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The Telephone Consumer Protection Act: A Trap for the Unwary

Wed, 10/25/2017 - 10:00 -- admin25

by Amber D. Reece  

Any business that texts its customers but is unaware of its obligations under the ever-changing landscape of the Telephone Consumer Protection Act (TCPA), 47 U.S.C. § 227, et seq., could be unwittingly stepping into a minefield. In deciding when and how to communicate with customers, businesses must understand the TCPA’s prohibitions against making any calls using an “automatic telephone dialing system” to a cell phone without the recipient’s prior express consent. This provision of the TCPA is not limited to solicitations and applies regardless of the purpose of the call. Any individual who receives a text in violation of the TCPA can bring a lawsuit to recover $500 for each violation, which can be trebled if the violations are found to be willful and knowing.

The TCPA was enacted in 1991—long before the ubiquitous use of cell phones—making some of its restrictions seem antiquated, especially when applied to text messages (which are considered calls under the statute). But the ease of sending text messages also means that damages can add up quickly for unwary businesses. In fact, the ability of individual plaintiffs to easily prove violations of the TCPA and recover statutory damages from unsuspecting callers has led to an upsurge in such lawsuits resulting in a number of high-profile and high-dollar settlements from large and small companies alike.

The TCPA defines “automatic telephone dialing system” or “autodialer” as equipment that has the capacity to (1) store or produce telephone numbers to be called using a random or sequential number generator and (2) dial such numbers. In 2015, the FCC issued an order concluding that any equipment that had such capacity, even if not being used for that purpose, is considered an autodialer subject to the TCPA’s restrictions. The Seventh Circuit recently analyzed the issue of whether an autodialer that could not and did not operate without human intervention could still subject the caller to liability in Blow v. Biora, Inc., 855 F.3d 793 (7th Cir. 2017). The court concluded that the district court had prematurely granted summary judgment to a defendant who put forth evidence showing that its software had not operated automatically. Nonetheless, the Seventh Circuit concluded that the software, which “‘pushed” texts to an aggregator that sent simultaneous messages to thousands of cell phones at a particular date and time was still an autodialer because human involvement was unnecessary at the “precise point of action barred by the TCPA.” Although the court upheld summary judgment for the defendant because it determined that the plaintiff had consented to the messages, the court’s analysis demonstrates that sending any sort of automated text message to a cell phone without the recipient’s prior express consent could subject a caller to liability.

What is more, businesses who get sued for violations the TCPA may no longer be able to look to their insurers to provide a defense. The Ninth Circuit recently held that a policy that contained an exclusion from coverage for claims based upon allegations of an “invasion of privacy” did not provide coverage for a TCPA suit. In Los Angeles Lakers v. Federal Insurance Company, No. 15-55777, 2017 WL 3613340 (9th Cir. 2017), the Ninth Circuit affirmed the dismissal of the Lakers’ suit against its insurer based on the insurer’s refusal to defend the Lakers in a suit brought under the TCPA. In the underlying suit, an attendee at a Lakers game who sent a text message to a number displayed on the scoreboard inviting fans to submit messages to be displayed on the screen brought a putative class action against the Lakers after receiving an automated response to his submission. The Lakers asked their insurer, Federal Insurance Company, to defend them in the suit, but Federal concluded that the claim was exclude from coverage because it was based on an invasion of privacy. The Lakers sued Federal, but the district court granted Federal’s motion to dismiss the suit, and the Ninth Circuit affirmed. In so doing, the Ninth Circuit concluded that a TCPA claim is “inherently an invasion of privacy claim.”

With new developments happening daily, businesses that wish to text their customers must seek legal guidance from counsel with experience in this constantly evolving area of the law and technology to avoid being held liable for violations of the TCPA.

Amber D. Reece is an associate at Figari + Davenport, LLP. She can be reached at amber.reece@figdav.com.

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