February 16, 2017

Who’s Calling? TCPA Litigation in the Aftermath of Spokeo

Charles N. Insler

By all accounts, litigation under the Telephone Consumer Protection Act (TCPA) is out of control, having “blossomed into a national cash cow for plaintiff’s attorneys specializing in [such] disputes.” Bridgeview Health Care Ctr., Ltd. v. Clark, 816 F.3d 935, 941 (7th Cir. 2016). In 2007, 14 TCPA cases were filed. As of October 31, 2016, more than 4,000 TCPA cases had been filed. WebRecon LLC, TCPA Cracks 4K, Smashes Record with 2 Months Still to Go, 5K in Sight? With TCPA litigation so far out of control, businesses had high hopes that the Supreme Court’s decision in Spokeo v. Robins, 136 S. Ct. 1540 (2016), might rein in this “national cash cow.” Recent federal court decisions applying Spokeo in the context of TCPA litigation have produced mixed results, with some cases offering defendants glimmers of hope, and others not so much.

TCPA litigation has impacted nearly every industry, from payment systems to ride sharing, and from pharmaceuticals to social networking. See, e.g., Roberts v. Paypal, Inc., 621 F. App’x 478 (9th Cir. 2015); Lathrop v. Uber Techs., Inc., No. 14-CV-05678-JST, 2016 WL 97511 (N.D. Cal. Jan. 8, 2016); Kolinek v. Walgreen Co., No. 13 C 4806, 2015 WL 7450759 (N.D. Ill. Nov. 23, 2015); Sherman v. Yahoo! Inc., 997 F. Supp. 2d 1129 (S.D. Cal. 2014). Even the Los Angeles Lakers have faced a TCPA lawsuit. Emanuel v. Los Angeles Lakers, Inc., No. CV 12-9936-GW SHX, 2013 WL 1719035 (C.D. Cal. Apr. 18, 2013).

Given that TCPA cases generally are brought as class actions, with statutory damages ranging from $500 to $1,500 for each call or text message, companies face tremendous exposure. In one such lawsuit, Chase Bank faced the specter of a $48 billion judgment—and bankruptcy—if a jury had found it willfully violated the TCPA. This exposure creates pressure to settle, and settle companies have, sometimes for enormous sums. Capital One settled a TCPA case for $75 million; AT&T, for $45 million; Bank of America, for $32 million; MetLife, for $23 million; Papa John’s Pizza, for $16 million; and Walgreen’s Pharmacy, for $11 million. Adonis Hoffman, Sorry, Wrong Number, Now Pay Up, Wall Street J. (June 15, 2015).

This was never the intent of the TCPA. Passed in 1991, the TCPA was intended to help consumers recover from abusive telemarketers without hiring an attorney. See U.S. Chamber of Commerce Institute for Legal Reform, The Juggernaut of TCPA Litigation: The Problems with Uncapped Statutory Damages. Instead of capturing aggressive telemarketers (with small pockets), however, the law has ensnared business calls and text messages from legitimate businesses (with big pockets) simply because the calls or texts may be automated. The automated fraud alerts, prescription reminders, and coupons that come to our cell phones—the hallmarks of our modern technology-based society—have become the basis for TCPA litigation. These automated messages and alerts are a far cry from abusive robo-calls from marketers. For anyone hoping the United States Supreme Court would rein in this “national cash cow” in Spokeo, that day largely came and went.

Spokeo Fails to Address the Crisis Directly…

In Spokeo, the Supreme Court was asked to decide whether a plaintiff had standing to sue when the plaintiff suffered no concrete injury and could point solely to a violation of federal statute. Thomas Robins filed suit against Spokeo, alleging that information available through the company’s people search engine was false. According to Robins, Spokeo’s website indicated he was married with children, employed, held a graduate degree, and was relatively affluent. Robins asserted that none of this information was accurate and was therefore a violation of the Fair Credit Reporting Act (FCRA). Whether these inaccuracies alone were enough to sustain a class-action lawsuit was the question for the Supreme Court. If they were not—if a bare violation a federal statute without more was not enough to invoke the jurisdiction of the federal courts—then litigation under the TCPA and other similar statutes might have been dealt a major blow.

