The Ninth Circuit Holds That The TCPA Prohibits Automated Calls Even When They Do Not Refer To Any Specific Good Or Service

by Sheppard Mullin Richter & Hampton LLP
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In Chesbro v. Best Buy Stores, LP, No. 11-35784, 2012 WL 4902839 (9th Cir. Oct. 17, 2012), the Ninth Circuit reversed the Western District of Washington’s grant of summary judgment in favor of Best Buy Stores, LP ("Best Buy") on claims that Best Buy placed automated telephone calls to plaintiff Michael Chesbro’s home in violation of the Telephone Consumer Protection Act of 1991 ("TCPA"), 47 U.S.C. § 227 and Washington statutes. The TCPA prohibits "any telephone call to any residential telephone line using an artificial or prerecorded voice to deliver a message without the prior express consent of the called party." However, the FCC has exempted automated calls that do not adversely affect the consumer's privacy rights and do not include any "unsolicited advertisement," pursuant to 47 U.S.C. § 227(b)(2)(B)(ii) and 47 C.F.R. § 64.1200(a)(2)(iii). An "unsolicited advertisement" is defined as "any material advertising the commercial availability or quality of any property, goods, or services which is transmitted to any person without that person's prior express invitation or permission." 47 U.S.C. § 227(a)(5). Here, the Ninth Circuit rejected Best Buy's argument that its automated calls to Chesbro were not "unsolicited advertisement[s]," holding that such calls need not explicitly mention a good, product, or service, but can nonetheless violate the TCPA if they encourage the listener to make future purchases.

Chesbro purchased a computer from Best Buy in July 2008. According to Best Buy, Chesbro enrolled in its Reward Zone Program ("RZP") and consented to the terms of the RZP Privacy Policy, which authorizes Best Buy to contact members with RZP-related communications. Chesbro contended that even if Best Buy had obtained his signature to enroll in the RZP, he did not know he was being enrolled or what the RZP was. Chesbro estimated he received "more than five, less than a dozen" automated calls from Best Buy following his purchase.

He first received a call reminding him to use his Reward Zone certificates before they expired. He filed a complaint about this call with the Washington Attorney General ("AG"), after which Best Buy agreed to place Chesbro on its Do Not Call (“DNC”) list. Chesbro maintained, however, that before filing his AG complaint, he had requested to opt out using Best Buy's automated touchtone dialing system. He also contended he called the Best Buy store and requested to be put on Best Buy's DNC list, but the customer service representatives with whom he spoke stated they did not know what phone calls he was talking about. He also asserted he was registered on the national DNC list.

Seven months later, Chesbro received another automated phone call from Best Buy explaining that Best Buy was making security updates and changing the RZP in certain respects. He filed a class action complaint; the trial court granted summary judgment in favor of Best Buy.

On appeal, Best Buy argued that its automated calls were informational calls and did not expressly refer to any "property, goods, or services." The Court noted that an informational call that includes a marketing component is still a prohibited "dual purpose" call. If an automated call includes a marketing component, "additional information provided in the calls does not inoculate them."

The Court found that the calls were prohibited “dual purpose” calls. Under 47 C.F.R. § 64.1200(f)(10) (2011) (amended 2012), “telemarketing" is defined as "encouraging the purchase or rental of, or investment in, property, goods, or services, which is transmitted to any person." The Court found that Best Buy's automated calls "encouraged" recipients to make future purchases at Best Buy, and stated that "[n]either the statute nor the regulations require an explicit mention of a good, product, or service where the implication is clear from the context." Finally, the Court rejected "[a]ny assertion that Chesbro either consented to receiving these communications or that the communications were not unsolicited," as he "repeatedly and expressly asked not to be contacted." Notably, the Ninth Circuit did not reverse and remand to the trial court, but reversed the grant of summary judgment and ruled as a matter of law in plaintiff’s favor.

After Chesbro v. Best Buy Stores, LP, businesses should be aware that an automated call not expressly referring to goods, products, or services may still fall within the TCPA’s prohibition against “unsolicited advertising” if the call can be construed as encouraging the consumer to engage in future purchases from the company.

Lai L. Yip
(415) 774-3147
lyip@sheppardmullin.com

Anna S. McLean
(415) 774-3154
amclean@sheppardmullin.com

Shannon Z. Petersen
(619) 338-6656
spetersen@sheppardmullin.com

 

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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