Category: Consumer Issues, Privacy & Data Security

1
Strength in Numbers: The Seventh Circuit Joins the Third and Eleventh Circuits in Limiting the Definition of an Automatic Telephone Dialing System under the TCPA
2
Eleventh Circuit Holds That a Single, Unsolicited Text Message Does Not Confer Article III Standing Under the TCPA
3
Supreme Court Declines to Define Scope of Deference Courts Should Apply to FCC TCPA Orders
4
Attorneys General Express Widespread Support for TRACED Act Reintroduced in the Senate to Stop Illegal Robocall Scams
5
Congress Holds Hearings on Abusive Robocalls and Caller ID Spoofing – Possible Legislative or Regulatory Changes Requires Close Watch
6
Court Finds Website Owner Did Not Send Text Messages Initiated by its Users and thus Did Not Violate the TCPA
7
District Court Dismisses TCPA Class Action for Pharmacy Reminder Calls Under “Emergency Purposes” Exception
8
Legislative Efforts to Curb Caller ID Spoofing Continue at Federal and State Levels
9
Second Circuit Affirms Dismissal of Action Against Healthcare Provider but Cautions Careful Review of TCPA Exemptions
10
District Court Dismisses TCPA Complaint Because Plaintiff Failed to Follow Defendant’s Opt-Out Instructions

Strength in Numbers: The Seventh Circuit Joins the Third and Eleventh Circuits in Limiting the Definition of an Automatic Telephone Dialing System under the TCPA

By Andrew C. GlassGregory N. BlaseJoseph C. Wylie IIMolly K. McGinleyHollee M. Boudreau, and Adam R.D. Paine

The Seventh Circuit recently acted to limit the definition of “automatic telephone dialing system” (“ATDS”) under the Telephone Consumer Protection Act (“TCPA”). In Gadelhak v. AT&T Services, Inc., [1] the court ruled that a dialing system that “neither stores nor produces numbers using a random or sequential number generator,” but rather “exclusively dials numbers stored in a customer database,” “is not an ‘automatic telephone dialing system’ as defined by the Act.” In construing the definition of ATDS narrowly, the Seventh Circuit joined the interpretation adopted by the Third and Eleventh Circuits and rejected the Ninth Circuit’s differing interpretation.

ANALYSIS

In Gadelhak, the plaintiff asserted that the defendant impermissibly used an automatic telephone dialing system to text him without his prior express consent. The defendant had texted the plaintiff using a system that drew on a database containing the numbers of existing customers. The district court entered summary judgment for the defendant, ruling that the defendant’s system did not constitute an ATDS under the TCPA.

On appeal, the Seventh Circuit first concluded (as the Second and Ninth Circuits had done) [2] that receipt of unwanted text messages can constitute a concrete injury-in-fact for Article III standing purposes. The Seventh Circuit then proceeded to examine the statutory definition of an ATDS to determine whether the definition encompassed defendant’s system, concluding that it did not. [3]

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.” [4] The defendant asserted that as a grammatical matter, the phrase “using a random or sequential number generator” modifies both the terms “store” and “produce.” The defendant then outlined how a different form of equipment from its system could store numbers using a random or sequential number generator such that the defendant’s interpretation would not render the term “store” mere surplusage. [5] Under the defendant’s interpretation, dialing systems that draw numbers from an existing database neither store nor produce numbers using a random or sequential number generator and thus cannot constitute an ATDS for TCPA purposes. [6]

After methodically considering the various grammatical interpretations of the definition of “automatic telephone dialing system,” the Seventh Circuit agreed with the defendant, rejecting the Ninth Circuit’s interpretation of ATDS urged by the plaintiff. [7] The Ninth Circuit had previously read the phrase “using a random or sequential number generator” as modifying only a system’s capacity to “produce” telephone numbers. [8] But the Seventh Circuit noted that such a broad interpretation would sweep into the definition of ATDS all equipment with the capacity to store and dial telephone numbers, including “[e]very iPhone today [which] has … capacity [to store telephone numbers and call or text them automatically] right out of the box.” [9] The Seventh Circuit found that this far-reaching result was well outside the intended plain-meaning of the statute.

The emerging trend narrowing the definition of an ATDS follows in the wake the D.C. Circuit’s 2018 decision rejecting the Federal Communications Commission’s broad definition of an ATDS. [10] The FCC issued notices in May and October 2018 inviting public comment concerning the interpretation of an ATDS but has yet to issue a revised definition.

