District Court Says TCPA Plaintiffs Are Not Required To Plead Their Phone Numbers; Allows Plaintiff’s Negligence Claim Premised On Existence of Statutory Duty Of Care Under The TCPA To Move Forward

The District of South Carolina recently rejected the argument that TCPA claims must be dismissed if a plaintiff does not specify the telephone number that was allegedly called. See Williams v. Bank of America, No. 14-4809-RBH (D.S.C. June 19, 2015).

Bank of America moved to dismiss on the grounds that the complaint parroted the elements of the TCPA rather than alleging facts that would establish a TCPA violation. Specifically, Bank of America argued that the plaintiff failed to (1) specify the telephone number it allegedly called, (2) plead facts showing that she received the calls from an ATDS, and (3) plead facts showing that it placed the alleged calls without her consent. With respect to the first issue, Bank of America relied on the Western District of Michigan’s decision in Strand v. Corinthian Colleges, Inc., No. 13-1235 (W.D. Mich. Apr. 17, 2014), which as we discussed last year dismissed the claim of a plaintiff who refused to plead her telephone number. The Strand court agreed with the defendant’s argument that “if a plaintiff is not required to provide her cellular telephone number,” defendants could not “reasonably determine if a violation occurred” and plaintiffs could “extort settlements from defendants by imposing asymmetric discovery costs on them, contrary to the policy aims of Iqbal and Twombly.”

The Williams court disagreed. It noted that the Fourth Circuit has yet to address the question of whether Rule 8 requires plaintiffs to include their phone number in their complaints, and then rejected Strand and held that a mere “allegation that [d]efendant called her cellular telephone provides adequate notice to [d]efendant of its conduct alleged to have violated the TCPA. Defendant may obtain information regarding the telephone number it allegedly called through discovery; the phone number is not necessary to put [d]efendant on notice of its alleged conduct.”

Also noteworthy is that the Williams court permitted plaintiff to move forward with a seemingly redundant state law claim for failure to train and supervise that is “premise[d] [on the argument] that [d]efendant owed her a statutory duty of care under the TCPA.” The court explained that plaintiff’s “claims indicate that the TCPA is designed to prevent automated telephone calls made without the recipient’s consent and that she belongs to the broad class of citizens the federal statute is designed to protect.” Accepting the truth of plaintiff’s allegations for purposes of the motion, the court found that “[p]laintiff’s complaint includes plausible factual statements that reasonably support the existence of a statutory duty of care owed by [de]fendant to [p]laintiff.”

FCC Holds Contentious Open Meeting, Majority Votes To Arm Plaintiffs With New Swords And Businesses With Few Shields

In the wake of its Open Meeting earlier today, the FCC issued a press release that promises “a package of declaratory rulings” that will bring “much needed clarity for consumers and businesses” on a variety of topics. Whether the rulings provide more answers than questions remains to be seen, as the Commission has yet to issue its order. What was on full display during the meeting and the subsequent press conferences, however, was how disenchanted Commissioners Pai and O’Rielly were with how the order had been negotiated. Neither they nor Chairman Wheeler were willing to elaborate in response to questions from reporters.

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FCC To Hold Open Meeting

As we previewed a few weeks ago, the FCC will hold an Open Meeting in Washington, D.C. tomorrow. Its published agenda includes the consideration of “a Declaratory Ruling and Order reaffirming the Telephone Consumer Protection Act’s protections against unwanted robocalls, encouraging pro-consumer uses of robocall technology, and responding to a number of requests for clarity from businesses and other callers.” For those who are interested, there will be a live webcast of the meeting. We will report back after the meeting concludes.

FCC Warns that Unilateral PayPal User Agreement Changes May Violate the TCPA

In advance of the FCC’s highly anticipated June 18 meeting, during which it is likely to vote on an omnibus order disposing of a wide range of pending petitions for declaratory ruling, the FCC’s Enforcement Bureau took an early shot across the bow at a proposed change to  PayPal Inc.’s User Agreement. In an unusual move, the Bureau sent a public letter to PayPal warning it that its new broad “consent to contact” provision may violate the TCPA.

