A district court in Illinois recently dismissed a lawsuit against Yahoo!, Inc. (“Yahoo”) alleging violations of the Telephone Consumer Protection Act (“TCPA”), reversing its previous decision denying summary judgment. In Johnson v. Yahoo! Inc., Case No. 14-cv-2028 (N.D. Ill. Nov. 29, 2018), the court granted Yahoo’s motion for reconsideration based on recent interpretations of the definition of an automatic telephone dialing system (“ATDS”) under the TCPA, particularly the decision in ACA Int’l v. FCC, 885 F.3d 687, 695 (D.C. Cir. 2018) (previously discussed here). In its ruling, the district court rejected prior Federal Communication Commission (“FCC”) pronouncements and adopted a narrow interpretation of ATDS, holding that only a system that actually dials randomly or sequentially generated numbers can be an ATDS.
Sen. John Thune (R-SD), chairman of the Senate Commerce Committee, and Sen. Ed Markey (D-MA), a member of the Committee and author of the Telephone Consumer Protection Act (TCPA), recently introduced S. 3655, the Telephone Robocall Abuse Criminal Enforcement and Deterrence Act (the TRACED Act), to prevent illegal robocall scams. In brief, the bill would extend the statute of limitations for the Federal Communications Commission (FCC) to pursue robocall scammers and others who intentionally violate the law, impose additional penalties on such violators, require call authentication and blocking technologies, and establish an interagency working group to explore further ways to prosecute robocallers who intentionally violate the law.
On November 13, 2018 the U.S. Supreme Court granted certiorari in a Telephone Consumer Protection Act (“TCPA”) case in which the Fourth Circuit vacated the district court’s holding that an unsolicited fax sent by a health information provider offering a free e-book must have a commercial goal to be considered an advertisement under the TCPA. This case presents important questions as to the scope of judicial deference to the Federal Communication Commission’s (“FCC”) rules under the Hobbs Act, which limits the ability of TCPA litigants to challenge FCC rules in private civil litigation.
In February of this year, the Fourth Circuit held that faxes that offer goods and services, even if the goods and services are free, are “advertisements” under the TCPA, and reversed the district court’s dismissal of the suit. See Carlton & Harris Chiropractic, Inc. v. PDR Network, LLC, 883 F.3d 459, 469 (4th Cir. 2018). In so ruling, the Fourth Circuit took issue with the district court treatment of a 2006 Rule promulgated by the Federal Communications Commission the FCC interpreting certain provisions of the TCPA. Pursuant to its statutory authority to “prescribe regulations to implement the requirements” of the TCPA, see 47 U.S.C. § 227(b)(2), the FCC promulgated a rule providing that “facsimile messages that promote goods or services even at no cost . . . are unsolicited advertisements under the TCPA’s definition.” See Rules and Regulations Implementing the Tel. Consumer Prot. Act of 1991; Junk Fax Prevention Act of 2005, 71 Fed. Reg. 25,967, 25,973 (May 3, 2006) (the “2006 Order”). In the district court, plaintiff Carlton & Harris argued that the fax it received was an unsolicited advertisement as defined in the 2006 Order because it promoted a good at no cost. Carlton & Harris Chiropractic, Inc. v. PDR Network, LLC, No. 3:15-14887, 2016 WL 5799301, at *4 (S.D. W. Va. Sept. 30, 2016). The district court declined to defer to the 2006 Order, holding that the Hobbs Act did not compel the court to defer to “the FCC’s interpretation of an unambiguous statute.” Id. The district court further held that even under the 2006 FCC Rule, PDR Network’s fax was still not an advertisement because the rule requires an advertisement to have a “commercial aim,” and no such aim existed. Id. Accordingly, it granted PDR Network’s motion to dismiss.
The Fourth Circuit disagreed, holding that the jurisdictional command of the Hobbs Act requires a district court to apply FCC interpretations of the TCPA. See Carlton & Harris Chiropractic, 883 F.3d at 469. The district court therefore erred by engaging in Chevron analysis and “declin[ing] to defer” to the FCC rule and issuing a ruling “at odds with the plaining meaning” of the 2006 Order’s text. Id. at 462. Thereafter, PDR Network appealed to the Supreme Court asserting that the Fourth Circuit opinion created a circuit split with the Second, Sixth, Ninth, and Eleventh Circuits, all of which require a “commercial” nexus for faxes promoting free goods or services to be considered “advertisements” under the TCPA.
