The TCPA Year in Review: Spokeo, FCC Rulings, and a Torrent of Court Decisions (updated February 6, 2017)

2016 was an active year for changes concerning the Telephone Consumer Protection Act (TCPA). This article highlights the following changes, with more detail found in NCLC’s Federal Deception Law ch. 6, as most recently updated online on January 6, 2017 (The chapter has now been updated online again on February 6, 2017, including a new January 30, 2017 Ninth Circuit decision in Van Patten v. Vertical Fitness Grp.):

• The number one development: every TCPA case now must carefully respond to standing challenges based on the Supreme Court’s May 16 Spokeo decision—this article explains the arguments by which most plaintiffs have prevailed.
• New 2016 FCC rules exempting from the TCPA calls involving collection of debt guaranteed by or owed to the United States and the impact of a delayed effective date.
• A 2016 Supreme Court decision endorsing the view that a text message is a “call” for purposes of the TCPA.
• A 2016 FCC declaratory ruling and 2016 Supreme Court and federal case law on TCPA liability issues: liability of government contractors; creditor’s’ liability for collectors’ auto-dialed or pre-recorded calls to cellphones; sellers’ vicarious liability for telemarketers’ violation of FCC rules; and TCPA liability of those on whose behalf junk faxes are sent.
• New 2016 decisions on certification of TCPA class actions and TCPA attorney fee awards made on a contingent fee basis.
• 2016 decisions on burden of proof as to consent in TCPA cases and also cases on TCPA pleading requirements.

TCPA Plaintiffs Are Guaranteed to Face Spokeo Challenges, but So Far Properly Prepared Plaintiffs Have Almost Always Prevailed

Consumer litigants can expect to face Article III standing challenges in any TCPA suit they file. Since the Supreme Court’s May 16 decision in Spokeo, Inc. v. Robins, 136 S. Ct. 1540 (2016), a motion challenging the plaintiff’s Constitutional standing has become a standard defense motion. Nevertheless, with careful pleading, case selection, and briefing, Spokeo issues are winnable in TCPA cases and the overwhelming majority of post-Spokeo decisions have found that the plaintiff has standing.

The Spokeo Holding

To meet Article III’s case or controversy requirement, a plaintiff in federal court must, among other standards, have suffered an injury in fact. Spokeo holds, to establish an injury in fact, a plaintiff must show an invasion of a legally protected interest that is “concrete and particularized” and “actual or imminent, not conjectural or hypothetical.”

Spokeo holds that there are two ways to show that an intangible injury—as is the case with most of the injuries caused by TCPA violations—is “concrete.” First, courts should consider “whether an alleged intangible harm has a close relationship to a harm that has traditionally been regarded as providing a basis for a lawsuit in English or American courts.” Second, Congress may “elevat[e] to the status of legally cognizable injuries concrete, de facto injuries that were previously inadequate in law. . . .” It “has the power to define injuries and articulate chains of causation that will give rise to a case or controversy where none existed before.” However, the Supreme Court also cautioned that a plaintiff does not automatically meet the injury-in-fact requirement whenever a statute grants a person a right and a cause of action to enforce it: a “bare procedural violation, divorced from any harm,” does not satisfy Article III’s requirements.

Spokeo Applied to TCPA Cases

Why consumers can win Spokeo challenges is best understood by considering three separate types of TCPA cases:

Robocall Cases: The TCPA’s legislative history shows Congress’s concern with the invasion of privacy, occupation of consumers’ phones, and wasted time caused by unwanted calls, and the explosion of these calls due to the introduction of autodialers. See Federal Deception Law § 6.9.2a.3. The harm caused by robocalls is also closely analogous to harm that is traditionally actionable as the torts of invasion of privacy and trespass to chattels.

Accordingly, courts since Spokeo overwhelmingly hold that unwanted robocalls cause particularized and concrete harm, so a plaintiff asserting a TCPA claim has Article III standing. Id. § 6.9.2a.3.5. The first circuit court decision to so hold, Van Patten v. Vertical Fitness Grp., 2017 WL 460663, (9th Cir. Jan. 30, 2017), squarely holds that “[u]nsolicited telemarketing phone calls or text messages, by their nature, invade the privacy and disturb the solitude of their recipients. A plaintiff alleging a violation under the TCPA ‘need not allege any additional harm beyond the one Congress has identified.’"

