TCPA Litigation After Recent Supreme Court, FCC, Other Rulings

One of the most active areas of consumer law is litigation under the Telephone Consumer Protection Act (TCPA), which offers statutory damages for certain unwanted telemarketing, debt collection, and other calls and texts to cell phones and landlines. Class recoveries have been significant.

The past nine months have seen major developments that affect TCPA litigation, both pros and cons:

• The Supreme Court’s June 25, 2021, ruling in TransUnion L.L.C. v. Ramirez may surprisingly make it easierto establish Article III standing to bring federal court TCPA cases.
• The Supreme Court’s April 1, 2021, ruling in Facebook, Inc. v. Duguid makes it harder to win TCPA cases based on the caller’s use of an autodialer.
• Courts continue to find older TCPA claims constitutional despite the Supreme Court’s July 6, 2020, ruling in Barr v. Am. Ass’n of Political Consultants, Inc., striking down a TCPA exemption to save the statute’s constitutionality.
• A December 18, 2020, FCC ruling enhances the viability of TCPA claims where a call to a cell phone or a telemarketing call to a landline is prerecorded, even when the Facebook ruling blocks an auto dialer challenge to the same call.
• A new final FCC rule, not yet in effect, will limit debt collectors’ prerecorded landline calls without the consumer’s consent to three calls per month and will require an easy opt-out mechanism from such calls.
• An August 10, 2021, Seventh Circuit ruling points to approaches to make sellers and not just their telemarketers liable for “do-not-call” rule violations.

This article examines these six recent TCPA developments. For more detail, this article cites to NCLC’s Federal Deception Law Chapter 6, a lengthy, detailed chapter, fully updated as of last month, that comprehensively covers all aspects of the TCPA, with extensive citations to case law and FCC rulings.

Supreme Court’s Ramirez Decision May Facilitate Finding Standing in TCPA Cases

The Supreme Court’s June 25 decision in TransUnion L.L.C. v. Ramirez, 141 S. Ct. 2190 (2021) holds that consumers who were wrongly identified as potential terrorists in TransUnion’s credit reporting database suffered a concrete injury, and therefore had Article III standing to bring suit in federal court under the FCRA, but only if TransUnion had already disseminated the false information to third parties. The decision also holds that consumers did not have Article III standing to bring suit for TransUnion’s violation of certain FCRA disclosure requirements unless the violations caused some additional harm—some “downstream consequences.”

Ramirez creates standing difficulties for many kinds of consumer cases filed in federal court. But for TCPA cases, the decision may actually strengthen the argument for standing.

Ramirez states that “[i]f a defendant has caused physical or monetary injury to the plaintiff, the plaintiff has suffered a concrete injury in fact under Article III.” Ramirez, 141 S. Ct. at 2204. In many TCPA cases—especially junk fax cases but also some robocall cases—it will be possible to show some monetary harm, such as the cost of paper, toner, per-call charges, or call-blocking apps. Some courts have accepted the view that the drain on a cell phone’s battery due to unwanted calls is a concrete harm. See NCLC’s Federal Deception Law §§ 6.10.3.1, 6.10.5.

Even more helpful, Ramirez lists “intrusion upon seclusion” as a type of intangible harm that is concrete because of its close relationship to a harm that is traditionally actionable as a common law tort. Moreover, to illustrate the point that intrusion on seclusion is a concrete injury, the Ramirez decision cites Gadelhak v. AT&T Services, Inc., 950 F.3d 458 (7th Cir. 2020), a TCPA decision written by Justice Barrett when she was on the Seventh Circuit bench. Gadelhak holds that, because of the analogy to the common law tort of intrusion upon seclusion, five unwanted text messages amounted to a concrete injury. Gadelhak explicitly rejects the Eleventh Circuit’s conclusion in Salcedo v. Hanna, 936 F.3d 1162 (11th Cir. 2019), that a single text message was not a concrete injury.

The Court’s explicit approval of Gadelhak should also suffice to rebut any defense argument that the court lacks standing because the elements of the plaintiff’s TCPA claim do not exactly match the elements of the common law claim. Gadelhak holds that “[a] few unwanted automated text messages may be too minor an annoyance to be actionable at common law. But such texts nevertheless pose the same kind of harm that common law courts recognize—a concrete harm that Congress has chosen to make legally cognizable.”

Ramirez confirms that while the federal claim must include the “fundamental requirements” of the analogous common law tort, Article III “does not require an exact duplicate in American history and tradition.” See NCLC’s Federal Deception Law §§ 6.10.3.4, 6.10.4, 6.10.5.