PDR Network’s petition for a writ of certiorari asks the Supreme Court to resolve the Circuit split regarding whether the Hobbs Act prevents courts from engaging in a typical Chevron analysis of FCC Orders interpreting the TCPA and requires automatic deference to the agency’s order where there has been no challenge to the validity of the order. It also asks the Court to resolve whether the FCC’s 2006 Order creates a per se rule that faxes that “promote goods and services even at no costs” are “advertisements” under the TCPA or whether courts can require a commercial nexus to a firms’ business in order for such a fax to fall within the definition of “advertisement.” In granting certiorari, the Supreme Court said it is limiting the certiorari to the question of whether the Hobbs Act required the lower court to accept the FCC’s legal interpretation of the TCPA.
The Consumer and Governmental Affairs Bureau of the Federal Communications Commission (the “FCC”) recently issued a public notice seeking comment on issues related to interpretation and implementation of the Telephone Consumer Protection Act (the “TCPA”). The notice followed the recent decision of the United States Court of Appeals for the District of Columbia in ACA International v. FCC, in which the Circuit Court affirmed and vacated in part a rule previously issued by the FCC. Our prior coverage of ACA International can be found here.
First, the FCC seeks comment on the TCPA definition of “automatic telephone dialing system.” The TCPA defines an automatic telephone dialing system as “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.” The FCC had previously interpreted the term “capacity” to include a device “even if, for example, it requires the addition of software to actually perform the functions described in the definition.” The ACA International Court set that definition aside—finding that the agency’s “capacious understanding of a device’s ‘capacity’ lies considerably beyond the agency’s zone of delegated authority” and that it would have “the apparent effect of embracing any and all smartphones.” The FCC seeks comment on how to interpret “capacity” in light of the guidance provided in ACA International, specifically seeking comment on how to more narrowly interpret the word “capacity” to better comport with congressional findings and the intended reach of the statute.
The FCC further seeks comment on the functions a device must be able to perform to qualify as an automatic telephone dialing system. The FCC seeks comment on whether equipment can be considered an automatic telephone dialing system if the equipment cannot itself dial random or sequential numbers. And the FCC seeks comment on whether the prohibition on making certain calls using an automatic telephone dialing system should apply to equipment that has the ability to use such technology but does not actually use it in making the call.
Second, the FCC seeks comment on how to treat calls to reassigned wireless numbers under the TCPA where the statute carves out calls “made with the prior express consent of the called party” from its prohibitions. The FCC seeks comment specifically on the definition of “called party:” does it refer to the person the caller expected to reach (or reasonably expected to reach) or the person that the caller actually reached, i.e., the wireless number’s present-day subscriber? Further, does it include the “customary user” (e.g., the close relative on a subscriber’s family calling plan)?
Third, the FCC seeks comment on how a called party may revoke prior express consent to receive robocalls. The ACA International Court found that (1) “a party may revoke her consent through any reasonable means clearly expressing a desire to receive no further messages from the caller,” and (2) such a standard means “callers . . . have no need to train every retail employee on the finer points of revocation” and have “every incentive to avoid TCPA liability by making available clearly-defined and easy-to-use opt-out methods.” The FCC now seeks input on what, if any, opt-out methods exist that would be sufficiently clearly defined and easy to use such that “any effort to sidestep the available methods in favor of idiosyncratic or imaginative revocation requests might well be seen as unreasonable” for unwanted calls (i.e., saying “stop calling” in response to a live caller, offering opt-out through a website, or responding with “stop” to unwanted texts; and whether callers must offer all or some combination of such methods to qualify).
Fourth, the FCC seeks renewed comment on two pending petitions for reconsideration of the FCC’s Broadnet Declaratory Ruling, in which the FCC determined that the TCPA does not apply to calls made by or on behalf of the federal government in the conduct of official government business, except when a call made by a contractor does not comply with the government’s instructions. The petitions seek reconsideration of the FCC’s interpretation of “persons” under the TCPA, and clarification of whether federal government contractors, regardless of their status as common-law agents, are “persons” under the TCPA. The FCC now seeks comment on whether contractors acting on behalf of federal, state, and local governments are “persons” for purposes of the TCPA.
Fifth, the FCC seeks renewed comment on the pending petition for reconsideration of its 2016 Federal Debt Collection Rules, which seeks reconsideration of several aspects of the rules, including the applicability of the TCPA limits on calls to reassigned wireless numbers. Referring to the holding in ACA International, the FCC seeks renewed comment on “this and other issues” raised by the petition.
