Tag: TCPA

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.

Getting Political: Florida Gubernatorial Candidate Democrat Jeff Greene Personally Hit with TCPA Class Action

As I have written numerous times, where the TCPA intersects politics things can get spicy.

Imagine it–using a draconian statute to assault your political rivals and bludgeon old foes with ligation designed to extract millions of dollars from their pocket based upon campaign phone calls.

Suing political candidates under the TCPA has become a bit of a ritual in America over the last few years. Obama faced a TCPA suit. As did Trump. More recently Beto O’Rourke faced such a suit. As did an organization supporting the Kavanugh confirmation.  Heck, even the Human Society’s text campaign supporting California’s Prop 12 was *ahem* neutered by a TCPA class action.

In furtherance of that great tradition,  a Florida resident named Lynda Maceda filed suit yesterday against bested Florida gubernatorial candidate Jeff Greene. According to his wiki page Jeff is a successful business guy and real estate investment type. According to Ms. Maceda’s Complaint, however, he’s a robocaller that sent the following message without consent:

“Hi, this is Democrat Jeff Greene running for governor. I’ll stand up to Donald Trump and for Florida’s families. Joseph, if you want world-class schools, commonsense gun reform and to protect women’s choice, please vote for me with your absentee ballot! Can we count on your support?”

The Complaint alleges that thousands of similar complaints were sent all of them without express consent. Ms. Maceda hopes to represent a failsafe clas of all individuals that received the texts without express consent. If these allegations are proven Ms. Maceda hopes to hold Mr. Greene accountable for “amounts [] greater than $15,000,000.” Gees.

Notably, Mr. Greene is sued personally for these violations–usually these TCPA claims are asserted against a candidate’s campaign rather than against the candidate individually.

The Complaint can be found here: Class Action Complaint against Florida Democratic Gubernatorial Candidate Jeff Greene

 

© Copyright 2019 Squire Patton Boggs (US) LLP
This post was written by Eric J. Troutman of Squire Patton Boggs (US) LLP.
Read more Litigation news on the National Law Review’s Litigation Type of Law page.

Using Prior FCC Rulings and Focusing on Human Intervention, Court Finds Texting Platform Is Not An ATDS

In today’s world of ever-conflicting TCPA rulings, it is important to remember that, where courts are asked to determine the TCPA’s ATDS definition, their inquiry will revolve around the question of whether that definition includes only devices that actually generate random or sequential numbers or also devices with a broader range of functionalities.  However, it is also important to remember that, when courts are trying to determine whether a calling/text messaging system meets the ATDS definition, focusing on the level of human intervention used in making a call or sending a text message is a separate decisive inquiry that also must be made.

As we’ve previously mentioned, this latter inquiry is important in all types of TCPA cases, but recently the issue has been given special attention in cases regarding text messages and text messaging platforms.  Indeed, this happened again yesterday when the court in Duran v. La Boom Disco determined a nightclub’s use of text messaging did not violate the TCPA because of the level of human involvement exhibited by the nightclub in operating the software and scheduling the sending of messages.

Background

In Duran v. La Boom Disco, the United States District Court for the Eastern District of New York was tasked with analyzing the ExpressText and EZ Texting platforms, which are text messaging software platforms offered to businesses and franchises, whereby the business can write, program, and schedule text messages to be sent to a curated list of consumer mobile phone numbers.

At first glance, the facts in Duran appear to signal a slam dunk case for the plaintiff.  The defendant nightclub had used the ExpressText and EZ Texting platforms to send marketing text messages to the plaintiff after he replied to a call-to-action advertisement by texting the keyword “TROPICAL” to obtain free admission to the nightclub for a Saturday night event.  Importantly, though, after the plaintiff texted this keyword, he never received a second text messaging asking whether he consented to receive recurring automated text messages (commonly referred to as a “double opt-in” message).  He did, however, receive approximately 100 text messages advertising other events at the nightclub and encouraging him to buy tickets, which ultimately led him to bring a TCPA action against the club.

Accordingly, the initial issue that the Duran court was tasked with deciding was whether the defendant nightclub had texted the plaintiff without his prior express written consent.  The court quickly dispensed with it, determining that the nightclub had not properly obtained written consent from the plaintiff, as it had failed to use a double opt-in process to ensure the plaintiff explicitly agreed to receive recurring automated marketing text message and could not otherwise prove that the plaintiff explicitly consented to receiving recurring messages or a marketing nature (which, under the TCPA, the nightclub had the burden to prove).

