TCPA Tracker - January 2019

Recent News

On January 23, 2019, separate letters were sent to the Federal Trade Commission and Federal Communications Commission asking each agency’s chairman to provide information about their efforts to address robocalls.  In the letter to FTC Chairman Joseph Simons, thirteen Democratic senators expressed concern about the ​“threat of illegal robocallers and other scammers” during the government shutdown, and observed that ​“legitimate telemarketers seeking to comply with the Do Not Call Registry are not even able to download the list of numbers they are not to call. Instead, they are instructed to ​‘continue to use their existing lists from the National Do Not Call Registry until the shutdown concludes.’”  The letter then posed a number of questions about ​“how Congress can assist the [FTC] to protect consumers during the shutdown and to ensure the agency has sufficient resources to address the backlog of consumer complaints and cases of identity theft as soon as funding is restored.” 

In a separate letter to FCC Chairman Ajit Pai, Senator Jeff Merkley (D-OR) inquired about the agency’s efforts to reduce the number of robocalls Americans receive.  Senator Merkley noted that in November 2018, he received an automated call claiming ​“to be a final notice of an outstanding case with the [FBI’s] ​‘Department of Tax and Crime Investigation.’”  The letter then specifically asked Chairman Pai to ​“share what [the FCC] is doing to protect consumers from these fraudulent calls and to authenticate calls to unmask these callers and track down the perpetrators.” 

Prior to Federal Shutdown, FCC Listed Proposed Amendments to Truth in Caller ID Rules on its January 2019 Meeting Agenda

Prior to the federal shutdown that began on December 21, 2018, the FCC released a Tentative Agenda for its monthly open meeting on January 30, 2019.  This tentative agenda, among other things, included a Notice of Proposed Rulemaking that would amend the agency’s Truth in Caller ID rules pursuant to a Congressional directive in the RAY BAUM’S Act of 2018.  That bill amended the Communications Act to address spoofing activities directed at consumers in the United States from actors outside the United States and extend the FCC’s reach to caller ID spoofing using alternative voice and text messaging services.  The proposed rule changes would implement these amendments.  Due to the shutdown, however, the FCC altered the January 30 agenda to be an ​“informational-only” meeting.  As of January 28, 2019, the FCC had not announced how or when it will consider the Truth in Caller ID NPRM. 

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.

Number of Petitions Pending

• 30 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
• 10 applications for review of fax waiver orders under the Anda progeny (these applications for review were not addressed in the Nov. 14, 2018 Bureau order)

• NorthStar Alarm Services, LLC.  Petition for Declaratory Ruling (filed Jan. 2, 2019) (NorthStar seeks a declaratory ruling that the use of soundboard technology, which allows a live operator to select one or more recorded message ​“snippets” during live calls with recipients, does not constitute the use of an artificial or prerecorded voice that delivers a message under the TCPA)
• SGS North America, Inc. Petition for Declaratory Ruling (filed Dec. 17, 2018) (SGS has asked the FCC to clarify the scope of ​“telemarketing” and ​“dual purpose” under the TCPA such that prior express written consent is required only if there is an advertisement ​“within the four corners of the communication itself”)

• Best Doctors, Inc. – seeking a declaratory ruling that faxes seeking verification of contact information and the operational status of an office are not ​“advertisements” within the meaning of the Junk Fax Protection Act of 2005 (Comments originally due January 25, now due on January 30; Reply Comments Due 2/8/19)
• SGS North America, Inc. – asking the FCC to clarify the scope of ​“telemarketing” and ​“dual purpose” under the TCPA such that prior express written consent is required only if there is an advertisement ​“within the four corners of the communication itself” (Comments originally due January 24, now due on January 30; Reply Comments Due 2/8/19)

• None since December 2018 report

Click here to see the full FCC Petitions Tracker.

Cases of Note

New Jersey District Court Rules that ​“Trivial” Human Intervention Is Enough to Defeat ATDS Claim

On December 20, 2018, the District Court of New Jersey granted the defendant, National Student Loan Program, summary judgment against an allegation of using an automated telephone dialing system (ATDS) in violation of the TCPA.  Collins v. Nat’l Student Loan Program, No. 17-cv-5345 (D.N.J. Dec. 20, 2018).  The case involved a defendant that used two systems from the same vendor, one of which required an agent to click a number to call.  Defendant used a system called LiveVox Human Call Initiator (HCI) that allowed users to upload cell phone numbers to the system and then such numbers are presented to a clicker agent, where a human must physically click the dialog box before a call can be launched.  Id. at 3.  Defendant used a separate LiveVox system called Quick Connect to call landline numbers that did not contain the human interaction components.  Quick Connect used predictive dialing to call landline numbers.  Id. at 4.  There was no dispute that Plaintiff was called from the HCI system.   Id.  Nonetheless, Plaintiff contended that the Quick Connect and HCI system were essentially different modes of operation for the same underlying system.  Id.  As a result, Plaintiff alleged that the LiveVox HCI system had the capacity to operate as an ATDS and place calls without human intervention.  Id. at 8.

The court found in favor of defendant, explaining that even if the human clicker agent role in the system seems trivial, it was sufficient to remove the classification of the HCI system as an ATDS.  Id. at 12.  Further, the court found that HCI and Quick Connect were separate systems because they operated on separate servers and used different software and hardware.  Id. at 14.  The court further explained that the ATDS definition cannot be based on a ​“latent or potential” capability but rather, the determination is based on the current functionalities of the calling system.  Id. at 14.

