Case 3:17-cv AJB-JMA Document 16-1 Filed 01/12/18 PageID.34 Page 1 of 24

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1 Case :-cv-0-ajb-jma Document - Filed 0// PageID. Page of 0 0 Karen P. Hewitt (SBN 0) kphewitt@jonesday.com JONES DAY Executive Drive, Suite 00 San Diego, CA - Telephone: () -00 Facsimile: () - Shay Dvoretzky (admitted pro hac vice) sdvoretzky@jonesday.com JONES DAY Louisiana Avenue NW Washington, DC 000 Telephone: (0) - Facsimile: (0) -00 Attorneys for Defendant SIRIUS XM RADIO INC. [Additional counsel identified on signature page] MICHELLE MEZA and STEVE MEZA, Individually and on Behalf of All Others Similarly Situated, v. Plaintiffs, SIRIUS XM RADIO INC., Defendant. UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF CALIFORNIA Case No.: :-CV-0-AJB-JMA MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF SIRIUS XM RADIO INC. S MOTION TO DISMISS OR STAY PLAINTIFFS COMPLAINT Judge: Hon. Anthony J. Battaglia Trial Date: TBD Date: April, 0 Time: :00 p.m. Courtroom: A Case No. :-CV-0-AJB-JMA

2 Case :-cv-0-ajb-jma Document - Filed 0// PageID. Page of 0 0 TABLE OF CONTENTS Page I. INTRODUCTION... II. STATEMENT OF THE CASE... III. ARGUMENT... A. The Court Should Dismiss the Complaint Because Plaintiffs Fail to Plead That Sirius XM Used an ATDS... B. The Court Should Dismiss the Complaint Because the TCPA Provision on Which Plaintiffs Rely Violates the Constitution.... Section (b)()(a)(iii) Is Content-Based and Thus Subject to Strict Scrutiny.... Section (b)()(a)(iii) Fails Strict Scrutiny... C. The Court Should Strike the Class Allegations Because Plaintiffs Are Inadequate Class Representatives... 0 D. At a Minimum, the Court Should Stay the Case Until the D.C. Circuit Decides ACA International... IV. CONCLUSION... -i- Case No. :-CV-0-AJB-JMA

3 Case :-cv-0-ajb-jma Document - Filed 0// PageID. Page of 0 0 CASES TABLE OF AUTHORITIES Page(s) ACA Int l v. FCC, No. - (D.C. Cir.)... passim Amchem Prods., Inc. v.windsor, U.S. ()... 0 Ariz. Free Enter. Club s Freedom Club PAC v. Bennett, U.S. (0)... ASARCO, LLC v. Union Pac. R. Co., F.d (th Cir. 0)... Ashcroft v. Iqbal, U.S. (00)... Ashwander v. TVA, U.S. ()... Bates v. Bankers Life & Cas. Co., F.d (th Cir. 0)... 0 Bell Atl. Corp. v. Twombly, 0 U.S. (00)..., Brown v. Entm t Merchants Ass n, U.S. (0)..., Burson v. Freeman, 0 U.S. ()... Carey v. Brown, U.S. (0)..., Carolina Cas. Ins. Co. v. Team Equip., Inc., F.d 0 (th Cir. 0)... Duguid v. Facebook, Inc., No. -cv-00-jst, 0 WL (N.D. Cal. Mar., 0)... Errington v. Time Warner Cable Inc., No. :-cv-0 RSWL (DTB), 0 WL 0 (C.D. Cal. May, 0)... Erznoznik v. City of Jacksonville, U.S. 0 ()... -ii- Case No. :-CV-0-AJB-JMA

4 Case :-cv-0-ajb-jma Document - Filed 0// PageID. Page of 0 0 TABLE OF AUTHORITIES (Cont d) Page(s) Fontes v. Time Warner Cable, Inc., No. CV-00-CAS, 0 WL 0 (C.D. Cal. Dec., 0)... Frisby v. Schultz, U.S. ()... Gen. Tel. Co. v. Falcon, U.S. ()... Gragg v. Orange Cab Co., F. Supp. d (W.D. Wash. 0)... 0 Gragg v. Orange Cab Co., No. C-0RSL, 0 WL (W.D. Wash. Jan., 0)... Hanlon v. Chrysler Corp., 0 F.d 0 (th Cir. )... 0 Holder v. Humanitarian Law Project, U.S. (00)... Hooker v. Sirius XM Radio Inc., No. -cv- (E.D. Va. 0)... passim Knutson v. Reply!, Inc., No. 0-CV- BEN (WMc), 0 WL 0 (S.D. Cal. Jan., 0)... Knutson v. Sirius XM Radio Inc., Case :-cv-00 AJB-DHB (S.D. Cal. 0)...,, Landis v. N. Am. Co., U.S. ()... Lathorp v. Uber Techs., Inc., No. -cv-0-jst, 0 WL (N.D. Cal. Jan., 0)... Levitt v. Yelp! Inc., F.d (th Cir. 0)... Levya v. Certified Grocers of Cal., Ltd., F.d (th Cir. )... Lilly v. Synchrony Fin., No. :-CV--JCM-VCF, 0 WL 0 (D. Nev. Apr., 0)... McCutcheon v. FEC, S. Ct. (0) iii- Case No. :-CV-0-AJB-JMA

