Category: Litigation & Arbitration

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COVID-19: UPDATED Emergency and Healthcare Calls and Texts
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COVID-19: NY State of Emergency Imposes Ban on Telemarketing Calls
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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
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Eleventh Circuit Holds That a Single, Unsolicited Text Message Does Not Confer Article III Standing Under the TCPA
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Circuit Court Affirms Holding Reducing TCPA Award by 98%
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Supreme Court Declines to Define Scope of Deference Courts Should Apply to FCC TCPA Orders
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FCC Seeks Comment on TCPA Following D.C. Circuit’s Decision in ACA International
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District Court Finds No Violation of First Amendment in TCPA Suit Brought By Coalition of Bi-Partisan Political Organizations
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District Court Dismisses TCPA Class Action for Pharmacy Reminder Calls Under “Emergency Purposes” Exception
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District Court Dismisses TCPA Complaint Because Plaintiff Failed to Follow Defendant’s Opt-Out Instructions

COVID-19: UPDATED Emergency and Healthcare Calls and Texts

Authors: Joseph C. Wylie IIMolly K. McGinley, and Nicole C. Mueller

UPDATE: Since our original publication, the Federal Communication Commission issued interpretive guidance on applicability of the emergency purpose exclusion, discussed below.

In the current environment, companies face a need to communicate with customers and patients about the impact that coronavirus (“COVID-19”) will have on their ability to provide goods and services. Companies should be aware of how the Telephone Consumer Protection Act, 42 U.S.C. §. 447 et seq. (the “TCPA”) may impact their calling and texting practices. This alert discusses certain exemptions to the TCPA that may allow companies to continue to contact clients and customers through automated and prerecorded phone calls and texts regarding the COVID-19 outbreak. Businesses can and should continue to contact clients as needed, with carefully tailored messages, to provide necessary updates regarding the COVID-19 pandemic.

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COVID-19: NY State of Emergency Imposes Ban on Telemarketing Calls

By Joseph C. Wylie IIMolly K. McGinley, and Nicole C. Mueller

On Saturday, March 7, 2020, Governor Andrew Cuomo declared a disaster state of emergency in the State of New York based on the COVID-19 outbreak. One significant consequence is that under a newly-enacted law, unsolicited telemarketing calls to New York residents are now prohibited during a state of emergency.

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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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Circuit Court Affirms Holding Reducing TCPA Award by 98%

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

In Golan v. FreeEats.com d/b/a ccAdvertising et al., the Eighth Circuit recently affirmed a trial court’s decision to reduce a TCPA judgment by approximately 98% on the grounds that an aggregate award of approximately $1.6 billion was unreasonable and disproportionate to the offense, and therefore unconstitutional.  In so holding, the Eighth Circuit deviated from long-standing case law rejecting constitutional challenges to the amount of statutory damages allowed under the TCPA.  If the Eighth Circuit’s analysis is adopted more widely, it could bring a needed measure of rationality to awards under the TCPA.

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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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FCC Seeks Comment on TCPA Following D.C. Circuit’s Decision in ACA International

By Joseph Wylie, Molly McGinley, Andrew Glass, Greg Blase, Pamela Garvie, Amy Carnevale, and Nicole Mueller

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.

 

District Court Finds No Violation of First Amendment in TCPA Suit Brought By Coalition of Bi-Partisan Political Organizations

By Andrew C. Glass, Gregory N. Blase, Christopher J. Valente, Michael R. Creta, and Elma Delic

The U.S. District Court for the Eastern District of North Carolina recently rejected a First Amendment challenge to a portion of the Telephone Consumer Protection Act (“TCPA”), 47 U.S.C. § 227(b)(1)(A)(iii). In American Association of Political Consultants, Inc., et al. v. Sessions, et al., Case No. 5:16-cv-00252-D (E.D.N.C.), a bi-partisan coalition of political groups sued the federal government.  The coalition asserted that the TCPA’s prohibition on making auto-dialed calls or texts to cell phones without the requisite consent (the “cell phone ban”) imposes a content-based restriction on speech that does not pass strict scrutiny and is unconstitutionally under-inclusive.  (The plaintiffs’ complaint was previously discussed here.) The government defended the TCPA’s constitutionality.

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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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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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