TCPA Connect

Roth and Reilly Invited to Speak at PACE Convention on TSR and TCPA Compliance and Related Developments

At the Professional Association for Customer Engagement (PACE) National Convention & Expo, attendees will hear from leading customer engagement brands and thought leaders on strategies and best practices to improve the customer experience at the point of engagement and ultimately grow their businesses.

Marc Roth and Christine Reilly, co-chairs of Manatt’s TCPA Compliance and Class Action Defense Group, have been invited to speak at a session titled “Legal Compliance Update: What You Need to Know to Avoid TSR and TCPA Liability.” Joined by Cindy Liebes (Director of the FTC’s Southeast Regional office), Marc and Christine will discuss recent FTC telemarketing enforcement cases, trends and priorities, with a focus on supplier and vendor liability for “assisting and facilitating” offensive marketer behavior. Attendees will also hear about TCPA litigation trends and developments in the past year and strategies for minimizing litigation risk.

The conference will be held April 19-22, 2015, at the Atlanta Marriott Marquis in Atlanta, Georgia.

back to top

California TCPA Suit Moves Forward

A putative class action alleging violations of the Telephone Consumer Protection Act by Bebe Stores will move forward after a California federal court judge denied defendant’s motion to dismiss.

Plaintiff Melita Meyer exchanged a dress at a Bebe Store in December 2013. In connection with the transaction—and allegedly believing it was required to complete the exchange—Meyer provided her cell phone number to the store. Soon after, she received a text message from Bebe, which read:

“Bebe: Get on the list! Reply YES to confirm opt-in. 10% OFF reg-price in-store/online. Restrictions apply. 2 mgs/mo, w/latest offers. Msg&data rates may apply.”

Meyer replied with a federal class action lawsuit, alleging both negligent and willful violations of the TCPA. She claimed she was never advised that the store would send her promotional text messages through an automatic telephone dialing system (ATDS) and that the message violated her privacy.

Bebe moved to dismiss the suit, arguing that Meyer lacked standing because she failed to state an injury-in-fact; she consented to receive the text message at issue, which was simply an informational, administrative message; she failed to adequately allege the defendant used an ATDS; and she failed to adequately show that Bebe acted in a knowing or willful manner.

U.S. District Court Judge Yvonne Gonzalez Rogers sided with the plaintiff on each point.

The court noted that only one case accepted the proposition that an unlimited text messaging plan prevented a plaintiff from bringing suit. That case was based on California Unfair Competition Law, which has different standing requirements than Article III, she explained.

The defendant argued that Meyer lacked standing because her only claimed injury was economic and she failed to allege that she incurred any carrier charges for the text at issue. Judge Rogers noted that with one exception decided under different standing requirements, the majority of courts have found an injury-in-fact for a purported TCPA violation even where the plaintiff did not receive an additional charge for the messages received. The court also analogized to a reference in the TCPA at Section 227(b)(2)(C) that allows claims where “calls to a telephone number assigned to a cellular telephone service that are not charged to the called party.” Such language “would be superfluous if defendant’s interpretation of the statute were adopted,” Judge Rogers wrote.

Addressing the issue of consent, the court disagreed with Bebe that the text was merely an informational or administrative message confirming Meyer’s opt-in and not sent for advertising or telemarketing purposes. The judge rejected the defendant’s attempts to compare the message to cases where plaintiffs received an opt-out message after initially consenting to receive communications.

“[T]he pleadings here establish a plausible lack of any prior express written consent by plaintiff to receive such messages,” Judge Rogers wrote. “Moreover, the Court finds that the message at issue plausibly constitutes an ‘advertisement’ and that it was plausibly sent for ‘telemarketing’ purposes as the regulation defines those terms.”

“Even if it also served a dual, administrative function of facilitating plaintiff’s possible opt-in, ‘[t]he FCC has determined that so-called “ dual purpose” calls, those with both a customer service or informational component as well as a marketing component, are prohibited,’ ” the court added. “Here, the message offered ‘10% OFF reg-price in-store/online’ on Bebe’s goods, presumably to encourage future purchases. Defendant argues the fact that the message asked plaintiff to ‘confirm [her] opt-in’ conclusively demonstrates she previously consented to receive it. However, it is plausible that a marketing message might be sent with such language even in the absence of actual prior express consent.”

