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Financial Services Law Insights and Observations


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  • District Court allows prerecorded-voice-based claims to proceed


    On March 23, the U.S. District Court for the Western District of New York partially granted a defendant debt collector’s motion for summary judgment in an action concerning the alleged use of an automated telephone dialing system (autodialer) to collect unpaid medical debt. Plaintiff claimed the defendant repeatedly called his cell phone using an autodialer and left messages using a prerecorded voice message even after he asked the defendant to stop. These actions, the plaintiff said, violated the FDCPA and the TCPA. In partially granting the defendant’s motion for summary judgment, the court found that the plaintiff’s TCPA claims concerning the alleged use of an autodialer were “no longer viable” following the U.S. Supreme Court’s ruling in Facebook v. Duguid (covered by a Special Alert), which narrowed the definition of autodialer under the TCPA, resulting in the law only covering equipment that generates numbers randomly and sequentially.

    Although both parties agreed that the Facebook decision does not affect plaintiff’s prerecorded-voice-based-claims (which are distinct from claims based on the use of an autodialer), the parties disputed how the defendant came to possess the plaintiff’s cell phone number. The defendant maintained that the hospital that treated the plaintiff provided the cell phone number; however, the plaintiff contended that he did not recall providing his number to the hospital. The court reviewed, among other things, whether the plaintiff expressly consented to receiving calls—prerecorded or not. Under the TCPA, “[p]roviding one’s phone number to an entity constitutes consent for that entity to use the number to collect a debt, so long as ‘such number was provided during the transaction that resulted in the debt [being] owed,’” the court explained, adding that the burden is on the defendant to demonstrate that the plaintiff consented to receiving the calls that allegedly used a prerecorded voice.

    A purported hospital intake form submitted by the defendant that included the plaintiff’s cell phone number did not indicate that “it was filled out by, or includes information provided only by, [the plaintiff],” the court said, also writing that “this document merely demonstrates that whenever the document was typed, [the hospital] had [plaintiff’s] phone number from some source.” This is not sufficient to indicate that the plaintiff consented to be contacted, the court ruled, holding that the defendant was not entitled to summary judgment based on its express consent affirmative defense. As a result, the court allowed the prerecorded-voice-based-claims to proceed to trial.

    Courts TCPA Autodialer Debt Collection FDCPA Consumer Finance

  • District Court preliminarily approves $2.75 million autodialer TCPA settlement


    On January 31, the U.S. District Court for the District of Maryland preliminarily approved a class action settlement in which a cloud computing technology company agreed to pay $2.75 million to resolve alleged violations of the TCPA and the Maryland Telephone Consumer Protection Act. According to the plaintiff, the defendant violated the TCPA by, among other things, placing unsolicited telemarketing calls using an automated dialing system to class members on residential and cell phone numbers. Under the terms of the proposed settlement agreement, the defendant must establish a non-reversionary fund of $2.75 million to go to class members to whom the defendant (or a third party acting on its behalf) made (i) one or more phone calls to their cell phones; (ii) two or more calls while their numbers were on the National Do Not Call Registry; or (iii) one or more calls after the recipients asked the defendant or the third party to stop calling. “Plaintiff has also shown that a class action litigation is superior to other available methods for adjudicating this controversy,” the court wrote. “Plaintiff's counsel estimate that the average settlement payment to each Class Member would be approximately $30.00 to $60.00. Given this, the individual claims of each Class Member would be too small to justify individual lawsuits.” The court also approved proposed attorneys’ fees (not to exceed a third of the total settlement fund), as well as up to $60,000 for plaintiff’s out-of-pocket expenses and a $10,000 service fee award.

    Courts TCPA Autodialer Class Action State Issues Maryland Do Not Call Registry

  • FCC affirms three-call limit but permits oral consent

    Federal Issues

    On December 21, the FCC issued an order on reconsideration and declaratory ruling under the TCPA, affirming a three-call limit and opt-out requirements for exempted residential calls. According to the FCC, the ruling is in response to requests from industry trade groups related to a 2020 order implementing portions of the Pallone-Thune Telephone Robocall Abuse Criminal Enforcement and Deterrence Act (TRACED Act). The ruling upheld the three-call-limit for exempt calls made using automated telephone dialing systems to residential lines but revised the 2020 order’s requirement for “prior express written consent” to allow callers to obtain consent orally or in writing if they wish to make more calls than allowed. The FCC also granted a request to confirm that “prior express consent” for calls made by utility companies to wireless phones applies equally to residential landlines. The FCC noted that “limiting the number of calls that can be made to a particular residential line to three artificial or prerecorded voice calls within any consecutive thirty-day period strikes the appropriate balance between these callers reaching consumers with valuable information and reducing the number of unexpected and unwanted calls consumers currently receive.”

