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  • District court: No subject-matter jurisdiction for unconstitutional TCPA section

    Courts

    On September 28, the U.S. District Court for the Eastern District of Louisiana granted in part and denied in part a motion to dismiss, concluding that the court lacked subject matter jurisdiction in a TCPA action over 129 out of 130 robocalls made prior to the U.S. Supreme Court’s July 6 decision in Barr v. American Association of Political Consultants Inc (AAPC) (covered by InfoBytes here). According to the opinion, the plaintiffs filed a putative class action against a telecommunications company for violating Section 227(b)(1)(A)(iii) of the TCPA, which prohibits robocalls to cell phones without prior express consent. The company moved to dismiss the action, arguing that the Supreme Court decision in AAPC—which concluded the government-debt exception in Section 227(b)(1)(A)(iii) is an unconstitutional content-based speech restriction—makes the alleged violations unenforceable in federal court because the provision was determined to be unconstitutional. In response, the plaintiffs argued that because the Supreme Court’s decision preserved the general ban on robocalls to cellphones by severing “the new-fangled government-debt exception,” the Supreme Court “confirmed that [Section] 227(b)(1)(A)(iii) was constitutional all along.”

    The district court disagreed with the plaintiffs, concluding that during the years that Section 227(b)(1)(A)(iii) permitted robocalls for government-debt collection while prohibiting other categories of robocalls, the entirety of the provision was unconstitutional. The district court noted that the Supreme Court’s opinion in AAPC provided little guidance, only “dicta of no precedential force.” The court looked to Justice Gorsuch’s opinion concurring in part and dissenting in part, noting his reasoning was better “as a matter of law and logic.” Because the entirety of Section 227(b)(1)(A)(iii) was unconstitutional prior to the Supreme Court’s severance of the government-debt exception on July 6, the district court dismissed the action with respect to the alleged TCPA violations that occurred prior to that date, but denied dismissal for the one robocall made after July 6. Lastly, the court granted a stay of the action pending the Supreme Court’s decision in Duguid v. Facebook, Inc (covered by InfoBytes here and here).

    Courts TCPA U.S. Supreme Court Subject Matter Jurisdiction Robocalls

  • FTC takes action against debt collection schemes

    Courts

    On August 19, the U.S. District Court for the District of South Carolina lifted the temporary seal of two FTC complaints (available here and here) filed against two groups of debt collection companies and their owners (collectively, “defendants”), alleging that the defendants’ debt collection practices violated the FTC Act and the FDCPA. According to both complaints, which were filed on July 13, the FTC alleges that the defendants engaged in a scheme to collect payments from consumers for debts that they did not actually owe or that the defendants had no authority to collect. Specifically, the defendants used a “two-step collection process,” in which they used robocalls with prerecorded messages to tell consumers they were subject to “an audit or other proceeding.” After the consumers contacted the defendants about the information in the robocalls, the defendants “falsely represent[ed] that they are representatives of a law firm or a mediation company” and falsely alleged that the consumers would be subject to legal action, including arrest, on a delinquent debt if it was not paid. The FTC asserts that the defendants collected over $17 million from the alleged scheme and is seeking, among other things, restitution, injunctions, and asset freezes.

    Courts FTC Debt Collection Enforcement FTC Act FDCPA Robocalls

  • District court: $925 million statutory damages award not constitutionally excessive

    Courts

    On August 14, the U.S. District Court for the District of Oregon refused to reduce a $925 million statutory damages award against a company found to have violated the TCPA by sending almost two million unsolicited robocalls to consumers. The company argued that the statutory damages award violates due process because “it is so severe and oppressive as to be wholly disproportionate to the offense and obviously unreasonable.” The court rejected the company’s argument that the penalty was unconstitutionally excessive, noting that the U.S. Court of Appeals for the Ninth Circuit has not yet answered the question as to “whether due process limits the aggregate statutory damages that can be awarded in a class action lawsuit under the TCPA.” Instead, the district court concluded that the allowance for at least $500 per violation under the TCPA is constitutionally valid and that the penalty’s “large aggregate number comes from simple arithmetic.” Referencing an opinion issued by the U.S. Court of Appeals for the Seventh Circuit, the court reasoned that “[s]omeone whose maximum penalty reaches the mesosphere only because the number of violations reaches the stratosphere can’t complain about the consequences of its own extensive misconduct.” Thus, the court rejected the company’s argument that the aggregate damages award should be reduced, finding that due process does not require the reduction of the aggregate statutory award where the company violated the TCPA nearly two million times.

