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Hot Developments with the Telephone Consumer Protection Act
September 25, 2013 3:00 – 4:30 pm eastern
Panelists Bikram Bandy, Federal Trade Commission ([email protected]) Abbas Kazerounian, Kazerouni Law Group ([email protected])
Christine Reilly, Loeb & Loeb LLP ([email protected]) Sherrese Smith, Paul Hastings LLP ([email protected])
Moderator: Eric Whisler, Vorys, Sater, Seymour and Pease LLP
Consumer Protection, Privacy & Information Security, Private Advertising Litigation, and Media & Technology Committees
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Agenda • Panel Introductions • General TCPA Overview • FTC’s Telemarketing Sales Rule and the
Interplay with the TCPA • Summary of the New TCPA regulations • Hot TCPA Issues • Plaintiffs’ and Defendants’ Perspectives on
TCPA cases • Questions & Answers
General TCPA Overview
Sherrese Smith
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TCPA Overview
• Congress enacted in 1991, and the FCC adopted implementing regulations in 1992
• Restricts marketing calls and text messages to cellphones and residential landlines
• Generally prohibits – without prior express consent – communications using automated systems, artificial callers and prerecorded messages
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TCPA Overview
• Specifies several requirements for fax machines, autodialers and voice messaging system
• Requires telemarketers using automated devices to self-identify and reveal contact information in the message
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TCPA Overview Exemptions
• Commercial calls for non-marketing purposes
• Calls from tax exempt, nonprofit entities
• Political calls • Loan servicer calls:
– Servicing existing commercial debt
– Home loan modifications – Refinancing of home
loans under the American Recovery and Reinvestment Act
• Notices and alerts from: – Airlines – Banks and credit card
companies (balances and fraud alerts)
– Schools and universities – Package delivery services – Wireless carriers (plan
usage) • Research calls or surveys
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FTC’s Telemarketing Sales Rule (“TSR”) and the Interplay
with the TCPA Bikram Bandy
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TSR vs. TCPA
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• Types of Calls Generally Covered – TSR: Telemarketing calls only – TCPA: All calls + SMS
• Jurisdiction – TSR: FTC, although no jurisdiction over
common carriers*, banks/financial institutions, insurance, airlines
– TCPA: FCC; does not have same jurisdictional limitations as FTC
TSR vs. TCPA
• Government Enforcement – TSR:
• Federal court action for injunctive relief brought by FTC directly
• Civil penalties brought in conjunction with DOJ – TCPA:
• Administrative proceeding for civil forfeiture
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TSR vs. TCPA
• Private Right of Action – TSR:
• Only if amount in controversy exceeds $50,000 in actual damages per person
• No statutory damages – TCPA:
• $500 in damages per violation • Treble damages • No damage threshold
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TSR vs. TCPA
• Robocalls: – Both TSR and TCPA prohibit telemarketing
robocalls to residential or wireless numbers, unless the caller has express written consent
• Autodialer Calls: – TSR: does not address calls or text messages
placed using an autodialer – TCPA: prohibits calls/messages placed to
wireless numbers using an autodialer without express written consent
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TSR v. TCPA
• Telemarketing Robocalls – Similarities Between TSR and TCPA (as of 10/16/13) – Consent
• Written; signed (E-Sign OK); clear and conspicuous; willingness of consumer to receive robocalls; no condition of purchase
– No established business relationship exception
– Automated opt-out 12
TSR v. TCPA
• Notable Robocall Exceptions (No Written Consent Needed) – Charitable calls:
• FTC: No jurisdiction over non-profits, but TSR does regulate for-profit telefunders
• FCC: Prior express consent (can be unwritten) for charitable robocalls to wireless lines; no consent required for charitable robocall to residential lines
– Business Sales Calls: • FTC: Not covered by TSR, unless robocall is selling nondurable office and
cleaning supplies • FCC: No TCPA rules on sales robocalls to business, except robocalls to
business wireless lines covered under general wireless line rules – Non-Sales Calls
• FTC: Not telemarketing – no consent needed • FCC: Prior express consent (can be unwritten) for non-sales robocalls to
wireless lines; no consent for non-sales robocall to residential lines
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What are the new TCPA Rules?
Sherrese Smith
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Amended TCPA Rules
• In a Report and Order approved on February 15, 2012, the FCC adopted additional protections for consumers concerning unwanted autodialed and/or robocalls.
• The changes to the TCPA rules are as follows:
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Amended TCPA Rules
New Rule Effective Date
What is the New Requirement?
Opt-Out Mechanism
Jan. 14, 2013 Telemarketers must implement an interactive opt-out mechanism announced at the outset of the call. Upon invocation, the consumer must be automatically added to the seller’s do-not-call list and the call must be immediately terminated.
Prior express written consent
Oct. 16, 2013 Unambiguous written consent required before telemarketing call or text message. Exception: calls that are manually dialed and do not contain a pre-recorded message are exempt from the TCPA.
