Tag: TCPA

Spooktacular Severability Ruling Raises Barr From The Dead, Buries TCPA Claims Arising Between November 2015 and July 2020

A few weeks ago, the Eastern District of Louisiana held that courts cannot impose liability under Sections 227(b)(1)(A) or (b)(1)(B) of the TCPA for calls that were made before the Supreme Court cured those provisions’ unconstitutionality by severing their debt collection exemptions.  The first-of-its-kind decision reasoned that courts cannot enforce unconstitutional laws, and severing the statute applied prospectively, not retroactively. Plaintiffs privately panicked but publicly proclaimed that the Creasy decision was “odd” and would not be followed.

So much for that. Yesterday, the Chief Judge of the Northern District of Ohio followed Creasy and dismissed another putative class action.  The new case—Lindenbaum v. Realgy—arose from two prerecorded calls, one to a cellphone and another to a landline. The defendant moved to dismiss, arguing that “severance can only be applied prospectively,” that Sections 227(b)(1)(A) and (b)(1)(B) were unconstitutional when the calls were made, and that courts lack jurisdiction to enforce unconstitutional statutes. The plaintiff opposed the motion, arguing, among other things, that a footnote in Justice Kavanaugh’s plurality opinion in Barr v. AAPC suggests “that severance of the government-debt exception applies retroactively to all currently pending cases.”

The court sided with the defendant. It began by agreeing with Creasy that this issue “was not before the Supreme Court,” and the lone footnote in Justice Kavanaugh’s plurality opinion is “passing Supreme Court dicta of no precedential force.” It then surveyed the law and found “little, if any, support for the conclusion that severance of the government-debt exception should be applied retroactively so as to erase the existence of the exception.” It reasoned that, while judicial interpretations of laws are “given full retroactive effect in all cases still open on direct review and as to all events,” severance is different because it is “a forward-looking judicial fix” rather than a backward-looking judicial “remedy.” In short, severance renders statutes “void,” not “void ab initio.”

Defendants are now two-for-two in seeking dismissal of claims based on the now-undeniable unconstitutionality of the debt-collection exceptions in Section 227(b)(1)(A) or (b)(1)(B). With more such motions pending in courts across the country, this may become a powerful weapon against whatever claims remain after the Supreme Court’s decision in Facebook v. Duguid.

© 2020 Faegre Drinker Biddle & Reath LLP. All Rights Reserved.
For more articles on the TCPA, visit the National Law Review Litigation / Trial Practice section.

Grin and Barrett– Judge that Wrote Ruling Narrowly Interpreting TCPA’s ATDS Definition Sworn In to SCOTUS Ahead of Big Facebook TCPA Challenge

Well, its official

Former Judge Amy Coney Barrett– previously of the Seventh Circuit Court of Appeals– is now Justice Amy Coney Barrett of the US Supreme Court.

Whatever you may think of the GOP moving forward with this nomination in the shadow of the election, this is a great day for callers and advocates of a narrow TCPA read.

You already know the headline: in her previous role on the Seventh Circuit Court of Appeals, then-Judge Barrett had written a critical opinion addressing the TCPA’s ATDS definition and determined that the TCPA only applies to random or sequential number dialers, thus legalizing the vast majority of so-called “robocalls” in the Seventh Circuit footprint and freeing callers from one of the worst-written statute in American history.

Now as a Supreme Court Justice, one of Barrett’s first challenges will be to decipher the precise same portion of the precise same statute as part of Facebook’s huge SCOTUS appeal of the TCPA’s ATDS definition.

At issue, of course, is whether the TCPA applies to any call made “automatically” from a list of stored numbers or only those dialers that have the capacity to dial randomly or sequentially.  As I have explained recently, this is a classic “pathos vs logos” situation-– the statute plainly seems to require random or sequential number generation, yet the near universal disdain for robocalls might lead to a results-based analysis (of the sort the Supremes just engaged in to save this same statute a mere three months ago)

In our latest episode of the insanely popular Unprecedented [VIDEO] Podcast I had the opportunity to ask Plaintiff’s lead counsel- Sergei Lemberg–how he felt about arguing this critical issue back to the exact same Judge who ruled on this very issue in Gadelhak.  You’ll get to hear his answer TOMORROW right here.

The ascension of Justice Barrett is just the latest in a string of seesaw developments in the TCPA ATDS saga, with momentum swinging wildly in favor of one side or the other these last three months. The latest big development was the arrival of Bryan Garner– co-author with Justice Scalia (Justice Barrett’s mentor) of Reading Law, one of the most persuasive works on statutory interpretation– onto the consumer lawyer’s team urging an expansive read of the TCPA. And, of course, just last week nearly 40 state AGs likewise joined the fray in favor of an expansive TCPA read.

But with Justice Barrett arriving on the bench is Facebook now playing with a stacked deck? Certainly Justice Barrett–having already spoken on this issue–has a clear and obvious lean. Yet the trendy Beltway mistrust for “Big Tech” coupled with the fact that the Conservative wing of the Court (now its majority) previously split on whether to keep the TCPA on the books, suggest that this result might not yet be baked.