5 Case :-cv-0-ajb-jma Document - Filed 0// PageID. Page of 0 0 TABLE OF AUTHORITIES (Cont d) Page(s) McKenna v. WhisperText, No. :-cv-00-psg, 0 WL 0 (N.D. Cal. Sep., 0)... Metromedia, Inc. v. City of San Diego, U.S. 0 ()... New Hampshire v. Maine, U.S. (00)... Peck v. Cingular Wireless, LLC, F.d 0 (th Cir. 00)... Pepka v. Kohl s Dep t Stores, Inc., No. CV-- MWF, 0 WL 0 (C.D. Cal. Dec., 0)... Police Dep t of Chicago v. Mosley, 0 U.S. ()...,, 0 Reed v. Town of Gilbert, S. Ct. (0)..., Reyn s Pasta Bella, LLC v. Visa USA, Inc., F.d (th Cir. 00)... Reynolds v. Geico Corp., No. :-cv-00-su, 0 WL (D. Or. Mar., 0)..., Rosenberger v. Rector, U.S. ()... Sanders v. Apple, Inc., F. Supp. d (N.D. Cal. 00)... Satterfield v. Simon & Schuster, Inc., F.d (th Cir. 00)... Sheppard v. Capital One Bank, No. CV 0- GAF, 00 WL (C.D. Cal. July, 00)... Small v. GE Capital, Inc., No. EDCV - JGB (DTBx), 0 WL 00 (C.D. Cal. June, 0)... Stephens v. Comenity, LLC, No. :-cv-000-mmd-njk, 0 WL 0 (D. Nev. Dec., 0)..., -iv- Case No. :-CV-0-AJB-JMA

6 Case :-cv-0-ajb-jma Document - Filed 0// PageID. Page of 0 0 TABLE OF AUTHORITIES (Cont d) Page(s) Whittlestone, Inc. v. Handi-Craft Co., F.d 0 (th Cir. 00)... Wright v. Family Dollar, Inc., No. 0 C 0, 00 WL (N.D. Ill. Nov. 0, 00)... STATUTES U.S.C U.S.C.... passim OTHER AUTHORITIES Fed. R. Civ. P..... Fed. R. Civ. P. (b)()..., Fed. R. Civ. P. (a)()... 0 H.R. Rep. No. 0- ()... Rules and Regulations Implementing the TCPA, 0 FCC Rcd. (0)...,, S. Rep. No. 0- ()... -v- Case No. :-CV-0-AJB-JMA

7 Case :-cv-0-ajb-jma Document - Filed 0// PageID.0 Page of 0 0 I. INTRODUCTION This case epitomizes abusive class-action litigation. Not long ago, Plaintiffs counsel filed a class-action lawsuit against Sirius XM Radio Inc. ( Sirius XM ) in this jurisdiction, claiming that Sirius XM s dialing practices violated the Telephone Consumer Protection Act ( TCPA ). Sirius XM settled that lawsuit and several related class-action lawsuits in 0. As part of that settlement, Sirius XM agreed to modify its dialing practices. Plaintiffs counsel agreed that the modified practices were lawful, and cited the changed practices as a justification for a multimillion-dollar attorney-fee award. Now, however, the same lawyers have brought the same lawsuit in the same jurisdiction against the same defendant all over again. They make no allegation that Sirius XM has failed to live up to its obligations under the earlier settlement. Instead, they challenge the very practices that, just over a year ago, they insisted that Sirius XM adopt. This lawsuit should not go forward. First, the Court should dismiss the claim that Sirius XM improperly used an automatic telephone dialing system because Plaintiffs fail to plausibly plead the use of such a device. Second, the Court should also dismiss the complaint because the statutory provisions on which Plaintiffs rely violate the First Amendment and the Equal Protection Clause. Third, the Court should strike Plaintiffs class allegations; because Plaintiffs counsel have already acknowledged the lawfulness of Sirius XM s dialing practices, Plaintiffs cannot adequately represent the class. Finally, at a minimum, the Court should stay the case pending the D.C. Circuit s imminent decision in ACA International v. FCC. II. STATEMENT OF THE CASE A. In the 0s, telemarketers began using equipment that automatically generated and dialed thousands of random or sequential telephone numbers. These aimless calls sometimes reached hospitals and police stations, distracting them from genuine emergencies. The calls also reached cell phones, saddling recipients with -- Case No. :-CV-0-AJB-JMA