No “Established Business Relationship”
Oct. 16, 2013 Established business relationship no longer relieves advertisers of prior unambiguous written consent requirement.
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Amended TCPA Rules
• Potential for hefty damages for violations of the TCPA and the amended rules: – Consumers may seek statutory damages
ranging from $500 to $1,500 for each non-complying robocall or SMS message, with no cap on total damages.
– In addition, the FCC recently ruled that a seller can be vicariously liable under the TCPA for calls made by third-party telemarketers.
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Hot TCPA Issues
• Prior express consent • Revocation of consent • Autodialer Issues • Confirmatory text messages • Certification Issues
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Prior Express Consent
Christine Reilly Sherrese Smith
Hot TCPA Issues
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Prior Express Consent
Issue: Consent must be clear and specific Satterfield v. Simon & Schuster, 569 F.3d 946 (9th Cir. 2009)
• Plaintiff brought putative class action concerning text message campaign by publishing company Simon & Schuster, which used an opt-in list purchased from Nextones to advertise new Stephen King book.
• Ninth Circuit took a narrow view of “prior express consent,” holding that it must be “clearly and unmistakably stated.”
• Plaintiff had opted in “to receive promotions from Nextones affiliates and brands.”
• Court held that plaintiff could not have given prior express consent to receive promotional materials from Simon & Schuster, since it was neither an affiliate nor brand of Nextones.
• Parties subsequently settled for $10 million.
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Prior Express Consent
Issue: Consent must be given by current phone subscriber Soppet v. Enhanced Recovery Co., 679 F.3d 637 (7th Cir. May 12, 2012)
• Defendant made a telephone call to a mobile number that had been reassigned. Prior phone subscriber had given consent to receive calls; new subscriber had not.
• First federal appellate court to address the issue. The Seventh Circuit affirmed district court’s decision holding that only the subscriber assigned to the cell number at the time of the call can provide the requisite consent.
• Court decision turns on the definition of “called party” under the TCPA. – Language of the statute: “called party” means current subscriber of the cell number – Rejects argument that “called party” means “intended recipient of the call” – “The phrase ‘intended recipient’ does not appear anywhere in § 227, so what justification
could there be for equating ‘called party’ with ‘intended recipient of the call’?” – Rejects argument that consent is effective until revoked by the new subscriber. “The idea
that one person can revoke another's consent is odd.” 21
Prior Express Consent
Issue: Does voluntarily providing a cell number indicate express consent to be called on that number?
• FCC Rulings: – “Persons who knowingly release their phone numbers have in effect given their
invitation or permission to be called at the number which they have given, absent instructions to the contrary.” Rules and Regulations Implementing the Telephone Consumer Protection Act of 1991, CC Docket No. 92-90, Report and Order, 7 FCC Rcd 8752, 8769, para. 31 (1992).
– “We conclude that the provision of a cell phone number to a creditor, e.g., as part of a credit application, reasonably evidences prior express consent by the cell phone subscriber to be contacted at that number regarding the debt.” Rules and Regulations Implementing the Telephone Consumer Protection Act of 1991, Request of ACA International for Clarification and Declaratory Ruling, CG Docket No. 02-278, Declaratory Ruling, 23 FCC Rcd 559, 564, para. 9 (2007).
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Prior Express Consent
Issue: Does voluntarily providing a cell number indicate express consent to be called on that number? (cont’d)
• Pinkard v. Wal-Mart Stores, Inc., 2012 U.S. Dist. LEXIS 160938 (N.D. Ala. Nov. 9, 2012) (Plaintiff provided several pieces of personal information, including cell phone number, when dropping off prescription. Within hours, she began receiving text messages on her cell phone. Motion to dismiss granted where complaint alleged that plaintiff provided her telephone number to defendant at defendant's request.)
• Mitchem v. Ill. Collection Serv., 2012 U.S. Dist. LEXIS 126017, at *5 (N.D. Ill. 2012) (Plaintiff gave cell phone number to medical provider when he received treatment. When plaintiff failed to pay bill, debt collection agency attempted to collect debt by contacting plaintiff on his cell phone. Summary judgment for defendant granted where “the record establishes that plaintiff consented to receiving calls about the medical debt on his cell phone by giving the cell phone number to a medical provider.”)
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Prior Express Consent
Issue: Does voluntarily providing a cell number indicate express consent to be called on that number? (cont’d)
• Lusskin v. Seminole Comedy, Inc., 2013 U.S. Dist. LEXIS 86192 (S.D. Fla. June 19, 2013) (Plaintiff bought ticket to comedy show and provided mobile number as part of transaction. Thereafter, he received text messages alerting him of future events. In rejecting motion to dismiss, Judge Scola held that FCC order was not entitled to deference and concluded that a person who merely releases his or her telephone number to another party has not consented to be contacted by that party with automated technology)
• Mais v. Gulf Coast Collection Bureau, Inc., 2013 U.S. Dist. LEXIS 65603 (S.D. Fla. May 8, 2013) (Wife provided plaintiff’s cellular phone number to hospital during trip to ER. Plaintiff was contacted on his cell phone by debt collector for failure to pay bill. Summary judgment for defendant denied. FCC ruling not entitled to deference-- “Although it may be reasonable to presume that an individual, in providing a cell phone number on a credit application, consents to be called at that number by the creditor, such consent is ‘implied’ through the individual's conduct”) (same judge)
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Revocation of Consent
Diamonds are forever, but is consent?
