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Eighth Circuit Reverses Summary Judgment, Directs Trial Court to Determine Whether Consent Was Revoked

In an unpublished, per curiam decision, the Eighth Circuit recently reversed the entry of summary judgment in favor of a defendant and directed the district court to address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).

Ninth Circuit Addresses TCPA Text Message Claims

In Gomez v. Campbell-Ewald Co., No. 13-55486, 2014 WL 4654478 (9th Cir. Sept. 19, 2014), a panel of the Ninth Circuit Court of Appeals addressed several recurring issues in TCPA litigation, including: the efficacy of Rule 68 offers to moot putative class actions; potential First Amendment defenses; and vicarious liability.

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Court Rules That Settlement Term Sheet Is Not Worth The Paper It’s Written On

Judge Amy J. St. Eve of the Northern District of Illinois recently held that a purported settlement agreement in a putative class action filed by Craftwood Lumber Co. against Interline Brands, Inc. was not enforceable. See Craftwood Lumber Co. v. Interline Brands Inc., No. 11-4462 (N.D. Ill. Sep. 23, 2014). Judge St. Eve held that the “Term Sheet” executed at the end of the parties’ mediation session lacked sufficient detail to establish that a binding and enforceable settlement had been reached.

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State Courts Disagree About Whether Statutory Damages Make Class Actions an Inferior Method for Adjudicating TCPA Claims

The statutory damages that have caused so many plaintiffs to file TCPA class actions have also caused some courts to find that class actions are not the superior method for adjudicating them.   Federal Rule of Civil Procedure 23(b)(3) requires not only that common questions predominate over individual ones, but also that “a class action is superior to other available methods for fairly and efficiently adjudicating the controversy.” Fed. R. Civ. P. 23(b)(3). Whether a class action is the superior method for adjudication depends on a number of stated and unstated considerations, among them “the class members’ interests in individually controlling the prosecution or defense of separate actions.” Fed. R. Civ. P. 23(b)(3)(A). As we have noted before, some courts have held that TCPA claims are categorically unfit for class treatment because $500-$1,500 plus attorneys’ fees and costs is adequate to incent individuals to file claims, is disproportionate to any actual damages, and is potentially ruinous if aggregated in a class action. Two state courts recently addressed this issue and reached contrary conclusions.

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FCC Letter Brief Suggests That Faxes and Phone Calls are Different for Purposes of Direct Liability Under the TCPA

At the invitation of the Eleventh Circuit Court of Appeals, the FCC recently filed a letter brief in Palm Beach Golf Center-Boca, Inc. v. Sarris, No. 13-14013 (11th Cir.). The letter brief took the position that defendants can be held directly liable any time their products or services are advertised via a fax that violates the TCPA—even if they did not send the fax or even know that it was going to be sent.

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W.D. Wash. Adopts Preponderance of the Evidence Standard for Elements of Class Cert., Rejects Numerosity Experts

The Western District of Washington recently adopted a “preponderance of the evidence” standard for establishing the prerequisites of Federal Rule of Civil Procedure 23 and denied class certification in a TCPA case because the plaintiffs’ expert testimony did not meet the rigors of even a preponderance standard. See Southwell v. Mortgage Investors Corp. of Ohio, No. 13-1289 , 2014 U.S. Dist. LEXIS 112362 (W.D. Wash. Aug. 12, 2014).

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