The Northern District of Illinois recently refused to certify a class in a case brought under the Telephone Consumer Protection Act, 47 U.S. Code § 227 (“TCPA”), on the grounds that the class could not include members who lacked Article III standing, and that determining whether individual class members had standing would lead to a multiplicity of mini-trials. See Christopher Legg et al. v. PTZ Insurance Agency LTD, et al., Case No. 14-C-10043. The decision was based in part on the Court’s finding that class members could not have suffered a concrete injury under Spokeo v. Robins (previously discussed here) if they consented to the calls, irrespective of the TCPA’s requirement that “advertising” calls require express written consent. Thus, the Court granted the defendants’ motion to strike class allegations and denied plaintiffs’ cross-motion to certify a class. Read More
Earlier this month, the federal government filed briefs on cross motions for summary judgment in American Association of Political Consultants v. Lynch, Case No. 5:16-00252-D (E.D.N.C.). The case challenges the constitutionality of the Telephone Consumer Protection Act, 47 U.S.C. § 227 (“TCPA”) (previously discussed here and here). The government defended the constitutionality of the statute on several bases.
First, the government argued that the TCPA is a “valid time, place, and manner regulation” and does not distinguish between the content or nature of such calls. In doing so, the government analogized the TCPA to regulations that prevent the ringing of doorbells after certain hours and attempted to distinguish the TCPA from unconstitutional ordinances regulating signs based on the type of information conveyed.
Second, the government argued that in determining whether the TCPA is “content-neutral,” the court should disregard FCC orders providing certain “exemptions” to the TCPA. The plaintiffs contend that the exemptions illustrate how the TCPA favors some types of speech over others. According to the government, however, (1) review of those orders is outside the court’s jurisdiction in analyzing the constitutionality of the TCPA, and (2) the “exemptions” are not actually exemptions and thus do not favor a particular type of speech. The government further asserted that to the extent any “exemption” is actually an exemption, such as the government-debt exemption passed in 2016, it is severable from the remainder of the TCPA.
Finally, the government argued that even if the TCPA regulates the content of speech, it withstands strict scrutiny because the “protection of residential privacy” is a compelling governmental interest, and the TCPA is related to that interest where it acts to protect against the invasion of residential privacy. The government also posited that the TCPA is narrowly tailored because it is limited to a small subset of speech, rather than all potential methods of communication, and that the statute is least restrictive option to accomplish that goal.
Although it is difficult to predict how the court may rule on the parties’ cross motions, the government’s arguments provide insight regarding the bases on which the court is likely to evaluate the constitutionality of the TCPA.
In a 475-page opinion issued earlier this week, the United States District Court for the Central District of Illinois ordered Dish Network Corp., to pay $280 million to the United States government and four states, marking what the government says is a record fine for telemarketing violations, including violations of the Telephone Consumer Protection Act (“TCPA”), the Telemarketing Sales Rule and the laws of California, Illinois, North Carolina, and Ohio, through what the Court called “millions and millions” of calls.
In March 2009, the states and the Federal Trade Commission (“FTC”) sued Dish Network after the company settled with 46 states for purported violations of “do not call” rules and rules governing robocalling. The Court found that Dish Network and its contractors made millions of illegal calls by calling numbers listed on the national Do Not Call Registry and by placing telemarketing calls that deliver prerecorded messages to live consumers, in violation of the TCPA and the states’ laws governing telemarketing.
Plaintiffs sought damages in the amount of $2.1 billion, but the Court determined that the amount requested, approximately 150 percent of Dish Network’s annual profits, “could materially affect Dish’s ability to continue operations.” Although the Court declined to interpret the TCPA as allowing an award “up to” $500 per violation rather than $500 per violation, as Dish Network requested, the Court exercised its discretion in awarding an amount less than $500 per violation. An award of $500 per violation would have incurred a penalty of $8.1 billion; instead, the Court awarded $280 million, or twenty percent of Dish Network’s 2016 profits, an amount it determined to be “proportionate and reasonable” and “a miniscule fraction of maximum possible penalties and damages.” The Court determined the reduced award to be appropriate given that Dish Network “made some efforts to avoid violations in its direct marketing and took some actions” to monitor third-party contractors while substantial enough to reflect “[t]he injury to consumers, the disregard for the law, and the steadfast refusal to accept responsibility.”
The Court further prohibited the company from violating do-not-call laws moving forward and imposed a 20-year plan for supervision of Dish Network’s telemarketing.
This is the second judgment against Dish Network issued in 2017 for violations of the TCPA (the prior judgment, issued by a federal court in North Carolina, is discussed here and here). As the cases against Dish Network demonstrate, companies may face substantial liability based on the actions of third-party contractors.