    Federal Issues Agency Rule-Making & Guidance FCC TCPA TRACED Act Robocalls Autodialer

  • 9th Circuit says number generator does not violate TCPA


    On November 16, the U.S. Court of Appeals for the Ninth Circuit upheld a district court’s dismissal of a proposed TCPA class action, holding that in order for technology to meet the definition of an “automatic telephone dialing system” (autodialer), the system must be able to “generate and dial random or sequential telephone numbers under the TCPA’s plain text.” Plaintiff claimed he began receiving marketing texts from the defendant after he provided his phone number to an insurance company on a website. Plaintiff sued alleging violations of the TCPA and asserting that the defendant used a “sequential number generator” to select the order in which to call customers who had provided their phone numbers. This type of number generator qualifies as an autodialer under the TCPA, the plaintiff contended, referring to a footnote in the U.S. Supreme Court’s ruling in Facebook v. Duguid (covered by a Buckley Special Alert), which narrowed the definition of an autodialer under the TCPA and said “an autodialer might use a random number generator to determine the order in which to pick phone numbers from a preproduced list.” Defendant countered, however, that its system is not an autodialer, and “that the TCPA defines an autodialer as one that must generate telephone numbers to dial, not just any number to decide which pre-selected phone numbers to call.”

    The 9th Circuit was unpersuaded by the plaintiff’s argument, calling it an “acontextual reading of a snippet divorced from the context of the footnote and the entire opinion.” The appellate court pointed out that nothing in Facebook suggests that the Supreme Court “intended to define an autodialer to include the generation of any random or sequential number.” The 9th Circuit further explained that “[u]sing a random or sequential number generator to select from a pool of customer-provided phone numbers would not cause the harms contemplated by Congress.”

    Courts Appellate Ninth Circuit TCPA Autodialer Class Action

  • 9th Circuit says telemarketing texts sent to mixed-use cells phones fall under TCPA


    On October 12, a split U.S. Court of Appeals for the Ninth Circuit reversed a district court’s dismissal of a TCPA complaint, disagreeing with the argument that the statute does not cover unwanted text messages sent to businesses. Plaintiffs (who are home improvement contractors) alleged that the defendants used an autodialer to send text messages to sell client leads to plaintiffs' cell phones, including numbers registered on the national do-not-call (DNC) registry. The plaintiffs contented they never provided their numbers to the defendants, nor did they consent to receiving text messages. The defendants countered that the plaintiffs lacked Article III and statutory standing because the TCPA only protects individuals from unwanted calls. The district court agreed, ruling that the plaintiffs lacked statutory standing and dismissed the complaint with prejudice.

    On appeal, the majority disagreed, stating that the plaintiffs did not expressly consent to receiving texts messages from the defendants and that their alleged injuries are particularized. In determining that the plaintiffs had statutory standing under sections 227(b) and (c) of the TCPA, the majority rejected the defendants’ argument that the TCPA only protects individuals from unwanted calls. While the defendants claimed that by operating as home improvement contractors the plaintiffs fall outside of the TCPA’s reach, the majority determined that all of the plaintiffs had standing to sue under § 227(b), “[b]ecause the statutory text includes not only ‘person[s]’ but also ‘entit[ies].’” With respect to the § 227(c) claims, which only apply to “residential” telephone subscribers, the appellate court reviewed whether a cell phone that is used for both business and personal reasons can qualify as a “residential” phone. Relying on the FCC’s view that “a subscriber’s use of a residential phone (including a presumptively residential cell phone) in connection with a homebased business does not necessarily take an otherwise residential subscriber outside the protection of § 227(c),” and “in the absence of FCC guidance on this precise point,” the majority concluded that a mixed-use phone is “presumptively ‘residential’ within the meaning of § 227(c).”

    Writing in a partial dissent, one judge warned that the majority’s opinion “usurps the role of the FCC and creates its own regulatory framework for determining when a cell phone is actually a ‘residential telephone,’ instead of deferring to the FCC’s narrower and more careful test.” The judge added that rather than “deferring to the 2003 TCPA Order which extended the protections of the national DNC registry to wireless telephones only to the extent they were similar to residential telephones, a reasonable interpretation of the TCPA, the majority has leaped over the FCC’s limitations to provide its own, much laxer, regulatory framework and procedures that broadly allow anybody who owns a cell phone to sue telemarketers under the TCPA.” 