The updates to the User Agreement authorize PayPal to contact a consumer by “autodialed or prerecorded calls and text messages … at any telephone number provided … or otherwise obtained” in order to notify the consumer about his or her account, to troubleshoot problems, or resolve a dispute, collect a debt, poll for opinions, to contact a consumer with promotions, or “as otherwise necessary.” The terms lack an opt-out mechanism for consumers who do not wish to receive these calls. Further, PayPal’s PayPal’s Policy Updates page uses bold and capital letters to make consent to contact a condition of use: “IF YOU DO NOT AGREE TO THE AMENDED USER AGREEMENT, PRIVACY POLICY OR ACCEPTABLE USE POLICY, YOU MAY CLOSE YOUR ACCOUNT BEFORE JULY 1, 2015 AND YOU WILL NOT BE BOUND BY THE AMENDED TERMS.”

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Illinois Federal Court Follows Eleventh Circuit’s Broad Definition of “Sender” in Blast Fax Case

Through prior posts (see here, here, and here), we have monitored the FCC’s somewhat perplexing distinction between calls and faxes in the context of analyzing direct and vicarious liability under the TCPA. Just two months ago, the FCC’s position, as originally set forth in a letter brief, was adopted by the Eleventh Circuit in Palm Beach Golf Center-Boca, Inc. v. Sarris, 781 F.3d 1245 (11th Cir. 2015) (“Sarris”). The Sarris court held that “a person whose services are advertised in an unsolicited fax transmission, and on whose behalf the fax is transmitted, may be held liable directly” under the TCPA. Id. at 1254. As we have previously reported, the FCC’s letter brief (and now Sarris) appear to be inconsistent with the FCC’s position in the voice call context, where it has ruled that a “seller” of goods or services is not directly liable for calls made by a “telemarketer” on its behalf, and instead the seller’s possible vicarious liability turns on the application of federal common law agency principles. See In re Joint Petition Filed by Dish Network, LLC, 28 F.C.C. Rcd. 6574 (2013) (“Dish Network”) (limiting direct liability to “telemarketers” that “initiate” calls and applying agency principles to determine vicarious liability of “sellers” for calls made on their behalf). Notwithstanding this apparent divide, district courts within the Eleventh Circuit have followed Sarris (granted, they must). See, e.g., Physicians Healthsource, Inc. v. Doctor Diabetic Supply, LLC, No. 12-22330-CIV, 2015 WL 1257983, at *1 (S.D. Fla. Mar. 18, 2015). The reach of Sarris has extended beyond the Eleventh Circuit, on two occasions thus far. The first was a decision from the District of Minnesota. See Bais Yaakov v. Varitronics, LLC, No. CIV. 14-5008 ADM/FLN, 2015 WL 1529279, at *5 (D. Minn. Apr. 3, 2015) (citing Sarris and noting “a plaintiff is not required to establish vicarious liability … when a third party sends the unsolicited fax advertisements”). More recently, the Northern District of Illinois applied the Sarris court’s broad definition of “sender” and denied a defendant’s motion to dismiss. See Helping Hand Caregivers, Ltd. v. Darden Restaurants, Inc., No. 14 CV 10127, 2015 WL 2330197 (N.D. Ill. May 14, 2015) (“Darden”).

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FCC Chairman Proposes to Clarify TCPA Rules at June Meeting

FCC Chairman Tom Wheeler released a fact sheet and issued a blog post this week announcing that he had circulated a proposed order that would rule on the numerous petitions that companies have filed with the FCC seeking clarity on the TCPA rules. According to the Chairman, his proposal reflected in the draft order would “close loopholes and strengthen consumer protections already on the books.” The FCC is expected to vote on the Chairman’s proposal at its monthly meeting currently scheduled for June 18, 2015.

Although details have not been made public, the statements from Chairman Wheeler provide some insight as to what he has proposed:

