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FCC seeks comments on interpretation of TCPA definition of autodialer following 9th Circuit decision
On October 3, the FCC’s Consumer and Governmental Affairs Bureau released a notice seeking comment on the interpretation of the TCPA in light of a recent 9th Circuit decision, which broadened the definition of an automatic telephone dialing system (autodialer) under the TCPA. As previously covered in InfoBytes, on September 20, the 9th Circuit held that the TCPA’s definition of an autodialer includes equipment with the capacity to store numbers to be called and to automatically dial such numbers whether or not those numbers have been generated by a random or sequential number generator. The court, however, declared the statutory definition of an autodialer to be “ambiguous on its face” and, thus, it looked to the context and structure of the TCPA in reaching its conclusion regarding the scope of the definition.
The FCC issued the notice “to supplement the record developed in response” to a prior notice issued last May, which sought comments on the interpretation of the TCPA following the D.C. Circuit’s decision in ACA International v. FCC. (See previous InfoBytes coverage on the May 2018 notice here.) Specifically, the FCC seeks comments on the following issues relevant to developing an interpretation of the TCPA’s definition of autodialer: (i) To the extent the definition of an autodialer is ambiguous, how should the FCC exercise its discretion to interpret such ambiguities? (ii) Does the 9th Circuit’s interpretation mean that any device with the capacity to dial stored numbers automatically qualifies as an autodialer? (iii) What devices have the capacity to store numbers, and do smartphones have such capacity? and (iv) What devices that have the capacity to dial stored numbers also have the capacity to automatically dial such numbers and do smartphones have such capacity?
Comments are due October 17 with reply comments due October 24.
On September 27, the U.S. District Court for the Northern District of Illinois denied certification of two proposed classes in a TCPA action against a national mortgage servicer, concluding that plaintiff had failed to meet his burden of demonstrating, under FRCP 23(b)(3), that common issues of fact or law predominated over any questions affecting only individual members. According to the opinion, plaintiff alleged the mortgage servicer contacted consumer phones, without express consent, using an automatic telephone dialing system (autodialer) in violation of the TCPA. One of the four named plaintiffs sought to represent two classes of consumers who were contacted by the servicer two or more times between October 2010 and November 2014: (i) those who received calls or texts and told the servicer to cease contact; and (ii) those who received calls and told the servicer it had called the wrong number.
The court found the issue of consent was decisive in this action, relying on authority holding that individual issues of consent predominate where a defendant “provides specific evidence that a significant number of putative class members consented to contact . . . .” The opinion notes that mortgage servicer’s policies contained a process for flagging accounts that withdrew consent to be contacted and if an account was flagged, the autodialer would not initiate calls to that number. The mortgage servicer argued that many consumers gave permission, retracted it, and gave the permission to be contacted again. The court found the servicer had “put forth specific evidence establishing that a significant percentage of the putative class consented to receiving calls.” The court reviewed expert reports by both parties and ultimately concluded that the method for determining class members suggested by the plaintiff and the plaintiff’s expert did not “adequately identify a common way to address the individual variations of consent and revocation that occurred in this case.” The court determined that it would need to conduct an individualized consent inquiry for accountholders in each putative class.
District court approves an $8.8 million TCPA class action settlement with an inmate telephone company
On September 24, the U.S. District Court for the Central District of California approved an $8.8 million class action settlement between consumers and an inmate telephone company. The settlement resolves allegations that the company violated the TCPA by playing a separate prerecorded “Notification Call” directing the receiving party to provide billing information for the inmate’s collect calls without obtaining the receiving party’s prior consent or providing the receiving party with an opt out mechanism for future calls. Under the terms of the settlement, the company will pay almost $175 to each class member and will change its practices to include both an interactive-voice/key activated opt-out mechanism and a toll-free number that the receiving party may use to opt-out of all future notification calls.
According to the court, “the manner in which this statement and the Terms of Service were presented placed a reasonable person on notice that there were terms incorporated with creating an . . . account and that, by creating an account, he or she was agreeing to those terms.” Concerning the plaintiff’s argument that his TCPA claim does not fall under the arbitration agreement’s purview, the court stated that the question of what falls within the scope of the arbitration agreement is itself subject to arbitration, and also stated that the Terms of Service specifically permitted the texting of promotional offers to customers, arguably requiring the TCPA claim to be arbitrated. The court dismissed without prejudice the plaintiff’s claims against the company and stayed the case until arbitration proceedings are resolved.