Although noting that a plaintiff “cannot satisfy the demands of Article III by alleging a bare procedural violation” such as an “incorrect zip code,” and that “Article III standing requires a concrete injury even in the context of a statutory violation,” the Supreme Court also determined that “the violation of a procedural right granted by statute can be sufficient in some circumstances to constitute injury in fact.” A concrete injury is a real injury that actually exists, but it does not necessarily mean a tangible injury. “‘Concrete’ is not, however, necessarily synonymous with ‘tangible.’” Ultimately, the Supreme Court ducked ruling on the sufficiency of the injury before it, holding that the U.S. Court of Appeals for the Ninth Circuit had not properly analyzed the standing issue, “having failed to fully appreciate the distinction between concreteness and particularization . . . .” The Supreme Court vacated the Ninth Circuit’s decision and remanded the case for additional analysis.

. . . But Still Leaves Some Hope

Spokeo failed to tackle the statutory violation issue directly, but district court cases have given defendants some helpful precedent for attacking TCPA plaintiffs’ standing. In Kostmayer Constr., LLC v. Port Pipe & Tube, Inc., No. 2:16-CV-01012, 2016 WL 6143075, at *1–2 (W.D. La. Oct. 19, 2016), the plaintiff alleged that it “personally received at least six unsolicited faxes that violated the TCPA” and that the receipt of these faxes caused the plaintiff and the purported class those statutory damages “contemplated by Congress and the [FCC].” Looking to Spokeo, the court found such allegations insufficient to establish standing at the dismissal stage: “Kostmayer must allege facts to establish a concrete injury, and his general references to damages contemplated by congress is insufficient.” See also Sartin v. EKF Diagnostics, Inc., No. CV 16-1816, 2016 WL 3598297, at *3 (E.D. La. July 5, 2016) (“[The complaint’s] vague reference to Congress and the FCC provides no factual material from which the Court can reasonably infer what specific injury, if any, Dr. Sartin sustained through defendants’ alleged statutory violations.”).

Kostmayer Construction’s allegations were vague and unspecific. In Smith v. Aitima Med. Equip., Inc., No. ED 16 CV 339 ABD-TBX, 2016 WL 4618780, at *4 (C.D. Cal. July 29, 2016), the plaintiff’s allegations were more specific, alleging that an unsolicited call (albeit a single call) from the defendant had caused her aggravation, drained her phone’s battery, and served as a nuisance. These allegations, although perhaps specific, were too de minimus to confer standing. More to the point, because the plaintiff had received “only one call,” any amendment would be futile, warranting dismissal with prejudice. See also Supply Pro Sorbents, LLC v. Ringcentral, Inc., No. C 16-02113 JSW, 2016 WL 5870111, at *3 (N.D. Cal. Oct. 7, 2016) (dismissing junk fax case where it was unclear how the plaintiff had “specifically suffered these particular harms”—loss of the use of the fax machine, paper, and ink toner, waste of recipient’s valuable time, and interruption of privacy—from “the single line identifier on the optional cover sheet of a solicited four-page fax it received.”).

In Stoops v. Wells Fargo Bank, N.A., No. CV 3:15-83, 2016 WL 3566266, at *11 (W.D. Pa. June 24, 2016), the district court applied Spokeo to attack the constitutional standing of a professional TCPA plaintiff who had filed nine TCPA lawsuits and had at least 35 cell phone numbers. Finding that a plaintiff who has “admitted that her only purpose in using her cell phones [was] to file TCPA lawsuits” could not have suffered the “nuisance, invasion of privacy, cost, and inconvenience” that the TCPA was intended to guard against. Stoops also found that the plaintiff could not establish that she had prudential standing because her interests were “not within the zone of interests intended to be protected by the TCPA.” “[I]t is unfathomable that Congress considered a consumer who files TCPA actions as a business when it enacted the TCPA as a result of its outrage over the proliferation of prerecorded telemarketing calls to private residences . . . .”

Romero v. Dep’t Stores Nat’l Bank, No. 15-CV-193-CAB-MDD, 2016 WL 4184099, at *1 (S.D. Cal. Aug. 5, 2016), takes these holdings even farther. Elisa Romero claimed to have received 290 unwanted calls from the defendant, causing her emotional distress and other harms. Because each alleged violation of the TCPA is a separate claim, a plaintiff must establish standing—an injury in fact—for each such violation. Each alleged violation by the defendant often comes with different factual underpinnings: a recipient’s phone may be turned off when dialed, may ring but go unheard or unanswered, or is answered.

