Claims Based on TCPA, Not Contract, Means No Arbitration

TCPA Connect

Reversing a district court’s order to arbitrate a Telephone Consumer Protection Act (TCPA) class action, the U.S. Court of Appeals, Ninth Circuit determined in April 2018 in Rahmany v. T-Mobile USA, Inc. that the plaintiffs’ claims were based on violations of the statute unrelated to the terms of a user agreement that mandated arbitration.

David and Yehuda Rahmany sued Subway Sandwich Shops Inc. (Subway) for allegedly encouraging T-Mobile USA (T-Mobile) to send text messages to its customers with an ad for a “T-Mobile Tuesday” sandwich deal at the national fast-food chain.

According to the plaintiffs’ complaint, the text read: “This T-Mobile Tuesday, Score a free 6" Oven Roasted Chicken sub at SUBWAY, just for being w/ T-Mobile,” accompanied by a link to more details.

Pointing to the arbitration provision contained in the Rahmanys’ user agreement with T-Mobile, Subway moved to compel arbitration of the suit. A district court judge from the Western District of Washington granted the motion, but the Ninth Circuit reversed in an unpublished opinion.

The plaintiffs brought two claims alleging that Subway—a non-signatory to the agreement between the Rahmanys and T-Mobile—violated the TCPA, the panel said, not their contract with T-Mobile.

“Although Rahmany’s complaint alleges that he did not provide ‘prior express consent’ to receive the text messages at issue, such an allegation does not constitute a ‘claim of [a] violation’ of the Wireless Agreement,” the court wrote. “The TCPA, not the Wireless Agreement, creates and defines any alleged duty to refrain from sending an unwanted text message.”

Further, express consent is an affirmative defense for which the defendant bears the burden of proof, and it is not an element of a plaintiff’s prima facie TCPA case, the panel added.

“Thus, although Subway’s affirmative defense of express consent may require the district court to analyze the Wireless Agreement, Rahmany’s claims do not ‘rely on the terms of the [Wireless Agreement],’ nor does Rahmany allege ‘substantially interdependent and concerted misconduct’ between Subway and T-Mobile that is ‘founded in or intimately connected with the obligations of the [Wireless Agreement].’ Accordingly, the district court erred in enforcing the Wireless Agreement’s arbitration clauses against Rahmany.”

To read the memorandum in Rahmany v. Subway Sandwich Shops, Inc., click here.

Why it matters: Emphasizing that the plaintiffs’ claims were filed under the TCPA and not as a result of some alleged breach of contract, the Ninth Circuit panel found that the arbitration provision in the user agreement was inapplicable to the dispute. Unhappy with the Ninth Circuit’s ruling, Subway has already asked for permission to appeal the decision to the Supreme Court. We will continue to monitor this case for developments.