    Courts Robocalls TCPA Settlement

  • FCC provides safe harbors for blocking illegal robocalls

    Privacy, Cyber Risk & Data Security

    On July 16, the FCC issued an order adopting rules to further encourage phone companies to block illegal and unwanted robocalls and to continue the Commission’s implementation of the TRACED Act (covered by InfoBytes here). The rule establishes two safe harbors from liability for the unintended or inadvertent blocking of wanted calls: (i) voice service providers will not be held liable under the Communications Act and FCC rules on terminating voice service providers that block calls, provided “reasonable analytics,” such as caller ID authentication information, are used to identify and block illegal or unwanted calls; and (ii) voice service providers will not be held liable for blocking calls from “bad-actor upstream voice service providers that continue to allow unwanted calls to traverse their networks.” The FCC’s order also includes a Further Notice of Proposed Rulemaking seeking comments on, among other things, “whether to obligate originating and intermediate providers to better police their networks against illegal calls,” whether the “reasonable analytics” safe harbor should be expanded “to include network-based blocking without consumer opt-out,” and whether the Commission should adopt more extensive redress requirements, and require terminating providers to provide consumers information about blocked calls.

    Privacy/Cyber Risk & Data Security FCC Robocalls TRACED Act

  • District court preliminarily approves $6.8 million TCPA settlement

    Courts

    On July 6, the U.S. District Court for the Eastern District of California granted preliminary approval to a nearly $6.8 million settlement between class members and a collection agency that allegedly violated the TCPA, FDCPA, and California’s Rosenthal Fair Debt Collection Practices Act by making calls using an autodialer or prerecorded voice in an attempt to collect purported debts. The lead plaintiff filed a proposed class action suit in 2016 against the collection agency claiming he received at least 25 calls to his cell phone even though he never consented to receiving such calls in the first place and had instructed the collection agency to stop calling him.

    According to the court’s order, the settlement consists of two sub-classes: (i) one class of individuals from anywhere in the U.S. who subscribed to call management applications and received automated calls from the defendant without providing the proper consent; and (ii) another class of individuals living in California who received automated calls from the defendant regarding their purported debts. The terms of the settlement provides for a $1.8 million cash fund and requires the forgiveness of nearly $5 million in outstanding debts for class members with existing accounts owned by either the collection agency or one of its affiliates.

    Courts Robocalls Settlement Class Action State Issues Autodialer TCPA FDCPA

  • State AGs emphasize the importance of robocall traceback work

    State Issues

    On June 4, 52 state attorneys general, through the National Association of Attorneys General, submitted reply comments to the FCC in support of an April final rule, which amends and adopts its rules in accordance with Section 13(d) of the Pallone–Thune Telephone Robocall Abuse Criminal Enforcement and Deterrence Act (TRACED Act) to create a single registered consortium that serves as a neutral third party to manage the private-led efforts to trace back the origin of unlawful robocalls. In the letter, the attorneys general emphasized the importance of traceback efforts to assist law enforcement in identifying and investigating illegal robocallers more efficiently. Moreover, the attorneys general note that traceback investigations help “shed light” on other actors in the “telecommunication ecosystem” that may support robocall scammers. Similarly, in May, the attorneys general, also through the National Association of Attorneys General, published a letter to industry groups asserting their intention to intensify enforcement efforts against illegal robocallers, and urged the US Telecom and the Industry Traceback Group to expand capabilities related to tracebacks in anticipation of growth in the need for data analysis and the number of civil investigative demands and subpoenas that will be issued directly to the Industry Traceback Group (covered by InfoBytes here).

