TCPA Connect

Marc Roth to Speak at Conference, Jan. 20

Marc Roth, partner in Manatt's Advertising, Marketing and Media practice and co-chair of the TCPA Compliance and Class Action Defense practice, will present on the challenges facing call centers under the TCPA in a session titled "Living with TCPA: They Are Going to Sue" at the Conference on Wednesday, January 20, 2016, in San Francisco, CA., a new conference series serving the lead generation industry, brings together an ecosystem of marketers, brands, founders, and innovators to help companies drive more calls and for increased revenue. To register and learn more about, click here.

back to top

Christine Reilly to Present on Class Action Settlements for PLI, Jan. 22

Christine Reilly, litigation partner and co-chair of the TCPA Compliance and Class Action Defense practice, has been invited to speak as a panelist at an upcoming Practising Law Institute (PLI) program on "Advanced Issues in Class Action Settlements." The panel of plaintiffs' lawyers and defense counsel will analyze trends in recent data privacy, security breach and TCPA class action settlements. The program will be held on January 22 in San Francisco, CA and will be available via simultaneous webcast. For more information, click here.

back to top

Manatt Defeats Motion for Class Certification in TCPA Complaint Against Network Telephone Services

A team of Manatt litigators secured a major victory for Network Telephone Services, Inc., on Jan. 12, 2016, in the U.S. Court of Appeals for the Ninth Circuit, against a plaintiff seeking to pursue a putative nationwide class action alleging violations of the Telephone Consumer Protection Act (TCPA). The court affirmed the U.S. District Court's ruling that no certifiable class had been identified.

The plaintiff's suit, filed in November 2012, claimed that NTS sent unsolicited text messages by autodialing his and purported class members' cellphones without their prior express consent, alleging he had received promotional text messages after calling an NTS-operated entertainment line. After the U.S. District Court found in 2013 that identification of the class was administratively infeasible, the plaintiff appealed to the Ninth Circuit.

"It's gratifying to see the court agree with Network Telephone Services that class certification was not appropriate," said lead litigation partner Robert H. Platt. "Class actions alleging violations of the TCPA are often brought with the primary purpose of recovering legal fees. Our client is very pleased with the decision by the Ninth Circuit in this matter."

NTS, which operates more than 45,000 entertainment telephone lines, advises all callers at the beginning of each call that they will receive text messages unless they opt out, and also discloses in its print advertising that callers will receive text messages. NTS only sends text messages to customers who have previously called one of the company's lines and have not opted out of receiving such messages.

Plaintiff admitted that he had called an NTS line prior to receiving the text messages, but claimed he did so by accident and hung up before he heard any sort of disclosure about receiving text messages, and sought to pursue the alleged violation on behalf of a class.

The court denied class certification because, as Manatt argued, (1) the class was not certifiable, because determining who was in plaintiff's proposed class of individuals who received unauthorized text messages would require inquiry into the merits of plaintiff's claims and a determination of who provided consent (i.e., who heard the disclosures, was aware of the advertisements saying they would receive information and elected not to opt out) and who did not; and (2) common issues did not predominate under Rule 23(b)(3) of the Federal Rules of Civil Procedure (FRCP) because the issue of consent would require individual hearings.

Manatt litigation partner Benjamin G. Shatz handled the appeal on behalf of NTS.

Why it matters: The Ninth Circuit's affirmation of the District Court's ruling demonstrates the court's careful and thoughtful application of the FRCP's requirements for certifying classes. This decision underscores the point that class certification will not be appropriate if any of the FRCP's requirements are found lacking.

back to top

What's in a Name? FCC Grants Waiver for TCPA Identification Requirement

The Federal Communications Commission granted National Grid USA a waiver of the Telephone Consumer Protection Act's caller identification requirement so it could provide its "doing business as" name rather than its legal name.

Section 227(d)(3)(A) of the TCPA requires that "all artificial or prerecorded telephone messages (i) shall, at the beginning of the message, state clearly the identity of the business, individual, or other entity initiating the call." Section 64.1200(b)(1) of the FCC's rules implementing the statute further mandates that all artificial or prerecorded voice telephone messages shall "[a]t the beginning of the message, state clearly the identity of the business, individual, or other entity that is responsible for initiating the call. If a business is responsible for initiating the call, the name under which the entity is registered to conduct business with the State Corporation Commission (or comparable regulatory authority) must be stated."

The FCC has clarified that the rules do not prohibit the use of "doing business as" (DBA) names as long as the legal name of the business is also stated.

Seeking a declaratory ruling or waiver from the requirement, National Grid argued that providing call recipients with its DBA name registered with the State Corporation Commission would actually be less confusing. Through its subsidiaries, National Grid provides gas and electric service in several northeastern states. Prerecorded calls are used by the company for various customer service purposes, including alerting customers who require medical care equipment when bad weather and possible power outages are anticipated.

For internal tracking and regulatory compliance purposes, the subsidiaries retain their specific historic names, such as Niagara Mohawk Power Corporation and Nantucket Electric Company.

