Perspectives on the TCPA

Transcription

1 June 10, 2014 What Every Business Needs to Know About the Telephone Consumer Protection Act Jason A. Levine Partner, Washington, D.C. (202) Perspectives on the TCPA The TCPA is a juggernaut: a destructive force that threatens companies with annihilation for technical violations that cause no actual injury or harm. U.S. Chamber Institute for Legal Reform, Oct Because plaintiffs may enforce the statute via class action... suits under the [TCPA] present lucrative opportunities for plaintiffs firms. Reliable Money Order, Inc. v. McKnight Sales Co. (7th Cir. 2013) How to Make a Telemarketer Cry (or, Suing Bozos for Fun & Profit ) (Oct. 15,2013) 2 Why Should You Care About the TCPA? A Fast Sign Company v. American Home Services, (Ga. Nov. 5, 2012) $459 million TCPA jury verdict over junk faxes Upheld by GA Supreme Court Class actions are proliferating Damages are statutory and uncapped Just one call, text, or fax campaign is enough Insurance coverage may be unavailable Defenses to liability are shrinking Consent defense has eroded Virtually strict liability for some violations 3 1

2 I Overview of the TCPA TCPA, 42 U.S.C. 227 Creates private right of action to sue for $500 per violation for 1. Calls/texts to mobile phones using ATDS or with artificial/prerecorded voice 2. Calls to land lines using artificial/prerecorded voice 3. Faxes of unsolicited commercial advertisements Exceptions for: emergency purposes (1-2); no commercial purpose (1-3); and prior express consent of the called/faxed party (1-3) 5 TCPA Overview (cont d) States can sue for patterns or practices of junk faxing FCC can impose fines up to $11,000 per violation Civil damages are subject to trebling for willful or knowing violations No cap on damages, no link to net worth or revenues Businesses in all industries that interact with consumers or customers via telemarketing, texts, or faxes are at risk of violation 6 2

3 Prior Express Written Consent As of October 16, 2013, pre-recorded and auto-dialed calls require prior express written consent per FCC Order 1. An agreement in writing with signature of person to be called (electronic OK) 2. Clearly authorizes seller to deliver, or cause to be delivered, ads or marketing messages via ATDS or artificial/pre-recorded voice 3. Identifies telephone number to which messages will be delivered Important eliminates the established business relationship exception 7 What is an ATDS? Equipment which has the capacity (A) to store or produce telephone numbers... using a... number generator; and (B) to dial such numbers. 47 U.S.C. 227(a)(1) Key per FCC Orders: lack of need for human intervention all automatic Courts have held that capacity of equipment to produce or call numbers is key, even if the equipment was not actually used for that purpose Some courts hold it is present, not potential future, capacity that counts Several petitions are pending at FCC to codify present capacity, at the time of the call, as the rule for defining ATDS 8 II TCPA Litigation Metrics 3

4 How is TCPA Enforced? Original intent in 1991: empower consumers to sue for $500 in small-claims court Class Action Fairness Act of 2005: state-court class actions seeking over $5 million removable to federal court defendants could remove TCPA class actions Mims v. Arrow Financial (U.S. 2012) 1. Federal question jurisdiction extends to TCPA suits 2. Concurrent federal-state jurisdiction exists 10 TCPA Federal Court Private Litigation Sept. 1-30, suits Aug. 1-31, suits Sept. 1-30, suits 11 TCPA Class Action Statistics % alleged nationwide classes, not state-specific ones Texts 37% of cases Faxes 31% of cases Calls 28% of cases Cases cross industries only 1/3 were filed against marketing, financial services, and telecom companies combined 88% focused on absence of prior consent as primary theory of liability will likely increase given new FCC regulation Other industries: retail (8%), pharmaceutical (6%), food (6%), construction (6%), health care (2%), automotive (2%) 12 4

5 Plaintiffs Firms Love the TCPA TCPA litigation is a new cottage industry Blogs and websites teach how to induce marketing calls and texts for lawsuits Some explain how to set up lawsuits to maximize damage for quick settlements Plaintiffs firms recruit class representatives based on a single call, text, or fax TCPA hotbeds : S.D. Cal. (LA), N.D. Cal. (SF), S.D. Fla. (Miami), N.D. Ill. (Chicago) 13 Recent TCPA Class Actions Rooney v. Rite Aid (S.D. Cal.) Alleges spam texts about prescription alert service Legg v. Quicken Loans (S.D. Fla.) Alleges spam calls to mobile phone number obtained from credit bureau Perez v. GM Financial (C.D. Cal.) Alleges virtually daily incessant calls to mobile phone about a different person s debt Bush v. Mercedes Benz (S.D. Cal.) Alleges calls to mobile phone without prior consent Freeman v. Tenet Health (N.D. Ga.) Alleges debt collection robo-calls without prior consent All filed since May 2014 All seek treble damages All purport to have large classes All pose multi-million dollar liability 14 Exposure and Settlements Rose v. Bank of America (N.D. Cal.) 7.7 million calls over $3.5 billion Arthur v. Sallie Mae (W. D. Wash.) 8 million calls $4 billion Malta v. Freddie Mac (S.D. Cal.) 5.9 million calls over $2.9 billion Ira Holtzman CPA v. Turza (7 th Cir.) Upheld $4.2 million SJ award Solo attorney, faxed to 200 CPAs Settled for $32 million Fee award of $8 million Settled for $24.1 million Fee award of $4.8 million Settled for $17 million Fee award of $4.3 million Even a recipient who gets the fax on a computer and deletes it without printing suffers some loss: the value of the time expended 15 5

