FCC Issues Declaratory Ruling That the Federal Government and Contractors Acting Within Agency Scope Are Not Subject to the TCPA
On July 5, 2016, the Federal Communications Commission (FCC) issued a Declaratory Ruling in which it determined that the Telephone Consumer Protection Act (TCPA) “does not apply to calls made by or on behalf of the federal government in the conduct of official government business, except when a call made by a contractor does not comply with the government’s instructions.” The Commission concluded that because the term “person” as defined in section 227(b)(1) of the Communications Act, did not expressly include the federal government, the prohibitions against autodialed and pre-recorded calls under this section do not apply to federal government agencies. It further determined that “subjecting the federal government to the TCPA’s prohibitions would significantly constrain the government’s ability to communicate with its citizens … and to collect data necessary to make informed public policy decisions.” The declaratory ruling also states that “the term ‘person’ in section 227(b)(1) does not include a contractor when acting on behalf of the federal government, as long as the contractor is acting as the government’s agent in accord with the federal common law of agency.” The Commission asserted that this conclusion is reasonable because “[i]f the TCPA were interpreted to forbid third-party contractors from making autodialed or artificial- or prerecorded-voice calls on behalf of the government, then, as a practical matter, it would be difficult (and in some cases impossible) for the government to engage in important activities on behalf of the public.”
The order specifically responds to petitions filed by three government contractors seeking such a ruling. The petitioners are as follows: - RTI International – RTI is a nonprofit organization that places survey research calls on behalf of federal government agencies, including the Centers for Disease Control. Its petition sought a declaratory ruling that the TCPA does not apply to research survey calls made by or on behalf of the federal government because the TCPA restricts calls made by a “person,” and federal government agencies fall outside the definition of “person” in the Communications Act.
- National Employment Network Association – NENA represents individual providers of employment services to beneficiaries receiving Social Security Disability Insurance and Supplemental Security Income payments due to a qualifying disability. Its members contract with the Social Security Administration (SSA) to “contact program-eligible beneficiaries to inform them about their options for returning to self-supporting employment.” NENA asked the Commission to clarify that, because its members’ contracts with the SSA require them to contact program-eligible beneficiaries, they “stand[] in the shoes” of the federal government and are “exempt from the TCPA’s restrictions on calls to wireless numbers.”
- Broadnet Teleservices, LLC – Broadnet is a provider of a technology platform that “enables members of government to communicate with citizens” (e.g., through a telephonic town hall). To alleviate concerns that Broadnet might need to obtain prior express consent from each recipient of a call on a wireless phone, the company sought clarification that (1) federal, state, and local government entities do not meet the definition of “person” for TCPA purposes when the government and government officials are acting for official purposes, and (2) the TCPA does not apply to service providers working on behalf of government entities and officials.
In the declaratory ruling, the Commission generally found that calls of the type described in these three petitions would not be subject to the TCPA, but emphasized that, consistent with the Supreme Court’s recent decision in Campbell-Ewald v. Gomez , “a call placed by a third-party agent will be immune from TCPA liability only where (i) the call was placed pursuant to authority that was ‘validly conferred’ by the federal government, and (ii) the third party complied with the government’s instructions and otherwise acted within the scope of his or her agency, in accord with federal common-law principles of agency.”
Who’s Still “Standing” Following Spokeo, Inc. v. Robins? From the first month of district court decisions issued since the United States Supreme Court decided Spokeo, Inc. v. Robins , No. 13-1339, 2016 WL 2842447, *3 (U.S. May 16, 2016), it appears the needle on Article III standing has moved slightly, but so far only slightly, in favor of the defense. Spokeo held that (i) in order to establish Article III standing, a plaintiff must allege an injury-in-fact that is both “concrete and particularized,” and (ii) the plaintiff cannot “automatically satisf[y] the injury-in-fact requirement whenever a statute grants a person a statutory right and purports to authorize that person to sue to vindicate that right.” Courts have begun to give that requirement teeth, dismissing claims where a defendant may have violated a statute’s technical requirements, but where the plaintiff suffered no adverse consequence as a result. At the same time, however, courts have recognized Spokeo ’s other holding that a “concrete” injury is not necessarily synonymous with a “tangible” injury, and that the “risk of real harm” counts as such an injury (even when such harm has not materialized). Dismissals on Spokeo grounds, therefore, have been sparse. Just days after Spokeo was decided, U.S. District Judge Theodore Chuang cited the decision while remanding a data breach class action against the Children’s National Health System to Maryland state court. See Khan v. Children’s Nat’l Health Sys ., No. 8:15-cv-02125, 2016 WL 2946165, at *7 (D. Md. May 19, 2016). In