It all adds up to high drama in the high stakes TCPAWorld ATDS battle.

© Copyright 2020 Squire Patton Boggs (US) LLP
For more articles on the TCPA, visit the National Law Review Communications, Media & Internet section.

Clash of Consumer Protection Goals: Does the Text of the TCPA Frustrate the Purposes of the CPSA?

“Hello.  This is an automated call from Acme Manufacturing. Our records indicate that you purchased Product X between December 2019 and January 2020. We wanted to let you know that we are recalling Product X because of a potential fire risk. Please call us or visit our website for important information on how to participate in this recall.”

When companies recall products, they do so to protect consumers.  In fact, various federal laws, including the Consumer Product Safety Act (CPSA), the Federal Food, Drug, and Cosmetic Act (FDCA), and National Highway and Motor Vehicle Safety Act (MVSA), encourage (and may require) recalls. And the agencies that enforce these statutes would likely approve of the hypothetical automated call above because direct notification is the best way to motivate consumer responses to recalls.[1]

But automated calls to protect consumers can run into a problem: the Telephone Consumer Protection Act (TCPA).

Are Recall Calls a Nuisance or an Emergency?

The TCPA seeks to protect consumers from the “nuisance and privacy invasion” of unwanted automated marketing calls.[2] The TCPA prohibits any person from making marketing calls to landlines, or any non-emergency calls or text messages[3] to wireless lines, using automated dialers or recorded messages unless the recipient has given prior written consent. The Act includes a private right of action and statutory per-violation damages – $500, trebled to $1,500 if a court finds the violation willful and knowing.[4] These penalties can add up quickly: In one case, a jury found that a company violated the TCPA nearly two million times, exposing the company to minimum statutory damages totaling almost $1,000,000,000.[5]

There is an important exception to the TCPA’s prohibition on automated calls. The TCPA allows autodialed calls for emergency purposes,[6] but the Act does not define that phrase. While the FCC has interpreted emergency purposes to mean “calls made necessary in any situation affecting the health and safety of consumers,”[7] recalls are not explicitly identified within this definition. As a result, aggressive plaintiffs have demanded millions in damages from companies that use automatic dialers to disseminate recall messages.[8]

For example, a grocery chain – Kroger – made automated calls to some purchasers of ground beef as part of a recall stemming from salmonella concerns. A plaintiff responded with a purported class action that did not mention the recall [9] but was based on consumers alleging that they had received “annoying” “automated call[s] from Kroger.”

Moving to dismiss, Kroger observed that the plaintiff – who had not listened to the call beyond its initial greeting[10] and thus could not comment on the call’s text – had “cherry-picked”[11] portions of consumers’ online comments to support the case, omitting text that clearly demonstrated that the calls were made for health and safety purposes.[12] Kroger argued that the online comments did not support the plaintiff’s allegations that Kroger had made any marketing calls.

The court granted Kroger’s motion and dismissed the complaint without leave to amend. Even so, Kroger was compelled to spend time and money defending the claim.

In light of this type of lawsuit, one communications firm involved in automotive recalls has petitioned the FCC to “clarify . . . that motor vehicle safety recall-related calls and texts are ‘made for emergency purposes.’”[13] The Association of Global Automakers and the Alliance of Automobile Manufacturers commented in support of the petition, arguing that the “[l]ack of clarity regarding TCPA liability for vehicle safety recall messages has had a chilling effect on these important communications.”[14] The Settlement Special Administrator for the Takata airbag settlements also wrote in support, commenting that automated “recall-related calls and texts serve an easily recognizable public safety purpose.”[15]

The TCPA’s emergency exception offers protection in litigation. The FCC’s definition – “calls made necessary in any situation affecting the health and safety of consumers” – neatly encapsulates the entire function of a recall, namely acting to protect consumers’ health and safety. Moreover, in developing the emergency exception, Congress broadened initial language that excepted calls made by a “public school or other governmental entity” to the enacted “emergency purposes” phrasing precisely to ensure the exception encompassed automated emergency calls by private entities.[16] One of the seminal emergency purposes for which a private entity might seek to make automated calls is a product recall.

Even with such sound arguments that TCPA claims related to recall calls are without merit within the statute, however, aggressive plaintiffs have brought such claims. These efforts compel companies to spend finite resources defending claims that should not be brought in the first place. An express statutory or regulatory statement that recalls are squarely within the definition of emergency purposes would give companies greater confidence that not only would they be able to successfully defend against any effort to pit the TCPA against consumer-protection values, but that the claims are so unlikely to be brought that the companies need not even fear to have to defend.

Protecting Against Recall-Call Complaints

Until the FCC or Congress expressly instructs plaintiff’s counsel not to try to litigate against automated recall calls, there are steps companies that want to use automated dialers to drive recall responses can take to minimize any risk of a court misinterpreting their calls or finding TCPA liability where it should not attach.

