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Dialing For Dollars: The Plaintiffs’ Bar Focuses on the TCPA

Bradley J. Andreozzi and Justin O. Kay, Drinker Biddle & Reath LLP

If you communicate with consumers but have yet to come across the Telephone Consumer Protection Act of 1991 (“TCPA”), an enterprising plaintiffs’ lawyer somewhere has substantial incentives to see that you do.

Almost a year has passed since the Federal Communications Commission updated its rules implementing the TCPA to (among other things) require prior written consent from the consumer for many types of telemarketing calls, and no one is happier with the changes than the plaintiffs’ bar. Originally passed in 1991 to address telemarketing practices deemed to be an invasion of consumer privacy, the TCPA restricts certain types of calls, texts, and faxes. Unlike the FTC’s Telemarketing Sales Rule (“TSR”) (which also regulates communications with consumers), the TCPA includes a robust private right of action accompanied by draconian statutory penalties for non-compliance—statutory damages of at least $500 and up to $1,500 per violation. The most frustrating aspect of the TCPA statute? A consumer need not have suffered any actual harm to seek these damages for even an inadvertent violation of the statute.

These suits typically arise in the context of broad-based customer outreach or marketing programs, meaning that when those statutory damages are aggregated as part of a purported class action, defendants can find themselves facing tens of millions to potentially billions of dollars in exposure. The pressure to settle is therefore enormous, and plaintiffs’ counsel knows it, making the settlements enormous, too: Bank of America and Capital One recently agreed to pay roughly $32 million and $75 million, respectively, to settle TCPA suits.

So Be Prepared If Your Next Encounter With The TCPA Is As “Count I”…

While the TCPA does include some general regulations governing calls made by live operators, it principally restricts the use of automatic telephone dialing systems (“ATDS”) and artificial or prerecorded messages (including text messages). The scope of those restrictions varies primarily based on the type of device or entity receiving the communication, but some of the restrictions also depend on the form, purpose, and content of the communication; the identity of the caller; and whether the caller has obtained consent to contact the called party.

The most protected devices are “wireless” devices (such as cellular telephones, pagers, and other categories of mobile or radio devices). Except in limited circumstances, the TCPA prohibits the use of an ATDS or an artificial or prerecorded voice (often referred to as “Robocalls”) to initiate any phone call to these devices.1 Residential land lines are also protected, but to a lesser extent; informational rather than telemarketing calls to land lines are generally allowed. Thus, whether an exception applies depends on (i) whether the call or text was made to a wireless device or to a residential land line and (ii) a host of secondary factors, such as whether the call was “informational,” “telemarketing,” “debt collection,” or for an “emergency purpose”; and (iii) whether consent was obtained and in what form.

Fax machines are also protected: In general, unsolicited advertisements are prohibited, and even solicited advertisements are prohibited under certain circumstances (if the fax itself fails to comply with several paragraphs of regulations regarding notices that must appear on the fax, for example).

Compliance: Two Questions To Ask

The TCPA is structured as a blanket ban on conduct, but with exceptions. The threshold issue therefore is whether certain conduct falls within TCPA’s ambit at all. For example, defendants have argued (with some success) that certain automated calls were not covered by the statute because they were not made using an “ATDS” as defined by the FCC, and have also argued (with less success) that certain calls to cell phones were not covered by the statute because they were not ones “for which the called party is charged for the call.”

So, while it is possible that the TCPA does not apply to the calls, the safer approach for compliance purposes is to assume that it does. And assuming it does apply, the important issue then becomes whether any of the exceptions apply. The starting point for making that determination is asking two questions in the following order: what device is being called, and why?

As noted above, cell phones, residential land lines, and fax machines are all treated differently. As for the distinction between cell phones and residential land lines, that dichotomy is a vestige of the environment when the TCPA was passed over twenty years ago: cellular phones were relatively rare and cellular calling plans were prohibitively expensive for most individuals. Congress therefore implemented a scheme providing special protections for cell phones. While the national telecommunications environment has changed radically (at least 40% of all Americans now have only a cell phone and calling plans are cheap) the regulatory dichotomy persists despite the fact that it may no longer make much sense.

The next issue to address is the purpose of the call, and specifically, whether the purpose can be fairly characterized as “telemarketing.”2 The FCC is particularly interested in restricting telemarketing (that was, after all, the type of call that Congress wanted to restrict by enacting the TCPA), and, as of October 16, 2013, requires “prior express written consent” for telemarketing calls to both cellular phones and residential land lines (with certain exceptions). If such consent is required, it is critical to obtain it, to obtain it properly (it cannot be, for example, “a condition of purchasing any property, goods, or services”)3 and to be aware that the circumstances under which such consent can be revoked vary by jurisdiction based on different courts’ interpretations of the TCPA.

