Calling/Texting Still a Minefield – Update on the TCPA during COVID-19
Many things have halted, paused, or changed since the COVID-19 pandemic; but, one thing that has remained constant is the risky and ever changing landscape of calling and texting consumers. In the last few months, we have seen a Supreme Court listening to oral arguments on the validity of a Telephone Consumer Protection Act (TCPA) amendment, lower courts continuing interpretation of what exactly is an autodialer, the Federal Communication Commission (FCC) amending a rule to allow it to levy a $10,000 penalty without warning and addressing COVID-19 as an emergency exception, general TCPA class action litigation continuing to dog businesses, and state governments further restricting calling/texting. With all of this movement, we continue to recommend that businesses carefully implement and monitor their calling and texting programs for compliance.
Could the Supreme Court Strike Down the TCPA?
As InfoLawGroup touched on in a recent blog post about autodialers, the Supreme Court in Barr v. American Association of Political Consultants Inc. heard oral arguments regarding the constitutionality of a 2015 exception to the TCPA's autodialer restriction that allows autodialed calls without consent to be made to collect debts owed to or guaranteed by the United States (e.g. student loans). As background, the American Association of Political Consultants brought suit saying that the 2015 exception is an unconstitutional content-based restriction of speech. The Fourth Circuit agreed and ruled that the exception violates the Free Speech Clause. The government then sought Supreme Court review.
During oral arguments, the Justices asked many questions on whether (if unconstitutional) the 2015 Amendment could be severed from the rest of the TCPA, or whether an unconstitutional 2015 Amendment would mean that the entire TCPA autodialer restriction (or the TCPA as a whole) would be unconstitutional. Such questions, surely, make the plaintiffs' bar nervous given the volume of lawsuits it has brought and large dollar damage awards and settlements under the TCPA (which last year included jury verdicts of $267,349,000 (McMillion v. Rash Curtis & Associates) and $925,220,000 (Wakefield v. ViSalus) ). Another theme of the Justices' questions was whether the government debt exception was a content-based restriction. If a content-based restriction, the Justices would need to apply strict scrutiny standard in deciding whether it is unconstitutional. It is very rare and difficult for a law to be stricken down by the Supreme Court under this high standard.
It's a bad idea to make any conclusions on how the Justices will decide a case based on oral arguments, but the Justices must be well aware of the public's dislike of unwanted calls ("It's an extremely popular law," said Chief Justice Roberts), the changes in technology and pervasive use of mobile phones since the initial passage of the TCPA in 1991, and the far reaching consequences of the TCPA being removed from the books. Hopefully, the Supreme Court will come back with a decision that clarifies the grey areas of the TCPA that are helping to spur so much uncertainty and litigation, including the definition of autodialer.
What is an Autodialer? Even the Circuits are Split
Just as the Supreme Court may be deciding on the constitutionality of the entire TCPA autodialer restriction, the confusing saga on what is and isn't an autodialer is continuing. This post isn't going into excruciating detail about how different courts try to interpret the vague and poorly written TCPA definition of autodialer, as InfoLawGroup did this in our blog post earlier this year. However, note that another decision out of the Second Circuit widens the split. In Duran v. La Boom Disco, Inc., the Circuit Court relied heavily on the human intervention argument that merely pressing send on a computer program to deliver text messages to numerous mobile phones at once isn't enough to get out of a definition of autodialer. (Interesting to note that the Court's analysis relied, in part, on the government backed debt exception in question in Barr.) The Circuit Court had previously given a relatively narrow definition of autodialer when it decided in favor of the defendants in King v. Time Warner Cable Inc. In Duran, the Court clarified that its decision in King didn't invalidate the FCC's previous broad definition of autodialer (in the FCC's 2015 Order). The Circuit Court didn't go into detail to distinguish its holding in the King case, but note that the King decision rested mainly on whether the definition of autodialer should be interpreted to only refer to a device’s current functions. In King, the Circuit Court held, in part, "[t]hat definition does not include every smartphone or computer that might be turned into an autodialer if properly reprogrammed, but does include devices whose autodialing features can be activated." With the confusion over what is and what isn't an autodialer continuing, the most prudent approach is to be conservative when determining whether the technology/system used is an autodialer.