Since 2016, when the Supreme Court issued its other recent Article III standing case, Spokeo, Inc. v. Robins, 136 S. Ct. 1540 (2016), federal courts have overwhelmingly held that they have Article III jurisdiction over cases alleging receipt of unwanted calls, text messages, or faxes. See NCLC’s Federal Deception Law §§ 6.10.3.5, 6.10.4, 6.10.5. Decisions issued after the June 25 Ramirez decision have continued this pattern. See Fischman v. Mediastratx, L.L.C., 2021 WL 359639 (E.D.N.C. Aug. 10, 2021); Perrong v. Victory Phones L.L.C., 2021 WL 3007258 (E.D. Pa. July 15, 2021) (single prerecorded call); Escano v. Concord Auto Protect, Inc., 2021 WL 2935295 (D.N.M. July 13, 2021) (Mag. recommendation) (22 robocalls and 13 robotexts that invaded plaintiff’s privacy and depleted his phone’s battery and the lifespan of its LED backlight), adopted by 2021 WL 3403547 (D.N.M. Aug. 4, 2021); Gross v. GG Homes, Inc., 2021 WL 2863623, at *3 (S.D. Cal. July 8, 2021) (invasion of privacy due to unwanted calls and text messages is injury-in-fact).

Even though Article III standing may be winnable in TCPA cases, many practitioners now advise filing TCPA and other consumer cases seeking statutory damages initially in a state court, if the state’s standing doctrine is favorable. Then, if the defendant removes the case to federal court, and the federal court holds that it lacks Article III jurisdiction over the case, the case will be remanded to state court rather than dismissed. See NCLC’s Federal Deception Law § 6.10.7b.

TCPA Claims Constitutional Even When Arising Prior to Supreme Court’s Severance of Exemption to Save TCPA’s Constitutionality

On July 6, 2020, the Supreme Court struck down the TCPA’s exemption for calls to collect government debts as an unconstitutional content-based restriction on speech. Barr v. Am. Ass’n of Political Consultants, Inc., 140 S. Ct. 2335 (2020). The Court held that the rest of the TCPA was severable, so remained in effect. As discussed in detail in a previous article, defendants then began arguing that the entire TCPA was void and unenforceable between the time the exemption was added and the time the Supreme Court struck it down.

So far, district courts have overwhelmingly rejected this argument, with at least 37 decisions rejecting it and just three adopting it. No circuit has yet weighed in on this question, but on July 29, 2021, the Sixth Circuit heard argument in the appeal of Lindenbaum v. Realgy, L.L.C., 497 F. Supp. 3d 290 (N.D. Ohio 2020), the first of the three district court decisions holding earlier TCPA claims to be unconstitutional. NCLC’s Federal Deception Law § 6.2.4.3 catalogs the 37 decisions rejecting the argument and the three adopting it. Section 6.2.4.3 also provides links to sample briefs and an excellent memo by Public Justice on the topic.

The Future of TCPA Autodialer Cases

The TCPA’s prohibition against autodialed calls to cell phones without the called party’s consent is a core TCPA protection. Unfortunately, the Supreme Court’s April 1, 2021, decision in Facebook, Inc. v. Duguid, 141 S. Ct. 1163 (2021), rejects a broad interpretation of the statutory definition of the key term “automatic telephone dialing system” (autodialer or ATDS) which many courts had adopted—that a device is an ATDS if it simply stores numbers for later automatic dialing and need not use a random or sequential number generator in this process. With this narrow definition, callers argue that the highly automated technology they use to make hundreds of thousands of robocalls is not an ATDS.

Facebook complicates, but may not preclude, a determination that a particular mass calling or texting system is an ATDS. At least two paths remain open to show that a particular dialer is an ATDS.

First, the TCPA’s definition of an ATDS is based on the device’s capacity. Although some courts have disagreed, most courts have given this term its ordinary meaning of “the ability to do something,” rather than just the functionalities that were used for a particular call. An expert witness may be able to show that a particular dialer has the capacity to generate random or sequential telephone numbers and dial them, without additional programming. Since Facebook dealt only with the argument that a device can be an ATDS even without the capacity to generate random or sequential numbers, it did not explore the question of the meaning of “capacity.” An expert witness will be essential to evaluate and test a particular device that was used to see if it has the “capacity” to generate random or sequential numbers even if in the case the caller used another approach. NCLC’s Federal Deception Law § 6.3.2.1a discusses this approach in detail.

Second, certain language in Facebook makes it clear that the numbers that an ATDS generates need not be telephone numbers, but also can be random or sequential numbers that the device uses in the process of producing or storing telephone numbers. See 141 S. Ct. at 1172, at the text near the reference to note 7 and especially note 7. Many dialers in use today are likely to meet this test, as mass dialing systems generate random or sequential numbers at various points, both in the process of storing the telephone numbers and in pulling them from the stored list for dialing. An expert witness with a background in software engineering will be essential to evaluate the application of this theory to a dialer.

