FCC PETITIONS TRACKER
Kelley Drye’s Communications group prepares a comprehensive
summary of pending petitions and FCC actions relating to the scope
and interpretation of the TCPA. Highlights of this month’s
summary are provided below.
Number of Petitions Pending
- 29 petitions pending
- 1 petition for reconsideration of the rules to implement the
government debt collection exemption - 1 application for review of the decision to deny a request for
an exemption of the prior express consent requirement of the TCPA
for “mortgage servicing calls” - 1 request for reconsideration of the 10/14/16 waiver of the
prior express written consent rule granted to 7 petitioners.
New Petitions Filed
- On January 26, 2022, the National Consumer Law Center and other
consumer groups filed an ex parte letter requesting that the FCC
expressly exclude prerecorded scam calls and automated texts from
the exemptions from the consent requirement for these calls and
texts in 42 U.S.C. § 227(b).
Upcoming Comments
Decisions Released
- In the Matter of Advanced Methods to Target & Eliminate
Unlawful Robocalls Call Authentication Tr. Anchor, No. CG17-59,
2022 WL 1631842, at *2 (OHMSV May 20, 2022)
Click here to see the full
FCC Petitions Tracker.
CASES OF NOTE
Ninth Circuit Directs Court to Apply Constitutionality
Tests to Statutory Punitive Award of Nearly One Billion
Dollars
In a recent Ninth Circuit decision, Plaintiff alleged that
Defendant, ViSalus Inc., (“ViSalus”) a multi-level
marketing company that sells weight-loss products, placed
systematic calls to former promoters and customers to entice them
to return or reactivate their memberships from 2012 to 2015 as part
of a “WinBack Campaign.”
Plaintiff enrolled as a ViSalus promoter in 2012, voluntarily
providing her phone number on the application. In April 2015, after
discontinuing her relationship and receiving written confirmation
of termination in 2013, Plaintiff received five prerecorded
messages on her home phone from ViSalus as part of the
aforementioned campaign. As a result, Plaintiff sued Visalus in
October 2015 alleging that “ViSalus had violated the TCPA by
sending unsolicited telemarketing calls featuring artificial or
prerecorded voices without her prior express consent.” Because
ViSalus did not provide the written disclosures to Plaintiff prior
to making the calls at issue, it petitioned the FCC for a
retroactive waiver of the written prior express consent rule. In
its Answer, however, ViSalus did not plead that it had
consent for the calls as an affirmative defense.
After a three-day trial, the jury returned a verdict against
ViSalus with a total damage award of $925,220,000. Approximately
two months later, the FCC granted ViSalus a retroactive waiver of
the written consent and disclosure requirements. ViSalus then moved
to decertify the class, grant judgment as a matter of law, or, in
the alternative, a new trial and challenged the damage award as
unconstitutionally excessive. The district court denied the
motions.
On October 20th, Judge Tallman for the Ninth Circuit affirmed
the “district court’s refusal to decertify class, grant
judgment as a matter of law, or grant a new trial.” However,
the Court “reversed and remanded to the district court for
further proceedings regarding the constitutionality of the nearly
one-billion-dollar statutory damages award.” The Court
analyzed ViSalus’s argument utilizing the test set forth in
St. Louis, I.M. & S. Ry. Co. v. Williams, arguing that
$925,220,000 was so “severe and oppressive” that it
violates ViSalus’s due process rights.
The Court found that “[a]s with punitive damages awarded by
juries and per-violation statutory damages awards, a district court
must consider the magnitude of the aggregated award in relation to
the statute’s goals of compensation, deterrence, and punishment
to the proscribed conduct.”
The Court instructed the district court to reassess the damages
guided by factors provided in Williams and Six Mexican
Workers: “1) the amount of award to each plaintiff, 2)
the total award, 3) the nature and persistence of the violations,
4) the extent of the defendant’s culpability, 5) damage awards
in similar cases, 6) the substantive or technical nature of the
violations, and 7) the circumstances of each case.”
Wakefield v. ViSalus, No. 21-35201, 2022 WL 11530386
(9th Cir. Oct. 20, 2022).
Ninth Circuit Parses Whether Messages Sent to
“Mixed-Use” Phones Used for Both Personal and Business
Purposes Fall Within Scope of TCPA
On October 12th, 2022, a split Ninth Circuit panel reversed the
12(b)(6) dismissal of TCPA claims, holding that Plaintiffs had
statutory standing under the TCPA for messages sent to their cell
phones that are used for both personal and business purposes.
