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District Court allows TCPA class action to proceed against auto company
On August 27, the U.S. District Court for the Central District of California denied a car manufacturer’s motion to dismiss a class action alleging that it violated the TCPA by sending unwanted automated text messages. According to the opinion, after a consumer visited a car dealership, she allegedly received unsolicited text messages to her cell phone from the dealership. The consumer filed a proposed class action alleging the corporate car manufacturer “directed, encouraged, and authorized its dealerships [] to send text messages promoting the sale of [the] automobiles to [the consumer] and other members of the proposed Class, pursuant to a common marketing scheme” and that the text messages were transmitted using an automated telephone dialing system (autodialer) in violation of the TCPA. The manufacturer moved to dismiss the action, arguing that the plaintiff failed to allege (i) that the manufacturer sent the text messages or that the dealership sent the text messages as the manufacturer’s agent; and (ii) that the text messages were sent using an autodialer.
The court first determined that the plaintiff plausibly alleged that the manufacturer directly sent the text messages, or, in the alternative, that the dealership was acting as the manufacturer’s agent when the texts were sent. Furthermore, the plaintiff alleged that the manufacturer used hardware and software programs with the requisite capabilities to qualify as an autodialer pursuant to the 9th Circuit’s decision in Marks v. Crunch San Diego, LLC (covered by InfoBytes here).
State AGs and VSPs to collaborate on robocalls
On August 22, North Carolina Attorney General Josh Stein announced a bipartisan agreement between 51 state attorneys general and 12 voice service providers, adopting eight principles for fighting illegal robocalls and preventing consumer fraud. Under the principles, the voice providers will: (i) offer no-cost call-blocking technology, including easy-to-use call blocking and labeling tools; (ii) implement STIR/SHAKEN call authentication (as previously covered by InfoBytes, in June the FCC adopted a Notice of Proposed Rulemaking requiring voice providers to implement the caller ID authentication framework); (iii) analyze and monitor high-volume voice network traffic for robocall patterns; (iv) investigate suspicious calls and calling patterns and take appropriate action; (v) confirm identities of new commercial customers; (vi) require traceback cooperation in new and renegotiated contracts; (vii) provide for timely and comprehensive law enforcement efforts through cooperation in traceback investigations; and (viii) communicate with state attorneys general about recognized robocall scams and trends and potential solutions. AG Stein noted that the principles will also “make it easier for attorneys general to investigate and prosecute bad actors.”
District Court upholds $925 million TCPA jury verdict against direct sales company
On August 21, the U.S. District Court for the District of Oregon upheld a $925 million jury verdict against a direct sales company in a TCPA class action lawsuit, denying the company’s motion to decertify the class. According to the opinion, the named plaintiff brought the 2015 class action lawsuit alleging the company violated the TCPA by calling consumers using an artificial or prerecorded voice without their consent. In April 2019, a jury concluded that a total of 1,850,436 calls were made using an artificial or prerecorded voice to either cell phones or landlines. However, in June 2019, the FCC granted a request made by the company in September 2017 for a retroactive waiver of the agency’s 2012 new written consent requirements for telemarketing robocalls, but only as it applied to “calls for which the petitioner had obtained some form of written consent.” Based on the newly-obtained waiver from the FCC, the company moved to decertify the class arguing that, among other things, (i) the named plaintiff lacked standing, and (ii) consent is now an individualized issue that “predominates” over the class issues. The court rejected these arguments, concluding that the company waived the affirmative defense of consent by not raising the defense earlier in the litigation when it knew its FCC waiver was pending. Specifically, the court reasoned that the failure to raise the issue “given the likelihood that the FCC would grant its waiver petition was unreasonable.” The court also rejected the company’s predominance arguments, concluding that whether the calls were made to a landline or cellphone is irrelevant as TCPA liability “attaches to any call made [to] either” type. The court concluded that class certification was proper, upholding the jury’s verdict.
FCC adopts rules addressing spoofed texts and international robocalls
On August 1, the FCC announced the adoption of new rules that will extend the Truth in Caller ID’s prohibitions against robocalls to caller ID spoofing of text messages and international calls, and implement measures passed last year in the RAY BAUM’s Act. As previously covered by InfoBytes, the rules are supported by a bipartisan group of more than 40 state attorneys general, and will allow the FCC to bring enforcement actions and assess fines on international players who try to defraud U.S. residents. However, while Commissioner Michael O’Rielly voted in favor of the measure, he raised concerns that the FCC may encounter problems when trying to enforce the rules across international borders. “As I expressed before, the expanded extraterritorial jurisdiction may prove difficult to execute in uncooperative nations and come back to bite us in other contexts,” O’Rielly stated. “In addition, the definitions of text messaging and voice services are broader than my liking and may cause future unintended consequences.” However, his statement did not specify what these unintended consequences might be.
