September 23, 2013
Practice Groups:
Commercial Disputes
Class Action
Litigation Defense
The Third Circuit Issues a “Double-Edged”
Decision that Could Increase Individual
Lawsuits under the Telephone Consumer
Protection Act, but Limit TCPA Class
Actions
By J.
Nicholas Ranjan 1
With the increased use of text messaging and smartphones, many companies have utilized automated
texts and “robocalls” as marketing vehicles. This, in turn, has spawned considerable and costly class
action litigation under the Telephone Consumer Protection Act of 1991 (“TCPA”). In these lawsuits,
classes of consumers have generally asserted that they did not, as required by the statute, expressly
consent to receiving advertising texts and robocalls, and have sought millions of dollars in steep
penalties authorized by the TCPA.
The U.S. Court of Appeals for the Third Circuit recently issued a “double-edged” decision in Gager v.
Dell Financial Services, LLC, No. 12-2823 (3d Cir. Aug. 22, 2013), which is likely to affect TCPA
litigation, including TCPA class action litigation. As discussed below, Gager, while potentially
opening the door to additional TCPA lawsuits being brought by individuals, may also curtail
consumers’ ability to certify those lawsuits as class actions.
Gager v. Dell Financial Services, LLC
In Gager, the Third Circuit held that consumers may revoke their consent to receive robocalls after
such consent has already been given. The plaintiff, Ashley Gager, provided her telephone number on
an application for a line of credit with Dell Financial Services without specifying that the number
belonged to a cellphone. She also did not inform Dell that she would not like to be contacted by
robocalls through that number. When Ms. Gager defaulted on her debt, Dell called her cellphone
multiple times through an automatic dialing system to leave recorded messages about the debt. Ms.
Gager wrote a letter requesting that Dell stop contacting her through that number, and when Dell
failed to do so, Ms. Gager filed suit under the TCPA.
On appeal from a district court decision dismissing Ms. Gager’s complaint, the Third Circuit
addressed two issues: (1) whether consumers can revoke their prior express consent to be contacted
via robocalls, and (2) whether there is a time limitation on the right to revoke. The court reinstated
Ms. Gager’s complaint, holding that there is a right to revoke and that it has no temporal limitation. In
addition to the text and purpose of the statute, the court looked to a recent decision of the FCC for
guidance. The court reasoned that a recent FCC ruling implied a right to revoke when the agency
decided that a company is not liable for sending a confirmatory text to a customer who revokes his or
her consent to receive further text messages. The court also held that imposing a temporal limitation
1
The author acknowledges Grady Nye, a K&L Gates LLP summer associate, for his assistance in the preparation of this
article.
The Third Circuit Issues a “Double-Edged” Decision that
Could Increase Individual Lawsuits under the Telephone
Consumer Protection Act, but Limit TCPA Class Actions
on the consumer’s right to revoke would be inconsistent with the common law and Congress’s
purpose of protecting consumer rights under the TCPA.
Gager’s Implications on TCPA Individual Lawsuits and Class
Actions
There are at least two significant implications of the Third Circuit’s decision in Gager:
First, Gager opens the door for additional consumers to file lawsuits against companies that have
transmitted marketing texts and robocalls. That is, certain consumers who may have previously
consented to receiving texts and calls can now, like Ms. Gager, allege that they revoked that consent,
giving rise to a legal claim under the TCPA.
Second, Gager may potentially curtail -- or at least provide additional defenses to -- class action
lawsuits under the TCPA. The question of whether a consumer revoked his or her consent is a factbound and individualized one, potentially not susceptible to a common source of proof. Indeed, while
Gager determined that a right to revoke exists, it did not define what consumers must do in order to
notify a company that they have revoked their consent. In Gager, for instance, Ms. Gager wrote a
letter to Dell, listing her phone number and requesting that the company cease the automated calls; but
other cases may implicate different types of revocations. The fact-bound and individualized
determination as to whether consent has been revoked may be a useful defense in order to argue
against class certification of certain TCPA claims.
Companies that engage in text and robocall advertising should closely watch how Gager is applied by
federal district courts in the Third Circuit (i.e., in Pennsylvania, New Jersey, and Delaware) and
assess, in particular, what effect the decision may have on consumers’ ability to certify TCPA class
action lawsuits.
Author:
J. Nicholas Ranjan
nicholas.ranjan@klgates.com
+1.412.355.8618
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The Third Circuit Issues a “Double-Edged” Decision that
Could Increase Individual Lawsuits under the Telephone
Consumer Protection Act, but Limit TCPA Class Actions
This publication is for informational purposes and does not contain or convey legal advice. The information herein should not be used or relied upon in
regard to any particular facts or circumstances without first consulting a lawyer.
©2013 K&L Gates LLP. All Rights Reserved.
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