On September 24, the U.S. District Court for the Middle District of Florida held that a hotel calling system, which required human intervention before a call was placed, does not qualify as an automatic telephone dialing system (autodialer) under the TCPA. The plaintiff filed the putative class action complaint alleging the hotel chain used an autodialer to call her cell phone without her consent. The hotel moved for summary judgment, arguing that the system did not qualify as an autodialer under the TCPA because it required a hotel agent to click “Make Call” before the system dialed the number. The court agreed, concluding that the defining characteristic of an autodialer is “the capacity to dial numbers without human intervention,” which the court noted remains unchanged even in light of the D.C. Circuit decision in ACA International v. FCC (covered by a Buckley Sandler Special Alert here). Because the calling system would not initiate an outbound call without an agent clicking the “Make Call” button, the court determined the plaintiff’s TCPA claim failed and granted summary judgment for the hotel chain.
On September 20, the U.S. Court of Appeals for the 9th Circuit vacated the district court’s order granting summary judgment in a TCPA action, in light of the recent D.C. Circuit opinion in ACA International v. FCC (covered by a Buckley Sandler Special Alert). The case arises from a plaintiff’s allegations that a California gym violated the TCPA by sending three text messages to the plaintiff’s cell phone. In October 2014, the district court granted summary judgment for the gym, holding that the automatic text messaging system used by the gym was not an “automatic telephone dialing system” (autodialer) under the TCPA because it lacked the capacity “to store or produce telephone numbers to be called, using a random or sequential number generator.” In 2016, the 9th Circuit stayed the appeal of the district court’s ruling pending the ACA International decision, which was issued in March of this year. In ACA International, the D.C. Circuit struck down the FCC’s definition of an autodialer, reasoning that the FCC’s definition “unreasonably, and impermissibly” included all smartphones while inadequately describing the functions that made a device an autodialer.
Because the ACA International decision set aside the FCC’s definition, the 9th Circuit performed its own review of the statutory definition of an autodialer in the TCPA. Through this review, the court concluded that the TCPA defined an autodialer as “equipment which has the capacity—(i) to store numbers to be called, or (ii) to produce numbers to be called, using a random or sequential number generator—and to dial such numbers automatically (even if the system must be turned on or triggered by a person).” Because the text system used by the gym stores numbers and dials them automatically to send the messages to the stored list of phone numbers, the 9th Circuit held there is a genuine issue of material fact as to whether the system qualified as an “autodialer” and remanded the case to district court for further proceedings.
Court approves $8.5 million class action settlement with global money service for alleged TCPA violations
On August 31, the U.S. District Court for the Northern District of Illinois approved an $8.5 million class action settlement resolving allegations that a global money service violated the Telephone Consumer Protection Act (TCPA) by sending unsolicited text messages to class members. While the court approved the full settlement amount, it only awarded 5 percent of the fund to the class counsel, as opposed to the 35 percent requested, noting counsel’s “disquieting conduct” related to a class objector and lack of billing records supporting the “substantial work” counsel claimed to have performed on the case (reportedly more than 2.5 times the hours spent by defense counsel). Of the $8.5 million required to be paid by the company, the court modified the agreement to provide class member claims over $7.5 million. The court determined that the settlement “provides fair actual cash value to the class,” as the company had potential defenses to the pending litigation; there was legal uncertainty as to whether the telecommunications equipment used by the company was actually an “automatic telephone dialing system” under the TCPA; and the inherent expense in litigation and proceeding to trial for the class.
On August 2, the U.S. District Court for the District of New Jersey denied a mortgage company’s motions to dismiss in two putative class actions (opinions available here and here) alleging violations of the Telephone Consumer Protection Act (TCPA) for unsolicited phone calls. In both cases, the mortgage company requested the court dismiss the action or, in the alternative, stay the proceedings pending guidance from the FCC regarding what constitutes an automatic telephone dialing system (autodialer) in light of the D.C. Circuit decision in ACA International v. FCC. (Covered by a Buckley Sandler Special Alert; InfoBytes coverage on the FCC’s notice seeking comment on what constitutes an autodialer, available here.) In each of the actions, consumers allege the company violated the TCPA by placing unsolicited calls to their phones using an autodialer. In denying both motions, the judge rejected the company’s argument, in one case, that it was not using “a random or sequential number generator” because the preloaded numbers belonged to the company’s customers rather than members of the public, reasoning that just because the population of numbers which may be dialed are pre-selected does not make the calling system, the next number being dialed, less random. Moreover, in the second case, the judge rejected the company’s assertion that written consent was not needed because the calls were placed to a number of customers with existing debt. The court noted the calls were regarding refinancing services and “calls to customers soliciting refinance are ‘telemarketing’ calls for a new product requiring prior express written consent under the TCPA.” As for the requests to stay the proceedings, the court held in both cases that it is unnecessary to stay the case because “whatever guidance the FCC may issue in the future will not alter the statutory definition of an [autodialer]” or previous unchanged FCC guidance pursuant to which the court decided the motions to dismiss.