    Courts Appellate Ninth Circuit Autodialer TCPA FCC Telemarketing

  • District Court grants final approval in TCPA class action


    On September 1, the U.S. District Court for the Central District of California granted final approval of a class action settlement in a TCPA suit. According to the plaintiffs’ motion for preliminary approval of the class action settlement, the plaintiffs are non-customers who the defendant contacted as part of its efforts to collect on the account of a defendant’s customer and who had not consented to calls from the defendant. The plaintiffs further alleged that the defendant used its autodialer to place those calls and conveyed prerecorded messages to third parties who had not consented to receive such calls, and that through analysis of the defendant’s records, broad notice to class members, and a robust claims verification procedure, it was possible to provide notice to non-customer class members. According to the settlement, the class includes any customer in the U.S. who received automated, non-emergency calls from the defendant on their cell phones from March 2012 through March 2022, and was not a party to an agreement with the defendant. The settlement noted that class members are expected to get between $75 and $250 per person, stating that “this estimated settlement range compares very favorably with other 'wrong number' settlements . . . , and with the $500 penalty for violation of the TCPA.”

    Courts Privacy, Cyber Risk & Data Security Class Action TCPA Autodialer Settlement

  • 3rd Circuit: Student loan servicer’s calling system is not an autodialer under the TCPA


    On June 14, the U.S. Court of Appeals for the Third Circuit affirmed a district court’s ruling in favor of a defendant student loan servicer, holding that it is not enough for telecommunication equipment to be capable of using a random or sequential number generator to dial telephone numbers in order to meet the definition of an automatic telephone dialing system (autodialer). Instead, to constitute a violation of the TCPA, the telecommunication system must actually employ such random- or sequential-number generation when placing the actual call. The plaintiffs filed a putative class action complaint against the defendant alleging it used an autodialer to call class members’ cell phones without their prior express consent. The defendant countered that the TCPA claims fail because its calling system “lacked the capacity to generate random or sequential telephone numbers and then dial those numbers.” As such, it could not be an autodialer. The district court granted summary judgment in favor of the defendant, ruling that the defendant did not use an autodialer to place the calls at issue as the calling system did not have “the necessary present capacity to store or produce telephone numbers using a random or sequential number generator.”

    On appeal, the 3rd Circuit disagreed with the district court’s finding that the defendant’s telecommunication system was not an autodialer, noting that the district court used too narrow a definition of the term “equipment” and holding that “an [autodialer] may include several devices that when combined have the capacity to store or produce telephone numbers using a random or sequential number generator and to dial those numbers.” Thus, the 3rd Circuit held that the district court erred in accepting defendant’s argument that the defendant’s telephone system was not an autodialer because the defendant’s SQL Server (which was capable of generating random and sequential numbers) was independent of the defendant’s dialing system.

    Nonetheless, the 3rd Circuit affirmed the district court’s ruling on the basis that it did not matter whether the defendant’s calling system could be classified as an autodialer under the TCPA because the phone numbers were drawn from a contact list stored on the defendant’s SQL Server and not randomly generated. As such, the appellate court held that the plaintiffs’ claims fail because the defendant did not actually use random- or sequential-number generation when it placed the specific calls in question.

    While agreeing with the decision to affirm, one of the judges argued that the majority focused on the wrong question. “In my view, the fundamental question is: what is an [autodialer] under Section 227(a)(1)? I would hold that a dialing system must actually use a random or sequential number generator to store or produce numbers in order to qualify as an [autodialer] under § 227(a)(1),” the concurring judge wrote. “Because [defendant’s] dialing system did not do so, it is not an [autodialer], and [defendant] is entitled to summary judgment.”

    Courts Appellate Third Circuit TCPA Robocalls Class Action Autodialer

  • 9th Circuit affirms lower court’s decision in TCPA suit


    On June 10, the U.S. Court of Appeals for the Ninth Circuit affirmed a lower court’s ruling on summary judgment that an individual’s text messages sent to a financial institution provided the express consent required under the TCPA to be contacted via an autodialer system. According to the opinion, the plaintiff, who was not a customer of the defendant, sent 11 text messages to the defendant’s short code number. Ten of the messages were unrelated to the defendant’s business, and the plaintiff’s messages were replied to with an automated message providing instructions about how to stop receiving text messages and how to contact the defendant. The remaining text message from the plaintiff to the defendant consisted of the word “STOP” to which the defendant replied with the response that plaintiff is not subscribed and will not receive alerts. These reply texts were the only text messages the defendant sent to the plaintiff’s mobile phone. Based on these facts, the plaintiff filed suit in the District of Connecticut, alleging that the defendant violated the TCPA by replying to his text messages using an automatic call-generating capability without obtaining the plaintiff’s consent. The defendant filed a motion to dismiss on procedural grounds, and plaintiff voluntarily withdrew the suit and subsequently sued in the District of Hawaii under similar facts and claims. The court granted the defendant’s motion for summary judgment, ruling that each of the texts sent to the defendant by the plaintiff constituted prior express consent to receive reply texts. The court also awarded attorneys’ fees to defendant as “costs” under Federal Rule of Civil Procedure 41(d).

