Companies nationwide are facing litigation over the use of text messages as part of their advertising campaigns. Recent months have seen a long series of class action lawsuits being filed against an array of companies by consumers who allege that they were sent text advertisements without their permission.
As text messaging spreads, it is useful for businesses to understand the statutory framework that governs advertising through text messages as well as key legal terms and the way these terms have been interpreted by the FCC and the courts.
In addition, a look at rulings in several significant cases reveals certain obstacles to class certification in such cases.
The Telephone Consumer Protection Act governs telemarketing
The Telephone Consumer Protection Act of 1991 (the TCPA) is the primary law in the United States governing the conduct of telephone solicitations, i.e., telemarketing. The TCPA restricts the use of automatic dialing systems, artificial or prerecorded voice messages, SMS text messages received by cell phones and the use of fax machines to send unsolicited advertisements. It also specifies several technical requirements for fax machines, auto-dialers and voice messaging systems concerning the required identification and contact information that the entity using the device must include in any such telephone message.
Under the TCPA, a consumer can seek $500.00 for each violation. Although no statute or regulation defines violation, it can be argued that every call is a violation. In addition, the TCPA also states that if a business "willfully or knowingly violated" the law, the court can increase damages to $1,500 a violation. Accordingly, a business making a large number of calls can face a significant damages allegation.
Regarding cell phone use, the TCPA provides that it is unlawful to make "any call" for which a party will be charged to a telephone number assigned to a cellular telephone service using "any automatic telephone dialing system" (ATDS) unless the call is for emergency purposes or is "made with the prior express consent of the called party." The key terms here are "call," "automatic telephone dialing system" and "prior express consent."
How have these terms been interpreted and defined?
The TCPA makes it unlawful “to make any call” using an ATDS. While the TCPA does not define “call,” the Federal Communications Commission, which is authorized to issue implementing regulations, has explicitly stated that the TCPA’s prohibition on ATDSs “encompasses both voice calls and text calls to wireless numbers including, for example, short message service (SMS) calls …” The FCC subsequently confirmed that the “prohibition on using automatic telephone dialing systems to make calls to wireless phone numbers applies to text messages (e.g., phone-to-phone SMS), as well as voice calls.” Therefore, the FCC has determined that a text message falls within the meaning of “to make any call.” Since 2004, a growing number of courts are agreeing with the position of the FCC that text messages are “calls” subject to the restrictions of the TCPA.
“Automatic telephone dialing system”
The TCPA prohibits a call to a cell phone using an "automatic telephone dialing system" or an artificial or pre-recorded voice "absent an emergency" or "prior express consent" from the called party. An artificial or pre-recorded voice is self-explanatory. However, an "automatic telephone dialing system" is a legal term, defined by the statute as "equipment which has the capacity ... to store or produce telephone numbers to be called, using a random or sequential number generator; and to dial such numbers." This definition is not entirely clear and has yet to be interpreted by the courts. The words "equipment" and "capacity," for example, are used broadly and, because they are not defined by the TCPA, remain open to interpretation, or even misinterpretation.
The FCC has, however, interpreted "automatic telephone dialing system" broadly, stating that a predictive dialer – which, in relevant part, stores pre-programmed numbers or receives them from a database – is an automatic telephone dialing system. Following the FCC's expansive definition on the predictive dialer front, courts have held that text messages can fall within the TCPA if they are sent "using equipment with some automated capacity."
“Prior express consent”
The TCPA does not specifically define “prior express consent.” Here, again, it is necessary to look to FCC regulations for guidance. In January 2008, the FCC released a statement which provided in part that “autodialed and prerecorded message calls to wireless numbers provided by the called party in connection with an existing debt are made with the ‘prior express consent’ of the called party … are permissible.” The FCC indicated that the caller bears the burden to maintain evidence showing that “prior express consent” was given. Neither the TCPA nor the FCC, however, requires consent to be in writing. Accordingly, a verbal consent is valid.
There are a number of obstacles to class certification. Of the above three key terms, the term that arguably has generated greater judicial interpretation and comment in connection with class certification is “prior express consent.”
“Inherently individualized”: Forman v. Data Transfer, 164 F.R.D. 400 (E.D. Pa. 1995). In Forman, the court denied class certification on the commonality and typicality prongs of Federal Rule 23(a). The court stated “[d]etermining membership in the class would essentially require a mini-hearing on the merits of each case … The essential question of fact that each potential plaintiff must prove is whether a specific transmission to its machine was without express invitation or permission on its part.” Assessing whether each call or text was without prior express consent is “inherently individualized” and for this reason the Forman court denied class certification.
Except when all called numbers are from a third-party database: Kavu v. Omnipak Corp., 246 F.R.D. 642 (W.D. Wash. 2007). In Kavu, the court certified a class action because the defendant, unlike the defendant in Forman, obtained all called numbers from a third party’s database. “[W]hether the recipients’ inclusion in the [third party’s] database constitutes express permission to receive advertisements … is a common issue.” In Kavu, therefore, there was a verifiable single source of telephone numbers, which eliminated the individualized analysis.
Plaintiff bears burden of proof: In Gene and Gene, LLC v. Biopay LLC, 541 F.3d 318 (5th Cir. 2008), the court reconciled Forman and Kavu and held that “plaintiffs must advance a viable theory employing generalized proof to establish liability with respect to the class involved, and it means too that district courts must only certify class actions filed under the TCPA when such a theory has been advanced.” A proposed class lacks the required cohesiveness for certification without such generalized proof, and the plaintiff can not satisfy the predominance requirement. While the burden of proof is not per se irrelevant to class certification, the plaintiff does have the burden of proof to prevail on a motion to certify a class.
What do these cases tell us?
While there are other obstacles to class certification, the conclusion gleaned from these three particular cases is that “prior express consent” is generally an individualized factor which will defeat class certification. As counsel to businesses that engage in telemarketing activities, we would urge businesses that use telemarketing for text messaging as part of their marketing to check their compliance procedures, and also ensure that any relevant vendors or service providers have adequate compliance procedures.
If you have any questions concerning either what a business needs to do to become compliant or what exposures your business may face if it is currently non-compliant, please contact: