Would-Be Employer Targeted in New TCPA Suit
By Christine M. Reilly, Chair, TCPA Compliance and Class Action Defense | Diana L. Eisner, Associate, Litigation
Could employers be the next target for Telephone Consumer Protection Act class actions?
Hopefully not, after an Illinois federal court judge dismissed a complaint brought by an applicant against a company to which she had applied for employment.
In March 2007, Herminia Dolemba submitted an application to Kelly Services, Inc., a temporary staffing company. She indicated an interest in positions using office skills such as accounts payable and accounts receivable. She also provided her cellphone number on the application form. Signing the application, Dolemba “authorize[d] Kelly to collect, use, store, transfer, and purge the personal information that [she] provided for employment-related purposes.”
Dolemba did not hear back from Kelly until February 2016, when her cellphone allegedly received a call made using an automatic telephone dialing system (ATDS), soliciting individuals for employment as machine operators in certain locations. She responded with a putative TCPA class action, arguing that the call exceeded the scope of her consent and that her consent expired long before she received the call in 2016.
Kelly told the court that Dolemba’s signature on the employment application indicated her consent to receive calls regarding employment opportunities, which encompassed the call at issue. U.S. District Court Judge Sara L. Ellis agreed, and she granted Kelly’s motion to dismiss the suit with prejudice.
A called party may revoke consent at any time and through any reasonable means, the court acknowledged, but “[i]f an individual does not revoke his or her consent, however, it does not expire at some point in time on its own.” Simply because Dolemba did not have further communications with Kelly after she submitted her application was insufficient to revoke her consent, “for silence or inaction cannot be effective,” the court said.
Dolemba also tried to narrow the scope of her consent, arguing that she only indicated interest in employment positions using office skills such as accounts payable and accounts receivable—not as a machine operator.
“But Dolemba’s attempt to recast her consent, which states that she allowed Kelly to use her personal information for ‘employment-related purposes,’ does not defeat Kelly’s motion to dismiss,” the court wrote. “The call Dolemba received clearly related to an employment opportunity. Although not specifically tailored to the exact job interests Dolemba indicated in her application, it still fell within the broad consent she gave to Kelly to use her cellular phone number to contact her generally for employment-related purposes regardless of whether that job matched her job interests.”
Because Dolemba provided her consent to be contacted about employment opportunities by Kelly, Judge Ellis dismissed her complaint.
To read the opinion and order in Dolemba v. Kelly Services, Inc., click here.
Why it matters: The decision is a victory not just for employers concerned about using modern technology to reach out to job applicants, but to TCPA defendants more generally. Judge Ellis confirmed that a consumer’s “silence or inaction” cannot revoke consent and that the plaintiff’s broad consent to be contacted for “employment-related purposes” even encompassed a job opportunity in which she may not have been interested.
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Buccaneers Agree to $19.5M TCPA Settlement
By Christine M. Reilly, Chair, TCPA Compliance and Class Action Defense | Diana L. Eisner, Associate, Litigation
A Florida judge granted preliminary approval to a $19.5 million deal in a TCPA suit brought against the Tampa Bay Buccaneers, alleging that the National Football League team sent unsolicited fax advertisements for tickets to games.
The dispute began in June 2013 when Cin-Q Automobiles initiated an action against the Buccaneers, alleging that the team sent unsolicited fax ads in 2009 and 2010 offering tickets to NFL games that failed to provide the proper opt-out notice required by the TCPA. Over the course of three years, the parties engaged in extensive discovery, motion practice and mediation conferences with no result.
After progress stalled, Technology Training Associates filed its own class action in May 2016 based on the same allegations and covering the same time period. Based in large part on the efforts made in the Cin-Q litigation, TTA and the Buccaneers reached a settlement agreement. Concurrently, the Cin-Q plaintiffs sought to intervene in the later suit, and a third suit was filed between the attorneys involved in the cases.
U.S. District Court Judge Anthony E. Porcelli then considered Cin-Q’s motions to consolidate the cases and intervene in the TTA action, as well as the unopposed motion for class certification and preliminary approval of the settlement deal between TTA and the Buccaneers.
