FCC Issues Declaratory Ruling Confirming an Exemption from Certain of the TCPA’s Restrictions for the Federal Government and its Contractors When Acting within Scope of an Agency Relationship

The FCC recently issued a declaratory ruling addressing petitions that had been filed by Broadnet Teleservices LLC (“Broadnet”), National Employment Network Association (“NENA”), and RTI International (“RTI”), each of which sought guidance or clarification on the extent of the TCPA’s governmental exception when a contractor is placing calls or texts pursuant to its work on behalf of the government. Each of the petitioners provide, or have members that provide, calling services on behalf of federal government entities; Broadnet offers teletown hall calling services for state and local governments as well and RTI performs social science survey work for entities such as the Centers for Disease Control and Prevention (CDC). NENA represents providers of employment services to beneficiaries of Social Security Disability Insurance and Supplemental Security Income. These providers are required to contact program-eligible beneficiaries to provide information about potential programs and services.
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The Rise Of The Professional TCPA Plaintiff

Filing TCPA actions has become a form of sport for certain plaintiffs. In TCPA Blog’s latest Law360 column, Seamus Duffy, Mike McTigue, Mike Daly, Meredith Slawe and Dan Brewer address the manufacturing of TCPA claims, which came to a head in a recent case involving an unabashed professional plaintiff who purchased at least 35 cellphones and numbers with the sole purpose of receiving calls to recycled numbers and then filing suit and cashing in. The article notes the growing use (and abuse) of the TCPA by such plaintiffs:
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Courts Continue To Require That TCPA Classes Be Presently and Readily Ascertainable By Reference To Objective Criteria

In a decision that many saw as lowering the bar for class certification, the Eighth Circuit recently reversed a trial court’s decision that a putative class was not readily ascertainable by reference to objective criteria. Sandusky Wellness Center LLC v. Medtox Scientific Inc., No. 15-1317, 2016 WL 1743037 (May 3, 2016). The Eighth Circuit held that classes must be readily ascertainable, which it had yet to squarely do, but found that this particular class was ascertainable, as it included individuals who “were sent” the fax at issue and “fax logs show[ed] the numbers that received faxes.” In doing so, it rejected the argument that fax logs do not necessarily identify the “recipient” of a fax who would have standing under 47 U.S.C. § 227(b)(1). The defendant had noted that the “recipient” could be not “the subscriber to the fax number” but rather “the owner of the fax machine,” “a lessee of the fax machine,” and indeed “any user disrupted by the fax.” The Eight Circuit acknowledged that “the subscriber to the fax number may not be the recipient of the fax.” But it reversed all the same, seemingly satisfied by the production of some “objective indicator,” even one that didn’t necessarily “indicate” who actually had standing to assert a claim arising from a particular fax. It then remanded for further proceedings, after which the case was reassigned to Judge Patrick J. Schiltz of the District of Minnesota.
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Campbell-Ewald — The ‘Offer Of Judgment’ Saga Continues

“Welcome to the great new world of TCPA litigation – where a plaintiff turns up his nose at $10,000 in cash to compensate him for his receipt of a single targeted text message recruiting for the United States Navy, and where our courts stretch the limits of Article III to preserve his crusade for a would-be class of others similarly situated.”-Seamus Duffy

It’s becoming a strange, strange world when it comes to making offers of complete relief to named plaintiffs in class actions.  Continue reading

Senate Commerce Committee Holds Hearing On TCPA’s Effects On Consumers And Businesses

U.S. Senator John Thune (R-S.D.), Chairman of the Senate Committee on Commerce, Science, and Transportation, convened a full committee hearing yesterday titled “The Telephone Consumer Protection Act at 25: Effects on Consumers and Business.”  Witnesses at the two-hour hearing included the Attorney General of Indiana and representatives of the U.S. Chamber Institute of Legal Reform, the National Consumer Law Center, and the American Association of Healthcare Administrative Management.  Chairman Thune opened the hearing with the following observations: Continue reading

