Category: TCPA

TCPA Rules on Revoking Consent for Unwanted Robocalls and Robotexts Effective April 2025

On October 11, 2024, the Federal Communications Commission announced that the effective date for Telephone Consumer Protection Act (TCPA) rules on revoking consent for unwanted robocalls and robotexts is set for April 11, 2025.

On February 15, 2024, the FCC adopted the TCPA Consent Order in the above-captioned proceeding. In that rulemaking, the FCC adopted rules making it simpler for consumers to revoke consent to receive unwanted robocalls and robotexts. Callers and texters must honor these opt-out requests in a timely manner.

The TCPA Consent Order established that these rules would become effective six months following publication in the Federal Register that the Office of Management and Budget has completed its review of the modified information collection requirements under the Paperwork Reduction Act of 1995. OMB approved these modified information collection requirements on September 26, 2024.

On October 11, 2024, the FCC announced in the Federal Register that compliance with the amendments and new rules set forth in the TCPA Consent Order as contained in 47 CFR §§ 64.1200(a)(9)(i)(F), (10), (11) and (d)(3) is required as of April 11, 2025.

Background of the TCPA Rules on Revoking Consent for Unwanted Robocalls and Robotexts

The TCPA restricts robocalls and robotexts absent the prior express consent of the called party or a recognized exemption. The FCC has made clear that consumers have a right to decide which robocalls and robotexts they wish to receive by exercising their ability to grant or revoke consent to receive such calls and texts.

The FCC has now adopted new rules to strengthen the ability of consumers to decide which robocalls and robotexts they wish to receive, codified the FCC’s past guidance on consent to make these requirements easily accessible and apparent to callers and consumers, and closed purported loopholes that allow wireless providers to make robocalls and robotexts without the ability for the subscriber to opt out.

What is the Practical Impact of the TCPA Revocation Rules?

As previously discussed by FTC defense and telemarketing compliance attorney Richard B. Newman, in March 2024 the Federal Communications Commission announced that it adopted new rules and codified previously adopted protections that make it simpler for consumers to revoke consent to unwanted robocalls and robotexts (specifically, autodialed and/or artificial/ prerecorded voice calls and texts) while requiring that callers and texters honor these requests in a timely manner.

In pertinent part:

  • Revocation of prior express consent for autodialed, prerecorded or artificial voice calls (and autodialed texts) can be made in any reasonable manner (callers may not infringe on that right by designating an exclusive means to revoke consent that precludes the use of any other reasonable method).
  • Callers are required to honor do-not-call and consent revocation requests within a reasonable time not to exceed ten (10) business days of receipt.
  • Text senders are limited to a prompt one-time text message confirming a consumer’s request that no further text messages be sent under the TCPA (the longer the delay, the more difficult it will be to demonstrate that such a message falls within the original prior consent).
  • Revocation of consent applies only to those autodialed and/or artificial/prerecorded voice calls and texts for which consent is required.
  • A revocation to marketing messages precludes all further telephone calls or text messages unless an enumerated exemption exists.

Telemarketers and lead generators should consult with an experienced FTC defense lawyer to discuss the scope of the new rules and protections, including, but not limited to, the scope and applicability of a revocation for one purpose to other communication purposes.

© 2024 Hinch Newman LLP

by: Richard B. Newman of Hinch Newman LLP

For more news on FCC TCPA Regulations, visit the NLR Communications, Media, & Internet section.

Confused About the FCC’s New One-to-One Consent Rules– You’re Not Alone. Here Are Some FAQs Answered For YOU!

Heard a lot about what folks are concerned about in the industry. Still seems to be a lot of confusion about it. So let me help with some answers to critical questions.

None of this is legal advice. Absolutely critical you hire a lawyer–AND A GOOD ONE–to assist you here. But this should help orient.

What is the new FCC One-to-One Ruling?

The FCC’s one-to-one ruling is a new federal regulation that alters the TCPA’s express written consent definition in a manner that requires consumers to select each “seller”–that is the ultimate good or service provider–the consumer chooses to receive calls from individually.

The ruling also limits the scope of consent to matters “logically and topically” related to the transaction that lead to consent.

Under the TCPA express written consent is required for any call that is made using regulated technology, which includes autodialers (ATDS), prerecorded or artificial voice calls, AI voice calls, and any form of outbound IVR or voicemail technology (including ringless) using prerecorded or artifical voice messages.

Why Does the FCC’s New One-to-One Ruling Matter?

Currently online webforms and comparison shopping websites are used to generate “leads” for direct to consumer marketers, insurance agents, real estate agents, and product sellers in numerous verticals.

Millions of leads a month are sold by tens of thousands of lead generation websites, leading to hundreds of millions of regulated marketing calls by businesses that rely on these websites to provide “leads”–consumers interested in hearing about their goods or services.

