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On May 26, the U.S. Court of Appeals for the Fifth Circuit held that receiving a single unsolicited text message is enough to establish standing under the TCPA. The plaintiff alleged he received an unsolicited text message on his cell phone from the defendant after he had previously revoked consent and reached a settlement with the defendant to resolve a dispute over two other unsolicited text messages. The plaintiff filed a putative class action alleging that the defendant negligently, willfully, and/or knowingly sent text messages using an automatic telephone dialing system without first receiving consent, and that the unsolicited message was “a nuisance and invasion of privacy.” The district court dismissed the suit for lack of standing, ruling that a “single unwelcome text message will not always involve an intrusion into the privacy of the home in the same way that a voice call to a residential line necessarily does.”
On appeal, the 5th Circuit disagreed, concluding that the nuisance arising from the single text message was a sufficiently concrete injury and enough to establish standing. “In enacting the TCPA, Congress found that ‘unrestricted telemarketing can be an intrusive invasion of privacy’ and a ‘nuisance,’” the appellate court wrote, commenting that the TCPA “cannot be read to regulate unsolicited telemarketing only when it affects the home.” In addition, the appellate court found that the plaintiff separately alleged personal injuries that separated him from the public at large by arguing that the “aggravating and annoying” robodialed text message “interfered with [his] rights and interests in his cellular telephone.” In reversing the district court’s ruling, the 5th Circuit disregarded precedent set by the 11th Circuit in Salcedo v. Hanna (covered by InfoBytes here). Calling the other appellate court’s decision “mistaken,” the 5th Circuit contended the other appellate court took too narrow a view of the theory of harm by concluding that there must be some actual damage before an action can be maintained. Moreover, the 5th Circuit stated the 11th Circuit misunderstood the U.S. Supreme Court’s decision in Spokeo, Inc. v. Robins, writing “Salcedo’s focus on the substantiality of an alleged harm threatens to make this already difficult area of law even more unmanageable. We therefore reject it.”
On April 1, the United States Supreme Court issued its long-awaited opinion in Facebook Inc. v. Duguid. The 9-0 decision narrows the definition of what type of equipment qualifies as an autodialer under the Telephone Consumer Protection Act (TCPA), a federal statute that generally prohibits calls or texts placed by autodialers without the prior express consent of the called party.
The TCPA defines an autodialer as equipment with the capacity both “to store or produce telephone numbers to be called, using a random or sequential number generator,” and to dial those numbers. The question before the Supreme Court in Facebook was whether that definition encompasses equipment that can “store” and dial telephone numbers, even if the device does not use “a random or sequential number generator.” The Court held it does not. Rather, to qualify as an “automatic telephone dialing system,” the Court held that a device must have the capacity either to store or produce a telephone number using a random or sequential generator. In other words, the modifier “using a random or sequential number generator” applied to both terms “store” and “produce.”
In 2014, Noah Duguid received text messages from Facebook alerting him that someone attempted to access his Facebook account. However, Duguid alleged that he never provided Facebook his phone number and did not have a Facebook account.
Duguid was unable to stop the notifications and eventually brought a putative class action against Facebook, alleging that Facebook violated the TCPA by maintaining technology that stored phone numbers, and sent automated texts to those numbers each time the associated account was accessed by an unrecognized device or web browser.
The U.S. District Court for the Northern District of California dismissed Duguid’s amended complaint with prejudice, but the Ninth Circuit reversed, finding Duguid stated a claim under the TCPA by alleging Facebook’s notification system automatically dialed stored numbers. The Ninth Circuit held that an autodialer as defined under the TCPA, need not have the capacity to use a random or sequential number generator, but that it need only have the capacity to store number to be called and to dial those numbers automatically.
The Supreme Court reversed the Ninth Circuit, holding that to “qualify as an ‘automatic telephone dialing system,’ a device must have the capacity either to store a telephone number using a random or sequential generator or to produce a telephone number using a random or sequential number generator.”
In reaching this decision, the Court explained that “expanding the definition of an autodialer to encompass any equipment that merely stores and dials telephone numbers would take a chainsaw” to the nuanced problems Congress sought to address with the TCPA. It further explained that Duguid’s interpretation of an autodialer—the one adopted by the Ninth Circuit—“would capture virtually all modern cell phones, which have the capacity to store telephone numbers to be called” and “dial such numbers.” “TCPA’s liability provisions, then, could affect ordinary cell phone owners in the course of commonplace usage, such as speed dialing or sending automated text message responses.”
And while the Court acknowledged that interpreting the statute in the manner it did may limit its application, the Court reasoned that it “cannot rewrite the TCPA to update it for modern technology,” and that its holding reflected the best reading of the statute.
