In many Telephone Consumer Protection Act (TCPA) cases, the sufficiency of a plaintiff’s allegations, particularly those concerning the defendant’s alleged use of an automatic telephone dialing system (“ATDS”), are tested at the pleadings stage through a motion to dismiss. No matter which side prevails, a trial court’s ruling at that procedural moment is limited to whether ATDS allegations are plausible—not whether any evidence actually proves that an ATDS was, in fact, used. And because so many lawsuits are resolved through an early settlement, a defendant often does not have a day in court on the question of whether its dialing equipment as configured and used constitutes an ATDS.

In the (relatively) rare circumstance where a TCPA case moves beyond the pleadings, proceeds through the close of discovery, does not settle, and is decided on the merits through a motion for summary judgment (or, perhaps, a trial), the court can make an evidence-based determination as to the defendant’s equipment and decide, with some measure of finality, whether it is an ATDS. Fortunately for the defendant in Brown v. Ocwen Loan Servicing LLC, No. 8:18-136-T-60, 2019 WL 4221718 (M.D. Fla. Sept. 5, 2019) (available here), the U.S. District Court for the Middle District of Florida has done just that.

In Brown, husband-and-wife plaintiffs claimed that mortgage servicer Ocwen Loan Servicing LLC had violated the TCPA by calling them using (1) an ATDS and (2) an artificial or prerecorded voice. Both sides filed cross-motions for summary judgment. Ocwen, for its part, argued it had not used an ATDS. It also claimed it had not used an artificial or prerecorded voice (with the exception of four calls), and otherwise asserted that it nevertheless had consent (and that any alleged revocation of consent by plaintiffs was insufficient).

Although the district court largely denied the cross-motions—there were genuine issues of fact as to the number of prerecorded or artificial voice calls, and whether and to what extent plaintiffs’ gave consent (or revoked it)—the Brown decision is notable because the court granted summary judgment on the ATDS issue, finding that Ocwen’s dialing equipment did not satisfy the statutory definition as interpreted by the D.C. Circuit in ACA International v. FCC, 885 F.3d 687 (D.C. Cir. 2018).

Initially, the court summarized the undisputed evidence regarding Ocwen’s dialing equipment and calling practices:

Ocwen stores its borrowers’ data in a program called “RealServicing Loan Platform.” Within this program, Ocwen identifies certain borrowers – for example, those who are in default or eligible for loan modifications – and creates a call list. This call list is transferred from RealServicing to a software called “Advanced List Management” (ALM), which is created by Aspect Software, Inc. Using ALM, Ocwen representatives configure how calls are to be placed to the numbers on the call list. Next, Ocwen transfers that call list with its dialing rules from ALM to another software created by Aspect, “Unified IP” (UIP). Then, UIP begins dialing Ocwen’s borrowers using the call list. . . . Although ALM and UIP are separate software, together they are referred to as the “Aspect dialer.”

Brown, 2019 WL 4221718, at *1 (citations omitted). Then, reviewing this evidence, the court reasoned as follows:

According to Ocwen, following the D.C. Circuit’s decision in [ACA International], a dialing system must have the present ability to generate random or sequential numbers to meet the definition of an ATDS. . . .

In support, Ocwen relies on Gonzalez v. Ocwen Loan Servicing, LLC, which held “the definition of an ATDS would not include a predictive dialer that lacks the capacity to generate random or sequential telephone numbers and dial them; but it would include a predictive dialer that has that capacity.” No. 5:18-cv-340-Oc-30PRL, 2018 WL 4217065, at *6 (M.D. Fla. Sept. 5, 2018). The court in Gonzalez also explained that “a device [has] the capacity to generate random or sequential telephone numbers only if the device has the ‘present ability’ to do so.” Id. (citing ACA Int’l, 885 F.3d at 695-97). Ocwen explains its Aspect dialer is not capable of generating and dialing random or sequential numbers. . . . Having independently considered the issue, the Court agrees with Gonzalez and concludes Ocwen’s Aspect dialer is not an ATDS under the TCPA.

Brown, 2019 WL 4221718, at *4.

