Internal DNC Policies Not Prerequisite to Using EBR Defense, Ohio Southern District Holds

Earlier this month, the U.S. District Court for the Southern District of Ohio clarified that a TCPA defendant need not maintain an internal do-not-call list and policies in order to invoke the “established business relationship” defense for telemarketing calls to numbers on the national DNC registry.

By way of background, the TCPA prohibits businesses from making “telephone solicitations” to phone numbers on the national DNC registry.  47 U.S.C. § 227(c); 47 C.F.R. § 64.1200(c).  However, telemarketing calls and messages can be sent to such numbers where the caller has an “established business relationship” with the recipient.  47 U.S.C. § 227(a)(4); 47 C.F.R. § 64.1200(f)(15)(ii).  The FCC has defined an “established business relationship” (“EBR”) as a “relationship formed by a voluntary two-way communication” regarding a telephone subscriber’s recent purchase of or inquiry about a product sold by the caller.  47 C.F.R. § 64.1200(f)(5).  A subscriber can terminate the EBR at any moment by making a clear and specific request for the calls and/or messages to stop.  Id. § 64.1200(f)(5)(i).  Separately, 47 C.F.R. § 64.1200(d) requires entities who place telemarketing calls to keep an internal list of individuals who have requested not to receive calls and to maintain policies to ensure that the list is honored.

In LaGuardia v. Designer Brands, Inc., No. 2:20-cv-2311, 2022 WL 1121382 (S.D. Ohio Apr. 14, 2022), the plaintiffs claimed that the defendants violated the TCPA and Section 64.1200(c) by sending telemarketing text messages to the plaintiffs, whose numbers were on the national DNC list.  On motion for summary judgment, the defendants argued that they had an “established business relationship” with the plaintiffs that allowed them to send the promotional messages.  Plaintiffs contended in response that the defendants’ failure to maintain an internal DNC list and policies barred them from relying on the EBR exception.  The court agreed and denied the defendants’ motion for summary judgment.

On the defendants’ motion for reconsideration, the court switched course and held that compliance with Section 64.1200(d) has no bearing on whether a defendant may claim the EBR defense for calls to numbers on the national DNC registry.  As the court explained, the EBR exception arises from Section 64.1200(c), and it does not make sense to “conflate[]” that section with the internal DNC requirements of Section 64.1200(d).  2022 WL 1121382, at *2.  In other words, a defendant can rely on the existence of an EBR with the plaintiff as a defense to a national DNC claim, even if the defendant failed to maintain an internal DNC list and policies.  “Accordingly, the Court erred by requiring Defendants to demonstrate that they had adequate [internal DNC] procedures in place as a prerequisite to establishing an EBR with Plaintiffs[.]”  Id.

The court went on to find that the plaintiffs had an EBR with the defendants because they had enrolled their phone numbers in the defendants’ “VIP Rewards Program” and had recently made purchases at the defendants’ stores.  However, the plaintiffs had subsequently terminated the EBR by texting “STOP” in response to one of the defendants’ texts, after which they continued to receive promotional messages.  Since the EBR was not in effect at the time of these texts, the court concluded that summary judgment for defendants was not warranted.

LaGuardia makes clear that the EBR exception is self-contained and may be used as a defense to DNC claims even where a defendant’s internal DNC compliance could use improvement.  As a matter of logic, and based on the statutory structure, failure to comply with Section 64.1200(d)’s internal list and policy requirement shouldn’t allow a plaintiff to sue under Section 64.1200(c) where the parties have a genuine existing business relationship.  The court in LaGuardia recognized this and clarified the correct rule.

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