As a matter of law, a plaintiff lacks standing to assert a TCPA violation for calls that she does not hear. “For Plaintiff to have suffered ‘lost time, aggravation, and distress,’ she must, at the very least, have been aware of the call when it occurred.” The same is true of calls that are heard but that go unanswered, for there is nothing to distinguish, from the plaintiff’s perspective, a call made by a family member or employer from a call made by a manually or ATDS-dialed marketer. “No reasonable juror could find that one unanswered telephone call could cause lost time, aggravation, distress, or any injury sufficient to establish standing.” See also Juarez v. Citibank, N.A., No. 16-CV-01984-WHO, 2016 WL 4547914, at *3 (N.D. Cal. Sept. 1, 2016) (distinguishing aspects of Romero, but noting that calls “made to a neglected phone that go unnoticed or calls that are dropped before they connect may violate the TCPA but not cause any concrete injury.”).

Even among the answered calls, there was no evidence tying the alleged injuries to the fact of a marketer calling from an automated dialing system (a TCPA violation) as opposed to having manually dialed the number (not a TCPA violation). “Although these calls seeking to collect debts may have been stressful, aggravating, and occupied Plaintiff’s time, that injury is completely unrelated to Defendants’ use of an ATDS to dial her number. Plaintiff would have been no better off had Defendants dialed her telephone number manually.” Despite allegations of 290 calls, the Romero court found that the plaintiff had not suffered “an injury in fact traceable to Defendants’ violation of the TCPA” and therefore lacked standing.

Defendants Should Not Get Too Excited; Each of the Cases Cited Above Has Its Foil or Its Detractors

District courts have dismissed TCPA cases for lack of standing following Spokeo, but have also found that the logic of Spokeo is not easily adapted to the TCPA. Spokeo concerned the FCRA, where a violation of the statute—the failure to ensure the accuracy of a consumer report—has the potential to cause serious harm, such as the loss of employment opportunities or a decrease in the consumer’s creditworthiness. A.D. v. Credit One Bank, N.A., No. 14 C 10106, 2016 WL 4417077, at *6 (N.D. Ill. Aug. 19, 2016). A violation of the FCRA could just as easily fail to cause any kind of harm or material risk of harm (such as having an incorrect zip code). Violating the FCRA does not necessarily cause the harm that Congress sought to guard against by passing the statute. The “same cannot be said of the TCPA” because the TCPA does not “require the adoption of procedures to decrease congressionally-identified risks.” By its very nature, a violation of the TCPA causes the privacy-related harm or intrusion that Congress sought to protect by enacting the TCPA. “There is no gap—there are not some kinds of violations of section 227 that do not result in the harm Congress intended to curb, namely, the receipt of unsolicited telemarketing calls that by their nature invade the privacy and disturb the solitude of their recipients.”

Rejecting the logic of Sartin, the Credit One Bank decision held that a TCPA plaintiff’s standing does not turn on whether the plaintiff had suffered “additional tangible harms like wasted time, actual annoyance, and financial losses” because Congress identified that unsolicited telephone contact constitutes an intangible, concrete harm. See also Griffith v. ContextMedia, Inc., No. 16 C 2900, 2016 WL 6092634, at *1 (N.D. Ill. Oct. 19, 2016) (“Courts in this district have held, both before and after the Court’s decision in Spokeo . . . that loss of time and privacy are concrete injuries for the purpose of conferring Article III standing.”).

Sartin is not the only case to have its logic questioned. Aitima Medical Equipment, 2016 WL 4618780, at *4, held that a single phone call was too de minimus to confer standing. Other courts have reached the opposition conclusion. In Etzel v. Hooters of America, LLC, No. 1:15-cv-1055 LMM (N.D. Ga. Nov. 15, 2016) (Doc. 39 at 9), the court found that a single call was sufficient to confer Article III standing (“[I]n light of the plain language of the TCPA and Congress’s role in elevating injuries to legally cognizable status, sending a single text message in violation of the TCPA constitutes an injury-in-fact to the recipient so as to provide Article III standing.”) (emphasis added). See also Aranda v. Caribbean Cruise Line, Inc., No. 12 C 4069, 2016 WL 4439935, at *6 (N.D. Ill. Aug. 23, 2016) (disagreeing with “the reasoning of the judge in Aitima Medical Equipment” and noting that it “does not matter whether plaintiffs lack additional tangible harms like loss of cell phone battery life, actual annoyance, and financial losses.”). The Juarez court reached the same conclusion. Juarez, 2016 WL 4547914, at *3 (“Even a single phone call can cause lost time, annoyance, and frustration.”).