    State Issues State Attorney General Robocalls FCC TRACED Act Enforcement

  • FTC, FCC warn VoIP service providers about Covid-19 robocalls

    Federal Issues

    On May 20, the FTC and the FCC sent letters to three more Voice over Internet Protocol (VoIP) service providers, warning the companies to stop routing and transmitting robocall campaigns promoting Covid-19 related scams. According to the FTC, two of the companies are routing coronavirus-related fraud robocalls originating overseas. In April, the agencies sent an initial round of letters to three VoIP service providers for similar issues (covered by InfoBytes here). As in April, the letters warn the companies that they have been identified as “routing and transmitting illegal robocalls, including Coronavirus-related scam calls” and must cease the behavior or they will be subject to enforcement action. Additionally, the agencies sent a separate letter to a telecommunications trade association thanking the group for its assistance in identifying the campaigns and relaying a warning that the FCC will authorize U.S. providers to begin blocking calls from the three companies if they do not comply with the agencies’ request within 48 hours after the release of the letter.

    Federal Issues FTC FCC Robocalls Enforcement Covid-19

  • FCC changes TCPA enforcement under TRACED Act

    Agency Rule-Making & Guidance

    On May 1, the FCC issued an order announcing the Commission will no longer send entities outside its jurisdiction warnings prior to commencing an enforcement action related to TCPA robocall violations. Specifically, the order, as mandated under Section 3 of the TRACED Act (covered by InfoBytes here), (i) removes provisions that previously required the FCC to issue a warning prior to imposing penalties for making robocalls; (ii) increases the maximum fine that the FCC can assess for robocall violations to $10,000 per intentional unlawful call, in addition to a forfeiture penalty amount; and (iii) extends the statute of limitations to four years for the FCC to investigate and take enforcement action against an entity that violates the TCPA. The order takes effect 30 days after publication in the Federal Register.

    Agency Rule-Making & Guidance FCC TRACED Act Enforcement Robocalls TCPA Privacy/Cyber Risk & Data Security

  • State AGs urge industry group develop better tools to fight illegal robocalls

    State Issues

    On May 4, the National Association of Attorneys General published a letter to US Telecom, an industry group of telecommunications providers, and the Industry Traceback Group, an industry group dedicated to assist with the tracing of illegal robocalls. The letter noted that state attorneys general intend to intensify enforcement efforts against illegal robocallers, and urged US Telecom and the Industry Traceback Group to expand capabilities related to tracebacks in anticipation of growth in the need for data analysis and the number of civil investigative demands and subpoenas that will be issued directly to the Industry Traceback Group. The need for action has been tied to an increase in Covid-19 related robocalls.

    State Issues Covid-19 State Attorney General Robocalls Enforcement CIDs

  • District court says $267 million robocall verdict is not unconstitutionally excessive

    Courts

    On April 17, the U.S. District Court for the Northern District of California issued an order granting in part and denying in part several motions pertaining to a class action lawsuit, which accused a debt collection agency (defendant) of violating the TCPA, FDCPA, and the California Rosenthal Fair Debt Collection Practices Act by using repeated robocalls and pre-recorded voices messages to collect debt. As previously covered by InfoBytes, last September the court entered a $267 million final judgment against the defendant, consistent with a jury’s verdict that found the defendant liable for violating the TCPA by making more than 500,000 unsolicited robocalls using autodialers. Under the terms of the judgment each class member was awarded $500 per call. The defendant argued that the award was unconstitutionally excessive and violated due process, and requested that the court reduce the per violation amount. The court was unpersuaded and upheld the judgment, stating that the defendant failed to identify (and the court could not find) any “Ninth Circuit authority on how a district court should reduce damages that are found to be unconstitutionally excessive.” While acknowledging that the award was “significant,” the court stated that it also “evidences the fervor with which the United States Congress was attempting to regulate the use of autodialers for non-consensual calls” and that “the unilateral slashing of an award does not only ignore the plain words of the statute, the task is devoid of objectivity.” Among other actions, the court granted the defendant’s request to amend the final judgment to reflect that allegations concerning “willful and/or knowing violations of the TCPA” were dismissed with prejudice and that the defendant succeeded at summary judgment on the FDCPA and state law claims. However, the court denied the defendant’s request to release any surplus or residue amounts not distributed to a class member back to the company. The court also approved the class counsel’s motion for more than $89 million in attorneys’ fees and non-taxable costs of $277,416.28, and awarded the named plaintiff a $25,000 service award.

    Courts Debt Collection TCPA FDCPA Settlement Robocalls Autodialer

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