Comments are due by June 13, 2018 and reply comments are due by June 28, 2018.
This public notice, along with recent congressional hearings considering legislation applicable to telephone calls (previously discussed here), demonstrates that in the wake of ACA International, the laws and regulations applicable to outbound calling will continue to evolve.
On March 16, 2018, in a long-awaited decision, the U.S. Court of Appeals for the District of Columbia Circuit vacated key provisions of the 2015 Federal Communications Commission order regarding the Telephone Consumer Protection Act, 47 U.S.C. § 227, including provisions regarding the definition of an autodialer and calls to reassigned wireless numbers. Click here for a full discussion of the decision.
The Court of Appeals for the Second Circuit recently determined that a flu shot reminder text message sent by a hospital is not an “advertisement” for purposes of the level of consent required under the Telephone Consumer Protection Act, 47 U.S.C. § 227(b) (the “TCPA”). In issuing its ruling in Latner v. Mt. Sinai, No. 17-99 (2d Cir. Jan. 3, 2018), the Second Circuit gave effect to the FCC’s “Healthcare Exception,” which holds that “a ‘health care’ message” sent by a HIPAA “covered entity” does not require prior express written consent.
Plaintiff David Latner visited a Mt. Sinai medical facility in 2003, where he signed release forms granting consent to Mt. Sinai to use his health information “for payment, treatment and hospital operations purposes.” On September 19, 2014, Mr. Latner received a single text message sent on behalf of Mt. Sinai by a third party encouraging him to schedule an appointment to obtain a flu shot. Mt. Sinai stated that it sent flu shot reminder texts to all active patients of the facility Mr. Latner visited the office within three years prior to the date of the texts. Mr. Latner’s last visit fell within that timeline. Mr. Latner filed a lawsuit, alleging that Mt. Sinai violated 47 U.S.C. § 227(b)(1)(A)(iii), which prohibits anyone from making any call (including text messages) using any automatic telephone dialing system or prerecorded voice to a cellular telephone service without prior written express consent. The District Court for the Southern District of New York granted Mt. Sinai’s motion for judgment on the pleadings and dismissed the case on the ground that the FCC has exempted healthcare providers from being required to obtain written consent prior to making calls that deliver a healthcare message.
Though it affirmed the lower court’s ultimate decision, the Second Circuit determined that the “analysis was incomplete” because it had not determined whether Mr. Latner had provided his prior express consent to receive text messages sent on behalf of Mt. Sinai. Considering the facts of the situation, the Second Circuit determined that the text message fell within the scope of consent that Mr. Latner had previously granted to Mt. Sinai, where the consent form included a reference to Mt. Sinai sharing his information for “treatment” purposes, and the privacy notices stated that the facility could use Mr. Latner’s information “to recommend possible treatment alternatives or health-related benefits and services.”
This opinion illustrates the care callers must employ in drafting its privacy and consent notices as they relate to patients receiving calls or messages, even where the message relates to treatment provided by a healthcare provider.
Last week a New Jersey federal district court dismissed a putative Telephone Consumer Protection Act (“TCPA”) class action against Kohl’s Department Stores Inc. (“Kohl’s”), Viggiano v. Kohl’s, Case No. 17-0243-BRM-TJB, because plaintiff Amy Viggiano failed to unsubscribe from Kohl’s text messages in the matter in which Kohl’s instructed.
In her putative class action, Viggiano admitted that she had consented to receiving text messages initially, but claimed that she changed her mind and relayed this message to Kohl’s. Viggiano alleged that she sent multiple messages to Kohl’s expressing that she no longer wanted to receive any messages, including messages like “I don’t want these messages anymore.” However, she acknowledged that she never texted the word “STOP” to the defendant, a point which was the focus of Kohl’s motion to dismiss.