Eighth Circuit Rules Insurer Properly Excluded Coverage for TCPA Claim

On January 3, 2019, the Eighth Circuit affirmed the Eastern District of Missouri’s granting of summary judgment in favor of an insurance company seeking to enforce policy exclusions for TCPA claims.  American Family Mutual Insurance Company v. Vein Centers for Excellence, Inc., No. 17-3266, slip op. (8th Cir. Jan. 3, 2019).  The underlying TCPA case was a class action involving unsolicited faxes.  Id. at 2.  The insurer brought a declaratory judgment action against its insured, Vein Centers for Excellence, regarding its duties to indemnify and defend Vein Centers under commercial liability umbrella and business owner’s policies.  Id. at 3.  The TCPA plaintiff, St. Louis Heart Center, was joined as a defendant in the insurer’s action.  Id.  St. Louis Heart argued that the court lacked subject matter jurisdiction and the insurer did not provide notice of the change to the business owner’s policy prior to its renewal.  Id. at 3-4.

First, the court found that it had diversity jurisdiction because the amount in controversy for the insurer’s declaratory judgment action was the probable costs of indemnification and defense minus the deductible.  Id. at 6.  The potential indemnification amount, based on St. Louis Heart’s filings, was more than $17,000,000 and the costs of litigation would likely exceed $75,000.  Id.  The court rejected St. Louis Heart’s argument that the insurer could not aggregate the claims of the TCPA plaintiffs to satisfy the amount in controversy requirement because, from the insurer’s perspective, the TCPA lawsuit was one claim from its insured, not an aggregation of the plaintiffs’ claims.  Id. at 7.

Second, the court ruled that the insurer provided prior notice of the policy changes that included the new exclusion of coverage for TCPA violations.  Under Missouri law, a significant change in an insurance policy requires prior notice or else the change does not take effect.  Id. at 4, 9.  The insurer provided deposition testimony of one of its employees, who testified about the company’s standard procedures for mailing a Policyholder Communication, which included policy changes, to its insureds prior to renewal.  Id. at 9-10.  The insurer did not have a copy of the Policyholder Communication that was sent to Vein Centers, but the court found that the employee’s testimony was sufficient to trigger a presumption that a letter is received by its addressee.  Id.  In instances ​“where the customary volume of mail would render proof impractical or infeasible, the purported sender may rely on ​‘evidence of the settled custom and usage of the sender in the regular and systematic transaction of its business’ to establish the presumption.”  Id. at 9 (citation omitted).  St. Louis Heart merely offered speculation that the insurer’s procedures weren’t followed instead of rebutting the presumption with evidence that Vein Centers did not receive the mail.  Id. at 10.  Thus, the court affirmed the district court’s granting of summary judgment in favor of the insurer.

District Court Dismisses Class Action Concerning Confirmational Text Messages

On December 13, 2018, Judge Beth Labson Freeman of the Northern District of California granted a pre-class certification motion for summary judgment in favor of a defendant travel agency who had sent text messages that confirmed travel reservations.  Phan v. Agoda Company Pte. Ltd., No. 16-cv-7243-BLF, slip op. (N.D. Cal. Dec. 13, 2018).  Plaintiff An Phan made four travel arrangements through Agoda, after which he received text messages that confirmed his reservation and provided him a link to Agoda’s app where he could manage his reservation.  Id. at 3.  Phan voluntarily provided his phone number to Agoda and agreed to Agoda’s Terms of Use and Privacy Policy, which stated that Agoda would send these types of text messages.  Id. at 13.  The issue in dispute was whether the text messages were advertising or telemarketing under the TCPA.  Id. at 1.  If they were, heightened consent requirements would apply.  Id. at 5.

Judge Freeman granted Agoda’s motion because she found that ​“the messages were neither advertising nor telemarketing and Agoda received prior express consent from Phan.”  Id. at 13.  Thus, Agoda was entitled to judgment as a matter of law based on the affirmative defense of consent.  Id.  Phan argued that the text messages were advertising or telemarketing because the transactions were complete when he booked the reservations, so the messages were not part of the transactions.  Id. at 7.  Additionally, Agoda designed the messages to encourage use of the app, which was meant for users to purchase more travel reservations.  Id.  Judge Freeman rejected Phan’s arguments because the context and content of the messages show that the messages were neither advertising nor telemarketing.  Id. at 10.  Contextually, the messages were part of an ongoing transaction between Phan and Agoda because Phan could modify or cancel his reservations until he finished traveling.  Id.  Regarding content, the plain language of each message merely confirmed the reservation and encouraged Phan to manage his reservation through the app.  Id. at 11.  The messages did not encourage the purchase of Agoda’s services or advertise the app’s commercial availability.  Id. at 12.  Judge Freeman concluded that the messages’ purpose ​“was directly cabined to facilitating and completing an existing transaction.”  Id. at 11.

Full Spectrum Podcast

FCC Enforcement Update Podcast: 2018 Year in Review

In this edition of Full Spectrum’s recurring series on FCC enforcement, it highlights some of the major developments in FCC enforcement in 2018 and discuss potential next steps in the year ahead.

Part one of this episode focuses on the big picture in 2018 and the FCC’s use of non-monetary tools to encourage adoption of industry best practices. Part two features a deeper dive into FCC enforcement trends on revocation of authority and inability to pay claims, and takes a close look at the FCC’s expanded robocalling enforcement.

Click here to subscribe on iTunes and here to visit the Full Spectrum website.

“Inside the TCPA” offers a deeper focus on TCPA issues and petitions pending before the FCC. Each episode tackles a single TCPA topic or petition that is in the news or affecting cases around the country. The most recent episode discusses how enforcement fits in as part of the overall FCC TCPA policy strategy.

Click here to subscribe on iTunes and here to visit the Full Spectrum website.