However, all of the operating subsidiaries use the National Grid name for all public-facing purposes, from marketing to billing and customer service. The company argued that since customers identify National Grid as the provider of their utility services, these customers will more easily identify the caller if the DBA name is used in lieu of the specific historic name. Because the DBA name is registered with the appropriate regulatory authority in each state, customers can search for and identify the caller just like a registered legal or official business name, the company argued.

"We conclude that granting this limited waiver will better serve the public interest by ensuring that National Grid's customers understand the identity of the calling party and are not confused by the use in prerecorded messages of unfamiliar legacy utility names," the agency wrote.

The waiver would better serve the public interest than a strict application of the rule, and special circumstances warranted a deviation, the FCC added. Allowing National Grid to use a DBA name "does not undermine the policy objectives of the rule because consumers will continue to have the ability to search for the identity and contact information of the calling party via the appropriate state or local databases for registered DBA names," according to the order.

The totality of special circumstances presented in the case alleviated concerns about the adequacy of using a DBA name to identify the calling party, the Commission concluded.

"In particular, we note that the basic policy objective of the rule is maintained by limiting the waiver to the use of a registered DBA name," the agency wrote. "National Grid has demonstrated that its DBA name is commonly known to its customers. In addition, because National Grid has registered the DBA names covered by this waiver, the recipients of prerecorded calls from National Grid can obtain the relevant corporate contact information from the state or local government regulatory body responsible for registering DBA names in a way that is similar to that of registered 'legal' or 'official' names. As a result, consumers will incur little or no additional difficulty in gaining access to this contact information due to the granting of this limited waiver."

To read the FCC's order granting the waiver, click here.

Why it matters: Although the FCC rejected National Grid's request for a declaratory ruling and instead granted a waiver applicable only to the petitioning company, the agency's order provides a helpful road map for other companies seeking similar relief. The Commission emphasized that the waiver respected the intent of the identification requirement—eliminating consumer confusion—and did not undermine the policy objectives of the statute or the implementing regulations.

back to top

California Court Finds Customer Consent to Receive Texts Ends TCPA Suit

A plaintiff provided his implied consent to receive text messages from the defendant by providing his telephone number to a cashier and therefore could not sue for violations of the Telephone Consumer Protection Act, a California federal court judge has ruled.

While paying for his lunch at a Flame Broiler restaurant in North Hollywood, Sunil Daniel asked the cashier about a Five Stars Loyalty logo displayed in the window. The cashier replied that through the Five Stars program, customers earn points for food purchased that can then be redeemed for free food.

The cashier then asked for Daniel's phone number, which he provided orally, and swiped his card. Within minutes Daniel received a text from Five Stars stating: "Welcome to Five Stars, the rewards program of Flame Broiler. Reply with your email to finish registering and get free pts! Txt STOP to unsubscribe."

Daniel filed suit alleging a single violation of the TCPA and seeking to certify a nationwide class of persons who received similar messages from Five Stars. The consumer rewards program moved to dismiss the suit, arguing that the plaintiff consented to receive the text.

U.S. District Court Judge William H. Orrick agreed.

The level of prior consent required to avoid liability under the TCPA depends on the character of the call or text message, he explained. Where it "includes or introduces an advertisement or constitutes telemarketing," the recipient must have given his prior express written consent. Alternatively, calls or text messages that do not include or introduce an advertisement or constitute telemarketing only require "prior express consent" that does not have to be written.

Five Stars argued that the welcome message sent to Daniel merely provided information about how to complete registration and did not constitute an advertisement or telemarketing. The plaintiff countered that when viewed in context, the message was designed to encourage future purchases at Flame Broiler.

"[A] text sent solely for the purpose of allowing the recipient to complete a registration process that he or she initiated shortly before receiving the text is not telemarketing within the meaning of [the implementing regulations]," Judge Orrick wrote, adding that "[c]ontext and common sense" did not help the plaintiff's position.

"The context in which the text message was sent—i.e., minutes after Daniel asked the Flame Broiler cashier about Five Stars and gave the cashier his telephone number—merely highlights the text's purpose of enabling Daniel to complete the registration process that he had initiated minutes before," the court said. "Likewise, common sense points to the conclusion that Daniel received a confirmatory text as part of the process of registering for Five Stars, not a telemarketing message. To the extent that it could be reasonably inferred based on context or otherwise that the text's purpose was also to 'encourage future purchases at Flame Broiler,' that purpose is simply too attenuated to make the text telemarketing."

The plaintiff received a single text message in "direct and immediate response to his inquiry" about the Five Stars program and the provision of his phone number, the court noted. "The message he received did not urge him to 'redeem' Five Stars points, did not direct him to a location where points could be redeemed or where more information about the Five Stars program could be obtained, and did not reference shopping or purchasing."

Further, the reference to "free pts" in the text message did not encourage the purchase of a product, Judge Orrick added, as it could be reasonably understood to mean that Daniel could earn points by replying with his e-mail address or could generally earn points by joining the program.

Having concluded the text message was not an advertisement or telemarketing, the court then found Daniel provided his prior express consent to receive it. "[T]he great weight of authority holds that an individual who knowingly provides her telephone number to another party without limiting instructions has given her prior express consent to receive calls at that number from that party," the court said, in a position that was affirmed by the Federal Communication Commission's July 2015 Order.

The complaint "establishes that Daniel asked a restaurant cashier about the Five Stars program and provided the cashier with his telephone number," Judge Orrick wrote, granting Five Star's motion to dismiss. "[B]y providing his telephone number Daniel gave his prior express consent to receive the text."

To read the order in Daniel v. Five Stars Loyalty, Inc., click here.

Why it matters: This is a victory for TCPA defendants on multiple fronts. The decision first found that the welcome text sent by the defendant was not an advertisement or telemarketing and joined the list of courts that have found prior express consent where a consumer provides his telephone number to another party without limiting instructions.

back to top

Court Certifies Class Against Yahoo! for Welcome Message

An Illinois federal court judge has allowed a Telephone Consumer Protection Act class action against Yahoo! to move forward, certifying a class of roughly half a million plaintiffs.

Rachel Johnson and Zenaida Calderin alleged they received two messages from Yahoo!'s Messenger feature, which converts instant messages from Yahoo! users into text messages. The first message came from the Yahoo! user and was not at issue. The second, a "Welcome Message" from the company explaining the Messenger service, was unwanted and unlawful in violation of the TCPA, the plaintiffs claimed. The message stated: "A Yahoo! user has sent you a message. Reply to that SMS to respond. Reply INFO to this SMS for help or go to"

Johnson and Calderin moved to certify a class of recipients that received the Welcome Message during the month of March 2013 while their mobile numbers were assigned to carriers Sprint and T-Mobile, respectively. Yahoo! objected.

U.S. District Court Judge Manish S. Shah rejected one of the potential class representatives but granted the certification motion with respect to a second, moving the suit forward.

The court found the proposed class was ascertainable and met the requirements of numerosity and commonality, with more than 500,000 potential class members featuring common questions. Turning to typicality and adequacy, Judge Shah agreed with Yahoo! that Calderin was an atypical and inadequate representative because her claim was subject to the defense of prior consent.

Why? In March 2012, Calderin consented to receive the Welcome Message when she agreed to the defendant's universal terms of service, which included contact via text messages. Although she argued that the consent provision did not specifically state such contact might occur using an automatic telephone dialing system, the court found explicit notice for use of an ATDS was "the minority view."

The majority of courts rely on declaratory rulings from the Federal Communications Commission "holding that a person can give express consent simply by providing her cell phone number to another," Judge Shah wrote. "Since the act of giving one's number does not also include communicating permissible or impermissible modes of communication with the giver—yet such an act still constitutes prior express consent—it stands to reason that the TCPA does not require a consenter to specify that an automatic telephone dialing system may be used."

Because Calderin agreed to the terms of service, Yahoo! did not violate the TCPA when it sent her the Welcome Message, the court held.

Yahoo! was not as lucky with regard to Johnson, trying to convince the court she provided consent through an intermediary when she agreed to receive phone calls and texts by filling out an application for a third-party app, which sent her the text via Messenger. Yahoo! was unable to demonstrate that the app provider conveyed consent, the court said, and "[w]ith no such proof, there is not basis to conclude that Johnson or any other recipient gave effective consent through an intermediary."

Judge Shah also found that the requirements for Federal Rule's of Civil Procedure Rule 23(b)(3) were satisfied by Johnson. Individual issues of consent did not overwhelm the common issues with regard to predominance, the court said, as Yahoo! failed to provide evidence to support its theory that intermediate consent or revocation of consent were likely to be significant issues.

The court also held that the class action format was superior to other forms of adjudicating the controversy, rejecting Yahoo!'s argument that certifying a class of plaintiffs for a one-month period with cell phone numbers assigned to a single mobile carrier amounted to piecemeal litigation. "As plaintiffs see it, obtaining a remedy for one month's worth of class members is superior to obtaining it for no months' worth," the court wrote. "I agree."

"I find class treatment to be the superior way to proceed in this case," Judge Shah concluded. "Defendant's concerns are not unreasonable, and there is a prospect that significant management difficulties could arise as the case moves forward. If plaintiff and her counsel cannot provide a manageable, cost-effective plan for identifying and communicating with the class, and resolving issues of consent, then decertification may follow. But without more concrete evidentiary support, defendant's fears are not sufficient to defeat class certification."

To read the order in Johnson v. Yahoo! Inc., click here.

Why it matters: While Yahoo! was able to remove one potential class representative from the suit, the court found the second representative met the necessary requirements to certify a class that could yield half a million members. To make matters worse for Yahoo!, it faces similar suits in other courts, including California, though the judge in that litigation reached the opposite conclusion last year, denying the plaintiff's certification motion after finding that the class was not ascertainable.

back to top



pursuant to New York DR 2-101(f)

© 2024 Manatt, Phelps & Phillips, LLP.

All rights reserved