November 2013

In this issue:

  • The FTC has obtained an injunction stopping several companies and their owners from attempting to collect “debts” that consumers did not owe or did not owe to the defendants. The court order freezes the defendant’s assets and appoints a receiver to distribute those assets.
  • A Florida court has ruled that debt collection calls are not exempt from TCPA restrictions. Ashley v. GE Capital Corp. While there are exemptions from the restrictions on calls to residential telephone lines, the restrictions on calls to cellular telephone lines apply to all calls placed using an automatic telephone dialing device.
  • The Seventh Circuit Court of Appeals has ruled that state law is not preempted by the TCPA.

Federal Communications Commission
A federal appellate court has reclassified a TCPA decision in which it ruled in favor of a company owning a radio station with regard to telephone calls it placed. Leyse v. Clear Channel Communications. In that case, the appellate court upheld the validity of the FCC’s exemption for calls encouraging listeners or viewers of free programing from the TCPA’s ban on prerecorded calls. A plaintiff argued that the FCC was not entitled to deference with regard to this regulation. The court ruled that the FCC was entitled to deference and the Hobbs Act prohibited a trial court level challenge to that exemption.

Comment: It appears that the classification of the ruling as “not recommended for full text publication” has no effect on its validity other than requiring parties who rely on it to follow certain procedural restrictions with regard to its use. Federal Rules specifically state that “a court may not prohibit or restrict the citation of federal judicial opinions… that have been designated as “unpublished … or the like ….” Federal Rule of Appellate Procedure 32.1.

Federal Trade Commission
The FTC has obtained an injunction stopping several companies and their owners from attempting to collect “debts” that consumers did not owe or did not owe to the defendants. The court order freezes the defendant’s assets and appoints a receiver to distribute those assets. FTC v. Pinnacle Payment Services, LLC. The defendants used prerecorded messages threatening legal action and arrest against consumers.

Comment: An injunction and appointing of a receiver amounts to “kicking the door down” of these defendants and is a remedy rarely sought by the commission except in cases of fraud.

The United States Justice Apartment continues to pursue Dish Network with regard to alleged violations of the TSR and TCPA. United States v. Dish Network, LLC. The U.S. government, as well as many state Attorneys General, alleged that Dish contacted individuals who had registered their telephone numbers on the national “do-not-call” list. Dish offered expert testimony that it may not be liable for the actions of subcontractors selling its products through telemarketing.

California
A California court has ruled that an arbitration clause in a debtor’s credit card contract prevented his suit against a bank for violations of the state Debt Collection Practices Act and the TCPA. Krause v. Barclays Bank Delaware. The court determined there was a valid agreement to arbitrate and that whether the plaintiff’s claims against the bank fell within that agreement were to be decided by the arbitrator, not the court.

A California court has denied class action status for a group of plaintiffs who received allegedly illegal text messages. Fields, et al. v. Mobile Messengers America, Inc., et al. The plaintiffs alleged that they were victims of a cramming scheme after they entered contact information on websites subscribing to text message plans. The court ruled that each individual class members’ consent to participate in the plan was not subject to class-wide proof, i.e. the court would have to hold a “mini trial” to determine whether each class member consented to receiving the text messages. Because of this, the Court denied class action status.

Comment: This case is important as many TCPA class actions hinge on consent to receive telephone calls or text messages. If whether each individual consented to receive the communications is not subject to class-wide proof, a TCPA class cannot proceed.

A California court has denied plaintiff’s motion for class certification against a seller of resort property. Connelly v. Hilton Grand Vacations, Co. The court ruled that because class members voluntarily provided their cell numbers to the defendant in a variety of factually different scenarios, consent was an individualized question.

District of Columbia
The District of Columbia requires registration for telephone solicitors and does not provide for many of the restrictions commonly found in other states’ telemarketing registration restrictions. The District of Columbia, however, never promulgated the forms necessary for businesses to register. I confirmed this in writing several years ago and recently was asked to contact the District of Columbia again to ask if these forms were ever published so that business could register in the District. I have not received a response to date.

Florida
A Florida court has ruled that debt collection calls are not exempt from TCPA restrictions. Ashley v. GE Capital Corp. While there are exemptions from the restrictions on calls to residential telephone lines, the restrictions on calls to cellular telephone lines apply to all calls placed using an automatic telephone dialing device.

Comment: The debt collector’s argument had little chance of success.

Georgia
A Georgia court has ruled that a plaintiff need not prove that a defendant had knowledge of the TCPA to establish that it willfully or knowingly violated the statute. American Home Services v. A Fast Sign Co. The case involved allegedly illegal faxes.

Indiana
The Seventh Circuit Court of Appeals has ruled that state law is not preempted by the TCPA. Patriotic Veterans, Inc. v. Indiana. The case involved a challenge to Indiana’s prerecorded call statute which is more restrictive than the TCPA. Although the lower court ruled that the TCPA preempted Indiana statute, the appellate court evaluated the preemption language in the statute and determined that state law, which imposed more restrictive intrastate requirements or which prohibited interstate prerecorded calls, was not preempted. This leads to an odd result that the state could prohibit interstate prerecorded calls but could not restrict them. The appellate court went on, however, to say that the language of the preemption clause aside, its opinion was that the state could restrict interstate calls as well because the statute is silent on that topic. The court went on to discount the language of the sponsor of the TCPA who said that “state regulation of interstate communications … is preempted,” while noting the comments of individual senators do not necessarily reflect Congress’ intent.

Comment: This is a blow to any argument that the TCPA preempts contrary state law with regard to interstate calls. I petitioned the FCC to rule on this issue many years ago and the FCC has not made a ruling probably because of pressure from state regulators. It seems unlikely that the Supreme Court will hear a case on this issue. Thus you should continue to comply with state or federal law, whichever is more restrictive, with regard to interstate telephone calls.

Pennsylvania
A Pennsylvania court has ruled that a company which called the plaintiff’s cell phone was not subject to personal jurisdiction in the state of Pennsylvania. The court ruled that there was no contact with Pennsylvania because the calls were placed to plaintiff’s cellular telephone number while he was temporarily residing in Pennsylvania and the defendants had no other contacts with Pennsylvania which established systemic and continuous contacts with that state.

Washington
A Washington court has ruled that the TCPA does not preempt state law with regard to interstate calls. Southwell v. Mortgage Investors Corp. of Ohio.