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.
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.
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.”
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.
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.
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.
On June 22, 2017, the Second Circuit affirmed summary judgment for a defendant in a case of first impression, holding that under the Telephone Consumer Protection Act, 47 U.S.C. § 227 (“TCPA”), consent to be contacted by telephone cannot be unilaterally revoked by one party when that consent is provided as bargained-for-consideration in a bilateral contract.
In Reyes v. Lincoln Automotive Financial Services, the plaintiff Alberto Reyes, Jr. (“Reyes”) leased a new Lincoln MKZ luxury sedan from a Ford dealership, defendant Lincoln Automotive Financial Services (“Lincoln”). The lease agreement itself provided “express consent” by Reyes for Lincoln to contact him “by manual calling methods, prerecorded or artificial voice messages, text messages, emails and/or automatic telephone dialing systems…. regardless of whether you incur charges as a result.” After the lease agreement was finalized, Reyes ceased making required payments under the agreement. After Lincoln placed multiple calls (using both live and pre-recorded voice messages) to Reyes cellular phone, Reyes allegedly sent a letter to Lincoln revoking his consent to be contacted by Lincoln at that telephone number.
Reyes filed a complaint against Lincoln in the Eastern District of New York, alleging violations of the TCPA and seeking $720,000 in damages. On June 20, 2016, the Eastern District of New York granted summary judgment to Lincoln, holding in part that “the TCPA does not permit a party to a legally binding contract to unilaterally revoke bargained-for consent by telephone.”
In affirming the district court’s ruling regarding revocation of consent, the Second Circuit acknowledged that the Third Circuit and Eleventh Circuit have previously ruled that a party can revoke consent under the TCPA–rulings that were the basis of the FCC’s 2015 Ruling that prior express consent is revocable under the TCPA (discussed here). However, the Second Circuit held that the question presented by the Reyes appeal was different. Unlike the plaintiffs in those cases who gave consent “gratuitously,” in the context of an application process, Reyes’s consent was included as an express provision of his lease agreement with Lincoln.
The Second Circuit rejected Reyes’s argument that under common law, the term “consent” is revocable at any time. While the Second Circuit agreed that the common law definition of “consent” applied to consent in the context of the TCPA, it held that “common law is clear that consent to another’s actions can ‘become irrevocable’ when it is provided in an legally binding agreement.” In such circumstances, any modification to consent must receive the “’mutual assent’ of every contracting party in order to have legal effect.” The Court reasoned “[i]t is black-letter law that one party may not alter a bilateral contract by revoking a term without consent of a counterparty.”
The Second Circuit further deemed “meritless” Reyes’s contention that his consent could be revoked because it was not an “essential term” of his lease. Instead, the Court reasoned that terms of a contract are enforceable even if they are not “essential.” “A party who has agreed to a particular term in a valid contract cannot later renege on that term or unilaterally declare it to no longer apply simply because the contract could have been formed without it.”
The Second Circuit also declined to accept Reyes’s argument that such an interpretation of consent under the TCPA would not further the statute’s remedial purpose of protecting consumers from unwanted telephone calls. Finding “no lack of clarity in the TCPA’s use of the term ‘consent,’” the Court rejected application of the remedial rule of statutory interpretation. In doing so, the Second Circuit recognized that businesses may insert consent clauses into standard sales contracts “thereby making revocation impossible in many instances,” but held that this “hypothetical concern” would be for Congress to resolve, not the Courts.
This ruling may provide a strong defense to revoked-consent claims brought against defendants by those in contractual relationships with those defendants. It remains to be seen whether the reasoning set forth by the Second Circuit will be adopted by other courts.
On June 13, the U.S. House Judiciary Committee’s Subcommittee on the Constitution and Civil Justice held a hearing on “Lawsuit Abuse and the Telephone Consumer Protection Act”. The House Energy & Commerce Committee has primary jurisdiction over the TCPA. But the Judiciary Committee oversees all matters related to the administration of justice in federal courts and has been active on a number of litigation reform matters, including most recently class action reform legislation. The Subcommittee held the hearing in response to the fact that between 2010 and 2016, TCPA case filings increased by 1,272%, and today TCPA lawsuits are the largest category of class actions filed in federal court. Although some of the Subcommittee’s Democratic members, including Ranking Democrat Steve Cohen (D-TN), questioned the Committee’s jurisdictional interest in the TCPA, the hearing focused on TCPA reform––specifically with an eye toward reducing lawsuit abuse, and the Republicans said they would work with Energy & Commerce on any legislative proposals.
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).