If you have any questions regarding the Supreme Court’s decision regarding the TCPA, please visit our Class Actions practice page, or contact a Buckley attorney with whom you have worked in the past.
On February 25, the U.S. District Court for the Northern District of West Virginia ruled that a satellite TV company cannot avoid class claims that it made unwanted calls to stored numbers using an automatic telephone dialing system (autodialer). The company filed a motion to dismiss plaintiff’s claims that it violated Section 227 of the TCPA when it made illegal automated and prerecorded telemarketing calls to her cellphone using an autodialer. The company argued, among other things, that the “statutory definition of an [autodialer] covers only equipment that can generate numbers randomly or sequentially,” and that “nothing in the complaint plausibly alleges that any of the calls were sent using that type of equipment.” According to the company, list-based dialing cannot be subject to liability under the TCPA. The court disagreed, stating that the TCPA makes it clear that it covers autodialers using stored lists. The court referenced a 6th Circuit decision in Allan v. Pennsylvania Higher Education Assistance Agency, which determined that “the plain text of [§ 227], read in its entirety, makes clear that devices that dial from a stored list of numbers are subject to the autodialer ban.” (Covered by InfoBytes here.) The court also referenced decisions issued by the 2nd, 6th, and 9th Circuits, which all said that the TCPA’s definition of an autodialer includes “autodialers which dial from a stored list of numbers.” However, these appellate decisions conflict with holdings issued by the 3rd, 7th, and 11th Circuits, which have concluded that autodialers require the use of randomly or sequentially generated phone numbers, consistent with the D.C. Circuit’s holding that struck down the FCC’s definition of autodialer in ACA International v. FCC (covered by a Buckley Special Alert). Currently, the specific definition of an autodialer is a question pending before the U.S. Supreme Court in Duguid v. Facebook, Inc. (covered by InfoBytes here). The court further ruled that three out-of-state consumers should be removed from the case as they failed to meet the threshold for personal jurisdiction, and also reiterated that the case could not be arbitrated as the company’s arbitration clause was “unconscionable.”
On January 31, the U.S. District Court of the Central District of California denied dismissal of a putative class action alleging that a consumer lender violated the TCPA, concluding that the U.S. Supreme Court’s decision in Barr v. American Association of Political Consultants Inc. (AAPC) (covered by InfoBytes here) does not bar the claims. According to the order, a consumer filed the putative class action alleging that the lender violated the TCPA by placing telemarketing calls to residential numbers listed on the National Do Not Call Registry. The lender moved to dismiss the action, arguing that the Court’s decision in AAPC (holding that the government-debt exception in Section 227(b)(1)(A)(iii) of the TCPA is an unconstitutional content-based speech restriction, and severing the provision from the statute), invalidated the entire TCPA from the time the offending exception was added in 2015 to July 2020 when the Court severed the provision from the statute. The district court disagreed, concluding that the Court’s decision in AAPC was limited to the specific provision for robocalls to cell phones in Section 227(b) and did not extend to Section 227(c)’s do not call provisions. Additionally, the court concluded that the “Court in AAPC did not conclude that the entire TCPA was unconstitutional.” Thus, Section 227(c) “remained ‘fully operative as law’” from 2015 through July 2020.
Earlier on January 28, the U.S. District Court for the Southern District of California denied dismissal of a TCPA action for lack of subject matter jurisdiction, concluding that the Court’s decision in Barr, did not invalidate the TCPA in its entirety from 2015 until July 2020. According to the order, consumers filed a consolidated class action against a cruise line, alleging violations of, among other things, the TCPA for marketing calls made to class members’ cell phones using an automatic telephone dialing system between November 2016 and December 2017. The cruise line moved to dismiss the action, arguing that the Court’s decision in AAPC (holding that the government-debt exception in Section 227(b)(1)(A)(iii) of the TCPA is unconstitutional “because it favored debt-collection speech over political or other speech in violation of the First Amendment,” and severing the provision from the statute), invalidated the entire TCPA from when the offending exception was enacted in 2015, until the Court severed the amendment in July 2020. Disagreeing with other district courts (covered by InfoBytes here and here), the district court rejected the cruise line’s argument, concluding that the Court did not intend to have TCPA actions “cavalierly dismissed by a district court.” The district court relied on a statement made by Justice Kavanaugh in the Court’s plurality opinion, stating “our decision today does not negate the liability of parties who made robocalls covered by the robocall restriction.” The district court rejected the cruise line’s argument that Kavanaugh’s statement is dicta, because, among the fragmented decisions, seven justices “agree that the 2015 amendment should be severed and the liability of parties making robocalls who were not collecting a government debt is not negated.” Thus, because the cruise line was not attempting to collect a government debt, the district court denied the motion to dismiss.
