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Ninth Circuit Hands Two Losses to TCPA Class Action Defendants

Posted in Class Action Trends, Motions Practice

October has been a good month to be a plaintiff in a class action under the Telephone Consumer Protection Act (“TCPA”) in the Ninth Circuit. Twice this month, that court has issued pro-plaintiff rulings, upholding a preliminary injunction against one defendant and reversing a district court’s grant of summary judgment to another defendant. See Meyer v. Portfolio Recovery Assocs., LLC, No. 11-56600 (9th Cir. Oct. 12, 2012); Chesbro v. Best Buy Stores, LP, No. 11-35784 (9th Cir. Oct. 17, 2012).

The TCPA restricts calls using an “automatic telephone dialing systems” or artificial or prerecorded voice messages. Absent “prior express consent” or an emergency, no one may make such calls to a mobile phone number. The TCPA also restricts prerecorded (or artificial voice) telephone solicitations to a residential number. TCPA class actions are becoming increasingly common, in large part because the statute provides for damages of $500 per violation. In Meyer and Chesbro, the Ninth Circuit offered a survey of many of the recurring issues in TCPA class actions.

Meyer v. Portfolio Recovery Associates, LLC

Jesse Meyer brought suit alleging that a debt collector called his cellular telephone at least three times using an autodialer without his consent. In particular, he alleged that the debt collector had obtained his cell phone number via skip tracing rather than by having been given permission to contact him at that number. The district court provisionally certified the class and granted Meyer’s request for a preliminary injunction against continued use of an autodialer to call mobile numbers obtained through skip-tracing.

Our previous post on Meyer discussed the class-certification aspects of that decision. But it also involves a number of substantive issues common in TCPA cases. For example, the defendant argued that a preliminary injunction was inappropriate because its predictive dialer wasn’t an “automated telephone dialing system” as the term is defined under the TCPA, and because it would be unconstitutional to apply the TCPA in the manner Meyer sought.

The Ninth Circuit affirmed the district court’s entry of the preliminary injunction. In doing so, the Ninth Circuit held that predictive dialers fell within the TCPA’s definition of “automatic telephone dialing system,” relying on the FCC’s 2003 TCPA Order, and continuing a long-running battle on this issue.

The Ninth Circuit also rejected the defendant’s constitutional challenges to the TCPA. The defendant had argued that it would violate due process to apply the TCPA—which was originally enacted to restrict telemarketing—to debt-collection activities, in light of modern mobile phone usage patterns. The Ninth Circuit concluded that Congress intended the TCPA more broadly to prevent invasions of privacy, and that this goal provided a rational basis for the TCPA’s restrictions. The defendant also had argued that the plaintiff was not injured by the calls and thus lacked standing to sue, but the Ninth Circuit concluded that the issue had been waived because it had not been adequately presented in the district court.

Chesbro v. Best Buy Stores, LP

In Chesbro, the plaintiff complained that the defendant—an electronics retailer—had made prerecorded calls to him after he had purchased a computer. The retailer explained that these calls were informational calls about the company’s rewards program, in which the plaintiff had enrolled when making his purchase. The plaintiff denied enrolling in the program, stated that he had tried to opt out of marketing calls, but was again called, thanked for shopping at the store, and told that his reward “certificates” were about to expire and how to obtain new ones.

Because the call was placed to the plaintiff’s home phone number, the key issue was whether it fell within an FCC exemption for calls that “do[] not include or introduce an unsolicited advertisement or constitute a telephone solicitation.” 47 C.F.R. § 64.1200(a)(2)(iii). In contrast, the FCC restricts “dual purpose” calls—i.e., ones that contain both informational and solicitation components. The district court concluded that these calls were informational and granted summary judgment to the defendant.
The Ninth Circuit reversed, holding that, even though the call did not mention any goods or services for sale, its underlying purpose was to “encourage[] the listener to make future purchases.” The Ninth Circuit reasoned that future purchases were the only way to redeem the certificates, and thought it significant that the retailer had thanked the plaintiff for his business during the call.

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Together, these cases highlight many of the common issues in TCPA cases—a major growth area for plaintiffs in class action litigation. Most significantly, questions of whether the called party has granted consent and disputes about whether the type of equipment used qualifies as an “automatic telephone dialing system” arise in nearly every such case involving calls to mobile phone numbers. Constitutional challenges also frequently show up. And, as in Chesbro, liability can hinge on the precise nature of the call placed. As a result, any business using automated dialing equipment or prerecorded messages should pay careful attention to these and other TCPA decisions.