At this stage, then, things were looking bad for the nightclub.  However, this was not the end of the court’s analysis, as the nightclub could only be liable for sending these non-consented-to messages if they had been sent using an ATDS.  Thus, the court turned to its second – and much more important – line of inquiry: whether the ExpressText and EZ Texting software, as used by the nightclub to text the plaintiff, qualified as an ATDS.

Defining the ATDS Term in the Aftermath of ACA International

In order to determine whether the ExpressText and EZ Texting platforms met the TCPA’s ATDS definition, the court performed an analysis that has become all too common since the FCC’s 2015 Declaratory Order was struck down in ACA International: determining what the appropriate definition of ATDS actually is.  With respect to this issue, the litigants took the same positions that we typically see advanced.  The plaintiff argued that the ExpressText and EZ Texting platforms were the equivalent of “predictive dialers” that could “dial numbers from a stored list,” which were included within the TCPA’s ATDS definition.  The Nightclub countered that predictive dialers and devices that dialed from a database fell outside of the ATDS definition, meaning the nightclub’s use of the ExpressText and EZ Texting platforms should not result in TCPA liability.

The court began the inquiry with what is now the all-too-familiar analysis of the extent to which the D.C. Circuit’s opinion in ACA International invalidated the FCC’s prior 2003 and 2008 predictive dialer rulings.  After examining the opinion, the court found that those prior rulings still remained intact because “the logic behind invalidating the 2015 Order does not apply to the prior FCC orders.”  The court then concluded that, because the 2003 and 2008 ATDS rulings remained valid, it could use the FCC’s 2003 and 2008 orders to define the ATDS term, and that, based on these rulings, the TCPA also prohibited defendants from sending automated text messages using predictive dialers and/or any dialing system that “dial numbers from a stored list.”

However, the fact that the ExpressText and EZ Texting platforms dialed numbers from a stored list did not end the inquiry since, under the 2003 and 2008 orders, “equipment can only meet the definition of an autodialer if it pulls from a list of numbers, [and] also has the capacity to dial those numbers without human intervention.”  And it was here where the plaintiff’s case fell apart, for while the ExpressText and EX Texting platforms dialed from stored lists and saved databases, these platforms could not dial the stored numbers without a human’s assistance.  As the court explained:

When the FCC expanded the definition of an autodialer to include predictive dialers, the FCC emphasized that ‘[t]he principal feature of predictive dialing software is a timing function.’  Thus, the human-intervention test turns not on whether the user must send each individual message, but rather on whether the user (not the software) determines the time at which the numbers are dialed….  There is no dispute that for the [ExpressText and EZ Texting] programs to function, ‘a human agent must determine the time to send the message, the content of the messages, and upload the numbers to be texted into the system.’

…

In sum, because a user determines the time at which the ExpressText and EZ Texting programs send messages to recipients, they operate with too much human involvement to meet the definition of an autodialer.

Human Intervention Saves the Day (Again)

In Duran, the district court made multiple findings that would ordinarily signal doom for a defendant: it broadly defined the ATDS term to include predictive dialers and devices that dialed numbers from a stored list/database and it found the nightclub’s text messages to have been sent without appropriately obtaining the plaintiff’s express written consent.  However, despite these holdings, the nightclub was still able to come out victorious because of the district court’s inquiry into the human intervention issue and because the ExpressText and EZ Texting platforms the nightclub used required just enough human involvement to move the systems into a zone of protection.  In many ways, this holding – and the analysis employed – is unique; however, with respect to the focus on the human intervention requirement, the district court’s decision can be seen as another step down a path that has been favorable to web-based text messaging platforms.

Indeed, over the course of the last two years, several courts have made it a point to note that the human intervention analysis is a separate, but equally important, determination that the court must analyze before concluding that a device is or is not an ATDS.  With respect to the text-messaging line of cases, this has especially been the case, with numerous courts noting that, no matter whether the ATDS definition is or is not limited to devices that randomly or sequentially generate numbers, the numbers must also be dialed without human intervention.  What is interesting, though, is that the courts that have interpreted this line of cases have focused on different actions as being the key source of human intervention.

