Category: Consumer Issues, Privacy & Data Security

1
Second Circuit Holds That Contractual Consent May Not Be Unilaterally Revoked Under The TCPA
2
U.S. House Judiciary Committee Examines Lawsuit Abuse and the TCPA
3
Dish Network to Pay $61.5 Million in Damages After TCPA Trial
4
It Wasn’t Me! – District Court Dismisses TCPA Action Alleging Vicarious Liability against Hotel Chains
5
Proposed Fairness in Class Action Litigation Act of 2017 Seeks to Curb Attorney Abuses of Class Action Device and Expand Class Action Defendant Protections
6
Second Circuit Affirms Denial of Class Certification in TCPA Case on Ascertainability Grounds Due to Lack of Recipient List
7
Rep. Virginia Foxx Seeks to Prohibit Political Robocalls to Numbers on Do-Not-Call Registry
8
Ninth Circuit Finds Article III Standing, Dismisses TCPA Action for Failure to Effectively Revoke Consent
9
Consumers Union Supports Stay of FCC’s July 2016 Broadnet Ruling Exempting Federal Contractors from Ban on Robocalls
10
Drones May Have Limited Range, But Regulatory Coordination Doesn’t Have To

Second Circuit Holds That Contractual Consent May Not Be Unilaterally Revoked Under The TCPA

By Joseph C. Wylie II and Molly K. McGinley

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.

U.S. House Judiciary Committee Examines Lawsuit Abuse and the TCPA

By Pamela Garvie, Elana Reman, Andrew Glass, Gregory Blase, Joseph C. Wylie II and Molly K. McGinley

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.

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Dish Network to Pay $61.5 Million in Damages After TCPA Trial

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

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).

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It Wasn’t Me! – District Court Dismisses TCPA Action Alleging Vicarious Liability against Hotel Chains

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

Proposed Fairness in Class Action Litigation Act of 2017 Seeks to Curb Attorney Abuses of Class Action Device and Expand Class Action Defendant Protections

By Brian M. Forbes, Joseph C. Wylie II, Molly K. McGinley, Jennifer Janeira Nagle, and Matthew N. Lowe                     

On February 9, 2017, Rep. Robert Goodlatte (R-Va.), the Chairman of the House Judiciary Committee, introduced the Fairness in Class Action Litigation Act of 2017 (the “Act” or “H.R. 985”).  The Act significantly expands the class action reforms proposed in an earlier version of the bill that stalled after passage in the U.S. House of Representatives and imposes significant new restrictions on class action lawyers and plaintiffs seeking to proceed under Rule 23 of the Federal Rules of Civil Procedure, as well as implementing new rules applicable to cases consolidated through the multidistrict litigation process.  The stated purposes of the Act are to: (1) “assure fair and prompt recoveries for class members and multidistrict litigation plaintiffs with legitimate claims;” (2) “diminish abuses in class action and mass tort litigation that are undermining the integrity of the U.S. legal system;” and (3) “restore the intent of the framers of the United States Constitution by ensuring Federal court consideration of interstate controversies of national importance consistent with diversity jurisdiction principles.” In a press release, Rep. Goodlatte announced that the objective of the proposed legislation is to “keep baseless class action suits away from innocent parties, while still keeping the doors to justice open for parties with real and legitimate claims, and maximizing their recoveries.”

To read the full alert on K&L Gates HUB, click here.

Second Circuit Affirms Denial of Class Certification in TCPA Case on Ascertainability Grounds Due to Lack of Recipient List

By Joseph Wylie, Molly McGinley, Nicole Mueller

In a non-precedential opinion issued earlier this week, the Second Circuit held in Leyse v. Lifetime Entertainment Services, LLC, that a class could not be certified in a Telephone Consumer Protection Act case because the plaintiff did not have a list of the recipients of telemarketing phone calls.  The Second Circuit followed its own precedent identifying ascertainability as an “implied requirement” under Rule 23.  In so ruling, the Second Circuit has further demonstrated the different approaches to ascertainability that federal circuit court apply (previously discussed here).

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Rep. Virginia Foxx Seeks to Prohibit Political Robocalls to Numbers on Do-Not-Call Registry

By Pamela J. Garvie, Andrew C. Glass, Joseph C. Wylie II, Gregory N. Blase, and Molly K. McGinley

Rep. Virginia Foxx (R-NC) has introduced a bill, H.R. 740 (the “Robo Calls Off Phones Act” or “Robo COP Act”), to “stop the intrusion of political robocalls in homes across America.” Rep. Foxx stated that “politicians made sure to exempt political robo-calls from the power of the ‘Do Not Call’ registry. If these calls weren’t such a nuisance, their blatant exclusion would be laughable.” Claiming that eligible voters receive more than 20 political prerecorded voice calls per day, Rep. Foxx seeks through the bill to end the “robocall loophole” for politicians.

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Ninth Circuit Finds Article III Standing, Dismisses TCPA Action for Failure to Effectively Revoke Consent

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

The Ninth Circuit ruled this week that a customer alleging that his former gym sent him texts in violation of the Telephone Consumer Protection Act (“TCPA”) suffered a concrete injury under the standard set forth in 2016 by the Supreme Court in Spokeo, Inc. v. Robins (previously discussed here) but that cancellation of his gym membership was insufficient to establish revocation of consent as required in order for the gym to incur liability under the statute.

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Consumers Union Supports Stay of FCC’s July 2016 Broadnet Ruling Exempting Federal Contractors from Ban on Robocalls

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

Consumers Union, the consumer advocacy arm of Consumer Reports, has filed a letter in support of the National Consumer Law Center’s (NCLC) request that the Federal Communications Commission (FCC) stay its recent ruling on Broadnet Teleservices LLC’s Petition for Declaratory Ruling in the on-going rulemaking matter In re Rules and Regulations Implementing the Telephone Consumer Protection Act of 1991 while that ruling is under appeal.  The July 5, 2016, Broadnet Ruling (previously discussed here) held that the TCPA, and its ban on autodialed calls to cellular telephones, does not apply to calls placed by the federal government itself, or its contractors, so long as the calls are placed in the course of conducting “official government business” and, for calls placed by contractors, the calls comply with the government’s instructions.  On July 26, 2016, the NCLC moved the FCC to reconsider its ruling and stay its effect until the motion is resolved.  Consumers Union is joining the request for the stay as part of its “End Robocalls” campaign, which purportedly seeks “technological solutions to the unwanted robocall problem,” according to the group’s letter to the FCC.  If the requested stay is granted, federal government employees and contractors will continue to be subject to the TCPA unless the Broadnet Ruling is upheld.

Drones May Have Limited Range, But Regulatory Coordination Doesn’t Have To

By Former Rep. James T. Walsh, contributor, and Rod Hall (Originally published in The Hill)

Safe integration of unmanned aircraft systems (UAS) into the national airspace is one of the foremost policy challenges of 2016. But while Capitol Hill has largely focused on the regulatory efforts of the Federal Aviation Administration (FAA), developments overseas will also shape the future of the dynamic UAS industry in the year ahead.

Just before the end of the year, the European Aviation Safety Agency (EASA) released its technical framework for UAS regulation across the 28 member states of the European Union. The framework will serve as the basis for rule-making activities at the EU and member-state levels in 2016 and 2017.

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