September 2013

Read Purchasing the Federal “Do-Not-Call” List During the Government Shutdown

In this issue:

  • The FCC has sought comment from the public regarding a petition for a Declaratory Ruling from Youmail, Inc. that its text message application was not an automatic telephone dialing system as that term is defined in the TCPA. Youmail is the subject of a class action alleging its application sent text messages without the express consent of the recipients in violation of the TCPA.
  • In California, the Ninth Circuit Court of Appeals has agreed to hear a case involving whether a defendant can settle with an individual class member and thus prevent the class from being certified. Pacleb v. Allstate.
  • A Texas court has held that a caller could compel arbitration with regard to an alleged TCPA class action brought by one of its customers. Masters v. Time Warner Cable, Inc.

Federal Communications Commission
The FCC has sought comment from the public regarding a petition for a Declaratory Ruling from Youmail, Inc. that its text message application was not an automatic telephone dialing system as that term is defined in the TCPA. Youmail is the subject of a class action alleging its application sent text messages without the express consent of the recipients in violation of the TCPA.

Federal Trade Commission
The FTC has reached a settlement involving a $3.2 million payment by a debt collector. FTC v. Expert Global Solution. In the complaint, the FTC alleged that the company called consumers several times a day even after being requested to stop.

The FTC has updated five actions first announced in November 2012 against companies alleging illegal prerecorded telephone calls. All of the suits have settled with injunctions and penalties.

The FTC has settled a lawsuit alleging millions of illegal prerecorded calls from “Rachael” and “Cardholder Services”, which illegally offered credit card interest rate reduction services. FTC v. A+ Financial Center, LLC, et al. Defendants are banned from making prerecorded calls and are required to comply with the Telemarketing Sales Rule in their future business activities. Defendants are required to transfer all of their assets to the FTC with the exception of $25,000.

The FTC testified before a U.S. Senate Commerce Subcommittee regarding prerecorded telephone calls. The agency took the opportunity to celebrate the 10-year anniversary of the national “do-not-call” list.

California
The Ninth Circuit Court of Appeals has agreed to hear a case involving whether a defendant can settle with an individual class member and thus prevent the class from being certified. Pacleb v. Allstate.

Comment: The class action environment in California is extremely abusive and active at this time with regard to TCPA violations and California call monitoring law. You should review compliance with these issues at your earliest opportunity.

A court has certified a class alleging illegal prerecorded calls advertising home delivery of frozen food. Knutson v. Schwan’s Home Service. The messages announced the date and time that a Schwan’s representative would be in the recipient’s neighborhood and were placed to plaintiff’s cell phone numbers. The plaintiff alleged that he did not expressly consent to receive such calls on his cell phone. Schwan’s had contracted with Nutrisystem to deliver weight loss food to Nutrisystem customers on Schwan’s routes and the plaintiff had been a customer of Nutrisystem, but not Schwan’s.

Comment: This case shows that express consent given to one entity does not extend to a third party even if those two businesses have a contract between each other. Express consent is given to a specific caller, not anyone who buys the number from that original company.

A court has ruled in favor of a plaintiff who alleged that she received illegal calls on her cell phone on behalf of Dish Network by a third party debt collector. Inigues v. CBE Group. The court ruled that cell phone restrictions to the TCPA apply to debt collectors and allow the suit to continue.

Connecticut
A trial court has denied certification of a TCPA class action after the plaintiff filed motion for class certification prior to discovery. Physicians Healthsource, Inc. v. Pure Pharma LP. The trial court, which is in the Second Circuit, held that another case in the Second Circuit which allowed a defendant to settle with a named plaintiff prior to a class certification motion and thus defeat the class is not controlling.

Comment: As set forth in the California case Pacleb v. Allstate above, this will be a very important TCPA issue in the coming months.

Florida
The state of Florida has revised its exemption to commercial telephone seller affidavit. Inexplicably, the old form omitted several of the statutory exemptions. The new form includes many more of the state exemptions in the boxes to be checked by the signer of the affidavit.

Comment: If you have filed a commercial telephone seller affidavit of exemption in the past, you may want to re-file based on the new form.

In August, the Department of Agriculture and Consumer Services raided telemarketing sales rooms based on suspicion of calling without being registered under the Florida Telemarketing Act. The Act contains many exemptions, however, and if your room or business falls within those exemptions, you should maintain proof in the form of an attorney letter or affidavit of exemption on site, if needed.

Illinois
A court has dismissed a suit against Yellowbook Yellow Pages after the plaintiff, allegedly a member of the class, claimed the prerecorded phone message verifying receipt of a Yellowbook phone directory violated the TCPA. Alleman v. Yellowbook. The court ruled that the call did have a commercial purpose but it did not contain an unsolicited advertisement. As the verification message did not contain an offer of sale of goods or services, the court ruled that it was not a telephone solicitation.

Maryland
An appellate court in Maryland has reviewed the TCPA and found it to be a constitutional content neutral restriction on speech. State of Maryland v. Universal Elections, Inc. The case involved prerecorded calls on Election Day, November 2, 2010, sent by a Republican candidate for governor of Maryland which stated “Hello, I am calling to let you know that Governor O’Malley and President Obama have been successful. Our goals have been met. The polls were correct, and we took it back. We’re okay. Relax. Everything is fine. The only thing left is to watch it on TV tonight. Congratulations and thank you.” The state of Maryland sued the caller alleging that these calls violated the TCPA and Universal Elections argued that the statute was unconstitutional.

Texas
A Texas court has held that a caller could compel arbitration with regard to an alleged TCPA class action brought by one of its customers. Masters v. Time Warner Cable, Inc. Masters alleged that he received a call on his cell phone to an unknown consumer seeking to collect a delinquent account. Despite asking Time Warner to cease calls, he was allegedly called 21 more times and he, therefore, sued alleging violation of the express consent calls to cell phones standard in the TCPA. Because he was a customer with an arbitration agreement, however, the court held that his suit could not continue and was, therefore, dismissed.

Vermont
Vermont has begun to charge a $125 fee for its telemarketing registration, which still is a one-time/one-page form.

Comment: A statute raised many license fees charged by the state.