Defendants’ discussions of the Third Circuit’s recent decisions in Leyse v. Bank of America and Dominguez v. Yahoo have been all doom and gloom. Some of that disappointment is understandable, as the Third Circuit vacated notable defense rulings and expanded the scope of consumers who have statutory standing to file suit under the TCPA. On closer examination, however, both of the decisions offer not only a sword to plaintiffs but a shield to defendants. This is the first of two posts that will dissect those decisions and discuss their implications for the ever-growing number of defendants that are facing TCPA claims.
Leyse v. Bank of America:
Who Has Standing To Sue?
In Leyse, a telemarketer placed a single prerecorded telemarketing call to a residential telephone that was shared by roommates Mark Leyse and Genevieve Dutriaux. Leyse filed a putative class action in the District of New Jersey (and, as it happens, several other courts across the country) and alleged that neither he nor Dutriaux had consented to the call.
The defendant moved to dismiss Leyse’s claims because it had intended to call Dutriaux, and as the unintended recipient of the call Leyse should not qualify as a “called party” who would have standing to sue under the statute. (For prior discussions of the term “called party,” see here.) Leyse opposed that motion and argued that the statute permits any “person or entity” to sue irrespective of whether they are a “called party.” The trial court granted the motion and dismissed Leyse’s claim, reasoning that Leyse was at most an incidental recipient of the call who consequently lacked statutory standing. Leyse then took an appeal to the Third Circuit.
The Third Circuit recently reversed. In doing so, it rejected the line of cases that had held that statutory standing extends only to a “called party,” which some courts have interpreted as the “intended recipient” and others have interpreted as the phone’s “subscriber,” “regular user,” or “primary user.” Instead, it held that Section 227(b)(1)(B) identifies who must provide consent (the “called party”) and Section 227(b)(3) identifies who may file suit (any “person or entity”). See Opinion at 12-13 nn.6-9 (citing cases). Simply put, in the Third Circuit’s view, “the text of [Section 227] does not limit the universe of plaintiffs who may file suit….” Id. at 14.
But the Third Circuit went on to explain that standing is not unlimited. On the contrary, standing is limited not only by “Article III of the U.S. Constitution,” which provides that “only certain plaintiffs will have suffered the particularized injury required to maintain an action in federal court,” id. at 14, but also by the Supreme Court’s decision in Lexmark Int’l, Inc. v. Static Controls Components, Inc., 134 S.Ct. 1377, 1388 (2014), which held that “a statutory cause of action extends only to plaintiffs whose interests ‘fall within the zone of interests protected by the law invoked.’” Id. at 15. The decision is notable because it appears to be one of the first to apply the Lexmark standard to the TCPA.
The remainder of the decision focused on trying to “delineate the zone of interests protected by the statute,” which the Third Circuit did by “looking at the prohibitions that the private right of action is intended to enforce.” Id. at 16. It concluded as follows:
It is the actual recipient, intended or not, who suffers the nuisance and invasion of privacy. This does not mean that all those within earshot of an unwanted robocall are entitled to make a federal case out of it. Congress’s repeated references to privacy convince us that a mere houseguest or visitor who picks up the phone would likely fall outside the protected zone of interests. On the other hand, a regular user of the phone line who occupies the residence being called undoubtedly has the sort of interest in privacy, peace, and quiet that Congress intended to protect….
Id. at 21. Because the Court concluded that standing depends on who actually answered the call, it closed by noting that “the burden of proof will, therefore, be on Leyse in the District Court to demonstrate that he answered the telephone when the robocall was received.” Id. at 23.
The outcome of the Third Circuit’s application of the Lexmark standard is troubling to be sure; because there is no way to prevent a third party from answering a call, there is no foolproof way to prevent lawsuits like this one. But all is not lost. On the contrary, a defendant will still be able to defend a case like this by showing that it had consent from the “called party.” See id. at 22 (“The caller may invoke the consent of the ‘called party’ as a defense even if the plaintiff is someone other than the ‘called party.’ Thus, if Dutriaux were the ‘called party’ by virtue of being the intended recipient of the calls, her consent to receive robocalls would shield Bank of America from any suit brought by Leyse.”).
Moreover, the court went out of its way to note that it was not deciding the meaning of the term “called party,” which is one of the principle issues being reviewed by the D.C. Circuit in the consolidated appeal from the FCC’s July 10th Declaratory Ruling and Order. See id. at 18 (“the parties did not brief the issue, and we need not decide it here.”). Accordingly, defendants in the Third Circuit can continue to argue that the “called party” is the intended rather than actual recipient of a call. Defendants can also continue to dispute whether a plaintiff has constitutional standing, which is a separate issue that the Supreme Court will soon revisit. See id. at 15 n.11.
But the most important implication of the ruling may be the one that the court does not discuss, namely its effect on class certification. Because class certification is the point at which claims can go from annoying to annihilating, any additional arrow in defendants’ quiver is a good thing. And the Leyse decision appears to be just that. For example, if the proper plaintiff in a TCPA case is the consumer who “answered the telephone when the robocall was received,” id. at 23, and answering parties only have constitutional and statutory standing if they not only have an “injury in fact” but also are a “regular user of the phone line who occupies the residence,” it follows that plaintiffs in a putative class action must prove that they can establish those things on a classwide basis. It is difficult to fathom how references to a calling log alone would ever be able to ascertain such people, let alone prove their claims on a classwide basis. So while the Leyse decision may make it easier for certain consumers to assert individual claims, it also appears to make it harder for consumers to certify a class action.