Consumer Litigation Risk Arthur Rotatori

Student Loan Legal
TCPA Litigation Update
Arthur J. Rotatori
McGlinchey Stafford PLLC
[email protected]
Telephone Consumer Protection Act
•What does it apply to?
– Automatic telephone dialing systems
– Artificial or prerecorded messages
– Calls to landlines
– Calls to cell phones
• Who does it apply to?
– Anyone – not just for telemarketers
– But life just got a little harder for
Telephone Consumer Protection Act
• TCPA defines “automatic telephone dialing
system” as:
– Equipment which has the capacity —
(A) to store or produce telephone numbers to
be called, using a random or sequential
number generator; and
(B) to dial such numbers.
– As long as the equipment has the capacity to
perform both functions, it is considered to be an
“automatic telephone dialing system” for TCPA
purposes, even if the function is not used.
Telephone Consumer Protection Act
• Conflict between the FCC’s 2012 Report and
Order containing the amended regulations
and the text of the TCPA and the regulations
– Deals with calls to residential landlines using an
automatic telephone dialing system.
– Unclear whether prior express written consent is
required for autodialed telemarketing calls to
residential landlines if there is no artificial or
prerecorded voice message.
Telephone Consumer Protection Act
• Report and Order:
“…we require prior express written consent for all
telephone calls using an automatic telephone
dialing system or a prerecorded voice to deliver a
telemarketing message to wireless numbers and
residential lines.”
• Regulation:
No person or entity may initiate any telephone call
to any residential line using an artificial or
prerecorded voice to deliver a message without
the prior express written consent of the called party
Telephone Consumer Protection Act
• Effective October 16, 2013 – calls to
residential landlines using artificial or
prerecorded messages and calls or text
messages to cell phones that use
ADAD equipment or prerecorded
message that contain an advertisement
or constitute telemarketing require the
called party’s prior express written
Old Rules
New Rules
Type of Call
No Advertisement
or Telemarketing
No Advertisement
or Telemarketing
Prior Express Consent
Prior Express Consent
Prior Express Written
Prior Express Consent
No Prior Express
Consent Required
No Prior Express
Consent Required
Prior Express Written
No Prior Express
Consent Required
•Because of Established
•Because of Established
•Because no
Business Relationship
Business Relationship
Advertisement or
Using Automatic
Telephone Dialing
System OR
Artificial or
Using Artificial or
•Also because no
Advertisement or
NOTE: Unclear whether
prior express written
consent is required for
calls using automatic
telephone dialing system
Some Case Law Considering
Case law concerns either:
– The capacity issue: the ability to store
– The consent issue: What did the
consumer authorize
Some Case Law Considering
The Capacity Issue
• Boyd v. Gen. Revenue Corp., 2013 WL
866944, at *12 (M.D. Tenn. March 7, 2013) –
Granting the defendant’s motion for summary
judgment because the defendant’s business
records reflected that the calls to the plaintiff's
cell phone number were manually dialed by
an individual debt collector, not by an autodialer.
• Ploch v. FirstSource Advantage, LLC, 2012
WL 5384876, at *4 (E.D. Mo. Nov. 1, 2012) –
Denying defendant’s motion for summary
judgment based on a genuine issue of
material fact despite defendant’s declaration
that all calls to the plaintiff’s cell phone
number were manually dialed through a PBX
phone system that does not have the
capability to store or produce telephone
numbers to be called, using a random or
sequential number generator, or to dial such
• Meyer v. Portfolio Recovery Associates, LLC,
707 F.3d 1036, 1043 (9th Cir. 2012) –
Reaffirming the Ninth Circuit’s earlier decision
in Satterfield v. Simon & Schuster, 569 F.3d
946, 951 (9th Cir. 2009) that “the clear
language of the TCPA ‘mandates that the
focus must be on whether the equipment has
the capacity ‘to store or produce telephone
numbers to be called, using a random or
sequential number generator.’”
• Ibey v. Taco Bell Corp., 2012 WL 2401972, at
** 2-3 (S.D. Cal. June 18, 2012) – “[A] system
need not actually store, produce, or call
randomly or sequentially generated numbers,
it need only have the capacity to do it” but
dismissing plaintiff’s TCPA claims for failure
to adequately plead the elements of the
• And at least 11 more cases on point.
Capacity And Expansive
• Nelson v. Santander Consumer, USA, Inc., No.
11-CV-307-BBC, 2013 WL 1141009 (W.D. Wis,
Mar. 8,2013)
• A person who receives a call has a private right
of action under the TCPA, even if the person is
not the telephone account holder or subscriber.
• The private right of action under the TCPA is
not limited to the subscriber or person named
on the bill. Instead, any person who answers
or receives the call has a private right of action.