Circuits Are Split Over Whether Agency Law Applies to TCPA Fax Cases

On May 9, 2016, the Sixth Circuit reversed a decision of the Northern District of Ohio granting summary judgment to Defendant in a TCPA fax case. Siding & Insulation Co. v. Alco Vending, Inc., No. 15-3551. The district court had accepted Defendant’s argument that it could not be liable under the TCPA for sending the allegedly offending faxes because while it did retain an ad agency (B2B/Caroline Abraham, a combination known well to practitioners in this space) to transmit faxes advertising its services to consenting businesses, it had never authorized transmission of faxes to non-consenting businesses, including the Plaintiff. Finding that under federal common-law agency principles Defendant could not be held vicariously liable for sending the faxes because it neither authorized the transmission of the offending faxes, nor ratified the ad agency’s conduct, the district court entered summary judgment in favor of Defendant.

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Supreme Court Holds That Plaintiffs Need Concrete Harm In Order To Seek Statutory Damages

Yesterday the Supreme Court issued its long-awaited decision in Spokeo, Inc. v. Robins, in which it was asked whether plaintiffs have Article III standing if they allege a bare violation of a statute (i.e., an injury in law) but no concrete harm (i.e., an injury in fact). Six of the eight sitting Justices agreed that an injury in law alone is insufficient and that plaintiffs must plead and prove concrete harm in order to satisfy Article III.

The Facts

Spokeo is a search engine that provides information on people (for example age, address, phone number, and occupational and marital status) based on computerized searches in various databases. Plaintiff Thomas Robins filed suit against Spokeo because he learned (he did not allege how) that it had reported (he did not allege to whom) that he was in his fifties, employed, married, and affluent. However, Robins alleged that he is in fact younger, unemployed, unmarried, and of modest means. Opinion at 4. Robins alleged that these inaccuracies resulted from various violations of the Fair Credit Reporting Act, which requires among other things the use of “reasonable procedures to assure maximum possible accuracy of” consumer reports, 15 U.S.C. § 1681e(b), and the posting of toll-free numbers that consumers can call to request reports. See id. § 1681j(a). Robins also alleged that those violations were “willful,” which he hoped would entitle him—and every other member of a putative class—to statutory damages plus fees and costs. See id. § 1681n(a). The District Court dismissed his claim due to the lack of an injury-in-fact but the Ninth Circuit reversed, reasoning that a “violation of a statutory right is usually sufficient injury in fact to confer standing.” Opinion at 5. The Supreme Court granted certiorari in order to answer that question for itself.

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FCC Proposes Rules to Effectuate the TCPA Exception in the Bipartisan Budget Act of 2015 Provisions for Federally-Held Debt

Last week, the FCC released a notice of proposed rulemaking (“NPRM”) detailing its proposals to implement the provisions of the 2015 Bipartisan Budget Act that allow greater flexibility under the TCPA for calls placed relating to federally-held debt.  Rules and Regulations Implementing the Telephone Consumer Protection Act of 1991, CG Docket No. 02-278, Notice of Proposed Rulemaking (May 06, 2016). This Act specifically “excepts from the Telephone Consumer Protection Act’s consent requirement robocalls made solely to collect a debt owed to or guaranteed by the United States.” Id. at ¶ 1. The Act set a nine-month deadline for the FCC to adopt rules implementing this exception, which gives the agency until August to adopt these rules. With this NPRM, the FCC sought to “balance the importance of collecting debt owed to the United States and the consumer protections inherent in the TCPA.” Id. The FCC’s rulemaking proceeding will apply to calls and text messages. As has been the case with a number of TCPA matters over the last few years, the FCC Commissioners were deeply divided on the proposals contained in the NPRM.

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Supreme Court Issues Decision in Spokeo, Inc. v. Robins

This morning the Supreme Court issued its highly anticipated decision in Spokeo, Inc. v. Robins, which vacates the Ninth Circuit’s decision and remands for further proceedings.  We are reviewing the majority opinion from Justice Alito (in which Justices Roberts, Thomas, Breyer, and Kagan joined), the concurring opinion from Justice Thomas, and the dissenting opinion from Justice Ginsburg (in which Justice Sotomayor joined), and will report back shortly.