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Revocation of Consent
Gager v. Dell Financial Services LLC, 2013 U.S. App. LEXIS 17579 (3rd Cir. Aug. 22, 2013)
• Gager purchased Dell computer equipment and provided her cell number as part of application. When she defaulted, Dell began leaving prerecorded messages on her cell phone. Gager sent a letter to Dell with her cell phone number requesting that the calls stop, but the calls continued.
• In a case of first impression for a federal appellate court, the Third Circuit held that consumers have the right to revoke consent and that there is no temporal restriction on that right.
• The court reasoned that consent can be revoked under common law, any ambiguity in the TCPA should be resolved in favor of the consumer, and the FCC’s Soundbite advisory ruling suggests that consent under the TCPA can be revoked.
• Rejected argument that FCC’s “absent instructions to the contrary” language in its 1992 Ruling meant that such instructions could only be given at the time the consumer consents to receive autodialed calls.
• Policy: “[A]n individual should be allowed to withdraw consent at any time if she no longer wishes to continue with a particular course of action.”
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Revocation of Consent Not all courts agree… • Saunders v. NCO Fin. Sys., 910 F. Supp. 2d 464, 468 (E.D.N.Y. 2012)
(holding that “there is no provision in the TCPA ... that allows withdrawal of a voluntarily-given, prior express consent to call a cell phone number”)
• Chavez v. Advantage Group, 2013 U.S. Dist. LEXIS 110522, at *11-12 (D. Colo. Aug. 5, 2013) (“Consent [once given] ... could not be ... effectively withdrawn.”)
• Kenny v. Mercantile Adjustment Bureau, 2013 U.S. Dist. LEXIS 62415, at *18-19 (W.D.N.Y. May 1, 2013) (suggesting in dicta that revocation is not possible).
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How To Revoke Consent
Written Revocation Required
• Starkey v. Firstsource Advantage, 2010 U.S. Dist. LEXIS 60955, at *16 (W.D.N.Y. Mar. 11, 2010). Explicitly states that verbal revocation is not sufficient under the TCPA. “There is nothing in either the TCPA or the FCC’s December 28, 2007 Declaratory Ruling to support plaintiff’s claim that a verbal request is sufficient to cease legitimate debt collection efforts.”
• See also Cunningham v. Credit Mgmt., L.P., 2010 U.S. Dist. LEXIS 102802 (N.D. Tex. Aug. 30, 2010) (following Starkey); Moore v. Firstsource Advantage, LLC, 2011 U.S. Dist. LEXIS 104517, at *33 (W.D.N.Y. Sept. 15, 2011) (“[A] verbal request to cease debt collection calls to a cellular phone will not be sufficient to revoke ‘prior express consent’ under the TCPA”); Moltz v. Firstsource Advantage, LLC, 2011 U.S. Dist. LEXIS 85196, at *15 (W.D.N.Y. Aug. 3, 2011) (noting that the FDCPA written notice requirement “overrides” the TCPA)
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How To Revoke Consent
Verbal Revocation Sufficient
• Beal v. Wyndham Vacation Resorts, 2013 U.S. Dist. LEXIS 89840, at *41 (W.D. Wis. June 20, 2013). “[C]onsumers have the right to revoke consent to receive autodialed calls under the [TCPA] and ... they may do so orally or in writing.”
• Adamcik v. Credit Control Servs., 832 F. Supp. 2d 744 (W.D. Tex. 2011). Court finds that TCPA’s silence on revocation means that oral revocation should be sufficient.
• Gutierrez v. Barclays Group, 2011 U.S. Dist. LEXIS 12546 (S.D. Cal. Feb. 9, 2011). Determining that because the FCC indicated that prior express consent need not be in writing, a consumer can revoke consent orally.
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Autodialer Issues
Christine Reilly
Hot TCPA Issues
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What is an Autodialer?
“Automatic telephone dialing system” (ATDS) means equipment which has the capacity:
(A) to store or produce telephone numbers to be called, using a random or sequential number generator; and
(B) to dial such numbers.
47 U.S.C.
227(a)(1); 47 C.F.R.
64.1200(f)(2)
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FCC Rulings
An ATDS encompasses hardware that “when paired with certain software, has the capacity to store or produce numbers and dial those numbers at random, in sequential order, or from a database of numbers.” FCC’s June 26, 2003 Report and Order ¶ 131.
The “basic function” of an autodialer is the “capacity to dial numbers without human intervention.” FCC’s June 26, 2003 Report and Order ¶ 132.
