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.
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.
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).
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
A New York U.S. District Court recently granted summary judgment in favor of defendant Rite Aid Headquarters Corporation in a putative Telephone Consumer Protection Act (“TCPA”) class action, holding that calls reminding customers about the flu vaccine were “health related” and therefore Rite Aid was not required to obtain prior express written consent before making the calls. Though the opinion was filed under seal on March 30, 2017, it was made public last week. Read More
The U.S. Court of Appeals for the District of Columbia Circuit, in a 2-1 split decision, has issued an opinion that the Federal Communications Commission (the “FCC”) lacked authority under the Telephone Consumer Protection Act (“TCPA”) to regulate facsimiles that were sent with the recipient’s consent.  This opinion found that an FCC rule issued in 2006 (the “2006 Order”) requiring a sender to include an opt-out notice on faxes that were solicited by the recipient was unlawful and vacated the FCC order implementing the rule. 
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A North Carolina federal district court recently denied a motion by the federal government to dismiss claims raising a First Amendment challenge to a portion of the Telephone Consumer Protection Act (“TCPA”). See American Ass’n of Political Consultants v. Lynch, Case No. 5:16-00252-D (E.D.N.C.). At this early stage of the case, the government did not address the substance of the constitutional challenge. Rather, the government asserted that the court did not have jurisdiction over the case and that the political organizations which filed the suit did not have standing to maintain suit. The court, however, rejected the government’s arguments and allowed the case to proceed.
Last year, a bi-partisan coalition of political groups filed a two-count complaint alleging that aspects of the TCPA run afoul of First Amendment free-speech protections. Specifically, the suit contends 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), imposes a content-based restriction on speech that fails to pass strict scrutiny and is unconstitutionally underinclusive. The federal government moved to dismiss on standing and subject-matter jurisdiction grounds. In response, the plaintiffs amended their complaint to add the Federal Communications Commission (“FCC”) as a defendant and to address purported deficiencies in the original complaint.
The Consumer and Governmental Affairs Bureau of the Federal Communications Commission (the “FCC”) recently issued public notices for comments on two petitions that seek clarification or reversal of the FCC’s interpretation of the “prior express consent” of the Telephone Consumer Protection Act (the “TCPA”). Taken together, the petitions request a reversal of the FCC’s long-standing guidance that a consumer provides “prior express consent” to be contacted on a wireless number by providing that number to a business in connection with a voluntary transaction, thus allowing the business to use autodialed or prerecorded voice calls to the consumer to communicate with the consumer regarding the parties’ relationship. A change to the FCC’s interpretation of “prior express consent” could have significant impact on businesses’ communications with its existing customers.
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).
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.