Defendants’ business model involved selling client leads to
home improvement contractors. Defendants had gathered and stored
contact information for millions of contractors from various
websites and sent automated text messages soliciting leads.
Defendants allegedly sent 7,527 texts through automatic telephone
dialing systems (“ATDS”) without Plaintiffs’ consent.
Fifteen of the plaintiffs had registered their numbers on the
National Do-Not-Call Registry. Plaintiffs claimed that these texts
violated two provisions of the TCPA: § 227(b) which prohibits
calls using ATDS to cell phones, and § 227(c) which prohibits
telephone solicitations sent to residential telephone subscribers
who have registered their numbers on the Do-Not-Call Registry.
The Ninth Circuit held that Plaintiffs had statutory standing
under § 227(b), following a brief “plain reading
analysis” of the statutory text. The court found that
“under the most natural reading of the term, ‘entity’
includes a business. Section 227(b) thus covers call to cell phones
of businesses as well as individuals.” The Ninth Circuit
looked to case law noting the importance of statutory
interpretation when determining whether a plaintiff falls within
the “zone of interests” of a “legislatively
conferred cause of action.” Defendants argued that Plaintiffs
lacked statutory standing because the phones that received the
messages are used for business purposes associated with their home
improvement businesses, in addition to personal use, and therefore
fall outside the scope of the TCPA. Defendants cited Senate and
House reports to show that “Congress did not intend to disrupt
normal business communications.” The Ninth Circuit, however,
found that the words of the statute were clear and unambiguous.
Turning to liability concerning the Do-Not-Call Registry, the
Court first found that “in the view of the FCC, a
subscriber’s use of a residential phone (including a
presumptively residential cell phone)” for a home business
“does not necessarily take an otherwise residential subscriber
outside the protection of § 227(c).” The Court honed in
on the question of “whether a cell phone that is used for both
business and personal purposes can be a ‘residential’ phone
within the meaning of § 227(c).” Defendants argued that
because “Plaintiffs use their cell phones both for personal
calls and for calls associated with their home improvement
businesses, they do not qualify as residential subscribers.”
However, after noting that “a few district courts have held,
despite the view of the FCC, that a phone used for both person and
business purposes is not a residential phone for purposes §
227(c),” the Ninth Circuit held that following discovery,
defendants could argue they “rebutted the presumption by
showing that plaintiffs’ cell phones” should have been
“properly regarded as business rather than
‘residential’ lines.”
The majority opinion found that the FCC has concluded that
“a cell phone is presumptively residential.” Thus,
lacking guidance on whether a mixed-use phone becomes a
“business phone” outside the scope of the TCPA, the Court
opted to continue with this presumption. As such, the Court held
that Plaintiffs had both Article III standing and statutory
standing under § 227(b) and (c), reversing and remanding the
lower court’s motion to dismiss decision.
Chennette v. Porch.Com, Inc., — F.4th —, 2022 WL
6884084 (9th Cir. Oct. 12, 2022).
Use Versus Capacity: New York Southern District Court
Parses Ambiguity in Binding 2021 SCOTUS Decision, Facebook v.
Diguid
On September 30th , the S.D.N.Y. Chief District Judge granted
Defendants’ summary judgment motion in a TCPA action, relying
the on Third Circuit’s reasoning its Panzarella
decision (discussed here). Here, Plaintiff alleged that
he had received upwards of 300 calls intended for the former owner
of Plaintiff’s phone number. The number’s former owner had
provided the number on Defendant bank’s cardholder agreement.
Defendant bank, Credit One, authorized a collection agency to make
the calls to the provided phone number after the former owner
defaulted on her credit card account. Plaintiff filed suit alleging
that Defendants had violated the TCPA by “placing autodialed
phone calls to his cell phone without his consent.”
In prior proceedings, the trial court had held for Plaintiff,
relying on three FCC orders that had “instructed that a
certain piece of equipment called a ‘predictive dialer’
constituted an auto-dialer and thus was ‘subject to the
TCPA’s restrictions on the use of auto-dialers.'”