TCPA Litigation Still Happening
Even though some courts have granted a stay (pause) in TCPA cases to await the Supreme Court's decision in Barr, COVID-19 hasn't stopped TCPA litigation. For example, the TCPA case against Dish Network is still ongoing. As InfoLawGroup highlighted in a blog post several years ago , the United States District Court for the Central District of Illinois awarded $280 million in civil penalties to be paid by Dish Network. In March, the Seventh Circuit in U.S. v. DISH Network, LLC held that the $280 million in penalties ($4 per violation) did not violate due process, but that the District court erred in basing "the penalty entirely on DISH’s ability to pay, setting it at 20% of a year’s profits." The Circuit Court vacated the judgment and remanded the case for further proceedings.
Class action cases are also not stopping, with the plaintiffs' bar moving full steam ahead. Of note is that the plaintiffs' bar seems to be shifting its focus to the legal cannabis industry. The plaintiffs' bar is known to migrate from targeting one industry after another, hitting numerous companies within an industry in succession. The latest industry that appears to be in favor is cannabis, and lawsuits against these companies are reportedly on the rise.
Other industries are also still fighting TCPA class action lawsuits, Quicken Loans recently had a motion to dismiss denied, Grocery Delivery E-Services USA, Inc. ("HelloFresh") wasn't able to compel arbitration in TCPA cases (see: Engen v. Grocery Delivery E Services USA Inc. and Murray v. Grocery Delivery E Services USA Inc.), Beyond Meat, Inc., and People For The Ethical Treatment Of Animals, Inc. (PETA) are facing a TCPA case in the US District Court for the Southern District of California (Massaro v. Beyond Meat, Inc. et al.), FedEx in Pepicelli v. FedEx Corporate Services recently successfully argued for a motion to dismiss on a TCPA case where the shipper had supplied the wrong mobile number for a package recipient to receive a text about delivery (note that there is a specific FCC TCPA exception for certain shippers who follow certain steps), and the Eleventh Circuit in Medley v. Dish Network, LLC, affirmed the District Court's ruling on a TCPA claim holding that a call recipient can't unilaterally revoke consent to receive calls to collect a debt given in a bargained-for contract.
The FCC Is Still Active
As the courts are hammering out what parts of the TCPA means and its constitutionality, the FCC is moving ahead in full force with implementing the Pallone-Thune Telephone Robocall Abuse Criminal Enforcement and Deterrence Act (TRACED Act). The Act that was passed last year with bipartisan support, gives the FCC more power to go after those who violate the TCPA. The FCC skipped the prior public notice and comment phase and went right to implementation which allows the FCC to go after violators quicker and for a longer period of time.
Most significantly, and in short, the TRACED Act amends section 227(b) of the TCPA to: (i) remove the requirement that the FCC issue a citation, or warning before proposing a monetary forfeiture; (ii) add potential forfeiture penalty of $10,000 for intentional violations (for actions brought by the FCC); (iii) change the statute of limitations for FCC enforcement actions for violations of the TCPA's autodialer/prerecorded voice restrictions (and certain Fax restrictions) from one to four years; and (iv) change the statute of limitations for the FCC to bring an action for spoofing (e.g. transmitting misleading or inaccurate caller identification information) from two to four years.
So, what do these changes mean for TCPA violators? Unlike the plaintiffs' bar that is going after large damages, government regulators/enforcers (like the FCC) typically pursue egregious violators or a few companies to make an example/point. As a result, the risk probably isn't as great as it is from the plaintiffs' bar which seems to cast a wide net to find money wherever it can. Although the risk of FCC enforcement is most likely less than class actions, it is still a real legal risk and these enhanced enforcement capabilities are just one more reason to be careful to comply with the TCPA when calling or texting.