Prior to the new one-to-one ruling website operators were free to include partner pages that linked thousands of companies the consumer might be providing consent to receive calls from. And fine-print disclosures might allow a consumer to receive calls from business selling products unrelated to the consumer’s request. (For instance a website offering information about a home for sale might include fine print allowing the consumer’s data to be sold to a mortgage lender or insurance broker to receive calls.)

The new one-to-one rule stop these practices and requires website operators to specifically identify each good or service provider that might be contacting the consumer and requires the consumer to select each such provider on a one by one basis in order for consent to be valid.

Will the FCC’s One-to-One Ruling Impact Me?

If you are buying or selling leads, YES this ruling will effect you.

If you are a BPO or call center that relies on leads– YES this ruling will effect you.

If you are a CPaaS or communication platform–YES this ruling will effect you.

If you are a telecom carrier–YES this ruling will effect you.

If you are lead gen platform or service provider–YES this ruling will effect you.

If you generate first-party leads–Yes this ruling will effect you.

When Does the Rule Go Into Effect?

The ruling applies to all calls made in reliance on leads beginning January 27, 2025.

However, the ruling applies regardless of the date the lead was generated. So compliance efforts need to begin early so as to assure a pipeline of available leads to contact on that date.

In other words, all leads NOT in compliance with the FCC’s one-to-one rule CANNOT be called beginning January 27, 2025.

What Do I have to Do to Comply?

Three things:

i) Comply with the rather complex, but navigable new one-to-one rule paradigm. (The Troutman Amin Fifteen is a handy checklist to assist you);

ii) Assure the lead is being captured in a manner that is “logically and topically” related to the calls that will be placed; and

iii) Assure the caller has possession of the consent record before the call is made.

© 2024 Troutman Amin, LLP
For more news on FCC Consent Regulations, visit the NLR Communications, Media, & Internet section.

No Arbitration for Lead Buyer: Consent Form Naming Buyer Does Not Give Buyer Right to Enforce Arbitration in Tcpa Class Action

A subsidiary of Move, Inc. bought a data lead from Nations Info, Corp. off of its HudHomesUsa.org website. The subsidiary made an outbound prerecorded call resulting in a TCPA lawsuit against Move. (Fun.)

Move, Inc. moved to compel arbitration arguing that since its subsidiary was named in the consent form–it argued the arbitration clause necessarily covered it because the whole purpose of the clause was to permit parties buying leads from the website to compel TCPA cases to arbitration.

Good argument, but the court disagreed.

In Faucett v. Move, Inc. 2024 WL 2106727 (C.D. Cal. April 22, 2024) the Court refused to enforce the arbitration clause finding that Move, Inc. was not a signatory to the agreement and could not enforce it under any theory.

Most interestingly, Move argued that a motivating purpose behind the publisher’s arbitration clause was to benefit Move because Nations Info listed Opcity —Move’s subsidiary—in the Consent Form as a company that could send marketing messages to Hud’s users. (Mot. 1–2.)

But the Court found the Terms and Consent Form were two different documents, and accepting the one did not change the scope of the other.

The Court also found equitable estoppel did not apply because Plaintiff was not moving to enforce the terms of the agreement. Quite the contrary, Plaintiff denied any arbitration (or consent) agreement existed.

So Move is stuck.

Pretty clear lesson here: lead buyers should make sure the arbitration provisions on any website they are buying leads from includes third-parties (like the buyer) as a party to the clause. Failing to do so may leave the lead buyer stuck without the ability to enforce the provision–and that can lead to a massive class action with potential exposure in the hundreds of millions or billions of dollars.

Lead buyers are already forcing sellers to revise their flows in light of the FCC’s new one to one consent rules. So now would be a GREAT time to revisit requirements around arbitration provisions as well.

Something to think about.

© 2024 Troutman Amin, LLP
For more news on Telephone Lead Litigation, visit the NLR Communications, Media & Internet section.

UNDER SURVEILLANCE: Police Commander and City of Pittsburgh Face Wiretap Lawsuit

Hi CIPAWorld! The Baroness here and I have an interesting filing that just came in the other day.

This one involves alleged violations of the Pennsylvania Wiretapping and Electronic Surveillance Act, 18 Pa.C.S.A. § 5703, et seq., and the Federal Wiretap Act, 18 U.S.C. § 2511, et seq.

Pursuant to the Pennsylvania Wiretapping and Electronic Surveillance Act, 18 Pa.C.S.A. § 5703, et seq., a person is guilty of a felony of the third degree if he:

(1) intentionally intercepts, endeavors to intercept, or procures any other person to intercept or endeavor to intercept any wire, electronic or oral communication;

(2) intentionally discloses or endeavors to disclose to any other person the contents of any wire, electronic or oral communication, or evidence derived therefrom, knowing or having reason to know that the information was obtained through the interception of a wire, electronic or oral communication; or

(3) intentionally uses or endeavors to use the contents of any wire, electronic or oral communication, or evidence derived therefrom, knowing or having reason to know, that the information was obtained through the interception of a wire, electronic or oral communication.

Seven police officers employed by the City of Pittsburg Bureau of Police team up to sue Matthew Lackner (Commander) and the City of Pittsburgh.