The court also considered whether Meyer sufficiently pled Bebe made use of an ATDS without her consent. Meyer alleged the text message at issue was sent “en mass,” and the text of the message “appears to be a form message,” requesting the recipient to send a “YES” response to opt-in. “These facts render plausible the general allegation that the message was sent using an automated system capable of storing or producing and dialing numbers randomly or sequentially,” Judge Rogers wrote. The court found that those allegations are sufficient at the pleading stage.

Finally, the court refused to dismiss plaintiff’s “knowing and willful” allegations for purposes of seeking treble damages. She found the pleadings sufficient at this early stage to allege that defendant plausibly acted knowingly or willfully.

To read the order in Meyer v. Bebe Stores, Inc., click here.

Why it matters: This case serves as a reminder that retailers should obtain express written consent before sending text messages through an ATDS. It is becoming increasingly difficult to show that a message is not a “marketing message,” and plaintiffs do not necessarily need to show actual economic harm for a TCPA suit to move forward.

back to top

GroupMe Scores Win in ATDS Ruling

A California federal court judge sided with GroupMe’s group messaging service in a Telephone Consumer Protection Act lawsuit, agreeing with the defendant that it did not use an automated telephone dialing system in violation of the statute.  

Brian Glauser filed suit against GroupMe in 2011. He alleged that he received two unsolicited text messages from the app reading, “Hi Brian Glauser, it’s Mike L. Welcome to GroupMe! I just added you to ‘Poker’ w/ Richard L. Text back to join the conversation.” And “GroupMe is a group texting service. Standard SMS rates may apply. Get the app at … to chat for free. Reply #exit to quit or #help for more.”

After receiving these two welcome texts, Glauser received multiple messages from the Poker group members. When he did not respond, GroupMe sent a third text saying, “Hey, are you there? GroupMe is more fun when you participate! We’ll remove you soon unless you reply to the group or text #stay. Reply #exit to leave.”

More messages were exchanged by the group members discussing plans to schedule a poker game. When Glauser again did not respond, GroupMe sent a fourth message: “We haven’t heard from you, so we removed you from this group to be on the safe side. Don’t worry, though. You can always get back in by replying to this text.” Glauser then responded with a text reading “In,” and GroupMe added him back to the group.

Glauser then filed suit. He claimed the two welcome texts violated the TCPA. The court stayed the case in January 2012 pending a decision by the Federal Communications Commission on the definition of an automatic telephone dialing system, among other issues. When the FCC took no action, the court lifted the stay in March 2014 and the parties filed cross-motions for summary judgment.

GroupMe told the court that it was not liable under the TCPA because it did not use an ATDS as defined by the statute. 47 U.S.C. Section 227(a)(1) defines an ATDS as “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.”

The company’s system did not have the present capacity to function as an autodialer, GroupMe said. While it may have had the potential capacity to function as an ATDS, such a test would create the potential for liability under the statute for any smartphone or device.

Noting similar decisions from federal courts in Alabama and Washington, U.S. District Court Judge Phyllis J. Hamilton agreed. She distinguished two opinions from the Ninth U.S. Circuit Court of Appeals as limited to the issue of “capacity vs. actual use” and not “present capacity vs. potential capacity.”

Having determined that “the Ninth Circuit has not yet spoken on the issue of ‘present capacity’ versus ‘potential capacity,’” the court “finds significant the use of the present tense by the statute, by the FCC, and by the Ninth Circuit.”

“[A] ‘potential’ capacity rule would ‘capture many of contemporary society’s most common technological devices within the statutory definition.’ Therefore, the court finds that the relevant inquiry under the TCPA is whether a defendant’s equipment has the present capacity to perform autodialing functions, even if those functions were not actually used,” Judge Hamilton wrote.