CONCLUSION

The Seventh Circuit’s decision that a system which places calls using an existing database of numbers does not qualify as an ATDS will be of assistance to businesses operating within the Seventh Circuit in defending against TCPA lawsuits. And the split between the Third, Seventh, and Eleventh Circuits, on the one hand, and the Ninth Circuit, on the other, may eventually spur the Supreme Court to provide its own interpretation of the definition of ATDS.

NOTES

[1] — F.3d —, 2020 WL 808270, at *1 (7th Cir. Feb. 19, 2020).

[2] Melito v. Experian Mktg. Sols., Inc., 923 F.3d 85, 92-93 (2d Cir.); Van Patten v. Vertical Fitness Grp., LLC, 847 F.3d 1037, 1042-43 (9th Cir. 2017).

[3] Gadelhak, 2020 WL 808270, at *3.

[4] 47 U.S.C. § 227(a)(1).

[5] Gadelhak, 2020 WL 808270, at *4-5.

[6] Id. at *4.

[7] See Marks v. Crunch San Diego, LLC, 904 F.3d 1041, 1050 (9th Cir. 2018), cert. dismissed, 139 S. Ct. 1289, 203 L. Ed. 2d 300 (2019).

[8] See id.Gadelhak, 2020 WL 808270, at *5-6. The Ninth Circuit was recently asked to reconsider the Marks decision to bring its interpretation of an ATDS under the TCPA into accord with the Third, Seventh, and Eleventh Circuits. See Lamkin v. Portfolio Recovery Assocs., No. 19-16947 (9th Cir.).

[9] Gadelhak, 2020 WL 808270, at *6.

[10] ACA Int’l v. FCC, 885 F.3d 687, 695 (D.C. Cir. 2018).

Eleventh Circuit Holds That a Single, Unsolicited Text Message Does Not Confer Article III Standing Under the TCPA

By Andrew C. Glass, Gregory N. Blase, and Hollee M. Watson

In a recent decision, the Eleventh Circuit held that a plaintiff’s receipt of a single, unsolicited text message does not constitute an injury sufficient to confer standing necessary to pursue a viable claim under the Telephone Consumer Protection Act (“TCPA”), 47 U.S.C. § 227. The holding in Salcedo v. Hanna – F.3d —, 2019 WL 4050424 (11th Cir. Aug. 28, 2019), has created a circuit split on the issue of Article III standing under the TCPA—a split which may cause the Supreme Court to clarify the scope of its decision in Spokeo, Inc. v. Robins (previously discussed here). In Spokeo, the Court addressed the question of what constitutes a concrete injury sufficient to establish Article III standing to pursue a statutory cause of action (there, the Fair Credit Reporting Act). But lower courts have interpreted and applied Spokeo in differing ways. The Eleventh Circuit decision may also have the effect of curbing TCPA class actions. Plaintiffs in that circuit will now have to allege and prove the sufficient concrete harm caused by their receipt of text messages.

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Supreme Court Declines to Define Scope of Deference Courts Should Apply to FCC TCPA Orders

Authors: Joseph C. Wylie, Molly K. McGinley, Nicole C. Mueller

Last week, in PDR Network, LLC v. Carlton & Harris Chiropractic, Inc., Case No. 17-1705 (2019), the Supreme Court declined to decide the level of deference that courts must afford the Federal Communications Commission (the “FCC”), finding that the answer may depend on resolution of two preliminary issues that had not been decided by the lower courts. The matter has been remanded to the Court of Appeals for the Fourth Circuit. In declining to reach the issues presented, the Supreme Court leaves open the crucial question of whether courts are bound by the FCC’s interpretation of the Telephone Consumer Protection Act (“TCPA”).

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Attorneys General Express Widespread Support for TRACED Act Reintroduced in the Senate to Stop Illegal Robocall Scams

By Pamela Garvie, Amy Carnevale, Andrew Glass, Gregory Blase, Joseph Wylie, Molly McGinley, and Hollee Watson

Sen. John Thune (R-SD), member of the Senate Commerce Committee and chairman of the Subcommittee on Communications, Technology, Innovation, and the Internet, and Sen. Ed Markey (D-MA), also a member of the Commerce Committee and author of the Telephone Consumer Protection Act (“TCPA”), recently reintroduced the Telephone Robocall Abuse Criminal Enforcement and Deterrence (“TRACED”) Act, S. 151. The TRACED Act is identical to the version as originally introduced in November 2018 (and previously discussed here). The bill seeks to prevent illegal robocall scams and other intentional violations of the TCPA.

