Barr Ruling Cures Claims Arising During Life of Government-Debt Exception, Holds Texas District Court

Last week, the U.S. District Court for the Southern District of Texas concluded that plaintiffs can bring claims for violations of 47 U.S.C. § 227(b) that arose while the government-debt exception (“GDE”) to that provision was still on the books.  The decision comes amid growing contention among courts in the wake of the U.S. Supreme Court’s decision last year in Barr v. American Association of Political Consultants, 140 S. Ct. 2335 (2020), which struck down the GDE as an unconstitutional content-based restriction on speech.

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FCC Seeks to Assess a $5.1 Million TCPA Fine from Political Operatives Behind Alleged Anti-Voting Phone Calls

The Federal Communications Commission has proposed to slap a Virginia political firm and two of its principals with a $5,134,500 fine for placing over one thousand prerecorded phone calls to cell phones across the country without prior consent from recipients, in violation of the TCPA and Commission rules. The action is the FCC’s first big enforcement matter under the recently enacted Telephone Robocall Abuse Criminal Enforcement and Deterrence (“TRACED”) Act and demonstrates the Commission’s willingness to use that statute to assess hefty penalties against noncompliant entities.

Under the 2019 TRACED Act, the Commission may issue a “Notice of Apparent Liability for Forfeiture” to an entity that violates the TCPA’s prohibitions on prerecorded voice messages and autodialing systems, without first having to issue a warning to the entity. See Pub. L. No. 116-105, 133 Stat. 3274, Sec. 3(a). The defendant then has an opportunity to challenge the allegations before the Commission issues a final decision on liability and fines. See FCC, Enforcement Primer (“FCC-Initiated Investigations”). Prior to the TRACED Act, FCC rules required the Commission to issue a citation to an alleged violator of § 227(b) before it could seek to impose a forfeiture penalty upon them.

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Private Cause of Action Exists for Violations of Do-Not-Call Rule, North Carolina Federal Judge Says

Last week, Judge James C. Dever III of the U.S. District Court for the Eastern District of North Carolina handed down a decision of first impression for that court: the FCC’s do-not-call rule, 47 C.F.R. § 64.1200(d), creates a private right of action for telephone subscribers who receive calls in violation of that rule’s “minimum standards.” The decision widens the growing split among federal courts as to which provision of the TCPA gives life to the DNC rule.

On its motion to dismiss, the defendant argued that the plaintiff could not maintain an action for alleged violations of § 64.1200(d) because the FCC promulgated that rule under 47 U.S.C. § 227(d), which does not create a private right of action for violations of implementing regulations. Fischman v. MediaStratX, LLC, No. 2:20-CV-83-D, 2021 WL 3559639, at *4 (E.D.N.C. Aug. 10, 2021). In opposition, the plaintiff argued that the rule was actually passed pursuant to 47 U.S.C. § 227(c), which does create a private right of action for such violations. Id.

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Telemarketers’ Alleged Conduct Establishes Personal Jurisdiction over Principal with No Direct Forum Ties, Seventh Circuit Holds

The Seventh Circuit has reversed a decision from last year by the U.S. District Court for the Northern District of Illinois dismissing a TCPA claim for lack of personal jurisdiction over an alleged principal of the caller.  That decision, which we covered here, concluded that the plaintiff had not established an agency relationship between defendant Health Insurance Innovations, Inc. (“HII”) and the unnamed “lead generators” that had made the allegedly unsolicited calls.  Bilek v. Fed. Ins. Co., No. 19-8389, 2020 WL 3960445, at *5 (N.D. Ill. July 13, 2020).  As a result, the Northern District held that it lacked specific personal jurisdiction over HII, which had no connection to the forum state beyond its alleged relationship with the telemarketers that called the plaintiff in Illinois.  Id.

On appeal, the plaintiff argued that he had plausibly alleged an agency relationship and that the district court should therefore have imputed the caller’s conduct to HII when assessing whether it could exercise specific personal jurisdiction over the latter.  Bilek v. Fed. Ins. Co., No. 20-2504, 2021 WL 3503132, at *6 (7th Cir. Aug. 10, 2021).

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Eastern District of Pennsylvania Court Holds Text Claim Satisfies Article III, Then Dismisses for Failure to Allege Enough Facts to Make Claim Plausible

A judge in the U.S. District Court for the Eastern District of Pennsylvania recently concluded that receipt of unwanted text messages in violation of the TCPA can constitute an injury-in-fact for purposes of Article III standing, but nevertheless dismissed the claim (without prejudice) pursuant to Rule 12(b)(6) based on its threadbare allegations.