  • The proposal would make plain that consumers may revoke their consent to receive “robocalls” and “robotexts” without the need to fill out any forms. To quote the Chairman: “Any reasonable way of saying ‘no’ is allowed.”
  • The proposal would clarify that telecommunications carriers can lawfully offer “robocall-blocking” technologies that consumers can elect to use.
  • The proposal would provide some clarification as to the definition of an automatic telephone dialing system (ATDS) under the TCPA. The Chairman’s blog post indicates that his proposal would “clarify that definition of ‘autodialers’ to include any technology with the potential to dial random or sequential numbers.” And the Chairman warned that his proposal “would ensure robocallers cannot skirt consumer consent requirements through changes in calling technology design or by calling from a list of numbers.” It remains to be seen how such a clarification would be squared with the statutory use of the term “capacity” in the definition of ATDS and whether the need for human intervention in making the calls or sending the text messages will remain as an element of the definition of ATDS.
  • The proposal would close what the Chairman calls the “reassigned number loophole.” This refers to situations where a customer consents to receiving telemarketing calls and text messages on his or her wireless number, but the telephone number is subsequently reassigned to a person who has not consented. But the Chairman’s statements also open the door to a potential safe harbor: the ruling would clarify that companies have to stop calling a number “after one call,” thus suggesting that companies may not be liable for making a call to what was (unbeknownst to them) a reassigned number. It remains to be seen how such a safe harbor would work in the context of text messages to wireless number that the sender does not know has been reassigned (and to which a recipient may nor may not respond) and whether a safe harbor might apply retroactively.
  • The proposal would allow for a limited and specific exception for urgent contact circumstances, such as calls or texts to alert consumers to possible fraud on their bank account or remind them of important medication refills.
  • The proposal would reinforce the FCC’s role in enforcing the rules through its Enforcement Bureau.

The fact sheet makes plain that the Chairman’s proposal, if adopted, will be implemented by way of issuing declaratory rulings in a single, omnibus order that adjudicates the pending petitions, which would be effective immediately upon release.

While the Chairman’s statements provide some insight as to his desired policy direction, the specifics of what will be permissible or conditionally permissible can only be guessed until the order is adopted and released and can then be reviewed in detail. We likely will know more after the FCC meets on June 18, but full details may not be available until the FCC releases its order, which may not necessarily happen on June 18.

Court Clarifies Free Offers and Dual Purpose Calls

A recent decision from the Southern District of Alabama provides more clarity as to the treatment of “dual purpose” telephone calls to wireless numbers that offer free goods and services. The Federal Communications Commission already has explained that “offers for free goods and services that are part of an overall marketing campaign to sell property, goods, or services” are advertisements under the TCPA and FCC regulations. The FCC also has explained that informational calls that are motivated in part by the intent to sell property, goods, or services are “in most instances” advertisements under the TCPA. This is true whether call recipients are encouraged to purchase, rent, or invest in property, goods, or services during the call or in the future (“such as in response to a message that provides a toll-free number”). Report and Order, In re Rules and Regulations Implementing the Telephone Consumer Protection Act of 1991, 18 FCC Rcd. 14014, ¶¶ 139-142 (2003).

The recent decision in Bennett v. Boyd Biloxi, LLC, No. 14-0330-WS-M, 2015 U.S. Dist. LEXIS 59632, at *1-2 (S.D. Ala. May 6, 2015), clarifies that the treatment of offers for free goods and services is the same whether the call is made to a wireless number or a residential number and illustrates how a call offering free goods or services can become a “dual purpose” call. The plaintiff in Bennett alleged that he had received a number of prerecorded messages from the defendant, a casino operator, on his cell phone offering him free concert tickets. The messages did not explicitly describe or attempt to sell other goods or services, but invited the plaintiff to visit the defendant’s website “to view all of your offers.”   The defendant’s website allegedly offered discounts on room reservations and food.

The court denied the defendant’s motion to dismiss, ruling that the prerecorded message constituted both advertising and telemarketing and rejecting the defendant’s argument that the FCC’s prohibition of dual purpose calls does not extend to cellular phones. The court reasoned that the FCC has confirmed its belief that “wireless subscribers should be afforded the same protections as wireline subscribers.” Id. at *12. “The defendant’s calls patently encouraged the plaintiff to visit [defendant’s] site and see what goods and services the defendant had for sale.” Id. at *7-8. Thus, as with a call to a landline, “any customer service or informational aspect to the defendant’s notification that the plaintiff was entitled to free show tickets does not insulate the defendant from liability for any advertisement or telemarketing contained elsewhere in the same message.”  Id. at *8.

Federal Court Denies Certification, Declines To Infer A Lack of Consent From A Lack Of Documentary Evidence Of Consent

The Middle District of Florida recently denied class certification because the plaintiff failed to prove that consent (or more to the point, an alleged lack of consent) could be established on a classwide basis. In doing so, it confirmed that class action plaintiffs have the burden of proving that issues are susceptible to classwide proof even though a defendant may bear the burden of proving or disproving some of those issues at trial. See Shamblin v. Obama for Am., No. 13-2428, 2015 U.S. Dist. LEXIS 54849 (M.D. Fla. Apr. 27, 2015).