So far, at least two decisions, including Carl v. First National Bank, 2021 WL 2444162, at *9 n.10 (D. Me. June 15, 2021), have recognized the possible viability of this approach, but several others have rejected it. See NCLC’s Federal Deception Law § 6.3.2.1b for a full discussion of this approach and the cases decided so far.

State robocall laws might provide yet another avenue to impose liability on callers who use automated dialers to swamp cell phones with unwanted calls. Several state robocall statutes, including a recently amended Florida law, may be construed to prohibit autodialed calls even where after Facebook the same autodialer is not within the TCPA’s scope. See NCLC’s Federal Deception Law § 6.3.2.1f.

FCC Ruling Increases Viability of TCPA Claims for Prerecorded Calls (Even When Outside ATDS Definition)

The increased difficulty of establishing that a dialer is an ATDS as defined by the TCPA heightens the importance of the TCPA’s other protections against unwanted calls, particularly the prohibition against prerecorded telemarketing calls to residential lines and any prerecorded calls (even when not telemarketing or to a residential line) to cell phones. Many automated calls to cell phones are prerecorded in whole or in part, so the restriction on prerecorded calls often makes it unnecessary to address whether the call was autodialed.

A ruling by the FCC at the end of 2020 helps remove one potential obstacle to claims regarding prerecorded calls. On December 18, 2020, the agency’s Consumer and Governmental Affairs Bureau issued a declaratory ruling confirming that a caller must have the called party’s prior express consent for any call that uses a prerecorded or artificial voice, even when played in snippets by a live operator. See In re Rules & Regulations Implementing the Tel. Consumer Prot. Act of 1991, Northstar Alarm Servs. L.L.C.’s Petition for Expedited Declaratory, 2020 WL 7586053 (F.C.C. Dec. 18, 2020) (declaratory ruling and order). The ruling is discussed in NCLC’s Federal Deception Law § 6.3.1b.

While this ruling addresses only one of the petitions filed by callers on this question (see, e.g., Petition for Expedited Declaratory Ruling of Assurance IQ, LLC Regarding the Application of 47 U.S.C. § 227(b)(1) of the Telephone Consumer Protection Act, CG Docket No. 02-278 (May 12, 2020)), it signals a strong pro-consumer approach on the part of the FCC, and stands more broadly for the proposition that any use of a prerecorded voice as part of a call subjects the call to the TCPA’s prior express consent requirement.

A very recent district court decision applies this principle to hold that a call is subject to the TCPA’s restrictions if it includes a prerecorded greeting, even if the consumer spoke to a live person later in the call. Dudley v. Vision Solar, L.L.C., 2021 WL 3077557, at *3 (E.D. Pa. July 21, 2021). See NCLC’s Federal Deception Law § 6.3.1b.

For prerecorded telemarketing calls to either cell phones or residential lines, consent must be written, making it easier to identify class members. See NCLC’s Federal Deception Law § 6.3.4.1. In every case, the TCPA plaintiff should investigate whether the entity that claims to have obtained written consent complied with the TCPA’s detailed requirements for consent and, if consent was obtained electronically, complied with the federal E-Sign Act. See id. § 6.3.4.1a.

New FCC Rule Will Assist TCPA Claims for Prerecorded Debt Collection Calls to Landlines

While the TCPA prohibits prerecorded calls to residential lines without the called party’s consent, FCC rulings have largely limited this prohibition to telemarketing calls to landlines (a separate prohibition applies to all prerecorded calls to cell phones). Consequently, until now, this TCPA limitation did not apply to debt collection calls to landlines.

This is about to change. In 2019, as part of the TRACED Act, Congress amended the TCPA to require the FCC to establish numerical limits on the number of calls that can be made pursuant to any FCC-created exceptions. 47 U.S.C. § 227(b)(2)(I).

In late 2020, the FCC announced a final rule that, once it goes into effect, will place numerical limits on the number of calls allowed pursuant to these exceptions. In re Rules & Regulations Implementing the Tel. Consumer Prot. Act of 1991, 2020 WL 7873750, ¶ 42 (F.C.C. Dec. 30, 2020) (providing that rule will go into effect six months after OMB approval is published in the Federal Register).

The limits vary by type of call, but for many of the exceptions the limit is three calls within any consecutive thirty-day period. For example, a collector could only call a consumer’s landline three times a month unless the collector had obtained the consumer’s consent. In addition, the caller must make an automated opt-out mechanism available and must honor a called party’s opt-out request. For example, the consumer could key in some numbers to a collector’s call to opt-out of further calls from that collector. See NCLC’s Federal Deception Law §§ 6.3.3.2, 6.4.2, 6.6.7.

While this new FCC rule will have significant applications, particularly to debt collection calls, no effective date has been announced for the new rule, which is awaiting approval by the Office of Management and Budget. In addition, a petition to amend the rule is pending before the FCC.