For example, companies may (as some already do) ask for customers’ consent to be autodialed in connection with the products they have purchased – e.g., by including consent language on product warranty cards or registration forms. In fact, the Consumer Product Safety Improvement Act of 2008 (CPSIA)[17] already requires manufacturers of durable infant and toddler products to include registration cards for recall-communication purposes.[18] Companies in some other industries (like the on- and off-road motor vehicle industries) typically have robust registration systems that can incorporate auto dialing consent, and more companies in other spaces may want to consider using registration to facilitate recalls.

Further, automated recall calls should focus on the recall. If calls extend to marketing messaging, that could undermine both a future TCPA defense and the efficacy of that and future recall communications.

Optimally, companies would be less likely to need these defenses if the statute more clearly signaled to would-be litigants that they should not even bother. If the FCC grants the pending petition and plainly states that product recalls are emergencies for TCPA purposes, courts’ deference to agency interpretations might deter at least some complaints. A statutory amendment would be the surest guarantee, though, and manufacturers may wish to ask Congress to amend the TCPA to clarify that recall messages are emergency messages.

[1] See, e.g., Joseph F. Williams, U.S. Consumer Prod. Safety Comm’n, Recall Effectiveness Workshop Report, 5 (Feb. 22, 2018).

[2] Pub. L. No. 102-243, § 2(12), 105 Stat. 2394, 2395 (Dec. 20, 1991).

[3] Rules and Regulations Implementing the Telephone Consumer Protection Act of 1991, CG Docket No. 02-278, Report and Order, 18 FCC Rcd 14014, 14115, para. 165 (2003)

[4] TCPA at § 3(a), 105 Stat. at 2399 (codified at 47 U.S.C. § 227(c)(5)).

[5] Wakefield v. ViSalus, Inc., No. 3:15-cv-1857-SI (D. Or.).

[6] See, e.g., TCPA at § 3(a), 105 Stat. at 2395-96 (codified at 47 U.S.C. § 227(b)(1)(A)).

[7] 47 C.F.R. § 64.1200(f)(4).

[8] See, e.g., Compl., Ibrahim v. Am. Honda Motor Co., Inc., No. 1:16-cv-04294, Dkt. #1 (N.D. Ill. Apr. 14, 2016).

[9] Compl., Brooks v. Kroger Co., No. 3:19-cv-00106-AJB-MDD, Dkt. #1 (S.D. Cal. Jan. 15, 2019) (“Brooks”).

[10] Pl. Opp. to Mot. to Dismiss at 5, Brooks, Dkt. #9 (Apr. 4, 2019).

[11] Reply in Supp. of Mot. to Dismiss at 7, Brooks, Dkt. #10 (Apr. 11, 2019).

[12] The plaintiff quoted one complaint as “Automated call from Kroger.” Compl. at 3-4, Brooks. As the defense noted, that complaint continued, “requesting that you return ground beef . . . due to the threat of salmonella.” Mem. in Supp. of Mot. to Dismiss at 6, Brooks Dkt. #7 (Mar. 21, 2019).

[13] IHS Markit Ltd. Petition for Emergency Declaratory Ruling, CG Docket No. 02-278, Petition, ii (Sept. 21, 2018).

[14] IHS Markit Ltd. Petition for Emergency Declaratory Ruling, CG Docket No. 02-278, Comments of Association of Global Automakers, Inc. and Alliance of Automobile Manufacturers, 9 (Nov. 5, 2018).

[15] IHS Markit Ltd. Petition for Emergency Declaratory Ruling, CG Docket No. 02-278, Comments of Patrick A. Juneau, 3 (Nov. 5, 2018).

[16] S. Rep. No. 102-178, 5 (Oct. 8, 1991).

[17] Pub. L. No. 110-314, 122 Stat. 3016 (Aug. 14, 2008) (codified as amended at 15 U.S.C. § 2056a).

[18] 15 U.S.C. § 2056a(d).

© 2020 Schiff Hardin LLP

For more on CPSA, FDCA, MVSA & other recalls, see the National Law Review Consumer Protection law section.

Million-Dollar Settlement of Billion-Dollar Claim Found Reasonable in Light of Due Process Problems Posed By Disproportionate Damages

Another court has observed that a billion-dollar aggregate liability under the TCPA likely would violate due process, adopting the Eighth Circuit’s reasoning that such a “shockingly large amount” of statutory damages would be “so severe and oppressive as to be wholly disproportionate[] to the offense and obviously unreasonable.”

In Larson v. Harman-Mgmt. Corp., No. 1:16-cv-00219-DAD-SKO, 2019 WL 7038399 (E.D. Cal. Dec. 20, 2019),  the Eastern District of California preliminarily approved a settlement proposal that represents less than 0.1% of potential statutory damages. Like the Eighth Circuit decision that we discussed previously, both courts observed that several uncertainties exist as to whether the plaintiffs can succeed in proving certain legal issues, such as whether consent was provided and whether an ATDS was used.