Plaintiffs, Colleen Jumba Baker, Brittany Mercer, Matthew O’Brien, Jonathan Sharp, Matthew Zuccher, Christopher Sedlak and Devlyn Valencic Keller allege that beginning on September 27, 2003 through October 4, 2003, Matthew Lacker utilized body worn cameras to video and audio records Plaintiffs along with utilizing the GPS component of the body worn camera to track them.

Yes. To track them.

Plaintiffs allege they were unaware that Lacker was utilizing a body worn camera to video and auto them and utilizing the GPS function of the body worn camera. Nor did they consent to have their conversations audio recorded by Lacker and/or the City of Pittsburgh.

Interestingly, Lackner was already charged with four (4) counts of Illegal Use of Wire or Oral Communication pursuant to the Pennsylvania Wiretapping and Electronic Surveillance Act. 18 Pa.C.S.A. § 5703(1) in a criminal suit.

So now Plaintiffs seek compensatory damages, including actual damages or statutory damages, punitive damages, and reasonably attorneys’ fees.

This case was just filed so it will be interesting to see how this case progresses. But this case is an important reminder that many states have their own privacy laws and to take these laws seriously to avoid lawsuits like this one.

Case No.: Case 2:24-cv-00461

© 2024 Troutman Amin, LLP
For more news on Wiretap Lawsuits, visit the NLR Communications, Media & Internet section.

MAXIMUM PRESSURE: Stratics Networks Hit With Massive DOJ Complaint Related to RVM Use by Customers and The Heat is Really On Platforms Right Now

So just last month the covered the story of Phone Burner being absolutely destroyed by a recent FCC order directing carriers to stop carrying its traffic. It be came the most read story EVER on TCPAWorld.com.

This one might be even bigger.

Before I get to the punchline, bear with me for a second.

Ringless voicemail.

I have been saying for many years that these things are covered by the TCPA. The Courts have said it. The FCC has said it.

But the ringless voicemail providers, by and large, refused to get the message. As recently as late last year I still have people coming to me telling me that this platform or that service was telling them that the TCPA does not apply to ringless voicemail. And I have personally heard sales pitches within the last couple of years where a ringless voicemail provider told potential customers the TCPA does not apply to the technology.

Lies, lies and more lies. And I hate lies.

The argument for RVM not being covered by the TCPA is a dreadful one. Some lawyer–NOT ME– long ago prepared a white paper suggesting that because voicemail is a title III information service and not a title II communication service that, somehow, that means the direct drop process to leave a voicemail also wasn’t a communication. Its nuts. Totally irrational. And beyond that, it was just dumb.

There was a better rationale for the argument–that the messages traversed business class landlines and not cellular networks–but that argument, too, has been rejected in recent years.

Anyhoo, RVM are definitely covered by the TCPA and that is a fact that has been known for many years. But that did not stop one major RVM provider from–allegedly–allowing its users to blast folks without consent.

And here is where we get to the big news: On Friday the Department of Justice filed a massive complaint–on referral from the FTC–against a debt relief company that was allegedly violating the TSR by sending RVMs without consent and failing to include content required by the TSR in the message.

Please notice that the complaint was NOT just filed against the debt relief company. It was filed against Stratics Networks–the wholesale carrier that permitted the traffic and also, apparently, supplied the RVM platform that was used to send the messages. But the complaint was also filed against the intermediary VOIP service provider, Netlatitude, Inc.–and its president Kurt S. Hannigan personally (!),  that provided access to the debt relief company through Stratics (or perhaps vice versa.)

The actual wrongdoers were apparently a debt relief company called Tek Ventures, LLC, doing business as Provident Solutions and a marketing company hired by Provident–Atlas Marketing Partners, Inc.

A bunch of other players, including INDIVIDUALS are also named as the FTC and DOJ really came to play with a sledgehammer here.

Each of these companies (and people) are alleged to have done something a bit different wrong. And its worth seeing how the government is going after each member of the alleged illegal robocall ring.

Of most interest to me–and I suspect most of you–is the case against Stratics. Like Phone Burner, Stratics is a very well known platform out there. Big footprint. And it is perceived to be a fairly compliant player.

Out of the gate, some of the allegations of the Complaint seek to impose a MUCH broader set of requirements on a carrier than have ever been seen before. For instance, the DOJ complains:

  • Despite acknowledging in its terms and conditions of service that its customers must “obtain the prior written consent from each recipient to contact such recipient” “[w]here required by applicable law or regulation,” Stratics Networks did not have evidence of such consent and did not request or require that its customers submit such evidence;

  • Stratics Networks has access to the prerecorded messages its customers upload to its RVM platform and reserves the right to audit its customers’ accounts in its terms and conditions of service, but it does not conduct due diligence to ensure that the messages actually identified the seller or caller, or to prohibit the transmission of prerecorded messages that failed to do so, or to ensure that that the call recipient had given express consent to receive the call; and

  • Stratics did not “require[]” and “ensur[e] that users  obtain prior express written consent from recipients, scrub lists of uploaded phone numbers against the DNC Registry, or otherwise comply with the TSR as a condition of using the platform.

