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On April 16, the U.S. District Court for the Eastern District of Pennsylvania granted in part and denied in part a telemarketing company’s motion to dismiss, concluding that the plaintiff did not have standing to bring some of his claims under the TCPA. According to the opinion, the plaintiff filed a lawsuit against the company for various claims under the TCPA, alleging that he received ten calls from the company to a phone number he had listed on the “National Do Not Call Registry” (Registry), nine of which were allegedly placed using an automatic dialing system (autodialer). The plaintiff requested orally, and later in writing, that the company cease calling the number, but the company allegedly continued to do so. The company moved to dismiss the action, arguing that the plaintiff created a business model to “encourage telemarketers to call his cellphone number so that he can later sue the telemarketers under the TCPA,” and therefore, has not suffered an injury-in-fact that the TCPA was designed to protect. The court agreed with the company on two claims related to the Registry, holding that the plaintiff does not have standing to bring claims under the TCPA’s prohibition of contacting numbers on the Registry because the phone was for business use and “business numbers are not permitted to be registered on the [Registry].” The court denied the motion to dismiss as to the remaining TCPA claims and ordered the company to respond.
On April 16, the U.S. District Court for the Northern District of California granted final approval to a $7.5 million class action settlement resolving allegations that a payment processor and its sales representative violated the TCPA by using an autodialer for telemarketing purposes without first obtaining consumers’ prior express consent. The settlement terms also require the defendants to pay roughly $1.8 million in attorneys’ fees. According to the second amended complaint, the sales representative placed pre-recorded calls to potential clients on behalf of the payment processor through the use of an autodialer, including consumers who had not consented to receiving the calls. The plaintiff further alleged that the payment processor also violated the TCPA by sending facsimile advertisements that did not contain a “Compliant Opt Out Notice” to recipients. The parties reached a preliminary settlement last August following discovery and mediation.
On April 3, the U.S. District Court for the Northern District of West Virginia denied an alarm company’s motion for summary judgment in multi-district litigation consisting of approximately 30 cases alleging the company is vicariously liable for the telemarketing conduct of its authorized retailers in violation of the TCPA. The company moved for summary judgment arguing, among other things, that it is not a “seller” governed by the TCPA and no evidence exists of an agency relationship between the company and the authorized retailers.
The court rejected these arguments, finding a genuine dispute of material fact as to the agency relationship based on “substantial evidence of the [the company’s] control over its dealers’ sales tactics,” including “the right to control the manner and means by which its Authorized dealers sold [the company]’s services and exercis[ed] that control.” Moreover, the court determined that the company was aware of the allegedly unlawful telemarketing calls through “dozens of complaints involving hundreds of consumers” but failed to take measures to address the problem. As for whether the company was considered a “seller” under the TCPA, the court noted that the authorized dealers worked exclusively for the company, the company had the right of first refusal to purchase the contracts sold by the dealers, the company was “totally dependent” on the dealers’ success, and the telemarketing calls were made to increase the flow of consumers to both the dealers and the company, therefore making the company a “seller” under the TCPA.
On March 29, the U.S. District Court for the Northern District of Illinois granted a telecommunication company’s summary judgment motion in a putative TCPA class action involving text messages. The plaintiff asserted that the company sent him text messages asking survey questions, even though he did not consent and was registered on the Do Not Call list. The company argued that it did not use an automated dialing system (autodialer) to send the text messages to the plaintiff. The court agreed. Citing to the D.C. Circuit’s decision in ACA International v. FCC and analyzing the definition of an autodialer under the TCPA, the court concluded that the system used by the company to send the text messages was not an autodialer because it could not “generate telephone numbers randomly or sequentially.” The court also rejected the consumer’s argument that the system had “the capacity” to generate numbers randomly by selecting numbers to dial from a compiled list of accounts, noting that the TCPA “does not support a reading where ‘using a random or sequential number generator’ refers to the order numbers from a list are dialed.”