While the case was pending appeal in the Second Circuit, the
Supreme Court issued its Facebook v. Duguid decision (discussed here), and the case was remanded
back to the trial court. To start, the Court here found it was
“bound by the Supreme Court’s holding that a device
‘must use a random or sequential number generator’ to be an
auto-dialer within the meaning of the statute.” The calls here
were made using the LiveVox dialing system, which calls numbers by
going down a curated list of phone numbers provided by Defendant
bank. The LiveVox system does not generate numbers on its own, but
uses an algorithm to automatically place and adjust the number of
calls. The system also “has the capacity to store and dial
randomly or sequentially generated numbers,” which
Plaintiff’s expert contended could hypothetically happen if an
agent were to upload “randomly or sequentially generated
telephone numbers” into the system.
In order to determine whether liability attached by the
“use” of such a system, or whether the system’s
“capacity” alone was determinative, the Court turned to
the Third Circuit’s Panzarella decision. The Court,
being careful to note that the Third Circuit had relied on case law
from both the Second and Third Circuits, specifically reiterated
the Panzarella court’s holding that to violate the
relevant TCPA provision, the calls at issue “must actually
employ an auto-dialer’s ‘capacity to use a random or
sequential number generator.'” Just as in
Panzarella, the Court here observed that “even if
Defendant’s LiveVox system theoretically had the capacity to
store or produce lists of random or sequential phone numbers to be
called, there is no evidence showing that Defendants made” the
calls at issue “using such a technique.”
The Court ultimately granted Defendants’ motions for summary
judgment, finding that because the LiveVox system “dialed
Plaintiff’s phone number from a curated list and employed no
random-or-sequential-number-generating capacity to do so, it did
not employ the kind of harmful dialing system that Congress sought
to proscribe through the TCPA.”
Jiminez v. Credit One Bank, N.A., — F. Supp. 3d —,
2022 WL 4611924 (S.D.N.Y. Sept. 30, 2022)
District Court Considers the “Health Care Message
Exception” that Lowers Threshold for Consent, and Effective
Revocation of Consent to Receive Calls
A Maryland district court recently denied a Plaintiff’s
cross-motion for summary judgment and class certification where
Plaintiff had provided prior “express” consent and
because the calls were “health care messages.” Defendant
was a primary care doctor who undertook a messaging campaign inform
his patients that he was reducing his practice to 300 patients
(from his nearly 4,000 patients) on a subscription-based membership
model. The calls were pre-recorded voice messages, made only to
patients whom Defendant treated before.
The Court established that Plaintiff had been a patient of the
Defendant’s until about 2015, Plaintiff had provided her cell
phone number, and Plaintiff signed a privacy form that authorized
the practice to use and disclose her contact information “to
perform the necessary administrative” business functions of
the practice. Around 2015, Plaintiff obtained a new primary care
doctor and called Defendant’s office to request that her
medical records be transferred. Although an employee thereafter
told her that the practice “no longer considered [Plaintiff] a
patient,” because Plaintiff did not pay the transfer fee nor
fill out transfer paperwork as directed, there was no record of
Plaintiff leaving Defendant’s practice, and she remained on the
list used for the 2021 messaging campaign. Plaintiff did not
contact Defendant to ask the office to stop contacting her after
receiving either of the two calls.
The Court first turned to the relevant regulations to determine
whether the calls Plaintiff received delivered a “health
care” message: “If they did, the calls required mere
prior express consent. If they did not, then the calls
required prior express written consent-a heightened
threshold that Defendants effectively conceded they did not
meet.” Defendant first argued that, although Plaintiff did not
provide express written consent to receive the calls, this
“heightened consent” was not required because the calls
fit under the “health care message exception” which has a
lower prior-express-consent threshold under § 64.1200(a)(2).
