MARCH 2019

Federal Trade Commission

The Federal Trade Commission (“FTC”) has obtained a temporary restraining order against a group of companies which allegedly collected fake debt from consumers which the companies had purchased from Scott Tucker, a payday loan generator recently seen in a Netflix documentary “Dirty Money”.

Comment: When the FTC obtains a temporary restraining order, it is “kicking the doors down” on a business, stopping it from doing business without negotiation or warning.

The FTC has added two new defendants to a case brought in California alleging violation of the Telemarketing Sales Rule (“TSR”) and other statutes with regard to student loan debt relief.

Comment: The TSR has very specific rules regarding when a business can charge for debt relief services and normally there can be no fee until relief is actually provided.

The FTC has completed a review of Controlling the Assault of Non-Solicited Pornography and Marketing Act (“CAN-SPAM”), 15 U.S.C. §§ 7701 et seq., and concluded the rule benefits consumers, does not impose substantial economic burdens on senders of email, and that no changes to the rule were needed.

Comment: Please contact me if you would like a summary of CAN-SPAM restrictions.

United States Supreme Court

The Supreme Court has ruled that states are forbidden by the Excessive Fines Clause in the Constitution from seizing valuable assets of criminal defendants.  Timbs v. Indiana.  Indiana argued that a civil forfeiture was not a fine, but the Supreme Court unanimously disagreed because the lower court had already ruled the seizure of Plaintiff Timbs’ $42,000 Land Rover SUV was grossly excessive compared to the maximum $10,000 monetary fine assessable against him.  The Court ruled the seizure was improper and unconstitutional.

Comment: The analogy to the TCPA is apt, as it is impossible to deny that a $500 to $1,500 civil penalty for seconds of consumer time is not excessive.  I expect TCPA defendants to soon claim excessive fines under Timbs and court rulings either accepting or denying this ruling to follow. 

United States Congress

A bill before Congress would revoke the TCPA exemption for government debt collectors. 

Comment:  This exemption has been challenged on First Amendment grounds in the Ninth Circuit by Charter Communications and in the Fourth Circuit by the American Association of Political Consultants.  If revoked, the exemption may make each of these suits moot.

Ninth Circuit Court of Appeals

The Ninth Circuit has notified the parties to the TCPA cell phone call ban to be prepared to discuss standing, i.e., the ability of a third party to challenge a statute which does not apply to it.

Comment: Courts can only consider controversies which affect the parties to a given lawsuit and, if the parties are not affected by the statute, a court may decline to rule even if the statute would be unconstitutional if applied to other parties or activities.

Alabama

A bill has been proposed in the Alabama House (HB 40) which would prohibit intentional display of misleading caller ID information.

Arkansas

A bill has been proposed in the Arkansas Senate which would prohibit displaying fictitious or misleading names or telephone numbers on caller ID (SB 514).  This is already illegal under federal law.

Arizona

A court has certified a class of persons who alleged they received wrong number calls in violation of the TCPA from Cox Communications.  Knapper v. Cox Communications.

Comment: In this case, the judge rejected the defendant’s argument that consent was an individualized question precluding class certification.

California

A California court has enforced an arbitration agreement against an Uber driver who sent unsolicited texts in violation of the TCPA.  Manning v. Uber Techs., Inc.  The court recently ruled, however, that Uber would be required to allow plaintiff to depose a software engineer regarding facts supporting or against whether the driver entered a valid arbitration agreement.

A California court has refused to strike class allegations in a TCPA suit brought against a short-term loan company.  Berman v. Freedom Financial Network.  Although someone provided plaintiff’s number on defendant’s website, the plaintiff stated under oath that he did not do that.  The judge ruled that the issue of false registrations would have to be reviewed through discovery and refused to dismiss the case.

Comment: This case appears to be a setup and the question of who provided a false express consent is becoming more common in these types of cases.

Connecticut

A judge has refused to certify a fax case brought by a hotel which claimed the opt-out language on the faxes it received did not comply with the law.  Gorss Motels, Inc. v. AT&T Mobility, LLC.  The judge denied this argument and adopted the language in Bais Yaakov which holds that opt-out disclosure language is not required on solicited faxes.  She then ruled that express consent was an individualized question precluding class certification.

Comment: The plaintiffs’ attorneys in this case were Anderson + Wanca who have brought class actions based on minor errors in disclosure language in many other lawsuits.  You should carefully review oral and written disclosure language to ensure it complies with each element required by the TCPA, despite defendant’s victory in this case.

Florida

A bill has been proposed in the Florida Senate (SB 1788) which would amend the state telemarketing statute to allow individuals to bring lawsuits if they have received more than one telephone sales call within any 12-month period in violation of the law.  Damages would be allowed in an amount not to exceed $500 per violation, trebled for willful or knowing violations.

Comment:  This language is similar to the language of the TCPA.  A class action explosion under the state law likely would be the result if passed.

Illinois

An Illinois court has refused to certify a class of persons texted by a marketing company on behalf of a cruise line.  Gordon v. Caribbean Cruise Line, Inc.  The judge found that plaintiffs could not meet the requirements of federal law because the named plaintiffs shared a business office with plaintiff’s counsel and served as class counsel with other cases with plaintiffs’ attorneys.  The judge also ruled that express consent in this case was an individualized question requiring “a multitude of mini-trials”.

Comment: This is an important victory as express consent issues normally are present in TCPA class actions.  If express consent is an individualized question, the particular case cannot proceed as a class action.

