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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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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:

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What’s the Purpose of the Emergency Purpose Statutory Exemption?

As we’ve noted in the past, there are a number of TPCA petitions for declaratory ruling or requests for interpretation of the TCPA statute or FCC rules on a range of issues relating to the definition of an autodialer, seeking a range of common sense rules or processes for dealing with recycled number issues, among others. A recently filed Petition, by Blackboard, Inc. (“Blackboard”), represents a new wrinkle in the fabric of interesting technological and practical challenges under the TCPA that can adversely affect the delivery of important and timely information to parties interested in receiving it.   Blackboard is an educational services platform provider seeking clarification from the FCC that the TCPA does not apply to “informational, non-commercial, non-advertising, and non-telemarketing autodialed and prerecorded messages sent by Blackboard’s educational institution customers because those calls are made for ‘emergency purposes.’”

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Court Grants Summary Judgment to Plaintiff Class in Blast Fax Case, Awards More Than $22 Million in Statutory Damages

In September, we reported that a court in the District ofNew Jersey denied the defendants’ motion for summary judgment in a “fax blast” class action, concluding that the defendants could be directly liable under the TCPA for fax advertisements they did not actually send, but rather that were sent by a third-party marketing firm to promote the defendants’ goods or services. See City Select Auto Sales, Inc. v. David Randall Associates, Inc., No. 11-2658, 2014 WL 4755487 (D.N.J. Sept. 24, 2014) (“City Select I”).

Six months later, relying heavily on that earlier ruling, the court has entered summary judgment on behalf of the plaintiff class and awarded it statutory damages of $22,405,000. City Select Auto Sales, Inc. v. David Randall Associates, Inc., et al., No. 11-2658, 2015 WL 1421539 (D. N.J. Mar. 27, 2015) (“City Select II”).

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Failure to Identify Fax Recipients Shows Putative Class Is Not Ascertainable

A court in the Northern District of Illinois recently denied class certification in a “fax blast” case because the plaintiff failed to meet its burden of proof in showing that the putative class was ascertainable where there was no evidence identifying the recipients of the faxes. Physicians Healthsource, Inc. v. Alma Lasers, Inc., et al., No. 12-4978, 2015 U.S. Dist. LEXIS 41339 (N.D. Ill. Mar. 31, 2015).

From the perspective of defense counsel, this case is a reminder of the importance of holding plaintiffs to their burden proof in showing that all of Rule 23’s requirements are satisfied when opposing a motion for class certification. As we have written previously, plaintiffs face a hurdle in showing a class is ascertainable where there is no objective criteria establishing the identities of recipients of a particular communication.

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Take Care When Crafting an Offer of Judgment

In Compressor Eng’g Corp. v. Thomas, Case No. 10-10059, 2015 U.S. Dist. LEXIS 20079 (E.D. Mich. Feb. 19, 2015), Defendant Charles Thomas Jr. sought to moot the claim of Plaintiff Compressor Engineering Corporation (“Compressor”) by making an offer of judgment for $1,500, the maximum statutory award for a single violation of the TCPA.

Compressor filed suit after receiving an allegedly unsolicited fax and sought to certify a class of “[a]ll persons that are holders of telephone numbers to which a facsimile transmission was sent on behalf of Defendant advertising the goods or services of Defendant at any time from August 13, 2005 to present….” Id. at 4. In addition to seeking monetary damages, Compressor also sought injunctive relief.

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Fail-Safe Class Fails in the Eastern District of Pennsylvania

In Zarichny v. Complete Payment Recovery Servs., Civ. No. 14-3197, 2015 U.S. Dist. LEXIS 6556 (Jan. 21, 2015), Plaintiff Sandra Zarichny attempted to bring a class action on behalf of two classes against defendants Fidelity National Information Services (“FIS”) and Complete Payment Recovery Services (“CPRS”). Id. at *1-2. Zarichny alleges that the defendants called her eleven times because they incorrectly believed that she owed a debt based on her alleged failure to return textbooks that she rented. Id. at 7-8. In her complaint, Zarichny alleged that the Defendants deliberately harassed her by calling at inconvenient times. Id. at 9. Zarichny alleged that both corporations violated the TCPA and the Fair Debt Collections Practices Act (the “FDCPA”).

Fidelity and CPRS brought a motion to dismiss Zarichny’s complaint and a motion to strike her class allegations, which the court granted in part and denied in part.

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You Still Can’t Violate the FDCPA by Complying With It…

In Gomez v. Oxford Law, 3:14-cv-00477, 2015 U.S. Dist. LEXIS 345, * 3 (M.D. Pa. Jan. 5, 2014), Ninouska Gomez filed suit under the Fair Debt Collection Practices Act (the “FDCPA”) after receiving a message from Oxford Law, which used an autodialer to leave the message. In their statement of undisputed facts, Gomez and Oxford Law agree that Gomez heard the following message: “… please hang up or disconnect. If you are Gomez, Vinouish please continue to listen to this message. There will now be a three second pause in this message.” The message was designed to comply with 15 U.S.C. § 1692c(b), the portion of the FDCPA that prohibits debt collectors from revealing information about a debtor to third parties.

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District of Connecticut Blocks Pick-Off Attempt (Twice)

In Mey v. Frontier Communs. Corp., No. 3:13-1191-MPS, 2014 U.S. Dist. LEXIS 161675 (D. Conn. Nov. 18, 2014), Plaintiff Diana Mey alleged that she received two calls to her cell phone from Frontier’s automatic telephone dialing system. Id. at *2-3. Mey filed a complaint against Frontier and simultaneously moved for class certification. Id. at *4-5. Two months later, Frontier wrote to Mey and offered to settle her claims with a payment of $6,400 plus taxable costs and entry of prospective injunctive relief.  Mey declined. Id. Frontier then moved to dismiss, arguing that the court lacked subject matter jurisdiction because Frontier’s offer had “mooted Ms. Mey’s individual claim and all potential class claims.” Id.

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Pending TCPA Petitions (Grouped by Primary Subject Matter)

As 2015 begins, we thought that providing a roundup of and the links to pending FCC TCPA petitions might be useful. The list includes most pending petitions filed since the FCC’s revised TCPA rules came into effect, with the exclusion of the many “blast fax” petitions for retroactive relief. We have grouped the petitions by primary subject matter (consent, ATDS definition, or other). We will update this list periodically.

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