District Court strikes class certification from robocall suit
On July 18, the U.S. District Court for the Northern District of Illinois granted a rental car company’s (defendant) motion to strike class allegations in a TCPA suit over alleged robocalls. The plaintiff, whose telephone number was listed on a rental contract between his mother and the defendant in addition to the mother’s telephone number, claimed he received multiple prerecorded messages on his cellphone from the defendant after his mother failed to return the car when it was due, even though he had allegedly opted out of the communications. The plaintiff commenced the suit, ultimately seeking certification of an amended putative class of all noncustomers who received automated calls from the defendant “where such [a] call was placed after a request to stop calling that phone number.” In August 2018, the court denied summary judgment to the defendant, who subsequently moved to strike class allegations. The court granted the defendant’s motion, stating there were too many contested facts that raised unique defenses particular to the plaintiff’s case, including (i) the type of consent to receive calls that the plaintiff’s mother gave under her contract; (ii) whether the calls to the plaintiff’s phone were robocalls; and (iii) whether and how the plaintiff revoked the consent given by his mother.
8th Circuit affirms reduction in TCPA statutory damages from $1.6 billion to $32 million
On July 16, the U.S. Court of Appeals for the 8th Circuit affirmed a district court’s decision to reduce a $1.6 billion award in statutory damages for TCPA violations to $32.4 million after the court determined the original award violated the Fifth Amendment’s Due Process Clause. The named plaintiffs in the class action alleged that parties involved in the financing and marketing campaign of a film with religious and political themes violated the TCPA through the use of a telephone campaign in which approximately 3.2 million prerecorded robocalls were made in the course of a week. The plaintiffs—who received two of these messages on their answering machine—filed an appeal after the district court concluded that the original award was “‘obviously unreasonable and wholly disproportionate to the offense’” and reduced the statutory damages awarded by a jury from $500 per call to $10 per call.
On appeal, the 8th Circuit addressed several issues, including (i) whether the plaintiffs alleged a concrete injury under the TCPA; (ii) whether the district court abused its discretion concerning instructions on direct liability against one of the defendants; and (iii) whether the court erred in finding the amount of statutory damages to be unconstitutional. The appellate court first reviewed whether the plaintiffs had alleged a sufficiently concrete injury under the TCPA. According to the opinion, “[t]he harm to be remedied by the TCPA was ‘the unwanted intrusion and nuisance of unsolicited telemarketing phone calls and fax advertisements. . . .The [plaintiffs’] harm . . . was the receipt of two telemarketing messages without prior consent. These harms bear a close relationship to the types of harms traditionally remedied by tort law, particularly the law of nuisance.” However, the appellate court stated that the district court was correct to reject the plaintiffs’ direct liability instructions against the defendant who helped finance the film, writing that the plaintiffs “improperly blurred the line between direct and agency liability” and that “to be held directly liable, the defendant must be the one who ‘initiates’ the call,” which the financing defendant did not do. Finally, the appellate court agreed with the district court that the $1.6 billion award violated the Due Process Clause, and highlighted evidence that the advertiser “plausibly believed it was not violating the TCPA” and “had prior consent to call the recipients about religious liberty,” which was a predominant theme of the film being promoted. Moreover, the court noted,”[t]he call campaign was conducted for only about a week,” and recipients could only hear the message about the film if they voluntarily opted in during the call. The court further reasoned that “the harm to the recipients was not severe—only about 7% of the calls made it to the third question, the one about the film. Under these facts, $1.6 billion is ‘so severe and oppressive as to be wholly disproportioned to the offense and obviously unreasonable.’”
FCC Chairman proposes rules addressing spoofed texts and international robocalls
On July 8, FCC Chairman Ajit Pai proposed rules supported by a bipartisan group of more than 40 state attorneys general that would extend prohibitions against robocalls to caller ID spoofing of text messages and international calls, implementing measures passed last year in the RAY BAUM’s Act. Previously, anti-spoofing prohibitions applied only to domestic robocalls. According to Pai, “Scammers often robocall us from overseas, and when they do, they typically spoof their numbers to try and trick consumers. . . . With these new rules, we’ll close the loopholes that hamstring law enforcement when they try to pursue international scammers and scammers using text messaging.” The FCC will vote on the proposed rules at its August 1 meeting.