8 Case :-cv-0-ajb-jma Document - Filed 0// PageID. Page of 0 0 pricey per-minute charges even when the recipients had no interest in the caller s message. See S. Rep. No. 0-, at (); H.R. Rep. No. 0-, at 0 (). Congress responded in by enacting the TCPA. The Act prohibits calling an emergency number or cell phone using an automatic telephone dialing system (an ATDS ) equipment which has the capacity (A) to store or produce telephone numbers to be called, using a random or sequential number generator; and (B) to dial such numbers. U.S.C. (a)(), (b)()(a). The Act also prohibits calling an emergency room or cell phone using an artificial or prerecorded voice. (b)()(a). The Act, however, permits the use of an ATDS or prerecorded voice if the caller has the prior express consent of the called party, if the caller makes the call for emergency purposes, or by virtue of a recent amendment if the caller makes the call solely to collect a debt owed to or guaranteed by the United States. Id. In 0, the Federal Communications Commission issued an order interpreting the statutory term ATDS. See Rules and Regulations Implementing the TCPA, 0 FCC Rcd. (0). A group of petitioners (including Sirius XM) challenged that order in the D.C. Circuit. See ACA Int l v. FCC, No. - (D.C. Cir.). The D.C. Circuit heard argument on October, 0, but it has not yet issued its opinion. B. In 0, Francis Hooker brought a class action against Sirius XM, alleging that it had violated the TCPA by using ATDS equipment to call class members cell phones. Hooker v. Sirius XM Radio Inc., No. -cv- (E.D. Va. 0). Mr. Hooker s lawyers eventually included Abbas Kazerounian and Jason Ibey, two of the lawyers who brought this case, who also brought (along with Joshua Swigart, counsel here as well) a Hooker companion case in this Court in 0, Knutson v. Sirius XM Radio Inc., Case :-cv-00 AJB-DHB (S.D. Cal. 0), similarly alleging the use of ATDS equipment to call cell phones in violation -- Case No. :-CV-0-AJB-JMA

9 Case :-cv-0-ajb-jma Document - Filed 0// PageID. Page of 0 0 of the TCPA. Sirius XM denied (and continues to deny) that its vendors used an ATDS to call the plaintiffs in those cases or the mobile phone of any other consumer, but to avoid the expense and burden of further litigation, it settled the claims in Hooker, Knutson and two other cases for a fraction of the putative class s claimed damages. Hooker, ECF No. - at (Hooker Settlement, attached as Exhibit A to the Request for Judicial Notice, filed concurrently herewith). The Hooker settlement contained specific provisions regarding the equipment that Sirius XM s telemarketing vendors would use going forward in dialing wireless numbers. Before Knutson and Hooker, those vendors used equipment that operated in different modes depending on whether the calls in question were made to wireless numbers (covered by the ATDS provision) or landlines (not covered). When calling landlines, the equipment operated in predictive mode: it dialed a group of numbers at once, doing so based on a prediction of the likely number of answered calls, and then connected the calls that actually were answered to live agents. By contrast, when calling wireless numbers, the equipment operated only in preview mode: the computer would preview a specific telephone number to a live agent, the agent would make a decision to click to initiate the call, and the agent would remain on the line throughout the entire call, repeating the process with a new number after the call ended. As part of the settlement, Sirius XM agreed to require its vendors to use separate and distinct systems to contact landline and wireless numbers. In particular, when calling wireless numbers, Sirius XM agreed to require its vendors to utilize manual telephone dialing systems that use human intervention to initiate calls and that are separate and distinct from any automatic dialing systems, including any predictive dialing systems, used by those vendors to call landline phones. Hooker Settlement at (emphasis added). What s more, the vendors manual dialing systems [must] use a distinct private branch exchange ( PBX ), or similar telephony mechanism, to connect the manual dialing system to the -- Case No. :-CV-0-AJB-JMA

10 Case :-cv-0-ajb-jma Document - Filed 0// PageID. Page 0 of 0 0 telephone service provider and not share a PBX or similar telephony mechanism with any automatic telephone dialing system. Id. In this way, Sirius XM agreed that its vendors would comply with the Hooker and Knutson plaintiffs extravagant view of what the TCPA demands to use human intervention to initiate calls, with specific physical separation and to monitor and audit compliance with this settlement provision. Id. The parties agreed that the settlement would not be deemed or construed to be an admission of any liability, wrongdoing or injury by Sirius XM. Id. at. Messrs. Kazerounian and Swigart signed the settlement. Id. at. In addition, in explaining to the Hooker court why he and the other lawyers in the case deserved significant attorneys fees, Mr. Kazerounian touted Sirius XM s promise to modify their [dialing] systems. Hooker, ECF No. at (Hooker Fees Memorandum; attached as Exhibit B to the Request for Judicial Notice). He also asserted that Sirius XM s modified practices comply with the Telephone Consumer Protection Act. Id. at ; see also id. at (the modified dialing systems comply with the TCPA ). Messrs. Kazerounian, Swigart, and Ibey all filed declarations in support of the fee award in Hooker. C. Now, these same lawyers have again brought a class-action lawsuit against Sirius XM, this time with Plaintiffs Steve and Michelle Meza as their clients. The lawsuit asserts that Sirius XM has violated the TCPA by calling the Mezas on their cell phones () using an ATDS and () using an artificial or prerecorded voice. Compl.. These plaintiffs seek to maintain their lawsuit as a class-action. Id.. In evaluating a motion to dismiss, courts may take judicial notice of settlement agreement[s] filed with a court, ASARCO, LLC v. Union Pac. R. Co., F.d, 00 n. (th Cir. 0), as well as other court filings such as memoranda, Reyn s Pasta Bella, LLC v. Visa USA, Inc., F.d, n. (th Cir. 00). Sirius XM accordingly asks the Court to take judicial notice of the Hooker settlement (attached as Ex. A to the Request for Judicial Notice) and the fee memorandum submitted by class counsel in Hooker (attached as Ex. B to the Request for Judicial Notice). -- Case No. :-CV-0-AJB-JMA