On July 16, the U.S. District Court for the Western District of Michigan held in a matter of first impression that direct-to-voicemail or direct-drop voicemails are covered by the Telephone Consumer Protection Act (TCPA). In so holding, the court denied a debt collection agency’s (defendant) motion for summary judgment. According to the opinion, the defendant asserted that the prerecorded voicemails left on the plaintiff’s cell phone in an effort to collect a mortgage did not violate the TCPA because calls were not dialed to the cell phone but rather deposited directly on a voicemail service—an action the defendant claimed was not within the scope of the TCPA and unregulated. However, the court found that the defendant’s use of the voicemail product constituted as a “call” within TCPA’s broadly constructed purview. In addition, the court specifically stated that the direct drop voicemails left by the defendant were “arguably more of a nuisance” to the plaintiff than receiving text messages since she would have to take steps each time to review or delete the message. In denying the defendant’s motion, the court held that “[b]oth the FCC and the courts have recognized that the scope of the TCPA naturally evolves in parallel with telecommunications technology as it evolves, e.g., with the advent of text messages and email-to-text messages or, as we have here, new technology to get into a consumer’s voicemail box directly.”
6th Circuit affirms dismissal of certain TCPA class action claims, reverses decision on survivability issue
On July 20, in a matter of first impression for the Courts of Appeals, the U.S. Court of Appeals for the 6th Circuit held that claims under the Telephone Consumer Protection Act (TCPA) survive the death of a plaintiff and may be brought by a successor in interest. In so doing, the court reversed the lower court’s decision that held the opposite and remanded the case back to the lower court for further proceedings. The 6th Circuit opined that the lower court erred in holding that TCPA was penal rather than remedial in nature, and thus could not survive a plaintiff’s death. “The purpose of the TCPA [is] to redress individual wrongs felt by individual consumers . . . [and] recovery under the statute runs to the harmed individual and not the public,” both of which suggest that TCPA claims were remedial, and thus survive a party’s death. Separately, the court affirmed the district court’s order granting a motion to sever and motion to dismiss.
- Valerie L. Hletko to discuss "Forecasting litigation and settlement trends in the mortgage servicing and fair lending context" at the American Conference Institute National Forum on Residential Mortgage Regulatory Enforcement & Litigation
- Michelle L. Rogers and Jonice Gray Tucker to discuss “Building a govt affairs program; Government investigations” at the TechGC National Summit
- Tina Tchen to deliver keynote address at the American Bar Foundation Montgomery Summer Research Diversity Fellowship 30th Anniversary Celebration
- Douglas F. Gansler to discuss "Privacy, security and protection of your assets in contracts; Security exercises and tactical measures" at the TechGC National Summit
- H Joshua Kotin will discuss federal regulatory developments in mortgage lending and servicing at the Mortgage Bankers Association of Arkansas Fall Conference
- Kate Shrout to discuss "Conducting workplace investigations" at the TechGC National Summit
- Kathryn R. Goodman to discuss "HECM servicing policies and updates" at the National Reverse Mortgage Lenders Association Annual Meeting & Expo
- Fredrick S. Levin to discuss "Reverse mortgage litigation trends" at the National Reverse Mortgage Lenders Association Annual Meeting & Expo
- Melissa Klimkiewicz to speak at the "Digital marketing compliance roundtable" at the National Reverse Mortgage Lenders Association Annual Meeting & Expo
- Hank Asbill to discuss "The role of the media in white collar criminal investigations and the Mueller probe" at the American Bar Association White Collar Crime Town Hall
- John C. Redding to discuss "Regulatory compliance update" at PowerSports Finance
- Matthew P. Previn to discuss "Enforcement trends: Who is doing what and how?" at the Cambridge Forums Inc. Forum on Consumer Finance Litigation & Enforcement
- Jonice Gray Tucker to discuss "Protect yourself from a CFPB investigation" at the National Association of Settlement Purchasers Conference
- Tina Tchen to deliver keynote address at the American Bar Association Professional Success Summit
- Andrea K. Mitchell to discuss "Developments in fair lending law" at the Mortgage Bankers Association Summit on Diversity and Inclusion
- Jonice Gray Tucker to discuss "Consumer financial services" at the Practising Law Institute Banking Law Institute
- Daniel P. Stipano to discuss "New CDD Rule: Pitfalls in compliance" at the American Bankers Association/American Bar Association Financial Crimes Enforcement Conference