On December 4, the U.S. Court of Appeals for the Eleventh Circuit affirmed summary judgment in a TCPA action in favor of a student loan servicer and an affiliate responsible for performing default aversion services (collectively, “defendants”), concluding that the plaintiff re-consented to being contacted on his cell phone after filling out a form on the servicer’s website. According to the opinion, following a class action settlement in 2010—in which members of the class (including the plaintiff) who did not “submit revocation request forms were ‘deemed to have provided prior express consent’” to be contacted by the defendants—the plaintiff later claimed to have revoked consent to being contacted through the use of an automated telephone dialing system (autodialer) during a call with the servicer. While on the call, the plaintiff filled out an online automatic debit agreement to make payments on his delinquent loan. The agreement included a demographic form with an option for the plaintiff to update his contact information, which included an optional cell phone number field and a disclosure that granted consent to being contacted on his cell phone using an autodialer. The defendants began contacting the plaintiff on his cell phone after he fell behind on his loan payments, and the plaintiff sued, alleging the defendants violated the TCPA by placing calls using an autodialer without obtaining his prior express consent. The district court granted the servicer’s motion for summary judgment, ruling that the plaintiff “expressly consented” to receiving the calls and could not “unilaterally revoke” consent “given as consideration in a valid bargained-for-contract,” and that the plaintiff nonetheless “reconsented when he submitted the demographic form.” The plaintiff appealed, arguing, among other things, that he did not re-consent to being contacted because the form was submitted directly after his oral revocation to the servicer.
On appeal, the 11th Circuit agreed with the district court, holding that while it was true that the plaintiff “filled out the demographic form just moments after he orally revoked his prior consent, [the plaintiff] cites no authority that this temporal proximity should require this Court to consider the separate interactions (of revoking consent and later reconsenting) as one lumped-together interaction.” As such, the appellate court disagreed with the plaintiff’s argument “that the revocation of consent standard should stretch to apply to [his] later reconsent to [the servicer].”
On October 23, a coalition of 38 state attorneys general filed an amici curiae brief with the U.S. Supreme Court, urging the court to accept the broad definition of an autodialer under the TCPA, which would cover all devices with the capacity to automatically dial numbers that are stored in a list. As previously covered by InfoBytes, the Court agreed to review the U.S. Court of Appeals for the Ninth Circuit’s decision in Duguid v. Facebook, Inc. (covered by InfoBytes here), which concluded the plaintiff plausibly alleged the social media company’s text message system fell within the definition of autodialer under the TCPA. The 9th Circuit applied the definition from their 2018 decision in Marks v. Crunch San Diego, LLC (covered by InfoBytes here), which broadened the definition of an autodialer to cover all devices with the capacity to automatically dial numbers that are stored in a list.
The attorneys general argue that the 9th Circuit’s definition of autodialer is “the only reading of the autodialer definition that is consistent with the ordinary meaning of the definition’s two key verbs: ‘store’ and ‘produce.’” Moreover, they assert the broad definition is within the original 1991 meaning of the TCPA when it was enacted by Congress as a way to address the gaps state consumer protection laws may have in preventing interstate telephone fraud and abuse. According to the attorneys general, every state statute that defined an autodialer in 1991, “understood that term to reach devices with the capacity to store and dial numbers from a predetermined list, regardless of whether a random or sequential number generator was used.” Therefore, when Congress enacted the TCPA with the intention to “supplement—not to shrink—preexisting state laws,” it would follow that Congress would not intentionally adopt a narrower definition than existed at the time among the states.
On July 29, the U.S. Court of Appeals for the 6th Circuit affirmed summary judgment in favor of the plaintiffs in a TCPA action, holding that a device used by a student loan servicer that only dials from a stored list of numbers qualifies as an automatic telephone dialing system (“autodialer”). According to the opinion, a borrower and co-signer sued the student loan servicer alleging the servicer violated the TCPA by using an autodialer to place calls to their cell phones without consent. The district court granted summary judgment in favor of the plaintiffs and awarded over $176,000 in damages. On appeal, the servicer argued that the equipment used did not qualify as an autodialer under the TCPA’s definition, because the calls are placed from a stored list of numbers and are not “randomly or sequentially” generated. The 6th Circuit rejected this argument, joining the 2nd and 9th Circuits, holding that under the TCPA, an autodialer is defined as “equipment which has the capacity—(A) to store [telephone numbers to be called]; or produce telephone numbers to be called, using a random or sequential number generator; and (B) to dial such numbers.” This decision is in conflict with holdings by the 3rd, 7th, and 11th Circuits, which have held that autodialers require the use of randomly or sequentially generated phone numbers, consistent with the D.C. Circuit’s holding that struck down the FCC’s definition of an autodialer in ACA International v. FCC (covered by a Buckley Special Alert).