11 Case :-cv-0-ajb-jma Document - Filed 0// PageID. Page of 0 0 III. ARGUMENT A. The Court Should Dismiss the Complaint Because Plaintiffs Fail to Plead That Sirius XM Used an ATDS The Court should dismiss Plaintiffs claims that Sirius XM used an ATDS to call them. To survive a motion to dismiss under Rule (b)(), a complaint must state a claim to relief that is plausible on its face. Ashcroft v. Iqbal, U.S., (00); see Bell Atl. Corp. v. Twombly, 0 U.S., 0 (00). The complaint must allege factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged. Levitt v. Yelp! Inc., F.d, (th Cir. 0) (quoting Iqbal, U.S. at ). This standard requires alleging the underlying facts ; merely reciting the elements of a cause of action is not enough. Id. These principles govern claims under the TCPA. The provision of the TCPA on which Plaintiffs rely, U.S.C., restricts the use of an automatic telephone dialing system or prerecorded voice. Rule (b)() therefore requires a plaintiff to plead that a defendant has, in fact, used an ATDS to place its calls. And because formulaic recitation of the elements of a cause of action does not suffice (Iqbal, U.S. at ), the plaintiff must go beyond simply saying, The defendant used an ATDS. Rather, the plaintiff must plead factual matter raising a reasonable inference that the defendant s device is, indeed, an ATDS. These principles are nothing new. Courts in this circuit have repeatedly ruled that the conclusory allegation that [the defendant] used an ATDS is not sufficient to support a claim. Duguid v. Facebook, Inc., No. -cv-00-jst, 0 WL, at * (N.D. Cal. Mar., 0); see McKenna v. WhisperText, No. :-cv-00-psg, 0 WL 0, at * (N.D. Cal. Sep., 0) ( [T]he claim that a defendant used an ATDS must be more than just conclusory. ); Gragg v. Orange Cab Co., No. C-0RSL, 0 WL, at * (W.D. Wash. Jan., 0) ( [P]laintiffs allegations regarding the use of the ATDS are -- Case No. :-CV-0-AJB-JMA

12 Case :-cv-0-ajb-jma Document - Filed 0// PageID. Page of 0 0 insufficient under Twombly. ); Knutson v. Reply!, Inc., No. 0-CV- BEN (WMc), 0 WL 0, at * (S.D. Cal. Jan., 0) ( It is conclusory to allege that messages were sent using [an ATDS]. Such a naked assertion need not be taken as true. ). To the extent Plaintiffs claims involve the use of an ATDS, the complaint fails these pleading requirements. (Sirius XM does not contest whether Plaintiffs have adequately pleaded the use of an artificial or prerecorded voice.) The complaint simply asserts: Upon information and belief, the calls were placed via an automatic telephone dialing system. (Compl..) The complaint contains no factual allegations about the nature of the equipment Sirius XM used. Nor does it contain any factual allegations from which a court could infer the nature of the equipment Sirius XM used. This conclusory assertion that Sirius XM used an ATDS falls well short of the requirements of Rule (b)(). This failing is particularly egregious under the circumstances of this case. Normally, a plaintiff pleads on information and belief (as Plaintiffs have done) because relevant information is not reasonably available. Carolina Cas. Ins. Co. v. Team Equip., Inc., F.d 0, 0 (th Cir. 0). That is not the case here. Plaintiffs counsel know exactly what kind of equipment Sirius XM uses to place its calls; they played a significant role in approving a legally-compliant solution that is embodied in the Hooker settlement. Plaintiffs counsel agreed in Hooker that Sirius XM s modified practices are lawful, and they secured the Hooker court s approval of a handsome fee award on the theory that their efforts had ensured that Sirius XM would comply with the law. Supra -. In light of counsel s knowledge of the nature of Sirius XM s calling equipment, there is no excuse for Plaintiffs failure to plead the nature of that equipment. And in light of counsel s acknowledgment in Hooker that the equipment is not an ATDS, there is no basis for Plaintiffs unsupported, naked assertion that it is an ATDS. -- Case No. :-CV-0-AJB-JMA