GroupMe further argued that its equipment did not have the present capacity to dial numbers randomly or sequentially. The court described the FCC’s expansion of the statutory definition of an ATDS to include predictive dialers, but emphasized that the 2008 Commission ruling “made clear that the defining characteristic of an ‘autodialer’ is not the ability to make calls randomly or sequentially—instead, the ‘basic function’ of an autodialer is ‘the capacity to dial numbers without human intervention.’”

In the case of GroupMe, human intervention was required, Judge Hamilton determined. The welcome texts sent to Glauser were triggered by the group creators, she said, rejecting the plaintiff’s argument that the entire process was automated.

In granting the defendant's motion for summary judgment, the court noted that the “Plaintiff admits the welcome texts were triggered when ‘GroupMe obtained the telephone numbers of the newly added group members’ (including himself), and ignores the fact that GroupMe obtained those numbers through the actions of the group’s creator.” “Thus, the welcome texts were sent to plaintiff as a direct response to the intervention of Mike L., the ‘Poker’ group creator.”

To read the order in Glauser v. GroupMe, click here.

Why it matters: The decision is a victory not only for GroupMe, but for other TCPA defendants litigating the issue of present capacity versus potential capacity with regard to the use of an ATDS. Judge Hamilton distinguished the Ninth Circuit cases cited by the plaintiff to support the potential capacity argument as focused on different issues. She wrote that she believed “the Ninth Circuit has clearly rejected a focus on ‘actual use’ rather than ‘capacity,’ but has not yet spoken on the issue of ‘present capacity’ versus ‘potential capacity.’” Given the significance of the issue, the federal appellate panel may get its chance if the plaintiff appeals.

back to top

JPMorgan Ends TCPA Suit

JPMorgan Chase received final court approval to pay up to $12 million to settle a Telephone Consumer Protection Act class action brought by Chase mortgage and home equity loan borrowers who claimed they received automated calls to their cell phones without consent.

The case initially settled in 2012 for a maximum amount of $9 million and a minimum of $7 million. But after receiving preliminary approval for the deal, an objector notified the California federal court that despite being a class member, he had not received notice of the settlement.

In response, the parties launched a 17-month investigation that revealed an additional 1,498,593 class members. In order to provide notice to the “Group 2” class members and provide approximately the same amount of payment as those in Group 1 (the initial class members identified), JPMorgan agreed to chip in more money, to increase its total payment up to $12 million.

Like Group 1, Group 2 included two subclasses: Subclass A, the individuals who actually received cell phone calls, and Subclass B, individuals whose numbers were included in the defendant’s records but did not receive a call (such as co-borrowers). The latter group would benefit from the injunctive relief promised by JPMorgan to comply with the TCPA going forward, according to the plaintiff’s unopposed motion for preliminary approval.

Knowing the ratio of how many claims were filed by potential class members from Group 1 (a rate of 4.72 percent or 55,872 claimants set to receive $69.97), the parties agreed to a dollar amount that would provide the same payment for Group 2. With an additional 1,303,112 Subclass A claimants, the parties estimated that 61,507 would file claims using the same 4.72 percent historical rate from the Group 1 Subclass A members.

To that end, the defendant agreed to pay up to $4,428,637 for the Group 2 claimants as well as an additional $125,000 in attorney’s fees and up to $580,500 in additional notice and administration costs—or a total of up to another $5,134,137. The amount of payment for Group 2 claimants is capped at $69.97 but could be decreased on a pro rata basis if more than the projected 61,507 claims are received. The attorney for the objector will receive $345,000, paid from the total attorney’s fees received by class counsel.

“This Group 2 Settlement follows the Group 1 Settlement, and adds a substantial amount of money to pay the Group 2 claims, pay additional notice and claims administration costs, and pay for additional attorney’s fees and costs,” the plaintiff told the court.

On February 5, U.S. District Court Judge Gonzalo P. Curiel granted final approval to the settlement and dismissed the case.

To read the unopposed motion for preliminary approval of the settlement in Connor v. JPMorgan Chase Bank, click here.

To read the court’s final judgment and order of dismissal, click here.

