June 11, 2013

TCPA Class Actions Continue to Clog Courts' Inboxes

Consumer Advertising Law Blog

We have previously discussed class action lawsuits raising claims under the federal Telephone ConsumerProtection Act (TCPA), involving allegations of improper use of cell phone numbers to send unsolicited text messages, faxes, or calls to consumers. Last month, Papa John's agreed to pay $16.5 million to resolve a "text spamming" nationwide class action certified in November (and reported on here). The proposed settlement, which must still be approved by the federal judge overseeing the case in the Western District of Washington, provides that each class member who submits a claim will receive a $50 payment from Papa John's, and all class members will automatically receive a voucher for a free Papa John's pizza.

Papa John's is far from the only company dealing with TCPA class action allegations. Last month, a federal judge also approved a $10 million settlement resolving a text spamming class action against shoe retailer Steve Madden. Another federal court recently rejected The Coca-Cola Co.'s attempt at dismissing a TCPA text spamming putative class action, noting that all is required to plead a valid TCPA claim was that a call or text was made to plaintiff's cell phone, and that it was done using an automated dialing system.

These are just a few examples of the surge of class action lawsuits brought under the TCPA in recent years, as plaintiffs and their counsel are drawn to the enticing possibility of statutory damages in the amount of $500 for each violation and up to $1,500 for each willful violation. While some defense attorneys have high hopes that the Supreme Court's recent Comcast decision might make certification of TCPA class actions more difficult, it is unclear what effect the decision might have on courts handling TCPA cases. On one hand, while not citing Comcast, California federal judge just this week denied class certification in a lawsuit alleging that phone sex operator Network Telephone Services violated the TCPA by sending unsolicited text messages, holding that the class was unascertainable and that individual issues, such as whether class members had seen disclosures of text message practices and whether the class member had attempted to opt-out, predominated. On the other hand, a Florida judge last week vehemently rejected a reconsideration request made by a TCPA defendant on the grounds that the Comcast decision justified revisiting the court's prior class certification decision. Judge Scola of the Southern District of Florida held that he did not believe that the Comcast decision "treads any new ground in class action law" and rather the case simply "restates rules from Wal-Mart Stores v. Dukes, 131 S. Ct. 2541 (2011), and other prior decisions."

To throw even more fuel on the TCPA fire, at the end of May the FCC issued a declaratory ruling that sellers who are using third-party telemarketers may still be vicariously liable for the third parties' violations of the TCPA under principles of agency. According to the FCC, companies that hire third party marketers to promote on their behalf can still be liable for unauthorized conduct of that third party, "if the seller knew (or reasonably should have known) that the telemarketer was violating the TCPA on the seller's behalf and the seller failed to take effective steps within its power to force the telemarketer to cease that conduct."

One thing is clear: just as unsolicited phone calls, texts, and faxes continue to pester American consumers, TCPA lawsuits continue to flood into courts around the country and cause substantial annoyances for companies across the country.

© Arnold & Porter Kaye Scholer LLP 2013 All Rights Reserved. This blog post is intended to be a general summary of the law and does not constitute legal advice. You should consult with counsel to determine applicable legal requirements in a specific fact situation.

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