Artful Pleading Won’t Circumvent Sovereign Immunity, Fourth Circuit Says

In Cunningham v. Lester, —F.3d—, 2021 WL 821467 (4th Cir. Mar. 4, 2021), the Fourth Circuit reiterated that the doctrine of sovereign immunity is alive and well and very much applicable to putative TCPA claims, and that crafty plaintiffs cannot artfully plead around the doctrine’s reach.

The Affordable Care Act (ACA) contains a provision requiring the U.S. Department of Health and Human Services, Centers for Medicare & Medicaid Services (CMS) to “establish a system” so applicants “receive notice of eligibility for an applicable State health subsidy program.” 42 U.S.C. §§ 18083(a), (b)(2), (e). CMS contracted with private company GDIT to fulfill CMS’s requirement that it contact individuals to inform them of their eligibility for participation in the subsidized health insurance plans offered through ACA’s health insurance exchanges. Defendants were individuals working for CMS in connection with the CMS-GDIT contract. Defendants instructed GDIT to prerecord a message and deliver it to approximately 680,000 individuals who had not consented to receive the message.

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Another District Court Joins Creasy Split

Recently, the Eastern District of Missouri added to the split among courts deciding whether they can hear TCPA claims alleging robocall violations that occurred when the now-invalidated government debt exception was part of the statute.  As we have previously reported on here, some district courts have joined Creasy v. Charter Communications, Inc., 2020 WL 5761117 (E.D. La. Sept. 28, 2020), in holding that subject matter jurisdiction is lacking in such cases, but a growing number—now including the Eastern District of Missouri—have disagreed.  Miles v. Medicredit, Inc., No. 4:20-cv-001186, 2021 WL 872678 (E.D. Mo. Mar. 9, 2021).

The scenario at issue in this case is a familiar one.  Defendant Medicredit is a medical debt collector.  Plaintiff Miles contended that Medicredit violated the TCPA’s prohibition on making calls using an ATDS or an artificial or prerecorded voice by placing six such calls to his cell phone, without his consent, in January and February 2018.  Not so, Medicredit responded, for the prohibition at issue, 47 U.S.C. § 227(b)(1)(A)(iii), was unconstitutional at the time Medicredit allegedly made the calls to Miles because the provision contained an exception, for calls to collect government debts, that the Supreme Court later invalidated as a content-based restriction on speech that violated the First Amendment.  Thus, Medicredit argued in its motion to dismiss that the court, having no statutory basis to enforce the alleged violations, lacked subject matter jurisdiction to hear the suit.

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Southern District of California Dismisses TCPA Claim Due to Speculative ATDS Allegations

The Southern District of California recently dismissed the TCPA case Hildre v. Heavy Hammer, Inc., No. 3:20-cv-00236, 2021 WL 734431 (S.D. Cal. Feb. 25, 2021), for the plaintiff’s failure to adequately allege that the defendants had used an automatic telephone dialing system (“ATDS”) when placing calls.

The plaintiff alleged that the defendants called him using an ATDS without first obtaining his consent.  Specifically, he claimed that the out-of-state defendant called him twice using a California telephone number.  After the first call, plaintiff claimed that he asked to be removed from the call list.  When plaintiff received the second call, he alleges that there was a “noticeable pause” after he answered.

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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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Senescence and Sensibility: Will the Supreme Court Mothball the TCPA?

TCPA Blog’s Mike Daly authored an article for the American Bar Association’s Consumer Litigation Committee titled, “Senescence and Sensibility: Will the Supreme Court Mothball the TCPA?” that discusses developments around TCPA’s autodialer restriction. The article addresses the dispute between courts over what qualifies as an ATDS and the impact the dispute has had on businesses trying to comply with the statue when its scope varies between circuit courts. The article also highlights how what constitutes an ATDS may finally be resolved in Facebook v. Duguid and what the case’s decision could mean for pending cases.

The full article is available for American Bar Association’s Consumer Litigation Committee subscribers.

