Robocall Defendants Accuse State AGs of Running ‘Public Smear Campaign’

The attorneys general of 48 states and the District of Columbia “pursued a public smear campaign” on robocalling allegations against VoIP provider Avid Telecom, its CEO Michael Lansky and its Vice President Stacey Reeves, despite the FCC or the FTC never having said a single call transmitted by the defendants was illegal, said the defendants’ motion to dismiss Friday (docket 4:23-cv-00233) in U.S. District Court for Arizona in Tucson. They also alternatively filed a motion to stay the proceedings and refer the allegations to the FCC and FTC, to the extent that the court declines to dismiss the complaint in its entirety.

The May 23 complaint alleged Avid, Lansky and Reeves facilitated robocalls or helped others make them. It alleged the defendants received 329 notifications from the USTelecom-led Industry Traceback Group, putting it “on notice” that it was transmitting illegal robocalls (see 2305240010).

Avid, Lansky and Reeves, said the AGs, “chose profit over running a business that conforms to state and federal law,” instead of implementing procedures to prevent or mitigate robocalls. The defendants responded in their motion to dismiss by asserting they "met every applicable regulatory obligation" and haven't violated the law.

There has been little activity in the nearly 5-month-old case, as the defendants asked for and got multiple deadline extensions to answer the complaint. Each time they told the court they needed more time to pursue good-faith settlement talks with the AGs. When U.S. District Judge Cindy Jorgenson, in a Sept. 14 order, granted the defendants one last extension over the AGs’ opposition, she appeared to show that her patience was running thin. "It is now clear that the matter will not be resolved expeditiously by settlement," her order said.

The complaint fails to allege “sufficient facts” to establish that Avid “purposefully directed activities at Arizona or consummated a transaction with an Arizona resident,” and so the Arizona district court lacks "specific personal jurisdiction" over Avid, said the motion to dismiss. Avid routes calls that pass through multiple states, it said. As state AGs acknowledge, the calls at issue “are transmitted by others” to Avid, it said. The transmitting party “determines the terminating location of the call,” it said. The AGs fail to present any facts on which the court could conclude that Avid has the “ability to control,” on a real-time basis, “the final destination of any call to Arizona,” it said.

That “reality,” which the state AGs “acknowledge in substance,” precludes any finding by the court that Avid “purposefully directed even a single call to a called party in Arizona,” let alone the “statutorily-required fact that the called party had not agreed to accept the call,” said the motion to dismiss. The AGs can’t, and haven’t, alleged, nor have they presented evidence, showing it was Avid’s “will” to “expressly aim” its provision of telecom services at the state in which the calls terminate, it said.

The complaint presents no basis in fact or law “for piercing the corporate veil and asserting claims directly against” CEO Lansky, said the motion to dismiss. The state AGs also failed to sufficiently plead the defendants’ liability, it said. Each count of the complaint is predicated on a “false legal premise,” it said. The complaint wrongly alleges Avid is directly liable, and the individual defendants are “somehow vicariously liable,” under the Telecom Sales Rule, the Telephone Consumer Protection Act and derivative state laws “for calls originated by others, from clients selected by others, based on telephone numbers selected by others, containing content created by others,” it said.

Even assuming all the facts as pleaded in the complaint are true, the state AGs can’t plead or establish that liability “adheres to Avid as a common carrier,” said the motion to dismiss. Nor can the AGs show Avid “actually participated or intended to participate in any illegal activity,” it said. On those bases, the complaint “must be dismissed,” it said.

The Arizona district court also lacks specific general jurisdiction over Reeves, it said. All the services she provided for Avid, plus all the actions alleged in the complaint, were provided from her home office in Oviedo, Florida, it said. Reeves has never had a residence or owned any property in Arizona, it said.

The complaint fails to allege Reeves “purposefully directed any activity to the state of Arizona,” said the motion to dismiss. Even viewing every allegation of fact as true, the complaint gives “no factual basis” on which the court could conclude that Reeves “knew or intended to be associated with telecommunications traffic that was terminated in Arizona,” it said. The absence of an allegation of purposeful direction “must fail” in light of her sworn declaration that she never transacted any business in Arizona, it said.