Class Actions and Robocalls: Pizza Anyone?Class Actions and Robocalls: Pizza Anyone?

When does the recipe for free pizza include spam? When outbound texting runs afoul of class action suits.

Anyone who has clients or customers that might even consider making any form of robocalls or texts--even to important customers for "all the right reasons," is well-advised to pay careful attention to not only the FCC's and FTC's enforcement of the TCPA (Telecommunications Consumer Protection Act), but also to the recent successes of the class action bar in securing mighty settlements from, among others, Steve Madden [Shoes], Coca Cola and Papa John's. Anyone who thinks the class action bar isn't hungry for this (more on that in a minute), hasn't been paying attention. And entities that send blanket texts from automated systems, as well as those who support and advise these senders, need to know what's going on.

The revised TCPA Enhanced Rules will take effect on October 16 of this year, and apply to both unwanted and unsolicited calls and texts. There have been some important changes, in terms of both practical applications and potential pitfalls. Among other things, the newly revised rules provide both plaintiffs and class action attorneys with the incentive of securing damages of $500 for each TCPA violation and $1,500 for each willful violation.

However, while the opportunity is there for recovery from violators, another recent decision may serve to make willing plaintiffs and their attorneys a bit more circumspect before beginning the process of creating classes and trying to get them certified for subsequent litigation. More on this in a moment as well.

Also of note is the FCC's recent determination that sellers who use third-party telemarketers may still be vicariously liable for the third parties' violations of the TCPA. In English, this means 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."

Content of such communications is also considered by the new rules. The revised rule does not apply to debt collection calls or texts, unless such calls or texts include or introduce any type of advertisement or marketing materials.

Here is a quick cheat sheet on the new rules, courtesy of http://www.kleinmoynihan.com/publication/new-tcpa-rules-effective-october-16-2013/

How courts will enforce the FCC's new interpretation remains to be seen. While courts are required to give deference to an agency's interpretation of a statute, such deference applies only if the statute is unclear.

The Pizza Decisions
Recently, as was mentioned at the outset, there have been some costly decisions against entities that have chosen to either ignore the rules or remain ignorant of them. Costly mistake.

Most notably, Papa John's is waiting for court approval of its offer to pay $16.5 million to resolve a "text spamming" nationwide class action suit that was certified in November. The proposed settlement, which has yet to be approved by the federal judge overseeing the case, provides that each class member who submits a claim will receive not only a $50 payment from Papa John's, but a voucher for a free Papa John's pizza as well.

While Papa John's waits, U.S. Magistrate Judge Stephen Riedlinger has granted preliminary approval to another popular pepperoni pizza purveyor, Domino's, over similar violations of the TCPA that occurred in Alabama, Louisiana and Mississippi. In this case, members of the class received prerecorded robocalls advertising...you guessed it...pizza. As a result of the settlement, members of the class will receive either $15 in cash or a voucher for...you guessed it again...a free pizza.

However, as mentioned above, the news is not all good for would-be suers, and seekers of free pizza. The Supreme Court's recent decision in Comcast Corp. v. Behrend may dampen the enthusiasm for plaintiffs and counsel in going after alleged TCPA violators.

This case involves the eligibility of plaintiffs, and the ability and/or inability to certify a class (and has nothing to do with the telecom portion of Comcast's business). However, while the Comcast decision is likely to have a significant impact on TCPA cases going forward, this recent decision does not affect those that are already in the pipeline.

Class action litigation is always tricky business. Recently, a California federal judge denied class certification in a lawsuit in which plaintiffs alleged that Network Telephone Services violated the TCPA by sending unsolicited text messages. According to a document published by well-respected law firm Arnold & Porter, the court held 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 recently strongly rejected a reconsideration request made by a TCPA defendant; that defendant had argued that the Comcast decision justified revisiting the court's prior decision in favor of certifying a class.

The bottom line is that court is the last place you or your clients want to go. By being familiar with these rules and the changes, telecom consultants and professionals can provide invaluable advice and guidance to their clients or employers.