The FCC “has emphasized that this [ATDS] definition covers any equipment that has the specified capacity to generate numbers and dial them without human intervention regardless of whether the numbers called are randomly or sequentially generated or come from calling lists. FCC’s November 26, 2012 Declaratory Order ¶ 5.
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What is an ATDS?
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• Manual dialing—not covered by the TCPA • Predictive dialing—yes
– Uses a complex set of algorithms to automatically dial telephone numbers in a manner that “predicts” the time when a consumer will answer the phone and an agent will be available to take the call
– FCC’s June 26, 2003 Report and Order, ¶¶ 131-33
What is an ATDS?
• Preview dialing (“click-to-call”) – Allows agent to preview information and manually choose a telephone
number to call by manually clicking a button (rather than 10 digits on a telephone keypad). The system then dials the telephone number.
– Requires “human intervention.” – Ashland Hosp. Corp. v. SEIU, 708 F.3d 737, 743-74 (6th Cir. 2013)
(Prerecorded voice messages sent to the homes of residents, who were given the option of being automatically connected to the hospital CEO’s direct extension by pressing “1” on their keypad. Calls made to the CEO in this manner were live calls and the “TCPA does not apply.”)
– But see Nelson v. Santander Consumer USA, Inc., 2013 U.S. Dist. LEXIS 40799, at *27 (W.D. Wis. Mar. 8, 2013) (calls made using preview dialing violated TCPA because equipment still had the capacity to make predictive dialing calls)
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Which is an Autodialer?
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Pending FCC Petitions
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• Revolution Messaging’s Petition for an Expedited Clarification and Declaratory Ruling, CG Dkt No. 02-278 (filed Jan. 19, 2012)
– Argues that FCC should find that internet-to-phone text messaging technology is not an ATDS.
• GroupMe, Inc., Petition for Expedited Declaratory Ruling and Clarification, CG Dkt No. 02-278 (filed Mar. 1, 2012) – Seeks clarification of ATDS:
• Does “capacity” mean a theoretical, potential capacity to autodial only after a significant re-design of the software?
• Or does “capacity” mean the actual, existing capacity of the equipment at the time of use?
• Asks FTC to find that the term “capacity” means only equipment that, at the time of use, could, in fact, have autodialed random or sequential numbers without human intervention and without being technologically altered.
– Asks FCC if a caller can rely on a representation from a third party that they have obtained the requisite consent from the called party.
Pending FCC Petitions
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• In the Matter of Petition for Declaratory Ruling Regarding Non-Telemarketing Use of Predictive Dialers, CG Dkt No. 02-278 (filed June 7, 2012 by Communication Innovators) – Seeks clarification of ATDS: Asks FCC to find that a predictive dialer
that is not used for telemarketing purposes and does not have the current ability to generate or dial random or sequential numbers is not an ATDS.
• Professional Association for Customer Engagement's Petition for Reconsideration, CG Dkt No. 02-278 (filed July 11, 2012) – Seeks clarification of ATDS:
• Asks FCC to narrow or qualify its rulings to state that a predictive dialer constitutes an ATDS only if it has the capacity to store or produce telephone numbers to be called using a “random or sequential number generator” and to provide a definition for “random or sequential number generator.”
– Asks the FCC to modify the definition of “prior express written consent.”
Pending FCC Petitions
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• YouMail, Inc., Petition for Expedited Declaratory Ruling and Clarification, CG Dkt No. 02-278 (filed Apr. 19, 2013) – YouMail service permits mobile users to customize voicemail greetings
and send confirming text messages in response to voicemails. – Asks the FCC to find that YouMail does not “initiate” calls under the
TCPA. – Seeks clarification of ATDS:
• Requests that the FCC find that its service does not use an ATDS because it lacks the current capacity to store and produce telephone numbers to be dialed using a random or sequential number generator.
– Requests that the FCC find that callers consent to receive responsive texts when leaving voicemail messages, thereby satisfying the TCPA’s requirement of prior express consent.
ATDS at the Pleading Stage
• Reciting the statutory definition of ATDS is sufficient.
– Torres v. Nat'l Enter. Sys., Inc., 2012 U.S. Dist. LEXIS 110514, at *10 (N.D. Ill. Aug. 7, 2012); Lozano v. Twentieth Century Fox Film Corp., 702 F.Supp.2d 999, 1010 (N.D. Ill. 2010)
• Statutory definition plus additional factual allegations is sufficient. – Vance v. Bureau of Collection Recovery, LLC, 2011 U.S. Dist. LEXIS
24908, at *2 (N.D. Ill. Mar. 11, 2011); Strickler v. Bijora, Inc., 2012 U.S. Dist. LEXIS 156830, at *7-8 (N.D. Ill. Oct. 30, 2012); Martin v. Leading Edge Recovery Solutions, LLC, 2012 U.S. Dist. LEXIS 112795, at *16 (N.D. Ill. Aug.10, 2012)
• Conclusory allegations insufficient to state a claim. – Abbas v. Selling Source, LLC, 2009 U.S. Dist. LEXIS 116697, at *13 (N.D.
Ill. Dec. 14, 2009); Kramer v. Autobytel, Inc., 759 F.Supp.2d 1165, 1171 (N.D. Cal. 2010); Johansen v. Vivant, Inc., 2012 U.S. Dist. LEXIS 178558, at *11-12 (N.D. Ill. Dec. 18, 2012); Knutson v. Reply!, Inc., 2011 U.S. Dist. LEXIS 7887, at *5-6 (S.D. Cal. Jan. 27, 2011); Ibey v. Taco Bell Corp., 2012 U.S. Dist. LEXIS 91030, at *9-10 (S.D. Cal. June 18, 2012)
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ATDS on Summary Judgment
• Whether an autodialer is used is often an issue for the trier of fact on motions for summary judgment. – See Satterfield v. Simon & Schuster, Inc., 569 F.3d 946, 951 (9th Cir.
2009) (summary judgment not appropriate where there was genuine issue of material fact whether the telephone system at issue was an ATDS); Ortega v. Collectors Training Inst. of Illinois, Inc., 2011 U.S. Dist. LEXIS 6282, at *27-28 (S.D. Fla. Jan. 24, 2011) (“Plaintiff has raised a triable issue of fact through his deposition testimony regarding whether calls were made or received using an automatic dialer.”)
• However, sometimes the ATDS issue can be decided on summary judgment. – See Mudgett v. Navy Fed. Credit Union, 2012 WL 870758 (E.D. Wis.
Mar. 13, 2012) (granting defendant’s motion for summary judgment where plaintiff had not refuted defendant’s assertion that the calls were dialed manually or “pointed to evidence from which a fact-finder could reasonably conclude that [defendant] placed calls from telephones that were connected to computers capable of autodialing”)
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Confirmatory Texting “You are now unsubscribed from
[BLANK] and will not receive further messages. For more info, visit [BLANK.
Msg&data rates may apply.”
Abbas Kazerounian Sherrese Smith
Hot TCPA Issues
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Inception of Confirmatory Text Cases
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• Gutierrez v. Barclays Group, 2011 U.S. Dist. LEXIS 12546 (S.D. Cal. Feb. 9, 2011) – this was the case that really opened the flood gates to confirmatory cases. Barclays settled a case for more than $8,000,000 demonstrating that there is money in these cases.
• This was followed by a flood of confirmatory cases including but not limited to cases against Taco Bell, Citi Bank, Redbox, Gamestop (SoundBite) just to mention a few. Most of these cases had little traction and in fact the case law began to go towards the favor of the defense bar.
New Momentum for Defense
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• Ibey v. Taco Bell Corp., 2012 WL 2401972 (S.D. Cal., June 18, 2012) – this is the first case that actually discussed the confirmatory cases and decided that it was against the intent of Congress.
• Ryabyshchuck v. Citibank (S.D.) N.A., 2012 U.S. Dist. LEXIS 156176 (S.D.Cal. Oct. 30, 2012) – this case came shortly after Ibey where Judge Gonzalez agreed and relied upon Judge Huff’s analysis.
• In the Matter of SoundBite Communications, Inc. Petition for Declaratory Ruling, CG Docket No. CG 02-278 – concurrently SoundBite had filed and obtained relief from the FCC stating that so long as the text sender had prior express consent in the first place, they would be entitled to one free confirmatory text so long as the confirmatory text does not have further marketing material in it.
After SoundBite
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• Even After the Ibey and Ryabyshchuck decisions, and the SoundBite advisory opinion, some of the Plaintiff’s bar still maintained that the case law was contradictory to the 9th Circuit authority of Satterfield v Simon & Schuster, Inc., 569 F.3d 946 (9th Cir. Cal. 2009) because the subsection of the TCPA in question is content neutral. As a result the Holt v Redbox matter and Emanuel v LA Lakers case continued on this trend of litigation.
New Trends
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• Holt v Redbox, S.D. Cal. (Case No. 11cv3046 DMS (RBB))- Judge Sabraw created the “LOOK THROUGH” exception to the SoundBite Advisory Opinion. It is not a published case but the only case that has visited this issue.
• Emanuel v. L.A. Lakers, Inc., 2013 U.S. Dist. LEXIS 58842 (C.D. Cal. April 18, 2013) – Judge Wu followed in the footsteps of Ibey, Ryabyshchuck and Pinkard and looked at legislative intent. Most noteable about this case is the USE of the confirmatory text defense. Since the ruling of this case, many defense firms have tried to fit the texts in question into the “confirmatory text” bracket. Emanuel is on appeal and that is one of the main issues. This same defense is being used right now in the Sherman v. Yahoo text case in the southern district of CA in front of Judge Curiel (opinion expected this Friday).