Under the health care message exception, ” a ‘covered
entity’ may lawfully place a telemarketing call that
“delivers a . . . message” about “health
care[,]” as long as the called party provides prior express
consent.” The Court found that the calls were “health
care messages” because they “discussed impending changes
to patients’ primary care,” and as such, the Court found
the express consent adequate. The court observed that “nothing
in the TCPA suggests that a health care message cannot also
encourage sales,” noting that “the health care message
exception is meant for calls that both
‘constitute.telemarketing’ and ‘deliver.a
health care message.’ “
Turning next to consent, the court determined that Plaintiff
“provided prior express consent for the calls she
received.” Since “[n]either the TCPA nor its
regulations” define “prior express consent,” the
Court relied on past FCC orders and federal court decisions that
holding that “by giving a phone number as part of a
transaction, a person gives prior express consent to receive
‘transaction-related communications[.]’ ” The Court
similarly rejected the argument any consent did not
“transfer” to the medical consulting company utilized by
Defendant doctor. Finally, the Court found that Plaintiff needed to
have “clearly express[ed] [her] desire not to receive further
calls,” and thus, Plaintiff’s call to the office to
request a transfer of her medical records was bit a withdrawal of
consent. Ultimately, the Court held that Defendants’ calls were
“health care messages” under the TCPA and that Plaintiff
had provided express consent for the calls, granting
Defendant’s motion for summary judgement.
Derossett v. Patrowicz, No. DKC 21-1294, 2022 WL
4448859 (D. Md. Sept. 23, 2022).
Summary of Michigan House Bill 6307
On June 30, 2022, Michigan introduced its own
“Mini-TCPA” legislation, following the direction of
several other states, including Florida and
Oklahoma. While the Michigan Telephone Solicitation Act
(“TSA“) differs slightly from its Florida and
Oklahoma counterparts in its treatment of automatic dialing systems
and consumer consent, the most concerning difference for companies
is the severity of the penalties that the Michigan TSA provides.
The TSA contains a private right of action which would allow people
who “suffer[] a loss as a result of a violation” to bring
a civil cause of action to recover either actual damages (including
attorney’s fees), or $1,000, whichever is greater (which is
greater than the $500 per violation provided for by Florida or
Oklahoma). Even more concerning, however, is that the TSA would
make a “violation of a federal or state law relating to the
subject matter of this act, including but not limited to, 16 C.F.R.
part 310 [Telemarketing Sales Rule] and 47 USC 227 [TCPA], [] a
violation of this act.”
Further, while other states cap their civil penalties at $1,500
per willful violation of their acts, the Michigan TSA (linked here) would allow courts to levy a
civil fine of up to $25,000 for any violation. Notably, “each
telephone communication may be considered a separate violation and
a singular telephone communication may generate multiple separate
violations.” The TSA would also provide for enhancements of
civil fines up to $50,000 when a person “knowingly . . .
targets vulnerable individuals” (individuals 75 or older or
those with disabilities) and up to $75,000 for “persistent and
knowing violations” directed at vulnerable individuals.
The use of an “automatic dialing and announcing
device” (“ADAD“)-defined as any device or
system that is used, whether alone or in conjunction with other
equipment, for the purposes of automatically selecting or dialing
telephone numbers-would be prohibited in solicitations that
“otherwise violate [the] act” or unless the list of
numbers from which the ADAD selects excludes both: (1) those on the
“do-not-call” list; and (2) “vulnerable”
numbers, such as numbers for emergency and government services,
healthcare facilities, and schools. The TSA would also prohibit
altogether any telephone solicitation to residential subscribers
whose numbers are on the FTC’s “do-not-call”
list.
Beyond the standard prohibition that telemarketers cannot engage
a subscriber “in telephone solicitations repeatedly,
continuously, or in a manner that a reasonable person would
consider annoying, harassing, or abusive,” the TSA would
prohibit any telephone solicitations using a “recorded message
in whole or in part,” require solicitors to state their full
first and last name and the name and address of their organization
at the beginning of each call, and prohibit calls between 8 P.M.
and 9 A.M. The TSA would also prohibit solicitors from blocking
their caller ID and would require companies to retain records
related to telephone solicitations for four years.
Finally, the TSA includes several exemptions. For example, it
would still allow solicitations made on behalf of debt collectors;
made to existing customers; made on behalf of schools; and made
with a subscriber’s “express verifiable
authorization”-which would include (i) prior written
authorization or confirmation, (ii) prior electronic authorization
or confirmation, (iii) a recorded prior oral authorization, or (iv)
prior confirmation through an independent third party.
The TSA has not yet been passed into law. It was referred to the
Michigan House of Representatives’ Committee on Commerce and
Tourism for consideration, but the committee has not officially
addressed the bill and the bill has not been put to a vote. The
Michigan House of Representatives must consider the TSA before the
end of the year as it will not carry over into next year’s
session. However, even at this stage, it is worth noting the
TSA’s requirements and preparing for its potential
enactment.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.