Once the rule goes into effect its limits will be particularly helpful with respect to prerecorded debt collection calls made to a called party’s residential landline. While the FDCPA also allows consumers to require debt collectors to stop contacting them, until November 30, 2021, that request must be a written request. After that date, a new CFPB regulation, 12 C.F.R. § 1006.14(h) (effective November 30, 2021), published at 85 Fed. Reg. 76,734 (Nov. 30, 2020), will allow oral opt-out of phone calls.

More importantly, most courts have ruled that FDCPA statutory damages are capped at $1000 per lawsuit, no matter how many wrongful calls were made by the collector. By contrast, the TCPA allows a separate statutory damage award for each violation.

The FDCPA does prohibit “causing a telephone to ring or engaging any person in telephone conversation repeatedly or continuously with intent to annoy, abuse, or harass any person at the called number.” See 15 U.S.C. § 1692d(5). Effective November 30, 2021, there will be a presumption that this provision is violated if a collector makes more than seven attempted calls per week—or one telephone conversation every seven days. See 12 C.F.R. § 1006.14(b)(2)(ii) (effective November 30, 2021), published at 85 Fed. Reg. 76,734 (Nov. 30, 2020). The FCC rule will provide important additional protections in that only three calls per month per called party can be prerecorded (or prerecorded messages left) unless the consumer has given consent.

Finding Sellers (Not Just Their Telemarketers) Liable for TCPA “Do-Not-Call” Rule Violations

Violations of the do-not-call rule that the FCC adopted under the TCPA are widespread—and maddening to many consumers. A primary impediment to redressing and deterring these abusive calls is the contortions that sellers go through to create plausible deniability of responsibility for the TCPA violations committed by the telemarketers they hire and from whose calls they profit.

The FCC has held that a seller does not “initiate” a telemarketer’s call, so is not directly liable for calls that violate the do-not-call rule. Instead, the seller’s liability must be based on common law agency principles, such as actual agency, apparent agency, or ratification. See NCLC’s Federal Deception Law § 6.9.2.5.1.

Sellers have responded to this ruling by creating layers upon layers of contractors and subcontractors between themselves and the entities that violate the TCPA. They also write clauses into their contracts by which their contractors promise never to violate the TCPA, and then they look the other way when violations come to their attention. Their contracts disavow any control by the seller over the telemarketer’s acts.

Pursuing these sellers requires detailed and tenacious discovery. Key questions to pursue include:

• Whether the seller exercised actual control over the telemarketer’s actions—regardless of what the contract says.
• Whether the company’s pay structure rewarded callers that violated the TCPA.
• Whether TCPA violations came to the seller’s attention, and exactly what the seller did about them.

When a seller’s telemarketers are routinely violating the do-not-call rule, it is highly likely that focused, rigorous discovery will reveal that violations came to the seller’s attention. Once complaints about violations are identified, follow-up discovery will often reveal that the seller declined to take any real enforcement action against the telemarketer and continued to accept the benefits of the illegal calls. For example, discovery may reveal emails showing that the seller’s sales department openly opposed terminating a telemarketer whose TCPA violations brought in a lot of business. Krakauer v. Dish Network, L.L.C., 925 F.3d 643, 659–662 (4th Cir. 2019), gives a detailed description of the evidence that won the case on this critical point, and is a model for this approach.

An August 10, 2021, Seventh Circuit decision in Bilek v. Fed. Ins. Col., 2021 WL 3503132 (7th Cir. 2021) hammers home these principles. The decision holds that, while an allegation that the seller had a contract with the caller was not sufficient in itself, a claim of actual agency was stated by allegations that lead generators initiated robocalls that solicited the seller’s health insurance, that the seller authorized the lead generators to use its approved scripts, tradename, and proprietary information in making these calls, and that the seller contracted with another company to provide price quotes in real time during the calls and to email the quotes to the call recipients. The court was unconcerned by the failure of the complaint to allege that the seller controlled the timing, quantity, or geographic location of the lead generators’ robocalls, characterizing these as “minute details.” Id. at *4.

Many courts rely on the Restatement (Third) of Agency as setting the standards for a showing of actual agency, apparent agency, or ratification. A close review of the Restatement provides surprisingly helpful principles. For example, the 2021 Seventh Circuit’s Bilek decision relies on the Restatement to hold that “a person may be an agent although the principal lacks the right to control the full range of the agent’s activities.” Restatement (Third) of Agency § 1.01 cmt. c. The Restatement is also explicit that no showing of reliance is required to establish apparent authority. It also states that the principal’s conduct, or even silence, can be a sufficient manifestation of a person’s apparent authority. See NCLC’s Federal Deception Law § 6.9.2.5.