Class Certification Issues
Abbas Kazerounian Christine Reilly
Hot TCPA Issues
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Class Certification
A Fast Sign Company, Inc. d/b/a FASTSIGNS v. American Home Services, Inc., 734 S.E.2d (Ga. Sup. Ct. Nov. 5, 2012) • Defendant hired company that sent out 306,000 unsolicited fax
advertisements on its behalf, including one to FASTSIGNS. • Class certified and trial court awarded damages in the amount of $459
million or $1,500 per fax. • Georgia court of appeals vacated judgment and remanded the case, finding
that trial court erroneously based liability and damages on the number of unsolicited advertisements sent rather than the number received.
• Georgia Supreme Court reversed and held that a sender is liable for unsolicited advertisements it attempts to send, whether or not the transmission is completed or received by the targeted recipient.
• Case remanded to court of appeals for further disposition. • Largest standing TCPA damages award to date.
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Class Certification
Agne v. Papa John’s International, Inc., Case No. 2:10-CV-01139 (W.D. Wash. Nov. 9, 2012) • Alleges that Papa John’s sent 500,000 unwanted text messages without
consumers’ consent. • Certain Papa John’s franchisees provided OnTime4U with lists of telephone
numbers of individuals who had purchased pizza from them. OnTime4U then sent text messages advertising Papa John’s products to the cell phone numbers on those lists.
• Evidence was presented that OnTime4U told Papa John’s franchisees that it was lawful to send texts without express consent because of an existing business relationship between the customers and Papa John’s.
• Nationwide class certified Nov. 2012. Ruling appealed to Ninth Circuit. • Parties settled for $16.5 million in May 2013. • Final approval hearing scheduled for October 22, 2013.
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Class Certification
How Big is Too Big: Not Over-Reaching • Lemieux v. Schwan's Home Serv., 2013 U.S. Dist. LEXIS 127032
(S.D. Cal. Sept. 5, 2013) – Judge Curiel certified this case without much hesitation. Plaintiff counsel really narrowed in on a smaller manageable sub-class and did not overreach. In some previous discovery opinions, the judge seemed to hint to his liking as to this method. Most Plaintiff class counsel tend to get carried away with the size of the class that they are trying to certify – this is a good example of success for not over-reaching.
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Class Certification Issues
• Problems with named plaintiff – Not a member of the class he or she purports to represent (e.g., not injured or
injured in wholly different manner) – Standing issues – Not a typical or adequate class representative – Credibility issues. See e.g., Jamison v. First Credit Servs., 290 F.R.D. 92, 104-
05 (N.D. Ill. 2013) (felony conviction for access device fraud)
• Special relationship between named plaintiff and counsel – London v. Wal-Mart Stores, Inc., 340 F.3d 1246, 1255 (11th Cir. 2003); Turoff v.
May Co., 531 F.2d 1357, 1360 (6th Cir. 1976); Susman v. Lincoln American Corp., 561 F.2d 86, 94 (7th Cir. 1977); Missud v. Oakland Coliseum Joint Venture, 2013 U.S. Dist. LEXIS 29915, at *74-75 (N.D. Cal. Mar. 5, 2013) (“California courts have held that a conflict of interest prohibits class counsel, their relatives, and their business associates from acting as a class representative.”)
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Class Certification Issues
• Class unascertainable or non-existent – Too narrow/ too broad. – “Fail-safe” class. See e.g., Schilling v. Kenton County, 2011 U.S. Dist.
LEXIS 8050 (E.D. Ky. Jan. 27, 2011) (granting motion to dismiss class allegations where plaintiffs alleged a fail-safe class)
– Notice issues. See e.g., Hartman v. United Bank Card, 2012 U.S. Dist. LEXIS 144759 (W.D. Wash. Oct. 4, 2012) (denying class certification under state TCPA equivalent where class limited to state residents but due to portability issues, no way to identify class members)
– Calling or texting class members?
• Predominance of individual issues v. common issues – Consent is MAJOR issue
• Damages typically not an issue since statutory 51
Class Certification Issues
• Class action not superior method – Plaintiff’s burden to prove superiority – Practical difficulties and expense of notice – Contrary to Congress’ intent to bring TCPA claims in small claims court
• E.g., Freedman v. Advanced Wireless Cellular Commc'ns, Inc., 2005 WL 2122304, at *2 (N.J. Super. Ct. Law Div. June 24, 2005) (vacating class certification order, finding that Congress intended for consumers to pursue TCPA claims in small claims court).
– Due process concerns—damages grossly disproportionate to harm suffered (if any)
• TCPA claims particularly ill-suited for class-wide adjudication?