Lori Shamblin alleged that Obama for America, DNC Services Corporation and New Partners Consulting, Inc. made “auto-dialed and prerecorded calls urging the recipients to vote for Barack Obama….” Id. at *4. Shamblin alleged that “two unsolicited auto-dialed calls to her cellular telephone” violated the TCPA because she did not give the Defendants her cell phone number, let alone “her express consent to call her cell phone.” Id. at *3, *5. She filed suit on behalf of not only herself but also a putative class consisting of “[a]ll persons in Florida who received one or more non-emergency telephone calls from Defendants in September through November 2012 in support of President Obama’s re-election to a cellular telephone through the use of an automatic-telephone-dialing system of an artificial or pre-recorded voice, and for whom Defendants’ records do not show prior express consent for those calls.” Id. at *11.

The Middle District of Florida recently denied certification of that class. It began by noting that “[t]he burden of proof to establish the propriety of class certification rests with the advocate of the class, and failure to establish any one of the four Rule 23(a) factors and at least one of the alternative requirements of Rule 23(b) precludes class certification.” Id. at *12 (citing Amchem Prods., Inc. v. Windsor, 521 U.S. 591, 613-14 (1997)). It then found that Shamblin had not satisfied her burden for three reasons.

First, the Court determined that “there can never be common answers to the questions of whether (1) the telephone number dialed was assigned to a cellular telephone at the time of the call and (2) whether the subscriber consented to be called.” Id. at *17. Judge Covington held that simply “list[ing] some common questions does not satisfy commonality” because there was an absence of “classwide proof on these outcome-determinative issues,” meaning that “individualized proof will be required for each and every plaintiff, which defeats the purpose of class certification.” Id. at *17, *18 (quoting Wal-Mart Stores, Inc. v. Dukes, 131 S. Ct. 2541, 2556 (2011)). Shamblin had tried to put the rabbit in the hat by defining a class that included called parties “for whom Defendants’ record do not show prior express consent,” the implication being that the burden of proof at the class certification stage should shift to the Defendant. See Shamblin, 2015 U.S. Dist. LEXIS 54849, at *11. The Court rejected her request to infer a lack of consent from a lack of documentary evidence of consent, reasoning that she was “not entitled to a presumption that all class members failed to consent” and that “Defendants have a constitutional right to a jury determination as to whether any person consented to receiving calls to their cellular telephone.” Shamblin, 2015 U.S. Dist. LEXIS 54849, at *18 (citing Rink v. Cheminova, Inc., 203 F.R.D. 648, 652 (M.D. Fla. 2001)).

Second, the Court held that even if there were a common answer to a crucial question, individualized inquiries would still predominate. Rule 23(b)(3) is satisfied when “‘the court finds that the questions of law or fact common to class members predominate over any questions affecting only individual members [predominance], and that a class action is superior to other available methods for fairly and efficiently adjudicating the whole controversy [superiority].’” Id. at *24. Defendants argued that prior express consent was obtained in a multitude of ways (e.g., signups, campaign contribution, petitions) and that “short of calling each class member to testify on the issue on consent, there is no way to determine whether the TCPA was in fact violated with each call.” Id. at *26-27. The Court agreed and held that, because the “TCPA ‘allows consent to be given orally, in writing, electronically, or by any other means, as long as the consent is expressly given to the particular entity making the call,’ …. [i]ndividualized inquiries into consent (including where, how, and when) will predominate.” Id. at *28-29 (quoting Osorio v. State Farm Bank, F.S.B., 746 F.3d 1242, 1255 (11th Cir. 2014)). In support of its decision, the Court cited several TCPA decisions denying certification due to the existence of individualized inquiries into consent. Id. at *29-31.

After determining that Shamblin had not established predominance, the Court also found that “class wide resolution of the dispute [was] not superior to other methods of adjudication.” Shamblin, 2015 U.S. Dist. LEXIS 54849, at *31. Defendants asserted that a class action was not the superior method of adjudication because individual issues predominated, alternative methods to adjudicate individual TCPA claims were both available and commonly used, and the potential for substantial aggregated damages for statutory damages that are grossly disproportionate to actual damages raised due process issues. The Court examined the superiority factors enumerated in 23(b)(3), agreed that a class action was not the superior method to adjudicate Shamblin’s claims, and placed particular emphasis on the predominance of individualized issues. Id. at *31-32 (“‘the predominance analysis … has a tremendous impact on the superiority analysis … for the simple reason that, the more common issues predominate over individual uses, the more desirable a class action lawsuit will be ….’”).