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Congress Holds Hearings on Abusive Robocalls and Caller ID Spoofing – Possible Legislative or Regulatory Changes Requires Close Watch

By Pamela Garvie and Amy Carnevale

The Senate Commerce Committee and House Energy and Commerce Committee held back-to-back hearings late last month on abusive robocalls and caller ID spoofing and how to combat them. Committee members and witnesses both highlighted the fact that robocalls and ID spoofing have “exploded in recent years” and several noted that “over 3 billion calls were placed [in March] alone” and “about a quarter of these calls are scam calls.”  Further, because the technology used to place robocalls and to spoof are evolving technically, the number of calls continues to grow.  There was broad agreement on both committees that consumer education, aggressive Federal Communications Commission (“FCC”) and Federal Trade Commission (“FTC”) enforcement actions, and the use of new ID verification and robocall-blocking technologies are important tools in combating these calls.  However, Republicans and Democrats and business and consumer witnesses are generally split on the question of whether legitimate businesses are part of the problem and whether the Telephone Consumer Protection Act (“TCPA”) needs to be reformed or conversely expanded through new legislation and regulations.  This focus on abusive/illegal robocalls and split on the TCPA presents both risks and potential opportunities for businesses and, consequently, requires close watch.

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Court Finds Website Owner Did Not Send Text Messages Initiated by its Users and thus Did Not Violate the TCPA

By Andrew C. Glass, Gregory N. Blase, Roger L. Smerage, and Matthew T. Houston

In a recent decision, the U.S. District Court for the Northern District of Illinois found that the host of an automobile website did not violate the Telephone Consumer Protection Act, 47 U.S.C. § 227 (“TCPA”), by providing its users a platform to send automated text messages regarding car listings.  In Serban v. CarGurus, Inc., Case No. 1:16-cv-02531 (N.D. Ill. Mar. 12, 2018), a user of the defendant’s website mistyped her telephone number when attempting to send herself a car listing.  In doing so, the user performed a multi-step process—including selecting the “Send to Phone” option, entering the telephone number, and clicking a “Send” button—to generate a text message automatically created by CarGurus based on the car selected.  As a result of the mistyped telephone number, the text message was transmitted to the plaintiff rather than the user.

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District Court Dismisses TCPA Class Action for Pharmacy Reminder Calls Under “Emergency Purposes” Exception

By: Joseph C. Wylie II, Molly K. McGinley, and Lexi D. Bond

A federal district court recently dismissed a putative Telephone Consumer Protection Act (“TCPA”) class action against CVS Health Corporation (“CVS”) Lindenbaum v. CVS Health Corp., Case No. 17-CV-1863 (N.D. Ohio Jan. 22, 2018), because the reminder calls to renew prescriptions fell within the “emergency purposes” exception of the TCPA.

Plaintiff Shari Lindenbaum alleged that CVS made at least six prerecorded prescription reminder calls to her cellphone in early 2017. She claimed that she received these calls because she had a “recycled” cell phone number — a number that once was used by an individual from whom the caller obtained consent but had since been reassigned to a different individual — and that she had never provided “prior express written consent” to receive the calls.  CVS asked the court to dismiss Lindenbaum’s claims, primarily arguing that the calls fell within the TCPA exception for “emergency purposes.”

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Legislative Efforts to Curb Caller ID Spoofing Continue at Federal and State Levels

By: Andrew C. Glass, Gregory N. Blase, and Roger L. Smerage

Caller ID spoofing—the act of using commercially-available technology or services to alter the name and telephone number that appear on the called party’s caller ID display—is pervasive. It presents significant risk not only to recipients (of being duped into thinking a call is from someone it is not) but also to the person or business whose name and telephone number the spoofer appropriates.  An unknowing recipient of a spoofed call could initiate legal proceedings against a completely innocent person or business whose information has been spoofed, causing that party unwarranted reputational harm.  Although federal and state governments have attempted to legislate against illegitimate caller ID spoofing, such legislation has struggled to counteract the problem.  Recently, however, legislators at both levels of government have undertaken new efforts to curtail harassing and deceptive use of spoofing.

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Second Circuit Affirms Dismissal of Action Against Healthcare Provider but Cautions Careful Review of TCPA Exemptions

By: Joseph C. Wylie II, Molly K. McGinley, Nicole C. Mueller

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.

District Court Dismisses TCPA Complaint Because Plaintiff Failed to Follow Defendant’s Opt-Out Instructions

By Joseph C. Wylie II, Molly K. McGinley, Lexi D. Bond

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.

 

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