As we already discussed, the court in Duran noted that the key inflection point for determining whether human intervention exists is based off of the timing of the message and whether a human or the device itself gets to determine when the text message is sent out.  And in Jenkins v. mGage, LLC, the District Court for the Northern District of Georgia reached a similar conclusion, finding that the defendant’s use of a text messaging platform involved enough human intervention to bring the device outside of the ATDS definition because “direct human intervention [was] required to send each text message immediately or to select the time and date when, in the future, the text message will be sent.”  The District Court for the Middle District of Florida also employed this line of thinking in Gaza v. Auto Glass America, LLC, awarding summary judgment to the defendant because the text messaging system the company employed could not send messages randomly, but rather required a human agent to input the numbers to be contacted and designate the time at which the messages were to be sent.

In the case of Ramos v. Hopele of Fort Lauderdale, however, the District Court for the Southern District of Florida found a separate human action to be critical, focusing instead on the fact that “the program can only be used to send messages to specific identified numbers that have been inputted into the system by the customer.”  And another court in the Northern District of Illinois echoed this finding in Blow v. Bijora, Inc., determining that, because “every single phone number entered into the [text] messaging system was keyed via human involvement … [and because] the user must manually draft the message that the platform will sent” the text messaging platform did not meet the TCPA’s ATDS requirements.

Indeed, with the entire industry still awaiting a new ATDS definition from the FCC, there is still much confusion as to how the ATDS term will be interpreted and applied to both users of calling platforms and users of texting platforms.  Fortunately, though, there appears to be a trend developing for text message platforms, with multiple courts finding that human intervention is a crucial issue that can protect companies from TCPA liability.  Granted, these courts have not yet been able to agree on what human action actually removes the platform from the ATDS definition, and, as we’ve noted previously, even if human intervention remains the guiding standard, determining precisely what qualifies as sufficient intervention and when in the process of transmitting a message the relevant intervention must occur remains much more an art than a science.  However, the cases mentioned above are still useful in pointing marketers everywhere in the right direction and present guidelines for ensuring they send text messages in compliance with the TCPA.

 

Copyright © 2019 Womble Bond Dickinson (US) LLP All Rights Reserved.
Read more news on the TCPA Litigation on the National Law Review Communication type of law page.

Now I Get It!: Using the FCC’s Order Keeping Text Messages as “Information Services” to Better Understand the Communications Act

Little known fact: the TCPA is just a tiny little part of something much bigger and more complex called the Communications Act of 1934, as amended by Telecom Act of 1996 (which the FCC loves to just call the “Communications Act.”) And yes, I know the TCPA was enacted in 1991 but trust me it is still part of the Communications Act of 1934.

The Communications Act divides communications services into two mutually exclusive types: highly regulated “telecommunications services” and lightly regulated “information services.”

So let’s look at some definitions:

A “telecommunications service” is a common carrier service that requires “the offering of telecommunications for a fee directly to the public, or to such classes of users as to be effectively available to the public, regardless of the facilities used.”

“Telecommunications” is “the transmission, between or among points specified by the end user, of information of the user’s choosing without change in the form or content of the information as sent and received.”

By contrast, an “information service” is “the offering of a capability for generating, acquiring, storing, transforming, processing, retrieving, utilizing, or making available information via telecommunications, and includes electronic publishing, but does not include any use of any such capability for the management, control, or operation of a telecommunications system or the management of a telecommunications service.”

Make sense so far? Basically a telecommunications service is something that telecommunications companies–who are common carriers– can’t tinker with and have to automatically connect without modifying. For instance, if I want to call my friends from law school and wish them well Verizon can’t say–wait a minute, Eric doesn’t have any friends from law school and refuse to connect the call. Verizon must just connect the call. It doesn’t matter who I am calling, how long the call will be, or why I’m making the call, the call must connect. The end.

Information services are totally different animals. Carriers can offer or not offer and tinker and manipulate such messages all they want–see also net neutrality.

So if text messages are a telecommunication then they must be connected without question. But if text messages are an information service then carriers can decide which messages get through and which don’t.

It might seem like you’d want text messages to be information services–after all why would we want the carriers determining how and when we can text each other? Well the FCC has an answer– automatic spam texts.

If text messages are subject to common carrier rules then people can blast your phone with spam text messages and the carriers can’t stop them. True the TCPA exists so you can sue the texter but–as we know–the vast majority of spammers are shady fly-by-nights or off-shore knuckleheads that you can’t find. So the FCC believes that keeping text messages categorized as “information services”–as they are currently defined–will keep spammers away from your SMS inbox. It issued a big order today accomplishing just that. 