On March 25, the U.S. District Court for the Southern District of Florida granted in part and denied in a part a motion to dismiss a putative class action alleging that an auto dealer violated the TCPA by using a “ringless” voicemail platform to leave pre-recorded telemarketing voicemails on consumers’ cell phones without obtaining prior express consent. The defendant moved to dismiss the putative class claims arguing that (i) the plaintiff lacked standing and failed to state a claim because he did not receive a “call” within the meaning of the TCPA; (ii) the plaintiff lacked standing to seek declaratory or injunctive relief; (iii) the TCPA was unconstitutional; and (iv) the complaint failed to adequately allege that the defendant “willfully or knowingly violated the TCPA.”
The court rejected the defendant’s argument that the plaintiff did not receive a “call” as defined by the TCPA, concluding that a ringless voicemail is a call subject to the TCPA restrictions. The court found that the plaintiff had Article III standing because he sufficiently alleged an injury-in-fact and actual harm, including, among other things, invasion of privacy, aggravation, annoyance, and intrusion. The court further found that the plaintiff’s complaint alleged sufficient facts to support the TCPA claim and the allegation that defendant acted willfully or knowingly. The court also rejected defendant’s challenge to the TCPA’s constitutionality. However, the court found the plaintiff could not seek declaratory or injunctive relief because the plaintiff failed to show real and immediate threat of future harm or proffer a basis that would allow the court to infer that the defendant would ever send ringless voicemails again.
On March 22, the U.S. Court of Appeals for the 9th Circuit reversed a lower court’s decision to dismiss TCPA claims against a student loan administrator (defendant), finding that the administrator could be held vicariously liable for a contractor’s alleged debt collection attempts. The plaintiff claimed in her suit that the companies hired by the contracted student loan servicer violated the TCPA by using an autodialer when attempting to contact borrowers to collect payment. The plaintiff argued that the defendant was “vicariously liable” for the alleged TCPA violations of the companies that were hired to collect the plaintiff’s debts, and that the defendant was “similarly liable under the federal common law agency principles of ratification and implied actual authority.” The claims against the collectors and the servicer were dismissed for lack of personal jurisdiction, and the lower court ruled on summary judgment that a jury could not hold the defendant responsible for the actions of the servicer.
On appeal, the split three-judge panel held that a reasonable jury could find that the defendant knew of the alleged TCPA violations, and that because the defendant “ratified the debt collectors’ calling practices by remaining silent,” or alternatively, willfully ignored potential violations through its collections arrangement with the servicer, a jury could find a “principal-agent” relationship—even if one did not exist in the contract—and the court should hold it liable for the collectors’ TCPA violations. According to the panel, there was evidence in the record that the defendant “had actual knowledge” of the alleged violations through audit reports provided by the servicer and “did nothing” to ensure that the debt collectors complied with the law. However, the entire panel agreed that the defendant was not per se vicariously liable for the debt collectors’ alleged TCPA violations.
In dissent, Judge Bybee agreed with the panel that the defendant is not per se vicariously liable for the debt collectors’ practices, and noted in addition that there is not enough evidence to show that the defendant consented to practices that violate the TCPA or that it granted the debt collectors authority to violate the law. He wrote, “there is no evidence whatsoever that [the defendant] approved of such practices. In fact, the only evidence in the record is to the contrary: when [the defendant] learned of wrongful practices, it reported them to [the servicer] and asked [the servicer] to correct the problem.”
On March 5, the U.S. District Court for the Southern District of New York granted an online retailer’s motion to dismiss an action alleging the retailer violated the FDCPA and the TCPA. According to the opinion, the plaintiff received a $300 credit line with the retailer for a laptop computer, which the plaintiff alleges he never received. The plaintiff alleges that the retailer continued to seek payment for the laptop and repeatedly contacted the plaintiff by phone after the plaintiff disputed the payment and informed the retailer to only communicate in writing. The retailor subsequently sent the plaintiff a letter acknowledging his request to only be contacted in writing, revoking prior consent to be contacted by phone. The plaintiff then filed the FDCPA and TCPA claims against the retailer after the plaintiff sought to collect $150,000 from the retailer for expenses defending against the retailer’s collection attempts, which the plaintiff argued the retailer “tacitly agreed” to pay. The retailer moved to dismiss the claims arguing the plaintiff failed to allege the retailer was a “debt collector” under the FDCPA and that the plaintiff failed to establish the retailer called the plaintiff without his prior consent under the TCPA. The court agreed, noting that the retailer had serviced the plaintiff’s account “well before” the plaintiff owed an actual debt and therefore, is not a debt collector under the FDCPA. As for the TCPA claim, the court found that the plaintiff failed to show the retailer called him after the parties agreed to revoke the prior consent. The court rejected the plaintiff’s argument that he had revoked consent prior to the retailer’s acknowledgment of the revocation, noting that a party cannot unilaterally revoke consent under the TCPA. Because the plaintiff failed to state plausible claims under the FDCPA and the TCPA, the court dismissed the action and denied the plaintiff leave to amend his complaint.