Why it matters: Final approval for the deal ends a long litigation process for the parties and results in yet another eight-figure TCPA settlement, following in the footsteps of a recent $40 million deal and Capital One’s record-breaking $75 million agreement.

back to top

FCC Declines to Intervene in TCPA Reassigned Numbers Dispute

The Federal Communications Commission refused to weigh in on the issue of Telephone Consumer Protection Act liability for reassigned cell phone numbers in a case pending before the Second U.S. Circuit Court of Appeals.

In the case before the court, a Jane Doe provided her cellular phone number to Mercy Hospital as a contact number in connection with her account. When her account became delinquent, the hospital entrusted the Mercantile Adjustment Bureau with collection and provided Jane Doe’s cellular phone number to MAB.

Without MAB’s knowledge, the phone number was recycled by the carrier and reassigned to Paul Sterling. MAB called Sterling 17 times with an automatic telephone dialing system. MAB subsequently stopped calling Sterling once it learned that the number had been reassigned. Although Sterling never spoke to MAB or requested MAB to stop calling, he filed a claim against MAB under the TCPA.

On cross motions for summary judgment, MAB argued that the phrase “prior express consent of the called party” as defined under the TCPA should be the intended recipient of the call—in this case, Jane Doe. In contrast, Sterling told the court that “the called party” requires the consent of the current subscriber of the number actually called.

Considering “the particular evils at which the legislation was aimed,” U.S. Magistrate Judge Jeremiah J. McCarthy issued a report and recommendation granting summary judgment to the plaintiff.

“[T]he ‘evil’ at which the TCPA was aimed was the ‘recipients[’] … invasion of privacy.’ Since Jane Doe no longer uses the cellular telephone number at issue, her privacy cannot possibly be invaded by MAB’s automated calls to that number, nor could her previous consent excuse the invasion of the current user’s privacy,” he wrote. “Congress found that ‘[b]anning such automated or prerecorded telephone calls … except where the receiving party consents to receiving the call … is the only effective means of protecting telephone consumers from this nuisance and privacy invasion.”

In light of that finding, Judge McCarthy concluded that MAB could not rely upon the consent of Jane Doe as a defense to Sterling’s TCPA claims. He added that his conclusion did not foreclose the use of predictive dialers. He suggested options like using a reverse lookup to identify the current subscriber of the number at issue, confirming with the creditor that the customer was still associated with the number, or having a person make the first call and then switching to a predictive dialer once the recipient’s identity has been verified.

“[T]he moral is that companies who make automated calls bear the responsibility of regularly checking the accuracy of their account records or placing intermittent live verification calls,” the court said, citing a Florida federal court decision.

A federal court judge accepted the report and recommendation and MAB appealed to the Second Circuit. The federal appellate panel turned to the FCC for insight on the following question: “Does the Telephone Consumer Protection Act’s prohibition on automated calls, absent prior consent from the called party, apply to a new and non-consenting user of a cellular telephone number previously assigned to a consenting user?”

In a letter brief, the Commission stated it “would like to assist the Court,” but offered two reasons why it would not take a position: first, the agency has yet to speak on the issue in any rules or orders, leaving litigation counsel unable to speak authoritatively; and second, multiple petitions are pending before the Commission on this very question. “Three different companies have petitioned the agency for a declaratory ruling to clarify whether a caller, having obtained prior consent to call a wireless telephone number, is liable under the Telephone Consumer Protection Act for placing autodialed calls to that number after the number has been reassigned from the consenting consumer to another consumer without the caller’s knowledge.”

As the Commission has yet to rule on the petitions, “it would be inappropriate for FCC litigation counsel to prejudge the agency’s ultimate disposition of this question in an amicus brief,” the FCC told the court.

To read the report and recommendation in Sterling v. Mercantile Adjustment Bureau, click here.

To read the FCC’s letter brief, click here.

Why it matters: While the FCC’s letter brief failed to provide clarity for either the Second Circuit or the industry on the question of TCPA liability for calls to reassigned numbers, it did highlight the fact that the issue is widespread and is currently being considered by the Commission. However, the magistrate’s report does provide some useful guidance for companies to consider before placing outbound calls to mobile phones that may mitigate the risk of calling reassigned numbers.

back to top



pursuant to New York DR 2-101(f)

© 2024 Manatt, Phelps & Phillips, LLP.

All rights reserved