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Court rejects mortgage company’s motions to dismiss in two separate TCPA actions
On August 2, the U.S. District Court for the District of New Jersey denied a mortgage company’s motions to dismiss in two putative class actions (opinions available here and here) alleging violations of the Telephone Consumer Protection Act (TCPA) for unsolicited phone calls. In both cases, the mortgage company requested the court dismiss the action or, in the alternative, stay the proceedings pending guidance from the FCC regarding what constitutes an automatic telephone dialing system (autodialer) in light of the D.C. Circuit decision in ACA International v. FCC. (Covered by a Buckley Sandler Special Alert; InfoBytes coverage on the FCC’s notice seeking comment on what constitutes an autodialer, available here.) In each of the actions, consumers allege the company violated the TCPA by placing unsolicited calls to their phones using an autodialer. In denying both motions, the judge rejected the company’s argument, in one case, that it was not using “a random or sequential number generator” because the preloaded numbers belonged to the company’s customers rather than members of the public, reasoning that just because the population of numbers which may be dialed are pre-selected does not make the calling system, the next number being dialed, less random. Moreover, in the second case, the judge rejected the company’s assertion that written consent was not needed because the calls were placed to a number of customers with existing debt. The court noted the calls were regarding refinancing services and “calls to customers soliciting refinance are ‘telemarketing’ calls for a new product requiring prior express written consent under the TCPA.” As for the requests to stay the proceedings, the court held in both cases that it is unnecessary to stay the case because “whatever guidance the FCC may issue in the future will not alter the statutory definition of an [autodialer]” or previous unchanged FCC guidance pursuant to which the court decided the motions to dismiss.
District Court holds TCPA covers direct-drop voicemails
On July 16, the U.S. District Court for the Western District of Michigan held in a matter of first impression that direct-to-voicemail or direct-drop voicemails are covered by the Telephone Consumer Protection Act (TCPA). In so holding, the court denied a debt collection agency’s (defendant) motion for summary judgment. According to the opinion, the defendant asserted that the prerecorded voicemails left on the plaintiff’s cell phone in an effort to collect a mortgage did not violate the TCPA because calls were not dialed to the cell phone but rather deposited directly on a voicemail service—an action the defendant claimed was not within the scope of the TCPA and unregulated. However, the court found that the defendant’s use of the voicemail product constituted as a “call” within TCPA’s broadly constructed purview. In addition, the court specifically stated that the direct drop voicemails left by the defendant were “arguably more of a nuisance” to the plaintiff than receiving text messages since she would have to take steps each time to review or delete the message. In denying the defendant’s motion, the court held that “[b]oth the FCC and the courts have recognized that the scope of the TCPA naturally evolves in parallel with telecommunications technology as it evolves, e.g., with the advent of text messages and email-to-text messages or, as we have here, new technology to get into a consumer’s voicemail box directly.”
6th Circuit affirms dismissal of certain TCPA class action claims, reverses decision on survivability issue
On July 20, in a matter of first impression for the Courts of Appeals, the U.S. Court of Appeals for the 6th Circuit held that claims under the Telephone Consumer Protection Act (TCPA) survive the death of a plaintiff and may be brought by a successor in interest. In so doing, the court reversed the lower court’s decision that held the opposite and remanded the case back to the lower court for further proceedings. The 6th Circuit opined that the lower court erred in holding that TCPA was penal rather than remedial in nature, and thus could not survive a plaintiff’s death. “The purpose of the TCPA [is] to redress individual wrongs felt by individual consumers . . . [and] recovery under the statute runs to the harmed individual and not the public,” both of which suggest that TCPA claims were remedial, and thus survive a party’s death. Separately, the court affirmed the district court’s order granting a motion to sever and motion to dismiss.