But, so what?

A carrier owes no duty to at law to review the content of messages sent over its network. Gees, it would be a huge violation of privacy if it did. And sure an RVM platform may have access to the voicemails that were uploaded but since when is it required to review those and provide compliance advice? That’s just plain nuts.

Further, the fact that Stratics required consent for users of its platform is plenty. Folks use AUPs and disclosures to assure their platforms are not being misused. Since when does the law require them to actually possess consent–or “require” and “ensure” compliance– before allowing someone to use their network? Since never. And its just nuts for the FTC and DOJ to suggest otherwise.

Outside of really extreme cases, a carrier is still just a carrier. And a platform is still just a platform. Sure there can be times when these companies are so involved with messages–or know (we’ll get to that) of abuses–such that they are responsible as if they had sent them. But in the ordinary course these folks have NO DUTY to ensure…. anything.

So I’m a bit perturbed by the insinuation that these allegations, alone, make Stratics blameworthy. They speak to duties that do not exist in the law. If the DOJ and FTC doesn’t like the current state of the law they should take it up with Congress (or, in the case of the FTC, start an NPRM process, hint hint.)

But other allegations are more damaging–particularly those related to the knowledge Stratics had about the use of its platform. And, here again, we see the ITG playing a big role.

Per the Complaint, “Stratics Networks received numerous Traceback Requests from USTelecom’s ITG alerting it to suspected illegal robocall traffic delivered via Stratics Networks’ RVM platform service and seeking its assistance in identifying the source(s) (i.e., upstream carrier or originating end-user) of these “likely illegal” robocalls, including over 30 such requests between August 2019 and February 2021.”

Now 30 requests may seem like a lot, but you have to keep in mind how active the ITG is. They’re firing off a ton of “tickets” every single day. So I’m not convinced that 30 tickets over a year and a half is really that big of a deal. Plus, these tickets are directed at the content of user messages traversing the Stratics network–it does not mean that any of these were actually Stratics customers. (BTW, the DOJ was kind enough to name a bunch of the ticket sources: “Atlas Marketing, Telecord, Telesero, Health Innovations, National Homebuyers, Elite Processing, Deltracon, Technest Limited, Shamoon Ahmad, Progressive Promoting, Nitzke Enterprize, Care Advocacy Solutions, and PubClub.” Hope your name isn’t in there!)

So, again, I don’t love the government’s case so far. But it does get stronger. For instance:

  • In some instances, even when Stratics Networks did identify the RVM customers responsible for these illegal robocalls, Stratics Networks allowed these RVM customers to open additional accounts and/or continue utilizing its RVM platform service for several weeks or months without suspending or terminating their RVM accounts.

  • In some instances, Stratics Networks did not suspend these RVM customers’ accounts until after it received a civil investigative demand from the FTC in November 2020 inquiring about prerecorded messages delivered using its RVM platform service.

Ok, now the government is getting closer. The case law is reasonably clear that where a carrier or platform knows of illegal traffic on its network it does need to take some action to prevent it. If Stratics allowed customers who were committing violations to open new accounts or run new campaigns that could be a problem, unless it did extra heightened diligence to assure compliance.

But now, the big allegations:

  • Several of US Telecom’s ITG’s Traceback Requests to Stratics Networks concerned robocalls delivered over Stratics Networks’ RVM platform as part of the Atlas Defendants’ debt relief telemarketing campaign, including Traceback Requests Stratics Networks received between April and June 2020. These Traceback Requests indicated that they concerned a “DebtReduction-Hardship” or “DebtReduction CoronaHardship” campaign, and they noted that the robocalls delivered prerecorded messages offering preapproved loans and did not identify the caller.

  • Notwithstanding Stratics Networks’ representation to US Telecom’s ITG in response to a April 29, 2020 traceback request that it “ha[d] taken immediate action and triggered a full investigation” into the Traceback Request and “also suspended traffic,” Stratics Networks permitted Atlas Marketing to continue using its RVM platform service to deliver millions more robocalls for over five more months;

  • After April 29, 2020, Stratics Networks permitted Atlas Marketing to use its RVM service to deliver more than 23 million additional ringless voicemail robocalls to American consumers.

Ok so Stratics allowed 23 million voicemails by Atlas after telling the ITG it would suspend its traffic. Now that could be a problem. Especially if those 23MM voicemails violated the TSR and TCPA (although that fact is, perhaps tellingly, left out of the complaint.)

Notice the timing here also. ITG tickets went out in April, 2020. A CID followed in October, 2020. And then the complaint was filed in February, 2023 two and a half years later.

So all of you carriers and platforms that have received ITG tickets followed by CIDs, keep this in mind. Even if a year or more has passed, the FTC might still be working the case.