13 Case :-cv-0-ajb-jma Document - Filed 0// PageID. Page of 0 0 B. The Court Should Dismiss the Complaint Because the TCPA Provision on Which Plaintiffs Rely Violates the Constitution Plaintiffs ATDS and prerecorded-voice claims both rest on U.S.C. (b)()(a)(iii). The Court should dismiss both claims because Section (b)()(a)(iii) s content-based restrictions violate the First Amendment and the Equal Protection Clause.. Section (b)()(a)(iii) Is Content-Based and Thus Subject to Strict Scrutiny Under the Free Speech Clause, government has no power to restrict expression because of its message, its ideas, its subject matter, or its content. Brown v. Entm t Merchants Ass n, U.S., 0 (0). Similarly, under the Equal Protection Clause, government has no power to discriminat[e] among speech-related activities because of the content of the [speaker s] communication. Carey v. Brown, U.S., (0). As a general matter, content-based regulation of speech complies with the Free Speech and Equal Protection Clauses only if the Government can demonstrate that it passes strict scrutiny. Entm t Merchants., U.S. at. A law is content-based if it draws distinctions based on the message a speaker conveys, Reed v. Town of Gilbert, S. Ct., (0), or accords preferential treatment to the expression of views on one particular subject, Carey, U.S. at. For example, a restriction on picketing near schools that exempts picketing on labor issues is based on... content. Police Dep t of Chicago v. Mosley, 0 U.S., 0 (). So is a restriction on picketing near houses that exempts labor picketing. Carey, U.S. at 0. And so is a restriction on billboards that carves out billboards carrying commercial messages. Metromedia, Inc. v. City of San Diego, U.S. 0, () (plurality op.). -- Case No. :-CV-0-AJB-JMA

14 Case :-cv-0-ajb-jma Document - Filed 0// PageID. Page of 0 0 Section (b)()(a)(iii) which prohibits using ATDS equipment or prerecorded voices to call cell phone numbers unless such call is made solely to collect a debt owed to or guaranteed by the United States regulates speech on the basis of its content. The law draws distinctions based on the message a speaker conveys : A caller may use an ATDS or prerecorded voice to collect a government debt, but not (for example) to urge church attendance, solicit a charitable contribution, or (as here) communicate with a customer. The law also accords preferential treatment to the expression of views on one particular subject : Just as the laws in Carey and Mosley singled out labor picketing for special favor, this law singles out calls about government debts for special favor. The preferential treatment here amounts not just to content discrimination, but to outright viewpoint discrimination a blatant and egregious form of content discrimination, Rosenberger v. Rector, U.S., (). In a particularly stark and selfserving example of that discrimination, the federal government has authorized callers to use an ATDS or prerecorded voice to tell a debtor to pay the government, but not to tell the debtor to pay a private company, or, for that matter, to tell the debtor to avoid paying the government by negotiating a settlement, challenging the debt in court, or declaring bankruptcy.. Section (b)()(a)(iii) Fails Strict Scrutiny A content-based speech restriction complies with the First Amendment only if it satisfies strict scrutiny only if the restriction furthers a compelling interest and is narrowly tailored to achieve that interest. Ariz. Free Enter. Club s Freedom Club PAC v. Bennett, U.S., (0). The restriction complies with equal-protection principles only if it satisfies carefu[l] scrutin[y] only if any distinctions it draws serve a substantial state interes[t] and are finely tailored to serve that interest. Carey, U.S. at. It is the rare case in which a content-based restriction satisfies these exacting standards. Entm t Merchants, U.S. at. This is not one of them. -- Case No. :-CV-0-AJB-JMA

15 Case :-cv-0-ajb-jma Document - Filed 0// PageID. Page of 0 0 First, Section (b) s purported goal protecting cell phone owners from unwanted automated calls is not a compelling interest. An objective qualifies as a compelling interest only if it is a public goal of the highest order, Reed, S. Ct. at on par with combating terrorism, Holder v. Humanitarian Law Project, U.S., (00), or preventing election fraud, Burson v. Freeman, 0 U.S., 0 () (plurality op.). Protecting listeners from speech they might find unwanted does not meet this standard. To the contrary, the Government ordinarily lacks the power to decide which types of otherwise protected speech are sufficiently offensive to require protection for the unwilling listener. Erznoznik v. City of Jacksonville, U.S. 0, 0 (). Second, (b) is not narrowly tailored to achieving the interest in preventing unwanted automated calls. Narrow tailoring requires targeting no more than the exact source of the evil [the regulation] seeks to remedy. Frisby v. Schultz, U.S., (). The exact source of the problem the Act seeks to remedy is, of course, calls that are autodialed. Yet rather than prohibiting calls that are in fact autodialed, Section (b)()(a)(iii) prohibits calls placed from devices that have the capacity to autodial regardless of whether the caller used that capacity when making the call in question. See, e.g., Satterfield v. Simon & Schuster, Inc., F.d, (th Cir. 00) ( [A] system need not actually store, produce or call randomly or sequentially generated telephone numbers, it only need to have the capacity to do it. ). Capacity, in turn, includes (according to the Commission s 0 TCPA Order) not just the device s present abilities but also its potential functionalities, if modified. 0 FCC Rcd. at. Section (b)()(a)(iii) is far removed from the exact source of the problem it sets out to solve: It prohibits calls from a device that could be modified in such a way that it could have the ability to autodial, regardless of whether the modification is ever made or the ability ever used. In doing so, it threatens to capture many of contemporary society s most common technological devices, because in today s -- Case No. :-CV-0-AJB-JMA