The court first granted the motion to certify the TTA class and preliminarily approved the settlement agreement. The deal provides a settlement fund of up to $19.5 million for the upwards of 343,000 faxes allegedly sent to more than 131,000 unique fax numbers, with payments of up to $350 for the first facsimile and up to $565 total for up to five faxes to class members who submit claims.
Also covered by the fund: incentive awards; notice and administration costs; and fees, costs and attorneys’ fees not to exceed 25% of the total fund. The Buccaneers further agreed not to send any unsolicited fax advertisements in violation of the TCPA going forward.
“Solely for purposes of preliminary approval, such terms appear fair, adequate, and reasonable,” Judge Porcelli wrote. “Namely, though the potential recovery may exceed the agreed-upon amounts recoverable, the Settlement is either on par with or greatly exceeds prior TCPA settlements, both in the total amount in the Settlement Fund and in the amount awarded to each class member.”
The court cited “the lengthy and detailed procedural history” of the Cin-Q action in support of granting approval, noting that the parties “can reasonably anticipate similar procedural hurdles, a lengthy duration, and great expense to both parties if they are forced to litigate the issues present in this action.”
As for the Cin-Q plaintiffs, the court denied the motion to intervene as well as the motion to consolidate the cases. Any concerns presented by the Cin-Q plaintiffs may be addressed through the objection process pursuant to Federal Rule of Civil Procedure 23, the court explained, even with the argument that the settlement agreement was the product of a “reverse auction.”
These rulings did not foreclose the possibility of potential incentive awards to Cin-Q plaintiffs or possible attorneys’ fee awards to their counsel, Judge Porcelli noted. He set a final hearing date on the deal for October 2017.
To read the order in Technology Training Associates v. Buccaneers Limited Partnership, click here.
Why it matters: Although the court granted preliminary approval to the deal, a final stamp of approval will require that the court decide the objections from the Cin-Q plaintiffs, who argued to the court the TTA case was the result of a “reverse auction,” where the Buccaneers “negotiated with ineffectual lawyers and a plaintiff with the weakest claim to obtain a settlement in the hope that the Court will approve a weak settlement that will preclude other claims” against the defendant.
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Serial Plaintiff Files Two TCPA Class Actions Against Prominent Companies
By Christine M. Reilly, Chair, TCPA Compliance and Class Action Defense | Diana L. Eisner, Associate, Litigation
California federal courts saw a pair of new suits filed by the same plaintiff on the same day against Marriott International and Gallup Inc.
Both suits claimed that the hotel chain and the polling company made unsolicited calls to Jason Hartley’s cellphone number despite the fact that it was registered on the National Do Not Call Registry since December 2004.
Marriott repeatedly called the number with marketing for vacations or rewards, in one case with a prerecorded message congratulating Hartley on being drawn as a winner in a contest. The plaintiff also asserted that although he answered one of the calls and selected the option to be placed on an internal do not call list, he received yet another phone call.
As for Gallup, Hartley claimed he was “frustrated and distressed” that the company “harassed” him with a call using an automatic telephone dialing system. Both suits seek to represent a nationwide class of plaintiffs estimated to number “in the several thousands,” requesting statutory damages for negligent as well as knowing and/or willful violations of the TCPA.
To read the complaint in Hartley v. Marriott International, Inc., click here.
To read the complaint in Hartley v. Gallup, Inc., click here.
Why it matters: TCPA class actions continue to be on the rise, underscoring the importance of good compliance to ward off such claims. Moreover, the complaint against Gallup shows that the need for compliance is not limited to companies which make marketing calls, but rather, all companies which utilize telephonic communications as part of their business.
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Application of Robocall Restrictions to Soundboard Technology Upheld
By Christine M. Reilly, Chair, TCPA Compliance and Class Action Defense | Diana L. Eisner, Associate, Litigation
In dismissing a challenge filed by an industry group, the D.C. federal district court has ruled that the Federal Trade Commission’s (FTC) position extending restrictions on robocalls to telemarketing calls making use of soundboard technology is constitutional and complied with applicable procedure.
