Explaining the Telephone Consumer Protection Act (TCPA)
By Michael Kost, Esq.
If your business or personal telephone lines (whether cellular or landlines) have been plagued by marketing and scam calls or faxes, you do have a recourse and a remedy that can inflict the necessary financial deterrence to diminish these parasites of your time and peace of mind. The Telephone Consumer Protection Act, 47 U.S.C. § 227 (TCPA) is a federal statute that was enacted to curb the abuses of telemarketing solicitation practices.
However, its role has expanded. During the past several years, the Act has been applied to render multi-million dollar verdicts and settlements against both big and small companies, including debt collectors, across the country. Judicial interpretation of the Act has also proliferated and changed significantly. As one instance, it has been conclusively determined by the United States Supreme Court that the TCPA creates federal question jurisdiction for private litigants so that they may sue in both federal and state courts.
The TCPA amended the Communications Act of 1934. It is an increasingly utilized device to sue debt collectors, but its use goes even further. Local businesses, national banks, credit card companies and global corporations can be brought into its reach.
While the TCPA governs various activities, litigation most often centers on the provision of the Act that prohibits sending unsolicited fax solicitations and prohibits the use of automatic telephone dialing systems and artificial or prerecorded voices to contact cell phones without prior express consent of the called party. The prohibition against using automated telephone dialing systems to contact cell phones encompasses text messages made to cell phones.
Litigants can seek the following relief under the TCPA: injunctive relief, actual damages or $500 for each violation of the Act (whichever is greater), or both injunctive relief and damages (47 U.S.C. § 227(b)(3)). Treble damages can also be awarded if a violation is “willful and knowing,” i.e., each $500 violation could be increased to $1,500 in the court’s discretion.
What constitutes a “willful and knowing” violation of the TCPA depends on the court where the action is filed: some courts hold that a defendant must know that its actions violate the TCPA, whereas other courts hold that the defendant must merely have willfully or knowingly made the prerecorded call or sent the unsolicited fax, so that proving knowledge of the law is unnecessary.
With statutory damage awards of up to $1,500 per violation, the Telephone Consumer Protection Act creates a possibility for very large verdicts and multi-million dollar settlements are not uncommon. Lastly, the TCPA does not provide for the recovery of attorneys’ fees, making it different from many consumer protection statutes.
The short answer is that a TCPA claim can be filed in either state or federal court. Until recently, there was a split among the US Circuit Courts as the whether the TCPA provided original federal question jurisdiction. This split was due to the fact that the TCPA contains distinct provisions governing civil actions brought by state attorneys general and private parties.
The TCPA allows private litigants to bring TCPA claims in an appropriate court of a state if otherwise permitted by the laws or rules of that state. States attorney generals are limited to bringing TCPA claims in federal court. Thus, the TCPA recognizes the express creation of a private right of action and corresponding jurisdictional grant to state courts to entertain them, while remaining silent as to federal court jurisdiction over private actions.
The United States Supreme Court ended the split with the release of Mims v. Arrow Financial Services, LLC, 132 S.Ct. 740 (2012), resolving the split of authority, holding that the TCPA provides U.S. District Courts with federal question jurisdiction over private party TCPA claims. The choice of forum will depend on state and federal precedent in that state.
The main problem of certifying a class action under the Telephone Consumer Protection Act is that most such class definitions fall prey to the “fail-safe” prohibition. A class action must demonstrate the existence of an “aggrieved class.”
Both Federal Rule of Civil Procedure 23 and due process require that plaintiffs propose a class that is ascertainable based on objective criteria and which does not require a merits-based analysis. If a court has to determine the merits of each class-member’s claim in order to ascertain class membership, then that class is a prohibited “fail-safe” class.
Most courts opine that they have the discretion, or can require plaintiff, to modify a “fail-safe” class definition so long as the class definition meets the other requirements under Rule 23: Plaintiff(s) as class representatives must be typical of the class as a whole (“typicality”), common questions of law and fact for all class members must predominate over their uncommon ones (“commonality” and “predominance”), and a class action must be the superior method of adjudicating the class-members’ claims (“superiority”).
Another potential type of collective action that can be utilized to avoid the pitfalls of the “fail-safe” class problem is allowing individual suits to be incorporated into a multi-district litigation (MDL). In an MDL, all suits remain separate lawsuits but discovery and proof issues are centralized in one court.
MDLs have been successfully utilized against Portfolio Recovery Associates (2016) and Midland Credit Management, Inc., and a class action was successfully employed against Capital One (2014), all of which settled for multi-million dollar figures.
For the Capital One class action, the defendants deny the allegations but agreed to settle the TCPA class action lawsuit to avoid the risk and uncertainty of litigation. Under the terms of the class action settlement, Capital One, Leading Edge Recovery Solutions LLC, Capital Management Services LLP and AllianceOne Receivables Management Inc. paid more than $75 million into a settlement fund for eligible class members.
The TCPA provides a powerful mechanism for defeating marketing and scam auto-dialed calls, faxes and texts; however, and experienced attorney is necessary to determine the proper forum, the type of litigation, and the careful wording of the pleadings that will make such an action successful.
The Lyon Firm has extensive experience in single-plaintiff suits, class actions and MDLs. In addition, we have brought such cases in many state and federal jurisdictions throughout the country. We have the reach, the experience, and the know-how to provide the most effective representation in the context of Telephone Consumer Protection Act suits.
If you or your business have suffered harassment and you have questions about the legal remedies available, contact The Lyon Firm at (800) 513-2403. You will speak directly with Mr. Lyon, and he will help you answer these critical questions.