that suit, plaintiff alleged that her sensitive personal information had been compromised, and that defendant did not take sufficient steps to protect it; however, despite plaintiff’s “concern” that her personal information would be misused, she did not claim that she or anyone else had actually been affected by the data breach. Judge Chuang found that under these circumstances, plaintiff did not satisfy Spokeo ’s newly articulated injury-in-fact standard, because there were no allegations indicating: “either actual misuse of the personal data or facts indicating a clear intent to engage in such misuse with plaintiffs’ data…” Id. at 8. The court concluded that it lacked subject matter jurisdiction, and remanded the case to state court. More recently, the Eastern District of Wisconsin similarly applied Spokeo to dismiss a putative class action brought under the Cable Communication Policy Act (“CCPA”). See Gubala v. Time Warner Cable, Inc. , No. 15-cv-1078 (E.D. Wisc. June 17, 2016). The Complaint alleged that defendant collected, and continued to maintain indefinitely, consumers’ personally identifiable information in violation of the CCPA’s provision that such information be destroyed when no longer necessary for the purpose for which it was collected. The Complaint did not allege, however, that defendant distributed, sold, or otherwise disclosed plaintiff’s information to any third party. The Court found that under these circumstances, Plaintiff failed to satisfy the “concrete” injury prong of the Spokeo analysis, and dismissed the case for lack of Article III standing. Most recently, in Stoops v. Wells Fargo Bank, N.A. , No. 3:15-cv-00083-KRG, 2016 U.S. Dist. LEXIS 82380 (W.D. Pa. June 24, 2016), a case involving the Telephone Consumer Protection Act (“TCPA”), a district court granted the defendant summary judgment because the plaintiff lacked both constitutional and prudential standing. The plaintiff in Stoops , far from being “disturbed” by unwanted calls, actually purchased wireless phones with numbers from economically depressed areas out-of-state, hoping to receive misdirected debt collection calls, meant for the former owners of those numbers, so that she could bring TCPA claims regarding those calls. Her interests therefore fell outside the statute’s protected zone of interests—“privacy, peace, and quiet”—and she lacked standing. But, in two other TCPA cases involving more conventional plaintiffs, district courts have refused to dismiss and/or remand for lack of Article III standing. In Booth v. Appstack, Inc ., No. 13-1533, 2016 U.S. Dist. LEXIS 68886, * 16-17 (W.D.Wash. May 25, 2016), neither party had briefed Spokeo , but the Court nevertheless analyzed the opinion and considered whether Plaintiff’s TCPA allegations of robocalling demonstrated a sufficiently “concrete injury,” as described in Spokeo . The Court believed if the violations alleged were proven, plaintiffs suffered the injury of “wast[ing] time answering or otherwise addressing widespread robocalls.” Id. Subsequently, in Rogers v. Capital One Bank (USA), N.A. , No. 1:15-cv-4016, 2016 U.S. LEXIS 735605, (N.D. Ga. June 3, 2016), another TCPA class action, the Court determined that plaintiffs had sufficiently alleged facts to support standing because the alleged calls were to plaintiffs’ “personal cell phone numbers, [and] they have suffered particularized injuries because their call phone lines were unavailable for legitimate use during the unwanted calls.” Many other TCPA-related issues remain to be decided. For example, no court has yet ruled on whether a TCPA plaintiff would have standing if he consented orally to receipt of calls or messages, but the defendant committed a technical violation of the requirement for written consent. No court has ruled, either, on whether a violation of the FCC’s required opt-out notice language for facsimile messages gives rise to a cognizable “injury.” Spokeo ’s impact on TCPA class certification also remains unexplored at this time. We expect that many more cases will address standing, post- Spokeo , in the coming months, and will continue to report on these matters. |
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| With the rise in TCPA litigation, numerous parties have sought clarification of the rules. Kelley Drye’s Communications group has compiled this comprehensive summary of the pending petitions. |
| Number of Petitions Pending | New Petitions Filed | Upcoming Comments | Decisions Released | | 23 (+32 seeking a retroactive waiver of the opt-out requirement for fax ads) | RingCentral, Inc. (July 6, 2016) – seeking a ruling that fax broadcasters are not “senders” for TCPA purposes and clarification regarding faxes with “ de minimis ” promotional information
Mortgage Bankers Association (June 16, 2016) – exemption to the prior express consent requirement for non-telemarketing mortgage servicing calls required by law under other statutes and regulations | Network Communications International Corp. – exemption to prior express consent requirements for inmate calling services
(Replies Due 7/22/16) | Declaratory Ruling – Broadnet Teleservices, RTI International, National Employment Network Association (rel. July 5, 2016) |
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Closing the Door on Campbell-Ewald ?
Since Campbell-Ewald Co. v. Gomez , 136 S. Ct. 663 (2016), left open whether a TCPA class claim is moot if a defendant actually tendered complete relief to the named plaintiff, at least one court of appeals and multiple district courts have held in the negative. See, e.g. , Chen v. Allstate Ins. Co. , No. 13-16816, 2016 U.S. App. LEXIS 6627, at *28 (9th Cir. Apr. 12, 2016); see also Wilson v. Gordon , No. 14-6191, 2016 U.S. App. LEXIS 9374, at *36-*37 (6th Cir. May 23, 2016) (accord in Medicaid class action).