As previously covered by InfoBytes, the FCC authorized voice service providers last month to automatically identify and block unwanted robocalls “based on reasonable call analytics, as long as their customers are informed and have the opportunity to opt out of the blocking.”
Federal and state enforcement agencies coordinate on robocall crackdown
On June 25, the FTC announced a major crackdown on illegal robocalls named “Operation Call it Quits,” which includes 94 enforcement actions from around the country brought by the FTC and 25 other federal, state, and local agencies. In addition to actions targeting the actors, the operation also includes a consumer education initiative and promotion of the development of technology-based solutions to block robocalls and fight caller ID spoofing. In addition to the 87 other enforcement actions brought under the initiatives, the FTC announced four new actions, some of which were filed by the DOJ on the FTC’s behalf, and three new settlements targeting robocallers for violations of the FTC Act and the Telemarketing Sales Rule (TSR), among other things. The FTC alleges many of the actors used illegal robocalls to contact financially distressed consumers regarding interest rate reductions, sell fraudulent money-making opportunities, pitch free medical alert systems, or develop leads for solar energy companies. The affected consumers in these actions were often listed on the Do Not Call Registry. The FTC provided a complete list of the 94 actions brought under Operation Call it Quits.
State Attorneys General participating in the initiative are: Alabama, Arizona, Colorado, Florida, Illinois, Indiana, Michigan, Missouri, North Carolina, North Dakota, Ohio, Oregon, Pennsylvania, Texas, and Virginia. Additionally, local agencies include: the Consumer Protection Divisions of the District Attorneys for the Counties of Los Angeles, San Diego, Riverside, and Santa Clara, California; the Florida Department of Agriculture and Consumer Services; and the Los Angeles City Attorney.
FCC approves robocall blocking
On June 6, the FCC approved a Declaratory Ruling and Notice of Proposed Rulemaking to address unwanted robocalls to consumers. The Declaratory Ruling affirms that voice service providers may block unwanted robocalls “based on reasonable call analytics, as long as their customers are informed and have the opportunity to opt out of the blocking.” Among other things, the Declaratory Ruling clarifies that voice providers (i) may offer call blocking tools to their customers as a default, as opposed to an opt-in basis; and (ii) may offer customers tools that would allow customers to block calls from any number that is not listed in the customer’s contact list or other “white lists.” The FCC notes that a “white list” could be based on a customer’s contact list and would be updated as customers add and remove contacts from their phone. According to reports, the FCC also adopted language that was added to the May proposal, which encourages voice providers to devise a system for addressing complaints made by legitimate companies whose calls to customers are being blocked. The final Declaratory Ruling is effective upon its publication on the FCC’s website.
The FCC also adopted a Notice of Proposed Rulemaking (NPRM) (available in the May proposal) requiring voice providers to implement the “STIR/SHAKEN” caller ID authentication framework—an “industry-developed system to authenticate Caller ID and address unlawful spoofing by confirming that a call actually comes from the number indicated in the Caller ID, or at least that the call entered the US network through a particular voice service provider or gateway.” The FCC asserts that once the “STIR/SHAKEN” is implemented, it would “reduce the effectiveness of illegal spoofing and allow bad actors to be identified more easily.” The deadline for comments in response to the NPRM will be established upon publication in the Federal Register.
4th Circuit upholds certification of TCPA class action against satellite provider
On May 30, the U.S. Court of Appeals for the 4th Circuit held that a lower court correctly certified a class of individuals who claimed a satellite provider (defendant) violated the TCPA when its authorized sales representative routinely placed telemarketing calls to numbers on the national Do-Not-Call registry. The plaintiff-appellee alleged that because his number was on the registry, the calls were not only annoying but illegal. He therefore filed a lawsuit against the defendant for violations of the TCPA, and in 2018, the court issued a final judgment upholding a jury’s verdict as to both liability and damages for a class of 18,066 members, tripling the damages to more than $61 million. The defendant appealed the verdict asserting that the class definition was too broad in that included uninjured consumers. Specifically, the defendant argued that the definition should be limited to telephone subscribers or the person who actually received the calls. The defendant further asserted on appeal that it was not responsible for the sales representative’s actions.
On appeal, the 4th Circuit affirmed the lower court’s judgment, stating that it saw “no basis for imposing such a limit,” on the class definition given that “[t]he text of the TCPA notes that it was intended to protect ‘consumers,’ not simply ‘subscribers.’” Concerning the defendant’s argument that it was not responsible for the violations, the appellate court noted that the sales representative’s “entire business model was to make calls like these on behalf of television service providers,” like the defendant, which the defendant knew were being placed on its behalf.