And to be sure, the carriers are monitoring and block spam texts as we speak. As the FCC finds: “wireless messaging providers apply filtering to prevent large volumes of unwanted messaging traffic or to identify potentially harmful texts.”  The FCC credits these carrier efforts with keeping text messages relatively spam free:

For example, the spam rate for SMS is estimated at 2.8% whereas the spam rate for email is estimated at over 50%.  Wireless messaging is therefore a trusted and reliable form of communication for many Americans. Indeed, consumers open a far larger percentage of wireless messages than email and open such messages much more quickly.

So from a policy perspective keeping text messages as information services probably makes sense, but let’s review those definitions again.

A telecommunication service is essentially the transmission of information of the user’s choosing.

An information service is “the offering of a capability for generating, acquiring, storing, transforming, processing, retrieving, utilizing, or making available information via telecommunications.”

So is a text message the transmission of information of my choosing or is it the use of Verizon’s ability to store and retrieve information I am sending? (And is there really even a difference?)

Well the FCC says texts are absolutely information services and here’s why:

  • SMS and MMS wireless messaging services provide the capability for “storing”
    and “retrieving” information. When a user sends a message, the message is routed through servers on mobile networks. When a recipient device is unavailable to receive the message because it is turned off, the message will be stored at a messaging center in the provider’s network until the recipient device is able to receive it.

  • SMS and MMS wireless messaging services also involve the capability for “acquiring” and “utilizing” information. As CTIA explains, a wireless subscriber can “ask for and receive content, such as weather, sports, or stock information, from a third party that has stored that information on its servers. SMS subscribers can ‘pull’ this information from the servers by making specific requests, or they can signal their intent to have such information regularly ‘pushed’ to their mobile phone.

  • SMS and MMS wireless messaging services involve “transforming” and
    “processing” capabilities. Messaging providers, for example, may change the form of transmitted information by breaking it into smaller segments before delivery to the recipient in order to conform to the character limits of SMS.

Yeah…I guess. But realistically when I send a text I just want it to get there there the way I sent it. Maybe there’s some storing and utilizing and processing or whatever but not very much.

And that was Twilio’s point. It asserted:  “the only offering that wireless carriers make to the public, with respect to messaging, is the ability of consumers to send and receive messages of the consumers’ design and choosing.” That sounds right.

Well the FCC disagrees: “These arguments are unpersuasive.”

The FCC’s point is that “what matters are the capabilities offered by the service, and as we explain above, wireless messaging services feature storage, retrieval, and other information-processing capabilities.”

Hmmm. ok. I guess I’m ok with that if you are.

But let’s get to the good stuff from a TCPA perspective. Recall that a text message is a “call” for purposes of the TCPA. Well if a text isn’t even a telecommunication how can it be a call? Asks Twilio.

Yeah, FCC, how can it be a call? Asks the Czar.

The Commission answers:

the Commission’s decision merely clarified the meaning of the undefined term “call” in order to address the obligations that apply to telemarketers and other callers under the TCPA. That decision neither prohibits us from finding that wireless messaging service is an information service, nor compels us to conclude that messaging is a telecommunications service.

Ok. Well. Why not?

The Commission answers further:

The TCPA provision itself generally prohibits the use of a facsimile machine to send
unsolicited advertisements, but that does not constitute a determination that an individual’s sending of a fax is a telecommunications service, just as the application to an individual’s making “text calls” does not reflect a determination that wireless messaging is a telecommunications service. In any event, for purposes of regulatory treatment, there is a significant difference between being subject to Commission regulation and being subject to per se common carrier regulation. Only the latter requires classification as a telecommunications service. We clarify herein that SMS and MMS wireless messaging are Title I services, and thus, will not be subject to per se common carrier regulation.

Umm FCC, no disrespect intended, but I kind of feel like that doesn’t really answer the question.

But in any event, the FCC plainly believes that text messages are a “call” for purposes of the TCPA but are not a “telecommunication” for purposes of common carrier regulation.

From a policy perspective I’m fine with the conclusion the Commission reached–it makes sense to keep text messages free from spam. But we have to be honest with ourselves here, the Commission just did legal somersaults to get there. Maybe its time for Congress to take another look at the Communications Act hmmm?

In any event, now you get it!

 

Copyright © 2018 Womble Bond Dickinson (US) LLP All Rights Reserved.
This post was written by Eric Troutman of Womble Bond Dickinson (US) LLP.
Read more news about the TCPA at the National Law Review.