January 2016 - Call Compliance News
· FCC Commissioner Michael O’Reilly has written a blog criticizing “regulation by citation” over the FCC’s recent use of citations to expand the FCC’s reach over non-regulated companies. https://www.fcc.gov/news-events/blog/2016/01/05/regulation-citation.
The FCC may assess a penalty against a non-licensed entity only if it first issues a citation of the alleged violation and gives that company a reasonable opportunity for review of the citation. O’Reilly states that “numerous reports indicate companies have been blindsided and treated as guilty before they even know what the supposed violations are … businesses are not always informed of citations before they are made public.”
Comment: Receiving an FCC citation is a serious event which should cause you to review your practices to ensure compliance with FCC and other rules. However, if no violation of the rules has occurred, you should seek rescission of the citation from the Commissioner.
· On January 15, 2016, the FCC filed its brief supporting the new automatic telephone dialing system (“ATDS”) regulation. More than nine companies and trade groups have challenged the constitutionality of the order and/or the legal ability of the FCC to promulgate the regulation. The brief can be reviewed here: http://transition.fcc.gov/Daily_Releases/Daily_Business/2016/db0115/DOC-337328A1.pdf.
Comment: The FCC has argued that the regulations reasonably exercise the authority delegated to it by Congress. It seems unreasonable, however, that the FCC states that “capacity” to dial includes both present and potential capacity, as anything with enough modification could have that capacity, especially any electronic item. Did Congress really intend every electronic item including your iPhone to be an ATDS?
The FTC has filed four separate actions against debt collection companies for alleged violations of the FTC Act including false statements, false arrest warrants, and other indecent behavior. FTC v. National Payment Processing, LLC, et al.
The FTC has obtained an order seizing the assets of an office supply sales company. FTC v. Liberty Supply Company. The complaint alleges the company quoted “per unit” prices but only sold in multi-unit quantities.
Comment: The FTC obtained a temporary restraining order shutting this business down, an indication of the seriousness of the charges.
The House of Representatives has passed the “Fairness in Class Action Litigation and Furthering Asbestos Claim Transparency Act of 2016” and referred it to the Senate (HR 1927). The bill provides that no class action can be certified unless each class member demonstrates that he or she has suffered the same “type and scope” injury as the named class representative. Proponents of the bill claim that its intent is to eliminate “non-injury” class action cases based on potential damages which have yet to result in harm.
Comment: The effect, if passed into law, of this law on TCPA class actions is uncertain because TCPA class actions do not involve actual damages but a statutory penalty of $500 or more per call. It clearly would add another hurdle for classes to be certified. We will carefully track the progress of this bill.
U.S. Supreme Court
In December, the Supreme Court ruled in favor of DIRECTV enforcing its arbitration agreement in California. DIRECTV, Inc. v. Imburgia. The arbitration agreement included a waiver of the ability by any subscriber to file a class action lawsuit. The Supreme Court ruled that California’s law banning such waivers was pre-empted by the Federal Arbitration Act.
Comment: This case is an example of federal law being the “supreme law of the land” and being enforced despite conflicting state law. It is important in the area of TCPA class actions which have often been brought by customers of a business when they have an arbitration clause with such waiver.
The Ninth Circuit Court of Appeals has affirmed a lower court’s ruling that a class could not be certified against a company which allegedly sent unsolicited text messages. Gannon v. Network Telephone Services. The plaintiff claimed he did not hear disclosures made when he placed a call to the defendant, and the Court therefore found that it would have to ask every purported class member whether he or she heard the disclosure, thus, making the class uncertifiable.
· A court has certified a class of recipients of text messages from Yahoo! who had no relationship with the company, but denied certification for persons who had signed up for Yahoo!’s text service. Johnson v. Yahoo!, Inc.
Comment: On whole this is a victory assuming Yahoo! used good “list hygiene” tools to ensure its database consisted of numbers provided by its customers which had not been reassigned to unrelated consumers.
· A judge has issued an opinion in United States v. Dish Network granting partial summary judgment to the United States in its suit alleging that Dish violated the Telemarketing Sales Rule. The case involves the FTC’s argument that its prohibition on abandonment prohibits prerecorded calls because the call is not promptly connected to a “sales representative.” The Court ruled in Dish’s favor that it could be allowed to claim a “mistake of law” defense with regard to the FTC’s interpretation of this section.
Comment: I was there when the FTC created this ban on prerecorded messages “bootstrapping” the ban into the prohibition on abandoned calls which made no distinction between live and prerecorded sales representatives.
An Oklahoma court has sanctioned a pro se plaintiff who sued after receiving “want ad” calls on a cell phone seeking truck drivers. Salmon v. CRST Expedited, Inc. The Judge found there was no reason to believe one of the defendants was responsible for calls placed to his cell phone and awarded that defendant attorney’s fees.
An Oregon court has approved a settlement of a TCPA class action with a settlement fund of approximately $7.5 million. Ott v. Mortgage Investor’s Corporation of Ohio, Inc.
A federal court has stayed a TCPA class action alleging violation of the TCPA based on texts sent to consumers by Papa Murphy’s. Lennartson v. Papa Murphy’s Holdings, Inc. Individuals signed up on Papa Murphy’s website to received promotional messages. After the FCC revised its standard for “prior express consent” in 2012, Lennartson sued saying his prior opt-in was not “prior express consent” under the new standard. The Court ruled that the FCC’s 2015 order applied retroactively and denied Papa Murphy’s motion for summary judgment.
Comment: The Court did stay the preceding based on the Supreme Court’s potential action in Spokeo, Inc. v. Robbins.