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.
A Greensboro, North Carolina jury handed down a $20.5 million verdict against Dish Network (“Dish”) last week in a class-action lawsuit, Krakauer v. Dish Network L.L.C., case number 1:14-cv-00333, brought under the Telephone Consumer Protection Act (“TCPA”). The verdict came after a five-day trial presided over by U.S. District Judge Catherine Eagles of the Middle District of North Carolina. Class representative Dr. Thomas Krakauer alleged Dish was responsible for telemarketing calls placed by an authorized Dish dealer to persons whose telephone numbers were on the National Do Not Call Registry.
The U.S. District Court for the Western District of Washington (“Court”) recently allowed a defendant to enforce the arbitration provision in a TCPA plaintiff’s wireless agreements even though the defendant was not a party to the wireless agreements. The plaintiff in Rahmany, et al. v. T-Mobile USA, Inc., et al., Case No. 2:16-cv-01416-JCC (W.D. Wash.), brought suit against Subway Sandwich Shops, Inc. and the plaintiff’s wireless carrier, alleging that the companies violated the TCPA by sending unsolicited text messages to the plaintiff and a putative class of individuals. Shortly after filing suit, the plaintiff voluntarily dismissed the wireless carrier. Subway, however, sought to enforce the mandatory arbitration clause in the agreement between the plaintiff and his wireless carrier, even though Subway was not a party to that agreement. The clause required the plaintiff to individually arbitrate disputes unless the plaintiff opted out of the provision within 30 days of signing the contract, which the plaintiff had not done.
The Sixth Circuit reversed a lower court’s denial of class certification and dismissal of an action following a lapsed offer for individual judgment in a decision released earlier this month. In doing so, the Sixth Circuit held that a defendant opposing class certification in a Telephone Consumer Protection Act (“TCPA”) case on the ground that issues of individualized consent predominate must do more than present “speculation and surmise to tip the decisional scales” because a “possible defense, standing alone, does not automatically defeat predominance.” The court also held that a defendant may not escape potential class-wide liability through an unaccepted offer of individual judgment.
In a ruling issued on December 1, 2016, the District Court for the Central District of California denied class certification in a Telephone Consumer Protection Act (“TCPA”) case due to the putative class representatives’ status as a so-called professional plaintiff. This ruling continues a trend in which courts have significantly limited the ability of professional plaintiffs to bring TCPA class actions. Courts increasingly view professional plaintiffs’ conduct in inviting the complained-of communications as a basis to challenge these plaintiffs’ standing and rendering them inadequate class representatives.
On Monday, the U.S. Department of Justice (“DOJ”) declined to intervene in Thorne v. Donald J. Trump for President, Inc., 1:16-cv-04603 (N.D. Ill.). As previously discussed here, a class of plaintiffs sued President-Elect Trump’s campaign alleging violations of the Telephone Consumer Protection Act (“TCPA”) in connection with text messages sent during the campaign. In seeking dismissal of the suit, the campaign argued that the TCPA does not pass muster under the First Amendment. Specifically, the campaign asserted that Congress’s November 2015 exemption of calls relating to government debt constitutes “preferential treatment” and qualifies as a “blatant and egregious form of content discrimination.”
The DOJ did not provide a reason for declining to intervene, and the campaign is now faced with the prospect of going it alone in its First Amendment challenge to the TCPA.
Donald Trump’s presidential campaign recently moved to dismiss a Telephone Consumer Protection Act (“TCPA”) claim on First Amendment grounds. Thorne v. Donald J. Trump for President, Inc., 1:16-cv-04603 (N.D. Ill.). The class-action complaint alleged that the campaign violated the TCPA by sending text messages without permission. In response, the campaign argued that the TCPA’s prohibition on the use of automatic telephone dialing systems (“ATDS”) for calls or text messages placed to cellular telephones, 47 U.S. Code § 227(b)(1)(A)(iii) (the “cell phone ban”), improperly regulates speech on the basis of content. Specifically, the campaign asserted that the ban cannot withstand strict scrutiny because it does not “further a compelling interest” and is not “narrowly tailored to achieve that interest.” Arizona Free Enterprise Club’s Freedom Club PAC v. Bennett, 564 U.S. 721, 734 (2011).
The Second Circuit recently refused to allow a plaintiff to proceed with a putative class action brought under the Telephone Consumer Protection Act (“TCPA”) in Bank v. Alliance Health Networks, LLC, finding that he lacked standing after the District Court entered judgment for Defendant in the amount of an unaccepted offer of judgment on Plaintiff’s individual claims.
In a precedential but split ruling, the Third Circuit recently held that diversity jurisdiction existed over a declaratory judgment action seeking insurance coverage for a classwide settlement of Telephone Consumer Protection Act (“TCPA”) claims even though no individual member of the underlying class had a claim in excess of the required $75,000 amount in controversy. See Auto-Owners Insurance Company v. Stevens & Ricci Inc., No. 15-2080, — F.3d — (3rd. Cir. 2016). The court also affirmed that the TCPA class settlement did not constitute covered “property damage” or “advertising injury” under the terms of the subject insurance policy.
The case arose when an insurance company sought a declaratory judgment that it had no obligation to defend or indemnify an insured law firm in connection with a class action lawsuit alleging TCPA violations. The named plaintiff in the underlying the class action lawsuit had alleged that the law firm violated the TCPA by sending unsolicited fax advertisements. The insurance company sought a declaratory judgment in the Eastern District of Pennsylvania against both the law firm and the named plaintiff in the underlying class action. At summary judgment, the district court concluded that the sending of unsolicited fax advertisements in violation of the TCPA did not fall within the terms of the applicable insurance policy.
At least two courts have recently dismissed TPCA claims where the plaintiffs appeared to manufacture standing. In Telephone Science Corp. v. Asset Recovery Solutions, the Northern District of Illinois dismissed a TCPA complaint brought by a plaintiff whose business model involved the intentional receipt of autodialed or prerecorded calls. There, the plaintiff, Telephone Science Corp. (“TSC”), operated a service called “Nomorobo,” designed to block certain unwanted calls. TSC uses a “honeypot” of telephone numbers, analyzes calls made to those numbers to identify numbers that TSC’s service identifies as being made using an autodialer or artificial or prerecorded voice calls, and then blocks calls made to Nomorobo subscribers made using those identified numbers.