While the Brown court’s decision and reasoning are fact-specific and tethered to both the functionalities of the Aspect dialer as well as Ocwen’s specific calling practices, the opinion is still helpful, at least within the Eleventh Circuit, for its description of the ATDS definition post-ACA International and for its confirmation that a defendant’s dialing equipment must have the requisite present capacity to constitute an ATDS. At least until the FCC issues its long-anticipated ruling on this subject, litigants can look to Brown for guidance.

In TCPAWorld, as elsewhere, courts are reluctant to second guess and discard arbitrator decisions, particularly where the parties stipulate to using the arbitral forum. That is unless the resulting arbitrated decision may be “in manifest disregard of the law.” Late last week, the United States Court of Appeals for the Second Circuit, in Robin Weiss v Sallie Mae, Incorporated, 2019 U.S. App. LEXIS 27476, Docket No. 18-2362, September 12, 2019, assessed a Telephone Consumer Protection Act (TCPA) arbitration award in light of that standard.

The plaintiff had taken out a student loan in 2008 but thereafter defaulted. Sometime in September of 2011, Sallie Mae – now Navient Solutions, LLC (NSL) – began calling her cell phone 7-8 times a day to collect. Finally, in 2013, Ms. Weiss sued under the TCPA. The parties agreed to arbitrate the dispute pursuant to a provision in her student loan promissory note. A hearing ensued in April of 2016, at which the parties stipulated that Ms. Weiss received 774 automated calls, at a cell phone number she had not previously provided to NSL, between September 2011 and July 2013.

However, the arbitrator also found that Ms. Weiss was a member of a settlement class in a TCPA class action case brought against then Sallie Mae in Federal District Court in Washington State – the Arthur Settlement. Under the terms of that settlement, because Ms. Weiss had not filed a “consent revocation” by September 15, 2012, the arbitrator held that she was precluded from recovering for NSL calls made after that date. However, he interpreted the settlement agreement to allow her to recover for 217 calls from NSL before that date. Thus, he awarded her TCPA statutory damages in the amount of US $108,500.

One significant problem: the Arthur Settlement contained a “general release” provision, the effect of which was that Ms. Weiss “was deemed to have waived ‘any and all’ TCPA claims effective the date of the final judgment” in that case. Yet, the arbitrator “did not even acknowledge this release provision” in his ruling in favor of Ms. Weiss. Oops!!

When NSL point out this “oversight,” the Federal District Court for the Western District of New York vacated the arbitration award because, “by neglecting to ‘apply – or even address – an explicit unambiguous term of the settlement agreement,’ which ‘clearly and unambiguously bars recovery for claims until and including the date of the agreement,’ the arbitrator manifestly disregarded the law.”

The Second Circuit agreed with the standard applied, although noting that vacation of arbitration awards on such grounds was only appropriate “in those exceedingly rare instances where some egregious impropriety on the part of the arbitrator is apparent.” Even under the manifest disregard standard, an award will be upheld if the “arbitrator has provided even a barely colorable justification for his or her interpretation of the contract.” By contrast, vacation of the award is “only warranted… ‘when an arbitrator strays from interpretation and application of the agreement and effectively dispenses his own brand of industrial justice.’” So there.

Despite Ms. Weiss’s protestations, the Second Circuit agreed that it was “impossible to square” the award for TCPA violations with “the general release provision barring Weiss’s recovery for ‘any and all’ TCPA claims.” The Court rejected Ms. Weiss’s attack on the adequacy of the class notice, noting the arbitrator “expressly found that … ‘the proof was conclusive’ that Ms. Weiss ‘received the required notice of the settlement and of her rights and obligations under the terms of the settlement.’”

After all this, one would think that the Court of Appeals would affirm the District Court. But no, presumably in the interest of giving the arbitrator the chance to come up with “even a barely colorable justification” to rectify the “incoherence” of his decision, the Second Circuit vacated the District Court ruling and remanded the case, to be further remanded to the arbitrator. In doing so, the Second Circuit provided specific “instructions” to be conveyed to the arbitrator regarding assessing the sufficiency of the class notice and the import of the general release. Specifically, the “arbitrator shall be instructed either to interpret and apply the terms of the….[s]ettlement agreement’s general release provision or to explain why that provision does not bar Weiss’s claims.”