An Illinois court has granted partial summary judgment to a plaintiff in a fax TCPA case.  Arwa Chiropractic v. Med-Care Diabetic and Med Supplies, Inc.  Med-Care used a third party faxing service, Westfax, to send out prescription request forms.  The plaintiff sued the company who placed the fax and Steven Silverman, that company’s president.  The court found Silverman was not the sender of the faxes and that he did not directly supervise the faxing process, and therefore dismissed him from the case.

A bill has been proposed in the Illinois General Assembly (HB 3513) which would revise the state’s eavesdropping law.

Comment: The bill does not address mobile phones and how a caller can no longer determine applicable eavesdropping law based on the area code of the number called.  It is our recommendation that callers follow “all” or “two-party” consent rules, even in states like Illinois which has a quality control exemption.

A bill has been proposed in the Illinois Senate (SB 1837) which would amend the state’s delivery of prerecorded calls law to specifically include artificial or prerecorded voices in its restrictions, as well as apply to advertisements or sales solicitations rather than solely applying to sales solicitations.

The Illinois House is considering a bill which would require registration for data brokers (HB 2871).  The rule also has behavioral restrictions regarding security for consumer data held and other rules.

Comment: If passed, Illinois would join Vermont requiring licenses for data brokers including lead vendors.

Indiana

The Indiana Senate is considering a bill (HB 1123) which would add two exemptions to the state no call statute.  First, calls to consumers from their telephone company would be exempt.  Second, calls from financial institutions or other entities licensed by the Indiana Department of Financial Institutions to their customers would be exempt.

Comment: Indiana does not have an established business relationship exemption, and these exemptions would add “content based” exemptions to the law, perhaps causing it to become unconstitutional.

Minnesota

A bill has been introduced in the Minnesota Senate (SB 907) which would ban blocking or using an altered caller ID to make a commercial telephone solicitation.

Comment: The term “altered caller ID” is not defined.  Federal law requires disclosure of name and telephone number either of the calling company or client.

Mississippi

A bill has passed in the Mississippi House and been transmitted to the Senate which would increase maximum penalties for violations of the state Telephone Solicitation Act (HB 1045).  Currently, penalties are a maximum of $5,000 per violation, which this bill would increase to a maximum of $10,000 per violation.

Montana

The Montana House is considering a bill (HB750) which would allow the State Commissioner of Political Practices to enforce the state’s law prohibiting most prerecorded telephone calls.  The statute sets liability for violations at $500 or three times the amount of expenditures used for the telephone calls, whichever is greater.

Nevada

A judge has refused to dismiss a TCPA text class action against Twilio holding that the plaintiff had alleged sufficient facts for a claim that Twilio, a text service, was liable with the other defendants as a sender of allegedly illegal texts.

Comment: Although transmitters of messages can, under certain circumstances, not be considered senders of those messages, the relationship needs to be carefully constructed to avoid liability and comply with the law.

New York

A New York court has refused to dismiss a claim brought by a consumer against Quicken Loans, who alleged he received texts and calls after requesting Quicken stop contacting him.  Battaglia v. Quicken Loans, Inc.  The judge held Battaglia’s allegation of receiving a prerecorded call was sufficient to state a claim under the TCPA that the calls he received were illegal.

A bill has been proposed in the New York Senate (SB 4777) which would require callers to disclose that the consumer can be added to the caller’s internal “do-not-call” list.  The bill also prohibits any seller from transmitting or sharing customers’ contact information with any other party without express written agreement.

Comment: The fourth disclosure is likely unconstitutional as a violation of free speech, but both provisions would be extremely onerous if implemented.

A notorious lawyer and pro se TCPA plaintiff has won, at least in part, a lawsuit against a group of debt relief companies which called him using a prerecorded message.  Bank v. CreditGuard of America, et al.  Judge Pamela K. Chen dismissed Bank’s claims that a nonprofit allegedly called his residential telephone line because nonprofit calls are exempt from that portion of the TCPA, but refused to dismiss claims against Freedom Financial Network.  The judge also dismissed state law claims on the grounds that the minimal amount of time Bank spent on the telephone did not constitute injury for him to bring suit under state law.

Comment: The judge allowed claims against a for-profit debt counselor to continue, however, even though Bank used a false name and false information when responding to the call.

North Dakota

Following Vermont’s passage of a data broker license statute, other states are studying the issue.  North Dakota has passed a bill (HB 1524) designating a legislative management study of the data broker industry turning the coming legislative term. 

Oklahoma

An Oklahoma judge has ruled that a system must have the present capacity to randomly or sequentially generate numbers to be considered an “automatic telephone dialing system”.  Might v. Capital One Bank United States.

Comment: This is probably good news for most callers as modern systems do not have the capacity to randomly or sequentially dial numbers.

Pennsylvania

The Pennsylvania House is considering a bill (HB318) which would allow businesses to add their numbers to the state “do-not-call” list.  The bill would also prevent blocking caller ID information.

Comment: The national “do-not-call” list was upheld in a constitutional challenge specifically because it applied only to residential telephone lines.  This addition may cause the state “do-not-call” list in Pennsylvania to become unconstitutional.

Virginia

A debt collector has agreed to a $2.5 million settlement in a TCPA class action.  Baker v. Navient Sols., LLC.  The complaint alleged Navient contacted plaintiff and others regarding their student loans using an ATDS without prior express consent.  Navient obtained the debtors’ telephone numbers from third parties, which is not prior express consent for any purpose under the TCPA regulations.