As previously covered by InfoBytes, the U.S. Supreme Court recently agreed to address the definition of an autodialer under the TCPA, which will resolve the split among the circuits.
On July 9, the U.S. Supreme Court agreed to review the following cases:
- FHFA Constitutionality. The Court agreed to review the U.S. Court of Appeals for the Fifth Circuit’s en banc decision in Collins. v. Mnuchin (covered by InfoBytes here), which concluded that the FHFA’s structure—which provides the director with “for cause” removal protection—violates the Constitution’s separation of powers requirements. As previously covered by a Buckley Special Alert last month, the Court held that a similar clause in the Dodd-Frank Act that requires cause to remove the director of the CFPB violates the constitutional separation of powers. The Court further held that the removal provision could—and should—be severed from the statute establishing the CFPB, rather than invalidating the entire statute.
- FTC Restitution Authority. The Court granted review in two cases: (i) the 9th Circuit’s decision in FTC V. AMG Capital Management (covered by InfoBytes here), which upheld a $1.3 billion judgment against the petitioners for allegedly operating a deceptive payday lending scheme and concluded that a district court may grant any ancillary relief under the FTC Act, including restitution; and (ii) the 7th Circuit’s FTC v. Credit Bureau Center (covered by InfoBytes here), which held that Section 13(b) of the FTC Act does not give the FTC power to order restitution. The Court consolidated the two cases and will decide whether the FTC can demand equitable monetary relief in civil enforcement actions under Section 13(b) of the FTC Act.
- TCPA Autodialer Definition. The Court agreed to review the U.S. Court of Appeals for the Ninth Circuit’s decision in Duguid v. Facebook, Inc. (covered by InfoBytes here), which concluded the plaintiff plausibly alleged the social media company’s text message system fell within the definition of autodialer under the TCPA. The 9th Circuit applied the definition from their 2018 decision in Marks v. Crunch San Diego, LLC (covered by InfoBytes here), which broadened the definition of an autodialer to cover all devices with the capacity to automatically dial numbers that are stored in a list. The 2nd Circuit has since agreed with the 9th Circuit’s holding in Marks. However, these two opinions conflict with holdings by the 3rd, 7th, and 11th Circuits, which have held that autodialers require the use of randomly or sequentially generated phone numbers, consistent with the D.C. Circuit’s holding that struck down the FCC’s definition of an autodialer in ACA International v. FCC (covered by a Buckley Special Alert).
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.
On July 6, the U.S. Supreme Court held in Barr v. American Association of Political Consultants Inc. that the TCPA’s government-debt exception is an unconstitutional content-based speech restriction and severed the provision from the remainder of the statute. As previously covered by InfoBytes, several political consultant groups (plaintiffs) argued that the TCPA’s statutory exemption enacted by Congress as a means of allowing automated calls to be placed to individuals’ cell phones “that relate to the collection of debts owed to or guaranteed by the federal government” is “facially unconstitutional under the Free Speech Clause” of the First Amendment. The plaintiffs argued that the debt-collection exemption to the automated call ban contravenes their free speech rights. Moreover, the plaintiffs claimed that “the free speech infirmity of the debt-collection exemption is not severable from the automated call ban and renders the entire ban unconstitutional.” The FCC, however, argued that the applicability of the exemption depended on the relationship between the government and the debtor and not on the content. The district court awarded summary judgment in favor of the FCC, which the U.S. Court of Appeals for the Fourth Circuit vacated, concluding the exemption violated the First Amendment’s Free Speech Clause.
In a plurality opinion, the Supreme Court agreed with the 4th Circuit. The Court noted that “a law is content-based if ‘a regulation of speech ‘on its face’ draws distinctions based on the message a speaker conveys’”; and a law that allows for robocalls asking for payment of government debt but does not allow robocalls for political donations, “is about as content-based as it gets.” The Court agreed with the government that the content-based restriction failed to satisfy strict scrutiny, as the government could not sufficiently justify the difference “between government-debt collection speech and other categories of robocall speech.” As for remedy, the Court applied “traditional severability principles,” with seven Justices concluding that the entire TCPA should not be invalidated but that the government-debt exception should be severed from the statute. The Court noted that its cases have “developed a strong presumption of severability,” and its “power and preference to partially invalidate a statute in that fashion has been firmly established since Marbury v. Madison.” Moreover, because the government-debt exception is “relatively narrow exception” to the TCPA’s broad robocall restriction, the Court concluded that severing the exception would “not raise any other constitutional problems.”