In addition to implementation of the TRACED Act, the FCC recently addressed the COVID-19 crisis as it relates to the TCPA. In a Declaratory Ruling the FCC clarified that COVID-19 fits under the current emergency exception to the TCPA. It stated that "the COVID-19 pandemic constitutes an “emergency” under the Telephone Consumer Protection Act (TCPA) and that consequently hospitals, health care providers, state and local health officials, and other government officials may lawfully communicate information about the novel coronavirus as well as mitigation measures without violating federal law." The FCC went on to explain that their Declaratory Ruling does not create expansive exception and is limited to callers that are from a hospital, a health care provider, state or local health official, or other government official and directly related to the imminent health or safety risk arising out of the COVID-19 outbreak. With such a narrow description, serious consideration should be taken before relying on this Ruling to make a call without the requisite consent.
Still Changes on Calling/Texting Restrictions in the States
Adding to the complexity of complying with calling and texting laws, in addition to the TCPA (and the Federal Telephone Sale Rule (TSR)-which works in tandem with the TCPA), there are state laws that regulate calls/texts (known as mini-TCPA statutes). Even amongst this pandemic, these mini-TCPA laws are changing. In two instances the regulations became more stringent (with one ultimately being nullified by the courts).
In Virginia, amendments to the Virginia Telephone Privacy Protection Act were enacted in March and come into effect July 1, 2020. The amendments significantly strengthen the law, including adding text messaging, and, most importantly, increases penalties to $5,000. In line with its previous language regarding calling mobile phones, the legislature drafted the statute amendment to cover texts sent to "any wireless telephone with a Virginia area code or to a wireless telephone registered to any natural person who is a resident of the Commonwealth" which could conceivably cover people who are no longer a Virginia resident but keep their Virginia telephone number, or even to Virginia residents who decide to get a telephone number with an area code outside of Virginia. This would, essentially, expand the reach of this to nationwide (unless the courts reign Virginia in). Regarding the increase in penalties, the current statute (without the amendment) tracks the TCPA's statutory damages of $500 dollars per violation, and up to $1,500 for a willful violation. Now, the Virginia amendment will far exceed the federal statute's dollar amount, with $500 for a first violation, $1,000 for a second violation, and $5,000 for each subsequent violation; and for willful the first and second violation can go up to $5,000. The amendment increases the damages in the same manner for government actions. This expansive coverage along with the whopping $5,000 damages will surely be attractive to plaintiffs' counsel and it wouldn't be surprising to see more claims under this Virginia mini-TCPA statute.
Virginia wasn't the only state to have changes to its mini-TCPA law. In Massachusetts, attempts by the Attorney General to restrict debt collectors from calling debtors during the COVID-19 emergency was stopped by the U. S. District Court. A few weeks ago, the District Court in ACA International v. Healey entered a temporary restraining order from enforcing the call restrictions (and restrictions on initiating lawsuits) of the emergency regulation stating that " . . . . I do not believe that the Regulation adds anything to their protections that the existing comprehensive scheme of law and regulation already affords to debtors, other than an unconstitutional ban on one form of communication." Although the Regulation in question in ACA is completely separate (and in some ways, opposite) from the 2015 TCPA Amendment, the Supreme Court's analysis in its upcoming Barr decision will probably touch on some of the same themes as in ACA. Both consider how far the government can intrude on the debt collector's right to call the debtors, and ask whether restrictions on these types of calls are content based restrictions on free speech.
What Should Legal Teams Do?
One thing that isn't changing during the pandemic is an increasing desire for businesses to connect with customers through texts and calls. Legal teams should be aware that their business is likely to update methods of communications, and should frequently follow-up with marketing, IT, customer support and other teams that may be reaching out to consumers. Also, be aware of the changing landscape and landmines of calling and texting. Compliance is tricky and guidelines and procedures should be periodically revisited for both the business's shifting needs and the evolving legal requirements.
And stay tuned, the Supreme Court could just rule that the entire TCPA is unconstitutional.