District Court grants preliminary approval of TCPA class action settlement
On June 25, the U.S. District Court for the Northern District of California issued an order preliminarily approving a class action settlement between class members and a student loan management enterprise (defendants) accused of violating the Telephone Consumer Protection Act (TCPA) by using an automatic telephone dialing system (ATDS) to place calls to cellular telephones without receiving prior express written consent. Specifically, the plaintiff alleged that the defendants used a phone number previously used by the Department of Education (Department) to contact borrowers and which was listed on the Department’s forms, website, and billing statements, so that when class members returned calls under the impression that they were contacting the Department, the defendants collected and stored the phone numbers. The plaintiff further alleged that the stored numbers were used by the defendants to place calls using an ATDS for the purpose of “mislead[ing] class members into paying for student loan forgiveness and payment programs that were otherwise offered for free by the federal government.” According to the order, preliminarily approval of the settlement prevents possible further litigation and, given the current “‘wind-down’ mode” of one of the defendants, prevents a risk that class members seeking relief would be unable to collect on a large judgment. Under the terms of the settlement, the defendants have agreed to establish a $1.1 million settlement fund, as well as to injunctive relief that prohibits the defendants from using an ATDS to contact individuals without first receiving prior written consent.
3rd Circuit affirms summary judgment for internet company in TCPA action
On June 26, the U.S. Court of Appeals for the 3rd Circuit affirmed summary judgment for a global internet media company holding that the plaintiff failed to show the equipment the company used fell within the definition of “automatic telephone dialing system” (autodialer) based the recent holding by the D.C. Circuit in ACA International v. FCC. (Covered by a Buckley Sandler Special Alert.) The decision results from a lawsuit filed by a consumer alleging the company’s email SMS service, which sent a text message every time a user received an email, was an “autodialer” and violated the TCPA. The consumer had not signed up for the service, but had purchased a cellphone with a reassigned number and the previous owner had elected to use the SMS service. Ultimately, the consumer received almost 28,000 text messages over 17 months. In 2014, the district court granted summary judgment for the company concluding that the email service did not qualify as an autodialer. In light of the FCC’s 2015 Declaratory Ruling—which concluded that an autodialer is not limited to its current functions but also its potential functions—the 3rd Circuit vacated the lower court’s judgment. On remand, the lower court again granted summary judgment in favor of the company.
In reaching the latest decision, the 3rd Circuit interpreted the definition of an autodialer as it would prior to the 2015 Declaratory Ruling in light of the D.C. Circuit’s recent holding, which struck down the part of the FCC’s 2015 Ruling expanding the definition to potential capacity. The appellate court held that the consumer failed to show that the email SMS service had the present capacity to function as an autodialer.
Plaintiffs must arbitrate with telecom provider over TCPA claims
On June 20, the U.S. District Court for the Northern District of Illinois granted a telecommunication company’s motion to compel arbitration and dismissed a putative class action alleging the company violated the Telephone Consumer Protection Act (TCPA). Specifically, the plaintiff brought an action against the telecommunications company for allegedly making unauthorized phone calls using prerecorded messages in an effort to reach account holders to collect unpaid bills. The company moved to compel arbitration because the plaintiff had entered into a “subscriber agreement,” which was provided to him via mail after he agreed to self-install his services, and the agreement requires arbitration of disputes. The court agreed with the company, holding that the arbitration provision of the subscriber agreement covered the dispute because the “Federal Arbitration Act does not require agreements to be signed, only written” and the plaintiff installed and used the telecommunication services, which constituted acceptance of the subscriber agreement.
Court denies plaintiff’s motion for summary judgment in TCPA action, questions accuracy of report citing number of robocalls
On May 21, the U.S. District Court for the Southern District of California denied a plaintiff’s motion for summary judgment against a solar company that she claimed made multiple unwanted robocalls to her cell phone, holding that questions remained about the accuracy of a report identifying the number of illegal calls the company allegedly placed. The plaintiff filed a putative class action complaint asserting that the company, in order to market products and services, violated the Telephone Consumer Protection Act (TCPA) when it used a “predictive dialer” to contact cell phone numbers the company bought from third parties. The plaintiff further claimed that none of the alleged call recipients had provided prior express consent to receive the calls, and that an expert retained by the plaintiff found that the company had made 897,534 calls to 220,007 unique cell phones. After the class was certified, the plaintiff moved for summary judgment, requesting that class members be awarded damages available under the TCPA of $1,500, or $500 per call.
While the court determined that there is no argument as to the plaintiff’s TCPA claim concerning whether the company made telemarketing calls (and failed to receive prior express consent), a dispute remained over whether the plaintiff had “carried its burden of demonstrating” that the high number of calls cited in the report were actually made. First, the court stated that, because the company “stipulated that the [p]laintiff’s expert in fact reached a certain conclusion, it does not follow that [the company] stipulated to the accuracy of the conclusion.” Second, the court held that, since a reasonable jury could find the report’s “conclusions are flawed for any number of reasons,” a fact issue as to the report’s accuracy remained. A settlement conference has been set for June 6.
