FCC’s 2015 Omnibus TCPA Declaratory Ruling Still Under Review at the D.C. Circuit
Nearly eleven months have passed since the U.S. Court of Appeals for the D.C. Circuit heard oral argument in ACA International et al. v. FCC
, which challenged the validity of the FCC’s rule changes and interpretations of the TCPA in its July 2015 Omnibus TCPA Declaratory Ruling. The appeal focuses on three main issues: (1) significant expansion of the scope of what equipment could be deemed an “autodialer”; (2) interpretation of the “called party” under the TCPA to mean the party that actually receives the call or message, rather than the intended recipient; and (3) allowing consumers to revoke consent to receive calls and other messages at any time and by any reasonable means. The delay in ruling is unusual, and has led to a lot of speculation as to the possible cause. Unfortunately, no reliable information concerning the status is available, and the public is relegated to anxiously awaiting the ruling. The court’s ruling on these issues, once released, will have a significant impact on TCPA litigation and enforcement. Kelley Drye will circulate a special issue of this TCPA Tracker as soon as possible when the decision becomes available.
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
- 19 (+9 seeking a retroactive waiver of the opt-out requirement for fax ads)
- 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”
- 3 requests for reconsideration of the 11/2/16 fax waiver in response to petitions by 22 parties
- 1 request for reconsideration of the 10/14/16 waiver of the prior express written consent rule granted to 7 petitioners
New Petitions Filed
- Advanced Methods to Target and Eliminate Unlawful Robocalls – Second Notice of Inquiry; FCC 17-90 (Replies due 9/26/17)
*Note: Although the most recent “ringless voicemail” petition was withdrawn in June 2017, the FCC continues to receive dozens of consumer comments opposed to exempting such services from the TCPA.
to see the full FCC Petitions Tracker.
Cases of Note
Eastern District of Pennsylvania Decision Clarifies Standard of Consent Under the TCPA
In Winner v. Kohl’s Dept. Stores, Inc.
, No. 16-1541, 2017 WL 3535038 (E.D. Pa. Aug. 17, 2017), the plaintiffs alleged that the defendant sent them multiple telemarketing text messages in violation of the TCPA. 2017 WL 3535038, at *1. Kohl’s had advertised to consumers via certain “calls to action” the ability to earn shopper rewards by texting in a specific code to Kohl’s; those “calls to action” contained “disclaimer” language that included authorization for Kohl’s to send texts by ATDS to plaintiffs. Id.
at *1-2, *6.
Despite the fact that Plaintiffs both texted a specific code in response to Kohl’s “calls to action,” they claimed that they were “annoyed by Defendant’s messages[,]” that they “were never clearly and conspicuously informed that they were enrolling to receive automated text messages to their cellular phones” and that “[n]either Plaintiff intentionally signed up for Defendant’s telemarketing text messages.” Id.
The court found that
the plaintiffs’ actions in responding to defendant’s program – by texting the specific code after viewing the “call to action” – satisfied the TCPA’s prior express consent requirement. Id.
at *7. The court then dismissed the complaint under Rule 12(b)(1) “[b]ecause [plaintiffs] consented to receiving the texts, Plaintiffs can show no concrete injury-in-fact and thus have not established that they have standing[.]” Id.
at *6, *8.
The case clarifies the FCC’s “reasonable means” standard for revocation of consent under the TCPA by showing that courts will hold consumers to companies’ fact-specific requirements for revoking consent to receive telemarketing calls and texts. The court’s opinion in this case also endorses the use of inbound texts to satisfy the consent standards, and shows that any request to opt out of ad programs, made by means other than those specified by the program’s terms and conditions, are insufficient.
Ninth Circuit Affirms LA Lakers’ Insurer Not on Hook for TCPA Lawsuit
On August 23, 2017, the Ninth Circuit affirmed
the District Court’s dismissal of a lawsuit against Federal Insurance Co., in which the Los Angeles Lakers alleged that the insurance company breached its policy and the implied covenant of good faith and fair dealing when it failed to defend the Lakers against or cover a plaintiff’s TCPA complaint. See L.A. Lakers Inc. v. Fed. Ins. Co.,
No. 15-55777 (9th Cir. Aug. 23, 2017).
