FCC building in Washington, D.C. Photo: Patrice Gilbert/ALM

A federal judge in Camden has ruled that two Telephone Consumer Protection Act suits against Freedom Mortgage Corp. should not be stayed while the Federal Communications Commission develops guidance on what constitutes an automated telephone dialing system under the statute.

The plaintiffs in the pair of cases have plausibly alleged that Freedom contacted them on their mobile phones, U.S. District Judge Jerome Simandle of the District of New Jersey said in his Aug. 2 rulings denying the defendant’s motions to dismiss. And the judge declined Freedom’s request to stay the litigation pending the FCC’s interpretation of what is or is not an automated telephone dialing system, finding that any such guidance from the agency would not be helpful during the current posture of the case.

Freedom Mortgage, headquartered in Mount Laurel, is facing the two putative class actions in the District of New Jersey, lodged over its alleged marketing calls to consumers’ mobile phones.

Berger Montague of Philadelphia represents the plaintiffs in both cases—Sieleman v. Freedom Mortgage, brought by a plaintiff from Minnesota, and Somogyi v. Freedom Mortgage, in which the plaintiffs hail from Pennsylvania.

Reed Smith represents Freedom in the Sieleman case, and Akin Gump Strauss Hauer & Feld and Drinker Biddle & Reath represent it in the Somogyi case.

Both suits claim Freedom Mortgage used automated dialers to promote mortgage refinancing to the plaintiffs without their consent, and that the calls continued even after the plaintiffs asked the defendant to stop.

In Somogyi, Freedom argued that the suit should be dismissed because the plaintiffs’ description of dialing equipment allegedly used by the defendant did not qualify as an automated telephone dialing system (ATDS) under the TCPA. Freedom also claimed that the suit failed to plausibly allege that calls to the plaintiffs were made by a random or sequential number generator, because the recipients already were customers of Freedom Mortgage.

Freedom Mortgage sought a stay in both cases in light of a March 2018 ruling from the U.S. Court of Appeals for the D.C. Circuit, ACA International v. Federal Communications Commission. That case was brought to challenge a 2015 FCC order that adopted an expansive view of what qualified as an ATDS.

The 2015 rules were so broad that smartphones were rendered ATDS, Simandle said. But the court in ACA International invalidated the 2015 order. Following the D.C. Circuit’s ruling in ACA International, the FCC issued a May 14 public notice seeking comment on “the functions a device must be able to perform” to qualify as an ATDS.

U.S. District Judge Jerome Simandle.
Photo: Carmen Natale/ALM

But Simandle saw no need for a stay.

“Since the statutory definition of an ATDS (as opposed to the FCC’s interpretation of an ATDS) was not questioned” in ACA International, “the court finds it is unnecessary to issue a stay at the present time. Whatever guidance the FCC may issue in the future will not alter the statutory definition of an ATDS,” Simandle said.

Simandle also rejected Freedom Mortgage’s claim that the numbers called are not random, as required in order to meet the ATDS definition, because all phone numbers in the system belong to Freedom customers.

“A calling system is no less random if the machine’s universe is the hundreds of thousands of customers, or the residents of a state, or the residents of a nation. Otherwise, the logic of defendant’s position would lead to the conclusion that a system containing fewer than all the telephones in the world is a pre-selected limited universe, and therefore not ‘random,’” he said.

In Sieleman, Freedom Mortgage claimed that the TCPA’s requirement for “express written consent” before making a telemarketing call to a wireless phone number did not apply to a number that the called party provided in connection with an existing debt. Although the plaintiff in Sieleman did not concede to such a disclosure, calls from a mortgage lender offering refinancing services are not made in connection with an existing debt, but are telemarketing calls for a new product, requiring express written consent under the TCPA, Simandle said.

“We are pleased that Judge Simandle required a pleading standard that was possible for a plaintiff to meet, and also found that we had met that standard and can go forward to discovery and try the case,” said Arthur Stock of Berger Montague, for the plaintiffs in both cases.

David Murphy of Reed Smith in Princeton, representing Freedom in the Sieleman case, declined to comment on the rulings.

Meredith Slawe and Michael McTigue of Akin Gump, and Katie Garayoa of Drinker Biddle & Reath, defending Freedom in Somogyi, didn’t return calls.