of this requirement to such faxes. We also note that the waiver does not affect the prohibition against sending unsolicited fax ads, which has remained in effect since its original effective date.").) In requesting that the Court stay this action pursuant to the doctrine of primary jurisdiction. Defendants are in essence asking the Court to allow the FCC to resolve the question of prior express permission--without which Defendants would not qualify for a waiver. For the following reasons, that question does not warrant application of the primary jurisdiction doctrine.
First, although the FCC has the authority to define " prior express permission" or " prior express invitation, " this is not an issue of first impression. In fact, the FCC has previously examined this term:
[P]rior express invitation or permission must be express, must be given prior to the sending of any facsimile advertisements, and must include the facsimile number to which such advertisements may be sent. It cannot be in the form of a " negative option." However, a company that requests a fax number on an application form could include a clear statement indicating that, by providing such fax number, the individual or business agrees to receive facsimile advertisements from that company or organization.
Rules & Regulations Implementing the Tel. Consumer Prot. Act of 1991, 21 FCC Red. 3787, 3811 (2006).
Second, this is not an issue that requires technical expertise beyond the Court's conventional experience. Indeed, following the FCC's recent decision, multiple courts have concluded that disputes over prior express permission are appropriate for judicial resolution. See, e.g., Physicians Healthsource, Inc. v. Doctor Diabetic Supply, LLC, No. 12-22330-CIV, 2014 WL 7366255, at *2-3 (S.D. Fla. Dec. 24, 2014) (certifying class despite indication that defendant would seek a waiver because defendant had presented no evidence of prior express permission); True Health Chiropractic Inc. v. McKesson Corp., No. 13-cv-02219-JST, 2014 WL 6707594, at *2 (N.D. Cal. Nov. 25, 2014) (holding that resolution of whether the named plaintiff's provided consent to receive faxes from the defendants is a factual issue that requires litigation, not a stay); Around the World Travel, Inc. v. Unique Vacations, Inc., No. 14-cv-12589, 2014 WL 6606953, at *3 (E.D. Mich. Nov. 19, 2014) (considering the primary jurisdiction doctrine and finding that continuing with the litigation and discovery were more appropriate even though the parties disputed the issue of prior express permission).
Finally, this is not the type of claim that requires uniformity of administration or the need to establish a national rule. To the contrary, the FCC recognized in its decision that waiver requests must be determined on a case-by-case basis. ( See Dkt. No. 36 at 19 n. 102 (" [W]e note that all future waiver requests will be adjudicated on a case-by-case basis and do not prejudge the outcome of future waiver requests in this Order.").). While the Court acknowledges the potential for inconsistent rulings between the FCC and this Court, this action is in its infancy; there is no basis to believe that after discovery on this issue there will remain a substantial risk of inconsistent rulings. Accordingly, the Court finds application of the doctrine of primary jurisdiction to be inappropriate in this case.
B. Defendants' Motion Is Not Warranted on Other Grounds
Alternatively, Defendants ask that the Court stay these proceedings in the interest of judicial economy and because they would suffer prejudice absent such a stay. " [T]he power to stay proceedings is incidental to the power inherent in every court to control the disposition of the cases on its docket with economy of time and effort for itself, for counsel, and for litigants." Landis v. N. Am. Co., 299 U.S. 248, 254, 57 S.Ct. 163, 81 L.Ed. 153 (1936). Although no precise rule governs the determination of when to grant a motion to stay when similar actions are pending in two different federal district courts, " the general principle is to avoid duplicative litigation." Colo. River Water Conservation Dist. v. U.S., 424 U.S. 800, 817, 96 S.Ct. 1236, 47 L.Ed.2d 483 (1976). The Ninth Circuit has held that a stay is proper if the conclusions of another tribunal " may be of valuable assistance to the court in resolving the [claims] presented in [the complaint], even under the assumption that the court is not bound and controlled by the [other tribunal's] conclusions." Leyva v. Certified Grocers of Cal., Ltd., 593 F.2d 857, 863 (9th Cir. 1979). Nevertheless, a " stay should not be granted unless it appears likely the other proceedings will be concluded within a reasonable time in relation to the urgency of the claims presented to the court." Id. at 864.