Third, the Court concluded that Shamblin’s attempt to certify a “hybrid class for injunctive and declaratory relief under Rule 23(b)(2) and monetary damages under Rule 23(b)(3)” was unsustainable because Shamblin failed to “set forth sufficient evidence to demonstrate that the monetary relief requested [did] not predominate over the injunctive and declaratory relief requested.” Id. at *24-25. Defendants argued that injunctive and declaratory relief under 23(b)(2) were categorically unavailable and the “predominant relief requested [was] monetary.” Id. at *23. Judge Covington agreed that Shamblin could not seek injunctive relief against the campaign organization since the President is constitutionally barred from running for a third consecutive term, “certification under 23(b)(2) would be improper because Obama for America cannot be enjoined from an activity that will not take place in the future.” Id. at *23.

Judge Covington’s Opinion confirms that plaintiffs have the burden of proving that critical questions can be proven on a classwide basis, even if defendants happen to bear the ultimate burden of proof on some of those issues, and that a class action is not the appropriate vehicle to navigate through a TCPA dispute when individual determinations on consent exist.


Supreme Court Grants Certiorari To Resolve Circuit Split As Second Circuit Holds That Offer Of Judgment Can Moot Named Plaintiffs’ Claims If Trial Court Enters Judgment

As we noted a few months ago, several pending Circuit appeals and a pending petition for certiorari to the United States Supreme Court foreshadowed that clarity might be coming to the question whether an offer of complete relief to a named plaintiff in a putative class action can moot the named plaintiff’s claim, and the related issue of whether named plaintiffs can continue to pursue claims on behalf of a putative class after their individual claims become moot. Last week the Second Circuit has provided a partial answer, and today the Supreme Court granted certiorari, which hopefully will put the issue to rest once and for all.

In Tanasi v. New Alliance Bank, No. 14-1389, 2015 WL 2251472 (2d Cir. May 14, 2015), the Second Circuit held that an unaccepted Rule 68 offer of judgment that provides complete relief does not, by itself, moot the claims of the named plaintiff. Instead, the named plaintiff’s claims become moot for purposes of Article III’s case or controversy requirement when the court enters judgment in the named plaintiff’s favor in accordance with the offer.

Here’s the wrinkle. In Tanasi, the Second Circuit did not hold that district courts are required to enter judgment in favor of the named plaintiff who refuses to accept an offer of complete relief. Rather, the Court suggested that district courts have discretion to do so. And the Court did not provide extensive guidance on the exercise of such discretion, other than noting that the purpose of Rule 68 is “to encourage settlement and avoid litigation,” and that entry of judgment is appropriate if the parties so agree, or if “a defendant “unconditionally surrenders” and “only the plaintiff’s obstinacy or madness prevents her from accepting total victory.” The Court did not suggest that this was an exhaustive list of scenarios in which a district court should enter judgment, nor did it overrule prior case law addressing this issue.

Because the district court in Tanasi never entered judgment in favor of the named plaintiff, the Second Circuit concluded that his “individual claims were not rendered moot ‘in the constitutional sense’ by the unaccepted Rule 68 offer,” and affirmed, albeit on alternate grounds, the district court’s decision that it had subject matter jurisdiction over the case. In a separate case involving a similar issue, the Second Circuit — relying on Tanasi — summarily vacated an order dismissing a class action as moot because the district court did not enter judgment in favor of the named plaintiff in accordance with the defendant’s offer of judgment. See Franco v. Allied Interstate, LLC, 14-1464 (2d Cir. May 18, 2015).

The Tanasi Court expressly left for another day the question of what happens to the putative class claims after a named plaintiff’s individual claims are rendered moot. That day likely is coming soon. Today, the United State Supreme Court granted certiorari in a TCPA class action that involves the issue of whether the entire case is rendered moot for purposes of Article III when the named plaintiff receives an offer of complete relief. Gomez v. Campbell-Ewald Co., 768 F.3d 871 (9th Cir. 2014), cert. granted sub nom. Campbell-Ewald Co. v. Gomez, 2015 WL 246885 (U.S. May 18, 2015) (No. 14-857). Our prior post about the Ninth Circuit’s decision in Campbell-Ewald is available here. Stay tuned for further developments.