So what did Netlatitude do wrong? Well this appears to be a volume play. Specifically the FTC is concerned that Netlatitude allowed Atlas to send “136,000 robocalls” using Stratics Networks’ SIP termination service on just two days in September 2020.

Again, I kind of want to shrug at that. While high volume traffic can be a red flag, there is ZERO requirement a carrier decline to carry traffic merely because there might be a lot of it.

Netlatitude also apparently received several ITG tickets but it is not clear that they had anything to do with Atlas. So I am very fuzzy as to why Netlatitude is in the case–except that Stratics apparently pointed the finger at Netlatitude and its President.

As to the debt relief companies, the claims here are wide and varied. First, there is a claim of straight consumer deception. They allegedly promised consumers they’d be out of debt in two years and that monthly payments would be used in a way that turned out not to be true. Ok. Makes sense.

Next they allegedly sent voicemails that did not identify the sender and sent calls to numbers on the DNC list without consent. Again, pretty straightforward.

They also allegedly received a fee prior to providing debt relief, which is also not permitted. So… if true, open and shut case. I think.

In the end the government is asking for a bunch of stuff. Most damaging for Stratics is the injunctive relief provision:

A. Enter a permanent injunction to prevent future violations of the TSR and the FTC Act by Defendants;

B. Award monetary and other relief within the Court’s power to grant;

C. Award Plaintiff monetary civil penalties for every violation of the Telemarketing Sales Rule; and

D. Award Plaintiff such other and additional relief the Court may determine to
be just and proper

Lots of big take aways here. We already knew that carriers and platforms can’t turn a blind eye to bad traffic on their networks, but in this case the government seeks to go much further and impose duties on these companies to “require” and “ensure” only lawful traffic traverses their networks. That is just craziness and I think a lot of carriers will fold up shop if they suddenly become strictly liable for misconduct on their networks. Indeed, just 8 years ago carriers were completely beyond liability for traffic on their network and now they are to be treated as always liable for it? That is unfair and absurd.

Obviously those of you in the debt relief game need to pay careful attention here as well. NO cheating allowed. If you make a representation it has to be true. And don’t charge that fee up front–can get you into trouble.

Notice also that NONE of these claims are brought under the TCPA. But some could have been. The TCPA also prevents the use of RVMs to to cell phones without the proper level of consent. And the TCPA bans solicitations to residential numbers on the DNC list. I presume the DOJ didn’t want to tangle with any additional issues here–or perhaps the FTC did not want to tread on the FCC’s toes by moving into TCPA issues. Unclear to me.

But what IS clear to me is that this complaint is a huge deal and should really have every carrier and platform out there asking itself what the future may hold…

Read the complaint here: Complaint Against Stratics, et al.

Article By Eric J. Troutman of Troutman Firm

For more internet and telecom legal news, click here to visit the National Law Review.

© 2023 Troutman Firm

SUPERBOWL CIPA SUNDAY: Does Samsung’s Website Chat Feature Violate CIPA?

Happy CIPA and Super Bowl Sunday TCPA World!

So, Samsung is under the spotlight with a new CIPA case brought by a self-proclaimed “tester.” You know like Rosa Parks?? Back to that in a bit.

The California Invasion of Privacy Act (“CIPA”) prohibits both wiretapping and eavesdropping of electronic communications without the consent of all parties to the communication. The Plaintiff’s bar is zoning in to CIPA with the Javier ruling.

If you recall, Javier found that “[T]hough written in terms of wiretapping, Section 631(a) applies to Internet communications. It makes liable anyone who ‘reads, or attempts to read, or to learn the contents’ of a communication ‘without the consent of all parties to the communication.’ Javier v. Assurance IQ, LLC, 2022 WL 1744107, at *1 (9th Cir. 2022).

Here, Plaintiff Garcia claims that Defendant both wiretaps the conversations of all website visitors and allows a third party to eavesdrop on the conversations in real time during transmission. Garcia v. Samsung Electronics America, Inc.

To enable the wiretapping, Plaintiff claims that Defendant has covertly embedded software code that functions as a device and contrivance into its website that automatically intercepts, records and creates transcripts of all conversations using the website chat feature.

To enable the eavesdropping, Defendant allows at least one independent third-party vendor to secretly intercept (during transmission and in real time), eavesdrop upon, and store transcripts of Defendant’s chat communications with unsuspecting website visitors – even when such conversations are private and deeply personal.

But Plaintiff currently proceeds in an individual action but if Samsung does not take appropriate steps to fully remedy the harm caused by its wrongful conduct, then Garcia will file an amended Complaint on behalf of a class of similarly aggrieved consumers.

Now back to Civil Rights.

According to this Complaint, Garcia is like Rosa Parks, you know, the civil rights activist. Why?

Well, because “Civil rights icon Rosa Parks was acting as a “tester” when she initiated the Montgomery Bus Boycott in 1955, as she voluntarily subjected herself to an illegal practice to obtain standing to challenge the practice in Court.”

Because Wiretapping and civil rights are similar right??

Disgusted.