The Larson case exposed the defendants to TCPA liability for allegedly sending 13.5 million text messages without prior express consent as part of a marketing program called the “A&W Text Club.” After extensive discovery and motion practice, the parties proposed a settlement that would have the defendants deposit $4 million into a settlement fund that in turn distributes $2.4 million to class members who submit a timely, valid claim.

The court preliminarily approved the proposed settlement, observing that its terms demonstrated “substantive fairness and adequacy.” As a preliminary matter, it found, “[i]t is well-settled law that a cash settlement amounting to only a fraction of the potential recovery does not per se render the settlement inadequate or unfair.” Concerned that calculating damages based on $500 per message under 47 U.S.C. § 227(b)(3)(B) would violate the Due Process Clause, it agreed that the conduct of the defendant (sending over 13.5 million messages) was not persistent or severely harmful to the 232,602 recipients to warrant the billion-dollar judgment.

While $4 million represents less than 0.1% of the theoretical aggregate damages, “the value of the settlement is intertwined with the risks of litigation.” Here, in addition to the uncertainty about whether the “A&T Text Club” program uses an ATDS, “several risks are present, including . . . whether the plaintiff can maintain the action as a class action, . . . and whether the plaintiff’s theories of individual and vicarious liability can succeed.” The proposed settlement amount was found to strike the appropriate balance as it would likely result in each class member receiving $52 to $210 for each message if 5% to 20% of the class submit timely claims.

Although the case was only at the preliminary approval stage, this decision again illustrates that at least some courts recognize the due process problem posed by disproportionate aggregate damages and do not reject settlements simply because they provide some fraction of the theoretical aggregate damages available under a given statute.

©2020 Drinker Biddle & Reath LLP. All Rights Reserved

Limiting Junk Fax Class Actions: Online Fax Services Outside Scope of TCPA FCC Rules

 

On December 9, 2019, the Federal Communications Commission (“FCC”) issued a declaratory ruling In the Matter of Amerifactors Financial Group, LLC (“Amerifactors”) concluding that modern faxing technologies are not within the scope of the Telephone Consumer Protection Act (TCPA).  The Amerifactors ruling, which follows the express language of the TCPA, determines that faxes received via an online fax service as electronic messages are effectively email and therefore are not faxes received on a “telephone facsimile machine” under the statute. This narrows the scope of the TCPA to traditional fax machines and will make it more difficult for attorneys to certify classes of fax recipients under the TCPA, ideally curbing the plethora of TCPA Fax class action lawsuits.

Amerifactors Background

In 2017, Amerifactors filed a petition for an expedited declaratory ruling asking the FCC to “clarify that faxes sent by “online fax services” are not faxes sent to “telephone facsimile machines”[1] therefore, outside of the scope of the TCPA. While faxing has declined in usage significantly, many of those who still receive faxes do so through cloud-based services that send the document via an attachment to an email.  At the time of Amerifactors’ declaratory filing, they were defending a class action suit with claims that Amerifactors violated the TCPA by sending unsolicited fax messages, the bulk of which were sent to consumers from online fax services.

FCC Ruling and Logic

In the Amerifactors ruling, the FCC explained that faxes sent by online fax services do not lead to the “specific harms” Congress sought to address in the TCPA’s Junk Fax Protection Amendment and concluded that “a fax received by an online fax service as an electronic message is effectively an email.”

Unlike printed fax messages that require the recipient to supply paper and ink, the FCC concluded consumers can manage faxes sent by online fax services the same way they manage their email by blocking senders or deleting incoming messages without printing them, short-circuiting many of the specific harms envisioned by the original legislation.  With online fax services, there is no phone-line that is occupied and therefore unavailable for other purposes, and no paper or ink used that must be supplied by the recipient.  Clarifying legislative intent, the FCC stated:

“The House Report on the TCPA makes clear that the facsimile provisions of the statute were intended to curb two specific harms: “First, [a fax advertisement] shifts some of the costs of advertising from the sender to the recipient. Second, it occupies the recipient’s facsimile machine so that it is unavailable for legitimate business messages while processing and printing the junk fax.”

In many ways, the FCC ruling in Amerifactors demonstrates FCC recognition of the changes in faxing technology.  Steven Augustino of KelleyDrye[2], one of the attorneys who represented Amerifactors,  points out that the language we use now does not match the technology that has largely replaced traditional faxing technology, instead offering a short-hand that has roots in an earlier era—and that references dead technologies.  Augustino says:

“Amerifactors argued that the term “faxing” has outlived the actual technology of faxing, much in the same way that we still dial a telephone even though no one has a rotary telephone, or we “cc” people on emails but we aren’t using carbon copies.  In many ways, saying ‘I sent a fax’ is similar to that, the term has outlived the technology that has supported it.”

There is reason to believe that this is the first of many declaratory rulings on fax matters under the TCPA.  As of November 2019, there are thirty-six petitions in front of the FCC, and six of those petitions specifically address “junk” faxing rules.  These petitions represent a variety of faxing issues, such as consent and the definition of an advertisement.   The declaratory ruling in Amerifactors and the FCC’s reasoning related to technological changes will likely impact the FCC’s rule-making on similar issues.