But not every automated or prerecorded call from a business to a consumer requires consent. With respect to residential land lines, for example, prior express consent is not required for a call that is “not made for a commercial purpose,” or is “made for a commercial purpose but does not include or introduce an advertisement or constitute telemarketing.”4

Litigation: Liability Is Not The Only Issue

As with compliance, the key in defending a TCPA suit is likely to be not whether the calls are governed by the TCPA, but whether the TCPA’s exceptions apply to the calls. But because exceptions such as consent have been treated by courts as affirmative defenses, whether an exception applies often may not be resolved until summary judgment at the earliest (unless the complaint on its face concedes the elements of the defense). Given the massive exposure at stake, defendants may be reluctant to roll the dice on such a determination. The good news is that there is an important interim step—class certification.

The real hammer in the TCPA is the threat of a class being certified; without the threat of $500 to $1500 in damages being multiplied over and over, an individual TCPA suit is reduced to the equivalent of a small claims matter. Defeating class certification is thus equivalent to a win on the merits, and some courts have accepted arguments that TCPA cases should not proceed as class actions.

TCPA class actions are filed in federal court as “(b)(3)” class actions under Rule 23 of the Federal Rules of Civil Procedure, meaning that to certify a class, the court must find (among other things) that “questions of law or fact common to class members predominate over any questions affecting only individual members, and that a class action is superior to other available methods for fairly and efficiently adjudicating the controversy.” Whether a TCPA class action turns on individual rather than common issues is of course a highly case-specific inquiry. But some defendants have succeeded in arguing that where “consent” may have been provided by at least some consumers in their specific dealings with the company, a class cannot be certified because whether there was consent will depend on individualized interactions between the defendant and each consumer.5

The Upshot

Before embarking on a call, text, or fax-based outreach program, it is best to consult with counsel well-versed in the TCPA to help minimize the likelihood of suit being filed. But there is no guarantee that suit will not be filed—indeed, defendants are increasingly facing so-called “recycled number” suits. In these cases, the defendant properly obtained consent from the holder of the phone number but that number was later reassigned to a new party who receives the call and files suit alleging that he/she never consented. Courts have split on whether the caller can be liable under the TCPA where the caller was never notified that the number had been reassigned.6 In some jurisdictions, a caller who did everything right – properly obtained prior consent to call the phone number – may still face liability for a call that the caller could not have known was unauthorized.

If suit is filed, it is sometimes best to retain counsel with experience not only litigating TCPA cases in court, but also practicing before and working with the FCC. Such counsel can advise whether the best defense may be a good offense, such as seeking a declaratory ruling from the FCC where the scope of the TCPA is ambiguous or a proposed interpretation implicates broad policy questions. Under the Administrative Procedures Act (also known as the Hobbs Act), a declaratory ruling or order from the FCC may be binding on the district court, in which case a favorable decision from the FCC can end the district court case.


* Find out more about Bradley J. Andreozzi and Justin O. Kay *

1 Although of less importance in class action litigation, the TCPA also prohibits automated or prerecorded calls to public service entities, such as 911 call centers, hospitals, police stations, etc.

2 Telemarketing is defined under the TCPA as “the initiation of a telephone call or message for the purpose of encouraging the purchase or rental of, or investment in, property, goods, or services, which is transmitted to any person”. 47 C.F.R. § 64.1200(f)(12).

3 47 C.F.R. § 64.1200(f)(8).

4 Additional exemptions based on the purpose of the call include “emergency purpose,” certain types of tax-exempt fundraising, and certain health-related communications. See 47 C.F.R. § 64.1200(a).

5 See, e.g., Jamison v. First Credit Svcs., Inc., 290 F.R.D. 92, 107 (N.D. Ill. 2013) (denying class certification because, inter alia, “there [was] no way to employ generalized proof to prove consent”—individual issues predominated), recon. denied 2013 U.S. Dist. LEXIS 105352 (N.D. Ill. July 29, 2013).

6 Compare e.g., Leyse v. Bank of Am., Nat’l Ass’n, No. 11cv7128, 2014 U.S. Dist. LEXIS 125527 (D.N.J. Sept. 8, 2014) (discussing split in authority and holding that an unintended recipient is not a “called party” under the TCPA) with Breslow v. Wells Fargo Bank, Nat’l Ass’n, 755 F.3d 1265, 1267 (11th Cir. 2014) (“called party” whose consent is required under the TCPA is the current user of the cell phone number at the time the call is placed) and Soppet v. Enhanced Recovery Co., 679 F.3d 637 (7th Cir. 2012) (same).

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