    The 9th Circuit agreed with the district court’s determination that the plaintiff “expressly consented to receive reply text messages.” With respect to the awarding of attorney’s fees, the appellate court recognized a circuit split on the issue of whether Rule 41(d) costs included attorney’s fees, and held that, (i) “costs” under Rule 41(d) does not include attorney’s fees as a matter of right and (ii) for purposes of the TCPA, “cost” does not include attorney’s fees because “it is undisputed that the TCPA does not provide for the award of attorney’s fees to the prevailing party.”

    Courts Appellate Ninth Circuit TCPA Autodialer

  • District Court certifies TCPA class action against debt collector


    On May 31, the U.S. District Court for the Western District of Washington granted a plaintiff’s motion for class certification in an action alleging a defendant debt collector placed unsolicited calls to borrowers’ cell phones when attempting to collect federal student loan debt. The plaintiff contended that the defendant violated the TCPA by calling her up to seven times a day without her consent using an automatic telephone dialing system (autodialer) and prerecorded calls or artificial voice calls. According to the plaintiff, in 2019, the defendant obtained her cell phone number through skip-tracing services performed by one of its vendors. The defendant allegedly had access to a call recording from a 2017 conversation between a Department of Education contractor and the plaintiff during which the plaintiff provided her phone number. The defendant, however, allegedly was not aware of the recording nor did it seek to access the file until after the plaintiff filed suit. The defendant also supposedly received a file from the contractor containing the plaintiff’s number but not until after it already acquired the number from the skip-tracing vendor. The defendant denied that it used an autodialer or made prerecorded calls or artificial voice calls. The defendant also claimed that “because it had constructive access to the recording of plaintiff’s 2017 phone conversation with [the contractor] and received the [] file with plaintiff’s number, it had plaintiff’s prior express consent to receiving calls.”

    The court certified the class, ruling that the question of whether access to the files in question was sufficient to confer consent under the TCPA is “a closer legal question, but not one that overcomes predominance at this stage.” According to the court, “the issue of whether defendant can show that its right of access to [the contractor’s] files constituted prior express consent is one that is currently capable of classwide resolution. Accordingly, while the affirmative defenses defendant presses will no doubt be important to the outcome of the litigation, they presently do not undercut the central common issues in this case.”

    Courts Class Action TCPA Debt Collection Autodialer Consumer Finance

  • 9th Circuit: Defendant is liable for third-party calls


    Recently, the U.S. Court of Appeals for the Ninth Circuit affirmed in part and reversed in part a district court’s ruling that a defendant knew its third-party contractor was making pre-recorded calls to prospective consumers without consumers’ consent in violation of the TCPA. As previously covered by InfoBytes, in December 2017, 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 suit alleged that the defendant hired a company to generate leads and initiate telephone calls to prospective consumers for cruise packages. The U.S. District Court for the Southern District of California denied dismissal of the TCPA action for lack of subject matter jurisdiction, concluding that the Court’s decision in Barr v. American Association of Political Consultants Inc., did not invalidate the TCPA in its entirety from 2015 until July 2020. In Barr the U.S. Supreme Court held that the TCPA’s government-debt exception is an unconstitutional content-based speech restriction and severed the provision from the remainder of the statute. (Covered previously by InfoBytes here.)

    On the appeal, the issue was whether the defendant is liable under the TCPA for prerecorded voice calls made by the third-party contractor to the plaintiffs, who had not given prior express consent to be called. The 9th Circuit agreed with the district court’s decision in granting summary judgment for the defendant where the TCPA did not require the defendant to ensure that the third-party contractor had prior express consent for each call that it made to the defendant’s customers, nor did the defendant have actual authority over the third-party contractor. However, the 9th Circuit concluded that the defendant may be vicariously liable for the third-party contractor’s calls because it might have ratified them. The appellate court noted that the defendant knew that it received 2.1 million warm-transferred calls from the company between January 2017 and June 2018, but only 80,081 of those transfers were from individuals who had allegedly consented to receiving the calls. The defendant also had knowledge that there was a slew of mismatched caller data, and that the third-party contractor placed calls using prerecorded voices. The appellate court wrote that, “[t]hese facts, in combination with the evidence of widespread TCPA violations in the cruise industry, would support a finding that [the defendant] knew facts that should have led it to investigate [the company’s] work for TCPA violations.”

    Courts TCPA Class Action Autodialer U.S. Supreme Court Appellate Ninth Circuit Third-Party