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Class Certification Issues
Cases holding that consent is an individual issue. • Jamison v. First Credit Servs., 290 F.R.D. 92 (N.D. Ill. 2013) (denying class certification
because “issues of individualized consent predominate when a defendant sets forth specific evidence showing that a significant percentage of the putative class consented to receiving calls on their cellphone”)
• Balthazor v. Central Credit Services, Inc., et al., --F.Supp.3d--, 2012 WL 6725872 (S.D. Fla. Dec. 27, 2012) (denying motion for class certification for failure to establish commonality and predominance; whether each class member provided express consent would involve individualized inquiries)
• See also Hicks v. Client Servs., 2008 U.S. Dist. LEXIS 101129, at *28 (S.D. Fla. Dec. 10, 2008); Gene & Gene LLC v. BioPay LLC, 541 F.3d 318, 329 (5th Cir. 2008); Conrad v. Gen. Motors Acceptance Corp., 283 F.R.D. 326, 330 (N.D. Tex. 2012) (denying motions for class certification)
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Class Certification Issues
Cases holding that consent is a common issue. • G.M. Sign, Inc. v. Finish Thompson, Inc., 2009 U.S. Dist. LEXIS 73869, at *18 (N.D.
Ill. Aug. 20, 2009) (“The evidence in the record shows only that the fax was sent to numbers on a third-party list. [Def.] did not review the list and [the list creator] did not seek consent from the persons on the list. As such, predominance is satisfied.”)
• Hinman v. M & M Rental Ctr., 545 F. Supp. 2d 802, 807 (N.D. Ill. 2008) (no individual consent issues because the “fax broadcasts at issue were sent en masse to recipients identified on a singular ‘leads’ list obtained from a singular source”)
• Sparkle Hill, Inc. v. Interstate Mat Corp., 2012 U.S. Dist. LEXIS 178793, at *8 (D. Mass. Dec. 18, 2012) (“Plaintiffs have presented evidence that the faxes were sent to numbers culled from a general business database,” raising an inference that recipients never consented to receipt of defendant’s faxes)
• Lee v. Stonebridge Life Ins. Co., 289 F.R.D. 292, 295 (N.D. Cal. 2013) (certifying class in text messaging case)
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Plaintiffs’ Perspectives on TCPA cases
Abbas Kazerounian
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Defendants’ Perspectives on TCPA cases Christine Reilly
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Defense Risk Analysis
Business Considerations v. Risk of Lawsuit
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Defense Strategies
• Consent issues – Prior express consent – verbal or written – Prior invitation
• Single, one-time confirmatory text • Established business relationship (for calls to residential lines,
exemption eliminated as of Oct. 16, 2013) • Call is non-commercial or purely informational (only applies to
residential phones) • Not an “automatic telephone dialing system” • Good faith defense (against alleged willful violations) • Statute of limitations (4 years, 28 U.S.C. § 1658)
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Defense Strategies • Class certification weaknesses • Enforceable arbitration clause • Derivative sovereign immunity • Agency defense (alleged violation not caused by an
employee or agent of the defendant) • Rule 68 offer of judgment/settlement offer • Other considerations
– Insurance coverage – Indemnity – Compliance readiness program
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Questions & Answers
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Panelists’ Bios
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Bikram Bandy Federal Trade Commission
• Bikram Bandy is a staff attorney in the Federal Trade Commission’s Bureau of Consumer Protection, Division of Marketing Practices, and serves as the agency’s Do-Not-Call Program Coordinator.
• Bikram’s work focuses on the investigation and prosecution of individuals and companies who are engaged in or assist telemarketing fraud and/or violations of telemarketing laws, including do-not-call violations, robocalling, and caller ID spoofing.
• As the agency’s Do-Not-Call Program Coordinator, Bikram actively works with persons both inside and outside the agency to develop strategies to combat violations of telemarketing laws, including coordinating the agency’s telemarketing law enforcement efforts.
• Prior to joining the FTC, Bikram was a partner at a major national law firm, where he worked on a variety of complex civil litigation and white collar criminal matters. He obtained his undergraduate degree from Duke University and his law degree from the George Washington University Law School.
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Abbas Kazerounian Kazerouni Law Group ([email protected])
• Abbas Kazerounian is one of the founding partners at Kazerouni Law Group, APC. Mr. Kazerounian’s areas of specialty are consumer rights and class actions (specializing in consumer rights class actions). Mr. Kazerounian is also an Adjunct Professor of Law at California Western School of Law where he teaches consumer law. He has also been a panelist lecturer at the ABA National Conference.
• In 2013 Mr. Kazerounian was selected by his peers as a Super Lawyers Rising Star, a prestigious recognition given to only 2.5% of the attorneys in the state. He was also voted as a Rising Star by the San Diego Daily Transcript in 2012.
• Mr. Kazerounian has litigated over 1000 individual consumer rights cases, mainly using the Fair Debt Collection Practices Act (FDCPA) and the California Fair Debt Collection Practices Act (RFDCPA). Mr. Kazerounian is regarded as a one of the predominant FDCPA and RFDCPA practitioners in California. His depth of experience and knowledge in this practice area along with his trial skills, make Mr. Kazerounian one of the premiere advocates within this field of law. Mr. Kazerounian prides himself with being a creator of law in continuing interpretations of the FDCPA and RFDCPA and will take cases as far as possible to advocate for consumers in both California and the United States. Mr. Kazerounian also has numerous pending cases before the Ninth Circuit and the California Court of Appeals.
