TCPA Tracker-June 2016
June 10, 2016
IN THE JUNE 2016 ISSUE:
Recent News | FCC Petitions Tracker | Cases of Note |   The Team
To read prior issues of TCPA Tracker, please click here.
 
Recent News

FCC Consumer Advisory Committee Releases TCPA Rule Recommendations

On June 10, 2016, the Federal Communication Commission's (FCC's) Consumer Advisory Committee (CAC) issued its recommendations to the Commission regarding regulations to implement the government debt collection exemption to the Telephone Consumer Protection Act (TCPA).  After first discussing concerns regarding the new exemption (including difficulty with private enforcement and the potential for increased instances of Internal Revenue Service (IRS) impersonation and other fraud), the CAC recommended that the Commission include the following consumer protection provisions in its rules to implement the exemption:

 

1. Calls pursuant to the exception would only be permitted to be made to the debtors themselves, not to family, friends or others, including employers;
2. The rule would apply to texts as well as to calls to cell phones;
3. Calls would be allowed only when related to delinquent or defaulted debt, and only related to the debt status, and no telemarketing messages would be permitted to be included;
4. The number of allowed calls or texts made pursuant to the proposed rule is limited to three calls per month, per servicer or collector and each initiated call would count as one call;
5. Callers would be required to honor a request for the calls to stop;
6. Callers would be required to notify consumers of their right to request that calls stop;
7. The rule proposes to apply limitations in the Fair Debt Collection Practices Act to the permissible time of calls covered by the rule (8:00 a.m. to 9:00 p.m.);
8. The rule would only permit calls to be made under the exception for debts currently owed to or guaranteed by the United States, so that calls to collect these debts after they have been sold to independent third parties would not be permitted without consent;
9. The same rules for wrong number calls, such as to reassigned numbers, as was required by the FCC's 2015 Omnibus Order would apply to calls made pursuant to this rule (this permits only 1 wrong number call).


The CAC further recommended that the Commission clarify the exemption in its rules by “requir[ing] that callers must have documented rationale for believing that a particular phone number belongs to the debtor being called or texted by the debt collector or servicer.”  Finally, the CAC advised the FCC to consult with the Federal Trade Commission (FTC) and the Consumer Financial Protection Bureau to “coordinate definitions for terms and protections across the debt collection landscape."

In addition to the CAC recommendations, the FCC received initial feedback on its proposed rules to implement the government debt collection exemption on June 6.  The proposals generally were well received by the FTC, members of Congress, and consumer advocacy groups, while loan servicing stakeholders contend the proposed rules are too strict.  Reply comments on the proposals are due on June 21, 2016.
           
FCC Enforcement Bureau Issues Junk Fax Settlements

On June 14, 2016, the FCC’s Enforcement Bureau released two consent decrees with individuals who allegedly violated the TCPA by repeatedly sending unsolicited fax advertisements on behalf of their business, EZ Business Loans.  As part of the settlement, the individuals agreed to refrain from sending fax advertisements in the future, as well as file periodic compliance reports with the FCC.  The parties further agreed that if they default on the terms of the settlement, they will pay a monetary penalty of $1.68 million.


iHeartMedia Doesn’t Heart the TCPA

iHeartMedia has agreed to pay $8.5 million to resolve allegations that the company violated the TCPA by sending unsolicited text messages to radio station listeners. According to the complaint, the company would invite listeners to send text messages in order to request songs or enter contests. Listeners who submitted requests or entries would receive messages from the company in return.

But rather than simply confirm receipt of the listener’s text, the plaintiffs alleged that the messages frequently included ads for the company’s partners. For example, when the plaintiffs sent a text message to enter a contest, they received a response inviting them to “play us in the brand new version of Words With Friends.” The text message included a link that led the recipient to the Words With Friends download page on their phone’s app store.

It is tempting to think that a person’s text to your company constitutes consent to text them back, but it’s not that simple. While you may be able to send a simple confirmation of receipt, in order to send an ad, you need prior express written consent. Without it, you could be liable for statutory damages of up to $1,500 per text sent without consent. As this settlement demonstrates, those numbers can quickly add up.

 

FCC Petitions Tracker
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
20 (+32 seeking a retroactive waiver of the opt-out requirement for fax ads) Network Communications International Corp. – exemption to prior express consent requirements for inmate calling services (filed 5/10/16)

Warner Chilcott Corporation; Wedgewood Village Pharmacy, Inc.; Roche Diagnostics Corporation; Amatheon, Inc. – retroactive waivers of opt-out language requirement on fax advertisements

Warner Chilcott Corporation; Wedgewood Village Pharmacy, Inc. – retroactive waivers of opt-out language requirement on fax advertisements
(Comments Due 6/14/16;
Replies Due 6/21/16) 

Network Communications International Corp. – exemption to prior express consent requirements for inmate calling services
(Comments Due 7/7/16;
Replies Due 7/22/16)

None
Click here to see the full FCC Petition Tracker.
Cases of Note
Watching Spokeo Unfold

In the wake of the U.S. Supreme Court’s decision in Spokeo, Inc. v. Robins, No. 13-1339, 578 U.S. ___ (May 16, 2016), private plaintiffs suing for procedural violations of federal laws, like the TCPA, who did not sufficiently allege the suffering of a concrete injury, cannot pursue their actions in federal courts.  These courts lack Article III standing to adjudicate such disputes according to the Supreme Court.  Now, an unharmed plaintiff may be limited to pursuing an action in a state court, either in the first instance, see 47 U.S.C. § 227(b)(3) (authorizing state court TCPA actions), or after remand pursuant to 28 U.S.C. § 1447(c), see, e.g., Khan v. Children’s Nat’l Health Sys., No. 8:15-cv-02125, 2016 WL 2946165, at *7 (D. Md. May 19, 2016) (remanding in light of Spokeo because a data breach plaintiff’s alleged invasion of privacy did not satisfy concrete harm).  We are carefully monitoring all post-Spokeo developments in pending TCPA actions.


Court Rejects Proposed Settlement in TCPA Class Action Due to “Notable Deficiency” Regarding the Scope of the Proposed Release
 
In Ronald Munday v. Navy Federal Credit Union, No. 8:15-cv-01629 (C.D. Cal. May 26, 2016), the Central District of California recently rejected a proposed class action settlement between Navy Federal Credit Union and individuals it allegedly called in violation of the TCPA.  The plaintiff alleged that Navy Federal Credit Union violated the TCPA by autodialing him on his cellphone without consent.  However, the district judge did not approve the settlement because it had a “notable deficiency as to the scope of the proposed release,” which rendered the settlement unreasonable.  Munday, slip op. at 8.  Specifically, the proposed release was not limited to claims “based on the identical factual predicate as the underlying claims in the class action.”  Id. (quoting Reyn’s Pasta Bella, LLC v. Visa USA, Inc., 442 F.3d 741, 748 (9th Cir. 2006)).  Beyond claims of autodialing cellphones, it released defendants from unrelated claims with an “all-encompassing ‘including without limitation’ provision.”  Id
 
Additionally, the court deemed the Armed Services YMCA as an inappropriate cy pres recipient, with insufficient relation to the settlement class.  Id., at 9.  Parties who endeavor to arrive at a potential class-wide settlement must closely consider the acceptable scope of a settlement release and cy pres considerations, to avoid the time and expense of revising the proposed settlement agreement to alleviate potential deficiencies.
 
 

Third Circuit Cases Illustrate Importance of Arbitration Clauses in Consumer Agreements
 
Two federal district courts in the Third Circuit recently compelled arbitration in lawsuits alleging TCPA violations, including a putative class action.  The decisions were Herndon v. Green Tree Servicing LLC, No. 4:15-cv-01202 (M.D. Pa. Apr. 22, 2016) and Raynor v. Verizon Wireless, No. 3:15-cv-05914 (D.N.J. Apr. 25, 2016).  Both courts held that arbitration clauses covered the alleged communications because the plaintiffs’ claims related to or arose out of the agreements that created the plaintiffs’ obligations to pay for services with the defendants.
 
In Herndon, a class action, the plaintiff entered an agreement to finance the purchase of a manufactured home.  The defendant was an assignee of the lender, and the agreement explicitly covered disputes between the contracting parties or their assignees.  Accordingly, the court held that the defendant-assignee could enforce the agreement and compel arbitration of her individual claims, and stayed the class claims.
 
In Raynor, the plaintiff set up two cell phone numbers with the defendant on the same day but only signed one of the two customer agreements.  The alleged TCPA violation involved the phone for which she did not sign the agreement.  The court held that the arbitration clause applied to both phone numbers because they were under the same account.  In other words, the signing of the one agreement applied its terms to both phone numbers.  Alternatively, the court held that the plaintiff accepted the agreement by activating her phone service, a method of acceptance that was explicitly stated in the agreement.
 
These cases illustrate the continued importance of including arbitration clauses in consumer agreements that cover wide-ranging disputes, such as TCPA violations or other putative class claims, as well as federal court's continued application of AT&T Mobility v. Concepcion to compel individual arbitration.  Additionally, the agreements should permit acceptance by conduct in case the consumer does not sign the agreement before using the product.