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).
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.
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.
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.”
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.
FCC Acts to Curb Foreign-Originated Illegal Robocalls, Imposes Several New Requirements on Gateway Providers
Recently, on May 20, 2022, the Federal Communications Commission (“FCC”) issued a Report and Order (“Order”), as well as a Further Notice of Proposed Rulemaking (all available here), with a plain objective: to “take further steps to stem the tide of foreign-originated illegal robocalls and seek comment on additional ways to address all such calls.” Order ¶ 1. As stated by the FCC, “reducing illegal robocalls that originate abroad is one of the most vexing challenges we face in tackling the problem of illegal robocalls.” Id. The Order was adopted by a unanimous, 4-0 vote by the FCC after it had received comments over the last nine months on various topics, including whether so-called “gateway providers” should be required to authenticate caller identification information and implement other efforts to reduce the number of illegal prerecorded and/or artificial voice “robocalls” originating overseas.
A “gateway provider” is a U.S.-based provider that acts as an intermediary for an international call by receiving a call directly from a foreign provider before transmitting that call downstream to other U.S.-based providers for termination. Order ¶ 25. This definition is not static but rather one that applies on a call-by-call basis, i.e., a provider is a gateway provider—and subject to the FCC’s new Order—only for those calls in which it acts as a gateway provider. Id. ¶ 28. Per the FCC, commenters “overwhelmingly” supported the imposition of additional requirements on gateway providers in order to “stop the flood of foreign-originated illegal calls.” Id. ¶ 21.
FCC Seeks Comment on HHS/CMS Request for Certainty About Communications Critical to Federal and State Health Insurance Programs Post-Pandemic
Reacting quickly to a joint request by the U.S. Department of Health and Human Services (HHS) and the Centers for Medicare & Medicaid Services (CMS) (collectively, the Health Agencies) last Thursday, the FCC released a Public Notice on May 3, 2022, inviting comments about how it should clarify “that certain automated calls and text messages or prerecorded voice calls relating to enrollment in state Medicaid and other governmental health coverage programs are permissible under the Telephone Consumer Protection Act (TCPA).” Recognizing the time-sensitive nature of the Health Agencies’ request, the FCC established a short cycle for public comment – comments are due in 14 days on May 17, 2022, and any reply comments are due on May 24, 2022.