16 Case :-cv-0-ajb-jma Document - Filed 0// PageID. Page of 0 0 world, the possibilities of modification and alteration are virtually limitless. Gragg v. Orange Cab Co., F. Supp. d, (W.D. Wash. 0). Section (b)()(a)(iii) s prophylaxis-upon-prophylaxis approach violates the First Amendment. McCutcheon v. FEC, S. Ct., (0). Third, Plaintiffs also cannot show that Section (b)()(a)(iii) s differential treatment of various types of speech, Mosley, 0 U.S. at, satisfies equal-protection scrutiny. No conceivable public interest can justify treating speech about, say, politics, religion, and economics less favorably than speech about government debt collection. C. The Court Should Strike the Class Allegations Because Plaintiffs Are Inadequate Class Representatives A court may, at the pleading stage, grant a motion to strike class allegations. Bates v. Bankers Life & Cas. Co., F.d, (th Cir. 0). If the Court does not dismiss the Complaint in its entirety, the Court should strike the class allegations because Plaintiffs counsel have a conflict of interest, and because it makes sense to address that conflict now rather than waiting until the certification stage.. To maintain a class action, Plaintiffs must show that the representative parties will fairly and adequately protect the interests of the class. Fed. R. Civ. P. (a)(). A plaintiff can be an adequate representative only if he and his attorney can properly represent the whole class without any conflicts of interest. Amchem Prods., Inc. v.windsor, U.S., (); see Hanlon v. Chrysler Corp., 0 F.d 0, 00 (th Cir. ) ( named plaintiffs and their counsel must not have any conflicts of interest with other class members ). These issues warrant special attention when the record suggests that [the class action] is driven by fees. Hanlon, 0 F.d at 0. There is a serious conflict between the interests of the putative class members and the interests of Plaintiffs counsel. The putative class members have an interest -0- Case No. :-CV-0-AJB-JMA

17 Case :-cv-0-ajb-jma Document - Filed 0// PageID.0 Page of 0 0 in arguing that Sirius XM s dialing practices, as described in the settlement in Hooker, violate the TCPA. But Plaintiffs counsel cannot effectively make such an argument. After all, in Hooker, counsel got Sirius XM to adopt those very practices, agreed that the practices complied with the TCPA, and asked the Hooker court to grant them lucrative legal fees in part because they got Sirius XM to adopt such practices. If counsel now try to argue that they have changed their minds, and that the practices they said were lawful in Hooker should be viewed as unlawful in this case, they will have undermined their own credibility before this Court and, potentially, before the jury. When a litigant or lawyer deliberately chang[es] positions according to the exigencies of the moment, he undermines his own trustworthiness by creating an impression that he is playing fast and loose with the courts. New Hampshire v. Maine, U.S., 0 (00). An about-face regarding plaintiffs counsel s position on the lawfulness of Sirius XM s dialing practices would create just such an impression of playing fast and loose with the courts an impression that would preclude counsel from adequately representing other members of the class. Making matters worse, counsel s change of position would undermine the essential integrity of the judicial process itself. Id. at 0. When someone assumes a certain position in a legal proceeding, succeeds in maintaining that position, and later, simply because his interests have changed, assume[s] a contrary position, he risks creating the perception that either the first court or the second court was misled a perception that poses a threat to judicial integrity. Id. Here, Plaintiffs counsel assume[d] a certain position in Hooker and succeed[ed] in maintaining that position. Id. If they were now to adopt and prevail on a contrary position, their turnaround would create the perception that [the Hooker] court was misled when it agreed to award millions of dollars in attorneys fees to reward counsel in that case (including these three lawyers) for -- Case No. :-CV-0-AJB-JMA

