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Debt collector settles for $9 million over allegedly illegal calling practices
On October 30, a third-party debt collector and its affiliates (defendants) entered into a stipulated final judgment in the Superior Court of California to settle a consumer protection lawsuit brought by the state of California over allegedly illegal debt collection calling practices. According to a press release issued by the Los Angeles County District Attorney, the defendants allegedly violated California’s Rosenthal Fair Debt Collection Practices Act, the FDCPA, and the TCPA by calling consumers with “excessive frequency,” continuing to call consumers even after being advised that they had reached the wrong number, and using a “predictive dialer” to place calls to consumers’ cell phones without their consent. By entering into the judgment, the defendants—who have not admitted to the allegations in the complaint—will, among other things, (i) pay $1 million in monetary relief; (ii) pay an $8 million civil penalty; (iii) maintain records of calls and complaints; (iv) conduct compliance training for employees responsible for outbound debt collection calls; and (v) conduct an annual third-party audit to ensure compliance with the settlement.
District Court rejects motion to dismiss robocall claims, says predictive dialer is autodialer
On October 30, the U.S. District Court for the Western District of Wisconsin denied a company’s motion to dismiss allegations that it violated the TCPA when it used a predictive dialer to try to collect a debt from the plaintiff. According to the opinion, the plaintiff alleged the company called him repeatedly without permission in an attempt to collect a debt using a predictive dialer. The company moved to dismiss because the plaintiff did not allege that the company used an autodialer with the ability to dial random or sequential phone numbers, which the company argued was required by the TCPA. The court found that a predictive dialer is an autodialer under the TCPA even if it does not generate random or sequential numbers. This conclusion was based on a 2003 FCC ruling, which stated that predictive dialers are autodialers “even if the device does not dial random or sequentially generated numbers.” The court further noted that the decision reached by the D.C. Circuit in ACA International v. FCC—which set aside the FCC’s 2015 interpretation of an autodialer as unreasonably expansive—did not invalidate the FCC’s 2003 order. (See previous Buckley Sandler Special Alert on ACA International here.) Based on this analysis, the court concluded that the plaintiff had established the three elements necessary to allege a TCPA violation.
9th Circuit denies petition for en banc rehearing of TCPA action against gym
On October 30, the U.S. Court of Appeals for the 9th Circuit denied a California gym’s petition for a rehearing en banc of the court’s September decision reviving a TCPA putative class action. As previously covered by InfoBytes, the appeals court vacated a district court order granting summary judgment in favor of the gym, concluding that there was a genuine issue of material fact as to whether the text system used by the gym—which stores numbers and dials them automatically to send the messages—qualified as an “autodialer” under the TCPA. Notably, in vacating the summary judgment order, the 9th Circuit performed its own review of the statutory definition of an autodialer in the TCPA, because the recent D.C. Circuit opinion in ACA International v. FCC (covered by a Buckley Sandler Special Alert) set aside the FCC’s definition. Through this review, the appeals court concluded that the TCPA defined an autodialer broadly as “equipment which has the capacity—(i) to store numbers to be called, or (ii) to produce numbers to be called, using a random or sequential number generator—and to dial such numbers automatically (even if the system must be turned on or triggered by a person).”
FCC seeks comments on interpretation of TCPA definition of autodialer following 9th Circuit decision
On October 3, the FCC’s Consumer and Governmental Affairs Bureau released a notice seeking comment on the interpretation of the TCPA in light of a recent 9th Circuit decision, which broadened the definition of an automatic telephone dialing system (autodialer) under the TCPA. As previously covered in InfoBytes, on September 20, the 9th Circuit held that the TCPA’s definition of an autodialer includes equipment with the capacity to store numbers to be called and to automatically dial such numbers whether or not those numbers have been generated by a random or sequential number generator. The court, however, declared the statutory definition of an autodialer to be “ambiguous on its face” and, thus, it looked to the context and structure of the TCPA in reaching its conclusion regarding the scope of the definition.