First promulgated in 1995, the Telemarketing Sales Rule prohibits telemarketing calls at certain times of day, allows consumers to request placement on a “do not call” list, and imposes other requirements on telemarketers.
In 2008, the FTC amended the TSR to include new regulations on robocalls, most notably the requirement that telemarketers obtain written “express agreement” before initiating any outbound telephone call that delivers a prerecorded message. The written consent requirement does contain exceptions, including prerecorded calls made on behalf of charitable organizations to past donors or current members.
Before the amendments took effect, a telemarketing firm sent a letter to the FTC seeking clarification of whether soundboard calls would be subject to the revised TSR. Distinct from traditional robocalls, soundboard technology involves two-way communication between a sales agent and a consumer, where the sales agent plays prerecorded audio clips in response to the consumer’s statements. The technology also allows the sales agent to break into the call and speak directly to the consumer, if needed.
The agency responded with an “informal staff opinion” stating that “the staff of the [FTC] has concluded that the 2008 TSR Amendments … do not prohibit telemarketing calls using this technology.” This letter remained the FTC’s position on soundboard technology until last year.
In November 2016, the agency announced in a new letter that it now considered soundboard calls subject to the TSR’s robocall regulation. Over the intervening seven years, the FTC saw an increased number of consumer complaints about the improper use of soundboard technology, the agency said, such as consumers who were not receiving appropriate responses to their questions and comments as well as live operators not picking up calls when necessary.
To give the industry time to adjust, the agency announced that the revocation of the 2009 letter would take effect in May 2017. Industry group Soundboard Association responded with a federal court complaint challenging the commission’s switch in position. The group asserted that the 2016 letter is a legislative rule that the FTC was required to promulgate through the notice and comment process of the Administrative Procedure Act (APA) and that the new stance runs afoul of the First Amendment because it treats speech tailored for first-time donors differently than speech tailored for previous donors, an unlawful content-based regulation.
U.S. District Court Judge Amit P. Mehta was not convinced by either argument.
While he agreed that the 2016 letter was a final agency action—as a definitive position with an immediate and practical impact on the telemarketing industry to either achieve compliance or risk enforcement action—it was not a “legislative” rule requiring notice and comment.
Instead, the FTC’s letter is an “interpretive” rule, not subject to the demands of the APA, the court said. The letter began with an explanation of the history of the issue, cited to the relevant TSR provision, and announced that in light of newly acquired facts, the FTC would apply “the plain language of the rule” to cover soundboard calls.
“That determination does not supplement or effect a change to the statutory or regulatory scheme applicable to telemarketers,” the court wrote. “Rather, it communicates to the telemarketing industry the agency’s view that an existing regulation now applies to a particular form of telemarketing technology as currently used by the industry. That is a ‘quintessential interpretive rule.’”
Turning to whether the TSR amendment as applied to soundboard calls violates the First Amendment, the court said the FTC had the better argument that the robocall regulation’s distinction between charitable solicitations to existing donors or members and potential new donors is a content-neutral restriction.
“The robocall regulation does not require the FTC to review a call’s content to determine whether the written-consent requirement applies to a pre-recorded charitable call,” Judge Mehta wrote. “It need only determine whether the call’s recipient is either a potential first-time donor or a prior donor or member. If the recipient falls into the first category, then the written-consent requirement applies; if she falls into the second, then it does not. The distinction is plainly relationship-based and does not constitute a content-based restriction on speech.”
As a content-neutral restriction, the regulation “easily” satisfied intermediate scrutiny, the court found, as it was narrowly tailored to serve a significant governmental interest and left open ample alternative channels of communication (such as mailings and in-person solicitations).
To read the opinion in Soundboard Association v. FTC, click here.
Why it matters: The decision is a significant victory for the FTC. Telemarketers should ensure compliance with the agency’s new position on soundboard technology or face potential enforcement action. The decision also underscores the current unpredictability of courts reviewing agency action. While the D.C. Circuit recently invalidated the FCC’s Solicited Fax Rule, that decision does not seem to be an indication that the judiciary will be looking at agency action with a higher level of scrutiny.
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