18 Case :-cv-0-ajb-jma Document - Filed 0// PageID. Page of 0 0 getting Sirius XM to change its dialing practices. Id. Such a perception would undermine judicial integrity. Id. In short, the case presents an intolerable conflict of interest: Plaintiffs counsel cannot, without undermining both their own credibility and the credibility of our judicial system, make the argument that the putative class members have an interest in advancing. This conflict of interest precludes Plaintiffs from serving as adequate representatives of the putative class.. It makes sense to strike the class allegations now, rather than waiting until the class-certification stage. The function of a motion to strike is to avoid the expenditure of time and money that must arise from litigating spurious issues by dispensing with those issues prior to trial. Whittlestone, Inc. v. Handi-Craft Co., F.d 0, (th Cir. 00). A court should grant a motion to strike allegations rather than postpone the issue until the class-certification stage where the issues are plain enough from the pleadings. Gen. Tel. Co. v. Falcon, U.S., 0 (); see, e.g., Pepka v. Kohl s Dep't Stores, Inc., No. CV-- MWF (FFMx), 0 WL 0, at * (C.D. Cal. Dec., 0) (striking TCPA class allegations that proposed an impermissible fail-safe class, reasoning that the matter [was] sufficiently obvious from the pleadings to resolve in advance of a motion for class certification ); Sanders v. Apple, Inc., F. Supp. d, 0 (N.D. Cal. 00) (striking fraud class allegations for lack of predominance, reasoning that an immediate decision would help the parties avoid [unnecessary] expenditure of time and money); Sheppard v. Capital One Bank, No. CV 0- GAF (FFMx), 00 WL, at *, * (C.D. Cal. July, 00) (striking class allegations that failed to satisfy the numerosity requirement, reasoning that it was appropriate to do so at the pleading stage because the issues involved [were] pure questions of law, and the record before the Court [was] undisputed ). -- Case No. :-CV-0-AJB-JMA

19 Case :-cv-0-ajb-jma Document - Filed 0// PageID. Page of 0 0 Wright v. Family Dollar, Inc., No. 0 C 0, 00 WL, at * (N.D. Ill. Nov. 0, 00), illustrates this point. In Wright, the district court struck class allegations for lack of adequate representation. The court considered it clear from the complaint that the putative class [was] permeated by conflicts of interest and that plaintiff s counsel [would] not be able to adequately represent all the members. Id. The court added: When the defendant advances a legal argument based on the pleadings, discovery is not necessary for the court to evaluate whether a class action may be maintained. Courts may and should address the plaintiff s class allegations when the pleadings are facially defective and definitively establish that a class action cannot be maintained. Id. at *. These cases support striking the class allegations now. As in Wright, it is clear from the complaint that the class is permeated by conflicts of interest and that Plaintiffs counsel cannot adequately represent all the members. As in Wright, this challenge to the class consists of a purely legal argument based on the pleadings ; discovery is neither necessary nor helpful in addressing it. Thus, as in Wright, the court may and should address the plaintiff s class allegations now and definitively establish that a class action cannot be maintained. Doing so now will enable the parties to avoid expending time and money on class allegations that are doomed to fail anyway. D. At a Minimum, the Court Should Stay the Case Until the D.C. Circuit Decides ACA International A federal district court has the inherent power to stay proceedings in order to promote economy of time and effort for itself, for counsel, and for litigants. Landis v. N. Am. Co., U.S., (). In particular, a court may enter a stay of an action before it, pending resolution of independent proceedings, if it determines that such a stay is efficient for its own docket and the fairest course for the parties. Levya v. Certified Grocers of Cal., Ltd., F.d, (th Cir. ). -- Case No. :-CV-0-AJB-JMA

20 Case :-cv-0-ajb-jma Document - Filed 0// PageID. Page 0 of 0 0 For several reasons, and absent the grant of other relief, this Court should stay proceedings in this case until the D.C. Circuit decides ACA International. First, a stay would promote the interests of the Court by conserving judicial resources. Plaintiffs claims turn on the proper definition of an ATDS. See Compl. 0. In ACA International, the D.C. Circuit will address what constitutes an ATDS. See Br. for Petitioners in ACA International, (arguing that an ATDS must be able to store or produce numbers using a random or sequential number generator, not just dial from a list, and that capacity refers to what the equipment can do as currently configured, not what it might be able to do if reprogrammed or reconditioned). Dkt. #, No. - (D.C. Cir.). And, because the Hobbs Act channels review of FCC orders into a single circuit, the D.C. Circuit s interpretation of the ATDS provision will bind this Court just as much as a Ninth Circuit decision would in any other case. See Peck v. Cingular Wireless, LLC, F.d 0, 0 (th Cir. 00). By waiting for that Court s imminent guidance, this Court will ensure that it does not waste its own time. Second, a stay would serve the interests of the parties. There is a serious possibility that the D.C. Circuit will overturn the FCC s interpretation of ATDS after all, the FCC s interpretation was so broad that it could not determine whether an ordinary smartphone qualified as an ATDS under its approach. See 0 FCC Rcd. at. As suggested above, if the D.C. Circuit does overturn the FCC s view, its decision would dispose of this case by eliminating the legal basis of Plaintiffs claims. It would make little sense to force the parties to go through motions practice and, potentially, discovery and trial preparation, only to learn later that the case should be dismissed. Moreover, even if the D.C. Circuit upholds the FCC s interpretation, its decision may simplify the issues in this case by providing useful guidance about what kinds of equipment qualify as an ATDS. Third, a stay is consistent with the principle of constitutional avoidance. As we discuss in detail above, Sirius XM challenges the constitutionality of the -- Case No. :-CV-0-AJB-JMA