In Camunas v. National Republican Senatorial Committee, the plaintiff (Rolando Camunas) alleged that he received no less than six unsolicited text messages from the defendant (NRSC) asking him to donate to a political party.  Civil Action No. 21-1005, 2021 WL 2144671, at *1 (E.D. Pa. May 26, 2021).  In his complaint, Camunas described the messages as “generic and obviously pre-written” and alleged that they were sent using an automatic telephone dialing system (ATDS), in violation of the TCPA.  Id.

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Sixth Circuit Rejects Strict Liability for Products Advertised via Fax, “Some Level of Knowledge” Required

The U.S. Court of Appeals for the Sixth Circuit recently re-affirmed its position that manufacturers of products advertised in unsolicited fax messages do not face strict liability under the TCPA’s junk-fax provision.  To face liability, the manufacturers must at least be aware that fax advertisements are being sent.

In Lyngaas v. Curaden AG, a dentist sued a Swiss toothbrush manufacturer, Curaden AG, and its American subsidiary, Curaden USA, for sending unsolicited fax advertisements for their toothbrushes.  992 F.3d 412, 417 (6th Cir. Mar. 24, 2021).  The district court concluded that Curaden AG could not be held liable for the faxes because Curaden USA had designed and broadcasted the faxes on its own, without parent authorization.  Id. at 423.  On appeal, the dentist argued that FCC regulation extended liability to any entity “whose goods or services are advertised or promoted” in a fax, regardless of knowledge.  Id. at 424 (quoting 47 C.F.R. § 64.1200(f)(10)).

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Supreme Court Adopts Narrow Autodialer Definition

In a decision issued this morning, the Supreme Court settled a long-running debate over the scope of the TCPA’s “automatic telephone dialing system” definition: “whether that definition encompasses equipment that can ‘store’ and dial telephone numbers, even if the device does not ‘us[e] a random or sequential number generator.” Facebook, Inc. v. Duguid, 592 U.S. — (2021).

The Court unequivocally held that devices that merely store numbers from a premade list do not qualify as autodialer systems subject to the TCPA. “To qualify as an [ATDS],” explained Justice Sotomayor, writing for Court, “a device must have the capacity either to store a telephone number using a random or sequential generator or to produce a telephone number” using either form of generation. Id. at 1.

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Auto Service Contractor Not Subject to Court’s Jurisdiction in Texas Resident’s TCPA Claim, Holds State’s Federal Northern District

The Northern District of Texas handed down a decision exploring the jurisdictional limitations on TCPA plaintiffs’ ability to hale out-of-state defendants into a plaintiff’s local federal court.

The case, Horton v. Sunpath, Ltd., involved a Texas resident (Lucas Horton) who launched a TCPA suit against a Massachusetts-based corporation (Sunpath).  Horton alleged that Sunpath’s agent, Northcoast Warranty Services, placed several calls to his cell phone using an automatic telephone dialing system and pre-recorded messages, despite the number’s listing on the National Do-Not Call Registry.  No. 3:20-cv-1884-B-BH, 2021 WL 982344, at *1 (N.D. Tex. Feb. 16, 2021).  On the calls, Horton stated, Northcoast encouraged him to purchase an auto service policy administered by Sunpath.  Id.  The calls continued for about three months until Horton purchased a policy from Sunpath in May 2020.  Id.  Horton filed suit against Sunpath about a month later in the Northern District of Texas.  Id.

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Seventh Circuit Reaffirms Gadelhak, Rejects Challenge to Narrow ATDS Definition

The Seventh Circuit last week affirmed its holding in Gadelhak v. AT&T Services, Inc., 950 F.3d 458 (7th Cir. 2020) that, to qualify as an “automatic telephone dialing system” (ATDS) under the TCPA, a device or calling system must have the ability to randomly or sequentially generate the phone numbers that it calls. As we reported here and here, this interpretation of the statute’s ATDS definition excludes systems and devices that place calls from a premade list of numbers, such as a list of customers’ mobile numbers. Courts remain divided on how to interpret the ATDS definition and the Supreme Court is expected to address the issue in a case that is currently before it, Facebook, Inc. v. Duguid.

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Eastern District of Texas Holds that Professional TCPA Litigant Can Face Counterclaims for Fraud

A federal magistrate judge in the Eastern District of Texas recently addressed a question of first impression for the jurisdiction: Can professional plaintiffs who manufacture TCPA claims face counterclaims for fraud brought by the defendant in an abusive lawsuit? According to the magistrate and the district judge that adopted her recommendation, the answer is yes.

In Cunningham v. USA Auto Protection, LLC, the plaintiff—professional litigant Craig Cunningham—alleged that defendant USA Auto Protection (USA Auto) made over twenty telemarketing calls to Cunningham’s cell phone without his consent. Case No. 4:20-cv-142, 2021 WL 434243, at *1 (E.D. Tex. Jan. 8, 2021).

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