Mey v. Got Warranty, Inc., 2016 WL 3645195 (N.D. W. Va. June 30, 2016), is a particularly detailed, thorough, and carefully reasoned decision, finding Article III standing for a cell phone robocall claim both because Congress has so clearly identified the harm to be redressed and because of the close analogy to common law torts including invasion of privacy and trespass to chattels.

The few cases to the contrary can be explained as involving a court’s clear misinterpretation of the Spokeo analysis or a “professional” plaintiff (a fact pattern that careful case selection should avoid) or where the defendant’s motion was unopposed.

Junk Fax Cases: Decisions applying Spokeo to junk fax claims, although fewer in number, likewise hold that a junk fax causes concrete harm and that the recipient has Article III standing. Id. § 6.9.2a.5. One court holds that even a single junk fax is sufficient to satisfy Article III’s requirements. JWD Auto., Inc. v. DJM Advisory Grp., L.L.C., 2016 WL 6835986 (M.D. Fla. Nov. 21, 2016). See id. § 6.9.2a.5.

A junk fax often causes tangible injury in that it uses up paper and toner. Indeed, Congress identified the fact that a junk fax “shifts some of the costs of advertising from the sender to the recipient” as one of the reasons it enacted the TCPA. H.R. Rep. No. 102–317, at 10 (1991). Another reason that consuming the fax recipient’s paper and toner is a concrete injury under Spokeo is that it is closely related to the harm addressed by the common law action for conversion.

But even if a junk fax is never printed, it causes intangible but equally concrete injuries. It ties up the recipient’s fax machine, which Congress specifically identified as one of the harms it wanted to prevent by passing the TCPA and which is closely analogous to that addressed by the ancient common law tort of trespass to chattels. Junk faxes also waste time by requiring recipients to identify and delete the unwanted fax. See generally id. § 6.9.2a.5.

Informational Injury Cases: A few of the TCPA’s requirements focus on information that must be provided to the consumer. For example, certain junk faxes must contain an opt-out notice. See id. § 6.8.2.4. In Spokeo, the Court specifically noted that informational injuries can amount to concrete harm. The Court cited as an example Public Citizen v. United States Department of Justice, 491 U.S. 440 (1989), which held that the plaintiff had standing to challenge the Justice Department’s failure to provide access to information, the disclosure of which was required by the Federal Advisory Committee Act. The Court held that the inability to obtain such information “constitutes a sufficiently distinct injury to provide standing to sue.” Accordingly, the first court to examine the question, Davies v. W.W. Grainger, Inc., 2016 WL 6833902 (N.D. Ill. Nov. 21, 2016), held that the injury caused by non-receipt of a required TCPA opt-out notice for certain junk faxes is a concrete injury that satisfies Article III’s requirements. Id. § 6.9.2a.5a.

Status of 2016 FCC Rules Exempting Government Collections from the TCPA

The TCPA was amended on November 2, 2015 to allow autodialed or prerecorded calls to cell phones if made to collect a debt owed to or guaranteed by the United States, but also to require the FCC to adopt rules limiting such calls. 47 U.S.C. § 227(b)(1)(A)(iii). The FCC has issued such rules in the Federal Register at 81 Fed. Reg. 80,594 (Nov. 16, 2016), but the rules do not go into effect until approved by the Office of Management and Budget. In the meantime, student loan servicers have filed a petition asking the FCC to reconsider its rule. See id. § 6.3.4a.1.

The FCC has announced that the new statutory exemption does not go into effect until the FCC rules are effective, so that the TCPA should still at the moment limit calls to cell phones to collect debts owed or guaranteed by the United States. The Department of Education has also instructed federal student loan servicers not to implement the exemption until the FCC rules are final. See id. § 6.3.4a.1. The FCC rule, though not yet in effect, is described in detail at id. § 6.3.4a.2 and subsequent subsections.