Nelson v. Santander
• Santander asserted the consumer did not
have a right to sue because the TCPA
protects the “called party” and should be
limited to the person named on the bill,
which was the plaintiff’s husband.
– The court disagreed noting nothing in the
statute limits the protections to the owner.
– Distinct from the rule that an owner is
the only party that has the right to
provide consent under the TCPA.
Nelson v. Santander
• Technology that pulls numbers from internal
database of numbers is a “predictive dialer”
– An employee that provides testimony about
internal practices and how employer uses
devices will be deemed sufficiently competent
and qualified.
– In response to deposition notice that requires
testimony regarding certain topics related to
Santander’s use of predictive dialers,
Santander cannot later assert the employee it
offer to provide testimony is not qualified.
Nelson v. Santander
• Court reiterates that the TCPA considers whether a
device has the capacity to store, produce, or call
randomly or sequentially generated numbers, not
whether it actually does so.
– Santander used the Aspect system, which offers
predictive dialing (algorithm times when an employee will
be ready to receive a called number) and preview dialing
(employee will select a telephone number on a computer
screen and the system calls it).
– Although the plaintiff did not identify which of the 1,000+
calls were placed using the predictive dialing method, this
issue was irrelevant because the Aspect system had the
capacity to do so even if most calls were made using the
preview method.
Spoiler Alert
• Nelson decision was vacated by a joint
stipulation of the parties and the case
was dismissed with prejudice, June 7,
• But the facts and theory in Nelson
provide a blueprint for copycat cases
Cases on the Consent Issue
• Whether consent was given
• Scope of the consent
• Whether consent can be revoked
Revocation of Prior Express Consent
• Courts have reached different conclusions regarding the
consumer’s ability to revoke prior express consent and,
when allowed, whether the revocation must be in writing
or verbal.
– Consumer cannot revoke prior express consent.
Gager v. Dell Financial Services, 2012 WL 1942079
(M.D. Pa. May 29, 2012)
– Oral statement that calls to cell phone are inconvenient
is not a sufficient revocation. Cunningham v. Credit
Mgmt., 2010 WL 3791104 (N.D. Tex. Aug. 30, 2010)
– Revocation must in writing. Starkey v. Firstsource
Advantage, 2010 WL 2541756 (W.D.N.Y. Mar. 11,
Effective Prior Consent
• Mais v. Gulf Coast Collection
No. 11-61936-CIV-Scola
(S.D. Fla. May 8, 2013)
• Case deals with the collection of a
health care bill
• Consumer gave consent to the hospital,
not to the health care provider seeking
• Debt collector working for health care
provider called the consumer using a
predictive dialer
Mais Court Held:
• Court had authority to determine validity of
the 2008 FCC Ruling on consent
• FCC interpretation of express consent was
really implied consent not authorized by
• Implied consent applies only to consumer
credit transactions
• Any consent given ran to the hospital, not the
health care provider
Another Potential Attack
• Lynn v. Monarch Recovery
(N.D. Md. March 25, 2013)
• Collection calls regarding delinquent
credit card
• Consumer’s phone line was originally a
residential line but the consumer
changed it to a VOIP subscription
• Consumer is charged $0.0149 per
minute for each incoming call, in sixsecond increments
• Consumer is also charged $0.00149 for
each caller ID transmission
• Consumer was not the debtor
• The debtor was the consumer’s brother, who
listed the consumer’s telephone number as
his, or was the prior resident of the
consumer’s house
• Consumer told debt collector that he was
charged for the incoming calls; denied giving
permission for the calls
• Debt collector left Foti messages on
consumer’s voicemail
• Debt collector used the same dialing system
used in Nelson
• The Court and the parties treated this
as a residential land line case, so the
consent issue was not relevant
• Debt collector relied on the fact that its
calls weren’t telemarketing calls
• Consumer alleged that the debt
collector violated the TCPA prohibition
on making calls that result in the called
party being charged for the call
• The Court interpreted the TCPA call
charged provision to apply to:
– Residential telephone lines which use
• This appears to be the first case to
squarely address this issue
Lessons from the TCPA
• A steady flow of new cases
• Some decisions are on appeal or may be
• Reported cases provide a road map for future
• No pro-industry trends – 500+ cases seeking
between $500 and $1500 per call
Possible Solution
• FCC action is necessary to resolve
these issues
• Preferred FCC response is to remove
predictive dialers, when used to place
non-telemarketing calls, from the
definition of auto-dialers in the TCPA
• FCC appears to have authority under
the FCC to create such an exemption
• Such exemption would sidestep the
prior express consent issue
• Petitions to create that exemption are
currently pending with the FCC
Arthur J. Rotatori
[email protected]
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