This week a federal judge in North Carolina ordered Dish Network LLC (“Dish”) to pay treble damages in the amount of $61.5 million, or $1,200 per call, to class members in a Telephone Consumer Protection Act (“TCPA”) action against Dish, Krakauer v. Dish Network L.L.C., Case No. 1:14-cv-00333, as a result of marketing efforts made by Dish’s contractor, Satellite Systems Network (“SSN”). Under the TCPA, treble damages are available in the court’s discretion for violations that occur “willfully or knowingly.” Since the court found that Dish “willfully and knowingly” violated the TCPA, Dish was ordered to pay three times the $20.5 million jury verdict (calculated at a rate of $400 per call) against Dish (previously discussed here).
By Andrew C. Glass, Gregory N. Blase, Roger L. Smerage, and Matthew T. Houston
A Michigan federal district court recently rejected a theory of vicarious liability under the Telephone Consumer Protection Act, 47 U.S.C. § 227 (“TCPA”). In Kern v. VIP Travel Services, the court concluded that the plaintiffs failed to state a claim against hotel chains for calls independent travel agents allegedly made to generate reservations at the hotels. See generally Op., Kern v. VIP Travel Servs., Case No. 1:16-cv-00008 (W.D. Mich. May 10, 2017). Accordingly, the court dismissed the putative class action. Read More
A New York U.S. District Court recently granted summary judgment in favor of defendant Rite Aid Headquarters Corporation in a putative Telephone Consumer Protection Act (“TCPA”) class action, holding that calls reminding customers about the flu vaccine were “health related” and therefore Rite Aid was not required to obtain prior express written consent before making the calls. Though the opinion was filed under seal on March 30, 2017, it was made public last week. Read More
The U.S. Court of Appeals for the District of Columbia Circuit, in a 2-1 split decision, has issued an opinion that the Federal Communications Commission (the “FCC”) lacked authority under the Telephone Consumer Protection Act (“TCPA”) to regulate facsimiles that were sent with the recipient’s consent.  This opinion found that an FCC rule issued in 2006 (the “2006 Order”) requiring a sender to include an opt-out notice on faxes that were solicited by the recipient was unlawful and vacated the FCC order implementing the rule. 
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A North Carolina federal district court recently denied a motion by the federal government to dismiss claims raising a First Amendment challenge to a portion of the Telephone Consumer Protection Act (“TCPA”). See American Ass’n of Political Consultants v. Lynch, Case No. 5:16-00252-D (E.D.N.C.). At this early stage of the case, the government did not address the substance of the constitutional challenge. Rather, the government asserted that the court did not have jurisdiction over the case and that the political organizations which filed the suit did not have standing to maintain suit. The court, however, rejected the government’s arguments and allowed the case to proceed.
Last year, a bi-partisan coalition of political groups filed a two-count complaint alleging that aspects of the TCPA run afoul of First Amendment free-speech protections. Specifically, the suit contends that the TCPA’s prohibition on making auto-dialed calls or texts to cell phones without the requisite consent, 47 U.S.C. § 227(b)(1)(A)(iii), imposes a content-based restriction on speech that fails to pass strict scrutiny and is unconstitutionally underinclusive. The federal government moved to dismiss on standing and subject-matter jurisdiction grounds. In response, the plaintiffs amended their complaint to add the Federal Communications Commission (“FCC”) as a defendant and to address purported deficiencies in the original complaint.
By Pamela J. Garvie, Andrew C. Glass, Joseph Wylie II, Gregory N. Blase, and Matthew T. Houston
The Federal Communications Commission unanimously voted at its March 23, 2017, “open meeting” to begin the process for adopting rules allowing carriers to block “spoofed” number calls. These are calls that use a reputable or commonly-known telephone number to mask the actual originating number. The proposed rules would allow carriers to block calls purporting to originate from telephone numbers that (1) are not assigned to a subscriber, (2) are invalid, or (3) are assigned to a subscriber expressly requesting that its number not be spoofed. In his remarks, Chairman Ajit Pai indicated that the proposed rules are needed to target scammers impersonating federal agencies, such as the Internal Revenue Service, and to protect consumers from unwanted solicitations. Commissioner Michael O’Rielly indicated that the proposed rules aim to address illegal “robocalls” in a manner that does not affect legitimate businesses, as opposed to prior efforts to regulate such calls under the Telephone Consumer Protection Act, 47 U.S.C. § 227. The proposed rules and accompanying comments suggest an effort by the now Republican-controlled FCC to issue rules specifically intended to block unwanted robocalls, often from overseas, intended to defraud consumers.
The FCC approved both a Notice of Proposed Rulemaking and a Notice of Inquiry to solicit feedback from consumers and other parties with an interest in the proposed rules. Comments on the proposed rules will be due within forty-five (45) days after publication in the Federal Register. Final rules are unlikely to take effect earlier than late 2017.