Kohl’s argued that it provided a direct opt-out mechanism for customer messaging in compliance with FCC requirements. The terms and conditions to Kohl’s mobile sales alerts instruct customers to respond with one of several words in order to opt-out of future messaging. The opt-out mechanism is triggered by words like STOP, CANCEL, and UNSUBSCRIBE. Viggiano did not text any of the single-word commands that Kohl’s instructed would terminate the text alerts, but instead sent several sentence-long messages. Kohl’s demonstrated that Viggiano received an automated text in reply to her messages which stated “Sorry we don’t understand the request! Text SAVE to join mobile alerts . . . Reply HELP for help, STOP to cancel.” Even accepting the facts in the complaint as true, the court found that Viggiano did not plausibly allege that she had a reasonable expectation that by sending the messages in question, she effectively communicated a request for revocation. Further, Viggiano did not allege that Kohl’s had “deliberately design[ed] systems or operations in ways that make it difficult or impossible to effectuate revocations.” In fact, the court found that the facts in the complaint suggested Viggiano herself adopted a method of opting out that made it difficult or impossible for defendant to honor her request. In dismissing the case, the court rejected Viggiano’s argument that her messages were “unequivocal written withdrawals of consent.”
This decision follows a case with similar facts from the Central District of California, Epps v. Earth Fare, Inc., No. 16-8221, 2017 WL 1424637, at *6 (C.D. Cal. Feb. 27, 2017), which resulted in dismissal on the same grounds. Taken together, these cases suggest that where subscribers to text message alerts are provided with clear instructions on how to revoke consent, a plaintiff’s failure to follow those instructions may provide an effective defense to a claim under the TCPA.
A district court recently decertified a class of plaintiffs seeking damages after the judge ruled that recent changes in the Telephone Consumer Protection Act (the “TCPA”) warranted decertification. In particular, the court ruled that under the “Solicited Fax Rule,” the question of consent required individualized analysis, and rejected the plaintiff’s argument that solicited faxes require the specific opt-out language required by TCPA regulations.
Plaintiff Lawrence S. Brodsky, an insurance wholesaler, filed a lawsuit against HumanaDental Insurance Company (“HumanaDental”) following the receipt of two identical one-page fax messages sent by Humana Specialty Benefits. Plaintiff has “market agreements” with numerous insurance companies in which he sells those companies’ products through various insurance agents and independent contractors. Plaintiff entered one such contract with Humana Insurance Co. “and all of their affiliates,” which stipulated that Plaintiff agreed that Humana Insurance Co. and all of its affiliates “may choose to communicate with [Plaintiff] through the use of . . . facsimile to the . . . facsimile numbers of” Plaintiff. In connection with this agreement, Plaintiff provided Humana Insurance Co. with his facsimile number.
Following the denial of HumanaDental’s motion for summary judgment, the court granted HumanaDental’s motion for class certification in part and certified a class of entities who received one or more faxes between May 2007 and September 2008 that named Humana Specialty Benefits or HumanaDental on the bottom of the fax and, among other items, contained an “opt out” notice that stated “If you don’t want us to contact you by fax, please call 1-800-U-CAN-ASK,” or “If you don’t want us to contact you by fax, please call 1-888-4-ASSIST.” Plaintiff argued that these faxes violated the TCPA because they did not contain the proper “opt out” language.
The Solicited Fax Rule
The TCPA prohibits sending “unsolicited advertisements” via fax, and a fax is “unsolicited” if the recipient has not given its prior expression invitation or permission to receive the fax. The TCPA provides select exceptions to the ban on unsolicited faxes if, among other things, the fax contains an “opt-out notice” that meets various statutory requirements. In 2006, the Federal Communications Commission (the “FCC”), pursuant to its authority to prescribe regulations to implement the requirements of the TCPA, promulgated the “Solicited Fax Rule,” which required both solicited and unsolicited faxes to include the opt-out notice described in the TCPA. In other words, the FCC’s 2006 rule mandated that senders of solicited faxes comply with a statutory requirement that applied only to senders of unsolicited faxes.
In October 2014, the FCC granted certain non-party petitioners retroactive waivers of the Solicited Fax Rule in light of inconsistencies between the Solicited Fax Rule and other FCC guidance (the “2014 Order”). The FCC also explicitly invited “similarly situated” parties to apply for other retroactive waivers. (Prior discussion on this blog regarding the Solicited Fax Rule waivers can be found on this blog here.)
HumanaDental applied for and received such a waiver. The waiver explicitly excused HumanaDental for any failure “to comply with the opt-out notice requirement for fax advertisements sent with the prior express invitation or permission of the recipient prior to April 30, 2015.”
Following the 2014 Order, several fax senders filed petitions for review of the FCC’s decision in multiple circuit courts. These petitions were consolidated into an action pending in the District of Columbia Circuit. In March 2017, a split panel of the D.C. Circuit struck down the Solicited Fax Rule in Bais Yaakov v. FCC, No. 14-1234 (D.C. Cir. Mar. 31, 2017) holding it “unlawful to the extent that it requires opt-out notices on solicited faxes.” The majority found that the TCPA only applies to unsolicited fax advertisements, such that the FCC lacked the authority to promulgate a rule governing solicited faxes.