On February 13, the U.S. District Court for the District of Nevada rejected a cloud communication company’s motion to dismiss a TCPA class action. According to the opinion, the plaintiffs’ alleged the company “collaborated as to the development, implementation, and maintenance of [a] telemarketing text message program,” which was used by a theater production company to send text messages without prior consent in violation of the TCPA and the Nevada Deceptive Trade Practices Act (NDTPA). The company moved to dismiss the claims, arguing, among other things, that it was not liable under the TCPA because it was a “transmitter” and not an “initiator” of communications. Citing the FCC’s previous determination that, under certain circumstances transmitters may be held liable under the TCPA, the court rejected this argument, concluding that the company took steps necessary to send the automated messages and that its “alleged involvement was to an extent that [it] could be considered to have initiated the contact.” Moreover, the court determined the plaintiff sufficiently alleged injury under the TCPA, concluding that violations of privacy and injury to the “quiet use and enjoyment of [a] cellular telephone” are consistent with the purpose of the TCPA. The court did dismiss the plaintiff’s NDTPA claims, however, holding that the transaction did not involve the sale or lease of goods or services as the law requires.
District court orders TCPA suit to mediation, states FCC’s interpretation of autodialer may take years
On February 1, the U.S. District Court for the Eastern District of Missouri issued an order referring the parties in a putative TCPA class action to mediation. The plaintiff’s complaint alleges that the defendant’s insurance company sent her text messages without her consent using an automatic telephone dialing system (autodialer). In response, the defendant argued that the software it used to send the text messages does not qualify as an autodialer because it calls numbers from a pre-set list, instead of one that is randomly or sequentially generated. The defendant further argued that the case should be stayed because the FCC is currently considering whether systems such as the one at issue qualify as autodialers under the TCPA following the D.C. Circuit’s March 2018 ruling in ACA International v. FCC, which set aside the FCC’s 2015 interpretation of an autodialer as “unreasonably expansive.” (Covered by a Buckley Special Alert.) The decision to refer the case to mediation comes after the court’s August 2018 order denying the defendant’s motion to stay the proceeding. In that order the court explained that, although the FCC issued a notice in May 2018 (covered by InfoBytes here) seeking comments on the interpretation of the TCPA, the rulemaking process would likely take years and may not even resolve the issue in the case.
District Court allows TCPA action to proceed, citing 9th Circuit autodialer definition as binding law
On January 17, the U.S. District Court for the District of Arizona denied a cable company’s motion to stay a TCPA action, disagreeing with the company’s arguments that the court should wait until the FCC releases new guidance on what constitutes an automatic telephone dialing system (autodialer) before reviewing the case. A consumer filed a proposed class action against the company, arguing that the company violated the TCPA by autodialing wrong or reassigned telephone numbers without express consent. The company moved to stay the case, citing the FCC’s May 2018 notice (covered by InfoBytes here), which sought comments on the interpretation of the TCPA following the D.C. Circuit’s decision in ACA International v. FCC (setting aside the FCC’s 2015 interpretation of an autodialer as “unreasonably expansive”). The company argued that the FCC would “soon rule on what constitutes an [autodialer], a ‘called party,’ in terms of reassigned number liability, and a possible good faith defense pursuant to the TCPA,” all of which would affect the company’s liability in the proposed class action. The court rejected these arguments, citing as binding law Marks v. Crunch San Diego, LLC, a September 2018 decision from the U.S. Court of Appeals for the 9th Circuit that broadly defined what constitutes an autodialer under the statute (covered by InfoBytes here), and therefore, determining there was nothing to inhibit the court from proceeding with the case. As for the FCC’s possible future guidance on the subject, the court concluded, “there seems little chance that any guidance from the FCC, at some unknown, speculative, future date, would affect this case.”
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