Congress enacted the Telephone Consumer Protection Act (TCPA)1 on December 20, 1991, to address certain telephone and facsimile marketing practices that Congress found to be an invasion of consumer privacy. In general, and among other things, the TCPA prohibits unsolicited fax advertisements and automated or prerecorded calls (interpreted to include text messages) to cellular telephones or other devices for which the consumer would bear the cost of the call.2 Congress vested the Federal Communications Commission (FCC) with authority to issue regulations implementing the TCPA. Pursuant to that authority, the FCC has issued a series of detailed and complex rules and regulations interpreting and implementing the statute’s requirements.

Over the past decade, U.S. courts have been inundated with putative class actions asserting alleged violations of the TCPA. The statute contains a private right of action provision entitling a successful individual plaintiff to $500 per violation without regard to the defendant’s state of mind, and up to $1,500 per “willful” violation. When filed as a putative class action on behalf of all recipients of a “fax blast” marketing campaign, or all recipients of an automated text message over a four-year period, the potential exposure for the defendants can be massive. These cases have become a popular area for plaintiffs’ class action counsel, who stand to recover substantial attorneys’ fees just for filing a recycled complaint based on a single fax or text message.

Recently, two courts have ruled in favor of defendants in putative TCPA class actions. In Roberts v. PayPal, a California district court held that the plaintiff’s voluntary act of providing his cell phone number to PayPal constituted “prior express consent” under the TCPA to receive automated and prerecorded calls (and texts) from PayPal to that number, which defeated the individual plaintiff’s claim.3 In Compressor Eng. Corp. v. Manufacturers Fin. Corp., an Illinois district court denied class certification based on the lack of an ascertainable class due to issues regarding who had standing to sue based on receipt of an unsolicited facsimile advertisement.4 While the FCC’s proposed upcoming changes to its TCPA rulemaking would limit the long-term value of the first decision to defendants faced with TCPA text class actions, the second decision may offer a longer-term basis to defeat TCPA unsolicited fax class actions.

Roberts and the Issue of “Prior Express Consent” for Calls to Cell Phones Under the TCPA

The TCPA prohibits the use of any “automatic telephone dialing system” to call any telephone number assigned to a cellular telephone service absent an emergency purpose or the “prior express consent of the called party.”5 Although the statute refers to “calls,” the FCC has concluded that a “call” includes the transmission of a text message to a cellular telephone number.6 Additionally, the statute defines “automatic dialing system” to mean any system that has the “capacity” to “store or produce numbers and dial those numbers at random, in sequential order, or from a database.”7 Thus, many putative TCPA class actions are based on text messages allegedly sent to users of a service using equipment with the capacity to function as an autodialer.

Roberts v. PayPal addressed such a claim and ruled in favor of the defendant. There, the court ruled on summary judgment that PayPal had obtained the plaintiff’s “prior express consent” to send the plaintiff a text message using an autodialer when the plaintiff voluntarily submitted his cell phone number to PayPal. As a result, the text messages PayPal sent regarding PayPal’s mobile services did not violate the TCPA.8 The court looked to the FCC’s guidance regarding the meaning of the phrase “prior express consent,” which concluded that “persons who knowingly release their phone numbers have in effect given their invitations or permission to be called at the number which they have given, absent instructions to the contrary.”9 This decision cites and is consistent with Pinkward v. Walmart, where another district court found a consumer’s act of voluntarily providing a cell phone number to Wal-Mart’s pharmacy to constitute express consent under the TCPA to receive text messages from Wal-Mart, even though Wal-Mart did not explicitly seek permission for the company to send text messages.10,11

The Roberts court distinguished its holding from the Ninth Circuit’s decision in Satterfield v. Simon & Schuster, where the court rejected the argument that the plaintiffs had consented to receive the text messages at issue by voluntarily disclosing their cell phone numbers. In Satterfield, the plaintiffs voluntarily provided their cell phone numbers to a company called Nextones in order to receive a free ringtone, but then received a text message from a third party (Simon & Schuster) that had purchased a list of the Nextones subscribers to deliver them advertisements.12 The Satterfield court held that the plaintiff’s consent did not extend to an unrelated third party, as the plaintiffs were told they were only consenting to receiving communications from Nextones or its affiliates and brands.13 In Roberts, in contrast, the text messages were from PayPal itself—the company to whom the plaintiff had voluntarily provided his cell phone number—not a third party.