Chief Judge Patti Saris of the District of Massachusetts noted the widespread agreement among courts since Campbell-Ewald in a TCPA class action, South Orange Chiropractic Center, LLC v. Cayan, LLC , No. 15-13069, 2016 U.S. Dist. LEXIS 70680 (May 31, 2016). After denying the defendant’s request to tender payment and have judgment entered against it, she denied the motion to certify her decision for interlocutory appeal because there was no “substantial ground for difference of opinion” on the issue of law given the harmony of decisions. Id. at *8 (quoting 28 U.S.C. § 1292(b)) (citing cases). The denial was without prejudice to allow the defendant another motion for interlocutory appeal if a case law split develops.
A Southern District of New York case, Leyse v. Lifetime Entertainment Services, LLC , No. 13-5794, 2016 U.S. Dist. LEXIS 47877 (Mar. 17, 2016), remains the outlier because of a key factual difference. In Leyse , the court held that it would enter judgment for the plaintiff after the defendant tendered full relief, including costs, to the court clerk because it had already denied the motion for class certification. Only the plaintiff’s individual TCPA claims remained. The limited opening to pick off a named TCPA plaintiff with a tender of complete relief, before a certification motion, appears to be closing.
A Plaintiff Who Manufactures a TCPA Claim Lacks Standing
As noted above, in Stoops v. Wells Fargo Bank, N.A. , No. 3:15-cv-00083-KRG, 2016 U.S. Dist. LEXIS 82380 (W.D. Pa. June 24, 2016), the district court granted the defendant summary judgment because the plaintiff lacked constitutional and prudential standing. The professional TCPA plaintiff could not prove that she suffered an injury-in-fact to confer Article III standing. Id. at * 26 (citing Spokeo , 136 S. Ct. at 1547). She had purchased wireless phones with numbers from economically depressed areas out-of-state, in the singular hope of receiving calls in search of delinquent customers of these reassigned numbers. Additionally, prudential standing was lacking because she sought to receive the alleged calls and profit from the TCPA’s statutory damages. Her interests, therefore, were outside the statute’s protected zone of interests—“privacy, peace, and quiet.”
Lyft Did Not Initiate an Invitational Text
The FCC meant what it wrote last year about affirmative steps by users of apps foreclosing TCPA liability for those apps. In Wright v. Lyft Inc., No 2:14-CV-00421-MJP (W.D. Wash. April 15, 2016), the district court dismissed a TCPA invitational text class claim. Lyft allegedly encouraged its app users to invite their contacts via text message. The FCC explained in its July 2015 Order that when transmission of a message requires affirmative steps by a user, app creators like petitioners YouMail and TextMe are not the initiators of text messages. See Rules and Regulations Implementing the Telephone Consumer Protection Act of 1991, et al. , CG Docket No. 02-278, WC Docket No. 07-135, Declaratory Ruling and Order, 30 FCC Rcd 7961 ¶ 37 (2015). Applying the FCC’s analysis and clearance of TextMe’s invitational user interface to Lyft’s, the court rejected the plaintiff’s distinction that Lyft did not specify that a text (versus another method) would be sent. However, the court allowed the Washington state law claims to proceed because that statute banned the assisting and sending of commercial text messages. TCPA plaintiffs cannot demonstrate that an app’s invitational messaging violates the TCPA where the message is sent at the behest of a user, who takes affirmative steps to do so.
The Plaintiff’s Burden of Proving Revocation of Consent
A TCPA plaintiff must prove revocation of consent according to the decision in Reyes v. Lincoln Automotive Financial Services , No. 9:15-cv-00560 (E.D.N.Y. June 20, 2016). In granting the creditor’s motion for summary judgment, the district court distinguished the Third Circuit’s holding in Gager v. Dell Financial Services, LLC , 727 F.3d 265 (3d Cir. 2013), that express consent may be revoked under the TCPA. Id. at 267. The court noted that the Second Circuit had not decided revocation, but the FCC adopted the Gager holding in its July 2015 Order. See Rules and Regulations Implementing the Telephone Consumer Protection Act of 1991, et al. , CG Docket No. 02-278, WC Docket No. 07-135, Declaratory Ruling and Order, 30 FCC Rcd 7961 ¶ 56 (2015); id. ¶ 70 (“[T]he consumer may revoke his or her consent in any reasonable manner.”). Unlike the letter requesting the cessation of calls related to a credit account in Gager , the purported letter in Reyes may not have been sent, and a letter from the defendant denied its receipt. Thus, while the FCC “s[aw] no reason to shift the TCPA compliance burden onto consumers . . . that a caller did not have prior express consent for a particular call,” id. ¶ 70, the district court placed the burden on the plaintiff to demonstrate the reasonableness of his revocation.
This decision may allay some fears about maintaining the affirmative defense of consent in the wake of the July 2015 Order, where there is no record of the alleged revocation communicated to the defendant. See id. , Statement of Commissioner Michael O’Rielly Dissenting in Part and Approving in Part at 12 (“Indeed, asking it to prove that consent was not withdrawn puts the company in the untenable position of having to prove a negative.”). But where oral revocation is alleged, or other individualized means chosen by the customer, the petitioners in ACA International v. FCC , No. 15-1211 (D.C. Cir. Nov. 25, 2015), argue that compliance with such a revocation regime is unworkable. We look forward to the D.C. Circuit’s weighing in on this and other controversial items in the July 2015 Order.
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