FCC Releases Declaratory Ruling Addressing the TCPA Compliance Status of Ringless Voicemails

On November 21, 2022, the Federal Communications Commission (FCC) released a Declaratory Ruling and Order (Declaratory Ruling), in which it determined that “ringless voicemail” to wireless phones requires prior consumer consent to transmit because it is a “call” made using an artificial or prerecorded voice and thus is covered under section 227(b)(1)(A)(iii) of the 1991 Telephone Consumer Protection Act (TCPA). The Declaratory Ruling was issued even though the petitioner, All About the Message, LLC (AATM) had requested withdrawal of its 2017 Petition for Declaratory Ruling seeking to have the FCC declare that ringless voicemail, based on the technology and the lack of direct charge to wireless consumers, is not subject to the TCPA and the agency’s implementing rules. Addressing AATM’s withdrawal request, the FCC stated that it believed a ruling was necessary to resolve a controversy and remove uncertainty about the status of ringless voicemail under the TCPA.

Codified in section 227 of the Communications Act of 1934, the TCPA addresses certain practices considered to be an invasion of consumer privacy or, in some instances, a risk to public safety. Section 227(b)(1)(A)(iii) prohibits making any non-emergency call using an automatic telephone dialing system (autodialer) or an artificial or prerecorded voice to a wireless telephone number without the prior express consent of the called party. AATM sought an FCC ruling that delivery of a voicemail message directly to a consumer’s cell phone voicemail is not covered by the TCPA. AATM relied on several arguments, but primarily claimed that its ringless voicemail message was not a “call” because its proprietary software creates a landline-to-landline session directly to the telephone company’s voicemail server without charge to the subscriber and is not shown as a call on any consumer bill.

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DNJ Enters Default Judgment on Breach of Contract Counterclaim in Manufactured TCPA Lawsuit

The United States District Court of New Jersey recently granted default judgment to Defendant Slack Technologies (“Defendant”) for its breach of contract counterclaim against Plaintiff Gino D’Ottavio (“Plaintiff”), who deliberately sent himself over 1,500 text messages but represented that the texts were unsolicited and sent improperly by Defendant.

In D’Ottavio v. Slack Technologies, No. 1:18-cv-09082-NLH-AMD, 2022 WL 15442211 (D. N.J. Oct. 26, 2022), Plaintiff filed a lawsuit against Defendant for allegedly knowingly and/or willfully and negligently violating the Telephone Consumer Protection Act (“TCPA”), 47 U.S.C. § 227. Plaintiff asserted he received numerous unsolicited text messages after signing up for Defendant’s service. Defendant denied Plaintiff’s claims and asserted that Plaintiff abused a feature on Defendant’s website. Defendant specifically asserted, “Plaintiff is a serial filer of TCPA claims who personally solicited 1,590 text messages from Defendant by entering his own phone number and clicking a ‘SEND LINK’ button in an effort to manufacture a lawsuit.” Defendant brought four counterclaims against Plaintiff: (1) willful and wanton misconduct; (2) common-law fraud; (3) breach of express contract; and (4) breach of the implied covenant of good faith and fair dealing.

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Second Circuit Reaffirms that Solicited Faxes are Not Subject to Certain TCPA Protections, Grants Judgment Suggested by Defendant

The Second Circuit recently affirmed a Southern District of New York judgment denying injunctive relief against Educational Testing Service (“ETS”), which was sought by serial TCPA-plaintiff, Bais Yaakov of Spring Valley.  See Bais Yaakov of Spring Valley v. Educational Testing Service, No. 21-399-cv, No. 21-541-cv, 2022 WL 6543814 (2d Cir. Oct. 31, 2022).

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The FCC Has Illegal and Scam Robotexting in its Sights, Proposed New Text Blocking Rules

For those regularly monitoring the FCC’s various TCPA dockets, you now have a new docket to follow: CG Docket No. 21-402. The FCC announced on September 27, 2022 that all Commissioners had voted to commence a new robotext proceeding, releasing the text of a Notice of Proposed Rulemaking (Notice) the same day. Comments and reply comments will be due 30 and 45 days respectively from the time a summary of the Notice is published in the Federal Register, which has not yet occurred as of the publication of this post.

In the Notice, the FCC states that it is receiving an increasing number of consumer complaints about fraudulent or scam texts and proposes to require wireless carriers to block “illegal” or “highly likely to be illegal” text messages at the network level “that purport to be from invalid, unallocated, or unused numbers, and numbers on a Do-Not-Originate (DNO) list.” If adopted, this blocking standard would be similar to the network-based call blocking that the FCC authorized in 2017 and has continued to refine in subsequent proceedings.

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Eleventh Circuit Applies TransUnion and Vacates Class Certification

The Eleventh Circuit recently decertified a TCPA settlement class because the class definition included members who could never have Article III standing under Eleventh Circuit precedent.  Drazen v. Pinto, — F.4th –, No. 21-10199, 2022 WL 2963470, at *4-7 (11th Cir. July 27, 2022).  The court applied the U.S. Supreme Court’s holding in TransUnion LLC v. Ramirez and ruled that all members of a Rule 23(e) settlement class must have Article III standing to recover damages.  Id. at *5-6 (citing TransUnion, 141 S. Ct. 2190, 2208 (2021)).  The Drazen court expressly rejected the proposition that plaintiffs with no standing in the Eleventh Circuit could be part of a nationwide class, even if they may have standing in another circuit.  Id.  As of the date of publication, Drazen is the first and only decision from a federal appellate court that analyzes TCPA claims under the TransUnion rubric.  Although the impact of Drazen outside of the Eleventh Circuit remains unclear, the case demonstrates how courts may analyze Article III standing issues in TCPA class actions going forward.