Court holds text message advertisements sent by internet domain provider do not violate TCPA
On May 14, the U.S. District Court for the District of Arizona granted an internet domain provider’s motion for summary judgment, holding that the platform used by the company to send text message advertisements did not qualify as an “autodialer” under the Telephone Consumer Protection Act (TCPA). The plaintiff filed a putative class action in 2016 asserting that the company, without his consent, sent him a single text message offering a discount on new products in violation of the TCPA. The company filed for summary judgment arguing that the platform it uses to send messages is not an “autodialer.” Citing to the recent D.C. Circuit decision in ACA International v. the FCC (covered by a Buckley Sandler Special Alert) which narrowed the FCC’s 2015 interpretation of “autodialer”, the Court agreed with the company. The Court held that the text was not sent automatically or without human intervention because the company had to “log into the system, create a message, schedule a time to send it, and perhaps most importantly, enter a code to authorize its ultimate transmission.”
As covered by InfoBytes, the FCC’s Consumer and Governmental Affairs Bureau released a notice seeking comment on the interpretation of the Telephone Consumer Protection Act (TCPA) in light of the recent D.C. Circuit decision in ACA International.
FCC seeks comments on interpretation of autodialer under TCPA
On May 14, the FCC’s Consumer and Governmental Affairs Bureau released a notice seeking comment on the interpretation of the Telephone Consumer Protection Act (TCPA) in light of the recent D.C. Circuit decision in ACA International v. FCC. (Covered by a Buckley Sandler Special Alert.) The notice requests, among other things, comment on what constitutes an “automatic telephone dialing system” (autodialer) due to the court setting aside the FCC’s 2015 interpretation of an autodialer as “unreasonably expansive.” Specifically, the FCC requests comment on how to interpret the term “capacity” under the TCPA’s definition of an autodialer (“equipment which has the capacity—(A) to store or produce telephone numbers to be called, using a random or sequential number generator; and (B) to dial such numbers”) and requests comment on the functions a device must be able to perform to qualify as an autodialer, including how “automatic” the dialing mechanism must be. Additionally, the notice seeks comment on (i) how to treat reassigned wireless numbers under the TCPA; (ii) how a party may revoke prior express consent to receive robocalls; and (iii) three pending petitions for reconsideration, including the 2016 Broadnet Declaratory Ruling and the 2016 Federal Debt Collection Rules. Comments are due by June 13 and reply comments are due by June 28.
On May 3, the U.S. Chamber of Commerce, the American Bankers Association, and over a dozen more trade associations petitioned the FCC seeking a declaratory ruling on the definition of an autodialer under the TCPA, previously covered by InfoBytes here.
Mortgage servicer must face TCPA allegations after court dismisses other claims
On May 2, the U.S. District Court for the Eastern District of New York granted in part and denied in part a mortgage loan owner and mortgage loan servicer’s motion to dismiss a consumer’s lawsuit alleging various violations of TILA, RESPA, FDCPA, TCPA and certain New York state laws. The court’s decision explains that the mortgage loan owner first initiated foreclosure proceedings against the consumer in 2009, but in August 2013 that action was dismissed and the parties executed a modification agreement. The consumer argues in the amended complaint that the mortgage debt is time-barred based on the six year statute of limitations to enforce the mortgage note, starting the clock with the 2009 foreclosure filing. The consumer alleges that after the statute of limitations expired, the mortgage servicer contacted the consumer by mail and by telephone to collect the mortgage debt, totaling over 600 calls placed by an autodialer and up to four threatening collection letters per month since 2015. The court, however, agreed with the mortgage companies that the execution of the 2013 modification agreement restarted the statute of limitations and therefore, the consumer’s alleged violations of New York state laws and the FDCPA failed because the mortgage debt was not time-barred. The court also held that the consumer failed to plead sufficient facts to support the alleged violations of TILA, RESPA, and New York’s General Business Law. In contrast, the court denied the mortgage servicer’s motion to dismiss the consumer’s claim under the TCPA, holding that the mortgage application signed by the consumer did not clearly consent to contact by an autodialer on his cell phone.