The Third Circuit Issues a “Double-Edged” Decision that Could Increase Individual Lawsuits under the Telephone Consumer Protection Act, but Limit TCPA Class Actions

by K&L Gates LLP
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With the increased use of text messaging and smartphones, many companies have utilized automated texts and “robocalls” as marketing vehicles. This, in turn, has spawned considerable and costly class action litigation under the Telephone Consumer Protection Act of 1991 (“TCPA”). In these lawsuits, classes of consumers have generally asserted that they did not, as required by the statute, expressly consent to receiving advertising texts and robocalls, and have sought millions of dollars in steep penalties authorized by the TCPA.

The U.S. Court of Appeals for the Third Circuit recently issued a “double-edged” decision in Gager v. Dell Financial Services, LLC, No. 12-2823 (3d Cir. Aug. 22, 2013), which is likely to affect TCPA litigation, including TCPA class action litigation. As discussed below, Gager, while potentially opening the door to additional TCPA lawsuits being brought by individuals, may also curtail consumers’ ability to certify those lawsuits as class actions.

Gager v. Dell Financial Services, LLC
In Gager, the Third Circuit held that consumers may revoke their consent to receive robocalls after such consent has already been given. The plaintiff, Ashley Gager, provided her telephone number on an application for a line of credit with Dell Financial Services without specifying that the number belonged to a cellphone. She also did not inform Dell that she would not like to be contacted by robocalls through that number. When Ms. Gager defaulted on her debt, Dell called her cellphone multiple times through an automatic dialing system to leave recorded messages about the debt. Ms. Gager wrote a letter requesting that Dell stop contacting her through that number, and when Dell failed to do so, Ms. Gager filed suit under the TCPA.

On appeal from a district court decision dismissing Ms. Gager’s complaint, the Third Circuit addressed two issues:  (1) whether consumers can revoke their prior express consent to be contacted via robocalls, and (2) whether there is a time limitation on the right to revoke. The court reinstated Ms. Gager’s complaint, holding that there is a right to revoke and that it has no temporal limitation. In addition to the text and purpose of the statute, the court looked to a recent decision of the FCC for guidance. The court reasoned that a recent FCC ruling implied a right to revoke when the agency decided that a company is not liable for sending a confirmatory text to a customer who revokes his or her consent to receive further text messages. The court also held that imposing a temporal limitation on the consumer’s right to revoke would be inconsistent with the common law and Congress’s purpose of protecting consumer rights under the TCPA.

Gager’s Implications on TCPA Individual Lawsuits and Class Actions
There are at least two significant implications of the Third Circuit’s decision in Gager:

First, Gager opens the door for additional consumers to file lawsuits against companies that have transmitted marketing texts and robocalls. That is, certain consumers who may have previously consented to receiving texts and calls can now, like Ms. Gager, allege that they revoked that consent, giving rise to a legal claim under the TCPA.

Second, Gager may potentially curtail -- or at least provide additional defenses to -- class action lawsuits under the TCPA. The question of whether a consumer revoked his or her consent is a fact-bound and individualized one, potentially not susceptible to a common source of proof. Indeed, while Gager determined that a right to revoke exists, it did not define what consumers must do in order to notify a company that they have revoked their consent. In Gager, for instance, Ms. Gager wrote a letter to Dell, listing her phone number and requesting that the company cease the automated calls; but other cases may implicate different types of revocations. The fact-bound and individualized determination as to whether consent has been revoked may be a useful defense in order to argue against class certification of certain TCPA claims.

Companies that engage in text and robocall advertising should closely watch how Gager is applied by federal district courts in the Third Circuit (i.e., in Pennsylvania, New Jersey, and Delaware) and assess, in particular, what effect the decision may have on consumers’ ability to certify TCPA class action lawsuits.

Note: The author acknowledges Grady Nye, a K&L Gates LLP summer associate, for his assistance in the preparation of this article.

 

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