As readers of this blog are aware, the U.S. Supreme Court issued its decision in TransUnion, LLC v. Ramirez last summer.  The decision reaffirmed that plaintiffs must demonstrate a “concrete harm” to establish Article III standing to sue in federal court.  TransUnion, 141 S. Ct. at 2200.  Moreover, in footnote 4 of the TransUnion decision, the Court explicitly stated that it was not addressing the “distinct question whether every class member must demonstrate standing before a court certifies a class.”  Id. at 2208 n.4.

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Eleventh Circuit Denies Petition for Rehearing, Permits Split Decision Barring Incentive Awards to Stand

The Eleventh Circuit recently decided not to rehear en banc a panel decision which held that a TCPA class action settlement could not include an incentive award for the lead plaintiff.  See Johnson v. NPAS Sols., LLC, No. 18-12344, 2022 WL 3083717 (11th Cir. Aug. 3, 2022).

The matter arose from a putative class action complaint, which alleged that defendant NPAS Solutions, a medical debt collection company, violated the TCPA by repeatedly robocalling plaintiffs to collect debts that did not actually belong to them.  The lead plaintiff in the case, Charles Johnson, retained counsel and was actively engaged in the litigation, including negotiations that resulted in a $1.432 million class settlement.

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Texas District Court Joins the Third, Sixth, and Eleventh Circuit Courts of Appeal, Permitting a Private Right of Action for Violation of Section 64.1200(d)

The Northern District of Texas, in Powers v. One Technologies, LLC, joined its sister courts and the Third, Sixth, and Eleventh Circuit Courts of Appeal to hold that 47 C.F.R. § 64.1200(d), which prohibits certain telemarketing communications to “residential telephone subscriber[s]” without properly maintaining a list of persons on the national do-not-call list, provides a private right of action under the TCPA. 2022 WL 2992881, at *2 (N.D. Tex. July 28, 2022).

The plaintiffs sued under Section 64.1200(d), alleging that One Technologies violated the TCPA when the plaintiffs received unsolicited, unlawful text messages.  Specifically, they alleged that One Technologies did not have or maintain “a procedure for maintaining a do-not-call list.”

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District of Connecticut Rejects ATDS Allegations in Complaint Against Subway

The District of Connecticut recently dismissed a TCPA action against the Subway Franchisee Advertising Fund Trust (“Subway”) because plaintiff failed to allege that Subway used an ATDS to send text messages to her cell phone.  Soliman v. Subway Franchisee Advertising Fund Trust Ltd., No. 3:19-cv-592, 2022 WL 2802347 (D. Conn. July 18, 2022).  The court held that “[t]he TCPA is clear:  a device is not an automatic telephone dialing system merely because it generates random or sequential index numbers that are used in turn to select which numbers to call from a stored list.”  Id. at *3 (emphasis in original).  The ruling serves as yet another example of a dialing technology that does not meet the definition of an ATDS following the U.S. Supreme Court’s decision in Facebook, Inc. v. Duguid, 141 S. Ct. 1163, 1171 (2021).

In Soliman, plaintiff alleged that she received a text message from Subway offering her a free bag of potato chips.  Id. at *1.  Plaintiff further alleged that she replied “STOP” to unsubscribe from the text messages but claimed that Subway texted her again a few days later.  Id. at *1.  Plaintiff subsequently filed a two-count class action lawsuit against Subway for negligently and intentionally violating the TCPA.  Id.  Subway filed a Rule 12(b)(6) motion to dismiss.  Id.

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Proposed Federal TCPA Legislation Offers a New and Broad ATDS Definition

On July 12, 2022, Representatives Raja Krishnamoorthi, D-Ill., and Katie Porter, D-Calif. introduced H.R. 8334 in the U.S. House of Representatives, which was referred to the Committee on Energy and Commerce. The bill would amend the Telephone Consumer Protection Act (the “TCPA”), 47 U.S.C. § 227, to, among other things, “prohibit the use of automated telephone equipment to send unsolicited text messages.”

The TCPA presently defines “automatic telephone dialing system” (or “ATDS”) as equipment that has the capacity “to store or produce telephone numbers to be called, using a random or sequential number generator . . . to dial such numbers.”  The law generally prohibits any person from making nonconsensual telemarketing or other types of telephone calls to a cell phone number using an ATDS.

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ATDS Status Turns on Capability of Dialing Equipment, Not Actual Use, Third Circuit Holds—But Liability Turns on Actual Use, Not Mere Capability

Last week, the U.S. Court of Appeals for the Third Circuit concluded that the TCPA’s definition of “automatic telephone dialing system” (or “ATDS”) includes all dialing equipment with the present ability to generate random or sequential phone numbers and dial those numbers, regardless of whether the equipment’s owner actually uses those “ATDS functionalities.” But, importantly, a caller must actually use such functionalities in order to violate the statute’s prohibition on making autodialed phone calls, the Court further held.

In other words, a dialing system’s status as an ATDS turns on the system’s present capabilities, not how it is used. But whether a defendant is liable for using an ATDS turns on how the system is used, not just what it can do. Thus, the Court read the ATDS definition broadly but the liability provision narrowly, in a ruling that will give some comfort to companies that use their dialing equipment to contact customers or prospects from set lists, rather than to randomly generate phone numbers to be called indiscriminately.

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