The TCPA As Great Uniter? Democrats and Tea Party Republicans Join Forces, File Suit Seeking To Have The TCPA Declared Unconstitutional

Friday afternoons typically see a high volume of notices of new TCPA complaints. Those complaints usually offer little variation: while the names of the parties and counsel sometimes change, they all typically name businesses as defendants and challenge their compliance with the TCPA. Friday, May 13th was no different, except in one key respect: one of those new complaints names Attorney General Loretta Lynch as the defendant and challenges the TCPA itself.

In American Association of Political Consultants, Inc. v. Lynch, No. 16-0252 (E.D.N.C. filed May 12, 2016), five political organizations filed suit seeking a declaration that the TCPA’s restrictions on automated or prerecorded calls to cell phones violates the First Amendment. The suit also seeks preliminary and permanent injunctions enjoining enforcement of the TCPA, nominal damages of $1, and attorneys’ fees and costs. The five named plaintiffs are:

  • American Association of Political Consultants, Inc., a “bipartisan, nonprofit association of political professionals located in McLean, Virginia” whose members make calls to cell phones “to solicit political donations and to discuss political and governmental issues”;
  • Democratic Party of Oregon, located in Portland, Oregon;
  • Public Policy Polling, LLC, a “for-profit company located in Raleigh, North Carolina” that uses automated telephone surveys to “measure[] and track[] public opinion”;
  • Tea Party Forward PAC, located in Alexandria, Virginia; and,
  • Washington State Democratic Central Committee, located in Seattle, Washington.

The plaintiffs allege that the TCPA is a content-based restriction on speech, citing the fact that, “[s]ince 1992, the FCC and Congress have passed at least six exemptions to the cell phone call ban which apply based on the identity of the caller and/or the content of the exempted calls.” Compl. ¶ 25. They identify the four free-to-end-user exemptions created by the FCC pursuant to 47 U.S.C. § 227(b)(2)(C) (wireless carriers to their own customers, package delivery notifications, healthcare notifications, and exigent financial notifications) as well as Congress’s recent exemption of debt collection calls to cell phones “made solely to collect a debt owed to or guaranteed by the United States.” Id. ¶¶ 26, 27, 29, 30, 31. They identify the sixth as an “intermediary consent exemption” allegedly created by the FCC’s decision in GroupMe. Id. ¶ 28.

The plaintiffs allege that these exemptions result in a regulatory scheme that restricts speech based on its content and favors commercial speech over “fully-protected political speech.” Id. ¶¶ 38-43. They further argue that these content-based restrictions mean that the TCPA should be subjected to strict scrutiny and that the TCPA fails that test because the restrictions are under-inclusive (by exempting free-to-end user calls and government debt collection but not political speech) and not narrowly tailored to further any compelling government interest. Id. 45-56.

As we’ve noted previously, while First Amendment challenges to the TCPA were relatively common (and unsuccessful) after the statute was passed, those were almost invariably in the context of unsolicited advertising in “junk fax” cases. A case involving political speech, however, may well be a political animal of a different color. Indeed, the Fourth Circuit’s decision in Cahaly v. Larosa, 796 F.3d 399 (4th Cir. 2015), lays out a roadmap for invalidating the TCPA, and was likely a driving force behind the decision to file in North Carolina.

In Cahaly, the Fourth Circuit addressed the constitutionality of South Carolina’s version of the TCPA, which prohibited (with exceptions based on the implied or express consent of the called party) automated calls that are “for the purpose of making an unsolicited consumer telephone call” or “of a political nature including, but not limited to, calls relating to political campaigns.” Cahaly, 796 F.3d at 402. The District Court declared the statute unconstitutional as a content-based restriction that did not withstand strict scrutiny. The Fourth Circuit affirmed, finding that (i) South Carolina’s version of the TCPA was a facially content-based restriction, and (ii) South Carolina’s asserted government interest in protecting residential privacy from robocalls (which the Fourth Circuit assumed, but did not decide, was “compelling”) could be accomplished by less restrictive means such as time-of-day limitations, mandatory identity disclosures, and do-not-call lists; and (iii) the statute was both over- and under-inclusive. Id. at 405-06. There are, of course, some differences between the TCPA and South Carolina’s version, and the key question in going forward will be whether those differences result in a different outcome.