2016 Supreme Court Decision: A Text Message Is a “Call” For TCPA Purposes

The FCC has ruled that an e-mail converted to a text message sent to a cell phone is a “call” for purposes of the TCPA. In 2016, the Supreme Court endorsed this view, holding that a “text message to a cellular telephone, it is undisputed, qualifies as a ‘call’ within the compass of §227(b)(1)(A)(iii).” Campbell-Ewald Co. v. Gomez, 136 S. Ct. 663 (2016). Other courts reach the same conclusion. See generally id. § 6.7.2.

2016 Developments on TCPA Liability for Third Parties and Government Contractors

2016 Supreme Court decision that federal contractors liable under the TCPA: In Campbell-Ewald Co. v. Gomez, 136 S. Ct. 663 (2016), the Court held that while the United States and its agencies have immunity from TCPA suits, federal contractors do not have derivative immunity. The Campbell-Ewald ruling, though, has been muddied by a 2016 FCC declaratory ruling (the Broadnet ruling) holding that government contractors are not “persons” as that term is used in the TCPA section restricting robocalls and junk faxes. A petition for reconsideration of the Broadnet ruling is pending before the FCC. See generally id. § 6.9.5.1.

Creditor’s liability for collector’s auto-dialed or pre-recorded calls to cellphones: A 2008 FCC ruling states that creditors are liable for improper autodialed or prerecorded calls to cell phones by their debt collection agents. A number of decisions, including one in 2016, affirm this rule. Harrington v. RoundPoint Mortg. Servicing Corp., 2016 WL 659331 (M.D. Fla. Feb. 18, 2016) (deferring to FCC’s ruling). But see Strauss v. CBE Grp., Inc., 2016 WL 1273913 (S.D. Fla. Mar. 28, 2016) (applying agency law to determine whether creditor is vicariously liable for collector’s calls; court appears to be unaware of FCC’s 2008 ruling). The FCC ruling and case law are examined at id. § 6.9.5.3.

Sellers’ vicarious liability for telemarketers’ violation of FCC rules: A 2013 FCC declaratory ruling holds that sellers can be vicariously liable under common law agency principles for their telemarketers’ violations of the prerecorded calls and do-not call rules. In 2016, the Supreme Court expressed its agreement with the FCC’s view in Campbell-Ewald Co. v. Gomez, 136 S. Ct. 663 (2016).

TCPA strict liability of those on whose behalf junk faxes are sent: Important 2016 decisions from the Sixth and Seventh Circuits discuss the extent to which a party on whose behalf an advertisement is faxed is responsible for any TCPA violations. Imhoff Inv., L.L.C. v. Alfoccino, Inc., 792 F.3d 627 (6th Cir. 2015) (applying FCC’s definition of “sender”); Paldo Sign & Display Co. v. Wagener Equities, Inc., 825 F.3d 793 (7th Cir. 2016) (upholding jury’s finding that defendant had not authorized junk faxes even though employee sent fax blaster a check by mistake, when agreement with fax blaster was that no faxes would be sent without his final approval, which he had not given). See id. § 6.9.5.2.1.

New 2016 Cases on TCPA Class Certification and on Attorney Fees

A significant number of TCPA class certification rulings were issued in 2016, many of them finding certification to be appropriate. Id. § 6.9.4. While the TCPA does not provide for attorney fees for prevailing plaintiffs, such fees can be awarded in a class action as contingent fee award. A 2016 Sixth Circuit decision, Holtzman v. Turza, 2016 WL 3648390 (7th Cir. July 8, 2016), holds that a one-third contingent fee is not excessive and discusses its calculation in a class action. See id. § 6.9.2.3a.

New 2016 TCPA Cases on Pleading Requirements and on Burden of Proof As to Consent

A TCPA complaint need not be pleaded with particularity. A number of 2016 decisions join the prevailing view that the complaint need not allege the full telephone number that was called or the dates of all the calls, and that it is usually sufficient to allege a few facts, such as “dead air” and multiple calls from which it can be inferred that an autodialer was used. See id. § 6.9.7. New 2016 decisions also affirm the well-accepted view that the existence of prior express consent to make an autodialed or an artificial or prerecorded call to a cell phone is an affirmative defense for which the caller bears the burden of proof. See id. § 6.9.8.