Florida Federal Court Grants Rule 12(b)(6) Motion For Failure To Satisfy Twombly/Iqbal Pleading Standard In TCPA Case

In a TCPA action involving allegedly unsolicited cellular telephone calls made using an automated telephone dialing system (“ATDS”), the Middle District of Florida ruled that plaintiff had merely recited the elements for a claim under the TCPA rather than allege adequate factual support, and dismissed plaintiff’s complaint without prejudice. See Hunter v. Diversified Consultants, Inc., No. 8:14-cv-2198, 2014 U.S. Dist. LEXIS 165355 (M.D. Fla. Nov. 26, 2014). The complaint contained only the following factual allegations: First, that “[d]uring the past 48 months prior to the filing of this complaint, Defendant contacted Plaintiffs’ [sic] cell phone without express permission with an automated dialing system”; and second, “Defendant called Plaintiffs’ [sic] cell phone intentionally and repeatedly, without express permission and with an automated telephone dialing system…” Id. at *2. Although the Court acknowledged it must accept all factual allegations set forth in the complaint and view them in the light most favorable to the plaintiff, it also noted that conclusory allegations, unwarranted factual deductions, and legal conclusions will not prevent dismissal. Id. (citing Ashcroft v. Iqbal, 129 S.Ct. 1937, 1950 (2009); Davila v. Delta Air Lines, Inc., 326 F.3d 1183, 1185 (11th Cir. 2003)). The Court then held that the meager factual allegations included in the complaint did not “create any inference supporting the allegation that calls were made using an automatic dialing system,” and were not sufficient to state a facially plausible claim. Id. (citing Chaparro v. Carnival Corp., 693 F.3d 1333, 1337 (11th Cir. 2012) (“Factual allegations that are merely consistent with a defendant’s liability fall short of being facially plausible.”)).

The FCC’s Clarification of its Blast Fax Rules to “Solicited” Fax Ads under Siege

In an attempt to clear out the backlog of numerous pending petitions addressing how the FCC’s “Blast Fax” rules apply to consensual fax advertisement transmissions, the agency on October 30, 2014 issued an Order addressing the need for and form of opt-out notices required for fax ads. The FCC’s rules since 2006 have contained a requirement that opt-out information be displayed on the faxed ad and that that notification requirement applies to both solicited fax ads, which are sent with the recipients’ prior express permission or invitation, and to non-solicited fax ad transmissions. A large number of Blast Fax lawsuits have involved fax ads reportedly sent with prior express consent but that may have lacked the required FCC opt-out notification or that failed to use the exact language the FCC rule appeared to require. Many defendants in these lawsuits beat a path to the FCC seeking either relief from or clarification of opt-out requirements, claiming in some cases confusion about when opt-out notices were in fact required. In its Order that divided on political party lines, the FCC clarified that its opt-out notice requirements are required on all fax advertisements, but in a far-reaching move, the FCC granted retroactive waivers to the petitioning fax senders who previously sent non-conforming fax ads. Similarly situated fax senders were invited also to seek retroactive waivers of the opt-out notice requirement but were warned they should apply for waiver relief by April 30, 2015.

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Political Campaigns: Consider Yourself Warned

If you had not noticed, the fall election campaign season is in full swing. The FCC’s Enforcement Bureau certainly has noticed, and reacted by releasing an unusual “Enforcement Advisory” this week, reminding campaigns and campaign promoters that there are TCPA limits on permissible uses of prerecorded voice message and autodialed calls in election campaigns. Restrictions on acceptable modes of communication vary depending upon whether a campaign or campaign promoter is delivering a call to a residential landline phone or a cell phone, which can be difficult to tell if a phone number has been recycled. Nevertheless, the Enforcement Advisory highlights a $2.9 million proposed fine levied against Dialing Services, LLC earlier this year for its alleged infractions of FCC requirements and warns all entities engaged in campaign calling and texting that they ignore FCC rules and restrictions at their peril of becoming subject to possible FCC enforcement scrutiny and fines. Fines for violations can go as high as $16,000 per violation, which is computed by call or text rather than by telemarketing campaign found to be impermissible by the Enforcement Bureau. While courts are the favored venue of the plaintiffs’ bar for seeking damages, the FCC’s Enforcement Bureau is aggressively staking out its own regulatory turf as the gubernatorial and congressional campaigns use as many tools as possible to galvanize potential voters.