The Plaintiff’s bar has no problem muddying the waters to appeal to the courts.

Do better.

CIPA is some dangerous stuff. Websites use chat features to engage with consumers all the time. It seems like it is easier to communicate via chat or text than to sit on a call waiting for an agent – assuming you get an agent. But maybe not?

Stay safe out there TCPA World!

Til next time Countess!! back to the game, GO EAGLES!!! #Phillyproud

Article By Jenniffer Cabrera of Troutman Firm

For more communications, media, and internet legal news, click here to visit the National Law Review.

© 2023 Troutman Firm

TCPA Turnstile: 2022 Year in Review (TCPA Case Update Vol. 17)

As 2022 comes to a close, we wanted to look back at the most significant Telephone Consumer Protection Act, 47 U.S.C. § 227 (“TCPA”) decisions of the year.  While we didn’t see the types of landscape-altering decisions that we saw in 2021, there’s still plenty to take note of.  We summarize here the biggest developments since our last update, listed by issue category in alphabetical order.

Arbitration: In Kelly v. McClatchy Co., LLC, 2022 WL 1693339 (E.D. Cal.  May 26, 2022), the District Court denied the defendant’s motion to compel arbitration because the contractual relationship between the parties had terminated before the unwanted calls were made. Plaintiffs had originally signed defendant’s Terms of Service which bound them to an arbitration provision for all legal disputes. Plaintiffs then cancelled their subscriptions which subsequently ended the enforceability of the Terms of Service against them. However, plaintiffs then received unwanted calls from Defendant seeking service renewals which the court deemed were not covered by the arbitration clause, even under a theory of post-expiration enforcement.

ATDS: Following Facebook v. Duguid, 141 S. Ct. 1163 (2021), courts are still struggling to define an “automatic telephone dialing system,” and the Third Circuit weighed in through Panzarella v. Navient Sols., Inc., 2022 WL 2127220 (3d Cir. June 14, 2022).  The district court granted defendant’s motion for summary judgment on the grounds that plaintiffs failed to show that an ATDS was used to call their phones. The Third Circuit upheld the summary judgment ruling but did not decide whether the dialing equipment used constituted an “ATDS” under the TCPA. Rather, its ruling hinged on the fact that defendant’s dialer pulled phone numbers from its internal database, not computer-generated tables. As such, the Third Circuit found that even though the system may very well be an unlawful ATDS system under the TCPA, if it is not used in that way, defendants could not be held liable.

In an interesting move, the court in Jiminez v. Credit One Bank, N.A., Nco Fin. Sys., 2022 WL 4611924 (S.D.N.Y. Sept. 30, 2022), narrowed the definition of an “ATDS,” choosing to reject the Second Circuit approach in favor of the Third Circuit’s approach in Panzarella. Here, plaintiff alleged that defendant used a dialing system to send numerous calls without consent. The Second Circuit follows the majority view that, if a system used to dial numbers has the ability to store or generate random numbers, the call made violates the TCPA, even if the random dialing function is not actually utilized. But the court in Jiminez found the Third Circuit’s reasoning persuasive and applied it to the case, finding that plaintiff failed to show the dialing system was actually used in a way that violated the TCPA. It granted summary judgment to defendants on the TCPA claims because the evidence showed the numbers used were all taken from a pre-approved customer list, not generated from random dialing.

Similarly, in Borden v. Efinancial, LLC, 2022 WL 16955661 (9th Cir. Nov. 16, 2022), the Ninth Circuit also adopted a narrower definition of an ATDS, finding that to qualify as an ATDS, a dialing system must use its automation function generate and dial random or sequential telephone numbers. This means that a mere ability to generate random or sequential numbers is irrelevant, the generated numbers must actually be telephone numbers. Given the circuit split on this issue, it seems likely that the Supreme Court will eventually have to weigh in.

Notably, in May 2022, the FCC issued a new order which will target unlawful robocalls originating outside the country. The order creates a new classification of service providers called “Gateway Providers” which have traditionally served a transmitters of international robocalls. These providers are domestic intermediaries which are now required to register with the FCC’s Robocall Mitigation database, file a mitigation plan with the agency, and certify compliance with the practices therein.

Class Certification: In Drazen v. Pinto, 41 F. 4th 1354 (11th Cir. July 27, 2022), the Eleventh Circuit considered the issue of standing in a TCPA class action. Plaintiffs’ proposed settlement class included unnamed plaintiffs who had only received one unsolicited text message. Because the court held in an earlier case (Salcedo v. Hanna, 936 F.3d 1162 (11th Cir. 2019)) that just one unwanted message is not sufficient to satisfy Article III standing, it found that some of the class members did not have adequate standing. The district court approved the class with these members in it, finding that those members could remain because they had standing in their respective Circuit and only named plaintiffs needed to have standing. The Eleventh Circuit held otherwise and vacated the class certification and settlement in the case. It remanded, allowing for redefinition of the class giving all members standing.