Implications for Future TCPA Fax Class Action Lawsuits

According to Douglas B. Brown of RumbergerKirk, one of the attorneys who represented Amerifactors in the FCC’s declaratory ruling:

“While the traditional fax machine has faded out of today’s business communications, online fax services provide secure communications that are critical to providing consumers with secure information about their finances, health and other important matters. The FCC’s ruling allows for these communications to continue without interference from debilitating class-action lawsuits.”

Per Samantha Duke of RumbergerKirk who also represented Amerifactors:

“First, according to the Hobbs Act, federal district courts are bound to enforce the FCC’s rules, regulations, and orders relating to the TCPA. Thus, this declaratory ruling may impact all fax class actions filed in the district courts in the country.”

The Amerifactors ruling requires a closer look at how faxes are being received complicating how class actions are certified under the TCPA.  Per Duke:

“The Amerifactors ruling now makes the method by which the fax was received key to determining whether any particular unsolicited facsimile violates the TCPA. This individualized determination will most certainly complicate any attempt to certify a TCPA-fax class action as the question of whether the facsimile was sent to an online fax service will predominate over any common issue.”

In short, unless a fax comes through an old-school fax machine, it’s outside the reach of the TCPA per the FCC’s Amerifactors ruling.

[1] See Petition for Expedited Declaratory Ruling of Amerifactors Financial Group, LLC, CG Docket Nos. 02-278, 05-338, at 2 (filed July 13, 2017) (Petition).

[2] Amerifactors Financial Group, LLC was represented by Rumberger, Kirk & Caldwell, PA attorneys Douglas B. Brown and Samantha Duke, along with attorney Steven A. Augustino of Kelley Drye & Warren LLP.

Copyright ©2019 National Law Forum, LLC

For more on the TCPA and FCC Regulations, see the National Law Review Communications, Media & Internet law section.

Text Messages Inviting Independent Voters to Political Speeches by Former Presidential Hopeful Howard Schultz Were Not “Solicitations” For His Book Tour

The Western District of Washington recently held in Vallianos. v. Schultz, C19-0464-JCC, 2019 WL 4980649 (W.D. Wash. Oct. 8, 2019), that two text messages encouraging recipients to view a livestream of a political speech by the former chairman and CEO of Starbucks Howard Schultz did not amount to “solicitations” under the TCPA. While exploring a run for President, Schultz released a book, “From the Ground Up,” and went on a three-month long cross-country book tour. He also collected from voter records the phone numbers of individuals registered as having “No Party Affiliation” and sent them the text messages at issue. Named plaintiffs Cassandra Vallianos, Stacey Karney, and Mike Barker brought a putative TCPA class action against Schultz alleging that the text messages were sent to them without their consent after they had placed their cell phone numbers on the national Do Not Call Registry.

Specifically, plaintiffs made two claims: first, that Schultz sent the text messages using an auto-dialer and without the plaintiffs’ consent; second, that the calls were solicitations sent in violation of the TCPA’s Do Not Call restrictions. Plaintiffs’ claims were based on two separate text messages Schultz sent Plaintiffs. The first said “Howard Schultz will be speaking in Miami at 12:30! Watch live: https://hs.media.mi-a030[.]” The second said “Howard Schultz will be speaking about his vision for America in Miami at 12:30! Watch live: https://hs.media/mia030[.]” Plaintiffs argued that these text messages were “solicitations” under the TCPA because the text messages were sent with the goal of getting recipients to purchase Schultz’s book. Defendant Schultz moved to dismiss only the Do Not Call claim.

Acknowledging that messages that serve a “dual-purpose” by including both advertising and informational communications are solicitations for purposes of the TCPA, the court looked to the context of the messages to determine whether they constituted “solicitations” under the TCPA. The court reviewed the text messages, the webpage to which the text messages directed recipients, and the speech embedded in the website. The court found that the text messages did not facially discuss Schultz’s book. The court also found that the link in both text messages took Plaintiffs to the homepage of Schultz’s website, which included various video clips, including a livestream of Schultz’s speech and a link to a website where consumers could purchase his book. But the court held that the website was not transformed into a solicitation by the “mere inclusion of a link to a website on which a consumer can purchase a product.” The court found that the speech focused on Schultz’s political views and potential run for president, not his book. The court further found that the website was just a way to facilitate viewing of Schultz’s speech. Thus, the court ultimately determined that the messages did not constitute “telephone solicitations” under the TCPA.

With the seemingly never-ending national campaign season chugging along, we expect to see more such claims filter their way through the courts.

©2019 Drinker Biddle & Reath LLP. All Rights Reserved

For more on TCPA litigation, see the National Law Review Communications, Media & Internet Law page.

Whatever Happened to that Big Ringless Voicemail Decision We Were All Expecting? It Was a Nothing Burger—For Now

You’ll recall a few weeks back TCPAWorld.com featured analysis of efforts by VoApps—makers of the DirectDrop ringless voicemail platform—to stem the tide of negative TCPA rulings addressing ringless voicemail technologies. VoApps founder David King even joined the Unprecedented podcast to discuss his submission of a lengthy declaration to the court addressing how the technology works and why it is not covered by the TCPA.