• Mr. Kazerounian has been lead counsel in over 400 national class actions in the last 6 years. This includes class actions against some of the nation’s largest banks, credit card companies and other fortune 500 companies. The majority of Mr. Kazerounian’s class action experience is in litigation involving TCPA (Telephone Consumer Protection Act), FDCPA, RFDCPA, CA Penal Code 630, et seq., CA Business and Professions Code §17200, et seq. and misrepresentation cases. Mr. Kazerounian was part of the class action Arthur v Sallie Mae, et al, which was approved preliminarily as the largest TCPA class action settlement in US jurisprudence history and also Malta, et al. v Wells Fargo, which was the second highest cash settlement in TCPA Class action history.
• Mr. Kazerounian was named by the CA Bar Journal in 2010 as a CA plaintiff attorney with one of the largest products liability settlements against a major international car manufacturer. The settlement was for $2,500,000.00. Lancaster mayor Rex Parris also awarded Mr. Kazerounian with a distinguished certificate for assisting consumers for the same case. The same is true for the Malta case in 2013.
• Mr. Kazerounian attended the University of Plymouth, U.K., where he received his bachelor of arts in English Literature & Theatre and Performance. He then received his masters from the prestigious London Academy of Performing Arts. Subsequently Mr. Kazerounian received his Juris Doctor from California Western School of Law in San Diego, CA.
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Christine M. Reilly Loeb & Loeb LLP ([email protected])
• Christine M. Reilly is a partner in Loeb & Loeb’s Consumer Protection Defense Department and is a trial lawyer representing clients in major litigation in a wide variety of areas, including consumer protection, unfair competition, false and deceptive advertising, business torts, and entertainment and intellectual property. Ms. Reilly regularly defends clients in consumer protection class actions and investigations and proceedings initiated by the Federal Trade Commission, Federal Communications Commission, and other federal and state government and regulatory agencies.
• Ms. Reilly has experience defending consumer class and regulatory actions alleging violations of various state and federal laws, including but not limited to the Telephone Consumer Protection Act (TCPA), Federal Trade Commission Act (FTC Act), Electronic Communications Privacy Act (ECPA), Electronic Funds Transfer Act (EFTA), Fair Debt Collection Practices Act (FDCPA), Magnuson-Moss Warranty Act, California False Advertising Law (Business & Professions Code §17500), California Unfair Competition Law (Business & Professions Code §17200), California Song-Beverly Consumer Warranty Act, California Fair Debt Collection Practices Act (Rosenthal Act), California Consumers Legal Remedies Act (CLRA), and California Penal Code § 327 (endless chain/pyramid scheme).
• In addition to her litigation practice, Ms. Reilly regularly counsels clients on marketing and advertising issues and compliance with consumer laws. She has represented companies in a variety of industries and service sectors, including sales and marketing, advertising, wireless/mobile, Internet, lead generation, manufacturing and electrical, software, telecommunications, television, music and entertainment, legal services, automotive parts and services, dietary supplement, food, and health and beauty.
• Ms. Reilly serves as a volunteer prosecutor for the Los Angeles City Attorney’s Office under the Los Angeles County Bar’s Trial Advocacy Program.
• Ms. Reilly serves as the Discussion Leader for the Telephone Consumer Protection Act Defense Forum, LinkedIn
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Sherrese M. Smith Paul Hastings LLP
• Sherrese Smith is a partner in the Telecommunications, Media, and Technology (TMT) and Privacy and Data Security practices at Paul Hastings and is based in the firm’s Washington, D.C., office. She is a highly regarded lawyer with significant private sector and high-level government experience in media, communications, Internet, and digital technology issues as well as privacy and data security issues.
• Prior to joining Paul Hastings, Ms. Smith served as Chief Counsel for Chairman Julius Genachowski at the Federal Communications Commission. In this position, she managed the overall policy agenda for the agency and developed the FCC’s positions and key messages for all media, telecommunications, and mobile policy issues and specialized in the areas of media, Internet, video, broadcast, cable, broadband, IP, mobile and wireless spectrum issues, and data privacy and security. Her work involved extensive interaction with external stakeholders, including wireless, media, cable, and telecommunications companies, industry groups and trade associations, federal and state agencies, and Congress.
• Prior to joining the FCC in 2009, Ms. Smith was Vice President and General Counsel of Washington Post Digital. In this role, she was in charge of all legal and policy matters for this leading digital media and technology company which managed The Washington Post Company’s flagship website, washingtonpost.com, as well as Slate.com, ForeignPolicy.com, TheRoot.com, TheBigMoney.com, and Loudounextra.com. As General Counsel, she oversaw and managed a full range of matters, including various media and Internet issues, content protection and privacy/data issues as well as technology, licensing, and commercial transactions. Further, she represented the Company on all regulatory and government affairs issues, including federal and state cases, consumer class actions, and state attorney general administrative actions. She also supported the corporate and business development teams in strategic transactions including acquisitions, divestitures, and joint ventures.
• Ms. Smith is currently an Adjunct Professor at The George Washington University.
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