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Legal Focus
JULY 2013
an ATDS as “equipment which has the capacity: (A) to store or produce telephone numbers to be called, using a random or sequential number generator; and (B) to dial such numbers.” A system need not actually store, produce, or dial numbers; it need only have the capacity to do it. As recently as November 2012, the FCC has stated that an ATDS “covers any equipment that has the specified capacity to generate numbers and dial them without human intervention regardless of whether the numbers called are randomly or sequentially generated or come from calling lists.” The latter part of this definition is very broad. Several petitions are pending before the FCC to gain further clarity on the meaning of an ATDS and the term “capacity,” including whether Internet-to-phone messaging technology qualifies as an ATDS.
Since consent and ATDS are typically issues that survive the pleading stage and may not be suitable for resolution on summary judgment, class certification is also an important issue in TCPA cases. There is a strong argument to be made that consent is an individual issue that renders TCPA claims unfit for class-wide certification. Many courts have denied class certification of TCPA claims on this basis, particularly in the fax context. However, courts are starting to become more receptive to class certification of TCPA claims.
In November 2012,
the Georgia Supreme Court certified a TCPA action against FASTSIGNS and awarded $459 million in damages. That same month, the Western District of Washington certified a nationwide class against Papa John’s in an action alleging $250 million in damages. Papa John’s has agreed to settle the lawsuit for $16.5 million.
How complex are the statutory and regulatory frameworks of the tCPA and what are the major challenges?
While the statutory and regulatory provisions are not necessarily complex, what is challenging in these cases is the application of the statute to new and evolving technology coupled with a very aggressive plaintiffs’ bar that continually tests (and attempts to expand) the TCPA’s reach. For example, several TCPA cases were
filed on group text messaging applications, which motivated a number of companies to file petitions with the FCC seeking guidance on whether the technology at issue falls within the TCPA’s provisions. Similarly, a slew of cases were filed alleging that confirmatory text messages from companies in response to consumer requests to opt-out of text messaging violated the TCPA, even if the consumer had initially agreed to receive text messages. The FCC ruled that such one-time confirmatory text messages were not violations of the statute; however, this ruling came after several companies expended substantial legal fees litigating these cases and/or settling them.
The FCC has been slow to respond to these novel issues, which has only worked to the benefit of plaintiffs and their counsel. In May 2013, the FCC ruled that sellers may be held vicariously liable for TCPA violations committed by third-party telemarketers. The issue had been pending before the FCC since 2010, though courts have consistently recognized vicarious liability in TCPA cases for years. Though courts have been quicker to respond than regulators, decisions often vary widely (some of them entirely contradictory), making informed decision-making on policies and procedures and litigation strategy difficult. For example, while manually dialed calls have been thought to be outside the reach of the TCPA, a recent decision calls this into question. Suffice it to say, results are not always predictable when it comes to the TCPA.
How can your firm assist companies in light of these challenges?
We take a two-pronged approach to TCPA matters. First, we advise our clients on litigation readiness strategies and compliance protocols before they are sued. We prepare a compliance program for our clients uniquely tailored to their business, outlining recommended policies and procedures, employee training, document retention and collection, complaint protocols, and testing. For most companies, it is not a matter of if they will be sued in a TCPA class action, but when they will be sued. Our goal is to position our clients to be in the strongest, most defensible