Well, a few days ago the Court issued its ruling on the pending motion—a summary judgment effort by the Plaintiff—and I must say, it was rather anti-climactic. Indeed, the court punted entirely on the key issue.

In Saunders v. Dyck O’Neal, Case No. 1:17-CV-335, 2019 U.S. Dist. LEXIS 177606 (W.D. Mich. Oct. 4, 2019) the court issued its highly-anticipated ruling on the Plaintiff’s bid to earn judgment following the Court’s earlier ruling that a ringless voicemail is a call under the TCPA. It was in response to this motion that VoApps submitted a mountain of evidence that although a ringless voicemail may be a “call” it is not a call to a number assigned to a cellular service—and so such calls are not actionable under the TCPA’s infamous section 227(b).

Rather than answer the question directly the Court made mincemeat of the Federal Rules of Civil Procedure and treated the summary judgment motion as if it were some sort of motion to confirm the Court’s earlier ruling. This is weird because: i) no it wasn’t; and ii) there’s no such thing. As the Court put it: “Admittedly, Saunders moved for summary judgment, but her motion is in fact limited to a request for clarification of the impact of the Court’s prior ruling: Was the Court’s prior ruling that DONI’s messaging technology falls within the purview of the TCPA a ruling as a matter of law that binds the parties going forward? The answer is clearly yes.”

Great. So we now know what we already all knew—the Saunders court holds that a ringless voicemail is a call. Got it. As to the key issue of whether the calls were made to a landline to a cell phone, however, the Court finds: “These issues were unnecessary to Saunders’s motion, as she has not [actually] moved for summary judgment on her claim.”

So there you go. Plaintiff’s motion for summary judgment was not actually a motion for summary judgment after all. So all that work by VoApps was for nothing. But not really. Obviously this fight is not yet over. The Court declined to enter judgment in favor of the Plaintiff meaning that further work—and perhaps a trial—lies ahead for the good folks over at VoApps. We’ll keep you posted.

 

© Copyright 2019 Squire Patton Boggs (US) LLP

For more on voicemail & phone regulation, see the National Law Review Communications, Media & Internet law page.

Corporate Closedown Does Not Shield Boss From Potential TCPA Culpability

So, your corporation is sued under the Telephone Consumer Protection Act (TCPA). One defense strategy if you are the founder and sole owner: cease operations, terminate your employees, close your offices, formally dissolve the corporation and live in British Columbia. No potential individual exposure for TCPA violations in Alabama – right?

Not so fast, said the United States District Court for the Northern District of Alabama in Eric K. Williams v. John G. Schanck. 2019 U.S. Dist. LEXIS 151778, Case No.:5-15-cv-01434-MHH, decided September 6, 2019. Mr. Williams originally sued Stellar Recovery, Inc., a company founded and solely owned by Schanck, for collection calls made to the plaintiff’s cellphone in Alabama. Mr. Schanck then told the Court in a telephone conference call that “Stellar Recovery had dissolved and did not intend to participate in this lawsuit.” Mr. Williams moved to amend his complaint to add Mr. Schanck individually and Judge Madeline Hughes Haikala granted his motion.

But, wait a minute, countered Mr. Schanck. Service of the amended complaint on me in Vancouver, British Columbia does not afford the Court personal jurisdiction. Furthermore, Mr. Williams is too late because he added me as a defendant after the four-year TCPA statute of limitations had passed. So, Mr. Schanck moved to dismiss under Federal Rules of Civil Procedure (FRCP) 12(b)(2) and 12(b)(6), respectively.

The Court was unconvinced on both counts.

First, on the jurisdictional issue, the Court examined whether Mr. Schanck’s alleged contacts with the State of Alabama were sufficient to satisfy specific jurisdiction (i.e., “contacts within the forum state give rise to the action before the court”). Mr. Williams asserted that Mr. Schanck “guide[d], over[saw], and ratifie[d] all operations of…Stellar” and knew of the “‘violations of the TCPA alleged’ in the complaint and ‘agreed to and ratified such actions of his company.’” Indeed, throughout the complaint, Mr. Williams contended that “Stellar acted on behalf of Defendant Schanck.”

Mr. Schanck did “not challenge the factual allegations concerning his ownership interest in Stellar or his managerial control over the company.” Rather, he contended that the “corporate shield doctrine” precluded the Court from exercising jurisdiction over him. However, Judge Haikala noted that the “express language of the TCPA allows actions against corporate officers who authorize TCPA violations” and Mr. Williams “has alleged just that – that Mr. Schanck directed and authorized the alleged TCPA violations that purportedly occurred in this District.” Motion to dismiss for lack of personal jurisdiction under FRCP 12(b)(2) denied.

Second, the Court also dispensed with the statute of limitations issue. The Court concluded that the claim against Mr. Schanck as an individual arose out of the “conduct, transaction or occurrence set forth or attempted to be set forth in the original pleading.” Under such circumstances, the claims in the amended complaint could relate back to Mr. Williams original complaint.