Consent: Chennette v. Porch, 2022 WL 6884084 (9th Cir. Oct. 12, 2022), involved a defendant who used cell phone numbers posted on publicly available websites, like Yelp and Facebook, to solicit client leads to contractors through unwanted text messages. The court rejected defendant’s argument that plaintiffs consented to the calls because their businesses were advertised through these public posts with the intent of obtaining new business. Beyond that, the court also found that even though these cell phones were used for both personal and business purposes, the numbers still fell within the protection of the TCPA, allowing plaintiffs to satisfy both statutory and Article III standing.

Damages: In Wakefield v. ViSalus, 2022 WL 11530386 (9th Cir. Oct. 20, 2022), the Ninth Circuit adopted a new test to determine the constitutionality of an exceptionally large damages award. Defendant was a marketing company that made unwanted calls to former customers, soliciting them to renew their subscriptions to weigh-loss products. After a multi-day trial, a jury returned a verdict for the plaintiff with a statutory damages award of almost $1 billion. The Ninth Circuit reversed and remanded to the district court to consider the constitutionality of the award. While the district court’s test asked whether the award was “so severe and oppressive” as to violate defendant’s due process rights, the Ninth Circuit instructed it to reassess using a test outlined in a different case, Six Mexican Workers. The Six Mexican Workers test assesses the following factors in determining the constitutionality of the damages award: “1) the amount of award to each plaintiff, 2) the total award, 3) the nature and persistence of the violations, 4) the extent of the defendant’s culpability, 5) damage awards in similar cases, 6) the substantive or technical nature of the violations, and 7) the circumstances of each .” We are still awaiting that determination on remand.

Standing: In Hall v. Smosh Dot Com, Inc., 2022 WL 2704571 (E.D. Cal July 12, 2022), the court addressed whether plaintiff had standing under the TCPA as a cell phone plan subscriber where the text messages were only received by someone else on the plan; in this case, plaintiff was the subscriber and her minor son was the recipient of the unwanted text messages. The court granted defendant’s motion to dismiss for lack of standing because she could not show that status of a subscriber alone could convey adequate standing under Article III.

In Rombough v. State Farm, No. 22-CV-15-CJW-MAR, (N.D. Iowa June 9, 2022), the court evaluated standing under the TCPA based on a plaintiff’s number being listed on the Do Not Call list. It determined that being on the DNC was not an easy ticket into court, plaintiff needed to allege more than just having its number on the list. Rather, the plaintiff need have actually registered their own numbers on the list.

© 2022 Vedder Price
For more Cybersecurity and Privacy Law news, click here to visit the National Law Review.

THE NEXT TCPA MEGA-TRIAL APPEARS TO BE SET: Coldwell Banker and Realogy Appear to Be Headed to the Jury On $225MM TCPA Claim

As I reported a couple months back, a Court in California certified a TCPA class action against brokerage giant Realogy related to calls made by Coldwell Banker agents, amongst others.

The classes have enough members to put at least $225MM at stake in the case (and it could be a lot more.)

Well just last Thursday the Court just denied Reaolgy’s request to seek reconsideration of the certification ruling. So Realogy appears to be stuck in a certified class action, which is barreling toward trial.

In fact, the Court just issued an order setting a pretrial conference for November 10, 2022, and trial is set for November 28, 2022!

In the meantime, the Court also just denied motions challenging the Plaintiff’s expert Anya Verkhovskaya, meaning that she’ll get to testify at trial.

TCPAWorld hasn’t seen a true mega trial–i.e. a trial of a certified class action with nine (or ten) figure exposure in some time. Will be extremely interesting to see where this goes.

And while Realogy has added new counsel recently, I don’t see any true Czar-level “monster trial lawyer” types on their side just yet. (Maybe I’m missing it.)

Definitely don’t want to walk into this unless you’re loaded for bear folks.

Anyway, I’ll keep an eye on this one. I suspect it will settle for some ridiculous number. But if not I may send Kiera down to take notes on the trial. We’ll see.

Article By Eric J. Troutman of Troutman Firm

For more communications, media, and internet legal news, click here to visit the National Law Review.

© 2022 Troutman Firm

NCLC Tells FCC “Callers can easily avoid making calls to telephone numbers that have been reassigned….” – But Is it That Simple?

The National Consumer Law Center is at it again.

In response to the Department of Health and Human Services’ recent letter to the FCC seeking clarity on whether the TCPA applies to texts it would like to make to alert Americans of certain medical benefits, the NCLC–an organization that nominally represents consumers, but really seems to represent the interests of the plaintiff’s bar–has filed a comment.

Unsurprisingly, the NCLC takes the position that HHS needs no relief. Government contractors are covered by the TCPA–it says–but the texts at issue in HHS’ letter are consented, so they’re fine. (Although it later clarifies that only “many” but not “all” of the enrollees whom HHS wishes to call have “probably” given their telephone numbers as part of written enrollment agreements–so perhaps not.)

Hmmmm. Feels like a trap. But we’ll ignore that for now.