6 III Developing TCPA Issues Revocation of Consent Consent is not permanent it can be revoked by the consumer Courts are split on whether revocation must be in writing Cunningham v. Credit Mgmt. (N.D. Tex 2010); Osorio v. State Farm (S.D. Fla. 2012)-Y Adamick v. Credit Control (N.D. Tex. 2011); Gutierrez v Barclays (S.D. Cal. 2011)-N Viability of defense will turn on where suit is filed 17 Vicarious Liability FCC Order May 9, 2013: federal common law of agency applies to TCPA FCC also provided helpful examples that go beyond the law of agency Challenged in DISH Network v. FCC (D.C. Cir.) court held them non-binding Businesses liable for TCPA violations by agents acting to benefit them Mere mention of company in message suffices for liability if marketer violates TCPA 18 6

7 Wrong-Number Liability Debt-collector calls number of consenting debtor but number has changed hands Seventh Circuit recently held that TCPA requires consent of the called party, not just the intended recipient of the call Court advised callers to manually dial, use reverse lookup to ensure right number Basically strict liability for dialing wrong number Soppet v. Enhanced Recovery Co., LLC (7th Cir. 2012) 19 Insurance Coverage Unclear TCPA liability may seem to be covered by advertising injury policies But insurers argue that TCPA damages are excluded as fines or penalties Commercial general liability policies also exclude damages from violation of law Courts are split over insurability of TCPA damages Ilinois & Missouri Supreme Courts not punitive, thus insurable 11th Cir.; FL, Penn., N.C., Mich. federal district courts: exclusions upheld 20 Some Good News One bright spot: some courts are rejecting TCPA claims! Consent must be addressed on individual basis different mechanisms no class Connelly v. Hilton Grand Vacations Co. (S.D. Cal. 2013) Individual testimony needed to determine consent to texts no class Smith v. Microsoft Corp. (S.D. Cal. 2014) Plaintiff has standing as subscriber only if both account-holder and regular user Olney v. Progressive Casualty Ins. Co. (S.D. Cal. 2014) Prior express consent provided when number included in dispute letter to creditor Wills v. Optimum Outcomes, Inc. (D. Utah 2014) 21 7

8 More Good News The FCC is granting some industry petitions for clarification Package notification calls to wireless phones exempt from consent requirement Cargo Airline Association petition Consent to calls or texts from GroupMe group may be obtained by an intermediary GroupMe petition FCC recognizes that strict interpretation of the TCPA may defy business reality Clarifications limited to facts presented, so be cautious strict compliance is safest 22 IV TCPA Compliance Tips How To Help Ensure Compliance? Send texts only to numbers with prior express written permission Provide clear opportunity for optouts by recipients ( Stop, quit ) Insist on a clear vendor contract setting out obligations/liability Put in place a written TCPA policy regarding texts, calls, faxes, with penalties for non-compliance Keep records of consents handy Only use vendors that can prove past TCPA compliance Update consent lists regularly to ensure accuracy Perform periodic TCPA compliance audits, including of vendors and in-house marketing personnel 24 8

9 Fillable Form Checklist Suggestion 1. Written TCPA policy 2. Explicit vendor contracts 3. Update consent/number lists 4. Adhere to consent lists 5. TCPA compliance audits Status Yes No Yes No Yes No Yes No Yes No 25 Questions? Jason A. Levine Partner, Washington Tel Fax A versatile courtroom lawyer for nearly 20 years, Jason represents clients in their most important business litigation. He serves as lead counsel in cases including class actions that involve contract disputes, fraud, business torts, antitrust,and constitutional claims. Jason hastried10 complex casestobench andjury. Hehas alsoargued federal appealsand often advises clients in the high-tech industry on the liability risks posed by digital media. As a example of his broad practice, within a recent six-month period, Jason tried and won a fulldefenseverdictin a$70 millionjury trialoveranallegedbreachof contract, defeatedthe U.S. Government s motion to strike or dismiss his client s claim in a $250 million civil forfeiture case, and secured full payment of his client s damages and fees in a fraud case. Jason has been recognized by peers and clients as a Washington, D.C. SuperLawyer ( ) and a Benchmark Litigation Future Star ( ), and by Lawdragon magazine as one of the top 3,000 attorneys in the United States ( ) and as one of 500 attorneys who are carrying the legal profession to new frontiers (2006). Before joining V&E, Jason chaired the D.C. Trial practice group of another global law firm. He received his J.D. in 1994 from Harvard Law School (cum laude),and his B.A. in 1991 from Brandeis University (summacumlaude, PhiBeta Kappa). Jason clerked for (now Chief) Judge RandallRaderonthe U.S. Court of Appealsforthe Federal Circuitfrom

10 PROGRAM DISCLAIMER: The content of this presentation is intended for educational and informational purposes only. It does not constitute the provision of legal advice or services by any of the speakers or by Vinson & Elkins LLP