TCPA Connect - June 2014

by Manatt, Phelps & Phillips, LLP

In This Issue:

  • TCPA Suit Based On Texts Unrelated To Promotion
  • Court Denies Class Certification in Florida TCPA Suit
  • GM Financial Target Of TCPA Suit
  • California Federal Court Orders Arbitration of TCPA Suit

TCPA Suit Based On Texts Unrelated To Promotion

Running a Cyber Monday promotion led to a Telephone Consumer Protection Act lawsuit for Cosmopolitan Hotels & Resorts.

Seyed M. Kazerouni filed suit in California federal court, alleging that he provided his cell phone number to take advantage of a special discount offered on a Las Vegas Cosmopolitan hotel. When Kazerouni tried to book his room online on December 2, 2013 – also known as Cyber Monday – high Internet traffic slowed the process, he said.

Cosmopolitan offered customers the option to leave a telephone number to receive a call back from a hotel agent to complete the reservation. Kazerouni provided his number but said the hotel never called him back. Instead, he received two text messages from Cosmopolitan, he claimed.

The first text read: “Thank you for signing up to receive alerts about The Cosmopolitan’s Cyber Monday offer. We’ll text you when it’s time to book.” More than one month later he received a second text with a link: “You previously signed up to see offers from The Cosmopolitan. This is your last chance to opt-in and receive offers like $150 on us.”

Kazerouni then filed his TCPA suit, alleging that the second text violated the statute because he had not given consent and Cosmopolitan did not inform him that he would receive text messages for purposes unrelated to Cyber Monday discounts.

“Defendant’s website did not inform Plaintiff that Plaintiff was signing up to receive alerts from Defendant,” according to the complaint. “Plaintiff merely desired to receive a telephone call from Defendant’s agent in order to take advantage of the Cyber Monday sale.”

The suit seeks to certify a nationwide class of consumers who received texts from the Cosmopolitan within the prior four years and requests statutory damages and injunctive relief.

To read the complaint in Kazerouni v. Cosmopolitan Hotels & Resorts, Inc., click here.

Why it matters: While Kazerouni admits he willingly provided his phone number to the defendant, he argues that he gave it for a single purpose: to receive a phone call to complete his hotel reservation. According to the plaintiff, the hotel chain violated the TCPA by using his phone number for a different purpose – to contact him via text message about other promotions. The suit makes clear once again the companies must be vigilant when sending commercial texts.

Court Denies Class Certification in Florida TCPA Suit

A defendant successfully avoided class certification in a TCPA suit when the plaintiff failed to provide evidence about the number of recipients who allegedly received unwanted text messages.

Christopher Legg sued Voice Media Group claiming he received “mobile spam” in violation of the statute. Although Legg once subscribed to receive messages from VMG, he alleged that he continued to receive messages after sending a “STOP ALL” message to the company.

Legg’s motion defined the potential class as “[a]ll cellular telephone subscribers with Florida area codes” who received unwanted messages after attempting to unsubscribe from VMG’s text messaging alert service from March 1, 2012, until the date of certification.

Analyzing the four requirements for certification under Federal Rule of Civil Procedure 23(a), U.S. District Court Judge James I. Cohn said Legg would be an adequate representative of the class and satisfied the commonality and typicality requirements.

But lack of evidence to satisfy Rule 23(a)(1)’s numerosity requirement doomed the plaintiff’s motion, despite the “relatively light” burden of showing a group of more than 40 class members.

In his motion, Legg contended that the class would be “comprised of at least 1,026 cellular telephone subscribers,” but his sole support was the declaration of his telecommunications expert who based his opinion on a review of a spreadsheet provided by VMG’s vendor that reflected 1,026 cellular subscribers sent “STOP ALL” messages to VMG between March 4, 2013, and July 22, 2013.

However, the court granted VMG’s motion to exclude the expert’s testimony with regard to the size of the proposed class. Even if the court had allowed the expert’s testimony, Judge Cohn said he would not have certified the class because the expert’s testimony was unsupported speculation.

“The obvious problem with the conclusion [the expert] has drawn from this information is that Legg’s proposed class is not coextensive with individuals who: (1) sent ‘STOP ALL’ messages; and (2) continued to receive advertisements from VMG,” Judge Cohn explained. “Because [the expert’s] count of the 1,026 subscribers who sent ‘STOP ALL’ messages to VMG does not speak to how many of those individuals continued to receive VMG’s advertisements, it does not reflect the size of the proposed class. [The expert’s] conclusion that each of these individuals is a class member thus has no support in the underlying documents.”

Although the plaintiff tried to argue that some of the subscribers on the list sent more than one “STOP ALL” text, implying they had continued to receive messages from VMG, the court said this was an assumption “based not on any data, but on … speculation,” and was “of no use to Legg in satisfying the numerosity requirement.”

Lacking competent evidence upon which to even estimate the size of the proposed class, Judge Cohn concluded Legg could not satisfy Rule 23(a)(1), declaring certification improper.