Romero also has its detractors. According to LaVigne v. First Cmty. Bancshares, Inc., No. 1:15-CV-00934-WJ-LF, 2016 WL 6305992, at *3 (D.N.M. Oct. 19, 2016), accepting the reasoning of Romero would make it all but “impossible for a plaintiff to allege a private right of action under the TCPA for automated solicitation calls.” Instead, LaVigne believed that the history and judgment of Congress suggested that a violation of the TCPA, on its own, constituted a concrete, de facto injury. “The list [of cases] goes on, with each finding that the bare statutory violation of the TCPA constitutes sufficient ‘concrete’ injury for Article III standing.” LaVigne also noted that Article III’s standing requirements do “not contain a minimum cost or harm threshold.” A harm, no matter how small, is actual and real.

More to the point, Romero has likely been overruled by the Ninth Circuit’s recent decision in Van Patten v. Vertical Fitness Group, No. 14-55980 (9th Cir. Jan. 30, 2017), which held that “[u]nsolicited telemarketing phone calls or text messages, by their nature, invade the privacy and disturb the solitude of their recipients.” (emphasis added). As a result, a plaintiff alleging a violation of the TCPA “need not allege any additional harm beyond the one Congress has identified” to satisfy Spokeo and Article III’s standing requirements.

Spokeo Is Still Not the Last Word

In July 2015, the FCC issued a Declaratory Ruling and Order that clarified the TCPA’s definition of “automatic telephone dialing system” and created a “very limited safe harbor” for calls made to reassigned numbers. Lathrop v. Uber Techs., Inc., No. 14-CV-05678-JST, 2016 WL 97511, at *2 (N.D. Cal. Jan. 8, 2016). Nine entities filed petitions with the U.S. Court of Appeals for the District of Columbia Circuit seeking to have the FCC’s ruling vacated, and these nine appeals were consolidated into a single case: ACA International v. Federal Communications Commission, No. 15-1211 (D.C. Cir. 2015).

Two of the five FCC commissioners issued sharp dissents in the July 2015 ruling. If the D.C. Circuit adopts the reasoning of these dissents and determines that the FCC reached the wrong conclusions in its July 2015 Order, such a decision “could potentially be dispositive” of current TCPA issues before the district courts. Fontes v. Time Warner Cable Inc., No. CV14-2060-CAS(CWX), 2015 WL 9272790, at *4 (C.D. Cal. Dec. 17, 2015). One court has already sided with the dissenting Commissioners and stated its belief that portions of the “FCC’s majority interpretation . . . contradict[] the plain language of the statute” and are “not entitled to deference on appeal.” Gensel v. Performant Techs., Inc., No. 13-C-1196, 2015 WL 6158072, at *2 (E.D. Wis. Oct. 20, 2015).

Even after Spokeo, some courts have decided to wait on a decision from the D.C. Circuit in ACA International, believing that a decision in that case has the potential to clarify and streamline important legal issues. See Rajput v. Synchrony Bank, No. 3:15-CV-1595, 2016 WL 6433150, at *1, *8 (M.D. Pa. Oct. 31, 2016) (lifting a stay following the Spokeo decision but then granting another stay pending the D.C. Circuit’s disposition of ACA International); Frable v. Synchrony Bank, No. 16-CV-0559 (DWF/HB), 2016 WL 6123248, at *4 (D. Minn. Oct. 17, 2016) (staying TCPA case until the D.C. Circuit Court of Appeals issues a decision in ACA International); but see Konopca v. Ctr. for Excellence in Higher Educ., Inc., No. CV155340FLWDEA, 2016 WL 4644461, at *3 (D.N.J. Sept. 6, 2016) (refusing to stay the case while the ACA International case remains pending). Spokeo is not the last word in TCPA litigation, and ACA International may also find its way to the Supreme Court.

Charles N. Insler

Charles N. Insler is an attorney in the St. Louis office of Hepler Broom LLC. He practices in the areas of complex commercial litigation, business torts, and class action litigation, among others.