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Northern District of Illinois Applies Twombly/Iqbal Pleading Standard to Affirmative Defenses in TCPA Case

In a TCPA action involving allegedly unsolicited fax advertisements, the Northern District of Illinois applied the plausibility standard articulated in Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007) and Ashcroft v. Iqbal, 556 U.S. 662 (2009) to affirmative defenses. See Mussat v. Power Liens, LLC, No. 13-7853, 2014 U.S. Dist. LEXIS 141561 (N.D. Ill. Oct. 6, 2014). We recently discussed a similar TCPA case where the court held that the plausibility standard did not apply, and in doing so sided with the majority view that the textual differences between Rule 8(a)(2) (claims) and Rules 8(b)(1)(A) (defenses) and 8(c)(1) (affirmative defenses) prevented the application of the plausibility standard to affirmative defenses. See Exclusively Cats Veterinary Hospital, P.C. v. Pharmaceutical Credit Corp., No. 13-14376, 2014 U.S. Dist. LEXIS 132440 (E.D. Mich. Sept. 22, 2014). Perhaps because the defendant focused elsewhere in its briefing, the Mussat court simply cited a 25-year-old decision from the Seventh Circuit holding that courts can strike affirmative defenses that do not satisfy federal pleading standards and then recited the requirements of the Twombly/Iqbal plausibility standard. Mussat, 2014 U.S. Dist. LEXIS 141561 at *2.

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ZocDoc Treats Doctor With Some Rule 68 Medicine

We have discussed several TCPA mootness decisions, mainly those coming out of the federal courts in Florida. Those cases hold that plaintiffs should not file “placeholder” class certification motions solely for the purpose of thwarting an attempted Rule 68 offer of judgment “pick-off.” We now turn our attention to the Southern District of New York, which recently found a TCPA plaintiff’s claim mooted by an offer of judgment made after the plaintiff’s “placeholder” motion for class certification was filed and before that motion was ruled upon.

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New Jersey Federal Court Rejects FCC’s Dish Network Ruling in Blast Fax Case, Relies on FCC’s Letter Brief in Sarris

As we previously reported, on July 17, 2014, the FCC filed a letter brief in Palm Beach Golf Center-Boca, Inc. v. Sarris, No. 13-14013 (11th Cir.) (“Sarris”), in which it took the position that entities can be held directly liable under the TCPA whenever their products or services are advertised in an unsolicited fax—even if they did not actually send the fax, and even if they did not know the fax was going to be sent. The FCC’s letter brief stood in marked contrast to its decision last year in In re Joint Petition Filed by Dish Network, LLC, 28 F.C.C. Rcd. 6574 (2013) (“Dish Network”), where the FCC had limited direct liability to only “telemarketers” that “initiate” calls, and otherwise applied agency principles to determine whether “sellers” might be vicariously liable for calls made on their behalf. As readers may recall, the FCC’s letter brief does not articulate a policy reason why a “seller” in the voice call context should receive more protection than an entity whose goods and services are promoted through a fax advertisement. But whatever the merits of the letter brief, it has yet to be cited by the Eleventh Circuit (which has heard argument but not yet issued an opinion) or, at least for the past few months, any other court.

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Somewhere Out There, a Certain Gecko Lets Out a Sigh of Relief

Judge Kathleen M. Williams of the Southern District of Florida handed GEICO a decisive victory on September 29, 2014, when she denied a renewed motion to certify a class of individuals who purportedly received robo-calls from GEICO because she found that the plaintiff failed to provide sufficient proof of numerosity.