TCPA Plaintiff Argues He Wasn’t Injured in Attempt to Dodge Federal Jurisdiction

Usually, it is the plaintiff that argues he or she was injured, not the defendant. But, in an effort to stay in state court, some TCPA plaintiffs have taken the counterintuitive position that they did not suffer an injury in fact under Article III of the U.S. Constitution and, therefore, their claims cannot be heard in federal court.

“[T]o satisfy Article III’s standing requirements, a plaintiff must show (1) it has suffered an ‘injury in fact’ that is (a) concrete and particularized and (b) actual or imminent, not conjectural or hypothetical; (2) the injury is fairly traceable to the challenged action of the defendant; and (3) it is likely, as opposed to merely speculative, that the injury will be redressed by a favorable decision.” Friends of Earth, Inc. v. Laidlaw Environmental Servs. (TOC), Inc., 528 U.S. 167, 180–181 (2000).

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FCC Order Causes Confusion Regarding Consent Required for Informational Calls to Residential Landlines

On December 30, 2020, the FCC issued a Report and Order (the December 2020 FCC Order) to implement Section 8 of the Pallone-Thune Telephone Robocall Abuse Criminal Enforcement and Deterrence Act (TRACED Act). The December 2020 FCC Order contains a critical internal inconsistency that has caused significant confusion regarding the level of consent required for certain prerecorded informational calls to residential landlines. As discussed below, the inconsistency is almost certainly the result of a drafting error.

The relevant terms of the TRACED Act state that the FCC must ensure that any exemptions to Section 227(b)(2)(B) or (C) of the TCPA include specific limits on “the number of such calls that may be made to a particular called party.” Dec. 2020 FCC Order ¶ 2 (citing TRACED Act, Pub. L. No. 116-105, 133 Stat. 3274, § 8 (2019)). The December 2020 FCC Order amends 47 C.F.R. § 64.1200(a)(3)(ii)-(iii) to limit the number of calls that a caller can make to a residential landline under the exemption for “informational” calls to three such calls within any thirty-day period.

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Another Court Rejects Threadbare Allegations of So-Called Vicarious Personal Jurisdiction

The District of Arizona recently dismissed Winters v. Grand Caribbean Cruises, Inc., No. 20-0168, 2021 WL 511217 (D. Ariz. Feb. 11, 2021), for lack of personal jurisdiction, finding that the plaintiffs had failed to establish that the caller’s contact with Arizona could be imputed to Grand Caribbean.

The plaintiffs alleged that Grand Caribbean violated the TCPA by using a prerecorded voice to initiate calls to numbers on the Do-Not-Call Registry.  Grand Caribbean moved to dismiss for lack of personal jurisdiction, among other things.

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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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Two More District Courts Disagree with Creasy

Confusion continues amongst federal district courts in the wake of Barr v. American Association of Political Consultants, Inc. (“AAPC”), 140 S. Ct. 2335 (2020), the Supreme Court decision that held the TCPA’s government-debt exception—instituted via a 2015 amendment to the statute—violated the First Amendment. Courts recently have dealt with the issue of whether plaintiffs can bring TCPA claims for conduct occurring between 2015 and July 2020, the date the unconstitutional amendment was passed and the date the Supreme Court declared the amendment unconstitutional and ordered it severed from the TCPA. The Eastern District of Louisiana said the answer to this question is no. Creasy v. Charter Communications, Inc., 2020 WL 5761117 (E.D. La. Sept. 28, 2020). The district courts for the Southern District of California and the Northern District of Ohio disagree, as we discuss below. Our prior posts on this issue, which we have been following closely, can be found here.

In McCurley et al. v. Royal Sea Cruises, Inc., 2021 WL 288164 (S.D. Cal. Jan. 28, 2021), and Less v. Quest Diagnostics Incorporated, 2021 WL 266548 (N.D. Ohio Jan. 26, 2021), defendants argued that TCPA claims arising during the above-mentioned time period were barred because the TCPA was entirely unconstitutional during that period. Both the McCurley and the Less courts disagreed, though the two courts differed in their rationales.

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