The Court declines to stay these proceedings pursuant to its inherent authority. In similar circumstances involving a dispute over prior express permission, courts have permitted the litigation to continue absent admissible evidence that disproves the plaintiff's allegations. See, e.g., Doctor Diabetic Supply, 2014 WL 7366255, at *3 (" DDS has not yet presented any evidence of express invitation or permission from any recipient."); True Health Chiropractic, 2014 WL 6707594, at *2 (" McKesson also seeks to resolve the factual question of whether the named Plaintiff's provided consent to receive faxes from McKesson. But resolution of that factual issue requires litigation, not a stay." (internal citations omitted)); Around the World Travel, 2014 WL 6606953, at *4 (" Plaintiff is entitled to discovery to determine whether defendant can support its position that it sent faxes with the permission of the recipients."). Despite the distinguishable procedural postures of these cases, their reasoning remains applicable; the Court will not blindly grant a stay, over the objection of Plaintiff, absent any evidence that Defendants obtained the prior express permission necessary to qualify for a waiver.
Around the World Travel involved a motion for reconsideration of an oral stay or, alternatively, a renewed motion to stay; True Health Chiropractic involved a motion for reconsideration of the district court's denial of a motion to stay; and Doctor Diabetic Supply involved certification of a class despite an ongoing petition.
Defendants rely on Physicians Healthsource, Inc. v. Endo Pharmaceuticals, No. 14-cv-002289-CMR, (Dkt. No. 27), to support . . . . their contention that a stay is equitable while the FCC reviews a party's request for a retroactive waiver. Unlike Plaintiff here, however, the plaintiff in Endo Pharmaceuticals asserted his claims without regard to whether the facsimile advertisements were solicited or unsolicited. Id. (Dkt. No. 27 at 1). This case is therefore more analogous to Around the World Travel, in which the class definition potentially included both solicited and unsolicited faxes, but the complaint clearly alleged that the actionable faxes were unsolicited. 2014 WL 6606953, at *2-4. Similarly here. Plaintiff's Complaint (if not his proposed class) specifically alleges that all faxes sent by Defendants were without prior express permission. (Compl. ¶ 15 (" Plaintiff did not give Defendants prior express invitation or permission . . . . Plaintiff is informed and believes . . . that Defendants sent or caused Exhibit 1 and other fax advertisements to be sent without obtaining prior express invitation or permission. In sending these faxes . . . Defendants also failed to include the disclosures required by the Opt-Out Notice Requirements . . . ." (emphasis added)).)
The Court takes judicial notice of this unpublished order. See Trigueros, 658 F.3d at 987.
Defendants have presented no evidence that rebuts Plaintiff's allegation that the faxes were sent without prior express permission. Defendant WholeHealth has submitted an affidavit in which it claims to have had an existing business relationship with Plaintiff, (Kent Decl. ¶ ¶ 4-5), but the FCC waiver would not apply in these circumstance, ( see Dkt. No. 36 at 5 n.2 (" This waiver does not extend to a similar requirement to include an opt-out notice on fax ads sent pursuant to an established business relationship . . . .")). Moreover, that WholeHealth obtained Plaintiff's fax number from an application he submitted does not conclusively demonstrate that the application contains a clear statement of consent to receive facsimile advertisements. No other evidence has been offered to disprove Plaintiff's claim. Accordingly, because as it would be inappropriate to stay the case without permitting Plaintiff the benefit of discovery to support his allegations, the Court declines to exercise its inherent power to stay these proceedings. See True Health Chiropractic, 2014 WL 6707594, at *2. If discovery reveals that the contested faxes were in fact sent with Plaintiff's or other class members' permission, a stay may become appropriate or may be relevant in limiting the size of the class. At this time, however, such a request remains premature.
Medversant has also submitted a copy of its privacy policy to support its claim that certain Healthways providers credentialed through Medversant affirmatively agreed to the terms of this policy. (Policarpio Decl. Ex. A.) Regardless of whether this privacy policy is sufficient to constitute prior express permission, however, Medversant does not claim that this agreement covers all members of the class, nor that it even covers Plaintiff.
IV. CONCLUSION
For the foregoing reasons, Defendants' motion to stay is DENIED. The hearing set for April 13, 2015 is VACATED.
IT IS SO ORDERED.