But, Mr. Schanck argued, Mr. Williams knew about him and his status in Stellar yet chose only to sue the latter. Therefore, there could have been no mistake on his part about the “identity” of the proper party (i.e., Mr. Schanck) to sue and the FRCP 15(c) requirements regarding the timing of serving Mr. Schanck as a new defendant were not met.

Correcting Mr. Schanck’s application of that requirement, the Court noted that the issue was not about Mr. Williams knowledge, but “whether Mr. Schanck himself knew or should have known that he would be named as a defendant ‘but for an error’” by Mr. Williams. And at this stage, “if Mr. Williams contentions about Mr. Schanck’s involvement with Stellar prove correct,” then Mr. Schanck “reasonably should have known that he would be named as a defendant but for an error.” Motion to dismiss for failure to state a claim under FRCP 12(b)(6) denied.

So some TCPAWorld lessons learned about the solidity of the “corporate” shield when one person allegedly runs the company show.

© Copyright 2019 Squire Patton Boggs (US) LLP

Case Closed?: Not Quite Yet, But Serial TCPA Litigator Testing Court’s Patience

Well, no one can say that he did not get his day in Court.

Plaintiff Ewing, a serial TCPA litigator who filed yet another case assigned to Judge Battaglia, narrowly escaped dismissal of all his claims, and was permitted leave to amend for a second time.  See Stark v. Stall, Case No. 19-CV-00366-AJB-NLS, 2019 U.S. Dist. LEXIS 132814 (S.D. Cal. Aug. 7, 2019).  But in the process, the Judge called attention to the Plaintiff’s unprofessional conduct in an earlier case, ruled that he failed to name a necessary party, and found that he inadequately plead the existence of an agency relationship between the defendant and the necessary party that he had failed to join in the lawsuit.

At the outset, the court dismissed the claim brought by co-plaintiff Stark, as the Complaint contained no allegations that any wrongful telephone calls were placed to that particular individual.

In 2015, Ewing had already been put on notice of the local rules of professionalism and their applicability to him, despite his status as a pro se litigator.  Thus, the Court easily granted defendant’s motion to strike Plaintiff’s allegations to the effect that defendant had made a “derogatory remark” simply by pointing out that he was designated as a vexatious litigator.

The two most important pieces of the case for TCPAWorld are the Court’s rulings about Plaintiff’s failure to join a necessary defendant and his insufficient allegations to establish vicarious liability.

Plaintiff had failed to name as a defendant the entity (US Global) that allegedly made the calls to him.  The court determined that this company is a necessary party that must be added in order for the court to afford complete relief among the parties.  We often see situations where only a caller but not a seller, creditor, employer, franchisor, etc. are named, or vice versa, so it is encouraging to see courts strictly enforce Federal Rule 15 in the TCPA context.

The court further held that the relationship between Defendant and US Global was not such that Defendant could be held liable for violations of the TCPA that were committed by US Global.  While Plaintiff made unsubstantiated allegations that an agency relationship existed, the Court treated these as merely legal conclusions and granted dismissal based on insufficient allegations of facts to establish a plausible claim that there is a common-law agency relationship between Defendant and US Global.  Simply stated, the bare allegation that Defendant had the ability to control some aspects of the caller’s activity was insufficient to establish control for purposes of TCPA vicarious liability principles.

Plaintiff’s amended pleading is due on August 31—anticipating another round of motion practice, we will track any further developments in this case.

© Copyright 2019 Squire Patton Boggs (US) LLP

For more TCPA cases, see the Communications, Media & Internet law page on the National Law Review.

Huge Anti-Robocall Measure Passes In the Senate: Here is Your Definitive Guide to How TRACED Alters the TCPA Worldscape

The TRACED Act passed the Senate and is on its way to the House for consideration by the Democratic-lead lower chamber.

But what is exactly is TRACED and why is it so important? As the Czar of the TCPA World it falls on me to provide a nuts and bolts perspective of TRACED—and just in time for Memorial Day weekend. Below is your definitive guide to the TRACED Act and what to expect if/when the bill becomes law.

First, it is important to recognize that TRACED does not create a new statutory scheme. Rather it modifies and enhances the existing Telephone Consumer Protection Act (“TCPA”) in a manner that assures the TCPA will remain the official federal response to the current robocall epidemic in this nation. That means that all of the TCPA’s broad and ambiguous terminology—such as “automated telephone dialing system” and the identity of the enigmatic “called party”—take on enhanced importance as the statute is exalted to “crown jewel” status. It also means that the pending constitutional challenges to the TCPA have even greater import. Understanding the TCPA is, therefore, more critical than ever before as TRACED moves toward becoming law.

As TCPAWorld.com is already filled with articles and resources to help you understand the TCPA, this article will not pause long on these background issues. But here is the bedrock: thou shalt not use regulated technology—whatever that may be—to call cell phones without the express consent—whatever that means—of the called party—whoever that is. So far so good?