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Eighth Circuit Reverses Summary Judgment, Directs Trial Court to Determine Whether Consent Was Revoked

In an unpublished, per curiam decision, the Eighth Circuit recently reversed the entry of summary judgment in favor of a defendant and directed the district court to address whether the plaintiff had revoked his consent to being called on his cell phone. Brenner v. Am. Ed. Servs., No. 14-1340, 2014 U.S. App. LEXIS 18416 (8th Cir. Sept. 26, 2014). Continue reading

Court Holds That Twombly/Iqbal Pleading Standard Does Not Apply to Affirmative Defenses in TCPA Case

In a TCPA action concerning allegedly unsolicited fax advertisements, the Eastern District of Michigan recently rejected the argument that the plausibility standard articulated in Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007) and Ashcroft v. Iqbal, 556 U.S. 662 (2009) applies to affirmative defenses. See Exclusively Cats Veterinary Hospital, P.C. v. Pharmaceutical Credit Corp., No. 13-14376, 2014 U.S. Dist. LEXIS 132440 (E.D. Mich. Sept. 22, 2014).

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Eleventh Circuit Holds That Debt Collector Had “Prior Express Consent” From Debtor Whose Wife Provided Number on Hospital Admission Form

This week the Eleventh Circuit held that a debt collector had “prior express consent” from a debtor whose wife had provided his wireless number on a hospital admission form. Mais v. Gulf Coast Collection Bureau, Inc., No. 13-14008, 2014 U.S. App. LEXIS 18554 (11th Cir. Sept. 29, 2014). In doing so, it reversed an outlier decision from the Southern District of Florida, adopted arguments that the FCC had made in an amicus brief late last year, and provided persuasive precedent on the “prior express consent” exception.

In Mais, the plaintiff went to the emergency room with his wife, who completed and executed an admission for him. The admission form disclosed that the hospital may use information or disclose it to its business partners for “purposes of . . . payment” and also acknowledged receipt of a privacy notice that similarly stated that the hospital may use or disclose information in order to “bill and collect payment.” Id. at *4. The admission form also included a space for patients’ telephone numbers, which the plaintiff’s wife provided.

The plaintiff filed a putative class action after a radiological practice’s debt collector placed calls to that number. The defendants moved for summary judgment and argued that the calls fell within the “prior express consent” exception as it has been interpreted by the FCC. They pointed in particular to a 2008 Declaratory Ruling that found as follows:

Because we find that autodialed and prerecorded message calls to wireless numbers provided by the called party in connection with an existing debt are made with the “prior express consent” of the called party, we clarify that such calls are permissible. We conclude that the provision of a cell phone number to a creditor, e.g., as part of a credit application, reasonably evidences prior express consent by the cell phone subscriber to be contacted at that number regarding the debt.

In re Rules and Regulations Implementing the Telephone Consumer Protection Act of 1991, Declaratory Ruling, 23 FCC Rcd. 559, 564 ¶ 9 (Jan. 4, 2008) (footnote omitted); see also In re Rules and Regulations Implementing the Telephone Consumer Protection Act of 1991, Report & Order, 7 FCC Rcd. 8752, 8769 ¶ 31 (Oct. 16, 1992) (“[P]ersons who knowingly release their phone numbers have in effect given their invitation or permission to be called at the number which they have given, absent instructions to the contrary. Hence, telemarketers will not violate our rules by calling a number which was provided as one at which the called party wishes to be reached. However, if a caller’s number is ‘captured’ . . . without notice to the residential telephone subscriber, the caller cannot be considered to have given an invitation or permission to receive autodialer or prerecorded voice message calls.” (footnote omitted)); H.R. Rep. No. 102-317, at 13 (1991) (“[T]he called party has in essence requested the contact by providing the caller with their telephone number for use in normal business communications.”). For his part, the plaintiff cross-moved for partial summary judgment and argued that the Declaratory Ruling does not apply outside of the commercial context and in any event would only allow calls by the hospital to which he gave his number, not by the affiliated radiological practice. Mais, 2014 U.S. App. LEXIS 18554, at *8.

