New FCC Interpretation Of "Express Consent" To Increase TCPA Class Action Liability

by Sheppard Mullin Richter & Hampton LLP
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Plaintiffs frequently sue businesses in class actions for violation of the Telephone Consumer Protection Act of 1991, 47 U.S.C. § 227 (the “TCPA”). The TCPA generally prohibits calls and text messages to cell phones using automated systems or artificial or pre-recorded voice unless the consumer gives "prior express consent." The TCPA imposes statutory penalties of $500 per negligent violation, and up to $1,500 per knowing or willful violation. In class actions, the potential liability usually extends back four years prior to the filing of the complaint. The numbers can get very high, very quickly—for example, at least $500,000 for 1000 calls; at least $5 million for 10,000 calls, etc. Though the TCPA does not authorize attorneys’ fees itself, plaintiffs usually recover them in class actions.

These cases often turn on whether the business has obtained “prior express consent.” Since 1992, the Federal Communications Commission (“FCC”), charged with implementing the TCPA, has interpreted this to mean that “persons who knowingly give their phone number have in effect given their invitation or permission to be called at the number which they have given, absent instructions to the contrary.” In re Rules and Regulations Implementing the TCPA, 7 FCC Rcd. 8752, 8769 (Oct. 16, 1992).

The FCC, however, is now set to reverse itself. On June 11, 2012, the FCC published a new interpretation of "prior express consent" for telemarketing calls that will go into effect on October 16, 2013. The FCC’s new interpretation now requires a prior, signed, written agreement, specifically agreeing to receive telemarketing calls or text messages via auto-dialer and/or pre-recorded voice. This rule does not apply to debt collection calls or texts, unless such calls or texts include or introduce any type of advertisement or marketing materials.

Under the new rule, 47 C.F.R. § 64.1200(f)(8) specifically provides:

The term prior express written consent means an agreement, in writing, bearing the signature of the person called that clearly authorizes the seller to deliver or cause to be delivered to the person called advertisements or telemarketing messages using an automatic telephone dialing system or an artificial or prerecorded voice, and the telephone number to which the signatory authorizes such advertisements or telemarketing messages to be delivered.

(i) The written agreement shall include a clear and conspicuous disclosure informing the person signing that:

(A) By executing the agreement, such person authorizes the seller to deliver or cause to be delivered to the signatory telemarketing calls using an automatic telephone dialing system or an artificial or prerecorded voice; and

(B) The person is not required to sign the agreement (directly or indirectly), or agree to enter into such an agreement as a condition of purchasing any property, goods, or services.

(ii) The term “signature” shall include an electronic or digital form of signature, to the extent that such form of signature is recognized as a valid signature under applicable federal law or state contract law.

What courts will do with the FCC’s new interpretation remains to be seen. Courts are required to give deference to an agency’s interpretation of a statute, but only if the statute is unclear. See Chevron, U.S.A., Inc. v. Natural Resources Defense Council, 467 U.S. 837, 842-843 (1984).

To date, most courts have followed the FCC’s old interpretation finding sufficient consent to be called if a cell phone number is provided. See Emanuel v. Los Angeles Lakers, Inc., 2013 WL 1719035, *6 (C.D. of Cal., April 18, 2013) (telemarketing case; court agreed with the “many federal courts” that “have concluded that when a customer provides a company his or her phone number in connection with a transaction, he or she consents to receiving calls about that transaction” on the phone); Saunders v. NCO Fin. Sys., 2012 WL 6644278, *3 (E.D.N.Y. 2012) (debt collection case; “the authorities are almost unanimous that voluntarily furnishing a cellphone number to a vendor or other contractual counterparty constitutes express consent”); Pinkard v. Wal-Mart Stores, Inc., 2012 WL 5511039, *5-6 (N.D. Ala. 2012) (telemarketing case; “distributing one’s telephone number is an invitation to be called”); Greene v. DirecTV, Inc., 2010 WL 4628734, *3 (N.D. Ill., 2010) (telemarketing case; plaintiff “expressly consented to the . . . phone call by releasing her cell phone number as the one at which she wished to be reached.”); Ibey v. Taco Bell Corp., 2012 WL 2401972, *3 (S.D. Cal. 2012) (telemarketing case; “plaintiff expressly consented to contact by Defendant when he initially texted . . . to Defendant”); Ryabyschuck v. Citibank, 2012 WL 5379143, *3 (S.D. Cal. 2012) (telemarketing case; where “lone text message at issue was sent to a number voluntarily provided by Plaintiff to Defendant without caveat . . . These circumstances unmistakably display some measure of prior consent”); Roberts v. Paypal, Inc., 2013 WL 2384242, *7 (N.D.Cal.) (telemarketing case; granting defendant's summary judgment motion finding that plaintiff consented to receive text messages from defendant "simply by providing his cell phone number."); Jamison v. First Credit Services, 2013 U.S. Dist. LEXIS 43978 *45 (N.D.Ill., 2013)(debt collection case; court denied class certification in suit against auto financing company, finding that "issues of individualized consent predominate[d]" because Honda set forth "evidence showing that a significant percentage of the putative class consented to receiving calls on their cell phone" by providing their cell phone numbers).

Other courts, however, have disagreed with the FCC’s old interpretation, requiring prior written consent to be called, specifically via an auto-dialer or prerecorded voice, for both telemarketing calls and debt collection calls. In the debt collection case of Leckler v. Cashcall, 554 F.Supp.2d 1025 (N.D. Cal. 2008), the court held that the FCC’s interpretation allows for “implied” consent and “flies in the face of Congress’ intent.” Id. at 1029-1030, vacated on other grounds 2008 WL 5000528. “Although the Court does not doubt that by providing her cell phone number in her loan application and in subsequent correspondence plaintiff consented to be called by defendant, such consent was implied through her actions and conduct . . . rather than expressly given in words . . . explicitly stating that plaintiff consented to be called with an autodialer or prerecorded voice.” Id. at 1030; see also Edeh v. Midland Credit Management, Inc., 748 F.Supp.2d 1030, 1038 (D. Minn. 2010) (debt collection; “express” means “explicit” and not “implicit;” defendant debt collector “was not permitted to make an automated call” unless debtor “had previously said something like this: ‘I give you permission to use an automatic telephone dialing system to call my cellular phone.’”); Thrasher-Lyon v. CCS Commercial LLC, 2012 WL 5389722, *2 (N.D. Ill. 2012) (telemarketing case; “agreeing to be contacted by telephone, which [plaintiff] effectively did when she gave out her number, is much different than expressly consenting to be robo-called.”); Travel Travel Kirkwood, Inc. v. Jen N.Y., Inc., 206 S.W.3d 387, 392 (Mo. Ct. App. 2006) (telemarketing case; “If consent is not manifested by explicit and direct words, but rather is gathered only by implication or necessary deduction from the circumstances, the general language, or the conduct of the parties, it is not express consent. Rather, it is merely implied consent.”).

Plaintiffs’ class action attorneys, of course, will take the most aggressive position. To avoid being sued in TCPA class actions, businesses should consider adopting the elements of the new FCC rule for both telemarketing and debt collection calls and texts. Businesses should also consider an even broader consent agreement, one in which the person agrees to receive calls or texts on the particular cell phone number provided, regardless of whether it is the signatory who receives this call or a friend or relative who might be in possession of the cell phone at the time.

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