Most importantly, TRACED grants the FCC explicit authority to implement its Shaken/Stir framework for call authentication and anti-spoofing technology. TRACED provides that not later than 18 months after passage, the FCC shall “require” a provider of voice service to implement the STIR/SHAKEN authentication framework in the internet protocol networks of the voice service provider.  “STIR/SHAKEN” is specifically defined to mean “the secure telephone identity revisited and signature-based handling of asserted information using tokens standards proposed by the information and communications technology industry.” That, in turn, means that wireless carriers have to transmit, receive, and interpret certain data packets containing authentication information so every carrier knows whether every call is legitimately being received by a true number authorized by another carrier. That, in turn, means that YOU should always know whether a phone call can be trusted or not. So far so good.

TRACED also required the FCC to implement rules regarding when a carrier is permitted to block calls that fail Stir/Shaken authentication, and to implement a safe harbor for calls that are improperly but accidentally blocked by carriers. This particular portion of TRACED has raised a lot of concern with industry groups that fear their legitimate messages will not be delivered due to the potential for wireless carriers to aggressively block messages utilizing non-public, vague or shifting standards or algorithms. To address this concern the amended version of TRACED allows callers who have been “adversely affected” by call blocking to seek redress:  TRACED requires the FCC to establish “a process to permit a calling party adversely affected by the information provided by the call authentication framework… to verify the authenticity of the calling party’s calls.”

Interesting, no?

TRACED also requires the FCC to initiate anti-spoofing rulemaking with an end goal to help protect consumers from receiving spoofed calls. Most importantly, TRACED directs the FCC to consider and determine “the best means of ensuring that a subscriber or provider has the ability to block calls from a caller using an unauthenticated North American Numbering Plan number.” This portion of TRACED is rather vague and the directive to the FCC seems to be “figure it out”—we’ll keep an eye on developments surrounding any potential FCC rulemaking proceeding if and when TRACED passes the House.

All of this is good to neutral news for TCPAWorld residents. The mandated enhancements to carrier technology should help assure that more calls are answered as consumers feel safe to use their phones again. And it should mean that we all experience a dramatic reduction in spam and scam calls. Not bad.

But TRACED also makes critical and potentially disastrous changes to the TCPA enforcement environment, potentially shifting enforcement activity away from the expert agency in this field—the FCC—and to other agencies that are less experienced in this field. Specifically, TRACED requires the creation of a “working group” including:

  • the Department of Commerce;
  • the Department of State;
  • the Department of Homeland Security(!);
  • the Federal Communications Commission;
  • the Federal Trade Commission; and
  • the Bureau of Consumer Financial Protection(!!).

This working group is specifically charged with figuring out how to better enforce the TCPA. Specifically, these agencies must determine whether Federal laws inhibit the prosecution of TCPA violations and encourage and improve coordination among agencies in the prevention and prosecution of TCPA violations. Translation: Congress wants more TCPA prosecutions and enforcement actions and is asking every federal agency with an enforcement arm to figure out how to make that happen. Perhaps scariest of all—the working group is specifically asked to determine whether State AG’s should be invited to the table:  the working group must consider “whether extending civil enforcement authority to the States would assist in the successful prevention and prosecution of such violations.” Eesh.

TRACED also affords additional (and clearer) authority to the FCC to pursue TCPA enforcement actions. Where the TCPA is violated willfully TRACED allows the FCC to seek a new and additional penalty of $10,000.00 per violation. That means if a bad actor acts badly and contacts cell phones knowing he or she lacks consent the FCC can seek to recover $10,000.00 for each one of those phone calls plus (apparently) the forfeiture penalty of up to $16,000.00 per violation that is already available under the general provisions of the Telecommunications Act. So TRACED appears to raise the maximum per call penalty for violating the TCPA to $26,000.00 per call! Notably, TRACED represents the first Congressional enactment that clearly defines the FCC’s forfeiture authority respecting illegal phone calls.  TRACED also expands the timeframe the FCC has to pursue actions for intentional misconduct to three years from one year.

To avoid confusion, let me be clear TCPAWorld– the penalties available in a civil suit remain $500.00 per call— and up to $1,500.00 per call for willful violations— where a private party is bringing suit. TRACED would not alter or amend this private right of action. And uncapped TCPA class actions remain a threat after TRACED.

TRACED also requires the FCC to prepare an annual report specifying the number of complaints it received related to robocalls and spoofing, and identifying what enforcement actions the Commission had undertaken in that same period of time.

Finally, for those of you already facing litigation, TRACED was designed not to have any impact on your case.  Section (b) of TRACED specifies: “[t]he amendments made by this section shall not affect any action or proceeding commenced before and pending on the date of enactment of this Act.” So work hard to get sued before the Act passes in the House. I’m kidding. Sort of.

So there you have it. A deep dive TRACED discussion you can read poolside or while working the ‘cue. Enjoy the ribs TCPAWorld.

 

© Copyright 2019 Squire Patton Boggs (US) LLP
This post was written by Eric J. Troutman of Squire Patton Boggs (US) LLP.