Making Meyer Lemonade Out Of Meyer Lemons: Ninth Circuit Affirms Provisional Class Certification and Injunction in TCPA Case

by Sheppard Mullin Richter & Hampton LLP
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[author: Elizabeth Barcohana]

In Meyer v. Portfolio Recovery Associates (Oct. 12, 2012), the Ninth Circuit affirmed the Southern District of California’s decision to provisionally certify a class and grant a preliminary injunction against Portfolio Recovery Associates (“PRA”), a debt collector alleged to be in violation of the Telephone Consumer Protection Act (the “TCPA”), 47 U.S.C. § 227, by calling California debtors’ wireless phones without their prior express consent.

The District Court provisionally certified a proposed class of California debtors whom PRA was allegedly calling without their consent under FRCP 23(b)(2), and issued a preliminary injunction to stop PRA’s practice of calling the class members.

On appeal, PRA argued, among other reasons, that individualized issues of consent should have defeated provisional class certification because some debtors might have agreed to be contacted at any telephone number, even telephone numbers obtained after the original transaction. The Ninth Circuit rejected the argument because, according to a Federal Communication Commission (“FCC”) declaratory ruling from 2008, “prior express consent is deemed granted only if the wireless telephone number was provided by the consumer to the creditor, and only if it was provided at the time of the transaction that resulted in the debt at issue. [citation]. Thus, consumers who provided their cellular telephone numbers to creditors after the time of the original transaction are not deemed to have consented to be contacted at those numbers for purposes of the TCPA.”

As for the preliminary injunction, PRA argued that the District Court erred because there was no showing of likely success on the merits. The Ninth Circuit rejected the argument because it found PRA’s “automatic telephone dialing system” has the “capacity” to store or produce telephone numbers using a random or sequential number generator, and to dial such numbers, which is what is required in a TCPA case. See 47 U.S.C. § 227(a)(1); (b)(1). The Ninth Circuit, relying on PRA’s securities filings, found PRA uses predictive dialers, which, according to the FCC, are “automatic telephone dialing systems.” Thus, businesses that use predictive dialers must be mindful that such use may likely land them within the purview of the TCPA.

Further, the Ninth Circuit agreed with the District Court that there was evidence PRA would have continued to violate the TCPA if an injunction had not been issued because, during a mere two-month period in 2011, PRA called over 46,000 California phone numbers, never acknowledged the wrongful nature of its conduct in opposing the motion for preliminary injunction, and only assured the District Court that it would stop calling the named plaintiff, without making any assurances regarding the provisional class.

This decision highlights the importance of collecting phone numbers during the course of a transaction: if the creditor believes contacting the consumer by phone may become necessary later, it is crucial to collect as many phone numbers as possible at the time of the transaction, obtain consent to contact the consumer at those numbers, and then only use those phone numbers to contact the consumer. (But note that there are decisions out of different districts throughout the country that address whether and under what circumstances a debtor may later revoke his or her consent to be contacted, regardless of what transpired during the original transaction. See Gager v. Dell Financial Services, No. 3:11-cv-2115 (M.D. Pa. May 29, 2012). Depending upon the jurisdiction, the answer differs.)

Additional arguments were raised by PRA, however, that were not addressed by the Ninth Circuit at all, or in any great detail, or with any resolution. For example, PRA raised a due process argument, which the Ninth Circuit rejected without much discussion. PRA also raised an argument for the first time on appeal – whether the FCC’s definition of “automatic telephone dialing systems” was valid – which was considered waived and left unaddressed. Finally, the Ninth Circuit did not reach the question of law of whether an injunction is appropriate without a showing of irreparable harm where the statute at issue provides for injunctive relief as in the TCPA. Thus, despite the conclusions drawn by the Ninth Circuit in Meyer, there is still some room for additional challenges to a plaintiff seeking provisional class certification and a preliminary injunction, even in a TCPA case.

 

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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