21 Case :-cv-0-ajb-jma Document - Filed 0// PageID. Page of 0 0 TCPA s ATDS restriction. But courts should reach constitutional questions only when there is no other basis for deciding the case. See Ashwander v. TVA, U.S., () (Brandeis, J., concurring). To the extent the Court concludes it is otherwise necessary to reach the constitutional question presented above, it would be prudent to await the D.C. Circuit s decision in ACA International, since that decision may make it unnecessary to reach that constitutional question. Fourth, a stay promotes the interests of a third party the Federal Government. The United States has a right to intervene in a case raising a constitutional challenge to a statute. U.S.C. 0; Fed. R. Civ. P... It would be unwise to force the United States to expend its resources to defend the constitutionality of the TCPA when the D.C. Circuit s decision may make such an expenditure of resources unnecessary. Fifth, a stay would not prejudice Plaintiffs. The D.C. Circuit held oral argument in ACA almost months ago; it could decide the case any day now. As a result, the stay would likely be brief. Finally, precedent supports a stay. For the most part, courts in this circuit have stayed TCPA cases pending the D.C. Circuit s decision. See, e.g., Stephens v. Comenity, LLC, No. :-cv-000-mmd-njk, 0 WL 0, at * (D. Nev. Dec., 0) (granting stay pending the D.C. Circuit s decision in ACA ); Reynolds v. Geico Corp., No. :-cv-00-su, 0 WL, at * (D. Or. Mar., 0) (same); Lilly v. Synchrony Fin., No. :-cv--jcm-vcf, 0 WL 0, at * (D. Nev. Apr., 0) (same); Small v. GE Capital, Inc., No. EDCV - JGB (DTBx), 0 WL 00, at * (C.D. Cal. June, 0) (same); Errington v. Time Warner Cable Inc., No. :-cv-0 RSWL (DTB), 0 WL 0, at * (C.D. Cal. May, 0) (same); Fontes v. Time Warner Cable, Inc., No. CV-00-CAS (CWx), 0 WL 0, at * (C.D. Cal. Dec., 0) (same). -- Case No. :-CV-0-AJB-JMA

22 Case :-cv-0-ajb-jma Document - Filed 0// PageID. Page of 0 0 To be sure, while the majority of courts in this Circuit have decid[ed] to issue a stay, a few courts have decided to proceed with TCPA cases. Reynolds, 0 WL, at *; see, e.g., Lathorp v. Uber Techs., Inc., No. -cv-0- JST, 0 WL, at * (N.D. Cal. Jan., 0). They did so, however, at a time when D.C. Circuit proceedings were just getting started. Now, given the time that has passed since the D.C. Circuit held oral argument, an opinion is likely imminent. Stephens, 0 WL 0, at *. Moreover, so far as we are aware, the cases in which the courts denied stays did not involve constitutional challenges to the TCPA. This case does involve such a constitutional challenge, making a stay all the more appropriate. IV. CONCLUSION The Court should dismiss Plaintiffs claims and strike the class allegations. At a minimum, the Court should stay the case until the D.C. Circuit decides ACA International. Dated: January, 0 Respectfully submitted, By: s/ Karen P. Hewitt Karen P. Hewitt (SBN 0) kphewitt@jonesday.com JONES DAY Executive Drive, Suite 00 San Diego, CA - Telephone: () -00 Facsimile: () - Shay Dvoretzky (admitted pro hac vice) sdvoretzky@jonesday.com JONES DAY Louisiana Avenue NW Washington, DC 000 Telephone: (0) - Facsimile: (0) Case No. :-CV-0-AJB-JMA

23 Case :-cv-0-ajb-jma Document - Filed 0// PageID. Page of 0 0 Thomas Demitrack (admitted pro hac vice) tdemitrack@jonesday.com JONES DAY 0 Lakeside Avenue Cleveland, Ohio Telephone: () - Facsimile: () -0 Lee A. Armstrong (admitted pro hac vice) Allison L. Waks (admitted pro hac vice) laarmstrong@jonesday.com awaks@jonesday.com JONES DAY 0 Vesey Street New York, New York 0 Telephone: () - Facsimile: () -0 Attorneys for Defendant SIRIUS XM RADIO INC. -- Case No. :-CV-0-AJB-JMA

24 Case :-cv-0-ajb-jma Document - Filed 0// PageID. Page of 0 0 CERTIFICATE OF SERVICE The undersigned hereby certifies that a true and correct copy of the above and foregoing document has been served on January, 0, to all counsel of record who are deemed to have consented to electronic service via the Court s CM/ECF system per Civil Local Rule.. Any other counsel of record will be served by electronic mail, facsimile, and/or overnight delivery. I certify under penalty of perjury that the foregoing is true and correct. Executed on January, 0, at San Diego, California. By: s/ Karen P. Hewitt Karen P. Hewitt (SBN 0) kphewitt@jonesday.com -- Case No. :-CV-0-AJB-JMA