The trial court sided with the plaintiff and entered partial summary judgment in his favor. Although it acknowledged that the Hobbs Act gives the courts of appeal exclusive jurisdiction to review the validity of final FCC orders, it found that it had jurisdiction because the primary purpose of the suit was to obtain damages, not to obtain review of the 2008 Declaratory Ruling. The court then reviewed the 2008 Declaratory Ruling all the same, finding that it was not entitled to deference, and indeed was inconsistent with the plain language of the statute because it turned the “prior express consent” exception into a “prior express or implied consent” exception. See id. at *9. Alternatively the court found that the 2008 Declaratory Ruling did not apply at all because it was issued in a commercial rather than medical context, and because the plaintiff’s wife had provided his number to the hospital rather than the radiological practice. Id. at *9-10.

The defendants appealed. As we previously reported, the FCC filed an amicus brief and explained that the Hobbs Act divested the trial court of jurisdiction to review the validity of the Declaratory Ruling. This week a unanimous panel of the Eleventh Circuit agreed, reversed the trial court, and remanded with instructions that it enter summary judgment against the plaintiff.

The Eleventh Circuit began by noting that the FCC has authority to make rules and regulations that are necessary to effectuate the TCPA, and that the FCC did that in the 2008 Declaratory Ruling and in the 1992 Report & Order that preceded it. Id. at *14-15 (citing 47 U.S.C. §§ 227(b)(2), 201(b), 303). It then held that the trial court had exceeded its jurisdiction because the Communications Act requires that proceedings to “enjoin, set aside, annul, or suspend any order of the [FCC]” must be brought under the Hobbs Act, which in turn gives courts of appeal “exclusive jurisdiction to enjoin, set aside, suspend (in whole or in part), or to determine the validity of” such orders. Id. at *19 (quoting 47 U.S.C. § 402(a); 28 U.S.C. § 2342). It stated that the analysis turns on what a decision’s “practical effect” would be, not on what a plaintiff’s “central purpose for bringing suit” might be. Mais, 2014 U.S. App. LEXIS 18554, at *21. If a party disagrees with an FCC order, it found, the proper course is to “ask the [FCC] reconsider its interpretation” and if necessary “challenge the FCC’s response in the court of appeals.” Id. at *23.

The Eleventh Circuit then addressed the alternate holding that the “circumstances of this case somehow fall outside the scope of the 2008 FCC Ruling.” Id. at *25. It rejected that as well:

[T]he FCC did not distinguish or exclude medical creditors from its 2008 Ruling. Quite the opposite, the FCC’s general language sends a strong message that it meant to reach a wide range of creditors and collectors, including those pursuing medical debts. . . . While the 2008 FCC Ruling listed the completion of “a credit application” as an example of the provision of a cell phone number to a creditor, the [FCC] did so illustratively, not exclusively. Similarly, the fact that the FCC’s interpretation often is invoked in the context of consumer or commercial creditors does not lessen its application to medical debt collection. . . . When it comes to expectations for receiving calls, we see no evidence that the FCC drew a meaningful distinction between retail purchasers who complete credit applications and medical patients who fill out admissions forms like the Hospital’s. A patient filling out a form from a healthcare provider may very well expect to be contacted about his health and treatment. But if the form explicitly states that the provided information will be used for payment and billing, the patient has the same reason to expect collection calls as a retail consumer.

Id. at *26-28 (internal citation omitted). As for the fact that the plaintiff’s wife gave his number to the hospital rather than the affiliated radiological practice, the Eleventh Circuit saw “no sign that the FCC thought a cell phone number could be ‘provided to the creditor’ only through direct delivery.” Id. at *29. It also noted that the FCC recently ruled that allowing consent to be obtained through intermediaries “facilitates . . . normal, expected, and desired business communications in a manner that preserves the intended protections of the TCPA.” Id. at *30 (quoting In re GroupMe, Inc./Skype Commc’ns S.A.R.L. Petition for Expedited Declaratory Relief, 29 FCC Rcd. 3442, 3445 ¶ 9 (2014)).

The Mais decision is important because it aligns the Eleventh Circuit with other courts that have considered this issue and provides persuasive precedent for courts that have not. See, e.g., Hudson v. Sharp Healthcare, No. 13-1807 (S.D. Cal. June 25, 2014) (dismissing substantially similar case due to existence of prior express consent).