The FCC issued the notice “to supplement the record developed in response” to a prior notice issued last May, which sought comments on the interpretation of the TCPA following the D.C. Circuit’s decision in ACA International v. FCC. (See previous InfoBytes coverage on the May 2018 notice here.) Specifically, the FCC seeks comments on the following issues relevant to developing an interpretation of the TCPA’s definition of autodialer: (i) To the extent the definition of an autodialer is ambiguous, how should the FCC exercise its discretion to interpret such ambiguities? (ii) Does the 9th Circuit’s interpretation mean that any device with the capacity to dial stored numbers automatically qualifies as an autodialer? (iii) What devices have the capacity to store numbers, and do smartphones have such capacity? and (iv) What devices that have the capacity to dial stored numbers also have the capacity to automatically dial such numbers and do smartphones have such capacity?
Comments are due October 17 with reply comments due October 24.
Court denies motion to certify classes in TCPA action against national mortgage servicer
On September 27, the U.S. District Court for the Northern District of Illinois denied certification of two proposed classes in a TCPA action against a national mortgage servicer, concluding that plaintiff had failed to meet his burden of demonstrating, under FRCP 23(b)(3), that common issues of fact or law predominated over any questions affecting only individual members. According to the opinion, plaintiff alleged the mortgage servicer contacted consumer phones, without express consent, using an automatic telephone dialing system (autodialer) in violation of the TCPA. One of the four named plaintiffs sought to represent two classes of consumers who were contacted by the servicer two or more times between October 2010 and November 2014: (i) those who received calls or texts and told the servicer to cease contact; and (ii) those who received calls and told the servicer it had called the wrong number.
The court found the issue of consent was decisive in this action, relying on authority holding that individual issues of consent predominate where a defendant “provides specific evidence that a significant number of putative class members consented to contact . . . .” The opinion notes that mortgage servicer’s policies contained a process for flagging accounts that withdrew consent to be contacted and if an account was flagged, the autodialer would not initiate calls to that number. The mortgage servicer argued that many consumers gave permission, retracted it, and gave the permission to be contacted again. The court found the servicer had “put forth specific evidence establishing that a significant percentage of the putative class consented to receiving calls.” The court reviewed expert reports by both parties and ultimately concluded that the method for determining class members suggested by the plaintiff and the plaintiff’s expert did not “adequately identify a common way to address the individual variations of consent and revocation that occurred in this case.” The court determined that it would need to conduct an individualized consent inquiry for accountholders in each putative class.
District court approves an $8.8 million TCPA class action settlement with an inmate telephone company
On September 24, the U.S. District Court for the Central District of California approved an $8.8 million class action settlement between consumers and an inmate telephone company. The settlement resolves allegations that the company violated the TCPA by playing a separate prerecorded “Notification Call” directing the receiving party to provide billing information for the inmate’s collect calls without obtaining the receiving party’s prior consent or providing the receiving party with an opt out mechanism for future calls. Under the terms of the settlement, the company will pay almost $175 to each class member and will change its practices to include both an interactive-voice/key activated opt-out mechanism and a toll-free number that the receiving party may use to opt-out of all future notification calls.
Court sends class action TCPA suit against global ride-sharing company to arbitration
On September 20, the U.S. District Court for the Northern District of Illinois granted a global ride-sharing company’s motion for summary judgment, ruling that a user had consented to arbitrate any disputes when he signed up for an account with the company. Specifically, the named plaintiff of the proposed class action brought the suit against the company for allegedly violating the TCPA when he received a single text message he claims he did not consent to after signing up for the company’s app, and that he claimed he received after he deleted the app. The company moved to compel arbitration, which initially was denied in 2017, when the court held that the company had not shown enough evidence that users were aware of the arbitration agreement and ordered the parties to engage in expedited discovery limited to the arbitration agreement formation. However, following both parties’ cross-motions for summary judgment, the court determined that the plaintiff “failed to raise a genuine dispute as to whether he entered into an enforceable agreement to arbitrate,” and that the app presented a statement that creating an account meant that users agreed to the terms of service and privacy policy, which was presented to users “in an easy-to-read font on an uncluttered screen” and required no scrolling.