The Roberts decision demonstrates a context-sensitive approach for determining whether “prior express consent” has been given to send text messages to a cell phone consistent with the FCC’s current interpretation of that phrase. Roberts and the FCC’s existing interpretation result in a common-sense outcome whereby a business may contact a consumer via a phone number voluntarily provided by the consumer directly to that business without violating the TCPA.

Unfortunately, and significantly, the FCC has issued new rulemaking effective October 16, 2013, that will eliminate its common-sense and business-friendly interpretation of “prior express consent” and replace it with an onerous prior express written consent requirement.14 The FCC’s upcoming changes may inhibit the future applicability of the Roberts and earlier Pinkard and Satterfield decisions, particularly with respect to calls and text messages to cellular telephone numbers made or sent after October 16, 2013. At minimum, the new requirements will provide plaintiffs’ class action counsel with new grist for their TCPA mills.

Compressor and Standing to Sue for Violation of the Fax Advertising Provisions of the TCPA

Compressor addressed an action for alleged violation of the TCPA’s prohibition on sending faxed advertisements without prior permission, and without an established business relationship with the recipient. The plaintiffs claimed receipt of such prohibited faxes and sought certification on behalf of a class of “all persons who were sent” the faxes at issue. The court denied the plaintiffs’ motion for class certification due to the lack of an ascertainable class and because the claims are inherently individualized, as they only extend to unsolicited faxes.

Looking at the TCPA’s legislative history, the Compressor court found that Congress sought to combat the uptake in “junk” faxes, which, among other things, shift the costs of printing advertisements from the sender to recipient.15 The Compressor court held that the plaintiff’s proposed class of persons who were sent fax advertisements was unnecessarily broad, as it could include everyone from the person to whom the fax was addressed to the person who happened to pick up the transmission, and failed to include a requirement that class members owned the fax machines that received the fax advertisements at issue. As defined, and particularly in light of the fact that the faxes were sent primarily to businesses, it was not clear that only persons with standing to pursue a claim would fall within the class.

The court went on to conclude that even if the plaintiffs modified their class definitions to include those with statutory standing, or limited it to recipients of “unsolicited” faxes, class certification would still be inappropriate because standing would remain dependent on an individualized determination.

The Compressor decision is likely to prove useful to defendants in TCPA unsolicited fax advertisement cases, particularly where the faxes at issue were sent to doctors’ offices or other businesses where more than one person may utilize a fax machine and fax numbers change over time.

147 U.S.C. § 227.

2 47 U.S.C. § 227(b)(1)(C); In re Rules and Regulations Implementing the Telephone Consumer Protection Act of 1991, Report and Order, 18 F.C.C.R. 14014, 14115 (July 3, 2003). The TCPA also regulates automated and prerecorded calls to residential phone lines.

3 No. C 12-0622 PJH, slip op. at 7 (N.D. Cal. May 30, 2013).

4 No. 09-14444, slip op. at 15 (E.D. Mich. April 26, 2013).

5 47 U.S.C. § 227(b)(1)(A).

6 In re Rules and Regulations Implementing the Telephone Consumer Protection Act of 1991, Report and Order, 18 FCC Rcd. 14014, 14115 (July 3, 2003). Numerous courts have adopted this interpretation. See, e.g., Saterfield v. Simon & Schuster, Inc., 569 F.3d 946, 954 (9th Cir. 2009).

7 Id. at 14092.

8 Roberts, slip op. at 6.

9 See In re Rules and Regulations Implementing the Telephone Consumer Protection Act of 1991, Report and Order, 7 F.C.C.R. 872, 8769 (Oct. 16, 1992).

10 2012 WL 5511039 (N.D. Ala. Nov. 9, 2012).

11 A district court in Florida has rejected the FCC’s interpretation and concluded that the voluntary provision of a cell phone to a business does not amount to “express” consent to receive text messages from that business. Mais v. Gulf Coast Collection Bureau, No. 11-61936, 2013 WL 1899616 at *9 (S.D. Fla. May 8, 2013).

12 569 F.3d at 949.

13 Id. at 955.

14 In re Rules and Regulations Implementing The Telephone Consumer Protection Act of 1991, Report and Order, 27 F.C.C.R. 1830, 1831 (Feb. 15, 2012).

15 Compressor at 16.