To read the order in Legg v. Voice Media Group, click here.

Why it matters: While VMG scored a victory and avoided class certification in the suit, other companies are still facing the plaintiff in the courtroom. Legg, a practicing attorney and self-described consumer advocate, recently filed a similar TCPA action against American Eagle Outfitters, as well as a putative class action alleging E-Z Rent A Car violated the Fair and Accurate Credit Transactions Act by printing more than five digits of his credit card number on a receipt.

GM Financial Target Of TCPA Suit

Consumers continue to file TCPA class actions in droves, and this time the target is General Motors Financial.

According to plaintiff Monique Perez, she received “virtually daily incessant calls” to her cell phone from GM’s financing arm beginning in late 2013. But the calls were not even intended for Perez, she claimed – the defendant was seeking repayment of an alleged debt owed by a person named “Melanie.”

Perez, who alleged she never provided GM with her cell phone number, said the calls not only violated her privacy, but also reduced her cell phone minutes and increased her charges. Further, the calls were made with an automatic telephone dialing system as defined by the TCPA, she said, and were sometimes made multiple times in a single day.

“The TCPA was designed to prevent calls and text messages like [those from GM], and to protect the privacy of citizens like Plaintiff,” according to Perez’s complaint.

The suit, filed in California federal court, also claims that she was not the only person to receive such calls. The complaint seeks to certify a nationwide class of recipients within a four-year period, with Perez estimating a potential class of “thousands, if not more.” Perez also requests injunctive relief and statutory damages up to $1,500 per violation.

To read the complaint in Perez v. General Motors Financial, click here.

Why it matters: Another day, another TCPA class action. While the cases continue to mount, companies should be aware of the litigation potential and must ensure compliance with the TCPA to avoid a possible suit. Since the allegedly violative calls in this case appear to have been intended for another person, GM might have been calling a person from whom it obtained consent to call for the debt, but whose number was subsequently re-assigned to the plaintiff. As reported in other cases, the TCPA is a strict liability statute, and as such, a call to a person who has not previously consented will likely result in liability, even when innocently sent.

California Federal Court Orders Arbitration of TCPA Suit

In a decision from a California federal court, the judge issued an order compelling arbitration of a TCPA claim over the plaintiff’s objection.

The case stems from a loan agreement that plaintiff Miguel Delgado entered into with Progress Financial Company in December 2012. An arbitration clause covering “[a]ny and all claims, controversies, or disputes arising out of or related in any way to” the loan agreement was included, as was a disclosure form that contained a clause authorizing Progress to contact Delgado electronically.

Despite the disclosure form’s notice that signatories agreed to be contacted via e-mail, text messages, and phone calls – even those automatically dialed and with recorded messages – Delgado sued Progress for violating the TCPA. The defendant “caused Plaintiff’s telephone to ring repeatedly and continuously to annoy Plaintiff,” according to the complaint, and “communicated with such frequency as to be unreasonable under the circumstances and to constitute harassment.”

Progress responded to the suit with a motion to compel arbitration pursuant to the terms of the loan agreement. Delgado objected, arguing that his claims were focused on the manner in which the defendant tried to collect a debt – not the debt itself, putting it outside the scope of the agreement.

But, emphasizing the broad language of the arbitration clause, particularly the phrase “related in any way to [the loan agreement],” U.S. District Court Judge Lawrence J. O’Neill sided with Progress.

“The use of the ‘related to’ language is a signal that the scope of the agreement is broad under Ninth Circuit case law and encompasses claims beyond the four corners of the contract,” he wrote. “Further, the arbitration agreement specifically states that it includes claims ‘whether arising in law or equity, and whether based upon federal, state or local law; contract; tort; fraud or intentional tort . . . .”

The court also pointed to the disclosure form signed by Delgado, that authorized Progress to contact him by phone, text message, or e-mail regarding the loan application and collection of the loan account. A lawsuit challenging such debt collection activities is “related to” that contract, the judge determined.

“[T]he agreement’s broad language, which explicitly includes ‘all claims’ including ‘tort’ and ‘intentional tort’ encompasses [the defendant’s] debt collection related activities, including practices discussed in the disclosure form – such as use of text messages and pre-recorded calls – for the narrow purpose of defendant’s ability to contact plaintiff about his loan account, payments and collections.”

Judge O’Neill cited similar decisions from California state courts as well as federal district courts in Florida and West Virginia. He distinguished contrary rulings from California and Colorado federal courts where the communications at issue related to future business and not an underlying contractual obligation.

Similarly, the court found that Delgado’s claims under California’s Rosenthal Fair Debt Collection Practices Act were also related to the loan agreement. Subsequently, the court ordered the parties to arbitration in accordance with the loan agreement.

To read the order in Delgado v. Progress Financial Co., click here.

Why it matters: For companies seeking to arbitrate claims, the Delgado decision provides an important lesson: California strongly favors the use of broad language such as “arising from or relating to” in the arbitration clause.



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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