So Ms. Weiss’s arbitral award may still survive in TCPAWorld if the arbitrator can rationalize his original conclusions. But the Second Circuit made clear that it stands ready to listen again to his further explanation. So the story may continue.

On September 10, 2019, California federal judge, U.S. District Judge Yvonne Gonzalez Rogers, entered a $267 million judgment against a debt collection agency, Rash Curtis & Associates (Rash Curtis), for its violation of the Telephone Consumer Protection Act (TCPA) for over 534,000 unsolicited robocalls. This judgment comes after a May jury trial in which the jury found for the plaintiff, Ignacio Perez and the class of consumers, based on the fact that Rash Curtis made over 501,000 calls to class members using its Global Connect dialer, 2,600 calls using a VIC dialer and more than 31,000 calls using a TCN dialer. Rash Curtis made 14 unwanted calls to Perez using the Global Connect dialer and an artificial or prerecorded voice. All of these actions are prohibited by the TCPA without prior express written consumer consent.

Each class member will receive $500 per call, totaling $267 million. Perez will receive a separate award of $7,000 for the calls he received in violation of the TCPA. This judgment covers all individuals who received these unsolicited calls between June 17, 2012, and April 2, 2019, but excludes anyone who provided their cell phone numbers in credit applications to a creditor that had opened an account with Rash Curtis in that debtor’s name prior to Rash Curtis placing its first call to that individual.

Last week, the Eleventh Circuit ruled that a single unsolicited text message doesn’t meet the harm requirement necessary to proceed with a Telephone Consumer Protection Act (TCPA) claim.   The Eleventh Circuit ruling, Salcedo v. Hanna, reverses a decision by a lower court allowing the plaintiff to move forward with a TCPA claim on grounds that he received an unsolicited text message from his former attorney.

“The chirp, buzz, or blink of a cell phone receiving a single text message is more akin to walking down a busy sidewalk and having a flyer briefly [waved] in one’s face,” Circuit Judge Elizabeth L. Branch opined for the Eleventh Circuit three-judge panel. “Annoying, perhaps, but not a basis for invoking the jurisdiction of the federal courts.”

In reaching its conclusion, the Eleventh Circuit panel drew from the legislative history of the TCPA, its own precedent and the Supreme Court’s decision in Spokeo v. Robins which emphasized that in order to meet the Article III standing requirement, a concrete injury must be alleged.

While we often report on the growing circuit split stemming from Spokeo in the context of data breach litigation, due its lack of clarity on what constitutes a concrete injury (see here and here), the Spokeo ruling has generated a similar circuit split in the context of the TCPA. For example, in 2017 the Ninth Circuit concluded that receiving two unsolicited text messages was sufficient to meet the Spokeo standard for a concrete injury. The Eleventh Circuit panel was not persuaded by the Ninth Circuit’s reasoning, highlighting that the Ninth Circuit,

“…stopped short of examining whether isolated text messages not received at home come within that judgment of Congress. Instead, it concluded that ‘Congress identified unsolicited contact as a concrete harm’… We disagree with this broad overgeneralization of the judgment of Congress.”  

The Eleventh Circuit did not quantify how many unsolicited text messages, if any, would be enough to satisfy the concrete harm requirement to establish standing under the TCPA. The Eleventh Circuit decision may suggest that TCPA text messaging class actions are no longer possible, at least in the Eleventh Circuit. However until the Supreme Court weighs in, by clarifying its ruling in Spokeo, we will continue to see a lack of consistency across the circuit courts, both in the TCPA and data breach litigation contexts.

Although the Eleventh Circuit concluded that a single unsolicited text message did not meet the actual harm requirement necessary to sustain a TCPA claim, any organization that uses text messaging for promotional marketing purposes, should be mindful of the legal and regulatory guidelines that govern text message communications. Likewise, when contracting out these services, companies should ensure that their vendors are compliant with all regulatory requirements.