The initial lawsuit stemmed from a November 2012 complaint by David Emanuel, who alleged that the Lakers violated the TCPA by sending him autodialed text messages after he used his mobile phone to send a message to the scoreboard during a Lakers game. The Lakers settled with Mr. Emanuel in 2014, after defending the lawsuit before the U.S. District Court for the Central District of California.
In affirming dismissal, and in a 2 to 1 decision, the Ninth Circuit concluded that a TCPA claim is “inherently an invasion of privacy claim,” as the statute states twice that it is intended to protect privacy rights, and was therefore excluded from the Lakers’ insurance coverage. However, one of the majority judges authored a concurring opinion stating that he would have affirmed the judgment on narrower grounds based solely on the plaintiff’s allegations, without broadly holding that a TCPA claim is necessarily a privacy claim. The dissenting judge, U.S. Circuit Judge Richard C. Tallman, explained that he would have reversed the district court’s decision because Emanuel did not expressly sue for an invasion of privacy.
The impact of the Ninth Circuit’s decision on other D&O coverage disputes remains to be seen, given that one judge dissented and the concurring judge suggested that the court did not need to rule broadly as to the intent of the TCPA in order to affirm.
Eleventh Circuit Approves Partial Revocation of TCPA Consent
On August 10, 2017, a three-judge panel reversed and remanded
a January 2016 decision in which the U.S. District Court for the Southern District of Florida determined that the TCPA and the FCC’s July 2015 Declaratory Ruling precluded partial revocation of consent. See Schweitzer v. Comenity Bank
, No. 16-10498 (11th Cir. Aug. 10, 2017).
In the initial complaint, the plaintiff alleged that defendant Comenity Bank violated the TCPA by placing over 200 automated calls to her within the five months after she told an employee that she did not want to receive any more calls “in the morning and during the work day.” Relying on the TCPA’s statutory silence regarding the means for revoking consent and common law principles, as well as language in the FCC’s Declaratory Ruling that “callers may not control consumers’ ability to revoke consent,” the Court of Appeals concluded that partial revocation is permissible.
Additionally, the Court dismissed the District Court’s concern about the feasibility of implementing partial revocation, noting that sophisticated software allows callers to place calls only during specified times, and that businesses can always place manually dialed, rather than autodialed, calls.
Ninth Circuit Finds Royal Administration Services Not Vicariously Liable for Calls by Telemarketer
On August 15, 2017, the Ninth Circuit affirmed
the District of Nevada’s grant of summary judgment, holding that defendant Royal Administration Services, Inc. could not be held vicariously liable under the TCPA for calls made by independent contractors. See Jones v. Royal Admin. Servs., Inc.
, No. 15-17328 (9th Cir. Aug. 9, 2017).
To arrive at its decision, the court applied the ten non-exhaustive factors of agency set forth in the Restatement (Second) of Agency, ultimately concluding that the telemarketers were not acting as Royal’s agents. Those factors are (1) the control exerted by the employer, (2) whether the employee is engaged in a distinct occupation, (3) whether the work is normally done under the supervision of an employer, (4) the skill required, (5) whether the employer supplies tools and instrumentalities [and the place of work], (6) the length of time employed, (7) whether payment is by time or by the job, (8) whether the work is in the regular business of the employer, (9) the subjective intent of the parties, and (10) whether the employer is in the business.
In determining that the telemarketers (AAAP) were not acting as Royal’s agents, the court focused on the following points:
- Royal did not have the right to control the hours worked or set quotas for the number of calls or sales made, and therefore “had only limited control of AAAP’s telemarketers.”
- Royal did not have any control of a call until the telemarketer decided to pitch a Royal product to the consumer because AAAP sold products for multiple companies and first “sold” consumers on the idea of a vehicle service plan, rather than a specific product.
- AAAP was an independent, separate business and provided most of the “tools and instrumentalities” necessary to complete the calls.
- Royal did not supervise the calls.
- The agreement between the parties was impermanent (e.g., with a one-year term and the right to cancel at any time with 30 days’ notice).
- AAAP was paid a commission for each sale, rather than for the time worked.