The critical piece here though is what the NCLC–very powerful voice, for better or (often) worse–is telling the FCC about the effectiveness of the new Reassigned Number Database:

3. Callers can easily avoid making calls to telephone numbers that have been reassigned to someone other than the enrollee

A primary source of TCPA litigation risk has been calls inadvertently made to numbers that are no longer assigned to the person who provided consent. Courts have held the caller liable for making automated calls to a cell phone number that has been reassigned to someone other than the person who provided consent to be called.29

The Commission has implemented the Reassigned Number Database specifically to address that risk of liability, as well as to limit the number of unwanted robocalls:

The FCC’s Reassigned Numbers Database (RND) is designed to prevent a consumer from getting unwanted calls intended for someone who previously held their phone number. Callers can use the database to determine whether a telephone number may have been reassigned so they can avoid calling consumers who do not want to receive the calls. Callers that use the database can also reduce their potential Telephone Consumer Protection Act (TCPA) liability by avoiding inadvertent calls to consumers who have not given consent for the call.31

The database has been fully operational since November 1, 2021. It provides a means for callers to find out before making a call if the phone number has been reassigned. If the database wrongly indicates that the number has not been reassigned, so long as the caller has used the database correctly, no TCPA liability will apply for reaching the wrong party. 32 Thus, as long as HHS’s callers make use of this simple, readily available database, they can be confident that they will not be held liable for making calls to reassigned numbers.

While I steadfastly support both the creation and use of the RND, it also must be observed that there are myriad problems with the RND as it currently exists. Most importantly, the data sets in the RND are only comprehensive through October 1, 2021 and spotty back to February, 2021 (beyond which there are no records!)

So for folks like HHS–and servicers of mortgages, and retailers, and credit card companies–who want to reach customers who provided their contact information before 10/2021 or 2/2021 the RND is simply not helpful.

The NCLC’s over simplification of a critical issue is not surprising. They once told Congress that the TCPA is “Straightforward and Clear” after all.

Full comment here: NCLC Comments-c3

We’ll keep an eye on developments on HHS’ letter and all the FCC goings ons.

Article By Eric J. Troutman of Troutman Firm

For more TCPA and communications legal news, click here to visit the National Law Review.

© 2022 Troutman Firm

Michigan SALT Workaround Update: Accrual Taxpayers

As a follow up to our tax advisory issued December 23, 2021, pertaining to Michigan’s new SALT workaround (Michigan Tops the Growing List of States with a SALT Cap Workaround for Pass-Through Entities), we are providing this update to alert accrual-basis taxpayers regarding the Michigan SALT workaround and the deductibility of taxes under section 164.

Section 164(a) of the Internal Revenue Code provides a deduction for state and local income taxes “paid or accrued”. Under normal accrual method accounting rules, taxes may be deducted if both of the following apply:

  1. The all events test has been met (i.e. all events have occurred that fix the fact of liability, and the liability can be determined with reasonable accuracy); and
  2. Economic performance has occurred.

With respect to taxes, economic performance generally occurs when taxes are paid. However, there is an exception to this for recurring items that meet four requirements:

  1. The all-events test is met.
  2. Economic performance occurs by the earlier of:
    • 8½ months after the close of the year, or
    • The date you file a timely tax return (including extensions) for the year.
  3. The item is recurring in nature and the taxpayer consistently treats similar items as incurred in the tax year in which the all-events test is met, and
  4. Either:
    • The item is not material, or
    • Accruing the item in the year in which the all-events test is met results in a better match against income from accruing the item in the year of economic performance.

Thus, under normal instances, if payment of tax is made by an accrual-basis taxpayer with a timely filed tax return in the following year and the rest of the elements above are met, state income taxes can be deducted on an entity’s federal return. Applying the normal accrual rules to the Michigan SALT cap workaround without additional authority, a partnership/S corporation that makes an election to be taxed at the passthrough entity level but does not pay such taxes until it files a timely return may still deduct Michigan income taxes if the elements above are met.

There is substantial concern, however, that the IRS may challenge this deduction based on authority issued. In Notice 2020-75, the IRS provided a limited blessing of certain SALT workarounds but focuses on where “specified income tax payments” are made. The notice does not specifically address accrual taxpayers, or whether accrual accounting rules would still apply to such taxes allowing payment in the following year. There are also concerns that the IRS may view passthrough entity taxes paid by accrual taxpayers as not satisfying the accrual accounting rules because of the elective nature of the tax.

Given the lack of certainty in this area, the conservative position for accrual-basis taxpayers should be to pay the passthrough entity tax by December 31, 2021. Payments can be made today on the Michigan Treasury Online system, which also triggers the election for the passthrough entity tax. From communications with the State of Michigan, we expect additional guidance to be issued in January of 2022 for the Michigan SALT workaround, including the release of the election form.

© 2022 Varnum LLP

Article By Steven G. Cappellino and Eric M. Nemeth of Varnum LLP

For more articles on SALT, visit the NLR Tax section.