According to the court, “the manner in which this statement and the Terms of Service were presented placed a reasonable person on notice that there were terms incorporated with creating an . . . account and that, by creating an account, he or she was agreeing to those terms.” Concerning the plaintiff’s argument that his TCPA claim does not fall under the arbitration agreement’s purview, the court stated that the question of what falls within the scope of the arbitration agreement is itself subject to arbitration, and also stated that the Terms of Service specifically permitted the texting of promotional offers to customers, arguably requiring the TCPA claim to be arbitrated. The court dismissed without prejudice the plaintiff’s claims against the company and stayed the case until arbitration proceedings are resolved.
District Court holds hotel calling system is not an autodialer under TCPA
On September 24, the U.S. District Court for the Middle District of Florida held that a hotel calling system, which required human intervention before a call was placed, does not qualify as an automatic telephone dialing system (autodialer) under the TCPA. The plaintiff filed the putative class action complaint alleging the hotel chain used an autodialer to call her cell phone without her consent. The hotel moved for summary judgment, arguing that the system did not qualify as an autodialer under the TCPA because it required a hotel agent to click “Make Call” before the system dialed the number. The court agreed, concluding that the defining characteristic of an autodialer is “the capacity to dial numbers without human intervention,” which the court noted remains unchanged even in light of the D.C. Circuit decision in ACA International v. FCC (covered by a Buckley Special Alert here). Because the calling system would not initiate an outbound call without an agent clicking the “Make Call” button, the court determined the plaintiff’s TCPA claim failed and granted summary judgment for the hotel chain.
9th Circuit ruling broadens the definition of automatic telephone dialing system under TCPA
On September 20, the U.S. Court of Appeals for the 9th Circuit vacated the district court’s order granting summary judgment in a TCPA action, in light of the recent D.C. Circuit opinion in ACA International v. FCC (covered by a Buckley Sandler Special Alert). The case arises from a plaintiff’s allegations that a California gym violated the TCPA by sending three text messages to the plaintiff’s cell phone. In October 2014, the district court granted summary judgment for the gym, holding that the automatic text messaging system used by the gym was not an “automatic telephone dialing system” (autodialer) under the TCPA because it lacked the capacity “to store or produce telephone numbers to be called, using a random or sequential number generator.” In 2016, the 9th Circuit stayed the appeal of the district court’s ruling pending the ACA International decision, which was issued in March of this year. In ACA International, the D.C. Circuit struck down the FCC’s definition of an autodialer, reasoning that the FCC’s definition “unreasonably, and impermissibly” included all smartphones while inadequately describing the functions that made a device an autodialer.
Because the ACA International decision set aside the FCC’s definition, the 9th Circuit performed its own review of the statutory definition of an autodialer in the TCPA. Through this review, the court concluded that the TCPA defined an autodialer as “equipment which has the capacity—(i) to store numbers to be called, or (ii) to produce numbers to be called, using a random or sequential number generator—and to dial such numbers automatically (even if the system must be turned on or triggered by a person).” Because the text system used by the gym stores numbers and dials them automatically to send the messages to the stored list of phone numbers, the 9th Circuit held there is a genuine issue of material fact as to whether the system qualified as an “autodialer” and remanded the case to district court for further proceedings.
Court approves $8.5 million class action settlement with global money service for alleged TCPA violations
On August 31, the U.S. District Court for the Northern District of Illinois approved an $8.5 million class action settlement resolving allegations that a global money service violated the Telephone Consumer Protection Act (TCPA) by sending unsolicited text messages to class members. While the court approved the full settlement amount, it only awarded 5 percent of the fund to the class counsel, as opposed to the 35 percent requested, noting counsel’s “disquieting conduct” related to a class objector and lack of billing records supporting the “substantial work” counsel claimed to have performed on the case (reportedly more than 2.5 times the hours spent by defense counsel). Of the $8.5 million required to be paid by the company, the court modified the agreement to provide class member claims over $7.5 million. The court determined that the settlement “provides fair actual cash value to the class,” as the company had potential defenses to the pending litigation; there was legal uncertainty as to whether the telecommunications equipment used by the company was actually an “automatic telephone dialing system” under the TCPA; and the inherent expense in litigation and proceeding to trial for the class.