HumanaDental’s Motion to Decertify Class
Following HumanaDental’s receipt of a waiver from the FCC and the D.C. Circuit’s decision in Bais Yaakov, HumanaDental moved to decertify the class, arguing that individual questions defeat the superiority and predominance requirements of Rule 23, such that the class must be decertified. The court agreed that the presence of the FCC waiver led to the conclusion that issues of individualized consent predominated, finding that: (1) a substantial portion of the certified class were not a parties to the same contract that Plaintiff entered into with Humana Insurance Co.; (2) select members of the class may have revoked their consent even after entering into such a contract; and (3) the “scope” of a particular consent in the contract might not extend to other “affiliated” class members offering insurance at the same location. The court noted by way of example that while Plaintiff was a party to the contract, at least seven other individuals had his permission to use his fax machine during the time period at issue; questions regarding whether those other individuals had consented to receiving faxes from HumanaDental would “consume and overwhelm” trial.
In so holding, the court rejected Plaintiff’s argument that the waiver, while insulating HumanaDental from an administrative enforcement action with the FCC, had no effect in a private TCPA action. Plaintiff relied on a single authority for its position, but the Court rejected that decision’s analysis and noted that the case had been “called into question by a number of authorities cited by Defendant” and sided with the caselaw cited by Defendant.
With regard to the application of Bais Yaakov, the Court also declined to adopt Plaintiff’s argument that the case was inconsistent with the Seventh Circuit’s decision in Holtzman v. Turza. Specifically, the court found that, at best, dicta from that decision could be read to expand the TCPA’s requirements relating to opt out notices to cover solicited as well as unsolicited faxes, but declined to afford Turza “a reading that would improperly expand the TCPA.”
The Court concluded that the waiver and Bais Yaakov bring the question of consent back into the picture. This decision provides defendants with a stronger argument for defense against motions to certify classes in instances where the communications in question include solicited communications.
Plaintiff has appealed this decision to the Seventh Circuit.
Last week, a bi-partisan coalition of political groups and the federal government completed briefing cross motions for summary judgment in American Association of Political Consultants, Inc., et al. v. Sessions, Case No. 5:16-cv-00252-D (E.D.N.C.). The case challenges the constitutionality of a portion of the Telephone Consumer Protection Act (“TCPA”). The plaintiffs contend 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) (the “cell phone ban”), imposes a content-based restriction on speech that fails to pass strict scrutiny and is unconstitutionally under-inclusive (the plaintiffs’ complaint is discussed here). The government is defending the statute’s constitutionality (previously discussed here).
In their summary judgment briefing, the plaintiffs argued that content-based exemptions to the TCPA’s cell phone ban, such as an exemption for debt collection calls made on behalf of the government, render the cell phone ban unconstitutional. According to the plaintiffs, these exemptions produce outcomes where certain speech is privileged in violation of the First Amendment. In particular, the plaintiffs asserted that the exemptions fail to withstand strict scrutiny because they are not narrowly tailored to further a compelling governmental interest by the least restrictive means available. Further, the plaintiffs rejected the government’s suggestion of severing the disputed exemptions because such action would not curb the power of Congress or the Federal Communications Commission (“FCC”) to promulgate future content-based exemptions.
The government responded to the plaintiffs’ arguments by asserting that the TCPA’s cell phone ban is a content-neutral “time, place, and manner regulation” concerned with restricting the method of calling cell phones, but not the content of those calls. Alternatively, the government asserted that even if the TCPA was found to be a content-based restriction on speech, it would nonetheless survive strict scrutiny because it serves a compelling governmental interest in protecting consumer privacy, is narrowly tailored, and lacks a comparable alternative. The government also argued that the court should not consider certain FCC orders providing exemptions to the TCPA’s cell phone ban because such orders do not call into question the constitutionality of the TCPA itself. Finally, the government argued that should there be a finding that the government-debt exemption is unconstitutional, the court should sever that provision from the cell phone ban and leave the remainder of the TCPA intact.
Although we cannot predict how the court will decide the cross motions for summary judgment, it is significant that the court is set to rule on a broad challenge to the TCPA’s constitutionality. K&L Gates LLP will continue to monitor the case and post developments as they occur.