Smartbiz, Fla. AG Spar in Responses to Motions for Summary Judgment

Defendant Smartbiz Telecom hasn’t met its burden to show that it's entitled to judgment as a matter of law, said the office of Florida Attorney General Ashley Moody (R) in its response Friday (docket 1:22-cv-23945) in U.S. District Court for Southern Florida in Miami to Smartbiz’s Sept. 28 motion for summary judgment in the state's robocalling case against the VoIP provider (see 2309290007). Making or initiating calls under the Telephone Consumer Protection Act (TCPA) doesn't "turn on an entity’s status” under FCC regulations, it said.

The Florida AG's office alleged Smartbiz is “one of the most prolific transmitters of illegal robocalls” in the U.S. in its December 2022 lawsuit, which alleges the VoIP company also violated the Telemarketing and Consumer Fraud and Abuse Prevention Act and other statutes, plus the FTC's Telemarketing Sales Rule (TSR) (see 2212060034).

Smartbiz claims it should be afforded “sweeping immunity” from federal and state law, but its status as an “intermediate provider" under 47 C.F.R. doesn’t preclude the company from making or initiating calls within the scope of 47 U.S.C. or the TCPA, said the response. Nor does its status as an intermediate provider exempt Smartbiz from liability under the Truth in Caller ID Act, or from any other claim the AG has alleged, it said. Smartbiz can’t “point to any statute, rule, or policy which categorically insulates it from TCPA liability,” said the response.

Knowingly transmitting “fraudulent, abusive, and deceptive telemarketing calls is actionable regardless of a company’s position in the call path,” said the response. Records show Smartbiz had “actual knowledge it was transmitting illegal calls and failed to stop them,” it said, citing “hundreds of traceback notifications” to the company with descriptions and recordings that “made plain the illegal nature of Defendant’s traffic.” Other intermediate providers in Smartbiz’ network escalated complaints to the company, “which spelled out the fraudulent and deceptive nature of Defendant’s call traffic,” the response said.

Smartbiz monitored its customers’ traffic profiles and “identified suspicious calling patterns its own procedures didn’t permit,” and it “ignored these procedures and continued to profit off the calls,” said the response. None of Smartbiz’ arguments excuse its conduct and its motion for summary judgment is “legally and factually unsupported and should be denied,” it said.

In its opposition to the AG’s October motion for summary judgment, Smartbiz said Florida relies on a 1992 FCC order that was issued before VoIP services existed to show that it initiated or made calls; it also relies on a 2015 FCC order for the same proposition, said the response. The AG asks the court to rely on FCC guidance from 1992 and 2015 to impose liability on a “regulatory expansion of the words ‘make’ and ‘initiate,’ but to ignore all FCC Traced Act guidance issued after 2020, “which applies to intermediate providers,” it said.

What began as a case to stop “one of the most prolific transmitters of illegal robocalls” who “made calls terminated to Florida because the calls would not have connected but for Smartbiz’s decision to allow them to transit its network,” has turned into a case about whether Smartbiz properly followed its own robocall mitigation procedures, said the response.

The AG’s office “had no choice but to shift the case” to focus on alleged noncompliance with internal procedures because Industry Traceback Group (ITG) records showed that Smartbiz “did not do what the lawsuit accused it of doing,” said the defendants' response. The company’s position in the chain “makes it impossible for it to have ‘made’ or ‘initiated' the calls," Smartbiz said. The plaintiff’s latest theory “is an attempt to shoehorn alleged noncompliance” with Smartbiz’ robocall mitigation procedures, as required by the Traced Act, into a 1992 FCC order “that predates VoIP,” it said. In doing so, the Florida AG "discards the TRACED Act and all associated FCC guidance,” it said.

On Truth in Caller ID claims, Smartbiz said it was exempted from authenticating caller ID information on calls that transited its network. It said the AG’s motion made no mention of the regulatory exemption in the 2015 FCC order or the FCC’s guidance in implementing the exemptions.

Smartbiz was “in full compliance at all times, responded to all traceback inquiries, and was not required to authenticate Caller ID,” it said. Smartbiz “did not violate” the TSR or the Florida Deceptive and Unfair Trade Practices Act, it said, saying repeated statements by the ITG and FCC “make it clear that it is unreasonable for an intermediate provider to conduct due diligence about the calling party – the entity actually responsible for making the calls.”

As an intermediate provider, Smartbiz was “numerous layers removed from any foreign entity making illegal calls,” said the response. If the plaintiff’s theory were true, “then every major telephone company in America and every single intermediate provider, including the company that sells phone numbers to YouMail, is engaged in unfair and deceptive trade practices,” Smartbiz said. Also, Smartbiz said, “there is not a shred of evidence” refuting its testimony that it implemented numerous security provisions on the SipNav platform “intended to prevent and detect fraud.” Summary judgment “must be denied,” it said.