Category: Litigation & Arbitration

1
FCC Seeks Comment on TCPA Following D.C. Circuit’s Decision in ACA International
2
District Court Finds No Violation of First Amendment in TCPA Suit Brought By Coalition of Bi-Partisan Political Organizations
3
District Court Dismisses TCPA Class Action for Pharmacy Reminder Calls Under “Emergency Purposes” Exception
4
District Court Dismisses TCPA Complaint Because Plaintiff Failed to Follow Defendant’s Opt-Out Instructions
5
District Court Decertifies TCPA Class Following Invalidation of Solicited Fax Rule
6
District Court Denies Class Certification in TCPA Case; Finds No Injury Possible Where Call Recipients Consented to Calls, Even if Consent Not in Writing
7
District Court Confirms That Text Messages Completing Consumer-Initiated Transaction Are Not Telemarketing
8
U.S. House Judiciary Committee Examines Lawsuit Abuse and the TCPA
9
Dish Network Ordered to Pay $280 Million Fine, Damages in Federal TCPA Lawsuit
10
Dish Network to Pay $61.5 Million in Damages After TCPA Trial

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.

 

District Court Decertifies TCPA Class Following Invalidation of Solicited Fax Rule

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

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.

District Court Denies Class Certification in TCPA Case; Finds No Injury Possible Where Call Recipients Consented to Calls, Even if Consent Not in Writing

By Joseph C. Wylie II,  Andrew C. Glass, Gregory N. Blase, Molly K. McGinley, and Lexi D. Bond

The Northern District of Illinois recently refused to certify a class in a case brought under the Telephone Consumer Protection Act, 47 U.S. Code § 227 (“TCPA”), on the grounds that the class could not include members who lacked Article III standing, and that determining whether individual class members had standing would lead to a multiplicity of mini-trials. See Christopher Legg et al. v. PTZ Insurance Agency LTD, et al., Case No. 14-C-10043. The decision was based in part on the Court’s finding that class members could not have suffered a concrete injury under Spokeo v. Robins (previously discussed here) if they consented to the calls, irrespective of the TCPA’s requirement that “advertising” calls require express written consent.  Thus, the Court granted the defendants’ motion to strike class allegations and denied plaintiffs’ cross-motion to certify a class. Read More

District Court Confirms That Text Messages Completing Consumer-Initiated Transaction Are Not Telemarketing

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

A recent decision from the Western District of Washington, Noah Wick v. Twilio Inc., Case No. C16-00914RSL, resulted in dismissal of a putative class action lawsuit under the Telephone Consumer Protection Act, 47 U.S. Code § 227 (“TCPA”), against Twilio Inc. (“Twilio”), a cloud communications platform service company which allows software developers to programmatically make and receive phone calls and send and receive text messages using its platform. Although several of Twilio’s arguments for dismissal were rejected, the court agreed with Twilio that the plaintiffs’ claims should be dismissed because a text message sent to complete a customer-initiated transaction is not telemarketing and the customer in this instance had given prior express consent to be contacted by providing his mobile number to the sender. Read More

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 Ordered to Pay $280 Million Fine, Damages in Federal TCPA Lawsuit

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

In a 475-page opinion issued earlier this week, the United States District Court for the Central District of Illinois ordered Dish Network Corp., to pay $280 million to the United States government and four states, marking what the government says is a record fine for telemarketing violations, including violations of the Telephone Consumer Protection Act (“TCPA”), the Telemarketing Sales Rule and the laws of California, Illinois, North Carolina, and Ohio, through what the Court called “millions and millions” of calls.

In March 2009, the states and the Federal Trade Commission (“FTC”) sued Dish Network after the company settled with 46 states for purported violations of “do not call” rules and rules governing robocalling. The Court found that Dish Network and its contractors made millions of illegal calls by calling numbers listed on the national Do Not Call Registry and by placing telemarketing calls that deliver prerecorded messages to live consumers, in violation of the TCPA and the states’ laws governing telemarketing.

Plaintiffs sought damages in the amount of $2.1 billion, but the Court determined that the amount requested, approximately 150 percent of Dish Network’s annual profits, “could materially affect Dish’s ability to continue operations.” Although the Court declined to interpret the TCPA as allowing an award “up to” $500 per violation rather than $500 per violation, as Dish Network requested, the Court exercised its discretion in awarding an amount less than $500 per violation.  An award of $500 per violation would have incurred a penalty of $8.1 billion; instead, the Court awarded $280 million, or twenty percent of Dish Network’s 2016 profits, an amount it determined to be “proportionate and reasonable” and “a miniscule fraction of maximum possible penalties and damages.”  The Court determined the reduced award to be appropriate given that Dish Network “made some efforts to avoid violations in its direct marketing and took some actions” to monitor third-party contractors while substantial enough to reflect “[t]he injury to consumers, the disregard for the law, and the steadfast refusal to accept responsibility.”

The Court further prohibited the company from violating do-not-call laws moving forward and imposed a 20-year plan for supervision of Dish Network’s telemarketing.

This is the second judgment against Dish Network issued in 2017 for violations of the TCPA (the prior judgment, issued by a federal court in North Carolina, is discussed here and here).  As the cases against Dish Network demonstrate, companies may face substantial liability based on the actions of third-party contractors.

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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